UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
or
[ ]MARCH 31, 2006
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
-------- --------
Commission file numberFOR THE TRANSITION PERIOD FROM______________ TO________________
COMMISSION FILE NUMBER 33-28976
IDS LIFE INSURANCE COMPANY
--------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0823832
- ------------------------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
829MINNESOTA 41-0823832
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
55 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS, MINNESOTA 55474
- ------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 671-3131
----------------
829 AXP FINANCIAL CENTER, MINNEAPOLIS, MINNESOTA
- ------------------------------------------------------------------------------
FormerNONE
(Former name, former address and former fiscal year, if
changed since last report.)
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 X|X| No --- ---|_|
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes |_| No X
--- ---|X|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 9, 2006
- ------------------------------------------------- --------------------------
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.
IDS LIFE INSURANCE COMPANY
FORM 10-Q
INDEX
Page No.
--------
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets -- June 30, 2005 and
December 31, 2004 1
Consolidated Statements of Income -- Three Months
Ended June 30, 2005 and 2004 2
Consolidated Statements of Income -- Six Months
Ended June 30, 2005 and 2004 3
Consolidated Statements of Cash Flows --
Six Months Ended June 30, 2005 and 2004 4
Consolidated Statements of Stockholder's
Equity -- Six Months Ended June 30, 2005 and 2004 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-16
Item 4. Controls and Procedures 17-18
PART II. Other Information
Item 1. Legal Proceedings 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibit Index
IDS LIFE INSURANCE COMPANY
FORM 10-Q
INDEX
PAGE NO.
--------
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2006 and December 31, 2005.................................. 1
Consolidated Statements of Income - Three Months Ended March 31, 2006 and 2005...................... 2
Consolidated Statements of Cash Flows - Three Months Ended March 31, 2006 and 2005.................. 3
Consolidated Statements of Stockholder's Equity - Three Months Ended March 31, 2006 and 2005........ 4
Notes to Consolidated Financial Statements.......................................................... 5-8
Item 2. Management's Discussion and Analysis................................................................ 9-12
Item 4. Controls and Procedures............................................................................. 13-14
Part II. Other Information:
Item 1. Legal Proceedings................................................................................... 14
Item 1A. Risk Factors........................................................................................ 14
Item 5. Other Information................................................................................... 14
Item 6. Exhibits............................................................................................ 14
Signatures.................................................................................................... 15
Exhibit Index................................................................................................. E-1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(thousands,(in thousands, except share data)amounts)
June 30, DecemberMARCH 31, DECEMBER 31,
2006 2005
2004
----------- ------------
(Unaudited)
--------------- ---------------
(UNAUDITED)
Assets
- ------
ASSETS
Investments:
Available-for-Sale:
Fixed maturities, at fair value (amortized cost: 2006, $27,624,166; 2005, $27,060,062;
2004, $27,400,640) $27,737,220 $28,131,195
Preferred and common$27,817,021) $ 27,093,965 $ 27,753,174
Common stocks, at fair value (cost: 2006 and 2005, and 2004, $30,019) 31,800 31,256$13)............................... 24 21
Mortgage loans on real estate, at cost (less reserves:allowance for loan losses: 2006, $37,347;
2005, $41,347
and 2004, $45,347) 2,849,178 2,923,542$41,347)........................................................................ 2,805,244 2,842,362
Policy loans 593,103 588,574loans............................................................................. 610,960 605,212
Trading securities and other investments 681,686 802,096
----------- -----------investments................................................. 517,499 547,668
--------------- ---------------
Total investments 31,892,987 32,476,663investments............................................................... 31,027,692 31,748,437
Cash and cash equivalents 1,019,382 131,427
Restricted cash 208,310 535,821equivalents................................................................ 39,403 233,589
Reinsurance recoverables 947,956 876,408recoverables................................................................. 1,013,263 982,521
Amounts due from brokers 43,742 7,109brokers................................................................. 3,015 4,166
Other accounts receivable 57,526 52,527receivable................................................................ 47,735 62,930
Accrued investment income 338,501 351,522income................................................................ 326,425 328,567
Deferred policy acquisition costs 3,748,720 3,637,956costs............................................................... 4,145,050 4,035,879
Deferred sales inducement costs 329,671 302,997costs.......................................................... 393,938 370,166
Deferred income tax assets, net.......................................................... 124,017 -
Other assets 118,712 259,600assets............................................................................. 236,008 220,371
Separate account assets 33,821,783 32,454,032
----------- -----------assets.................................................................. 41,247,882 37,929,960
--------------- ---------------
Total assets $72,527,290 $71,086,062
=========== ===========
Liabilities and Stockholder's Equity
- ------------------------------------
Liabilities:assets........................................................................... $ 78,604,428 $ 75,916,586
=============== ===============
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Future policy benefits:
Fixed annuities $26,697,459 $26,978,596annuities....................................................................... $ 25,528,620 $ 26,126,068
Variable annuity guarantees 31,966 32,955guarantees........................................................... 17,788 29,550
Universal life insurance 3,707,431 3,689,639insurance.............................................................. 3,705,181 3,711,628
Traditional life insurance 283,783 271,516insurance............................................................ 305,705 298,479
Disability income and long-term care insurance 2,049,625 1,942,656insurance........................................ 2,216,833 2,145,969
Policy claims and other policyholders' funds 79,655 69,884funds............................................. 82,087 90,233
Amounts due to brokers 246,275 162,609brokers................................................................... 31,296 31,772
Deferred income taxes, net 166,745 141,202tax liabilities, net..................................................... - 9,099
Other liabilities 346,672 437,418liabilities........................................................................ 460,214 381,938
Separate account liabilities 33,821,783 32,454,032
----------- -----------liabilities............................................................. 41,247,882 37,929,960
--------------- ---------------
Total liabilities 67,431,394 66,180,507
----------- -----------
Stockholder's equity:liabilities...................................................................... 73,595,606 70,754,696
--------------- ---------------
STOCKHOLDER'S EQUITY:
Capital stock, $30 par value;
100,000 shares authorized, issued and outstandingoutstanding...................................... 3,000 3,000
Additional paid-in capital 1,370,388 1,370,388capital............................................................... 2,020,388 2,020,388
Retained earnings 3,407,479 3,190,474earnings........................................................................ 3,381,105 3,269,206
Accumulated other comprehensive income,loss, net of tax:
Net unrealized securities gains 351,959 370,615
Net unrealized derivative losses (36,930) (28,922)
----------- -----------
Total accumulated other comprehensive income 315,029 341,693
----------- -----------tax......................................... (395,671) (130,704)
--------------- ---------------
Total stockholder's equity 5,095,896 4,905,555
----------- -----------equity............................................................. 5,008,822 5,161,890
--------------- ---------------
Total liabilities and stockholder's equity $72,527,290 $71,086,062
=========== ===========equity............................................. $ 78,604,428 $ 75,916,586
=============== ===============
See Notes to Consolidated Financial StatementsStatements.
