Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1. Our Management’s Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 (“2021 10-K”), as well as our current reports on Form 8-K and other publicly available information. References below 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 Financial is a diversified financial services company with a more than 125-year history of providing financial solutions. We are a long-standing leader in financial planning and advice with $1.2 trillion in assets under management and administration as of June 30, 2022. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives.

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.

We operate our business in the broader context of the macroeconomic forces around us, including the global and U.S. economies, the coronavirus disease 2019 (“COVID-19”) pandemic, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments. 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, “Risk Factors” in our 2021 10-K 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 deposit products, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and fixed deferred annuities. We have been operating in a historically low interest rate environment and though short term rates have risen, remain in a low interest rate environment today with uncertainty about where rates will go in the future. A lower 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 after tax. For additional discussion on our interest rate risk, see Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and the information set forth in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk.”

On June 2, 2021, we filed an application to convert Ameriprise Bank, FSB to a state-chartered industrial bank regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation. We also filed an application to transition the FSB’s personal trust services business to a new limited purpose national trust bank regulated by the Office of the Comptroller of the Currency. If the applications are approved, the proposed changes are not expected to impact our long-term strategy for the bank and should enable us to continue our strong lineup of banking solutions, including deposits, credit cards, mortgages and securities-based lending to our wealth management clients without interruption.

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 4 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

AMERIPRISE FINANCIAL, INC.

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 and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impact; 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%.

AMERIPRISE FINANCIAL, INC.

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


						Per Diluted Share
	Three Months Ended June 30,					Three Months Ended June 30,
	2022		2021		2022			2021
	(in millions, except per share amounts)
Net income (loss)	$	756	$	591		$	6.61		$	4.88

Less: Net realized investment gains (losses) (1)	(14)		11			(0.12)			0.09
Add: Market impact on non-traditional long-duration products (1)	(305)		87			(2.67)			0.71
Add: Mean reversion related impacts (1)	161		(42)			1.41			(0.35)
Add: Market impact of hedges on investments (1)	—		17			—			0.14

Add: Integration/restructuring charges (1)	14		7			0.12			0.06
Less: Net income (loss) attributable to CIEs	(1)		(2)			(0.01)			(0.02)
Tax effect of adjustments (2)	24		(12)			0.21			(0.10)
Adjusted operating earnings	$	665	$	639		$	5.81		$	5.27

Weighted average common shares outstanding:
Basic	112.3		118.4
Diluted	114.4		121.2


						Per Diluted Share
	Six Months Ended June 30,					Six Months Ended June 30,
	2022		2021		2022			2021
	(in millions, except per share amounts)
Net income (loss)	$	1,517	$	1,028		$	13.16		$	8.45
Less: Net realized investment gains (losses) (1)	2		66			0.02			0.54
Add: Market impact on non-traditional long-duration products (1)	(439)		483			(3.81)			3.97
Add: Mean reversion related impacts (1)	220		(98)			1.91			(0.81)
Add: Market impact of hedges on investments (1)	—		17			—			0.14

Add: Integration/restructuring charges (1)	24		7			0.21			0.06
Less: Net income (loss) attributable to CIEs	1		(3)			0.01			(0.02)
Tax effect of adjustments (2)	41		(72)			0.36			(0.59)
Adjusted operating earnings	$	1,360	$	1,302		$	11.80		$	10.70

Weighted average common shares outstanding:
Basic	113.0		119.1
Diluted	115.3		121.7

(1) Pretax adjusted operating adjustments.

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

AMERIPRISE FINANCIAL, INC.

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


	Twelve Months Ended June 30,
2022			2021
(in millions)
Net income	$	3,249		$	1,065
Less: Adjustments (1)	467			(980)
Adjusted operating earnings	2,782			2,045

Total Ameriprise Financial, Inc. shareholders’ equity	5,278			5,924
Less: AOCI, net of tax	(426)			463
Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI	5,704			5,461
Less: Equity impacts attributable to CIEs	2			1
Adjusted operating equity	$	5,702		$	5,460



Return on equity, excluding AOCI	57.0	%	19.5	%
Adjusted operating return on equity, excluding AOCI (2)	48.8	%	37.5	%

(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; block transfer reinsurance transaction impacts; the market impact of hedges to offset interest rate and currency 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 tax 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. These accounting policies are discussed in detail in “Management’s Discussion and Analysis — Critical Accounting Estimates” in our 2021 10-K.

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 2 to our Consolidated Financial Statements.

Economic Environment

Global equity market conditions could materially affect our financial condition and results of operations. The following table presents relevant market indices:


	Three months ended June 30,				Six Months Ended June 30,
2022		2021	Change	2022	2021	Change
S&P 500
Daily average	4,110		4,182	(2)%	4,288		4,022	7%
Period end	3,785		4,298	(12)%	3,785		4,298	(12)%
Weighted Equity Index (“WEI”) (1)
Daily average	2,707		2,858	(5)%	2,829		2,761	2%
Period end	2,491		2,921	(15)%	2,491		2,921	(15)%

(1) Weighted Equity Index is an Ameriprise calculated proxy for equity market movements calculated using a weighted average of the S&P 500, Russell 2000, Russell Midcap and MSCI EAFE indices based on North America distributed equity assets.

See our segment results of operations discussion below for additional information on how changes in the economic environment have and may continue to impact our results. For further information regarding the impact of the economic environment on our financial condition and results of operations, and potentially material effects, see Part 1 - Item 1A “Risk Factors” of our 2021 10-K.

AMERIPRISE FINANCIAL, INC.

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:


	June 30,					Change
2022			2021
(in billions)
Assets Under Management and Administration
Advice & Wealth Management AUM	$	396.3		$	426.5	$	(30.2)	(7)	%
Asset Management AUM	598.2			593.4		4.8		1
Corporate AUM	0.2			0.1		0.1		NM
Eliminations	(37.5)			(42.0)		4.5		11
Total Assets Under Management	957.2			978.0		(20.8)		(2)
Total Assets Under Administration	212.9			233.3		(20.4)		(9)
Total AUM and AUA	$	1,170.1		$	1,211.3	$	(41.2)	(3)	%

Total AUM decreased $20.8 billion, or 2%, to $957.2 billion as of June 30, 2022 compared to $978.0 billion as of June 30, 2021 due to a $30.2 billion decrease in Advice & Wealth Management AUM driven by equity market depreciation, partially offset by wrap account net inflows, and a $4.8 billion increase in Asset Management AUM driven by the acquisition of the BMO Global Asset Management (EMEA) business, partially offset by equity market depreciation. See our segment results of operations discussion below for additional information on changes in our AUM.

AMERIPRISE FINANCIAL, INC.

Consolidated Results of Operations for the Three Months Ended June 30, 2022 and 2021

The following table presents our consolidated results of operations:


	Three Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	2,277	$	2,251	$	26	1	%
Distribution fees	458		452		6		1
Net investment income	287		278		9		3
Premiums, policy and contract charges	365		364		1		—
Other revenues	124		75		49		65
Total revenues	3,511		3,420		91		3
Banking and deposit interest expense	3		2		1		50
Total net revenues	3,508		3,418		90		3
Expenses
Distribution expenses	1,236		1,233		3		—
Interest credited to fixed accounts	145		124		21		17
Benefits, claims, losses and settlement expenses	82		404		(322)		(80)
Amortization of deferred acquisition costs	152		63		89		NM
Interest and debt expense	44		43		1		2
General and administrative expense	894		830		64		8
Total expenses	2,553		2,697		(144)		(5)
Pretax income	955		721		234		32
Income tax provision	199		130		69		53
Net income	$	756	$	591	$	165	28	%
NM Not Meaningful.

