13 unchanged sentences
In estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedging instruments, we assume no change in implied market volatility despite the 10% drop in equity prices.
−Removed: The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of June 30, 2023 and December 31, 2022:
−Removed: June 30, 2023
+Added: AMERIPRISE FINANCIAL, INC.
+Added: The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of September 30, 2023 and December 31, 2022:
+Added: September 30, 2023
Equity Price Decline 10% Equity Price Exposure to Pretax Income
10 unchanged sentences
Total $ (477) $ 185 $ (292) (2)
−Removed: AMERIPRISE FINANCIAL, INC.
Interest Rate Increase 100 Basis Points Interest Rate Exposure to Pretax Income
26 unchanged sentences
Total $ (621) $ 337 $ (284) (2)
+Added: AMERIPRISE FINANCIAL, INC.
Interest Rate Increase 100 Basis Points Interest Rate Exposure to Pretax Income
15 unchanged sentences
(2) Represents the net impact to pretax income.
−Removed: The estimated net impact to pretax adjusted operating income is $(303) million as of June 30, 2023 and $(283) million as of December 31, 2022, respectively.
+Added: The estimated net impact to pretax adjusted operating income is $(290) million as of September 30, 2023 and $(283) million as of December 31, 2022, respectively.
Net impacts shown in the above tables from market risk benefits result largely from differences between the liability valuation basis and the hedging basis.
3 unchanged sentences
For example, the illustration above includes assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve.
−Removed: Furthermore, we have not tried to
−Removed: AMERIPRISE FINANCIAL, INC.
−Removed: anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in the above scenarios.
+Added: Furthermore, we have not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in the above scenarios.
The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events.
2 unchanged sentences
We earn asset-based management fees and distribution fees on our assets under management.
−Removed: As of June 30, 2023, the value of our assets under management was $1.0 trillion.
+Added: As of September 30, 2023, the value of our assets under management was $1.0 trillion.
These sources of revenue are subject to both interest rate and equity price risk since the value of these assets and the fees they earn fluctuate inversely with interest rates and directly with equity prices.
2 unchanged sentences
Market Risk Benefits
−Removed: The total contract value of all variable annuities as of June 30, 2023 was $78.5 billion.
+Added: The total contract value of all variable annuities as of September 30, 2023 was $75.1 billion.
See Note 11 for details of the reserves associated with market risk benefits.
−Removed: The changes in fair value of variable annuity market risk benefits are recorded through earnings, with the exception of the portion of the change in fair value due to a change in the Company’s nonperformance risk, which is recognized in other comprehensive income.
+Added: The changes in fair value of variable annuity market risk benefits are recorded through earnings, with the exception of the portion of the change in fair value due to a change in our nonperformance risk, which is recognized in other comprehensive income (loss).
Fair value is calculated based on projected, discounted cash flows over the life of the contract, including projected, discounted benefits and fees.
6 unchanged sentences
See Note 15 to our Consolidated Financial Statements for further information on our derivative instruments.
+Added: AMERIPRISE FINANCIAL, INC.
Interest Rate Risk
4 unchanged sentences
Structured Variable Annuities
−Removed: Structured variable annuities offer the contractholder the ability to allocate account value to either an account that earns fixed interest (fixed account) or an account that is impacted by the performance of various equity indices (indexed account).
+Added: Structured variable annuities offer the contractholder the ability to allocate account value to either an account that earns fixed interest (fixed account) or an account that is impacted by the performance of various equity indices (indexed account) subject to a cap, floor or buffer.
Our earnings are based upon the spread between investment income earned and the credits made to the fixed account and benefits reflected in an indexed account of the structured variable annuities.
−Removed: As of June 30, 2023, we had $8.6 billion in liabilities related to structured variable annuities.
+Added: As of September 30, 2023, we had $9.2 billion in liabilities related to structured variable annuities.
Equity Price Risk
12 unchanged sentences
Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments.
−Removed: Therefore, in an
−Removed: AMERIPRISE FINANCIAL, INC.
−Removed: 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.
+Added: Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income.
While interest rates under the current environment have relieved some pressure from the liability guaranteed minimum interest rates (“GMIRs”), there are still some GMIRs above current levels.
1 unchanged sentence
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.
−Removed: Of the $35.7 billion in Policyholder account balances, future policy benefits and claims as of June 30, 2023, $17.5 billion is related to liabilities created by these products.
+Added: Of the $35.5 billion in Policyholder account balances, future policy benefits and claims as of September 30, 2023, $17.2 billion is related to liabilities created by these products.
We do not hedge this exposure.
1 unchanged sentence
We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods under the current environment.
−Removed: 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, 2025 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $4.9 billion and 4.8%, respectively, as of June 30, 2023.
