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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

☒

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

For the Quarterly Period Ended

~~March 31,~~September 30, 2021

☐

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

For the Transition Period from_______________________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

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes

☒

☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☐
		Emerging growth company	☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

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 10,~~November 9, 2021

Common Stock (par value $30 per share)

100,000 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.

RIVERSOURCE LIFE INSURANCE COMPANY

FORM 10-Q

INDEX


Part I. Financial Information	Part I. Financial Information				Part I. Financial Information
Item 1. Financial Statements (Unaudited)	Item 1. Financial Statements (Unaudited)				Item 1. Financial Statements (Unaudited)
						Consolidated Balance Sheets — September 30, 2021 and December 31, 2020		3
		Consolidated Balance Sheets — March 31, 2021 and December 31, 2020		3		Consolidated Statements of Income — Three months and nine months ended September 30, 2021 and 2020		4
		Consolidated Statements of Income — Three months ended March 31, 2021 and 2020		4		Consolidated Statements of Comprehensive Income — Three months and nine months ended September 30, 2021 and 2020		4
		Consolidated Statements of Comprehensive Income — Three months ended March 31, 2021 and 2020		4		Consolidated Statements of Shareholder’s Equity — Three months and nine months ended September 30, 2021 and 2020		5
		Consolidated Statements of Shareholder’s Equity — Three months ended March 31, 2021 and 2020		5		Consolidated Statements of Cash Flows — Nine months ended September 30, 2021 and 2020		6
		Consolidated Statements of Cash Flows — Three months ended March 31, 2021 and 2020		6		Notes to Consolidated Financial Statements		8
		Notes to Consolidated Financial Statements		8		1.	Basis of Presentation	8
		1.	Basis of Presentation	8		2.	Recent Accounting Pronouncements	8
		2.	Recent Accounting Pronouncements	8		3.	Revenue from Contracts with Customers	11
		3.	Revenue from Contracts with Customers	10		4.	Variable Interest Entities	12
		4.	Variable Interest Entities	11		5.	Investments	16
		5.	Investments	14		6.	Financing Receivables	19
		6.	Financing Receivables	17		7.	Reinsurance	22
		7.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	20		8.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	22
		8.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	21		9.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	23
		9.	Variable Annuity and Insurance Guarantees	22		10.	Variable Annuity and Insurance Guarantees	24
		10.	Debt	23		11.	Debt	25
		11.	Fair Values of Assets and Liabilities	23		12.	Fair Values of Assets and Liabilities	26
		12.	Offsetting Assets and Liabilities	31		13.	Offsetting Assets and Liabilities	36
		13.	Derivatives and Hedging Activities	33		14.	Derivatives and Hedging Activities	38
		14.	Shareholders’ Equity	36		15.	Shareholders’ Equity	41
		15.	Income Taxes	36		16.	Income Taxes	43
		16.	Contingencies	37		17.	Contingencies	44
Item 2. Management’s Narrative Analysis	Item 2. Management’s Narrative Analysis			38	Item 2. Management’s Narrative Analysis			45
Item 4. Controls and Procedures	Item 4. Controls and Procedures			46	Item 4. Controls and Procedures			54

Part II. Other Information	Part II. Other Information			46	Part II. Other Information			54
Item 1. Legal Proceedings	Item 1. Legal Proceedings			46	Item 1. Legal Proceedings			54
Item 1A. Risk Factors	Item 1A. Risk Factors			46	Item 1A. Risk Factors			54
Item 6. Exhibits	Item 6. Exhibits			47	Item 6. Exhibits			55
Signatures	Signatures			48	Signatures			56

RIVERSOURCE LIFE INSURANCE COMPANY

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(in millions, except share amounts)					(in millions, except share amounts)
Assets	Assets					Assets
Investments:	Investments:					Investments:
Available-for-Sale: Fixed maturities, at fair value (amortized cost: 2021, $20,153; 2020, $20,260) (allowance for credit losses: 2021, NaN; 2020, $10)		$	22,031	$	22,855
Available-for-Sale: Fixed maturities, at fair value (amortized cost: 2021, $14,129; 2020, $20,260) (allowance for credit losses: 2021, $1; 2020, $10)						Available-for-Sale: Fixed maturities, at fair value (amortized cost: 2021, $14,129; 2020, $20,260) (allowance for credit losses: 2021, $1; 2020, $10)	$	15,789	$	22,855

Mortgage loans, at amortized cost (allowance for credit losses: 2021 and 2020, $28)		2,541		2,574
Mortgage loans, at amortized cost (allowance for credit losses: 2021, $14 and 2020, $28)						Mortgage loans, at amortized cost (allowance for credit losses: 2021, $14 and 2020, $28)	1,776		2,574
Policy loans	Policy loans	838		846		Policy loans	836		846
Other investments (allowance for credit losses: 2021, $5; 2020, $7)		662		701

Other investments (allowance for credit losses: 2021, nil; 2020, $7)						Other investments (allowance for credit losses: 2021, nil; 2020, $7)	239		701
Total investments	Total investments	26,072		26,976		Total investments	18,640		26,976
Investments of consolidated investment entities, at fair value	Investments of consolidated investment entities, at fair value	2,642		1,918		Investments of consolidated investment entities, at fair value	2,170		1,918
Cash and cash equivalents	Cash and cash equivalents	2,285		3,191		Cash and cash equivalents	2,664		3,191
Cash of consolidated investment entities	Cash of consolidated investment entities	325		94		Cash of consolidated investment entities	68		94

Reinsurance recoverables (allowance for credit losses: 2021, $9; 2020, $8)		3,368		3,409
Other receivables		1,620		1,613
Reinsurance recoverables (allowance for credit losses: 2021, $11; 2020, $8)						Reinsurance recoverables (allowance for credit losses: 2021, $11; 2020, $8)	4,536		3,409
Receivables						Receivables	8,242		1,613
Receivables of consolidated investment entities, at fair value	Receivables of consolidated investment entities, at fair value	17		16		Receivables of consolidated investment entities, at fair value	18		16
Accrued investment income	Accrued investment income	180		172		Accrued investment income	131		172
Deferred acquisition costs	Deferred acquisition costs	2,661		2,508		Deferred acquisition costs	2,710		2,508
Other assets	Other assets	6,335		6,969		Other assets	7,371		6,969
Other assets of consolidated investment entities, at fair value	Other assets of consolidated investment entities, at fair value	2		2		Other assets of consolidated investment entities, at fair value	2		2
Separate account assets	Separate account assets	88,433		87,556		Separate account assets	90,026		87,556
Total assets	Total assets	$	133,940	$	134,424	Total assets	$	136,578	$	134,424

Liabilities and Shareholder’s Equity	Liabilities and Shareholder’s Equity					Liabilities and Shareholder’s Equity
Liabilities:	Liabilities:					Liabilities:
Policyholder account balances, future policy benefits and claims	Policyholder account balances, future policy benefits and claims	$	32,696	$	33,986	Policyholder account balances, future policy benefits and claims	$	34,857	$	33,986
Short-term borrowings	Short-term borrowings	200		200		Short-term borrowings	200		200
Debt of consolidated investment entities, at fair value	Debt of consolidated investment entities, at fair value	2,671		1,913		Debt of consolidated investment entities, at fair value	2,163		1,913

Long-term debt	Long-term debt	500		500		Long-term debt	500		500
Other liabilities	Other liabilities	6,441		6,887		Other liabilities	6,802		6,887
Other liabilities of consolidated investment entities, at fair value	Other liabilities of consolidated investment entities, at fair value	256		69		Other liabilities of consolidated investment entities, at fair value	71		69
Separate account liabilities	Separate account liabilities	88,433		87,556		Separate account liabilities	90,026		87,556
Total liabilities	Total liabilities	131,197		131,111		Total liabilities	134,619		131,111

Shareholder’s equity:	Shareholder’s equity:					Shareholder’s equity:
Common stock, $30 par value; 100,000 shares authorized, issued and outstanding	Common stock, $30 par value; 100,000 shares authorized, issued and outstanding	3		3		Common stock, $30 par value; 100,000 shares authorized, issued and outstanding	3		3
Additional paid-in capital	Additional paid-in capital	2,466		2,466		Additional paid-in capital	2,466		2,466
Accumulated deficit	Accumulated deficit	(308)		(76)		Accumulated deficit	(911)		(76)
Accumulated other comprehensive income, net of tax	Accumulated other comprehensive income, net of tax	582		920		Accumulated other comprehensive income, net of tax	401		920
Total shareholder’s equity	Total shareholder’s equity	2,743		3,313		Total shareholder’s equity	1,959		3,313
Total liabilities and shareholder’s equity	Total liabilities and shareholder’s equity	$	133,940	$	134,424	Total liabilities and shareholder’s equity	$	136,578	$	134,424

See Notes to Consolidated Financial Statements.

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(in millions)				(in millions)
Revenues	Revenues							Revenues
Premiums	Premiums	$	78	$	93			Premiums	$	(1,098)	$	82	$	(945)	$	256
Net investment income	Net investment income	247		223				Net investment income	193		212		664		647
Policy and contract charges	Policy and contract charges	547		551				Policy and contract charges	590		535		1,715		1,529
Other revenues	Other revenues	128		119				Other revenues	177		122		436		357
Net realized investment gains (losses)	Net realized investment gains (losses)	48		(17)				Net realized investment gains (losses)	533		1		589		(16)
Total revenues	Total revenues	1,048		969				Total revenues	395		952		2,459		2,773
Benefits and expenses	Benefits and expenses							Benefits and expenses
Benefits, claims, losses and settlement expenses	Benefits, claims, losses and settlement expenses	652		(1,748)				Benefits, claims, losses and settlement expenses	(719)		1,101		337		820
Interest credited to fixed accounts	Interest credited to fixed accounts	159		91				Interest credited to fixed accounts	172		170		455		523
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	2		503				Amortization of deferred acquisition costs	6		83		69		338
Interest and debt expense	Interest and debt expense	21		0				Interest and debt expense	43		—		84		—
Other insurance and operating expenses	Other insurance and operating expenses	194		163				Other insurance and operating expenses	179		163		553		490
Total benefits and expenses	Total benefits and expenses	1,028		(991)				Total benefits and expenses	(319)		1,517		1,498		2,171
Pretax income		20		1,960
Income tax provision		2		166
Net income		$	18	$	1,794
Pretax income (loss)								Pretax income (loss)	714		(565)		961		602
Income tax provision (benefit)								Income tax provision (benefit)	111		(131)		121		35
Net income (loss)								Net income (loss)	$	603	$	(434)	$	840	$	567

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(in millions)				(in millions)
Net income		$	18	$	1,794
Net income (loss)								Net income (loss)	$	603	$	(434)	$	840	$	567
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:							Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities	Net unrealized gains (losses) on securities	(338)		(395)				Net unrealized gains (losses) on securities	(321)		88		(519)		219

Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	(338)		(395)				Total other comprehensive income (loss), net of tax	(321)		88		(519)		219
Total comprehensive income		$	(320)	$	1,399
Total comprehensive income (loss)								Total comprehensive income (loss)	$	282	$	(346)	$	321	$	786

See Notes to Consolidated Financial Statements.

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)


		Common Shares		Additional Paid-In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total			Common Shares		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
													(in millions)
Balances at July 1, 2020												Balances at July 1, 2020	$	3	$	2,466	$	787	$	705	$	3,961

Comprehensive income (loss):												Comprehensive income (loss):
Net income (loss)												Net income (loss)	—		—		(434)		—		(434)
Other comprehensive income (loss), net of tax												Other comprehensive income (loss), net of tax	—		—		—		88		88
Total comprehensive income (loss)												Total comprehensive income (loss)									(346)

Cash dividends to Ameriprise Financial, Inc.												Cash dividends to Ameriprise Financial, Inc.	—		—		(150)		—		(150)
Balances at September 30, 2020												Balances at September 30, 2020	$	3	$	2,466	$	203	$	793	$	3,465

Balances at July 1, 2021												Balances at July 1, 2021	$	3	$	2,466	$	(589)	$	722	$	2,602

Comprehensive income (loss):												Comprehensive income (loss):
Net income (loss)												Net income (loss)	—		—		603		—		603
Other comprehensive income (loss), net of tax												Other comprehensive income (loss), net of tax	—		—		—		(321)		(321)
Total comprehensive income (loss)												Total comprehensive income (loss)									282

Cash dividends to Ameriprise Financial, Inc.												Cash dividends to Ameriprise Financial, Inc.	—		—		(925)		—		(925)
Balances at September 30, 2021												Balances at September 30, 2021	$	3	$	2,466	$	(911)	$	401	$	1,959
		(in millions)
		$	3	$	2,466	$	293	$	574	$	3,336	Balances at January 1, 2020	$	3	$	2,466	$	293	$	574	$	3,336
Cumulative effect of adoption of current expected credit losses guidance	Cumulative effect of adoption of current expected credit losses guidance	—		—		(7)		—		(7)		Cumulative effect of adoption of current expected credit losses guidance	—		—		(7)		—		(7)
Comprehensive income (loss):	Comprehensive income (loss):											Comprehensive income (loss):
Net income (loss)	Net income (loss)	—		—		1,794		—		1,794		Net income (loss)	—		—		567		—		567
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—		—		—		(395)		(395)		Other comprehensive income (loss), net of tax	—		—		—		219		219
Total comprehensive income (loss)	Total comprehensive income (loss)									1,399		Total comprehensive income (loss)									786

Cash dividends to Ameriprise Financial, Inc.	Cash dividends to Ameriprise Financial, Inc.	—		—		(250)		—		(250)		Cash dividends to Ameriprise Financial, Inc.	—		—		(650)		—		(650)
Balances at March 31, 2020		$	3	$	2,466	$	1,830	$	179	$	4,478
Balances at September 30, 2020												Balances at September 30, 2020	$	3	$	2,466	$	203	$	793	$	3,465

Balances at January 1, 2021	Balances at January 1, 2021	$	3	$	2,466	$	(76)	$	920	$	3,313	Balances at January 1, 2021	$	3	$	2,466	$	(76)	$	920	$	3,313

Comprehensive income (loss):	Comprehensive income (loss):											Comprehensive income (loss):
Net income (loss)	Net income (loss)	—		—		18		—		18		Net income (loss)	—		—		840		—		840
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—		—		—		(338)		(338)		Other comprehensive income (loss), net of tax	—		—		—		(519)		(519)
Total comprehensive income (loss)	Total comprehensive income (loss)									(320)		Total comprehensive income (loss)									321

Cash dividends to Ameriprise Financial, Inc.	Cash dividends to Ameriprise Financial, Inc.	—		—		(250)		—		(250)		Cash dividends to Ameriprise Financial, Inc.	—		—		(1,675)		—		(1,675)
Balances at March 31, 2021		$	3	$	2,466	$	(308)	$	582	$	2,743

Balances at September 30, 2021												Balances at September 30, 2021	$	3	$	2,466	$	(911)	$	401	$	1,959

See Notes to Consolidated Financial Statements.

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
		(in millions)					(in millions)
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	18	$	1,794	Net income	$	840	$	567
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	Adjustments to reconcile net income to net cash provided by (used in) operating activities:					Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net	Depreciation, amortization and accretion, net	(2)		(9)		Depreciation, amortization and accretion, net	(50)		(19)
Deferred income tax (benefit) expense	Deferred income tax (benefit) expense	(124)		1,209		Deferred income tax (benefit) expense	(43)		186
Contractholder and policyholder charges, non-cash	Contractholder and policyholder charges, non-cash	(97)		(96)		Contractholder and policyholder charges, non-cash	(292)		(288)
Loss from equity method investments	Loss from equity method investments	16		16		Loss from equity method investments	56		58
Net realized investment (gains) losses	Net realized investment (gains) losses	(48)		(4)		Net realized investment (gains) losses	(602)		(9)
Impairments and provision for loan losses	Impairments and provision for loan losses	(4)		21		Impairments and provision for loan losses	1		25
Net losses (gains) of consolidated investment entities	Net losses (gains) of consolidated investment entities	(19)		—		Net losses (gains) of consolidated investment entities	(17)		—
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Deferred acquisition costs	Deferred acquisition costs	(59)		446		Deferred acquisition costs	(127)		183

Policyholder account balances, future policy benefits and claims, net	Policyholder account balances, future policy benefits and claims, net	(953)		2,730		Policyholder account balances, future policy benefits and claims, net	1,465		3,540
Derivatives, net of collateral	Derivatives, net of collateral	141		(745)		Derivatives, net of collateral	(316)		268
Reinsurance recoverables	Reinsurance recoverables	34		(19)		Reinsurance recoverables	20		(156)
Other receivables		6		14
Receivables						Receivables	6		53
Accrued investment income	Accrued investment income	(13)		(6)		Accrued investment income	16		(9)
Current income tax expense (benefit)	Current income tax expense (benefit)	125		(1,086)		Current income tax expense (benefit)	(401)		(82)
Payable for investment securities purchase	Payable for investment securities purchase	75		—		Payable for investment securities purchase	20		—
Other operating assets and liabilities of consolidated investment entities						Other operating assets and liabilities of consolidated investment entities	15		—
Other, net	Other, net	28		40		Other, net	77		93
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(876)		4,305		Net cash provided by (used in) operating activities	668		4,410

Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Available-for-Sale securities:	Available-for-Sale securities:					Available-for-Sale securities:
Proceeds from sales	Proceeds from sales	92		79		Proceeds from sales	555		84
Maturities, sinking fund payments and calls	Maturities, sinking fund payments and calls	819		474		Maturities, sinking fund payments and calls	2,396		1,788
Purchases	Purchases	(806)		(413)		Purchases	(2,680)		(3,079)
Proceeds from sales, maturities and repayments of mortgage loans	Proceeds from sales, maturities and repayments of mortgage loans	53		52		Proceeds from sales, maturities and repayments of mortgage loans	218		138
Funding of mortgage loans	Funding of mortgage loans	(21)		(58)		Funding of mortgage loans	(152)		(120)
Proceeds from sales and collections of other investments	Proceeds from sales and collections of other investments	36		33		Proceeds from sales and collections of other investments	88		92
Purchase of other investments	Purchase of other investments	(11)		(73)		Purchase of other investments	(31)		(147)
Purchase of investments by consolidated investment entities	Purchase of investments by consolidated investment entities	(737)		—		Purchase of investments by consolidated investment entities	(1,461)		—
Proceeds from sales, maturities and repayments of investments by consolidated investment entities	Proceeds from sales, maturities and repayments of investments by consolidated investment entities	240		—		Proceeds from sales, maturities and repayments of investments by consolidated investment entities	850		—
Purchase of equipment and software	Purchase of equipment and software	(3)		(2)		Purchase of equipment and software	(9)		(7)
Change in policy loans, net	Change in policy loans, net	8		(2)		Change in policy loans, net	10		18

Cash paid for deposit receivable	Cash paid for deposit receivable	(2)		(1)		Cash paid for deposit receivable	(216)		(3)
Cash received for deposit receivable	Cash received for deposit receivable	21		30		Cash received for deposit receivable	132		74
Advance on line of credit to Ameriprise Financial, Inc.	Advance on line of credit to Ameriprise Financial, Inc.	0		702		Advance on line of credit to Ameriprise Financial, Inc.	(1)		(702)
Repayment from Ameriprise Financial, Inc. on line of credit	Repayment from Ameriprise Financial, Inc. on line of credit	0		(702)		Repayment from Ameriprise Financial, Inc. on line of credit	1		702
Cash received from written options with deferred premiums	Cash received from written options with deferred premiums	21		95		Cash received from written options with deferred premiums	60		129
Cash paid for written options with deferred premiums	Cash paid for written options with deferred premiums	(211)		(258)		Cash paid for written options with deferred premiums	(314)		(292)
Other, net	Other, net	(2)		1		Other, net	(19)		(67)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(503)		(43)		Net cash provided by (used in) investing activities	(573)		(1,392)
											See Notes to Consolidated Financial Statements.