1
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME (thousands)
(Unaudited)(UNAUDITED)
(in thousands)
Three Months Ended
June 30,
--------------------------THREE MONTHS ENDED
MARCH 31,
---------------------------------------
2006 2005
2004
-------- --------
---------------- -----------------
Revenues:
REVENUES
Premiums:
Traditional life insuranceinsurance...................................................... $ 19,26718,164 $ 17,00317,490
Disability income and long-term care insurance 72,776 70,268
-------- --------insurance.................................. 74,343 71,343
---------------- -----------------
Total premiums 92,043 87,271premiums.............................................................. 92,507 88,833
Net investment income 422,922 464,644income............................................................. 444,475 458,788
Contractholder and policyholder charges 142,757 138,181charges........................................... 152,408 143,057
Mortality and expense risk and other fees 108,390 101,740fees......................................... 146,272 114,778
Net realized gain on investments 37,645 8,867
-------- --------investments.................................................. 5,839 194
---------------- -----------------
Total 803,757 800,703
-------- --------
Benefits and Expenses:revenues.............................................................. 841,501 805,650
---------------- -----------------
BENEFITS AND EXPENSES
Death and other benefits:
Traditional life insurance 8,511 9,528insurance...................................................... 5,418 12,069
Investment contracts and universal life-type insurance 66,437 58,474insurance.......................... 57,013 52,287
Disability income and long-term care insurance 19,022 16,178insurance.................................. 20,748 17,177
Increase (decrease) in liabilities for future policy benefits:
Traditional life insurance 1,472 649insurance...................................................... (219) 938
Disability income and long-term care insurance 29,969 34,566insurance.................................. 42,171 29,597
Interest credited to account values 280,359 280,009values............................................... 269,551 273,262
Amortization of deferred policy acquisition costs 98,193 88,206costs........................................ 105,285 99,082
Separation costs 25,772costs.................................................................. 24,607 -
Other insurance and operating expenses 148,171 119,824
-------- --------expenses............................................ 156,854 137,524
---------------- -----------------
Total 677,906 607,434
-------- --------benefits and expenses................................................. 681,428 621,936
---------------- -----------------
Income before income tax provision 125,851 193,269provision................................................... 160,073 183,714
Income tax provision 34,387 70,165
-------- --------provision................................................................. 48,174 58,173
---------------- -----------------
Net incomeincome........................................................................... $ 91,464 $123,104
======== ========111,899 $ 125,541
================ =================
See Notes to Consolidated Financial StatementsStatements.
2
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(thousands)
(Unaudited)
Six Months Ended
June 30,
--------------------------------
2005 2004
---------- ----------
Revenues:
Premiums:
Traditional life insurance $ 36,757 $ 34,054
Disability income and long-term care insurance 144,119 138,366
---------- ----------
Total premiums 180,876 172,420
Net investment income 881,710 879,817
Contractholder and policyholder charges 285,814 274,384
Mortality and expense risk and other fees 223,168 208,982
Net realized gain on investments 37,839 17,513
---------- ----------
Total 1,609,407 1,553,116
---------- ----------
Benefits and Expenses:
Death and other benefits:
Traditional life insurance 20,580 20,090
Investment contracts and universal life-type insurance 118,724 116,707
Disability income and long-term care insurance 36,199 31,536
Increase (decrease) in liabilities for future policy benefits:
Traditional life insurance 2,410 (616)
Disability income and long-term care insurance 59,566 54,686
Interest credited to account values 553,621 563,080
Amortization of deferred policy acquisition costs 197,275 111,784
Separation costs 25,772 -
Other insurance and operating expenses 285,695 245,412
---------- ----------
Total 1,299,842 1,142,679
---------- ----------
Income before income tax provision and accounting change 309,565 410,437
Income tax provision 92,560 140,536
---------- ----------
Income before accounting change 217,005 269,901
Cumulative effect of accounting change, net of tax (Note 1) - (70,568)
---------- ----------
Net income $ 217,005 $ 199,333
========== ==========
See Notes to Consolidated Financial Statements
3
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands)
(Unaudited)(UNAUDITED)
(in thousands)
Six Months Ended
June 30,
--------------------------------THREE MONTHS ENDED
MARCH 31,
-----------------------------------
2006 2005
2004
----------- -----------
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net incomeincome............................................................................... $ 217,005111,899 $ 199,333125,541
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Policy loans, excluding universal life-type insurance
Repayment 18,265 19,370
Issuance (18,500) (19,101)
Change in reinsurance recoverables (71,548) (54,109)
Change in other accounts receivable (4,999) (4,148)
Change in accrued investment income 13,021 9,528
Change inAmortization of deferred policy acquisition costs, net (106,155) (151,457)
Change incosts............................................. 105,285 99,082
Amortization of deferred sales inducement costs, net (25,858) (20,112)costs........................................ 11,285 9,633
Capitalization of deferred acquisition costs........................................... (172,463) (141,538)
Capitalization of deferred sales inducement costs...................................... (27,703) (20,657)
Amortization of premium, net........................................................... 18,460 22,719
Deferred income taxes.................................................................. 9,558 43,394
Policyholder and contractholder charges, non-cash...................................... (55,164) (57,584)
Net realized gain on investments....................................................... (5,839) (194)
Net realized gain on trading securities and equity method investments in hedge funds... (21,201) (8,971)
Change in liabilities for futureoperating assets and liabilities:
Trading securities and equity method investments in hedge funds, net................... 68,928 63,236
Future policy benefits for traditional life, disability income and long-term care
insurance 119,236 100,690
Change in policyinsurance........................................................................... 78,090 59,337
Policy claims and other policyholders' funds 9,771 14,089
Deferred income taxes 39,900 32,367
Change in otherfunds........................................... (8,146) 7,862
Policy loans, excluding universal life-type insurance:
Repayment........................................................................... 8,573 8,799
Issuance............................................................................ (9,027) (8,856)
Reinsurance recoverables............................................................... (30,742) (33,891)
Other accounts receivable.............................................................. 15,195 (4,790)
Accrued investment income.............................................................. 2,142 (7,030)
Other assets and liabilities, net 47,587 48,803
Amortization of premium, net 46,370 43,069
Net realized gain on investments (37,839) (17,513)
Trading securities and equity method investments in hedge funds, net 116,791 (29,345)
Net realized gain on trading securities (4,962) (16,087)
