What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-01 compared with 2022-05-02 · 453 added, 177 removed, 548 unchanged (53% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1.

The following discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1.

Our Management’s Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 (“2021 10-K”), as well as our current reports on Form 8-K and other publicly available information.

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Ameriprise Financial is a diversified financial services company with a more than 125-year history of providing financial solutions.

We are a long-standing leader in financial planning and advice with $1.3 trillion in assets under management and administration as of March 31, 2022.

We are a long-standing leader in financial planning and advice with $1.2 trillion in assets under management and administration as of June 30, 2022.

We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives.

The coronavirus disease 2019 (‘‘COVID-19’’) pandemic has presented ongoing significant economic and societal disruption and market unpredictability, which has affected our business and operating environment driven by what has been a low interest rate environment and volatility and changes in the equity markets and the potential associated implications to client behavior.

COVID-19 continues its ongoing impact and has been occurring in multiple waves, so there are still no reliable estimates of how long the implications from the pandemic will last, the effects current and other new variants will ultimately have, how many people are likely to be affected by it, or its impact on the overall economy.

There is still significant uncertainty around the extent to which the COVID-19 pandemic will continue to impact our business, results of operations, and financial condition, which depends on current and future developments, including the ultimate scope, duration and severity of the pandemic, success of worldwide vaccination efforts, multiple mutations of COVID-19 or similar diseases, the effectiveness of our office reopenings, the additional measures that may be taken by various governmental authorities in response to the outbreak, the actions of third parties in response to the pandemic, and the possible further impacts on the global economy.

Given the ongoing impact of the pandemic, financial results may not be comparable to previous years and the results presented in this report may not necessarily be indicative of future operating results.

For further information regarding the impact of the COVID-19 pandemic, and any potentially material effects, see Part 1 - Item 1A “Risk Factors” of our 2021 10-K.

The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income.

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These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.

We operate our business in the broader context of the macroeconomic forces around us, including the global and U.S.

economies, the coronavirus disease 2019 (“COVID-19”) pandemic, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments.

Financial markets and macroeconomic conditions have had and will continue to have a significant impact on our operating and performance results.

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The success of these and other strategies may be affected by the factors discussed in Item 1A, “Risk Factors” in our 2021 10-K and other factors as discussed herein.

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

Earnings, as well as adjusted operating earnings after tax, may be impacted by the ongoing low interest rate environment.

Although interest rates could rise in the future, we continue to operate within a comparatively low interest rate environment.

In addition to continuing spread compression in our interest sensitive product lines, a sustained low interest rate environment may result in increases to our reserves and changes in various rate assumptions we use to amortize DAC and DSIC, which may negatively impact our adjusted operating earnings after tax.

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

We have been operating in a historically low interest rate environment and though short term rates have risen, remain in a low interest rate environment today with uncertainty about where rates will go in the future.

A lower interest rate environment may result in increases to our reserves and changes in various rate assumptions we use to amortize DAC and DSIC, which may negatively impact our adjusted operating earnings after tax.

For additional discussion on our interest rate risk, see Item 3.

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We also filed an application to transition the FSB’s personal trust services business to a new limited purpose national trust bank regulated by the Office of the Comptroller of the Currency.

If the applications are approved, the proposed changes are not expected to impact our long-term strategy for the bank and

AMERIPRISE FINANCIAL, INC.

should enable us to continue our strong lineup of banking solutions, including deposits, credit cards, mortgages and securities-based lending to our wealth management clients without interruption.

If the applications are approved, the proposed changes are not expected to impact our long-term strategy for the bank and should enable us to continue our strong lineup of banking solutions, including deposits, credit cards, mortgages and securities-based lending to our wealth management clients without interruption.

We consolidate certain variable interest entities for which we provide asset management services.

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While our consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual;

generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC

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and DAC amortization, unearned revenue amortization and the reinsurance accrual;

the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts, net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual;

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

AMERIPRISE FINANCIAL, INC.

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

Per Diluted Share

Three Months Ended March 31,

Three Months Ended June 30,

(in millions, except per share amounts)

Net income (loss)

$ 756 $ 591 $ 6.61 $ 4.88

Net realized investment gains (losses) (1)

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161 (42) 1.41 (0.35)

Market impact of hedges on investments (1)

Integration/restructuring charges (1)

14 7 0.12 0.06

Net income (loss) attributable to CIEs (1) (2) (0.01) (0.02)

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Adjusted operating earnings

$ 665 $ 639 $ 5.81 $ 5.27

Weighted average common shares outstanding:

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Diluted 114.4 121.2

Per Diluted Share

Six Months Ended June 30,

(in millions, except per share amounts)

Net income (loss) $ 1,517 $ 1,028 $ 13.16 $ 8.45

Net realized investment gains (losses) (1)

2 66 0.02 0.54

Market impact on non-traditional long-duration products (1)

(439) 483 (3.81) 3.97

Mean reversion related impacts (1)

220 (98) 1.91 (0.81)

Market impact of hedges on investments (1)

Integration/restructuring charges (1)

24 7 0.21 0.06

Net income (loss) attributable to CIEs 1 (3) 0.01 (0.02)

Tax effect of adjustments (2)

41 (72) 0.36 (0.59)

Adjusted operating earnings $ 1,360 $ 1,302 $ 11.80 $ 10.70

Weighted average common shares outstanding:

Basic 113.0 119.1

Diluted 115.3 121.7

(1) Pretax adjusted operating adjustments.

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

Twelve Months Ended March 31,

Twelve Months Ended June 30,

(in millions)

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The following table presents relevant market indices:

Three Months Ended March 31,

Three months ended June 30,

Six Months Ended June 30,

Daily average 4,110 4,182 (2)% 4,288 4,022 7%

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Asset Management AUM 598.2 593.4 4.8 1

Corporate AUM 0.1 0.1 — —

Corporate AUM 0.2 0.1 0.1 NM

Eliminations (37.5) (42.0) 4.5 11

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Total AUM and AUA $ 1,170.1 $ 1,211.3 $ (41.2) (3) %

Total AUM increased $179.1 billion, or 19%, to $1.1 trillion as of March 31, 2022 compared to $921.1 billion as of March 31, 2021 due to a $47.0 billion increase in Advice & Wealth Management AUM driven by wrap account net inflows and market appreciation and a $134.5 billion increase in Asset Management AUM driven by the acquisition of the BMO Global Asset Management (EMEA) business and net inflows, partially offset by retail fund distributions.

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

See our segment results of operations discussion below for additional information on changes in our AUM.

