UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 20152016
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from from_______________________to_______________________to 

Commission File No. 033-28976
RIVERSOURCE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Minnesota 41-0823832
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1099 Ameriprise Financial Center, Minneapolis, Minnesota 55474
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:  (612) 671-3131
 Former name, former address and former fiscal year, if changed since last report:   Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes xNo o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes xNo o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filero
Accelerated Filero
 
Non-Accelerated Filerx
(Do not check if a smaller reporting company)
Smaller reporting companyo
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes oNo x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding at May 4, 20155, 2016
Common Stock (par value $30 per share) 100,000 sharesShares
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
     



RIVERSOURCE LIFE INSURANCE COMPANY



 
FORM 10-Q
INDEX
Information 
(Unaudited) 
2015
2015
2015
2015
2015
Notes to Consolidated Financial Statements
1. Basis of Presentation
2. Recent Accounting Pronouncements
3. Variable Interest Entities
4. Investments
5. Financing Receivables
6. Deferred Acquisition Costs and Deferred Sales Inducement Costs
7. Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities
8. Variable Annuity and Insurance Guarantees
9. Short-term Borrowings
10. Fair Values of Assets and Liabilities
11. Offsetting Assets and Liabilities
12. Derivatives and Hedging Activities
13. Shareholder’s Equity
14. Income Taxes
15. Guarantees and Contingencies
Item 2.  Management’s Narrative Analysis
4.  Controls and Procedures
 
Part II.  Other Information
Item 1.  Legal Proceedings
Item 1A.  Risk Factors
Item 6.  Exhibits
Signatures
Exhibit Index


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RIVERSOURCE LIFE INSURANCE COMPANY



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS 
ITEM 1.
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts) (UNAUDITED)
 March 31, 2015 December 31, 2014
 (unaudited)  
Assets 
  
Investments: 
  
Available-for-Sale: 
  
Fixed maturities, at fair value (amortized cost: 2015, $21,127; 2014, $21,354)$23,219
 $23,243
Common stocks, at fair value (cost: 2015 and 2014, $2)7
 7
Mortgage loans, at amortized cost (less allowance for loan losses: 2015, $21; 2014, $23)3,225
 3,298
Policy loans811
 805
Other investments983
 987
Total investments28,245
 28,340
Cash and cash equivalents619
 307
Reinsurance recoverables2,321
 2,268
Other receivables232
 206
Accrued investment income247
 255
Deferred acquisition costs2,570
 2,576
Other assets5,401
 5,006
Separate account assets80,234
 79,178
Total assets$119,869
 $118,136
    
Liabilities and Shareholder’s Equity 
  
Liabilities: 
  
Policyholder account balances, future policy benefits and claims$29,916
 $29,805
Short-term borrowings200
 200
Other liabilities5,163
 4,650
Separate account liabilities80,234
 79,178
Total liabilities115,513
 113,833
Shareholder’s equity: 
  
Common stock, $30 par value; 100,000 shares authorized, issued and outstanding3
 3
Additional paid-in capital2,465
 2,464
Retained earnings1,095
 1,107
Accumulated other comprehensive income, net of tax793
 729
Total shareholder’s equity4,356
 4,303
Total liabilities and shareholder’s equity$119,869
 $118,136
See Notes to Consolidated Financial Statements.

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RIVERSOURCE LIFE INSURANCE COMPANY


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in millions)
 Three Months Ended 
 March 31,
 
 2015 2014 
Revenues 
  
 
Premiums$97
 $104
 
Net investment income306
 333
 
Policy and contract charges460
 447
 
Other revenues104
 95
 
Net realized investment gains10
 4
 
Total revenues977
 983
 
Benefits and expenses 
  
 
Benefits, claims, losses and settlement expenses306
 208
 
Interest credited to fixed accounts172
 186
 
Amortization of deferred acquisition costs55
 71
 
Other insurance and operating expenses182
 182
 
Total benefits and expenses715
 647
 
Pretax income262
 336
 
Income tax provision49
 38
 
Net income$213
 $298
 
     
Supplemental Disclosures: 
  
 
Total other-than-temporary impairment losses on securities$(1) $(1) 
Portion of loss recognized in other comprehensive income (before taxes)1
 
 
Net impairment losses recognized in net realized investment gains$
 $(1) 


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in millions)
 Three Months Ended 
 March 31,
 2015 2014
Net income$213
 $298
Other comprehensive income, net of tax: 
  
Net unrealized gains (losses) on securities: 
  
Net unrealized securities gains arising during the period140
 208
Reclassification of net securities gains included in net income(8) (3)
Impact of deferred acquisition costs, deferred sales inducement costs, unearned revenue, benefit reserves and reinsurance recoverables(69) (91)
Total net unrealized gains on securities63
 114
Net unrealized losses on derivatives: 
  
Reclassification of net derivative losses included in net income1
 1
Total net unrealized losses on derivatives1
 1
Total other comprehensive income, net of tax64
 115
Total comprehensive income$277
 $413
 March 31, 2016 December 31, 2015
 (in millions, except share amounts)
Assets 
  
Investments: 
  
Available-for-Sale: 
  
Fixed maturities, at fair value (amortized cost: 2016, $20,906; 2015, $20,886)$22,262
 $21,772
Common stocks, at fair value (cost: 2016 and 2015, $2)6
 7
Mortgage loans, at amortized cost (less allowance for loan losses: 2016 and 2015, $19)2,929
 3,211
Policy loans828
 823
Other investments989
 998
Total investments27,014
 26,811
Cash and cash equivalents814
 370
Reinsurance recoverables2,447
 2,415
Other receivables310
 255
Accrued investment income244
 244
Deferred acquisition costs2,614
 2,688
Other assets5,423
 4,569
Separate account assets75,849
 76,004
Total assets$114,715
 $113,356
    
Liabilities and Shareholder’s Equity 
  
Liabilities: 
  
Policyholder account balances, future policy benefits and claims$29,821
 $29,029
Short-term borrowings200
 200
Other liabilities4,728
 4,058
Separate account liabilities75,849
 76,004
Total liabilities110,598
 109,291
Shareholder’s equity: 
  
Common stock, $30 par value; 100,000 shares authorized, issued and outstanding3
 3
Additional paid-in capital2,465
 2,465
Retained earnings1,077
 1,202
Accumulated other comprehensive income, net of tax572
 395
Total shareholder’s equity4,117
 4,065
Total liabilities and shareholder’s equity$114,715
 $113,356
See Notes to Consolidated Financial Statements.


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RIVERSOURCE LIFE INSURANCE COMPANY


CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITYINCOME (UNAUDITED)
(in millions)

 
Common
Shares
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income
 Total
Balances at January 1, 2014$3
 $2,463
 $1,042
 $650
 $4,158
Comprehensive income: 
  
  
  
  
Net income
 
 298
 
 298
Other comprehensive income, net of tax
 
 
 115
 115
Total comprehensive income 
  
  
  
 413
Tax adjustment on share-based incentive compensation plan
 1
 
 
 1
Cash dividend to Ameriprise Financial, Inc.
 
 (150) 
 (150)
Balances at March 31, 2014$3
 $2,464
 $1,190
 $765
 $4,422
          
Balances at January 1, 2015$3
 $2,464
 $1,107
 $729
 $4,303
Comprehensive income: 
  
  
  
  
Net income
 
 213
 
 213
Other comprehensive income, net of tax
 
 
 64
 64
Total comprehensive income 
  
  
  
 277
Tax adjustment on share-based incentive compensation plan
 1
 
 
 1
Cash dividend to Ameriprise Financial, Inc.
 
 (225) 
 (225)
Balances at March 31, 2015$3
 $2,465
 $1,095
 $793
 $4,356
 Three Months Ended March 31,
 2016 2015
 (in millions)
Revenues 
  
Premiums$102
 $97
Net investment income290
 306
Policy and contract charges469
 460
Other revenues98
 104
Net realized investment gains9
 10
Total revenues968
 977
Benefits and expenses 
  
Benefits, claims, losses and settlement expenses226
 306
Interest credited to fixed accounts146
 172
Amortization of deferred acquisition costs90
 55
Other insurance and operating expenses177
 182
Total benefits and expenses639
 715
Pretax income329
 262
Income tax provision54
 49
Net income$275
 $213
    
Supplemental Disclosures: 
  
Total other-than-temporary impairment losses on securities$
 $(1)
Portion of loss recognized in other comprehensive income (before taxes)
 1
Net impairment losses recognized in net realized investment gains$
 $
See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 Three Months Ended March 31,
 2016 2015
 (in millions)
Net income$275
 $213
Other comprehensive income, net of tax: 
  
   Net unrealized gains on securities176
 63
   Net unrealized gains on derivatives1
 1
Total other comprehensive income, net of tax177
 64
Total comprehensive income$452
 $277
See Notes to Consolidated Financial Statements.


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RIVERSOURCE LIFE INSURANCE COMPANY


CONSOLIDATED STATEMENTS OF CASH FLOWSSHAREHOLDER’S EQUITY (UNAUDITED)
(in millions)
 Three Months Ended 
 March 31,
 2015 2014
Cash Flows from Operating Activities 
  
Net income$213
 $298
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Depreciation, amortization and accretion, net5
 2
Deferred income tax expense (benefit)45
 (93)
Contractholder and policyholder charges, non-cash(82) (82)
Loss from equity method investments8
 6
Net realized investment gains(12) (5)
Other-than-temporary impairments and provision for loan losses recognized in net realized investment gains2
 1
Changes in operating assets and liabilities: 
  
Deferred acquisition costs(5) 9
Policyholder account balances, future policy benefits and claims, net481
 167
Derivatives, net of collateral(249) (97)
Reinsurance recoverables(56) (27)
Other receivables(32) 23
Accrued investment income8
 13
Other, net311
 24
Net cash provided by operating activities637
 239
    
Cash Flows from Investing Activities 
  
Available-for-Sale securities: 
  
Proceeds from sales44
 99
Maturities, sinking fund payments and calls851
 780
Purchases(614) (447)
Proceeds from maturities and repayments of mortgage loans161
 138
Funding of mortgage loans(83) (124)
Proceeds from sales and collections of other investments17
 30
Purchase of other investments(30) (101)
Purchase of land, buildings, equipment and software(2) (1)
Change in policy loans, net(6) (6)
Other, net18
 10
Net cash provided by investing activities356
 378
 Common Shares Additional Paid-In Capital Retained Earnings 
Accumulated Other
Comprehensive Income
 Total
 (in millions)
Balances at January 1, 2015$3
 $2,464
 $1,107
 $729
 $4,303
Comprehensive income: 
  
  
  
  
Net income
 
 213
 
 213
Other comprehensive income, net of tax
 
 
 64
 64
Total comprehensive income 
  
  
  
 277
Tax adjustment on share-based incentive compensation plan
 1
 
 
 1
Cash dividends to Ameriprise Financial, Inc.
 
 (225) 
 (225)
Balances at March 31, 2015$3
 $2,465
 $1,095
 $793
 $4,356
          
Balances at January 1, 2016$3
 $2,465
 $1,202
 $395
 $4,065
Comprehensive income: 
  
  
  
  
Net income
 
 275
 
 275
Other comprehensive income, net of tax
 
 
 177
 177
Total comprehensive income 
  
  
  
 452
Cash dividends to Ameriprise Financial, Inc.
 
 (400) 
 (400)
Balances at March 31, 2016$3
 $2,465
 $1,077
 $572
 $4,117
See Notes to Consolidated Financial Statements.


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RIVERSOURCE LIFE INSURANCE COMPANY


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
(in millions)
 Three Months Ended 
 March 31,
 2015 2014
Cash Flows from Financing Activities 
  
Policyholder account balances: 
  
Deposits and other additions$470
 $494
Net transfers to separate accounts(56) (56)
Surrenders and other benefits(788) (661)
Change in short-term borrowings, net
 (200)
Proceeds from line of credit with Ameriprise Financial, Inc.
 8
Payments on line of credit with Ameriprise Financial, Inc.
 (158)
Tax adjustment on share-based incentive compensation plan1
 1
Cash paid for purchased options with deferred premiums(83) (116)
Cash dividend to Ameriprise Financial, Inc.(225) (150)
Net cash used in financing activities(681) (838)
Net increase (decrease) in cash and cash equivalents312
 (221)
Cash and cash equivalents at beginning of period307
 344
Cash and cash equivalents at end of period$619
 $123
    
Supplemental Disclosures: 
  
Income taxes paid (received), net$(223) $179
Interest paid on borrowings
 1
Non-cash investing activity: 
  
Affordable housing partnership commitments not yet remitted10
 

 Three Months Ended March 31,
 2016 2015
 (in millions)
Cash Flows from Operating Activities 
  
Net income$275
 $213
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Depreciation, amortization and accretion, net8
 5
Deferred income tax expense24
 45
Contractholder and policyholder charges, non-cash(86) (82)
Loss from equity method investments10
 8
Net realized investment gains(11) (12)
Other-than-temporary impairments and provision for loan losses recognized in net realized investment gains2
 2
Changes in operating assets and liabilities: 
  
Deferred acquisition costs27
 (5)
Policyholder account balances, future policy benefits and claims, net730
 481
Derivatives, net of collateral(348) (249)
Reinsurance recoverables(39) (56)
Other receivables(51) (32)
Accrued investment income
 8
Other, net65
 311
Net cash provided by operating activities606
 637
    
Cash Flows from Investing Activities 
  
Available-for-Sale securities: 
  
Proceeds from sales92
 44
Maturities, sinking fund payments and calls434
 851
Purchases(534) (614)
Proceeds from sales, maturities and repayments of mortgage loans408
 161
Funding of mortgage loans(113) (83)
Proceeds from sales and collections of other investments21
 17
Purchase of other investments(36) (30)
Purchase of land, buildings, equipment and software(2) (2)
Change in policy loans, net(5) (6)
Other, net(1) 18
Net cash provided by investing activities264
 356
See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.
6

5


RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

 Three Months Ended March 31,
 2016 2015
 (in millions)
Cash Flows from Financing Activities 
  
Policyholder account balances: 
  
Deposits and other additions$481
 $470
Net transfers to separate accounts33
 (56)
Surrenders and other benefits(497) (788)
Proceeds from line of credit with Ameriprise Financial, Inc.10
 
Payments on line of credit with Ameriprise Financial, Inc.(10) 
Tax adjustment on share-based incentive compensation plan
 1
Cash received for purchased options with deferred premiums33
 
Cash paid for purchased options with deferred premiums(76) (83)
Cash dividend to Ameriprise Financial, Inc.(400) (225)
Net cash used in financing activities(426) (681)
Net increase in cash and cash equivalents444
 312
Cash and cash equivalents at beginning of period370
 307
Cash and cash equivalents at end of period$814
 $619
    
Supplemental Disclosures: 
  
Income taxes paid (received), net$1
 $(223)
Non-cash investing activity: 
  
Affordable housing partnership commitments not yet remitted10
 10
See Notes to Consolidated Financial Statements.




7




RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



1.Basis of Presentation
1. Basis of Presentation
RiverSource Life Insurance Company is a stock life insurance company with twoone wholly owned subsidiaries,stock life insurance company subsidiary, RiverSource Life Insurance Co. of New York and (“RiverSource Tax Advantaged Investments, Inc. (“RTA”Life of NY”). RiverSource Life Insurance Company is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial”).
RiverSource Life Insurance Company is domiciled in Minnesota and holds Certificates of Authority in American Samoa, the District of Columbia and all states except New York. RiverSource Life Insurance Company issues insurance and annuity products.
RiverSource Life of NY is domiciled and holds a Certificate of Authority in New York. RiverSource Life of NY issues insurance and annuity products.
RiverSource Life Insurance Company also wholly owns RiverSource Tax Advantaged Investments, Inc. (“RTA”). RTA is a stock company domiciled in Delaware and is a limited partner in affordable housing partnership investments.
The accompanying Consolidated Financial Statements include the accounts of RiverSource Life Insurance Company and companies in which it directly or indirectly has a controlling financial interest (collectively, the “Company”). All intercompany transactions and balances have been eliminated in consolidation.
The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods have been made. All adjustments made were of a normal recurring nature.
The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014,2015, filed with the Securities and Exchange Commission on February 24, 2015.25, 2016.
The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. No subsequent events or transactions were identified.
2.
Recent Accounting2. Recent Accounting Pronouncements
Adoption of New Accounting Standards
Transfers and ServicingFair Value Measurement - Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)
In June 2014,May 2015, the Financial Accounting Standards Board (“FASB”) updated the accounting standards related to transfers and servicing.fair value measurement. The update requires repurchase-to-maturity transactions and linked repurchase financingsapplies to be accounted for as secured borrowings consistent with the accounting for other repurchase agreements.investments that are measured at net asset value (“NAV”). The standard requireseliminates the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share as a practical expedient. In addition, the update limits disclosures relatedabout the nature and risks of the investments to transfers of financial assets accountedinvestments for as sales in transactionswhich the entity elected to measure the fair value using the practical expedient rather than all investments that are similar to repurchase agreements. The standard also requires disclosures oneligible for the remaining contractual maturity of the agreements, disaggregation of the gross obligation by class of collateral pledged and potential risks associated with the agreements and the related collateral pledged in repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings.NAV practical expedient. The standard is effective for interim and annual periods beginning after December 15, 2014, except for the disclosure requirements for repurchase agreements, security lending transactions and repurchase-to-maturity transactions accounted for as secured borrowings which are effective for interim periods beginning after March 15, 2015. The Company adopted the standard requires entitieson January 1, 2016 on a retrospective basis to present changes in accounting for transactions outstanding at the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The adoptionall periods presented. There was no impact of the standard did not have any effect onto the Company’s consolidated financial condition andor results of operations. The Company will make the required disclosures beginning in the second quarter.
Receivables - Troubled Debt Restructuring by Creditors
In January 2014, the FASB updated the accounting standard related to recognizing residential real estate obtained through a repossession or foreclosure from a troubled debtor. The update clarifies the criteria for derecognition of the loan receivable and recognition of the real estate property. The standard is effective for interim and annual periods beginning after December 15, 2014 and can be applied under a modified retrospective transition method or a prospective transition method. The adoption of the standard did not have any effect on the Company’s consolidated financial condition and results of operations.
Investments - Equity Method and Joint Ventures
In January 2014, the FASB updated the accounting standard related to investments in qualified affordable housing projects. The update allows for an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the investment in a qualified affordable housing project is amortized in proportion to the tax credits and other tax benefits received. The net investment performance is recognized as a component of income tax expense (benefit). The standard is effective for interim and annual periods beginning after December 15, 2014 and should be applied retrospectively to all periods presented. The Company did not elect the proportional amortization method.

6

RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Future Adoption of New Accounting Standards
Consolidation
In February 2015, the FASB updated the accounting standard for consolidation. The update changes the accounting for the consolidation model for limited partnerships and a variable interest entityentities (“VIE”VIEs”) and excludes certain money market funds out offrom the consolidation analysis. Specific to the consolidation analysis of a VIE, the update clarifies consideration of fees paid to a decision maker and amends the related party guidance. The standard is effective for periods beginning after December 15, 2015. The Company adopted the standard on January 1, 2016 using the modified retrospective approach. There was no impact of the standard to the Company’s consolidated financial condition or results of operations.