Contractholder and policyholder charges, non-cash (115,827) (115,062)
Cumulative effect of accounting change, net of tax (Note 1) - 70,568
----------- -----------net...................................................... 52,678 40,529
--------------- ---------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 242,258 110,883
----------- -----------ACTIVITIES...................................... 151,808 196,621
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-Sale securities:
Sales 1,907,590 795,643Proceeds from sales.................................................................... 396,056 547,237
Maturities, sinking fund payments and calls 887,324 1,026,235
Purchases (2,458,636) (2,041,103)calls............................................ 595,209 428,245
Purchases.............................................................................. (810,097) (864,336)
Other investments, excluding policy loans:
Sales,Proceeds from sales, maturities, sinking fund payments and calls 308,521 307,311
Purchases (227,876) (198,010)calls....................... 148,670 98,233
Purchases.............................................................................. (128,756) (99,298)
Change in amounts due to and from brokers, net 47,033 (36,033)net........................................... 675 (121,775)
Change in restricted cash 327,511 10,929
----------- -----------cash................................................................ - (40,264)
--------------- ---------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 791,467 (135,028)
----------- -----------ACTIVITIES...................................... 201,757 (51,958)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Activity related to investment contracts and universal life-type insurance:
Considerations received 883,552 1,127,947received................................................................ 335,567 443,345
Interest credited to account values 553,621 563,080values.................................................... 269,551 273,262
Surrenders and other benefits (1,578,649) (1,400,677)benefits.......................................................... (1,147,575) (793,517)
Universal life-type insurance policy loans:
Repayment 46,477 46,102
Issuance (50,771) (46,397)
Cash dividend to parent - (430,000)
----------- -----------Repayment.............................................................................. 24,975 21,991
Issuance............................................................................... (30,269) (24,190)
--------------- ---------------
NET CASH USED INPROVIDED BY (USED IN) FINANCING ACTIVITIES (145,770) (139,945)
----------- -----------ACTIVITIES...................................... (547,751) (79,109)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 887,955 (164,090)EQUIVALENTS..................................... (194,186) 65,554
Cash and cash equivalents at beginning of periodperiod......................................... 233,589 131,427
400,294
----------- -------------------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIODPERIOD............................................... $ 1,019,38239,403 $ 236,204
=========== ===========
SUPPLEMENTAL DISCLOSURES:196,981
=============== ===============
Supplemental disclosures:
Income taxes paidpaid...................................................................... $ 99,79813,106 $ 83,26131,651
Interest paid on borrowingsborrowings............................................................ $ 63146 $ 37953
See Notes to Consolidated Financial StatementsStatements.
43
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (thousands)
(Unaudited)(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(in thousands)
Accumulated
Additional Other
Capital Paid-In Comprehensive Retained
Total Stock Capital Income/(Loss) Earnings
- -------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED
ADDITIONAL OTHER
CAPITAL PAID-IN RETAINED COMPREHENSIVE
STOCK CAPITAL EARNINGS INCOME (LOSS) TOTAL
----------- ------------- ------------ ----------------- -------------
Balances at December
BALANCES AT DECEMBER 31, 2003 $5,397,836 $3,000 $1,370,3882004............ $ 399,611 $3,624,837
- -------------------------------------------------------------------------------------------------------------------------------3,000 $ 1,370,388 $3,190,474 $ 341,693 $ 4,905,555
Comprehensive loss:
Net income 199,333 199,333income............................ 125,541 125,541
Change in net unrealized holding
gainslosses on Available-for-Sale
securities, net of reclassification
adjustments and other adjustments
to deferred policy acquisition costs,
deferred sales inducement costs and
fixed annuity liabilities, net of
related deferred income taxes (368,405) (368,405)
Reclassification adjustment for
gains on derivatives includednet........... (310,033) (310,033)
Change in net income, net of related
deferred income taxes (12,227) (12,227)
---------unrealized derivative
losses, net......................... (6,684) (6,684)
-------------
Total comprehensive loss (181,299)
Dividends to parent (430,000) (430,000)
- -------------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 2004 $4,786,537 $3,000 $1,370,388loss................. (191,176)
----------- ------------- ------------ ----------------- -------------
BALANCES AT MARCH 31, 2005............... $ 18,979 $3,394,170
===============================================================================================================================
Balances at December3,000 $ 1,370,388 $3,316,015 $ 24,976 $ 4,714,379
=========== ============= ============ ================= =============
BALANCES AT DECEMBER 31, 2004 $4,905,555 $3,000 $1,370,3882005............ $ 341,693 $3,190,4743,000 $ 2,020,388 $3,269,206 $ (130,704) $ 5,161,890
Comprehensive income:loss:
Net income 217,005 217,005income............................ 111,899 111,899
Change in net unrealized holding
gainslosses on Available-for-Sale
securities, net of reclassification
adjustments and other adjustments
to deferred policy acquisition costs,
deferred sales inducement costs and
fixed annuity liabilities, net of
related deferred income taxes (18,656) (18,656)
Reclassification adjustment for
gains on derivatives includednet........... (265,680) (265,680)
Change in net income, net of related
deferred income taxes (8,008) (8,008)
---------unrealized derivative
losses, net......................... 713 713
-------------
Total comprehensive income 190,341
- -------------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 2005 $5,095,896 $3,000 $1,370,388loss................. (153,068)
----------- ------------- ------------ ----------------- -------------
BALANCES AT MARCH 31, 2006............... $ 315,029 $3,407,479
===============================================================================================================================3,000 $ 2,020,388 $3,381,105 $ (395,671) $ 5,008,822
=========== ============= ============ ================= =============
See Notes to Consolidated Financial StatementsStatements.
54
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying Consolidated Financial Statements should be read in
conjunction withinclude the financial statements in the Annual Report on Form
10-Kaccounts
of IDS Life Insurance Company (IDS Life) for the year ended
December 31, 2004. Certain reclassifications of prior period amountsand companies in which it directly or
indirectly has a controlling financial interest. All material
intercompany transactions and balances between or among IDS Life
Insurance Company and its subsidiaries and affiliates have been
madeeliminated in consolidation. IDS Life Insurance Company is a stock life
insurance company with four wholly-owned operating subsidiaries: IDS
Life Insurance Company of New York, American Partners Life Insurance
Company, American Enterprise Life Insurance Company and American
Centurion Life Assurance Company. IDS Life Insurance Company also owns
IDS REO 1, LLC, IDS REO 2, LLC and American Enterprise REO 1, LLC which
hold real estate investments. IDS Life Insurance Company and its seven
subsidiaries are referred to conform to the current presentation.collectively in this Form 10-Q as "IDS
Life".