RIVERSOURCE LIFE INSURANCE COMPANY

														CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
									Three Months Ended March 31,						Nine Months Ended September 30,
	2021			2020		2021					2020
	(in millions)					(in millions)
Cash Flows from Financing Activities	Cash Flows from Financing Activities								Cash Flows from Financing Activities
Policyholder account balances:	Policyholder account balances:							Policyholder account balances:
Deposits and other additions	Deposits and other additions	$	384		$	255	Deposits and other additions		$	1,131		$	1,202
Net transfers from (to) separate accounts	Net transfers from (to) separate accounts	(60)			30		Net transfers from (to) separate accounts		(206)			(63)
Surrenders and other benefits	Surrenders and other benefits	(368)			(430)		Surrenders and other benefits		(1,002)			(1,035)

Proceeds from line of credit with Ameriprise Financial, Inc.	Proceeds from line of credit with Ameriprise Financial, Inc.	0			5		Proceeds from line of credit with Ameriprise Financial, Inc.		5			6
Payments on line of credit with Ameriprise Financial, Inc.	Payments on line of credit with Ameriprise Financial, Inc.	0			(55)		Payments on line of credit with Ameriprise Financial, Inc.		(5)			(56)

Cash received for purchased options with deferred premiums	Cash received for purchased options with deferred premiums	306			0		Cash received for purchased options with deferred premiums		580			40
Cash paid for purchased options with deferred premiums	Cash paid for purchased options with deferred premiums	(42)			(36)		Cash paid for purchased options with deferred premiums		(94)			(177)
Borrowings by consolidated investment entities	Borrowings by consolidated investment entities	797			—		Borrowings by consolidated investment entities		1,375			—
Repayments of debt by consolidated investment entities	Repayments of debt by consolidated investment entities	(63)			—		Repayments of debt by consolidated investment entities		(757)			—
Cash dividends to Ameriprise Financial, Inc.	Cash dividends to Ameriprise Financial, Inc.	(250)			(250)		Cash dividends to Ameriprise Financial, Inc.		(1,675)			(650)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	704			(481)		Net cash provided by (used in) financing activities		(648)			(733)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(675)			3,781		Net increase (decrease) in cash and cash equivalents		(553)			2,285
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	3,285			1,275		Cash and cash equivalents at beginning of period		3,285			1,275
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	2,610		$	5,056	Cash and cash equivalents at end of period		$	2,732		$	3,560

Supplemental Disclosures:	Supplemental Disclosures:						Supplemental Disclosures:
Income taxes paid (received), net	Income taxes paid (received), net	$	1		$	2	Income taxes paid (received), net		$	567		$	(122)
Interest paid on borrowings		—			1
Interest paid excluding consolidated investment entities							Interest paid excluding consolidated investment entities		—			2
Interest paid by consolidated investment entities							Interest paid by consolidated investment entities		73			—
Non-cash investing activity:	Non-cash investing activity:						Non-cash investing activity:
Partnership commitments not yet remitted	Partnership commitments not yet remitted	—			2		Partnership commitments not yet remitted		—			4
Exchange of an investment that resulted in a realized gain and an increase to amortized cost	Exchange of an investment that resulted in a realized gain and an increase to amortized cost	17			—		Exchange of an investment that resulted in a realized gain and an increase to amortized cost		17			—

Investments transferred in connection with reinsurance transaction							Investments transferred in connection with reinsurance transaction		7,527			—

See Notes to Consolidated Financial Statements.	See Notes to Consolidated Financial Statements.						See Notes to Consolidated Financial Statements.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

RiverSource Life Insurance Company is a stock life insurance company with 1 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”).

•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 and variable interest entities (“VIEs”) in which it is the primary beneficiary (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 fair statement 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, 2020, filed with the Securities and Exchange Commission on February 24, 2021 (“2020 10-K”).

During the third quarter of 2021, RiverSource Life Insurance Company closed on a transaction with Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company, effective July 1, 2021, to reinsure approximately $7.0 billion of fixed deferred and immediate annuity policies. As part of the transaction, RiverSource Life Insurance Company transferred $7.8 billion in consideration primarily consisting of Available-for-Sale securities, commercial mortgage loans, syndicated loans and cash. The transaction resulted in a net realized gain of approximately $532 million on investments sold. A similar previously announced transaction with RiverSource Life of New York did not receive regulatory approval in time to close by September 30, 2021 and the transaction was terminated by the parties.

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 requiring recognition or disclosure were identified.

2. Recent Accounting Pronouncements

Adoption of New Accounting Standards

Income Taxes – Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) updated the accounting standards to simplify the accounting for income taxes. The update eliminates certain exceptions to: (1) accounting principles related to intra-period tax allocation to be applied on a prospective basis, (2) deferred tax liabilities related to outside basis differences to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption, and (3) year-to-date losses in interim periods to be applied on a prospective basis. The update also amends existing guidance related to situations when an entity receives: (1) a step-up in the tax basis of goodwill to be applied on a prospective basis, (2) an allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements to be applied on a retrospective basis for all periods presented, (3) interim recognition of enactment of tax laws or rate changes to be applied on a prospective basis, and (4) franchise taxes and other taxes partially based on income to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted the standard on January 1, 2021. The adoption of this standard had no impact on the Company’s consolidated financial condition or results of operations.

~~Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~

In August 2018, the FASB updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy of timing of transfers between levels of the fair value hierarchy, and (3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the provisions of the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update did not have an impact on the Company’s consolidated financial condition or results of operations.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~

In August 2018, the FASB updated the accounting standards related to customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the nature of hosting arrangements that are service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update is effective for interim and annual periods beginning after December 15, 2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on January 1, 2020. The adoption did not have an impact on the Company’s consolidated financial condition or results of operations.

Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life of the asset. At adoption, the initial estimate of the expected credit losses will be recorded through retained earnings and subsequent changes in the estimate will be reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to retained earnings should be recorded as of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated financial condition or results of operations.

Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy of timing of transfers between levels of the fair value hierarchy, and (3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in other comprehensive income (“OCI”) for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the provisions of the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update did not have an impact on the Company’s consolidated financial condition or results of operations.

Future Adoption of New Accounting Standards

Reference Rate Reform – Expedients for Contract Modifications

In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are affected by reference rate reform (i.e., the elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: (1) receivables and debt contracts are accounted for prospectively by adjusting the effective interest rate, (2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and (3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. The amendments in this update were effective upon issuance and must be elected prior to December 31, 2022. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. In January 2021, FASB updated the standard to allow an entity to elect to apply the treatment under the original guidance to derivative instruments that use an interest rate ~~that~~ for margining, discounting or contract price alignment that will be modified due to reference rate reform but did not qualify under the original guidance. The Company has not yet applied any of the optional expedients. The adoption of the standard is not expected to have an impact on the Company’s consolidated results of operations and financial condition.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Financial Services – Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB updated the accounting standard related to long-duration insurance contracts. The guidance revises key elements of the measurement models and disclosure requirements for long-duration insurance contracts issued by insurers and reinsurers.

The guidance establishes a significant new category of benefit features called market risk benefits that protect the contractholder from other-than-nominal capital market risk and expose the insurer to that risk. Insurers will have to measure market risk benefits at fair value. Market risk benefits include variable annuity guaranteed benefits (i.e. guaranteed minimum death, withdrawal, withdrawal for life, accumulation and income benefits). The portion of the change in fair value attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position will be recorded in OCI.

Significant changes also relate to the measurement of the liability for future policy benefits for nonparticipating traditional long-duration insurance contracts and immediate annuities with a life contingent feature ~~include~~including the following:

•Insurers will be required to review and update the cash flow assumptions used to measure the liability for future policy benefits rather than using assumptions locked in at contract inception. The review of assumptions to measure the liability for all future policy benefits will be required annually at the same time each year, or more frequently if suggested by experience. The effect of updating assumptions will be measured on a retrospective catch-up basis and presented separate from the ongoing policyholder

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

benefit expense in the statement of operations in the period the update is made. This new unlocking process will be required for the Company’s term and whole life insurance, disability income, long term care insurance and immediate annuities with a life contingent feature.

•The discount rate used to measure the liability for future policy benefits will be standardized. The current requirement to use a discount rate reflecting expected investment yields will change to an upper-medium grade (low credit risk) fixed income corporate instrument yield (generally interpreted as an “A” rating) reflecting the duration characteristics of the liability. Entities will be required to update the discount rate at each reporting date with the effect of discount rate changes reflected in OCI.

•The current premium deficiency test is being replaced with a net premium ratio cap of 100%. If the net premium ratio (i.e. the ratio of the present value of total expected benefits and related expenses to the present value of total expected premiums) exceeds 100%, insurers are required to recognize a loss in the statement of operations in the period. Contracts from different issue years will no longer be permitted to be grouped to determine contracts in a loss position.

In addition, the update requires ~~DAC~~deferred acquisition costs (“DAC”) and ~~DSIC~~deferred sales inducement costs (“DSIC”) relating to all long-duration contracts and most investment contracts to be amortized on a straight-line basis over the expected life of the contract independent of profit emergence. Under the new guidance, interest will not accrue to the deferred balance and DAC and DSIC will not be subject to an impairment test.

The update requires significant additional disclosures, including disaggregated rollforwards of the liability for future policy benefits, policyholder account balances, market risk benefits, DAC and DSIC, as well as qualitative and quantitative information about expected cash flows, estimates and assumptions. The standard is effective for interim and annual periods beginning after December 15, 2022, and interim periods within those years. The standard should be applied to the liability for future policy benefits and DAC and DSIC on a modified retrospective basis and applied to market risk benefits on a retrospective basis with the option to apply full retrospective transition if certain criteria are met. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated financial condition, results of operations and disclosures.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. Revenue from Contracts with Customers

The following table presents disaggregated revenue from contracts with customers and a reconciliation to total revenues reported on the Consolidated Statements of Income.


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(in millions)				(in millions)
Policy and contract charges	Policy and contract charges							Policy and contract charges
Affiliated	Affiliated	$	46	$	41			Affiliated	$	50	$	44	$	144	$	127
Unaffiliated	Unaffiliated	4		3				Unaffiliated	4		3		12		10
Total	Total	50		44				Total	54		47		156		137

Other revenues	Other revenues							Other revenues
Administrative fees	Administrative fees							Administrative fees
Affiliated	Affiliated	12		11				Affiliated	13		12		37		33
Unaffiliated	Unaffiliated	4		4				Unaffiliated	5		3		15		13
		16		15					18		15		52		46
Other fees	Other fees							Other fees
Affiliated	Affiliated	95		86				Affiliated	99		89		291		259
Unaffiliated	Unaffiliated	1		1				Unaffiliated	1		1		4		3
		96		87					100		90		295		262
Total	Total	112		102				Total	118		105		347		308
Total revenue from contracts with customers	Total revenue from contracts with customers	162		146				Total revenue from contracts with customers	172		152		503		445
Revenue from other sources (1)	Revenue from other sources (1)	886		823				Revenue from other sources (1)	223		800		1,956		2,328
Total revenues	Total revenues	$	1,048	$	969			Total revenues	$	395	$	952	$	2,459	$	2,773

(1) Amounts primarily consist of revenue associated with insurance and annuity products or financial instruments.

The following discussion describes the nature, timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with customers.

Policy and contract charges

The Company earns revenue for providing distribution-related services to affiliated and unaffiliated mutual funds that are available as underlying investments in its variable annuity and variable life insurance products. The performance obligation is satisfied at the time

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

the mutual fund is distributed. Revenue is recognized over the time the mutual fund is held in the variable product and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund. The revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control, including market volatility and how long the fund(s) remain in the insurance policy or annuity contract. The revenue will not be recognized until it is probable that a significant reversal will not occur. These fees are accrued and collected on a monthly basis.

Other revenues

Administrative fees

The Company earns revenue for providing customer support, contract servicing and administrative services for affiliated and unaffiliated mutual funds that are available as underlying instruments in its variable annuity and variable life insurance products. The transfer agent and administration revenue is earned daily based on a fixed rate applied, as a percentage, to assets under management. These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. These fees are accrued and collected on a monthly basis.

Other fees

The Company earns revenue for providing affiliated and unaffiliated partners an opportunity to educate the financial advisors of its affiliate, Ameriprise Financial Services, LLC (“AFS”), that sell the Company's products as well as product and marketing personnel to support the offer, sale and servicing of funds within the Company's variable annuity and variable life insurance products. These payments allow the parties to train and support the advisors, explain the features of their products, and distribute marketing and educational materials. The affiliated revenue is earned based on a rate, updated at least annually, which is applied, as a percentage, to the market value of assets invested. The unaffiliated revenue is earned based on a fixed rate applied, as a percentage, to the market value of assets invested. These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. These fees are accrued and collected on a monthly basis.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Receivables

Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company has an unconditional right to the revenue. Receivables related to revenues from contracts with customers were ~~$59~~$62 million and $57 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

4. Variable Interest Entities

The Company provides asset management services to collateralized loan obligations (“CLOs”) which are considered to be VIEs that are sponsored by the Company. In addition, the Company invests in structured investments other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates the CLOs if the Company is deemed to be the primary beneficiary. The Company has no0 obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment and existing future funding commitments, and the Company has not provided any support to these entities. The Company has unfunded commitments related to consolidated CLOs of ~~$20~~$27 million and $13 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

CLOs

CLOs are asset backed financing entities collateralized by a pool of assets, primarily syndicated loans and, to a lesser extent, high-yield bonds. Multiple tranches of debt securities are issued by a CLO, offering investors various maturity and credit risk characteristics. The debt securities issued by the CLOs are non-recourse to the Company. The CLO’s debt holders have recourse only to the assets of the CLO. The assets of the CLOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CLO’s collateral pool. The Company earns management fees from the CLOs based on the value of the CLO’s collateral pool and, in certain instances, may also receive incentive fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company has invested in a portion of the unrated, junior subordinated notes and highly rated senior notes of certain CLOs. The Company consolidates certain CLOs where it is the primary beneficiary and has the power to direct the activities that most significantly impact the economic performance of the CLO.

Affordable Housing Partnerships and Other Real Estate Partnerships

The Company is a limited partner in affordable housing partnerships that qualify for government-sponsored low income housing tax credit programs and partnerships that invest in multi-family residential properties that were originally developed with an affordable housing component. The Company has determined it is not the primary beneficiary and therefore does not consolidate these partnerships.

A majority of the limited partnerships are ~~variable interest entities (“VIEs”).~~VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in other investments and was ~~$187~~$151 million and $200 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. The Company had a $9 million liability recorded as of both ~~March 31,~~September 30, 2021 and December 31, 2020 related to original purchase commitments not yet remitted to the VIEs. The Company

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the funding commitments.

Structured Investments

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, and commercial 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 amortized cost. See Note 5 for additional information on these structured investments.

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 1112 for the definition of the three levels of the fair value hierarchy.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:


		March 31, 2021									September 30, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(in millions)									(in millions)
Assets	Assets									Assets
Investments:	Investments:									Investments:

Common stocks	Common stocks	$	—	$	2	$	—	$	2	Common stocks	$	—	$	2	$	—	$	2
Syndicated loans	Syndicated loans	—		2,485		155		2,640		Syndicated loans	—		2,123		45		2,168
Total investments	Total investments	—		2,487		155		2,642		Total investments	—		2,125		45		2,170
Receivables	Receivables	—		17		—		17		Receivables	—		18		—		18
Other assets	Other assets	—		2		—		2		Other assets	—		2		—		2
Total assets at fair value	Total assets at fair value	$	—	$	2,506	$	155	$	2,661	Total assets at fair value	$	—	$	2,145	$	45	$	2,190

Liabilities	Liabilities									Liabilities
Debt (1)	Debt (1)	$	—	$	2,671	$	—	$	2,671	Debt (1)	$	—	$	2,163	$	—	$	2,163
Other liabilities	Other liabilities	—		256		—		256		Other liabilities	—		71		—		71
Total liabilities at fair value	Total liabilities at fair value	$	—	$	2,927	$	—	$	2,927	Total liabilities at fair value	$	—	$	2,234	$	—	$	2,234


	December 31, 2020
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	8	$	—	$	8
Common stocks	—		1		—		1
Syndicated loans	—		1,817		92		1,909
Total investments	—		1,826		92		1,918
Receivables	—		16		—		16
Other assets	—		—		2		2
Total assets at fair value	$	—	$	1,842	$	94	$	1,936

Liabilities
Debt (1)	$	—	$	1,913	$	—	$	1,913
Other liabilities	—		69		—		69
Total liabilities at fair value	$	—	$	1,982	$	—	$	1,982

(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was ~~$2.7~~$2.2 billion and $2.0 billion as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The following tables provide a summary of changes in Level 3 assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:

Syndicated Loans Other Assets
(in millions)
Balance, January 1, 2021 $ 92 $ 2
Total gains (losses) included in:
Net income 2 —
Purchases 59 —
Sales (10) —
Settlements (20) —
Transfers into Level 3 57 —
Transfers out of Level 3 (25) (2)
Balance, March 31, 2021 $ 155 $ 0
Changes in unrealized gains (losses) included in income relating to assets held at March 31, 2021 $ 1 $ —


	Syndicated Loans
	(in millions)
Balance, July 1, 2021	$	112


Purchases	7
Sales	(4)
Settlements	(10)
Transfers into Level 3	5
Transfers out of Level 3	(47)
Deconsolidation of consolidated investment entities	(18)
Balance, September 30, 2021	$	45

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Syndicated Loans			Other Assets
	(in millions)
Balance, January 1, 2021	$	92		$	2
Total gains (losses) included in:
Net income	2		(1)	—

Purchases	88			—
Sales	(38)			—

Settlements	(49)			—
Transfers into Level 3	90			—
Transfers out of Level 3	(122)			(2)
Deconsolidation of consolidated investment entities	(18)			—
Balance, September 30, 2021	$	45		$	—

(1) Included in net investment income in the Consolidated Statements of Operations.

Securities and loans transferred from Level 3 primarily represent assets with fair values that are now obtained from a third-party pricing service with observable inputs or priced in active markets. Securities and loans transferred to Level 3 represent assets with fair values that are now based on a single non-binding broker quote.

All Level 3 measurements as of ~~March 31,~~September 30, 2021 and December 31, 2020 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Determination of Fair Value

Assets

Investments

The fair value of syndicated loans obtained from third-party pricing services using a market approach with observable inputs is classified as Level 2. The fair value of syndicated loans obtained from third-party pricing services with a single non-binding broker quote as the underlying valuation source is classified as Level 3. The underlying inputs used in non-binding broker quotes are not readily available to the Company. See Note 1112 for a description of the Company’s determination of the fair value of corporate debt securities, common stocks and other investments.

Receivables

For receivables of the consolidated CLOs, the carrying value approximates fair value as the nature of these assets has historically been short term and the receivables have been collectible. The fair value of these receivables is classified as Level 2.

Liabilities

Debt

The fair value of the CLOs’ assets, typically syndicated bank loans, is more observable than the fair value of the CLOs’ debt tranches for which market activity is limited and less transparent. As a result, the fair value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets and is classified as Level 2.