8



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Future Adoption of New Accounting Standards
Leases - Recognition of Lease Assets and Liabilities on Balance Sheet
In February 2016, the FASB updated the accounting standards for leases. The update was issued to increase transparency and comparability for the accounting of lease transactions. The standard will require most lease transactions for lessees to be recorded on the balance sheet as lease assets and lease liabilities and both quantitative and qualitative disclosures about leasing arrangements. The standard is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. The update should be applied at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of the standard on its consolidated financial condition and results of operations.
Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities
In January 2016, the FASB updated the accounting standards on the recognition and measurement of financial instruments. The update requires entities to carry marketable equity securities, excluding investments in securities that qualify for the equity method of accounting, at fair value through net income. The update affects other aspects of accounting for equity instruments, as well as the accounting for financial liabilities utilizing the fair value option. The update eliminates the requirement to disclose the methods and assumptions used to estimate the fair value of financial assets or liabilities held at cost on the balance sheet and requires entities to use the exit price notion when measuring the fair value of financial instruments. The standard is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted including adoption in an interim period. The standard mayfor certain provisions. Generally, the update should be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity at the beginning of the period of adoption or applied retrospectively.adoption. The Company is currently evaluating the impact of the standard on its consolidated financial condition and results of operations.
Presentation of Financial Statements - Going Concern
In August 2014, the FASB updated the accounting standard related to an entity’s assessment of its ability to continue as a going concern. The standard requires that management evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. In situations where there is substantial doubt about an entity’s ability to continue as a going concern, disclosure should be made so that a reader can understand the conditions that raise substantial doubt, management’s assessment of those conditions and any plan management has to mitigate those conditions. The standard is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of the standard is not expected to have a material impact on the Company’s consolidated financial condition and results of operations.
Revenue from Contracts with Customers
In May 2014, the FASB updated the accounting standards for revenue from contracts with customers. The update provides a five step revenue recognition model for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers (unless the contracts are in the scope of other standards). The standard also updates the accounting for certain costs associated with obtaining and fulfilling a customer contract. In addition, the standard requires disclosure of quantitative and qualitative information that enables users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB updated the accounting standards to defer the effective date by one year. In March 2016, the FASB updated the accounting standards to provide clarification on determining if an entity is a principal or an agent in revenue transactions involving third parties. The standardkey provisions of the update include assessing which entity controls the good or service and whether the nature of the transaction is to provide the good or service or arrange for that good or service to be provided by another entity. In April 2016, the FASB updated the accounting standards to provide clarification on the identification of performance obligations in contracts with customers and licensing implementation guidance. The standards are effective for interim and annual periods beginning after December 15, 20162017 and early adoption is prohibited.permitted for interim and annual periods beginning after December 15, 2016. The standard may be applied retrospectively for all periods presented or retrospectively with a cumulative-effect adjustment at the date of adoption. The Company is currently evaluating the impact of the standard on its consolidated financial condition, and results of operations.operations and disclosures.
3. Variable Interest Entities
Variable Interest Entities
The Company has variable interests in affordable housing partnerships for which it is not the primary beneficiary and therefore does not consolidate. The Company’s maximum exposure to loss as a result of its investments in the affordable housing partnerships is limited to the carrying valuesvalue of these investments. The carrying value is reflected in other investments and was $506 million and $504$517 million as of both March 31, 20152016 and December 31, 2014, respectively.2015. The Company has no obligation to provide financial or other support to the affordable housing partnerships in addition to liabilities already recorded for future funding commitments nor has it provided any additional support to the affordable housing partnerships.
The Company invests in structured investments which are considered VIEs for which it is not the sponsor. These structured investments typically invest in fixed income instruments and are managed by third parties and include asset backed securities, commercial mortgage backed securities and residential mortgage backed securities. The Company classifies these investments as Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to the size of the Company’s investment in the entities and position in the capital structure of these entities. The Company’s maximum exposure to loss as a result of its investment in these structured investments is limited to its carrying value. The carrying value is included in Available-for-Sale fixed maturities on the consolidated balance sheets. See Note 4 for additional information about these structured investments.Consolidated Balance Sheets. The Company has no obligation to provide financial or other support to the structured investments beyond its investment nor has the Company provided any support to the structured investments. See Note 4 for additional information about these structured investments.

79


RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

4. Investments

4.
Investments
Available-for-Sale securities distributed by type were as follows:
 March 31, 2015 March 31, 2016
Description of Securities Amortized
Cost
 Gross
Unrealized
Gains
 Gross
Unrealized
Losses
 Fair
Value
 
Noncredit
OTTI
(1)
 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value 
Noncredit OTTI (1)
 (in millions) (in millions)
Fixed maturities:  
  
  
  
  
  
  
  
  
  
Corporate debt securities $13,628
 $1,622
 $(36) $15,214
 $3
 $13,688
 $1,125
 $(172) $14,641
 $4
Residential mortgage backed securities 3,329
 156
 (26) 3,459
 (9) 3,010
 112
 (26) 3,096
 (9)
Commercial mortgage backed securities 2,161
 129
 (1) 2,289
 
 2,111
 106
 (1) 2,216
 
State and municipal obligations 941
 201
 (26) 1,116
 
 1,056
 189
 (22) 1,223
 
Asset backed securities 804
 54
 (1) 857
 
 746
 37
 (9) 774
 
Foreign government bonds and obligations 227
 24
 (6) 245
 
 257
 23
 (7) 273
 
U.S. government and agencies obligations 37
 2
 
 39
 
 38
 1
 
 39
 
Total fixed maturities 21,127
 2,188
 (96) 23,219
 (6) 20,906
 1,593
 (237) 22,262
 (5)
Common stocks 2
 5
 
 7
 3
 2
 4
 
 6
 2
Total $21,129
 $2,193
 $(96) $23,226
 $(3) $20,908
 $1,597
 $(237) $22,268
 $(3)
 December 31, 2014 December 31, 2015
Description of Securities Amortized
Cost
 Gross
Unrealized
Gains
 Gross
Unrealized
Losses
 Fair
Value
 
Noncredit
OTTI
(1)
 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value 
Noncredit OTTI (1)
 (in millions) (in millions)
Fixed maturities:  
  
  
  
  
  
  
  
  
  
Corporate debt securities $13,763
 $1,474
 $(54) $15,183
 $3
 $13,764
 $891
 $(281) $14,374
 $2
Residential mortgage backed securities 3,374
 150
 (32) 3,492
 (9) 3,015
 96
 (36) 3,075
 (8)
Commercial mortgage backed securities 2,116
 115
 (3) 2,228
 
 2,081
 68
 (13) 2,136
 
State and municipal obligations 947
 191
 (25) 1,113
 
 1,023
 153
 (27) 1,149
 
Asset backed securities 882
 56
 (1) 937
 
 748
 33
 (5) 776
 
Foreign government bonds and obligations 236
 21
 (6) 251
 
 217
 17
 (11) 223
 
U.S. government and agencies obligations 36
 3
 
 39
 
 38
 1
 
 39
 
Total fixed maturities 21,354
 2,010
 (121) 23,243
 (6) 20,886
 1,259
 (373) 21,772
 (6)
Common stocks 2
 5
 
 7
 3
 2
 5
 
 7
 3
Total $21,356
 $2,015
 $(121) $23,250
 $(3) $20,888
 $1,264
 $(373) $21,779
 $(3)
 (1) 
Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.
As of March 31, 20152016 and December 31, 2014,2015, investment securities with a fair value of $997$945 million and $1.2 billion,$862 million, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings.borrowings, of which $289 million and $408 million, respectively, may be sold, pledged or rehypothecated by the counterparty.
At bothAs of March 31, 20152016 and December 31, 20142015, fixed maturity securities comprised approximately 82% and 81%, respectively, of the Company’s total investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. At March 31, 20152016 and December 31, 20142015, approximately $1.1$1.0 billion and $1.2$1.1 billion,, respectively, of securities were internally rated by Columbia Management Investment Advisers, LLC, an affiliate of the Company, using criteria similar to those used by NRSROs.

810


RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


A summary of fixed maturity securities by rating was as follows:
 March 31, 2015 December 31, 2014 March 31, 2016 December 31, 2015
Ratings Amortized
Cost
 Fair
Value
 Percent of
Total Fair
Value
 Amortized
 Cost
 Fair
Value
 Percent of
Total Fair
Value
 Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value
 (in millions, except percentages) (in millions, except percentages)  
AAA $5,059
 $5,347
 23% $5,111
 $5,374
 23% $4,765
 $4,994
 22% $4,661
 $4,806
 22%
AA 950
 1,146
 5
 967
 1,158
 5
 913
 1,096
 5
 1,010
 1,185
 5
A 4,088
 4,724
 20
 4,452
 5,062
 22
 3,684
 4,115
 19
 3,749
 4,101
 19
BBB 9,483
 10,431
 45
 9,328
 10,165
 44
 9,621
 10,243
 46
 9,964
 10,278
 47
Below investment grade 1,547
 1,571
 7
 1,496
 1,484
 6
 1,923
 1,814
 8
 1,502
 1,402
 7
Total fixed maturities $21,127
 $23,219
 100% $21,354
 $23,243
 100% $20,906
 $22,262
 100% $20,886
 $21,772
 100%
At March 31, 20152016 and December 31, 20142015, approximately 47%46% and 46%47%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. No holdings of any other issuer were greater than 10% of total equity.
The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:
 March 31, 2015 March 31, 2016
 Less than 12 months 12 months or more TotalLess than 12 months 12 months or more Total
Description of Securities  Number of
Securities
 Fair
Value
 Unrealized
Losses
 Number of
Securities
 Fair
Value
 Unrealized
Losses
 Number of
Securities
 Fair
Value
 Unrealized
Losses
 Number 
of Securities
 Fair Value Unrealized Losses Number 
of Securities
 Fair Value Unrealized Losses Number 
of Securities
 Fair Value Unrealized Losses
 (in millions, except number of securities) (in millions, except number of securities)
Corporate debt securities 64
 $684
 $(31) 13
 $138
 $(5) 77
 $822
 $(36)Corporate debt securities126
 $1,872
 $(96) 38
 $362
 $(76) 164
 $2,234
 $(172)
Residential mortgage backed securities 16
 162
 (1) 56
 593
 (25) 72
 755
 (26)Residential mortgage backed securities25
 199
 (3) 61
 545
 (23) 86
 744
 (26)
Commercial mortgage backed securities 10
 98
 
 4
 57
 (1) 14
 155
 (1)Commercial mortgage backed securities8
 49
 
 6
 56
 (1) 14
 105
 (1)
State and municipal obligations 1
 5
 
 2
 101
 (26) 3
 106
 (26)State and municipal obligations4
 40
 (1) 2
 106
 (21) 6
 146
 (22)
Asset backed securities 2
 26
 
 2
 14
 (1) 4
 40
 (1)Asset backed securities19
 227
 (9) 1
 2
 
 20
 229
 (9)
Foreign government bonds and obligations 3
 7
 (1) 14
 26
 (5) 17
 33
 (6)Foreign government bonds and obligations5
 26
 
 16
 30
 (7) 21
 56
 (7)
Total 96
 $982
 $(33) 91
 $929
 $(63) 187
 $1,911
 $(96)Total187
 $2,413
 $(109) 124
 $1,101
 $(128) 311
 $3,514
 $(237)
 December 31, 2014 December 31, 2015
 Less than 12 months 12 months or more TotalLess than 12 months 12 months or more Total
Description of Securities  Number of 
Securities
 Fair
Value
 Unrealized
Losses
 Number of
Securities
 Fair
Value
 Unrealized
Losses
 Number of
Securities
 Fair
Value
 Unrealized
Losses
 Number
of Securities
 Fair Value Unrealized Losses Number 
of Securities
 Fair Value Unrealized Losses Number 
of Securities
 Fair Value Unrealized Losses
 (in millions, except number of securities) (in millions, except number of securities)
Corporate debt securities 106
 $1,093
 $(36) 40
 $689
 $(18) 146
 $1,782
 $(54)Corporate debt securities253
 $3,703
 $(208) 35
 $300
 $(73) 288
 $4,003
 $(281)
Residential mortgage backed securities 17
 138
 (2) 55
 670
 (30) 72
 808
 (32)Residential mortgage backed securities36
 535
 (7) 59
 526
 (29) 95
 1,061
 (36)
Commercial mortgage backed securities 9
 80
 
 9
 95
 (3) 18
 175
 (3)Commercial mortgage backed securities45
 568
 (12) 3
 33
 (1) 48
 601
 (13)
State and municipal obligations 1
 5
 
 2
 102
 (25) 3
 107
 (25)State and municipal obligations9
 40
 (1) 2
 101
 (26) 11
 141
 (27)
Asset backed securities 5
 52
 
 3
 32
 (1) 8
 84
 (1)Asset backed securities21
 241
 (5) 
 
 
 21
 241
 (5)
Foreign government bonds and obligations 4
 10
 (1) 14
 27
 (5) 18
 37
 (6)Foreign government bonds and obligations9
 39
 (2) 15
 27
 (9) 24
 66
 (11)
Total 142
 $1,378
 $(39) 123
 $1,615
 $(82) 265
 $2,993
 $(121)Total373
 $5,126
 $(235) 114
 $987
 $(138) 487
 $6,113
 $(373)
As part of the Company’s ongoing monitoring process, management determined that a majority of the change in gross unrealized losses on its Available-for-Sale securities is primarily attributable to movementa decrease in interest rates.

911


Table of Contents
RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following table presents a rollforward of the cumulative amounts recognized in the Consolidated Statements of Income for other-than-temporary impairments related to credit losses on Available-for-Sale securities for which a portion of the securities’ total other-than-temporary impairments was recognized in other comprehensive income:income (loss):
 Three Months Ended 
 March 31,
Three Months Ended March 31,
 2015 20142016 2015
 (in millions)(in millions)
Beginning balance $33
 $54
$33
 $33
Credit losses for which an other-than-temporary impairment was not previously recognized 
 
Credit losses for which an other-than-temporary impairment was previously recognized
 
Ending balance $33
 $54
$33
 $33
The change in net unrealized securities gains (losses) in other comprehensive income (loss) includes three components, net of tax: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit other-than-temporary impairment losses to credit losses; and (iii) other adjustments primarily consisting of changes in insurance and annuity asset and liability balances, such as deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), unearned revenue, benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.
The following table presents a rollforward of the net unrealized securities gains on Available-for-Sale securities included in AOCI:
  Net Unrealized Securities Gains Deferred
Income
Tax
 AOCI Related to Net Unrealized Securities Gains 
  (in millions) 
Balance at January 1, 2014 $1,033
 $(366) $667
 
Net unrealized securities gains arising during the period (1)
 320
 (112) 208
 
Reclassification of net securities gains included in net income (4) 1
 (3) 
Impact of other adjustments (140) 49
 (91) 
Balance at March 31, 2014 $1,209
 $(428) $781
(2) 
        
Balance at January 1, 2015 $1,148
 $(407) $741
 
Net unrealized securities gains arising during the period (1)
 215
 (75) 140
 
Reclassification of net securities gains included in net income (12) 4
 (8) 
Impact of other adjustments (106) 37
 (69) 
Balance at March 31, 2015 $1,245
 $(441) $804
(2) 
(1)
Includes other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income during the period.
(2) 
Includes $2 million and $6 million of noncredit related impairments on securities and net unrealized securities losses on previously impaired securities at March 31, 2015 and 2014, respectively.

10

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net realized investment gains were as follows:
 Three Months Ended 
 March 31,
Three Months Ended March 31,
 2015 20142016 2015
 (in millions)(in millions)
Gross realized investment gains $17
 $6
$3
 $17
Gross realized investment losses (5) (1)(3) (5)
Other-than-temporary impairments 
 (1)
Total $12
 $4
$
 $12
Other-than-temporary impairmentsSee Note 13 for the three months ended March 31, 2014 primarily related to the Company's decision to sell a corporate debt security.rollforward of net unrealized investment gains (losses) included in AOCI.
Available-for-Sale securities by contractual maturity at March 31, 20152016 were as follows:
 Amortized Cost Fair ValueAmortized Cost Fair Value
 (in millions)(in millions)
Due within one year $777
 $791
$779
 $787
Due after one year through five years 5,627
 6,164
5,891
 6,289
Due after five years through 10 years 4,844
 5,127
4,598
 4,718
Due after 10 years 3,585
 4,532
3,771
 4,382
 14,833
 16,614
15,039
 16,176
Residential mortgage backed securities 3,329
 3,459
3,010
 3,096
Commercial mortgage backed securities 2,161
 2,289
2,111
 2,216
Asset backed securities 804
 857
746
 774
Common stocks 2
 7
2
 6
Total $21,129
 $23,226
$20,908
 $22,268
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities, as well as common stocks, were not included in the maturities distribution.
Net investment income is summarized as follows:
 Three Months Ended 
 March 31,
Three Months Ended March 31,
 2015 20142016 2015
 (in millions)(in millions)
Fixed maturities $264
 $286
$251
 $264
Mortgage loans 45
 46
40
 45
Other investments 5
 9
6
 5
 314
 341
297
 314
Less: investment expenses 8
 8
7
 8
Total $306
 $333
$290
 $306

12


5.Financing Receivables

RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. Financing Receivables
The Company’s financing receivables include commercial and residential mortgage loans, syndicated loans and policy loans. Syndicated loans are reflected in other investments.
Allowance for Loan Losses
Policy loans do not exceed the cash surrender value of the policy at origination. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses for policy loans. The Company does not currently have an allowance for loan losses for residential mortgage loans.

11

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following table presents a rollforward of the allowance for loan losses for commercial mortgage loans and syndicated loans for the three months ended and the ending balance of the allowance for loan losses by impairment method:
 Three Months Ended 
 March 31,
 2015 2014March 31, 2016 March 31, 2015
 (in millions)(in millions)
Beginning balance $28
 $28
$25
 $28
Charge-offs (2) (2)
 (2)
Provisions 1
 
1
 1
Ending balance $27

$26
$26

$27
       
Individually evaluated for impairment $7
 $7
$4
 $7
Collectively evaluated for impairment 20
 19
22
 20
The recorded investment in commercial and residential mortgage loans and syndicated loansfinancing receivables by impairment method was as follows:
 March 31, 2015 December 31, 2014March 31, 2016 December 31, 2015
 (in millions)(in millions)
Individually evaluated for impairment $32
 $32
$24
 $25
Collectively evaluated for impairment 3,659
 3,740
3,369
 3,657
Total $3,691
 $3,772
$3,393
 $3,682
As of both March 31, 20152016 and December 31, 2014,2015, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $7 million and $4 million, respectively.
Residential mortgage loans are presented net of unamortized discount of $31 million and $34 million as of March 31, 2015 and December 31, 2014, respectively.$12 million.
During the three months ended March 31, 20152016 and 2014,2015, the Company purchased $12$13 million and $65$12 million, respectively, and sold $6$250 million and $4$6 million, respectively, of commercialloans. The loans sold in the first quarter of 2016 consisted of residential mortgage loans and syndicatedloans. See below for additional discussion on the sale of these loans.
Credit Quality Information
Nonperforming loans, which are generally loans 90 days or more past due, were $8$9 million and $108 million as of March 31, 20152016 and December 31, 2014,2015, respectively. All other loans were considered to be performing.
Commercial Mortgage Loans
The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were 1% of total commercial mortgage loans at both March 31, 20152016 and December 31, 2014.2015. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. In addition, the Company reviews the concentrations of credit risk by region and property type.

