The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements,” our Consolidated Financial Statements and Notes that follow and the “Consolidated Five-Year Summary of Selected Financial Data” and the “Risk Factors” included in our Annual Report on Form 10-K. References to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries.

Overview

Ameriprise is a diversified financial services company with a 125-year history of providing financial solutions. We are a long-standing leader in financial planning and advice with $1.1 trillion in assets under management and administration as of December 31, 2020. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives. For additional discussion of our businesses, see Part I, Item 1 of this Annual Report on Form 10-K.

The coronavirus disease 2019 (‘‘COVID-19’’) pandemic presents ongoing significant economic and societal disruption and market volatility, which has had and will continue to have ongoing impacts to our business and operating environment driven by a low interest rate environment, significant volatility in the equity markets and the potential associated implications to client behavior. There are no reliable estimates of how long the pandemic will last, how many people are likely to be affected by it, or its impact on the overall economy.

We continue to implement comprehensive strategies to navigate the operating environment spurred by the pandemic. During the first quarter, we implemented a work-from-home protocol for virtually all of our employee population, restricted business travel, and provided resources for complying with the guidance from the World Health Organization, the U.S. Centers for Disease Control and governments. We have begun a thoughtful phased reopening of our office locations while complying with applicable health agencies’ guidelines and governmental orders. We continue to operate successfully and satisfy elevated customer service volumes in this unique time - client service and the health and safety of our clients, advisors and employees remain our priorities while our employees and advisors have various work arrangements. The pandemic strategy we have employed is flexible and scalable, recognizing this pandemic is widespread and occurs in multiple waves, affecting different communities at different times with varying levels of severity.

There was significant economic volatility during 2020 and our results of operations continue to be affected by the COVID-19 pandemic. There is still uncertainty surrounding the magnitude, duration, speed and reach of the ongoing global pandemic, success of worldwide vaccination efforts, as well as the impact of actions that have been or could be taken by governmental authorities, clients or other third parties. While we have successfully adapted to a virtual work environment and deployed numerous adaptive business strategies so far this year, we believe the pandemic and its accompanying impact on the global financial markets and on our operations and financial results may cause results not to be comparable to previous years. The results presented in this report are not necessarily indicative of future operating results. For further information regarding the impact of the COVID-19 pandemic, and any potentially material effects, see Item 1A of this Annual Report on Form 10-K - “Risk Factors”.

The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income. Revenues and net income are significantly affected by investment performance and the total value and composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.

Financial markets and macroeconomic conditions have had and will continue to have a significant impact on our operating and performance results. In addition, the business, political and regulatory environments in which we operate are subject to elevated uncertainty and substantial, frequent change. Accordingly, we expect to continue focusing on our key strategic objectives and obtaining operational and strategic leverage from our core capabilities. The success of these and other strategies may be affected by the factors discussed in Item 1A of this Annual Report on Form 10-K - “Risk Factors” - and other factors as discussed herein.

Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits and the “spread” income generated on our fixed deferred annuities, fixed insurance, fixed portion of variable annuities and variable insurance contracts and deposit products.

Earnings, as well as adjusted operating earnings, will be negatively impacted by the ongoing low interest rate environment should it continue. In addition to continuing spread compression in our interest sensitive product lines, a sustained low interest rate environment may result in increases to our reserves and changes in various rate assumptions we use to amortize DAC and DSIC, which may negatively impact our adjusted operating earnings. For additional discussion on our interest rate risk, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.”

In the third quarter, we updated our market-related assumptions and implemented model changes related to our living benefit valuation. In addition, we conducted our annual review of life insurance and annuity valuation assumptions relative to current

experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. We also reviewed our active life future policy benefit reserve adequacy for our long term care (“LTC”) business in the third quarter. See our Consolidated and Segment Results of Operations sections for the pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.

During the third quarter of 2020, as we continue to reposition the business and implement strategies focusing on product features and sales, the composition of our reportable segments changed from five to four segments. The Chief Operating Decision Maker (“CODM”) now manages the Annuities and Protection business as one operating segment, referred to as Retirement & Protection Solutions. The Retirement & Protection Solutions segment will include Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, we moved the Fixed Annuities and Fixed Indexed Annuities (collectively “FA”) business to the Corporate & Other segment as a closed block. These segment reporting changes align with the way our CODM began assessing the performance of our reportable segments and other business activities effective in the third quarter of 2020. Certain prior period amounts have been revised to conform to the current presentation. These changes have no impact on previously reported consolidated balance sheets or statements of operations, comprehensive income, stockholders equity, or cash flows.

On October 1, 2019, we completed the sale of our Ameriprise Auto & Home Insurance business (“AAH”) to American Family Insurance Mutual Holding Company (American Family Insurance). See Note 19 to our Consolidated Financial Statements for additional information on the sale of AAH. This sale is consistent with our focus on our core growth areas of Advice & Wealth Management and Asset Management.

In 2018, we made the strategic decision to expand the banking products and services we can provide directly to our clients, and commenced the process to convert Ameriprise National Trust Bank into a federal savings bank with the capabilities to offer FDIC insured deposits and a range of lending products. We completed that process, received regulatory approvals and converted Ameriprise National Trust Bank to a federal savings bank in May 2019.

We consolidate certain variable interest entities for which we provide asset management services. These entities are defined as consolidated investment entities (“CIEs”). While the consolidation of the CIEs impacts our balance sheet and income statement, our exposure to these entities is unchanged and there is no impact to the underlying business results. For further information on CIEs, see Note 5 to our Consolidated Financial Statements. The results of operations of the CIEs are reflected in the Corporate & Other segment. On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in the fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in net investment income. We include the fees from these entities in the management and financial advice fees line within our Asset Management segment.

While our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts), net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; mean reversion related impacts (the impact on variable annuity and variable universal life (“VUL”) products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves); the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. Management uses these non-GAAP measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors. Also, certain of these non-GAAP measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Throughout our Management’s Discussion and Analysis, these non-GAAP measures are referred to as adjusted operating measures. These non-GAAP measures should not be viewed as a substitute for U.S. GAAP measures.

It is management’s priority to increase shareholder value over a multi-year horizon by achieving our on-average, over-time financial targets.

Our financial targets are:

• Adjusted operating earnings per diluted share growth of 12% to 15%, and

• Adjusted operating return on equity excluding accumulated other comprehensive income (“AOCI”) of over 30%.

The following tables reconcile our GAAP measures to adjusted operating measures:

															Per Diluted Share
			Years Ended December 31,												Years Ended December 31,
2020						2019						2020						2019
(in millions, except per share amounts)
Net income			$	1,534					$	1,893					$	12.20					$	13.92
Less: Net realized investment gains (losses) (1)			(10)						(4)						(0.08)						(0.03)
Add: Market impact on non-traditional long-duration products (1)			375						591						2.98						4.35
Add: Mean reversion related impacts (1)			(87)						(57)						(0.69)						(0.42)
Add: Market impact of hedges on investments (1)			—						35						—						0.26
Less: Gain on disposal of business (1)			—						213						—						1.57
Add: Integration/restructuring charges (1)			4						17						0.03						0.12
Less: Net income (loss) attributable to CIEs			3						1						0.02						0.01
Tax effect of adjustments (2)			(63)						(79)						(0.50)						(0.58)
Adjusted operating earnings			$	1,770					$	2,190					$	14.08					$	16.10
Weighted average common shares outstanding:
Basic			123.8						134.1
Diluted			125.7						136.0

(1) Pretax adjusted operating adjustments.

(2) Calculated using the statutory tax rate of 21%.

The following table reconciles net income to adjusted operating earnings and the five-point average of quarter-end equity to adjusted operating equity:

			Years Ended December 31,
2020						2019
(in millions)
Net income			$	1,534					$	1,893
Less: Adjustments (1)			(236)						(297)
Adjusted operating earnings			$	1,770					$	2,190
Total Ameriprise Financial, Inc. shareholders’ equity			$	6,171					$	5,837
Less: AOCI, net of tax			301						122
Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI			5,870						5,715
Less: Equity impacts attributable to CIEs			1						1
Adjusted operating equity			$	5,869					$	5,714

Return on equity, excluding AOCI			26.1		%				33.1		%
Adjusted operating return on equity, excluding AOCI (2)			30.2		%				38.3		%

(1) Adjustments reflect the sum of after-tax net realized investment gains/losses, net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; mean reversion related impacts; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and net income (loss) from consolidated investment entities. After-tax is calculated using the statutory tax rate of 21%.

(2) Adjusted operating return on equity, excluding AOCI is calculated using adjusted operating earnings in the numerator and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory rate of 21%.

Critical Accounting Estimates

The accounting and reporting policies that we use affect our Consolidated Financial Statements. Certain of our accounting and reporting policies are critical to an understanding of our consolidated results of operations and financial condition and, in some cases, the application of these policies can be significantly affected by the estimates, judgments and assumptions made by management during the preparation of our Consolidated Financial Statements. The accounting and reporting policies and estimates we have identified as fundamental to a full understanding of our consolidated results of operations and financial condition are described below. See Note 2 to our Consolidated Financial Statements for further information about our accounting policies.

Valuation of Investments

The most significant component of our investments is our Available-for-Sale securities, which we carry at fair value within our Consolidated Balance Sheets. See Note 15 to our Consolidated Financial Statements for discussion of the fair value of our Available-for-Sale securities. Financial markets are subject to significant movements in valuation and liquidity, which can impact our ability to liquidate and the selling price that can be realized for our securities and increases the use of judgment in determining the estimated fair value of certain investments.

Deferred Acquisition Costs

See Note 2 to our Consolidated Financial Statements for discussion of our DAC accounting policy.

Non-Traditional Long-Duration Products

For our non-traditional long-duration products (including variable, structured variable and fixed deferred annuity contracts, UL and VUL insurance products), our DAC balance at any reporting date is based on projections that show management expects there to be estimated gross profits (“EGPs”) after that date to amortize the remaining balance. These projections are inherently uncertain because they require management to make assumptions about financial markets, mortality levels and contractholder and policyholder behavior over periods extending well into the future. Projection periods used for our annuity products are typically 30 to 50 years and for our UL insurance products 50 years or longer.

EGPs vary based on persistency rates (assumptions at which contractholders and policyholders are expected to surrender, make withdrawals from and make deposits to their contracts), mortality levels, client asset value growth rates (based on equity and bond market performance), variable annuity benefit utilization and interest margins (the spread between earned rates on invested assets and rates credited to contractholder and policyholder accounts). Changes in these assumptions can be offsetting and we are unable to predict their movement or offsetting impact over time. When assumptions are changed, the percentage of EGPs used to amortize DAC might also change. A change in the required amortization percentage is applied retrospectively; an increase in amortization percentage will result in a decrease in the DAC balance and an increase in DAC amortization expense, while a decrease in amortization percentage will result in an increase in the DAC balance and a decrease in DAC amortization expense. The effect on the DAC balance that would result from the realization of unrealized gains (losses) on securities is recognized with an offset to accumulated other comprehensive income on the consolidated balance sheet.

The client asset value growth rates are the rates at which variable annuity and VUL insurance contract values invested in separate accounts are assumed to appreciate in the future. The rates used vary by equity and fixed income investments. The long-term client asset value growth rates are based on assumed gross annual returns of 9% for equity funds and 5.4% for fixed income funds. We typically use a five-year mean reversion process as a guideline in setting near-term equity fund growth rates based on a long-term view of financial market performance as well as recent actual performance. The suggested near-term equity fund growth rate is reviewed quarterly to ensure consistency with management’s assessment of anticipated equity market performance.

A decrease of 100 basis points in separate account fund growth rate assumptions is likely to result in an increase in DAC amortization and an increase in benefits and claims expense for variable annuity and VUL insurance contracts. The following table presents the estimated impact to current period pretax income:

			Estimated Impact to Pretax Income (1)
DAC Amortization						Benefits and Claims Expense						Total
(in millions)
Decrease in future near- and long-term fixed income fund growth returns by 100 basis points			$	(37)					$	(71)					$	(108)
Decrease in future near-term equity fund growth returns by 100 basis points			$	(33)					$	(50)					$	(83)
Decrease in future long-term equity fund growth returns by 100 basis points			(21)						(32)						(53)
Decrease in future near- and long-term equity fund growth returns by 100 basis points			$	(54)					$	(82)					$	(136)

(1) An increase in the above assumptions by 100 basis points would result in an increase to pretax income for approximately the same amount.

An assessment of sensitivity associated with changes in any single assumption would not necessarily be an indicator of future results.

Traditional Long-Duration Products

For our traditional long-duration products (including traditional life and disability income (“DI”) insurance products), our DAC balance at any reporting date is based on projections that show management expects there to be adequate premiums after the date to amortize the remaining balance. These projections are inherently uncertain because they require management to make assumptions over periods extending well into the future. These assumptions include interest rates, persistency rates and mortality and morbidity rates and are not modified (unlocked) unless recoverability testing determines that reserves are inadequate. Projection periods used for our traditional life insurance are up to 30 years. Projection periods for our DI products are up to 45 years. We may experience accelerated amortization of DAC if policies terminate earlier than projected or a slower rate of amortization of DAC if policies persist longer than projected.

For traditional life and DI insurance products, the assumptions provide for adverse deviations in experience and are revised only if management concludes experience will be so adverse that DAC are not recoverable. If management concludes that DAC are not recoverable, DAC are reduced to the amount that is recoverable based on best estimate assumptions.

Future Policy Benefits and Claims

We establish reserves to cover the benefits associated with non-traditional and traditional long-duration products. Non-traditional long-duration products include variable and structured variable annuity contracts, fixed annuity contracts and UL and VUL policies. Traditional long-duration products include term life, whole life, DI and LTC insurance products.

Guarantees accounted for as insurance liabilities include guaranteed minimum death benefits (“GMDB”), gain gross-up (“GGU”), guaranteed minimum income benefit (“GMIB”) and the life contingent benefits associated with guaranteed minimum withdrawal benefit (“GMWB”). In addition, UL and VUL policies with product features that result in profits followed by losses are accounted for as insurance liabilities.

Guarantees accounted for as embedded derivatives include guaranteed minimum accumulation benefit (“GMAB”) and the non-life contingent benefits associated with GMWB. In addition, the portion of structured variable annuities, indexed annuities and IUL policies allocated to the indexed account is accounted for as an embedded derivative.

