Overview

RiverSource Life Insurance coverage Firm and its subsidiaries are referred to
collectively on this Type 10-Ok because the “Firm.” The next dialogue and
administration’s narrative evaluation of the monetary situation and outcomes of
operations ought to be learn along side the “Ahead-Wanting Statements,”
“Merchandise 1A – Threat Elements” and the Consolidated Monetary Statements and Notes.

The Consolidated Monetary Statements are ready in accordance with U.S.
typically accepted accounting rules (“GAAP”). Administration’s narrative
evaluation is offered pursuant to Common Directions I(2) (a) of Type 10-Ok in
lieu of Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes
of Operations.

The COVID-19 pandemic has offered ongoing vital financial and societal
disruption and market unpredictability, which has affected the Firm’s
enterprise and working surroundings pushed by a low rate of interest surroundings and
volatility and adjustments within the fairness markets and the potential related
implications to shopper conduct. COVID-19 continues its ongoing impression and has
been occurring in a number of waves, so there are nonetheless no dependable estimates of
how lengthy the implications from the pandemic will final, the consequences present and
different new variants will finally have, how many individuals are more likely to be
affected by it, or its impression on the general financial system. There’s nonetheless vital
uncertainty across the extent to which the COVID-19 pandemic will proceed to
impression the Firm’s enterprise, outcomes of operations, and monetary situation,
which is dependent upon present and future developments, together with the final word scope,
period and severity of the pandemic, success of worldwide vaccination efforts,
a number of mutations of COVID-19 or comparable illnesses, the effectiveness of the
Firm’s workplace reopenings, the extra measures which may be taken by
numerous governmental authorities in response to the outbreak, the actions of
third events in response to the pandemic, and the attainable additional impacts on
the worldwide financial system. Given the continuing impression of the pandemic, monetary outcomes
might not be corresponding to earlier years and the outcomes offered on this report
might not essentially be indicative of future working outcomes. For additional
info concerning the impression of the COVID-19 pandemic, and any probably
materials results, see Half 1 – Merchandise 1A “Threat Elements” on this report.

Through the third quarter of 2021, RiverSource Life closed on a transaction with
Commonwealth, efficient July 1, 2021, to reinsure roughly $7.0 billion of
mounted deferred and quick annuity insurance policies. As a part of the transaction,
RiverSource Life transferred $7.8 billion in consideration primarily consisting
of Accessible-for-Sale securities, industrial mortgage loans, syndicated loans
and money. The transaction resulted in a internet realized acquire of roughly $532
million on investments bought. An analogous beforehand introduced transaction with
RiverSource Life Insurance coverage Co. of New York didn’t obtain regulatory approval
in time to shut by September 30, 2021 and the transaction was terminated by the
events.

The Firm consolidates sure variable curiosity entities for which it
offers funding administration providers. These entities are outlined as
consolidated funding entities (“CIEs”). Whereas the consolidation of the CIEs
impacts the Firm’s stability sheet and revenue assertion, the publicity to those
entities is unchanged and there’s no impression to the underlying enterprise outcomes.
For additional info on CIEs, see Observe 5 to the Consolidated Monetary
Statements. Adjustments within the truthful worth of property and liabilities associated to the
CIEs, primarily syndicated loans and debt, are mirrored in Web funding
revenue.

See “Merchandise 1 – Enterprise” and Observe 1 to the Consolidated Monetary Statements for
an outline of the enterprise.

Important Accounting Estimates

The accounting and reporting insurance policies that the Firm makes use of have an effect on its
Consolidated Monetary Statements. Sure of the Firm’s accounting and
reporting insurance policies are important to an understanding of the Firm’s monetary
situation and outcomes of operations. In some instances, the applying of those
insurance policies might be considerably affected by the estimates, judgments and
assumptions made by administration in the course of the preparation of the Consolidated
Monetary Statements. The accounting and reporting insurance policies and estimates the
Firm has recognized as basic to a full understanding of its monetary
situation and outcomes of operations are described beneath. See Observe 2 to the
Consolidated Monetary Statements for additional details about the Firm’s
accounting insurance policies.

Valuation of Investments

Essentially the most major factor of the Firm’s investments is its
Accessible-for-Sale securities, which the Firm carries at truthful worth inside
its Consolidated Stability Sheets. See Observe 13 to the Consolidated Monetary
Statements for dialogue of the truthful worth of Accessible-for-Sale securities.
Monetary markets are topic to vital actions in valuation and
liquidity, which might impression the Firm’s capability to liquidate and the promoting
value that may be realized for the Firm’s securities and will increase the usage of
judgment in figuring out the estimated truthful worth of sure investments. The
Firm is unable to foretell impacts and decide sensitivities in reported
quantities reflecting such market actions on its mixture Accessible-for-Sale
portfolio. Adjustments to assumptions don’t happen in isolation and it’s
impracticable to foretell such impacts on the particular person safety unit of measure
that are predominately Degree 2 truthful worth and based mostly on observable inputs.

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Commercial

Deferred Acquisition Prices

See Observe 2 to the Consolidated Monetary Statements for dialogue of the
Firm’s DAC accounting coverage. See Observe 3 to the Consolidated Monetary
Statements for dialogue of adjustments to the measurement of DAC amortization
efficient for interim and annual durations starting after December 15, 2022.

Non-Conventional Lengthy-Period Merchandise

For the Firm’s non-traditional long-duration merchandise (together with variable,
structured variable and stuck deferred annuity contracts, common life (“UL”)
and variable common life (“VUL”) insurance coverage merchandise), the DAC stability at any
reporting date relies on projections that present administration expects there to be
estimated gross earnings (“EGPs”) after that date to amortize the remaining
stability. These projections are inherently unsure as a result of they require
administration to make assumptions about monetary markets, mortality ranges and
contractholder and policyholder conduct over durations extending properly into the
future. Projection durations used for the Firm’s annuity merchandise are usually
30 to 50 years and for UL insurance coverage merchandise 50 years or longer.

EGPs differ based mostly on persistency charges (assumptions at which contractholders and
policyholders are anticipated to give up, make withdrawals from and make deposits
to their contracts), mortality ranges, shopper asset worth development charges (based mostly on
fairness and bond market efficiency), variable annuity profit utilization and
curiosity margins (the unfold between earned charges on invested property and charges
credited to contractholder and policyholder accounts). Adjustments in these
assumptions might be offsetting and the Firm is unable to foretell their
motion, sensitivities in reported quantities, offsetting impacts or future
impacts to the Consolidated Monetary Statements over time or in any given
future interval. When assumptions are modified, the share of EGPs used to
amortize DAC may additionally change. A change within the required amortization share
is utilized retrospectively; a rise in amortization share will outcome
in a lower within the DAC stability and a rise in DAC amortization expense,
whereas a lower in amortization share will end in a rise within the
DAC stability and a lower in DAC amortization expense. The impact on the DAC
stability that might outcome from the belief of unrealized good points (losses) on
securities is acknowledged with an offset to amassed different complete
revenue on the Consolidated Stability Sheets.

The shopper asset worth development charges are the charges at which variable annuity and
VUL insurance coverage contract values invested in separate accounts are assumed to
admire sooner or later. The charges used differ by fairness and stuck revenue
investments. The long-term shopper asset worth development charges are based mostly on assumed
gross annual returns of 9% for fairness funds and 5.65% for mounted revenue funds.
The Firm usually makes use of a five-year imply reversion course of as a suggestion in
setting near-term fairness fund development charges based mostly on a long-term view of
monetary market efficiency in addition to current precise efficiency. The steered
near-term fairness fund development charge is reviewed quarterly to make sure consistency
with administration’s evaluation of anticipated fairness market efficiency.

A lower of 100 foundation factors in separate account fund development charge assumptions
is more likely to end in a rise in DAC amortization and a rise in
advantages and claims expense for variable annuity and VUL insurance coverage contracts.
The next desk presents the estimated impression to present interval pretax
revenue:

Estimated Impression to Pretax Revenue (1)

Advantages and
DAC Amortization Claims Expense Whole
(in tens of millions)

Lower in future near- and long-term mounted revenue fund development
returns by 100 foundation factors

$

(38) $ (70) $ (108)

Lower in future near-term fairness fund development returns by 100
foundation factors

$

(35) $ (51) $ (86)
Lower in future long-term fairness fund development returns by 100
foundation factors

(22) (34) (56)

Lower in future near- and long-term fairness fund development returns
by 100 foundation factors

$

(57) $ (85) $ (142)

(1) A rise within the above assumptions by 100 foundation factors would end in an
improve to pretax revenue for about the identical quantity.

An evaluation of sensitivity related to remoted adjustments of any single
assumption just isn’t an indicator of future outcomes.

Conventional Lengthy-Period Merchandise

For conventional long-duration merchandise (together with conventional life and DI
insurance coverage merchandise), the DAC stability at any reporting date relies on
projections that present administration expects there to be satisfactory premiums after the
date to amortize the remaining stability. These projections are inherently
unsure as a result of they require administration to make assumptions over durations
extending properly into the long run. These assumptions embrace rates of interest,
persistency charges and mortality and morbidity charges and should not modified
(unlocked) except recoverability testing determines that reserves are
insufficient. Adjustments in these assumptions might be offsetting and the Firm is
unable to foretell their motion, sensitivities in reported quantities, offsetting
impacts, or future impacts to the Consolidated Monetary Statements over time or
in any given future interval. Projection durations used for the Firm’s
conventional life insurance coverage are as much as 30 years. Projection durations for DI
merchandise are as much as 45 years. The Firm might expertise accelerated amortization
of DAC if insurance policies terminate sooner than projected or a slower charge of
amortization of DAC if insurance policies persist longer than projected.

For conventional life and DI insurance coverage merchandise, the assumptions present for
adversarial deviations in expertise and are revised provided that

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administration concludes expertise shall be so adversarial that DAC should not recoverable.
If administration concludes that DAC should not recoverable, DAC are lowered to the
quantity that’s recoverable based mostly on greatest estimate assumptions.

Future Coverage Advantages and Claims

See Observe 3 to the Consolidated Monetary Statements for dialogue of adjustments to
the measurement of DAC amortization efficient for interim and annual durations
starting after December 15, 2022.

The Firm establishes reserves to cowl the advantages related to
non-traditional and conventional long-duration merchandise. Non-traditional
long-duration merchandise embrace variable annuity contracts, mounted annuity
contracts and UL and VUL insurance policies. Conventional long-duration merchandise embrace
time period life, entire life, DI and LTC insurance coverage merchandise.

Ensures accounted for as insurance coverage liabilities embrace assured minimal
demise profit (“GMDB”), acquire gross-up (“GGU”), assured minimal revenue profit
(“GMIB”) and the life contingent advantages related to assured minimal
withdrawal profit (“GMWB”). As well as, UL and VUL insurance policies with product
options that end in earnings adopted by losses are accounted for as
insurance coverage liabilities.

Ensures accounted for as embedded derivatives embrace assured minimal
accumulation profit (“GMAB”) and the non-life contingent advantages related
with GMWB. As well as, the portion of structured variable annuities, listed
annuities and listed common life (“IUL”) insurance policies allotted to the listed
account is accounted for as an embedded spinoff.

The institution of reserves is an estimation course of utilizing a wide range of
strategies, assumptions and information parts. If precise expertise is best than or
equal to the outcomes of the estimation course of, then reserves ought to be satisfactory
to supply for future advantages and bills. If precise expertise is worse than
the outcomes of the estimation course of, extra reserves could also be required.

Non-Conventional Lengthy-Period Merchandise, together with Embedded Derivatives

UL and VUL

A portion of the Firm’s UL and VUL insurance policies have product options that outcome
in earnings adopted by losses from the insurance coverage element of the contract.
These earnings adopted by losses might be generated by the associated fee construction of the
product or secondary ensures within the contract. The secondary assure ensures
that, topic to specified circumstances, the coverage is not going to terminate and can
proceed to supply a demise profit even when there may be inadequate coverage worth
to cowl the month-to-month deductions and prices. The legal responsibility for these future
losses is set utilizing actuarial fashions to estimate the demise advantages in
extra of account worth and recognizing the surplus over the estimated life based mostly
on anticipated assessments (e.g. value of insurance coverage prices, contractual
administrative prices, comparable charges and funding margin). Vital
assumptions made in projecting future advantages and assessments relate to shopper
asset worth development charges, mortality, persistency and funding margins and are
according to these used for DAC valuation for a similar contracts. Adjustments in
these assumptions might be offsetting and the Firm is unable to foretell their
motion, sensitivities in reported quantities, offsetting impacts, or future
impacts to the Consolidated Monetary Statements over time or in any given
future interval. See Observe 11 to the Consolidated Monetary Statements for
info concerning the legal responsibility for contracts with secondary ensures.

Variable Annuities

The Firm has roughly $92 billion of variable annuity account worth that
has been issued over a interval of greater than 50 years. The diversified variable
annuity block consists of $35 billion of account worth with no residing profit
ensures and $57 billion of account worth with residing profit ensures,
primarily GMWB provisions. The enterprise is predominately issued by way of the
Ameriprise Monetary Providers, LLC (“AFS”) monetary advisor community. The
majority of the variable annuity contracts supplied by the Firm include GMDB
provisions. The Firm additionally affords variable annuities with demise profit
provisions that gross up the quantity payable by a sure share of contract
earnings that are known as GGU advantages. As well as, the Firm affords
contracts with GMWB and GMAB provisions and, till Might 2007, the Firm supplied
contracts containing GMIB provisions. See Observe 11 to the Consolidated Monetary
Statements for additional dialogue of variable annuity contracts.

In figuring out the liabilities for GMDB, GGU, GMIB and the life contingent
advantages related to GMWB, the Firm initiatives these advantages and contract
assessments utilizing actuarial fashions to simulate numerous fairness market situations.
Vital assumptions made in projecting future advantages and assessments
relate to buyer asset worth development charges, mortality, persistency, profit
utilization and funding margins and are according to these used for DAC
valuation for a similar contracts. As with DAC, administration critiques, and the place
applicable, adjusts its assumptions every quarter. Except administration identifies
a cloth deviation over the course of quarterly monitoring, administration critiques
and updates these assumptions yearly within the third quarter of every 12 months.

Relating to the publicity to variable annuity residing profit ensures, the supply
of behavioral danger is pushed by adjustments in policyholder surrenders and
utilization of assured withdrawal advantages. The Firm has in depth
expertise research and evaluation to watch adjustments and developments in policyholder
conduct. A big quantity of company-specific policyholder expertise information
is obtainable and offers administration with the power to recurrently analyze
policyholder conduct. On a month-to-month foundation, precise give up and profit
utilization expertise is in comparison with expectations. Expertise information contains
detailed coverage info offering the chance to evaluation impacts of
a number of variables. The flexibility to research variations in expertise, akin to
presence of a residing profit rider,

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existence of give up prices, and tax {qualifications} offers the Firm an
efficient strategy in rapidly detecting adjustments in policyholder conduct.

At the least yearly, the Firm performs a radical policyholder conduct
evaluation to validate the assumptions included in its profit reserve, embedded
spinoff and DAC balances. The variable annuity assumptions and ensuing
reserve computations mirror a number of policyholder variables. Differentiation in
assumptions by policyholder age, existence of give up prices, assured
withdrawal utilization, and tax qualification are examples of things acknowledged
in establishing administration’s assumptions utilized in reserve calculations. The
in depth information derived from the Firm’s variable annuity block informs
administration in confirming earlier assumptions and revising the variable annuity
conduct assumptions. Adjustments in assumptions are ruled by a evaluation and
approval course of to make sure an applicable measurement of all impacted monetary
assertion balances. Adjustments in these assumptions might be offsetting and the
Firm is unable to foretell their motion, sensitivities in reported quantities,
offsetting impacts, or future impacts to the Consolidated Monetary Statements
over time or in any given future interval.

See the desk within the earlier dialogue of “Deferred Acquisition Prices” for the
estimated impression to advantages and claims expense associated to variable annuity and
VUL insurance coverage contracts ensuing from a lower of 100 foundation factors in
separate account fund development charge assumptions.

Embedded Derivatives

The truthful worth of embedded derivatives associated to GMAB and the non-life
contingent advantages related to GMWB provisions fluctuate based mostly on fairness,
rate of interest and credit score markets which might trigger these embedded derivatives to
be both an asset or a legal responsibility. The truthful worth of embedded derivatives
associated to structured variable annuities, listed annuities and IUL fluctuate
based mostly on fairness markets and rates of interest and is a legal responsibility. As well as, the
valuation of embedded derivatives is impacted by an estimate of the Firm’s
nonperformance danger adjustment. This estimate features a unfold over the London
Inter-Financial institution Supplied Fee (“LIBOR”) swap curve as of the stability sheet date. As
the Firm’s estimate of this unfold over LIBOR widens or tightens, the
legal responsibility will lower or improve.

Moreover, the Firm’s Company Actuarial Division calculates the truthful
worth of the embedded derivatives on a month-to-month foundation. Throughout this course of,
management checks are carried out to validate the completeness of the info. Actuarial
administration approves numerous parts of the valuation together with the ultimate
outcomes. The change within the truthful worth of the embedded derivatives is reviewed
month-to-month with senior administration.

See Observe 13 to the Consolidated Monetary Statements for info concerning
the truthful worth measurement of embedded derivatives.

Conventional Lengthy-Period Merchandise

Liabilities for unpaid quantities on reported DI and LTC claims embrace any
periodic or different profit quantities due and accrued, together with estimates of the
current worth of obligations for persevering with profit funds. These unpaid
quantities are calculated utilizing anticipated declare continuance charges based mostly on
established {industry} tables, adjusted as applicable for the Firm’s
expertise. The low cost charges used to calculate current values are based mostly on
common rates of interest earned on property supporting the legal responsibility for
unpaid quantities.

Liabilities for estimates of advantages that can grow to be payable on future claims
on time period life, entire life and DI insurance policies are based mostly on the web stage premium and
LTC insurance policies are based mostly on a gross premium valuation reflecting administration’s
present greatest estimate assumptions. Web stage premium contains anticipated
premium funds, mortality and morbidity charges, coverage persistency and curiosity
charges earned on property supporting the legal responsibility. Gross premium valuation
contains anticipated premium charge will increase, profit reductions, morbidity charges,
coverage persistency and rates of interest earned on property supporting the legal responsibility.
Anticipated mortality and morbidity charges are based mostly on established {industry}
mortality and morbidity tables, with modifications based mostly on the Firm’s
expertise. Anticipated premium funds and persistency charges differ by coverage
type, situation age, coverage period and sure different pricing components.

Spinoff Devices and Hedging Actions

The Firm makes use of spinoff devices to handle its publicity to varied market
dangers. All derivatives are recorded at truthful worth. The truthful worth of the
Firm’s spinoff devices is set utilizing both market quotes or
valuation fashions which are based mostly upon the web current worth of estimated future
money flows and incorporate present market observable inputs to the extent
out there. The Firm is unable to foretell impacts and decide sensitivities
in reported quantities reflecting such market actions on its mixture spinoff
portfolio. Adjustments to assumptions don’t happen in isolation and it’s
impracticable to foretell such impacts on the particular person safety unit of measure
that are predominately Degree 2 truthful worth and based mostly on observable inputs.

For additional particulars on the sorts of derivatives the Firm makes use of and the way it
accounts for them, see Observe 2, Observe 13 and Observe 17 to the Consolidated Monetary
Statements. For dialogue of the Firm’s market danger exposures and hedging
program and associated sensitivity testing, see Merchandise 7A – “Quantitative and
Qualitative Disclosures About Market Threat.”

Current Accounting Pronouncements

For info concerning current accounting pronouncements and their anticipated
impression on the Firm’s future consolidated monetary situation or outcomes of
operations, see Observe 3 to the Consolidated Monetary Statements.

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Sources of Revenues and Bills

Premiums

Premiums embrace premiums on conventional life, DI and LTC insurance coverage merchandise and
quick annuities with a life contingent function and are internet of reinsurance
premiums.

Web Funding Revenue

Web funding revenue primarily contains curiosity revenue on mounted maturity
securities categorised as Accessible-for-Sale, industrial mortgage loans, coverage
loans, different investments and money and money equivalents and investments of CIEs;
the adjustments in truthful worth of sure derivatives and sure property and
liabilities of CIEs; and the pro-rata share of internet revenue or loss on fairness
methodology investments.

Coverage and Contract Expenses

Coverage and contract prices embrace mortality and expense danger charges and sure
different prices assessed on annuities and UL and VUL insurance coverage, which include
value of insurance coverage prices (internet of reinsurance premiums and price of reinsurance
for UL and VUL insurance coverage merchandise), administrative and give up prices and
distribution charges from affiliated funds underlying the Firm’s variable
annuity and VUL merchandise.

Web Realized Funding Features (Losses)

Web realized funding good points (losses) primarily embrace realized good points and
losses on the sale of investments and adjustments for the allowance for credit score
losses.

Different Revenues

Different revenues primarily embrace charges acquired beneath advertising and marketing assist
preparations that are calculated as a share of the Firm’s separate
account property and the accretion on mounted annuities reinsurance deposit
receivables.

For dialogue of the Firm’s accounting insurance policies on income recognition, see
Observe 2 to the Consolidated Monetary Statements.

Advantages, Claims, Losses and Settlement Bills

Advantages, claims, losses and settlement bills include quantities paid and
adjustments in liabilities held for anticipated future profit funds beneath
insurance coverage insurance policies and annuity contracts, together with prices to course of and pay
such quantities. Quantities are internet of profit funds recovered or anticipated to be
recovered beneath reinsurance contracts. Advantages beneath variable annuity
ensures embrace the adjustments in truthful worth of GMWB and GMAB embedded
derivatives and the derivatives hedging these advantages, in addition to the adjustments
in truthful worth of derivatives hedging GMDB provisions. The adjustments in truthful worth
of structured variable annuity embedded derivatives and the derivatives hedging
this product, in addition to the amortization of deferred gross sales inducement prices
(“DSIC”) are additionally included in Advantages, claims losses and settlement bills.

Curiosity Credited to Mounted Accounts

Curiosity credited to mounted accounts represents quantities earned by contractholders
and policyholders on mounted account values related to UL and VUL insurance coverage
and annuity contracts. The adjustments in truthful worth of listed annuities and IUL
embedded derivatives and the derivatives hedging these merchandise are additionally
included inside Curiosity credited to mounted accounts.

Amortization of DAC

Direct gross sales commissions and different prices capitalized as DAC are amortized over
time. For annuity and UL/VUL contracts, DAC are amortized based mostly on projections
of EGPs over amortization durations equal to the approximate lifetime of the enterprise.
For different insurance coverage merchandise, DAC are typically amortized as a share of
premiums over amortization durations equal to the premium-paying interval.

Curiosity and Debt Expense

Curiosity and debt expense primarily contains curiosity on CIE debt and long-term
debt.

Different Insurance coverage and Working Bills

Different insurance coverage and working bills embrace bills allotted to the Firm
from its mum or dad, Ameriprise Monetary, Inc. (“Ameriprise Monetary”), for the
Firm’s share of compensation, skilled and advisor charges and bills
related to info know-how and communications, amenities and
tools, promoting and promotion and authorized and regulatory prices. Additionally
included are commissions, gross sales and advertising and marketing bills and different working
bills. These bills are offered internet of acquisition value deferrals.

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Consolidated Outcomes of Operations

12 months Ended December 31, 2021 In comparison with 12 months Ended December 31, 2020

The next desk presents the Firm’s consolidated outcomes of operations:
Years Ended December 31,
2021 2020 Change
(in tens of millions)
Revenues
Premiums $ (871)$ 341$ (1,212) NM
Web funding revenue 827 869 (42) (5) %
Coverage and contract prices 2,304 2,094 210 10
Different revenues 616 482 134 28
Web realized funding good points (losses) 595 (10) 605 NM
Whole revenues 3,471 3,776 (305) (8)

Advantages and bills
Advantages, claims, losses and settlement bills 715 1,805 (1,090) (60)
Curiosity credited to mounted accounts 600 644 (44) (7)
Amortization of deferred acquisition prices 112 264 (152) (58)
Curiosity and debt expense 105 5 100 NM
Different insurance coverage and working bills 738 665 73 11
Whole advantages and bills 2,270 3,383 (1,113) (33)
Pretax revenue 1,201 393 808 NM
Revenue tax provision (profit) 137 (45) 182 NM
Web revenue $ 1,064$ 438$ 626 NM
NM Not Significant.

General

Web revenue elevated $626 million for 2021 in comparison with the prior 12 months. Pretax
revenue elevated $808 million for 2021 in comparison with the prior 12 months.

The next impacts had been vital drivers of the year-over-year change in
pretax revenue:

•The favorable impression of the block switch reinsurance transaction was $521
million for 2021 primarily reflecting the web realized good points on investments bought
to the reinsurer.

•The favorable impression of unlocking was $17 million for 2021 in comparison with an
unfavorable impression of unlocking and long run care (“LTC”) loss recognition of
$454 million for the prior 12 months.

•The market impression on non-traditional long-duration merchandise (together with variable
and stuck deferred annuity contracts and common life (“UL”) insurance coverage
contracts), internet of hedges and the associated DSIC and DAC amortization, unearned
income amortization and the reinsurance accrual was an expense of $656 million
for 2021 in comparison with an expense of $375 million for the prior 12 months.

•The impression on variable annuity and VUL merchandise for the distinction between
assumed and up to date separate account funding efficiency on DAC, DSIC,
unearned income amortization, reinsurance accrual and extra insurance coverage
profit reserves (“imply reversion associated impression”) was a good thing about $152 million
for the 12 months ended December 31, 2021 in comparison with a good thing about $87 million for
the prior 12 months.

The Firm’s variable annuity account balances elevated 8% to $92.3 billion as
of December 31, 2021 in comparison with the prior 12 months as a consequence of market appreciation,
partially offset by internet outflows of $1.9 billion. Variable annuity gross sales
elevated 37% to $6.0 billion for 2021 in comparison with the prior 12 months reflecting an
improve in gross sales of structured variable annuities that was partially offset by
a lower in gross sales of variable annuities with residing profit ensures. Gross sales
of variable annuities with out residing profit ensures comprised 67% of whole
variable annuity gross sales in 2021 in comparison with 49% in 2020. The danger profile of its
in pressure block continues to enhance, with account values with residing profit
riders all the way down to 61% as of December 31, 2021 in comparison with over 63% a 12 months in the past.

The Firm continues to optimize its danger profile and shift its enterprise combine to
decrease danger choices. Through the fourth quarter of 2021, the Firm made the
resolution to discontinue new gross sales of considerably all of its variable annuities
with residing profit ensures on the finish of 2021, with a full exit by mid-2022.
As well as, the Firm has discontinued new gross sales of its common life
insurance coverage with secondary ensures and its single-pay mounted common life with
a long run care rider merchandise on the finish of 2021.

Within the third quarter of the 12 months, administration up to date its market-related
assumptions and carried out mannequin adjustments associated to the

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residing profit valuation. As well as, administration carried out its annual evaluation of
life insurance coverage and annuity valuation assumptions relative to present expertise
and administration expectations together with modeling adjustments. These aforementioned
adjustments are collectively known as unlocking. Administration additionally reviewed its
lively life future coverage profit reserve adequacy for its LTC enterprise within the
third quarter.

The next desk presents the overall pretax impacts on the Firm’s revenues
and bills attributable to unlocking and LTC loss recognition for the years
ended December 31:
Pretax Improve (Lower) 2021 2020
(in tens of millions)
Coverage and contract prices $ 19$ (1)
Whole revenues 19 (1)

Advantages, claims, losses and settlement bills:
LTC unlocking and loss recognition 3

141

Unlocking impression, excluding LTC 59

212

Whole advantages, claims, losses and settlement bills 62

353
Amortization of DAC (60) 100
Whole advantages and bills 2 453
Pretax revenue $ 17$ (454)

The first drivers of the year-over-year unlocking impression excluding LTC embrace
the next objects:

•Rate of interest assumptions resulted in a decrease expense in 2021 in comparison with the
prior 12 months interval. The ten-year Treasury charge assumption remained unchanged in
2021 at 3.5% with a grading interval ending December 31, 2026.

•Fairness market volatility and correlation assumptions on variable annuities
resulted in a better profit in 2021 in comparison with the prior 12 months.

•Surrenders assumptions on variable annuities with residing profit ensures
resulted in a decrease expense in 2021 in comparison with the prior 12 months.

The unfavorable LTC unlocking impression of $3 million in 2021 in comparison with the
unfavorable LTC unlocking and loss recognition impression of $141 million within the
prior 12 months is primarily as a consequence of prior 12 months updates to rate of interest assumptions.

Revenues

Premiums decreased $1.2 billion for 2021 in comparison with the prior 12 months primarily
reflecting ceded premiums of $1.2 billion related to the reinsurance
transaction for all times contingent quick annuity insurance policies.

Web funding revenue decreased $42 million, or 5%, for 2021 in comparison with the
prior 12 months primarily reflecting a lower in funding revenue on mounted
maturities as a consequence of decrease yields because of decrease rates of interest and decrease
common invested property because of the sale of investments to the reinsurer as a
results of the mounted deferred and quick annuity reinsurance transaction,
partially offset by the consolidation of CIEs.

Coverage and contract prices elevated $210 million, or 10%, for 2021 in comparison with
the prior 12 months interval primarily as a consequence of greater separate account charges and better
contract and rider prices from elevated account balances as a consequence of market
appreciation, in addition to the unearned income amortization and the reinsurance
accrual offset to the market impression of IUL advantages, which was a good thing about $38
million for 2021 in comparison with a good thing about $10 million for the prior 12 months.

Different revenues elevated $134 million, or 28%, for 2021 in comparison with the prior
12 months interval primarily reflecting greater charges from elevated account balances due
to market appreciation and the yield on deposit receivables.

Web realized funding good points had been $595 million for 2021 in comparison with internet
realized funding losses of $10 million for the prior 12 months. For 2021, internet
realized funding good points included internet realized good points of $556 million on
Accessible-for-Sale securities and internet realized good points of $59 million primarily
associated to industrial mortgage loans and syndicated loans. These internet realized
good points are primarily because of the sale of securities and loans to the reinsurer as
a results of the mounted deferred and quick annuity reinsurance transaction
that closed within the third quarter of 2021.

Advantages and Bills

Advantages, claims, losses and settlement bills decreased $1.1 billion, or 60%,
for 2021 in comparison with the prior 12 months primarily reflecting the next objects:

•A $1.2 billion lower in expense related to the reinsurance transaction
for all times contingent quick annuity insurance policies.

•A $450 million improve in expense primarily reflecting the impression of
year-over-year adjustments within the unhedged nonperformance credit score unfold danger
adjustment on variable annuity assured advantages. The unfavorable impression of
the nonperformance credit score unfold was $108 million for 2021 in comparison with a
favorable impression of $342 million for the prior 12 months. Because the undiscounted

22

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embedded spinoff legal responsibility on which the nonperformance credit score unfold is
utilized will increase (decreases), the impression of the nonperformance credit score unfold on
advantages bills is favorable (unfavorable). Moreover, because the estimate of
the nonperformance credit score unfold over the LIBOR swap curve tightens or widens,
the embedded spinoff legal responsibility will improve or lower.

•An $80 million lower in expense from different market impacts on variable
annuity assured advantages, internet of hedges in place to offset these dangers and
the associated DSIC amortization. This improve was the results of a positive
$2.5 billion change available in the market impression on variable annuity assured residing
advantages reserves, partially offset by an unfavorable $2.4 billion change within the
market impression on derivatives hedging the variable annuity assured advantages.
The primary market drivers contributing to those adjustments are summarized beneath:

•Fairness market impression on the variable annuity assured residing advantages
legal responsibility internet of the impression on the corresponding hedge property resulted in a
greater expense for 2021 in comparison with the prior 12 months.

•Rate of interest impression on the variable annuity assured residing advantages
legal responsibility internet of the impression on the corresponding hedge property resulted in an
expense for 2021 in comparison with a profit within the prior 12 months.

•Volatility impression on the variable annuity assured residing advantages legal responsibility
internet of the impression on the corresponding hedge property resulted in a decrease
expense for 2021 in comparison with the prior 12 months.

•Different unhedged objects, together with the distinction between the assumed and precise
underlying separate account funding efficiency, mounted revenue credit score
exposures, transaction prices and numerous contractholder behavioral objects, had been a
internet profit for 2021 in comparison with a internet expense for the prior 12 months.

•The impression of unlocking excluding LTC was an expense of $59 million for 2021
in comparison with an expense of $212 million for the prior 12 months.

•The annual evaluation of LTC future coverage profit reserve in 2021 resulted in
unlocking of $3 million in comparison with unlocking and loss recognition of $141
million within the prior 12 months.

•The imply reversion associated impression was a good thing about $91 million for 2021
in comparison with a good thing about $53 million for the prior 12 months.

Curiosity credited to mounted accounts decreased $44 million, or 7%, for 2021
in comparison with the prior 12 months primarily reflecting the next objects:

•An $8 million lower in expense from the unhedged nonperformance credit score
unfold danger adjustment on IUL advantages. The unfavorable impression of the
nonperformance credit score unfold was $10 million for 2021 in comparison with an unfavorable
impression of $18 million for the prior 12 months.

•A $22 million lower in expense from different market impacts on IUL advantages,
internet of hedges, which was a good thing about $54 million for 2021 in comparison with a profit
of $32 million for the prior 12 months. The lower in expense was primarily as a consequence of
a lower within the IUL embedded spinoff within the present interval, which mirrored
decrease possibility prices as a consequence of greater low cost charges in comparison with a rise within the
IUL embedded spinoff within the prior 12 months interval, which mirrored greater possibility
prices as a consequence of decrease low cost charges.