1213


Table of Contents
RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:
 Loans PercentageLoans Percentage
 March 31, 2015 December 31, 2014 March 31, 2015 December 31, 2014March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015
 (in millions)    (in millions)    
South Atlantic $696
 $710
 27% 27%$740
 $746
 28% 28%
Pacific 670
 673
 26
 26
735
 709
 28
 27
Mountain 244
 236
 9
 9
239
 242
 9
 9
West North Central 228
 223
 9
 8
209
 217
 8
 8
Middle Atlantic203
 203
 8
 8
East North Central 208
 237
 8
 9
198
 208
 7
 8
Middle Atlantic 201
 210
 8
 8
West South Central 149
 151
 6
 6
126
 128
 5
 5
New England 129
 130
 5
 5
106
 115
 4
 4
East South Central 55
 62
 2
 2
69
 68
 3
 3
 2,580
 2,632
 100% 100%2,625
 2,636
 100% 100%
Less: allowance for loan losses 21
 23
  
  
19
 19
  
  
Total $2,559
 $2,609
  
  
$2,606
 $2,617
  
  
Concentrations of credit risk of commercial mortgage loans by property type were as follows:
 Loans PercentageLoans Percentage
 March 31, 2015 December 31, 2014 March 31, 2015 December 31, 2014March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015
 (in millions)    (in millions)    
Retail $932
 $956
 36%
36%$932
 $947
 36%
36%
Office 514
 535
 20
 20
505
 522
 19
 20
Apartments 473
 473
 18
 18
462
 473
 18
 18
Industrial 438
 447
 17
 17
457
 444
 17
 17
Mixed use 45
 46
 2
 2
39
 35
 1
 1
Hotel 32
 32
 1
 1
33
 34
 1
 1
Other 146
 143
 6
 6
197
 181
 8
 7
 2,580
 2,632
 100% 100%2,625
 2,636
 100% 100%
Less: allowance for loan losses 21
 23
  
  
19
 19
  
  
Total $2,559
 $2,609
  
  
$2,606
 $2,617
  
  
Residential Mortgage Loans
The recorded investment in residential mortgage loans at March 31, 20152016 and December 31, 20142015 was $665$323 million and $689$594 million, respectively. The Company considers the credit worthiness of borrowers (FICO score), collateral characteristics such as loan-to-value (“LTV”) and geographic concentration to determine when an amount for an allowance for loan losses for residential mortgage loans is appropriate. At a minimum, management updates FICO scores and LTV ratios semiannually. As of March 31, 20152016 and December 31, 2014,2015, no allowance for loan losses was recorded.
On March 30, 2016, the Company sold $250 million (amortized cost, net of unamortized discount) of its residential mortgage loans to an unaffiliated third party. The Company received cash proceeds of $260 million and recognized a gain of $10 million. As a result of the sale, the Company’s unamortized discount related to its residential mortgage loans was reduced from $21 million at December 31, 2015 to nil as of March 31, 2016.

14



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

As of both March 31, 20152016 and December 31, 2014,2015, approximately 5%3% and 4%, respectively, of residential mortgage loans had FICO scores below 640. As of both March 31, 20152016 and December 31, 2014,2015, nil and approximately 1%, respectively, of the Company’s residential mortgage loans had LTV ratios greater than 90%. The Company’s most significant geographic concentration for residential mortgage loans is in California representing 32% and 37% of the portfolio as of both March 31, 20152016 and December 31, 2014.2015, respectively, and in Colorado representing 11% of the portfolio as of March 31, 2016. No other state represents more than 10% of the total residential mortgage loan portfolio.
Syndicated Loans
The recorded investment in syndicated loans at March 31, 20152016 and December 31, 20142015 was $446$445 million and $451$452 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans at both March 31, 20152016 and December 31, 20142015 were $3 million.$7 million and $5 million, respectively.

13

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Troubled Debt Restructurings
The recorded investment in restructured loans was not material as of March 31, 20152016 and December 31, 2014.2015. The troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for the three months ended March 31, 20152016 and 2014.2015. There are no material commitments to lend additional funds to borrowers whose loans have been restructured. 
6.
DeferredAcquisitionCosts6. Deferred Acquisition Costs and Deferred Sales Inducement Costs
The balances of and changes in DAC were as follows:
 2015 20142016 2015
 (in millions)(in millions)
Balance at January 1 $2,576
 $2,633
$2,688
 $2,576
Capitalization of acquisition costs 60
 62
63
 60
Amortization (55) (71)(90) (55)
Impact of change in net unrealized securities gains (11) (25)(47) (11)
Balance at March 31 $2,570
 $2,599
$2,614
 $2,570
The balances of and changes in DSIC, which areis included in other assets, were as follows:
 2015 20142016 2015
 (in millions)(in millions)
Balance at January 1 $361
 $409
$334
 $361
Capitalization of sales inducement costs 1
 1
1
 1
Amortization (9) (13)(12) (9)
Impact of change in net unrealized securities gains (2) (5)(8) (2)
Balance at March 31 $351
 $392
$315
 $351

15


7.Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities

RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities
Policyholder account balances, future policy benefits and claims consisted of the following:
 March 31, 2015 December 31, 2014March 31, 2016 December 31, 2015
 (in millions)(in millions)
Policyholder account balances       
Fixed annuities $12,216
 $12,700
$11,068
 $11,239
Variable annuity fixed sub-accounts 4,849
 4,860
4,966
 4,912
Variable universal life (“VUL”)/universal life (“UL”) insurance 2,858
 2,856
2,918
 2,897
Indexed universal life (“IUL”) insurance 590
 534
859
 808
Other life insurance 826
 840
785
 794
Total policyholder account balances 21,339
 21,790
20,596
 20,650
   
Future policy benefits       
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”) 1,040
 693
1,706
 1,057
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (1)
 (35) (41)
Variable annuity guaranteed minimum accumulation benefits (“GMAB”)31
 
Other annuity liabilities 124
 115
78
 31
Fixed annuities life contingent liabilities 1,502
 1,511
1,499
 1,501
Equity indexed annuities (“EIA”) 29
 29
27
 27
Life, disability income and long term care insurance 5,277
 5,106
5,212
 5,112
VUL/UL and other life insurance additional liabilities 463
 437
479
 452
Total future policy benefits 8,400
 7,850
9,032
 8,180
Policy claims and other policyholders’ funds 177
 165
193
 199
Total policyholder account balances, future policy benefits and claims $29,916
 $29,805
$29,821
 $29,029
(1)
Includes the value of GMAB embedded derivatives that was a net asset at both March 31, 2015 and December 31, 2014 reported as a contra liability.

14

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Separate account liabilities consisted of the following:
 March 31, 2015 December 31, 2014March 31, 2016 December 31, 2015
 (in millions)(in millions)
Variable annuity $73,087
 $72,125
$69,241
 $69,333
VUL insurance 7,110
 7,016
6,574
 6,637
Other insurance 37
 37
34
 34
Total $80,234
 $79,178
$75,849
 $76,004
8.Variable Annuity and Insurance Guarantees
8. Variable Annuity and Insurance Guarantees
The majority of the variable annuity contracts offered by the Company contain guaranteed minimum death benefit (“GMDB”) provisions. The Company also offers variable annuities with death benefit provisions that gross up the amount payable by a certain percentage of contract earnings, which are referred to as gain gross-up (“GGU”) benefits. In addition, the Company offers contracts with GMWB and GMAB provisions. The Company previously offered contracts containing guaranteed minimum income benefit (“GMIB”) provisions.
Certain UL policies offered by the Company provide secondary guarantee benefits. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.

16



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table provides information related to variable annuity guarantees for which the Company has established additional liabilities:
 March 31, 2015 December 31, 2014 March 31, 2016 December 31, 2015
Variable Annuity Guarantees by
Benefit Type (1)
 Total
Contract
Value
 Contract
Value in
Separate
Accounts
 Net
Amount
at Risk
 Weighted Average Attained Age Total
Contract
Value
 Contract
Value in
Separate
Accounts
 Net
Amount
at Risk
 Weighted Average Attained Age Total Contract Value Contract Value in Separate Accounts Net Amount at Risk Weighted Average Attained Age Total Contract Value Contract Value in Separate Accounts Net Amount at Risk Weighted Average Attained Age
 (in millions, except age) (in millions, except age)
GMDB:  
  
  
    
  
  
    
  
  
    
  
  
  
Return of premium $56,429
 $54,623
 $20
 64 $55,378
 $53,565
 $24
 64 $54,991
 $53,127
 $310
 65 $54,716
 $52,871
 $297
 65
Five/six-year reset 10,269
 7,728
 25
 65 10,360
 7,821
 28
 64 9,135
 6,529
 71
 65 9,307
 6,731
 78
 65
One-year ratchet 7,395
 7,016
 30
 66 7,392
 7,006
 39
 66 6,650
 6,280
 247
 67 6,747
 6,379
 266
 67
Five-year ratchet 1,774
 1,717
 1
 63 1,773
 1,717
 2
 63 1,590
 1,531
 18
 63 1,613
 1,556
 20
 63
Other 955
 937
 38
 70 959
 941
 38
 70 896
 877
 86
 71 887
 869
 82
 71
Total — GMDB $76,822
 $72,021
 $114
 64 $75,862
 $71,050
 $131
 64 $73,262
 $68,344
 $732
 65 $73,270
 $68,406
 $743
 65
                          
GGU death benefit $1,104
 $1,052
 $126
 67 $1,072
 $1,019
 $123
 67 $1,049
 $997
 $111
 68 $1,056
 $1,004
 $113
 67
                          
GMIB $331
 $310
 $9
 67 $343
 $321
 $9
 67 $261
 $242
 $18
 68 $270
 $251
 $17
 68
                          
GMWB:  
  
  
    
  
  
    
  
  
    
  
  
  
GMWB $3,641
 $3,629
 $1
 68 $3,671
 $3,659
 $1
 68 $3,015
 $3,006
 $2
 69 $3,118
 $3,109
 $2
 69
GMWB for life 37,711
 37,607
 93
 65 36,843
 36,735
 95
 65 37,795
 37,675
 383
 66 37,301
 37,179
 330
 66
Total — GMWB $41,352
 $41,236
 $94
 65 $40,514
 $40,394
 $96
 65 $40,810
 $40,681
 $385
 66 $40,419
 $40,288
 $332
 66
                          
GMAB $4,307
 $4,293
 $1
 58 $4,247
 $4,234
 $2
 58 $3,921
 $3,912
 $31
 58 $4,018
 $4,006
 $31
 58
(1) 
Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.
The net amount at risk for GMDB, GGU and GMAB guarantees is defined as the current guaranteed benefit amount in excess of the current contract value. The net amount at risk for GMIB and GMWB guarantees is defined as the greater of the present value of the minimum guaranteed withdrawal payments less the current contract value or zero. The present value is calculated using a discount rate that is consistent with assumptions embedded in the Company’s annuity pricing models.

15

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following table provides information related to insurance guarantees for which the Company has established additional liabilities:
  March 31, 2015 December 31, 2014
  Net Amount at Risk Weighted Average Attained Age Net Amount at Risk Weighted Average Attained Age
  (in millions, except age)
UL secondary guarantees $6,162
 63 $6,076
 62
 March 31, 2016 December 31, 2015
 Net Amount at Risk Weighted Average Attained Age Net Amount at Risk Weighted Average Attained Age
 (in millions, except age)
UL secondary guarantees$6,276
 64 $6,601
 63
The net amount at risk for UL secondary guarantees is defined as the current guaranteed death benefit amount in excess of the current policyholder value.account balance.

17



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Changes in additional liabilities (contra liabilities) for variable annuity and insurance guarantees were as follows:
 GMDB & GGU GMIB 
GMWB (1)
 
GMAB (1)
 ULGMDB & GGU GMIB 
GMWB (1)
 
GMAB (1)
 UL
 (in millions)
Balance at January 1, 2014 $4
 $6
 $(383) $(62) $206
Incurred claims 1
 
 116
 (7) 19
Paid claims (1) 
 
 
 (4)
Balance at March 31, 2014 $4
 $6
 $(267) $(69) $221
          (in millions)
Balance at January 1, 2015 $9
 $7
 $693
 $(41) $263
$9
 $7
 $693
 $(41) $263
Incurred claims 1
 
 347
 6
 22
1
 
 347
 6
 22
Paid claims (1) 
 
 
 (6)(1) 
 
 
 (6)
Balance at March 31, 2015 $9
 $7
 $1,040
 $(35) $279
$9
 $7
 $1,040
 $(35) $279
         
Balance at January 1, 2016$14
 $8
 $1,057
 $
 $332
Incurred claims4
 
 649
 31
 22
Paid claims(4) 
 
 
 (6)
Balance at March 31, 2016$14
 $8
 $1,706
 $31
 $348
(1) 
The incurred claims for GMWB and GMAB represent the total change in the liabilities (contra liabilities).
The liabilities for guaranteed benefits are supported by general account assets.
The following table summarizes the distribution of separate account balances by asset type for variable annuity contracts providing guaranteed benefits:
 March 31, 2015 December 31, 2014March 31, 2016 December 31, 2015
 (in millions)(in millions)
Mutual funds:  
  
 
  
Equity $41,882
 $41,403
$39,138
 $39,806
Bond 25,115
 25,060
23,818
 23,700
Other 4,800
 4,490
5,719
 5,241
Total mutual funds $71,797
 $70,953
$68,675
 $68,747
9.Short-term Borrowings
9. Short-term Borrowings
The Company enters into repurchase agreements in exchange for cash which it accounts for as secured borrowings. The Companyborrowings and has pledged Available-for-Sale securities consistingto collateralize its obligations under the repurchase agreements. As of both March 31, 2016 and December 31, 2015, the Company has pledged $30 million, respectively, of agency residential mortgage backed securities and $22 million of commercial mortgage backed securities to collateralize its obligation under the repurchase agreements. The fair value of the securities pledged is recorded in investments and was $52 million at both March 31, 2015 and December 31, 2014.securities. The amount of the Company’s liability including accrued interest as of both March 31, 20152016 and December 31, 20142015 was $50 million. The remaining maturity of outstanding repurchase agreements was less than one month as of both March 31, 2016 and December 31, 2015. The weighted average annualized interest rate on the repurchase agreements held as of both March 31, 20152016 and December 31, 20142015 was 0.4%.0.7% and 0.5%, respectively.
RiverSource Life Insurance Company is a member of the Federal Home Loan Bank (“FHLB”) of Des Moines which provides access to collateralized borrowings. The Company has pledged Available-for-Sale securities consisting of commercial mortgage backed securities to collateralize its obligationobligation under these borrowings. The fair value of the securities pledged is recorded in investments and was $297$432 million and $298$290 million atas of March 31, 20152016 and December 31, 2014,2015, respectively. The amount of the Company’s liability including accrued interest as of both March 31, 20152016 and December 31, 20142015 was $150 million. The remaining maturity of outstanding FHLB advances was less than three months as of both March 31, 2016 and December 31, 2015. The weighted average annualized interest rate on the FHLB advances held as of both March 31, 20152016 and December 31, 20142015 was 0.3%.0.6% and 0.5%, respectively.

16

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY10. Fair Values of Assets and Liabilities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


10.Fair Values of Assets and Liabilities
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressed sale.
Valuation Hierarchy
The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:
Level 1Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.

18



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Level 2Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

17

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following tables present the balances of assets and liabilities measured at fair value on a recurring basis:
 March 31, 2015 
 Level 1 Level 2 Level 3 Total 
 (in millions) 
Assets 
  
  
  
 
Available-for-Sale securities: Fixed maturities: 
  
  
  
 
Corporate debt securities$
 $13,854
 $1,360
 $15,214
 
Residential mortgage backed securities
 3,420
 39
 3,459
 
Commercial mortgage backed securities
 2,269
 20
 2,289
 
State and municipal obligations
 1,116
 
 1,116
 
Asset backed securities
 738
 119
 857
 
Foreign government bonds and obligations
 245
 
 245
 
U.S. government and agencies obligations4
 35
 
 39
 
Total Available-for-Sale securities: Fixed maturities4
 21,677
 1,538
 23,219
 
Common stocks3
 4
 
 7
 
Cash equivalents9
 591
 
 600
 
Other assets: 
  
  
  
 
Interest rate derivative contracts
 2,397
 
 2,397
 
Equity derivative contracts226
 1,987
 
 2,213
 
Foreign exchange derivative contracts
 54
 
 54
 
Other derivative contracts
 2
 
 2
 
Total other assets226
 4,440
 
 4,666
 
Separate account assets
 80,234
 
 80,234
 
Total assets at fair value$242
 $106,946
 $1,538
 $108,726
 
         
Liabilities 
  
  
  
 
Policyholder account balances, future policy benefits and claims: 
  
  
  
 
EIA embedded derivatives$
 $6
 $
 $6
 
IUL embedded derivatives
 
 270
 270
 
GMWB and GMAB embedded derivatives
 
 827
 827
(2) 
Total policyholder account balances, future policy benefits and claims
 6
 1,097
 1,103
(1) 
Other liabilities: 
  
  
  
 
Interest rate derivative contracts
 1,244
 
 1,244
 
Equity derivative contracts303
 2,385
 
 2,688
 
Credit derivative contracts
 3
 
 3
 
Foreign exchange derivative contracts
 5
 
 5
 
Other derivative contracts
 14
 
 14
 
Total other liabilities303
 3,651
 
 3,954
 
Total liabilities at fair value$303
 $3,657
 $1,097
 $5,057
 
(1)
The Company’s adjustment for nonperformance risk resulted in a $359 million cumulative decrease to the embedded derivatives.
(2)
The fair value of the GMWB and GMAB embedded derivatives included $979 million of individual contracts in a liability position and $152 million of individual contracts in an asset position.