The establishment of reserves is an estimation process using a variety of methods, assumptions and data elements. If actual experience is better than or equal to the results of the estimation process, then reserves should be adequate to provide for future benefits and expenses. If actual experience is worse than the results of the estimation process, additional reserves may be required.

Non-Traditional Long-Duration Products, including Embedded Derivatives

UL and VUL

A portion of our UL and VUL policies have product features that result in profits followed by losses from the insurance component of the contract. These profits followed by losses can be generated by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges. The liability for these future losses is determined using actuarial models to estimate the death benefits in excess of account value and recognizing the excess over the estimated life based on expected assessments (e.g. cost of insurance charges, contractual administrative charges, similar fees and investment margin). Significant assumptions made in projecting future benefits and assessments relate to client asset value growth rates, mortality, persistency and investment margins and are consistent with those used for DAC valuation for the same contracts. See Note 12 to our Consolidated Financial Statements for information regarding the liability for contracts with secondary guarantees.

Variable Annuities

We have approximately $86 billion of variable annuity account value that has been issued over a period of more than fifty years. The diversified variable annuity block consists of $31 billion of account value with no living benefit guarantees and $55 billion of account value with living benefit guarantees, primarily GMWB provisions. The business is predominately issued through the Ameriprise Financial® advisor network. The majority of the variable annuity contracts offered by us contain GMDB provisions. We also offer variable annuities with death benefit provisions that gross up the amount payable by a certain percentage of contract earnings which are referred to as GGU benefits. In addition, we offer contracts with GMWB and GMAB provisions and, until May 2007, we offered contracts containing GMIB provisions. See Note 12 to our Consolidated Financial Statements for further discussion of our variable annuity contracts.

In determining the liabilities for GMDB, GGU, GMIB and the life contingent benefits associated with GMWB, we project these benefits and contract assessments using actuarial models to simulate various equity market scenarios. Significant assumptions made in projecting future benefits and assessments relate to customer asset value growth rates, mortality, persistency, benefit utilization and investment margins and are consistent with those used for DAC valuation for the same contracts. As with DAC, management reviews, and where appropriate, adjusts its assumptions each quarter. Unless management identifies a material deviation over the course of quarterly monitoring, management reviews and updates these assumptions annually in the third quarter of each year.

Regarding the exposure to variable annuity living benefit guarantees, the source of behavioral risk is driven by changes in policyholder surrenders and utilization of guaranteed withdrawal benefits. We have extensive experience studies and analysis to monitor changes and trends in policyholder behavior. A significant volume of company-specific policyholder experience data is available and provides management with the ability to regularly analyze policyholder behavior. On a monthly basis, actual surrender and benefit utilization experience is compared to expectations. Experience data includes detailed policy information providing the opportunity to review impacts of multiple variables. The ability to analyze differences in experience, such as presence of a living benefit rider, existence of surrender charges, and tax qualifications provide us an effective approach in quickly detecting changes in policyholder behavior.

At least annually, we perform a thorough policyholder behavior analysis to validate the assumptions included in our benefit reserve, embedded derivative and DAC balances. The variable annuity assumptions and resulting reserve computations reflect multiple policyholder variables. Differentiation in assumptions by policyholder age, existence of surrender charges, guaranteed withdrawal utilization, and tax qualification are examples of factors recognized in establishing management’s assumptions used in reserve calculations. The extensive data derived from our variable annuity block informs management in confirming previous assumptions and revising the variable annuity behavior assumptions. Changes in assumptions are governed by a review and approval process to ensure an appropriate measurement of all impacted financial statement balances.

See the table in the previous discussion of “Deferred Acquisition Costs” for the estimated impact to benefits and claims expense related to variable annuity and VUL insurance contracts resulting from a decrease of 100 basis points in separate account fund growth rate assumptions.

Embedded Derivatives

The fair value of embedded derivatives related to GMAB and the non-life contingent benefits associated with GMWB provisions fluctuate based on equity, interest rate and credit markets which can cause these embedded derivatives to be either an asset or a liability. The fair value of embedded derivatives related to structured variable annuities, indexed annuities and IUL fluctuate based on equity markets and interest rates and is a liability. In addition, embedded derivatives are impacted by an estimate of our nonperformance risk adjustment. This estimate includes a spread over the LIBOR swap curve as of the balance sheet date. As our estimate of this spread over LIBOR widens or tightens, the liability will decrease or increase.

Additionally, our Corporate Actuarial Department calculates the fair value of the embedded derivatives on a monthly basis. During this process, control checks are performed to validate the completeness of the data. Actuarial management approves various components of the valuation along with the final results. The change in the fair value of the embedded derivatives is reviewed monthly with senior management.

See Note 15 to our Consolidated Financial Statements for information regarding the fair value measurement of embedded derivatives.

Traditional Long-Duration Products

Liabilities for unpaid amounts on reported DI and LTC claims include any periodic or other benefit amounts due and accrued, along with estimates of the present value of obligations for continuing benefit payments. These unpaid amounts are calculated using anticipated claim continuance rates based on established industry tables, adjusted as appropriate for our experience. The discount rates used to calculate present values are based on average interest rates earned on assets supporting the liability for unpaid amounts.

Liabilities for estimates of benefits that will become payable on future claims on term life, whole life and DI policies are based on the net level premium and LTC policies are based on a gross premium valuation reflecting management’s current best estimate assumptions. Net level premium includes anticipated premium payments, mortality and morbidity rates, policy persistency and interest rates earned on assets supporting the liability. Gross premium valuation includes expected premium rate increases, benefit reductions, morbidity rates, policy persistency and interest rates earned on assets supporting the liability. Anticipated mortality and morbidity rates are based on established industry mortality and morbidity tables, with modifications based on our experience. Anticipated premium payments and persistency rates vary by policy form, issue age, policy duration and certain other pricing factors.

Derivative Instruments and Hedging Activities

We use derivative instruments to manage our exposure to various market risks. All derivatives are recorded at fair value. The fair value of our derivative instruments is determined using either market quotes or valuation models that are based upon the net present value of estimated future cash flows and incorporate current market observable inputs to the extent available.

For further details on the types of derivatives we use and how we account for them, see Note 2, Note 15 and Note 17 to our Consolidated Financial Statements. For discussion of our market risk exposures and hedging program and related sensitivity testing, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.”

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements and their expected impact on our future consolidated results of operations and financial condition, see Note 3 to our Consolidated Financial Statements.

Sources of Revenues and Expenses

Management and Financial Advice Fees

Management and financial advice fees relate primarily to fees earned from managing mutual funds, private funds, separate account and wrap account assets and institutional investments, as well as fees earned from providing financial advice, administrative services (including transfer agent and administration fees earned from providing services to retail mutual funds) and other custodial services. Management and financial advice fees include performance-based incentive management fees, which we may receive on certain management contracts. Management and financial advice fees also include mortality and expense risk fees.

Distribution Fees

Distribution fees primarily include point-of-sale fees (such as mutual fund front-end sales loads) and asset-based fees (such as 12b-1 distribution and shareholder service fees). Distribution fees also include amounts received under marketing support arrangements for sales of mutual funds and other companies’ products, such as through our wrap accounts, as well as surrender charges on annuities and UL and VUL insurance.

Net Investment Income

Net investment income primarily includes interest income on fixed maturity securities classified as Available-for-Sale, mortgage loans, policy loans, margin loans, pledged asset lines of credit, other investments, cash and cash equivalents and investments of CIEs; the changes in fair value of trading securities, certain derivatives and certain assets and liabilities of CIEs; the pro rata share of net income or loss on equity method investments; and realized gains and losses on the sale of investments and changes for the allowance for credit losses.

Premiums, policy and contract charges

Premiums include premiums on traditional life, DI and LTC insurance and immediate annuities with a life contingent feature and are net of reinsurance premiums. Additionally, prior to the sale of AAH on October 1, 2019, premiums included earned premiums from auto and home insurance products. Policy and contract charges include variable annuity rider charges and UL and VUL insurance charges, which consist of cost of insurance charges (net of reinsurance premiums and cost of reinsurance for UL and VUL insurance products) and administrative charges.

Other Revenues

Other revenues primarily include the accretion on the fixed annuities reinsurance deposit receivable and other miscellaneous revenues.

For discussion of our accounting policies on revenue recognition, see Note 2 to our Consolidated Financial Statements.

Banking and Deposit Interest Expense

Banking and deposit interest expense primarily includes interest expense related to investment certificates and banking deposits. The changes in fair value of stock market certificate embedded derivatives and the derivatives hedging stock market certificates are included within banking and deposit interest expense.

Distribution Expenses

Distribution expenses primarily include compensation paid to our financial advisors, registered representatives, third-party distributors and wholesalers. The portion of these costs which are incremental and direct to the acquisition of a new or renewal insurance policy or annuity contract issued by the RiverSource Life companies are deferred. The amounts capitalized and amortized are based on actual distribution costs. The majority of these costs, such as advisor and wholesaler compensation, vary directly with the level of sales. Distribution expenses also include marketing support and other distribution and administration related payments made to affiliated and unaffiliated distributors of products provided by our affiliates. The majority of these expenses vary with the level of sales, or assets held, by these distributors, and the remainder is fixed. Distribution expenses also include wholesaling costs.

Interest Credited to Fixed Accounts

Interest credited to fixed accounts represents amounts earned by contractholders and policyholders on fixed account values associated with UL and VUL insurance and annuity contracts. The changes in fair value of fixed deferred indexed annuity and IUL embedded derivatives and the derivatives hedging these products are also included within interest credited to fixed accounts.

Benefits, Claims, Losses and Settlement Expenses

Benefits, claims, losses and settlement expenses consist of amounts paid and changes in liabilities held for anticipated future benefit payments under insurance policies and annuity contracts, along with costs to process and pay such amounts. Amounts are net of benefit payments recovered or expected to be recovered under reinsurance contracts. Benefits under variable annuity guarantees include the changes in fair value of GMWB and GMAB embedded derivatives and the derivatives hedging these benefits, as well as the changes in fair value of derivatives hedging GMDB provisions. The changes in fair value of structured variable annuity embedded derivatives and the derivatives hedging this product, as well as the amortization of DSIC are also included in benefits, claims losses and settlement expenses.

Amortization of DAC

Direct sales commissions and other costs capitalized as DAC are amortized over time. For annuity and UL/VUL contracts, DAC are amortized based on projections of EGPs over amortization periods equal to the approximate life of the business. For other insurance products, DAC are generally amortized as a percentage of premiums over amortization periods equal to the premium-paying period.

Interest and Debt Expense

Interest and debt expense primarily includes interest on corporate debt and CIE debt, the impact of interest rate hedging activities and amortization of debt issuance costs.

General and Administrative Expense

General and administrative expense includes compensation, share-based awards and other benefits for employees (other than employees directly related to distribution, such as financial advisors), professional and consultant fees, information technology, facilities and equipment, advertising and promotion, legal and regulatory and corporate related expenses.

Assets Under Management and Administration

Assets under management (“AUM”) include external client assets for which we provide investment management services, such as the assets of the Columbia Threadneedle Investments funds, institutional clients and clients in our advisor platform held in wrap accounts as well as assets managed by sub-advisors selected by us. AUM also includes certain assets on our Consolidated Balance Sheets for which we provide investment management services and recognize management fees in our Asset Management segment, such as the assets of the general account and the variable product funds held in the separate accounts of our life insurance subsidiaries and CIEs.

Assets under administration (“AUA”) include assets for which we provide administrative services such as client assets invested in other companies’ products that we offer outside of our wrap accounts. These assets include those held in clients’ brokerage accounts. We generally record revenues received from administered assets as distribution fees. We do not exercise management discretion over these assets and do not earn a management fee. These assets are not reported on our Consolidated Balance Sheets. AUA also includes certain assets on our Consolidated Balance Sheets for which we do not provide investment management services and do not recognize management fees, such as investments in non-affiliated funds held in the separate accounts of our life insurance subsidiaries.

AUM and AUA do not include assets under advisement, for which we provide advisory services such as model portfolios but do not have full discretionary investment authority.

The following table presents detail regarding our AUM and AUA:

			December 31,												Change
2020						2019
(in billions)
Assets Under Management and Administration
Advice & Wealth Management AUM			$	376.8					$	315.2					$	61.6					20		%
Asset Management AUM			546.6						494.2						52.4						11
Eliminations			(37.4)						(31.3)						(6.1)						(19)
Total Assets Under Management			886.0						778.1						107.9						14
Total Assets Under Administration			216.1						195.3						20.8						11
Total AUM and AUA			$	1,102.1					$	973.4					$	128.7					13		%

Total AUM increased $107.9 billion, or 14%, to $886.0 billion as of December 31, 2020 compared to $778.1 billion as of December 31, 2019 due to a $61.6 billion increase in Advice & Wealth Management AUM driven by wrap account net inflows and market appreciation and a $52.4 billion increase in Asset Management AUM driven by market appreciation and continued improvement in net flows, partially offset by retail fund distributions. See our segment results of operations discussion for additional information on changes in our AUM.

Consolidated Results of Operations

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The following table presents our consolidated results of operations:

			Years Ended December 31,												Change
2020						2019
(in millions)
Revenues
Management and financial advice fees			$	7,368					$	7,015					$	353					5		%
Distribution fees			1,661						1,919						(258)						(13)
Net investment income			1,251						1,463						(212)						(14)
Premiums, policy and contract charges			1,395						2,224						(829)						(37)
Other revenues			283						269						14						5
Gain on disposal of business			—						213						(213)						NM
Total revenues			11,958						13,103						(1,145)						(9)
Banking and deposit interest expense			59						136						(77)						(57)
Total net revenues			11,899						12,967						(1,068)						(8)
Expenses
Distribution expenses			4,059						3,810						249						7
Interest credited to fixed accounts			644						669						(25)						(4)
Benefits, claims, losses and settlement expenses			1,806						2,576						(770)						(30)
Amortization of deferred acquisition costs			277						179						98						55
Interest and debt expense			162						214						(52)						(24)
General and administrative expense			3,120						3,287						(167)						(5)
Total expenses			10,068						10,735						(667)						(6)
Pretax income			1,831						2,232						(401)						(18)
Income tax provision			297						339						(42)						(12)
Net income			$	1,534					$	1,893					$	(359)					(19)		%

NM Not Meaningful.

Overall

Pretax income decreased $401 million, or 18%, to $1.8 billion for the year ended December 31, 2020 compared to $2.2 billion for the prior year. The following impacts were significant drivers of the year-over-year change in pretax income:

• The unfavorable impact of unlocking and LTC loss recognition was $454 million for the year ended December 31, 2020 compared to $16 million for the prior year.