Amortization of DAC decreased $152 million, or 58%, for 2021 in comparison with the
prior 12 months primarily reflecting the next objects:
•The impression of unlocking in 2021 was a good thing about $60 million in comparison with an
expense of $100 million within the prior 12 months interval.

•The DAC offset to the market impression on non-traditional long-duration
merchandise was a good thing about $51 million for 2021 in comparison with a good thing about
$5 million for the prior 12 months.

•The imply reversion associated impression was a good thing about $60 million for 2021
in comparison with a good thing about $34 million for the prior 12 months.

•The next stage of normalized amortization because of the development of variable
annuities and unlocked market and policyholder assumptions within the prior 12 months.

Curiosity and debt expense elevated $100 million for 2021 in comparison with the prior
12 months reflecting the consolidation of CIEs and the issuance of a surplus notice. On
December 23, 2020, the Firm issued a $500 million unsecured 3.5% surplus notice
to Ameriprise Monetary.

Different insurance coverage and working bills elevated $73 million, or 11%, for 2021
in comparison with the prior 12 months primarily reflecting greater bills from the
consolidation of CIEs and better distribution bills.

Revenue Taxes

The Firm’s efficient tax charge was 11.4% for 2021 in comparison with (11.5)% for the
prior 12 months. See Observe 19 to the Consolidated Monetary Statements for added
dialogue on revenue taxes.

Truthful Worth Measurements

The Firm stories sure property and liabilities at truthful worth; particularly,
separate account property, derivatives, embedded derivatives, most investments and
money equivalents. Truthful worth assumes the change of property or liabilities
happens in orderly transactions and isn’t the results of a compelled liquidation or
distressed sale. The Firm contains precise market costs, or observable
inputs, in its truthful worth measurements to the extent out there. Dealer quotes
are obtained when quotes from pricing providers should not out there. The Firm
validates costs obtained from third events by way of a wide range of means akin to:
value variance evaluation,

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——————————————————————————–

subsequent gross sales testing, stale value evaluation, value comparability throughout pricing
distributors and due diligence critiques of distributors. See Observe 13 to the Consolidated
Monetary Statements for added info on the Firm’s truthful worth
measurements.

Truthful Worth of Liabilities and Nonperformance Threat

Corporations are required to measure the truthful worth of liabilities on the value
that might be acquired to switch the legal responsibility to a market participant (an
exit value). Since there may be not a marketplace for the Firm’s obligations of its
variable annuity riders, mounted deferred listed annuities, structured variable
annuities, and IUL insurance coverage, the Firm considers the assumptions individuals
in a hypothetical market would make to mirror an exit value. Consequently, the
Firm adjusts the valuation of variable annuity riders, mounted deferred listed
annuities, structured variable annuities, and IUL insurance coverage by updating sure
contractholder assumptions, including express margins to supply for danger, and
adjusting the charges used to low cost anticipated money flows to mirror a market
estimate of the Firm’s nonperformance danger. The nonperformance danger
adjustment relies on observable market information adjusted to estimate the danger of
the Firm not fulfilling these liabilities. In step with normal market
circumstances, this estimate resulted in a selection over the LIBOR swap curve as of
December 31, 2021. Because the Firm’s estimate of this unfold widens or tightens,
the legal responsibility will lower or improve. If this nonperformance credit score unfold
strikes to a zero unfold over the LIBOR swap curve, the discount to future internet
revenue can be roughly $457 million, internet of DAC, DSIC, unearned income
amortization, the reinsurance accrual and revenue taxes (calculated on the
statutory tax charge of 21%), based mostly on December 31, 2021 credit score spreads.

Liquidity and Capital Sources

Liquidity Technique

The liquidity necessities of the Firm are typically met by funds offered by
funding revenue, maturities and periodic repayments of investments, premiums
and proceeds from gross sales of investments, mounted annuity and stuck insurance coverage
deposits in addition to capital contributions from its mum or dad, Ameriprise Monetary.
Different liquidity sources the Firm has established are short-term borrowings
and out there traces of credit score with Ameriprise Monetary, aggregating
$1.1 billion. See Observe 14 to the Consolidated Monetary Statements for
extra info on the traces of credit score.

The Firm enters into short-term borrowings, which can embrace repurchase
agreements and Federal Dwelling Mortgage Financial institution (“FHLB”) advances to scale back reinvestment
danger. Brief-term borrowings permit the Firm to obtain money to reinvest in
longer-duration property, whereas sustaining the flexibleness to pay again the
short-term debt with money flows generated by the mounted revenue portfolio.
RiverSource Life Insurance coverage Firm is a member of the FHLB of Des Moines, which
offers RiverSource Life Insurance coverage Firm entry to collateralized borrowings.
As of December 31, 2021 and 2020, the Firm had estimated most borrowing
capability of $4.0 billion and $5.7 billion, respectively, beneath the FHLB
facility, of which $200 million was excellent as of each December 31, 2021 and
2020, and is collateralized with industrial mortgage backed securities.

Brief-term contractual obligations for the 12 months 2022 embrace estimated insurance coverage
and annuity advantages of $1.6 billion along with working liquidity wants.
Lengthy-term contractual obligations for years after 2022 embrace estimated
insurance coverage and annuity advantages of $42.9 billion.

See Observe 12 to the Consolidated Monetary Statements for additional info
in regards to the Firm’s long-term debt.

The first makes use of of funds are coverage advantages, commissions, different
product-related acquisition and gross sales inducement prices, working bills,
coverage loans, dividends to Ameriprise Monetary and funding purchases. The
Firm routinely critiques its sources and makes use of of funds in an effort to meet its
ongoing obligations. The Firm believes these money flows shall be adequate to
fund its short-term and long-term working liquidity wants and dividends to
Ameriprise Monetary.

In 2009, River Supply Life Insurance coverage Firm established an settlement to guard
its publicity to Genworth Life Insurance coverage Firm (“GLIC”) for its reinsured LTC.
In 2016, substantial enhancements to this reinsurance safety settlement had been
finalized. The phrases of those confidential provisions throughout the settlement have
been shared, within the regular course of standard critiques, with the Firm’s
domiciliary regulator and ranking businesses. GLIC is domiciled in Delaware, so in
the occasion GLIC had been subjected to rehabilitation or insolvency proceedings, such
proceedings can be situated in (and ruled by) Delaware legal guidelines. Delaware courts
have an extended custom of respecting industrial and reinsurance affairs, as properly
as contracts amongst subtle events. Related credit score protections to what
RiverSource Life Insurance coverage Firm has with GLIC have been examined and revered
in Delaware and elsewhere in the US, and consequently RiverSource Life
Insurance coverage Firm believes its credit score protections can be revered even within the
unlikely occasion that GLIC turns into topic to rehabilitation or insolvency
proceedings in Delaware. Accordingly, whereas no credit score protections are excellent,
RiverSource Life Insurance coverage Firm believes the right manner to consider the
dangers represented by its counterparty credit score publicity to GLIC just isn’t the complete
quantity of the gross legal responsibility that GLIC reinsures, however a a lot smaller internet
publicity to GLIC (if any that may exist after taking into consideration RiverSource
Life Insurance coverage Firm’s credit score protections). Thus, administration believes that
this settlement and offsetting non LTC legacy preparations with Genworth
Monetary, Inc. will allow RiverSource Life Insurance coverage Firm to recuperate on all
internet publicity in all materials respects within the occasion of a rehabilitation or
insolvency of GLIC.

As of December 31, 2021, the Firm’s nursing residence indemnity LTC block had
roughly $74 million in gross in pressure annual premium and future
policyholder advantages and declare reserves of roughly $1.3 billion, internet
of reinsurance, which was 52% of GAAP reserves. This block has been shrinking
over the previous few years given the common attained age is 83 and the common
attained age of policyholders on declare is 88. Fifty-four p.c of day by day
advantages in pressure on this block come from insurance policies which have a lifetime

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profit interval.

As of December 31, 2021, the Firm’s complete reimbursement LTC block had
roughly $115 million in gross in pressure annual premium and future
policyholder advantages and declare reserves of roughly $1.2 billion, internet of
reinsurance. This block has greater premiums per coverage than the nursing residence
indemnity LTC insurance policies. The common attained age is 78 and the common attained
age of policyholders on declare is 85. Thirty-five p.c of day by day advantages in
pressure on this block come from insurance policies which have a lifetime profit interval.

The Firm makes use of three main levers to handle its LTC enterprise. First, the
Firm has taken an lively strategy of steadily growing charges since 2005,
with cumulative charge will increase of 199% on its nursing residence indemnity LTC block
and 113% on its complete reimbursement LTC block as of December 31, 2021.
Second, the Firm has a reserving course of that displays the coverage options
and danger traits of its blocks. As of December 31, 2021, the Firm had
38,000 insurance policies that had been closed with declare exercise, in addition to 8,000 open
claims. The Firm applies this expertise to its in pressure insurance policies, which had been
91,000 as of December 31, 2021, at a really granular stage by situation 12 months, attained
age and profit options. The Firm’s statutory reserves are roughly
$381 million greater than its GAAP reserves and embrace margins on key
assumptions for morbidity and mortality, in addition to $363 million in asset
adequacy reserves as of December 31, 2021. Lastly, the Firm has prudently
managed its funding portfolio primarily by way of a liquid, funding grade
portfolio that’s at the moment in a internet unrealized acquire place.

The Firm undertakes an in depth evaluation of lively life future coverage profit
reserve adequacy yearly in the course of the third quarter of every 12 months, or extra
incessantly if applicable, utilizing present greatest estimate assumptions as of the
date of the evaluation. The annual evaluation course of contains an evaluation of its key
reserve assumptions, together with these for morbidity, terminations (mortality and
lapses), premium charge will increase, and funding yields.

Capital Exercise

Money dividends or distributions paid and acquired by RiverSource Life Insurance coverage
Firm had been as follows:

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Paid to Ameriprise Monetary $ 1,900$ 800$ 1,350

Obtained from RiverSource Life Insurance coverage Co. of New York
(“RiverSource Lifetime of NY”)

– – 43
Obtained from RiverSource Tax Advantaged Investments, Inc. 50 95 100

On February 23, 2022, RiverSource Life Insurance coverage Firm’s Board of Administrators
declared a money dividend of $300 million to Ameriprise Monetary, payable on or
after March 25, 2022, pending approval by the Minnesota Division of Commerce.

For dividends or distributions from the life insurance coverage firms, notifications
to state insurance coverage regulators had been made prematurely of funds in extra of
statutorily outlined thresholds. See Observe 15 to the Consolidated Monetary
Statements for added info.

Regulatory Capital

RiverSource Life Insurance coverage Firm and RiverSource Lifetime of NY are topic to
regulatory capital necessities. Precise capital, decided on a statutory
foundation, and regulatory capital necessities as of December 31 for every of the
life insurance coverage entities are as follows:
Precise Capital (1) Regulatory Capital Requirement (2)
December 31, December 31,
December 31, 2021 2020 December 31, 2021 2020
(in tens of millions)
RiverSource Life Insurance coverage Firm $ 3,419$ 5,021$ 502$ 993
RiverSource Lifetime of NY 310 323 42 42

(1) Precise capital, as outlined by the Nationwide Affiliation of Insurance coverage
Commissioners for functions of assembly regulatory capital necessities, contains
statutory capital and surplus, plus sure statutory valuation reserves.

(2) Regulatory capital requirement is the corporate motion stage and relies on
the statutory risk-based capital submitting.

Threat Administration

In accordance with regulatory funding tips, RiverSource Life Insurance coverage
Firm and RiverSource Lifetime of NY, by way of their respective boards of administrators
or board of administrators’ funding committees or workers capabilities, evaluation fashions
projecting totally different rate of interest situations, danger/return measures, and their
impact on profitability in an effort to information the administration of the overall account
property. Additionally they evaluation the distribution of property within the portfolio by kind and
credit score danger sector. The target is to construction the funding securities
portfolio within the normal account to satisfy contractual obligations beneath the
insurance coverage and annuity merchandise and obtain focused ranges of profitability
inside outlined danger parameters.

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The Firm has developed an asset/legal responsibility administration strategy with separate
funding aims to assist particular product liabilities, akin to insurance coverage
and annuities. As a part of this strategy, the Firm develops particular
funding tips which are designed to optimize trade-offs between danger and
return and assist make sure the Firm is ready to assist future profit funds
beneath its insurance coverage and annuity obligations. These similar aims should be
according to administration’s general funding aims for the overall
account funding portfolio.

The Firm’s owned funding securities are primarily invested in long-term
and intermediate-term mounted maturity securities to earn a aggressive charge of
return on investments whereas managing danger. Investments in mounted maturity
securities are designed to supply the Firm with a focused margin between
the yield earned on investments and the rate of interest credited to purchasers’
accounts. The Firm doesn’t commerce in securities to generate short-term
earnings for its personal account.

As a part of the Firm’s funding course of, administration, with the help of
its funding advisors, conducts a quarterly evaluation of funding efficiency.
The evaluation course of entails the evaluation of sure invested property which the
committee evaluates to find out whether or not or not any investments are
other-than-temporarily impaired and/or which particular curiosity incomes
investments ought to be placed on an curiosity non-accrual foundation.

The Firm has rate of interest danger and fairness market danger. Rate of interest danger
may end up from investing in property that don’t precisely match the money move
profile of the liabilities they assist. The Firm manages rate of interest danger
by way of the usage of a wide range of instruments that embrace managing the period of
investments supporting its mounted annuities and insurance coverage merchandise. Moreover,
the Firm enters into spinoff devices, akin to structured derivatives,
choices, futures and swaps, which change the rate of interest traits of
shopper liabilities or funding property. As a result of sure of its funding
actions are impacted by the worth of its managed equity-based portfolios,
every now and then the Firm enters into danger administration methods which will
embrace the usage of fairness spinoff devices, akin to fairness choices, to
mitigate its publicity to volatility within the fairness markets.

Quantitative and Qualitative Disclosures About Market Threat

The Firm’s main market danger exposures are rate of interest, fairness value and
credit score danger. Fairness value and rate of interest fluctuations can have a big
impression on the Firm’s outcomes of operations, primarily because of the results on
asset-based charges and bills, the “unfold” revenue generated on its mounted
deferred annuities, mounted insurance coverage and the mounted portion of its variable
annuities and variable insurance coverage contracts, the worth of DAC and DSIC property,
the worth of liabilities for assured advantages related to its variable
annuities and the worth of derivatives held to hedge these advantages.

The assured advantages related to the Firm’s variable annuities are
GMWB, GMAB, GMDB and GMIB. Every of those advantages ensures payouts to the
annuity holder beneath sure particular circumstances whatever the efficiency
of the underlying invested property.

The variable annuity ensures proceed to be managed by using a hedging
program which makes an attempt to match the sensitivity of the property with the
sensitivity of the liabilities. This strategy works with the premise that
matched sensitivities will produce a extremely efficient hedging outcome. The
Firm’s complete hedging program focuses primarily on first order
sensitivities of property and liabilities: Fairness Market Degree (Delta), Curiosity
Fee Degree (Rho) and Volatility (Vega). Moreover, numerous second order
sensitivities are managed. The Firm makes use of numerous choices, swaptions, swaps
and futures to handle danger exposures. The exposures are measured and monitored
day by day and changes to the hedge portfolio are made as crucial.

The Firm has a macro hedge program to supply safety in opposition to the
statutory tail situation danger arising from variable annuity reserves on its
statutory surplus and to cowl a few of the residual dangers not lined by different
hedging actions. The Firm assesses this residual danger beneath a variety of
situations in creating and executing the macro hedge program. As a way of
economically hedging these dangers, the Firm might use a mix of futures,
choices, swaps and swaptions. Sure of the macro hedge derivatives used
include settlement provisions linked to each fairness returns and rates of interest;
the remaining are rate of interest contracts or fairness contracts. The macro hedge
program may end in extra earnings volatility as adjustments within the worth
of the macro hedge derivatives, that are designed to scale back statutory capital
volatility, might not be carefully aligned to adjustments within the variable annuity
assure embedded derivatives.

To judge rate of interest and fairness value danger, the Firm performs
sensitivity testing which measures the impression on pretax revenue from the sources
listed beneath for a 12-month interval following a hypothetical 100 foundation level
improve in rates of interest or a hypothetical 10% decline in fairness costs. The
rate of interest danger take a look at assumes a sudden 100 foundation level parallel shift within the
yield curve, with charges then staying at these ranges for the subsequent 12 months. The
fairness value danger take a look at assumes a sudden 10% drop in fairness costs, with fairness
costs then staying at these ranges for the subsequent 12 months. In estimating the
values of variable annuity riders, listed annuities, IUL insurance coverage and the
related hedge property, the Firm assumed no change in implied market
volatility regardless of the ten% drop in fairness costs.

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The next tables current the Firm’s estimate of the impression on pretax
revenue from the above outlined hypothetical market actions as of December 31,
2021:
Fairness Worth Publicity to Pretax Revenue
Earlier than
Fairness Worth Decline 10% Hedge Impression Hedge Impression Web Impression
(in tens of millions)
Asset-based charges and bills $ (74) $ – $

(74)

DAC and DSIC amortization(1)(2) (27) –

(27)

Variable annuity riders and structured variable annuities:
GMDB and GMIB(2) (6) – (6)
GMWB(2) (327) 312 (15)
GMAB (18) 18 –
Structured variable annuities 358 (326) 32
DAC and DSIC amortization(3) N/A N/A

(2)

Whole variable annuity riders and structured variable annuities 7 4 9
Macro hedge program(4) – 175 175

IUL insurance coverage 61 (46) 15
Whole $ (33) $ 133 $ 98

Curiosity Fee Publicity to Pretax Revenue
Earlier than
Curiosity Fee Improve 100 Foundation Factors Hedge Impression Hedge Impression Web Impression
(in tens of millions)
Asset-based charges and bills $ (16) $ – $ (16)
Variable annuity riders and structured variable annuities:

GMWB 1,402 (1,753) (351)
GMAB 15 (20) (5)
Structured variable annuities (20) 110 90
DAC and DSIC amortization(3) N/A N/A 38
Whole variable annuity riders and structured variable annuities 1,397 (1,663) (228)
Macro hedge program(4) – (3) (3)

Mounted annuities, mounted insurance coverage and stuck portion of variable annuities and variable insurance coverage
merchandise 57 – 57
IUL insurance coverage 19 1 20
Whole $ 1,457$ (1,665)$ (170)

N/A Not Relevant.

(1) Market impression on DAC and DSIC amortization ensuing from decrease projected
earnings.

(2) In estimating the impression to pretax revenue on DAC and DSIC amortization and
extra insurance coverage profit reserves, the assumed fairness asset development charges
mirror what administration would comply with in its imply reversion tips.

(3) Market impression on DAC and DSIC amortization associated to variable annuity
riders and structured variable annuities is modeled internet of hedge impression.

(4) The market impression of the macro hedge program is modeled internet of any associated
impression to DAC and DSIC amortization.

The above outcomes evaluate to an estimated constructive internet impression to pretax revenue
of $157 million associated to a ten% fairness value decline and an estimated unfavorable
internet impression to pretax revenue of $253 million associated to a 100 foundation level
improve in rates of interest as of December 31, 2020. The change in fairness value
publicity as of December 31, 2021 in comparison with prior year-end was primarily pushed
by a lower within the fairness hedge place.

Web impacts proven within the above desk from GMWB riders outcome largely from
variations between the legal responsibility valuation foundation and the hedging foundation.
Liabilities are valued utilizing truthful worth accounting rules, with danger margins
integrated in contractholder conduct assumptions and with low cost charges
elevated to mirror a present market estimate of the Firm’s danger of
nonperformance particular to those liabilities. The Firm’s hedging relies on
its willpower of financial danger, which excludes sure objects within the
legal responsibility valuation together with the nonperformance unfold danger.

Precise outcomes may differ materially from these illustrated above as they’re
based mostly on a lot of estimates and assumptions. These embrace assuming that
implied market volatility doesn’t change when fairness costs fall by 10% and
that the 100 foundation level improve in rates of interest is a parallel shift of the
yield curve. Moreover, the Firm has not tried to anticipate adjustments in
shopper preferences for several types of property or different adjustments in shopper
conduct, nor has the Firm tried to anticipate all strategic actions
administration would possibly take to extend revenues or cut back bills in these
situations.

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The number of a 100 foundation level rate of interest improve in addition to a ten%
fairness value decline shouldn’t be construed as a prediction of future market
occasions. Impacts of bigger or smaller adjustments in rates of interest or fairness costs
might not be proportional to these proven for a 100 foundation level improve in
rates of interest or a ten% decline in fairness costs.

Asset-Based mostly Charges and Bills

The Firm earns asset-based administration charges on its owned separate account
property partially offset by sure bills. As of December 31, 2021, the worth
of those property was $92.2 billion. This income is topic to each
rate of interest and fairness value danger because the worth of those property and the charges
they earn fluctuate inversely with rates of interest and straight with fairness
costs. The Firm doesn’t at the moment hedge the rate of interest or fairness value
danger of this publicity.

DAC and DSIC Amortization

For annuity and UL/VUL merchandise, DAC and DSIC are amortized on the premise of
EGPs. EGPs are a proxy for pretax revenue previous to the popularity of DAC and
DSIC amortization expense. When occasions happen that cut back or improve present
interval EGPs, DAC and DSIC amortization expense is often lowered or elevated
as properly, considerably mitigating the impression of the occasion on pretax revenue.

Variable Annuity Riders

The full contract worth of all variable annuities as of December 31, 2021 was
$92.3 billion. These contract values embrace GMWB and GMAB contracts which had been
$54.3 billion and $2.0 billion, respectively, as of December 31, 2021. As of
December 31, 2021, reserves for GMWB had been internet liabilities of $2.3 billion and
reserves for GMAB had been internet property of $23 million. The GMWB and GMAB reserves
embrace the truthful worth of embedded derivatives, which fluctuates based mostly on
fairness, rate of interest and credit score markets which might trigger these embedded
derivatives to be both an asset or a legal responsibility. As of December 31, 2021, the
reserve for GMDB and GMIB was a internet legal responsibility of $41 million.

Fairness Worth Threat

The variable annuity assured advantages assure payouts to the annuity holder
beneath sure particular circumstances whatever the efficiency of the
funding property. Because of this, when fairness costs decline, the returns from
the separate account property coupled with assured profit charges from annuity
holders might not be adequate to fund anticipated payouts. In that case, reserves
should be elevated with a unfavorable impression to the Firm’s earnings.

The core spinoff devices with which the Firm hedges the fairness value
danger of its GMWB and GMAB provisions are longer dated put and name choices;
these core devices are supplemented with fairness futures and whole return
swaps. See Observe 17 to the Consolidated Monetary Statements for additional
info on the Firm’s spinoff devices.

Curiosity Fee Threat

The GMAB and the non-life contingent advantages related to the GMWB
provisions create embedded derivatives that are carried at truthful worth
individually from the underlying host variable annuity contract. Adjustments within the
truthful worth of the GMWB and GMAB liabilities are recorded by way of earnings with
truthful worth calculated based mostly on projected, discounted money flows over the lifetime of
the contract, together with projected, discounted advantages and charges. Will increase in
rates of interest cut back the truthful worth of the GMWB and GMAB liabilities. The GMWB
and GMAB rate of interest publicity is hedged with a portfolio of longer dated put
and name choices, futures, rate of interest swaps and swaptions. The Firm
entered into rate of interest swaps in line with danger exposures alongside maturities,
thus creating each mounted charge payor and variable charge payor phrases. If curiosity
charges had been to extend, the Firm must pay extra to the swap
counterparty and the truthful worth of its fairness places would lower, leading to
a unfavorable impression to the Firm’s pretax revenue.

Structured Variable Annuities

Structured variable annuities supply the contract-holder the power to allocate
premiums to both an account that earns mounted curiosity (mounted account) or an
account that credit curiosity based mostly on the efficiency of assorted fairness indices
(listed account) topic to a cap, ground, or buffer. Our earnings are based mostly
upon the unfold between funding revenue earned and the credit made to the
mounted and listed accounts of the structured variable annuities. As of December
31, 2021, the Firm had $4.4 billion in liabilities associated to structured
variable annuities.

Fairness Worth Threat

The equity-linked return to traders creates fairness value danger as the quantity
credited is dependent upon adjustments in fairness costs. The fairness value danger for
structured variable annuities is evaluated along with the variable annuity
riders as a part of a hedge program utilizing the spinoff devices constant
with the hedging on variable annuity riders.

Curiosity Fee Threat

The truthful worth of the embedded spinoff related to structured variable
annuities relies on a reduced money move strategy. Adjustments in rates of interest
impression the discounting of the embedded spinoff legal responsibility. The unfold between
the funding revenue earned and quantities credited to contract-holders can also be
affected by adjustments in rates of interest. These rate of interest dangers related to
structured variable annuities should not at the moment hedged.

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Mounted Annuities, Mounted Insurance coverage and Mounted Portion of Variable Annuities and
Variable Insurance coverage Contracts

The Firm’s earnings from mounted deferred annuities, mounted insurance coverage, and the
mounted portion of variable annuities and variable insurance coverage contracts are based mostly
upon the unfold between charges earned on property held and the charges at which
curiosity is credited to accounts. The Firm primarily invests in mounted charge
securities to fund the speed credited to purchasers. The Firm ensures an
rate of interest to the holders of those merchandise. Funding property and shopper
liabilities typically differ because it pertains to foundation, repricing or maturity
traits. Charges credited to purchasers’ accounts typically reset at shorter
intervals than the yield on the underlying investments. Subsequently, in an
growing rate of interest surroundings, greater rates of interest could also be mirrored in
crediting charges to purchasers before in charges earned on invested property, which
may end in a lowered unfold between the 2 charges, lowered earned revenue
and a unfavorable impression on pretax revenue. Nonetheless, the present low rate of interest
surroundings is leading to rates of interest beneath the extent of a few of the
Firm’s legal responsibility assured minimal rates of interest (“GMIRs”). Therefore, a modest
rise in rates of interest wouldn’t essentially end in adjustments to all of the
legal responsibility credited charges whereas projected asset purchases would seize the complete
improve in rates of interest. This dynamic would end in widening spreads beneath
a modestly rising charge situation given the present relationship between the
present stage of rates of interest and the underlying GMIRs on the enterprise. Of the
$35.7 billion in Policyholder account balances, future coverage advantages and
claims as of December 31, 2021, $23.9 billion is said to liabilities created
by these merchandise. The Firm doesn’t hedge this publicity.

On account of the low rate of interest surroundings, the Firm’s present
reinvestment yields are typically decrease than the present portfolio yield. The
Firm expects its portfolio revenue yields to proceed to say no in future
durations if rates of interest stay low. The carrying worth and weighted common
yield of non-structured mounted maturity securities and industrial mortgage loans
which will generate proceeds to reinvest by way of 2023 as a consequence of prepayment, maturity
or name exercise on the possibility of the issuer, excluding securities with a
make-whole provision, had been $1.0 billion and three.9%, respectively, as of December
31, 2021. As well as, residential mortgage backed securities, that are topic
to prepayment danger because of the low rate of interest surroundings, totaled
$2.3 billion and had a weighted common yield of two.0% as of December 31, 2021.
Whereas these quantities characterize investments that may very well be topic to reinvestment
danger, additionally it is attainable that these investments shall be used to fund
liabilities or might not be pay as you go and can stay invested at their present
yields. Along with the rate of interest surroundings, the combo of profit
funds versus product gross sales in addition to the timing and volumes related to
such combine might impression the Firm’s funding yield. Moreover, reinvestment
actions and the related funding yield can also be impacted by company
methods carried out at administration’s discretion. The common yield for
funding purchases in the course of the 12 months ended December 31, 2021 was roughly
2.1%.

The reinvestment of proceeds from maturities, calls and prepayments at charges
beneath the present portfolio yield, which can be beneath the extent of some
legal responsibility GMIRs, can have a unfavorable impression to future working outcomes. To
mitigate the unfavorable impression that the low rate of interest surroundings has on
the Firm’s unfold revenue, it assesses reinvestment danger in its funding
portfolio and screens this danger in accordance with its asset/legal responsibility
administration framework. As well as, the Firm might cut back the crediting charges on
its mounted merchandise when warranted, topic to assured minimums.

The next desk presents the account values of mounted deferred annuities,
mounted insurance coverage, and the mounted portion of variable annuities and variable
insurance coverage contracts by vary of GMIRs and the vary of the distinction between
charges credited to policyholders and contractholders as of December 31, 2021 and
the respective assured minimums, in addition to the share of account values
topic to charge reset within the time interval indicated. Charges are reset on the
Firm’s discretion, topic to assured minimums.

Account Values with Crediting Charges

1-49 bps above 50-99 bps above 100-150 bps above
At Assured Minimal Assured Minimal Assured Minimal Assured Minimal Whole
(in billions, besides percentages)
Vary of Assured Minimal Crediting
Charges
1% – 1.99% $ 1.3 $ 0.1 $ 0.1 $ 0.1 $ 1.6
2% – 2.99% 0.5 – – – 0.5
3% – 3.99% 7.4 – – – 7.4
4% – 5.00% 5.5 – – – 5.5
Whole $ 14.7 $ 0.1 $ 0.1 $ 0.1 $ 15.0

Share of Account Values That Reset
In:
Subsequent 12 months (1) 99 % 85 % 80 % 34 % 98 %
> 12 months to 24 months (2) 1 – 10 66 1
> 24 months (2) – 15 10 – 1
Whole 100 % 100 % 100 % 100 % 100 %

(1) Consists of contracts with annual discretionary crediting charge resets and
contracts with 12 or much less months till the crediting charge turns into discretionary
on an annual foundation.

(2) Consists of contracts with greater than 12 months remaining till the crediting
charge turns into an annual discretionary charge.

29

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Fairness Listed Annuities

The Firm’s fairness listed annuity (“EIA”) product is a single premium annuity
issued with an preliminary time period of seven years. The annuity ensures the
contractholder a minimal return of three% on 90% of the preliminary premium or finish of
prior time period accumulation worth upon renewal plus a return that’s linked to the
efficiency of the S&P 500® Index. The equity-linked return relies on a
participation charge initially set at between 50% and 90% of the S&P 500® Index
which is assured for the preliminary seven-year time period when the contract is held to
full time period. As of December 31, 2021, the Firm had $19 million in liabilities
associated to EIAs. The Firm discontinued new gross sales of EIAs in 2007.

Fairness Worth Threat

The equity-linked return to traders creates fairness value danger as the quantity
credited is dependent upon adjustments in fairness costs. To hedge this publicity, the
Firm purchases futures which generate returns to copy what the Firm
should credit score to shopper accounts.

Curiosity Fee Threat

Many of the proceeds acquired from EIAs are invested in mounted revenue securities
with the return on these investments supposed to fund the three% assure. The
Firm earns revenue from the distinction between the return earned on invested
property and the three% assure charge credited to buyer accounts. The unfold
between return earned and quantity credited is affected by adjustments in curiosity
charges. This danger just isn’t at the moment hedged and was immaterial as of December 31,
2021.

Listed Common Life

IUL insurance coverage is much like UL in lots of regards, though the speed of credited
curiosity above the minimal assure for funds allotted to an listed account
is linked to the efficiency of the desired index for the listed account
(topic to acknowledged account parameters, which embrace a cap and ground, or a
unfold and ground). The Firm affords an S&P 500® Index account possibility and a
blended multi-index account possibility comprised of the S&P 500 Index, the MSCI®
EAFE Index and the MSCI EM Index. Each choices supply two crediting durations,
one-year and two-year. The policyholder might allocate all or a portion of the
coverage worth to a hard and fast or any out there listed account. As of December 31,
2021, the Firm had $2.4 billion in liabilities associated to the listed
accounts of IUL, with the overwhelming majority within the S&P 500® Index account possibility.

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Fairness Worth Threat

The equity-linked return to traders creates fairness value danger as the quantity
credited is dependent upon adjustments in fairness costs. Many of the proceeds acquired from
IUL insurance coverage are invested in mounted revenue securities. To hedge the fairness
publicity, a portion of the funding earnings acquired from the mounted revenue
securities is used to buy name spreads which generate returns to copy
what the Firm should credit score to shopper accounts.

Curiosity Fee Threat

As talked about above, many of the proceeds acquired from IUL insurance coverage are
invested in mounted revenue securities with the return on these investments
supposed to fund the acquisition of name spreads and choices. There are two dangers
regarding rates of interest. First, the Firm has the danger that funding
returns are such that it doesn’t have sufficient funding revenue to buy the
wanted name spreads. Second, within the occasion the coverage is surrendered, the Firm
pays out a ebook worth give up quantity and there’s a danger that it’ll incur a
loss upon having to promote the mounted revenue securities backing the legal responsibility (if
rates of interest have risen). This danger just isn’t at the moment hedged.

Credit score Threat

The Firm is uncovered to credit score danger inside its funding portfolio, together with
its mortgage portfolio, and thru its spinoff and reinsurance actions.
Credit score danger pertains to the uncertainty of an obligor’s continued capability to make
well timed funds in accordance with the contractual phrases of the monetary
instrument or contract. The Firm considers its whole potential credit score
publicity to every counterparty and its associates to make sure compliance with
pre-established credit score tips on the time it enters right into a transaction which
would probably improve the Firm’s credit score danger. These tips and
oversight of credit score danger are managed by way of a complete enterprise danger
administration program that features members of senior administration.