Other Liabilities

Other liabilities consist primarily of securities purchased but not yet settled held by consolidated CLOs. The carrying value approximates fair value as the nature of these liabilities has historically been short term. The fair value of these liabilities is classified as Level 2. Other liabilities also include accrued interest on the CLO debt.

Fair Value Option

The Company has elected the fair value option for the financial assets and liabilities of the consolidated CLOs. Management believes that the use of the fair value option better matches the changes in fair value of assets and liabilities related to the CLOs.

1314

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(in millions)					(in millions)
Syndicated loans	Syndicated loans					Syndicated loans
Unpaid principal balance	Unpaid principal balance	$	2,690	$	1,990	Unpaid principal balance	$	2,223	$	1,990
Excess unpaid principal over fair value	Excess unpaid principal over fair value	(50)		(81)		Excess unpaid principal over fair value	(55)		(81)
Fair value	Fair value	$	2,640	$	1,909	Fair value	$	2,168	$	1,909

Fair value of loans more than 90 days past due	Fair value of loans more than 90 days past due	$	1	$	5	Fair value of loans more than 90 days past due	$	2	$	5
Fair value of loans in nonaccrual status	Fair value of loans in nonaccrual status	15		19		Fair value of loans in nonaccrual status	5		19
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	20		24		Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	5		24

Debt	Debt					Debt
Unpaid principal balance	Unpaid principal balance	$	2,808	$	2,069	Unpaid principal balance	$	2,298	$	2,069
Excess unpaid principal over fair value	Excess unpaid principal over fair value	(137)		(156)		Excess unpaid principal over fair value	(135)		(156)
Carrying value (1)	Carrying value (1)	$	2,671	$	1,913	Carrying value (1)	$	2,163	$	1,913

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

Interest income from syndicated loans, bonds and structured investments is recorded based on contractual rates in net investment income. Gains and losses related to changes in the fair value of investments are recorded in net investment income and gains and losses on sales of investments are recorded in net realized investment gains (losses). Interest expense on debt is recorded in interest and debt expense with gains and losses related to changes in the fair value of debt recorded in net investment income.

Total net gains (losses) recognized in net investment income related to the changes in fair value of investments the Company owns in the consolidated CLOs where it has elected the fair value option and collateralized financing entity accounting were immaterial for both the three months and nine months ended ~~March 31,~~September 30, 2021.

Debt of the consolidated investment entities and the stated interest rates were as follows:


		Carrying Value				Weighted Average Interest Rate					Carrying Value				Weighted Average Interest Rate
		March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
		(in millions)									(in millions)
Debt of consolidated CLOs due 2025-2034	Debt of consolidated CLOs due 2025-2034	$	2,671	$	1,913	2.0	%	2.1	%	Debt of consolidated CLOs due 2025-2034	$	2,163	$	1,913	1.7	%	2.1	%

The debt of the consolidated CLOs has both fixed and floating interest rates, which range from 0.0% to ~~8.9%~~8.8%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and contractual interest rates.

~~5. Investments~~

~~Available-for-Sale securities distributed by type were as follows:~~

Description of Securities March 31, 2021
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value
(in millions)
Fixed maturities:
Corporate debt securities $ 11,289 $ 1,426 $ (87) $ — $ 12,628
Residential mortgage backed securities 2,650 96 (7) — 2,739
Commercial mortgage backed securities 3,896 167 (11) — 4,052
State and municipal obligations 1,025 242 (3) — 1,264
Asset backed securities 1,064 39 — — 1,103
Foreign government bonds and obligations 229 17 (1) — 245
Total $ 20,153 $ 1,987 $ (109) $ — $ 22,031

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. Investments

Available-for-Sale securities distributed by type were as follows:


Description of Securities	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities:
Corporate debt securities	$	8,135	$	1,293	$	(31)	$	—	$	9,397
Residential mortgage backed securities	2,107		46		(7)		—		2,146
Commercial mortgage backed securities	2,448		86		(6)		—		2,528
State and municipal obligations	835		249		(1)		(1)		1,082
Asset backed securities	523		27		—		—		550
Foreign government bonds and obligations	80		6		(1)		—		85
U.S. government and agency obligations	1		—		—		—		1
Total	$	14,129	$	1,707	$	(46)	$	(1)	$	15,789


Description of Securities	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities:
Corporate debt securities	$	10,982	$	1,903	$	(2)	$	(10)	$	12,873
Residential mortgage backed securities	2,888		115		(1)		—		3,002
Commercial mortgage backed securities	3,935		235		(4)		—		4,166
State and municipal obligations	1,050		295		(1)		—		1,344
Asset backed securities	1,168		45		(1)		—		1,212
Foreign government bonds and obligations	236		22		(1)		—		257
U.S. government and agency obligations	1		—		—		—		1
Total	$	20,260	$	2,615	$	(10)	$	(10)	$	22,855

In March 2020, the Company purchased $368 million of investments at fair value, primarily agency residential mortgage back securities, from Ameriprise Financial.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, accrued interest of ~~$135~~$125 million and $158 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in accrued investment income on the Consolidated Balance Sheets.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, investment securities with a fair value of ~~$2.7~~$2.5 billion and $2.9 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which ~~$417~~$403 million and $454 million, respectively, may be sold, pledged or rehypothecated by the counterparty.

As of both ~~March 31,~~September 30, 2021 and December 31, 2020, fixed maturity securities comprised approximately 85% 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. As of ~~March 31,~~September 30, 2021 and December 31, 2020, approximately ~~$516~~$352 million and $553 million, 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.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

A summary of fixed maturity securities by rating was as follows:


Ratings	Ratings	March 31, 2021						December 31, 2020						Ratings	September 30, 2021						December 31, 2020
		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	AAA	$	6,984	$	7,252	33	%	$	7,323	$	7,698	34	%	AAA	$	4,723	$	4,858	31	%	$	7,323	$	7,698	34	%
AA	AA	1,026		1,212		6		1,036		1,266		6		AA	785		967		6		1,036		1,266		6
A	A	2,481		2,900		13		2,663		3,235		14		A	1,589		1,950		12		2,663		3,235		14
BBB	BBB	8,359		9,238		42		7,770		9,026		39		BBB	6,074		6,905		44		7,770		9,026		39
Below investment grade	Below investment grade	1,303		1,429		6		1,468		1,630		7		Below investment grade	958		1,109		7		1,468		1,630		7
Total fixed maturities	Total fixed maturities	$	20,153	$	22,031	100	%	$	20,260	$	22,855	100	%	Total fixed maturities	$	14,129	$	15,789	100	%	$	20,260	$	22,855	100	%

As of ~~March 31,~~September 30, 2021 and December 31, 2020, approximately ~~36%~~42% and 37%, respectively, of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. The Company had holdings of ~~$356~~$317 million in Ameriprise Advisor Financing, LLC (“AAF”), ~~an affiliate of the Company,~~$246 million in Kraft Heinz Co., $227 million in Duke Energy Corp., $213 million in Suncor Energy Inc., and $212 million in AT&T Inc. which ~~was~~were greater than 10% of the Company’s total equity as of ~~March 31,~~September 30, 2021. The Company had holdings of $372 million in AAF which was greater than 10% of total equity as of December 31, 2020. There were 0no other holdings of any other issuer greater than 10% of total equity as of both ~~March 31,~~September 30, 2021 and December 31, 2020.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The following tables summarize the fair value and gross unrealized losses on Available-for-Sale securities, aggregated by major investment type and the length of time that individual securities have been in a continuous unrealized loss position for which no allowance for credit losses has been recorded:


Description of Securities	Description of Securities	March 31, 2021															Description of Securities	September 30, 2021
		Less than 12 months					12 months or more					Total						Less than 12 months					12 months or more					Total
		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	Corporate debt securities	84	$	1,948	$	(87)	2	$	16	$	—	86	$	1,964	$	(87)	Corporate debt securities	79	$	1,454	$	(29)	5	$	23	$	(2)	84	$	1,477	$	(31)
Residential mortgage backed securities	Residential mortgage backed securities	16	329		(7)		13	22		—		29	351		(7)		Residential mortgage backed securities	24	688		(7)		2	2		—��		26	690		(7)
Commercial mortgage backed securities	Commercial mortgage backed securities	32	518		(10)		8	100		(1)		40	618		(11)		Commercial mortgage backed securities	38	550		(5)		3	22		(1)		41	572		(6)
State and municipal obligations	State and municipal obligations	28	75		(2)		2	7		(1)		30	82		(3)		State and municipal obligations	18	49		(1)		—	—		—		18	49		(1)

Foreign government bonds and obligations	Foreign government bonds and obligations	4	5		—		7	7		(1)		11	12		(1)		Foreign government bonds and obligations	5	6		—		6	4		(1)		11	10		(1)

Total	Total	164	$	2,875	$	(106)	32	$	152	$	(3)	196	$	3,027	$	(109)	Total	164	$	2,747	$	(42)	16	$	51	$	(4)	180	$	2,798	$	(46)


Description of Securities	December 31, 2020
	Less than 12 months					12 months or more					Total
	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)
Corporate debt securities	26	$	228	$	(1)	1	$	12	$	(1)	27	$	240	$	(2)
Residential mortgage backed securities	11	47		(1)		7	14		—		18	61		(1)
Commercial mortgage backed securities	12	179		(3)		7	60		(1)		19	239		(4)
State and municipal obligations	2	4		—		1	4		(1)		3	8		(1)
Asset backed securities	4	65		—		2	36		(1)		6	101		(1)

Foreign government bonds and obligations	1	3		—		7	8		(1)		8	11		(1)


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

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

As part of the Company’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities for which an allowance for credit losses has not been recognized during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 is primarily attributable to higher interest rates, partially offset by tighter credit spreads. The Company did not recognize these unrealized losses in earnings because it was determined that such losses were due to non-credit factors. The Company does not intend to sell these securities and does not believe that it is more likely than not that the Company will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of ~~March 31,~~September 30, 2021 and December 31, 2020, ~~81%~~88% and 83% respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

The following tables present a rollforward of the allowance for credit losses on Available-for-Sale securities:


	~~Corporate Debt Securities~~
	~~(in millions)~~
~~Balance, January 1, 2021~~	$	10

~~Charge-offs~~	~~(10)~~
~~Balance, March 31, 2021~~	$	0

~~Balance at January 1, 2020~~	$	0
~~Additions for which credit losses were not previously recognized~~	13

~~Balance at March 31, 2020~~	$	13


	Corporate Debt Securities		State and Municipal Obligations		Total
	(in millions)
Balance, July 1, 2021	$	—	$	—	$	—
Additions for which credit losses were not previously recorded	—		1		1
Charge-offs	—		—		—
Balance, September 30, 2021	$	—	$	1	$	1

Balance, July 1, 2020	$	13	$	—	$	13
Additions for which credit losses were not previously recorded	—		—		—

Balance, September 30, 2020	$	13	$	—	$	13

Balance, January 1, 2021	$	10	$	—	$	10
Additions for which credit losses were not previously recorded	—		1		1
Charge-offs	(10)		—		(10)
Balance, September 30, 2021	$	—	$	1	$	1

Balance at January 1, 2020 (1)	$	—	$	—	$	—
Additions for which credit losses were not previously recorded	13		—		13

Balance at September 30, 2020	$	13	$	—	$	13

(1)

Prior to January 1, 2020, credit losses on Available-for-Sale securities were not recorded in an allowance but were recorded as a reduction of the book value of the security if the security was other-than-temporarily impaired.

~~RIVERSOURCE LIFE 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 (losses) were as follows:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(in millions)				(in millions)
Gross realized investment gains	Gross realized investment gains	$	49	$	6			Gross realized investment gains	$	505	$	2	$	568	$	12
Gross realized investment losses	Gross realized investment losses	—		(1)				Gross realized investment losses	(6)		—		(6)		(2)
Credit losses	Credit losses	—		(13)				Credit losses	(1)		—		(1)		(13)

Other impairments								Other impairments	—		—		(13)		—
Total	Total	$	49	$	(8)			Total	$	498	$	2	$	548	$	(3)

~~There were no credit losses for the three months ended March 31, 2021.~~ Credit losses for the three months and nine months ended ~~March 31,~~September 30, 2021 primarily related to recording an allowance for credit losses on a state and municipal security. For the nine months ended September 30, 2020, credit losses primarily related to recording an allowance for credit losses on certain corporate debt securities, primarily in the oil and gas industry. Other impairments for the nine months ended September 30, 2021 relate to Available-for-Sale securities that were impaired prior to being sold in the reinsurance transaction. See Note 1 for more information on the reinsurance transaction.

See Note 1415 for a rollforward of net unrealized investment gains (losses) included in AOCI.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Available-for-Sale securities by contractual maturity as of ~~March 31,~~September 30, 2021 were as follows:


		Amortized Cost		Fair Value			Amortized Cost		Fair Value
		(in millions)					(in millions)
Due within one year	Due within one year	$	453	$	460	Due within one year	$	411	$	417
Due after one year through five years	Due after one year through five years	4,445		4,734		Due after one year through five years	1,955		2,090
Due after five years through 10 years	Due after five years through 10 years	3,417		3,558		Due after five years through 10 years	3,049		3,166
Due after 10 years	Due after 10 years	4,228		5,385		Due after 10 years	3,636		4,892
		12,543		14,137			9,051		10,565
Residential mortgage backed securities	Residential mortgage backed securities	2,650		2,739		Residential mortgage backed securities	2,107		2,146
Commercial mortgage backed securities	Commercial mortgage backed securities	3,896		4,052		Commercial mortgage backed securities	2,448		2,528
Asset backed securities	Asset backed securities	1,064		1,103		Asset backed securities	523		550
Total	Total	$	20,153	$	22,031	Total	$	14,129	$	15,789

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 were not included in the maturities distribution.

The following is a summary of net investment income: Three Months Ended March 31,
2021 2020
(in millions)
Fixed maturities $ 189 $ 201
Mortgage loans 28 29
Other investments 35 (1)
252 229
Less: investment expenses 5 6
Total $ 247 $ 223
The following is a summary of net investment income:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Fixed maturities	$	137	$	191	$	511	$	585
Mortgage loans	21		29		82		86
Other investments	40		(3)		86		(9)
	198		217		679		662
Less: investment expenses	5		5		15		15
Total	$	193	$	212	$	664	$	647

6. Financing Receivables

Financing receivables are comprised of commercial loans, consumer loans, and the deposit receivable.

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses for the ~~three~~nine months ended ~~March 31:~~September 30:


	Commercial Loans
	(in millions)


Balance, January 1, 2021	$	35
Provisions	~~(2)~~(21)


Balance, ~~March 31,~~September 30, 2021	$	3314

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


	Commercial Loans
	(in millions)
Balance, December 31, 2019 (1)	$	20
Cumulative effect of adoption of current expected credit losses guidance	3
Balance, January 1, 2020	23
Provisions	913


Balance, ~~March 31,~~September 30, 2020	$	3236

(1)Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset.

The decrease in the allowance for credit losses provision for commercial loans reflects the sale of certain commercial mortgage loans and syndicated loans in conjunction with the fixed deferred and immediate annuity reinsurance transaction discussed in Note 1.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, accrued interest on commercial loans was ~~$15~~$10 million and $14 million, respectively, and is recorded in accrued investment income on the Consolidated Balance Sheets and excluded from the amortized cost basis of commercial loans.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Purchases and Sales

During the three months and nine months ended ~~March 31,~~September 30, 2021, the Company sold $746 million of commercial mortgage loans.

During the three months ended September 30, 2021 and 2020, the Company purchased ~~$9 million~~nil and ~~$41~~$84 million, respectively, of syndicated loans, and sold $3$350 million and $7$2 million, respectively, of syndicated loans. During the nine months ended September 30, 2021 and 2020, the Company purchased $26 million and $134 million, respectively, of syndicated loans and sold $354 million and $9 million, respectively, of syndicated loans.

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

Credit Quality Information

Nonperforming loans were ~~$2 million~~nil and $7 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. All other loans were considered to be performing.

Commercial Loans

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. Loan-to-value ratio is the primary credit quality indicator included in this review. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates when credit risk changes. Commercial mortgage loans which management has assigned its highest risk rating were less than 1% of total commercial mortgage loans as of both ~~March 31,~~September 30, 2021 and December 31, 2020. 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. Total commercial mortgage loan modifications through ~~March~~December 31, ~~2021~~2020 due to the COVID-19 pandemic consisted of 88 loans with a total unpaid balance of $~~360~~$360 million. Modifications primarily consisted of short-term forbearance and interest only payments. There were no additional modifications through September 30, 2021. As of ~~March 31,~~September 30, 2021, there ~~was 1 loan~~were no loans remaining that ~~was~~were modified due to ~~COVID-19 with interest only payments with an unpaid balance of $10 million.~~COVID-19. All ~~other~~ loans returned to their normal payment schedules. Total commercial mortgage loans past due were ~~NaN~~nil as of both ~~March 31,~~September 30, 2021 and December 31, 2020.