The accompanying Consolidated Financial Statements have been prepared
in accordance with U.S. generally accepted accounting principles
("GAAP"). The interim financial information in this report has not been
audited. In the opinion of management, all adjustments necessary for a
fair presentation of the consolidated financial position and the
consolidated results of operations for the interim periods have been
made. All adjustments made were of a normal, recurring nature. Results
of operations reported for interim periods are not necessarily
indicative of results for the entire year. SeparationThese Consolidated Financial
Statements and Notes should be read in conjunction with the Annual
Report on Form 10-K of AmeripriseIDS Life for the year ended December 31, 2005,
filed with the Securities and Exchange Commission ("SEC") on March 10,
2006.
Certain reclassifications of prior period amounts have been made to
conform to the current presentation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In February 2006, the Financial ----------------------------------Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 155,
"Accounting for Certain Hybrid Financial Instruments-an amendment of
FASB Statements No. 133 and 140." SFAS No. 155 improves financial
reporting by eliminating the exemption from applying SFAS No. 133 to
interests in securitized financial assets so that similar instruments
are accounted for similarly regardless of the form of the instruments.
It also improves financial reporting by allowing a preparer to elect
fair value measurement at acquisition, at issuance, or when a
previously recognized financial instrument is subject to a
remeasurement (new basis) event, on an instrument-by-instrument basis,
in cases in which a derivative would otherwise have to be bifurcated.
SFAS No. 155 is effective for all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins
after September 15, 2006. IDS Life is currently evaluating the impact
of SFAS No. 155 on IDS Life's consolidated results of operations and
financial condition.
On November 3, 2005, the FASB issued FASB Staff Position ("FSP") FAS
115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments." FSP FAS 115-1 and FAS
124-1 address the determination as to when an investment is considered
impaired, whether that impairment is other-than-temporary and the
measurement of loss. It also includes accounting considerations
subsequent to the recognition of an other-than-temporary impairment and
requires certain disclosures about unrealized losses that have not been
recognized as other-than-temporary impairments. FSP FAS 115-1 and FAS
124-1 are effective for reporting periods beginning after December 15,
2005. The effect of adopting FSP FAS 115-1 and FAS 124-1 on IDS Life's
consolidated results of operations and financial condition was not
material.
5
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In September 2005, the American Institute of Certified Public
Accountants issued Statement of Position 05-1, "Accounting by Insurance
Enterprises for Deferred Acquisition Costs in Connection With
Modifications or Exchanges of Insurance Contracts" ("SOP 05-1"). SOP
05-1 provides guidance on accounting by insurance enterprises for
deferred acquisition costs on internal replacements of insurance and
investment contracts other than those specifically described in SFAS
No. 97, "Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale
of Investments." SOP 05-1 is effective for internal replacements
occurring in fiscal years beginning after December 15, 2006, with
earlier adoption encouraged. IDS Life is currently evaluating the
impact of SOP 05-1 on IDS Life's consolidated results of operations and
financial condition.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections" ("SFAS 154"). This statement replaces Accounting
Principles Board ("APB") Opinion No. 20, "Accounting Changes," and SFAS
No. 3, "Reporting Accounting Changes in Interim Financial Statements"
and changes the requirements for the accounting for and reporting of a
change in accounting principle. SFAS 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning after
December 15, 2005. The effect of adopting SFAS 154 on IDS Life's
consolidated results of operations and financial condition was not
material.
3. SEPARATION OF AMERIPRISE FINANCIAL, INC.
IDS Life Insurance Company is a wholly ownedwholly-owned subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial)("Ameriprise Financial"). Prior to August 1, 2005,
Ameriprise Financial was knownreferred to as American Express Financial
Corporation (AEFC). Ameriprise Financial is a wholly owned subsidiary
ofCorporation. On February 1, 2005, the American Express Company
(American Express).("American Express") Board of Directors announced its intention to
pursue the disposition of 100% of its shareholdings in what is now
Ameriprise Financial changed its name on August 1, 2005("the Separation") through a tax-free distribution
to American Express shareholders. Effective as a
consequence of the plans announced by American Expressclose of business
on February 1,
2005, to pursue a spin off of the businesses now being operated under
the Ameriprise Financial name. The separation from American Express is
expected to be completed on or after September 30, 2005, subject to
certain regulatory and other approvals, including final approval by the
board of directors of American Express. After the expected separation
from American Express Ameriprise Financialcompleted the Separation and
its subsidiaries will
no longer be affiliated with American Express. Ameriprise Financial anddistribution of common shares to American Express will be independent companies, with separate public
ownership, boards of directors and management.shareholders ("the
Distribution"). In connection with the Distribution, Ameriprise
Financial entered into certain agreements with American Express to
effect the separation of its business and to define the responsibility
for obligations arising before and after the date of the Distribution,
including, among others, obligations relating to transition services,
taxes, and employees. IDS Life will bewas allocated certain
separation and distribution-related expenses incurred
as a result of Ameriprise Financial becoming an independent company.
Cumulatively, the expenses allocated to IDS Life are expected to be significant to IDS
Life. IDS Life received a capital contribution of $650 million from
Ameriprise Financial will provide additional capital to IDS Lifeduring the third quarter of 2005 to support its
current financial strength ratings.
Separation Costs
----------------ratings and to cover separation costs.
During the quarter ended June 30, 2005, Ameriprise Financial developed an allocation policy for
separation costs resulting in the allocation of certain costs to IDS
Life that it considered to be a reasonable reflection of separation
costs benefiting IDS Life. During the quarter
ended June 30, 2005, IDS Life recorded $25.8 million in allocated
separation costs. Had this allocation method been applied for the
quarter ended March 31, 2005, approximately $6.7 million of these costs
would have been charged to IDS Life during that period. Separation costs generally consist of
financial advisor and employee retention
program costs, information technology costs,allocated re-branding and marketing costs and certain consulting expensescosts to separate and
reestablish technology platforms related to the separation and
distributionDistribution of Ameriprise Financial. For the three months ended March
31, 2006, IDS Life incurred $24.6 million in separation costs.
6
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Application of Recently Issued Accounting Standards
---------------------------------------------------
In July 2003, the American Institute of Certified Public Accountants
issued SOP 03-1 effective for fiscal years beginning after December 15,
2003. SOP 03-1 provides guidance on separate account presentation and
accounting for interests in separate accounts. Additionally, SOP 03-1
provides clarifying guidance as to the recognition of bonus interest
and other sales inducement benefits and the presentation of any
deferred amounts in the financial statements. Lastly, SOP 03-1 requires
insurance enterprises to establish additional liabilities for benefits
that may become payable under variable annuity death benefit guarantees
or other insurance or annuity contract provisions. Where an additional
liability is established, the recognition of this liability will then
be considered in amortizing deferred policy acquisition costs (DAC) and
any deferred sales inducement costs associated with those insurance or
annuity contracts.
The adoption of SOP 03-1 as of January 1, 2004, resulted in a
cumulative effect of accounting change that reduced the first quarter
2004 results by $70.6 million ($108.6 million pretax). The cumulative
effect of accounting change consisted of: (i) $42.9 million pretax from
establishing additional liabilities for certain variable annuity
guaranteed benefits ($32.8 million) and from considering these
liabilities in valuing DAC and deferred sales inducement costs
associated with those contracts ($10.1 million) and (ii) $65.7 million
pretax from establishing additional liabilities for certain variable
universal life and single pay universal life insurance contracts under
which contractual cost of insurance charges are expected to be less
than future death benefits ($92 million) and from considering these
liabilities in valuing DAC associated with those contracts ($26.3
million offset). Prior to the adoption of SOP 03-1, amounts paid in
excess of contract value were expensed when payable. IDS Life's
accounting for separate accounts was already consistent with the
provisions of SOP 03-1 and, therefore, there was no impact related to
this requirement.
In November 2003, the Financial Accounting Standards Board (FASB)
ratified a consensus on the disclosure provisions of Emerging Issues
Task Force (EITF) Issue 03-1, "The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments" (EITF 03-1). IDS
Life complied with the disclosure provisions of this rule in Note 2 to
the Consolidated Financial Statements included in its Annual Report on
Form 10-K for the years ended December 31, 2004 and 2003. In March
2004, the FASB reached a consensus regarding the application of a
three-step impairment model to determine whether investments accounted
for in accordance with SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS No. 115), and other
cost method investments are other-than-temporarily impaired. However,
with the issuance of FASB Staff Position (FSP) No. EITF 03-1-1,
"Effective Date of Paragraphs 10-20 of EITF 03-1," on September 30,
2004, the provisions of the consensus relating to the measurement and
recognition of other-than-temporary impairments will be deferred
pending further clarification from the FASB. The remaining provisions
of this rule, which primarily relate to disclosure requirements, are
required to be applied prospectively to all current and future
investments accounted for in accordance with SFAS No. 115 and other
cost method investments. IDS Life will evaluate the potential impact of
EITF 03-1 after the FASB completes its reassessment.
7
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2.(UNAUDITED) (CONTINUED)
4. INVESTMENT SECURITIES
Gross realized gains and losses on sales of Available-for-Sale
securities and other-than-temporary impairment losses on
Available-for-Sale securities included in net realized gains and losses
recognized for
other-than-temporary impairments of securities classified as
Available-for-Sale, using the specific identification method, were as follows for the three and six months ended June 30:follows:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------THREE MONTHS ENDED
MARCH 31,
------------------------------------
2006 2005
2004 2005 2004
-------- ------- -------- -------
(Thousands)
---------------- -------------
(IN THOUSANDS)
Gross realized gains on salesfrom sales......................... $ 63,52910,537 $ 10,543 $ 72,363 $ 23,7698,834
Gross realized (losses) on sales $(24,153) $ (2,663) $(32,247) $ (6,389)
Realized (losses) recognized for
other-than-temporary impairments $losses from sales........................ (5,172) (8,094)
Other-than-temporary impairments........................ - $ - $ (636) $ (130)
3.5. INCOME TAXES
IDS Life is required to establish a valuation allowance for any portion
of the deferred tax assets that management believes will not be
realized. Included in IDS Life's deferred tax assets is a significant
deferred tax asset relating to capital losses realized for tax return
purposes and capital losses that have been recognized for financial
statement purposes but not yet for tax return purposes. Under current
U.S. federal income tax law, capital losses generally must be used
against capital gain income within five years of the year in which the
capital losses are recognized for tax purposes. IDS Life's deferred tax
assets include $231 million in capital loss carryforwards that expire
December 31, 2009. Based on analysis of IDS Life's tax position,
management believes it is more likely than not that the results of
future operations and implementation of tax planning strategies will
generate sufficient taxable income to enable IDS Life to utilize all of
its deferred tax assets. Accordingly, no valuation allowance for
deferred tax assets was established as of March 31, 2006 and December
31, 2005.
6. COMMITMENTS AND CONTINGENCIES
At June 30, 2005March 31, 2006 and December 31, 2004,2005, IDS Life had commitments to
fund mortgage loans on real estate of $217$94.6 million and $92.5$106.8 million,
respectively.
The Securities and Exchange Commission (SEC),SEC, the National Association of Securities Dealers (NASD) and several
state attorneys generalauthorities have brought proceedings challenging several mutual
fund and variable accountproduct financial practices, generally including
suitability, late trading, market timing, compensation and disclosure
of revenue sharing arrangements and
inappropriate sales of B shares.arrangements. IDS Life and its subsidiaries havehas received requests for
information and havehas been contacted by regulatory authorities concerning
its practices and is cooperating fully with these inquiries.
IDS Life and its subsidiaries areis involved in a number of other legal
and arbitration proceedings concerning matters arising in
connection with the conduct of their respectiveits business activities. IDS Life
believes it has meritorious defenses to each of these actions and
intends to defend them vigorously. IDS Life
believes that it is not a party to, nor are any of its properties the
subject of, any pending legal, arbitration or arbitrationregulatory proceedings
that would have a material adverse effect on IDS Life'sits consolidated financial
condition, results of operations or liquidity. However, it is possible
that the outcome of any such proceedings could have a material adverse
impact on results of operations in any particular reporting period as
the proceedings are resolved.
The IRS routinely examines7
IDS Life's federal income tax returnsLIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
7. REGULATORY REQUIREMENTS
IDS Life Insurance Company and is
currently conducting an auditits wholly-owned life insurance
subsidiaries are subject to regulatory capital requirements. Actual
capital, determined on a statutory basis, and regulatory capital
requirements, based on the most recent statutory risk-based capital
filings for each of the 1997 through 2002 tax years.
Management does not believe there will be a material adverse effect on
IDS Life's consolidated financial positionlife insurance entities are as a resultfollows:
REGULATORY CAPITAL
ACTUAL CAPITAL AS OF(a) REQUIREMENT
---------------------------------------- -----------------
MARCH 31, DECEMBER 31, DECEMBER 31,
2006 2005 2005
------------------- ----------------- -----------------
(IN THOUSANDS)
IDS Life Insurance Company.......................... $ 3,376,810 $ 3,270,285 $ 750,975
American Enterprise Life Insurance Company.......... 585,731 583,303 125,285
IDS Life Insurance Company of New York.............. 254,712 246,001 39,880
American Partners Life Insurance Company............ 70,053 67,884 10,906
American Centurion Life Assurance Company........... 64,058 61,748 12,654
--------------
(a) Actual capital, as defined by the National Association of
these audits.Insurance Commissioners for purposes of meeting regulatory capital
requirements, includes statutory capital and surplus, plus certain
statutory valuation reserves.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONSThe following Management's Discussion and Analysis ("MD&A") should be
read in conjunction with IDS Life Insurance Company's Consolidated
Financial Statements and related notes presented in Item 1. IDS Life
Insurance Company and its seven subsidiaries are referred to
collectively in this Form 10-Q as "IDS Life". This discussion may
contain forward-looking statements that reflect IDS Life's plans,
estimates and beliefs. Actual results could differ materially from
those discussed in these forward-looking statements. Factors that could
cause or contribute to these differences include, but are not limited
to, those discussed under "Forward-Looking Statements." IDS Life
believes it is useful to read its MD&A in conjunction with its Annual
Report on Form 10-K for the year ended December 31, 2005, filed with
the Securities and Exchange Commission ("SEC") on March 10, 2006, as
well as its current reports on Form 8-K and other publicly available
information.
IDS Life follows United States generally accepted accounting principles
("GAAP"), and the following discussion is presented on a consolidated
basis consistent with GAAP.
Management's narrative analysis of the results of operations is
presented in lieu of MD&A, pursuant to General Instructions H(2) (a) of
Form 10-Q.
OVERVIEW
IDS Life Insurance Company is a stock life insurance company organized
under the lawswith four
wholly-owned operating subsidiaries: IDS Life Insurance Company of the State of Minnesota.New
York, American Partners Life Insurance Company, American Enterprise
Life Insurance Company and American Centurion Life Assurance Company.
IDS Life Insurance Company is a wholly ownedwholly-owned subsidiary of Ameriprise
Financial, Inc. (Ameriprise
Financial)("Ameriprise Financial").
Prior to August 1, 2005, Ameriprise Financial was known as
American Express Financial Corporation (AEFC). Ameriprise Financial is
a wholly owned subsidiary of American Express Company (American
Express).
Ameriprise Financial changed its name on August 1, 2005 as a
consequence of the plans announced by American Express on February 1,
2005, to pursue a spin off of the businesses now being operated under
the Ameriprise Financial name. The separation from American Express is
expected to be completed on or after September 30, 2005, subject to
certain regulatory and other approvals, including final approval by the
board of directors of American Express. After the expected separation
from American Express, Ameriprise Financial and its subsidiaries will
no longer be affiliated with American Express. Ameriprise Financial and
American Express will be independent companies, with separate public
ownership, boards of directors and management.o IDS Life Insurance Company serves residentsis domiciled in Minnesota and holds
Certificates of Authority in American Samoa, the District of
Columbia and all states except New York. IDS Life Insurance Company
distributes
its fixed and variableissues insurance and annuity products almost
exclusively through the Ameriprise Financial Services, Inc. (formerly
known as American Express Financial Advisors Inc. (AEFAI)) retail sales
force. IDS Life Insurance Company has four wholly owned life insurance
company subsidiaries: IDS Life Insurance Company of New York, a New
York stock life insurance company (IDS Life of New York); American
Partners Life Insurance Company, an Arizona stock life insurance
company (American Partners Life);products.
o American Enterprise Life Insurance Company an Indiana("American Enterprise
Life") is a stock life insurance company (American Enterprise
Life);domiciled in Indiana,
which holds Certificates of Authority in the District of Columbia
and American Centurion Life Assurance Company, aall states except New York stock
life insurance company (American Centurion Life). IDS Life of New York
serves New York State residents and distributes its fixed and variable
insurance and annuity products exclusively through the Ameriprise
Financial Services, Inc. retail sales force.York. American Enterprise Life provides clients of financial institutions and regional and/or
independent broker-dealers with financial products and wholesaling
services to support its retail insurance and annuity operations.
American Enterprise Life underwritesissues
fixed and variable annuity contracts primarily through regional and
national financial institutions and regional and/or independent
broker-dealers,broker-dealers. (In past years, American Enterprise Life issued a
nominal number of variable universal life contracts.)
o American Partners Life Insurance Company ("American Partners Life")
is a stock life insurance company domiciled in Arizona, which holds
Certificates of Authority in the District of Columbia and all
states except New York.York and New Hampshire. American Partners Life
markets annuity products directly to customers, generally persons
holding an American Express(R) Card.
o IDS Life Insurance Company of New York ("IDS Life of New York") is
a stock life insurance company domiciled in New York, which holds
Certificates of Authority in New York and North Dakota. IDS Life of
New York issues insurance and annuity products.
o American Centurion Life offersAssurance Company ("American Centurion
Life") is a stock life insurance company domiciled in New York,
which holds Certificates of Authority in New York, Alabama and
Delaware. American Centurion Life issues fixed and variable annuity
contracts primarily through financial institutions and independent
broker-dealers. American Centurion Life also markets annuity
products directly, generally to persons holding an American
Express(R) Cardmembers
and others in New York, as well as fixed and variable annuity contracts
for sale through non-affiliated representatives and agents of third
party distributors, in New York. American Partners Life offers fixed
and variable annuity contracts directly to American Express(R)
Cardmembers and others who reside in states other than New York.Card.
IDS Life Insurance Company also owns IDS REO 1, LLC, and IDS REO 2, LLC and
American Enterprise REO 1, LLC which hold real estate investments.
IDS Life Insurance Company and its
six subsidiaries are9
Prior to August 1, 2005, Ameriprise Financial was referred to collectively as
"IDS Life"American Express Financial Corporation. On February 1, 2005 American
Express Company ("American Express") announced its intention to pursue
the disposition of 100% of its shareholdings in this
Form 10-Q.what is now Ameriprise
Financial ("the Separation") through a tax-free distribution to
American Express shareholders. Effective as of the close of business on
September 30, 2005, American Express completed the Separation and
distribution of common shares to American Express shareholders ("the
Distribution"). In connection with the separation,Distribution, Ameriprise
Financial entered into certain agreements with American Express has indicated that
it will provide additional capital to
Ameriprise Financialeffect the separation of approximately $1 billion. This capital contribution is intended to
provide adequate support for Ameriprise Financial's senior debt rating
on the distribution date, to allow Ameriprise Financial to have
efficient access to the capital markets,its business and to supportdefine the current
financial strength ratingsresponsibility
for obligations arising before and after the date of Ameriprise Financial's insurance
subsidiaries.
9
the Distribution,
including, among others, obligations relating to transition services,
taxes, and employees. IDS Life will bewas allocated certain separation and distribution-related expenses incurred
as a result of Ameriprise Financial becoming an independent company.
Cumulatively, the expenses allocated to IDS Life are expected to be significant to IDS
Life. The majority of such costs are expected to be incurred by
December 31, 2006. IDS Life received a capital contribution of $650
million from Ameriprise Financial will
provide additional capital to IDS Lifeduring the third quarter of 2005 to
support its current financial strength ratings.
IDS Life follows United States generally accepted accounting principles
(GAAP),ratings and the following discussion is presented on a consolidated
basis consistent with GAAP.
Certain of the statements below are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
See the Forward-Looking Statements section below.
Management's narrative analysis of the results of operations is
presented in lieu of management's discussion and analysis of financial
condition and results of operations, pursuant to General Instructions
H(1) (a) of Form 10-Q.cover separation costs.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30,MARCH 31, 2006 COMPARED TO MARCH 31, 2005
AND 2004Overview
Net income was $91.5$111.9 million for the three months ended June 30, 2005,March 31, 2006
compared to $123.1$125.5 million for the three months ended June 30, 2004.March 31, 2005.
The decrease in net income primarily reflectsresulted from increases in
separation costs, amortization of deferred acquisition costs ("DAC")
and higherother insurance and operating expenses, as well as a decrease in
net investment income, partially offset by a lower
effective tax rate, as further described below.
The effective tax rate decreased to 27 percent in the three months
ended June 30, 2005 from 36 percent in the three months ended June 30,
2004higher mortality and expense
risk and other fees and contractholder and policyholder charges.
Revenues
Disability income ("DI") and long-term care ("LTC") insurance premiums
increased $3.0 million or 4% reflecting higher dividend exclusions and other tax-advantaged
items. The effective tax rateDI insurance in the three months ended June 30, 2004
included a reduction in net deferred tax assets which increased the
effective rate.
REVENUESforce
levels.
Net investment income decreased $41.7$14.3 million or 9 percent primarily3% reflecting a
declinedecrease in overall investment yieldsthe average yield and a lowerunfavorable mark-to market
adjustments on options hedging guaranteed minimum withdrawal benefit
("GMWB") provisions, partially offset by favorable mark-to-market
adjustments on trading securities, equity method investments in hedge
funds and options hedging equity index annuities ("EIA"). The decrease
also reflects $7.8 million in income in the first quarter of 2005
compared to $0.9 million in income in the first quarter of 2006 related
to the liquidation of structured investments. More
specifically, net investment income for the current quarter includes a
$4.8 million benefit on the liquidation of structured investments
compared to an $18.4 million benefitsecured loan trusts. The impacts from options
hedging EIA and GMWB were primarily offset in the same period a year ago.interest credited to
account values and death and other benefits for investment contracts
and universal life-type insurance line items.
Contractholder and policyholder charges increased $4.6$9.4 million or 3 percent7%
reflecting an increase in the amount of cost of insurance charges on variable
universal life products, as well as a slightan increase in the amount of surrender charges on
variable annuity
products.annuities.
Mortality and expense risk and other fees increased $6.7$31.5 million or
7 percent27% reflecting higher average market values of separate account assets.
10
assets due to
increased inflows and market appreciation.
Net realized gain on investments was $37.6$5.8 million for the three months
ended June 30, 2005March 31, 2006 compared to $8.9$0.2 million for the three months
ended June 30, 2004.March 31, 2005. For the three months ended June 30, 2005, $63.6March 31, 2006, $11.0
million of total investment gains were partially offset by $26.0 million of
losses and impairments. Included in these total net investment gains
and losses were $63.5 million of gross realized gains partially offset
by $24.2 million of gross realized losses from sales of securities,
classified as Available-for-Sale. Included in net realized gain on
investments classified as Available-for-Sale for the three months ended
June 30, 2005 were gross realized gains and losses of $39.2 million and
$14.3 million, respectively, related to the sale of all of IDS Life's
retained interest in a collateralized debt obligation (CDO)
securitization trust, reflecting management's decision to continue to
improve the investment portfolio's risk profile through the liquidation
of certain structured investments.
For the three months ended June 30, 2004, $11.6 million of total
investment gains were partially offset by $2.7$5.2 million
of losses. Included in these total net investment gains and losses were
$10.5 million of gross realized gains and $2.7partially offset by $5.2 million
of gross realized losses from sales of securities, classified as
Available-for-Sale.
BENEFITS AND EXPENSES
Death and other benefits for investment contracts and universal
life-type insurance increased $8 million or 14 percent primarily
related to guaranteed minimum withdrawal benefit (GMWB) riders on
variable annuity contracts.
Amortization of deferred policy acquisition costs (DAC) increased to
$98.2 million forFor the three months ended June 30,March 31, 2005, from $88.2
million for the three months ended June 30, 2004. The increase
primarily reflects higher insurance and annuity DAC balances and the
impact on amortization of improved equity markets for the three months
ended June 30, 2005. These increases were partially offset by a
decrease of $2 million in DAC amortization related to the quarterly
recalculation of benefit ratios which are used to estimate the cost of
certain variable annuity guarantee features.
Separation costs generally consist of financial advisor and employee
retention program costs, information technology costs, re-branding and
marketing costs and certain consulting expenses related to the
separation and distribution of Ameriprise Financial. During the quarter
ended June 30, 2005, IDS Life recorded $25.8 million in allocated
separation costs.
Other insurance and operating expenses increased $28.3 million or 24
percent primarily reflecting a $20 million increase in non-deferrable
distribution costs due to increased sales related costs and other
spending through our distribution channel.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
Income before accounting change was $217 million for the six months
ended June 30, 2005, compared to $269.9 million for the six months
ended June 30, 2004. The decrease in income before accounting change
primarily reflects higher amortization of deferred policy acquisition
costs and separation costs partially offset by a lower effective tax
rate, as further described below.