Overall

Pretax income increased $234 million, or 32%, for the three months ended June 30, 2022 compared to the prior year period. The following impacts were significant drivers of the period-over-period change in pretax income:

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 was a benefit of $305 million for the three months ended June 30, 2022 compared to an expense of $87 million for the prior year period.
A favorable impact from higher short-term interest rates.
An unfavorable impact from lower average equity markets for the three months ended June 30, 2022 compared to the prior year period.
The mean reversion related impact was an expense of $161 million for the three months ended June 30, 2022 compared to a benefit of $42 million for the prior year period.

Net Revenues

Management and financial advice fees increased $26 million, or 1%, for the three months ended June 30, 2022 compared to the prior year period reflecting revenue associated with the acquisition of the BMO Global Asset Management (EMEA) business and continued wrap account net inflows, partially offset by lower average equity markets and an unfavorable foreign exchange impact.

Distribution fees increased $6 million, or 1%, for the three months ended June 30, 2022 compared to the prior year period due to higher fees on off-balance sheet brokerage cash due to an increase in short-term interest rates, partially offset by decreased transactional activity and lower average equity markets.

Net investment income increased $9 million, or 3%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

Net realized investment losses of $15 million for the three months ended June 30, 2022 compared to net realized investment gains of $11 million for the prior year period. Net realized investment losses for three months ended June 30, 2022 were driven by the sale of specific Available-for-Sale securities and impairments on securities we intend to sell as we repositioned a portion of our fixed maturity bond portfolio in response to recent market conditions.

AMERIPRISE FINANCIAL, INC.

The favorable impact of rising interest rates on the investment portfolio yield.
The unfavorable impact of lower average invested assets due to the sale of investments to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction.

Other revenues increased $49 million, or 65%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

Expenses

Interest credited to fixed accounts increased $21 million, or 17%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

A $45 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The favorable impact of the nonperformance credit spread was $32 million for the three months ended June 30, 2022 compared to an unfavorable impact of $13 million for the prior year period.
A $73 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $23 million for the three months ended June 30, 2022 compared to a benefit of $50 million for the prior year period. The increase in expense was primarily due to an increase in the IUL embedded derivative in the current period, which reflected higher option costs due to a higher new money rate.

Benefits, claims, losses and settlement expenses decreased $322 million, or 80%, the three months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

A $67 million decrease in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The favorable impact of the nonperformance credit spread was $130 million for the three months ended June 30, 2022 primarily as a result of the nonperformance credit spread increasing compared to a favorable impact of $63 million for the prior year period. As the undiscounted embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread on benefits expenses is favorable (unfavorable). Additionally, as the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease.
A $348 million decrease 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 decrease was the result of a favorable $1.1 billion change in the market impact on variable annuity guaranteed living benefits reserves, partially offset by an unfavorable $800 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits. 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 benefit for the three months ended June 30, 2022 compared to an expense for the prior year period.
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 three months ended June 30, 2022 compared to the prior year period.
Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the three months ended June 30, 2022 compared to an expense for the prior year period.
Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net expense for the three months ended June 30, 2022 compared to a net benefit for the prior year period.
The mean reversion related impact was an expense of $90 million for the three months ended June 30, 2022 compared to a benefit of $25 million for the prior year period.

Amortization of DAC increased $89 million, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

The DAC offset to the market impact on non-traditional long-duration products was an expense of $26 million for the three months ended June 30, 2022 compared to an expense of $5 million for the prior year period.
The mean reversion related impact was an expense of $70 million for the three months ended June 30, 2022 compared to a benefit of $16 million for the prior year period.
A decrease in amortization reflecting lower than expected client exit rates.

General and administrative expense increased $64 million, or 8%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, and $14 million of integration related expenses, partially offset by a favorable change in the mark-to-market impact on share-based compensation.

AMERIPRISE FINANCIAL, INC.

Income Taxes

Our effective tax rate was 20.8% for the three months ended June 30, 2022 compared to 18.1% for the prior year period. The higher effective tax rate for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily the result of higher pretax income and a decrease in low income housing tax credits compared to the prior year period. See Note 15 to our Consolidated Financial Statements for additional discussion on income taxes.

Results of Operations by Segment for the Three Months Ended June 30, 2022 and 2021

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 18 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:


	Three Months Ended June 30,
2022			2021
(in millions)
Advice & Wealth Management
Net revenues	$	2,056		$	1,980
Expenses	1,564			1,557
Adjusted operating earnings	$	492		$	423
Asset Management
Net revenues	$	881		$	879
Expenses	659			626
Adjusted operating earnings	$	222		$	253
Retirement & Protection Solutions
Net revenues	$	760		$	808
Expenses	581			626
Adjusted operating earnings	$	179		$	182
Corporate & Other
Net revenues	$	119		$	119
Expenses	172			196
Adjusted operating loss	$	(53)		$	(77)

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the three months ended June 30:


	2022		2021
(in billions)
Beginning balance	$	447.0	$	399.8
Net flows	6.2		10.0
Market appreciation (depreciation) and other	(53.9)		20.2
Ending balance	$	399.3	$	430.0

Advisory wrap account assets ending balance (1)	$	395.1	$	425.2
Average advisory wrap account assets (2)	$	425.6	$	407.7

(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.

(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 three months ended June 30, 2022 and 2021.

Ending wrap account assets decreased $47.7 billion, or 11%, to $399.3 billion during the three months ended June 30, 2022 due to market depreciation of $53.9 billion, partially offset by net inflows of $6.2 billion. Average advisory wrap account assets increased $17.9 billion, or 4%, compared to the prior year period primarily reflecting net inflows, partially offset by market depreciation.

AMERIPRISE FINANCIAL, INC.

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


	Three Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	1,340	$	1,299	$	41	3	%
Distribution fees	542		562		(20)		(4)
Net investment income	120		63		57		90
Other revenues	57		58		(1)		(2)
Total revenues	2,059		1,982		77		4
Banking and deposit interest expense	3		2		1		50
Total net revenues	2,056		1,980		76		4
Expenses
Distribution expenses	1,185		1,194		(9)		(1)
Interest and debt expense	3		2		1		50
General and administrative expense	376		361		15		4
Total expenses	1,564		1,557		7		—
Adjusted operating earnings	$	492	$	423	$	69	16	%

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $69 million, or 16%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting higher average wrap account balances due to net inflows and a benefit from higher short-term interest rates. Pretax adjusted operating margin increased to 23.9% for the three months ended June 30, 2022 compared to 21.4% for the prior year period, reflecting the benefit of higher short-term interest rates. Client brokerage cash balances continued to increase to $47.4 billion given the market volatility.