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Consolidated Results of Operations for the Three Months Ended March 31, 2022 and 2021

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

The following table presents our consolidated results of operations:

Three Months Ended March 31,

Three Months Ended June 30,

(in millions)

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Total expenses 2,553 2,697 (144) (5)

Pretax income (loss)

923 493 430 87

Income tax provision 162 56 106 NM

Net income (loss) $ 761 $ 437 $ 324 74%

Pretax income 955 721 234 32

Income tax provision 199 130 69 53

Net income $ 756 $ 591 $ 165 28 %

NM Not Meaningful.

Pretax income increased $430 million, or 87%, for the three months ended March 31, 2022 compared to the prior year period.

Pretax income increased $234 million, or 32%, for the three months ended June 30, 2022 compared to the prior year period.

The following impacts were significant drivers of the period-over-period change in pretax income:

• The market impact on non-traditional long duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual was a benefit of $134 million for the three months ended March 31, 2022 compared to an expense of $396 million for the prior year period.

• A favorable impact from higher average equity markets for the three months ended March 31, 2022 compared to the prior year period.

• A favorable impact from continued client net inflows from Advice & Wealth Management.

• A $20 million favorable impact of higher asset management net performance fees.

• The mean reversion related impact was an expense of $59 million for the three months ended March 31, 2022 compared to a benefit of $56 million for the prior year period.

• A $45 million unfavorable impact due to more normalized long term care (“LTC”) insurance claims in the current period compared to the benefit of COVID-19 related impacts in the year ago period.

Management and financial advice fees increased $357 million, or 17%, for the three months ended March 31, 2022 compared to the prior year period reflecting higher average equity markets, revenue associated with the acquisition of the BMO Global Asset Management (EMEA) business, continued wrap account net inflows, and a $53 million increase in performance fees.

Distribution fees decreased $12 million, or 3%, for the three months ended March 31, 2022 compared to the prior year period due to decreased transactional activity, partially offset by higher average equity markets.

• The market impact on non-traditional long duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual was a benefit of $305 million for the three months ended June 30, 2022 compared to an expense of $87 million for the prior year period.

• A favorable impact from higher short-term interest rates.

• An unfavorable impact from lower average equity markets for the three months ended June 30, 2022 compared to the prior year period.

• The mean reversion related impact was an expense of $161 million for the three months ended June 30, 2022 compared to a benefit of $42 million for the prior year period.

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

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

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

• Net realized investment losses of $15 million for the three months ended June 30, 2022 compared to net realized investment gains of $11 million for the prior year period.

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

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Net investment income decreased $116 million, or 31%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the following items:

• Net realized investment gains of $20 million for the three months ended March 31, 2022 compared to net realized investment gains of $69 million for the prior year period.

Net realized investment gains included a $15 million gain on a strategic investment in the prior year period.

• The favorable impact of rising interest rates on the investment portfolio yield.

• The unfavorable impact of lower average invested assets due to the sale of investments to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction.

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

• The unfavorable impact of continued low interest rates, including lower investment yields on the investment portfolio supporting the certificate products.

Premiums, policy and contract charges increased $21 million, or 6%, for the three months ended March 31, 2022 compared to the prior year primarily reflecting a favorable change in unearned revenue amortization and the reinsurance accrual offset to the market impact on IUL benefits.

Other revenues increased $52 million, or 73%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

Banking and deposit interest expense decreased $3 million, or 60%, for the three months ended March 31, 2022 compared to the prior year period due to lower average crediting rates on certificates and lower average certificate balances.

Distribution expenses increased $122 million, or 10%, for the three months ended March 31, 2022 compared to the prior year period reflecting higher advisor compensation primarily due to an increase in average wrap account balances, partially offset by decreased transactional activity.

Interest credited to fixed accounts decreased $18 million, or 11%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the following items:

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

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

• A $45 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits.

The favorable impact of the nonperformance credit spread was $28 million for the three months ended March 31, 2022 compared to an unfavorable impact of $1 million for the prior year period.

• A $14 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $12 million for the three months ended March 31, 2022 compared to a benefit of $2 million for the prior year period.

The favorable impact of the nonperformance credit spread was $32 million for the three months ended June 30, 2022 compared to an unfavorable impact of $13 million for the prior year period.

• A $73 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $23 million for the three months ended June 30, 2022 compared to a benefit of $50 million for the prior year period.

The increase in expense was primarily due to an increase in the IUL embedded derivative in the current period, which reflected higher option costs due to a higher new money rate.

Benefits, claims, losses and settlement expenses decreased $442 million, or 68%, the three months ended March 31, 2022 compared to the prior year period primarily reflecting the following items:

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

• A $67 million decrease in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits.

The unfavorable impact of the nonperformance credit spread was $18 million for the three months ended March 31, 2022 compared to an unfavorable impact of $225 million for the prior year period.

The favorable impact of the nonperformance credit spread was $130 million for the three months ended June 30, 2022 primarily as a result of the nonperformance credit spread increasing compared to a favorable impact of $63 million for the prior year period.

As the undiscounted embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread on benefits expenses is favorable (unfavorable).

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• A $348 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization.

This decrease was the result of a favorable $1.3 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, partially offset by an unfavorable $950 million change in the market impact on variable annuity guaranteed living benefits reserves.

This decrease was the result of a favorable $1.1 billion change in the market impact on variable annuity guaranteed living benefits reserves, partially offset by an unfavorable $800 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits.

The main market drivers contributing to these changes are summarized below:

• Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the three months ended March 31, 2022 compared to an expense for the prior year period.

• Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the three months ended March 31, 2022 compared to the prior year period.

• Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower expense for the three months ended March 31, 2022 compared to the prior year period.

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• Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net expense for the three months ended March 31, 2022 compared to a net benefit for the prior year period.

• The mean reversion related impact was an expense of $34 million for the three months ended March 31, 2022 compared to a benefit of $34 million for the prior year period.

• A $41 million increase in expense on LTC insurance as claims returned to more normalized levels compared to the prior year period which benefited from COVID-19 related impacts.

Amortization of DAC increased $91 million, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the following items:

• The DAC offset to the market impact on non-traditional long-duration products was an expense of $11 million for the three months ended March 31, 2022 compared to a benefit of $46 million for the prior year period.

• The mean reversion related impact was an expense of $25 million for the three months ended March 31, 2022 compared to a benefit of $22 million for the prior year period.

• Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the three months ended June 30, 2022 compared to an expense for the prior year period.

• Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the three months ended June 30, 2022 compared to an expense for the prior year period.

• Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net expense for the three months ended June 30, 2022 compared to a net benefit for the prior year period.

• The mean reversion related impact was an expense of $90 million for the three months ended June 30, 2022 compared to a benefit of $25 million for the prior year period.

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

• The DAC offset to the market impact on non-traditional long-duration products was an expense of $26 million for the three months ended June 30, 2022 compared to an expense of $5 million for the prior year period.

• The mean reversion related impact was an expense of $70 million for the three months ended June 30, 2022 compared to a benefit of $16 million for the prior year period.

• A decrease in amortization reflecting lower than expected client exit rates.

General and administrative expense increased $124 million, or 15%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, higher performance fee related compensation, and $10 million of integration related expenses, partially offset by an unfavorable change in the mark-to-market impact on share-based compensation in the prior year period.

Our effective tax rate was 17.6% for the three months ended March 31, 2022 compared to 11.3% for the prior year period.

The higher effective tax rate for the three months ended March 31, 2022 compared to March 31, 2021 is primarily the result of higher pretax income and a decrease in low income housing tax credits, partially offset by an increase in incentive compensation in the current period compared to the prior period.

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

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Our effective tax rate was 20.8% for the three months ended June 30, 2022 compared to 18.1% for the prior year period.

The higher effective tax rate for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily the result of higher pretax income and a decrease in low income housing tax credits compared to the prior year period.

See Note 15 to our Consolidated Financial Statements for additional discussion on income taxes.

Results of Operations by Segment for the Three Months Ended March 31, 2022 and 2021

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

Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance.

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The following table presents summary financial information by segment:

Three Months Ended March 31,

Three Months Ended June 30,

(in millions)

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Adjusted operating loss $ (53) $ (77)

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Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the three months ended March 31:

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

(in billions)

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Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.

(2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the three months ended March 31, 2022 and 2021.

Wrap account assets decreased $17.7 billion, or 4%, during the three months ended March 31, 2022 due to market depreciation of $26.4 billion, partially offset by net inflows of $8.7 billion.

Average advisory wrap account assets increased $66.4 billion, or 18%, compared to the prior year period primarily reflecting net inflows, along with market appreciation.

Ending wrap account assets decreased $47.7 billion, or 11%, to $399.3 billion during the three months ended June 30, 2022 due to market depreciation of $53.9 billion, partially offset by net inflows of $6.2 billion.

Average advisory wrap account assets increased $17.9 billion, or 4%, compared to the prior year period primarily reflecting net inflows, partially offset by market depreciation.

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

Three Months Ended March 31,

Three Months Ended June 30,

(in millions)

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Adjusted operating earnings $ 492 $ 423 $ 69 16 %

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $51 million, or 13%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting higher average wrap account balances due to net inflows, market appreciation, and increased bank profitability.

Pretax adjusted operating margin was 21.5% for the three months ended March 31, 2022 compared to 20.7% for the prior year period.

Cash balances increased $5.3 billion to $45.7 billion contrary to normal seasonal patterns in the first quarter.

Ameriprise Bank, FSB is continuing its deposit growth trend, with cash sweep balances increasing $5.2 billion from the prior year period to $13.2 billion and brokerage client pledged asset lines of credit increasing to $520 million as of March 31, 2022.

Management and financial advice fees increased $175 million, or 15%, for the three months ended March 31, 2022 compared to the prior year period primarily due to growth in average wrap account assets.

Average advisory wrap account assets increased $66.4 billion, or 18%, compared to the prior year period reflecting net inflows and market appreciation.

Distribution fees decreased $30 million, or 5%, for the three months ended March 31, 2022 compared to the prior year period reflecting decreased transactional activity, partially offset by higher average equity markets.

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $69 million, or 16%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting higher average wrap account balances due to net inflows and a benefit from higher short-term interest rates.

Pretax adjusted operating margin increased to 23.9% for the three months ended June 30, 2022 compared to 21.4% for the prior year period, reflecting the benefit of higher short-term interest rates.

Client brokerage cash balances continued to increase to $47.4 billion given the market volatility.

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

Profitability at the bank increased compared to the prior year period reflecting deposit growth and increased interest rates.

Management and financial advice fees increased $41 million, or 3%, for the three months ended June 30, 2022 compared to the prior year period primarily due to growth in average wrap account assets.

Average advisory wrap account assets increased $17.9 billion, or 4%, compared to the prior year period reflecting net inflows, partially offset by market depreciation.

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

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

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

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

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Net investment income, which excludes net realized investment gains or losses, increased $14 million, or 22%, for the three months ended March 31, 2022 compared to the prior year period primarily due to higher average invested assets due to increased bank deposits, partially offset by lower certificate balances and the unfavorable impact of continued low interest rates, including lower investment yields on the investment portfolio supporting the certificate products.

Banking and deposit interest expense decreased $3 million, or 60%, for the three months ended March 31, 2022 compared to the prior year period primarily due to lower average crediting rates on certificates and lower average certificate balances.

Distribution expenses increased $97 million, or 9%, for the three months ended March 31, 2022 compared to the prior year period reflecting higher asset-based advisor compensation from higher wrap account assets, partially offset by decreased transactional activity.

General and administrative expense increased $16 million, or 5%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting higher volume related expenses.

Asset Management

The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds, including recently acquired BMO branded funds, as of March 31, 2022:

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

Retail Fund Rankings in Top 2 Quartiles or Above Index Benchmark - Asset Weighted (1)

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Percent of rated assets 66% 56% 52% 63%

(1) Retail Fund performance rankings for each fund is measured on a consistent basis against the most appropriate peer group or index.

Peer Groupings are defined by either Lipper, IA, or Morningstar and based primarily on the Institutional Share Class, Net of Fees.

(1) Retail Fund performance rankings for each fund are measured on a consistent basis against the most appropriate peer group or index.

Peer groupings of Columbia funds are defined by Lipper category and are based on the Primary Share Class (i.e.

Institutional if available, otherwise Advisor or Instl3 share class), net of fees.

Peer groupings of Threadneedle and legacy BMO funds are defined by either IA or Morningstar index, and are based on the highest-rated share class.

Comparisons to Index are measured Gross of Fees.

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(2) Columbia funds are available for purchase by U.S.

Out of 95 Columbia funds (Institutional shares) rated, 13 received a 5-star Overall Rating and 39 received a 4-star Overall Rating.

Out of 92 Threadneedle funds (highest rated share class) rated, 18 received a 5-star Overall Rating and 32 received a 4-star Overall Rating.