The tables below present the amortized cost basis of commercial mortgage loans by year of origination and loan-to-value ratio:

March 31, 2021
Loan-to-Value Ratio 2021 2020 2019 2018 2017 Prior Total
(in millions)
> 100% $ 0 $ 0 $ 0 $ 2 $ 0 $ 15 $ 17
80% - 100% 0 15 19 8 3 22 67
60% - 80% 13 77 148 27 33 174 472
40% - 60% 7 27 44 83 132 661 954
< 40% 0 7 28 58 95 871 1,059
Total $ 20 $ 126 $ 239 $ 178 $ 263 $ 1,743 $ 2,569

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


	September 30, 2021
Loan-to-Value Ratio	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	19	$	11	$	—	$	30	$	60
80% - 100%	9		14		10		2		—		37		72
60% - 80%	93		64		66		25		59		128		435
40% - 60%	23		31		84		66		52		412		668
< 40%	6		7		39		—		45		458		555
Total	$	131	$	116	$	218	$	104	$	156	$	1,065	$	1,790


	December 31, 2020
Loan-to-Value Ratio	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	2	$	—	$	—	$	10	$	12
80% - 100%	15		16		9		3		7		15		65
60% - 80%	85		152		27		29		46		141		480
40% - 60%	20		50		74		147		111		543		945
< 40%	7		22		69		88		58		856		1,100
Total	$	127	$	240	$	181	$	267	$	222	$	1,565	$	2,602

Loan-to-value ratio is based on income and expense data provided by borrowers at least annually and long-term capitalization rate assumptions based on property type.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

In addition, the Company reviews the concentrations of credit risk by region and property type. Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:


		Loans				Percentage					Loans				Percentage
		March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
		(in millions)									(in millions)
East North Central										East North Central	$	179	$	250	10	%	10	%
East South Central										East South Central	65		111		4		4
Middle Atlantic										Middle Atlantic	109		165		6		6
Mountain										Mountain	119		234		7		10
New England										New England	23		47		1		2
Pacific										Pacific	571		784		32		30
South Atlantic	South Atlantic	$	658	$	663	26	%	25	%	South Atlantic	476		663		27		25
Pacific		774		784		30		30
Mountain		228		234		9		10
West North Central	West North Central	189		192		7		7		West North Central	134		192		7		7
East North Central		247		250		10		10
Middle Atlantic		163		165		6		6
West South Central	West South Central	154		156		6		6		West South Central	114		156		6		6
New England		46		47		2		2
East South Central		110		111		4		4
		2,569		2,602		100	%	100	%		1,790		2,602		100	%	100	%
Less: allowance for loan losses		28		28
Less: allowance for credit losses										Less: allowance for credit losses	14		28
Total	Total	$	2,541	$	2,574					Total	$	1,776	$	2,574

Concentrations of credit risk of commercial mortgage loans by property type were as follows:


		Loans				Percentage					Loans				Percentage
		March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
		(in millions)									(in millions)
Retail		$	834	$	843	33	%	32	%
Office		346		358		13		14
Apartments	Apartments	678		680		26		26		Apartments	$	468	$	680	26	%	26	%
Hotel										Hotel	15		49		1		2
Industrial	Industrial	395		401		15		16		Industrial	280		401		16		16
Mixed use	Mixed use	75		76		3		3		Mixed use	57		76		3		3
Hotel		49		49		2		2
Office										Office	258		358		15		14
Retail										Retail	597		843		33		32
Other	Other	192		195		8		7		Other	115		195		6		7
		2,569		2,602		100	%	100	%		1,790		2,602		100	%	100	%
Less: allowance for loan losses		28		28
Less: allowance for credit losses										Less: allowance for credit losses	14		28
Total	Total	$	2,541	$	2,574					Total	$	1,776	$	2,574

Syndicated Loans

The recorded investment in syndicated loans as of ~~March 31,~~September 30, 2021 and December 31, 2020 ~~was $420~~were $35 million and $446 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were ~~NaN~~nil and $2 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. The Company assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The tables below present the amortized cost basis of syndicated loans by origination year and internal risk rating:


		March 31, 2021															September 30, 2021
Internal Risk Rating	Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total		Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total
		(in millions)															(in millions)
Risk 5	Risk 5	$	—	$	—	$	—	$	—	$	—	$	2	$	2	Risk 5	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Risk 4	Risk 4	—		—		—		1		5		5		11		Risk 4	—		—		—		—		—		—		—
Risk 3	Risk 3	—		2		6		10		13		27		58		Risk 3	—		—		—		—		—		1		1
Risk 2	Risk 2	4		21		38		41		51		34		189		Risk 2	12		—		2		1		4		1		20
Risk 1	Risk 1	3		14		22		35		41		45		160		Risk 1	4		—		2		—		4		4		14
Total	Total	$	7	$	37	$	66	$	87	$	110	$	113	$	420	Total	$	16	$	—	$	4	$	1	$	8	$	6	$	35

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2020
Internal Risk Rating	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	—	$	—	$	—	$	2	$	2
Risk 4	—		—		3		7		—		7		17
Risk 3	—		7		6		19		10		18		60
Risk 2	23		42		45		51		10		32		203
Risk 1	14		25		35		43		17		30		164
Total	$	37	$	74	$	89	$	120	$	37	$	89	$	446

Policy Loans

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, there is 0no allowance for credit losses.

Deposit Receivable

The deposit receivable was $8.0 billion and $1.4 billion as of ~~both March 31,~~September 30, 2021 and December 31, ~~2020.~~2020, respectively. The deposit receivable is fully collateralized by the fair value of the assets held in ~~a trust.~~trusts. Based on management’s evaluation of the nature of the underlying assets and the potential for changes in the collateral value, there was 0 allowance for credit losses for the deposit receivable as of both ~~March 31,~~September 30, 2021 and December 31, 2020. The increase in the deposit receivable is primarily driven by the reinsurance transaction, effective July 1, 2021, to reinsure fixed deferred and non-life contingent immediate annuity policies. See Note 1 for more information on the fixed deferred and immediate annuity reinsurance transaction.

Troubled Debt Restructurings

There were 0no loans accounted for as a troubled debt restructuring by the Company during ~~each of~~both the three months and nine months ended ~~March 31,~~September 30, 2021 and 2020. There are 0no commitments to lend additional funds to borrowers whose loans have been restructured.

7. Reinsurance

During the third quarter of 2021, RiverSource Life Insurance Company reinsured 100% of its insurance risk associated with its life contingent immediate annuity policies in force as of July 1, 2021 through a reinsurance agreement with Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company. Policies issued after July 1, 2021 are not subject to this reinsurance agreement. See Note 1 for more information on the fixed deferred and immediate annuity reinsurance transaction.

The ceded premiums associated with life contingent immediate annuity policies were $1.2 billion for the three months and nine months ended September 30, 2021.

Reinsurance recoverables included $1.1 billion related to life contingent immediate annuity policies as of September 30, 2021.

8. Deferred Acquisition Costs and Deferred Sales Inducement Costs

During the third quarter of the year, management updated market-related inputs and implemented model changes related to the living benefit valuation. In addition, management conducted its annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. The impact of unlocking to DAC in the third quarter of 2021 primarily reflected a favorable impact from lower surrenders on variable annuities with living benefits and UL and VUL insurance products. The impact of unlocking to DAC in the third quarter of 2020 primarily reflected an unfavorable impact from updates to interest rate assumptions, partially offset by a favorable impact from lower surrenders on variable annuities with living benefit guarantees.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The balances of and changes in DAC were as follows:


		2021		2020			2021		2020
		(in millions)					(in millions)
Balance at January 1	Balance at January 1	$	2,508	$	2,673	Balance at January 1	$	2,508	$	2,673
Capitalization of acquisition costs	Capitalization of acquisition costs	62		57		Capitalization of acquisition costs	196		155
Amortization	Amortization	(2)		(503)		Amortization	(129)		(238)

Amortization, impact of valuation assumptions review						Amortization, impact of valuation assumptions review	60		(100)
Impact of change in net unrealized (gains) losses on securities	Impact of change in net unrealized (gains) losses on securities	93		118		Impact of change in net unrealized (gains) losses on securities	75		(61)
Balance at March 31		$	2,661	$	2,345
Balance at September 30						Balance at September 30	$	2,710	$	2,429

The balances of and changes in DSIC, which is included in other assets, were as follows:

2021 2020
(in millions)
Balance at January 1 $ 187 $ 216
Amortization (3) (36)
Impact of change in net unrealized (gains) losses on securities 4 15
Balance at March 31 $ 188 $ 195


	2021		2020
	(in millions)
Balance at January 1	$	187	$	216
Capitalization of sales inducement costs	1		1
Amortization	(15)		(19)
Amortization, impact of valuation assumptions review	2		(16)
Impact of change in net unrealized (gains) losses on securities	11		(1)
Balance at September 30	$	186	$	181

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

8.9. 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, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(in millions)					(in millions)
Policyholder account balances	Policyholder account balances					Policyholder account balances
Fixed annuities (1)	Fixed annuities (1)	$	8,401	$	8,531	Fixed annuities (1)	$	8,229	$	8,531
Variable annuity fixed sub-accounts	Variable annuity fixed sub-accounts	5,075		5,104		Variable annuity fixed sub-accounts	5,020		5,104
Universal life (“UL”)/variable universal life (“VUL”) insurance	Universal life (“UL”)/variable universal life (“VUL”) insurance	3,110		3,122		Universal life (“UL”)/variable universal life (“VUL”) insurance	3,098		3,122
Indexed universal life (“IUL”) insurance	Indexed universal life (“IUL”) insurance	2,336		2,269		Indexed universal life (“IUL”) insurance	2,461		2,269
Structured variable annuities	Structured variable annuities	2,027		1,371		Structured variable annuities	3,552		1,371
Other life insurance	Other life insurance	597		605		Other life insurance	580		605
Total policyholder account balances	Total policyholder account balances	21,546		21,002		Total policyholder account balances	22,940		21,002

Future policy benefits	Future policy benefits					Future policy benefits
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	1,479		3,049		Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	2,256		3,049
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	(22)		1		Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	(14)		1
Other annuity liabilities	Other annuity liabilities	173		211		Other annuity liabilities	73		211
Fixed annuity life contingent liabilities	Fixed annuity life contingent liabilities	1,346		1,370		Fixed annuity life contingent liabilities	1,303		1,370
Life and disability income insurance	Life and disability income insurance	1,179		1,187		Life and disability income insurance	1,152		1,187
Long term care insurance	Long term care insurance	5,558		5,722		Long term care insurance	5,664		5,722
UL/VUL and other life insurance additional liabilities	UL/VUL and other life insurance additional liabilities	1,244		1,259		UL/VUL and other life insurance additional liabilities	1,278		1,259
Total future policy benefits	Total future policy benefits	10,957		12,799		Total future policy benefits	11,712		12,799
Policy claims and other policyholders’ funds	Policy claims and other policyholders’ funds	193		185		Policy claims and other policyholders’ funds	205		185
Total policyholder account balances, future policy benefits and claims	Total policyholder account balances, future policy benefits and claims	$	32,696	$	33,986	Total policyholder account balances, future policy benefits and claims	$	34,857	$	33,986

(1) Includes fixed deferred annuities, non-life contingent fixed payout annuities and fixed deferred indexed annuity host contracts.

(2) Includes the fair value of GMAB embedded derivatives that was a net asset as of ~~March 31,~~September 30, 2021 reported as a contra liability.

~~Separate account liabilities consisted of the following:~~

March 31, 2021 December 31, 2020
(in millions)
Variable annuity $ 79,862 $ 79,299
VUL insurance 8,539 8,226
Other insurance 32 31
Total $ 88,433 $ 87,556

2123

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9.Separate account liabilities consisted of the following:


	September 30, 2021		December 31, 2020
	(in millions)
Variable annuity	$	81,063	$	79,299
VUL insurance	8,931		8,226
Other insurance	32		31
Total	$	90,026	$	87,556

10. 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.

The following table provides information related to variable annuity guarantees for which the Company has established additional liabilities:


Variable Annuity Guarantees by Benefit Type (1)	Variable Annuity Guarantees by Benefit Type (1)	March 31, 2021							December 31, 2020							Variable Annuity Guarantees by Benefit Type (1)	September 30, 2021							December 31, 2020
		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:	GMDB:															GMDB:
Return of premium	Return of premium	$	67,317	$	65,396	$	7	68	$	66,874	$	64,932	$	5	68	Return of premium	$	68,486	$	66,600	$	18	69	$	66,874	$	64,932	$	5	68
Five/six-year reset	Five/six-year reset	8,211		5,486		7		68	8,116		5,386		6		68	Five/six-year reset	8,181		5,467		13		68	8,116		5,386		6		68
One-year ratchet	One-year ratchet	6,093		5,765		13		71	6,094		5,763		8		71	One-year ratchet	6,105		5,786		40		71	6,094		5,763		8		71
Five-year ratchet	Five-year ratchet	1,437		1,383		1		67	1,436		1,381		0		67	Five-year ratchet	1,425		1,371		2		67	1,436		1,381		—		67
Other	Other	1,267		1,249		45		74	1,261		1,243		45		73	Other	1,281		1,264		46		74	1,261		1,243		45		73
Total — GMDB	Total — GMDB	$	84,325	$	79,279	$	73	68	$	83,781	$	78,705	$	64	68	Total — GMDB	$	85,478	$	80,488	$	119	69	$	83,781	$	78,705	$	64	68

GGU death benefit	GGU death benefit	$	1,196	$	1,139	$	168	72	$	1,183	$	1,126	$	162	71	GGU death benefit	$	1,221	$	1,166	$	176	72	$	1,183	$	1,126	$	162	71

GMIB	GMIB	$	187	$	174	$	5	71	$	187	$	173	$	6	71	GMIB	$	186	$	172	$	5	71	$	187	$	173	$	6	71

GMWB:	GMWB:															GMWB:
GMWB	GMWB	$	1,949	$	1,944	$	1	74	$	1,972	$	1,967	$	1	74	GMWB	$	1,903	$	1,897	$	1	75	$	1,972	$	1,967	$	1	74
GMWB for life	GMWB for life	50,389		50,316		209		69	50,142		50,057		185		69	GMWB for life	51,275		51,226		215		69	50,142		50,057		185		69
Total — GMWB	Total — GMWB	$	52,338	$	52,260	$	210	69	$	52,114	$	52,024	$	186	69	Total — GMWB	$	53,178	$	53,123	$	216	69	$	52,114	$	52,024	$	186	69

GMAB	GMAB	$	2,187	$	2,186	$	0	61	$	2,291	$	2,291	$	0	61	GMAB	$	2,037	$	2,037	$	—	62	$	2,291	$	2,291	$	—	61

(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 is defined as the current guaranteed benefit amount in excess of the current contract value. The net amount at risk for GMIB is defined as the greater of the present value of the minimum guaranteed annuity payments less the current contract value or zero. The net amount at risk for GMWB is defined as the greater of the present value of the minimum guaranteed withdrawal payments less the current contract value or zero.

RIVERSOURCE LIFE 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, 2021			December 31, 2020				September 30, 2021			December 31, 2020
		Net Amount at Risk		Weighted Average Attained Age	Net Amount at Risk		Weighted Average Attained Age		Net Amount at Risk		Weighted Average Attained Age	Net Amount at Risk		Weighted Average Attained Age
		(in millions, except age)							(in millions, except age)
UL secondary guarantees	UL secondary guarantees	$	6,573	67	$	6,587	67	UL secondary guarantees	$	6,563	68	$	6,587	67

The net amount at risk for UL secondary guarantees is defined as the current guaranteed death benefit amount in excess of the current policyholder account balance.

~~RIVERSOURCE LIFE 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)											(in millions)
Balance at January 1, 2020	Balance at January 1, 2020	$	16	$	7	$	1,462	$	(39)	$	758	Balance at January 1, 2020	$	16	$	7	$	1,462	$	(39)	$	758
Incurred claims	Incurred claims	5		2		2,437		127		32		Incurred claims	10		1		2,219		63		172
Paid claims	Paid claims	(2)		—		—		—		(12)		Paid claims	(6)		(1)		—		—		(34)
Balance at March 31, 2020		$	19	$	9	$	3,899	$	88	$	778
Balance at September 30, 2020												Balance at September 30, 2020	$	20	$	7	$	3,681	$	24	$	896

Balance at January 1, 2021	Balance at January 1, 2021	$	24	$	6	$	3,049	$	1	$	916	Balance at January 1, 2021	$	24	$	6	$	3,049	$	1	$	916
Incurred claims	Incurred claims	3		0		(1,570)		(23)		32		Incurred claims	12		1		(793)		(15)		106
Paid claims	Paid claims	(1)		—		—		—		(8)		Paid claims	(3)		(1)		—		—		(27)
Balance at March 31, 2021		$	26	$	6	$	1,479	$	(22)	$	940
Balance at September 30, 2021												Balance at September 30, 2021	$	33	$	6	$	2,256	$	(14)	$	995

(1) The incurred claims for GMWB and GMAB include the change in the fair value of the liabilities (contra liabilities) less paid claims.

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, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(in millions)					(in millions)
Mutual funds:	Mutual funds:					Mutual funds:
Equity	Equity	$	46,823	$	45,947	Equity	$	47,854	$	45,947
Bond	Bond	25,614		26,073		Bond	24,779		26,073
Other	Other	7,060		6,911		Other	8,067		6,911
Total mutual funds	Total mutual funds	$	79,497	$	78,931	Total mutual funds	$	80,700	$	78,931

~~10.~~11. Debt

Long-Term Debt

The Company has a $500 million unsecured 3.5% surplus note due December 31, 2050 to Ameriprise Financial. The outstanding balance was $500 million as of both ~~March 31,~~September 30, 2021 and December 31, 2020 and is recorded in Long-term debt on the Consolidated Balance Sheets.

Short-term Borrowings

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 under these borrowings. The fair value of the securities pledged is recorded in investments and was $1.0 billion and $1.2 billion as of ~~both March 31,~~September 30, 2021 and December 31, ~~2020.~~2020, respectively. The amount of the Company’s liability including accrued interest was $200 million as of both ~~March 31,~~September 30, 2021 and December 31, 2020. The remaining maturity of outstanding FHLB advances was less than ~~two~~three months as of ~~March 31,~~September 30, 2021 and less than three months as of December 31, 2020. The weighted average annualized interest rate on the FHLB advances held as of ~~March 31,~~September 30, 2021 and December 31, 2020 was 0.3% and 0.4%, respectively.

~~11.~~

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. 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.

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.

RIVERSOURCE LIFE 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, 2021										September 30, 2021
		Level 1		Level 2		Level 3		Total				Level 1		Level 2		Level 3		Total
		(in millions)										(in millions)
Assets	Assets										Assets
Available-for-Sale securities:	Available-for-Sale securities:										Available-for-Sale securities:
Corporate debt securities	Corporate debt securities	$	—	$	11,821	$	807	$	12,628		Corporate debt securities	$	—	$	8,883	$	514	$	9,397
Residential mortgage backed securities	Residential mortgage backed securities	—		2,730		9		2,739			Residential mortgage backed securities	—		2,146		—		2,146
Commercial mortgage backed securities	Commercial mortgage backed securities	—		4,052		—		4,052			Commercial mortgage backed securities	—		2,528		—		2,528
State and municipal obligations	State and municipal obligations	—		1,264		—		1,264			State and municipal obligations	—		1,082		—		1,082
Asset backed securities	Asset backed securities	—		724		379		1,103			Asset backed securities	—		232		318		550
Foreign government bonds and obligations	Foreign government bonds and obligations	—		245		—		245			Foreign government bonds and obligations	—		85		—		85

U.S. government and agency obligations											U.S. government and agency obligations	1		—		—		1
Total Available-for-Sale securities	Total Available-for-Sale securities	—		20,836		1,195		22,031			Total Available-for-Sale securities	1		14,956		832		15,789
Cash equivalents	Cash equivalents	1,504		692		—		2,196			Cash equivalents	1,637		1,013		—		2,650
Receivables:											Receivables:
Fixed deferred indexed annuity ceded embedded derivatives											Fixed deferred indexed annuity ceded embedded derivatives	—		—		56		56
Other assets:	Other assets:										Other assets:
Interest rate derivative contracts	Interest rate derivative contracts	—		1,003		—		1,003			Interest rate derivative contracts	1		1,184		—		1,185
Equity derivative contracts	Equity derivative contracts	333		3,543		—		3,876			Equity derivative contracts	486		3,937		—		4,423
Foreign exchange derivative contracts	Foreign exchange derivative contracts	1		17		—		18			Foreign exchange derivative contracts	—		17		—		17
Credit derivative contracts	Credit derivative contracts	—		26		—		26			Credit derivative contracts	—		18		—		18
Total other assets	Total other assets	334		4,589		—		4,923			Total other assets	487		5,156		—		5,643
Separate account assets at net asset value (“NAV”)	Separate account assets at net asset value (“NAV”)							88,433		(1)	Separate account assets at net asset value (“NAV”)							90,026		(1)
Total assets at fair value	Total assets at fair value	$	1,838	$	26,117	$	1,195	$	117,583		Total assets at fair value	$	2,125	$	21,125	$	888	$	114,164


Liabilities	Liabilities										Liabilities
Policyholder account balances, future policy benefits and claims:	Policyholder account balances, future policy benefits and claims:										Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives	Fixed deferred indexed annuity embedded derivatives	$	—	$	4	$	52	$	56		Fixed deferred indexed annuity embedded derivatives	$	—	$	4	$	54	$	58
IUL embedded derivatives	IUL embedded derivatives	—		—		949		949			IUL embedded derivatives	—		—		917		917
GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	—		—		715		715		(2)	GMWB and GMAB embedded derivatives	—		—		1,436		1,436		(2)
Structured variable annuity embedded derivatives	Structured variable annuity embedded derivatives	—		—		124		124			Structured variable annuity embedded derivatives	—		—		217		217
Total policyholder account balances, future policy benefits and claims	Total policyholder account balances, future policy benefits and claims	—		4		1,840		1,844		(3)	Total policyholder account balances, future policy benefits and claims	—		4		2,624		2,628		(3)
Other liabilities:	Other liabilities:										Other liabilities:
Interest rate derivative contracts	Interest rate derivative contracts	1		485		—		486			Interest rate derivative contracts	—		476		—		476
Equity derivative contracts	Equity derivative contracts	149		3,132		—		3,281			Equity derivative contracts	167		3,396		—		3,563
Foreign exchange derivative contracts	Foreign exchange derivative contracts	1		—		—		1			Foreign exchange derivative contracts	2		—		—		2

Total other liabilities	Total other liabilities	151		3,617		—		3,768			Total other liabilities	169		3,872		—		4,041
Total liabilities at fair value	Total liabilities at fair value	$	151	$	3,621	$	1,840	$	5,612		Total liabilities at fair value	$	169	$	3,876	$	2,624	$	6,669

2427

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2020
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Available-for-Sale securities:
Corporate debt securities	$	—	$	12,107	$	766	$	12,873
Residential mortgage backed securities	—		2,993		9		3,002
Commercial mortgage backed securities	—		4,166		—		4,166
State and municipal obligations	—		1,344		—		1,344
Asset backed securities	—		817		395		1,212
Foreign government bonds and obligations	—		257		—		257
U.S. government and agency obligations	1		—		—		1
Total Available-for-Sale securities	1		21,684		1,170		22,855
Cash equivalents	2,419		713		—		3,132
Other assets:
Interest rate derivative contracts	1		1,754		—		1,755
Equity derivative contracts	406		3,578		—		3,984
Foreign exchange derivative contracts	1		17		—		18
Credit derivative contracts	—		1		—		1
Total other assets	408		5,350		—		5,758
Separate account assets at NAV							87,556		(1)
Total assets at fair value	$	2,828	$	27,747	$	1,170	$	119,301


Liabilities
Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives	$	—	$	3	$	49	$	52
IUL embedded derivatives	—		—		935		935
GMWB and GMAB embedded derivatives	—		—		2,316		2,316		(4)
Structured variable annuity embedded derivatives	—		—		70		70
Total policyholder account balances, future policy benefits and claims	—		3		3,370		3,373		(5)
Other liabilities:
Interest rate derivative contracts	—		734		—		734
Equity derivative contracts	182		3,329		—		3,511
Foreign exchange derivative contracts	2		—		—		2
Credit derivative contracts	—		1		—		1
Total other liabilities	184		4,064		—		4,248
Total liabilities at fair value	$	184	$	4,067	$	3,370	$	7,621

(1) Amounts are comprised of certain financial instruments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy.