Ameriprise Bank, FSB is continuing its deposit growth trend, with cash sweep balances increasing $6.8 billion from the prior year period to $15.5 billion and brokerage client pledged asset lines of credit increasing $251 million from the prior year period to $601 million as of June 30, 2022. Profitability at the bank increased compared to the prior year period reflecting deposit growth and increased interest rates.

Net Revenues

Management and financial advice fees increased $41 million, or 3%, for the three months ended June 30, 2022 compared to the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $17.9 billion, or 4%, compared to the prior year period reflecting net inflows, partially offset by market depreciation.

Distribution fees decreased $20 million, or 4%, for the three months ended June 30, 2022 compared to the prior year period reflecting decreased transactional activity, partially offset by higher fees on off-balance sheet brokerage cash due to an increase in short-term interest rates.

Net investment income, which excludes net realized investment gains or losses, increased $57 million, or 90%, for the three months ended June 30, 2022 compared to the prior year period primarily due to higher average invested assets due to increased bank deposits and the favorable impact of increasing short-term interest rates, including higher investment yields on the investment portfolio supporting the certificate products.

Expenses

Distribution expenses decreased $9 million, or 1%, for the three months ended June 30, 2022 compared to the prior year period reflecting decreased transactional activity, partially offset by higher asset-based advisor compensation from higher average wrap account assets.

General and administrative expense increased $15 million, or 4%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting higher volume related expenses.

AMERIPRISE FINANCIAL, INC.

Asset Management

The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds, including funds recently acquired through the BMO Global Asset Management (EMEA) acquisition, as of June 30, 2022:


Retail Fund Rankings in Top 2 Quartiles or Above Index Benchmark - Asset Weighted(1)	1 year	3 year	5 year	10 year
Equity	50%	76%	76%	89%
Fixed Income	35%	82%	73%	91%
Asset Allocation	53%	60%	72%	90%

4- or 5-star Morningstar rated funds(2)	Overall	3 year	5 year	10 year
Number of rated funds	144	107	93	106
Percent of rated assets	66%	56%	52%	63%

(1) Retail Fund performance rankings for each fund are measured on a consistent basis against the most appropriate peer group or index. Peer groupings of Columbia funds are defined by Lipper category and are based on the Primary Share Class (i.e. Institutional if available, otherwise Advisor or Instl3 share class), net of fees. Peer groupings of Threadneedle and legacy BMO funds are defined by either IA or Morningstar index, and are based on the highest-rated share class. Comparisons to Index are measured Gross of Fees.

To calculate asset weighted performance, the sum of the total assets of the funds with above median ranking are divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.

Aggregated Asset Allocation Funds may include funds that invest in other Columbia or Threadneedle branded mutual funds included in both equity and fixed income.

(2) Columbia funds are available for purchase by U.S. customers. Out of 104 Columbia funds rated (based on primary share class), 18 received a 5-star Overall Rating and 41 received a 4-star Overall Rating. Out of 92 Threadneedle funds rated (based on highest-rated share class), 13 received a 5-star Overall Rating and 39 received a 4-star Overall Rating. Out of 63 BMO funds rated (based on highest-rated share class), 6 received a 5-star Overall Rating and 27 received a 4-star Overall Rating. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Rating metrics.


The following table presents global managed assets by type:													Average (1)				Change
	As of June 30,						Change					Three Months Ended June 30,
2022			2021			2022			2021
	(in billions)
Equity	$	306.0		$	339.0		$	(33.0)		(10)	%		$	336.7	$	330.8	$	5.9	2	%
Fixed income	216.5			202.5			14.0			7			235.6		199.5		36.1		18
Money market	19.3			5.5			13.8			NM			16.5		5.8		10.7		NM
Alternative	38.4			23.3			15.1			65			39.4		23.1		16.3		71
Hybrid and other	18.0			23.1			(5.1)			(22)			19.5		22.6		(3.1)		(14)
Total managed assets (2)	$	598.2		$	593.4		$	4.8		1	%		$	647.7	$	581.8	$	65.9	11	%
NM Not Meaningful.

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

(2) In the fourth quarter of 2021, the definition of Alternative AUM was changed to now include real estate, CLOs, private equity, hedge funds (direct and fund of funds), infrastructure and commodities to better demonstrate our underlying business and the additional assets from the acquisition of the BMO Global Asset Management (EMEA) business. Prior periods have been restated to reflect this change.

AMERIPRISE FINANCIAL, INC.

The following table presents the changes in global managed assets:


	Three Months Ended June 30,
2022			2021
(in billions)
Global Retail Funds
Beginning assets	$	380.0		$	340.2
Inflows	15.5			19.4
Outflows	(23.8)			(17.1)
Net VP/VIT fund flows	(1.0)			(1.0)
Net new flows	(9.3)			1.3
Reinvested dividends	3.5			2.9
Net flows	(5.8)			4.2
Distributions	(3.8)			(3.3)

Market appreciation (depreciation) and other	(43.1)			18.1
Foreign currency translation (1)	(4.3)			0.3
Total ending assets	323.0			359.5

Global Institutional
Beginning assets	318.6			223.9
Inflows (2)	16.1			9.3
Outflows (2)	(13.4)			(6.8)
Net flows	2.7			2.5

Market appreciation (depreciation) and other (3)	(36.4)			7.1
Foreign currency translation (1)	(9.7)			0.4
Total ending assets	275.2			233.9
Total managed assets	$	598.2		$	593.4

Total net flows	$	(3.1)		$	6.7

Legacy insurance partners net flows (4)	$	(1.2)		$	(1.4)

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

(2) Global Institutional inflows and outflows include net flows from our RiverSource Structured Annuity product and Ameriprise Bank, FSB.

(3) Included in Market appreciation (depreciation) and other for Global Institutional is the change in affiliated general account balance, excluding net flows related to our structured variable annuity product and Ameriprise Bank, FSB.

(4) Legacy insurance partners assets and net flows are included in the rollforwards above.

Total segment AUM decreased $100.4 billion, or 14%, during the three months ended June 30, 2022 primarily due to equity market depreciation. Net outflows were $3.1 billion in the second quarter of 2022, a $9.8 billion decrease compared to the prior year period. Global retail net outflows were $5.8 billion. Global institutional net inflows were $2.7 billion and included $1.2 billion of outflows from legacy insurance partners assets.

AMERIPRISE FINANCIAL, INC.

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


	Three Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	777	$	758	$	19	3	%
Distribution fees	100		118		(18)		(15)
Net investment income	—		2		(2)		NM
Other revenues	4		1		3		NM
Total revenues	881		879		2		—
Banking and deposit interest expense	—		—		—		—
Total net revenues	881		879		2		—
Expenses
Distribution expenses	252		282		(30)		(11)
Amortization of deferred acquisition costs	3		3		—		—
Interest and debt expense	1		1		—		—
General and administrative expense	403		340		63		19
Total expenses	659		626		33		5
Adjusted operating earnings	$	222	$	253	$	(31)	(12)	%
NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $31 million, or 12%, for the three months ended June 30, 2022 compared to the prior year period primarily due to equity market depreciation and net outflows, partially offset by AUM from the acquisition of the BMO Global Asset Management (EMEA) business.