Out of 63 BMO branded funds (highest rated share class) rated, 6 received a 5-star Overall Rating and 21 received a 4-star Overall Rating.

Out of 104 Columbia funds rated (based on primary share class), 18 received a 5-star Overall Rating and 41 received a 4-star Overall Rating.

Out of 92 Threadneedle funds rated (based on highest-rated share class), 13 received a 5-star Overall Rating and 39 received a 4-star Overall Rating.

Out of 63 BMO funds rated (based on highest-rated share class), 6 received a 5-star Overall Rating and 27 received a 4-star Overall Rating.

The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Rating metrics.

The following table presents global managed assets by type:

As of March 31,

Change Three Months Ended March 31,

As of June 30,

Change Three Months Ended June 30,

(in billions)

12 unchanged sentences

The following table presents the changes in global managed assets:

Three Months Ended March 31,

Three Months Ended June 30,

(in billions)

21 unchanged sentences

$ (1.2) $ (1.4)

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

Total AUM as of January 1, 2022 remained unchanged.

(2) Included in the first quarter 2022 net flows are $2.5 billion of retail and $0.1 billion of institutional net flows from the US asset transfer from the BMO acquisition.

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

2 unchanged sentences

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

AMERIPRISE FINANCIAL, INC.

Total segment AUM decreased $55.5 billion, or 7%, during the three months ended March 31, 2022.

Net outflows were $0.7 billion in the first quarter of 2022, a $5.6 billion decrease compared to the prior year period.

Total segment AUM decreased $100.4 billion, or 14%, during the three months ended June 30, 2022 primarily due to equity market depreciation.

Net outflows were $3.1 billion in the second quarter of 2022, a $9.8 billion decrease compared to the prior year period.

Global retail net outflows were $5.8 billion.

Global institutional net inflows were $2.7 billion and included $1.2 billion of outflows from legacy insurance partners assets.

AMERIPRISE FINANCIAL, INC.

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

Three Months Ended March 31,

Three Months Ended June 30,

(in millions)

2 unchanged sentences

Net investment income — 2 (2) NM

Other revenues 4 — 4 —

Other revenues 4 1 3 NM

Total revenues 881 879 2 —

8 unchanged sentences

NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $57 million, or 25%, for the three months ended March 31, 2022 compared to the prior year period primarily due to a higher level of average AUM from the acquisition of the BMO Global Asset Management (EMEA) business, equity market appreciation and cumulative net inflows, as well as higher performance fees.

Management and financial advice fees increased $185 million, or 26%, for the three months ended March 31, 2022 compared to the prior year period primarily due to the acquired BMO Global Asset Management (EMEA) business, $53 million of higher performance fees, higher average equity markets, and the cumulative impact from net inflows.

Distribution expenses increased $9 million, or 3%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting higher average equity markets.

General and administrative expense increased $123 million, or 38%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business and higher performance fee related compensation expenses.

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

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

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

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

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

AMERIPRISE FINANCIAL, INC.

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30,

(in millions)

15 unchanged sentences

Adjusted operating earnings $ 179 $ 182 $ (3) (2) %

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts, net of hedges and the related DSIC and DAC amortization, unearned amortization and the reinsurance accrual), mean reversion related impacts, and block transfer reinsurance transaction impacts increased $8 million, or 4%, for the three months ended March 31, 2022 compared to prior year period.

Variable annuity account balances decreased 1% to $85.8 billion as of March 31, 2022 compared to the prior year period due to net outflows of $1.9 billion, partially offset by market appreciation.

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts, net of hedges and the related DSIC and DAC amortization, unearned amortization and the reinsurance accrual), mean reversion related impacts, and block transfer reinsurance transaction impacts decreased $3 million, or 2%, for the three months ended June 30, 2022 compared to prior year period.

Variable annuity account balances decreased 16% to $75.7 billion as of June 30, 2022 compared to the prior year period due to market depreciation and net outflows of $2.0 billion.

Variable annuity sales decreased 29% compared to the prior year period reflecting a decrease in sales of variable annuities with living benefit guarantees.

The risk profile of our in force block continues to improve, with account values with living benefit riders down to 60% as of March 31, 2022 compared to 63% a year ago.

The risk profile of our in force block continues to improve, with account values with living benefit riders down to 59% as of June 30, 2022 compared to 62% a year ago.

This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

We continue to optimize our risk profile and shift our business mix to lower risk offerings.

During the fourth quarter of 2021, we made the decision to discontinue new sales of substantially all of our variable annuities with living benefit guarantees at the end of 2021, with a full exit by mid-2022.

During the fourth quarter of 2021, we made the decision to discontinue new sales of substantially all of our variable annuities with living benefit guarantees at the end of 2021, and have fully stopped issuing new contracts as of June 30, 2022.

In addition, we discontinued new sales of our universal life insurance with secondary guarantees and our single-pay fixed universal life with a long term care rider products at the end of 2021.

Net investment income, which excludes net realized investment gains or losses, decreased $12 million, or 10%, for the three months ended March 31, 2022 compared to the prior year period primarily due to lower yields on the investment portfolio.

Distribution expenses decreased $10 million, or 8%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting decreased variable annuity sales.

Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity contracts and IUL contracts and the DAC offset to net realized investment gains or losses, decreased $10 million for the three months ended March 31, 2022 compared to the prior year period primarily reflecting lower than expected client exit rates.

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

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

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

Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity contracts and IUL contracts and the DAC offset to net realized investment gains or losses, decreased $16 million, or 23%, for the three months ended June 30, 2022 compared to the prior year period primarily reflecting lower than expected client exit rates.

AMERIPRISE FINANCIAL, INC.

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30,

(in millions)

3 unchanged sentences

Total revenues 119 120 (1) (1)

Banking and deposit interest expense — — — —

Banking and deposit interest expense — 1 (1) NM

Total net revenues 119 119 — —

1 unchanged sentence

Interest credited to fixed accounts 60 62 (2) (3)

Benefits, claims, losses and settlement expenses 54 13 41 NM

Amortization of deferred acquisition costs 3 4 (1) (25)

Benefits, claims, losses and settlement expenses 59 54 5 9

Amortization of deferred acquisition costs — 2 (2) NM

Interest and debt expense 15 17 (2) (12)

1 unchanged sentence

Total expenses 172 196 (24) (12)

Adjusted operating loss $ (76) $ (21) $ (55) NM

Adjusted operating loss $ (53) $ (77) $ 24 31 %

NM Not Meaningful.