(2) The fair value of the GMWB and GMAB embedded derivatives included ~~$980 million~~$1.6 billion of individual contracts in a liability position and ~~$265~~$142 million of individual contracts in an asset position (recorded as a contra liability) as of ~~March 31,~~September 30, 2021.

(3) The Company’s adjustment for nonperformance risk resulted in a ~~$500~~$550 million cumulative decrease to the embedded derivatives as of ~~March 31,~~September 30, 2021.

(4) The fair value of the GMWB and GMAB embedded derivatives included $2.4 billion of individual contracts in a liability position and $67 million of individual contracts in an asset position (recorded as a contra liability) as of December 31, 2020.

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

2528

RIVERSOURCE LIFE 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									Available-for-Sale Securities					Receivables
		Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities			Total			Corporate Debt Securities				Asset Backed Securities	Total				Fixed Deferred Indexed Annuity Ceded Embedded Derivatives
		(in millions)						(in millions)
Balance, January 1, 2021		$	766	$	9	$	395		$	1,170
Balance, July 1, 2021													Balance, July 1, 2021	$	385		$	336	$	721		$	—
Total gains (losses) included in:	Total gains (losses) included in:												Total gains (losses) included in:

Net income													Net income	(1)			—		(1)		(1)	—
Other comprehensive income (loss)	Other comprehensive income (loss)	(5)		0		3			(2)				Other comprehensive income (loss)	(3)			—		(3)			—
Purchases	Purchases	46		—		—			46				Purchases	9			—		9			—
Issues													Issues	—			—					57		(4)
Settlements	Settlements	—		—		(19)			(19)				Settlements	(44)			(20)		(64)			(1)
Transfers into Level 3													Transfers into Level 3	168			2		170			—

Balance, September 30, 2021													Balance, September 30, 2021	$	514		$	318	$	832		$	56

Balance, March 31, 2021		$	807	$	9	$	379		$	1,195

Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2021		$	(5)	$	—	$	3		$	(2)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2021													Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2021	$	(4)		$	—	$	(4)		$	—


		Policyholder Account Balances, Future Policy Benefits and Claims															Policyholder Account Balances, Future Policy Benefits and Claims
		Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total			Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
		(in millions)															(in millions)
Balance, January 1, 2021		$	49		$	935		$	2,316		$	70		$	3,370
Balance, July 1, 2021																Balance, July 1, 2021	$	54		$	928		$	1,373		$	214		$	2,569
Total (gains) losses included in:	Total (gains) losses included in:															Total (gains) losses included in:
Net income	Net income	4		(1)	29		(1)	(1,729)		(2)	75		(2)	(1,621)		Net income	1		(2)	14		(2)	(69)		(3)	17		(3)	(37)
Issues	Issues	—			5			90			(15)			80		Issues	—			—			95			(7)			88
Settlements	Settlements	(1)			(20)			38			(6)			11		Settlements	(1)			(25)			37			(7)			4
Balance, March 31, 2021		$	52		$	949		$	715		$	124		$	1,840
Balance, September 30, 2021																Balance, September 30, 2021	$	54		$	917		$	1,436		$	217		$	2,624

Changes in unrealized (gains) losses in net income relating to liabilities held at March 31, 2021		$	—		$	29	(1)	$	(1,705)	(2)	$	—		$	(1,676)
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2021																Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2021	$	—		$	14	(2)	$	(60)	(3)	$	—		$	(46)


		Available-for-Sale Securities									Available-for-Sale Securities
		Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities		Total				Corporate Debt Securities		Residential Mortgage Backed Securities				Asset Backed Securities	Total
		(in millions)								(in millions)
Balance, January 1, 2020		$	735	$	17	$	389	$	1,141
Balance, July 1, 2020													Balance, July 1, 2020	$	731	$	56		$	352	$	1,139
Total gains (losses) included in:	Total gains (losses) included in:												Total gains (losses) included in:

Other comprehensive income (loss)	Other comprehensive income (loss)	(6)		0		(89)		(95)					Other comprehensive income (loss)	5		—			32		37
Purchases	Purchases	6		—		—		6					Purchases	7		1			—		8
Settlements	Settlements	(14)		—		—		(14)					Settlements	(7)		—			—		(7)
Transfers into Level 3													Transfers into Level 3	—		—			14
Transfers out of Level 3													Transfers out of Level 3	—		(39)			—		(39)
Balance, September 30, 2020													Balance, September 30, 2020	$	736	$	18		$	398	$	1,152

Balance, March 31, 2020		$	721	$	17	$	300	$	1,038

Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at March 31, 2020		$	(6)	$	—	$	(89)	$	(95)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020													Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020	$	5	$	—		$	32	$	37

2629

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


		Policyholder Account Balances, Future Policy Benefits and Claims															Policyholder Account Balances, Future Policy Benefits and Claims
		Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total			Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
		(in millions)															(in millions)
Balance, January 1, 2020		$	43		$	881		$	763		$	0		$	1,687
Balance, July 1, 2020																Balance, July 1, 2020	$	41		$	882		$	3,129		$	9		$	4,061
Total (gains) losses included in:	Total (gains) losses included in:															Total (gains) losses included in:
Net income	Net income	(12)		(1)	(145)		(1)	2,420		(2)	(3)		(2)	2,260		Net income	3		(2)	50		(2)	(296)		(3)	3		(3)	(240)
Issues	Issues	2			8			88			(6)			92		Issues	—			15			93			(3)			105
Settlements	Settlements	—			(19)			5			—			(14)		Settlements	—			(21)			17			—			(4)
Balance, March 31, 2020		$	33		$	725		$	3,276		$	(9)		$	4,025
Balance, September 30, 2020																Balance, September 30, 2020	$	44		$	926		$	2,943		$	9		$	3,922

Changes in unrealized (gains) losses in net income relating to liabilities held at March 31, 2020		$	—		$	(145)	(1)	$	2,423	(2)	$	—		$	2,278
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2020																Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2020	$	—		$	50	(2)	$	(283)	(3)	$	—		$	(233)


	Available-for-Sale Securities								Receivables
	Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities		Total			Fixed Deferred Indexed Annuity Ceded Embedded Derivatives
	(in millions)
Balance, January 1, 2021	$	766	$	9	$	395	$	1,170		$	—
Total gains (losses) included in:
Net income	(1)		—		—		(1)		(1)	—
Other comprehensive income (loss)	(6)		—		3		(3)			—
Purchases	76		—		—		76			—
Issues	—		—		—		—			57		(4)
Settlements	(73)		—		(58)		(131)			(1)
Transfers into Level 3	168		—		2		170			—
Transfers out of Level 3	(416)		(9)		(24)		(449)			—
Balance, September 30, 2021	$	514	$	—	$	318	$	832		$	56

Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2021	$	(4)	$	—	$	3	$	(1)		$	—


	Policyholder Account Balances, Future Policy Benefits and Claims
	Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
	(in millions)
Balance, January 1, 2021	$	49		$	935		$	2,316		$	70		$	3,370
Total (gains) losses included in:
Net income	7		(2)	51		(2)	(1,273)		(3)	192		(3)	(1,023)
Issues	—			4			274			(22)			256
Settlements	(2)			(73)			119			(23)			21
Balance, September 30, 2021	$	54		$	917		$	1,436		$	217		$	2,624

Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2021	$	—		$	51	(2)	$	(1,236)	(3)	$	—		$	(1,185)

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Available-for-Sale Securities
	Corporate Debt Securities		Residential Mortgage Backed Securities		Asset Backed Securities				Total
	(in millions)
Balance, January 1, 2020	$	735	$	17	$	389	$	1,141
Total gains (losses) included in:
Net income	(1)		—		—		(1)			(1)
Other comprehensive income (loss)	13		1		(5)		9
Purchases	13		39		—		52
Settlements	(24)		—		—		(24)
Transfers into Level 3	—		—		14		14
Transfers out of Level 3	—		(39)		—		(39)
Balance, September 30, 2020	$	736	$	18	$	398	$	1,152

Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020	$	(1)	$	—	$	—	$	(1)		(1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020	$	13	$	1	$	(5)	$	9


	Policyholder Account Balances, Future Policy Benefits and Claims
	Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
	(in millions)
Balance, January 1, 2020	$	43		$	881		$	763		$	—		$	1,687
Total (gains) losses included in:
Net income	(2)		(2)	53		(2)	1,900		(3)	16		(3)	1,967
Issues	3			53			267			(7)			316
Settlements	—			(61)			13			—			(48)
Balance, September 30, 2020	$	44		$	926		$	2,943		$	9		$	3,922

Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2020	$	—		$	53	(2)	$	1,936	(3)	$	—		$	1,989

(1) Included in net investment income in the Consolidated Statements of Income.

(2) Included in interest credited to fixed accounts in the Consolidated Statements of Income.

~~(2)~~(3) Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Income.

(4) Represents the amount of ceded embedded derivatives associated with fixed deferred annuity products reinsured in the third quarter of 2021. See Note 1 for additional information on the reinsurance transaction.

The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was ~~$(167)~~$1 million and ~~$1.8 billion,~~$(123) million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively.

The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $(138) million and $446 million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual for the nine months ended September 30, 2021 and 2020, respectively.

Securities transferred from Level 3 primarily represent securities with fair values that are obtained from a third-party pricing service with observable ~~inputs.~~inputs or fair values that were included in an observable transaction with a market participant.

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, 2021
Fair Value Valuation Technique Unobservable Input Range Weighted Average
(in millions)
Corporate debt securities (private placements) $ 806 Discounted cash flow
Yield/spread to U.S. Treasuries (1)
0.9% – 2.9% 1.3%
Asset backed securities $ 379 Discounted cash flow Annual default rate 5.6% 5.6%
Loss severity 25.0% 25.0%
Yield/spread to swap rates (2)
175 bps – 300 bps 183 bps
IUL embedded derivatives $ 949 Discounted cash flow
Nonperformance risk (3)
65 bps 65 bps
Fixed deferred indexed annuity embedded derivatives $ 52 Discounted cash flow
Surrender rate (4)
0.0% – 50.0% 1.6%
Nonperformance risk (3)
65 bps 65 bps
GMWB and GMAB embedded derivatives $ 715 Discounted cash flow
Utilization of guaranteed withdrawals (5) (6)
0.0% – 48.0% 10.6%

Surrender rate (4)
0.1% – 73.5% 3.9%

Market volatility (7) (8)
4.2% – 17.0% 10.8%
Nonperformance risk (3)
65 bps 65 bps
Structured variable annuity embedded derivatives $ 124 Discounted cash flow
Surrender rate (4)
0.8% – 40.0% 0.9%
Nonperformance risk (3)
65 bps 65 bps

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~


	September 30, 2021
	Fair Value		Valuation Technique	Unobservable Input	Range			Weighted Average
	(in millions)
Corporate debt securities (private placements)	$	514	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	0.8%	–	2.4%	1.2%
Asset backed securities	$	318	Discounted cash flow	Annual default rate	5.6%			5.6%
				Loss severity	25.0%			25.0%
				Yield/spread to swap rates (2)	140 bps	–	225 bps	146 bps
Fixed deferred indexed annuity ceded embedded derivatives	$	56	Discounted cash flow	Surrender rate (4)	0.0%	–	66.8%	1.4%
IUL embedded derivatives	$	917	Discounted cash flow	Nonperformance risk (3)	60 bps			60 bps
Fixed deferred indexed annuity embedded derivatives	$	54	Discounted cash flow	Surrender rate (4)	0.0%	–	66.8%	1.4%
				Nonperformance risk (3)	60 bps			60 bps
GMWB and GMAB embedded derivatives	$	1,436	Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0%	–	48.0%	10.6%
				Surrender rate (4)	0.1%	–	63.4%	3.6%
				Market volatility (7) (8)	4.4%	–	17.6%	11.3%
				Nonperformance risk (3)	60 bps			60 bps
Structured variable annuity embedded derivatives	$	217	Discounted cash flow	Surrender rate (4)	0.8%	–	40.0%	0.9%
				Nonperformance risk (3)	60 bps			60 bps


	December 31, 2020
	Fair Value		Valuation Technique	Unobservable Input	Range			Weighted Average
	(in millions)
Corporate debt securities (private placements)	$	766	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	1.0%	–	3.3%	1.5%
Asset backed securities	$	395	Discounted cash flow	Annual default rate	5.3%			5.3%
				Loss severity	25.0%			25.0%
				Yield/spread to swap rates (2)	250 bps	–	400 bps	259 bps
IUL embedded derivatives	$	935	Discounted cash flow	Nonperformance risk (3)	65 bps			65 bps
Fixed deferred indexed annuity embedded derivatives	$	49	Discounted cash flow	Surrender rate (4)	0.0%	–	50.0%	1.2%
				Nonperformance risk (3)	65 bps			65 bps
GMWB and GMAB embedded derivatives	$	2,316	Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0%	–	48.0%	10.6%
				Surrender rate (4)	0.1%	–	73.5%	3.8%
				Market volatility (7) (8)	4.3%	–	17.1%	11.0%
				Nonperformance risk (3)	65 bps			65 bps
Structured variable annuity embedded derivatives	$	70	Discounted cash flow	Surrender rate (4)	0.8%	–	40.0%	0.9%
				Nonperformance risk (3)	65 bps			65 bps

(1) The weighted average for the spread to U.S. Treasuries for corporate debt securities (private placements) is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(2) The weighted average for the spread to swap rates for asset backed securities is calculated as the sum of each tranche’s balance multiplied by its spread to swap divided by the aggregate balances of the tranches.

(3) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.

(4) The weighted average surrender rate is weighted based on the benefit base of each contract and represents the average assumption in the current year including the effect of a dynamic surrender formula.

(5) The utilization of guaranteed withdrawals represents the percentage of contractholders that will begin withdrawing in any given year.

(6) The weighted average utilization rate represents the average assumption for the current year, weighting each policy evenly. The calculation excludes policies that have already started taking withdrawals.

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

(8) The weighted average market volatility represents the average volatility across all contracts, weighted by the size of the guaranteed benefit.

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.

Uncertainty of Fair Value Measurements

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 have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in the annual default rate used in the fair value measurement of Level 3 asset backed securities in isolation, generally, would have resulted in a significantly lower (higher) fair value measurement and significant increases (decreases) in loss severity in isolation would have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in the yield/spread to swap rates in isolation would have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in the surrender rate used in the fair value measurement of the fixed deferred indexed annuity ceded embedded derivatives in isolation would have resulted 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 have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurements of the fixed deferred indexed annuity embedded derivatives and structured variable annuity embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value.

Significant increases (decreases) in utilization and volatility used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly higher (lower) liability value.

Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value. Utilization of

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

guaranteed withdrawals and surrender rates vary with the type of rider, the duration of the policy, the age of the contractholder, the distribution channel 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 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.

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 time deposits and other highly liquid investments with original or remaining maturities at the time of purchase of 90 days or less. Actively traded money market funds are measured at their NAV and classified as Level 1. U.S. Treasuries are also 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.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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 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. The fair value of securities included in an observable transaction with a market participant are also considered Level 2 when the market is not active.

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. The fair value of affiliated asset backed securities is determined using a discounted cash flow model. Inputs used to determine the expected cash flows include assumptions about discount rates and default, prepayment and recovery rates of the underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the fair value of the investment in the affiliated asset backed securities is classified as Level 3.

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.

Receivables

During the third quarter of 2021, the Company reinsured its fixed deferred indexed annuity products which have an indexed account that is accounted for as an embedded derivative. The Company uses discounted cash flow models including Black-Scholes calculations to determine the fair value of these ceded embedded derivatives. The fair value of fixed deferred indexed annuity ceded embedded derivatives includes significant observable interest rates, volatilities and equity index levels and significant unobservable surrender rates. Given the significance of the unobservable surrender rates, these embedded derivatives are classified as Level 3. See Note 1 for more information on the reinsurance transaction.

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 excluded from classification in 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. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

immaterial as of both ~~March 31,~~September 30, 2021 and December 31, 2020. See Note 1213 and Note 1314 for further information on the credit risk of derivative instruments and related collateral.

Liabilities

Policyholder Account Balances, Future Policy Benefits and Claims

There is no active market for the transfer of the Company’s embedded derivatives attributable to the provisions of certain variable annuity riders, fixed deferred indexed annuity, structured variable annuity and IUL products.

The Company values the embedded derivatives attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value as the present value of future expected benefit payments less the present value of future expected rider fees attributable to the embedded derivative feature. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to implied volatility as well as contractholder behavior assumptions that include margins for risk, all of which the Company believes a 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

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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 a discounted cash flow model to determine the fair value of the embedded derivatives associated with the provisions of its equity index annuity product. The projected cash flows generated by this model are based on significant observable inputs related to interest rates, volatilities and equity index levels and, therefore, are classified as Level 2.