The Firm manages the danger of credit-related losses within the occasion of
nonperformance by counterparties by making use of disciplined basic credit score
evaluation and underwriting requirements, prudently limiting exposures to
lower-quality, higher-yielding investments, and diversifying exposures by
issuer, {industry}, area and underlying funding kind. The Firm stays
uncovered to occasional adversarial cyclical financial downturns throughout which default
charges could also be considerably greater than the long-term historic common utilized in
pricing.

The Firm manages its credit score danger associated to over-the-counter derivatives by
getting into into transactions with creditworthy counterparties, sustaining
collateral preparations and thru the usage of grasp netting preparations that
present for a single internet cost to be made by one counterparty to a different at
every due date and upon termination. Usually, the Firm’s present credit score
publicity on over-the-counter spinoff contracts is proscribed to a spinoff
counterparty’s internet constructive truthful worth of spinoff contracts after taking into
consideration the existence of netting preparations and any collateral acquired.
This publicity is monitored and managed to a suitable threshold stage.

30

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The counterparty danger for centrally cleared over-the-counter derivatives is
transferred to a central clearing social gathering by way of contract novation. As a result of the
central clearing social gathering screens open positions and adjusts collateral
necessities day by day, the Firm has minimal credit score publicity from such spinoff
devices.

Alternate-traded derivatives are effected by way of regulated exchanges that
require contract standardization and preliminary margin to transact by way of the
change. As a result of exchange-traded futures are marked to market and customarily
money settled each day, the Firm has minimal publicity to
credit-related losses within the occasion of nonperformance by counterparties to such
spinoff devices. Different exchange-traded derivatives can be uncovered to
nonperformance by counterparties for quantities in extra of preliminary margin
necessities provided that the change is unable to satisfy the contract.

The Firm manages its credit score danger associated to reinsurance treaties by
evaluating the monetary situation of reinsurance counterparties previous to
getting into into new reinsurance treaties. As well as, the Firm recurrently
evaluates their monetary energy in the course of the phrases of the treaties. As of
December 31, 2021, the Firm’s largest reinsurance credit score dangers are associated to
coinsurance treaties with Commonwealth and with life insurance coverage subsidiaries of
Genworth Monetary, Inc. See Observe 7 and Observe 9 to the Consolidated Monetary
Statements for added info on reinsurance.

Ahead-Wanting Statements

This report comprises forward-looking statements that mirror the Firm’s
plans, estimates and beliefs. The Firm’s precise outcomes may differ
materially from these described in these forward-looking statements. Examples of
such forward-looking statements embrace:

•statements of the Firm’s plans, intentions, expectations, aims, or
objectives, together with these associated to the introduction, cessation, phrases or pricing
of latest or current services and products and the consolidated tax charge;

•statements of the Firm’s place, future efficiency and talent to pursue
enterprise technique relative to the unfold and impression of the COVID-19 pandemic and
the associated market, financial, shopper, governmental and healthcare system
response;

•statements in regards to the anticipated development within the shift to lower-risk merchandise,
together with the exit from variable annuities with residing profit riders and the
discontinuance of latest gross sales of common life insurance coverage with secondary
ensures;

•different statements about future financial efficiency, the efficiency of fairness
markets and rate of interest variations and the financial efficiency of the United
States and of world markets; and

•statements of assumptions underlying such statements.

The phrases “consider,” “count on,” “anticipate,” “optimistic,” “intend,” “plan,”
“intention,” “will,” “might,” “ought to,” “may,” “would,” “seemingly,” “forecast,” “on
observe,” “challenge,” “proceed,” “capable of stay,” “resume,” “ship,” “develop,”
“evolve,” “drive,” “allow,” “flexibility,” “situation,” “case” and comparable
expressions are supposed to determine forward-looking statements however should not the
unique technique of figuring out such statements. Ahead-looking statements are
topic to dangers and uncertainties which may trigger precise outcomes to vary
materially from such statements.

Such components embrace, however should not restricted to:

•the impacts on the Firm’s enterprise of the COVID-19 pandemic and the associated
financial, shopper, governmental and healthcare system responses;

•market fluctuations and normal financial and political components, together with
volatility within the U.S. and world market circumstances, shopper conduct and
volatility within the markets for the Firm’s merchandise;

•adjustments in rates of interest and durations of low rates of interest;

•adversarial capital and credit score market circumstances or any downgrade within the Firm’s
credit score rankings;

•results of competitors and the Firm’s bigger rivals’ economies of
scale;

•declines within the Firm’s funding administration efficiency;

•the Firm’s and its associates’ capability to compete in attracting and
retaining expertise, together with AFS attracting and retaining monetary advisors;

•impairment, unfavorable efficiency or default by monetary establishments or different
counterparties;

•poor efficiency of the Firm’s variable merchandise;

•adjustments in valuation of securities and investments included within the Firm’s
property;

•results of the elimination of LIBOR on, and worth of, securities and different
property and liabilities tied to LIBOR;

•the willpower of the quantity of allowances taken on loans and investments;

•the illiquidity of the Firm’s investments;

•failures by different insurers that result in greater assessments the Firm owes to
state insurance coverage warranty funds;

•failures or defaults by counterparties to the Firm’s reinsurance
preparations;

•insufficient reserves for future coverage advantages and claims or for future
redemptions and maturities;

•deviations from the Firm’s assumptions concerning morbidity, mortality and
persistency affecting the Firm’s profitability;

•adjustments to the Firm’s or its associates’ status arising from worker or
agent misconduct or in any other case;

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•direct or oblique results of or responses to local weather change;

•interruptions or different failures within the Firm’s working programs and
networks, together with errors or failures attributable to third-party service suppliers,
interference or third-party assaults;

•interruptions or different errors within the Firm’s telecommunications or information
processing programs;

• identification and mitigation of danger publicity in market environments, new
merchandise, distributors and different sorts of danger;

• incidence of pure or man-made disasters and catastrophes;

• authorized and regulatory actions introduced in opposition to the Firm;

• adjustments to legal guidelines and laws that govern operation of the Firm’s
enterprise;

• adjustments in company tax legal guidelines and laws and interpretations and
determinations of tax legal guidelines impacting the Firm’s merchandise;

• safety of the Firm’s mental property and claims the Firm
infringes the mental property of others; and

•adjustments in and the adoption of latest accounting requirements.

The Firm cautions the reader that the foregoing listing of things just isn’t
exhaustive. There can also be different dangers that the Firm is unable to foretell
presently which will trigger precise outcomes to vary materially from these in
forward-looking statements. Readers are cautioned to not place undue reliance on
these forward-looking statements, which communicate solely as of the date on which they
are made. The Firm undertakes no obligation to replace publicly or revise any
forward-looking statements.

The foregoing listing of things ought to be learn along side the “Threat
Elements” dialogue in Half I, Merchandise 1A within the Firm’s 2021 10-Ok.

Merchandise 7A. Quantitative and Qualitative Disclosure About Market Threat

Objects required beneath this part are included in Merchandise 7 on this Annual Report
on Type 10-Ok – “Administration’s Narrative Evaluation – Quantitative and Qualitative
Disclosures about Market Threat.”

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RiverSource Life Insurance coverage Firm

Merchandise 8. Monetary Statements and Supplementary Knowledge

Consolidated Monetary Statements:

Report of Impartial Registered Public Accounting Agency (PCAOB Agency ID 238)

34
Consolidated Stability Sheets – December 31, 2021 and 2020 37

Consolidated Statements of Revenue – Years ended December 31, 2021, 2020 and 2019

38

Consolidated Statements of Complete Revenue – Years ended December 31, 2021, 2020 and
2019

38

Consolidated Statements of Shareholder’s Fairness – Years ended December 31, 2021, 2020 and
2019

39

Consolidated Statements of Money Flows – Years ended December 31, 2021, 2020 and 2019

40
Notes to Consolidated Monetary Statements 42
1. Nature of Enterprise and Foundation of Presentation 42
2. Abstract of Vital Accounting Insurance policies 42
3. Current Accounting Pronouncements 50
4. Income from Contracts with Prospects 52
5. Variable Curiosity Entities 53
6. Investments 57
7. Financing Receivables 60
8. Deferred Acquisition Prices and Deferred Gross sales Inducement Prices 63
9. Reinsurance 64
Policyholder Account Balances, Future Coverage Advantages and

Claims and Separate

10. Account Liabilities 65
11. Variable Annuity and Insurance coverage Ensures 67
12. Debt 69
13. Truthful Values of Property and Liabilities 70
14. Associated Social gathering Transactions 80
15. Regulatory Necessities 81
16. Offsetting Property and Liabilities 82
17. Derivatives and Hedging Actions 83
18. Shareholder’s Fairness 87
19. Revenue Taxes 88
20. Commitments, Ensures and Contingencies 90

Schedules:

All info on schedules to the Consolidated Monetary Statements required
by Rule 7-05 in Article 7 of Regulation S-X is included within the Consolidated
Monetary Statements and Notes thereto or just isn’t required. Subsequently, all
schedules have been omitted.

33

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Report of Impartial Registered Public Accounting Agency

To the Board of Administrators and Shareholder of RiverSource Life Insurance coverage Firm

Opinion on the Monetary Statements

We’ve audited the accompanying consolidated stability sheets of RiverSource Life
Insurance coverage Firm and its subsidiaries (the “Firm”) as of December 31, 2021
and 2020, and the associated consolidated statements of revenue, of complete
revenue, of shareholder’s fairness and of money flows for every of the three years in
the interval ended December 31, 2021, together with the associated notes (collectively
known as the “consolidated monetary statements”). In our opinion, the
consolidated monetary statements current pretty, in all materials respects, the
monetary place of the Firm as of December 31, 2021 and 2020, and the
outcomes of its operations and its money flows for every of the three years within the
interval ended December 31, 2021 in conformity with accounting rules
typically accepted in the US of America.

Foundation for Opinion

These consolidated monetary statements are the accountability of the Firm’s
administration. Our accountability is to precise an opinion on the Firm’s
consolidated monetary statements based mostly on our audits. We’re a public
accounting agency registered with the Public Firm Accounting Oversight Board
(United States) (PCAOB) and are required to be unbiased with respect to the
Firm in accordance with the U.S. federal securities legal guidelines and the relevant
guidelines and laws of the Securities and Alternate Fee and the PCAOB.

We carried out our audits of those consolidated monetary statements in accordance
with the requirements of the PCAOB. These requirements require that we plan and
carry out the audits to acquire affordable assurance about whether or not the consolidated
monetary statements are free of fabric misstatement, whether or not as a consequence of error or
fraud. The Firm just isn’t required to have, nor had been we engaged to carry out, an
audit of its inner management over monetary reporting. As a part of our audits we
are required to acquire an understanding of inner management over monetary
reporting however not for the aim of expressing an opinion on the effectiveness
of the Firm’s inner management over monetary reporting. Accordingly, we
categorical no such opinion.

Our audits included performing procedures to evaluate the dangers of fabric
misstatement of the consolidated monetary statements, whether or not as a consequence of error or
fraud, and performing procedures that reply to these dangers. Such procedures
included inspecting, on a take a look at foundation, proof concerning the quantities and
disclosures within the consolidated monetary statements. Our audits additionally included
evaluating the accounting rules used and vital estimates made by
administration, in addition to evaluating the general presentation of the consolidated
monetary statements. We consider that our audits present an affordable foundation for
our opinion.

Important Audit Issues

The important audit issues communicated beneath are issues arising from the
present interval audit of the consolidated monetary statements that had been
communicated or required to be communicated to the audit committee and that (i)
relate to accounts or disclosures which are materials to the consolidated
monetary statements and (ii) concerned our particularly difficult, subjective,
or advanced judgments. The communication of important audit issues doesn’t alter
in any manner our opinion on the consolidated monetary statements, taken as a
entire, and we’re not, by speaking the important audit issues beneath,
offering separate opinions on the important audit issues or on the accounts or
disclosures to which they relate.

Valuation of the reserves for long run care insurance policies

As described in Notes 2 and 10 to the consolidated monetary statements, the
whole reserves for long run care insurance policies was $5,664 million as of December 31,
2021, which is included in policyholder account balances, future coverage advantages
and claims on the consolidated stability sheet. Liabilities for estimates of
advantages that can grow to be payable on future claims on long run care insurance policies
are based mostly on a gross premium valuation reflecting administration’s present greatest
estimate assumptions. Administration makes use of greatest estimate assumptions as of the
date the coverage is issued with provisions for the danger of adversarial deviation, as
applicable. After the liabilities are initially established, administration
performs premium deficiency checks utilizing present greatest estimate assumptions
yearly within the third quarter of every 12 months except administration identifies a
materials deviation over the course of quarterly monitoring. The most effective estimate
assumptions embrace anticipated premium charge will increase, profit reductions,
morbidity charges, coverage persistency and rates of interest earned on property
supporting the legal responsibility. If a premium deficiency is acknowledged, the assumptions
as of the date of the loss recognition are locked in and utilized in subsequent
durations, and it’s recorded as a element of advantages, claims, losses and
settlement bills. As disclosed by administration, this evaluation didn’t end in
the identification of a premium deficiency for 2021.

The principal issues for our willpower that performing procedures
regarding the valuation of the reserves for long run care insurance policies is a
important audit matter are the numerous judgment by administration when growing
the present greatest estimate assumptions used within the premium deficiency take a look at on the
reserves for long run care insurance policies, which in flip led to a excessive diploma of
auditor judgment, subjectivity and energy in performing procedures and
evaluating audit proof regarding administration’s present greatest estimate
assumptions associated to anticipated premium charge will increase, profit reductions,
morbidity charges, and rates of interest earned on property supporting the legal responsibility.
Additionally, the audit effort concerned the usage of professionals with specialised ability
and information.

34

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Addressing the matter concerned performing procedures and evaluating audit
proof in reference to forming our general opinion on the consolidated
monetary statements. These procedures included testing the effectiveness of
controls regarding the Firm’s premium deficiency take a look at on the reserves for
long run care insurance policies, together with controls over administration’s improvement of the
present greatest estimate assumptions. These procedures additionally included, amongst others,
evaluating and testing administration’s course of for performing the premium
deficiency testing on the reserves for long run care insurance policies, together with
testing that assumptions are precisely mirrored within the valuation fashions and
testing the completeness and accuracy of underlying information utilized by administration.
Evaluating and testing administration’s course of additionally included the involvement of
professionals with specialised ability and information to help in (i) evaluating
the reasonableness of the present greatest estimate assumptions associated to anticipated
premium charge will increase, profit reductions, morbidity charges, and rates of interest
earned on property supporting the legal responsibility based mostly on {industry} information and information
in addition to historic Firm information and expertise, and (ii) evaluating the
appropriateness of administration’s valuation fashions.

Valuation of the embedded derivatives in sure variable annuity riders

As described in Notes 2, 10, 11, and 13 to the consolidated monetary
statements, administration values the embedded derivatives attributable to the
provisions of sure variable annuity riders utilizing inner valuation fashions.
As there isn’t any lively marketplace for the switch of those embedded derivatives,
such inner valuation fashions estimate truthful worth by discounting anticipated money
flows. As of December 31, 2021, the web embedded spinoff legal responsibility in sure
variable annuity riders was $1,486 million, and is included in policyholder
account balances, future coverage advantages and claims on the consolidated stability
sheet. Administration’s discounted money move mannequin for estimating truthful worth
contains observable capital market assumptions and incorporates vital
unobservable inputs associated to implied volatility, nonperformance danger and
contractholder conduct assumptions that embrace margins for danger, all of which
administration believes a market participant would count on.

The principal issues for our willpower that performing procedures
regarding the valuation of the embedded derivatives in sure variable
annuity riders is a important audit matter are the numerous judgment by
administration to estimate the truthful worth of the embedded derivatives in sure
variable annuity riders, which in flip led to a excessive diploma of auditor judgment,
subjectivity and energy in performing procedures and evaluating audit proof
regarding the numerous unobservable inputs associated to implied volatility,
nonperformance danger and contractholder conduct assumptions that embrace margins
for danger. Additionally, the audit effort concerned the usage of professionals with
specialised ability and information.

Addressing the matter concerned performing procedures and evaluating audit
proof in reference to forming our general opinion on the consolidated
monetary statements. These procedures included testing the effectiveness of
controls associated to the Firm’s estimate of the truthful worth of embedded
derivatives in sure variable annuity riders, together with controls over the
vital unobservable inputs. These procedures additionally included, amongst others,
evaluating and testing administration’s course of for growing the truthful worth
estimate. Testing administration’s course of included evaluating the reasonableness of
the numerous unobservable inputs associated to implied volatility,
nonperformance danger and contractholder conduct assumptions that embrace margins
for danger and testing the completeness and accuracy of underlying information utilized by
administration within the improvement of the numerous unobservable inputs.
Professionals with specialised ability and information had been used to help in (i)
evaluating the reasonableness of sure vital unobservable inputs associated
to implied volatility, nonperformance danger and contractholder conduct
assumptions that embrace margins for danger based mostly on {industry} information and information
in addition to historic Firm information and expertise, and (ii) evaluating the
appropriateness of administration’s fashions.

Valuation of sure ensures on variable annuity and sure life insurance coverage
insurance policies accounted for as insurance coverage liabilities

As described in Notes 2, 10, and 11 to the consolidated monetary statements,
the Firm points common life, variable common life and variable annuity
insurance policies which have product options which are accounted for as insurance coverage
liabilities. As disclosed by administration, the legal responsibility for these insurance policies, which
is included in policyholder account balances, future coverage advantages and claims
on the consolidated stability sheet, is set utilizing actuarial fashions to
estimate the current worth of the projected advantages in extra of account worth
and recognizing the surplus over the estimated life based mostly on anticipated
assessments. Vital assumptions utilized by administration in projecting the
current worth of future advantages and assessments embrace buyer asset worth
development charges, mortality, persistency, and funding margins, and moreover
for variable annuity insurance policies, profit utilization.

The principal issues for our willpower that performing procedures
regarding the valuation of sure ensures on variable annuity and sure
life insurance coverage insurance policies accounted for as insurance coverage liabilities is a important
audit matter are the numerous judgment by administration when growing the
estimate of sure ensures on variable annuity and sure life insurance coverage
insurance policies accounted for as insurance coverage liabilities, which in flip led to a excessive
diploma of auditor judgment, subjectivity and energy in performing procedures and
evaluating administration’s vital assumptions associated to buyer asset worth
development charges, persistency, funding margins, and, for variable annuity
insurance policies, profit utilization. Additionally, the audit effort concerned the usage of
professionals with specialised ability and information.

35

——————————————————————————–

Addressing the matter concerned performing procedures and evaluating audit
proof in reference to forming our general opinion on the consolidated
monetary statements. These procedures included testing the effectiveness of
controls regarding the Firm’s valuation of sure ensures on variable
annuity and sure life insurance coverage insurance policies accounted for as insurance coverage
liabilities, together with controls over administration’s improvement of the numerous
assumptions. These procedures additionally included, amongst others, evaluating and
testing administration’s course of for growing the estimate of sure ensures
on variable annuity and sure life insurance coverage insurance policies accounted for as
insurance coverage liabilities, testing the completeness and accuracy of underlying information
utilized by administration and testing that assumptions are precisely mirrored within the
fashions. Evaluating and testing administration’s course of additionally included the
involvement of execs with specialised ability and information to help in
(i) evaluating the reasonableness of the numerous assumptions associated to
buyer asset worth development charges, persistency, profit utilization and
funding margins based mostly on {industry} information and information in addition to historic
Firm information and expertise, and (ii) evaluating the appropriateness of
administration’s fashions.

/s/ PricewaterhouseCoopers LLPMinneapolis, MinnesotaFebruary 25, 2022

We’ve served because the Firm’s auditor since 2010.

36

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RiverSource Life Insurance coverage Firm

Consolidated Stability Sheets

December 31,
2021 2020
(in tens of millions, besides share
quantities)

Property

Investments:

Accessible-for-Sale: Mounted maturities, at truthful worth (amortized value: 2021,
$14,718; 2020, $20,260; allowance for credit score losses: 2021, $1; 2020, $10)

$ 16,239$ 22,855
Mortgage loans, at amortized value (allowance for credit score losses: 2021, $12;
2020, $28)

1,788 2,574
Coverage loans 834 846

Different investments (allowance for credit score losses: 2021, nil; 2020, $7)

230 701
Whole investments 19,091 26,976
Investments of consolidated funding entities, at truthful worth 2,184 1,918
Money and money equivalents 3,200 3,191
Money of consolidated funding entities, at truthful worth 121 94

Reinsurance recoverables (allowance for credit score losses: 2021, $11; 2020, $8)

4,529 3,409
Receivables 8,148 1,613
Receivables of consolidated funding entities, at truthful worth 17 16
Accrued funding revenue 124 172
Deferred acquisition prices 2,757 2,508
Different property 7,084 6,969
Different property of consolidated funding entities, at truthful worth 3 2
Separate account property 92,238 87,556
Whole property

$ 139,496$ 134,424

Liabilities and Shareholder’s Fairness
Liabilities:
Policyholder account balances, future coverage advantages and claims $ 35,744$ 33,986
Brief-term borrowings 200 200
Debt of consolidated funding entities, at truthful worth 2,164 1,913

Lengthy-term debt 500 500
Different liabilities 6,628 6,887

Different liabilities of consolidated funding entities, at truthful worth

137 69
Separate account liabilities 92,238 87,556
Whole liabilities 137,611 131,111

Shareholder’s fairness:
Widespread inventory, $30 par worth; 100,000 shares approved, issued and excellent 3

3
Further paid-in capital 2,466 2,466
Retained earnings (deficit) (912) (76)
Collected different complete revenue, internet of tax 328 920
Whole shareholder’s fairness 1,885 3,313
Whole liabilities and shareholder’s fairness

$ 139,496$ 134,424

See Notes to Consolidated Monetary Statements.

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RiverSource Life Insurance coverage Firm

Consolidated Statements of Revenue

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Revenues
Premiums $ (871)$ 341$ 397
Web funding revenue 827 869 917
Coverage and contract prices 2,304 2,094 2,042
Different revenues 616 482 464
Web realized funding good points (losses) 595 (10) (2)
Whole revenues 3,471 3,776 3,818
Advantages and bills
Advantages, claims, losses and settlement bills 715 1,805 1,804
Curiosity credited to mounted accounts 600 644 669
Amortization of deferred acquisition prices 112 264 133
Curiosity and debt expense 105 5 –
Different insurance coverage and working bills 738 665 685
Whole advantages and bills 2,270 3,383 3,291
Pretax revenue (loss) 1,201 393 527
Revenue tax provision (profit) 137 (45) (60)
Web revenue $ 1,064$ 438$ 587

See Notes to Consolidated Monetary Statements.

Consolidated Statements of Complete Revenue

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Web revenue $ 1,064$ 438$ 587
Different complete revenue (loss), internet of tax:
Web unrealized good points (losses) on securities (592)

346 529

Whole different complete revenue (loss), internet of tax (592)

346 529
Whole complete revenue $ 472$ 784$ 1,116

See Notes to Consolidated Monetary Statements.

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RiverSource Life Insurance coverage Firm

Consolidated Statements of Shareholder’s Fairness

Further Retained Collected
Widespread Paid-In Earnings Different Complete
Shares Capital (Deficit) Revenue (Loss) Whole
(in tens of millions)
Balances at January 1, 2019 3 2,466 1,058 45 3,572

Cumulative impact of adoption of premium
amortization on bought callable debt
securities steering – – (2) – (2)
Web revenue – – 587 587
Different complete revenue (loss), internet of tax – – – 529 529

Money dividends to Ameriprise Monetary, Inc. – – (1,350) – (1,350)
Balances at December 31, 2019 3 2,466 293 574 3,336
Cumulative impact of adoption of present
anticipated credit score losses steering – – (7) – (7)

Web revenue – – 438 – 438
Different complete revenue (loss), internet of tax – – – 346 346

Money dividends to Ameriprise Monetary, Inc. – – (800) – (800)
Balances at December 31, 2020 3 2,466 (76) 920 $ 3,313

Web revenue – – 1,064 – 1,064
Different complete revenue (loss), internet of tax – – – (592) (592)

Money dividends to Ameriprise Monetary, Inc. – – (1,900) – (1,900)
Balances at December 31, 2021 $ 3$ 2,466$ (912) $ 328 $ 1,885

See Notes to Consolidated Monetary Statements.

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RiverSource Life Insurance coverage Firm

Consolidated Statements of Money Flows

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Money Flows from Working Actions
Web revenue $ 1,064$ 438$ 587
Changes to reconcile internet revenue to internet money offered by (utilized in)
working actions:
Depreciation, amortization and accretion, internet (98) (22) (22)
Deferred revenue tax (profit) expense (40) (278) (278)
Contractholder and policyholder prices, non-cash (390) (385) (380)
Loss from fairness methodology investments 72 73 99
Web realized funding (good points) losses (611) (12) (15)
Impairments and provision for mortgage losses (3) 22 17
Web losses (good points) of consolidated funding entities (20) (2) –
Adjustments in working property and liabilities:
Deferred acquisition prices (155) 48 (106)

Policyholder account balances, future coverage advantages and claims, internet

2,478 3,441 751
Derivatives, internet of collateral (575) (134) 333
Reinsurance recoverables 29 (166) (90)
Different receivables 114 62 19
Accrued funding revenue 10 (3) 26
Present revenue tax, internet (321) 378 2

Different working property and liabilities of consolidated funding
entities

20 – –
Different, internet 4 79 23
Web money offered by (utilized in) working actions 1,578 3,539 966

Money Flows from Investing Actions
Accessible-for-Sale securities:
Proceeds from gross sales 555 102 232
Maturities, sinking fund funds and calls 2,804 2,813 2,250
Purchases (3,677) (4,069) (1,772)
Proceeds from gross sales, maturities and repayments of mortgage loans 272 207 223
Funding of mortgage loans (215) (135) (331)
Proceeds from gross sales and collections of different investments 93 123 129
Buy of different investments (32) (184) (164)

Proceeds from gross sales, maturities and repayments of investments by
consolidated funding entities

1,047 46 –
Buy of investments by consolidated funding entities (1,603) (57) –
Buy of kit and software program (13) (10) (10)
Change in coverage loans, internet 12 21 (6)
Money paid for deposit receivables (377) (4) (349)
Money acquired for deposit receivables 254 93 98
Advance on line of credit score to Ameriprise Monetary, Inc. (1) (702) –
Compensation from Ameriprise Monetary, Inc. on line of credit score 1 702 –
Money paid for written choices with deferred premiums (552) (338) (243)
Money acquired from written choices with deferred premiums 106 133 170

Web money impression of consolidating consolidated funding entities

– 83 –
Different, internet (39) 2 42
Web money offered by (utilized in) investing actions (1,365) (1,174) 269

See Notes to Consolidated Monetary Statements.

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RiverSource Life Insurance coverage Firm

Consolidated Statements of Money Flows (Continued)

Years Ended December 31,

2021 2020 2019
(in tens of millions)

Money Flows from Financing Actions
Policyholder account balances:
Deposits and different additions $ 1,553$ 1,649$ 2,152
Web transfers from (to) separate accounts (273) (125) (86)
Surrenders and different advantages (1,365) (1,357) (1,728)
Proceeds from line of credit score with Ameriprise Monetary, Inc. 6 186 73
Repayments to Ameriprise Monetary, Inc. on line of credit score (6) (236) (23)
Proceeds from long-term debt with Ameriprise Monetary, Inc. – 500 –
Money acquired from bought choices with deferred premiums 1,350 40 206
Money paid for bought choices with deferred premiums (156) (211) (289)
Borrowings by consolidated funding entities 1,756 – –
Repayments of debt by consolidated funding entities (1,142) (1) –
Money dividends to Ameriprise Monetary, Inc. (1,900) (800) (1,350)
Web money offered by (utilized in) financing actions (177) (355) (1,045)
Web improve (lower) in money and money equivalents 36 2,010 190
Money and money equivalents at starting of interval 3,285 1,275 1,085
Money and money equivalents at finish of interval $ 3,321$ 3,285$ 1,275

Supplemental Disclosures:
Revenue taxes paid (acquired), internet $ 496$ (143)$ 215
Curiosity paid on borrowings – 2 5
Curiosity paid by consolidated funding entities 90 – –
Non-cash investing exercise:
Partnership commitments not but remitted – – 4

Alternate of an funding that resulted in a realized acquire and an
improve to amortized value

17 – –

Investments transferred in reference to mounted annuity reinsurance
transaction

7,513 – 1,265

See Notes to Consolidated Monetary Statements.

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RiverSource Life Insurance coverage Firm

Notes to Consolidated Monetary Statements

1. Nature of Enterprise and Foundation of Presentation

RiverSource Life Insurance coverage Firm is a inventory life insurance coverage firm with one
wholly owned inventory life insurance coverage firm subsidiary, RiverSource Life Insurance coverage
Co. of New York (“RiverSource Lifetime of NY”). RiverSource Life Insurance coverage Firm
is a completely owned subsidiary of Ameriprise Monetary, Inc. (“Ameriprise
Monetary”).

•RiverSource Life Insurance coverage Firm is domiciled in Minnesota and holds
Certificates of Authority in American Samoa, the District of Columbia and all
states besides New York. RiverSource Life Insurance coverage Firm points insurance coverage and
annuity merchandise.

•RiverSource Lifetime of NY is domiciled and holds a Certificates of Authority in New
York. RiverSource Lifetime of NY points insurance coverage and annuity merchandise.

RiverSource Life Insurance coverage Firm additionally wholly owns RiverSource Tax Advantaged
Investments, Inc. (“RTA”)and Columbia Cent CLO Advisors, LLC (“Columbia Cent”).
RTA is a inventory firm domiciled in Delaware and is a restricted accomplice in
reasonably priced housing partnership investments. Columbia Cent offers asset
administration providers to collateralized mortgage obligations (“CLOs”).

The accompanying Consolidated Monetary Statements embrace the accounts of
RiverSource Life Insurance coverage Firm and corporations wherein it straight or
not directly has a controlling monetary curiosity and variable curiosity entities
(“VIEs”) wherein it’s the main beneficiary (collectively, the “Firm”).
All intercompany transactions and balances have been eradicated in
consolidation.

The accompanying Consolidated Monetary Statements are ready in accordance
with U.S. typically accepted accounting rules (“GAAP”) which differ in
sure respects from reporting practices prescribed or permitted by state
insurance coverage regulatory authorities as described in Observe 15.

Through the third quarter of 2021, RiverSource Life Insurance coverage Firm closed on a
transaction with World Atlantic Monetary Group’s subsidiary Commonwealth
Annuity and Life Insurance coverage Firm (“Commonwealth”), efficient July 1, 2021, to
reinsure roughly $7.0 billion of mounted deferred and quick annuity
insurance policies. As a part of the transaction, RiverSource Life Insurance coverage Firm
transferred $7.8 billion in consideration primarily consisting of
Accessible-for-Sale securities, industrial mortgage loans, syndicated loans and
money. The transaction resulted in a internet realized acquire of roughly
$532 million on investments bought. An analogous beforehand introduced transaction
with RiverSource Lifetime of New York didn’t obtain regulatory approval in time to
shut by September 30, 2021 and the transaction was terminated by the events.

The Firm evaluated occasions or transactions which will have occurred after the
stability sheet date for potential recognition or disclosure by way of the date the
monetary statements had been issued. Aside from disclosed in Observe 14, no different
subsequent occasions or transactions requiring recognition or disclosure
had been recognized.

The Firm’s principal merchandise are variable annuities, structured variable
annuities, common life (“UL”) insurance coverage, together with listed common life
(“IUL”) and variable common life (“VUL”) insurance coverage, that are issued
primarily to people. Waiver of premium and unintended demise profit riders
are typically out there with UL merchandise, along with different profit riders.
Variable annuity contract purchasers can select so as to add optionally available profit riders
to their contracts, akin to assured minimal demise profit (“GMDB”),
assured minimal withdrawal profit (“GMWB”) and assured minimal
accumulation profit (“GMAB”) riders. In 2020, the Firm started providing
structured variable annuities which give contractholders the choice to allocate
a portion of their account worth to an listed account with the contractholder’s
charge of return, which can be constructive or unfavorable, tied to chose indices.
Throughout 2021, the Firm made the choice to discontinue new gross sales of
considerably all of its variable annuities with residing profit ensures at
the tip of 2021, with a full exit by mid-2022. Because the Firm continues to
optimize its danger profile and shift its enterprise combine to decrease danger choices, it
has discontinued new gross sales of its UL insurance coverage with secondary ensures and its
single-pay mounted common life with a long run care rider merchandise on the finish
of 2021.

The Firm additionally affords quick annuities, conventional life insurance coverage and
incapacity revenue (“DI”) insurance coverage. In 2020, the Firm discontinued gross sales of
mounted deferred annuities.

The Firm’s enterprise is bought by way of the advisor community of Ameriprise
Monetary Providers, LLC (“AFS”), a subsidiary of Ameriprise Monetary.
RiverSource Distributors, Inc., a subsidiary of Ameriprise Monetary, serves as
the principal underwriter and distributor of variable annuity and life insurance coverage
merchandise issued by the Firm.

2. Abstract of Vital Accounting Insurance policies

The Firm adopted accounting customary, Monetary Devices – Credit score Losses –
Measurement of Credit score Losses on Monetary Devices, on January 1, 2020. The
vital accounting insurance policies for Accessible-for-Sale Securities, Financing
Receivables, and Reinsurance had been up to date because of adopting the brand new
accounting customary.