1 unchanged sentence

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs.

Our Corporate & Other segment pretax adjusted operating loss increased $55 million, for the three months ended March 31, 2022 compared to the prior year period.

LTC insurance had a pretax adjusted operating earnings of $1 million for the three months ended March 31, 2022 compared to pretax adjusted operating earnings of $46 million for the prior year period reflecting the return to more normalized results compared to the COVID-19 related impacts in the year ago period.

FA business had a pretax adjusted operating loss of $5 million for the three months ended March 31, 2022 compared to a pretax adjusted operating loss of $4 million.

Fixed deferred annuity account balances declined 4% to $7.5 billion as of March 31, 2022 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities.

Our Corporate & Other segment pretax adjusted operating loss decreased $24 million, for the three months ended June 30, 2022 compared to the prior year period.

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

FA business had a pretax adjusted operating loss of $4 million for the three months ended June 30, 2022 compared to a pretax adjusted operating loss of $6 million.

Fixed deferred annuity account balances declined 5% to $7.4 billion as of June 30, 2022 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities.

During the third quarter of 2021, we closed on a transaction to reinsure RiverSource Life’s fixed deferred and immediate annuity policies.

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, integration and restructuring charges, and the impact of consolidating CIEs, decreased $67 million, or 67%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting lower average invested assets due to the sale of investments to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction and a $15 million gain on a strategic investment in the prior year period.

Other revenues increased $44 million to $59 million for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

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

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

AMERIPRISE FINANCIAL, INC.

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, increased $41 million, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting more normalized claims on LTC insurance, which benefited from COVID-19 related impacts in the prior year period.

General and administrative expense decreased $10 million, or 14%, for the three months ended March 31, 2022 compared to the prior year period primarily reflecting the unfavorable mark-to-market impact on share-based compensation expense in the prior year period.

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

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

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

The following table presents our consolidated results of operations:

Six Months Ended June 30,

(in millions)

Management and financial advice fees $ 4,736 $ 4,353 $ 383 9 %

Distribution fees 904 910 (6) (1)

Net investment income 548 655 (107) (16)

Premiums, policy and contract charges 733 711 22 3

Other revenues 247 146 101 69

Total revenues 7,168 6,775 393 6

Banking and deposit interest expense 5 7 (2) (29)

Total net revenues 7,163 6,768 395 6

Distribution expenses 2,533 2,408 125 5

Interest credited to fixed accounts 286 283 3 1

Benefits, claims, losses and settlement expenses 293 1,057 (764) (72)

Amortization of deferred acquisition costs 248 68 180 NM

Interest and debt expense 84 85 (1) (1)

General and administrative expense 1,841 1,653 188 11

Total expenses 5,285 5,554 (269) (5)

Pretax income

1,878 1,214 664 55

Income tax provision 361 186 175 94

Net income $ 1,517 $ 1,028 $ 489 48 %

NM Not Meaningful.

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

• The market impact on non-traditional long duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual was a benefit of $439 million for the six months ended June 30, 2022 compared to an expense of $483 million for the prior year period.

• A $20 million favorable impact of higher asset management net performance fees.

• The mean reversion related impact was an expense of $220 million for the six months ended June 30, 2022 compared to a benefit of $98 million for the prior year period.

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

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

AMERIPRISE FINANCIAL, INC.

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

• Net realized investment gains of $5 million for the six months ended June 30, 2022 compared to net realized investment gains of $65 million for the prior year period.

Net realized investment gains for the six months ended June 30, 2021 included a $15 million gain on strategic investment.

• The unfavorable impact of lower average invested assets due to the sale of investments as a result of the fixed deferred and immediate annuity reinsurance transaction.

• The favorable impact of increased bank deposits and rising short-term interest rates.

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

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

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

• A $74 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits.

The favorable impact of the nonperformance credit spread was $60 million for the six months ended June 30, 2022 compared to an unfavorable impact of $14 million for the prior year period.

• An $87 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $35 million for the six months ended June 30, 2022 compared to a benefit of $52 million for the prior year period.

The increase in expense was primarily due to an increase in the IUL embedded derivative in the current period, which reflected higher option costs due to a higher new money rate.

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

• A $274 million decrease in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits.

The favorable impact of the nonperformance credit spread was $112 million for the six months ended June 30, 2022 primarily as a result of the nonperformance credit spread increasing compared to an unfavorable impact of $162 million for the prior year period.

Additionally, as the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease.

• A $687 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization.

This decrease was the result of a favorable $489 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits and a favorable $198 million change in the market impact on variable annuity guaranteed living benefits reserves.

The main market drivers contributing to these changes are summarized below:

• Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the six months ended June 30, 2022 compared to an expense in the prior year period.

• Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the six months ended June 30, 2022 compared to the prior year period.

• Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the six months ended June 30, 2022 compared to an expense in the prior year period.

• Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net expense for the six months ended June 30, 2022 compared to a net benefit for the prior year period.

• The mean reversion related impact was an expense of $124 million for the six months ended June 30, 2022 compared to a benefit of $59 million for the prior year period.

• A $46 million increase in expense on LTC insurance as claims returned to more normalized levels compared to the prior year period which benefited from COVID-19 related impacts.

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

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

AMERIPRISE FINANCIAL, INC.

• The mean reversion related impact was an expense of $95 million for the six months ended June 30, 2022 compared to a benefit of $38 million for the prior year period.

• A decrease in amortization reflecting lower than expected client exit rates.

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

Our effective tax rate was 19.2% for the six months ended June 30, 2022 compared to 15.4% for the prior year period.

The higher effective tax rate for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily the result of higher pretax income, a decrease in low income housing tax credits and an increase in state income taxes, net of federal benefit, compared to the prior year period.

See Note 15 to our Consolidated Financial Statements for additional discussion on income taxes.

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

The following table presents summary financial information by segment:

Six Months Ended June 30,

(in millions)

Advice & Wealth Management

Net revenues $ 4,098 $ 3,859

Expenses 3,166 3,047

Adjusted operating earnings $ 932 $ 812

Asset Management

Net revenues $ 1,898 $ 1,707

Expenses 1,391 1,226

Adjusted operating earnings $ 507 $ 481

Retirement & Protection Solutions

Net revenues $ 1,532 $ 1,595

Expenses 1,162 1,230

Adjusted operating earnings $ 370 $ 365

Corporate & Other

Net revenues $ 235 $ 258

Expenses 364 356

Adjusted operating loss $ (129) $ (98)

Advice & Wealth Management

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

(in billions)

Beginning balance $ 464.7 $ 380.0

Net flows (1)

Market appreciation (depreciation) and other (1)

Ending balance $ 399.3 $ 430.0

Advisory wrap account assets ending balance (2)

$ 395.1 $ 425.2

Average advisory wrap account assets (3)

$ 435.7 $ 393.5

(1) Beginning in the first quarter of 2021, wrap net flows is calculated including dividends and interest less fees which were previously recorded in Market appreciation (depreciation) and other.