−Removed: In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $19.0 billion and had a weighted average yield of 4.1% as of June 30, 2023.
+Added: The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through September 25, 2025 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $5.2 billion and 4.9%, respectively, as of September 30, 2023.
+Added: In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $19.3 billion and had a weighted average yield of 4.3% as of September 30, 2023.
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.
1 unchanged sentence
Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion.
−Removed: The average yield for investment purchases during the six months ended June 30, 2023 was approximately 5.6%.
+Added: The average yield for investment purchases during the nine months ended September 30, 2023 was approximately 5.7%.
The reinvestment of proceeds from maturities, calls and prepayments at rates near the current portfolio yield will have limited impact to future operating results.
1 unchanged sentence
In addition, we may update the crediting rates on our fixed products when warranted, subject to guaranteed minimums.
−Removed: See Note 9 for more information on the account values of fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of GMIRs and the range of the difference between rates credited to policyholders and contractholders as of June 30, 2023 and December 31, 2022 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated.
+Added: AMERIPRISE FINANCIAL, INC.
+Added: See Note 9 for more information on the account values of fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of GMIRs and the range of the difference between rates credited to policyholders and contractholders as of September 30, 2023 and December 31, 2022 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated.
Banking Deposits and Brokerage Client Cash Balances
10 unchanged sentences
This exposure is not currently hedged although we monitor our investment strategy and make modifications based on our changing liabilities and the expected interest rate environment.
−Removed: Of the $35.6 billion in customer deposits as of June 30, 2023, $11.8 billion related to reserves for our fixed rate certificate products.
+Added: Of the $36.1 billion in customer deposits as of September 30, 2023, $12.4 billion related to reserves for our fixed rate certificate products.
Stock Market Certificates
3 unchanged sentences
Liabilities for our stock market certificates are included in Customer deposits.
−Removed: As of June 30, 2023, we had $224 million in reserves related to stock market certificates.
+Added: As of September 30, 2023, we had $203 million in reserves related to stock market certificates.
The equity-linked return to investors creates equity price risk exposure.
2 unchanged sentences
Stock market certificates have some interest rate risk as changes in interest rates affect the fair value of the payout to be made to the certificate holder.
−Removed: This risk is not currently hedged and was immaterial as of June 30, 2023.
−Removed: AMERIPRISE FINANCIAL, INC.
+Added: This risk is not currently hedged and was immaterial as of September 30, 2023.
Indexed Universal Life
1 unchanged sentence
The policyholder may allocate all or a portion of the policy value to a fixed or any available indexed account.
−Removed: As of June 30, 2023, we had $2.6 billion in liabilities related to the indexed accounts of IUL.
+Added: As of September 30, 2023, we had $2.6 billion in liabilities related to the indexed accounts of IUL.
Equity Price Risk
8 unchanged sentences
This risk is not currently hedged.
+Added: AMERIPRISE FINANCIAL, INC.
Foreign Currency Risk
We have foreign currency risk through our net investment in foreign subsidiaries and our operations in foreign countries.
−Removed: We are primarily exposed to changes in British Pounds related to our net investment in Threadneedle, which was approximately £1.3 billion as of June 30, 2023.
+Added: We are primarily exposed to changes in British Pounds related to our net investment in Threadneedle, which was approximately $1.3 billion as of September 30, 2023.
We also have exposure related to operations in foreign countries to Euros, Indian Rupees and other currencies.
We monitor the foreign exchange rates that we have exposure to and enter into foreign currency forward contracts to mitigate risk when economically prudent.
−Removed: As of June 30, 2023, the notional value of outstanding contracts and our remaining foreign currency risk related to operations in foreign countries were not material.
+Added: As of September 30, 2023, the notional value of outstanding contracts and our remaining foreign currency risk related to operations in foreign countries were not material.
Interest Rate Risk on External Debt
15 unchanged sentences
Other exchange-traded derivatives would be exposed to nonperformance by counterparties for amounts in excess of initial margin requirements only if the exchange is unable to fulfill the contract.
−Removed: AMERIPRISE FINANCIAL, INC.
We manage our credit risk related to reinsurance treaties by evaluating the financial condition of reinsurance counterparties prior to entering into new reinsurance treaties.
In addition, we regularly evaluate their financial strength during the terms of the treaties.
−Removed: As of June 30, 2023, our largest reinsurance credit risks are related to coinsurance treaties with Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company and with life insurance subsidiaries of Genworth Financial, Inc.
+Added: As of September 30, 2023, our largest reinsurance credit risks are related to coinsurance treaties with Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company and with life insurance subsidiaries of Genworth Financial, Inc.
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.