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Ideas of Consolidation

A VIE is an entity that both has fairness traders that lack sure important
traits of a controlling monetary curiosity (together with substantive
voting rights, the duty to soak up the entity’s losses, or the rights
to obtain the entity’s returns) or has fairness traders that don’t present
adequate monetary sources for the entity to assist its actions.

Voting curiosity entities (“VOEs”) are these entities that don’t qualify as a
VIE. The Firm consolidates VOEs wherein it holds a larger than 50% voting
curiosity. The Firm typically accounts for entities utilizing the fairness methodology
when it holds a larger than 20% however lower than 50% voting curiosity or when the
Firm workout routines vital affect over the entity. All different investments
that aren’t reported at truthful worth as buying and selling or Accessible-for-Sale securities
are accounted for utilizing the measurement different methodology when the Firm owns
lower than a 20% voting curiosity and doesn’t train vital affect.
Below the measurement different, the funding is recorded on the value foundation,
much less impairments, if any, plus or minus observable value adjustments of similar or
comparable investments of the identical issuer.

A VIE is consolidated by the reporting entity that determines it has each:

•the ability to direct the actions of the VIE that almost all considerably impression
the VIE’s financial efficiency; and

•the duty to soak up probably vital losses or the suitable to obtain
probably vital advantages to the VIE.

All VIEs are assessed for consolidation beneath this framework. When evaluating
entities for consolidation, the Firm considers its contractual rights in
figuring out whether or not it has the ability to direct the actions of the VIE that
most importantly impression the VIE’s financial efficiency. In figuring out whether or not
the Firm has this energy, it considers whether or not it’s performing in a task that
permits it to direct the actions that almost all considerably impression the financial
efficiency of an entity or whether it is performing in an agent function.

In figuring out whether or not the Firm has the duty to soak up losses of the
VIE or the suitable to obtain advantages from the VIE that might probably be
vital to the VIE, the Firm considers an evaluation of its rights to
obtain advantages akin to funding returns and its obligation to soak up losses
related to any funding within the VIE along side different qualitative
components. Administration and incentive charges which are at market and commensurate with
the extent of providers offered, and the place the Firm doesn’t maintain different
pursuits within the VIE that might take in greater than an insignificant quantity of the
VIE’s anticipated losses or obtain greater than an insignificant quantity of the VIE’s
anticipated residual returns, should not thought of a variable curiosity and are
excluded from the evaluation.

The consolidation steering has a scope exception for reporting entities with
pursuits in registered cash market funds which wouldn’t have an express assist
settlement.

Quantities Based mostly on Estimates and Assumptions

Accounting estimates are an integral a part of the Consolidated Monetary
Statements. Partially, they’re based mostly upon assumptions regarding future occasions.
Among the many extra vital are those who relate to funding securities
valuation and the popularity of credit score losses or impairments, deferred
acquisition prices (“DAC”) and the corresponding recognition of DAC amortization,
valuation of spinoff devices and hedging actions, litigation reserves,
future coverage advantages and claims reserves and revenue taxes and the popularity
of deferred tax property and liabilities. These accounting estimates mirror the
greatest judgment of administration and precise outcomes may differ.

Investments

Accessible-for-Sale Securities

Accessible-for-Sale securities are carried at truthful worth with unrealized good points
(losses) recorded in amassed different complete revenue (“AOCI”), internet of
impacts to DAC, deferred gross sales inducement prices (“DSIC”), unearned income,
profit reserves, reinsurance recoverables and revenue taxes. Features and losses
are acknowledged on a commerce date foundation within the Consolidated Statements of Revenue
upon disposition of the securities.

Accessible-for-Sale securities are impaired when the truthful worth of an funding
is lower than its amortized value. When an Accessible-for-Sale safety is
impaired, the Firm first assesses whether or not or not: (i) it has the intent to
promote the safety (decided to promote) or (ii) it’s extra seemingly than not
that the Firm shall be required to promote the safety earlier than its anticipated
restoration. If both of those circumstances exist, the Firm acknowledges an
impairment by decreasing the ebook worth of the safety for the distinction between
the funding’s amortized value and its truthful worth with a corresponding cost
to earnings. Subsequent will increase within the truthful worth of Accessible-for-Sale
securities that happen in durations after a write-down has occurred are recorded as
unrealized good points in different complete revenue (“OCI”), whereas subsequent
decreases in truthful worth would proceed to be recorded as reductions of ebook
worth with a cost to earnings.

For securities that don’t meet the above standards, the Firm determines
whether or not the lower in truthful worth is because of a credit score loss or as a consequence of different
components. The quantity of impairment as a consequence of credit-related components, if any, is
acknowledged as an allowance for credit score losses with a associated cost to internet
realized funding good points (losses). The allowance for credit score losses is proscribed
to the quantity by which the safety’s amortized value foundation exceeds its truthful
worth. The quantity of the impairment associated to different components is acknowledged in
OCI.

Elements the Firm considers in figuring out whether or not declines within the truthful worth
of mounted maturity securities are as a consequence of credit-related components embrace: (i) the
extent to which the market worth is beneath amortized value; (ii) basic
evaluation of the liquidity, enterprise

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prospects and general monetary situation of the issuer; and (iii) market occasions
that might impression credit score rankings, financial and enterprise local weather, litigation and
authorities actions, and comparable exterior enterprise components.

If by way of subsequent analysis there’s a sustained improve in money flows
anticipated, each the allowance and associated cost to earnings could also be reversed to
mirror the rise in anticipated principal and curiosity funds. Nonetheless, for
Accessible-for-Sale securities that acknowledged an impairment previous to January 1,
2020 by decreasing the ebook worth of the safety, the distinction between the brand new
amortized value foundation and the improved money flows anticipated to be collected is
accreted as curiosity revenue.

In an effort to decide the quantity of the credit score loss element for company debt
securities, a greatest estimate of the current worth of money flows anticipated to be
collected discounted on the safety’s efficient rate of interest is in comparison with
the amortized value foundation of the safety. The numerous inputs to money move
projections take into account potential debt restructuring phrases, projected money flows
out there to pay collectors and the Firm’s place within the debtor’s general
capital construction. When assessing potential credit-related impairments for
structured investments (e.g., residential mortgage backed securities, industrial
mortgage backed securities and asset backed securities), the Firm additionally
considers credit-related components akin to general deal construction and its place
throughout the construction, high quality of underlying collateral, delinquencies and
defaults, loss severities, recoveries, prepayments and cumulative loss
projections.

Administration has elected to exclude accrued curiosity in its measurement of the
allowance for credit score losses for Accessible-for-Sale securities. Accrued curiosity
on Accessible-for-Sale securities is recorded as earned in Accrued funding
revenue. Accessible-for-Sale securities are positioned on nonaccrual standing when the
accrued stability turns into 90 days overdue or earlier based mostly on administration’s
analysis of the info and circumstances of every safety beneath evaluation. All
beforehand accrued curiosity is reversed by way of Web funding revenue.

Different Investments

Different investments primarily mirror the Firm’s pursuits in reasonably priced
housing partnerships and syndicated loans. Inexpensive housing partnerships are
accounted for beneath the fairness methodology.

Financing Receivables

Financing receivables are comprised of business loans, coverage loans, and
deposit receivables.

Industrial Loans

Industrial loans embrace industrial mortgage loans and syndicated loans and are
recorded at amortized value much less the allowance for mortgage losses. Industrial
mortgage loans are recorded inside Mortgage loans and syndicated loans are
recorded inside Different investments. Industrial mortgage loans are loans on
industrial properties which are originated by the Firm. Syndicated loans
characterize the Firm’s funding in mortgage syndications originated by unrelated
third events.

Curiosity revenue is accrued as earned on the unpaid principal balances of the
loans. Curiosity revenue acknowledged on industrial mortgage loans and syndicated
loans is recorded in Web funding revenue.

Coverage Loans

Coverage loans don’t exceed the money give up worth at origination. As there may be
minimal danger of loss associated to coverage loans, there isn’t any allowance for credit score
losses.

Curiosity revenue is accrued as earned on the unpaid principal balances of the
loans. Curiosity revenue acknowledged on coverage loans is recorded in Web funding
revenue.

Deposit Receivables

For every of its reinsurance agreements, the Firm determines whether or not the
settlement offers indemnification in opposition to loss or legal responsibility associated to
insurance coverage danger in accordance with relevant accounting requirements. If the
Firm determines {that a} reinsurance settlement doesn’t expose the reinsurer to
an affordable risk of a big loss from insurance coverage danger, the Firm
data the settlement utilizing the deposit methodology of accounting. Deposits made and
any associated embedded derivatives are included in Receivables. As quantities are
acquired, according to the underlying contracts, deposit receivables are
adjusted. Deposit receivables are accreted utilizing the curiosity methodology and the
accretion is reported in Different revenues.

See Observe 7 for added info on financing receivables.

Allowance for Credit score Losses

The allowance for credit score losses is a valuation account that’s deducted from the
amortized value foundation of the monetary property to current the web quantity anticipated
to be collected over the asset’s anticipated life, contemplating previous occasions, present
circumstances and affordable and supportable forecasts of future financial
circumstances. Previous to January 1, 2020, the allowance for credit score losses was based mostly
on an incurred loss mannequin that didn’t require estimating anticipated credit score losses
over the anticipated lifetime of the asset. Estimates of anticipated credit score losses
take into account each historic charge-off and restoration expertise in addition to present
financial circumstances and administration’s expectation of future charge-off and
restoration ranges. Anticipated losses associated to dangers aside from credit score danger are
excluded from the allowance for credit score losses. The allowance for credit score losses
is measured and recorded upon preliminary recognition of the mortgage, no matter
whether or not it’s originated or bought. The strategies and knowledge used to
develop the allowance for credit score losses for every class of financing receivable
are mentioned beneath.

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Industrial Loans

The allowance for credit score losses for industrial mortgage loans and syndicated
loans makes use of a chance of default and loss severity strategy to estimate
lifetime anticipated credit score losses. Precise historic default and loss severity
information for every kind of business mortgage is adjusted for present circumstances and
affordable and supportable forecasts of future financial circumstances to develop
the chance of default and loss severity assumptions which are utilized to the
amortized value foundation of the loans over the anticipated life of every portfolio. The
allowance for credit score losses on industrial mortgage loans and syndicated loans is
recorded by way of provisions charged to Web realized funding good points (losses)
and is lowered/elevated by internet charge-offs/recoveries.

Administration determines the adequacy of the allowance for credit score losses based mostly on
the general mortgage portfolio composition, current and historic loss expertise,
and different pertinent components, together with when relevant, inner danger rankings,
loan-to-value (“LTV”) ratios and occupancy charges, together with affordable and
supportable forecasts of financial and market circumstances. This analysis is
inherently subjective because it requires estimates, which can be inclined to
vital change. Whereas the Firm might attribute parts of the allowance to
particular mortgage swimming pools as a part of the allowance estimation course of, your complete
allowance is obtainable to soak up losses anticipated over the lifetime of the mortgage
portfolio.

Deposit receivables

The allowance for credit score losses is calculated on a person reinsurer foundation.
Deposit receivables are collateralized by underlying belief preparations.
Administration evaluates the phrases of the reinsurance and belief agreements, the
nature of the underlying property, and the potential for adjustments within the collateral
worth when contemplating the necessity for an allowance for credit score losses.

Nonaccrual Loans

Industrial mortgage loans and syndicated loans are positioned on nonaccrual standing
when both the gathering of curiosity or principal has grow to be 90 days overdue
or is in any other case thought of uncertain of assortment. When a mortgage is positioned on
nonaccrual standing, unpaid accrued curiosity is reversed. Curiosity funds
acquired on loans on nonaccrual standing are typically utilized to principal except
the remaining principal stability has been decided to be totally collectible.
Administration has elected to exclude accrued curiosity in its measurement of the
allowance for credit score losses for industrial mortgage loans and syndicated loans.

Restructured Loans

A mortgage is assessed as a restructured mortgage when the Firm makes sure
concessionary modifications to contractual phrases for debtors experiencing
monetary difficulties. When the rate of interest, minimal funds, and/or due
dates have been modified in an try to make the mortgage extra reasonably priced to a
borrower experiencing monetary difficulties, the modification is taken into account a
troubled debt restructuring. Modifications to mortgage phrases don’t routinely
end in troubled debt restructurings (“TDRs”). Per the Interagency Assertion
on Mortgage Modifications and Reporting for Monetary Establishments Working with
Prospects Affected by the Coronavirus, modifications made on a very good religion foundation
in response to the coronavirus illness 2019 (“COVID-19”) pandemic to debtors
who weren’t greater than 30 days overdue as of December 31, 2019, akin to cost
deferrals, extensions of reimbursement phrases, payment waivers, or delays in cost that
should not vital to the unpaid principal worth of the mortgage, should not
thought of TDRs. Usually, efficiency previous to the restructuring or
vital occasions that coincide with the restructuring are thought of in
assessing whether or not the borrower can meet the brand new phrases which can outcome within the
mortgage being returned to accrual standing on the time of the restructuring or after
a efficiency interval. If the borrower’s capability to satisfy the revised cost
schedule just isn’t moderately assured, the mortgage stays on nonaccrual standing.

Cost-off and Foreclosures

Cost-offs are recorded when the Firm concludes that each one or a portion of the
industrial mortgage mortgage or syndicated mortgage is uncollectible. Elements utilized by
the Firm to find out whether or not all quantities due on industrial mortgage loans
shall be collected, embrace however should not restricted to, the monetary situation of
the borrower, efficiency of the underlying properties, collateral and/or
ensures on the mortgage, and the borrower’s estimated future capability to pay based mostly
on property kind and geographic location. Elements utilized by the Firm to
decide whether or not all quantities due on syndicated loans shall be collected, embrace
however should not restricted to the borrower’s monetary situation, {industry} outlook, and
inner danger rankings based mostly on ranking company information and inner analyst
expectations.

Whether it is decided that foreclosures on a industrial mortgage mortgage is possible
and the truthful worth is lower than the present mortgage stability, anticipated credit score losses
are measured because the distinction between the amortized value foundation of the asset and
truthful worth much less estimated promoting prices. Upon foreclosures, the industrial
mortgage mortgage and associated allowance are reversed, and the foreclosed property is
recorded as actual property owned inside Different property.

Money and Money Equivalents

Money equivalents embrace extremely liquid investments with unique or remaining
maturities on the time of buy of 90 days or much less.

Reinsurance

The Firm cedes insurance coverage danger to different insurers beneath reinsurance agreements.

Reinsurance premiums paid and advantages acquired are accounted for constantly
with the premise utilized in accounting for the insurance policies from which danger is reinsured
and constantly with the phrases of the reinsurance contracts. Reinsurance
premiums for conventional life,

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long run care (“LTC”) , DI and life contingent quick annuities, internet of the
change in any pay as you go reinsurance asset, are reported as a discount of
Premiums. UL and VUL reinsurance premiums are reported as a discount of Coverage
and contract prices. As well as, for UL and VUL insurance coverage insurance policies, the web
value of reinsurance ceded, which represents the discounted quantity of the
anticipated money flows between the reinsurer and the Firm, is assessed as an
asset or contra asset and amortized over the estimated lifetime of the insurance policies in
proportion to the estimated gross earnings (“EGPs”) and is topic to
retrospective adjustment in a fashion much like retrospective adjustment of DAC.
The assumptions used to challenge the anticipated money flows are according to
these used for DAC valuation for a similar contracts. Adjustments within the internet value of
reinsurance are mirrored as a element of Coverage and contract prices.
Reinsurance recoveries are reported as parts of Advantages, claims, losses
and settlement bills.

Insurance coverage liabilities are reported earlier than the consequences of reinsurance.
Policyholder account balances, future coverage advantages and claims recoverable
beneath reinsurance contracts are recorded inside Reinsurance recoverables, internet of
the allowance for credit score losses. The Firm evaluates the monetary situation
of its reinsurers previous to getting into into new reinsurance contracts and on a
periodic foundation in the course of the contract time period. The allowance for credit score losses associated
to reinsurance recoverable relies on making use of observable {industry} information
together with insurer rankings, default and loss severity information to the Firm’s
reinsurance recoverable balances. Administration evaluates the outcomes of the
calculation and considers variations between the {industry} information and the
Firm’s information. Such variations embrace the truth that the Firm has no precise
historical past of losses and the truth that {industry} information might include non-life insurers.
This analysis is inherently subjective because it requires estimates, which can be
inclined to vital change given the long-term nature of those
receivables. As well as, the Firm has a reinsurance safety settlement
that gives credit score protections for its reinsured long run care enterprise. The
allowance for credit score losses on reinsurance recoverable is recorded by way of
provisions charged to Advantages, claims, losses and settlement bills.

The Firm additionally assumes life insurance coverage and stuck annuity danger from different
insurers in restricted circumstances. Reinsurance premiums acquired and advantages
paid are accounted for constantly with the premise utilized in accounting for the
insurance policies from which danger is reinsured and constantly with the phrases of the
reinsurance contracts. Liabilities for assumed enterprise are recorded inside
Policyholder account balances, future coverage advantages and claims.

See Observe 9 for added info on reinsurance.

Land, Buildings, Tools and Software program

Land, buildings, tools and internally developed software program are carried at value
much less amassed depreciation or amortization and are mirrored inside different
property. The Firm makes use of the straight-line methodology of depreciation and
amortization over durations starting from three to 39 years.

As of December 31, 2021 and 2020, land, buildings, tools and software program had been
$123 million and $124 million, respectively, internet of amassed depreciation of
$216 million and $202 million, respectively. Depreciation and amortization
expense for the years ended December 31, 2021, 2020 and 2019 was $14 million,
$14 million and $16 million, respectively.

Spinoff Devices and Hedging Actions

Freestanding spinoff devices are recorded at truthful worth and are mirrored
in Different property or Different liabilities. The Firm’s coverage is to not offset truthful
worth quantities acknowledged for derivatives and collateral preparations executed
with the identical counterparty beneath the identical grasp netting association. The
accounting for adjustments within the truthful worth of a spinoff instrument is dependent upon
its supposed use and the ensuing hedge designation, if any. The Firm
primarily makes use of derivatives as financial hedges that aren’t designated as
accounting hedges or don’t qualify for hedge accounting therapy. The Firm
sometimes designates derivatives as (i) hedges of adjustments within the truthful worth
of property, liabilities, or agency commitments (“truthful worth hedges”) or (ii) hedges
of a forecasted transaction or of the variability of money flows to be acquired
or paid associated to a acknowledged asset or legal responsibility (“money move hedges”).

Spinoff devices which are entered into for hedging functions are designated
as such on the time the Firm enters into the contract. For all spinoff
devices which are designated for hedging actions, the Firm paperwork
the entire hedging relationships between the hedge devices and the hedged
objects on the inception of the relationships. Administration additionally paperwork its danger
administration aims and methods for getting into into the hedge transactions.
The Firm assesses, at inception and on a quarterly foundation, whether or not derivatives
designated as hedges are extremely efficient in offsetting the truthful worth or money
flows of hedged objects. Whether it is decided {that a} spinoff is now not extremely
efficient as a hedge, the Firm will discontinue the applying of hedge
accounting.

For spinoff devices that don’t qualify for hedge accounting or should not
designated as accounting hedges, adjustments in truthful worth are acknowledged in present
interval earnings. Adjustments in truthful worth of derivatives are offered within the
Consolidated Statements of Revenue based mostly on the character and use of the instrument.
Adjustments in truthful worth of derivatives used as financial hedges are offered in
the Consolidated Statements of Revenue with the corresponding change within the
hedged asset or legal responsibility.

For spinoff devices that qualify as truthful worth hedges, adjustments within the
truthful worth of the derivatives, in addition to adjustments within the truthful worth of the
hedged property, liabilities or agency commitments, are acknowledged on a internet foundation in
present interval earnings. The carrying worth of the hedged merchandise is adjusted for
the change in truthful worth from the designated hedged danger. If a good worth hedge
designation is eliminated or the hedge is terminated previous to maturity, earlier
changes to the carrying worth of the hedged merchandise are acknowledged into
earnings over the remaining lifetime of the hedged merchandise.

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For spinoff devices that qualify as money move hedges, the efficient
portion of the acquire or loss on the spinoff devices is reported in AOCI
and reclassified into earnings when the hedged merchandise or transaction impacts
earnings. The quantity that’s reclassified into earnings is offered within the
Consolidated Statements of Revenue with the hedged instrument or transaction
impression. Any ineffective portion of the acquire or loss is reported in present
interval earnings as a element of Web funding revenue. If a hedge designation
is eliminated or a hedge is terminated previous to maturity, the quantity beforehand
recorded in AOCI is reclassified to earnings over the interval that the hedged
merchandise impacts earnings. For hedge relationships which are discontinued as a result of the
forecasted transaction just isn’t anticipated to happen in line with the unique
technique, any associated quantities beforehand recorded in AOCI are acknowledged in
earnings instantly.

The fairness element of listed annuity, structured variable annuity and IUL
obligations are thought of embedded derivatives. Moreover, sure annuities
include GMAB and GMWB provisions. The GMAB and the non-life contingent advantages
related to GMWB provisions are additionally thought of embedded derivatives.

See Observe 13 for info concerning the Firm’s truthful worth measurement of
spinoff devices and Observe 17 for the impression of derivatives on the
Consolidated Statements of Revenue.

Deferred Acquisition Prices

The Firm incurs prices in reference to buying new and renewal insurance coverage
and annuity companies. The portion of those prices that are incremental and
direct to the acquisition of a brand new or renewal insurance coverage coverage or annuity
contract are deferred. Vital prices capitalized embrace gross sales based mostly
compensation associated to the acquisition of latest and renewal insurance coverage insurance policies
and annuity contracts, medical inspection prices for profitable gross sales, and a
portion of worker compensation and profit prices based mostly upon the period of time
spent on profitable gross sales. Gross sales based mostly compensation paid to AFS advisors and
workers and third-party distributors is capitalized. Worker compensation and
advantages prices that are capitalized relate primarily to gross sales efforts,
underwriting and processing. All different prices which aren’t incremental direct
prices of buying an insurance coverage coverage or annuity contract are expensed as
incurred. The DAC related to insurance coverage insurance policies or annuity contracts that
are considerably modified or internally changed with one other contract are
accounted for as contract terminations. These transactions are anticipated in
establishing amortization durations and different valuation assumptions.

The Firm screens different DAC amortization assumptions, akin to persistency,
mortality, morbidity, curiosity margin, variable annuity profit utilization and
upkeep expense ranges every quarter and, when assessed independently, every
may impression the Firm’s DAC balances.

The evaluation of DAC balances and the corresponding amortization is a dynamic
course of that considers all related components and assumptions described
beforehand. Except the Firm’s administration identifies a big deviation
over the course of the quarterly monitoring, administration critiques and updates
these DAC amortization assumptions yearly within the third quarter of every 12 months.

Non-Conventional Lengthy-Period Merchandise

For non-traditional long-duration merchandise (together with variable, structured
variable and stuck deferred annuity contracts, UL and VUL insurance coverage merchandise),
DAC are amortized based mostly on projections of EGPs over amortization durations equal
to the approximate lifetime of the enterprise.

EGPs differ based mostly on persistency charges (assumptions at which contractholders and
policyholders are anticipated to give up, make withdrawals from and make deposits
to their contracts), mortality ranges, shopper asset worth development charges (based mostly on
fairness and bond market efficiency), variable annuity profit utilization and
curiosity margins (the unfold between earned charges on invested property and charges
credited to contractholder and policyholder accounts) and are administration’s greatest
estimates. Administration recurrently screens monetary market circumstances and precise
contractholder and policyholder conduct expertise and compares them to its
assumptions. These assumptions are up to date each time it seems that earlier
estimates ought to be revised. When assumptions are modified, the share of
EGPs used to amortize DAC may additionally change. A change within the required
amortization share is utilized retrospectively; a rise in amortization
share will end in a lower within the DAC stability and a rise in DAC
amortization expense, whereas a lower in amortization share will end in
a rise within the DAC stability and a lower in DAC amortization expense. The
impression on outcomes of operations of fixing assumptions might be both constructive
or unfavorable in any specific interval and is mirrored within the interval wherein
such adjustments are made. At every stability sheet date, the DAC stability is adjusted
for the impact that might outcome from the belief of unrealized good points
(losses) on securities impacting EGPs, with the associated change acknowledged
by way of AOCI.

The shopper asset worth development charges are the charges at which variable annuity and
VUL insurance coverage contract values invested in separate accounts are assumed to
admire sooner or later. The charges used differ by fairness and stuck revenue
investments. Administration critiques and, the place applicable, adjusts its assumptions
with respect to shopper asset worth development charges frequently. The Firm
usually makes use of a five-year imply reversion course of as a suggestion in setting
near-term fairness fund development charges based mostly on a long-term view of economic market
efficiency in addition to current precise efficiency. The steered near-term fairness
fund development charge is reviewed quarterly to make sure consistency with administration’s
evaluation of anticipated fairness market efficiency. DAC amortization expense
recorded in a interval when shopper asset worth development charges exceed administration’s
near-term estimate will usually be lower than in a interval when development charges
fall wanting administration’s near-term estimate.

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Conventional Lengthy-Period Merchandise

For conventional long-duration merchandise (together with conventional life and DI
insurance coverage merchandise), DAC are typically amortized as a share of premiums
over amortization durations equal to the premium paying interval. The assumptions
made in calculating the DAC stability and DAC amortization expense are constant
with these utilized in figuring out the liabilities.

For conventional life and DI insurance coverage merchandise, the assumptions present for
adversarial deviations in expertise and are revised provided that administration concludes
expertise shall be so adversarial that DAC should not recoverable. If administration
concludes that DAC should not recoverable, DAC are lowered to the quantity that’s
recoverable based mostly on greatest estimate assumptions and there’s a corresponding
expense recorded within the Consolidated Statements of Revenue.

Deferred Gross sales Inducement Prices

Gross sales inducement prices include bonus curiosity credit and premium credit
added to sure annuity contract and insurance coverage coverage values. These advantages
are capitalized to the extent they’re incremental to quantities that might be
credited on comparable contracts with out the relevant function. The quantities
capitalized are amortized utilizing the identical methodology and assumptions used to
amortize DAC. DSIC is recorded in Different property and amortization of DSIC is
recorded in Advantages, claims, losses and settlement bills.

Separate Account Property and Liabilities

Separate account property characterize funds held for the good thing about and Separate
account liabilities characterize the duty to the variable annuity
contractholders and variable life insurance coverage policyholders who’ve a contractual
proper to obtain the advantages of their contract or coverage and bear the associated
funding danger. Features and losses on separate account property accrue on to
the contractholder or policyholder and should not reported within the Firm’s
Consolidated Statements of Revenue. Separate account property are recorded at truthful
worth and Separate account liabilities are equal to the property acknowledged.

Policyholder Account Balances, Future Coverage Advantages and Claims

The Firm establishes reserves to cowl the advantages related to
non-traditional and conventional long-duration merchandise. Non-traditional
long-duration merchandise embrace variable and structured variable annuity
contracts, mounted annuity contracts and UL and VUL insurance policies. Conventional
long-duration merchandise embrace time period life, entire life, DI and LTC insurance coverage
merchandise.

Ensures accounted for as insurance coverage liabilities embrace GMDB, acquire gross-up
(“GGU”), assured minimal revenue profit (“GMIB”) and the life contingent
advantages related to GMWB. As well as, UL and VUL insurance policies with product
options that end in earnings adopted by losses are accounted for as
insurance coverage liabilities.

Ensures accounted for as embedded derivatives embrace GMAB and the non-life
contingent advantages related to GMWB. As well as, the portion of structured
variable annuities, listed annuities and IUL insurance policies allotted to the listed
account is accounted for as an embedded spinoff.

Adjustments in future coverage advantages and claims are mirrored in earnings within the
interval changes are made. The place relevant, profit quantities anticipated to be
recoverable from reinsurance firms who share within the danger are individually
recorded as Reinsurance recoverables.

Non-Conventional Lengthy-Period Merchandise

The liabilities for non-traditional long-duration merchandise embrace mounted account
values on variable and stuck annuities and UL and VUL insurance policies, liabilities for
assured advantages related to variable annuities and embedded derivatives
for variable and structured variable annuities, listed annuities and IUL
merchandise.

Liabilities for mounted account values on variable, structured variable and stuck
deferred annuities and UL and VUL insurance policies are equal to accumulation values,
that are the cumulative gross deposits and credited curiosity much less withdrawals
and numerous prices.

A portion of the Firm’s UL and VUL insurance policies have product options that outcome
in earnings adopted by losses from the insurance coverage element of the contract.
These earnings adopted by losses might be generated by the associated fee construction of the
product or secondary ensures within the contract. The secondary assure ensures
that, topic to specified circumstances, the coverage is not going to terminate and can
proceed to supply a demise profit even when there may be inadequate coverage worth
to cowl the month-to-month deductions and prices. The legal responsibility for these future
losses is set by estimating the demise advantages in extra of account worth
and recognizing the surplus over the estimated life based mostly on anticipated assessments
(e.g. value of insurance coverage prices, contractual administrative prices, comparable
charges and funding margin). See Observe 11 for info concerning the legal responsibility
for contracts with secondary ensures.

Liabilities for mounted deferred listed annuity, structured variable annuity and
IUL merchandise are equal to the buildup of host contract values overlaying
assured advantages and the truthful worth of embedded fairness choices.

The GMDB and GGU legal responsibility is set by estimating the anticipated worth of
demise advantages in extra of the projected contract accumulation worth and
recognizing the surplus over the estimated life based mostly on anticipated assessments
(e.g., mortality and expense charges, contractual administrative prices and
comparable charges).

If elected by the contract proprietor and after a stipulated ready interval from
contract issuance, a GMIB ensures a minimal lifetime annuity based mostly on a
specified charge of contract accumulation worth development and predetermined annuity
buy charges. The GMIB legal responsibility

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is set every interval by estimating the anticipated worth of annuitization
advantages in extra of the projected contract accumulation worth on the date of
annuitization and recognizing the surplus over the estimated life based mostly on
anticipated assessments.

The legal responsibility for the life contingent advantages related to GMWB provisions
is set by estimating the anticipated worth of advantages which are contingent
upon survival after the account worth is the same as zero and recognizing the
advantages over the estimated life based mostly on anticipated assessments (e.g., mortality
and expense charges, contractual administrative prices and comparable charges).

In figuring out the liabilities for GMDB, GGU, GMIB and the life contingent
advantages related to GMWB, the Firm initiatives these advantages and contract
assessments utilizing actuarial fashions to simulate numerous fairness market situations.
Vital assumptions made in projecting future advantages and assessments
relate to buyer asset worth development charges, mortality, persistency, profit
utilization and funding margins and are according to these used for DAC
valuation for a similar contracts. As with DAC, except the Firm’s administration
identifies a big deviation over the course of quarterly monitoring,
administration critiques and updates these assumptions yearly within the third quarter
of every 12 months.

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See Observe 11 for info concerning variable annuity ensures.

Liabilities for mounted annuities in a profit or payout standing make the most of
assumptions established as of the date the payout part is initiated. The
liabilities are the current worth of future estimated funds lowered for
mortality (which relies on {industry} mortality tables with modifications based mostly
on the Firm’s expertise) and discounted with rates of interest.

Embedded Derivatives

The truthful worth of embedded derivatives associated to GMAB and the non-life
contingent advantages related to GMWB provisions fluctuate based mostly on fairness,
rate of interest and credit score markets and the estimate of the Firm’s
nonperformance danger, which might trigger these embedded derivatives to be both an
asset or a legal responsibility. The truthful worth of embedded derivatives associated to
structured variable annuities, listed annuities and IUL fluctuate based mostly on
fairness markets and rates of interest and the estimate of the Firm’s
nonperformance danger and is a legal responsibility. See Observe 13 for info concerning
the truthful worth measurement of embedded derivatives.

Conventional Lengthy-Period Merchandise

The liabilities for conventional long-duration merchandise embrace liabilities for
unpaid quantities on reported claims, estimates of advantages payable on claims
incurred however not but reported and estimates of advantages that can grow to be payable
on time period life, entire life, DI and LTC insurance policies as claims are incurred within the
future.

Liabilities for unpaid quantities on reported life insurance coverage claims are equal to
the demise advantages payable beneath the insurance policies.

Liabilities for unpaid quantities on reported DI and LTC claims embrace any
periodic or different profit quantities due and accrued, together with estimates of the
current worth of obligations for persevering with profit funds. These unpaid
quantities are calculated utilizing anticipated declare continuance charges based mostly on
established {industry} tables, adjusted as applicable for the Firm’s
expertise. The low cost charges used to calculate current values are based mostly on
common rates of interest earned on property supporting the legal responsibility for unpaid
quantities.

Liabilities for estimated advantages payable on claims which were incurred however
not but reported are based mostly on periodic evaluation of the particular time lag between
when a declare happens and when it’s reported.

Liabilities for estimates of advantages that can grow to be payable on future claims
on time period life, entire life and DI insurance coverage insurance policies are based mostly on the web stage
premium and LTC insurance policies are based mostly on a gross premium valuation reflecting
administration’s present greatest estimate assumptions. Web stage premium contains
anticipated premium funds, mortality and morbidity charges, coverage persistency
and rates of interest earned on property supporting the legal responsibility. Gross premium
valuation contains anticipated premium charge will increase, profit reductions,
morbidity charges, coverage persistency and rates of interest earned on property
supporting the legal responsibility. Anticipated mortality and morbidity charges are based mostly on
established {industry} mortality and morbidity tables, with modifications based mostly on
the Firm’s expertise. Anticipated premium funds and persistency charges
differ by coverage type, situation age, coverage period and sure different pricing
components.