18

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


December 31, 2014 March 31, 2016 
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 
(in millions) (in millions) 
Assets 
  
  
  
  
  
  
  
 
Available-for-Sale securities: Fixed maturities: 
  
  
  
  
  
  
  
 
Corporate debt securities$
 $13,830
 $1,353
 $15,183
 $
 $13,398
 $1,243
 $14,641
 
Residential mortgage backed securities
 3,483
 9
 3,492
 
 3,077
 19
 3,096
 
Commercial mortgage backed securities
 2,138
 90
 2,228
 
 2,206
 10
 2,216
 
State and municipal obligations
 1,113
 
 1,113
 
 1,223
 
 1,223
 
Asset backed securities
 786
 151
 937
 
 641
 133
 774
 
Foreign government bonds and obligations
 251
 
 251
 
 273
 
 273
 
U.S. government and agencies obligations4
 35
 
 39
 4
 35
 
 39
 
Total Available-for-Sale securities: Fixed maturities4
 21,636
 1,603
 23,243
 4
 20,853
 1,405
 22,262
 
Common stocks3
 3
 1
 7
 2
 4
 
 6
 
Cash equivalents1
 235
 
 236
 44
 747
 
 791
 
Other assets: 
  
  
  
  
  
  
  
 
Interest rate derivative contracts
 1,955
 
 1,955
 
 3,102
 
 3,102
 
Equity derivative contracts282
 1,711
 
 1,993
 79
 1,345
 
 1,424
 
Foreign exchange derivative contracts
 29
 
 29
 
 67
 
 67
 
Total other assets282
 3,695
 
 3,977
 79
 4,514
 
 4,593
 
Separate account assets
 79,178
 
 79,178
 
Separate account assets measured at NAV      75,849
(1) 
Total assets at fair value$290
 $104,747
 $1,604
 $106,641
 $129
 $26,118
 $1,405
 $103,501
 
                
Liabilities 
  
  
  
  
  
  
  
 
Policyholder account balances, future policy benefits and claims: 
  
  
  
  
  
  
  
 
EIA embedded derivatives$
 $6
 $
 $6
 $
 $5
 $
 $5
 
IUL embedded derivatives
 
 242
 242
 
 
 382
 382
 
GMWB and GMAB embedded derivatives
 
 479
 479
(2) 

 
 1,515
 1,515
(2) 
Total policyholder account balances, future policy benefits and claims
 6
 721
 727
(1) 

 5
 1,897
 1,902
(3) 
Other liabilities: 
  
  
  
  
  
  
  
 
Interest rate derivative contracts
 1,136
 
 1,136
 
 1,556
 
 1,556
 
Equity derivative contracts376
 2,286
 
 2,662
 37
 1,869
 
 1,906
 
Credit derivative contracts
 5
 
 5
 
Foreign exchange derivative contracts
 2
 
 2
 1
 23
 
 24
 
Other derivative contracts
 11
 
 11
 
Total other liabilities376
 3,435
 
 3,811
 38
 3,453
 
 3,491
 
Total liabilities at fair value$376
 $3,441
 $721
 $4,538
 $38
 $3,458
 $1,897
 $5,393
 
(1) 
The Company’s adjustmentAmounts are comprisedof certain investments that are measured at fair valueusing the NAV (or its equivalent) as a practical expedient andhavenot been classifiedinthe fair value hierarchy. SeeNote2 for nonperformance risk resulted in a $311 million cumulative decrease to the embedded derivatives.further information.
(2) 
The fair value of the GMWB and GMAB embedded derivatives included $700 million$1.6 billion of individual contracts in a liability position and $221$75 million of individual contracts in an asset position.
(3)
The Company’s adjustment for nonperformance risk resulted in a $634 million cumulative decrease to the embedded derivatives.

19



19

Table of Contents
RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 December 31, 2015 
 Level 1 Level 2 Level 3 Total 
 (in millions) 
Assets 
  
  
  
 
Available-for-Sale securities: Fixed maturities: 
  
  
  
 
Corporate debt securities$
 $13,139
 $1,235
 $14,374
 
Residential mortgage backed securities
 3,054
 21
 3,075
 
Commercial mortgage backed securities
 2,133
 3
 2,136
 
State and municipal obligations
 1,149
 
 1,149
 
Asset backed securities
 643
 133
 776
 
Foreign government bonds and obligations
 223
 
 223
 
U.S. government and agencies obligations4
 35
 
 39
 
Total Available-for-Sale securities: Fixed maturities4
 20,376
 1,392
 21,772
 
Common stocks3
 4
 
 7
 
Cash equivalents48
 285
 
 333
 
Other assets: 
  
  
  
 
Interest rate derivative contracts
 1,882
 
 1,882
 
Equity derivative contracts92
 1,477
 
 1,569
 
Credit derivative contracts
 2
 
 2
 
Foreign exchange derivative contracts1
 54
 
 55
 
Total other assets93
 3,415
 
 3,508
 
Separate account assets measured at NAV      76,004
(1) 
Total assets at fair value$148
 $24,080
 $1,392
 $101,624
 
         
Liabilities 
  
  
  
 
Policyholder account balances, future policy benefits and claims: 
  
  
  
 
EIA embedded derivatives$
 $5
 $
 $5
 
IUL embedded derivatives
 
 364
 364
 
GMWB and GMAB embedded derivatives
 
 851
 851
(2) 
Total policyholder account balances, future policy benefits and claims
 5
 1,215
 1,220
(3) 
Other liabilities: 
  
  
  
 
Interest rate derivative contracts
 948
 
 948
 
Equity derivative contracts45
 1,930
 
 1,975
 
Foreign exchange derivative contracts1
 16
 
 17
 
Total other liabilities46
 2,894
 
 2,940
 
Total liabilities at fair value$46
 $2,899
 $1,215
 $4,160
 
(1)
Amounts are comprised of certain investments that are measured at fair value using the NAV (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy. See Note 2 for further information.
(2)
The fair value of the GMWB and GMAB embedded derivatives included $994 million of individual contracts in a liability position and $143 million of individual contracts in an asset position.
(3)
The Company’s adjustment for nonperformance risk resulted in a $398 million cumulative decrease to the embedded derivatives.

20



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables provide a summary of changes in Level 3 assets and liabilities measured at fair value on a recurring basis:
             
 Available-for-Sale Securities: Fixed Maturities   
 Corporate
Debt
Securities
 Residential
Mortgage
Backed
Securities
 Commercial
Mortgage
Backed
Securities
 Asset
Backed
Securities
 Total Common Stocks 
 (in millions)
Balance, January 1, 2015$1,353
 $9
 $90
 $151
 $1,603
 $1
 
Total gains (losses) included in: 
  
  
  
  
   
Other comprehensive income12
 
 
 
 12
 (1) 
Purchases15
 31
 
 
 46
 
 
Settlements(20) (1) (1) 
 (22) 
 
Transfers into Level 3
 
 6
 
 6
 
 
Transfers out of Level 3
 
 (75) (32) (107) 
 
Balance, March 31, 2015$1,360
 $39
 $20
 $119
 $1,538
 $
 
Changes in unrealized gains (losses) relating to assets held at March 31, 2015 included in:
Net investment income$
 $
 $
 $
 $
 $
 
      
 Policyholder Account Balances,
Future Policy Benefits and Claims
 IUL
Embedded
Derivatives
 GMWB and GMAB Embedded Derivatives Total
 (in millions)
Balance, January 1, 2015$242
 $479
 $721
Total losses included in: 
  
  
Net income14
(1) 
280
(2) 
294
Issues19
 64
 83
Settlements(5) 4
 (1)
Balance, March 31, 2015$270
 $827
 $1,097
Changes in unrealized losses relating to liabilities held at March 31, 2015 included in:
Benefits, claims, losses and settlement expenses$
 $278
 $278
Interest credited to fixed accounts14
 
 14
 Available-for-Sale Securities: Fixed Maturities
 Corporate Debt Securities 
Residential Mortgage
Backed Securities
 
Commercial Mortgage
Backed Securities
 Asset Backed Securities Total
 (in millions)
Balance, January 1, 2016$1,235
 $21
 $3
 $133
 $1,392
Total gains included in: 
  
  
  
  
Other comprehensive income16
 
 
 
 16
Purchases
 
 9
 
 9
Settlements(8) (2) (2) 
 (12)
Balance, March 31, 2016$1,243
 $19
 $10
 $133
 $1,405
          
Changes in unrealized gains (losses) relating to assets held at March 31, 2016 included in:
Net investment income$
 $
 $
 $
 $
(1)
Included in interest credited to fixed accounts in the Consolidated Statements of Income.
(2)
Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Income.

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RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


 Available-for-Sale Securities: Fixed Maturities 
 Corporate
Debt
Securities
 Residential
Mortgage
Backed
Securities
 Commercial
Mortgage
Backed
Securities
 Asset
Backed
Securities
 Total 
 (in millions)
Balance, January 1, 2014$1,516
 $58
 $30
 $218
 $1,822
 
Total gains included in: 
  
  
  
  
 
Net income1
 
 
 
 1
(1) 
Other comprehensive loss5
 
 
 
 5
 
Purchases24
 11
 39
 
 74
 
Sales(11) 
 
 
 (11) 
Settlements(144) 
 
 
 (144) 
Transfers out of Level 3
 (58) (14) (69) (141) 
Balance, March 31, 2014$1,391
 $11
 $55
 $149
 $1,606
 
Changes in unrealized gains relating to assets held at March 31, 2014 included in:
Net investment income$
 $
 $
 $
 $
 
(1)
Represents a $1 million net gain included in net realized investment gains in the Consolidated Statements of Income.
Policyholder Account Balances,
Future Policy Benefits and Claims
Policyholder Account Balances,
Future Policy Benefits and Claims
IUL Embedded
Derivatives
 GMWB and
GMAB
Embedded
Derivatives
 TotalIUL Embedded Derivatives 
GMWB and GMAB
Embedded Derivatives
 Total
 (in millions)(in millions)
Balance, January 1, 2014$125
 $(575) $(450)
Total losses included in: 
  
 

Balance, January 1, 2016$364
 $851
 $1,215
Total (gains) losses included in: 
  
 

Net income6
(1) 
52
(2) 
58
(8)
(1) 
602
(2) 
594
Issues24
 59
 83
32
 68
 100
Settlements(1) (7) (8)(6) (6) (12)
Balance, March 31, 2014$154

$(471)
$(317)
Changes in unrealized losses relating to liabilities held at March 31, 2014 included in:
Balance, March 31, 2016$382
 $1,515
 $1,897
     
Changes in unrealized (gains) losses relating to liabilities held at March 31, 2016 included in:Changes in unrealized (gains) losses relating to liabilities held at March 31, 2016 included in:
Benefits, claims, losses and settlement expenses$
 $52
 $52
$
 $616
 $616
Interest credited to fixed accounts6
 
 6
(8) 
 (8)
(1) 
Included in interest credited to fixed accounts in the Consolidated Statements of Income.
(2) 
Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Income.

21



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 Available-for-Sale Securities: Fixed Maturities  
 Corporate Debt Securities Residential Mortgage
Backed Securities
 Commercial Mortgage
Backed Securities
 Asset Backed Securities Total Common Stocks
 (in millions)
Balance, January 1, 2015$1,353
 $9
 $90
 $151
 $1,603
 $1
Total gains (losses) included in: 
  
  
  
  
  
Other comprehensive income12
 
 
 
 12
 (1)
Purchases15
 31
 
 
 46
 
Settlements(20) (1) (1) 
 (22) 
Transfers into Level 3
 
 6
 
 6
 
Transfers out of Level 3
 
 (75) (32) (107) 
Balance, March 31, 2015$1,360
 $39
 $20
 $119
 $1,538

$
            
Changes in unrealized gains (losses) relating to assets held at March 31, 2015 included in:
Net investment income$
 $
 $
 $
 $
 $
 Policyholder Account Balances,
Future Policy Benefits and Claims
 IUL Embedded Derivatives GMWB and GMAB
Embedded Derivatives
 Total
  (in millions)
Balance, January 1, 2015$242
 $479
 $721
Total losses included in: 
  
 

Net income14
(1) 
280
(2) 
294
Issues19
 64
 83
Settlements(5) 4
 (1)
Balance, March 31, 2015$270

$827

$1,097
      
Changes in unrealized losses relating to liabilities held at March 31, 2015 included in:
Benefits, claims, losses and settlement expenses$
 $278
 $278
Interest credited to fixed accounts14
 
 14
(1)
Included in interest credited to fixed accounts in the Consolidated Statements of Income.
(2)
Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Income.

The increase to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $37$189 million and $15$37 million,, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual for the three months ended March 31, 20152016 and 2014,2015, respectively.
Securities transferred from Level 3 primarily represent securities with fair values that are now obtained from a third party pricing service with observable inputs. Securities transferred to Level 3 represent securities with fair values that are now based on a single non-binding broker quote. The Company recognizes transfers between levels of the fair value hierarchy as of the beginning of the quarter in which each transfer occurred. For assets and liabilities held at the end of the reporting periods that are measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2.

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RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following tables provide a summary of the significant unobservable inputs used in the fair value measurements developed by the Company or reasonably available to the Company of Level 3 assets and liabilities:
March 31, 2015March 31, 2016
Fair Value Valuation Technique Unobservable Input Range Weighted AverageFair Value Valuation Technique Unobservable Input Range Weighted Average
(in millions)       (in millions)       
Corporate debt securities (private placements)$1,331
 Discounted cash flow Yield/spread to U.S. Treasuries 1.0%-3.5% 1.5%$1,229
 Discounted cash flow Yield/spread to U.S. Treasuries 1.2%-4.3% 1.7%
IUL embedded derivatives$270
 Discounted cash flow 
Nonperformance risk (1)
 63
 bps $382
 Discounted cash flow 
Nonperformance risk (1)
 85
 bps 
GMWB and GMAB embedded derivatives$827
 Discounted cash flow 
Utilization of guaranteed withdrawals (2)
 0.0%-51.1% $1,515
 Discounted cash flow 
Utilization of guaranteed withdrawals (2)
 0.0%-75.6% 
    Surrender rate 0.0%-59.1%     Surrender rate 0.0%-59.1% 
    
Market volatility (3)
 5.4%-21.6%     
Market volatility (3)
 5.4%-21.6% 
    
Nonperformance risk (1)
 63
 bps     
Nonperformance risk (1)
 85
 bps 
  
Elective contractholder strategy allocations (4)
 0.0%-3.0% 
 December 31, 2014
 Fair Value Valuation Technique Unobservable Input Range Weighted Average
 (in millions)          
Corporate debt securities (private placements)$1,311
 Discounted cash flow Yield/spread to U.S. Treasuries 1.0%-3.9% 1.5%
IUL embedded derivatives$242
 Discounted cash flow 
Nonperformance risk (1)
 65
 bps  
GMWB and GMAB embedded derivatives$479
 Discounted cash flow 
Utilization of guaranteed withdrawals (2)
 0.0%-51.1%  
     Surrender rate 0.0%-59.1%  
     
Market volatility (3)
 5.2%-20.9%  
     
Nonperformance risk (1)
 65
 bps  
     
Elective contractholder strategy allocations (4)
 0.0%-3.0%  
.
 December 31, 2015
 Fair Value Valuation Technique Unobservable Input Range Weighted Average
 (in millions)          
Corporate debt securities (private placements)$1,221
 Discounted cash flow Yield/spread to U.S. Treasuries 1.1%-3.8% 1.6%
IUL embedded derivatives$364
 Discounted cash flow 
Nonperformance risk (1)
 68
 bps  
GMWB and GMAB embedded derivatives$851
 Discounted cash flow 
Utilization of guaranteed withdrawals (2)
 0.0%-75.6%  
     Surrender rate 0.0%-59.1%  
     
Market volatility (3)
 5.4%-21.5%  
     
Nonperformance risk (1)
 68
 bps  
(1) 
The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.
(2) 
The utilization of guaranteed withdrawals represents the percentage of contractholders that will begin withdrawing in any given year.
(3) 
Market volatility is implied volatility of fund of funds and managed volatility funds.
(4)
The elective allocation represents the percentage of contractholders that are assumed to electively switch their investment allocation to a different allocation model.
Level 3 measurements not included in the table above are obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.
Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs
Significant increases (decreases) in the yield/spread to U.S. Treasuries used in the fair value measurement of Level 3 corporate debt securities in isolation would result in a significantly lower (higher) fair value measurement.
Significant increases (decreases) in nonperformance risk used in the fair value measurement of the IUL embedded derivatives in isolation would result in a significantly lower (higher) fair value measurement.
Significant increases (decreases) in utilization and volatility used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would result in a significantly higher (lower) liability value. Significant increases (decreases) in nonperformance risk and surrender rate and elective investment allocation model used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would result in a significantly lower (higher) liability value. Utilization of guaranteed withdrawals and surrender rates vary with the type of rider, the duration of the policy, the age of the contractholder, the distribution system and whether the value of the guaranteed benefit exceeds the contract accumulation value.
Determination of Fair Value
The Company uses valuation techniques consistent with the market and income approaches to measure the fair value of its assets and liabilities. The Company’s market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s income approach uses valuation techniques

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RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


to convert future projected cash flows to a single discounted present value amount. When applying either approach, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

23



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.
Assets
Cash Equivalents
Cash equivalents include highly liquid investments with original maturities of 90 days or less. Actively traded money market funds are measured at their net asset value (“NAV”)NAV and classified as Level 1. The Company’s remaining cash equivalents are classified as Level 2 and measured at amortized cost, which is a reasonable estimate of fair value because of the short time between the purchase of the instrument and its expected realization.
Available-for-Sale Securities
When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from third party pricing services, non-binding broker quotes, or other model-based valuation techniques. Level 1 securities primarily include U.S. Treasuries. Level 2 securities primarily include corporate bonds, residential mortgage backed securities, commercial mortgage backed securities, state and municipal obligations, asset backed securities and U.S. agency and foreign government securities. The fair value of these Level 2 securities is based on a market approach with prices obtained from third party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes. Level 3 securities primarily include certain corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and asset backed securities. The fair value of corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and certain asset backed securities classified as Level 3 is typically based on a single non-binding broker quote. The underlying inputs used for some of the non-binding broker quotes are not readily available to the Company. The Company’s privately placed corporate bonds are typically based on a single non-binding broker quote. In addition to the general pricing controls, the Company reviews the broker prices to ensure that the broker quotes are reasonable and, when available, compares prices of privately issued securities to public issues from the same issuer to ensure that the implicit illiquidity premium applied to the privately placed investment is reasonable considering investment characteristics, maturity, and average life of the investment.
In consideration of the above, management is responsible for the fair values recorded on the financial statements. Prices received from third party pricing services are subjected to exception reporting that identifies investments with significant daily price movements as well as no movements. The Company reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. The Company also performs subsequent transaction testing. The Company performs annual due diligence of third party pricing services. The Company’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies, and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.
Separate Account Assets
The fair value of assets held by separate accounts is determined by the NAV of the funds in which those separate accounts are invested. The NAV is used as a practical expedient for fair value and represents the exit price for the separate account. Separate account assets are classified as Level 2 as they are tradedexcluded from classification in principal-to-principal markets with little publicly released pricing information.the fair value hierarchy.
Other Assets
Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. Other derivative contracts consist of the Company'sCompany’s macro hedge program. See Note 12 for further information on the macro hedge program. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial at March 31, 20152016 and December 31, 2014.2015. See Note 11 and Note 12 for further information on the credit risk of derivative instruments and related collateral.