The Company uses discounted cash flow models including Black-Scholes calculations to determine the fair value of the embedded derivatives associated with the provisions of its fixed deferred indexed annuity, structured variable annuity and IUL products. The structured variable annuity product is a limited flexible purchase payment annuity that offers 45 different indexed account options providing equity market exposure and a fixed account. Each indexed account includes a protection option (a buffer or a floor). If the index has a negative return, contractholder losses will be reduced by buffer or limited to a floor. The portion allocated to an indexed account is accounted for as an embedded derivative. The fair value of fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives includes significant observable interest rates, volatilities and equity index levels and ~~the~~ significant unobservable surrender rates and the estimate of the Company’s nonperformance risk. Given the significance of the unobservable surrender rates and the nonperformance risk assumption to the fair value, the fixed deferred indexed annuity, structured variable annuity and 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.

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 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. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial as of both ~~March 31,~~September 30, 2021 and December 31, 2020. See Note 1213 and Note 1314 for further information on the credit risk of derivative instruments and related collateral.

Fair Value on a Nonrecurring Basis

The Company assesses its investment in affordable housing partnerships for impairment. The investments that are determined to be impaired are written down to their fair value. The Company uses a discounted cash flow model to measure the fair value of these investments. Inputs to the discounted cash flow model are estimates of future net operating losses and tax credits available to the Company and discount rates based on market condition and the financial strength of the syndicator (general partner). The balance of affordable housing partnerships measured at fair value on a nonrecurring basis was ~~$97~~$99 million and $101 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, and is classified as Level 3 in the fair value hierarchy.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Asset and Liabilities Not Reported at Fair Value

The following tables provide the carrying value and the estimated fair value of financial instruments that are not reported at fair value:


		March 31, 2021											September 30, 2021
		Carrying Value		Fair Value									Carrying Value		Fair Value
				Level 1		Level 2		Level 3		Total					Level 1		Level 2		Level 3		Total
		(in millions)											(in millions)
Financial Assets	Financial Assets											Financial Assets
Mortgage loans, net	Mortgage loans, net	$	2,541	$	—	$	—	$	2,627	$	2,627	Mortgage loans, net	$	1,776	$	—	$	—	$	1,873	$	1,873
Policy loans	Policy loans	838		—		838		—		838		Policy loans	836		—		836		—		836
Other investments	Other investments	434		—		397		36		433		Other investments	53		—		35		18		53
Other receivables		1,411		—		—		1,648		1,648
Receivables												Receivables	7,952		—		—		8,799		8,799
Financial Liabilities	Financial Liabilities											Financial Liabilities
Policyholder account balances, future policy benefits and claims	Policyholder account balances, future policy benefits and claims	$	10,499	$	—	$	—	$	11,630	$	11,630	Policyholder account balances, future policy benefits and claims	$	11,767	$	—	$	—	$	12,845	$	12,845
Short-term borrowings	Short-term borrowings	200		—		200		—		200		Short-term borrowings	200		—		200		—		200
Long-term debt	Long-term debt	500		—		449		—		449		Long-term debt	500		—		496		—		496
Other liabilities	Other liabilities	11		—		—		11		11		Other liabilities	10		—		—		10		10
Separate account liabilities — investment contracts	Separate account liabilities — investment contracts	369		—		369		—		369		Separate account liabilities — investment contracts	378		—		378		—		378

December 31, 2020
Carrying Value Fair Value
Level 1 Level 2 Level 3 Total
(in millions)
Financial Assets
Mortgage loans, net $ 2,574 $ — $ — $ 2,724 $ 2,724
Policy loans 846 — 846 — 846
Other investments 457 — 417 40 457
Other receivables 1,430 — — 1,732 1,732
Financial Liabilities
Policyholder account balances, future policy benefits and claims $ 9,990 $ — $ — $ 11,686 $ 11,686
Short-term borrowings 200 — 200 — 200
Long-term debt 500 — 509 — 509
Other liabilities 12 — — 11 11
Separate account liabilities — investment contracts 351 — 351 — 351

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2020
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial Assets
Mortgage loans, net	$	2,574	$	—	$	—	$	2,724	$	2,724
Policy loans	846		—		846		—		846
Other investments	457		—		417		40		457
Receivables	1,430		—		—		1,732		1,732
Financial Liabilities
Policyholder account balances, future policy benefits and claims	$	9,990	$	—	$	—	$	11,686	$	11,686
Short-term borrowings	200		—		200		—		200
Long-term debt	500		—		509		—		509
Other liabilities	12		—		—		11		11
Separate account liabilities — investment contracts	351		—		351		—		351

Other investments include syndicated loans and the Company’s membership in the FHLB. ~~Other receivables~~Receivables include the deposit receivable. See Note 6 for additional information on mortgage loans, policy loans, syndicated loans and the deposit receivable.

Policyholder account balances, future policy benefits and claims includes fixed annuities in deferral status, non-life contingent fixed annuities in payout status, indexed and structured variable annuity host contracts, and the fixed portion of a small number of variable annuity contracts classified as investment contracts. See Note 89 for additional information on these liabilities. Short-term borrowings include FHLB borrowings. Long-term debt includes the surplus note with Ameriprise Financial. See Note 1011 for further information on short-term borrowings and long-term debt. Other liabilities include future funding commitments to affordable housing partnerships and other real estate partnerships. Separate account liabilities are related to certain annuity products that are classified as investment contracts.

~~12.~~13. Offsetting Assets and Liabilities

Certain financial instruments and derivative instruments are eligible for offset in the Consolidated Balance Sheets. The Company’s derivative instruments are subject to master netting 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.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The following tables present the gross and net information about the Company’s assets subject to master netting arrangements:


		March 31, 2021															September 30, 2021
		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						Net Amount			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						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	4,638	$	—	$	4,638	$	(3,305)	$	(1,073)	$	(252)	$	8	OTC	$	5,266	$	—	$	5,266	$	(3,441)	$	(1,364)	$	(404)	$	57
OTC cleared	OTC cleared	39		—		39		(39)		—		—		0		OTC cleared	25		—		25		(15)		—		—		10
Exchange-traded	Exchange-traded	246		—		246		(107)		(133)		—		6		Exchange-traded	352		—		352		(110)		(213)		—		29
Total derivatives	Total derivatives	$	4,923	$	—	$	4,923	$	(3,451)	$	(1,206)	$	(252)	$	14	Total derivatives	$	5,643	$	—	$	5,643	$	(3,566)	$	(1,577)	$	(404)	$	96

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2020
	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						Net Amount
							Financial Instruments (1)		Cash Collateral		Securities Collateral
	(in millions)
Derivatives:
OTC	$	5,391	$	—	$	5,391	$	(3,801)	$	(1,243)	$	(315)	$	32
OTC cleared	58		—		58		(25)		—		—		33
Exchange-traded	309		—		309		(90)		(165)		—		54
Total derivatives	$	5,758	$	—	$	5,758	$	(3,916)	$	(1,408)	$	(315)	$	119

(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.

The following tables present the gross and net information about the Company’s liabilities subject to master netting arrangements:


		March 31, 2021															September 30, 2021
		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						Net Amount			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						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	3,580	$	—	$	3,580	$	(3,305)	$	(3)	$	(258)	$	14	OTC	$	3,916	$	—	$	3,916	$	(3,441)	$	(182)	$	(293)	$	—
OTC cleared	OTC cleared	76		—		76		(39)		—		—		37		OTC cleared	15		—		15		(15)						—
Exchange-traded	Exchange-traded	112		—		112		(108)		—		—		4		Exchange-traded	110		—		110		(110)						—
Total derivatives	Total derivatives	$	3,768	$	—	$	3,768	$	(3,452)	$	(3)	$	(258)	$	55	Total derivatives	$	4,041	$	—	$	4,041	$	(3,566)	$	(182)	$	(293)	$	—


		December 31, 2020															December 31, 2020
		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						Net Amount			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						Net Amount
								Financial Instruments (1)		Cash Collateral		Securities Collateral											Financial Instruments (1)		Cash Collateral		Securities Collateral
		(in millions)															(in millions)
Derivatives:	Derivatives:															Derivatives:
OTC	OTC	$	4,129	$	—	$	4,129	$	(3,801)	$	(1)	$	(327)	$	0	OTC	$	4,129	$	—	$	4,129	$	(3,801)	$	(1)	$	(327)	$	—
OTC cleared	OTC cleared	25		—		25		(25)		—		—		0		OTC cleared	25		—		25		(25)		—		—		—
Exchange-traded	Exchange-traded	94		—		94		(90)		—		—		4		Exchange-traded	94		—		94		(90)		—		—		4
Total derivatives	Total derivatives	$	4,248	$	—	$	4,248	$	(3,916)	$	(1)	$	(327)	$	4	Total derivatives	$	4,248	$	—	$	4,248	$	(3,916)	$	(1)	$	(327)	$	4

(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 amount of assets or liabilities presented 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.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

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, it may be required to post additional collateral.

Freestanding derivative instruments are reflected in other assets and other liabilities. Cash collateral pledged by the Company is reflected in other assets and cash collateral accepted by the Company is reflected in other liabilities. See Note 1314 for additional disclosures related to the Company’s derivative instruments.

~~13.~~

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. 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.

Certain of the Company’s freestanding derivative instruments are 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 1213 for additional information regarding the estimated fair value of the Company’s freestanding derivatives after considering the effect of master netting arrangements and collateral.

Generally, the Company uses derivatives as economic hedges and accounting hedges. The following table presents the notional value and gross fair value of derivative instruments, including embedded derivatives:


		March 31, 2021						December 31, 2020							September 30, 2021										December 31, 2020
		Notional		Gross Fair Value				Notional		Gross Fair Value					Notional		Gross Fair Value								Notional		Gross Fair Value
				Assets (1)		Liabilities (2)(3)						Liabilities (2)(3)					Assets (1)			Liabilities (2)(3)										Liabilities (2)(3)
		(in millions)										(in millions)
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Interest rate contracts	Interest rate contracts	$	79,798	$	1,003	$	486	$	77,925			$	1,755		$	734	Interest rate contracts		$	79,344		$	1,185	$	476				$	77,925		$	1,755	$	734
Equity contracts	Equity contracts	50,327		3,876		3,281		55,993				3,984		3,511		Equity contracts	58,509			4,423			3,563				55,993			3,984			3,511
Credit contracts	Credit contracts	2,064		26		—		2,269		1		1		Credit contracts	1,727		18			—					2,269		1			1
Foreign exchange contracts	Foreign exchange contracts	2,580		18		1		3,124		18		2		Foreign exchange contracts	2,255		17			2					3,124		18			2
Total non-designated hedges	Total non-designated hedges	134,769		4,923		3,768		139,311		5,758		4,248		Total non-designated hedges	141,835		5,643			4,041					139,311		5,758			4,248

Embedded derivatives	Embedded derivatives													Embedded derivatives
GMWB and GMAB (4)	GMWB and GMAB (4)	N/A		—		715		N/A		—		2,316		GMWB and GMAB (4)	N/A		—			1,436					N/A		—			2,316
IUL	IUL	N/A		—		949		N/A		—		935		IUL	N/A		—			917					N/A		—			935
Fixed deferred indexed annuities		N/A		—		56		N/A		—		52
Fixed deferred indexed annuities and deposit receivables														Fixed deferred indexed annuities and deposit receivables	N/A		56			58					N/A		—			52
Structured variable annuities	Structured variable annuities	N/A		—		124		N/A		—		70		Structured variable annuities	N/A		—			217					N/A		—			70
Total embedded derivatives	Total embedded derivatives	N/A		—		1,844		N/A		—		3,373		Total embedded derivatives	N/A		56			2,628					N/A		—			3,373
Total derivatives	Total derivatives	$	134,769	$	4,923	$	5,612	$	139,311	$	5,758	$	7,621	Total derivatives	$	141,835	$	5,699		$	6,669				$	139,311	$	5,758		$	7,621

N/A Not applicable.

(1) The fair value of freestanding derivative assets is included in Other assets and the fair value of ceded embedded derivative assets related to deposit receivables is included in Receivables 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, fixed deferred indexed annuity and structured variable annuity embedded derivatives is included in Policyholder account balances, future policy benefits and claims on the Consolidated Balance Sheets.

(3) The fair value of the Company’s derivative liabilities after considering the effects of master netting arrangements, cash collateral held by the same counterparty and the fair value of net embedded derivatives was ~~$2.2~~$2.9 billion and $3.7 billion as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. See Note 1213 for additional information related to master netting arrangements and cash collateral.

(4) The fair value of the GMWB and GMAB embedded derivatives as of ~~March 31,~~September 30, 2021 included ~~$980 million~~$1.6 billion of individual contracts in a liability position and ~~$265~~$142 million of individual contracts in an asset position. The fair value of the GMWB and GMAB embedded derivatives as of December 31, 2020 included $2.4 billion of individual contracts in a liability position and $67 million of individual contracts in an asset position.

See Note 1112 for additional information regarding the Company’s fair value measurement of derivative instruments.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, investment securities with a fair value of ~~$292~~$448 million and $325 million, respectively, were received as collateral to meet contractual obligations under derivative contracts, of which ~~$292~~$448 million and $325 million, respectively, may be sold, pledged or rehypothecated by the Company. As of both ~~March 31,~~September 30, 2021 and December 31, 2020, the

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

Company had sold, pledged, or rehypothecated ~~NaN~~none of these securities. In addition, as of both ~~March 31,~~September 30, 2021 and December 31, 2020, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present a summary of the impact of derivatives not designated as hedging instruments, including embedded derivatives, on the Consolidated Statements of Income:


		Net Investment Income		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses			Net Investment Income		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses
				(in millions)							(in millions)
Three Months Ended March 31, 2021
Three Months Ended September 30, 2021								Three Months Ended September 30, 2021
Interest rate contracts	Interest rate contracts	$	—	$	—	$	(1,825)	Interest rate contracts	$	—	$	—	$	(171)
Equity contracts	Equity contracts	1		25		(310)		Equity contracts	—		—		1
Credit contracts	Credit contracts	—		—		69		Credit contracts	—		—		2
Foreign exchange contracts	Foreign exchange contracts	—		—		11		Foreign exchange contracts	—		—		—

GMWB and GMAB embedded derivatives	GMWB and GMAB embedded derivatives	—		—		1,600		GMWB and GMAB embedded derivatives	—		—		(64)
IUL embedded derivatives	IUL embedded derivatives	—		(9)		—		IUL embedded derivatives	—		11		—
Fixed deferred indexed annuity embedded derivatives		—		(5)		—
Fixed deferred indexed annuity and deposit receivables embedded derivatives								Fixed deferred indexed annuity and deposit receivables embedded derivatives	—		1		—
Structured variable annuity embedded derivatives	Structured variable annuity embedded derivatives	—		—		(75)		Structured variable annuity embedded derivatives	—		—		(17)
Total gain (loss)	Total gain (loss)	$	1	$	11	$	(530)	Total gain (loss)	$	—	$	12	$	(249)

Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2021
Interest rate contracts								Interest rate contracts	$	—	$	—	$	(1,125)
Equity contracts								Equity contracts	1		55		(613)
Credit contracts								Credit contracts	—		—		41
Foreign exchange contracts								Foreign exchange contracts	—		—		6

GMWB and GMAB embedded derivatives								GMWB and GMAB embedded derivatives	—		—		879
IUL embedded derivatives								IUL embedded derivatives	—		22		—
Fixed deferred indexed annuity and deposit receivables embedded derivatives								Fixed deferred indexed annuity and deposit receivables embedded derivatives	—		(7)		—
Structured variable annuity embedded derivatives								Structured variable annuity embedded derivatives	—		—		(192)
Total gain (loss)								Total gain (loss)	$	1	$	70	$	(1,004)

Interest Credited to Fixed Accounts Benefits, Claims, Losses and Settlement Expenses
(in millions)
Three Months Ended March 31, 2020
Interest rate contracts $ — $ 2,515
Equity contracts (112) 1,993
Credit contracts — (36)
Foreign exchange contracts — 44
GMWB and GMAB embedded derivatives — (2,513)
IUL embedded derivatives 164 —
Fixed deferred indexed annuity embedded derivatives 12 —
Structured variable annuity embedded derivatives — 3
Total gain (loss) $ 64 $ 2,006

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses
	(in millions)
Three Months Ended September 30, 2020
Interest rate contracts	$	—	$	(371)
Equity contracts	42		(468)
Credit contracts	—		(12)
Foreign exchange contracts	—		(23)

GMWB and GMAB embedded derivatives	—		186
IUL embedded derivatives	(29)		—
Fixed deferred indexed annuity embedded derivatives	(3)		—
Structured variable annuity embedded derivatives	—		(3)
Total gain (loss)	$	10	$	(691)

Nine Months Ended September 30, 2020
Interest rate contracts	$	—	$	2,204
Equity contracts	(7)		58
Credit contracts	—		(91)
Foreign exchange contracts	—		26

GMWB and GMAB embedded derivatives	—		(2,180)
IUL embedded derivatives	8		—
Fixed deferred indexed annuity embedded derivatives	2		—
Structured variable annuity embedded derivatives	—		(16)
Total gain (loss)	$	3	$	1

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 indexed portion of structured variable annuities and 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 aggregate exposure related to the indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions using options, swaptions, swaps and futures.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The deferred premium associated with certain of the above options and swaptions is paid or received semi-annually over the life of the contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options and swaptions as of ~~March 31,~~September 30, 2021:


		Premiums Payable		Premiums Receivable			Premiums Payable		Premiums Receivable
		(in millions)					(in millions)
2021 (1)	2021 (1)	$	112	$	85	2021 (1)	$	60	$	45
2022	2022	205		205		2022	204		205
2023	2023	51		42		2023	51		43
2024	2024	138		25		2024	138		25
2025	2025	125		22		2025	125		22
2026 - 2028	2026 - 2028	262		88		2026 - 2028	262		88
Total	Total	$	893	$	467	Total	$	840	$	428

(1) 2021 amounts represent the amounts payable and receivable for the period from ~~April~~October 1, 2021 to December 31, 2021.

Actual timing and payment amounts may differ due to future settlements, modifications or exercises of the contracts prior to the full premium being paid or received.

RIVERSOURCE LIFE 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 may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives may contain settlement provisions linked to both equity returns and interest rates. The Company’s macro hedge derivatives that contain settlement provisions linked to both equity returns and interest rates, if any, are shown in other contracts in the tables above.

~~Fixed deferred indexed annuity, structured~~Structured variable annuity 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 ~~fixed deferred indexed annuity,~~ structured variable annuity and IUL products will positively or negatively impact earnings over the life of these products. The equity component of ~~fixed deferred indexed annuity,~~ structured variable annuity and IUL product obligations 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. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and futures contracts.

Cash Flow Hedges

During both the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company held 0no derivatives that were designated as cash flow hedges. During both the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, 0no hedge relationships were discontinued due to forecasted transactions no longer being expected to occur according to the original hedge strategy.