For time period life, entire life, DI and LTC insurance policies, the Firm makes use of greatest
estimate assumptions as of the date the coverage is issued with provisions for the
danger of adversarial deviation, as applicable. After the liabilities are initially
established, administration performs premium deficiency checks utilizing present greatest
estimate assumptions with out provisions for adversarial deviation yearly within the
third quarter of every 12 months except administration identifies a cloth deviation
over the course of quarterly monitoring. If the liabilities decided based mostly on
these greatest estimate assumptions are larger than the web reserves (i.e., GAAP
reserves internet of any DAC stability), the present internet reserves are adjusted by
first decreasing the DAC stability by the quantity of the deficiency or to zero
by way of a cost to present interval earnings. If the deficiency is greater than the
DAC stability, then the web reserves are elevated by the surplus by way of a cost
to present interval earnings. If a premium deficiency is acknowledged, the
assumptions as of the date of the loss recognition are locked in and utilized in
subsequent durations. The assumptions for LTC insurance coverage merchandise are administration’s
greatest estimate as of the date of loss recognition and thus now not present for
adversarial deviations in expertise.

See Observe 10 for info concerning the liabilities for conventional
long-duration merchandise.

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Unearned Income Legal responsibility

The Firm’s UL and VUL insurance policies require cost of charges or different policyholder
assessments prematurely for providers to be offered in future durations. These
prices are deferred as unearned income and amortized utilizing EGPs, much like
DAC. The unearned income legal responsibility is recorded in Different liabilities and the
amortization is recorded in Coverage and contract prices.

Revenue Taxes

The Firm qualifies as a life insurance coverage firm for federal revenue tax
functions. As such, the Firm is topic to the Inner Income Code
provisions relevant to life insurance coverage firms.

The Firm’s taxable revenue is included within the consolidated federal revenue tax
return of Ameriprise Monetary. The Firm offers for revenue taxes on a
separate return foundation, besides that, beneath an settlement between Ameriprise
Monetary and the Firm, tax advantages are acknowledged for losses to the extent
they can be utilized within the consolidated return. It’s the coverage of Ameriprise
Monetary that it’ll reimburse its subsidiaries for any tax advantages recorded.

The Firm’s provision for revenue taxes represents the web quantity of revenue
taxes that the Firm expects to pay or to obtain from numerous taxing
jurisdictions in reference to its operations. The Firm offers for revenue
taxes based mostly on quantities that the Firm believes it is going to finally owe taking
into consideration the popularity and measurement for unsure tax positions.
Inherent within the provision for revenue taxes are estimates and judgments concerning
the tax therapy of sure objects.

In reference to the supply for revenue taxes, the Consolidated Monetary
Statements mirror sure quantities associated to deferred tax property and
liabilities, which outcome from non permanent variations between the property and
liabilities measured for monetary assertion functions versus the property and
liabilities measured for tax return functions.

The Firm is required to determine a valuation allowance for any portion of
its deferred tax property that administration believes is not going to be realized.
Vital judgment is required in figuring out if a valuation allowance ought to
be established and the quantity of such allowance if required. Elements utilized in
making this willpower embrace estimates regarding the efficiency of the
enterprise. Consideration is given to, amongst different issues in making this
willpower: (i) future taxable revenue unique of reversing non permanent
variations and carryforwards; (ii) future reversals of current taxable
non permanent variations; (iii) taxable revenue in prior carryback years; and (iv)
tax planning methods. Administration might must determine and
implement applicable planning methods to make sure its capability to comprehend
deferred tax property and cut back the chance of the institution of a
valuation allowance with respect to such property. See Observe 19 for added
info on the Firm’s valuation allowance.

Adjustments in tax charges and tax regulation are accounted for within the interval of enactment.
Deferred tax property and liabilities are adjusted for the impact of a change in
tax legal guidelines or charges and the impact is included in internet revenue.

Income Recognition

Premiums on conventional life, DI and LTC insurance coverage merchandise and quick
annuities with a life contingent function are internet of reinsurance ceded and are
acknowledged as income when due.

Curiosity revenue is accrued as earned utilizing the efficient curiosity methodology, which
makes an adjustment of the yield for safety premiums and reductions on all
performing mounted maturity securities categorised as Accessible-for-Sale in order that
the associated safety or mortgage acknowledges a continuing charge of return on the
excellent stability all through its time period. When precise prepayments differ
considerably from initially anticipated prepayments, the retrospective
efficient yield is recalculated to mirror precise funds up to now and up to date
future cost assumptions and a catch-up adjustment is recorded within the present
interval. As well as, the brand new efficient yield, which displays anticipated future
funds, is used prospectively.

Mortality and expense danger charges are based mostly on a share of the truthful worth of
property held within the Firm’s separate accounts and acknowledged when assessed.
Variable annuity assured profit rider prices, value of insurance coverage prices on
UL and VUL insurance coverage and contract prices (internet of reinsurance premiums and price
of reinsurance for UL insurance coverage merchandise) and give up prices on annuities and
UL and VUL insurance coverage are acknowledged as income when assessed.

Realized good points and losses on the sale of securities, aside from fairness methodology
investments, are acknowledged utilizing the particular identification methodology, on a commerce
date foundation.

Charges acquired beneath advertising and marketing assist and distribution providers preparations are
acknowledged as income when earned.

See Observe 4 for additional dialogue of accounting insurance policies on income from
contracts with clients.

3. Current Accounting Pronouncements

Adoption of New Accounting Requirements

Revenue Taxes – Simplifying the Accounting for Revenue Taxes

In December 2019, the Monetary Accounting Requirements Board (“FASB”) up to date the
accounting requirements to simplify the accounting for revenue taxes. The replace
eliminates sure exceptions to: (1) accounting rules associated to
intra-period tax allocation to be utilized on a potential foundation, (2) deferred
tax liabilities associated to outdoors foundation variations to be utilized on a modified
retrospective

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foundation by way of a cumulative-effect adjustment to retained earnings as of the
starting of the interval of adoption, and (3) year-to-date losses in interim
durations to be utilized on a potential foundation. The replace additionally amends current
steering associated to conditions when an entity receives: (1) a step-up within the tax
foundation of goodwill to be utilized on a potential foundation, (2) an allocation of
revenue tax expense when members of a consolidated tax submitting group situation
separate monetary statements to be utilized on a retrospective foundation for all
durations offered, (3) interim recognition of enactment of tax legal guidelines or charge
adjustments to be utilized on a potential foundation, and (4) franchise taxes and different
taxes partially based mostly on revenue to be utilized on a retrospective foundation for all
durations offered or a modified retrospective foundation by way of a cumulative-effect
adjustment to retained earnings as of the start of the interval of adoption.
The usual is efficient for interim and annual durations starting after
December 15, 2020, with early adoption permitted. The Firm adopted the
customary on January 1, 2021. The adoption of this customary had no impression on the
Firm’s consolidated monetary situation or outcomes of operations.

Future Adoption of New Accounting Requirements

Reference Fee Reform – Expedients for Contract Modifications

In March 2020, the FASB up to date the accounting requirements to supply optionally available
expedients and exceptions for making use of GAAP to contracts, hedging or different
transactions which are affected by reference charge reform (i.e., the elimination
of LIBOR). The next expedients are offered for modified contracts whose
reference charge is modified: (1) receivables and debt contracts are accounted for
prospectively by adjusting the efficient rate of interest, (2) leases are accounted
for as a continuation of the present contracts with no reassessments of the
lease classification and low cost charge or remeasurements of lease funds that
in any other case can be required, and (3) an entity just isn’t required to reassess its
unique conclusion about whether or not that contract comprises an embedded spinoff
that’s clearly and carefully associated to the financial traits and dangers of
the host contract. The amendments on this replace had been efficient upon issuance
and should be elected previous to December 31, 2022. When elected, the optionally available
expedients for contract modifications should be utilized constantly for all
eligible contracts or eligible transactions. In January 2021, FASB up to date the
customary to permit an entity to elect to use the therapy beneath the unique
steering to spinoff devices that use an rate of interest that for margining,
discounting or contract value alignment that shall be modified as a consequence of reference
charge reform however didn’t qualify beneath the unique steering. The Firm has not
but utilized any of the optionally available expedients. The adoption of the usual just isn’t
anticipated to have an effect on the Firm’s consolidated outcomes of operations
and monetary situation.

Monetary Providers – Insurance coverage – Focused Enhancements to the Accounting for
Lengthy-Period Contracts

In August 2018, the FASB up to date the accounting customary associated to
long-duration insurance coverage contracts. The steering revises key parts of the
measurement fashions and disclosure necessities for long-duration insurance coverage
contracts issued by insurers and reinsurers.

The steering establishes a big new class of profit options known as
market danger advantages that defend the contractholder from other-than-nominal
capital market danger and expose the insurer to that danger. Insurers should
measure market danger advantages at truthful worth. Market danger advantages embrace
variable annuity assured advantages (i.e. assured minimal demise, withdrawal,
withdrawal for all times, accumulation and revenue advantages). The portion of the
change in truthful worth attributable to a change within the instrument-specific credit score
danger of market danger advantages in a legal responsibility place shall be recorded in OCI.

Vital adjustments additionally relate to the measurement of the legal responsibility for future
coverage advantages for nonparticipating conventional long-duration insurance coverage
contracts and quick annuities with a life contingent function together with the
following:

•Insurers shall be required to evaluation and replace the money move assumptions used
to measure the legal responsibility for future coverage advantages quite than utilizing
assumptions locked in at contract inception. The evaluation of assumptions to
measure the legal responsibility for all future coverage advantages shall be required yearly
on the similar time annually, or extra incessantly if steered by expertise. The
impact of updating assumptions shall be measured on a retrospective catch-up
foundation and offered separate from the continuing policyholder profit expense in
the assertion of operations within the interval the replace is made. This new unlocking
course of shall be required for the Firm’s time period and entire life insurance coverage,
incapacity revenue, long run care insurance coverage and quick annuities with a life
contingent function.

•The low cost charge used to measure the legal responsibility for future coverage advantages will
be standardized. The present requirement to make use of a reduction charge reflecting
anticipated funding yields will change to an upper-medium grade (low credit score
danger) mounted revenue company instrument yield (typically interpreted as an “A”
ranking) reflecting the period traits of the legal responsibility. Entities will
be required to replace the low cost charge at every reporting date with the impact
of low cost charge adjustments mirrored in OCI.

•The present premium deficiency take a look at is being changed with a internet premium ratio
cap of 100%. If the web premium ratio (i.e. the ratio of the current worth of
whole anticipated advantages and associated bills to the current worth of whole
anticipated premiums) exceeds 100%, insurers are required to acknowledge a loss in
the assertion of operations within the interval. Contracts from totally different situation years
will now not be permitted to be grouped to find out contracts in a loss
place.

As well as, the replace requires DAC and DSIC regarding all long-duration
contracts and most funding contracts to be amortized on a straight-line foundation
over the anticipated lifetime of the contract unbiased of revenue emergence. Below
the brand new steering, curiosity is not going to accrue to the deferred stability and DAC and
DSIC is not going to be topic to an impairment take a look at.

The replace requires vital extra disclosures, together with disaggregated
rollforwards of the legal responsibility for future coverage advantages, policyholder account
balances, market danger advantages, DAC and DSIC, in addition to qualitative and
quantitative details about

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anticipated money flows, estimates and assumptions. The usual is efficient for
interim and annual durations starting after December 15, 2022. The usual
ought to be utilized to the legal responsibility for future coverage advantages and DAC and DSIC
on a modified retrospective foundation and utilized to market danger advantages on a
retrospective foundation with the choice to use full retrospective transition if
sure standards are met. Early adoption is permitted. The Firm is at the moment
within the strategy of implementing the usual, together with the implementation of
managed measurement and reporting processes. The Firm expects the impression
of adopting the usual to be materials to its consolidated monetary situation
and outcomes of operations.

4. Income from Contracts with Prospects

The next desk presents disaggregated income from contracts with clients
and a reconciliation to whole revenues reported on the Consolidated Statements
of Revenue.
Years Ended December 31,
2021 2020 2019
(in tens of millions)
Coverage and contract prices
Affiliated (from Columbia Administration Funding Distributors,
Inc.) $ 193$ 173$ 170
Unaffiliated 17 14 14
Whole 210 187 184

Different revenues
Administrative charges
Affiliated (from Columbia Administration Funding Providers,
Corp.) 49 44 43
Unaffiliated 20 18 20
69 62 63
Different charges

Affiliated (from Columbia Administration Funding Advisers, LLC
(“CMIA”) and Columbia Wanger Asset Administration, LLC)

389 351 344
Unaffiliated 5 4 4
394 355 348
Whole 463 417 411
Whole income from contracts with clients 673 604 595
Income from different sources (1) 2,798 3,172 3,223
Whole revenues $ 3,471$ 3,776$ 3,818

(1) Quantities primarily include income related to insurance coverage and annuity
merchandise or monetary devices.

The next dialogue describes the character, timing, and uncertainty of
revenues and money flows arising from the Firm’s contracts with clients.

Coverage and contract prices

The Firm earns income for offering distribution-related providers to
affiliated and unaffiliated mutual funds which are out there as underlying
investments in its variable annuity and variable life insurance coverage merchandise. The
efficiency obligation is glad on the time the mutual fund is distributed.
Income is acknowledged over the time the mutual fund is held within the variable
product and is mostly earned based mostly on a hard and fast charge utilized, as a share,
to the web asset worth of the fund. The income just isn’t acknowledged on the time of
sale as a result of it’s variably constrained as a consequence of components outdoors the Firm’s
management, together with market volatility and the way lengthy the fund(s) stay within the
insurance coverage coverage or annuity contract. The income is not going to be acknowledged till
it’s possible {that a} vital reversal is not going to happen. These charges are
accrued and picked up on a month-to-month foundation.

Different revenues

Administrative charges

The Firm earns income for offering buyer assist, contract servicing and
administrative providers for affiliated and unaffiliated mutual funds which are
out there as underlying devices in its variable annuity and variable life
insurance coverage merchandise. The switch agent and administration income is earned
day by day based mostly on a hard and fast charge utilized, as a share, to property beneath
administration. These efficiency obligations are thought of a sequence of distinct
providers which are considerably the identical and are glad every day over the
contract time period. These charges are accrued and picked up on a month-to-month foundation.

Different charges

The Firm earns income for offering affiliated and unaffiliated companions an
alternative to teach the monetary advisors of its affiliate, AFS, that promote
the Firm’s merchandise in addition to product and advertising and marketing personnel to assist the
supply, sale and servicing of

52

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funds throughout the Firm’s variable annuity and variable life insurance coverage
merchandise. These funds permit the events to coach and assist the advisors,
clarify the options of their merchandise, and distribute advertising and marketing and academic
supplies. The affiliated income is earned based mostly on a charge, up to date a minimum of
yearly, which is utilized, as a share, to the market worth of property
invested. The unaffiliated income is earned based mostly on a hard and fast charge utilized, as a
share, to the market worth of property invested. These efficiency
obligations are thought of a sequence of distinct providers which are considerably
the identical and are glad every day over the contract time period. These charges are
accrued and picked up on a month-to-month foundation.

Receivables

Receivables for income from contracts with clients are acknowledged when the
efficiency obligation is glad and the Firm has an unconditional proper
to the income. Receivables associated to revenues from contracts with clients
had been $62 million and $57 million as of December 31, 2021 and 2020, respectively.

5. Variable Curiosity Entities

The Firm offers asset administration providers to CLOs that are thought of to
be VIEs which are sponsored by the Firm. As well as, the Firm invests in
structured investments aside from CLOs and sure reasonably priced housing
partnerships that are thought of VIEs. The Firm consolidates the CLOs if the
Firm is deemed to be the first beneficiary. The Firm has no obligation
to supply monetary or different assist to the non-consolidated VIEs past its
preliminary funding and current future funding commitments, and the Firm has
not offered any assist to those entities. The Firm has unfunded commitments
associated to consolidated CLOs of $27 million and $13 million as of
December 31, 2021 and 2020, respectively. See Observe 20 for info on future
funding commitments of different VIEs.

See Observe 2 for additional dialogue of the Firm’s accounting coverage
on consolidation.

CLOs

CLOs are asset backed financing entities collateralized by a pool of property,
primarily syndicated loans and, to a lesser extent, high-yield bonds. A number of
tranches of debt securities are issued by a CLO, providing traders numerous
maturity and credit score danger traits. The debt securities issued by the CLOs
are non-recourse to the Firm. The CLO’s debt holders have recourse solely to
the property of the CLO. The property of the CLOs can’t be utilized by the Firm.
Scheduled debt funds are based mostly on the efficiency of the CLO’s collateral
pool. The Firm earns administration charges from the CLOs based mostly on the worth of the
CLO’s collateral pool and, in sure situations, can also obtain incentive
charges. The payment association is at market and commensurate with the extent of effort
required to supply these providers. The Firm has invested in a portion of the
unrated, junior subordinated notes and extremely rated senior notes of sure
CLOs. The Firm consolidates sure CLOs the place it’s the main beneficiary
and has the ability to direct the actions that almost all considerably impression the
financial efficiency of the CLO.

Inexpensive Housing Partnerships and Different Actual Property Partnerships

The Firm is a restricted accomplice in reasonably priced housing partnerships that qualify
for government-sponsored low revenue housing tax credit score applications and partnerships
that put money into multi-family residential properties that had been initially
developed with an reasonably priced housing element. The Firm has decided it’s
not the first beneficiary and due to this fact doesn’t consolidate these
partnerships.

A majority of the restricted partnerships are VIEs. The Firm’s most publicity
to loss because of its funding within the VIEs is proscribed to the carrying
worth. The carrying worth is mirrored in different investments and was $138 million
and $200 million as of December 31, 2021 and 2020, respectively. The Firm had
a $8 million and $9 million legal responsibility recorded as of December 31, 2021 and 2020,
respectively, associated to unique buy commitments not but remitted to the
VIEs. The Firm has not offered any extra assist and isn’t
contractually obligated to supply extra assist to the VIEs past the
funding commitments.

Structured Investments

The Firm invests in structured investments that are thought of VIEs for
which it isn’t the sponsor. These structured investments usually put money into
mounted revenue devices and are managed by third events and embrace asset
backed securities, and industrial and residential mortgage backed securities.
The Firm classifies these investments as Accessible-for-Sale securities. The
Firm has decided that it isn’t the first beneficiary of those
constructions because of the dimension of the Firm’s funding within the entities and
place within the capital construction of those entities. The Firm’s most
publicity to loss because of its funding in these structured investments
is proscribed to its amortized value. See Observe 6 for added info on these
structured investments.

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Truthful Worth of Property and Liabilities

The Firm categorizes its truthful worth measurements in line with a three-level
hierarchy. See Observe 13 for the definition of the three ranges of the truthful worth
hierarchy.

The next tables current the balances of property and liabilities held by
consolidated funding entities measured at truthful worth on a recurring foundation:
December 31, 2021
Degree 1 Degree 2 Degree 3 Whole
(in tens of millions)
Property
Investments:

Widespread shares $ – $ 3 $ – $ 3

Syndicated loans – 2,117 64 2,181
Whole investments – 2,120 64 2,184
Receivables – 17 – 17
Different property – – 3 3
Whole property at truthful worth $ – $ 2,137$ 67$ 2,204

Liabilities
Debt (1) $ – $ 2,164 $ – $ 2,164
Different liabilities – 137 – 137
Whole liabilities at truthful worth $ – $ 2,301 $ – $ 2,301

December 31, 2020
Degree 1 Degree 2 Degree 3 Whole
(in tens of millions)
Property
Investments:
Company debt securities $ – $ 8 $ – $ 8
Widespread shares – 1 – 1

Syndicated loans – 1,817 92 1,909
Whole investments – 1,826 92 1,918
Receivables – 16 – 16
Different property – – 2 2
Whole property at truthful worth $ – $ 1,842$ 94$ 1,936

Liabilities
Debt (1) $ – $ 1,913 $ – $ 1,913
Different liabilities – 69 – 69

Whole liabilities at truthful worth $ – $ 1,982 $ – $ 1,982

(1) The carrying worth of the CLOs’ debt is about equal to the truthful worth of the
CLOs’ property. The estimated truthful worth of the CLOs’ debt was $2.2 billion and
$2.0 billion as of December 31, 2021 and 2020, respectively.

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The next tables present a abstract of adjustments in Degree 3 property held by
consolidated funding entities measured at truthful worth on a recurring foundation:
Syndicated Loans Different Property

Stability, January 1, 2021 $ 92 $ 2
Whole good points (losses) included in:
Web revenue 2 (1) 1 (1)
Purchases 106 –
Gross sales (38) –
Settlements (49) –
Transfers into Degree 3 119 2
Transfers out of Degree 3 (150) (2)

Deconsolidation of consolidated funding entities (18) –
Stability, December 31, 2021 $ 64 $ 3

Adjustments in unrealized good points (losses) included in internet revenue regarding

(1)
property held at December 31, 2021 $ – $ 1

Syndicated Loans Different Property
(in tens of millions)
Stability, January 1, 2020 $ – $ –

Purchases – 2
Gross sales (2) –

Transfers into Degree 3 15 –
Transfers out of Degree 3 (70) –
Consolidation of consolidated funding entities 149 –

Stability, December 31, 2020 $ 92 $ 2

Adjustments in unrealized good points (losses) included in internet revenue regarding
property held at December 31, 2020

$ – $ –

(1) Included in Web funding revenue.

Securities and loans transferred from Degree 3 primarily characterize property with
truthful values that are actually obtained from a third-party pricing service with
observable inputs or priced in lively markets. Securities and loans transferred
to Degree 3 characterize property with truthful values that are actually based mostly on a single
non-binding dealer quote.

All Degree 3 measurements as of December 31, 2021 and 2020 had been obtained from
non-binding dealer quotes the place unobservable inputs utilized within the truthful worth
calculation should not moderately out there to the Firm.

Dedication of Truthful Worth

Property

Investments

The truthful worth of syndicated loans obtained from third-party pricing providers
utilizing a market strategy with observable inputs is assessed as Degree 2. The
truthful worth of syndicated loans obtained from third-party pricing providers with a
single non-binding dealer quote because the underlying valuation supply is assessed
as Degree 3. The underlying inputs utilized in non-binding dealer quotes should not
available to the Firm. See Observe 13 for an outline of the Firm’s
willpower of the truthful worth of company debt securities, frequent shares and
different investments.

Receivables

For receivables of the consolidated CLOs, the carrying worth approximates truthful
worth as the character of those property has traditionally been brief time period and the
receivables have been collectible. The truthful worth of those receivables is
categorised as Degree 2.

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Liabilities

Debt

The truthful worth of the CLOs’ property, usually syndicated financial institution loans, is extra
observable than the truthful worth of the CLOs’ debt tranches for which market
exercise is proscribed and fewer clear. Consequently, the truthful worth of the
CLOs’ debt is about equal to the truthful worth of the CLOs’ property and is assessed
as Degree 2.

Different Liabilities

Different liabilities consist primarily of securities bought however not but settled
held by consolidated CLOs. The carrying worth approximates truthful worth because the
nature of those liabilities has traditionally been brief time period. The truthful worth of
these liabilities is assessed as Degree 2. Different liabilities additionally embrace
accrued curiosity on the CLO debt.

Truthful Worth Choice

The Firm has elected the truthful worth possibility for the monetary property and
liabilities of the consolidated CLOs. Administration believes that the usage of the
truthful worth possibility higher matches the adjustments in truthful worth of property and
liabilities associated to the CLOs.

The next desk presents the truthful worth and unpaid principal stability of
loans and debt for which the truthful worth possibility has been elected:

December 31, December 31,
2021 2020
(in tens of millions)
Syndicated loans
Unpaid principal stability $ 2,233$ 1,990
Extra unpaid principal over truthful worth (52) (81)
Truthful worth $

2,181 $ 1,909

Truthful worth of loans greater than 90 days overdue $ – $ 5
Truthful worth of loans in nonaccrual standing 13 19

Distinction between truthful worth and unpaid principal of loans extra
than 90 days overdue, loans in nonaccrual standing or each

10 24

Debt
Unpaid principal stability $ 2,296$ 2,069
Extra unpaid principal over truthful worth (132) (156)
Carrying worth (1) $ 2,164$ 1,913

(1) The carrying worth of the CLOs’ debt is about equal to the truthful worth of the
CLOs’ property. The estimated truthful worth of the CLOs’ debt was $2.2 billion and
$2.0 billion as of December 31, 2021 and 2020, respectively.

Through the first quarter of 2021, the Firm launched two new CLOs and issued
debt of $817 million.

Curiosity revenue from syndicated loans, bonds and structured investments is
recorded based mostly on contractual charges in internet funding revenue. Features and losses
associated to adjustments within the truthful worth of investments are recorded in internet
funding revenue and good points and losses on gross sales of investments are recorded in
internet realized funding good points (losses). Curiosity expense on debt is recorded in
curiosity and debt expense with good points and losses associated to adjustments within the truthful
worth of debt recorded in internet funding revenue.

Whole internet good points (losses) acknowledged in Web funding revenue associated to the
adjustments in truthful worth of investments the Firm owns within the consolidated CLOs
the place it has elected the truthful worth possibility and collateralized financing entity
accounting had been immaterial for the years ended December 31, 2021 and 2020.

Debt of the consolidated funding entities and the acknowledged rates of interest had been
as follows:
Weighted Common
Carrying Worth Curiosity Fee
December 31, December 31, December 31, December 31,
2021 2020 2021 2020
(in tens of millions)
Debt of consolidated CLOs due 2028-2034 $ 2,164$ 1,913 1.7 % 2.1 %

The debt of the consolidated CLOs has each mounted and floating rates of interest,
which vary from nil to 9.4%. The rates of interest on the debt of CLOs are
weighted common charges based mostly on the excellent principal and contractual
rates of interest.

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6. Investments

Accessible-for-Sale securities distributed by kind had been as follows:

December 31, 2021
Gross
Amortized Gross Unrealized Allowance for Truthful
Description of Securities Value Unrealized Features Losses Credit score Losses Worth
(in tens of millions)
Mounted maturities:
Company debt securities $ 8,447 $ 1,238 $ (47) $ – $ 9,638
Residential mortgage backed securities 2,226 36 (12) – 2,250
Industrial mortgage backed securities 2,615 56 (15) – 2,656
State and municipal obligations 832 244 (1) (1) 1,074
Asset backed securities 517 22 (2) – 537
International authorities bonds and obligations 80 4 (1) – 83
U.S. authorities and company obligations 1 – – – 1
Whole $ 14,718 $ 1,600 $ (78) $ (1) $ 16,239

December 31, 2020
Gross
Amortized Gross Unrealized Allowance for Truthful
Description of Securities Value Unrealized Features Losses Credit score Losses Worth
(in tens of millions)
Mounted maturities:
Company debt securities $ 10,982 $ 1,903 $ (2) $ (10) $ 12,873
Residential mortgage backed securities 2,888 115 (1) – 3,002
Industrial mortgage backed securities 3,935 235 (4) – 4,166
State and municipal obligations 1,050 295 (1) – 1,344
Asset backed securities 1,168 45 (1) – 1,212
International authorities bonds and obligations 236 22 (1) – 257
U.S. authorities and company obligations 1 – – – 1

Whole $ 20,260 $ 2,615 $ (10) $ (10) $ 22,855

In March 2020, the Firm bought $368 million of investments at truthful worth,
primarily company residential mortgage backed securities, from Ameriprise
Monetary.

As of December 31, 2021 and 2020, accrued curiosity of $118 million and
$158 million, respectively, is excluded from the amortized value foundation of
Accessible-for-Sale securities within the tables above and is recorded in Accrued
funding revenue.

As of December 31, 2021 and 2020, funding securities with a good worth of
$2.4 billion and $2.9 billion, respectively, had been pledged to satisfy contractual
obligations beneath spinoff contracts and short-term borrowings, of which $314
million and $454 million, respectively, could also be bought, pledged or rehypothecated
by the counterparty.

As of each December 31, 2021 and 2020, mounted maturity securities comprised
roughly 85% of the Firm’s whole investments. Score company designations
are based mostly on the provision of rankings from Nationally Acknowledged Statistical
Score Organizations (“NRSROs”), together with Moody’s Traders Service
(“Moody’s”), Customary & Poor’s Scores Providers (“S&P”) and Fitch Scores Ltd.
(“Fitch”). The Firm makes use of the median of obtainable rankings from Moody’s, S&P
and Fitch, or if fewer than three rankings can be found, the decrease ranking is
used. When rankings from Moody’s, S&P and Fitch are unavailable, the Firm might
make the most of rankings from different NRSROs or charge the securities internally. As of
December 31, 2021 and 2020, $359 million and $553 million, respectively, of
securities had been internally rated by CMIA, an affiliate of the Firm, utilizing
standards much like these utilized by NRSROs.

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A abstract of mounted maturity securities by ranking was as follows:

December 31, 2021 December 31, 2020
P.c of P.c of
Amortized Truthful Whole Truthful Amortized Truthful Whole Truthful
Scores Value Worth Worth Value Worth Worth
(in tens of millions, besides percentages)
AAA $ 5,031$ 5,107 31 % $ 7,323$ 7,698 34 %
AA 757 932 6 1,036 1,266 6
A 1,662 2,013 12 2,663 3,235 14
BBB 6,293 7,063 44 7,770 9,026 39
Under funding grade 975 1,124 7 1,468 1,630 7
Whole mounted maturities $ 14,718$ 16,239 100 % $ 20,260$ 22,855 100 %

As of December 31, 2021 and 2020, roughly 40% and 37%, respectively, of
securities rated AAA had been GNMA, FNMA and FHLMC mortgage backed securities. The
Firm had holdings of $289 million in Ameriprise Advisor Financing, LLC
(“AAF”), an affiliate of the Firm, $247 million in Kraft Heinz Co., $225
million in Duke Vitality Corp., $221 million in AT&T Inc., and $210 million in
Suncor Vitality Inc., which had been larger than 10% of the Firm’s whole
shareholder’s fairness as of December 31, 2021. The Firm had holdings of $372
million in AAF which was larger than 10% of the Firm’s whole shareholder’s
fairness as of December 31, 2020. There have been no different holdings of another issuer
larger than 10% of the Firm’s whole shareholder’s fairness as of each
December 31, 2021 and 2020.

The next tables summarize the truthful worth and gross unrealized losses on
Accessible-for-Sale securities, aggregated by main funding kind and the
size of time that particular person securities have been in a steady unrealized
loss place for which no allowance for credit score losses has been recorded:
December 31, 2021
Lower than 12 months 12 months or extra Whole
Variety of Truthful Unrealized Variety of Truthful Unrealized Variety of Truthful

Unrealized

Description of Securities Securities Worth Losses Securities Worth Losses Securities Worth Losses
(in tens of millions, besides variety of securities)
Company debt securities 102 $ 2,007$ (42) 14 $ 81$ (5) 116 $ 2,088$ (47)
Residential mortgage backed securities 55 1,162 (12) 2 1 – 57 1,163

(12)

Industrial mortgage backed securities 60 809 (15) 3 13 – 63 822

(15)

State and municipal obligations 25 63 (1) – – – 25 63 (1)
Asset backed securities 5 91 (2) – – – 5 91 (2)

International authorities bonds and obligations 5 6 – 6 4 (1) 11 10 (1)
Whole 252 $ 4,138$ (72) 25 $ 99$ (6) 277 $ 4,237$ (78)

December 31, 2020
Lower than 12 months 12 months or extra Whole
Variety of Truthful Unrealized Variety of Truthful Unrealized Variety of Truthful

Unrealized

Description of Securities Securities Worth Losses Securities Worth Losses Securities Worth Losses
(in tens of millions, besides variety of securities)
Company debt securities 26 $ 228$ (1) 1 $ 12$ (1) 27 $ 240$ (2)
Residential mortgage backed securities 11 47 (1) 7 14 – 18 61

(1)

Industrial mortgage backed securities 12 179 (3) 7 60 (1) 19 239

(4)

State and municipal obligations 2 4 – 1 4 (1) 3 8 (1)
Asset backed securities 4 65 – 2 36 (1) 6 101 (1)
International authorities bonds and obligations 1 3 – 7 8 (1) 8 11 (1)

Whole 56 $ 526$ (5) 25 $ 134$ (5) 81 $ 660$ (10)

As a part of the Firm’s ongoing monitoring course of, administration decided that
the change in gross unrealized losses on its Accessible-for-Sale securities for
which an allowance for credit score losses has not been acknowledged in the course of the 12 months
ended December 31,

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2021 is primarily attributable to greater rates of interest. The Firm didn’t
acknowledge these unrealized losses in earnings as a result of it was decided that
such losses had been as a consequence of non-credit components. The Firm doesn’t intend to promote
these securities and doesn’t consider that it’s extra seemingly than not that the
Firm shall be required to promote these securities earlier than the anticipated
restoration of the remaining amortized value foundation. As of December 31, 2021 and
2020, roughly 92% and 83%, respectively, of the overall of
Accessible-for-Sale securities with gross unrealized losses had been thought of
funding grade.