Net flows excludes short-term and long-term capital gain distributions.

Prior periods have been restated.

(2) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts.

Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.

AMERIPRISE FINANCIAL, INC.

(3) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the six months ended June 30, 2022 and 2021.

Ending wrap account assets decreased $65.4 billion, or 14%, to $399.3 billion during the six months ended June 30, 2022 due to market depreciation and other of $80.2 billion, partially offset by net inflows of $14.8 billion.

Average advisory wrap account assets increased $42.2 billion, or 11%, compared to the prior year period primarily reflecting net inflows, partially offset by market depreciation.

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

Six Months Ended June 30,

(in millions)

Management and financial advice fees $ 2,720 $ 2,504 $ 216 9 %

Distribution fees 1,071 1,121 (50) (4)

Net investment income 198 127 71 56

Other revenues 114 114 — —

Total revenues 4,103 3,866 237 6

Banking and deposit interest expense 5 7 (2) (29)

Total net revenues 4,098 3,859 239 6

Distribution expenses 2,417 2,329 88 4

Interest and debt expense 5 5 — —

General and administrative expense 744 713 31 4

Total expenses 3,166 3,047 119 4

Adjusted operating earnings $ 932 $ 812 $ 120 15 %

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

Pretax adjusted operating margin was 22.7% for the for the six months ended June 30, 2022 compared to 21.0% for the prior year period.

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

Average advisory wrap account assets increased $42.2 billion, or 11%, compared to the prior year period primarily reflecting net inflows.

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

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

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

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

AMERIPRISE FINANCIAL, INC.

Asset Management

The following table presents global managed assets by type:

As of June 30,

Change Six Months Ended June 30,

(in billions)

Equity $ 306.0 $ 339.0 $ (33.0) (10) % $ 357.0 $ 319.8 $ 37.2 12 %

Fixed income 216.5 202.5 14.0 7 250.6 197.8 52.8 27

Money market 19.3 5.5 13.8 NM 14.3 5.9 8.4 NM

Alternative 38.4 23.3 15.1 65 39.6 22.9 16.7 73

Hybrid and other 18.0 23.1 (5.1) (22) 20.9 21.8 (0.9) (4)

Total managed assets (2)

$ 598.2 $ 593.4 $ 4.8 1 % $ 682.4 $ 568.2 $ 114.2 20 %

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

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

Prior periods have been restated to reflect this change.

The following table presents the changes in global managed assets:

Six Months Ended June 30,

(in billions)

Global Retail Funds (1)

Beginning assets $ 409.4 $ 323.5

Inflows 37.3 41.9

Outflows (47.0) (34.7)

Net VP/VIT fund flows (2.1) (2.0)

Net new flows (2)

Reinvested dividends 4.1 3.6

Net flows (7.7) 8.8

Distributions (4.6) (4.2)

Market appreciation (depreciation) and other (68.9) 31.3

Foreign currency translation (3)

Total ending assets 323.0 359.5

Global Institutional (1)

Beginning assets 344.7 223.1

(24.9) (14.3)

Net flows 3.9 2.8

Market appreciation (depreciation) and other (5)

Foreign currency translation (3)

Total ending assets 275.2 233.9

Total managed assets $ 598.2 $ 593.4

Total net flows $ (3.8) $ 11.6

Legacy insurance partners net flows (6)

$ (1.9) $ (2.6)

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

Total AUM as of January 1, 2022 remained unchanged.

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

AMERIPRISE FINANCIAL, INC.

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

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

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

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

Total segment AUM decreased $155.9 billion, or 21%, during the six months ended June 30, 2022 primarily due to equity market depreciation.

Net outflows were $3.8 billion for the six months ended June 30, 2022, a decrease of $15.4 billion compared to the prior year period.

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

Six Months Ended June 30,

(in millions)

Management and financial advice fees $ 1,675 $ 1,471 $ 204 14 %

Distribution fees 211 232 (21) (9)

Net investment income 4 3 1 33

Other revenues 8 1 7 NM

Total revenues 1,898 1,707 191 11

Banking and deposit interest expense — — — —

Total net revenues 1,898 1,707 191 11

Distribution expenses 529 550 (21) (4)

Amortization of deferred acquisition costs 6 6 — —

Interest and debt expense 2 2 — —

General and administrative expense 854 668 186 28

Total expenses 1,391 1,226 165 13

Adjusted operating earnings $ 507 $ 481 $ 26 5 %

NM Not Meaningful.

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

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

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

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

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

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

AMERIPRISE FINANCIAL, INC.

Retirement & Protection Solutions

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

Six Months Ended June 30,

(in millions)

Management and financial advice fees $ 415 $ 456 $ (41) (9) %

Distribution fees 218 238 (20) (8)

Net investment income 238 253 (15) (6)

Premiums, policy and contract charges 654 648 6 1

Other revenues 7 — 7 —

Total revenues 1,532 1,595 (63) (4)

Banking and deposit interest expense — — — —

Total net revenues 1,532 1,595 (63) (4)

Distribution expenses 234 263 (29) (11)

Interest credited to fixed accounts 192 194 (2) (1)

Benefits, claims, losses and settlement expenses 463 475 (12) (3)

Amortization of deferred acquisition costs 107 133 (26) (20)

Interest and debt expense 18 19 (1) (5)

General and administrative expense 148 146 2 1

Total expenses 1,162 1,230 (68) (6)

Adjusted operating earnings $ 370 $ 365 $ 5 1 %

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

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

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

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

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

AMERIPRISE FINANCIAL, INC.

Corporate & Other

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

Six Months Ended June 30,

(in millions)

Net investment income $ 72 $ 179 $ (107) (60) %

Premiums, policy and contract charges 48 49 (1) (2)

Other revenues 115 31 84 NM

Total revenues 235 259 (24) (9)

Banking and deposit interest expense — 1 (1) NM

Total net revenues 235 258 (23) (9)

Distribution expenses (4) (4) — —

Interest credited to fixed accounts 121 123 (2) (2)

Benefits, claims, losses and settlement expenses 113 67 46 69

Amortization of deferred acquisition costs 3 6 (3) (50)

Interest and debt expense 31 32 (1) (3)

General and administrative expense 100 132 (32) (24)

Total expenses 364 356 8 2

Adjusted operating loss $ (129) $ (98) $ (31) (32) %

NM Not Meaningful.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impact, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs.