23

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RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Liabilities
Policyholder Account Balances, Future Policy Benefits and Claims
The Company values the embedded derivatives attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value by discounting expected cash flows from benefits plus margins for profit, risk and expenses less embedded derivative fees. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to contractholder behavior assumptions, implied volatility, and margins for risk,

24



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

profit and expenses that the Company believes an exit market participant would expect. The fair value also reflects a current estimate of the Company’s nonperformance risk specific to these embedded derivatives. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3. The embedded derivatives attributable to these provisions are recorded in policyholder account balances, future policy benefits and claims.
The Company uses various Black-Scholes calculations to determine the fair value of the embedded derivatives associated with the provisions of its EIA and IUL products. Significant inputs to the EIA calculation include observable interest rates, volatilities and equity index levels and, therefore, are classified as Level 2. The fair value of the IUL embedded derivatives includes significant observable interest rates, volatilities and equity index levels and the significant unobservable estimate of the Company’s nonperformance risk. Given the significance of the nonperformance risk assumption to the fair value, the IUL embedded derivatives are classified as Level 3. The embedded derivatives attributable to these provisions are recorded in policyholder account balances, future policy benefits and claims.
The Company’s Corporate Actuarial Department calculates the fair value of the embedded derivatives on a monthly basis. During this process, control checks are performed to validate the completeness of the data. Actuarial management approves various components of the valuation along with the final results. The change in the fair value of the embedded derivatives is reviewed monthly with senior management. The Level 3 inputs into the valuation are consistent with the pricing assumptions and updated as experience develops. Significant unobservable inputs that reflect policyholder behavior are reviewed quarterly along with other valuation assumptions.
Other Liabilities
Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active OTC markets areis generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. Other derivative contracts consist of the Company’s macro hedge program. See Note 12 for further information on the macro hedge program. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial at March 31, 20152016 and December 31, 2014.2015. See Note 11 and Note 12 for further information on the credit risk of derivative instruments and related collateral.
During the reporting periods, there were no material assets or liabilities measured at fair value on a nonrecurring basis.
The following tables provide the carrying value and the estimated fair value of financial instruments that are not reported at fair value. All other financial instruments that are reported at fair value have been included above in the tables with balances of assets and liabilities measured at fair value on a recurring basis.value:
 March 31, 2015March 31, 2016 
 Carrying Fair ValueCarrying Value Fair Value 
 Value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 
 (in millions)(in millions) 
Financial Assets  
  
  
  
  
 
  
  
  
  
 
Mortgage loans, net $3,225
 $
 $
 $3,349
 $3,349
$2,929
 $
 $
 $3,031
 $3,031
 
Policy loans 811
 
 
 796
 796
828
 
 
 802
 802
 
Other investments 456
 
 426
 33
 459
454
 
 408
 37
 445
 
                    
Financial Liabilities  
  
  
  
  
 
  
  
  
  
 
Policyholder account balances, future policy benefits and claims $12,495
 $
 $
 $13,720
 $13,720
$11,352
 $
 $
 $12,353
 $12,353
 
Short-term borrowings 200
 
 200
 
 200
200
 
 200
 
 200
 
Other liabilities 120
 
 
 118
 118
118
 
 115
 
 115
 
Separate account liabilities 399
 
 399
 
 399
Separate account liabilities measured at NAV352
       352
(1) 

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RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


 December 31, 2014December 31, 2015 
 Carrying Fair ValueCarrying Value Fair Value 
 Value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 
 (in millions)(in millions) 
Financial Assets  
  
  
  
  
 
  
  
  
  
 
Mortgage loans, net $3,298
 $
 $
 $3,413
 $3,413
$3,211
 $
 $
 $3,254
 $3,254
 
Policy loans 805
 
 
 793
 793
823
 
 
 803
 803
 
Other investments 463
 
 403
 55
 458
463
 
 416
 33
 449
 
                    
Financial Liabilities  
  
  
  
  
 
  
  
  
  
 
Policyholder account balances, future policy benefits and claims $12,979
 $
 $
 $13,996
 $13,996
$11,523
 $
 $
 $12,424
 $12,424
 
Short-term borrowings 200
 
 200
 
 200
200
 
 200
 
 200
 
Other liabilities 124
 
 
 121
 121
117
 
 
 113
 113
 
Separate account liabilities 400
 
 400
 
 400
Separate account liabilities measured at NAV360
       360
(1) 
(1)
Amounts are comprised of certain investments that are measured at fair value using the NAV (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy. See Note 2 for further information.
Mortgage Loans, Net
The fair value of commercial mortgage loans, except those with significant credit deterioration, is determined by discounting contractual cash flows using discount rates that reflect current pricing for loans with similar remaining maturities, liquidity and characteristics including LTV ratio, occupancy rate, refinance risk, debt service coverage, location, and property condition. For commercial mortgage loans with significant credit deterioration, fair value is determined using the same adjustments as above with an additional adjustment for the Company’s estimate of the amount recoverable on the loan.
The fair value of residential mortgage loans is determined by discounting estimated cash flows and incorporating adjustments for prepayment, administration expenses, loss severity and credit loss estimates, with discount rates based on the Company’s estimate of current market conditions.
Given the significant unobservable inputs to the valuation of mortgage loans, these measurements are classified as Level 3.
Policy Loans
Policy loans represent loans made against the cash surrender value of the underlying life insurance or annuity product. These loans and the related interest are usually realized at death of the policyholder or contractholder or at surrender of the contract and are not transferable without the underlying insurance or annuity contract. The fair value of policy loans is determined by estimating expected cash flows discounted at rates based on the U.S. Treasury curve. Policy loans are classified as Level 3 as the discount rate used may be adjusted for the underlying performance of individual policies.
Other Investments
Other investments primarily consist of syndicated loans and an investment in FHLB. The fair value of syndicated loans is obtained from a third party pricing service or non-binding broker quotes. Syndicated loans that are priced using a market approach with observable inputs are classified as Level 2 and syndicated loans priced using a single non-binding broker quote are classified as Level 3. The fair value of the investment in FHLB is approximated by the carrying value and classified as Level 3 due to restrictions on transfer and lack of liquidity in the primary market for this asset.
Policyholder Account Balances, Future Policy Benefits and Claims
The fair value of fixed annuities in deferral status is determined by discounting cash flows using a risk neutral discount rate with adjustments for profit margin, expense margin, early policy surrender behavior, a margin for adverse deviation from estimated early policy surrender behavior and the Company’s nonperformance risk specific to these liabilities. The fair value of non-life contingent fixed annuities in payout status, EIA host contracts and the fixed portion of a small number of variable annuity contracts classified as investment contracts is determined in a similar manner. Given the use of significant unobservable inputs to these valuations, the measurements are classified as Level 3.

26



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Short-term Borrowings
The fair value of short-term borrowings is obtained from a third party pricing service. A nonperformance adjustment is not included as collateral requirements for these borrowings minimize the nonperformance risk. The fair value of short-term borrowings is classified as Level 2.

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Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Other Liabilities
Other liabilities consist of future funding commitments to affordable housing partnerships. The fair value of these future funding commitments is determined by discounting cash flows. The fair value of these commitments includes an adjustment for the Company’s nonperformance risk and is classified as Level 3 due to the use of the significant unobservable input.
Separate Account Liabilities
Certain separate account liabilities are classified as investment contracts and are carried at an amount equal to the related separate account assets. The NAV of the related separate account assets is used as a practical expedient for fair value and represents the exit price for the separate account liabilities. Separate account liabilities are classified as Level 2 as they are tradedexcluded from classification in principal-to-principal markets with little publicly released pricing information. A nonperformance adjustment is not included as the related separate account assets act as collateral for these liabilitiesfair value hierarchy.
11. Offsetting Assets and minimize nonperformance risk.Liabilities
11.Offsetting Assets and Liabilities
Certain financial instruments and derivative instruments are eligible for offset in the Consolidated Balance Sheets. The Company’s derivative instruments and repurchase agreements are subject to master netting arrangements and collateral arrangements and qualify for offset. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. The Company’s policy is to recognize amounts subject to master netting arrangements on a gross basis in the Consolidated Balance Sheets.
The following tables present the gross and net information about the Company’s assets subject to master netting arrangements:
 March 31, 2015March 31, 2016
 Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Amounts of Assets Presented in the Consolidated Balance Sheets Gross Amounts Not Offset
in the Consolidated Balance Sheets
  
Gross Amounts of
Recognized Assets
 
Gross Amounts Offset in the
Consolidated Balance Sheets
 Amounts of Assets Presented in the Consolidated Balance Sheets Gross Amounts Not Offset
in the Consolidated Balance Sheets
  
 
Financial Instruments (1)
 Cash Collateral Securities Collateral Net Amount 
Financial Instruments (1)
 Cash Collateral Securities Collateral Net Amount
  
 (in millions)(in millions)
Derivatives:  
  
  
  
  
  
  
 
  
  
  
  
  
  
OTC $4,144
 $
 $4,144
 $(3,073) $(444) $(614) $13
$3,750
 $
 $3,750
 $(2,546) $(469) $(719) $16
OTC cleared 473
 
 473
 (357) (116) 
 
825
 
 825
 (713) (111) 
 1
Exchange-traded 49
 
 49
 
 
 
 49
18
 
 18
 (2) 
 
 16
Total derivatives $4,666
 $
 $4,666
 $(3,430) $(560) $(614) $62
$4,593
 $
 $4,593
 $(3,261) $(580) $(719) $33
 December 31, 2014December 31, 2015
 Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Amounts of Assets Presented in the Consolidated Balance Sheets Gross Amounts Not Offset
in the Consolidated Balance Sheets
  
Gross Amounts of
Recognized Assets
 
Gross Amounts Offset in the
Consolidated Balance Sheets
 Amounts of Assets Presented in the Consolidated Balance Sheets Gross Amounts Not Offset
in the Consolidated Balance Sheets
  
 
Financial Instruments (1)
 Cash Collateral Securities Collateral Net Amount 
Financial Instruments (1)
 Cash Collateral Securities Collateral Net Amount
  
 (in millions)(in millions)
Derivatives:  
  
  
  
  
  
  
 
  
  
  
  
  
  
OTC $3,612
 $
 $3,612
 $(2,934) $(228) $(418) $32
$3,051
 $
 $3,051
 $(2,293) $(354) $(320) $84
OTC cleared 304
 
 304
 (222) (82) 
 
417
 
 417
 (313) (102) 
 2
Exchange-traded 61
 
 61
 
 
 
 61
40
 
 40
 (3) 
 
 37
Total derivatives $3,977
 $
 $3,977
 $(3,156) $(310) $(418) $93
$3,508
 $
 $3,508
 $(2,609) $(456) $(320) $123
(1) 
Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

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RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following tables present the gross and net information about the Company’s liabilities subject to master netting arrangements:
March 31, 2016
 March 31, 2015
Gross Amounts of
Recognized Liabilities
 
Gross Amounts Offset in the
Consolidated Balance Sheets
 Amounts of Liabilities Presented in the Consolidated Balance Sheets Gross Amounts Not Offset
in the Consolidated Balance Sheets
  
 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Amounts of Liabilities Presented in the Consolidated Balance Sheets 
Gross Amounts Not Offset
in the Consolidated Balance Sheets
   
Financial Instruments (1)
 Cash Collateral Securities Collateral Net Amount
 
Financial
Instruments (1)
 
Cash
Collateral
 
Securities
Collateral
 
Net
Amount
 
 (in millions)(in millions)
Derivatives:                           
OTC $3,597
 $
 $3,597
 $(3,073) $
 $(511) $13
$2,776
 $
 $2,776
 $(2,546) $
 $(224) $6
OTC cleared 357
 
 357
 (357) 
 
 
713
 
 713
 (713) 
 
 
Exchange-traded2
 
 2
 (2) 
 
 
Total derivatives 3,954
 
 3,954
 (3,430) 
 (511) 13
3,491



3,491

(3,261)


(224)
6
Repurchase agreements 50
 
 50
 
 
 (50) 
50
 
 50
 
 
 (50) 
Total $4,004
 $
 $4,004
 $(3,430) $
 $(561) $13
$3,541
 $
 $3,541
 $(3,261) $
 $(274) $6
December 31, 2015
 December 31, 2014
Gross Amounts of
Recognized Liabilities
 
Gross Amounts Offset in the
Consolidated Balance Sheets
  Amounts of Liabilities Presented in the Consolidated Balance Sheets Gross Amounts Not Offset
in the Consolidated Balance Sheets
  
 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Amounts of Liabilities Presented in the Consolidated Balance Sheets 
Gross Amounts Not Offset
in the Consolidated Balance Sheets
   
Financial Instruments (1)
 Cash Collateral Securities Collateral Net Amount
 
Financial
Instruments (1)
 
Cash
Collateral
 
Securities
Collateral
 
Net
Amount
 
 (in millions)(in millions)
Derivatives:                           
OTC $3,589
 $
 $3,589
 $(2,934) $
 $(655) $
$2,624
 $
 $2,624
 $(2,293) $
 $(331) $
OTC cleared 222
 
 222
 (222) 
 
 
313
 
 313
 (313) 
 
 
Exchange-traded3
 
 3
 (3) 
 
 
Total derivatives 3,811



3,811

(3,156)


(655)

2,940



2,940

(2,609)


(331)

Repurchase agreements 50
 
 50
 
 
 (50) 
50
 
 50
 
 
 (50) 
Total $3,861
 $
 $3,861
 $(3,156) $
 $(705) $
$2,990
 $
 $2,990
 $(2,609) $
 $(381) $
(1) 
Represents the amount of liabilities that could be offset by assets with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.
In the tables above, the amounts of assets or liabilities presented in the Consolidated Balance Sheets are offset first by financial instruments that have the right of offset under master netting or similar arrangements, then any remaining amount is reduced by the amount of cash and securities collateral. The actual collateral may be greater than amounts presented in the tables.
When the fair value of collateral accepted by the Company is less than the amount due to the Company, there is a risk of loss if the counterparty fails to perform or provide additional collateral. To mitigate this risk, the Company monitors collateral values regularly and requires additional collateral when necessary. When the value of collateral pledged by the Company declines, the Company may be required to post additional collateral.
The Company’s freestanding derivative instruments are reflected in other assets and other liabilities. Repurchase agreements are reflected in short-term borrowings. See Note 12 for additional disclosures related to the Company’s derivative instruments and Note 9 for additional disclosures related to the Company’s repurchase agreements.

28


12.Derivatives and Hedging Activities

RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. Derivatives and Hedging Activities
Derivative instruments enable the Company to manage its exposure to various market risks. The value of such instruments is derived from an underlying variable or multiple variables, including equity and interest rate indices or prices. The Company primarily enters into derivative agreements for risk management purposes related to the Company’s products and operations.
The Company’s freestanding derivatives are recorded at fair value and are reflected in other assets or other liabilities. The Company’s freestanding derivative instruments are all subject to master netting arrangements. The Company’s policy on the recognition of derivatives on the Consolidated Balance Sheets is to not offset fair value amounts recognized for derivatives and collateral arrangements executed with the same counterparty under the same master netting arrangement. See Note 11 for additional information regarding the estimated fair value of the Company’s freestanding derivatives after considering the effect of master netting arrangements and collateral.

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Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The Company currently uses derivatives as economic hedges and accounting hedges. The following table presents the balance sheet locationnotional value and the gross fair value of derivative instruments, including embedded derivatives:
    Assets   Liabilities
Derivatives not designated
as hedging instruments
 Balance Sheet
Location
 March 31,
2015
 December 31,
2014
 Balance Sheet Location March 31,
2015
 December 31,
2014
    (in millions)   (in millions)
GMWB and GMAB    
  
    
  
Interest rate contracts Other assets $2,397
 $1,955
 Other liabilities $1,244
 $1,136
Equity contracts Other assets 2,180
 1,954
 Other liabilities 2,681
 2,650
Credit contracts Other assets 
 
 Other liabilities 3
 
Foreign exchange contracts Other assets 54
 29
 Other liabilities 5
 2
Embedded derivatives (1)
 N/A 
 
 
Policyholder account balances, future policy benefits and claims (2)
 827
 479
Total GMWB and GMAB   4,631
 3,938
   4,760
 4,267
Other derivatives:    
  
    
  
Equity    
  
    
  
EIA embedded derivatives N/A 
 
 Policyholder account balances, future policy benefits and claims 6
 6
IUL Other assets 33
 39
 Other liabilities 7
 12
IUL embedded derivatives N/A 
 
 Policyholder account balances, future policy benefits and claims 270
 242
Other            
Macro hedge program Other assets 2
 
 Other liabilities 14
 11
Total other derivatives   35
 39
   297
 271
Total derivatives   $4,666
 $3,977
   $5,057
 $4,538
 March 31, 2016 December 31, 2015
 Notional Gross Fair Value Notional Gross Fair Value
  
Assets (1)
 
Liabilities (2)
  
Assets (1)
 
Liabilities (2)
 (in millions)
Derivatives not designated as hedging instruments          
Interest rate contracts$64,933
 $3,102
 $1,556
 $62,591
 $1,882
 $948
Equity contracts61,203
 1,424
 1,906
 69,009
 1,569
 1,975
Credit contracts757
 
 5
 600
 2
 
Foreign exchange contracts4,736
 67
 24
 4,155
 55
 17
Other contracts2,400
 
 
 2,150
 
 
Total non-designated hedges134,029
 4,593
 3,491
 138,505
 3,508
 2,940
            
Embedded derivatives           
GMWB and GMAB (3)
N/A
 
 1,515
 N/A
 
 851
IULN/A
 
 382
 N/A
 
 364
EIAN/A
 
 5
 N/A
 
 5
Total embedded derivativesN/A
 
 1,902
 N/A
 
 1,220
Total derivatives$134,029
 $4,593
 $5,393
 $138,505
 $3,508
 $4,160
N/ANot applicable.
(1)
N/A  Not applicable.
(1) The fair value of freestanding derivative assets is included in Other assets on the Consolidated Balance Sheets.
(2) The fair value of freestanding derivative liabilities is included in Other liabilities on the Consolidated Balance Sheets. The fair value of GMWB and GMAB, IUL, and EIA embedded derivatives is included in Policyholder account balances, future policy benefits and claims on the Consolidated Balance Sheets.
(3) The fair value of the GMWB and GMAB embedded derivatives at March 31, 2016 included $1.6 billion of individual contracts in a liability position and $75 million of individual contracts in an asset position. The fair value of the GMWB and GMAB embedded derivatives at December 31, 2015 included $994 million of individual contracts in a liability position and $143 million of individual contracts in an asset position.
The fair values of GMWB and GMAB embedded derivatives fluctuate based on changes in equity, interest rate and credit markets.
(2)
The fair value of the GMWB and GMAB embedded derivatives at March 31, 2015 included $979 million of individual contracts in a liability position and $152 million of individual contracts in an asset position. The fair value of the GMWB and GMAB embedded derivatives at December 31, 2014 included $700 million of individual contracts in a liability position and $221 million of individual contracts in an asset position.
See Note 10 for additional information regarding the Company’s fair value measurement of derivative instruments.
At March 31, 2016 and December 31, 2015, investment securities with a fair value of $767 million and $323 million, respectively, were received as collateral to meet contractual obligations under derivative contracts, of which $529 million and $193 million, respectively, may be sold, pledged or rehypothecated by the Company. At March 31, 2016 and December 31, 2015, the Company had $29 million and nil, respectively, of securities that were sold, pledged, or rehypothecated. In addition, at March 31, 2016 and December 31, 2015, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.

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Table of Contents
RIVERSOURCE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The following table presents a summary of the impact of derivatives not designated as hedging instruments on the Consolidated Statements of Income:
    
Amount of Gain (Loss) on Derivatives
Recognized in Income
Derivatives not designated as hedging instruments Location of Gain (Loss) on Derivatives Recognized in Income Three Months Ended 
 March 31,
  2015 2014
    (in millions)
GMWB and GMAB    
  
Interest rate contracts Benefits, claims, losses and settlement expenses $386
 $264
Equity contracts Benefits, claims, losses and settlement expenses (122) (190)
Credit contracts Benefits, claims, losses and settlement expenses (9) (10)
Foreign exchange contracts Benefits, claims, losses and settlement expenses (6) (1)
Embedded derivatives (1)
 Benefits, claims, losses and settlement expenses (348) (104)
Total GMWB and GMAB   (99) (41)
Other derivatives:    
  
Interest rate      
Tax hedge Net investment income 
 3
Equity    
  
IUL Interest credited to fixed accounts 1
 5
IUL embedded derivatives Interest credited to fixed accounts (9) (6)
Other      
Macro hedge program Benefits, claims, losses and settlement expenses (6) 13
Total other derivatives   (14)
15
Total derivatives   $(113) $(26)
 Interest Credited
to Fixed Accounts
 Benefits, Claims, Losses
and Settlement Expenses
 (in millions)
Three Months Ended March 31, 2016   
Interest rate contracts$
 $755
Equity contracts(3) (65)
Credit contracts
 (16)
Foreign exchange contracts
 (35)
GMWB and GMAB embedded derivatives
 (664)
IUL embedded derivatives14
 
Total gain (loss)$11
 $(25)
    
Three Months Ended March 31, 2015   
Interest rate contracts$
 $386
Equity contracts1
 (122)
Credit contracts
 (9)
Foreign exchange contracts
 (6)
Other contracts
 (6)
GMWB and GMAB embedded derivatives
 (348)
IUL embedded derivatives(9) 
Total loss$(8) $(105)
(1)
The fair values of GMWB and GMAB embedded derivatives fluctuate based on changes in equity, interest rate and credit markets.
The Company holds derivative instruments that either do not qualify or are not designated for hedge accounting treatment. These derivative instruments are used as economic hedges of equity, interest rate, credit and foreign currency exchange rate risk related to various products and transactions of the Company.
Certain annuity contracts contain GMWB or GMAB provisions, which guarantee the right to make limited partial withdrawals each contract year regardless of the volatility inherent in the underlying investments or guarantee a minimum accumulation value of consideration received at the beginning of the contract period, after a specified holding period, respectively. The GMAB and non-life contingent GMWB provisions are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. The Company economically hedges the exposure related to GMAB and non-life contingent GMWB and GMAB provisions primarily using various futures, options, interest rate swaptions, interest rate swaps, total return swaps and variance swaps. At March 31, 2015 and December 31, 2014, the gross notional amount of derivative contracts for the Company’s GMWB and GMAB provisions was $139.1 billion and $132.0 billion, respectively.
The deferred premium associated with certain of the above options is paid or received semi-annually over the life of the option contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options:
 Premiums Payable Premiums ReceivablePremiums
Payable
  Premiums
Receivable
 (in millions)(in millions)
2015 (1)
 $298
 $55
2016 314
 66
2016 (1)
$239
 $66
2017 255
 68
257
 75
2018 185
 91
204
 129
2019 240
 86
248
 128
2020-2026 525
 142
2020179
 58
2021-2026624
 201
Total $1,817
 $508
$1,751
 $657
(1)2016 amounts represent the amounts payable and receivable for the period from April 1, 2016 to December 31, 2016.

30



RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

2015 amounts represent the amounts payable and receivable for the period from April 1, 2015 to December 31, 2015.
Actual timing and payment amounts may differ due to future contract settlements, modifications or exercises of options prior to the full premium being paid or received.

29

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The Company has a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on its statutory surplus and to cover some of the residual risks not covered by other hedging activities. As a means of economically hedging these risks, the Company uses a combination of options, interest rate swaptions and/or swaps.swaptions. Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts. The gross notional amount of these derivativeCompany’s macro hedge derivatives are included in Other contracts was $2.1 billion and $1.2 billion at March 31, 2015 and December 31, 2014, respectively.in the tables above.
EIA and IUL products have returns tied to the performance of equity markets. As a result of fluctuations in equity markets, the obligation incurred by the Company related to EIA and IUL products will positively or negatively impact earnings over the life of these products. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and futures contracts. The gross notional amount of these derivative contracts was $1.1 billion and $953 million at March 31, 2015 and December 31, 2014, respectively.
Embedded Derivatives
Certain annuities contain GMAB and non-life contingent GMWB provisions, which are considered embedded derivatives. In addition, the equity component of the EIA and IUL product obligations are also considered embedded derivatives. These embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. As discussed above,a means of economically hedging its obligations under the provisions of these products, the Company uses derivatives to mitigate the financial statement impact of these embedded derivatives.enters into index options and futures contracts.
Cash Flow Hedges
The Company has amounts classified in AOCI related to gains and losses associated with the effective portion of previously designated cash flow hedges. The Company reclassifies these amounts into income as the forecasted transactions impact earnings. During the three months ended March 31, 2015,2016, the Company held no derivatives that were designated as cash flow hedges.
At March 31, 20152016, the Company expects to reclassify $6 million of deferred loss on derivative instruments from AOCI to earnings during the next 12 months that will be recorded in net investment income. These were originally losses on derivative instruments related to interest rate swaptions. During the three months ended March 31, 20152016 and 2014,2015, no hedge relationships were discontinued due to forecasted transactions no longer being expected to occur according to the original hedge strategy. For the three months ended March 31, 20152016 and 2014,2015, amounts recognized in earnings on derivative transactions that were ineffective were not material.
The following table presents See Note 13 for a rollforwardsummary of net unrealized derivative lossesgains included in AOCI related to previously designated cash flow hedges included in AOCI:
  2015 2014
  (in millions)
Net unrealized derivative losses at January 1 $(12) $(17)
Reclassification of realized losses (1)
 2
 2
Income tax provision (1) (1)
Net unrealized derivative losses at March 31 $(11) $(16)
(1)hedges.
Loss reclassified from AOCI to net investment income on the Consolidated Statements of Income.
Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is fourthree years and relates to interest credited on forecasted fixed premium product sales.
Credit Risk
Credit risk associated with the Company’s derivatives is the risk that a derivative counterparty will not perform in accordance with the terms of the applicable derivative contract. To mitigate such risk, the Company has established guidelines and oversight of credit risk through a comprehensive enterprise risk management program that includes members of senior management. Key components of this program are to require preapproval of counterparties and the use of master netting arrangements and collateral arrangements whenever practical. See Note 11 for additional information on the Company’s credit exposure related to derivative assets.
Certain of the Company’s derivative contracts contain provisions that adjust the level of collateral the Company is required to post based on the Company’s financial strength rating (or based on the debt rating of the Company’s parent, Ameriprise Financial). Additionally, certain of the Company’s derivative contracts contain provisions that allow the counterparty to terminate the contract if the Company does not maintain a specific financial strength rating or Ameriprise Financial’s debt does not maintain a specific credit rating (generally an investment grade rating). If these termination provisions were to be triggered, the Company’s counterparty could require immediate settlement of any net liability position. At March 31, 20152016 and

30

Table of Contents
RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


December 31, 2014,2015, the aggregate fair value of derivative contracts in a net liability position containing such credit contingent provisions was $395$204 million and $367$243 million, respectively. The aggregate fair value of assets posted as collateral for such instruments as of March 31, 20152016 and December 31, 20142015 was $382$197 million and $367$243 million, respectively. If the credit contingent provisions of derivative contracts in a net liability position at March 31, 20152016 and December 31, 20142015 were triggered, the aggregate fair value of additional assets that would be required to be posted as collateral or needed to settle the instruments immediately would have been $13$7 million and nil, respectively.

31


13.Shareholder’s Equity

RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. Shareholder’s Equity
The following table provides informationtables provide the amounts related to amounts reclassified from AOCI:each component of other comprehensive income (“OCI”):
    Three Months Ended 
 March 31,
AOCI Reclassification Location of (Gain) Loss Recognized in Income 2015 2014
    (in millions)
Net unrealized gains on Available-for-Sale securities Net realized investment gains $(12) $(4)
Tax expense Income tax provision 4
 1
Net of tax   $(8) $(3)
Losses on cash flow hedges:      
Swaptions Net investment income $2
 $2
Tax benefit Income tax provision (1) (1)
Net of tax   $1
 $1
 Three Months Ended March 31, 2016
Pretax Income Tax Benefit (Expense) Net of Tax
 (in millions)
Net unrealized securities gains:     
Net unrealized securities gains arising during the period (1)
$469
 $(165) $304
Impact of deferred acquisition costs, deferred sales inducement costs, unearned revenue, benefit reserves and reinsurance recoverables(197) 69
 (128)
Net unrealized securities gains272
 (96) 176
      
Net unrealized derivatives gains:     
Reclassification of net derivative losses included in net income (3)
1
 
 1
Net unrealized derivatives gains1
 
 1
      
Other comprehensive income$273
 $(96) $177
See Note 4 for additional information
 Three Months Ended March 31, 2015
Pretax Income Tax Benefit (Expense) Net of Tax
 (in millions)
Net unrealized securities gains:     
Net unrealized securities gains arising during the period (1)
$215
 $(75) $140
Reclassification of net securities gains included in net income (2)
(12) 4
 (8)
Impact of deferred acquisition costs, deferred sales inducement costs, unearned revenue, benefit reserves and reinsurance recoverables(106) 37
 (69)
Net unrealized securities gains97
 (34) 63
      
Net unrealized derivatives gains:    

Reclassification of net derivative losses included in net income (3)
2
 (1) 1
Net unrealized derivatives gains2
 (1) 1
      
Other comprehensive income$99
 $(35) $64
(1) Includes other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income during the impactperiod.
(2) Reclassification amounts are recorded in net realized investment gains.
(3) Reclassification amounts are recorded in net investment income.
Other comprehensive income (loss) related to net unrealized securities gains (losses) includes three components: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit other-than-temporary impairment losses to credit losses; and (iii) other adjustments primarily consisting of changes in insurance and annuity asset and liability balances, such as DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverablerecoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

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RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table presents the changes in the balances of each component of AOCI, net of tax:
 Net Unrealized Securities Gains Net Unrealized Derivatives Gains Total
 (in millions)
Balance, January 1, 2015$741
 $(12) $729
  OCI before reclassifications71
 
 71
  Amounts reclassified from AOCI(8) 1
 (7)
Total OCI63
 1
 64
Balance, March 31, 2015$804
(1) 
$(11) $793
      
Balance, January 1, 2016$403
 $(8) $395
  OCI before reclassifications176
 1
 177
  Amounts reclassified from AOCI
 
 
Total OCI176
 1
 177
Balance, March 31, 2016$579
(1) 
$(7) $572
(1) Includes $2 million of noncredit related impairments on securities and net unrealized securities gains/losses included in AOCI. See Note 12 for additional information regarding the Company’s cash flow hedges. on previously impaired securities at both March 31, 2016 and 2015.
14.Income Taxes
14. Income Taxes
The Company’s effective tax rate was 18.5%16.4% and 11.2%18.5% for the three months ended March 31, 20152016 and 2014,2015, respectively. The effective tax rates are lower than the statutory rate as a result of tax preferred items including the dividends received deduction and low income housing tax credits. The increase in the effective tax rate for the three months ended March 31, 2015 compared to the prior year period was the result of an $18 million benefit in the first quarter of 2014 related to the completion of an Internal Revenue Service (“IRS”) audit.
Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $7 million which will expire beginning December 31, 2015.2016.
The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Included in deferred tax assets is a significant deferred tax asset relating to capital losses that have been recognized for financial statement purposes but not yet for tax return purposes as well as future deductible capital losses realized for tax return purposes. Under current U.S. federal income tax law, capital losses generally must be used against capital gain income within five years of the year in which the capital losses are recognized for tax purposes. Significant judgment is required in determining if a valuation allowance should be established, and the amount of such allowance if required. Factors used in making this determination include estimates relating to the performance of the business including the ability to generate capital gains.business. Consideration is given to, among other things in making this determination, (i) future taxable income exclusive of reversing temporary differences and carryforwards, (ii) future reversals of existing taxable temporary differences, (iii) taxable income in prior carryback years, and (iv) tax planning strategies. Based on analysis of the Company’s tax position, management believes it is more likely than not that the results of future operations and implementation of tax planning strategies will not allow the Company to realize certain state deferred tax assets and state net operating losses. The valuation allowance for state deferred tax assets and state net operating losses was $8 million at both March 31, 20152016 and December 31, 2014.2015.
As of March 31, 20152016 and December 31, 20142015, the Company had $161$58 million and $160$95 million,, respectively, of gross unrecognized tax benefits. If recognized, approximately $7$8 million and $9 million, net of federal tax benefits, of unrecognized tax benefits at both March 31, 20152016 and December 31, 20142015, respectively, would affect the effective tax rate.
It is reasonably possible that the total amounts of unrecognized tax benefits will change in the next 12 months. Based on the current audit position of the Company, it is estimated that the total amount of gross unrecognized tax benefits may decrease by $150$50 million to $160$60 million in the next 12 months due to resolution of IRS examinations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized nil and a net decrease of $1$39 million and nil in interest and penalties for the three months ended March 31, 20152016 and 2014,2015, respectively. At both March 31, 20152016 and December 31, 2014,2015, the Company had a payable of $40$2 million and $41 million, respectively, related to accrued interest and penalties.

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RIVERSOURCELIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The Company or one or more of its subsidiaries files income tax returns as part of its inclusion in the consolidated federal income tax returns of Ameriprise Financial in the U.S. federal jurisdiction and various state jurisdictions. The IRS has completed its field examination of the 1997 through 2011 tax returns. However, for federal income tax purposes, thesetax years except for 2007, continue to1997 through 2006, 2008 and 2009 remain open as a consequence offor certain unagreed-upon issues. The IRS is currently auditing the Company’s U.S. income tax returns for 2012 and 2013. The Company’s or certain of its subsidiaries’ state income tax returns are currently under examination by various jurisdictions for years ranging from 1997 through 2012 and remain open for all years after 2012.
15.Guarantees and Contingencies
15. Guarantees and Contingencies
Guarantees
The Company is required by law to be a member of the guaranty fund association in every state where it is licensed to do business. In the event of insolvency of one or more unaffiliated insurance companies, the Company could be adversely affected by the requirement to pay assessments to the guaranty fund associations.
The Company projects its cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations (“NOLHGA”) and the amount of its premiums written relative to the industry-wide premium in each state. The Company accrues the estimated cost of future guaranty fund assessments when it is considered probable that an assessment will be imposed, the event obligating the Company to pay the assessment has occurred and the amount of the assessment can be reasonably estimated.
The Company has a liability for estimated guaranty fund assessments and a related premium tax asset. At both March 31, 20152016 and December 31, 2014,2015, the estimated liability was $14$13 million and the related premium tax asset was $12 million. The expected period over which guaranty fund assessments will be made and the related tax credits recovered is not known.
Contingencies
Insurance companies have been the subject of increasing regulatory, legislative and judicial scrutiny. Numerous state and federal regulatory agencies have commenced examinations and other inquiries of insurance companies regarding sales and marketing practices (including sales to older consumers and disclosure practices), claims handling, and unclaimed property and escheatment practices and procedures. With regard to an industry-wide investigation of unclaimed property and escheatment practices and procedures, the Company is responding to regulatory audits, market conduct examinations and other inquiries (including inquiries from the State of Minnesota and a multistate insurance department examination)examination and a market conduct examination by the State of Minnesota). The Company has cooperated and will continue to cooperate with the applicable regulators regarding their inquiries.regulators.
The Company is involved in the normal course of business in a number of other legal and arbitration proceedings concerning matters arising in connection with the conduct of its business activities. The Company believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory investigation, examination or proceeding that is likely to have a material adverse effect on its consolidated financial condition, results of operations or liquidity.
Notwithstanding the foregoing, it is possible that the outcome of any current or future legal, arbitration or regulatory proceeding could have a material impact on results of operations in any particular reporting period as the proceedings are resolved.
Uncertain economic conditions, heightened and sustained volatility in the financial markets and significant financial reform legislation may increase the likelihood that clients and other persons or regulators may present or threaten legal claims or that regulators increase the scope or frequency of examinations of the Company or the insurance industry generally.
In September 2011, the California Department of Insurance (“CA DOI”) issued an Order to Show Cause administrative action against RiverSource Life Insurance Company alleging that certain claims handling practices reviewed in a 2007-2008 market conduct exam did not comply with applicable law. In August 2014, RiverSource Life Insurance Company and the CA DOI reached an agreement in principle to settle all pending allegations for $800,000, with the exception of a single allegation related to certain coverage determinations made under long term care insurance policies issued between 1989-1992. An administrative hearing on this remaining allegation concluded in November 2014, and in April 2015 a decision was issued by the California Insurance Commissioner resolving the matter in favor of RiverSource Life Insurance Company, finding no violations of the California Insurance Code and no penalties warranted against RiverSource Life Insurance Company. 

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ITEM 2.MANAGEMENT’S NARRATIVE ANALYSIS
The following narrative analysis of RiverSource Life Insurance Company’s consolidated financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements” that follow and RiverSource Life Insurance Company’s Consolidated Financial Statements and Notes presented in Item 1. ITEM 2. MANAGEMENT’S NARRATIVE ANALYSIS
Overview
RiverSource Life Insurance Company and its subsidiaries are referred to collectively in this Form 10-Q as the “Company”. The Company’sfollowing discussion and management’s narrative analysis of the financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements” that follow, the Consolidated Financial Statements and Notes presented in Item 1 and its Annual Report on Form 10-K for the year ended December 31, 20142015 filed with the Securities and Exchange Commission (“SEC”) on February 24, 25, 2016 (“2015 (“2014 10-K”), as well as any current reports on Form 8-K and other publicly available information.
The Company followsConsolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and the following discussion is presented on a consolidated basis consistent with GAAP.
. Management’s narrative analysis of the results of operations is presented in lieu of management’s discussion and analysis of financial condition and results of operations, pursuant to General Instructions H(2)(a) of Form 10-Q.
Overview10-Q in lieu of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
RiverSource Life InsuranceSee Note 1 to the Consolidated Financial Statements for additional information.
On April 8, 2016, the Department of Labor published its final rule regarding the fiduciary status of investment advice providers to retirement investors (primarily account holders in 401(k) plans and IRAs and other types of ERISA clients) and its new and amended prohibited transaction exemptions regarding how ERISA investment advice fiduciaries can provide products manufactured by the Company and unaffiliated insurers to retirement investors. These final regulations focus in large part on conflicts of interest related to investment recommendations made by financial advisors, registered investment advisors and other investment or insurance professionals to retirement investors, how financial advisors are able to discuss IRA rollovers, as well as how financial advisors and affiliates can transact with retirement investors. Qualified accounts, particularly IRAs, make up a significant portion of the Company’s annuity product sales. The Company is a stock life insurance companycontinuing to review and analyze the potential impact of the final regulations on its clients and prospective clients as well as the potential impact on its business. Teams are working diligently to assess these principles-based rules and the Company will work with one wholly owned stock life insurance company subsidiary, RiverSource Life Insurance Co. of New York (“RiverSource Life of NY”). RiverSource Life Insurance Company is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial”). its selling firms and their advisors to make the necessary changes to effectively implement these new rules.
RiverSource Life Insurance Company is domiciled in Minnesota and holds Certificates of Authority in American Samoa, the District of Columbia and all states except New York. RiverSource Life Insurance Company issues insurance and annuity products.
RiverSource Life of NY is domiciled and holds a Certificate of Authority in New York. RiverSource Life of NY issues insurance and annuity products.
RiverSource Life Insurance Company also wholly owns RiverSource Tax Advantaged Investments, Inc. (“RTA”). RTA is a stock company domiciled in Delaware and is a limited partner in affordable housing partnership investments.
Critical Accounting Policies and Estimates
The accounting and reporting policies that the Company uses affect its Consolidated Financial Statements. Certain of the Company’s accounting and reporting policies are critical to an understanding of the Company’s financial condition and results of operations. In some cases, the application of these policies can be significantly affected by the estimates, judgments and assumptions made by management during the preparation of the Consolidated Financial Statements. These accounting policies are discussed in detail in “Management’s Narrative Analysis — Critical Accounting Policies”Policies and Estimates” in the Company’s 20142015 10-K.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements and their expected impact on the Company’s future consolidated financial condition or results of operations, see Note 2 to the Consolidated Financial Statements.