• A negative impact of $384 million in the Advice & Wealth Management segment from lower short-term interest rates.

• A gain of $213 million recognized on the sale of AAH in the prior year.

• The market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual was an expense of $375 million for the year ended December 31, 2020 compared to an expense of $591 million for the prior year.

• A positive impact from higher average equity markets compared to the prior year. Our average weighted equity index (“WEI”), which is a proxy for equity movements on AUM, increased 7% for the year ended December 31, 2020 compared to the prior year. The average S&P 500 index was 10% higher for the year ended December 31, 2020 compared to the prior year. The disconnect between the increase in the WEI and S&P 500 was larger than usual, primarily due to the outperformance of the S&P 500 compared to international and small cap indices.

• The market impact of hedges on investments was nil for the year ended December 31, 2020 compared to an expense of $35 million for the prior year.

• A decrease in impairments of our investment in affordable housing partnerships, which was $2 million for the year ended December 31, 2020 compared to $35 million for the prior year.

• The mean reversion related impact was a benefit of $87 million for the year ended December 31, 2020 compared to a benefit of $57 million for the prior year.

The following table presents the total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the years ended December 31:

Pretax Increase (Decrease)						2020						2019
						(in millions)
Premiums, policy and contract charges						$	(1)					$	5
Total revenues						(1)						5
Benefits, claims, losses and settlement expenses:
LTC unlocking and loss recognition						141						8
Unlocking impact, excluding LTC						212						(1)
Total benefits, claims, losses and settlement expenses						353						7
Amortization of DAC						100						14
Total expenses						453						21
Pretax income (1)						$	(454)					$	(16)

(1) Includes a $12 million net expense and $4 million net benefit related to the market impact on non-traditional long-duration products for the years ended December 31, 2020 and 2019, respectively, which is excluded from adjusted operating earnings. Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking and LTC loss recognition.

The primary drivers of the unfavorable unlocking impact excluding LTC in 2020 were consistent with the prior year and include the following items:

• Updates to our interest rate assumptions resulted in a higher expense in 2020 compared to the prior year.

• Lower surrenders assumptions on variable annuities with living benefit guarantees resulted in a higher expense in 2020 compared to the prior year.

• Changes in equity market volatility and correlation assumptions on variable annuities resulted in a lower benefit in 2020 compared to the prior year.

The primary drivers of the unfavorable LTC unlocking and loss recognition in 2020 were consistent to the prior year and include the following items:

• Updates to our interest rates assumptions resulted in a higher expense in 2020 compared to the prior year.

• Assumptions regarding morbidity, mortality and persistency were more in line with experience and resulted in a lower expense in 2020 compared to the prior year.

• Approved and expected premium rate increases and benefit reductions resulted in a lower benefit in 2020 compared to the prior year.

The total unfavorable impact of updates to our interest rate assumptions noted above for unlocking and LTC loss recognition was $405 million. This non-cash unfavorable impact was primarily driven by the reduction of our ultimate 10-year Treasury rate assumption from 5% to 3.5% due to recent interest rate trends and extending the grading period from three years to 6.5 years with no grading in 2020.

Net Revenues

Net revenues decreased $1.1 billion, or 8%, to $11.9 billion for the year ended December 31, 2020 compared to $13.0 billion for the prior year.

Management and financial advice fees increased $353 million, or 5%, to $7.4 billion for the year ended December 31, 2020 compared to $7.0 billion for the prior year primarily due to higher wrap account net inflows and higher average equity markets, partially offset by lower performance fees.

Distribution fees decreased $258 million, or 13%, to $1.7 billion for the year ended December 31, 2020 compared to $1.9 billion for the prior year primarily due to $317 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates, partially offset by higher average equity markets.

Net investment income decreased $212 million, or 14% to $1.3 billion for the year ended December 31, 2020 compared to $1.5 billion for the prior year primarily due to the following impacts:

• The unfavorable impact of lower interest rates, including lower short-term interest rates on the investment portfolio supporting the certificate and on-balance sheet brokerage cash products.

• The unfavorable impact of fixed annuity net outflows and the fixed annuities reinsurance transaction.

• A decrease of $45 million due to the prior year sale of AAH.

• The favorable market impact of hedges on investments of $35 million in the prior year.

• A decrease of $17 million in net investment income of CIEs.

• The favorable impact of higher average invested assets related to the bank, offset by lower average certificate balances.

• Lower impairments of our investment in affordable housing partnerships.

Premiums, policy and contract charges decreased $829 million, or 37%, to $1.4 billion for the year ended December 31, 2020 compared to $2.2 billion for the prior year primarily reflecting the sale of AAH. Premiums in the prior year included $827 million from AAH.

Gain on disposal of business of $213 million for the prior year was recognized on the sale of AAH, net of an affinity partner payment of $100 million.

Banking and deposit interest expense decreased $77 million, or 57%, to $59 million for the year ended December 31, 2020 compared to $136 million for the prior year due to lower average crediting rates on certificates and lower average certificate balances.

Expenses

Total expenses decreased $667 million, or 6%, to $10.1 billion for the year ended December 31, 2020 compared to $10.7 billion for the prior year.

Distribution expenses increased $249 million, or 7%, to $4.1 billion for the year ended December 31, 2020 compared to $3.8 billion for the prior year reflecting higher advisor compensation primarily due to an increase in wrap account balances driven by higher net inflows and higher average equity markets.

Interest credited to fixed accounts decreased $25 million, or 4%, to $644 million for the year ended December 31, 2020 compared to $669 million for the prior year primarily reflecting the following items:

• A $49 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The unfavorable impact of the nonperformance credit spread was $18 million for the year ended December 31, 2020 compared to an unfavorable impact of $67 million for the prior year.

• A $22 million increase in expense from other market impacts on IUL benefits, net of hedges, which was a benefit of $32 million for the year ended December 31, 2020 compared to a benefit of $54 million for the prior year. The increase in expense was primarily due to an increase in the IUL embedded derivative, which is reflecting higher option costs.

Benefits, claims, losses and settlement expenses decreased $770 million, or 30%, to $1.8 billion for the year ended December 31, 2020 compared to $2.6 billion for the prior year primarily reflecting the following items:

• A $517 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits driven by an increase in the undiscounted embedded derivative liability. The favorable impact of the nonperformance credit spread was $342 million for the year ended December 31, 2020 compared to an unfavorable impact of $175 million for the prior year. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense.

• A $254 million increase in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This increase was the result of an unfavorable $1.6 billion change in the market impact on variable annuity guaranteed living benefits reserves, partially offset by a favorable $1.3 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits and a favorable $2 million change in the DSIC offset. The main market drivers contributing to these changes are summarized below:

• Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the year ended December 31, 2020 compared to the prior year.

• Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the year ended December 31, 2020 compared to the prior year.

• Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the year ended December 31, 2020 compared to an expense in the prior year.

• Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various contractholder behavioral items, were a net unfavorable impact compared to the prior year.

• The impact of unlocking excluding LTC was an expense of $212 million for the year ended December 31, 2020 compared to a benefit of $1 million for the prior year. The unlocking impact for 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities compared to the prior year.

• Our annual review of LTC active life future policy benefit reserve adequacy in 2020 resulted in unlocking and loss recognition of $141 million compared to $8 million in the prior year. The unlocking and loss recognition in 2020 was primarily due to a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to

assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year.

• A $719 million decrease in auto and home expenses reflecting the prior year sale of AAH.

• The mean reversion related impact was a benefit of $53 million for the year ended December 31, 2020 compared to a benefit of $26 million for the prior year.

• A $49 million decrease in reserves for immediate annuities with a life contingent feature primarily due to lower sales. This impact is offset by a decrease in premiums.

Amortization of DAC increased $98 million, or 55%, to $277 million for the year ended December 31, 2020 compared to $179 million for the prior year primarily reflecting the following items:

• The impact of unlocking in 2020 was an expense of $100 million compared to an expense of $14 million in the prior year period. The unlocking impact in 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year.

• The DAC offset to the market impact on non-traditional long-duration products was a benefit of $5 million for the year ended December 31, 2020 compared to a benefit of $82 million for the prior year.

• A $43 million decrease in auto and home expenses reflecting the prior year sale of AAH.

Interest and debt expense decreased $52 million, or 24%, to $162 million for the year ended December 31, 2020 compared to $214 million for the prior year primarily due to a decrease in interest expense of CIEs, as well as lower levels of corporate debt and lower interest rates.

General and administrative expense decreased $167 million, or 5%, to $3.1 billion for the year ended December 31, 2020 compared to $3.3 billion for the prior year primarily reflecting a $90 million decrease in auto and home expenses reflecting the prior year sale of AAH, lower performance fee compensation, disciplined expense management and reengineering.

Income Taxes

Our effective tax rate was 16.2% for the year ended December 31, 2020 compared to 15.2% for the prior year. See Note 24 to our Consolidated Financial Statements for additional discussion on income taxes.

Results of Operations by Segment

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. We believe the presentation of segment adjusted operating earnings as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. See Note 28 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating earnings.

The following table presents summary financial information by segment:

			Years Ended December 31,
2020						2019
(in millions)
Advice & Wealth Management
Net revenues			$	6,675					$	6,599
Expenses			5,354						5,090
Adjusted operating earnings			$	1,321					$	1,509
Asset Management
Net revenues			$	2,891					$	2,913
Expenses			2,194						2,252
Adjusted operating earnings			$	697					$	661
Retirement & Protection Solutions
Net revenues			$	3,094					$	3,123
Expenses			2,614						2,399
Adjusted operating earnings			$	480					$	724
Corporate & Other
Net revenues			$	546					$	1,477
Expenses			915						1,763
Adjusted operating loss			$	(369)					$	(286)

The following table presents the segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the years ended December 31:

Segment Pretax Adjusted Operating Increase (Decrease)						2020												2019
Retirement & Protection Solutions						Corporate			Retirement & Protection Solutions						Corporate
						(in millions)
Premiums, policy and contract charges						$	2					$	(3)					$	5					$	—
Total revenues						2						(3)						5						—
Benefits, claims, losses and settlement expenses
LTC unlocking and loss recognition						—						141						—						8
Unlocking, excluding LTC						189						7						6						(2)
Total benefits, claims, losses and settlement expenses						189						148						6						6
Amortization of DAC						108						(4)						15						(2)
Total expenses						297						144						21						4
Pretax income (loss)						$	(295)					$	(147)					$	(16)					$	(4)

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the years ended December 31:

			2020						2019
(in billions)
Beginning balance			$	317.5					$	251.5
Net flows			24.1						17.6
Market appreciation (depreciation) and other			38.4						48.4
Ending balance			$	380.0					$	317.5
Advisory wrap account assets ending balance (1)			$	375.7					$	314.3
Average advisory wrap account assets (2)			$	318.3					$	282.9

(1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee. Beginning in the fourth quarter of 2019, all advisory fee billing is calculated in advance on a monthly basis using point-in-time assets. Prior to the fourth quarter of 2019, some advisory accounts billed in arrears on a quarterly or monthly basis using average daily assets.

(2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the twelve months ended December 31, 2020 and 2019.

Wrap account assets increased $62.5 billion, or 20%, during the year ended December 31, 2020 due to net inflows of $24.1 billion and market appreciation and other of $38.4 billion. Average advisory wrap account assets increased $35.4 billion, or 13%, compared to the prior year reflecting net inflows and market appreciation.

The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:

			Years Ended December 31,												Change
2020						2019
(in millions)
Revenues
Management and financial advice fees			$	4,211					$	3,841					$	370					10		%
Distribution fees			2,002						2,281						(279)						(12)
Net investment income			313						411						(98)						(24)
Other revenues			208						202						6						3
Total revenues			6,734						6,735						(1)						—
Banking and deposit interest expense			59						136						(77)						(57)
Total net revenues			6,675						6,599						76						1
Expenses
Distribution expenses			3,946						3,714						232						6
Interest and debt expense			10						11						(1)						(9)
General and administrative expense			1,398						1,365						33						2
Total expenses			5,354						5,090						264						5
Adjusted operating earnings			$	1,321					$	1,509					$	(188)					(12)		%

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $188 million, or 12%, to $1.3 billion for the year ended December 31, 2020 compared to $1.5 billion for the prior year due to lower interest rates, partially offset by higher average wrap account balances reflecting wrap account net inflows and equity market appreciation. Pretax adjusted operating margin was 19.8% for the year ended December 31, 2020 compared to 22.9% for the prior year.

We launched Ameriprise Bank, FSB in the second quarter of 2019. Since then, we have continued to add deposits, with $7.4 billion of cash sweep balances as of December 31, 2020. In the third quarter of 2019, we purchased the existing Ameriprise portfolio of credit card accounts from a third party bank, and in the fourth quarter of 2020, we acquired $224 million in an existing portfolio of brokerage client pledged asset lines of credit that are a 50% participation interest with a third party bank.

Net Revenues

Net revenues exclude net realized investment gains or losses. Net revenues increased $76 million or 1%, to $6.7 billion for the year ended December 31, 2020 compared to $6.6 billion for the prior year. Adjusted operating net revenue per advisor increased to $674,000 for the year ended December 31, 2020, up 2%, from $664,000 for the prior year.

Management and financial fees increased $370 million, or 10%, to $4.2 billion for the year ended December 31, 2020 compared to $3.8 billion for the prior year primarily due to growth in wrap account assets. Average advisory wrap account assets increased $35.4 billion, or 13%, compared to the prior year reflecting net inflows and market appreciation.

Distribution fees decreased $279 million, or 12%, to $2.0 billion for the year ended December 31, 2020 compared to $2.3 billion for the prior year reflecting $317 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates, partially offset by higher average equity markets.

Net investment income decreased $98 million, or 24%, to $313 million for the year ended December 31, 2020 compared to $411 million for the prior year primarily due to the unfavorable impact of lower short-term interest rates on the investment portfolio supporting the certificate and on-balance sheet brokerage cash products, as well as lower certificate balances, partially offset by higher average invested assets due to increased bank deposits.

Banking and deposit interest expense decreased $77 million, or 57%, to $59 million for the year ended December 31, 2020 compared to $136 million for the prior year primarily due to lower average crediting rates on certificates and lower average certificate balances.

Expenses

Total expenses increased $264 million, or 5%, to $5.4 billion for the year ended December 31, 2020 compared to $5.1 billion for the prior year.

Distribution expenses increased $232 million, or 6%, to $3.9 billion for the year ended December 31, 2020 compared to $3.7 billion for the prior year reflecting higher advisor compensation due to wrap account net inflows and market appreciation, as well as investments in recruiting experienced advisors.

General and administrative expense increased $33 million, or 2%, for the year ended December 31, 2020 compared to the prior year primarily due to bank-related expenses and investments in the business for future growth, partially offset by reengineering.

Asset Management

The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds as of December 31:

Columbia Mutual Fund Rankings in top 2 Lipper Quartiles									2020						2019
Domestic Equity			Equal weighted			1 year			68		%				59		%
						3 year			61		%				55		%
						5 year			57		%				48		%
			Asset weighted			1 year			73		%				75		%
						3 year			77		%				66		%
						5 year			78		%				69		%
International Equity			Equal weighted			1 year			71		%				100		%
						3 year			92		%				80		%
						5 year			92		%				65		%
			Asset weighted			1 year			61		%				100		%
						3 year			88		%				86		%
						5 year			88		%				69		%
Taxable Fixed Income			Equal weighted			1 year			76		%				83		%
						3 year			81		%				81		%
						5 year			73		%				88		%
			Asset weighted			1 year			88		%				90		%
						3 year			91		%				89		%
						5 year			77		%				90		%
Tax Exempt Fixed Income			Equal weighted			1 year			68		%				89		%
						3 year			74		%				89		%
						5 year			89		%				94		%
			Asset weighted			1 year			54		%				93		%
						3 year			60		%				92		%
						5 year			67		%				98		%
Asset Allocation Funds			Equal weighted			1 year			71		%				64		%
						3 year			64		%				58		%
						5 year			75		%				80		%
			Asset weighted			1 year			94		%				86		%
						3 year			83		%				88		%
						5 year			94		%				96		%
Number of funds with 4 or 5 Morningstar star ratings						Overall			53						56
						3 year			38						51
						5 year			49						53
Percent of funds with 4 or 5 Morningstar star ratings						Overall			58		%				54		%
						3 year			41		%				49		%
						5 year			54		%				53		%
Percent of assets with 4 or 5 Morningstar star ratings						Overall			65		%				66		%
						3 year			47		%				50		%
						5 year			54		%				59		%

Mutual fund performance rankings are based on the performance of the Institutional Class for Columbia branded mutual funds. Only funds with Institutional Class shares are included. Prior period rankings have been adjusted to reflect the change in a fund’s investment category to more accurately reflect its investment strategy.

Equal Weighted Rankings in Top 2 Quartiles: Counts the number of funds with above median ranking divided by the total number of funds. Asset size is not a factor.

Asset Weighted Rankings in Top 2 Quartiles: Sums the total assets of the funds with above median ranking divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.

Threadneedle Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index Benchmark									2020						2019
Equity			Equal weighted			1 year			80		%				87		%
						3 year			83		%				77		%
						5 year			75		%				70		%
			Asset weighted			1 year			86		%				91		%
						3 year			88		%				79		%
						5 year			85		%				82		%
Fixed Income			Equal weighted			1 year			96		%				78		%
						3 year			96		%				88		%
						5 year			92		%				96		%
			Asset weighted			1 year			99		%				75		%
						3 year			99		%				93		%
						5 year			96		%				97		%
Allocation (Managed) Funds			Equal weighted			1 year			89		%				100		%
						3 year			88		%				75		%
						5 year			88		%				88		%
			Asset weighted			1 year			99		%				100		%
						3 year			99		%				94		%
						5 year			99		%				98		%

The performance of each fund is measured on a consistent basis against the most appropriate benchmark — a peer group of similar funds or an index.

Equal weighted: Counts the number of funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total number of funds. Asset size is not a factor.

Asset weighted: Sums the assets of the funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total sum of assets in the funds. Funds with more assets will receive a greater share of the total percentage above or below median or index.

Aggregated Allocation (Managed) Funds include funds that invest in other funds of the Threadneedle range including those funds that invest in both equity and fixed income.

Aggregated Threadneedle data includes funds on the Threadneedle platform sub-advised by Columbia Management as well as advisors not affiliated with Ameriprise Financial, Inc.

The following table presents managed assets by type:

			December 31,												Change												Average (1)												Change
December 31,
2020						2019			2020						2019
(in billions)																								(in billions)
Equity			$	302.6					$	271.1					$	31.5					12		%				$	259.8					$	251.5					$	8.3					3		%
Fixed income			196.5						179.2						17.3						10						185.6						171.2						14.4						8
Money market			5.9						5.6						0.3						5						5.1						5.1						—						—
Alternative			3.6						3.1						0.5						16						3.2						3.1						0.1						3
Hybrid and other			38.0						35.2						2.8						8						35.4						33.9						1.5						4
Total managed assets			$	546.6					$	494.2					$	52.4					11		%				$	489.1					$	464.8					$	24.3					5		%

(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.

The following tables present the changes in global managed assets:

			Years Ended December 31,
2020						2019
(in billions)
Global Retail Funds
Beginning assets			$	287.5					$	247.9
Inflows			64.7						46.9
Outflows			(61.9)						(53.8)
Net VP/VIT fund flows			(2.9)						(2.7)
Net new flows			(0.1)						(9.6)
Reinvested dividends			10.0						9.7
Net flows			9.9						0.1
Distributions			(11.6)						(11.3)
Market appreciation (depreciation) and other			35.5						50.3
Foreign currency translation (1)			2.2						0.5
Total ending assets			323.5						287.5
Global Institutional
Beginning assets			206.7						182.8
Inflows (2)			27.4						22.7
Outflows			(31.6)						(29.9)
Net flows			(4.2)						(7.2)
Market appreciation (depreciation) and other (3)			16.9						29.7
Foreign currency translation (1)			3.7						1.4
Total ending assets			223.1						206.7
Total managed assets			$	546.6					$	494.2
Total net flows			$	5.7					$	(7.1)
Former Parent Company Related (4)
Retail net new flows			$	0.5					$	(0.9)
Institutional net new flows			(3.4)						(3.4)
Total net new flows			$	(2.9)					$	(4.3)

(1) Amounts represent local currency to US dollar translation for reporting purposes.

(2) Includes $1.3 billion of net flows from our recently launched structured variable annuity product.

(3) Includes $3.0 billion and $4.6 billion for the total change in Affiliated General Account Assets, excluding net flows related to our recently launched structured variable annuity product, during the years ended December 31, 2020 and 2019, respectively.

(4) Former parent company related assets and net new flows are included in the rollforwards above.

The United Kingdom’s (“U.K.”) and the European Union’s (“EU”) trade and cooperation agreement did not include cross-border financial services. As a result, our U.K. asset management business is no longer able to market its services into the EU on a passporting basis and must now comply with local EU and country requirements as a non-EU firm, which includes leveraging our Luxembourg-based management company affiliate to provide services and marketing to EU clients and investors. As a result the full impact of Brexit remains uncertain.

Total segment AUM increased $52.4 billion, or 11%, during the year ended December 31, 2020 driven by market appreciation and net inflows. Net inflows were $5.7 billion for the year ended December 31, 2020, a $12.8 billion improvement compared to the prior year.

The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:

			Years Ended December 31,												Change
2020						2019
(in millions)
Revenues
Management and financial advice fees			$	2,475					$	2,488					$	(13)					(1)		%
Distribution fees			411						408						3						1
Net investment income			3						15						(12)						(80)
Other revenues			2						2						—						—
Total revenues			2,891						2,913						(22)						(1)
Banking and deposit interest expense			—						—						—						—
Total net revenues			2,891						2,913						(22)						(1)
Expenses
Distribution expenses			945						928						17						2
Amortization of deferred acquisition costs			11						9						2						22
Interest and debt expense			5						25						(20)						(80)
General and administrative expense			1,233						1,290						(57)						(4)
Total expenses			2,194						2,252						(58)						(3)
Adjusted operating earnings			$	697					$	661					$	36					5		%

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $36 million, or 5%, to $697 million for the year ended December 31, 2020 compared to $661 million for the prior year primarily due to equity market appreciation and disciplined expense management, partially offset by a $38 million decrease in net performance fees.

Net Revenues

Net revenues, which exclude net realized investment gains or losses, decreased $22 million, or 1%, for the year ended December 31, 2020 compared to the prior year.

Management and financial advice fees decreased $13 million, or 1%, for the year ended December 31, 2020 compared to the prior year primarily driven by a $74 million decrease in performance fees, partially offset by higher average equity markets.

Net investment income, which excludes net realized investment gains or losses, decreased $12 million, or 80%, to $3 million for the year ended December 31, 2020 compared to $15 million for the prior year primarily reflecting an impairment of an investment and lower interest income.

Expenses

Total expenses decreased $58 million, or 3%, to $2.2 billion for the year ended December 31, 2020 compared to $2.3 billion for the prior year.

General and administrative expense decreased $57 million, or 4%, to $1.2 billion for the year ended December 31, 2020 compared to $1.3 billion for the prior year primarily reflecting disciplined expense management and reengineering and elevated performance fee related compensation in the prior year.

Retirement & Protection Solutions

The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:

			Years Ended December 31,												Change
2020						2019
(in millions)
Revenues
Management and financial advice fees			$	831					$	827					$	4					—		%
Distribution fees			437						438						(1)						—
Net investment income			508						528						(20)						(4)
Premiums, policy and contract charges			1,315						1,330						(15)						(1)
Other revenues			3						—						3						—
Total revenues			3,094						3,123						(29)						(1)
Banking and deposit interest expense			—						—						—						—
Total net revenues			3,094						3,123						(29)						(1)
Expenses
Distribution expenses			455						469						(14)						(3)
Interest credited to fixed accounts			394						387						7						2
Benefits, claims, losses and settlement expenses			1,131						988						143						14
Amortization of deferred acquisition costs			300						230						70						30
Interest and debt expense			39						31						8						26
General and administrative expense			295						294						1						—
Total expenses			2,614						2,399						215						9
Adjusted operating earnings			$	480					$	724					$	(244)					(34)		%

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts, net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual) and mean reversion related impacts, decreased $244 million, or 34%, to $480 million for the year ended December 31, 2020 compared to $724 million for the prior year.

RiverSource variable annuity account balances increased 7% to $85.8 billion as of December 31, 2020 compared to the prior year due to market appreciation, partially offset by net outflows of $2.1 billion. Variable annuity sales increased 7% to $4.4 billion for the year ended December 31, 2020 compared to the prior year reflecting a decrease in sales of variable annuities with living benefit guarantees that was more than offset by sales of structured variable annuities launched earlier in 2020. Sales of variable annuities without living benefit guarantees comprised 49% of total variable annuity sales in 2020 compared to 25% in 2019. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

Net Revenues

Net revenues, which exclude net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual) and the unearned revenue amortization and reinsurance accrual offset to the market impact on IUL contracts, decreased $29 million, or 1%, for the year ended December 31, 2020 compared to the prior year.

Net investment income, which excludes net realized investment gains or losses, decreased $20 million, or 4%, to $508 million for the year ended December 31, 2020 compared to $528 million for the prior year reflecting lower fixed maturity investment yields.

Premiums, policy and contract charges, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL contracts, decreased $15 million, or 1%, for the year ended December 31, 2020 compared to the prior year primarily due to lower sales of immediate annuities with a life contingent feature, partially offset by higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates.

Expenses

Total expenses, which exclude the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts), (net of hedges and the related DSIC and DAC amortization), mean reversion related impacts and the DAC and DSIC offset to net realized investment gains or losses, increased $215 million, or 9%, to $2.6 billion for the year ended December 31, 2020 compared to $2.4 billion for the prior year.

Distribution expenses decreased $14 million, or 3%, to $455 million for the year ended December 31, 2020 compared to $469 million for the prior year primarily reflecting lower insurance sales and annuity product mix.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity contracts (net of hedges and the related DSIC amortization), mean reversion related impacts and the DSIC offset to net realized investment gains or losses, increased $143 million, or 14%, to $1.1 billion for the year ended December 31, 2020 compared to $988 million for the prior year primarily due to the impact of unlocking, partially offset by lower sales of immediate annuities with a life contingent feature. The unlocking impact for 2020 was an expense of $189 million compared to an expense of $6 million for the prior year and primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees, partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities with living benefit guarantees compared to the prior year.

Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity contracts and IUL contracts and the DAC offset to net realized investment gains or losses, increased $70 million, or 30%, to $300 million for the year ended December 31, 2020 compared to $230 million for the prior year primarily reflecting the impact of unlocking, partially offset by a lower DAC amortization rate which is the result of lower surrenders on variable annuities. The impact of unlocking for 2020 was an expense of $108 million compared to an expense of $15 million in the prior year. The unlocking impact for 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year.

Corporate & Other

The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:

			Years Ended December 31,												Change
2020						2019
(in millions)
Revenues
Management and financial advice fees			$	—					$	4					$	(4)					NM
Distribution fees			—						6						(6)						NM
Net investment income			377						479						(102)						(21)		%
Premiums, policy and contract charges			102						931						(829)						(89)
Other revenues			70						65						5						8
Total revenues			549						1,485						(936)						(63)
Banking and deposit interest expense			3						8						(5)						(63)
Total net revenues			546						1,477						(931)						(63)
Expenses
Distribution expenses			(7)						4						(11)						NM
Interest credited to fixed accounts			261						270						(9)						(3)
Benefits, claims, losses and settlement expenses			344						965						(621)						(64)
Amortization of deferred acquisition costs			6						55						(49)						(89)
Interest and debt expense			66						78						(12)						(15)
General and administrative expense			245						391						(146)						(37)
Total expenses			915						1,763						(848)						(48)
Adjusted operating loss			$	(369)					$	(286)					$	(83)					(29)		%

NM Not Meaningful.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss increased $83 million, or 29%, to $369 million for the year ended December 31, 2020 compared to $286 million for the prior year primarily reflecting the unfavorable impact from unlocking and loss recognition, partially offset by disciplined expense management and the favorable impacts from COVID-19 on LTC insurance.

Our Corporate & Other segment includes our closed blocks of LTC insurance and FA business. See below for more details on our closed block of LTC insurance.

Auto and Home pretax adjusted operating earnings were $13 million for the year ended December 31, 2019. We sold AAH on October 1, 2019.

Net Revenues

Net revenues, which exclude net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain on disposal of business that is not considered discontinued operations, integration and restructuring charges and revenues attributable to CIEs, decreased $931 million, or 63%, to $546 million for the year ended December 31, 2020 compared to $1.5 billion for the prior year. Net revenues for the year ended December 31, 2019 included $881 million from Auto and Home, which was sold in 2019.

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments and net investment income attributable to CIEs, decreased $102 million, or 21%, to $377 million for the year ended December 31, 2020 compared to $479 million for the prior year primarily reflecting the sale of AAH and lower average invested assets due to fixed annuity net outflows and lower asset earned rates, partially offset by lower impairments of our investments in affordable housing partnerships.

Premiums, policy and contract charges decreased $829 million, or 89%, to $102 million for the year ended December 31, 2020 compared to $931 million for the prior year primarily due to the sale of AAH.

Expenses

Total expenses, which exclude the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), integration and restructuring charges and expenses attributable to CIEs, decreased $848 million, or 48%, to $915 million for the year ended December 31, 2020 compared to $1.8 billion for the prior year. Total expenses for the year ended December 31, 2019 included $868 million from Auto and Home reflecting the prior year sale of AAH.

Distribution expenses decreased $11 million to a benefit of $7 million for the year ended December 31, 2020 compared to an expense of $4 million for the prior year reflecting the prior year sale of AAH.

Interest credited to fixed accounts, which exclude the market impact on fixed deferred annuity contracts (net of hedges), decreased $9 million, or 3%, to $261 million for the year ended December 31, 2020 compared to $270 million for the prior year due to lower average fixed deferred annuity account balances.

Benefits, claims, losses and settlement expenses decreased $621 million, or 64%, to $344 million for the year ended December 31, 2020 compared to $965 million for the prior year primarily reflecting the sale of AAH and the impact of COVID-19 on LTC insurance, partially offset by the impact of LTC unlocking and loss recognition and the FA unlocking impact. The impact of COVID-19 resulted in fewer LTC clients entering nursing homes as well as increased mortality-related client terminations. Our annual review of LTC active life future policy benefit reserve adequacy resulted in unlocking and loss recognition of $141 million in 2020 compared to $8 million in the prior year. The unlocking and loss recognition in 2020 was primarily due to a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year.

Amortization of DAC, which excludes the DAC offset to the market impact on fixed deferred annuity contracts, decreased $49 million, or 89%, to $6 million for the year ended December 31, 2020 compared to $55 million for the prior year reflecting the prior year sale of AAH.

General and administrative expense, which excludes integration and restructuring charges and expenses attributable to CIEs, decreased $146 million, or 37%, to $245 million for the year ended December 31, 2020 compared to $391 million for the prior year primarily due to the prior year sale of AAH and lower project expenses.

Closed Block LTC Insurance

As of December 31, 2020, our nursing home indemnity LTC block had approximately $79 million in gross in force annual premium and future policyholder benefits and claim reserves of approximately $1.3 billion, net of reinsurance, which was 53% of GAAP reserves. This block has been shrinking over the last few years given the average attained age is 82 and the average attained age of policyholders on claim is 88. Fifty-four percent of daily benefits in force in this block come from policies that have a lifetime benefit period.

As of December 31, 2020, our comprehensive reimbursement LTC block had approximately $116 million in gross in force annual premium and future policyholder benefits and claim reserves of approximately $1.2 billion, net of reinsurance. This block has higher premiums per policy than the nursing home indemnity LTC policies. The average attained age is 77 and the average attained age of policyholders on claim is 84. Thirty-six percent of daily benefits in force in this block come from policies that have a lifetime benefit period.

We utilize three primary levers to manage our LTC business. First, we have taken an active approach of steadily increasing rates since 2005, with cumulative rate increases of 190% on our nursing home indemnity LTC block and 107% on our comprehensive reimbursement LTC block as of December 31, 2020. Second, we have a reserving process that reflects the policy features and risk characteristics of our blocks. As of December 31, 2020, we had 35,000 policies that were closed with claim activity, as well as 8,000 open claims. We apply this experience to our in force policies, which were 97,000 as of December 31, 2020, at a very granular

level by issue year, attained age and benefit features. Our statutory reserves are $313 million higher than our GAAP reserves and include margins on key assumptions for morbidity and mortality, as well as $288 million in asset adequacy reserves as of December 31, 2020. Lastly, we have prudently managed our investment portfolio primarily through a liquid, investment grade portfolio that is currently in a net unrealized gain position.

We undertake an extensive review of active life future policy benefit reserve adequacy annually during the third quarter of each year, or more frequently if appropriate, using current best estimate assumptions as of the date of the review. Our annual review process includes an analysis of our key reserve assumptions, including those for morbidity, terminations (mortality and lapses), premium rate increases and investment yields.

Consolidated Results of Operations

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

The following table presents our consolidated results of operations:

			Years Ended December 31,												Change
2019						2018
(in millions)
Revenues
Management and financial advice fees			$	7,015					$	6,776					$	239					4		%
Distribution fees			1,919						1,877						42						2
Net investment income			1,463						1,596						(133)						(8)
Premiums, policy and contract charges			2,224						2,467						(243)						(10)
Other revenues			269						208						61						29
Gain on disposal of business			213						—						213						NM
Total revenues			13,103						12,924						179						1
Banking and deposit interest expense			136						89						47						53
Total net revenues			12,967						12,835						132						1
Expenses
Distribution expenses			3,810						3,637						173						5
Interest credited to fixed accounts			669						674						(5)						(1)
Benefits, claims, losses and settlement expenses			2,576						2,302						274						12
Amortization of deferred acquisition costs			179						322						(143)						(44)
Interest and debt expense			214						245						(31)						(13)
General and administrative expense			3,287						3,171						116						4
Total expenses			10,735						10,351						384						4
Pretax income			2,232						2,484						(252)						(10)
Income tax provision			339						386						(47)						(12)
Net income			$	1,893					$	2,098					$	(205)					(10)		%

NM Not Meaningful.

Overall

Pretax income decreased $252 million, or 10%, to $2.2 billion for the year ended December 31, 2019 compared to $2.5 billion for the prior year. The following impacts were significant drivers of the year-over-year change in pretax income:

• The market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization) was an expense of $579 million for the year ended December 31, 2019 compared to an expense of $31 million for the prior year.

• The market impact of hedges on investments was an expense of $35 million for the year ended December 31, 2019 compared to a benefit of $11 million for the prior year.

• A $49 million unfavorable change in the mark-to-market impact on share-based compensation expenses.

• Higher mark-to-market impact on advisor deferred compensation expense and investments in recruiting experienced advisors.

• An increase in general and administrative expenses for our Advice & Wealth Management segment related to investments in business growth.

• An increase in impairments of our investment in affordable housing partnerships, which was $35 million for the year ended December 31, 2019 compared to $7 million for the prior year.

• The cumulative impact of asset management net outflows, partially offset by wrap account net inflows.

• A gain of $213 million recognized on the sale of AAH on October 1, 2019.

• A positive impact from higher average equity markets and higher average short-term interest rates.

• The mean reversion related impact was a benefit of $57 million for the year ended December 31, 2019 compared to an expense of $33 million for the prior year.

• The unfavorable impact of unlocking and LTC loss recognition was $16 million for the year ended December 31, 2019 compared to $53 million for the prior year.

The following table presents the total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the years ended December 31:

Pretax Increase (Decrease)						2019						2018
						(in millions)
Premiums, policy and contract charges						$	5					$	78
Total revenues						5						78
Benefits, claims, losses and settlement expenses:
LTC unlocking and loss recognition						8						52
Unlocking impact, excluding LTC						(1)						112
Total benefits, claims, losses and settlement expenses						7						164
Amortization of DAC						14						(33)
Total expenses						21						131
Pretax income (1)						$	(16)					$	(53)

(1) Includes a $4 million and $5 million net benefit related to the market impact on variable annuity guaranteed benefits for the years ended December 31, 2019 and 2018, respectively, which is excluded from adjusted operating earnings. Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking and LTC loss recognition.

The unfavorable unlocking impact in 2019 primarily reflected the impact from updates to our interest rate assumptions and lower surrenders on annuity contracts with a withdrawal benefit partially offset by a benefit from changes in equity market volatility and correlation assumptions on variable annuities. The unfavorable unlocking impact in the prior year primarily reflected unfavorable mortality experience on UL and VUL insurance products and lower surrender rate assumptions on variable annuities partially offset by the impact from updates to assumptions on utilization of guaranteed withdrawal benefits.

The unfavorable LTC unlocking and loss recognition in 2019 was primarily due to the impact from updates to our interest rates assumptions and changes in morbidity experience partially offset by higher approved and expected premium rate increases and benefit reductions. The unfavorable LTC unlocking and loss recognition in the prior year was primarily due to changes in morbidity experience partially offset by approved, pending and future expected premium rate increases.

The unfavorable impact of updates to our interest rate assumptions noted above for unlocking and LTC loss recognition was $118 million. Based on the significant interest rate dislocation, we extended the grading period one year to reach our ultimate 10-year treasury rate of 5% by assuming rates remain flat for six months and then grade to our long-term rate over the next three years.

Net Revenues

Net revenues increased $132 million, or 1%, to $13.0 billion for the year ended December 31, 2019 compared to $12.8 billion for the prior year.

Management and financial advice fees increased $239 million, or 4%, to $7.0 billion for the year ended December 31, 2019 compared to $6.8 billion for the prior year primarily due to higher average equity markets, wrap account net inflows and a $57 million increase in performance fees, partially offset by asset management net outflows and a $27 million negative foreign currency translation impact.

Distribution fees increased $42 million, or 2%, to $1.9 billion for the year ended December 31, 2019 compared to the prior year reflecting higher average equity markets and higher earnings on brokerage cash due to an increase in average short-term interest rates, partially offset by asset management net outflows.

Net investment income decreased $133 million, or 8%, to $1.5 billion for the year ended December 31, 2019 compared to $1.6 billion for the prior year primarily due to the following impacts:

• A $46 million unfavorable change in the market impact of hedges on investments.

• A $43 million decrease in net investment income of CIEs.

• Net realized investment losses of $3 million for the year ended December 31, 2019 compared to net realized investment gains of $10 million for the prior year.

• Impairments of our investment in affordable housing partnerships of $35 million for the year ended December 31, 2019 compared to $7 million for the prior year.

• The unfavorable impact of fixed annuity net outflows and the fixed annuities reinsurance transaction.

• The favorable impact of higher average invested assets related to the bank and certificates and higher average investment yields related to certificates.

Premiums, policy and contract charges decreased $243 million, or 10%, to $2.2 billion for the year ended December 31, 2019 compared to $2.5 billion for the prior year primarily due to the sale of AAH and unlocking, partially offset by an increase in variable annuity guaranteed benefit rider charges and a $7 million expense in the prior year related to a modification of costs within a reinsurance contract. Premiums for the year ended December 31, 2019 included $827 million from Auto and Home for the nine months prior to sale on October 1, 2019 compared to $1.0 billion for the prior year. The impact from unlocking was a $5 million favorable impact compared to a $78 million favorable impact in the prior year. The unlocking impact for 2019 reflected updates to our interest rate assumptions. The primary driver of the unlocking impact for the prior year was higher projected gains on reinsurance contracts resulting from unfavorable mortality experience on UL and VUL insurance products.

Other revenues increased $61 million, or 29%, to $269 million for the year ended December 31, 2019 compared to $208 million for the prior year primarily due to accretion on our fixed annuities reinsurance deposit receivable and a $7 million gain on the sale of real estate in the third quarter of 2019.

Gain on disposal of business of $213 million for the year ended December 31, 2019 was recognized on the sale of AAH, net of an affinity partner payment of $100 million.

Banking and deposit interest expense increased $47 million, or 53%, to $136 million for the year ended December 31, 2019 compared to $89 million for the prior year due to interest expense on banking deposits, higher average certificate balances and higher average crediting rates on certificates.

Expenses

Total expenses increased $384 million, or 4%, to $10.7 billion for the year ended December 31, 2019 compared to $10.4 billion for the prior year.

Distribution expenses increased $173 million, or 5%, to $3.8 billion for the year ended December 31, 2019 compared to $3.6 billion for the prior year reflecting higher advisor compensation due to wrap account net inflows, higher average markets, higher mark-to-market impact on advisor deferred compensation expense and investments in recruiting experienced advisors, partially offset by the impact of asset management net outflows.

Benefits, claims, losses and settlement expenses increased $274 million, or 12%, to $2.6 billion for the year ended December 31, 2019 compared to $2.3 billion for the prior year primarily reflecting the following items:

• A $425 million increase in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The unfavorable impact of the nonperformance credit spread was $175 million for the year ended December 31, 2019 compared to a favorable impact of $250 million for the prior year. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense.

• A $228 million increase in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This increase was the result of a favorable $315 million change in the market impact on variable annuity guaranteed living benefits reserves, an unfavorable $549 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits and a favorable $6 million change in the DSIC offset. The main market drivers contributing to these changes are summarized below:

• Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the year ended December 31, 2019 compared to the prior year.

• Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the year ended December 31, 2019 compared to the prior year.

• Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the year ended December 31, 2019 compared to the prior year.

• Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various contractholder behavioral items, were a net favorable impact compared to the prior year.

• The impact of unlocking excluding LTC was a benefit of $1 million for the year ended December 31, 2019 compared to an expense of $112 million for the prior year. The unlocking impact for 2019 primarily reflected a benefit from changes in equity market volatility and correlation assumptions on variable annuities, partially offset by updates to our interest rate assumptions and lower surrenders on annuity contracts with a withdrawal benefit. The unlocking impact for the prior year primarily reflected unfavorable mortality experience on UL and VUL insurance products and lower surrender rate assumptions on variable annuities, partially offset by a favorable impact from updates to assumptions on utilization of guaranteed withdrawal benefits.

• Our annual review of LTC active life future policy benefit reserve adequacy in 2019 resulted in unlocking and loss recognition of $8 million compared to $52 million in the prior year. The unlocking and loss recognition in 2019 was primarily due to the impact from updates to our interest rates assumptions and changes in morbidity experience, partially offset by higher approved and expected premium rate increases and benefit reductions. The unlocking and loss recognition in the prior year was primarily due to changes in morbidity experience, partially offset by approved, pending and future expected premium rate increases.

• A $204 million decrease in auto and home expenses primarily reflecting the sale of AAH.

• The mean reversion related impact was a benefit of $26 million for the year ended December 31, 2019 compared to an expense of $12 million for the prior year.

Amortization of DAC decreased $143 million, or 44%, to $179 million for the year ended December 31, 2019 compared to $322 million for the prior year primarily reflecting the following items:

• The DAC offset to the market impact on variable annuity guaranteed benefits was a benefit of $82 million for the year ended December 31, 2019 compared to an expense of $23 million for the prior year.

• The mean reversion related impact was a benefit of $31 million for the year ended December 31, 2019 compared to an expense of $21 million for the prior year.

• A $10 million decrease in auto and home expenses primarily reflecting the sale of AAH.

• A favorable impact from normal year over year experience differences for variable annuities.

• The impact of unlocking in 2019 was an expense of $14 million and reflected updates to our interest rate assumptions, partially offset by a favorable impact from lower surrenders on annuity contracts with a withdrawal benefit. The impact of unlocking in the prior year was a benefit of $33 million and primarily reflected updated mortality assumptions on UL and VUL insurance products and lower surrender rate assumptions on variable annuities, partially offset by an unfavorable impact from updates to assumptions on utilization of guaranteed withdrawal benefits.

Interest and debt expense decreased $31 million, or 13%, to $214 million for the year ended December 31, 2019 compared to $245 million for the prior year primarily due to a decrease in interest expense of CIEs.

General and administrative expense increased $116 million, or 4%, to $3.3 billion for the year ended December 31, 2019 compared to $3.2 billion for the prior year primarily due to a $49 million unfavorable change in the mark-to-market impact on share-based compensation expenses, a $28 million increase in compensation related to higher performance fees, bank-related expenses, investments in business growth and a $13 million increase in severance, partially offset by a $15 million positive foreign currency translation impact and a $25 million decrease in auto and home expenses primarily reflecting the sale of AAH.

Income Taxes

Our effective tax rate was 15.2% for the year ended December 31, 2019 compared to 15.5% for the prior year. Net excess tax benefits related to employee share-based payments was a benefit of $15 million for the year ended December 31, 2019 compared to $25 million for the prior year. See Note 24 to our Consolidated Financial Statements for additional discussion on income taxes.

Results of Operations by Segment

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

The following table presents summary financial information by segment:

			Years Ended December 31,
2019						2018
(in millions)
Advice & Wealth Management
Net revenues			$	6,599					$	6,189
Expenses			5,090						4,800
Adjusted operating earnings			$	1,509					$	1,389
Asset Management
Net revenues			$	2,913					$	3,011
Expenses			2,252						2,283
Adjusted operating earnings			$	661					$	728
Retirement & Protection Solutions
Net revenues			$	3,123					$	3,166
Expenses			2,399						2,445
Adjusted operating earnings			$	724					$	721
Corporate & Other
Net revenues			$	1,477					$	1,742
Expenses			1,763						2,016
Adjusted operating loss			$	(286)					$	(274)

The following table presents the segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the years ended December 31:

Segment Pretax Adjusted Operating Increase (Decrease)						2019												2018
Retirement & Protection Solutions						Corporate			Retirement & Protection Solutions						Corporate
						(in millions)
Premiums, policy and contract charges						$	5					$	—					$	78					$	—
Total revenues						5						—						78						—
Benefits, claims, losses and settlement expenses
LTC unlocking and loss recognition						—						8						—						52
Unlocking impact, excluding LTC						6						(2)						118						1
Total benefits, claims, losses and settlement expenses						6						6						118						53
Amortization of DAC						15						(2)						(40)						5
Total expenses						21						4						78						58
Pretax income (loss)						$	(16)					$	(4)					$	—					$	(58)

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the years ended December 31:

			2019						2018
(in billions)
Beginning balance			$	251.5					$	248.2
Net flows			17.6						21.1
Market appreciation (depreciation) and other			48.4						(17.8)
Ending balance			$	317.5					$	251.5
Advisory wrap account assets ending balance (1)			$	314.3					$	249.1
Average advisory wrap account assets (2)			$	282.9					$	255.5

(1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee. Beginning in the fourth quarter of 2019, all advisory fee billing is calculated in advance on a monthly basis using point-in-time assets. Prior to the fourth quarter of 2019, some advisory accounts billed in arrears on a quarterly or monthly basis using average daily assets.

(2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.

Wrap account assets increased $66.0 billion, or 26%, during the year ended December 31, 2019 due to net inflows of $17.6 billion and market appreciation and other of $48.4 billion. Average advisory wrap account assets increased $27.4 billion, or 11%, compared to the prior year reflecting net inflows and market appreciation.

The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:

			Years Ended December 31,												Change
2019						2018
(in millions)
Revenues
Management and financial advice fees			$	3,841					$	3,538					$	303					9		%
Distribution fees			2,281						2,241						40						2
Net investment income			411						316						95						30
Other revenues			202						183						19						10
Total revenues			6,735						6,278						457						7
Banking and deposit interest expense			136						89						47						53
Total net revenues			6,599						6,189						410						7
Expenses
Distribution expenses			3,714						3,521						193						5
Interest and debt expense			11						10						1						10
General and administrative expense			1,365						1,269						96						8
Total expenses			5,090						4,800						290						6
Adjusted operating earnings			$	1,509					$	1,389					$	120					9		%

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $120 million, or 9%, to $1.5 billion for the year ended December 31, 2019 compared to $1.4 billion for the prior year reflecting wrap account net inflows, average equity market appreciation and higher earnings on brokerage cash, partially offset by higher expenses from continued investments for growth and higher mark-to-market impact on advisor deferred compensation expenses. Pretax adjusted operating margin was 22.9% for the year ended December 31, 2019 compared to 22.4% for the prior year.

We launched Ameriprise Bank, FSB in the second quarter of 2019 and continued to add deposits during the year, with $3.8 billion of cash sweep balances as of December 31, 2019. In the third quarter of 2019, we purchased the existing Ameriprise portfolio of credit card accounts from a third party bank.

Net Revenues

Net revenues exclude net realized investment gains or losses. Net revenues increased $410 million, or 7%, to $6.6 billion for the year ended December 31, 2019 compared to $6.2 billion for the prior year. Adjusted operating net revenue per advisor increased to $664,000 for the year ended December 31, 2019, up 6%, from $624,000 for the prior year.

Management and financial fees increased $303 million, or 9%, to $3.8 billion for the year ended December 31, 2019 compared to $3.5 billion for the prior year primarily due to growth in wrap account assets. Average advisory wrap account assets increased $29.8 billion, or 12%, compared to the prior year reflecting net inflows and market appreciation.

Distribution fees increased $40 million, or 2%, to $2.3 billion for the year ended December 31, 2019 compared to $2.2 billion for the prior year reflecting higher earnings on brokerage cash due to an increase in average short-term interest rates, partially offset by decreased transactional activity and lower sales of variable annuities. We earned 198 basis points on brokerage cash balances for the year ended December 31, 2019 compared to 164 basis points for the prior year.

Net investment income increased $95 million, or 30%, to $411 million for the year ended December 31, 2019 compared to $316 million for the prior year primarily due to higher average invested assets due to the bank and certificates and higher average investment yields.

Banking and deposit interest expense increased $47 million, or 53%, to $136 million for the year ended December 31, 2019 compared to $89 million for the prior year due to interest expense on banking deposits, higher average certificate balances and higher average crediting rates on certificates.

Expenses

Total expenses increased $290 million, or 6%, to $5.1 billion for the year ended December 31, 2019 compared to $4.8 billion for the prior year.

Distribution expenses increased $193 million, or 5%, to $3.7 billion for the year ended December 31, 2019 compared to $3.5 billion for the prior year reflecting higher advisor compensation due to wrap account net inflows and market appreciation, higher mark-to-market impact on advisor deferred compensation expense and investments in recruiting experienced advisors, partially offset by decreased transactional activity.

General and administrative expense increased $96 million, or 8%, to $1.4 billion for the year ended December 31, 2019 compared to $1.3 billion for the prior year primarily due to bank-related expenses and investments in business growth.

Asset Management

The following table presents managed assets by type:

			December 31,																		Change												Average (1)																		Change
						December 31,
2019						2018									2019						2018
(in billions)
Equity			$	271.1					$	229.0											$	42.1					18		%				$	251.5					$	266.4											$	(14.9)					(6)		%
Fixed income			179.2						160.9												18.3						11						171.2						168.9												2.3						1
Money market			5.6						5.1												0.5						10						5.1						5.7												(0.6)						(11)
Alternative			3.1						3.1												—						—						3.1						4.4												(1.3)						(30)
Hybrid and other			35.2						32.6												2.6						8						33.9						34.2												(0.3)						(1)
Total managed assets			$	494.2					$	430.7											$	63.5					15		%				$	464.8					$	479.6											$	(14.8)					(3)		%

(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.

The following tables present the changes in global managed assets:

			Years Ended December 31,
2019						2018
(in billions)
Global Retail Funds
Beginning assets			$	247.9					$	287.8
Inflows			46.9						53.0
Outflows			(53.8)						(67.2)
Net VP/VIT fund flows			(2.7)						(3.0)
Net new flows			(9.6)						(17.2)
Reinvested dividends			9.7						11.6
Net flows			0.1						(5.6)
Distributions			(11.3)						(13.8)
Market appreciation (depreciation) and other			50.3						(18.2)
Foreign currency translation (1)			0.5						(2.3)
Total ending assets			287.5						247.9
Global Institutional
Beginning assets			182.8						206.8
Inflows			22.7						21.6
Outflows			(29.9)						(37.2)
Net flows			(7.2)						(15.6)
Market appreciation (depreciation) and other (2)			29.7						(4.5)
Foreign currency translation (1)			1.4						(3.9)
Total ending assets			206.7						182.8
Total managed assets			$	494.2					$	430.7
Total net flows			$	(7.1)					$	(21.2)
Former Parent Company Related (3)
Retail net new flows			$	(0.9)					$	(2.8)
Institutional net new flows			(3.4)						(5.2)
Total net new flows			$	(4.3)					$	(8.0)

(1) Amounts represent local currency to US dollar translation for reporting purposes.

(2) Includes $4.6 billion and $0.6 billion for the total change in Affiliated General Account Assets during the years ended December 31, 2019 and 2018, respectively.

(3) Former parent company related assets and net new flows are included in the rollforwards above.

Total segment AUM increased $63.5 billion, or 15%, during the year ended December 31, 2019 driven by market appreciation, partially offset by net outflows and retail fund distributions. Europe, Middle East and Africa (“EMEA”) retail net outflows were $3.1 billion for the year ended December 31, 2019 reflecting negative consumer sentiment associated with Brexit and geopolitical concerns in Europe. North America retail net inflows, which include reinvested dividends, were $3.2 billion for the year ended December 31, 2019, a $5.8 billion improvement compared to the prior year. Global institutional net outflows of $7.2 billion included $3.4 billion of outflows from former parent-related assets.

The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:

			Years Ended December 31,												Change
2019						2018
(in millions)
Revenues
Management and financial advice fees			$	2,488					$	2,540					$	(52)					(2)		%
Distribution fees			408						433						(25)						(6)
Net investment income			15						19						(4)						(21)
Other revenues			2						19						(17)						(89)
Total revenues			2,913						3,011						(98)						(3)
Banking and deposit interest expense			—						—						—						—
Total net revenues			2,913						3,011						(98)						(3)
Expenses
Distribution expenses			928						961						(33)						(3)
Amortization of deferred acquisition costs			9						13						(4)						(31)
Interest and debt expense			25						24						1						4
General and administrative expense			1,290						1,285						5						—
Total expenses			2,252						2,283						(31)						(1)
Adjusted operating earnings			$	661					$	728					$	(67)					(9)		%

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $67 million, or 9%, to $661 million for the year ended December 31, 2019 compared to $728 million for the prior year primarily due to the cumulative impact of net outflows and a vendor credit of $14 million in the prior year, partially offset by higher average markets and a $29 million increase in net performance fees.

Net Revenues

Net revenues, which exclude net realized investment gains or losses, decreased $98 million, or 3%, to $2.9 billion for the year ended December 31, 2019 compared to $3.0 billion for the prior year.

Management and financial advice fees decreased $52 million, or 2%, to $2.5 billion for the year ended December 31, 2019 compared to the prior year driven by cumulative net outflows and a $27 million negative foreign currency translation impact, partially offset by a $57 million increase in performance fees and higher average markets. Our average weighted equity index, which is a proxy for equity movements on AUM, increased 4% for the year ended December 31, 2019 compared to the prior year.

Distribution fees decreased $25 million, or 6%, to $408 million for the year ended December 31, 2019 compared to $433 million for the prior year due to the cumulative impact of net outflows, partially offset by higher average markets.

Other revenues decreased $17 million, or 89%, to $2 million for the year ended December 31, 2019 compared to $19 million for the prior year due to a $14 million vendor credit in the prior year related to the completion of our front, middle and back-office integration.

Expenses

Total expenses decreased $31 million, or 1%, to $2.3 billion for the year ended December 31, 2019 compared to the prior year.

Distribution expenses decreased $33 million, or 3%, to $928 million for the year ended December 31, 2019 compared to $961 million for the prior year primarily due to the cumulative impact of net outflows, partially offset by higher average markets.

Retirement & Protection Solutions

The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:

			Years Ended December 31,												Change
2019						2018
(in millions)
Revenues
Management and financial advice fees			$	827					$	839					$	(12)					(1)		%
Distribution fees			438						439						(1)						—
Net investment income			528						528						—						—
Premiums, policy and contract charges			1,330						1,360						(30)						(2)
Other revenues			—						—						—						—
Total revenues			3,123						3,166						(43)						(1)
Banking and deposit interest expense			—						—						—						—
Total net revenues			3,123						3,166						(43)						(1)
Expenses
Distribution expenses			469						476						(7)						(1)
Interest credited to fixed accounts			387						379						8						2
Benefits, claims, losses and settlement expenses			988						1,060						(72)						(7)
Amortization of deferred acquisition costs			230						196						34						17
Interest and debt expense			31						29						2						7
General and administrative expense			294						305						(11)						(4)
Total expenses			2,399						2,445						(46)						(2)
Adjusted operating earnings			$	724					$	721					$	3					—		%

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which exclude net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts, net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual) and mean reversion related impacts, increased $3 million to $724 million for the year ended December 31, 2019 compared to $721 million for the prior year.

RiverSource variable annuity account balances increased 11% to $80.1 billion as of December 31, 2019 compared to the prior year due to equity market appreciation, partially offset by net outflows of $3.2 billion. Variable annuity sales decreased 8% compared to the prior year.

Net Revenues

Net revenues, which exclude net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual) and the unearned revenue amortization and reinsurance accrual offset to the market impact on IUL contracts, decreased $43 million, or 1%, to $3.1 billion for the year ended December 31, 2019 compared to $3.2 billion for the prior year.

Premiums, policy and contract charges, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL contracts, decreased $30 million, or 2% to $1.3 billion for the year ended December 31, 2019 compared to $1.4 billion for the prior year due to the impact of unlocking, partially offset by higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date, higher average fee rates and a $7 million expense in the prior year related to a modification of costs within a reinsurance contract.

Expenses

Total expenses, which exclude the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts, net of hedges and the related DSIC and DAC amortization), mean reversion related impacts and the DAC and DSIC offset to net realized investment gains or losses, decreased $46 million, or 2%, for the year ended December 31, 2019 compared to the prior year.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity contracts (net of hedges and the related DSIC amortization), mean reversion related impacts and the DSIC offset to net realized investment gains or losses, decreased $72 million, or 7%, to $988 million for the year ended December 31, 2019 compared to $1.1 billion for the prior year primarily due to the impact of unlocking, partially offset by higher reserve funding driven by the impact of higher variable annuity guaranteed benefit rider charges. The unlocking impact for 2019 was an expense of $6 million and primarily reflected updates to our interest rate assumptions and lower surrenders on annuity contracts with a withdrawal benefit, partially offset by a benefit from changes in equity market volatility and correlation assumptions on variable annuities. The unlocking impact for the prior year was an expense of

$118 million and primarily reflected unfavorable mortality experience on UL and VUL insurance products and lower surrender rate assumptions on variable annuities, partially offset by a favorable impact from updates to assumptions on utilization of guaranteed withdrawal benefits.

Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity contracts and IUL contracts and the DAC offset to net realized investment gains or losses, increased $34 million, or 17%, to $230 million for the year ended December 31, 2019 compared to $196 million for the prior year primarily reflecting the impact of unlocking, partially offset by a favorable impact from normal year over year experience differences for variable annuities. The impact of unlocking for 2019 was an expense of $15 million and reflected updates to our interest rate assumptions, partially offset by a favorable impact from lower surrenders on annuity contracts with a withdrawal benefit. The impact of unlocking in the prior year was a benefit of $40 million and primarily reflected updated mortality assumptions on UL and VUL insurance products and lower surrender rate assumptions on variable annuities, partially offset by an unfavorable impact from updates to assumptions on utilization of guaranteed withdrawal benefits.

Corporate & Other

The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:

			Years Ended December 31,												Change
2019						2018
(in millions)
Revenues
Management and financial advice fees			$	4					$	5					$	(1)					(20)		%
Distribution fees			6						7						(1)						(14)
Net investment income			479						582						(103)						(18)
Premiums, policy and contract charges			931						1,148						(217)						(19)
Other revenues			65						6						59						NM
Total revenues			1,485						1,748						(263)						(15)
Banking and deposit interest expense			8						6						2						33
Total net revenues			1,477						1,742						(265)						(15)
Expenses
Distribution expenses			4						14						(10)						(71)
Interest credited to fixed accounts			270						282						(12)						(4)
Benefits, claims, losses and settlement expenses			965						1,235						(270)						(22)
Amortization of deferred acquisition costs			55						72						(17)						(24)
Interest and debt expense			78						62						16						26
General and administrative expense			391						351						40						11
Total expenses			1,763						2,016						(253)						(13)
Operating loss			$	(286)					$	(274)					$	(12)					(4)		%

NM Not Meaningful.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss increased $12 million, or 4%, to $286 million for the year ended December 31, 2019 compared to $274 million for the prior year.

Our LTC insurance pretax adjusted operating earnings were nil for the year ended December 31, 2019 compared to a pretax adjusted operating loss of $61 million for the prior year. Our annual review of LTC active life future policy benefit reserve adequacy resulted in unlocking and loss recognition of $8 million for the year ended December 31, 2019 compared to $52 million in the prior year.

FA business had a pretax adjusted operating earnings of $34 million for the year ended December 31, 2019 compared to $30 million for the prior year.

RiverSource fixed deferred annuity account balances declined 5% to $8.3 billion as of December 31, 2019 compared to the prior year as older policies continue to lapse and new sales are limited due to low interest rates. We reinsured approximately 20% of our fixed annuities block during the first quarter of 2019. The reinsurance transaction generated $200 million of excess capital and had a marginal impact on fixed annuity adjusted pretax operating earnings.

Auto and Home pretax adjusted operating earnings were $13 million for the year ended December 31, 2019 compared to a pretax adjusted operating loss of $10 million for the prior year. We sold AAH on October 1, 2019.

Net Revenues

Net revenues, which exclude net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain on disposal of business that is not considered discontinued operations, integration and restructuring charges and revenues attributable to CIEs, decreased $265 million, or 15%, to $1.5 billion for the year ended December 31, 2019 compared to $1.7 billion for the prior year. Net revenues for the year ended December 31, 2019 included $881 million from Auto and Home compared to $1.1 billion for the prior year reflecting the sale of AAH.

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments and net investment income attributable to CIEs, decreased $103 million, or 18%, to $479 million for the year ended December 31, 2019 compared to $582 million for the prior year primarily due to a $47 million unfavorable impact related to the fixed annuities reinsurance transaction, approximately $30 million from lower average invested assets due to fixed annuity net outflows and impairments of our investment in affordable housing partnerships. Impairments of our investment in affordable housing partnerships were $35 million for the year ended December 31, 2019 compared to $7 million for the prior year.

Premiums, policy and contract charges decreased $217 million, or 19%, to $931 million for the year ended December 31, 2019 compared to $1.1 billion for the prior year primarily due to the sale of AAH.

Other revenues increased $59 million to $65 million for the year ended December 31, 2019 compared to $6 million for the prior year primarily due to accretion on our fixed annuities reinsurance deposit receivable and a $7 million gain on the sale of real estate in the third quarter of 2019.

Expenses

Total expenses, which exclude the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), integration and restructuring charges and expenses attributable to CIEs, decreased $253 million, or 13%, to $1.8 billion for the year ended December 31, 2019 compared to $2.0 billion for the prior year. Total expenses for the year ended December 31, 2019 included $868 million from Auto and Home reflecting the sale of AAH.

Distribution expenses decreased $10 million, or 71%, to $4 million for the year ended December 31, 2019 compared to $14 million for the prior year reflecting the sale of AAH.

Interest credited to fixed accounts, which excludes the market impact on fixed deferred annuity contracts (net of hedges), decreased $12 million, or 4%, to $270 million for the year ended December 31, 2019 compared to $282 million for the prior year due to lower average fixed deferred annuity account balances.

Benefits, claims, losses and settlement expenses decreased $270 million, or 22%, to $965 million for the year ended December 31, 2019 compared to $1.2 billion for the prior year reflecting a decrease in LTC unlocking and loss recognition and the sale of AAH.

Amortization of DAC, which excludes the DAC offset to the market impact on fixed deferred annuity contracts, decreased $17 million, or 24%, to $55 million for the year ended December 31, 2019 compared to $72 million for the prior year primarily reflecting the sale of AAH and the impact of unlocking.

Interest and debt expense, which excludes interest expense attributable to CIEs, increased $16 million, or 26%, to $78 million for the year ended December 31, 2019 compared to $62 million for the prior year primarily due to interest expense on asset backed securities issued by one of our subsidiaries in the fourth quarter of 2018. This interest expense is eliminated on a consolidated basis.

General and administrative expense, which excludes integration and restructuring charges and expenses attributable to CIEs, increased $40 million, or 11%, to $391 million for the year ended December 31, 2019 compared to $351 million for the prior year primarily due to a $33 million unfavorable change in the mark-to-market impact on share-based compensation expenses, investments in growth initiatives and a $13 million increase in severance, partially offset by a $25 million decrease in auto and home expenses primarily reflecting the sale of AAH.

Fair Value Measurements

We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives and most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or distressed sale. We include actual market prices, or observable inputs, in our fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. We validate prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 15 to the Consolidated Financial Statements for additional information on our fair value measurements.

Fair Value of Liabilities and Nonperformance Risk

Companies are required to measure the fair value of liabilities at the price that would be received to transfer the liability to a market participant (an exit price). Since there is not a market for our obligations of our variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, we consider the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, we adjust the valuation of variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance by updating certain contractholder assumptions, adding explicit margins to provide for risk, and adjusting the rates used to discount expected cash flows to reflect a market estimate of our nonperformance risk. The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of December 31, 2020. As our estimate of this spread widens or tightens, the liability will decrease or increase. If this nonperformance credit spread moves to a zero spread over the LIBOR swap curve, the reduction to future net income would be approximately $467 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on December 31, 2020 credit spreads.

Liquidity and Capital Resources

Overview

We maintained substantial liquidity during the year ended December 31, 2020. At December 31, 2020 and 2019, we had $6.8 billion and $3.7 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.

At December 31, 2020 and 2019, the parent company had $1.1 billion and $1.8 billion, respectively, in cash, cash equivalents, and unencumbered liquid securities. Liquid securities predominantly include U.S. government agency mortgage back securities. Additional sources of liquidity include a line of credit with an affiliate up to $867 million and an unsecured revolving committed credit facility for up to $750 million that expires in October 2022. Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of December 31, 2020 was $2.3 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.

Under the terms of the committed credit facility, we can increase the availability to $1.0 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At December 31, 2020, we had no outstanding borrowings under this credit facility and had $1 million of outstanding letters of credit. Our credit facility contains various administrative, reporting, legal and financial covenants. Compliance with these covenants is not currently impaired by the COVID-19 pandemic, and we remain in compliance with all such covenants at December 31, 2020.

On April 2, 2020, we issued $500 million of unsecured 3.0% senior notes due April 2, 2025 and incurred debt issuance costs of $4 million. Interest payments are due semi-annually in arrears on April 2 and October 2, commencing on October 2, 2020.

The Company repaid $750 million principal amount of its 5.3% senior notes at maturity on March 16, 2020.

In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances. Our subsidiaries, RiverSource Life Insurance Company (“RiverSource Life”), and Ameriprise Bank, FSB are members of the FHLB of Des Moines, which provides access to collateralized borrowings. We had $200 million and $201 million of borrowings from the FHLB, which is collateralized with commercial mortgage backed securities and residential mortgage backed securities, as of December 31, 2020 and 2019. We believe cash flows from operating activities, available cash balances and our availability of revolver borrowings will be sufficient to fund our operating liquidity needs and stress requirements.

On November 3, 2020, S&P Global lowered our issuer credit and senior unsecured debt rating from A with a negative outlook to A-with a stable outlook due to gradual expansion in our non-insurance businesses driving a S&P ratings methodology change. We do not believe this rating change will have a material impact on our access to or cost of capital or otherwise materially impact our liquidity.

We continue to monitor and respond to the ongoing COVID-19 pandemic. Our risk management strategy is designed to provide proactive protection during stress events such as the current pandemic. We believe our process is working as intended, and our liquidity and capital resources have remained a source of balance sheet strength during the twelve months ended December 31, 2020.

Dividends from Subsidiaries

Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly-owned subsidiaries. Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding Corporation, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc. (“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment Advisers, LLC, and Ameriprise International Holdings GmbH, which is the parent company of Threadneedle Asset Management Holdings Sàrl. The payment of dividends by many of our subsidiaries is restricted and certain of our subsidiaries are subject to regulatory capital requirements.

Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were as follows:

			Actual Capital									Regulatory Capital Requirements
December 31,						December 31,
2020			2019			2020			2019
(in millions)
RiverSource Life (1)(2)			$	5,021		$	2,924					$	993		$	601
RiverSource Life of NY (1)(2)			323			235						42			38
ACC (4)(5)			387			430						362			402
Threadneedle Asset Management Holdings Sàrl (6)			445			287						204			183
Ameriprise Bank, FSB (4)(7)			658			300						543			180
AFS (3)(4)			134			94						#			#
Ameriprise Captive Insurance Company (3)			41			48						8			9
Ameriprise Trust Company (3)			42			35						37			32
AEIS (3)(4)			122			133						25			22
RiverSource Distributors, Inc. (3)(4)			12			13						#			#
Columbia Management Investment Distributors, Inc. (3)(4)			16			16						#			#

N/A Not applicable.

Amounts are less than $1 million.

(1) Actual capital is determined on a statutory basis.

(2) Regulatory capital requirement is the company action level and is based on the statutory risk-based capital filing.

(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of December 31, 2020 and 2019.

(4) Actual capital is determined on an adjusted GAAP basis.

(5) ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.

(6) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The regulatory capital requirements at December 31, 2020 represent calculations at September 30, 2020 of the rule based requirements, as specified by FCA regulations.

(7) Regulatory capital requirement is based on minimum requirements for well capitalized banks in accordance with the Office of the Comptroller of the Currency (“OCC”).

In addition to the particular regulations restricting dividend payments and establishing subsidiary capitalization requirements, we take into account the overall health of the business, capital levels and risk management considerations in determining a strategy for payments to our parent holding company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries.

During the year ended December 31, 2020, the parent holding company received cash dividends or a return of capital from its subsidiaries of $2.1 billion and contributed cash to its subsidiaries of $416 million. During the year ended December 31, 2019, the parent holding company received cash dividends or a return of capital from its subsidiaries of $2.7 billion and contributed cash to its subsidiaries of $368 million.

The table below presents the historical subsidiary capacity for dividends and other distributions to the parent holding company in each of the years ended December 31:

			2020						2019						2018
(in millions)
RiverSource Life (1)			$	1,505					$	1,676					$	958
Ameriprise Bank, FSB			74						20						4
ACC (2)			97						96						25
CMIA			381						368						395
CMIS			14						48						39
Ameriprise International Holdings GmbH			254						231						446
Ameriprise Trust Company			—						3						6
Ameriprise Captive Insurance Company			48						54						64
RiverSource Distributors, Inc.			12						12						12
AMPF Holding Corporation			1,116						1,092						1,027
Total capacity			$	3,501					$	3,600					$	2,976

(1) For RiverSource Life payments in excess of statutory unassigned funds require advance notice to the Minnesota Department of Commerce, RiverSource Life’s primary regulator, and are subject to potential disapproval. In addition, dividends and other distributions whose fair market value, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of (1) the previous year’s statutory net gain from operations or (2) 10% of the previous year-end statutory capital and surplus are referred to as “extraordinary dividends.” Extraordinary dividends also require advance notice to the Minnesota Department of Commerce, and are subject to potential disapproval. For dividends exceeding these thresholds, RiverSource Life provided notice to the Minnesota Department of Commerce and received responses indicating that it did not object to the payment of these dividends. Total dividend capacity for RiverSource Life represents dividends paid during year ended December 31 along with any unpaid ordinary dividend capacity, subject to unassigned funds limitation.