Our Corporate & Other segment pretax adjusted operating loss increased $31 million, or 32%, for the six months ended June 30, 2022 compared to the prior year period.

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

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

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

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

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

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

AMERIPRISE FINANCIAL, INC.

Our primary market risk exposures are interest rate, equity price, foreign currency exchange rate and credit risk.

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Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income.

However, the current low interest rate environment is resulting in interest rates below the level of some of our liability guaranteed minimum interest rates (“GMIRs”).

Hence, a modest rise in interest rates would not necessarily result in changes to all the liability credited rates while projected asset purchases would capture the full increase in interest rates.

While interest rates under the current environment have relieved some pressure from the liability guaranteed minimum interest rates (“GMIRs”), there are still some GMIRs above current levels.

Hence, liability credited rates will move more slowly under a modest rise in interest rates while projected asset purchases would capture the full increase in interest rates.

This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business.

As a result of the current interest rate environment, our reinvestment yields are generally lower than the current portfolio yield.

We expect our portfolio income yields to continue to decline in future periods should interest rates remain comparatively low.

The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through March 31, 2024 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $2.5 billion and 1.9%, respectively, as of March 31, 2022.

In addition, residential mortgage backed securities, which could be subject to prepayment risk if the low interest rate environment continues, totaled $11.7 billion and had a weighted average yield of 1.8% as of March 31, 2022.

As a result of the current market environment, reinvestment yields are becoming more aligned with the current portfolio yield.

We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods under the current environment.

The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through June 30, 2024 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $2.6 billion and 2.5%, respectively, as of June 30, 2022.

In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $13.3 billion and had a weighted average yield of 2.5% as of June 30, 2022.

While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields.

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Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion.

The average yield for investment purchases during the three months ended March 31, 2022 was approximately 2.4%.

The average yield for investment purchases during the six months ended June 30, 2022 was approximately 3.3%.

The reinvestment of proceeds from maturities, calls and prepayments at rates below the current portfolio yield, which may be below the level of some liability GMIRs, will have a negative impact to future operating results.

To mitigate the unfavorable impact that the low interest rate environment has on our spread income, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework.

To mitigate the unfavorable impact that a low interest rate environment could have on our spread income, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework.

In addition, we may reduce the crediting rates on our fixed products when warranted, subject to guaranteed minimums.

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We have a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on our statutory surplus and to cover some of the residual risks not covered by other hedging activities.

We assess the residual risk under

AMERIPRISE FINANCIAL, INC.

a range of scenarios in creating and executing the macro hedge program.

We assess the residual risk under a range of scenarios in creating and executing the macro hedge program.

As a means of economically hedging these risks, we may use a combination of futures, options, swaps and swaptions.

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The macro hedge program could result in additional earnings volatility as changes in the value of the macro hedge derivatives, which are designed to reduce statutory capital volatility, may not be closely aligned to changes in the variable annuity guarantee embedded derivatives.

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

AMERIPRISE FINANCIAL, INC.

decline in equity prices.

The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months.

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In estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedge assets, we assume no change in implied market volatility despite the 10% drop in equity prices.

The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of March 31, 2022:

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

Equity Price Decline 10% Equity Price Exposure to Pretax Income

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GMDB and GMIB (3)

(593) 585 (8)

GMAB (37) 37 —

3 unchanged sentences

Macro hedge program (5)

Certificates — — —

IUL insurance 19 (22) (3)

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Macro hedge program (5)

— (148) (148)

Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products 43 — 43

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

AMERIPRISE FINANCIAL, INC.

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

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

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

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

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

The above results compare to an estimated negative net impact to pretax income of $190 million related to a 10% equity price decline and an estimated positive net impact to pretax income of $80 million related to a 100 basis point increase in interest rates as of December 31, 2021.

The change in interest rate exposure as of March 31, 2022 compared to December 31, 2021 was driven by variable annuity riders, specifically GMWB, primarily due to changes in market rates.

AMERIPRISE FINANCIAL, INC.

December 31, 2021.

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

Net impacts shown in the above table from GMWB riders result largely from differences between the liability valuation basis and the hedging basis.

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The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities.

Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of March 31, 2022.

Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of June 30, 2022.

As our estimate of this spread widens or tightens, the liability will decrease or increase.

If this nonperformance credit spread moves to a zero spread over the LIBOR swap curve, the reduction to future net income would be approximately $420 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on March 31, 2022 credit spreads.

If this nonperformance credit spread moves to a zero spread over the LIBOR swap curve, the reduction to future net income would be approximately $577 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on June 30, 2022 credit spreads.

Liquidity and Capital Resources

We maintained substantial liquidity during the three months ended March 31, 2022.

At March 31, 2022 and December 31, 2021, we had $6.6 billion and $7.1 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.

At March 31, 2022 and December 31, 2021, the parent company had $316 million and $841 million, respectively, in cash, cash equivalents, and unencumbered liquid securities.

We maintained substantial liquidity during the six months ended June 30, 2022.

At June 30, 2022 and December 31, 2021, we had $7.5 billion and $7.1 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.

At June 30, 2022 and December 31, 2021, the parent company had $759 million and $841 million, respectively, in cash, cash equivalents, and unencumbered liquid securities.

Liquid securities predominantly include U.S.

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Additional sources of liquidity include a line of credit with an affiliate up to $729 million and an unsecured revolving committed credit facility for up to $1.0 billion that expires in June 2026.

Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of March 31, 2022 was $1.5 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.

AMERIPRISE FINANCIAL, INC.

Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of June 30, 2022 was $1.9 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.

Under the terms of the committed credit facility, we can increase the availability to $1.25 billion upon satisfaction of certain approval requirements.

Available borrowings under this facility are reduced by any outstanding letters of credit.

At March 31, 2022, we had no outstanding borrowings under this credit facility and had $1 million of outstanding letters of credit.

At June 30, 2022, we had no outstanding borrowings under this credit facility and had $1 million of letters of credit issued against the facility.

Our credit facility contains various administrative, reporting, legal and financial covenants.

We remain in compliance with all such covenants at March 31, 2022.

We remain in compliance with all such covenants at June 30, 2022.

AMERIPRISE FINANCIAL, INC.

In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances.