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Consolidated Results of Operations for theThree Months EndedMarch 31, 20152016 and 20142015
The following table presents the Company’s consolidated results of operations:
 Three Months Ended March 31,    Three Months Ended March 31,  
 2015 2014 Change2016 2015 Change
  (in millions, except percentages)(in millions)  
Revenues  
  
  
  
       
Premiums $97
 $104
 $(7) (7)%$102
 $97
 $5
 5 %
Net investment income 306
 333
 (27) (8)290
 306
 (16) (5)
Policy and contract charges 460
 447
 13
 3
469
 460
 9
 2
Other revenues 104
 95
 9
 9
98
 104
 (6) (6)
Net realized investment gains 10
 4
 6
 NM
9
 10
 (1) (10)
Total revenues 977
 983
 (6) (1)968
 977
 (9) (1)
Benefits and expenses  
  
  
  
       
Benefits, claims, losses and settlement expenses 306
 208
 98
 47
226
 306
 (80) (26)
Interest credited to fixed accounts 172
 186
 (14) (8)146
 172
 (26) (15)
Amortization of deferred acquisition costs 55
 71
 (16) (23)90
 55
 35
 64
Other insurance and operating expenses 182
 182
 
 
177
 182
 (5) (3)
Total benefits and expenses 715
 647
 68
 11
639
 715
 (76) (11)
Pretax income 262
 336
 (74) (22)329
 262
 67
 26
Income tax provision 49
 38
 11
 29
54
 49
 5
 10
Net income $213
 $298
 $(85) (29)%$275
 $213
 $62
 29 %
NM Not Meaningful.NM Not Meaningful.
NM  Not Meaningful.
OverviewOverall
Net income decreased $85increased $62 million or 29% to $213$275 million for the three months ended March 31, 20152016 compared to $298$213 million for the prior year period. Pretax income decreased $74increased $67 million or 22%26% to $262$329 million for the three months ended March 31, 20152016 compared to $336$262 million for the prior year period primarily reflecting a $32 million long term care (“LTC”) reserve increase, the market impact on variable annuity guaranteed benefits (net of hedges and the related deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) amortization), a $27$32 million benefitincrease in long term care (“LTC”) reserves in the prior year period and a $10 million gain from policyholder movementthe sale of investments in Portfolio Navigator (traditional asset allocation) funds under certain in force variable annuities with living benefit guarantees to the Portfolio Stabilizer (managed volatility) funds compared to a $2 million benefit in the current periodresidential mortgage loans partially offset by the impact ofon DAC, DSIC and reserves for insurance features in non-traditional long-duration contracts from actual versus expected market appreciation. performance.
The market impact on variable annuity guaranteed benefits (net of hedges and the related DACDSIC and DSICDAC amortization) was an expensea benefit of $38$24 million for the three months ended March 31, 2015,2016 compared to an expense of $3$38 million for the prior year period.
The impact on DAC, DSIC and reserves for insurance features in non-traditional long-duration contracts from actual versus expected market performance based on the Company’s view of bond and equity performance was an expense of $10 million ($6 million for DAC, $1 million for DSIC and $3 million for insurance features in non-traditional long duration contracts) for the three months ended March 31, 2016 compared to a benefit of $19 million ($9 million for DAC, $2 million for DSIC and $8 million for insurance features in non-traditional long duration contracts) for the prior year period. The primary driver of the year-over-year difference is due to a change in how the Company is recalibrating expected bond fund returns based on current interest rates and spreads while still assuming ultimate rates and spreads do not change from the original expectations. Previously, the difference between actual and expected interest rates directly impacted income in the current period and there would be an offsetting impact during annual unlocking. The prior year benefit reflected favorable equity market and bond fund returns.
The Company’s variable annuity account balances increased 3%decreased 5% to $77.9$74.2 billion at March 31, 20152016 compared to the prior year period due to market appreciation, partially offset by net outflows of $1.7 billion.$1.2 billion and market depreciation.
The Company’s fixed annuity account balances declined 10% to $11.7$10.5 billion at March 31, 20152016 compared to the prior year period reflecting limited new sales from low interest rates and higher lapse rates related torates. Given the re-pricing of the five-year guarantee block during 2014, a portion of which came out of its surrender charge period during the first quarter of 2015. As of March 31, 2014, approximately $3.0 billion of the $4.1 billion five-year guarantee block was re-priced. The change in crediting rates decreased the level of spread compression in both periods.
During the quarter, the Company conducted a review of its LTC reserve for unpaid amounts on reported claims based on additional information it received from Genworth Financial, Inc., which reinsures 50% ofcurrent interest rate environment, the Company’s LTC business and administers all of its claims. Based on this information, along with a review of the discount rate, management’s best estimate for LTC claims reserves resulted in a net $32 million increase. The most significant drivers of the reserve increase were updates to the benefit utilization rates and claims termination rates, partially offset by a $15 million benefit from a higher discount rate. The Company is finalizing its review of LTC claims experience whichcurrent fixed annuity book is expected to be completed in the second quarter. The Company also increased the discount rate forgradually run off and earnings on its disability income (“DI”) reserve for unpaid amounts on reported claims, which resulted in a $7 million reserve decrease. The current discount rates are based on the average interest rates earned on assets supporting the liability and were 6.25% and 5.0% for LTC and DI, respectively, at March 31, 2015.fixed annuity business will trend down.

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Revenues
Total revenues decreased $6by $9 million or 1% to $977$968 million for the three months ended March 31, 20152016 compared to $983$977 million for the prior year period.

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RIVERSOURCE LIFE INSURANCE COMPANY

Premiums decreased $7increased $5 million or 7%5% to $97$102 million for the three months ended March 31, 20152016 compared to $104$97 million for the prior year period. The decrease wasperiod primarily due to lowerreflecting higher sales of immediate annuities with life contingencies.
Net investment income decreased $27$16 million or 8%5% to $306$290 million for the three months ended March 31, 20152016 compared to $333$306 million for the prior year period reflecting a decrease in investment income on fixed maturities primarily due to lower invested assets and continued low interest rates.
Other revenues increased $9decreased $6 million or 9%6% to $104$98 million for the three months ended March 31, 20152016 compared to $95$104 million for the prior year period reflecting higherlower marketing support due to higherdriven by lower average separate account balances. Average variable annuity account balances driven by positivedecreased $5.6 billion, or 8%, from the prior year period due to net outflows and market performance.depreciation.
Net realized investment gains were $10$9 million for the three months ended March 31, 20152016 compared to net realized investment gains of $4$10 million for the prior year period. For the three months ended March 31, 2016, a net realized gain of $10 million from the sale of certain residential mortgage loans was partially offset by a $1 million increase in the provision for loan losses on syndicated loans. For the three months ended March 31, 2015,, net realized gains of $12 million on Available-for-Sale securities due to sales, calls and tenders were partially offset by a $1 million increase in the provision for loan losses on syndicated loans. For the three months ended March 31, 2014, net realized gains of $5 million on Available-for-Sale securities due to sales, calls and tenders were partially offset by other-than-temporary impairments recognized in earnings of $1 million which primarily related to the Company's decision to sell a corporate debt security.
Benefits and Expenses
Total benefits and expenses increased $68decreased $76 million or 11% to $715$639 million for the three months ended March 31, 20152016 compared to $647$715 million for the prior year period primarily due to an increasea decrease in benefits, claims, losses and settlement expenses partially offset by a decrease inand interest credited to fixed accounts andpartially offset by an increase in amortization of DAC.deferred acquisition costs.
Benefits, claims, losses and settlement expenses increased $98decreased $80 million or 47%26% to $306$226 million for the three months ended March 31, 20152016 compared to $208$306 million for the prior year period primarily reflecting the following items:
A $5$32 million increase in LTC reserves in the prior year period.
The market impact on reserves for insurance features in non-traditional long-duration contracts was a $3 million expense for the three months ended March 31, 2016 compared to an $8 million benefit in the prior year period. See additional discussion above in the Overall section.
A $7 million increase in reserves for immediate annuities with life contingencies primarily due to higher sales. This impact is mostly offset by an increase in premiums.
A $4 million increase in expense related to higher reserve funding driven by the impact of higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date.
An increase in expenses compared to the prior year period due to a $32 million benefit in the first quarter of 2014 from policyholder movement of investments in Portfolio Navigator funds under certain in force variable annuities with living benefit guarantees to the Portfolio Stabilizer funds compared to $3 million in the first quarter of 2015.
A $32 million increase in LTC reserves in the first quarter of 2015.
A $7 million favorable impact in the prior year period from a change in the discount rate for DI productsdisability income products.
The impact on DSIC from actual versus expected market performance based on the Company’s view of bond and equity performance was an expense of $1 million for the three months ended March 31, 2016 compared to a benefit of $2 million for the prior year period. See additional discussion above in the first quarter of 2015.Overall section.
A $29$175 million decrease in expense compared to the prior year period from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. The favorable impact of the nonperformance credit spread was $44$219 million for the first quarter of 2015three months ended March 31, 2016 compared to $15a favorable impact of $44 million for the prior year period.
A $71$91 million increase in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This increase was the result of an unfavorable $238$485 million change in the market impact on variable annuity guaranteed living benefits reserves, a favorable $167$396 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits and noan unfavorable $2 million DSIC offset. The main market drivers contributing to these changes are summarized below:
Interest rates were down in the first quarter of 2015 and 2014, but decreased more in the first quarter of 2015 resulting in a larger unfavorable change inrate impact on the variable annuity guaranteed living benefits liability compared tonet of the prior year period, partially offset by a larger favorable changeimpact on the corresponding hedge assets resulted in higher expense in the related hedge assetsfirst quarter of 2016 compared to the prior year period.
Equity market volatility impactsimpact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in an increase inhigher expense in the first quarter of 20152016 compared to a decrease in expense in the prior year period. This unfavorable change was partially offset by a decrease
Market volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in lower expense in the first quarter of 20152016 compared to an increase in expense in the prior year period from equity market volatility impacts on the related hedge assets.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 unfavorable impact compared to the prior year period.

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Interest credited to fixed accounts decreased $14$26 million or 8%15% to $172$146 million for the three months ended March 31, 20152016 compared to $186$172 million for the prior year period primarily due to lower average fixed annuity account balances and the market impact on

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RIVERSOURCE LIFE INSURANCE COMPANY

indexed universal life benefits, net of hedges. The market impact on indexed universal life benefits, net of hedges was a lower average crediting rate on interest sensitive fixed annuities.benefit of $16 million for the three months ended March 31, 2016 compared to an expense of $5 million for the prior year period. Average fixed annuity account balances decreased $1.2$1.3 billion or 9%11% to $11.9$10.6 billion for the three months ended March 31, 20152016 compared to the prior year period dueas older policies continue to net outflows reflecting limitedlapse and new sales are limited from low rates and higher lapseinterest rates. The average fixed annuity crediting rate excluding capitalized interest decreased to 3.0% for the three months ended March 31, 2015 compared to 3.3% for the prior year period reflecting the re-pricing of the five-year guarantee block.
Amortization of DAC decreased $16increased $35 million or 23%64% to $55$90 million for the three months ended March 31, 20152016 compared to $71$55 million for the prior year period primarily reflecting the following items:

The impact on DAC from actual versus expected market performance based on the Company’s view of bond and equity performance was an expense of $6 million for the three months ended March 31, 2016 compared to a benefit of $9 million for the prior year period. See additional discussion above in the Overall section.
The DAC offset to the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization) was an expense of $17 million for the three months ended March 31, 2016 compared to a benefit of $5 million for the first quarter of 2015 compared to an expense of $2 million in the prior year period.
The impact on DAC from actual versus expected market performance based on the Company's view of bond and equity performance was a benefit of $9 million for the first quarter of 2015 compared to a benefit of $6 million for the prior year period.
A $4 million decrease in expenses compared to the prior year period from the DAC offset related to policyholder movement of investments in Portfolio Navigator funds under certain in force variable annuities with living benefit guarantees to the Portfolio Stabilizer funds.
Income Taxes
The Company’s effective tax rate was 18.5%16.4% for the three months ended March 31, 2015,2016, compared to 11.2%18.5% for the three months ended March 31, 2014.2015. The effective tax rates are lower than the statutory rate as a result of tax preferred items including the dividends received deduction and low income housing tax credits. The increase in the effective tax rate for the three months ended March 31, 2015 compared to the prior year period was the result of an $18 million benefit in the first quarter of 2014 related to the completion of an Internal Revenue Service (“IRS”) audit.
Market Risk
The Company’s primary market risk exposures are interest rate, equity price and credit risk. Equity price and interest rate fluctuations can have a significant impact on the Company’s results of operations, primarily due to the effects on asset-based fees and expenses, the “spread” income generated on its fixed annuities, fixed insurance and fixed portion of its variable annuities and variable insurance contracts, the value of DAC and DSIC assets, the value of liabilities for guaranteed benefits associated with its variable annuities and the value of derivatives held to hedge these benefits.
The Company’s earnings from fixed annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts are based upon the spread between rates earned on assets held and the rates at which interest is credited to accounts. The Company primarily invests in fixed rate securities to fund the rate credited to clients. The Company guarantees an interest rate to the holders of these products. Investment assets and client liabilities generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments. Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income. However, the current low interest rate environment is resulting in interest rates below the level of some of the Company’s 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. 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 low interest rate environment, the Company’s current reinvestment yields are generally lower than the current portfolio yield. The Company expects its portfolio income yields to continue to decline in future periods if interest rates remain 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, 20172018 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, was $1.6$2.4 billion and 4.7%4.9%, respectively, as of March 31, 2015.2016. In addition, residential mortgage-backed securities, which are subject to prepayment risk as a result of the low interest rate environment, totaled $3.5$3.1 billion and had a weighted average yield of 3.9%3.6% as of March 31, 2015.2016. While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields. In addition to the interest rate environment, the mix of benefit payments versus product sales as well as the timing and volumes associated with such mix may impact the

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Company’s investment yield. Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion. The average yield for investment purchases during the three months ended March 31, 20152016 was approximately 3.5%4.3%.
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 guaranteed minimum interest rates,GMIRs, will have a negative impact to future operating results. To mitigate the unfavorable impact that the low interest rate environment has on the Company’s spread income, it assesses reinvestment risk in its investment portfolio and monitors this risk in accordance with its asset/liability management framework. In addition, the Company may reduce the crediting rates on its fixed products when warranted, subject to guaranteed minimums. In 2014, the Company completed the process of setting lower renewal interest rates for a portion of its fixed annuities that were above the guaranteed minimum interest rates, which helped relieve some of the spread compression caused by low rates.
The following table presents the account values of fixed annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of guaranteed minimum crediting rates and the range of the difference between rates credited to policyholders and contractholders as of March 31, 2015 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated. Rates are reset at the Company’s discretion, subject to guaranteed minimums.
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RIVERSOURCE LIFE INSURANCE COMPANY
 Account Values with Crediting Rates
 At Guaranteed Minimum 1-49 bps above Guaranteed Minimum 50-99 bps above Guaranteed Minimum 100-150 bps above Guaranteed Minimum Greater Than 150 bps above Guaranteed Minimum Total
Range of Guaranteed Minimum Crediting Rates(in billions, except percentages)
           
1% - 1.99%$2.2
 $1.0
 $0.4
 $0.2
 $0.1
 $3.9
2% - 2.99%0.5
 
 
 
 
 0.5
3% - 3.99%9.2
 
 
 
 
 9.2
4% - 5.00%5.5
 
 
 
 
 5.5
Total$17.4

$1.0

$0.4

$0.2

$0.1

$19.1
            
Percentage of Account Values That Reset In:           
Next 12 months (1)
100% 88% 34% 46% 74% 97%
> 12 months to 24 months (2)

 5
 32
 19
 26
 1
> 24 months (2)

 7
 34
 35
 
 2
  Total100% 100% 100% 100% 100% 100%

(1)
Includes contracts with annual discretionary crediting rate resets and contracts with twelve or less months until the crediting rate becomes discretionary on an annual basis.
(2)
Includes contracts with more than twelve months remaining until the crediting rate becomes an annual discretionary rate.
In addition to the fixed rate exposures noted above, the Company also has the following variable annuity guarantee benefits: guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these guaranteed benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying invested assets.
The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the liabilities. This approach works with the premise that matched sensitivities will produce a highly effective hedging result. The Company’s comprehensive hedging program focuses mainly on first order sensitivities of assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho) and Volatility (Vega). Additionally, various second order sensitivities are managed. The Company uses various index options across the term structure, interest rate swaps and swaptions, total return swaps and futures to manage the risk exposures. The exposures are measured and monitored daily and adjustments to the hedge portfolio are made as necessary.
The Company has a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on its statutory surplus and to cover some of the residual risks not covered by other hedging activities. The Company assesses this residual risk under a range of scenarios in creating and executing the macro hedge program. As a means of economically hedging these risks, the Company uses a combination of options and/or swaps.swaptions. Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts. The macro hedge program could result in additional earnings volatility as changes in the value of

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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, the Company performs 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. The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuity riders, equity indexed annuities, indexed universal life insurance and the associated hedge assets, the Company assumed no change in implied market volatility despite the 10% drop in equity prices.
The following tables present the Company’s estimate of the impact on pretax income from the above defined hypothetical market movements as of March 31, 2015:2016:
 Equity Price Exposure to Pretax Income Equity Price Exposure to Pretax Income
Equity Price Decline 10% Before
Hedge Impact
 Hedge
Impact
 Net Impact Before Hedge Impact Hedge Impact Net Impact
 (in millions) (in millions)
Asset-based fees and expenses $(89) $
 $(89) $(74) $
 $(74)
DAC and DSIC amortization (1) (2)
 (99) 
 (99) (122) 
 (122)
Variable annuity riders:  
  
    
  
  
GMDB and GMIB (2)
 (104) 
 (104) (198) 
 (198)
GMWB (241) 250
 9
 (463) 491
 28
GMAB (35) 36
 1
 (49) 51
 2
DAC and DSIC amortization (3)
 N/A
 N/A
 (1) N/A
 N/A
 (6)
Total variable annuity riders (380)
286

(95) (710)
542

(174)
Macro hedge program (4)
 
 2
 2
Equity indexed annuities 1
 (1) 
 1
 (1) 
Indexed universal life insurance 26
 (24) 2
 23
 (17) 6
Total $(541)
$263

$(279) $(882)
$524

$(364)

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RIVERSOURCE LIFE INSURANCE COMPANY

 Interest Rate Exposure to Pretax Income Interest Rate Exposure to Pretax Income
Interest Rate Increase 100 Basis Points Before
Hedge Impact
 Hedge
Impact
 Net Impact Before Hedge Impact Hedge Impact Net Impact
 (in millions) (in millions)
Asset-based fees and expenses $(25) $
 $(25) $(26) $
 $(26)
Variable annuity riders:  
  
  
  
  
  
GMDB and GMIB 
 
 
 
 
 
GMWB 947
 (1,039) (92) 1,140
 (1,109) 31
GMAB 30
 (33) (3) 42
 (39) 3
DAC and DSIC amortization (3)
 N/A
 N/A
 12
 N/A
 N/A
 (3)
Total variable annuity riders 977

(1,072)
(83) 1,182

(1,148)
31
Macro hedge program (4)
 
 13
 13
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products 39
 
 39
 69
 
 69
Indexed universal life insurance 39
 1
 40
 62
 1
 63
Total $1,030

$(1,058)
$(16) $1,287

$(1,147)
$137

N/A Not Applicable.
N/ANot Applicable.
(1) 
Market impact on DAC and DSIC amortization resulting from lower projected profits.
(2) 
In estimating the impact on DAC and DSIC amortization resulting from lower projected profits, the Company has not changed its assumed equity asset growth rates. This is a significantly more conservative estimate than if the Company assumed management follows its mean reversion guideline and increased near-term rates to recover the drop in equity values over a five-year period. The Company makes this same conservative assumption in estimating the impact from GMDB and GMIB riders.
(3) 
Market impact on DAC and DSIC amortization related to variable annuity riders is modeled net of hedge impact.
(4)
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 above results compare to an estimated negative net impact to pretax income of $284$285 million related to a 10% equity price decline and an estimated positive net impact to pretax income of nil$33 million related to a 100 basis point increase in interest rates as of December 31, 20142015.
Net impacts shown in the above table from GMWB and GMAB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions and with discount rates increased to reflect a current market estimate of the Company’s risk of nonperformance specific to these liabilities. The nonperformance spread risk is not hedged.
Actual results could differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming that implied market volatility does not change when equity prices fall by 10%, that management does not increase assumed equity asset growth rates to anticipate recovery of the drop in equity values when valuing DAC, DSIC and GMDB and GMIB liability values and that the 100 basis point increase in interest rates is a parallel shift of the yield curve. Furthermore, the Company has not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor has the Company tried to anticipate actions management might take to increase revenues or reduce expenses in these scenarios.
The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events. Impacts of larger or smaller changes in interest rates or equity prices may not be proportional to those shown for a 100 basis point increase in interest rates or a 10% decline in equity prices.