Net Revenues

Management and financial advice fees increased $19 million, or 3%, for the three months ended June 30, 2022 compared to the prior year period primarily due to the acquired BMO Global Asset Management (EMEA) business, partially offset by lower average equity markets, the cumulative impact from net outflows and the impact of foreign exchange rates.

Distribution fees decreased $18 million, or 15%, for the three months ended June 30, 2022 compared to the prior year period reflecting lower average equity markets and the cumulative impact from net outflows.

Expenses

Distribution expenses decreased $30 million, or 11%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting lower average equity markets and the cumulative impact from net outflows.

General and administrative expense increased $63 million, or 19%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, partially offset by the cumulative impact from net outflows and the impact of foreign exchange rates.

AMERIPRISE FINANCIAL, INC.

Retirement & Protection Solutions

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


	Three Months Ended June 30,					Change
2022			2021
(in millions)
Revenues
Management and financial advice fees	$	197		$	234	$	(37)	(16)	%
Distribution fees	106			122		(16)		(13)
Net investment income	124			127		(3)		(2)
Premiums, policy and contract charges	329			325		4		1
Other revenues	4			—		4		—
Total revenues	760			808		(48)		(6)
Banking and deposit interest expense	—			—		—		—
Total net revenues	760			808		(48)		(6)
Expenses
Distribution expenses	115			134		(19)		(14)
Interest credited to fixed accounts	96			98		(2)		(2)
Benefits, claims, losses and settlement expenses	233			241		(8)		(3)
Amortization of deferred acquisition costs	54			70		(16)		(23)
Interest and debt expense	9			9		—		—
General and administrative expense	74			74		—		—
Total expenses	581			626		(45)		(7)
Adjusted operating earnings	$	179		$	182	$	(3)	(2)	%

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 amortization and the reinsurance accrual), mean reversion related impacts, and block transfer reinsurance transaction impacts decreased $3 million, or 2%, for the three months ended June 30, 2022 compared to prior year period.

Variable annuity account balances decreased 16% to $75.7 billion as of June 30, 2022 compared to the prior year period due to market depreciation and net outflows of $2.0 billion. Variable annuity sales decreased 29% compared to the prior year period reflecting a decrease in sales of variable annuities with living benefit guarantees. The risk profile of our in force block continues to improve, with account values with living benefit riders down to 59% as of June 30, 2022 compared to 62% a year ago. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

We continue to optimize our risk profile and shift our business mix to lower risk offerings. During the fourth quarter of 2021, we made the decision to discontinue new sales of substantially all of our variable annuities with living benefit guarantees at the end of 2021, and have fully stopped issuing new contracts as of June 30, 2022. In addition, we discontinued new sales of our universal life insurance with secondary guarantees and our single-pay fixed universal life with a long term care rider products at the end of 2021.

Net Revenues

Management and financial advice fees decreased $37 million, or 16%, for the three months ended June 30, 2022 compared to the prior year period primarily due to lower average equity markets and the cumulative impact from net outflows.

Distribution fees decreased $16 million, or 13%, for the three months ended June 30, 2022 compared to the prior year period reflecting lower average equity markets and the cumulative impact from net outflows.

Expenses

Distribution expenses decreased $19 million, or 14%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting decreased variable annuity sales.

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, decreased $16 million, or 23%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting lower than expected client exit rates.

AMERIPRISE FINANCIAL, INC.

Corporate & Other

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


	Three Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues


Net investment income	$	39	$	79	$	(40)	(51)	%
Premiums, policy and contract charges	24		25		(1)		(4)
Other revenues	56		16		40		NM
Total revenues	119		120		(1)		(1)
Banking and deposit interest expense	—		1		(1)		NM
Total net revenues	119		119		—		—
Expenses
Distribution expenses	(3)		(2)		(1)		(50)
Interest credited to fixed accounts	60		62		(2)		(3)
Benefits, claims, losses and settlement expenses	59		54		5		9
Amortization of deferred acquisition costs	—		2		(2)		NM
Interest and debt expense	15		17		(2)		(12)
General and administrative expense	41		63		(22)		(35)
Total expenses	172		196		(24)		(12)
Adjusted operating loss	$	(53)	$	(77)	$	24	31	%
NM Not Meaningful.

Our Corporate & Other segment includes our closed blocks of LTC insurance and fixed annuity and fixed indexed annuity (“FA”) business.

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 and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, 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 decreased $24 million, for the three months ended June 30, 2022 compared to the prior year period.

LTC insurance had a pretax adjusted operating loss of $1 million for the three months ended June 30, 2022 compared to pretax adjusted operating earnings of $3 million for the prior year period.

FA business had a pretax adjusted operating loss of $4 million for the three months ended June 30, 2022 compared to a pretax adjusted operating loss of $6 million. Fixed deferred annuity account balances declined 5% to $7.4 billion as of June 30, 2022 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities. During the third quarter of 2021, we closed on a transaction to reinsure RiverSource Life’s fixed deferred and immediate annuity policies.

Net Revenues

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, integration and restructuring charges, and the impact of consolidating CIEs, decreased $40 million, or 51%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting lower average invested assets due to the sale of investments to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction and a $7 million impairment in our affordable housing partnerships in the prior year period.

Other revenues increased $40 million to $56 million for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

AMERIPRISE FINANCIAL, INC.

Expenses

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, increased $5 million, or 9%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting more normalized claims on LTC insurance, which benefited from COVID-19 related impacts in the prior year period.

General and administrative expense decreased $22 million, or 35%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting the favorable mark-to-market impact on share-based compensation expense.

Consolidated Results of Operations for the Six Months Ended June 30, 2022 and 2021

The following table presents our consolidated results of operations:


	Six Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	4,736	$	4,353	$	383	9	%
Distribution fees	904		910		(6)		(1)
Net investment income	548		655		(107)		(16)
Premiums, policy and contract charges	733		711		22		3
Other revenues	247		146		101		69
Total revenues	7,168		6,775		393		6
Banking and deposit interest expense	5		7		(2)		(29)
Total net revenues	7,163		6,768		395		6
Expenses
Distribution expenses	2,533		2,408		125		5
Interest credited to fixed accounts	286		283		3		1
Benefits, claims, losses and settlement expenses	293		1,057		(764)		(72)
Amortization of deferred acquisition costs	248		68		180		NM
Interest and debt expense	84		85		(1)		(1)
General and administrative expense	1,841		1,653		188		11
Total expenses	5,285		5,554		(269)		(5)
Pretax income	1,878		1,214		664		55
Income tax provision	361		186		175		94
Net income	$	1,517	$	1,028	$	489	48	%
NM Not Meaningful.

Overall

Pretax income increased $664 million, or 55%, for the six months ended June 30, 2022 compared to the prior year period.

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 a benefit of $439 million for the six months ended June 30, 2022 compared to an expense of $483 million for the prior year period.
A $20 million favorable impact of higher asset management net performance fees.
The mean reversion related impact was an expense of $220 million for the six months ended June 30, 2022 compared to a benefit of $98 million for the prior year period.

Net Revenues

Management and financial advice fees increased $383 million, or 9%, for the six months ended June 30, 2022 compared to the prior year period reflecting revenue associated with the acquisition of the BMO Global Asset Management (EMEA) business and continued wrap account net inflows, and an increase in performance fees of $55 million.

Distribution fees decreased $6 million, or 1%, for the six months ended June 30, 2022 compared to the prior year period due to lower transactional activity, partially offset by higher fees on off-balance sheet brokerage cash primarily due to an increase in short-term interest rates.

AMERIPRISE FINANCIAL, INC.

Net investment income decreased $107 million, or 16%, for the six months ended June 30, 2022 compared the prior year period primarily reflecting:

Net realized investment gains of $5 million for the six months ended June 30, 2022 compared to net realized investment gains of $65 million for the prior year period. Net realized investment gains for the six months ended June 30, 2021 included a $15 million gain on strategic investment.
The unfavorable impact of lower average invested assets due to the sale of investments as a result of the fixed deferred and immediate annuity reinsurance transaction.
The favorable impact of increased bank deposits and rising short-term interest rates.

Other revenues increased $101 million, or 69%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

Expenses

Distribution expenses increased $125 million, or 5%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting higher advisor compensation due to an increase in average wrap account balances.

Interest credited to fixed accounts increased $3 million, or 1%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

A $74 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The favorable impact of the nonperformance credit spread was $60 million for the six months ended June 30, 2022 compared to an unfavorable impact of $14 million for the prior year period.
An $87 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $35 million for the six months ended June 30, 2022 compared to a benefit of $52 million for the prior year period. The increase in expense was primarily due to an increase in the IUL embedded derivative in the current period, which reflected higher option costs due to a higher new money rate.

Benefits, claims, losses and settlement expenses decreased $764 million, or 72%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

A $274 million decrease in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The favorable impact of the nonperformance credit spread was $112 million for the six months ended June 30, 2022 primarily as a result of the nonperformance credit spread increasing compared to an unfavorable impact of $162 million for the prior year period. As the undiscounted 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. Additionally, as the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease.
A $687 million decrease 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 decrease was the result of a favorable $489 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits and a favorable $198 million change in the market impact on variable annuity guaranteed living benefits reserves. 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 benefit for the six months ended June 30, 2022 compared to an expense in the prior year period.
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 six months ended June 30, 2022 compared to the prior year period.
Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the six months ended June 30, 2022 compared to an expense in the prior year period.
Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net expense for the six months ended June 30, 2022 compared to a net benefit for the prior year period.
The mean reversion related impact was an expense of $124 million for the six months ended June 30, 2022 compared to a benefit of $59 million for the prior year period.
A $46 million increase in expense on LTC insurance as claims returned to more normalized levels compared to the prior year period which benefited from COVID-19 related impacts.

Amortization of DAC increased $180 million, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the following items:

The DAC offset to the market impact on non-traditional long-duration products was an expense of $37 million for the six months ended June 30, 2022 compared to a benefit of $40 million for the prior year period.

AMERIPRISE FINANCIAL, INC.

The mean reversion related impact was an expense of $95 million for the six months ended June 30, 2022 compared to a benefit of $38 million for the prior year period.
A decrease in amortization reflecting lower than expected client exit rates.

General and administrative expense increased $188 million, or 11%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, and $24 million of integration related expenses, partially offset by a favorable change in the mark-to-market impact on share-based compensation.

Income Taxes

Our effective tax rate was 19.2% for the six months ended June 30, 2022 compared to 15.4% for the prior year period. The higher effective tax rate for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily the result of higher pretax income, a decrease in low income housing tax credits and an increase in state income taxes, net of federal benefit, compared to the prior year period. See Note 15 to our Consolidated Financial Statements for additional discussion on income taxes.

Results of Operations by Segment for the Six Months Ended June 30, 2022 and 2021

The following table presents summary financial information by segment:


	Six Months Ended June 30,
2022			2021
(in millions)
Advice & Wealth Management
Net revenues	$	4,098		$	3,859
Expenses	3,166			3,047
Adjusted operating earnings	$	932		$	812
Asset Management
Net revenues	$	1,898		$	1,707
Expenses	1,391			1,226
Adjusted operating earnings	$	507		$	481
Retirement & Protection Solutions
Net revenues	$	1,532		$	1,595
Expenses	1,162			1,230
Adjusted operating earnings	$	370		$	365
Corporate & Other
Net revenues	$	235		$	258
Expenses	364			356
Adjusted operating loss	$	(129)		$	(98)

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the six months ended June 30:


	2022		2021
(in billions)
Beginning balance	$	464.7	$	380.0
Net flows (1)	14.8		20.4
Market appreciation (depreciation) and other (1)	(80.2)		29.6
Ending balance	$	399.3	$	430.0

Advisory wrap account assets ending balance (2)	$	395.1	$	425.2
Average advisory wrap account assets (3)	$	435.7	$	393.5

(1) Beginning in the first quarter of 2021, wrap net flows is calculated including dividends and interest less fees which were previously recorded in Market appreciation (depreciation) and other. Net flows excludes short-term and long-term capital gain distributions. Prior periods have been restated.

(2) 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.

AMERIPRISE FINANCIAL, INC.

(3) 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 six months ended June 30, 2022 and 2021.

Ending wrap account assets decreased $65.4 billion, or 14%, to $399.3 billion during the six months ended June 30, 2022 due to market depreciation and other of $80.2 billion, partially offset by net inflows of $14.8 billion. Average advisory wrap account assets increased $42.2 billion, or 11%, compared to the prior year period primarily reflecting net inflows, partially offset by market depreciation.

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


	Six Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	2,720	$	2,504	$	216	9	%
Distribution fees	1,071		1,121		(50)		(4)
Net investment income	198		127		71		56
Other revenues	114		114		—		—
Total revenues	4,103		3,866		237		6
Banking and deposit interest expense	5		7		(2)		(29)
Total net revenues	4,098		3,859		239		6
Expenses
Distribution expenses	2,417		2,329		88		4

Interest and debt expense	5		5		—		—
General and administrative expense	744		713		31		4
Total expenses	3,166		3,047		119		4
Adjusted operating earnings	$	932	$	812	$	120	15	%

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $120 million, or 15%, for the six months ended June 30, 2022 compared to the prior year period due to higher average wrap account balances and higher earnings on brokerage cash as a result of increasing short-term interest rates. Pretax adjusted operating margin was 22.7% for the for the six months ended June 30, 2022 compared to 21.0% for the prior year period.

Net Revenues

Management and financial advice fees increased $216 million, or 9%, for the six months ended June 30, 2022 compared to the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $42.2 billion, or 11%, compared to the prior year period primarily reflecting net inflows.

Distribution fees decreased $50 million, or 4%, for the six months ended June 30, 2022 compared to the prior year period reflecting decreased transactional activity, partially offset by higher fees on off-balance sheet brokerage cash due to an increase in short-term interest rates.

Net investment income, which excludes net realized investment gains or losses, increased $71 million, or 56%, for the six months ended June 30, 2022 compared to the prior year period primarily due to higher average invested assets due to increased bank deposits and the favorable impact of increased short-term interest rates.