Our subsidiaries, RiverSource Life Insurance Company (“RiverSource Life”), and Ameriprise Bank, FSB are members of the FHLB of Des Moines, which provides access to collateralized borrowings.

As of March 31, 2022 and December 31, 2021, we had $8.2 billion and $8.1 billion, respectively, under the FHLB facilities, of which $200 million was outstanding as of both March 31, 2022 and December 31, 2021, and is collateralized with commercial mortgage backed securities and residential mortgage backed securities.

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

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

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

We repaid $500 million principal amount of its 3.0% senior notes at maturity on March 22, 2022.

We repaid $500 million principal amount of our 3.0% senior notes at maturity on March 22, 2022.

We issued $500 million of 4.5% unsecured senior notes on May 13, 2022.

See Note 10 to our Consolidated Financial Statements for further information about our long-term debt maturities.

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Our risk management strategy is designed to provide proactive protection during stress events such as the current pandemic.

We believe our process is working as intended, and our liquidity and capital resources have remained a source of balance sheet strength during the three months ended March 31, 2022.

We believe our process is working as intended, and our liquidity and capital resources have remained a source of balance sheet strength during the six months ended June 30, 2022.

Dividends from Subsidiaries

Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly-owned subsidiaries.

Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding Corporation, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc.

Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding, LLC, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc.

(“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment Advisers, LLC, TAM UK International Holdings Ltd, which includes Threadneedle Asset Management Holdings Sàrl and Ameriprise International Holdings GmbH within its organizational structure, and Columbia Threadneedle Investments UK International Ltd.

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Actual Capital Regulatory Capital Requirements

March 31, 2022

June 30, 2022

December 31, 2021

March 31, 2022

June 30, 2022

December 31, 2021

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

AMERIPRISE FINANCIAL, INC.

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

(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of March 31, 2022 and December 31, 2021.

(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of June 30, 2022 and December 31, 2021.

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

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

AMERIPRISE FINANCIAL, INC.

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

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

During the three months ended March 31, 2022, the parent holding company received cash dividends or a return of capital from its subsidiaries of $777 million (including $300 million from RiverSource Life) and contributed cash to its subsidiaries of $129 million (including $95 million to Ameriprise Bank, FSB).

During the three months ended March 31, 2021, the parent holding company received cash dividends or a return of capital from its subsidiaries of $621 million (including $250 million from RiverSource Life) and contributed cash to its subsidiaries of $34 million.

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

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

In 2009, RiverSource Life established an agreement to protect its exposure to Genworth Life Insurance Company (“GLIC”) for its reinsured LTC.

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The terms of these confidential provisions within the agreement have been shared, in the normal course of regular reviews, with our domiciliary regulator and rating agencies.

GLIC is domiciled in Delaware so in the event GLIC were subjected to rehabilitation or insolvency proceedings, such proceedings would be located in (and governed by) Delaware laws.

GLIC is domiciled in Delaware, so in the event GLIC was subjected to rehabilitation or insolvency proceedings, such proceedings would be located in (and governed by) Delaware laws.

Delaware courts have a long tradition of respecting commercial and reinsurance affairs as well as contracts among sophisticated parties.

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Dividends Paid to Shareholders and Share Repurchases

We paid regular quarterly dividends to our shareholders totaling $133 million and $129 million for the three months ended March 31, 2022 and 2021, respectively.

On April 25, 2022, we announced a quarterly dividend of $1.25 per common share.

The dividend will be paid on May 20, 2022 to our shareholders of record at the close of business on May 9, 2022.

In August 2020, the Company’s Board of Directors authorized us to repurchase up to $2.5 billion of our common stock through September 30, 2022.

We paid regular quarterly dividends to our shareholders totaling $275 million and $263 million for the six months ended June 30, 2022 and 2021, respectively.

On July 26, 2022, we announced a quarterly dividend of $1.25 per common share.

The dividend will be paid on August 19, 2022 to our shareholders of record at the close of business on August 8, 2022.

In August 2020, the Company’s Board of Directors authorized us to repurchase up to $2.5 billion of our common stock through September 30, 2022, which was exhausted in the second quarter of 2022.

In January 2022, the Company’s Board of Directors authorized an additional $3.0 billion for the repurchase of the Company’s common stock through March 31, 2024.

As of March 31, 2022, we had $3.0 billion remaining under these share repurchase authorizations.

As of June 30, 2022, we had $2.5 billion remaining under the share repurchase authorization.

We intend to fund share repurchases through existing working capital, future earnings and other customary financing methods.

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Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means.

During the three months ended March 31, 2022, we repurchased a total of 1.4 million shares of our common stock at an average price of $299.14 per share.

During the six months ended June 30, 2022, we repurchased a total of 3.2 million shares of our common stock at an average price of $279.74 per share.

Cash flows of CIEs and restricted and segregated cash and cash equivalents are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities.

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Operating Activities

Net cash provided by operating activities increased $1.4 billion to $409 million for the three months ended March 31, 2022 compared to net cash used in operating activities of $1.0 billion for the prior year period primarily reflecting a $882 million increase in policyholder account balances, future policy benefits and claims, net, a $324 million increase in net income and a $222 million increase in cash related to brokerage deposits.

AMERIPRISE FINANCIAL, INC.

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

Investing Activities

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Further, this activity is significantly affected by the net flows of our investment certificate, fixed annuity and universal life products reflected in financing activities.

Net cash used in investing activities increased $856 million to $1.7 billion for the three months ended March 31, 2022 compared to $809 million for the prior year period primarily reflecting a $755 million decrease in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities, a $727 million increase in cash used for purchases of Available-for-Sale securities, partially offset by a $490 million decrease in net cash flows used related to investments of consolidated investment entities.

AMERIPRISE FINANCIAL, INC.

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

Financing Activities

Net cash provided by financing activities increased $85 million to $518 million for the three months ended March 31, 2022 compared to $433 million for the prior year period primarily reflecting a $1.2 billion increase in banking deposits, a $399 million reduction in net cash outflows from investment certificates, partially offset by a $797 million decrease in borrowings by CIEs and a $500 million increase in repayments of long-term debt.

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

Forward-Looking Statements

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

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

• statements about the expected trend in the shift to lower-risk products, including the exit from variable annuities with living benefit riders and the discontinuance of new sales of universal life insurance with secondary guarantees;

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• statements of assumptions underlying such statements.

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

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

Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements.

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

AMERIPRISE FINANCIAL, INC.

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

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

AMERIPRISE FINANCIAL, INC.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis