UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the Quarterly Period Ended March 31, ~~2015~~2016


o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o~~TRANSITION 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, 2015~~5, 2016
Common Stock (par value $30 per share)		100,000 ~~shares~~Shares

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.

~~Table of Contents~~

RIVERSOURCE LIFE INSURANCE COMPANY

FORM 10-Q

INDEX



Part I.			Financial ~~Information:~~ Information
			Item 1.	Financial Statements (Unaudited)
				Consolidated ~~Balance Sheets~~Statements of Operations — March 31, ~~2015~~2016 and December 31, ~~2014~~ 2015	13
				Consolidated Statements of Income — Three months ended March 31, ~~2015~~2016 and ~~2014~~ 2015	24
				Consolidated Statements of Comprehensive Income — Three months ended March 31, ~~2015~~2016 and ~~2014~~ 2015	24
				Consolidated Statements of Shareholder’s Equity — Three months ended March 31, ~~2015~~2016 and ~~2014~~ 2015	35
				Consolidated Statements of Cash Flows — Three months ended March 31, ~~2015~~2016 and ~~2014~~	4
	~~Notes to Consolidated Financial Statements~~ 2015	6
Notes to Consolidated Financial Statements			~~Item 2.~~8
1. Basis of Presentation			~~Management’s Narrative Analysis~~8
2. Recent Accounting Pronouncements			8
3. Variable Interest Entities			9
4. Investments			10
5. Financing Receivables			13
6. Deferred Acquisition Costs and Deferred Sales Inducement Costs			15
7. Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities			16
8. Variable Annuity and Insurance Guarantees			16
9. Short-term Borrowings			18
10. Fair Values of Assets and Liabilities			18
11. Offsetting Assets and Liabilities			27
12. Derivatives and Hedging Activities			29
13. Shareholder’s Equity			32
14. Income Taxes			33
15. Guarantees and Contingencies			~~Item 4.~~	~~Controls and Procedures~~	4134
~~Part II.~~ Item 2. Management’s Narrative Analysis			~~Other Information:~~35
			Item 1.	~~Legal Proceedings~~ 4. Controls and Procedures	42
			~~Item 1A.~~	~~Risk Factors~~	42
			~~Item 6.~~	~~Exhibits~~ Part II. Other Information	43
Item 1. Legal Proceedings			~~Signatures~~43
Item 1A. Risk Factors			43
Item 6. Exhibits			44
Signatures			45
Exhibit Index			E-1

~~Table of Contents~~

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 loans 811
805
Other investments 983
987
Total investments 28,245
28,340
Cash and cash equivalents 619
307
Reinsurance recoverables 2,321
2,268
Other receivables 232
206
Accrued investment income 247
255
Deferred acquisition costs 2,570
2,576
Other assets 5,401
5,006
Separate account assets 80,234
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 borrowings 200
200
Other liabilities 5,163
4,650
Separate account liabilities 80,234
79,178
Total liabilities 115,513
113,833
Shareholder’s equity:

Common stock, $30 par value; 100,000 shares authorized, issued and outstanding 3
3
Additional paid-in capital 2,465
2,464
Retained earnings 1,095
1,107
Accumulated other comprehensive income, net of tax 793
729
Total shareholder’s equity 4,356
4,303
Total liabilities and shareholder’s equity $ 119,869
$ 118,136

~~See Notes to Consolidated Financial Statements.~~

~~Table of Contents~~

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)~~

~~(in millions)~~

Three Months Ended
March 31,
2015 2014
Revenues

Premiums $ 97
$ 104

Net investment income 306
333

Policy and contract charges 460
447

Other revenues 104
95

Net realized investment gains 10
4

Total revenues 977
983

Benefits and expenses

Benefits, claims, losses and settlement expenses 306
208

Interest credited to fixed accounts 172
186

Amortization of deferred acquisition costs 55
71

Other insurance and operating expenses 182
182

Total benefits and expenses 715
647

Pretax income 262
336

Income tax provision 49
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 period 140
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 securities 63
114
Net unrealized losses on derivatives:

Reclassification of net derivative losses included in net income 1
1
Total net unrealized losses on derivatives 1
1
Total other comprehensive income, net of tax 64
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 loans	828		823
Other investments	989		998
Total investments	27,014		26,811
Cash and cash equivalents	814		370
Reinsurance recoverables	2,447		2,415
Other receivables	310		255
Accrued investment income	244		244
Deferred acquisition costs	2,614		2,688
Other assets	5,423		4,569
Separate account assets	75,849		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 borrowings	200		200
Other liabilities	4,728		4,058
Separate account liabilities	75,849		76,004
Total liabilities	110,598		109,291
Shareholder’s equity:
Common stock, $30 par value; 100,000 shares authorized, issued and outstanding	3		3
Additional paid-in capital	2,465		2,465
Retained earnings	1,077		1,202
Accumulated other comprehensive income, net of tax	572		395
Total shareholder’s equity	4,117		4,065
Total liabilities and shareholder’s equity	$	114,715	$	113,356

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF ~~SHAREHOLDER’S EQUITY~~INCOME (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 income	290		306
Policy and contract charges	469		460
Other revenues	98		104
Net realized investment gains	9		10
Total revenues	968		977
Benefits and expenses
Benefits, claims, losses and settlement expenses	226		306
Interest credited to fixed accounts	146		172
Amortization of deferred acquisition costs	90		55
Other insurance and operating expenses	177		182
Total benefits and expenses	639		715
Pretax income	329		262
Income tax provision	54		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 securities	176		63
Net unrealized gains on derivatives	1		1
Total other comprehensive income, net of tax	177		64
Total comprehensive income	$	452	$	277

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~SHAREHOLDER’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, net 5
2
Deferred income tax expense (benefit) 45
(93 )
Contractholder and policyholder charges, non-cash (82 ) (82 )
Loss from equity method investments 8
6
Net realized investment gains (12 ) (5 )
Other-than-temporary impairments and provision for loan losses recognized in net realized investment gains 2
1
Changes in operating assets and liabilities:

Deferred acquisition costs (5 ) 9
Policyholder account balances, future policy benefits and claims, net 481
167
Derivatives, net of collateral (249 ) (97 )
Reinsurance recoverables (56 ) (27 )
Other receivables (32 ) 23
Accrued investment income 8
13
Other, net 311
24
Net cash provided by operating activities 637
239

Cash Flows from Investing Activities

Available-for-Sale securities:

Proceeds from sales 44
99
Maturities, sinking fund payments and calls 851
780
Purchases (614 ) (447 )
Proceeds from maturities and repayments of mortgage loans 161
138
Funding of mortgage loans (83 ) (124 )
Proceeds from sales and collections of other investments 17
30
Purchase of other investments (30 ) (101 )
Purchase of land, buildings, equipment and software (2 ) (1 )
Change in policy loans, net (6 ) (6 )
Other, net 18
10
Net cash provided by investing activities 356
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.

~~Table of Contents~~

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 plan 1
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 equivalents 312
(221 )
Cash and cash equivalents at beginning of period 307
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 remitted 10
—



	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, net	8			5
Deferred income tax expense	24			45
Contractholder and policyholder charges, non-cash	(86		)	(82		)
Loss from equity method investments	10			8
Net realized investment gains	(11		)	(12		)
Other-than-temporary impairments and provision for loan losses recognized in net realized investment gains	2			2
Changes in operating assets and liabilities:
Deferred acquisition costs	27			(5		)
Policyholder account balances, future policy benefits and claims, net	730			481
Derivatives, net of collateral	(348		)	(249		)
Reinsurance recoverables	(39		)	(56		)
Other receivables	(51		)	(32		)
Accrued investment income	—			8
Other, net	65			311
Net cash provided by operating activities	606			637

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	92			44
Maturities, sinking fund payments and calls	434			851
Purchases	(534		)	(614		)
Proceeds from sales, maturities and repayments of mortgage loans	408			161
Funding of mortgage loans	(113		)	(83		)
Proceeds from sales and collections of other investments	21			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 activities	264			356
See Notes to Consolidated Financial Statements.

~~See Notes to Consolidated Financial Statements.~~

~~Table of Contents~~

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 accounts	33			(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 premiums	33			—
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 equivalents	444			312
Cash and cash equivalents at beginning of period	370			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 remitted	10			10
See Notes to Consolidated Financial Statements.

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 ~~two~~one 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 Accounting~~2. Recent Accounting Pronouncements

Adoption of New Accounting Standards

~~Transfers and Servicing~~Fair 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 financings~~applies 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 ~~requires~~eliminates 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 ~~related~~about the nature and risks of the investments to ~~transfers of financial assets accounted~~investments for ~~as sales in transactions~~which 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 on~~eligible 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 entities~~on 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 adoption~~all periods presented. There was no impact of the standard ~~did not have any effect on~~to the Company’s consolidated financial condition ~~and~~or 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.

~~Table of Contents~~

~~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 ~~entity~~entities (“~~VIE”~~VIEs”) and excludes certain money market funds ~~out of~~from 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.

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 may~~for 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 ~~standard~~key 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, ~~2016~~2017 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 ~~values~~value of these investments. The carrying value is reflected in other investments and was ~~$506 million and $504~~$517 million as of both March 31, ~~2015~~2016 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.

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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, ~~2015~~2016 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 both~~As of March 31, ~~2015~~2016 and December 31, ~~2014~~2015, 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, ~~2015~~2016 and December 31, ~~2014~~2015, 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

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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, ~~2015~~2016 and December 31, ~~2014~~2015, 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						Total							Less 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 securities	126	$	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 securities	25	199		(3		)	61	545		(23		)	86	744		(26		)
Commercial mortgage backed securities	10	98		—			4	57		(1		)	14	155		(1		)	Commercial mortgage backed securities	8	49		—			6	56		(1		)	14	105		(1		)
State and municipal obligations	1	5		—			2	101		(26		)	3	106		(26		)	State and municipal obligations	4	40		(1		)	2	106		(21		)	6	146		(22		)
Asset backed securities	2	26		—			2	14		(1		)	4	40		(1		)	Asset backed securities	19	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 obligations	5	26		—			16	30		(7		)	21	56		(7		)
Total	96	$	982	$	(33	)	91	$	929	$	(63	)	187	$	1,911	$	(96	)	Total	187	$	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						Total							Less 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 securities	253	$	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 securities	36	535		(7		)	59	526		(29		)	95	1,061		(36		)
Commercial mortgage backed securities	9	80		—			9	95		(3		)	18	175		(3		)	Commercial mortgage backed securities	45	568		(12		)	3	33		(1		)	48	601		(13		)
State and municipal obligations	1	5		—			2	102		(25		)	3	107		(25		)	State and municipal obligations	9	40		(1		)	2	101		(26		)	11	141		(27		)
Asset backed securities	5	52		—			3	32		(1		)	8	84		(1		)	Asset backed securities	21	241		(5		)	—	—		—			21	241		(5		)
Foreign government bonds and obligations	4	10		(1		)	14	27		(5		)	18	37		(6		)	Foreign government bonds and obligations	9	39		(2		)	15	27		(9		)	24	66		(11		)
Total	142	$	1,378	$	(39	)	123	$	1,615	$	(82	)	265	$	2,993	$	(121	)	Total	373	$	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 ~~movement~~a decrease in interest rates.

911

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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		2014		2016		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.~~

~~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			2014			2016			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 impairments~~See 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, ~~2015~~2016 were as follows:


	Amortized Cost		Fair Value		Amortized 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		2014		2016		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


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.

~~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			2014			March 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 loans~~financing receivables by impairment method was as follows:


	March 31, 2015		December 31, 2014		March 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, ~~2015~~2016 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, ~~2015~~2016 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 ~~commercial~~loans. The loans sold in the first quarter of 2016 consisted of residential mortgage ~~loans and syndicated~~loans. 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, ~~2015~~2016 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, ~~2015~~2016 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

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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				Percentage				Loans				Percentage
	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014		March 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 Atlantic									203		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				Percentage				Loans				Percentage
	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014		March 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, ~~2015~~2016 and December 31, ~~2014~~2015 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, ~~2015~~2016 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.

RIVERSOURCELIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

As of ~~both~~ March 31, ~~2015~~2016 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, ~~2015~~2016 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, ~~2015~~2016 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, ~~2015~~2016 and December 31, ~~2014~~2015 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, ~~2015~~2016 and December 31, ~~2014~~2015 were ~~$3 million.~~$7 million and $5 million, respectively.

~~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, ~~2015~~2016 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, ~~2015~~2016 and ~~2014.~~2015. There are no ~~material~~ commitments to lend additional funds to borrowers whose loans have been restructured.


6.	~~DeferredAcquisitionCosts~~6. Deferred Acquisition Costs and Deferred Sales Inducement Costs

The balances of and changes in DAC were as follows:


	2015			2014			2016			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 ~~are~~is included in other assets, were as follows:


	2015			2014			2016			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


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, 2014			March 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.~~

~~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, 2014		March 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.

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.

~~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.

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⁾			UL			GMDB & 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 claims															4			—		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, 2014		March 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 Company~~borrowings and has pledged Available-for-Sale securities ~~consisting~~to 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, ~~2015~~2016 and December 31, ~~2014~~2015 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, ~~2015~~2016 and December 31, ~~2014~~2015 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 ~~obligation~~obligation 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, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. The amount of the Company’s liability including accrued interest as of both March 31, ~~2015~~2016 and December 31, ~~2014~~2015 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, ~~2015~~2016 and December 31, ~~2014~~2015 was ~~0.3%.~~0.6% and 0.5%, respectively.

~~Table of Contents~~

~~RIVERSOURCELIFE INSURANCE COMPANY~~10. 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 1	Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.

RIVERSOURCELIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


Level 2	Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.


Level 3	Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

~~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 obligations 4
35
—
39

Total Available-for-Sale securities: Fixed maturities 4
21,677
1,538
23,219

Common stocks 3
4
—
7

Cash equivalents 9
591
—
600

Other assets:

Interest rate derivative contracts —
2,397
—
2,397

Equity derivative contracts 226
1,987
—
2,213

Foreign exchange derivative contracts —
54
—
54

Other derivative contracts —
2
—
2

Total other assets 226
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 contracts 303
2,385
—
2,688

Credit derivative contracts —
3
—
3

Foreign exchange derivative contracts —
5
—
5

Other derivative contracts —
14
—
14

Total other liabilities 303
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.~~

~~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 obligations	4		35		—		39			4		35		—		39
Total Available-for-Sale securities: Fixed maturities	4		21,636		1,603		23,243			4		20,853		1,405		22,262
Common stocks	3		3		1		7			2		4		—		6
Cash equivalents	1		235		—		236			44		747		—		791
Other assets:
Interest rate derivative contracts	—		1,955		—		1,955			—		3,102		—		3,102
Equity derivative contracts	282		1,711		—		1,993			79		1,345		—		1,424
Foreign exchange derivative contracts	—		29		—		29			—		67		—		67
Total other assets	282		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 contracts	376		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 liabilities	376		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 adjustment~~Amounts 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.

~~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 obligations	4		35		—		39
Total Available-for-Sale securities: Fixed maturities	4		20,376		1,392		21,772
Common stocks	3		4		—		7
Cash equivalents	48		285		—		333
Other assets:
Interest rate derivative contracts	—		1,882		—		1,882
Equity derivative contracts	92		1,477		—		1,569
Credit derivative contracts	—		2		—		2
Foreign exchange derivative contracts	1		54		—		55
Total other assets	93		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 contracts	45		1,930		—		1,975
Foreign exchange derivative contracts	1		16		—		17
Total other liabilities	46		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.

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 income 12
—
—
—
12
(1 )
Purchases 15
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 income 14
⁽¹⁾
280
⁽²⁾
294
Issues 19
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 accounts 14
—
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 income	16			—			—			—		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.~~

~~Table of Contents~~

~~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 income 1
—
—
—
1
⁽¹⁾
Other comprehensive loss 5
—
—
—
5

Purchases 24
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				Total			IUL 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 income	6			⁽¹⁾	52			⁽²⁾	58			(8		)	⁽¹⁾	602			⁽²⁾	594
Issues	24				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 accounts	6				—				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.

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 income	12			—			—			—			12			(1		)
Purchases	15			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 income	14			⁽¹⁾	280		⁽²⁾	294
Issues	19				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 accounts	14				—			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, ~~2015~~2016 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.

2122

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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, 2015									March 31, 2016
	Fair Value		Valuation Technique	Unobservable Input	Range				Weighted Average	Fair 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

~~Table of Contents~~

~~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.

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 traded~~excluded 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's~~Company’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, ~~2015~~2016 and December 31, ~~2014.~~2015. See Note 11 and Note 12 for further information on the credit risk of derivative instruments and related collateral.

~~Table of Contents~~

~~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,

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 ~~are~~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’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, ~~2015~~2016 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, 2015										March 31, 2016
	Carrying		Fair Value								Carrying Value		Fair Value
	Value		Level 1		Level 2		Level 3		Total		Carrying Value		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 NAV											352								352		⁽¹⁾

2425

~~Table of Contents~~

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2014										December 31, 2015
	Carrying		Fair Value								Carrying Value		Fair Value
	Value		Level 1		Level 2		Level 3		Total		Carrying Value		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 NAV											360								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.

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.

~~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 traded~~excluded 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 liabilities~~fair 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, 2015																									March 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
														Securities Collateral				Net Amount						Financial Instruments ⁽¹⁾								Cash Collateral				Securities Collateral				Net Amount
			Financial Instruments ⁽¹⁾			(in millions)																									(in millions)
Derivatives:										Cash Collateral
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, 2014																									December 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
														Securities Collateral				Net Amount						Financial Instruments ⁽¹⁾								Cash Collateral				Securities Collateral				Net Amount
			Financial Instruments ⁽¹⁾			(in millions)																									(in millions)
Derivatives:										Cash Collateral
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.

2627

~~Table of Contents~~

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													Financial Instruments ⁽¹⁾					Cash Collateral				Securities Collateral				Net Amount
	Gross Amounts of Recognized Liabilities		(in millions)																					(in millions)
Derivatives:				Gross Amounts Offset in the Consolidated Balance Sheets
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-traded																					2				—				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													Financial Instruments ⁽¹⁾					Cash Collateral				Securities Collateral				Net Amount
	Gross Amounts of Recognized Liabilities		(in millions)																					(in millions)
Derivatives:				Gross Amounts Offset in the Consolidated Balance Sheets
OTC	$	3,589		$	—	$	3,589		$	(2,934	)		$	—		$	(655	)	$	—		$	2,624				$	—			$	2,624			$	(2,293	)		$	—			$	(331	)		$	—
OTC cleared	222			—		222			(222		)		—			—			—		313				—				313				(313		)		—				—				—
Exchange-traded																					3				—				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.


~~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.

~~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 location~~notional 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
	Notional		Assets⁽¹⁾		Liabilities⁽²⁾		Notional		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 contracts	61,203		1,424		1,906		69,009		1,569		1,975
Credit contracts	757		—		5		600		2		—
Foreign exchange contracts	4,736		67		24		4,155		55		17
Other contracts	2,400		—		—		2,150		—		—
Total non-designated hedges	134,029		4,593		3,491		138,505		3,508		2,940

Embedded derivatives
GMWB and GMAB ⁽³⁾	N/A		—		1,515		N/A		—		851
IUL	N/A		—		382		N/A		—		364
EIA	N/A		—		5		N/A		—		5
Total embedded derivatives	N/A		—		1,902		N/A		—		1,220
Total derivatives	$	134,029	$	4,593	$	5,393	$	138,505	$	3,508	$	4,160


~~N/A~~	~~Not 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.

2829

~~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 derivatives	14			—
Total gain (loss)	$	11		$	(25	)

Three Months Ended March 31, 2015
Interest rate contracts	$	—		$	386
Equity contracts	1			(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 Receivable		Premiums 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
2020					179		58
2021-2026					624		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.

~~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 derivative~~Company’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, ~~2015~~2016, 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, ~~2015~~2016 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, ~~2015~~2016 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 ~~rollforward~~summary of net unrealized ~~derivative losses~~gains 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 ~~four~~three 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, ~~2015~~2016 and

~~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, ~~2015~~2016 and December 31, ~~2014~~2015 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, ~~2015~~2016 and December 31, ~~2014~~2015 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.


~~13.~~	~~Shareholder’s Equity~~

RIVERSOURCELIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. Shareholder’s Equity

The following ~~table provides information~~tables 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 gains	272			(96		)	176

Net unrealized derivatives gains:
Reclassification of net derivative losses included in net income⁽³⁾	1			—			1
Net unrealized derivatives gains	1			—			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 gains	97			(34		)	63

Net unrealized derivatives gains:
Reclassification of net derivative losses included in net income⁽³⁾	2			(1		)	1
Net unrealized derivatives gains	2			(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 ~~impact~~period.

⁽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 ~~recoverable~~recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

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 reclassifications	71				—			71
Amounts reclassified from AOCI	(8		)		1			(7		)
Total OCI	63				1			64
Balance, March 31, 2015	$	804		⁽¹⁾	$	(11	)	$	793

Balance, January 1, 2016	$	403			$	(8	)	$	395
OCI before reclassifications	176				1			177
Amounts reclassified from AOCI	—				—			—
Total OCI	176				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, ~~2015~~2016 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, ~~2015~~2016 and December 31, ~~2014~~.2015.

As of March 31, ~~2015~~2016 and December 31, ~~2014~~2015, 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, ~~2015~~2016 and December 31, ~~2014~~2015, 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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~~RIVERSOURCELIFE INSURANCE COMPANY~~

~~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, ~~2015~~2016 and ~~2014,~~2015, respectively. At ~~both~~ March 31, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company had a payable of ~~$40~~$2 million and $41 million, respectively, related to accrued interest and penalties.

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, ~~these~~tax years ~~except for 2007, continue to~~1997 through 2006, 2008 and 2009 remain open ~~as a consequence of~~for 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, ~~2015~~2016 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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RIVERSOURCE LIFE INSURANCE COMPANY


~~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’s~~following 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, ~~2014~~2015 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 follows~~Consolidated 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.~~

~~Overview~~10-Q in lieu of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~RiverSource Life Insurance~~See 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 company~~continuing 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 of NY is domiciled and holds a Certificate of Authority in New York. RiverSource Life of NY issues insurance and annuity products.~~

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 ~~2014~~2015 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.

3335

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RIVERSOURCE LIFE INSURANCE COMPANY

Consolidated Results of Operations for theThree Months EndedMarch 31, ~~2015~~2016 and ~~2014~~2015

The following table presents the Company’s consolidated results of operations:


	Three Months Ended March 31,									Three Months Ended March 31,
	2015		2014		Change					2016		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.~~

~~Overview~~Overall

Net income ~~decreased $85~~increased $62 million or 29% to ~~$213~~$275 million for the three months ended March 31, ~~2015~~2016 compared to ~~$298~~$213 million for the prior year period. Pretax income ~~decreased $74~~increased $67 million or ~~22%~~26% to ~~$262~~$329 million for the three months ended March 31, ~~2015~~2016 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 ~~benefit~~increase in long term care (“LTC”) reserves in the prior year period and a $10 million gain from ~~policyholder movement~~the 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 period~~residential 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 ~~DAC~~DSIC and ~~DSIC~~DAC amortization) was ~~an expense~~a 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, ~~2015~~2016 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, ~~2015~~2016 compared to the prior year period reflecting limited new sales from low interest rates and higher lapse ~~rates related to~~rates. 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 for~~gradually 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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~~RIVERSOURCE LIFE INSURANCE COMPANY~~

Revenues

Total revenues decreased $6by $9 million or 1% to ~~$977~~$968 million for the three months ended March 31, ~~2015~~2016 compared to ~~$983~~$977 million for the prior year period.

RIVERSOURCE LIFE INSURANCE COMPANY

Premiums ~~decreased $7~~increased $5 million or 7%5% to ~~$97~~$102 million for the three months ended March 31, ~~2015~~2016 compared to ~~$104~~$97 million for the prior year ~~period. The decrease was~~period primarily ~~due to lower~~reflecting 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, ~~2015~~2016 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 $9~~decreased $6 million or 9%6% to ~~$104~~$98 million for the three months ended March 31, ~~2015~~2016 compared to ~~$95~~$104 million for the prior year period reflecting ~~higher~~lower marketing support ~~due to higher~~driven by lower average separate account balances. Average variable annuity account balances ~~driven by positive~~decreased $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, ~~2015~~2016 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 $68~~decreased $76 million or 11% to ~~$715~~$639 million for the three months ended March 31, ~~2015~~2016 compared to ~~$647~~$715 million for the prior year period primarily due to ~~an increase~~a decrease in benefits, claims, losses and settlement expenses ~~partially offset by a decrease in~~and interest credited to fixed accounts ~~and~~partially offset by an increase in amortization of ~~DAC.~~deferred acquisition costs.

Benefits, claims, losses and settlement expenses ~~increased $98~~decreased $80 million or ~~47%~~26% to ~~$306~~$226 million for the three months ended March 31, ~~2015~~2016 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 products~~disability 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 2015~~three months ended March 31, 2016 compared to ~~$15~~a 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 in~~rate impact on the variable annuity guaranteed living benefits liability ~~compared to~~net of the ~~prior year period, partially offset by a larger favorable change~~impact on the corresponding hedge assets resulted in higher expense in the ~~related hedge assets~~first quarter of 2016 compared to the prior year period.

Equity market ~~volatility impacts~~impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in ~~an increase in~~higher expense in the first quarter of ~~2015~~2016 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 ~~2015~~2016 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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~~RIVERSOURCE LIFE INSURANCE COMPANY~~

Interest credited to fixed accounts decreased ~~$14~~$26 million or 8%15% to ~~$172~~$146 million for the three months ended March 31, ~~2015~~2016 compared to ~~$186~~$172 million for the prior year period primarily due to lower average fixed annuity account balances and the market impact on

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, ~~2015~~2016 compared to the prior year period ~~due~~as older policies continue to ~~net outflows reflecting limited~~lapse and new sales are limited from low ~~rates and higher lapse~~interest 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 $16~~increased $35 million or ~~23%~~64% to ~~$55~~$90 million for the three months ended March 31, ~~2015~~2016 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, ~~2017~~2018 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, ~~2015~~2016 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.

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
Total 100 % 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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~~RIVERSOURCE LIFE INSURANCE COMPANY~~

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	)

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/A~~	~~Not 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, ~~2014~~2015.

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 are~~observable 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, ~~2015~~2016 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, ~~2015~~2016 and December 31, ~~2014~~2015 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, ~~2015~~2016 and

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December 31, ~~2014~~,2015, the Company had borrowings of $150 million from the ~~FHLB~~FHLB 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

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 ~~are~~were as follows:


	Actual Capital ⁽¹⁾				Regulatory Capital Requirement ⁽²⁾		Actual Capital				Regulatory Capital Requirements
	March 31, 2015		December 31, 2014		December 31, 2014		March 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 ~~2014~~2015 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;

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's~~Company’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 party~~third-party service providers, interference or failures caused by ~~third party~~third-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 ~~2014~~2015 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.


~~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 Form~~2015 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 change~~published its final rule regarding the ~~definition~~fiduciary status of ~~who is an~~ investment advice ~~fiduciary under ERISA and how such advice can be provided~~providers 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, ~~specifically~~particularly IRAs, make up a significant portion of RiverSource Life’s annuity product sales. RiverSource Life is ~~currently reviewing~~continuing to review and ~~analyzing~~analyze the potential impact of the ~~proposed~~final 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 related~~Teams are working diligently to ~~investment recommendations made by financial~~assess these principles-based rules and RiverSource Life will work with its selling firms and their advisors to ~~clients holding qualified accounts and~~make 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 ~~its~~RiverSource Life’s results of operations.

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~~RIVERSOURCE LIFE INSURANCE COMPANY~~

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 when~~has 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, 29~~premium 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

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 ~~with~~within 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 Form~~2015 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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RIVERSOURCE LIFE INSURANCE COMPANY

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, 2015~~5, 2016	By	/s/ John R. Woerner
			John R. Woerner
			Chairman and President


Date:	May ~~4, 2015~~5, 2016	By	/s/ Brian J. McGrane
			Brian J. McGrane
			Executive Vice President and
			Chief Financial Officer

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RIVERSOURCE LIFE INSURANCE COMPANY

EXHIBIT INDEX

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



Exhibit		Description


3.1	Copy 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.


3.1.1	Copy 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.


3.2	Copy 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, ~~2015~~2016 and December 31, ~~2014~~;2015; (ii) Consolidated Statements of Income for the three months ended March 31, ~~2015~~2016 and ~~2014~~;2015; (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2015~~2016 and ~~2014~~;2015; (iv) Consolidated Statements of Shareholder’s Equity for the three months ended March 31, ~~2015~~2016 and ~~2014~~;2015; (v) Consolidated Statements of Cash Flows for the three months ended March 31, ~~2015~~2016 and ~~2014~~;2015; and (vi) Notes to the Consolidated Financial Statements.

* Filed electronically herewith.


*	~~Filed electronically herewith.~~

E-1



	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 loans	811		805
Other investments	983		987
Total investments	28,245		28,340
Cash and cash equivalents	619		307
Reinsurance recoverables	2,321		2,268
Other receivables	232		206
Accrued investment income	247		255
Deferred acquisition costs	2,570		2,576
Other assets	5,401		5,006
Separate account assets	80,234		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 borrowings	200		200
Other liabilities	5,163		4,650
Separate account liabilities	80,234		79,178
Total liabilities	115,513		113,833
Shareholder’s equity:
Common stock, $30 par value; 100,000 shares authorized, issued and outstanding	3		3
Additional paid-in capital	2,465		2,464
Retained earnings	1,095		1,107
Accumulated other comprehensive income, net of tax	793		729
Total shareholder’s equity	4,356		4,303
Total liabilities and shareholder’s equity	$	119,869	$	118,136



	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



	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⁾




	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 income	12			—			—			—			12			(1		)
Purchases	15			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 income	14			⁽¹⁾	280		⁽²⁾	294
Issues	19				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 accounts	14				—			14



		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



		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,
Derivatives not designated as hedging instruments	Location of Gain (Loss) on Derivatives Recognized in Income	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	)



		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



	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)
Range of Guaranteed Minimum Crediting Rates
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
Total	100		%	100		%	100		%	100		%	100		%	100		%