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 and collateral arrangements whenever practical. See Note 1213 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. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the aggregate fair value of derivative contracts in a net liability position containing such credit contingent provisions was ~~$261~~$378 million and $324 million, respectively. The aggregate fair value of assets posted as collateral for such instruments as of ~~March 31,~~September 30, 2021 and December 31, 2020 was ~~$258~~$378 million and $324 million, respectively. If the credit contingent provisions of derivative contracts in a net liability position as of ~~March 31,~~September 30, 2021 and December 31, 2020 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 ~~$3 million and NaN~~nil on ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

15. Shareholder’s Equity

The following tables provide the amounts related to each component of OCI:


	Three Months Ended September 30,
	2021						2020
	Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
	(in millions)
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	$	(57)	$	14	$	(43)	$	208	$	(44)	$	164
Reclassification of net (gains) losses on securities included in net income (2)	(498)		104		(394)		(2)		—		(2)
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	147		(31)		116		(94)		20		(74)
Net unrealized gains (losses) on securities	(408)		87		(321)		112		(24)		88
Total other comprehensive income (loss)	$	(408)	$	87	$	(321)	$	112	$	(24)	$	88

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~14. Shareholder’s Equity~~

~~The following table provides the amounts related to each component of OCI:~~


		Three Months Ended March 31,													Nine Months Ended September 30,
		2021						2020							2021						2020
		Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax			Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
		(in millions)													(in millions)
Net unrealized gains (losses) on securities:	Net unrealized gains (losses) on securities:													Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	Net unrealized gains (losses) on securities arising during the period (1)	$	(678)	$	142	$	(536)	$	(1,002)	$	212	$	(790)	Net unrealized gains (losses) on securities arising during the period (1)	$	(396)	$	86	$	(310)	$	500	$	(107)	$	393
Reclassification of net (gains) losses on securities included in net income (2)	Reclassification of net (gains) losses on securities included in net income (2)	(49)		11		(38)		(8)		2		(6)		Reclassification of net (gains) losses on securities included in net income (2)	(548)		115		(433)		3		(1)		2
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	299		(63)		236		508		(107)		401		Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	284		(60)		224		(223)		47		(176)
Net unrealized gains (losses) on securities	Net unrealized gains (losses) on securities	(428)		90		(338)		(502)		107		(395)		Net unrealized gains (losses) on securities	(660)		141		(519)		280		(61)		219
Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	(428)	$	90	$	(338)	$	(502)	$	107	$	(395)	Total other comprehensive income (loss)	$	(660)	$	141	$	(519)	$	280	$	(61)	$	219

(1) Includes impairments on Available-for-Sale securities related to factors other than credit that were recognized in OCI during the period.

(2) Reclassification amounts are recorded in net realized investment gains (losses).

Other comprehensive income (loss) related to net unrealized gains (losses) on securities includes three components: (i) unrealized gains (losses) that arose from changes in the fair 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 impairments 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 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 the changes in the balances of each component of AOCI, net of tax:


		Net Unrealized Gains (Losses) on Securities		Other		Total			Net Unrealized Gains (Losses) on Securities		Other		Total
									(in millions)
Balance, July 1, 2021								Balance, July 1, 2021	$	723	$	(1)	$	722
OCI before reclassifications								OCI before reclassifications	73		—		73
Amounts reclassified from AOCI								Amounts reclassified from AOCI	(394)		—		(394)
Total OCI								Total OCI	(321)		—		(321)
Balance, September 30, 2021								Balance, September 30, 2021	$	402	$	(1)	$	401
		(in millions)
Balance, January 1, 2021	Balance, January 1, 2021	$	921	$	(1)	$	920	Balance, January 1, 2021	$	921	$	(1)	$	920
OCI before reclassifications	OCI before reclassifications	(300)		0		(300)		OCI before reclassifications	(86)		—		(86)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	(38)		0		(38)		Amounts reclassified from AOCI	(433)		—		(433)
Total OCI	Total OCI	(338)		0		(338)		Total OCI	(519)		—		(519)
Balance, March 31, 2021		$	583	$	(1)	$	582

Balance, January 1, 2020		$	575	$	(1)	$	574
OCI before reclassifications		(389)		0		(389)
Amounts reclassified from AOCI		(6)		0		(6)
Total OCI		(395)		0		(395)
Balance, March 31, 2020		$	180	$	(1)	$	179
Balance, September 30, 2021								Balance, September 30, 2021	$	402	$	(1)	$	401


	Net Unrealized Gains (Losses) on Securities		Other		Total
	(in millions)
Balance, July 1, 2020	$	706	$	(1)	$	705
OCI before reclassifications	90		—		90
Amounts reclassified from AOCI	(2)		—		(2)
Total OCI	88		—		88
Balance, September 30, 2020	$	794	$	(1)	$	793

Balance, January 1, 2020	$	575	$	(1)	$	574
OCI before reclassifications	217		—		217
Amounts reclassified from AOCI	2		—		2
Total OCI	219		—		219
Balance, September 30, 2020	$	794	$	(1)	$	793

~~15.~~

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

16. Income Taxes

The Company’s effective tax rate was ~~9.1%~~15.6% and ~~8.5%~~23.2% for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. The Company’s effective tax rate was 12.7% and 5.7% for the nine months ended September 30, 2021 and 2020, respectively.

The effective tax rate for the three months ended ~~March 31,~~September 30, 2021 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits and the dividends received deduction. The effective tax rate for the nine months ended September 30, 2021 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits, the dividends received deduction and foreign tax credits.

The Company recorded a pretax loss for the three months ended September 30, 2020. Tax benefits applied to a pretax loss raise the effective tax rate. The effective tax rate for the three months ended September 30, 2020 is higher than the statutory rate as a result of tax benefits including low income housing tax credits and the dividends received deduction. The effective tax rate for the nine months ended September 30, 2020 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits and the dividends received deduction.

The lower effective tax rate for the three months ended ~~March 31, 2020 was lower than~~September 30, 2021 is the ~~statutory rate primarily due to previous tax law changes that resulted in a $160 million tax benefit related~~result of current period pretax income compared to the ~~forecasted utilization of~~prior period pretax loss and a ~~2020 net operating loss (“NOL”) that was to be applied to previous~~decrease in tax ~~filings,~~preferred items including low income housing tax credits and ~~other~~the dividends received deduction.

The increase in the effective tax rate for the nine months ended September 30, 2021 compared to the prior period is the result of higher pretax income and a decrease in tax preferred ~~items. The Company determined~~items including low income housing tax credits and the ~~NOL benefit was attributable to current year losses; accordingly, the benefit was recorded~~dividends received deduction partially offset by an increase in ~~the annual effective~~foreign tax ~~rate.~~credits.

Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $9 million, net of federal benefit, which will expire beginning December 31, 2021.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. 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. 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 of $2 million and state net operating losses of $9 million; therefore, a valuation allowance of $11 million has been established as of both ~~March 31,~~September 30, 2021 and December 31, 2020.

As of ~~both March 31,~~September 30, 2021 and December 31, 2020, the Company had $39 million and $38 million, respectively, of gross unrecognized tax benefits. If recognized, approximately $21 million and $20 million, net of federal tax benefits, of unrecognized tax benefits as of ~~both March 31,~~September 30, 2021 and December 31, 2020 would affect the effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. The Company estimates that the total amount of gross unrecognized tax benefits may decrease by approximately $33 million in the next 12 months primarily due to Internal Revenue Service (“IRS”) settlements.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized ~~NaN~~nil in interest and penalties for both the three months and nine months ended ~~March 31,~~September 30, 2021 and 2020. As of both ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had a payable of $2 million related to accrued interest and penalties.

The Company 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 federal statute of limitations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The IRS is currently auditing Ameriprise Financial’s U.S. income tax returns for 2016, 2017 and 2018. Ameriprise Financial’s or the Company’s state income tax returns are currently under examination by various jurisdictions for years ranging from ~~2010~~2015 through 2019.

~~16.~~

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

17. Contingencies

The Company and its affiliates are involved in the normal course of business in legal proceedings which include regulatory inquiries, arbitration and litigation, including class actions, concerning matters arising in connection with the conduct of its activities. These include proceedings specific to the Company as well as proceedings generally applicable to business practices in the industries in which it operates. The Company can also be subject to legal proceedings arising out of its general business activities, such as its investments, contracts, and employment relationships. 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.

The level of regulatory activity and inquiry concerning the Company’s businesses remains elevated. Insurance companies, including the Company, have been the subject of ~~increasing regulatory, legislative~~examinations and ~~judicial scrutiny. Numerous~~other inquiries by various 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. From time to time, the Company and its affiliates, including AFS and RiverSource Distributors, Inc. receive requests for information from, and/or are subject to examination or claims by various state, federal and other domestic authorities concerning their business activities and practices and other subjects, including from time to time: sales and distribution of various products, including the Company’s life insurance and variable annuity products; supervision of associated persons, including AFS financial advisors and RiverSource Distributors Inc.’s wholesalers; administration of insurance and annuity claims; security of client information; and transaction monitoring systems and controls. The Company ~~has~~and its affiliates have cooperated and will continue to cooperate with the applicable 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.

RiverSource Life Insurance Company and RiverSource Life of NY are required by law to be a member of the guaranty fund association in every state where they are 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. As of both ~~March 31,~~September 30, 2021 and December 31, 2020, the estimated liability was $12 million. As of both ~~March 31,~~September 30, 2021 and December 31, 2020, the related premium tax asset was $10 million. The expected period over which guaranty fund assessments will be made and the related tax credits recovered is not known.

3744

RIVERSOURCE LIFE INSURANCE COMPANY

ITEM 2. MANAGEMENT’S NARRATIVE ANALYSIS

Overview

RiverSource Life Insurance Company (“RiverSource Life”) and its subsidiaries are referred to collectively in this Form 10-Q as the “Company”. The 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, 2020 filed with the Securities and Exchange Commission (“SEC”) on February 24, 2021 (“2020 10-K”), as well as any current reports on Form 8-K and other publicly available information.

The Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Management’s narrative analysis is presented pursuant to General Instructions H(2)(a) of Form 10-Q in lieu of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

See Note 1 to the Consolidated Financial Statements for additional information.

The coronavirus disease 2019 (‘‘COVID-19’’) pandemic has presented ongoing significant economic and societal disruption and market unpredictability, which has affected the Company’s business and operating environment driven by a low interest rate environment and volatility and changes in the equity markets and the potential associated implications to client behavior. In early 2020, the Company and its affiliates implemented a work-from-home protocol for virtually all of the Company’s employee population, restricted business travel, and provided resources for complying with the guidance from the World Health Organization, the U.S. Centers for Disease Control and governments. The Company and its affiliates are thoughtfully ~~undergoing a phased reopening of~~returning to its office locations, where it is reasonable to do so, while complying with applicable health agencies’ guidelines and governmental orders. ~~Though there are indications that the effects of the virus are lessening in some areas,~~ COVID-19 continues ~~to deeply~~its ongoing impact ~~other areas~~ and has been occurring in multiple waves, so there are still no reliable estimates of how long the implications from the pandemic will last, the effects current and other new variants will ultimately have, how many people are likely to be affected by it, or its impact on the overall economy. Given the impact of the pandemic, financial results may not be comparable to previous years and the results presented in this report may not necessarily be indicative of future operating results. For further information regarding the impact of the COVID-19 pandemic, and any potentially material effects, see Part 1 - Item 1A “Risk Factors” in the Company’s 2020 10-K.

During the third quarter of 2021, RiverSource Life closed on a transaction with Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company, effective July 1, 2021, to reinsure approximately $7.0 billion of fixed deferred and immediate annuity policies. As part of the transaction, RiverSource Life transferred $7.8 billion in consideration primarily consisting of Available-for-Sale securities, commercial mortgage loans, syndicated loans and cash. The transaction resulted in a net realized gain of approximately $532 million on investments sold. A similar previously announced transaction with RiverSource Life Insurance Co. of New York did not receive regulatory approval in time to close by September 30, 2021 and the transaction was terminated by the parties.

The Company consolidates certain variable interest entities for which it provides investment management services. These entities are defined as consolidated investment entities (“CIEs”). While the consolidation of the CIEs impacts the Company’s balance sheet and income statement, the exposure to these entities is unchanged and there is no impact to the underlying business results. For further information on CIEs, see Note 4 to the Consolidated Financial Statements. Changes in the fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in net investment income.

Critical Accounting 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 Estimates” in the Company’s 2020 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.

3845

RIVERSOURCE LIFE INSURANCE COMPANY

Consolidated Results of Operations for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

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


		Three Months Ended March 31,				Change					Nine Months Ended September 30,				Change
		2021		2020							2021		2020
		(in millions)									(in millions)
Revenues	Revenues									Revenues
Premiums	Premiums	$	78	$	93	$	(15)	(16)	%	Premiums	$	(945)	$	256	$	(1,201)	NM
Net investment income	Net investment income	247		223		24		11		Net investment income	664		647		17		3	%
Policy and contract charges	Policy and contract charges	547		551		(4)		(1)		Policy and contract charges	1,715		1,529		186		12
Other revenues	Other revenues	128		119		9		8		Other revenues	436		357		79		22
Net realized investment gains (losses)	Net realized investment gains (losses)	48		(17)		65		NM		Net realized investment gains (losses)	589		(16)		605		NM
Total revenues	Total revenues	1,048		969		79		8		Total revenues	2,459		2,773		(314)		(11)

Benefits and expenses	Benefits and expenses									Benefits and expenses
Benefits, claims, losses and settlement expenses	Benefits, claims, losses and settlement expenses	652		(1,748)		2,400		NM		Benefits, claims, losses and settlement expenses	337		820		(483)		(59)
Interest credited to fixed accounts	Interest credited to fixed accounts	159		91		68		75		Interest credited to fixed accounts	455		523		(68)		(13)
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	2		503		(501)		NM		Amortization of deferred acquisition costs	69		338		(269)		(80)
Interest and debt expense	Interest and debt expense	21		—		21		—		Interest and debt expense	84		—		84		—
Other insurance and operating expenses	Other insurance and operating expenses	194		163		31		19		Other insurance and operating expenses	553		490		63		13
Total benefits and expenses	Total benefits and expenses	1,028		(991)		2,019		NM		Total benefits and expenses	1,498		2,171		(673)		(31)
Pretax income	Pretax income	20		1,960		(1,940)		(99)		Pretax income	961		602		359		60
Income tax provision	Income tax provision	2		166		(164)		(99)		Income tax provision	121		35		86		NM
Net income	Net income	$	18	$	1,794	$	(1,776)	(99)		Net income	$	840	$	567	$	273	48	%
NM Not Meaningful.	NM Not Meaningful.									NM Not Meaningful.

Overall

Net income ~~decreased $1.8 billion,~~increased $273 million, or ~~99%~~48%, to ~~$18~~$840 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$1.8 billion~~$567 million for the prior year period. Pretax income ~~decreased $1.9 billion,~~increased $359 million, or ~~99%~~60%, to ~~$20~~$961 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$2.0 billion~~$602 million for the prior year ~~period, primarily from market dislocation related to the COVID-19 pandemic.~~period.

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

•The favorable impact of the block transfer reinsurance transaction was $521 million for the nine months ended September 30, 2021 primarily reflecting the net realized gains on the investments sold to the reinsurer.

•The favorable impact of unlocking and long term care (“LTC”) loss recognition was $17 million for the nine months ended September 30, 2021 compared to an unfavorable impact of $454 million for the prior year period.

•The impact on variable annuity and variable universal life products for the difference between assumed and updated separate account investment performance on deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves (“mean reversion related impact”) was a benefit of $107 million for the nine months ended September 30, 2021 compared to an expense of $30 million for the prior year period.

•The market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts), net of hedges and the related ~~deferred sales inducement costs (“DSIC”)~~DSIC and ~~deferred acquisition costs (“DAC”)~~DAC amortization, unearned revenue amortization and the reinsurance accrual was an expense of ~~$396~~$577 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to a benefit of ~~$1.8 billion for the prior year period.~~

•The impact on variable annuity and variable universal life products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves (“mean reversion related impact”) was a benefit of $56 million for the three months ended March 31, 2021 compared to an expense of $61$239 million for the prior year period.

•~~Net realized investment gains of $48 million for the three months ended March 31, 2021 compared to net realized investment losses of $17 million for the prior year period.~~

~~The Company’s variable~~Variable annuity account balances increased ~~24%~~12% to ~~$87.0~~$89.6 billion as of ~~March 31,~~September 30, 2021 compared to the prior year period due to market appreciation, partially offset by net outflows of ~~$1.9~~$1.8 billion. ~~Variable~~During the nine months ended September 30, 2021, variable annuity sales increased ~~33%~~47% compared to the prior year period reflecting an increase in sales of structured variable ~~annuities launched in 2020, partially offset by lower sales of variable annuities with living benefit guarantees.~~annuities. Sales of variable annuities without living benefit guarantees comprised ~~64%~~67.2% of total variable annuity sales for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~31%~~45.9% for the prior year period. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

~~The Company’s fixed~~Fixed deferred annuity account balances declined 4% to ~~$7.9~~$7.7 billion as of ~~March 31,~~September 30, 2021 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities and fixed index annuities due to the low interest rate ~~environment as well as~~environment. During the ~~Company’s strategic decisions regarding its~~third quarter of 2021, the Company closed on a transaction to reinsure RiverSource Life’s fixed deferred and immediate annuity ~~business.~~policies. See Note 1 for more information on the reinsurance transaction.

3946

RIVERSOURCE LIFE INSURANCE COMPANY

In the third quarter, management updates its market-related assumptions and implements model changes related to the living benefit valuation. In addition, management conducts its annual review of insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. Management also reviews its future policy benefit reserve adequacy for its LTC business in the third quarter.

The following table presents the total pretax impacts on the Company’s revenues and expenses attributable to unlocking and LTC loss recognition for the nine months ended September 30:


Pretax Increase (Decrease)	2021		2020
	(in millions)
Policy and contract charges	$	19	$	(1)
Total revenues	19		(1)

Benefits, claims, losses and settlement expenses:
LTC unlocking and loss recognition	3		141
Unlocking impact, excluding LTC	59		212
Total benefits, claims, losses and settlement expenses	62		353
Amortization of DAC	(60)		100
Total expenses	2		453
Pretax income	$	17	$	(454)

The primary drivers of the year-over-year unlocking impact excluding LTC include the following items:

•Interest rate assumptions resulted in a lower expense in the third quarter of 2021 compared to the prior year period. The 10-year Treasury rate assumption remained unchanged in 2021 at 3.5% with a grading period ending December 31, 2026.

•Equity market volatility and correlation assumptions on variable annuities resulted in a higher benefit in the third quarter of 2021 compared to the prior year period.

•Surrenders assumptions on variable annuities with living benefit guarantees resulted in a lower expense in the third quarter of 2021 compared to the prior year period.

The unfavorable LTC unlocking impact of $3 million in the third quarter of 2021 compared to the unfavorable LTC unlocking and loss recognition impact of $141 million in the prior year period is primarily due to updates to our interest rate assumptions in the prior year period.

Revenues

Total revenues ~~increased $79~~decreased $314 million, or 8%11%, to ~~$1.0~~$2.5 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$1.0~~$2.8 billion for the prior year period.

Premiums decreased ~~$15 million, or 16%,~~$1.2 billion to ~~$78~~$(945) million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$93~~$256 million for the prior year period primarily reflecting ~~lower sales~~ceded premiums of ~~immediate annuities~~$1.2 billion associated with athe reinsurance transaction for life contingent ~~feature.~~immediate annuity policies.

Net investment income increased ~~$24~~$17 million, or ~~11%~~3%, to ~~$247~~$664 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$223~~$647 million for the prior year period reflecting the consolidation of CIEs, ~~and higher average invested assets,~~ partially offset by a decrease in investment income on fixed maturities due to lower yields as a result of continued low interest rates and lower ~~interest rates.~~average invested assets due to the sale of investments to the reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction.

Policy and contract charges increased $186 million, or 12%, to $1.7 billion for the nine months ended September 30, 2021 compared to $1.5 billion for the prior year period primarily due to the unearned revenue amortization and the reinsurance accrual offset to the market impact of IUL benefits, which was a benefit of $25 million for the nine months ended September 30, 2021 compared to an expense of $10 million for the prior year period, as well higher separate account fees from increased account balances due to market appreciation.