(2) The dividend capacity for ACC is based on capital held in excess of regulatory requirements.

The following table presents cash dividends paid or return of capital to the parent holding company, net of cash capital contributions made by the parent holding company for the following subsidiaries for the years ended December 31:

			2020						2019						2018
(in millions)
RiverSource Life			$	800					$	1,350					$	750
Ameriprise Bank, FSB			(300)						(260)						—
ACC			72						69						(33)
CMIA			324						286						308
CMIS			—						40						—
Ameriprise International Holdings GmbH (1)			—						116						393
Ameriprise Advisor Capital, LLC (2)			(102)						(84)						401
Ameriprise Captive Insurance Company			15						15						10
AMPF Holding Corporation			924						920						840
Ameriprise Trust Company			(4)						—						—
Ameriprise India			4						—						—
Total			$	1,733					$	2,452					$	2,669

(1) Includes forgiveness of parent holding company debt of $81 million and $195 million for the years ended December 31, 2019 and 2018, respectively.

(2) In 2018, the amount includes $351 million from a securitized portfolio of advisor loans which were previously held at Ameriprise Advisor Capital, LLC. The securitization transaction eliminated in consolidation.

In 2009, RiverSource Life established an agreement to protect its exposure to Genworth Life Insurance Company (“GLIC”) for its reinsured LTC. In 2016, substantial enhancements to this reinsurance protection agreement were finalized. The terms of these confidential provisions within the agreement have been shared, in the normal course of regular reviews, with our domiciliary regulator and rating agencies. GLIC is domiciled in Delaware, so in the event GLIC were subjected to rehabilitation or insolvency proceedings, such proceedings would be located in (and governed by) Delaware laws. Delaware courts have a long tradition of respecting commercial and reinsurance affairs, as well as contracts among sophisticated parties. Similar credit protections to what we have with GLIC have been tested and respected in Delaware and elsewhere in the United States, and as a result we believe our credit protections would be respected even in the unlikely event that GLIC becomes subject to rehabilitation or insolvency proceedings in Delaware. Accordingly, while no credit protections are perfect, we believe the correct way to think about the risks represented by our counterparty credit exposure to GLIC is not the full amount of the gross liability that GLIC reinsures, but a much smaller net exposure to GLIC (if any that might exist after taking into account our credit protections). Thus, management believes that our agreement and

offsetting non LTC legacy arrangements with Genworth will enable RiverSource Life to recover on all net exposure in all material respects in the event of a rehabilitation or insolvency of GLIC.

Dividends Paid to Shareholders and Share Repurchases

We paid regular quarterly dividends to our shareholders totaling $512 million and $518 million for the years ended December 31, 2020 and 2019, respectively. On January 27, 2021, we announced a quarterly dividend of $1.04 per common share. The dividend will be paid on February 26, 2021 to our shareholders of record at the close of business on February 12, 2021.

In February 2019, our Board of Directors authorized us to repurchase up to $2.5 billion of our common stock through March 31, 2021, which was exhausted in the fourth quarter of 2020. In August 2020, our Board of Directors authorized an additional repurchase up to $2.5 billion of our common stock through September 30, 2022. As of December 31, 2020, we had $2.3 billion remaining under this share repurchase authorization. We intend to fund share repurchases through existing working capital, future earnings and other customary financing methods. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means. During the year ended December 31, 2020, we repurchased a total of 8.4 million shares of our common stock at an average price of $158.17 per share.

Cash Flows

Cash flows of CIEs and restricted and segregated cash are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities. Cash held by CIEs is not available for general use by Ameriprise Financial, nor is Ameriprise Financial cash available for general use by its CIEs. Cash segregated under federal and other regulations is held for the exclusive benefit of our brokerage customers and is not available for general use by Ameriprise Financial.

Operating Activities

Net cash provided by operating activities increased $2.3 billion to $4.6 billion for the year ended December 31, 2020 compared to $2.3 billion for the prior year primarily reflecting a $865 million increase in cash from changes in brokerage deposits, a $373 million decrease in income taxes paid and an increase in cash collateral related to derivatives, partially offset $624 million decrease in cash from changes in restricted and segregated investments.

Net cash provided by operating activities decreased $256 million to $2.3 billion for the year ended December 31, 2019 compared to $2.6 billion for the prior year primarily reflecting a $375 million decrease in cash from changes in restricted and segregated investments, a $264 million decrease in cash from changes in brokerage deposits and a $100 million payment to an affinity partner in connection with the sale of AAH, partially offset by changes in receivables.

Investing Activities

Our investing activities primarily relate to our Available-for-Sale investment portfolio. This activity is significantly affected by the net flows of our investment certificate, banking, fixed annuity and universal life products reflected in financing activities.

Net cash used in investing activities decreased $340 million to $2.9 billion for the year ended December 31, 2020 compared to $3.2 billion for the prior year primarily reflecting a $1.5 billion increase in proceeds from sales of Available-for-Sale securities, a $1.4 billion increase in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities, a $391 million decrease in net cash flows related to investments of consolidated investment entities partially offset by a $1.6 billion increase in cash used for purchases of Available-for-Sale securities, $934 million in proceeds from the sale of AAH, net of cash and cash equivalents sold of $204 million, in 2019, a $340 million increase in net cash flows related to deposit receivable and a $134 million increase in net cash flows related to mortgage loans.

Net cash used in investing activities increased $2.6 billion to $3.2 billion for the year ended December 31, 2019 compared to $587 million for the prior year primarily due to a $3.6 billion increase in cash used for purchases of Available-for-Sale securities, a $193 million decrease in proceeds from sales of Available-for-Sale securities, a $635 million decrease in net cash flows related to investments of consolidated investment entities, a $251 million decrease in cash related to the fixed annuities reinsurance arrangement and a $138 million decrease to cash related to written options with deferred premiums, partially offset by a $1.5 billion increase in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities and $934 million in proceeds from the sale of AAH, net of cash and cash equivalents sold of $204 million. See Note 19 to our Consolidated Financial Statements for additional information on the sale of AAH.

Financing Activities

Net cash provided by financing activities decreased $262 million to $952 million for the year ended December 31, 2020 compared to $1.2 billion for the prior year primarily reflecting a $172 million decrease in net cash inflows from banking deposits, a $378 million decrease in cash related to investment certificates due to certificate net outflows, a $450 million increase in senior note repayments, partially offset by a $502 million decrease in share repurchases and a $382 million increase in borrowings by consolidated investment entities.

Net cash provided by financing activities was $1.2 billion for the year ended December 31, 2019 compared to net cash used in financing activities of $1.3 billion for the prior year primarily reflecting a $3.8 billion increase in net cash inflows from banking deposits, proceeds of $497 million from issuance of debt and a $508 million decrease in net cash outflows related to CIE debt, partially offset by a $1.9 billion decrease in cash related to investment certificates due to certificate net outflows, repayment of $300 million of our senior notes in June 2019 and a $313 million increase in share repurchases.

Contractual Commitments

The contractual obligations identified in the table below include both our on and off-balance sheet transactions that represent material expected or contractually committed future obligations. The table excludes obligations of CIEs as they are not direct obligations of the Company and have recourse only to the assets of the CIEs. Estimated cash payments due by period as of December 31, 2020 were as follows:

			Total						2021						2022-2023						2024-2025						2026 and Thereafter
(in millions)
Balance Sheet
Senior notes (1)			$	2,800					$	—					$	1,250					$	1,050					$	500
Insurance and annuities (2)			52,892						2,127						4,140						3,962						42,663
Investment certificates (3)			6,760						6,521						239						—						—
Deferred premium options (4)			932						153						258						267						254
Lease obligations			298						66						104						73						55
Affordable housing and other real estate partnerships (5)			12						6						2						2						2
Off-Balance Sheet
Purchase obligations (6)			812						292						304						137						79
Interest on senior notes (7)			325						95						156						64						10
Interest on lease obligations			25						7						10						5						3
Total			$	64,856					$	9,267					$	6,463					$	5,560					$	43,566

(1) See Note 14 to our Consolidated Financial Statements for more information about our long-term debt.

(2) These scheduled payments are represented by reserves of approximately $34.0 billion at December 31, 2020 and are based on interest credited, mortality, morbidity, lapse, surrender and premium payment assumptions. The estimated payments are presented gross before reinsurance. The scheduled payments are undiscounted and exceed the corresponding liability at December 31, 2020. Actual payment obligations may differ if experience varies from these assumptions. As of December 31, 2020, the projected period for which cash payments will be made is 40 years. Separate account liabilities have been excluded as associated contractual obligations would be met by separate account assets.

(3) The payments due by year are based on contractual term maturities. However, contractholders have the right to redeem the investment certificates earlier and at their discretion subject to surrender charges, if any. Redemptions are most likely to occur in periods of substantial increases in interest rates.

(4) The fair value of these commitments included on the Consolidated Balance Sheets was $900 million as of December 31, 2020. See Note 17 to our Consolidated Financial Statements for more information about our deferred premium options.

(5) Call dates for the obligations presented are either date or event specific. For date specific obligations, we are required to fund a specific amount on a stated date provided there are no defaults under the agreement. For event specific obligations, we are required to fund a specific amount of its capital commitment when properties in a fund become fully stabilized. For event specific obligations, the estimated call date of these commitments is used in the table above.

(6) Purchase obligations include the minimum contractual amounts by period under contracts that were in effect at December 31, 2020. Many of the purchase agreements giving rise to these purchase obligations include termination clauses that may require payment of termination fees if the agreements are terminated by us without cause prior to their stated expiration; however, the table reflects the amounts to be paid assuming the contracts are not terminated.

(7) Interest on senior notes was estimated based on rates in effect as of December 31, 2020.

In addition to the contractual commitments outlined in the table above, we periodically fund the employees’ defined benefit plans. In 2021, we expect to contribute $15 million to our pension plans and $1 million to our defined benefit postretirement plans. See Note 25 to our Consolidated Financial Statements for additional information.

Total funding commitments related to loans and private funds, which are not included in the table above due to uncertainty with respect to timing of future cash flows, were $18 million and $9 million, respectively, at December 31, 2020. For additional information relating to these contractual commitments, see Note 26 to our Consolidated Financial Statements.

Off-Balance Sheet Arrangements

We provide asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds, property funds and other private funds, which are sponsored by us. We consolidate certain CLOs. We have determined that consolidation is not required for hedge funds, property funds and other private funds, which are sponsored by us. Our maximum exposure to loss with respect to our investment in these non-consolidated entities is limited to our carrying value and future funding commitments that are legally binding. Other than future funding commitments that are legally binding, we have no obligation to provide further financial or other support to these investment entities nor have we provided any support to these investment entities. See Note 5 and Note 26 to our Consolidated Financial Statements for additional information on our arrangements with these investment entities.

Forward-Looking Statements

This report contains forward-looking statements that reflect management’s plans, estimates and beliefs. Actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include:

• statements of the Company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth opportunities;

• statements of the Company’s position, future performance and ability to pursue business strategy relative to the spread and impact of the COVID-19 pandemic and the related market, economic, client, governmental and healthcare system response;

• statements about the expected trend in the shift of the variable annuity sales business away from products with living benefit guarantees over time;

• other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and

• statements of assumptions underlying such statements.

The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “project,” “continue,” “able to remain,” “resume,” “deliver,” “develop,” “evolve,” “drive,” “enable,” “flexibility,” “scenario,” “case” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements.

Such factors include, but are not limited to:

• the impacts on our business of the COVID-19 pandemic and the related economic, client, governmental and healthcare system responses;

• market fluctuations and general economic and political factors, including volatility in the U.S. and global market conditions, client behavior and volatility in the markets for our products;

• changes in interest rates and periods of low interest rates;

• adverse capital and credit market conditions or any downgrade in our credit ratings;

• effects of competition and the economics of changes in our product revenue mix and distribution channels;

• declines in our investment management performance;

• our ability to compete in attracting and retaining talent, including financial advisors;

• impairment, negative performance or default by financial institutions or other counterparties;

• the ability to maintain our unaffiliated third-party distribution channels and the impacts of sales of unaffiliated products;

• changes in valuation of securities and investments included in our assets;

• the determination of the amount of allowances taken on loans and investments;

• the illiquidity of our investments;

• effects of the elimination of LIBOR on, and value of, securities and other assets and liabilities tied to LIBOR;

• failures by other insurers that lead to higher assessments we owe to state insurance guaranty funds;

• failures or defaults by counterparties to our reinsurance arrangements;

• inadequate reserves for future policy benefits and claims or for future redemptions and maturities;

• deviations from our assumptions regarding morbidity, mortality and persistency affecting our insurance profitability;

• changes to our reputation arising from employee or advisor misconduct or otherwise;

• interruptions or other failures in our operating systems and networks, including errors or failures caused by third-party service providers, interference or third-party attacks;

• interruptions or other errors in our telecommunications or data processing systems;

• identification and mitigation of risk exposure in market environments, new products, vendors and other types of risk;

• ability of our subsidiaries to transfer funds to us to pay dividends;

• changes in exchange rates and other risks in connection with our international operations and earnings and income generated overseas;

• occurrence of natural or man-made disasters and catastrophes;

• legal and regulatory actions brought against us;

• changes to laws and regulations that govern operation of our business;

• supervision by bank regulators and related regulatory and prudential standards as a savings and loan holding company that may limit our activities and strategies;

• changes in corporate tax laws and regulations and interpretations and determinations of tax laws impacting our products; and

• protection of our intellectual property and claims we infringe the intellectual property of others.

Management cautions the reader that the foregoing list of factors is not exhaustive. There may also be other risks that management is unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management undertakes no obligation to update publicly or revise any forward-looking statements.

Ameriprise Financial announces financial and other information to investors through the Company’s investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this report or in any other report or document the Company furnishes or files with the SEC.