The next tables current a rollforward of the allowance for credit score losses on
Accessible-for-Sale securities:

State and
Company Debt Municipal
Securities Obligations Whole
(in tens of millions)
Stability at January 1, 2021 $ 10

$ – $ 10
Additions for which credit score losses weren’t beforehand
recorded

– 1 1
Cost-offs (10) – (10)
Stability at December 31, 2021 $ – $ 1 $ 1

Company Debt
Securities
(in tens of millions)
Stability at January 1, 2020 (1) $ –
Additions for which credit score losses weren’t beforehand recorded 13

Further will increase (decreases) on securities that had an allowance recorded in a
earlier interval

(3)
Stability at December 31, 2020 $ 10

(1) Previous to January 1, 2020, credit score losses on Accessible-for-Sale securities
weren’t recorded in an allowance however had been recorded as a discount of the ebook
worth of the safety if the safety was other-than-temporarily impaired.

Web realized good points and losses on Accessible-for-Sale securities, decided utilizing
the particular identification methodology, acknowledged in Web realized funding good points
(losses) had been as follows:
Years Ended December 31,
2021 2020 2019
(in tens of millions)
Gross realized funding good points $ 576$ 17 $

29

Gross realized funding losses (6) (2) (14)
Credit score losses (1) (10) (17)
Different impairments (13) – –
Whole $ 556$ 5$ (2)

Credit score losses for the 12 months ended December 31, 2021 primarily associated to
recording an allowance for credit score losses on sure state and municipal
securities. For the 12 months ended December 31, 2020, credit score losses primarily
associated to recording an allowance for credit score losses on sure company debt
securities, primarily within the oil and gasoline {industry}. Different-than-temporary
impairments for the 12 months ended December 31, 2019 associated to company debt
securities. Different impairments for the 12 months ended December 31, 2021 associated to
Accessible-for-Sale securities that had been impaired after they had been categorised as
held on the market previous to being bought within the reinsurance transaction. See Observe 1 for
extra info on the reinsurance transaction.

See Observe 18 for a rollforward of internet unrealized funding good points (losses)
included in AOCI.

Accessible-for-Sale securities by contractual maturity as of December 31, 2021
had been as follows:

Amortized Value Truthful Worth
(in tens of millions)
Due inside one 12 months $ 470 $ 476
Due after one 12 months by way of 5 years 1,878 1,981
Due after 5 years by way of 10 years 3,283 3,359
Due after 10 years 3,729 4,980
9,360 10,796
Residential mortgage backed securities 2,226 2,250
Industrial mortgage backed securities 2,615 2,656
Asset backed securities 517 537
Whole $ 14,718$ 16,239

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Precise maturities might differ from contractual maturities as a result of issuers might
have the suitable to name or prepay obligations. Residential mortgage backed
securities, industrial mortgage backed securities and asset backed securities
should not due at a single maturity date. As such, these securities weren’t
included within the maturities distribution.

The next is a abstract of Web funding revenue:

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Mounted maturities $ 643$ 777$ 848
Mortgage loans 102 115 119
Different investments 101 (3) (26)
846 889 941
Much less: funding bills 19 20 24
Whole $ 827$ 869$ 917

Web realized funding good points (losses) are summarized as follows:

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Mounted maturities $ 556$ 5$ (2)
Mortgage loans 57 (10) –
Different investments (18) (5) –
Whole $ 595$ (10)$ (2)

7. Financing Receivables

Financing receivables are comprised of business loans, coverage loans, and
deposit receivables. See Observe 2 for info concerning the Firm’s
accounting insurance policies associated to financing receivables and the allowance for
credit score losses.

Allowance for Credit score Losses

The next tables current a rollforward of the allowance for credit score losses:
Industrial Loans
(in tens of millions)

Stability, January 1, 2021 $ 35
Provisions (23)

Stability, December 31, 2021 $ 12

Industrial Loans
(in tens of millions)
Stability, December 31, 2019 (1) $ 20

Cumulative impact of adoption of present anticipated credit score losses steering

3
Stability, January 1, 2020 23
Provisions 12

Stability, December 31, 2020 $ 35

(1) Previous to January 1, 2020, the allowance for credit score losses was based mostly on an
incurred loss mannequin that didn’t require estimating anticipated credit score losses over
the anticipated lifetime of the asset.
Industrial Loans

(in tens of millions)

Stability, January 1, 2019 $ 20

Cost-offs –

Stability, December 31, 2019 $ 20

The lower within the allowance for credit score losses provision for industrial loans
displays the sale of sure industrial mortgage loans and syndicated loans in
conjunction with the mounted deferred and quick annuity reinsurance
transaction mentioned in Observe 1.

As of December 31, 2021 and 2020, accrued curiosity on industrial loans was $11
million and $14 million, respectively, and is recorded in Accrued funding
revenue and excluded from the amortized value foundation of business loans.

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Purchases and Gross sales

Through the 12 months ended December 31, 2021, the Firm bought $746 million of
industrial mortgage loans.

Through the years ended December 31, 2021, 2020 and 2019, the Firm bought
$26 million, $140 million and $121 million, respectively, of syndicated loans
and bought $340 million, $13 million and $43 million, respectively, of syndicated
loans.

The Firm has not acquired any loans with deteriorated credit score high quality as of
the acquisition date.

Credit score High quality Data

Nonperforming loans had been nil and $7 million as of December 31, 2021 and 2020,
respectively. All different loans had been thought of to be performing.

Industrial Mortgage Loans

The Firm critiques the credit score worthiness of the borrower and the efficiency of
the underlying properties in an effort to decide the danger of loss on industrial
mortgage loans. Mortgage-to-value ratio is the first credit score high quality indicator
included on this evaluation. Based mostly on this evaluation, the industrial mortgage loans are
assigned an inner danger ranking, which administration updates when credit score danger
adjustments. Industrial mortgage loans which administration has assigned its highest
danger ranking had been lower than 1% of whole industrial mortgage loans as of each
December 31, 2021 and 2020. Loans with the very best danger ranking characterize
distressed loans which the Firm has recognized as impaired or expects to
grow to be delinquent or enter into foreclosures throughout the subsequent six months. Whole
industrial mortgage mortgage modifications by way of December 31, 2020 because of the
COVID-19 pandemic consisted of 88 loans with a complete unpaid stability of $360
million. Modifications primarily consisted of short-term forbearance and
curiosity solely funds. There have been no extra modifications in the course of the 12 months
ended December 31, 2021. As of December 31, 2021, there have been no loans remaining
that had been modified as a consequence of COVID-19. All loans returned to their regular cost
schedules. Whole industrial mortgage loans overdue had been nil as of each December
31, 2021 and 2020.

The tables beneath current the amortized value foundation of business mortgage loans
by 12 months of origination and loan-to-value ratio:

December 31, 2021
2021 2020 2019 2018 2017 Prior Whole
Mortgage-to-Worth Ratio (in tens of millions)
> 100% $ – $ – $ 20$ 10 $ – $ 29$ 59
80% – 100% 9 2 9 2 – 29 51
60% – 80% 141 76 59 15 58 133 482
40% – 60% 37 30 75 74 49 393 658
< 40% 6 8 46 - 47 443 550 Total $ 193$ 116$ 209$ 101$ 154$ 1,027$ 1,800 December 31, 2020 2020 2019 2018 2017 2016 Prior Total Loan-to-Value Ratio (in millions) > 100% $ – $ – $ 2 $ – $ – $ 10$ 12
80% – 100% 15 16 9 3 7 15 65
60% – 80% 85 152 27 29 46 141 480
40% – 60% 20 50 74 147 111 543 945
< 40% 7 22 69 88 58 856 1,100 Whole $ 127$ 240$ 181$ 267$ 222$ 1,565$ 2,602 Mortgage-to-value ratio relies on revenue and expense information offered by debtors at least yearly and long-term capitalization charge assumptions based mostly on property kind. 61

——————————————————————————–

As well as, the Firm critiques the concentrations of credit score danger by area and
property kind. Concentrations of credit score danger of business mortgage loans by
U.S. area had been as follows:
Loans Share
December 31, December 31, December 31,
2021 2020 December 31, 2021 2020
(in tens of millions)
East North Central $ 183$ 250 10 % 10 %
East South Central 54 111 3 4
Center Atlantic 107 165 6 6
Mountain 111 234 6 10
New England 21 47 1 2
Pacific 589 784 33 30
South Atlantic 477 663 26 25
West North Central 136 192 8 7
West South Central 122 156 7 6
1,800 2,602 100 % 100 %
Much less: allowance for credit score losses 12 28
Whole $ 1,788 $ 2,574

Concentrations of credit score danger of business mortgage loans by property kind had been
as follows:

Loans Share
December 31, December 31, December 31,
2021 2020 December 31, 2021 2020
(in tens of millions)
Flats $ 464 $ 680 26 % 26 %
Resort 15 49 1 2
Industrial 293 401 16 16
Combined use 57 76 3 3
Workplace 254 358 14 14
Retail 589 843 33 32
Different 128 195 7 7
1,800 2,602 100 % 100 %
Much less: allowance for credit score losses 12 28
Whole $ 1,788 $ 2,574

Syndicated Loans

The recorded funding in syndicated loans as of December 31, 2021 and 2020 was
$43 million and $446 million, respectively. The Firm’s syndicated mortgage
portfolio is diversified throughout industries and issuers. Whole syndicated loans
overdue had been nil and $2 million as of December 31, 2021 and 2020, respectively.
The Firm assigns an inner danger ranking to every syndicated mortgage in its
portfolio starting from 1 by way of 5, with 5 reflecting the bottom high quality.

The tables beneath current the amortized value foundation of syndicated loans by
origination 12 months and inner danger ranking:

December 31, 2021
2021 2020 2019 2018 2017 Prior Whole
Inner Threat Score (in tens of millions)
Threat 5 $ – $ – $ – $ – $ – $ – $ –
Threat 4 – – – – – – –
Threat 3 – – – – – 1 1
Threat 2 11 – 4 1 8 4 28
Threat 1 4 – – 3 3 4 14
Whole $ 15 $ – $ 4 $ 4 $ 11 $ 9 $ 43

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December 31, 2020
2020 2019 2018 2017 2016 Prior Whole
Inner Threat Score (in tens of millions)
Threat 5 $ – $ – $ – $ – $ – $ 2 $ 2
Threat 4 – – 3 7 – 7 17
Threat 3 – 7 6 19 10 18 60
Threat 2 23 42 45 51 10 32 203
Threat 1 14 25 35 43 17 30 164
Whole $ 37 $ 74 $ 89 $ 120 $ 37 $ 89 $ 446

Coverage Loans
Coverage loans don’t exceed the money give up worth at origination. As there may be
minimal danger of loss associated to coverage loans, there isn’t any allowance for credit score
losses.

Deposit Receivables

Deposit receivables had been $7.9 billion and $1.4 billion as of December 31, 2021
and 2020, respectively. Deposit receivables are totally collateralized by the truthful
worth of the property held in trusts. Based mostly on administration’s analysis of the
nature of the underlying property and the potential for adjustments within the collateral
worth, there was no allowance for credit score losses for deposit receivables as of
December 31, 2021 and 2020. The rise in deposit receivables is primarily
pushed by the reinsurance transaction, efficient July 1, 2021, to reinsure mounted
deferred and non-life contingent quick annuity insurance policies. See Observe 1 for extra
info on the mounted deferred and quick annuity reinsurance transaction.

Troubled Debt Restructurings

There have been no loans accounted for as a troubled debt restructuring by the
Firm in the course of the years ended December 31, 2021, 2020 and 2019. There are not any
commitments to lend extra funds to debtors whose loans have been
restructured.

8. Deferred Acquisition Prices and Deferred Gross sales Inducement Prices

Administration updates market-related inputs on a quarterly foundation and implements
mannequin adjustments associated to the residing profit valuation. As well as, administration
conducts its annual evaluation of life insurance coverage and annuity valuation assumptions
relative to present expertise and administration expectations together with modeling
adjustments. These aforementioned adjustments are collectively known as unlocking.
The impression of unlocking to DAC for the 12 months ended December 31, 2021 primarily
mirrored a positive impression from decrease surrenders on variable annuities with
residing advantages and UL and VUL insurance coverage merchandise. The impression of unlocking to
DAC for the 12 months ended December 31, 2020 primarily mirrored updates to curiosity
charge assumptions, partially offset by a positive impression from decrease surrenders
on annuity contracts with a withdrawal profit. The impression of unlocking to DAC
for the 12 months ended December 31, 2019 primarily mirrored up to date mortality
assumptions on UL and VUL insurance coverage merchandise and decrease give up charge
assumptions on variable annuities, partially offset by an unfavorable impression
from updates to assumptions on utilization of assured withdrawal advantages.

The balances of and adjustments in DAC had been as follows:

2021 2020 2019
(in tens of millions)
Stability at January 1 $ 2,508 $ 2,673 $ 2,742
Capitalization of acquisition prices 267 216 239
Amortization (172) (164) (119)
Amortization, impression of valuation assumptions evaluation 60 (100) (14)
Impression of change in internet unrealized (good points) losses on securities 94 (117) (175)
Stability at December 31 $ 2,757 $ 2,508 $ 2,673

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The balances of and adjustments in DSIC, which is included in Different property, had been as
follows:

2021 2020 2019
(in tens of millions)
Stability at January 1 $ 187 $ 216 $ 249
Capitalization of gross sales inducement prices 1 1 1
Amortization (16) (13) (15)
Amortization, impression of valuation assumptions evaluation 2 (16) –
Impression of change in internet unrealized (good points) losses on securities 13 (1) (19)
Stability at December 31 $ 187 $ 187 $ 216

9. Reinsurance

The Firm reinsures a portion of the insurance coverage dangers related to its
conventional life, DI and LTC insurance coverage merchandise by way of reinsurance agreements
with unaffiliated reinsurance firms. Through the third quarter of 2021, the
Firm reinsured 100% of its insurance coverage danger related to its life contingent
quick annuity insurance policies in pressure as of July 1, 2021 by way of a reinsurance
settlement with Commonwealth. Insurance policies issued after July 1, 2021 should not topic
to this reinsurance settlement. See Observe 1 for extra info on the mounted
deferred and quick annuity reinsurance transaction.

Reinsurance contracts don’t relieve the Firm from its main obligation to
policyholders.

The Firm typically reinsures 90% of the demise profit legal responsibility for brand new time period
life insurance coverage insurance policies starting in 2001 (RiverSource Lifetime of NY started in 2002)
and new particular person UL and VUL insurance coverage insurance policies starting in 2002 (2003 for
RiverSource Lifetime of NY). Insurance policies issued prior to those dates should not topic to
these similar reinsurance ranges.

Nonetheless, for IUL insurance policies issued after September 1, 2013 and VUL insurance policies issued
after January 1, 2014, the Firm typically reinsures 50% of the demise profit
legal responsibility. Equally, the Firm reinsures 50% of the demise profit and
morbidity liabilities associated to its UL product with LTC advantages.

The utmost quantity of life insurance coverage danger the Firm will retain is $10 million
on a single life and $10 million on any versatile premium survivorship life
coverage; nonetheless, reinsurance agreements are in place such that retaining extra
than $1.5 million of insurance coverage danger on a single life or a versatile premium
survivorship life coverage could be very uncommon. Threat on UL and VUL insurance policies is
reinsured on a yearly renewable time period foundation. Threat on most time period life insurance policies
beginning in 2001 (2002 for RiverSource Lifetime of NY) is reinsured on a coinsurance
foundation, a kind of reinsurance wherein the reinsurer participates proportionally
in all materials dangers and premiums related to a coverage.

The Firm additionally has life insurance coverage and stuck annuity danger beforehand assumed
beneath reinsurance preparations with unaffiliated insurance coverage firms.

For current LTC insurance policies, the Firm has continued ceding 50% of the danger on a
coinsurance foundation to subsidiaries of Genworth Monetary, Inc. (“Genworth”) and
retains the remaining danger. For RiverSource Lifetime of NY, this reinsurance
association applies for 1996 and later points solely. Below these agreements, the
Firm has the suitable, however by no means the duty, to recapture some, or all, of
the danger ceded to Genworth.

Usually, the Firm retains at most $5,000 per thirty days of danger per life on DI
insurance policies bought on coverage types launched in most states beginning in 2007 (2010
for RiverSource Lifetime of NY) and reinsures the rest of the danger on a
coinsurance foundation with unaffiliated reinsurance firms. The Firm retains
all danger for brand new claims on DI contracts bought on different coverage types launched
previous to 2007 (2010 for RiverSource Lifetime of NY). The Firm additionally retains all
danger on unintended demise profit claims and considerably all danger related
with waiver of premium provisions.

As of December 31, 2021 and 2020, conventional life and UL insurance coverage insurance policies in
pressure had been $198.6 billion and $195.7 billion, respectively, of which $145.1
billion and $143.6 billion as of December 31, 2021 and 2020 had been reinsured at
the respective 12 months ends.

The impact of reinsurance on premiums for conventional long-duration merchandise was
as follows:

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Direct premiums $ 490 $ 565 $ 621
Reinsurance ceded (1,361) (224) (224)
Web premiums $ (871) $ 341 $ 397

Coverage and contract prices are offered on the Consolidated Statements of
Revenue internet of $152 million, $140 million and $132 million of reinsurance ceded
for non-traditional long-duration merchandise for the years ended
December 31, 2021, 2020 and 2019, respectively.

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The quantity of claims recovered by way of reinsurance on all contracts was $404
million, $400 million and $377 million for the years ended December 31, 2021,
2020 and 2019, respectively.

Reinsurance recoverables embrace roughly $2.6 billion and $2.7 billion
associated to LTC danger ceded to Genworth as of December 31, 2021 and 2020,
respectively.

Policyholder account balances, future coverage advantages and claims embrace
$413 million and $440 million associated to beforehand assumed reinsurance
preparations as of December 31, 2021 and 2020, respectively.

10. Policyholder Account Balances, Future Coverage Advantages and Claims and
Separate Account Liabilities

Policyholder account balances, future coverage advantages and claims consisted of
the next:

December 31,
2021 2020
(in tens of millions)
Policyholder account balances
Mounted annuities (1) $ 8,117 $ 8,531
Variable annuity mounted sub-accounts 4,990 5,104
UL/VUL insurance coverage 3,103 3,122
IUL insurance coverage 2,534 2,269
Structured variable annuities 4,440 1,371
Different life insurance coverage 563 605
Whole policyholder account balances 23,747 21,002

Future coverage advantages
Variable annuity GMWB 2,336 3,049
Variable annuity GMAB (2) (23) 1
Different annuity liabilities 67 211
Mounted annuity life contingent liabilities 1,278 1,370
Life and DI insurance coverage 1,139 1,187
LTC insurance coverage 5,664 5,722
UL/VUL and different life insurance coverage extra liabilities 1,291 1,259
Whole future coverage advantages 11,752 12,799
Coverage claims and different policyholders’ funds 245 185

Whole policyholder account balances, future coverage advantages and
claims

$

35,744 $ 33,986

(1) Consists of mounted deferred annuities, non-life contingent mounted payout
annuities and stuck deferred listed annuity host contracts.

(2) Consists of the truthful worth of GMAB embedded derivatives that was a internet asset as
of December 31, 2021 reported as a contra legal responsibility.

Mounted Annuities

Mounted annuities embrace deferred, payout and stuck deferred listed annuity
contracts. In 2020, the Firm discontinued gross sales of mounted deferred and stuck
deferred listed annuities.

Deferred contracts supply a assured minimal charge of curiosity and safety of
the principal invested. Payout contracts assure a hard and fast revenue cost for
life or the time period of the contract. Liabilities for mounted annuities in a profit
or payout standing are based mostly on future estimated funds utilizing established
{industry} mortality tables and rates of interest, starting from 2.23% to 9.38% as of
December 31, 2021, relying on 12 months of situation, with a median charge of
roughly 3.6%. The Firm typically invests the proceeds from the annuity
contracts in mounted charge securities.

The Firm’s fairness listed annuity (“EIA”) product is a single premium mounted
deferred annuity. The Firm discontinued new gross sales of EIAs in 2007. The
contract was issued with an preliminary time period of seven years and curiosity earnings
are linked to the efficiency of the S&P 500® Index. This annuity has a minimal
rate of interest assure of three% on 90% of the preliminary premium, adjusted for any
surrenders. The Firm typically invests the proceeds from the annuity
contracts in mounted charge securities and hedges the fairness danger with spinoff
devices.

The Firm’s mounted index annuity product is a hard and fast annuity that features an
listed account. The speed of curiosity credited above the minimal assure for
funds allotted to the listed account is linked to the efficiency of the
particular index for the listed account (topic to a cap). The Firm
beforehand supplied S&P 500® Index and MSCI® EAFE Index account choices. Each
choices supplied two crediting durations, one-year and two-year. The
contractholder may allocate all or a portion of the coverage worth to a hard and fast or
listed account. The portion of the coverage allotted to the listed account is
accounted for as an embedded spinoff. The

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Firm hedges the curiosity credited charge together with fairness and rate of interest
danger associated to the listed account with spinoff devices. The
contractholder may select so as to add a GMWB for all times rider for a further payment.

See Observe 17 for added info concerning the Firm’s spinoff
devices used to hedge the danger associated to listed annuities.

Variable Annuities

Purchasers of variable annuities can choose from a wide range of funding choices
and may elect to allocate a portion to a hard and fast account. A overwhelming majority of the
premiums acquired for variable annuity contracts are held in separate accounts
the place the property are held for the unique good thing about these contractholders.

Many of the variable annuity contracts issued by the Firm include a number of
assured advantages, together with GMWB, GMAB, GMDB or GGU provisions. The Firm
beforehand supplied contracts with GMIB provisions. See Observe 2 and Observe 11 for
extra info concerning the Firm’s variable annuity ensures. The
Firm doesn’t at the moment hedge its danger beneath the GGU and GMIB provisions. See
Observe 13 and Observe 17 for added info concerning the Firm’s
spinoff devices used to hedge dangers associated to GMWB, GMAB and GMDB
provisions.

Structured Variable Annuities

In 2020, the Firm started providing structured variable annuities which provides
contractholders the choice to allocate a portion of their account worth to an
listed account with the contractholder’s charge of return, which can be constructive
or unfavorable, tied to chose indices.

Insurance coverage Liabilities

UL/VUL is the most important group of insurance coverage insurance policies written by the Firm.
Purchasers of UL accumulate money worth that will increase by a hard and fast rate of interest.
Purchasers of VUL can choose from a wide range of funding choices and may elect
to allocate a portion to a hard and fast account or a separate account. A overwhelming majority
of the premiums acquired for VUL insurance policies are held in separate accounts the place
the property are held for the unique good thing about these policyholders.

IUL is a UL coverage that features an listed account. The speed of credited
curiosity above the minimal assure for funds allotted to the listed account
is linked to the efficiency of the particular index for the listed account
(topic to acknowledged account parameters, which embrace a cap and ground, or a
unfold and ground). The Firm affords an S&P 500® Index account possibility and a
blended multi-index account possibility comprised of the S&P 500 Index, the MSCI®
EAFE Index and the MSCI EM Index. Each choices supply two crediting durations,
one-year and two-year. The policyholder might allocate all or a portion of the
coverage worth to a hard and fast or any out there listed account. The portion of the
coverage allotted to the listed account is accounted for as an embedded
spinoff at truthful worth. The Firm hedges the curiosity credited charge
together with fairness and rate of interest danger associated to the listed account with
spinoff devices. See Observe 17 for added info concerning the
Firm’s spinoff devices used to hedge the danger associated to IUL.

The Firm additionally affords time period life insurance coverage in addition to DI merchandise. The Firm
now not affords standalone LTC merchandise and entire life insurance coverage however has in
pressure insurance policies from prior years.

Insurance coverage liabilities embrace accumulation values, incurred however not reported
claims, obligations for anticipated future claims and unpaid reported claims.

The legal responsibility for estimates of advantages that can grow to be payable on future
claims on time period life, entire life and DI insurance policies relies on the web stage
premium and LTC insurance policies relies on a gross premium valuation reflecting
administration’s present greatest estimate assumptions. Each embrace the anticipated
rates of interest earned on property supporting the legal responsibility. Anticipated curiosity
charges for time period and entire life ranged from 2.25% to 10% as of December 31, 2021.
Anticipated rates of interest for DI insurance policies ranged from 3.00% to 7.5% as of
December 31, 2021 and for LTC insurance policies ranged from 5% to five.7% as of
December 31, 2021.

The legal responsibility for unpaid reported claims on DI and LTC insurance policies contains an
estimate of the current worth of obligations for persevering with profit funds.
The low cost charges used to calculate current values are based mostly on common
rates of interest earned on property supporting the legal responsibility for unpaid quantities and
had been 4.5% and 5.95% for DI and LTC claims, respectively, as of
December 31, 2021.

Parts of the Firm’s UL and VUL insurance policies have product options that outcome
in earnings adopted by losses from the insurance coverage element of the coverage. These
earnings adopted by losses might be generated by the associated fee construction of the product
or secondary ensures within the coverage. The secondary assure ensures that,
topic to specified circumstances, the coverage is not going to terminate and can proceed
to supply a demise profit even when there may be inadequate coverage worth to cowl
the month-to-month deductions and prices.

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Separate Account Liabilities

Separate account liabilities consisted of the next:

December 31,
2021 2020
(in tens of millions)
Variable annuity $ 82,862 $ 79,299
VUL insurance coverage 9,343 8,226
Different insurance coverage 33 31
Whole $ 92,238 $ 87,556

11. Variable Annuity and Insurance coverage Ensures

Many of the variable annuity contracts issued by the Firm include a number of
assured advantages, together with GMWB, GMAB, GMDB or GGU provisions. The Firm
beforehand supplied contracts containing GMIB provisions. See Observe 2 and Observe 10
for added info concerning the Firm’s variable annuity ensures.

The GMDB and GGU provisions present a specified minimal return upon demise of the
contractholder. The demise profit payable is the larger of (i) the contract
worth much less any buy cost credit topic to recapture much less a pro-rata
portion of any rider charges, or (ii) the GMDB provisions specified within the
contract. The Firm has the next main GMDB provisions:

•Return of premium – offers buy funds minus adjusted partial
surrenders.

•Reset – offers that the worth resets to the account worth each sixth
contract anniversary minus adjusted partial surrenders. This provision was usually
offered together with the return of premium provision and isn’t any
longer supplied.

•Ratchet – offers that the worth ratchets as much as the utmost account worth at
specified anniversary intervals, plus subsequent buy funds much less adjusted
partial surrenders.

The variable annuity contracts with GMWB riders usually have account values
which are based mostly on an underlying portfolio of mutual funds, the values of which
fluctuate based mostly on fund efficiency. At contract situation, the assured quantity is
equal to the quantity deposited however the assure could also be elevated yearly to the
account worth (a “step-up”) within the case of favorable market efficiency or by a
profit credit score if the contract contains this provision.

The Firm has GMWB riders in pressure, which include a number of of the next
provisions:

•Withdrawals at a specified charge per 12 months till the quantity withdrawn is the same as
the assured quantity.

•Withdrawals at a specified charge per 12 months for the lifetime of the contractholder
(“GMWB for all times”).

•Withdrawals at a specified charge per 12 months for joint contractholders whereas both
is alive.

•Withdrawals based mostly on efficiency of the contract.

•Withdrawals based mostly on the age withdrawals start.

•Credit are utilized yearly for a specified variety of years to extend the
assured quantity so long as withdrawals haven’t been taken.

Variable annuity contractholders age 79 or youthful at contract situation also can
acquire a principal-back assure by buying the optionally available GMAB rider for an
extra cost. The GMAB rider ensures that, no matter market
efficiency on the finish of the 10-year ready interval, the contract worth shall be
a minimum of the unique funding or a specified share of the very best
anniversary worth, adjusted for withdrawals. If the contract worth is lower than
the assure on the finish of the 10-year interval, a lump sum shall be added to the
contract worth to make the contract worth equal to the assure worth.

Sure UL insurance policies present secondary assure advantages. The secondary
assure ensures that, topic to specified circumstances, the coverage is not going to
terminate and can proceed to supply a demise profit even when there may be
inadequate coverage worth to cowl the month-to-month deductions and prices.

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The next desk offers info associated to variable annuity ensures
for which the Firm has established extra liabilities:

December 31, 2021 December 31, 2020
Whole Web Whole Web
Contract Contract Worth Quantity Weighted Common Contract Contract Worth Quantity Weighted Common
Variable Annuity Ensures by Profit Sort (1) Worth in Separate Accounts at Threat Attained Age Worth in Separate Accounts at Threat Attained Age
(in tens of millions, besides age)
GMDB:
Return of premium $ 70,020 $ 68,145 $ 6 69 $ 66,874 $ 64,932 $ 5 68
5/six-year reset 8,309 5,612 6 68 8,116 5,386 6 68
One-year ratchet 6,177 5,858 13 71 6,094 5,763 8 71
5-year ratchet 1,438 1,386 1 68 1,436 1,381 – 67
Different 1,302 1,286 38 74 1,261 1,243 45 73
Whole – GMDB $ 87,246 $ 82,287 $ 64 69 $ 83,781 $ 78,705 $ 64 68

GGU demise profit $ 1,260 $ 1,198 $ 184 72 $ 1,183 $ 1,126 $ 162 71

GMIB $ 184 $ 170 $ 4 71 $ 187 $ 173 $ 6 71

GMWB:
GMWB $ 1,900 $ 1,895 $ 1 75 $ 1,972 $ 1,967 $ 1 74
GMWB for all times 52,387 52,334 187 69 50,142 50,057 185 69
Whole – GMWB $ 54,287 $ 54,229 $ 188 69 $ 52,114 $ 52,024 $ 186 69

GMAB $ 2,005 $ 2,005 $ – 62 $ 2,291 $ 2,291 $ – 61

(1) Particular person variable annuity contracts might have multiple assure and
due to this fact could also be included in multiple profit kind. Variable annuity
contracts for which the demise profit equals the account worth should not proven in
this desk.

The web quantity in danger for GMDB, GGU and GMAB is outlined as the present
assured profit quantity in extra of the present contract worth. The web
quantity in danger for GMIB is outlined because the larger of the current worth of the
minimal assured annuity funds much less the present contract worth or zero. The
internet quantity in danger for GMWB is outlined because the larger of the current worth of
the minimal assured withdrawal funds much less the present contract worth or
zero.

The next desk offers info associated to insurance coverage ensures for
which the Firm has established extra liabilities:

December 31, 2021 December 31, 2020
Weighted Common Weighted Common
Web Quantity at Threat Attained Age Web Quantity at Threat Attained Age
(in tens of millions, besides age)
UL secondary ensures $ 6,564 68 $ 6,587 67

The web quantity in danger for UL secondary ensures is outlined as the present
assured demise profit quantity in extra of the present policyholder account
stability.

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Adjustments in extra liabilities (contra liabilities) for variable annuity and
insurance coverage ensures had been as follows:

GMDB &
GGU GMIB GMWB (1) GMAB (1) UL
(in tens of millions)
Stability at January 1, 2019 $ 19 $ 8 $ 875 $ (19) $ 659
Incurred claims 2 (1) 587 (20) 141
Paid claims (5) – – – (42)
Stability at December 31, 2019 16 7 1,462 (39) 758
Incurred claims 15 – 1,587 40 209
Paid claims (7) (1) – – (51)
Stability at December 31, 2020 24 6 3,049 1 916
Incurred claims 17 – (713) (24) 140
Paid claims (5) (1) – – (36)
Stability at December 31, 2021 $ 36 $ 5 $ 2,336 $ (23) $ 1,020

(1) The incurred claims for GMWB and GMAB embrace the change within the truthful worth
of the liabilities (contra liabilities) much less paid claims.

The liabilities for assured advantages are supported by normal account property.

The next desk summarizes the distribution of separate account balances by
asset kind for variable annuity contracts offering assured advantages:

December 31,
2021 2020
(in tens of millions)
Mutual funds:
Fairness $ 49,183 $ 45,947
Bond 24,998 26,073
Different 8,316 6,911
Whole mutual funds $ 82,497 $ 78,931

No good points or losses had been acknowledged on property transferred to separate accounts
for the years ended December 31, 2021, 2020 and 2019.

12. Debt

Brief-Time period Borrowings

RiverSource Life Insurance coverage Firm is a member of the Federal Dwelling Mortgage Financial institution
(“FHLB”) of Des Moines which offers entry to collateralized borrowings. The
Firm has pledged Accessible-for-Sale securities consisting of business
mortgage backed securities to collateralize its obligation beneath these
borrowings. The truthful worth of the securities pledged is recorded in Investments
and was $1.0 billion and $1.2 billion as of December 31, 2021 and 2020,
respectively. The quantity of the Firm’s legal responsibility together with accrued curiosity
was $200 million as of each December 31, 2021 and 2020. The remaining maturity
of excellent FHLB advances was lower than three months as of each
December 31, 2021 and 2020. The weighted common annualized rate of interest on the
FHLB advances held as of December 31, 2021 and 2020 was 0.3% and 0.4%,
respectively.

Traces of Credit score

RiverSource Life Insurance coverage Firm, because the borrower, has a revolving credit score
settlement with Ameriprise Monetary because the lender. The mixture quantity
excellent beneath the road of credit score might not exceed 3% of RiverSource Life
Insurance coverage Firm’s statutory admitted property (excluding separate accounts) as
of the prior 12 months finish. The rate of interest for any borrowing beneath the settlement
is established by reference to London Inter-Financial institution Supplied Fee (“LIBOR”) for U.S.
greenback deposits with maturities corresponding to the related curiosity interval, plus
an relevant margin topic to adjustment based mostly on debt rankings of the senior
unsecured debt of Ameriprise Monetary. Quantities borrowed could also be repaid at any
time with no prepayment penalty. There have been no quantities excellent on this line
of credit score as of each December 31, 2021 and 2020.