Other revenues increased $79 million, or 22%, to $436 million for the nine months ended September 30, 2021 compared to $357 million for the prior year period primarily reflecting higher fees from increased account balances due to market appreciation and the yield on deposit receivables.

Net realized investment gains were ~~$48~~$589 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to net realized investment losses of ~~$17~~$16 million for the prior year period. The ~~three~~nine months ended ~~March 31,~~September 30, 2021 included net realized gains of ~~$49~~$548 million on Available-for-Sale securities and net realized gains of $56 million primarily related to commercial mortgage loans and syndicated loans. These net realized gains are primarily due to ~~sales, calls~~sale of securities and ~~tenders.~~loans to the reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction that closed in the third quarter 2021.

RIVERSOURCE LIFE INSURANCE COMPANY

Also included in net realized investment gains are $15 million of losses in the consolidated CIEs. For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, net realized gains of $4$10 million on Available-for-Sale securities due to sales, calls and tenders were more than offset by an increase in the allowance for credit losses of $13 million primarily related to credit losses on corporate debt securities and an increase of $9$13 million in the provision for commercial mortgage loans and syndicated loans.

Benefits and Expenses

Total benefits and expenses ~~increased $2.0 billion~~decreased $673 million, or 31%, to ~~$1.0~~$1.5 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~a benefit of $1.0~~$2.2 billion for the prior year period.

Benefits, claims, losses and settlement expenses ~~increased $2.4 billion~~decreased $483 million, or 59% , to ~~an expense of $652~~$337 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~a benefit of $1.7 billion~~$820 million for the prior year period primarily reflecting the following items:

•A ~~$1.8~~$1.2 billion decrease in expense associated with the reinsurance transaction for life contingent immediate annuity policies.

•A $687 million increase in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The unfavorable impact of ~~$225~~the nonperformance credit spread was $157 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was driven by changes in the undiscounted embedded derivative liability compared to a favorable impact of ~~$1.6 billion~~$530 million for the prior year ~~period primarily as a result of the nonperformance credit spread widening by 145 basis points due to the market dislocation related to the COVID-19 pandemic.~~period. As the undiscounted 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. Additionally, as the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease.

•A ~~$727~~$342 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 ~~$6.6~~$3.9 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, partially offset by a favorable ~~$5.8~~$3.5 billion change in the market impact on variable annuity guaranteed living benefits reserves. The main market drivers contributing to these changes are summarized below:

•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in an expense for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to a benefit for the prior year period.

•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in ana lower expense for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~a benefit in~~ the prior year period.

•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower expense for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to the prior year period.

•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net benefit for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to a net expense for the prior year period.

•The impact of unlocking excluding LTC was an expense of $59 million for the nine months ended September 30, 2021 compared to an expense of $212 million for the prior year period.

•The annual review of LTC future policy benefit reserve in the third quarter of 2021 resulted in unlocking of $3 million compared to unlocking and loss recognition of $141 million in the prior year period.

•The mean reversion related impact was a benefit of ~~$34~~$65 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to an expense of ~~$24~~$21 million for the prior year period.

•~~A $13 million decrease in reserves for immediate annuities with a life contingent feature primarily due to lower sales. This impact is offset by a decrease in premiums.~~

Interest credited to fixed accounts ~~increased~~decreased $68 million, or ~~75%~~13%, to ~~$159~~$455 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$91~~$523 million for the prior year period primarily reflecting the following items:

•A ~~$235~~$39 million increase in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The unfavorable impact of the nonperformance credit spread was $1$16 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to a favorable impact of ~~$234~~$23 million for the prior year period.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

•A ~~$168~~$98 million decrease in expense from other market impacts on IUL benefits, net of hedges, which was a benefit of $2$45 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to an expense of ~~$166~~$53 million for the prior year period. The decrease in expense was primarily due to a decrease in the IUL embedded derivative in the current period, which reflected lower option costs due to higher discount rates compared to an increase in the IUL embedded derivative in the prior year period, which reflected higher option costs due to lower discount rates.

Amortization of DAC decreased ~~$501~~$269 million, or 80%, to $2$69 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$503~~$338 million for the prior year period primarily reflecting the following items:

•The impact of unlocking in the third quarter of 2021 was a benefit of $60 million compared to an expense of $100 million in the prior year period.

RIVERSOURCE LIFE INSURANCE COMPANY

•The DAC offset to the market impact on non-traditional long-duration products was a benefit of ~~$46~~$42 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to an expense of ~~$416~~$89 million for the prior year period.

•The mean reversion related impact was a benefit of ~~$22~~$41 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to an expense of ~~$36~~$9 million for the prior year period.

•A higher level of normalized amortization due to the growth of variable annuities and unlocked market and policyholder assumptions in the prior year.

Interest and debt expense increased ~~$21~~$84 million to ~~$21~~$84 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to nil for the prior year period reflecting the consolidation of CIEs and the issuance of a surplus note. On December 23, 2020, the Company issued a $500 million unsecured 3.5% surplus note to Ameriprise Financial.

Other insurance and operating expenses increased ~~$31~~$63 million, or ~~19%~~13%, to ~~$194~~$553 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$163~~$490 million for the prior year period primarily reflecting higher expenses from the consolidation of CIEs and higher distribution expenses.

Income Taxes

The Company’s effective tax rate was ~~9.1%~~12.7% for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~8.5%~~5.7% for the prior year period. The increase in the effective tax rate for the ~~quarter~~nine months ended ~~March 31,~~September 30, 2021 compared to the prior year period is ~~primarily~~ the result of a ~~$160 million~~higher pretax income and a decrease in tax ~~benefit in~~preferred items including low income housing tax credits and the ~~prior year period associated with the forecasted utilization of a 2020 net operating loss (“NOL”) that was not ultimately realized.~~dividends received deduction. See Note 1516 to the Consolidated Financial Statements for additional discussion on income taxes.

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 ~~deferred annuities, fixed~~ insurance, ~~and the~~ fixed portion of its variable annuities and variable insurance contracts, and the fixed deferred annuities, 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 ~~deferred annuities, fixed~~ insurance, ~~and the~~ fixed portion of variable annuities and variable insurance contracts, and the fixed deferred annuities 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 total non-structured fixed maturity securities and commercial mortgage loans in the Company’s investment portfolio that may generate proceeds to reinvest through ~~March 31,~~September 30, 2023 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were ~~$2.4~~$1.0 billion and ~~3.6%~~3.8%, respectively, as of ~~March 31,~~September 30, 2021. In addition, residential mortgage-backed securities, which are subject to prepayment risk as a result of the low interest rate environment, totaled ~~$2.7~~$2.1 billion and had a weighted average yield of ~~2.3%~~2.0% as of ~~March 31,~~September 30, 2021. 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 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~~nine months ended ~~March 31,~~September 30, 2021 was approximately ~~2.2%~~2.1%.

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

The reinvestment of proceeds from maturities, calls and prepayments at rates below the current portfolio yield, which may be below the level of some liability GMIRs, will have a negative impact to future operating results. To mitigate the unfavorable impact that the low interest rate environment has on 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.

RIVERSOURCE LIFE INSURANCE COMPANY

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 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 options, swaptions, swaps and futures to manage 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 may use a combination of futures, options, swaps and 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 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 annuities, fixed deferred indexed annuities, IUL 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,~~September 30, 2021:


Equity Price Decline 10%	Equity Price Decline 10%	Equity Price Exposure to Pretax Income						Equity Price Decline 10%	Equity Price Exposure to Pretax Income
		Before Hedge Impact		Hedge Impact		Net Impact			Before Hedge Impact		Hedge Impact		Net Impact
		(in millions)							(in millions)
Asset-based fees and expenses	Asset-based fees and expenses	$	(75)	$	—	$	(75)	Asset-based fees and expenses	$	(71)	$	—	$	(71)
DAC and DSIC amortization (1) (2)	DAC and DSIC amortization (1) (2)	(40)		—		(40)		DAC and DSIC amortization (1) (2)	(15)		—		(15)
Variable annuities:	Variable annuities:							Variable annuities:
GMDB and GMIB (2)	GMDB and GMIB (2)	(10)		—		(10)		GMDB and GMIB (2)	(4)		—		(4)
GMWB (2)	GMWB (2)	(291)		256		(35)		GMWB (2)	(391)		318		(73)
GMAB	GMAB	(17)		17		—		GMAB	(22)		21		(1)
Structured variable annuities	Structured variable annuities	160		(133)		27		Structured variable annuities	317		(264)		53
DAC and DSIC amortization (3)	DAC and DSIC amortization (3)	N/A		N/A		5		DAC and DSIC amortization (3)	N/A		N/A		—
Total variable annuities	Total variable annuities	(158)		140		(13)		Total variable annuities	(100)		75		(25)
Macro hedge program (4)	Macro hedge program (4)	—		219		219		Macro hedge program (4)	—		189		189
Fixed deferred indexed annuities		6		(4)		2

IUL insurance	IUL insurance	45		(42)		3		IUL insurance	54		(53)		1
Total	Total	$	(222)	$	313	$	96	Total	$	(132)	$	211	$	79

4250

RIVERSOURCE LIFE INSURANCE COMPANY


Interest Rate Increase 100 Basis Points	Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income						Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
		Before Hedge Impact		Hedge Impact		Net Impact			Before Hedge Impact		Hedge Impact		Net Impact
		(in millions)							(in millions)
Asset-based fees and expenses	Asset-based fees and expenses	$	(16)	$	—	$	(16)	Asset-based fees and expenses	$	(17)	$	—	$	(17)
Variable annuities:	Variable annuities:							Variable annuities:

GMWB	GMWB	1,192		(1,477)		(285)		GMWB	1,389		(1,706)		(317)
GMAB	GMAB	19		(25)		(6)		GMAB	17		(22)		(5)
Structured variable annuities	Structured variable annuities	(12)		49		37		Structured variable annuities	(19)		99		80
DAC and DSIC amortization (3)	DAC and DSIC amortization (3)	N/A		N/A		42		DAC and DSIC amortization (3)	N/A		N/A		31
Total variable annuities	Total variable annuities	1,199		(1,453)		(212)		Total variable annuities	1,387		(1,629)		(211)
Macro hedge program (4)	Macro hedge program (4)	—		(4)		(4)		Macro hedge program (4)	—		(3)		(3)
Fixed deferred indexed annuities		(1)		—		(1)

Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	51		—		51		Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	63		—		63
IUL insurance	IUL insurance	17		1		18		IUL insurance	18		2		20
Total	Total	$	1,250	$	(1,456)	$	(164)	Total	$	1,451	$	(1,630)	$	(148)

N/A Not Applicable.

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

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

(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.

The above results compare to an estimated positive net impact to pretax income of $157 million related to a 10% equity price decline and an estimated negative net impact to pretax income of $253 million related to a 100 basis point increase in interest rates as of December 31, 2020. The change in interest rate exposure as of ~~March 31,~~September 30, 2021 compared to December 31, 2020 was driven by variable annuity riders, specifically GMWB, primarily due to changes in market rates.

Net impacts shown in the above table from GMWB 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 Company’s hedging is based on its determination of economic risk, which excludes certain items in the liability valuation including the nonperformance spread risk.

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% 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 all strategic 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 1112 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, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, the Company considers the assumptions participants in a hypothetical market would make to reflect an exit price.

RIVERSOURCE LIFE INSURANCE COMPANY

As a result, the Company adjusts the valuation of variable annuity riders,

~~RIVERSOURCE LIFE INSURANCE COMPANY~~

fixed deferred indexed annuities, structured variable annuities, and IUL 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 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,~~September 30, 2021. 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 future net income would be approximately ~~$334~~$365 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on ~~March 31,~~September 30, 2021 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, premiums and proceeds from sales of investments, fixed annuity and fixed insurance deposits as well as capital contributions from its parent, Ameriprise Financial Inc. (“Ameriprise Financial”). Other liquidity sources the Company has established are short-term borrowings and available lines of credit with Ameriprise Financial aggregating ~~$1.6~~$1.1 billion.

The Company enters into short-term borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances to reduce reinvestment risk. Short-term borrowings allow the Company to receive cash to reinvest in longer-duration assets, while maintaining the flexibility to pay back the short-term debt with cash flows generated by the fixed income portfolio. RiverSource Life Insurance Company is a member of the FHLB of Des Moines, which provides RiverSource Life Insurance Company access to collateralized borrowings. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had estimated maximum borrowing capacity of ~~$5.2~~$4.3 billion and $5.7 billion, respectively, under the FHLB facility, of which $200 million was outstanding as of both ~~March 31,~~September 30, 2021 and December 31, 2020 and 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.

In 2009, the Company established an agreement to protect its exposure to Genworth Life Insurance Company (“GLIC”) for its reinsured long term care (“LTC”). In 2016, substantial enhancements to this reinsurance protection agreement were finalized. The terms of these confidential provisions within the agreement have been shared, in the normal course of regular reviews, with the Company’s domiciliary regulator and rating agencies. GLIC is domiciled in Delaware, so in the event GLIC were subjected to rehabilitation or insolvency proceedings, such proceedings would be located in (and governed by) Delaware laws. Delaware courts have a long tradition of respecting commercial and reinsurance affairs as well as contracts among sophisticated parties. Similar credit protections to what the Company has with GLIC have been tested and respected in Delaware and elsewhere in the United States, and as a result the Company believes its credit protections would be respected even in the unlikely event that GLIC becomes subject to rehabilitation or insolvency proceedings in Delaware. Accordingly, while no credit protections are perfect, the Company believes the correct way to think about the risks represented by its counterparty credit exposure to GLIC is not the full amount of the gross liability that GLIC reinsures, but a much smaller net exposure to GLIC (if any that might exist after taking into account the Company’s credit protections). Thus, management believes that this agreement and offsetting non LTC legacy arrangements with Genworth will enable the Company to recover on all net exposure in all material respects in the event of a rehabilitation or insolvency of GLIC.

Capital Activity

Cash dividends or distributions paid and received by RiverSource Life Insurance Company were as follows:


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
		(in millions)					(in millions)
Paid to Ameriprise Financial	Paid to Ameriprise Financial	$	250	$	250	Paid to Ameriprise Financial	$	1,675	$	650

Received from RiverSource Tax Advantaged Investments, Inc.						Received from RiverSource Tax Advantaged Investments, Inc.	50		—

For dividends or distributions from the life insurance companies, notifications to state insurance regulators were made in advance of payments in excess of statutorily defined thresholds.

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Regulatory Capital

RiverSource Life Insurance Company and 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 were as follows:


		Actual Capital (1)				Regulatory Capital Requirements (2)			Actual Capital (1)							Regulatory Capital Requirements (2)
		March 31, 2021		December 31, 2020		September 30, 2021					December 31, 2020
		(in millions)							(in millions)
RiverSource Life Insurance Company	RiverSource Life Insurance Company	$	4,522	$	5,021		$	993		RiverSource Life Insurance Company	$	3,626		$	5,021		$	993
RiverSource Life Insurance Co. of NY	RiverSource Life Insurance Co. of NY	240		323		42	RiverSource Life Insurance Co. of NY		321				323			42

(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 the company action level and is based on the statutory risk-based capital filing. The regulatory capital requirement is only required to be calculated annually.

Contractual Commitments

There have been no material changes to the Company’s contractual obligations disclosed in the Company’s 2020 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;

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

•statements about the expected trend in the shift of the ~~variable annuity~~retirement product sales business ~~away from~~to lower risk products ~~with~~over time, such as products without living benefit ~~guarantees over time;~~guarantees;

•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 track,” “project,” “continue,” “able to remain,” “resume,” “deliver,” “develop,” “evolve,” “drive,” “enable,” “flexibility,” “scenario,” “case”, “appear”, “expands” 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:

•the impacts on the Company’s business of the COVID-19 pandemic and the related economic, client, governmental and healthcare system responses;

•market fluctuations and general economic and political factors, including volatility in the U.S. and global market conditions, client behavior and volatility in the markets for the Company’s products;

•changes in interest rates and periods of low interest rates;

•adverse capital and credit market conditions or any downgrade in the Company’s credit ratings;

•effects of competition and the economics of changes in the Company’s product revenue mix and distribution channels;

•declines in the Company’s investment management performance;

•the Company’s and its affiliates’ ability to compete in attracting and retaining talent, including AFS attracting and retaining financial advisors;

•impairment, negative performance or default by financial institutions or other counterparties;

•poor performance of the Company’s variable products;

•changes in valuation of securities and investments included in the Company’s assets;

•effects of the elimination of LIBOR on, and value of, securities and other assets and liabilities tied to LIBOR;

•the determination of the amount of allowances taken on loans and investments;

•the illiquidity of the Company’s investments;

•failures by other insurers that lead to higher assessments the Company owes to state insurance guaranty funds;

•failures or defaults by counterparties to the Company’s reinsurance arrangements;

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RIVERSOURCE LIFE INSURANCE COMPANY

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

•deviations from our assumptions regarding morbidity, mortality and persistency affecting the Company’s profitability;

•changes to the Company’s or its affiliates’ reputation arising from employee or agent misconduct or otherwise;

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

•interruptions or other errors in the Company’s telecommunications or data processing systems;

•identification and mitigation of risk exposure in market environments, new products, vendors and other types of risk;

•occurrence of natural or man-made disasters and catastrophes;

•legal and regulatory actions brought against the Company;

•changes to laws and regulations that govern operation of the Company’s business;

•changes in corporate tax laws and regulations and interpretations and determinations of tax laws impacting the Company’s products;

•protection of the Company’s intellectual property and claims the Company infringes the intellectual property of others; and

•changes in and the adoption of new accounting standards.

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 2020 10-K.

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 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,~~September 30, 2021.

Changes in Internal Control over Financial Reporting

The Company implemented a new financial system during the first quarter of fiscal 2021. The new system allows it to maximize financial system functionality, enable a scalable platform and simplify processes for reporting and analytics. As part of the financial system implementation, the Company enhanced and modified certain existing internal controls within the general ledger, accounts payable, fixed assets, and financial reporting functions. The Company will continue to monitor and ensure effectiveness of any changes in internal controls. There have not been ~~no other~~any changes to 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

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 1617 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors provided in Part I, Item 1A of RiverSource Life Insurance Company’s 2020 10-K.

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RIVERSOURCE LIFE INSURANCE COMPANY

ITEM 6. EXHIBITS

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 Gumer C. Alvero, Executive Vice President - Annuities (Acting Principal Executive Officer), 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 Gumer C. Alvero, Executive Vice President - Annuities (Acting Principal Executive Officer) 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 on Form 10-Q for the period ended ~~March 31,~~September 30, 2021 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at ~~March 31,~~September 30, 2021 and December 31, 2020; (ii) Consolidated Statements of Income for the three months and nine months ended ~~March 31,~~September 30, 2021 and 2020; (iii) Consolidated Statements of Comprehensive Income for the three months and nine months ended ~~March 31,~~September 30, 2021 and 2020; (iv) Consolidated Statements of Equity for the three months and nine months ended ~~March 31,~~September 30, 2021 and 2020; (v) Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020; and (vi) Notes to the Consolidated Financial Statements.
104			The cover page from RiverSource Life Insurance Company’s Quarterly Report on Form 10-Q for the period ended ~~March 31,~~September 30, 2021 is formatted in iXBRL and contained in Exhibit 101.
* Filed electronically herewithin.

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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 10,~~November 9, 2021	By:	/s/ Brian J. McGrane
			Brian J. McGrane Executive Vice President and Chief Financial Officer

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