Fair Value Measurements
The Company reports certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives, most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or distressed sale. The Company includes actual market prices, or observable inputs, in its fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. The Company validates prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 10 to the Consolidated Financial Statements for additional information on the Company’s fair value measurements.
Fair Value of Liabilities and Nonperformance Risk
Companies are required to measure the fair value of liabilities at the price that would be received to transfer the liability to a market participant (an exit price). Since there is not a market for the Company’s obligations of its variable annuity riders and indexed universal life insurance, the Company considers the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, the Company adjusts the valuation of variable annuity riders and indexed universal life insurance by updating certain contractholder assumptions, adding explicit margins to provide for profit, risk and expenses, and adjusting the rates used to discount expected cash flows to reflect a current market estimate of the Company’s nonperformance risk. The nonperformance risk adjustment is based on broker quotes for credit default swaps that areobservable market data adjusted to estimate the risk of the Company not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of March 31, 2015.2016. As the Company’s 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 net income would be approximately $183$348 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 35%), based on March 31, 20152016 credit spreads.
Liquidity and Capital Resources
Liquidity Strategy
The liquidity requirements of the Company are generally met by funds provided by investment income, maturities and periodic repayments of investments, fixed annuity and fixed insurance deposits, premiums and proceeds from sales of investments, fixed annuity and fixed insurance deposits as well as capital contributions from Ameriprise Financial. Other liquidity sources the Company has established are short-term borrowings and available lines of credit with Ameriprise Financial aggregating $1$1.0 billion.
The Company enters into short-term borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances to reduce reinvestment risk from higher levels of expected annuity net cash flows.risk. Short-term borrowings allow the Company to receive cash to reinvest in longer-duration assets, while paying back the short-term debt with cash flows generated by the fixed income portfolio. The balance of repurchase agreements at both March 31, 20152016 and December 31, 20142015 was $50 million which is collateralized with agency residential mortgage backed securities and commercial mortgage backed securities from the Company’s investment portfolio. RiverSource Life Insurance Company is a member of the FHLB of Des Moines, which provides RiverSource Life Insurance Company access to collateralized borrowings. At both March 31, 20152016 and

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December 31, 2014,2015, the Company had borrowings of $150 million from the FHLBFHLB which is collateralized with commercial mortgage backed securities.
The primary uses of funds are policy benefits, commissions, other product-related acquisition and sales inducement costs, operating expenses, policy loans, dividends to Ameriprise Financial and investment purchases. The Company routinely reviews its sources and uses of funds in order to meet its ongoing obligations.
Capital Activity
Dividends paid by RiverSource Life Insurance Company were as follows:
  Three Months Ended 
 March 31,
  2015 2014
  (in millions)
Cash dividends paid to Ameriprise Financial $225
 $150
 Three Months Ended March 31,
 2016 2015
 (in millions)
Cash dividends paid to Ameriprise Financial$400
 $225

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RIVERSOURCE LIFE INSURANCE COMPANY

Regulatory Capital
RiverSource Life Insurance Company and RiverSource Life Insurance Co. of NYNew York (“RiverSource Life of NY”) are subject to regulatory capital requirements. Actual capital, determined on a statutory basis, and regulatory capital requirements for each of the life insurance entities arewere as follows:
 
Actual Capital (1)
 
Regulatory Capital
Requirement (2)
Actual Capital Regulatory 
Capital 
Requirements
 March 31, 2015 December 31, 2014 December 31, 2014March 31, 2016 December 31, 2015 December 31, 2015
   (in millions)  (in millions)
RiverSource Life Insurance Company(2) $3,738
 $3,614
 $595
$3,951
 $3,800
 $589
RiverSource Life Insurance Co. of New York 331
 312
 59
RiverSource Life Insurance Co. of NY (1)(2)
369
 333
 44
(1) Actual capital, as defined by the National Association of Insurance Commissioners for purposes of meeting regulatory capital requirements, includes statutory capital and surplus, plus certain statutory valuation reserves.
(2) Regulatory capital requirement is based on the statutory risk-based capital filing.
(1)
Actual capital, as defined by the National Association of Insurance Commissioners for purposes of meeting regulatory capital requirements, includes statutory capital and surplus, plus certain statutory valuation reserves.
(2)
Regulatory capital requirement is based on the statutory risk-based capital filing.
Contractual Commitments
There have been no material changes to the Company’s contractual obligations disclosed in the Company’s 20142015 10-K.
Forward-Looking Statements
This report contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include: 
statements of the Company’s plans, intentions, expectations, objectives, or goals, including those related to the introduction, cessation, terms or pricing of new or existing products and services and the consolidated tax rate;
other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and
statements of assumptions underlying such statements.
The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on pace,” “project” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements.
Such factors include, but are not limited to: 
conditions in the interest rate, credit default, equity market and foreign exchange environments, including changes in valuations, liquidity and volatility;
changes in and the adoption of relevant accounting standards and securities rating agency standards and processes, as well as changes in the litigation and regulatory environment, including ongoing legal proceedings and regulatory actions, the frequency and extent of legal claims threatened or initiated by clients, other persons and regulators, and developments in regulation and legislation, including the rules and regulations implemented or to be implemented in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act;Act or in light of the U.S. Department of Labor rule and exemptions pertaining to the fiduciary status of investment advice providers to 401(k) plans, plan sponsors, plan participants and the holders of individual retirement or health savings accounts;
the Company’s investment management performance and consumer acceptance of the Company’s products;
effects of competition in the financial services industry, including pricing pressure, the introduction of new products and services and changes in product distribution mix and distribution channels;

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changes to the Company’s reputation that may arise from employee or Ameriprise Financial Services, Inc. advisor misconduct, legal or regulatory actions, improper management of conflicts of interest or otherwise;
the Company’s capital structure as a subsidiary of Ameriprise Financial, including the ability of its parent to support its financial strength and ratings, as well as the opinions of rating agencies and other analysts or the Company’s regulators, distributors or policyholders and contractholders in response to any change or prospect of change in any such opinion;
risks of default, capacity constraint or repricing by issuers or guarantors of investments the Company owns or by counterparties to hedge derivative, insurance or reinsurance arrangements, experience deviations from the Company’s assumptions regarding such risks, the evaluations or the prospect of changes in evaluations of any such third parties published by rating agencies or other analysts and the reactions of other market participants or the Company’s regulators, distribution partners or customers in response to any such evaluation or prospect of changes in evaluation;

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RIVERSOURCE LIFE INSURANCE COMPANY

experience deviations from the Company’s assumptions regarding morbidity, mortality and persistency in certain annuity and insurance products, or from assumptions regarding market returns assumed in valuing or unlocking DAC and DSIC or market volatility underlying the Company’s valuation and hedging of guaranteed benefit annuity riders, or from assumptions regarding interest rates assumed in the Company'sCompany’s loss recognition testing of its long term care business;
successfully cross-selling insurance and annuity products and services to Ameriprise Financial’s customer base;
the Company’s ability to effectively hedge risks relating to guaranteed benefit riders and certain other products;
the impact of intercompany allocations to the Company from Ameriprise Financial and its affiliates;
Ameriprise Financial’s ability to attract, recruit and retain qualified advisors and employees and its ability to distribute the Company’s products through current and future distribution channels;
changes in capital requirements that may be indicated, required or advised by regulators or rating agencies;
the impacts of Ameriprise Financial’s efforts to improve distribution economics and realize benefits from reengineering and tax planning;
interruptions or other failures in the Company’s communications, technology and other operating systems, including errors or failures caused by third partythird-party service providers, interference or failures caused by third partythird-party attacks on the Company’s systems, or the failure to safeguard the privacy or confidentiality of sensitive information and data on such systems; and
general economic and political factors, including consumer confidence in the economy, the ability and inclination of consumers generally to invest, as well as their ability and inclination to invest in financial instruments and products other than cash and cash equivalents, the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation and changes therein, including tax laws, tax treaties, fiscal and central government treasury policy, and policies regarding the financial services industry and regulatory rulings and pronouncements.
The Company cautions the reader that the foregoing list of factors is not exhaustive. There may also be other risks that the Company is unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statements. The foregoing list of factors should be read in conjunction with the “Risk Factors” discussion included in Part I, Item 1A of the Company’s 20142015 10-K and Part II, Item 1A of this Form 10-Q.
ITEM 4.CONTROLS AND PROCEDURES
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in and pursuant to Securities and Exchange Commission regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to the Company’s management, including its principal executive officer and chief financial officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, the Company’s disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.
The Company’s management, under the supervision and with the participation of the Company’s principal executive officer and chief financial officer, evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered

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by this report. Based upon that evaluation, the Company’s principal executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures were effective at a reasonable level of assurance as of March 31, 2015.2016.
Changes in Internal Control over Financial Reporting
There have not been any changes in RiverSource Life Insurance Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, RiverSource Life Insurance Company’s internal control over financial reporting.

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PART II.OTHER INFORMATION


RIVERSOURCE LIFE INSURANCE COMPANY

PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
ITEM 1. LEGAL PROCEEDINGS
The information set forth in Note 15 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference. 
ITEM 1A.RISK FACTORS
ITEM 1A. RISK FACTORS
The Company is including the following revised risk factor which should be read in conjunction with the description of risk factors provided in Part I, Item 1A of RiverSource Life Insurance Company’s 2014 10-K:2015 10-K.
RiverSource Life’s business is regulated heavily, and changes to the laws and regulations may have an adverse effect on RiverSource Life’s operations, reputation and financial condition.
RiverSource Life is subject to various federal and state laws and regulations, and is required to obtain and maintain licenses for its business in addition to being subject to regulatory oversight. For a discussion of the regulatory framework in which RiverSource Life operates, see Item 1 of RiverSource Life’s Annual Report for the year ended December 31, 2014 on Form2015 10-K - “Regulation.” Compliance with these applicable laws and regulations is time-consuming and personnel-intensive, and RiverSource Life has invested and will continue to invest substantial resources to ensure compliance by its parent company and its subsidiaries, directors, officers, employees and affiliated employees and agents. Any enforcement actions, investigations or other proceedings brought against RiverSource Life or its subsidiaries, directors, employees and affiliated employees and agents by its regulators may result in fines, injunctions or other disciplinary actions that could harm RiverSource Life’s reputation or impact its results of operations. Further, any changes to the laws and regulations applicable to RiverSource Life’s business, as well as changes to the interpretation and enforcement of such laws and regulations, may affect its financial condition and operations. Such changes may impact the operations and profitability of RiverSource Life, including with respect to the scope of products and services provided and the incurrence of additional costs of doing business. Ongoing changes to regulation and oversight of the insurance industry may produce results, the full impact of which cannot be immediately ascertained. In addition, RiverSource Life continues to see enhanced legislative and regulatory interest regarding retirement investing, and RiverSource Life will continue to closely review and monitor any legislative or regulatory proposals and changes. Any incremental requirements, costs and risks imposed on RiverSource Life in connection with such current or future legislative or regulatory changes, may constrain its ability to market its products to potential customers, and could negatively impact its profitability and make it more difficult for RiverSource Life to pursue its growth strategy.
Some of the changes resulting from rules and regulations called for under the Dodd-Frank Act could present operational challenges and increase costs. For example, in the area of derivatives, higher margin and capital requirements, coupled with more restrictive collateral rules, could impact RiverSource Life’s ability to effectively manage and hedge risk. Ultimately these complexities and increased costs could have an impact on RiverSource Life’s ability to offer cost-effective and innovative insurance products to its clients.
On April 20, 2015,8, 2016, the Department of Labor proposed regulations seeking to changepublished its final rule regarding the definitionfiduciary status of who is an investment advice fiduciary under ERISA and how such advice can be providedproviders to retirement investors (primarily account holders in 401(k) plans and IRAs.IRAs and other types of ERISA clients) and its new and amended prohibited transaction exemption for how ERISA investment advice fiduciaries can provide products manufactured by RiverSource Life and unaffiliated insurers to retirement investors. These final regulations focus in large part on conflicts of interest related to investment recommendations made by financial advisors, registered investment advisors and other investment or insurance professionals to retirement investors, how financial advisors are able to discuss IRA rollovers, as well as how financial advisors and affiliates can transact with retirement investors. Qualified accounts, specificallyparticularly IRAs, make up a significant portion of RiverSource Life’s annuity product sales. RiverSource Life is currently reviewingcontinuing to review and analyzinganalyze the potential impact of the proposedfinal regulations on its clients and prospective clients who save through retirement accounts, as well as the potential impact on its business. These regulations focus on conflicts of interest relatedTeams are working diligently to investment recommendations made by financialassess these principles-based rules and RiverSource Life will work with its selling firms and their advisors to clients holding qualified accounts andmake the necessary changes to effectively implement these new rules. These rules will also on how financial advisors are able to discuss IRA rollovers.  These proposed regulations are subject to a 75-day public comment period ending on July 6, 2015. The Department of Labor has announced that there will be a public hearing within 30 days after the end of the public comment period and that the comment period will be reopened after the hearing. RiverSource Life cannot predict whether or when the regulations may be finalized, or how any final regulations may differ from the proposed regulation.  If final regulations were to be issued with provisions substantially similar to the proposed regulation, they could impact how RiverSource Life compensatesrequire various changes in the financial advisors who sell its annuity products,services industry, any of which could negatively impact itsRiverSource Life’s results of operations.

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RiverSource Life is subject to state regulation and must comply with statutory reserve and capital requirements, including preparing financial statements in accordance with statutory accounting principles. State regulators, as well as the NAIC, continually review and update these requirements and other requirements relating to the business operations of insurance companies, including their underwriting and sales practices. Changes in these requirements that are made for the benefit of the consumer sometimes lead to additional expense for the insurer and, thus, could have a material adverse effect on RiverSource Life's financial condition and results of operations. In December 2012, the NAIC adopted a new reserve valuation manual that applies principles-based reserve standards to life insurance products. The valuation manual becomes the effective reserve valuation method whenhas been adopted by 42 jurisdictions that account for at least 75%the required number of states and the percentage of U.S. insurance premiums combined. To date, 29premium threshold has been reached, therefore, the valuation manual will be effective for companies domiciled in adopted states on January 1, 2017. Minnesota and New York, however, are two states that have not yet adopted the valuation manual.manual so the effective date for RiverSource Life Insurance Company and RiverSource Life of NY is unknown. If and when adopted, a three-year transition period is available to defer implementation of this reserve standard. The requirement for principles-based life insurance reserves may result in statutory reserves being more sensitive to changes in interest rates, policyholder behavior and other market factors. It is not

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RIVERSOURCE LIFE INSURANCE COMPANY

possible at this time to estimate the potential impact of future changes in statutory reserve and capital requirements. Further, RiverSource Life cannot predict the effect that proposed federal legislation may have on RiverSource Life or its competitors, such as the option of federally chartered insurers, or a mandated federal systemic risk regulator, or future initiatives of the FIO withwithin the Department of the Treasury, may have on RiverSource Life or its competitors.by any of the domiciliary regulators of the International Association of Insurance Supervisors with respect to insurance holding company supervision, capital standards or systemic risk regulation. For additional discussion on the role and activities of the FIO, see Item 1 of RiverSource Life’s Annual Report for the year ended December 31, 2014 on Form2015 10-K — “Regulation”- "Regulation".
RiverSource Life’s profit margins and earnings are dependent in part on its ability to maintain current fee levels for the products and services that it offers. Competition within the financial services industry could lead RiverSource Life to reduce the fees that it charges its clients for products and services. See the risk factor entitled “Intense competition and the economics of changes in RiverSource Life’s product revenue mix and distribution channels could negatively impact RiverSource Life’s ability to maintain or increase its market share and profitability.” In addition, RiverSource Life may be required to reduce its fee levels, or restructure the fees it charges, as a result of regulatory initiatives or proceedings that are either industry-wide or specifically targeted at RiverSource Life. Reductions or other changes in the fees that RiverSource Life charges for its products and services could reduce its revenues and earnings.
ITEM 6.EXHIBITS
ITEM 6. EXHIBITS
The list of exhibits required to be filed as exhibits to this report are listed on page E-1 hereof, under “Exhibit Index,” which is incorporated herein by reference.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  RIVERSOURCE LIFE INSURANCE COMPANY
  (Registrant)
    
Date:May 4, 20155, 2016By/s/ John R. Woerner
   John R. Woerner
   Chairman and President
    
    
Date:May 4, 20155, 2016By/s/ Brian J. McGrane
   Brian J. McGrane
   Executive Vice President and
   Chief Financial Officer


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EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report:

ExhibitDescription

3.1Copy of Certificate of Incorporation of IDS Life Insurance Company, filed as Exhibit 3.1 to Post-Effective Amendment No. 5 to Registration Statement No. 33-28976, is incorporated by reference.
3.1.1Copy of Certificate of Amendment of Certificate of Incorporation of IDS Life Insurance Company dated June 22, 2006, filed as Exhibit 3.1 to Form 8-K filed on January 5, 2007, is incorporated by reference.
3.2Copy of Amended and Restated By-Laws of RiverSource Life Insurance Company dated June 22, 2006, filed as Exhibit 27(f)(2) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777, is incorporated by reference.
31.1*
Certification of John R. Woerner, Chairman and President, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*Certification of Brian J. McGrane, Chief Financial Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*Certification of John R. Woerner, Chairman and President, and Brian J. McGrane, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*
The following materials from RiverSource Life Insurance Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015,2016, formatted in XBRL: (i) Consolidated Balance Sheets at March 31, 20152016 and December 31, 2014;2015; (ii) Consolidated Statements of Income for the three months ended March 31, 20152016 and 2014;2015; (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 20152016 and 2014;2015; (iv) Consolidated Statements of Shareholder’s Equity for the three months ended March 31, 20152016 and 2014;2015; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 20152016 and 2014;2015; and (vi) Notes to the Consolidated Financial Statements.


*   Filed electronically herewith.
*
Filed electronically herewith.


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