RiverSource Lifetime of NY, because the borrower, has a revolving credit score settlement with
Ameriprise Monetary because the lender. The mixture quantity excellent beneath the
line of credit score might not exceed the lesser of $25 million or 3% of RiverSource
Lifetime of NY’s statutory admitted property (excluding separate accounts) as of the
prior 12 months finish. The rate of interest for any borrowing beneath the settlement is
established by reference to LIBOR for U.S. greenback deposits with maturities
corresponding to the related curiosity interval. Quantities borrowed could also be repaid at
any time with no prepayment penalty. There have been no quantities excellent on this
line of credit score as of each December 31, 2021 and 2020.

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RTA, because the borrower, has a revolving credit score settlement with Ameriprise Monetary
because the lender to not exceed $100 million. The rate of interest for any borrowing
beneath the settlement is established by reference to LIBOR for U.S. greenback
deposits with maturities corresponding to the related curiosity interval, plus an
relevant margin topic to adjustment based mostly on debt rankings of the senior
unsecured debt of Ameriprise Monetary. This line of credit score is routinely
renewed yearly with Ameriprise Monetary. There have been no quantities excellent on
this revolving credit score settlement as of each December 31, 2021 and 2020.

Lengthy-Time period Debt

The Firm has a $500 million unsecured 3.5% surplus notice due December 31, 2050
to Ameriprise Monetary. The excess notice is subordinate in proper of cost to
the prior cost in filled with the Firm’s obligations to policyholders,
claimants and beneficiaries and all different collectors. No cost of principal or
curiosity shall be made with out the prior approval of the Minnesota Division of
Commerce and such funds shall be made solely from RiverSource Life Insurance coverage
Firm’s statutory surplus. Curiosity funds, which commenced on June 30,
2021, are due semiannually in arrears on June 30 and December 31. Topic to the
previous circumstances, the Firm might prepay all or a portion of the principal
at any time. The excellent stability was $500 million as of each
December 31, 2021 and 2020 and is recorded in Lengthy-term debt.

13. Truthful Values of Property and Liabilities

GAAP defines truthful worth as the worth that might be acquired to promote an asset or
paid to switch a legal responsibility in an orderly transaction between market
individuals on the measurement date; that’s, an exit value. The exit value
assumes the asset or legal responsibility just isn’t exchanged topic to a compelled liquidation
or distressed sale.

Valuation Hierarchy

The Firm categorizes its truthful worth measurements in line with a three-level
hierarchy. The hierarchy prioritizes the inputs utilized by the Firm’s valuation
strategies. A stage is assigned to every truthful worth measurement based mostly on the
lowest stage enter that’s vital to the truthful worth measurement in its
entirety. The three ranges of the truthful worth hierarchy are outlined as follows:

Degree 1 Unadjusted quoted costs for similar property or liabilities in lively
markets which are accessible on the measurement date.

Degree 2 Costs or valuations based mostly on observable inputs aside from quoted
costs in lively markets for similar property and liabilities.

Degree 3 Costs or valuations that require inputs which are each vital to
the truthful worth measurement and unobservable.

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The next tables current the balances of property and liabilities measured at
truthful worth on a recurring foundation:

December 31, 2021
Degree 1 Degree 2 Degree 3 Whole
(in tens of millions)

Property

Accessible-for-Sale securities:
Company debt securities $ – $ 9,142 $ 496 $ 9,638
Residential mortgage backed securities – 2,250 – 2,250
Industrial mortgage backed securities – 2,656 – 2,656
State and municipal obligations – 1,074 – 1,074
Asset backed securities – 246 291 537
International authorities bonds and obligations – 83 – 83
U.S. authorities and company obligations 1 – – 1
Whole Accessible-for-Sale securities 1 15,451 787 16,239
Money equivalents 1,985 1,191 – 3,176

Receivables:

Mounted deferred listed annuity ceded embedded derivatives – – 59 59
Different property:
Rate of interest spinoff contracts 1 1,251 – 1,252
Fairness spinoff contracts 158 4,080 – 4,238
International change spinoff contracts 1 17 – 18
Credit score spinoff contracts – 9 – 9
Whole different property 160 5,357 – 5,517
Separate account property at internet asset worth (“NAV”) 92,238 (1)
Whole property at truthful worth $ 2,146 $ 21,999 $ 846 $ 117,229

Liabilities

Policyholder account balances, future coverage advantages and
claims:
Mounted deferred listed annuity embedded derivatives

$ – $ 5 $ 56 $ 61
IUL embedded derivatives – – 905 905
GMWB and GMAB embedded derivatives – – 1,486 1,486 (2)
Structured variable annuity embedded derivatives – – 406 406
Whole policyholder account balances, future coverage advantages (3)
and claims – 5 2,853 2,858
Different liabilities:
Rate of interest spinoff contracts 1 467 – 468
Fairness spinoff contracts 101 3,610 – 3,711
International change spinoff contracts 1 – – 1

Whole different liabilities 103 4,077 – 4,180
Whole liabilities at truthful worth $ 103 $ 4,082 $ 2,853 $ 7,038

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December 31, 2020
Degree 1 Degree 2 Degree 3 Whole
(in tens of millions)

Property

Accessible-for-Sale securities:
Company debt securities $ – $ 12,107 $ 766 $ 12,873
Residential mortgage backed securities – 2,993 9 3,002
Industrial mortgage backed securities – 4,166 – 4,166
State and municipal obligations – 1,344 – 1,344
Asset backed securities – 817 395 1,212
International authorities bonds and obligations – 257 – 257
U.S. authorities and company obligations 1 – – 1
Whole Accessible-for-Sale securities 1 21,684 1,170 22,855
Money equivalents 2,419 713 – 3,132
Different property:
Rate of interest spinoff contracts 1 1,754 – 1,755
Fairness spinoff contracts 406 3,578 – 3,984
International change spinoff contracts 1 17 – 18
Credit score spinoff contracts – 1 – 1
Whole different property 408 5,350 – 5,758
Separate account property at NAV 87,556 (1)
Whole property at truthful worth $ 2,828 $ 27,747 $ 1,170 $ 119,301

Liabilities

Policyholder account balances, future coverage advantages and
claims:
Mounted deferred listed annuity embedded derivatives

$ – $ 3 $ 49 $ 52
IUL embedded derivatives – – 935 935
GMWB and GMAB embedded derivatives – – 2,316 2,316 (4)
Structured variable annuity embedded derivatives – – 70 70
Whole policyholder account balances, future coverage advantages (5)
and claims – 3 3,370 3,373
Different liabilities:
Rate of interest spinoff contracts – 734 – 734
Fairness spinoff contracts 182 3,329 – 3,511
International change spinoff contracts 2 – – 2
Credit score spinoff contracts – 1 – 1
Whole different liabilities 184 4,064 – 4,248
Whole liabilities at truthful worth $ 184

$ 4,067 $ 3,370 $ 7,621

(1) Quantities are comprised of sure monetary devices which are measured at
truthful worth utilizing the NAV per share (or its equal) as a sensible expedient
and haven’t been categorised within the truthful worth hierarchy.

(2) The truthful worth of the GMWB and GMAB embedded derivatives included $1.6
billion of particular person contracts in a legal responsibility place and $133 million of
particular person contracts in an asset place (recorded as a contra legal responsibility) as of
December 31, 2021.

(3) The Firm’s adjustment for nonperformance danger resulted in a $598 million
cumulative lower to the embedded derivatives as of December 31, 2021.

(4) The truthful worth of the GMWB and GMAB embedded derivatives included $2.4
billion of particular person contracts in a legal responsibility place and $67 million of
particular person contracts in an asset place (recorded as a contra legal responsibility) as of
December 31, 2020.

(5) The Firm’s adjustment for nonperformance danger resulted in a $727 million
cumulative lower to the embedded derivatives as of December 31, 2020.

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The next tables present a abstract of adjustments in Degree 3 property and
liabilities measured at truthful worth on a recurring foundation:

Accessible-for-Sale Securities Receivables
Mounted Deferred
Listed
Residential Annuity Ceded
Mortgage Backed Asset Backed Embedded
Company Debt Securities Securities Securities Whole Derivatives
(in tens of millions)
Stability at January 1, 2021 $ 766 $ 9 $ 395 $ 1,170 $ –
Whole good points (losses) included in:
Web revenue (1) – – (1) (1) 3
Different complete revenue (loss) (10) – (1) (11) –
Purchases 108 – – 108 –

Points – – – – 57 (4)
Settlements (119) – (81) (200) (1)
Transfers into Degree 3 168 – 2 170 –
Transfers out of Degree 3 (416) (9) (24) (449) –
Stability at December 31, 2021 $ 496 $ – $ 291 $ 787 $ 59

Adjustments in unrealized good points (losses) in
internet revenue regarding property held at (1)
December 31, 2021 $ (1) $ – $ – $ (1) $ –
Adjustments in unrealized good points (losses) in
different complete revenue (loss)
regarding property held at December 31,
2021 $ (8) $ – $ (1) $ (9) $ –

Policyholder Account Balances, Future Coverage Advantages and Claims

Structured
Mounted Deferred Variable
Listed Annuity GMWB and GMAB Annuity
Embedded IUL Embedded Embedded Embedded
Derivatives Derivatives Derivatives Derivatives Whole
(in tens of millions)
Stability at January 1, 2021 $ 49 $ 935 $ 2,316 $ 70 $ 3,370
Whole (good points) losses included in:
Web revenue 10 (2) 68 (2) (1,344) (3) 393 (3) (873)
Points – – 369 (28) 341
Settlements (3) (98) 145 (29) 15
Stability at December 31, 2021 $ 56 $ 905 $ 1,486 $ 406 $ 2,853

Adjustments in unrealized (good points) losses in internet
revenue regarding liabilities held at (2) (3)
December 31, 2021 $ – $ 68 $ (1,299) $ – $ (1,231)

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Accessible-for-Sale Securities
Residential
Mortgage Backed Asset Backed
Company Debt Securities Securities Securities Whole
(in tens of millions)
Stability at January 1, 2020 $ 735 $ 17 $ 389 $ 1,141

Whole good points (losses) included in:

Different complete revenue (loss) 15 1 (2) 14
Purchases 62 39 – 101
Settlements (46) – (6) (52)
Transfers into Degree 3 – – 14 14
Transfers out of Degree 3 – (48) – (48)
Stability at December 31, 2020 $ 766 $ 9 $ 395 $ 1,170

Adjustments in unrealized good points (losses) in internet
revenue regarding property held at December 31, (1)
2020 $ (1) $ – $ – $ (1)
Adjustments in unrealized good points (losses) in different
complete revenue (loss) regarding property
held at December 31, 2020 $ 15 $ 1 $ (2) $ 14

Policyholder Account Balances, Future Coverage Advantages and Claims

Structured
Mounted Deferred Variable
Listed Annuity GMWB and GMAB Annuity
Embedded IUL Embedded Embedded Embedded
Derivatives Derivatives Derivatives Derivatives Whole
(in tens of millions)
Stability at January 1, 2020 $ 43 $ 881 $ 763 $ – $ 1,687
Whole (good points) losses included in:
Web revenue 4 (2) 76 (2) 1,152 (3) 91 (3) 1,323
Points 3 61 362 (21) 405
Settlements (1) (83) 39 – (45)
Stability at December 31, 2020 $ 49 $ 935 $ 2,316 $ 70 $ 3,370

Adjustments in unrealized (good points) losses in internet
revenue regarding liabilities held at (2) (3)
December 31, 2020 $ – $ 76 $ 1,206 $ – $ 1,282

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Accessible-for-Sale Securities
Residential
Mortgage Backed Asset Backed
Company Debt Securities Securities Securities Whole
(in tens of millions)
Stability at January 1, 2019 $ 871 $ 64 $ 374 $ 1,309
Whole good points (losses) included in:
Web revenue (1) – – (1) (1)
Different complete revenue (loss) 30 – 5 35
Purchases 55 27 – 82
Settlements (220) (3) – (223)
Transfers into Degree 3 – – 10 10
Transfers out of Degree 3 – (71) – (71)
Stability at December 31, 2019 $ 735 $ 17 $ 389 $ 1,141

Adjustments in unrealized good points (losses) in internet
revenue regarding property held at December 31, (1)
2019 $ (1) $ – $ – $ (1)

Policyholder Account

Balances, Future Coverage Advantages and Claims

Mounted Deferred
Listed Annuity GMWB and GMAB
Embedded IUL Embedded Embedded
Derivatives Derivatives Derivatives Whole
(in tens of millions)
Stability at January 1, 2019 $ 14 $ 628 $ 328 $ 970
Whole (good points) losses included in:
Web revenue 8 (2) 209 (2) 80 (3) 297
Points 21 113 361 495
Settlements – (69) (6) (75)
Stability at December 31, 2019 $ 43 $ 881 $ 763 $ 1,687

Adjustments in unrealized (good points) losses in internet
revenue regarding liabilities held at (2) (3)
December 31, 2019 $ – $ 209 $ 82 $ 291

(1) Included in Web funding revenue.

(2) Included in Curiosity credited to mounted accounts.

(3) Included in Advantages, claims, losses and settlement bills.
(4) Represents the quantity of ceded embedded derivatives related to mounted
deferred annuity merchandise reinsured within the third quarter of 2021. See Observe 1 for
extra info on the reinsurance transaction.

The rise (lower) to pretax revenue of the Firm’s adjustment for
nonperformance danger on the truthful worth of its embedded derivatives was $(92)
million, $196 million and $(190) million, internet of DAC, DSIC, unearned income
amortization and the reinsurance accrual, for the years ended December 31, 2021,
2020 and 2019, respectively.

Securities transferred from Degree 3 primarily characterize securities with truthful
values which are obtained from a third-party pricing service with observable
inputs or truthful values that had been included in an observable transaction with a
market participant. Securities transferred to Degree 3 characterize securities with
truthful values that are actually based mostly on a single non-binding dealer quote.

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The next tables present a abstract of the numerous unobservable inputs
used within the truthful worth measurements developed by the Firm or moderately
out there to the Firm of Degree 3 property and liabilities:

December 31, 2021
Truthful
Worth Valuation Method Unobservable Enter Vary Weighted Common
(in tens of millions)
Company debt securities $ 496 Discounted money move Yield/unfold to U.S. Treasuries (1) 0.8% – 2.4% 1.1%
(non-public placements)
Asset backed securities $ 291 Discounted money move Annual default charge 5.8% 5.8%
Loss severity 25.0% 25.0%
Yield/unfold to swap charges (2) 175 bps – 275 bps 182 bps
Mounted deferred listed $ 59 Discounted money move Give up charge (4) 0.0% – 66.8% 1.4%
annuity ceded embedded
derivatives
IUL embedded derivatives $ 905 Discounted money move Nonperformance danger (3) 65 bps 65 bps
Mounted deferred listed $ 56 Discounted money move Give up charge (4) 0.0% – 66.8% 1.4%

annuity embedded derivatives

Nonperformance danger (3) 65 bps 65 bps
GMWB and GMAB embedded $ 1,486 Discounted money move Utilization of assured withdrawals 0.0% – 48.0% 10.6%
derivatives (5) (6)
Give up charge (4) 0.1% – 55.7% 3.6%
Market volatility (7) (8) 4.3% – 16.8% 10.8%
Nonperformance danger (3) 65 bps 65 bps
Structured variable annuity $ 406 Discounted money move Give up charge (4) 0.8% – 40.0% 0.9%

embedded derivatives

Nonperformance danger (3) 65 bps 65 bps

December 31, 2020
Truthful
Worth Valuation Method Unobservable Enter Vary Weighted Common
(in tens of millions)
Company debt securities $ 766 Discounted money move Yield/unfold to U.S. Treasuries (1) 1.0% – 3.3% 1.5%
(non-public placements)
Asset backed securities $ 395 Discounted money move Annual default charge 5.3% 5.3%
Loss severity 25.0% 25.0%
Yield/unfold to swap charges (2) 250 bps – 400 bps 259 bps
IUL embedded derivatives $ 935 Discounted money move Nonperformance danger (3) 65 bps 65 bps
Mounted deferred listed $ 49 Discounted money move Give up charge (4) 0.0% – 50.0% 1.2%

annuity embedded derivatives

Nonperformance danger (3) 65 bps 65 bps
GMWB and GMAB embedded $ 2,316 Discounted money move Utilization of assured withdrawals 0.0% – 48.0% 10.6%
derivatives (5) (6)
Give up charge (4) 0.1% – 73.5% 3.8%
Market volatility (7) (8) 4.3% – 17.1% 11.0%
Nonperformance danger (3) 65 bps 65 bps
Structured variable annuity $ 70 Discounted money move Give up charge (4) 0.8% – 40.0% 0.9%

embedded derivatives

Nonperformance danger (3) 65 bps 65 bps

(1) The weighted common for the unfold to U.S. Treasuries for company debt
securities (non-public placements) is weighted based mostly on the safety’s market worth
as a share of the mixture market worth of the securities.

(2) The weighted common for the unfold to swap charges for asset backed
securities is calculated because the sum of every tranche’s stability multiplied by its
unfold to swap divided by the mixture balances of the tranches.

(3) The nonperformance danger is the unfold added to the observable rates of interest
used within the valuation of the embedded derivatives.

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(4) The weighted common give up charge is weighted based mostly on the profit base of
every contract and represents the common assumption within the present 12 months
together with the impact of a dynamic give up method.

(5) The utilization of assured withdrawals represents the share of
contractholders that can start withdrawing in any given 12 months.

(6) The weighted common utilization charge represents the common assumption for
the present 12 months, weighting every coverage evenly. The calculation excludes
insurance policies which have already began taking withdrawals.

(7) Market volatility represents the implied volatility of fund of funds and
managed volatility funds.

(8) The weighted common market volatility represents the common volatility
throughout all contracts, weighted by the scale of the assured profit.

Degree 3 measurements not included within the desk above are obtained from
non-binding dealer quotes the place unobservable inputs utilized within the truthful worth
calculation should not moderately out there to the Firm.

Uncertainty of Truthful Worth Measurements

Vital will increase (decreases) within the yield/unfold to U.S. Treasuries utilized in
the truthful worth measurement of Degree 3 company debt securities in isolation
would have resulted in a considerably decrease (greater) truthful worth measurement.

Vital will increase (decreases) within the annual default charge used within the truthful
worth measurement of Degree 3 asset backed securities in isolation, typically,
would have resulted in a considerably decrease (greater) truthful worth measurement and
vital will increase (decreases) in loss severity in isolation would have
resulted in a considerably decrease (greater) truthful worth measurement.

Vital will increase (decreases) within the yield/unfold to swap charges in isolation
would have resulted in a considerably decrease (greater) truthful worth measurement.

Vital will increase (decreases) within the give up charge used within the truthful worth
measurement of the mounted deferred listed annuity ceded embedded derivatives in
isolation would have resulted in a considerably decrease (greater) truthful worth
measurement.

Vital will increase (decreases) in nonperformance danger used within the truthful worth
measurement of the IUL embedded derivatives in isolation would have resulted in
a considerably decrease (greater) truthful worth measurement.

Vital will increase (decreases) in nonperformance danger and give up charge used
within the truthful worth measurements of the mounted deferred listed annuity embedded
derivatives and structured variable annuity embedded derivatives in isolation
would have resulted in a considerably decrease (greater) legal responsibility worth.

Vital will increase (decreases) in utilization and volatility used within the truthful
worth measurement of the GMWB and GMAB embedded derivatives in isolation would
have resulted in a considerably greater (decrease) legal responsibility worth.

Vital will increase (decreases) in nonperformance danger and give up charge used
within the truthful worth measurement of the GMWB and GMAB embedded derivatives in
isolation would have resulted in a considerably decrease (greater) legal responsibility worth.
Utilization of assured withdrawals and give up charges differ with the kind of
rider, the period of the coverage, the age of the contractholder, the
distribution channel and whether or not the worth of the assured profit exceeds the
contract accumulation worth.

Dedication of Truthful Worth

The Firm makes use of valuation strategies according to the market and revenue
approaches to measure the truthful worth of its property and liabilities. The
Firm’s market strategy makes use of costs and different related info generated
by market transactions involving similar or comparable property or liabilities.
The Firm’s revenue strategy makes use of valuation strategies to transform future
projected money flows to a single discounted current worth quantity. When making use of
both strategy, the Firm maximizes the usage of observable inputs and
minimizes the usage of unobservable inputs.

The next is an outline of the valuation strategies used to measure truthful
worth and the overall classification of those devices pursuant to the truthful
worth hierarchy.

Property

Accessible-for-Sale Securities

When out there, the truthful worth of securities relies on quoted costs in lively
markets. If quoted costs should not out there, truthful values are obtained from
third-party pricing providers, non-binding dealer quotes, or different model-based
valuation strategies.

Degree 1 securities primarily embrace U.S. Treasuries.

Degree 2 securities primarily embrace company bonds, residential mortgage
backed securities, industrial mortgage backed securities, state and municipal
obligations, asset backed securities and overseas authorities securities. The truthful
worth of those Degree 2 securities relies on a market strategy with costs
obtained from third-party pricing providers. Observable inputs used to worth
these securities can embrace, however should not restricted to, reported trades, benchmark
yields, issuer spreads and non-binding dealer quotes. The truthful worth of
securities included in an observable transaction with a market participant are
additionally thought of Degree 2 when the market just isn’t lively.

Degree 3 securities primarily embrace sure company bonds, non-agency
residential mortgage backed securities, industrial mortgage backed securities
and asset backed securities with truthful worth usually based mostly on a single
non-binding dealer quote. The underlying inputs used for a few of the non-binding
dealer quotes should not available to the Firm. The Firm’s privately
positioned

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company bonds are usually based mostly on a single non-binding dealer quote. The
truthful worth of affiliated asset backed securities is set utilizing a
discounted money move mannequin. Inputs used to find out the anticipated money flows
embrace assumptions about low cost charges and default, prepayment and restoration
charges of the underlying property. Given the importance of the unobservable
inputs to this truthful worth measurement, the truthful worth of the funding within the
affiliated asset backed securities is assessed as Degree 3.

In consideration of the above, administration is accountable for the truthful values
recorded on the monetary statements. Costs acquired from third-party pricing
providers are subjected to exception reporting that identifies investments with
vital day by day value actions in addition to no actions. The Firm critiques
the exception reporting and resolves the exceptions by way of reaffirmation of the
value or recording an applicable truthful worth estimate. The Firm additionally performs
subsequent transaction testing. The Firm performs annual due diligence of
third-party pricing providers. The Firm’s due diligence procedures embrace
assessing the seller’s valuation {qualifications}, management surroundings, evaluation
of asset-class particular valuation methodologies, and understanding of sources of
market observable assumptions and unobservable assumptions, if any, employed in
the valuation methodology. The Firm additionally considers the outcomes of its
exception reporting controls and any ensuing value challenges that come up.

Money Equivalents

Money equivalents embrace time deposits and different extremely liquid investments with
unique or remaining maturities on the time of buy of 90 days or much less.
Actively traded cash market funds are measured at their NAV and categorised as
Degree 1. U.S. Treasuries are additionally categorised as Degree 1. The Firm’s remaining
money equivalents are categorised as Degree 2 and measured at amortized value, which
is an affordable estimate of truthful worth due to the brief time between the
buy of the instrument and its anticipated realization.

Receivables

Through the third quarter of 2021, the Firm reinsured its mounted deferred
listed annuity merchandise which have an listed account that’s accounted for as
an embedded spinoff. The Firm makes use of discounted money move fashions to
decide the truthful worth of those ceded embedded derivatives. The truthful worth of
mounted deferred listed annuity ceded embedded derivatives contains vital
observable rates of interest, volatilities and fairness index ranges and vital
unobservable give up charges. Given the importance of the unobservable
give up charges, these embedded derivatives are categorised as Degree 3. See Observe
1 for extra info on the reinsurance transaction.

Different Property

Derivatives which are measured utilizing quoted costs in lively markets, akin to
derivatives which are exchange-traded, are categorised as Degree 1 measurements.
The variation margin on futures contracts can also be categorised as Degree 1. The
truthful worth of derivatives which are traded in much less lively
over-the-counter (“OTC”) markets is mostly measured utilizing pricing fashions with
market observable inputs akin to rates of interest and fairness index ranges. These
measurements are categorised as Degree 2 throughout the truthful worth hierarchy and
embrace swaps and the vast majority of choices. The counterparties’ nonperformance
danger related to uncollateralized spinoff property was immaterial as of
December 31, 2021 and 2020. See Observe 16 and Observe 17 for additional info on
the credit score danger of spinoff devices and associated collateral.

Separate Account Property

The truthful worth of property held by separate accounts is set by the NAV of
the funds wherein these separate accounts are invested. The NAV is used as a
sensible expedient for truthful worth and represents the exit value for the
separate account. Separate account property are excluded from classification in
the truthful worth hierarchy.

Liabilities

Policyholder Account Balances, Future Coverage Advantages and Claims

There isn’t a lively marketplace for the switch of the Firm’s embedded derivatives
attributable to the provisions of sure variable annuity riders, mounted
deferred listed annuity, structured variable annuity and IUL merchandise.

The Firm values the embedded derivatives attributable to the provisions of
sure variable annuity riders utilizing inner valuation fashions. These fashions
calculate truthful worth as the current worth of future anticipated profit funds
much less the current worth of future anticipated rider charges attributable to the
embedded spinoff function. The projected money flows utilized by these fashions
embrace observable capital market assumptions and incorporate vital
unobservable inputs associated to implied volatility in addition to contractholder
conduct assumptions that embrace margins for danger, all of which the Firm
believes a market participant would count on. The truthful worth additionally displays a
present estimate of the Firm’s nonperformance danger particular to those embedded
derivatives. Given the numerous unobservable inputs to this valuation, these
measurements are categorised as Degree 3. The embedded derivatives attributable to
these provisions are recorded in Policyholder account balances, future coverage
advantages and claims.

The Firm makes use of a reduced money move mannequin to find out the truthful worth of the
embedded derivatives related to the provisions of its fairness index annuity
product. The projected money flows generated by this mannequin are based mostly on
vital observable inputs associated to rates of interest, volatilities and fairness
index ranges and, due to this fact, are categorised as Degree 2.

The Firm makes use of discounted money move fashions to find out the truthful worth of the
embedded derivatives related to the provisions of its mounted deferred
listed annuity, structured variable annuity and IUL merchandise. The structured
variable annuity product

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is a restricted versatile buy cost annuity that provides 45 totally different listed
account choices offering fairness market publicity and a hard and fast account. Every
listed account features a safety possibility (a buffer or a ground). If the index
has a unfavorable return, contractholder losses shall be lowered by a buffer or
restricted to a ground. The portion allotted to an listed account is accounted for
as an embedded spinoff. The truthful worth of mounted deferred listed annuity,
structured variable annuity and IUL embedded derivatives contains vital
observable rates of interest, volatilities and fairness index ranges and vital
unobservable give up charges and the estimate of the Firm’s nonperformance
danger. Given the importance of the unobservable give up charges and the
nonperformance danger assumption, the mounted deferred listed annuity, structured
variable annuity and IUL embedded derivatives are categorised as Degree 3.

The embedded derivatives attributable to those provisions are recorded in
Policyholder account balances, future coverage advantages and claims.

Different Liabilities

Derivatives which are measured utilizing quoted costs in lively markets, akin to
derivatives which are exchange-traded, are categorised as Degree 1 measurements.
The variation margin on futures contracts can also be categorised as Degree 1. The
truthful worth of derivatives which are traded in much less lively OTC markets is
typically measured utilizing pricing fashions with market observable inputs akin to
rates of interest and fairness index ranges. These measurements are categorised as
Degree 2 throughout the truthful worth hierarchy and embrace swaps and the vast majority of
choices. The Firm’s nonperformance danger related to uncollateralized
spinoff liabilities was immaterial as of December 31, 2021 and 2020. See
Observe 16 and Observe 17 for additional info on the credit score danger of spinoff
devices and associated collateral.

Truthful Worth on a Nonrecurring Foundation

The Firm assesses its funding in reasonably priced housing partnerships for
impairment. The investments which are decided to be impaired are written down
to their truthful worth. The Firm makes use of a reduced money move mannequin to measure
the truthful worth of those investments. Inputs to the discounted money move mannequin
are estimates of future internet working losses and tax credit out there to the
Firm and low cost charges based mostly on market situation and the monetary energy
of the syndicator (normal accomplice). The stability of reasonably priced housing
partnerships measured at truthful worth on a nonrecurring foundation was $93 million and
$101 million as of December 31, 2021 and 2020, respectively, and is assessed
as Degree 3 within the truthful worth hierarchy. The Firm additionally measured sure
equity-method investments at truthful worth on a nonrecurring foundation utilizing a
discounted money move mannequin. Inputs to the mannequin embrace projected money flows and
a market-based low cost charge. At December 31, 2021, the truthful worth of those
investments was $7 million and is assessed as Degree 3 within the truthful worth
hierarchy.

Property and Liabilities Not Reported at Truthful Worth

The next tables present the carrying worth and the estimated truthful worth of
monetary devices that aren’t reported at truthful worth:

December 31, 2021
Carrying Truthful Worth
Worth Degree 1 Degree 2 Degree 3 Whole
(in tens of millions)
Monetary Property
Mortgage loans, internet $ 1,788 $ – $ – $ 1,872 $ 1,872
Coverage loans 834 – 834 – 834
Different investments 61 – 40 21 61
Receivables 7,876 – – 8,630 8,630

Monetary Liabilities
Policyholder account balances, future coverage
advantages and claims $ 12,342 $ – $ – $ 13,264 $ 13,264
Brief-term borrowings 200 – 200 – 200

Lengthy-term debt 500 – 498 – 498
Different liabilities 9 – – 9 9
Separate account liabilities – funding contracts 403 – 403 – 403

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December 31, 2020
Carrying Truthful Worth
Worth Degree 1 Degree 2 Degree 3 Whole
(in tens of millions)
Monetary Property
Mortgage loans, internet $ 2,574 $ – $ – $ 2,724 $ 2,724
Coverage loans 846 – 846 – 846
Different investments 457 – 417 40 457
Receivables 1,430 – – 1,732 1,732

Monetary Liabilities
Policyholder account balances, future coverage
advantages and claims $ 9,990 $ – $ – $ 11,686 $ 11,686
Brief-term borrowings 200 – 200 – 200
Lengthy-term debt 500 – 509 – 509

Different liabilities 12 – – 11 11
Separate account liabilities – funding contracts 351 – 351 – 351

Different investments embrace syndicated loans and the Firm’s membership within the
FHLB. Receivables embrace deposit receivables. See Observe 7 for added
info on mortgage loans, coverage loans, syndicated loans and deposit
receivables.

Policyholder account balances, future coverage advantages and claims contains mounted
annuities in deferral standing, non-life contingent mounted annuities in payout
standing, listed and structured variable annuity host contracts, and the mounted
portion of a small variety of variable annuity contracts categorised as funding
contracts. See Observe 10 for added info on these liabilities.
Brief-term borrowings embrace FHLB borrowings. Lengthy-term debt contains the
surplus notice with Ameriprise Monetary. See Observe 12 for additional info on
short-term borrowings and long-term debt. Different liabilities embrace future
funding commitments to reasonably priced housing partnerships and different actual property
partnerships. Separate account liabilities are associated to sure annuity
merchandise which are categorised as funding contracts.

14. Associated Social gathering Transactions

Revenues

See Observe 4 for details about revenues from contracts with clients earned
by the Firm from associated social gathering transactions with associates.

The Firm is the lessor of 1 actual property property which it leases to
Ameriprise Monetary beneath an working lease that expires November 30, 2029.
The Firm earned $5 million in rental revenue for every of the years ended
December 31, 2021, 2020 and 2019, which is mirrored in Different revenues. The
Firm expects to earn $5 million in annually of the 5 12 months interval ending
December 31, 2026 and a complete of $14 million thereafter.

Bills

Expenses by Ameriprise Monetary and affiliated firms to the Firm to be used
of joint amenities, know-how assist, advertising and marketing providers and different providers
aggregated $345 million, $358 million and $370 million for the years ended
December 31, 2021, 2020 and 2019, respectively. Sure of those prices are
included in DAC. Bills allotted to the Firm might not be reflective of
bills that might have been incurred by the Firm on a stand-alone foundation.

Revenue Taxes

The Firm’s taxable revenue is included within the consolidated federal revenue tax
return of Ameriprise Monetary. The web quantity due from (to) Ameriprise
Monetary for federal revenue taxes was $18 million and $(297) million as of
December 31, 2021 and 2020, respectively, which is mirrored in Different property as
of December 31, 2021 and Different liabilities as of December 31, 2020.

Investments

The Firm invests in AA and A rated asset backed securities issued by AAF, an
affiliate of the Firm. The asset backed securities are collateralized by a
portfolio of loans issued to advisors affiliated with AFS, an affiliated dealer
vendor. As of December 31, 2021 and 2020, the truthful worth of those asset backed
securities was $289 million and $372 million, respectively, and is reported in
Investments: Accessible-for-Sale Mounted Maturities on the Firm’s Consolidated
Stability Sheets. Curiosity revenue from these asset backed securities was $12
million, $14 million and $14 million for the years ended December 31, 2021, 2020
and 2019, respectively, and is reported in Web funding revenue.