Expenses

Distribution expenses increased $88 million, or 4%, for the six months ended June 30, 2022 compared to the prior year period reflecting higher asset-based advisor compensation from higher average wrap account assets and increased investments in recruiting experienced advisors, partially offset by decreased transactional activity.

General and administrative expense increased $31 million, or 4%, for the six months ended June 30, 2022 compared to the prior year period primarily due to higher volume related expenses and investments for business growth.

AMERIPRISE FINANCIAL, INC.

Asset Management


The following table presents global managed assets by type:													Average (1)				Change
	As of June 30,						Change					Six Months Ended June 30,
2022			2021			2022			2021
	(in billions)
Equity	$	306.0		$	339.0		$	(33.0)		(10)	%		$	357.0	$	319.8	$	37.2	12	%
Fixed income	216.5			202.5			14.0			7			250.6		197.8		52.8		27
Money market	19.3			5.5			13.8			NM			14.3		5.9		8.4		NM
Alternative	38.4			23.3			15.1			65			39.6		22.9		16.7		73
Hybrid and other	18.0			23.1			(5.1)			(22)			20.9		21.8		(0.9)		(4)
Total managed assets (2)	$	598.2		$	593.4		$	4.8		1	%		$	682.4	$	568.2	$	114.2	20	%

(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 table presents the changes in global managed assets:


	Six Months Ended June 30,
	2022		2021
	(in billions)
Global Retail Funds (1)
Beginning assets	$	409.4	$	323.5
Inflows	37.3		41.9
Outflows	(47.0)		(34.7)
Net VP/VIT fund flows	(2.1)		(2.0)
Net new flows (2)	(11.8)		5.2
Reinvested dividends	4.1		3.6
Net flows	(7.7)		8.8
Distributions	(4.6)		(4.2)
Market appreciation (depreciation) and other	(68.9)		31.3
Foreign currency translation (3)	(5.2)		0.1
Total ending assets	323.0		359.5

Global Institutional (1)
Beginning assets	344.7		223.1
Inflows (4)	28.8		17.1
Outflows (4)	(24.9)		(14.3)
Net flows	3.9		2.8
Market appreciation (depreciation) and other (5)	(58.1)		7.3
Foreign currency translation (3)	(15.3)		0.7
Total ending assets	275.2		233.9

Total managed assets	$	598.2	$	593.4
Total net flows	$	(3.8)	$	11.6

Legacy insurance partners net flows (6)	$	(1.9)	$	(2.6)

(1) The beginning balances as of January 1, 2022 for Global Retail Funds and Global Institutional were corrected by $8.9 billion due to a reclassification of assets. Total AUM as of January 1, 2022 remained unchanged.

(2) First quarter 2022 net flows included $2.5 billion of retail and $0.1 billion of institutional net flows from the US asset transfer in connection with our acquisition of the BMO Global Asset Management (EMEA) business.

AMERIPRISE FINANCIAL, INC.

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

(4) Global Institutional inflows and outflows include net flows from our RiverSource Structured Annuity product and Ameriprise Bank, FSB.

(5) Included in Market appreciation (depreciation) and other for Global Institutional is the change in affiliated general account balance, excluding net flows related to our structured variable annuity product and Ameriprise Bank, FSB.

(6) Legacy insurance partners assets and net flows are included in the rollforwards above.

Total segment AUM decreased $155.9 billion, or 21%, during the six months ended June 30, 2022 primarily due to equity market depreciation. Net outflows were $3.8 billion for the six months ended June 30, 2022, a decrease of $15.4 billion compared to the prior year period.

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


	Six Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	1,675	$	1,471	$	204	14	%
Distribution fees	211		232		(21)		(9)
Net investment income	4		3		1		33
Other revenues	8		1		7		NM
Total revenues	1,898		1,707		191		11
Banking and deposit interest expense	—		—		—		—
Total net revenues	1,898		1,707		191		11
Expenses
Distribution expenses	529		550		(21)		(4)
Amortization of deferred acquisition costs	6		6		—		—
Interest and debt expense	2		2		—		—
General and administrative expense	854		668		186		28
Total expenses	1,391		1,226		165		13
Adjusted operating earnings	$	507	$	481	$	26	5	%
NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $26 million, or 5%, for the six months ended June 30, 2022 compared to the prior year period primarily due to market appreciation and disciplined expense management.

Net Revenues

Management and financial advice fees increased $204 million, or 14%, for the six months ended June 30, 2022 compared to the prior year period primarily due to the acquired BMO Global Asset Management (EMEA) business and an increase in performance fees of $55 million, partially offset by the cumulative impact from net outflows and the impact of foreign exchange rates.

Distribution fees decreased $21 million, or 9%, for the six months ended June 30, 2022 compared to the prior year period primarily due to the cumulative impact from net outflows.

Other revenues increased $7 million for the six months ended June 30, 2022 compared to the prior year period primarily due to the acquired BMO Global Asset Management (EMEA) business.

Expenses

Distribution expenses decreased $21 million, or 4%, for the six months ended June 30, 2022 compared to the prior year period primarily due to the cumulative impact from net outflows.

General and administrative expense increased $186 million, or 28%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business and higher performance fee related compensation, partially offset by the cumulative impact from net outflows and the impact of foreign exchange rates.

AMERIPRISE FINANCIAL, INC.

Retirement & Protection Solutions

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


	Six Months Ended June 30,					Change
2022			2021
(in millions)
Revenues
Management and financial advice fees	$	415		$	456	$	(41)	(9)	%
Distribution fees	218			238		(20)		(8)
Net investment income	238			253		(15)		(6)
Premiums, policy and contract charges	654			648		6		1
Other revenues	7			—		7		—
Total revenues	1,532			1,595		(63)		(4)
Banking and deposit interest expense	—			—		—		—
Total net revenues	1,532			1,595		(63)		(4)
Expenses
Distribution expenses	234			263		(29)		(11)
Interest credited to fixed accounts	192			194		(2)		(1)
Benefits, claims, losses and settlement expenses	463			475		(12)		(3)
Amortization of deferred acquisition costs	107			133		(26)		(20)
Interest and debt expense	18			19		(1)		(5)
General and administrative expense	148			146		2		1
Total expenses	1,162			1,230		(68)		(6)
Adjusted operating earnings	$	370		$	365	$	5	1	%

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual), mean reversion related impacts, and block transfer reinsurance transaction impacts increased $5 million, or 1%, for the six months ended June 30, 2022 compared to the prior year period.

Net Revenues

Management and financial advice fees decreased $41 million, or 9%, for the six months ended June 30, 2022 compared to the prior year period primarily due to variable annuity net outflows and market depreciation.

Distribution fees decreased $20 million, or 8%, for the six months ended June 30, 2022 compared to the prior year period due to market depreciation.

Expenses

Distribution expenses decreased $29 million, or 11%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting lower variable annuity sales and market depreciation.

Amortization of DAC, which excludes mean reversion related impacts and the DAC offset to the market impact on variable annuity guaranteed benefits, decreased $26 million, or 20%, for the six months ended June 30, 2022 compared to the prior year period reflecting lower than expected client exit rates.

AMERIPRISE FINANCIAL, INC.

Corporate & Other

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


	Six Months Ended June 30,				Change
	2022		2021
	(in millions)
Revenues


Net investment income	$	72	$	179	$	(107)	(60)	%
Premiums, policy and contract charges	48		49		(1)		(2)
Other revenues	115		31		84		NM
Total revenues	235		259		(24)		(9)
Banking and deposit interest expense	—		1		(1)		NM
Total net revenues	235		258		(23)		(9)
Expenses
Distribution expenses	(4)		(4)		—		—
Interest credited to fixed accounts	121		123		(2)		(2)
Benefits, claims, losses and settlement expenses	113		67		46		69
Amortization of deferred acquisition costs	3		6		(3)		(50)
Interest and debt expense	31		32		(1)		(3)
General and administrative expense	100		132		(32)		(24)
Total expenses	364		356		8		2
Adjusted operating loss	$	(129)	$	(98)	$	(31)	(32)	%
NM Not Meaningful.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impact, 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 $31 million, or 32%, for the six months ended June 30, 2022 compared to the prior year period.

LTC insurance had a pretax adjusted operating earnings of nil for the six months ended June 30, 2022 compared to a pretax adjusted operating earnings of $49 million for the prior year period primarily reflecting the return to more normalized results compared to the COVID-19 related impacts in the prior year period.

FA business had a pretax adjusted operating loss of $9 million for the six months ended June 30, 2022 compared to a pretax adjusted operating loss of $10 million for the prior year period.

Net Revenues

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $107 million, or 60%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting lower average invested assets due to the sale of investments to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction and a $15 million gain on a strategic investment in the prior year period.

Other revenues increased $84 million for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

Expenses

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, increased $46 million, or 69%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting more normalized claims on LTC insurance, which benefited from COVID-19 related impacts in the prior year period.

General and administrative expense, which excludes integration and restructuring charges, decreased $32 million, or 24%, for the six months ended June 30, 2022 compared to the prior year period primarily reflecting the favorable mark-to-market impact on share-based compensation expense.

AMERIPRISE FINANCIAL, INC.

Market Risk

Our primary market risk exposures are interest rate, equity price, foreign currency exchange rate and credit risk. Equity price 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 spread income generated on our fixed insurance, brokerage client cash balances, banking deposits, face-amount certificate products, fixed portion of our variable annuities and variable insurance contracts, the value of DAC and DSIC assets, the value of liabilities for guaranteed benefits associated with our variable annuities and the value of derivatives held to hedge these benefits.

Our earnings from fixed insurance, the fixed portion of variable annuities and variable insurance contracts, and fixed deferred annuities are based upon the spread between rates earned on assets held and the rates at which interest is credited to accounts. We primarily invest in fixed rate securities to fund the rate credited to clients. We guarantee an interest rate to the holders of these products. Investment assets and client liabilities generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments. Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income. While interest rates under the current environment have relieved some pressure from the liability guaranteed minimum interest rates (“GMIRs”), there are still some GMIRs above current levels. Hence, liability credited rates will move more slowly under a modest rise in interest rates while projected asset purchases would capture the full increase in interest rates. This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business.

As a result of the current market environment, reinvestment yields are becoming more aligned with the current portfolio yield. We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods under the current environment. The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through June 30, 2024 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $2.6 billion and 2.5%, respectively, as of June 30, 2022. In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $13.3 billion and had a weighted average yield of 2.5% as of June 30, 2022. While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields. In addition to the interest rate environment, the mix of benefit payments versus product sales as well as the timing and volumes associated with such mix may impact our investment yield. Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion. The average yield for investment purchases during the six months ended June 30, 2022 was approximately 3.3%.

The reinvestment of proceeds from maturities, calls and prepayments at rates below the current portfolio yield, which may be below the level of some liability GMIRs, will have a negative impact to future operating results. To mitigate the unfavorable impact that a low interest rate environment could have on our spread income, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework. In addition, we may reduce the crediting rates on our fixed products when warranted, subject to guaranteed minimums.

In addition to the fixed rate exposures noted above, RiverSource Life has the following variable annuity guarantee benefits: guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying invested assets.

The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the liabilities. This approach works with the premise that matched sensitivities will produce a highly effective hedging result. Our comprehensive hedging program focuses mainly on first order sensitivities of assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho) and Volatility (Vega). Additionally, various second order sensitivities are managed. We use various options, swaptions, swaps and futures to manage risk exposures. The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary.

We have a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on our statutory surplus and to cover some of the residual risks not covered by other hedging activities. We assess the residual risk under a range of scenarios in creating and executing the macro hedge program. As a means of economically hedging these risks, we may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts. The macro hedge program could result in additional earnings volatility as changes in the value of the macro hedge derivatives, which are designed to reduce statutory capital volatility, may not be closely aligned to changes in the variable annuity guarantee embedded derivatives.

To evaluate interest rate and equity price risk we perform sensitivity testing which measures the impact on pretax income from the sources listed below for a 12-month period following a hypothetical 100 basis point increase in interest rates or a hypothetical 10%

AMERIPRISE FINANCIAL, INC.

decline in equity prices. The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedge assets, we assume no change in implied market volatility despite the 10% drop in equity prices.

The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of June 30, 2022:


Equity Price Decline 10%	Equity Price Exposure to Pretax Income
Before Hedge Impact	Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(287)	$	3	$	(284)
DAC and DSIC amortization (2)(3)	(40)		—		(40)
Variable annuities:
GMDB and GMIB (3)	(19)		—		(19)
GMWB (3)	(593)		585		(8)
GMAB	(37)		37		—
Structured variable annuities	399		(370)		29
DAC and DSIC amortization (4)	N/A		N/A		(3)
Total variable annuities	(250)		252		(1)
Macro hedge program (5)	—		117		117


IUL insurance	19		(22)		(3)
Total	$	(558)	$	350	$	(211)	(6)
N/A Not Applicable.


Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
Before Hedge Impact	Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(54)	$	—	$	(54)
Variable annuities:

GMWB	867		(1,072)		(205)
GMAB	6		(8)		(2)
Structured variable annuities	(33)		131		98
DAC and DSIC amortization (4)	N/A		N/A		13
Total variable annuities	840		(949)		(96)
Macro hedge program (5)	—		(148)		(148)
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	43		—		43
Banking deposits	31		—		31
Brokerage client cash balances	199		—		199

Certificates	14		—		14
IUL insurance	16		2		18
Total	$	1,089	$	(1,095)	$	7
N/A Not Applicable.

(1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.

(2) Market impact on DAC and DSIC amortization resulting from lower projected profits.

(3) In estimating the impact to pretax income on DAC and DSIC amortization and additional insurance benefit reserves, our assumed equity asset growth rates reflect what management would follow in its mean reversion guidelines.

(4) Market impact on DAC and DSIC amortization related to variable annuities is modeled net of hedge impact.

(5) The market impact of the macro hedge program is modeled net of any related impact to DAC and DSIC amortization.

(6) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is approximately $(284) million.

The above results compare to an estimated negative net impact to pretax income of $190 million related to a 10% equity price decline and an estimated positive net impact to pretax income of $80 million related to a 100 basis point increase in interest rates as of

AMERIPRISE FINANCIAL, INC.