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Traces of Credit score

RiverSource Life Insurance coverage Firm, because the lender, has a revolving credit score
settlement with Ameriprise Monetary because the borrower. This line of credit score just isn’t
to exceed 3% of RiverSource Life Insurance coverage Firm’s statutory admitted property
as of the prior 12 months finish. The rate of interest for any borrowing is established by
reference to LIBOR for U.S. greenback deposits with maturities corresponding to the
related curiosity interval, plus an relevant margin topic to adjustment based mostly
on debt rankings of the senior unsecured debt of Ameriprise Monetary. Within the
occasion of default, a further 1% curiosity will accrue throughout such interval of
default. There have been no quantities excellent on this revolving credit score settlement as
of each December 31, 2021 and 2020. See Observe 12 for details about extra
traces of credit score with an affiliate.

Lengthy-Time period Debt

See Observe 12 for details about a surplus notice to an affiliate.

Dividends or Distributions

Money dividends or distributions paid and acquired by RiverSource Life Insurance coverage
Firm had been as follows:

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Paid to Ameriprise Monetary $ 1,900 $ 800 $ 1,350
Obtained from RiverSource Lifetime of NY – – 43
Obtained from RTA 50 95 100

On February 23, 2022, RiverSource Life Insurance coverage Firm’s Board of Administrators
declared a money dividend of $300 million to Ameriprise Monetary, payable on or
after March 25, 2022, pending approval by the Minnesota Division of Commerce.

For dividends and different distributions from the life insurance coverage firms, advance
notification was offered to state insurance coverage regulators previous to funds. See
Observe 15 for added info.

15. Regulatory Necessities

The Nationwide Affiliation of Insurance coverage Commissioners (“NAIC”) defines Threat-Based mostly
Capital (“RBC”) necessities for insurance coverage firms. The RBC necessities are
utilized by the NAIC and state insurance coverage regulators to determine firms that benefit
regulatory actions designed to guard policyholders. These necessities apply
to the Firm. The Firm has met its minimal RBC necessities.

Insurance coverage firms are required to arrange statutory monetary statements in
accordance with the accounting practices prescribed or permitted by the
insurance coverage departments of their respective states of domicile, which differ
materially from GAAP. Prescribed statutory accounting practices embrace
publications of the NAIC, in addition to state legal guidelines, laws and normal
administrative guidelines. The extra vital variations from GAAP embrace
charging coverage acquisition prices to expense as incurred, establishing annuity
and insurance coverage reserves utilizing totally different actuarial strategies and assumptions,
classifying surplus notes as a element of statutory surplus quite than debt,
valuing investments on a special foundation and excluding sure property from the
stability sheet by charging them on to surplus, akin to a portion of the web
deferred revenue tax property.

RiverSource Life Insurance coverage Firm acquired approval from the Minnesota
Division of Commerce to use a permitted statutory accounting follow,
efficient July 1, 2017 by way of June 30, 2019, for sure spinoff devices
used to economically hedge the rate of interest publicity of sure variable
annuity merchandise that don’t qualify for statutory hedge accounting. The
permitted follow was supposed to mitigate the impression to statutory surplus from
the misalignment between variable annuity statutory reserves, which aren’t
carried at truthful worth, and the truthful worth of derivatives used to economically
hedge the rate of interest publicity of non-life contingent residing profit
ensures.

The permitted follow allowed RiverSource Life Insurance coverage Firm to defer a
portion of the change in truthful worth, internet funding revenue and realized good points or
losses generated from designated derivatives to the extent the quantities don’t
offset the present interval interest-rate associated change within the variable annuity
statutory reserve legal responsibility. The deferred quantity may very well be amortized over ten
years utilizing the straight-line methodology with the power to speed up amortization
at administration’s discretion. As of June 30, 2019, RiverSource Life Insurance coverage
Firm elected to speed up amortization of the web deferred quantity related
with its permitted follow.

State insurance coverage statutes include limitations as to the quantity of dividends and
different distributions that insurers might make with out offering prior notification
to state regulators. For RiverSource Life Insurance coverage Firm, funds in extra
of unassigned surplus, as decided in accordance with accounting practices
prescribed by the State of Minnesota, require advance discover to the Minnesota
Division of Commerce, RiverSource Life Insurance coverage Firm’s main regulator,
and are topic to potential disapproval. RiverSource Life Insurance coverage Firm’s
statutory unassigned surplus aggregated $175 million and $1.3 billion as of
December 31, 2021 and 2020, respectively.

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As well as, dividends or distributions whose truthful market worth, along with
that of different dividends or distributions made throughout the previous 12 months,
exceed the larger of the earlier 12 months’s statutory internet acquire from operations or
10% of the earlier year-end statutory capital and surplus are known as
“extraordinary dividends.” Extraordinary dividends additionally require advance discover
to the Minnesota Division of Commerce, and are topic to potential
disapproval. Statutory capital and surplus was $3.4 billion and $4.8 billion as
of December 31, 2021 and 2020, respectively.

Statutory internet acquire from operations and internet revenue for RiverSource Life Insurance coverage
Firm are summarized as follows:

Years Ended December 31,
2021 2020 2019
(in tens of millions)

Statutory internet acquire from operations $ 1,366 $ 1,393 $ 1,505
Statutory internet revenue

253 1,582 786

Authorities debt securities of $5 million and $4 million as of December 31, 2021
and 2020, respectively, had been on deposit with numerous states as required by regulation.

16. Offsetting Property and Liabilities

Sure monetary devices and spinoff devices are eligible for offset
within the Consolidated Stability Sheets. The Firm’s spinoff devices are
topic to grasp netting and collateral preparations and qualify for offset. A
grasp netting association with a counterparty creates a proper of offset for
quantities as a consequence of and from that very same counterparty that’s enforceable within the occasion
of a default or chapter. The Firm’s coverage is to acknowledge quantities topic
to grasp netting preparations on a gross foundation within the Consolidated Stability
Sheets.

The next tables current the gross and internet details about the Firm’s
property topic to grasp netting preparations:

December 31, 2021

Gross Quantities Quantities of Property
Offset within the Offered in Gross Quantities

Not Offset within the Consolidated Stability Sheets

Gross Quantities of Consolidated the Consolidated Securities
Acknowledged Property Stability Sheets Stability Sheets Monetary Devices(1) Money Collateral Collateral Web Quantity
(in tens of millions)
Derivatives:
OTC $ 5,330 $ – $ 5,330 $ (3,571) $ (1,623) $ (114) $ 22
OTC cleared 88 – 88 (41) – – 47
Alternate-traded 99 – 99 (91) – – 8
Whole derivatives $ 5,517 $ – $ 5,517 $ (3,703) $ (1,623) $ (114) $ 77

December 31, 2020

Gross Quantities Quantities of Property
Offset within the Offered in Gross Quantities

Not Offset within the Consolidated Stability Sheets

Gross Quantities of Consolidated the Consolidated Securities
Acknowledged Property Stability Sheets Stability Sheets Monetary Devices(1) Money Collateral Collateral Web Quantity
(in tens of millions)
Derivatives:
OTC $ 5,391 $ – $ 5,391 $ (3,801) $ (1,243) $ (315) $ 32
OTC cleared 58 – 58 (25) – – 33
Alternate-traded 309 – 309 (90) (165) – 54
Whole derivatives $ 5,758 $ – $ 5,758 $ (3,916) $ (1,408) $ (315) $ 119

(1) Represents the quantity of property that may very well be offset by liabilities with the
similar counterparty beneath grasp netting or comparable preparations that administration
elects to not offset on the Consolidated Stability Sheets.

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The next tables current the gross and internet details about the Firm’s
liabilities topic to grasp netting preparations:

December 31, 2021
Gross Quantities Quantities of Gross Quantities Not Offset
Gross Quantities of Offset within the Liabilities Offered in

the Consolidated Stability Sheets

Acknowledged Consolidated within the Consolidated Monetary Money Securities
Liabilities Stability Sheets Stability Sheets Devices(1) Collateral Collateral Web Quantity
(in tens of millions)
Derivatives:
OTC $ 4,048 $ – $ 4,048 $ (3,571) $ (181) $ (293) $ 3
OTC cleared 41 – 41 (41) – – –
Alternate-traded 91 – 91 (91) – – –
Whole derivatives $ 4,180 $ – $ 4,180 $ (3,703) $ (181) $ (293) $ 3

December 31, 2020

Quantities of Gross Quantities Not Offset
Gross Quantities Liabilities within the

Consolidated Stability Sheets

Gross Quantities of Offset within the Offered within the
Acknowledged Consolidated Consolidated Monetary Money Securities
Liabilities Stability Sheets Stability Sheets Devices(1)
Collateral Collateral Web Quantity
(in tens of millions)
Derivatives:
OTC $ 4,129 $ – $ 4,129 $ (3,801) $ (1) $ (327) $ –
OTC cleared 25 – 25 (25) – – –
Alternate-traded 94 – 94 (90) – – 4
Whole derivatives $ 4,248 $ – $ 4,248 $ (3,916) $ (1) $ (327) $ 4

(1) Represents the quantity of liabilities that may very well be offset by property with the
similar counterparty beneath grasp netting or comparable preparations that administration
elects to not offset on the Consolidated Stability Sheets.

Within the tables above, the quantity of property or liabilities offered are offset
first by monetary devices which have the suitable of offset beneath grasp
netting or comparable preparations, then any remaining quantity is lowered by the
amount of money and securities collateral. The precise collateral could also be larger
than quantities offered within the tables.

When the truthful worth of collateral accepted by the Firm is lower than the
quantity because of the Firm, there’s a danger of loss if the counterparty fails to
carry out or present extra collateral. To mitigate this danger, the Firm
screens collateral values recurrently and requires extra collateral when
crucial. When the worth of collateral pledged by the Firm declines, it might
be required to publish extra collateral.

Freestanding spinoff devices are mirrored in Different property and Different
liabilities. Money collateral pledged by the Firm is mirrored in Different property
and money collateral accepted by the Firm is mirrored in Different liabilities.
See Observe 17 for added disclosures associated to the Firm’s spinoff
devices.

17. Derivatives and Hedging Actions

Spinoff devices allow the Firm to handle its publicity to varied
market dangers. The worth of such devices is derived from an underlying
variable or a number of variables, together with fairness and rate of interest indices or
costs. The Firm primarily enters into spinoff agreements for danger
administration functions associated to the Firm’s merchandise and operations.

Sure of the Firm’s freestanding spinoff devices are topic to
grasp netting preparations. The Firm’s coverage on the popularity of
derivatives on the Consolidated Stability Sheets is to not offset truthful worth
quantities acknowledged for derivatives and collateral preparations executed with the
similar counterparty beneath the identical grasp netting association. See Observe 16 for
extra info concerning the estimated truthful worth of the Firm’s
freestanding derivatives after contemplating the impact of grasp netting
preparations and collateral.

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Usually, the Firm makes use of derivatives as financial hedges and accounting
hedges. The next desk presents the notional worth and gross truthful worth of
spinoff devices, together with embedded derivatives:

December 31, 2021 December 31, 2020
Gross Truthful Worth Gross Truthful Worth
Liabilities Liabilities
Notional Property (1) (2)(3) Notional Property (1) (2)(3)
(in tens of millions)
Derivatives not designated as hedging devices
Rate of interest contracts $ 79,459 $ 1,252 $ 468 $ 77,925 $ 1,755 $ 734
Fairness contracts 59,763 4,238 3,711 55,993 3,984 3,511
Credit score contracts 1,717 9 – 2,269 1 1
International change contracts 2,239 18 1 3,124 18 2

Whole non-designated hedges 143,178 5,517 4,180 139,311 5,758

4,248

Embedded derivatives
GMWB and GMAB (4) N/A – 1,486 N/A – 2,316
IUL N/A – 905 N/A – 935
Mounted deferred listed annuities and deposit
receivables N/A 59 61 N/A – 52
Structured variable annuity N/A – 406 N/A – 70
Whole embedded derivatives N/A 59 2,858 N/A – 3,373
Whole derivatives $ 143,178 $ 5,576 $ 7,038 $ 139,311 $ 5,758 $ 7,621

N/A Not relevant.

(1) The truthful worth of freestanding spinoff property is included in Different property
and the truthful worth of ceded spinoff property associated to deposit receivables is
included in Receivables.

(2) The truthful worth of freestanding spinoff liabilities is included in Different
liabilities. The truthful worth of GMWB and GMAB, IUL, and stuck deferred listed
annuity and structured variable annuity embedded derivatives is included in
Policyholder account balances, future coverage advantages and claims.

(3) The truthful worth of the Firm’s spinoff liabilities after contemplating the
results of grasp netting preparations, money collateral held by the identical
counterparty and the truthful worth of internet embedded derivatives was $3.2 billion and
$3.7 billion as of December 31, 2021 and 2020, respectively. See Observe 16 for
extra info associated to grasp netting preparations and money
collateral.

(4) The truthful worth of the GMWB and GMAB embedded derivatives as of
December 31, 2021 included $1.6 billion of particular person contracts in a
legal responsibility place and $133 million of particular person contracts in an asset
place. The truthful worth of the GMWB and GMAB embedded derivatives as of
December 31, 2020 included $2.4 billion of particular person contracts in a legal responsibility
place and $67 million of particular person contracts in an asset place.

See Observe 13 for added info concerning the Firm’s truthful worth
measurement of spinoff devices.

As of December 31, 2021 and 2020, funding securities with a good worth of
$123 million and $325 million, respectively, had been acquired as collateral to satisfy
contractual obligations beneath spinoff contracts, of which $123 million and
$325 million, respectively, could also be bought, pledged or rehypothecated by the
Firm. As of each December 31, 2021 and 2020, the Firm had bought, pledged,
or rehypothecated none of those securities. As well as, as of each
December 31, 2021 and 2020, non-cash collateral accepted was held in separate
custodial accounts and was not included within the Firm’s Consolidated Stability
Sheets.

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The next desk presents a abstract of the impression of derivatives not
designated as hedging devices, together with embedded derivatives, on the
Consolidated Statements of Revenue:

Advantages, Claims,
Losses and
Web Funding Curiosity Credited Settlement
Revenue to Mounted Accounts Bills
(in tens of millions)
12 months Ended December 31, 2021
Rate of interest contracts $ – $ – $ (886)
Fairness contracts 1 91 (817)
Credit score contracts – – 43
International change contracts – – 5

GMWB and GMAB embedded derivatives – – 830
IUL embedded derivatives – 30 –

Mounted deferred listed annuity and deposit receivables
embedded derivatives

– (8) –
Structured variable annuity embedded derivatives – – (393)
Whole acquire (loss) $ 1 $ 113 $ (1,218)

12 months Ended December 31, 2020
Rate of interest contracts $ – $ – $ 1,633
Fairness contracts – 55 (744)
Credit score contracts – – (106)
International change contracts – – (8)

GMWB and GMAB embedded derivatives – – (1,553)
IUL embedded derivatives – 7 –
Mounted deferred listed annuities embedded derivatives – (4) –
Structured variable annuity embedded derivatives – – (91)
Whole acquire (loss) $ – $ 58 $ (869)

12 months Ended December 31, 2019
Rate of interest contracts $ – $ – $ 1,100
Fairness contracts – 117 (1,501)
Credit score contracts – – (73)
International change contracts – – (30)

GMWB and GMAB embedded derivatives – – (435)
IUL embedded derivatives – (140) –
Mounted deferred listed annuities embedded derivatives – (8) –
Whole acquire (loss) $ – $ (31) $ (939)

The Firm holds spinoff devices that both don’t qualify or should not
designated for hedge accounting therapy. These spinoff devices are used
as financial hedges of fairness, rate of interest, credit score and overseas foreign money
change charge danger associated to varied merchandise and transactions of the Firm.

Sure annuity contracts include GMWB or GMAB provisions, which assure the
proper to make restricted partial withdrawals every contract 12 months whatever the
volatility inherent within the underlying investments or assure a minimal
accumulation worth of consideration acquired firstly of the contract
interval, after a specified holding interval, respectively. The listed portion of
structured variable annuities and the GMAB and non-life contingent GMWB
provisions are thought of embedded derivatives, that are bifurcated from their
host contracts for valuation functions and reported on the Consolidated Stability
Sheets at truthful worth with adjustments in truthful worth reported in earnings. The
Firm economically hedges the mixture publicity associated to the listed
portion of structured variable annuities and the GMAB and non-life contingent
GMWB provisions utilizing choices, swaptions, swaps and futures.

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The deferred premium related to sure of the above choices and swaptions
is paid or acquired semi-annually over the lifetime of the contract or at maturity.
The next is a abstract of the funds the Firm is scheduled to make and
obtain for these choices and swaptions as of December 31, 2021:

Premiums Premiums
Payable Receivable
(in tens of millions)
2022 $ 204 $ 204
2023 51 43
2024 137 25
2025 124 22
2026 252 88
2027-2028 18 –
Whole $ 786 $ 382

Precise timing and cost quantities might differ as a consequence of future settlements,
modifications or workout routines of the contracts previous to the complete premium being paid
or acquired.

The Firm has a macro hedge program to supply safety in opposition to the
statutory tail situation danger arising from variable annuity reserves on its
statutory surplus and to cowl a few of the residual dangers not lined by different
hedging actions. As a way of economically hedging these dangers, the Firm
might use a mix of futures, choices, swaps and swaptions. Sure of the
macro hedge derivatives might include settlement provisions linked to each fairness
returns and rates of interest. The Firm’s macro hedge derivatives that include
settlement provisions linked to each fairness returns and rates of interest, if any,
are proven in different contracts within the tables above.

Structured variable annuity and IUL merchandise have returns tied to the
efficiency of fairness markets. On account of fluctuations in fairness markets,
the duty incurred by the Firm associated to structured variable annuity
and IUL merchandise will positively or negatively impression earnings over the lifetime of
these merchandise. The fairness element of structured variable annuity and IUL
product obligations are thought of embedded derivatives, that are bifurcated
from their host contracts for valuation functions and reported on the
Consolidated Stability Sheets at truthful worth with adjustments in truthful worth reported in
earnings. As a way of economically hedging its obligations beneath the
provisions of those merchandise, the Firm enters into rate of interest swaps, index
choices and futures contracts.

Money Circulate Hedges

Through the years ended December 31, 2021 and 2020, the Firm held no
derivatives that had been designated as money move hedges. Through the years ended
December 31, 2021, 2020 and 2019, no hedge relationships had been discontinued due
to forecasted transactions now not being anticipated to happen in line with the
unique hedge technique.

Credit score Threat

Credit score danger related to the Firm’s derivatives is the danger {that a}
spinoff counterparty is not going to carry out in accordance with the phrases of the
relevant spinoff contract. To mitigate such danger, the Firm has
established tips and oversight of credit score danger by way of a complete
enterprise danger administration program that features members of senior administration.
Key parts of this program are to require preapproval of counterparties and
the usage of grasp netting and collateral preparations each time sensible. See
Observe 16 for added info on the Firm’s credit score publicity associated to
spinoff property.

Sure of the Firm’s spinoff contracts include provisions that regulate the
stage of collateral the Firm is required to publish based mostly on the Firm’s
monetary energy ranking (or based mostly on the debt ranking of the Firm’s mum or dad,
Ameriprise Monetary). Moreover, sure of the Firm’s spinoff
contracts include provisions that permit the counterparty to terminate the
contract if the Firm doesn’t preserve a selected monetary energy ranking
or Ameriprise Monetary’s debt doesn’t preserve a selected credit standing
(typically an funding grade ranking). If these termination provisions had been to
be triggered, the Firm’s counterparty may require quick settlement of
any internet legal responsibility place. As of December 31, 2021 and 2020, the mixture truthful
worth of spinoff contracts in a internet legal responsibility place containing such credit score
contingent provisions was $383 million and $324 million, respectively. The
mixture truthful worth of property posted as collateral for such devices as of
December 31, 2021 and 2020 was $383 million and $324 million, respectively. If
the credit score contingent provisions of spinoff contracts in a internet legal responsibility
place as of each December 31, 2021 and 2020 had been triggered, the mixture
truthful worth of extra property that might be required to be posted as
collateral or wanted to settle the devices instantly would have been nil
on each December 31, 2021 and 2020.

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18. Shareholder’s Fairness

The next tables present the quantities associated to every element of OCI:

12 months Ended December 31, 2021
Revenue Tax
Pretax Profit (Expense) Web of Tax
(in tens of millions)

Web unrealized good points (losses) on securities:
Web unrealized good points (losses) on securities arising in the course of the
interval (1)

$

(527) $ 111 $ (416)
Reclassification of internet (good points) losses on securities included
in internet revenue (2)

(556) 117 (439)

Impression of DAC, DSIC, unearned income, profit reserves and
reinsurance recoverables

333 (70) 263
Web unrealized good points (losses) on securities (750) 158 (592)

Whole different complete revenue (loss) $

(750) $ 158 $ (592)

12 months Ended December 31, 2020

Revenue Tax
Profit
Pretax (Expense) Web of Tax
(in tens of millions)
Web unrealized good points (losses) on securities:
Web unrealized good points (losses) on securities arising in the course of the
interval (1) $ 811

$ (170) $ 641
Reclassification of internet (good points) losses on securities included
in internet revenue (2)

5 (1) 4

Impression of DAC, DSIC, unearned income, profit reserves and
reinsurance recoverables

(379) 80 (299)
Web unrealized good points (losses) on securities 437 (91) 346

Whole different complete revenue (loss) $ 437 $ (91) $ 346

12 months Ended December 31, 2019
Revenue Tax
Profit
Pretax (Expense) Web of Tax
(in tens of millions)
Web unrealized good points (losses) on securities:
Web unrealized good points (losses) on securities arising in the course of the
interval (1) $ 1,360

$ (289) $ 1,071
Reclassification of internet (good points) losses on securities included
in internet revenue (2)

2 – 2

Impression of DAC, DSIC, unearned income, profit reserves and
reinsurance recoverables

(688) 144 (544)
Web unrealized good points (losses) on securities 674 (145) 529

Whole different complete revenue (loss) $ 674

$ (145) $ 529

(1) Consists of impairments on Accessible-for-Sale securities associated to components
aside from credit score that had been acknowledged in OCI in the course of the interval.

(2) Reclassification quantities are recorded in Web realized funding good points
(losses).

Different complete revenue (loss) associated to internet unrealized good points (losses) on
securities contains three parts: (i) unrealized good points (losses) that arose
from adjustments available in the market worth of securities that had been held in the course of the interval;
(ii) (good points) losses that had been beforehand unrealized, however have been acknowledged in
present interval internet revenue as a consequence of gross sales of Accessible-for-Sale securities and due
to the reclassification of noncredit other-than-temporary impairment losses to
credit score losses; and (iii) different changes primarily consisting of adjustments in
insurance coverage and annuity asset and legal responsibility balances, akin to DAC, DSIC, unearned
income, profit reserves and reinsurance recoverables, to mirror the anticipated
impression on their carrying values had the unrealized good points (losses) been realized
as of the respective stability sheet dates.

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The next desk presents the adjustments within the balances of every element of
AOCI, internet of tax:

Web
Unrealized
Features
(Losses) on
Securities Different Whole
(in tens of millions)
Stability, January 1, 2019 $ 46 $ (1) $ 45
OCI earlier than reclassifications 527 – 527
Quantities reclassified from AOCI 2 – 2
Whole OCI 529 – 529
Stability, December 31, 2019 575 (1) (1) 574
OCI earlier than reclassifications 342 – 342
Quantities reclassified from AOCI 4 – 4
Whole OCI 346 – 346
Stability, December 31, 2020 921 (1) (1) 920
OCI earlier than reclassifications (153) – (153)
Quantities reclassified from AOCI (439) – (439)
Whole OCI (592) – (592)
Stability, December 31, 2021 $

329 (1) $ (1) $ 328

(1) Consists of nil of noncredit associated impairments on securities and internet
unrealized good points (losses) on beforehand impaired securities as of December 31,
2021, 2020 and 2019.

19. Revenue Taxes

The parts of revenue tax provision (profit) had been as follows:

Years Ended December 31,
2021 2020 2019
(in tens of millions)
Present revenue tax
Federal $ 171 $ 233 $ 210
State 6 – 8
Whole present revenue tax 177 233 218
Deferred revenue tax
Federal (39) (277) (271)
State (1) (1) (7)
Whole deferred revenue tax (40) (278) (278)
Whole revenue tax provision (profit) $ 137 $ (45)

$ (60)

The principal causes that the mixture revenue tax provision (profit) is
totally different from that computed by utilizing the U.S. statutory charge of 21% had been as
follows:

Years Ended December 31,
2021 2020 2019
Tax at U.S. statutory charge 21.0 % 21.0 % 21.0 %
Adjustments in taxes ensuing from:
Low revenue housing tax credit (5.6) (20.1)

(15.3)

Dividend acquired deduction (2.9) (9.7)

(7.6)

International tax credit score, internet of addback (1.5) (1.9) (9.5)
Audit changes – – (1.4)
Unsure tax positions – – 1.8

Different, internet 0.4 (0.8) (0.4)
Revenue tax provision (profit) 11.4 % (11.5) %

(11.4) %

The rise within the Firm’s efficient tax charge for the 12 months ended December 31,
2021 in comparison with 2020 is primarily because of the greater pre-tax revenue relative to
tax most popular objects.

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Deferred revenue tax property and liabilities outcome from non permanent variations
between the property and liabilities measured for GAAP reporting versus revenue tax
return functions. Deferred revenue tax property and liabilities are measured on the
statutory charge of 21% as of each December 31, 2021 and 2020. The numerous
parts of the Firm’s deferred revenue tax property and liabilities, which
are included internet inside Different property or Different liabilities, had been as follows:

December 31,
2021 2020
(in tens of millions)
Deferred revenue tax property
Liabilities for policyholder account balances, future coverage advantages and
claims $ 1,994 $ 1,617

Different 14 13
Gross deferred revenue tax property 2,008 1,630
Much less: valuation allowance 11 11
Whole deferred revenue tax property 1,997 1,619

Deferred revenue tax liabilities
Funding associated 508 216
Deferred acquisition prices 469 424
Web unrealized good points on Accessible-for-Sale securities 114 274
Deferred gross sales inducement prices – 44

Different 58 12
Gross deferred revenue tax liabilities 1,149 970
Web deferred revenue tax property

$ 848 $ 649

Included within the Firm’s deferred revenue tax property are tax advantages primarily
associated to state internet working losses of $9 million, internet of federal profit,
which can expire starting December 31, 2022. Based mostly on evaluation of the
Firm’s tax place, administration believes it’s extra seemingly than not that the
Firm is not going to notice sure state internet working losses of $9 million and
state deferred tax property of $2 million; due to this fact, a valuation allowance of $11
million has been established.

A reconciliation of the start and ending quantity of gross unrecognized tax
advantages was as follows:

2021 2020 2019
(in tens of millions)
Stability at January 1 $ 38 $ 39 $ 19
Additions based mostly on tax positions associated to the present 12 months – 1 1
Reductions based mostly on tax positions associated to the present 12 months (1) (1) –
Additions for tax positions of prior years – – 34
Reductions for tax positions of prior years – – (4)
Audit settlements – – (11)
Reductions as a consequence of lapse of statute of limitations – (1) –
Stability at December 31 $ 37 $ 38 $ 39

If acknowledged, roughly $20 million, $20 million and $17 million, internet of
federal tax advantages, of unrecognized tax advantages as of December 31, 2021, 2020
and 2019, respectively, would have an effect on the efficient tax charge.

It’s moderately attainable that the overall quantity of unrecognized tax advantages
will change within the subsequent 12 months. The Firm estimates that the overall quantity
of gross unrecognized tax advantages might lower by roughly $34 million in
the subsequent 12 months primarily as a consequence of Inner Income Service (“IRS”)
settlements.

The Firm acknowledges curiosity and penalties associated to unrecognized tax
advantages as a element of the revenue tax provision. The Firm acknowledged a
internet improve of $1 million, nil and a internet improve of $1 million in curiosity and
penalties for the years ended December 31, 2021, 2020 and 2019, respectively.
The Firm had a payable of $3 million and $2 million associated to accrued
curiosity and penalties as of December 31, 2021 and 2020, respectively.

The Firm recordsdata revenue tax returns as a part of its inclusion within the
consolidated federal revenue tax returns of Ameriprise Monetary within the U.S.
federal jurisdiction and numerous state jurisdictions. The federal statute of
limitations are closed on years by way of 2015, apart from one situation for 2014 and
2015 which was claimed on amended returns. The IRS is at the moment auditing
Ameriprise Monetary’s U.S. revenue tax returns for 2016 by way of 2020. Ameriprise
Monetary’s or the Firm’s state revenue tax returns are at the moment beneath
examination by numerous jurisdictions for years starting from 2015 by way of 2019.

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20. Commitments, Ensures and Contingencies

Commitments

The next desk presents the Firm’s funding commitments as of December
31:

2021 2020
(in tens of millions)
Industrial mortgage loans $ 48 $ 18
Inexpensive housing and different actual property partnerships 9 12
Whole funding commitments $ 57 $ 30

Ensures

The Firm’s annuity and life merchandise all have minimal rate of interest
ensures of their mounted accounts. As of December 31, 2021, these ensures
vary from 1% to five%.

Contingencies

The Firm and its associates are concerned within the regular course of enterprise in
authorized proceedings which embrace regulatory inquiries, arbitration and
litigation, together with class actions, regarding issues arising in connection
with the conduct of its actions. These embrace proceedings particular to the
Firm in addition to proceedings typically relevant to enterprise practices within the
industries wherein it operates. The Firm can be topic to authorized
proceedings arising out of its normal enterprise actions, akin to its
investments, contracts, and employment relationships. Unsure financial
circumstances, heightened and sustained volatility within the monetary markets and
vital monetary reform laws might improve the chance that
purchasers and different individuals or regulators might current or threaten authorized claims or
that regulators improve the scope or frequency of examinations of the Firm
or the insurance coverage {industry} typically.

As with different insurance coverage firms, the extent of regulatory exercise and inquiry
in regards to the Firm’s companies stays elevated. Sometimes, the
Firm and its associates, together with AFS and RiverSource Distributors, Inc.
obtain requests for info from, and/or are topic to examination or
claims by numerous state, federal and different home authorities. The Firm and
its associates usually have quite a few pending issues, which incorporates
info requests, exams or inquiries concerning their enterprise actions and
practices and different topics, together with every now and then: gross sales and
distribution of assorted merchandise, together with the Firm’s life insurance coverage and
variable annuity merchandise; supervision of related individuals, together with AFS
monetary advisors and RiverSource Distributors Inc.’s wholesalers;
administration of insurance coverage and annuity claims; safety of shopper info;
and transaction monitoring programs and controls. The Firm and its associates
have cooperated and can proceed to cooperate with the relevant regulators.

These authorized proceedings are topic to uncertainties and, as such, it’s
inherently troublesome to find out whether or not any loss is possible and even
moderately attainable, or to moderately estimate the quantity of any loss. The
Firm can’t predict with certainty if, how or when any such proceedings will
be initiated or resolved. Issues incessantly have to be extra developed earlier than a
loss or vary of loss might be moderately estimated for any continuing. An adversarial
consequence in a number of proceedings may ultimately end in adversarial judgments,
settlements, fines, penalties or different sanctions, along with additional claims,
examinations or adversarial publicity that might have a cloth adversarial impact on
the Firm’s consolidated monetary situation, outcomes of operations or
liquidity.

In accordance with relevant accounting requirements, the Firm establishes an
accrued legal responsibility for contingent litigation and regulatory issues when these
issues current loss contingencies which are each possible and might be moderately
estimated. The Firm discloses the character of the contingency when administration
believes there may be a minimum of an affordable risk that the result could also be
materials to the Firm’s consolidated monetary statements and, the place possible,
an estimate of the attainable loss. In such instances, there nonetheless could also be an publicity
to loss in extra of any quantities moderately estimated and accrued. When a loss
contingency just isn’t each possible and fairly estimable, the Firm doesn’t
set up an accrued legal responsibility, however continues to watch, along side
any outdoors counsel dealing with a matter, additional developments that might make such
loss contingency each possible and fairly estimable. As soon as the Firm
establishes an accrued legal responsibility with respect to a loss contingency, the Firm
continues to watch the matter for additional developments that might have an effect on the
quantity of the accrued legal responsibility that has been beforehand established, and any
applicable changes are made every quarter.

Warranty Fund Assessments

RiverSource Life Insurance coverage Firm and RiverSource Lifetime of NY are required by
regulation to be a member of the warranty fund affiliation in each state the place they
are licensed to do enterprise. Within the occasion of insolvency of a number of
unaffiliated insurance coverage firms, the Firm may very well be adversely affected by the
requirement to pay assessments to the warranty fund associations.

The Firm initiatives its value of future warranty fund assessments based mostly on
estimates of insurance coverage firm insolvencies offered by the Nationwide
Group of Life and Well being Insurance coverage Warranty Associations and the quantity
of its premiums written relative to the industry-wide premium in every state. The
Firm accrues the estimated value of future warranty fund assessments when it
is

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thought of possible that an evaluation shall be imposed, the occasion obligating the
Firm to pay the evaluation has occurred and the quantity of the evaluation can
be moderately estimated.

The Firm has a legal responsibility for estimated warranty fund assessments and a
associated premium tax asset. As of each December 31, 2021 and 2020, the estimated
legal responsibility was $12 million. As of each December 31, 2021 and 2020, the associated
premium tax asset was $10 million. The anticipated interval over which warranty fund
assessments shall be made and the associated tax credit recovered just isn’t recognized.

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