December 31, 2021. The change in interest rate exposure as of June 30, 2022 compared to December 31, 2021 was driven by additional downside rate protection added in the macro hedge program.

Net impacts shown in the above table from GMWB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions and with discount rates increased to reflect a current market estimate of our risk of nonperformance specific to these liabilities. Our hedging is based on our determination of economic risk, which excludes certain items in the liability valuation including the nonperformance spread risk.

Actual results will differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve. Furthermore, we have not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in these scenarios.

The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events. Impacts of larger or smaller changes in interest rates or equity prices may not be proportional to those shown for a 100 basis point increase in interest rates or a 10% decline in equity prices.

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 11 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 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 current 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 June 30, 2022. 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 $577 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on June 30, 2022 credit spreads.

Liquidity and Capital Resources

Overview

We maintained substantial liquidity during the six months ended June 30, 2022. At June 30, 2022 and December 31, 2021, we had $7.5 billion and $7.1 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.

At June 30, 2022 and December 31, 2021, the parent company had $759 million and $841 million, 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 $729 million and an unsecured revolving committed credit facility for up to $1.0 billion that expires in June 2026. Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of June 30, 2022 was $1.9 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 $1.25 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At June 30, 2022, we had no outstanding borrowings under this credit facility and had $1 million of letters of credit issued against the facility. Our credit facility contains various administrative, reporting, legal and financial covenants. We remain in compliance with all such covenants at June 30, 2022.

AMERIPRISE FINANCIAL, INC.

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. As of June 30, 2022 and December 31, 2021, we had $9.0 billion and $8.1 billion, respectively, under the FHLB facilities, of which $200 million was outstanding as of both June 30, 2022 and December 31, 2021, and is collateralized with commercial mortgage backed securities and residential mortgage backed securities.

There have been no material changes to our contractual obligations disclosed in our 2021 10-K.

We repaid $500 million principal amount of our 3.0% senior notes at maturity on March 22, 2022. We issued $500 million of 4.5% unsecured senior notes on May 13, 2022. See Note 10 to our Consolidated Financial Statements for further information about our long-term debt maturities.

We believe cash flows from operating activities, available cash balances, our availability of revolver borrowings and dividends from our subsidiaries will be sufficient to fund our short-term and long-term operating liquidity needs and stress requirements.

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 six months ended June 30, 2022.

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, LLC, 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, TAM UK International Holdings Ltd, which includes Threadneedle Asset Management Holdings Sàrl and Ameriprise International Holdings GmbH within its organizational structure, and Columbia Threadneedle Investments UK International Ltd. 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
	June 30, 2022		December 31, 2021		June 30, 2022			December 31, 2021
	(in millions)
RiverSource Life (1)(2)	$	3,085	$	3,419		N/A			$	502
RiverSource Life of NY (1)(2)	210		310			N/A			42
ACC (4)(5)	303		304			$	282		283
TAM UK International Holdings Ltd (6)	476		330			241			248

Ameriprise Bank, FSB (4) (7)	1,181		853			769			589
AFS (3)(4)	162		103			#			#
Ameriprise Captive Insurance Company (3)	37		39			12			10
Ameriprise Trust Company (3)	50		47			37			44
AEIS (3)(4)	168		155			31			29
RiverSource Distributors, Inc. (3)(4)	11		10			#			#
Columbia Management Investment Distributors, Inc. (3)(4)	18		14			#			#
Columbia Threadneedle Investments UK International Ltd. (8)	315		348			153			170

N/A Not applicable as only required to be calculated annually.

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 June 30, 2022 and December 31, 2021.

(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.

AMERIPRISE FINANCIAL, INC.

(6) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation.

(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”).

(8) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation.

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 six months ended June 30, 2022, the parent holding company received cash dividends or a return of capital from its subsidiaries of $1.4 billion (including $500 million from RiverSource Life) and contributed cash to its subsidiaries of $294 million (including $245 million to Ameriprise Bank, FSB). During the six months ended June 30, 2021, the parent holding company received cash dividends or a return of capital from its subsidiaries of $1.6 billion (including $750 million from RiverSource Life) and contributed cash to its subsidiaries of $71 million (including $7 million to Ameriprise Bank, FSB).

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 was 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 $275 million and $263 million for the six months ended June 30, 2022 and 2021, respectively. On July 26, 2022, we announced a quarterly dividend of $1.25 per common share. The dividend will be paid on August 19, 2022 to our shareholders of record at the close of business on August 8, 2022.

In August 2020, the Company’s Board of Directors authorized us to repurchase up to $2.5 billion of our common stock through September 30, 2022, which was exhausted in the second quarter of 2022. In January 2022, the Company’s Board of Directors authorized an additional $3.0 billion for the repurchase of the Company’s common stock through March 31, 2024. As of June 30, 2022, we had $2.5 billion remaining under the 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 six months ended June 30, 2022, we repurchased a total of 3.2 million shares of our common stock at an average price of $279.74 per share.

Cash Flows

Cash flows of CIEs and restricted and segregated cash and cash equivalents 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 and cash equivalents 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 $887 million to $1.8 billion for the six months ended June 30, 2022 compared to $931 million for the prior year period primarily reflecting a $489 million increase in net income, a $327 million increase in current income tax, net and a $318 million increase in deferred taxes, net, partially offset by a $224 million decrease in policyholder account balances, future policy benefits and claims, net.

Investing Activities

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

AMERIPRISE FINANCIAL, INC.

Net cash used in investing activities increased $3.7 billion to $4.6 billion for the six months ended June 30, 2022 compared to $909 million for the prior year period primarily reflecting a $2.7 billion increase in cash used for purchases of Available-for-Sale securities and a $1.7 billion decrease in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities, partially offset by a $567 million decrease in net cash flows used related to investments of consolidated investment entities.

Financing Activities

Net cash provided by financing activities increased $2.7 billion to $2.6 billion for the six months ended June 30, 2022 compared to net cash used in financing activities of $101 million for the prior year period primarily reflecting a $2.8 billion increase in banking deposits, a $995 million reduction in net cash outflows from investment certificates and $491 million increase in issuance of long-term debt, partially offset by a $1.4 billion decrease in borrowings by CIEs and a $501 million increase in repayments of long-term debt.

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 about the expected trend in the shift to lower-risk products, including the exit from variable annuities with living benefit riders and the discontinuance of new sales of universal life insurance with secondary guarantees;
statements about the outcomes from the application to convert Ameriprise Bank, FSB to a state-chartered bank and national trust bank or the anticipated deposit growth or impacts from possible future interest rate increases;
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”, “appear”, “expand” 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 our larger competitors’ economies of scale;
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;
direct or indirect effects of or responses to climate change;
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;

AMERIPRISE FINANCIAL, INC.

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;
risks in acquisition transactions, such as the integration of the BMO Global Asset Management (EMEA) business, or other potential strategic acquisitions or divestitures;
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;
protection of our intellectual property and claims we infringe the intellectual property of others; and
changes in and the adoption of new accounting standards.

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. The foregoing list of factors should be read in conjunction with the “Risk Factors” discussion included in Part I, Item 1A of our 2021 10-K.

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.

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