11
Net income was $217 million for the six months ended June 30, 2005
compared to $199.3 million for the six months ended June 30, 2004. Net
income for the six months ended June 30, 2004 reflects the $70.6
million after-tax ($108.6 million pretax) cumulative effect of
accounting change as a result of IDS Life's adoption of SOP 03-1. See
"Application of Recently Issued Accounting Standards" section of Note 1
to the Consolidated Financial Statements for discussion regarding the
impact of adoption of SOP 03-1.
The effective tax rate decreased to 30 percent in the six months ended
June 30, 2005 from 34 percent in the six months ended June 30, 2004
reflecting higher dividend exclusions and other tax-advantaged items.
The effective tax rate in the six months ended June 30, 2004 included a
reduction in net deferred tax assets which increased the effective
rate.
REVENUES
Disability income and long-term care insurance premiums increased
$5.8 million or 4 percent reflecting higher disability income insurance
inforce levels as well as a $1.6 million (net of reinsurance) increase
in long-term care premiums as a result of rate increases implemented
during the first six months of 2005.
Contractholder and policyholder charges increased $11.4 million or
4 percent reflecting an increase in the amount of cost of insurance
charges on variable universal life products, as well as an increase in
the amount of surrender charges on variable annuity products.
Mortality and expense risk and other fees increased $14.2 million or
7 percent reflecting higher average market values of separate account
assets.
Net realized gain on investments was $37.8 million for the six months
ended June 30, 2005 compared to $17.5 million for the six months ended
June 30, 2004. For the six months ended June 30, 2005, $72.5$8.9 million of total
investment gains were partially offset by $34.7$8.7 million of losses and
impairments. Included in these total net investment gains and losses
were $72.4$8.8 million of gross realized gains partially offset
by $32.2and $8.1 million of gross
realized losses from sales of securities, as well as $0.6 million of
other-than-temporary impairment losses on investments, classified as
Available-for-Sale.
Included10
Benefits and Expenses
Death and other benefits for traditional life insurance decreased $6.7
million or 55% reflecting lower claims volume.
Death and other benefits for investment contracts and universal
life-type insurance increased $4.7 million or 9% reflecting an increase
in net realized
gain on investments classified as Available-for-Sale for the six months
ended June 30, 2005 were gross realized gainsvariable universal life benefits and losses of $39.2
million and $14.3 million, respectively, related to the sale of all of
IDS Life's retained interestincreases in a CDO securitization trust, reflecting
management's decision to continue to improve the investment portfolio's
risk profile through the liquidation of certain structured investments.
For the six months ended June 30, 2004, $26.5 million of total
investment gains wereguaranteed minimum
death benefit ("GMDB") reserves, partially offset by $9.0decreases in GMWB
reserves.
Increase in liabilities for future policy benefits for DI and LTC
insurance increased $12.6 million of lossesor 42% reflecting a $5.1 million
adjustment to the liabilities for incurred but not reported claims and
impairments. Included in these total net investment gains and losses
were $23.7 million of gross realized gains and $6.4 million of gross
realized losses from sales of securities, as well as $0.1 million of
other-than-temporary impairment losses on investments, classified as
Available-for-Sale.
BENEFITS AND EXPENSESunfavorable claims experience relative to the same period a year ago.
Interest credited to account values decreased $9.5by $3.7 million or 2 percent,1%
primarily reflectingdue to lower interest crediting rates on
annuity products and average
accumulation values of annuities, partially offset by the effect of
depreciation duringappreciation on equity indexed annuities linked to the current
periodS&P 500 Index in
the first quarter of 2006 versus appreciationdepreciation in the same period a year
ago in the S&P 500
on equity index annuities, partially offset by higher life insurance
inforce levels and average annuity accumulation values.
12
ago.
Amortization of deferred policy acquisition costs (DAC)DAC increased to $197.3$105.3 million for the sixthree months
ended June 30, 2005March 31, 2006 from $111.8$99.1 million for the sixthree months ended
June 30, 2004March 31, 2005. The increase primarily reflectingreflects an adjustment to the
unearned commission balance. Amortization of DAC associated with
variable annuities was up only slightly in the first quarter 2004 $65.7 million pretax DAC valuation benefit
reflecting an adjustment associatedof 2006
compared to the first quarter of 2005. Increased amortization
consistent with strong growth of the lengtheningvariable annuity business was
mostly offset by the impact of amortization periods for certain insurance and annuity products in
conjunction with the adoption of SOP 03-1, as well as higher insurance
and annuity DAC balances.more favorable equity market conditions.
Separation costs generally consist of financial advisor and employee
retention program costs, information technology costs,allocated re-branding and
marketing costs and certain consulting expensescosts to separate and reestablish technology
platforms related to the separation and distributionDistribution of Ameriprise
Financial. During 2005,the quarter ended March 31, 2006, IDS Life recorded $25.8incurred
$24.6 million in allocated separation costs.
Other insurance and operating expenses increased $40.3$19.3 million or 16 percent14%
primarily reflecting a $26.6 million increase inincreased non-deferrable distribution costs,
due to increased sales relatedcompensation costs and other
spending through our distribution channel.
DEFERRED POLICY ACQUISITION COSTS
DAC represent the costs of acquiring new business, principally direct
sales commissions and other distribution and underwriting costs that
have been deferred on the sale of annuity and life and health insurance
products. These costs are deferred to the extent they are recoverable
from future profits. For insurance and annuity products, DAC are
amortized over periods approximating the lives of the business,
generally as a percentage of premiums or estimated gross profits or as
a portion of product interest margins depending on the product's
characteristics.
Forcorporate overhead expenses.
Income Taxes
IDS Life's insurance and annuity products,effective tax rate was 30% for the projections
underlyingthree months ended March
31, 2006 compared to 32% for the amortization of DAC require the use of certain
assumptions, including interest margins, mortality rates, persistency
rates, maintenance expense levels and customer asset value growth rates
for variable products. Management routinely monitors a wide variety of
trendsthree months ended March 31, 2005. The
decreased effective tax rate primarily reflects higher tax-advantaged
items in the business, including comparisons of actual and assumed
experience. The customer asset value growth rate is the rate at which
contract values are assumed to appreciate in the future. The rate is
net of asset fees and anticipates a blend of equity and fixed income
investments. Management reviews and, where appropriate, adjusts its
assumptions with respect to customer asset value growth rates on a
quarterly basis.
Management monitors other principal DAC assumptions, such as
persistency, mortality rates, interest margin and maintenance expense
level assumptions, each quarter. Unless management identifies a
material deviation over the course of the quarterly monitoring,
management reviews and updates these DAC assumptions annually in the
third quarter of each year. When assumptions are changed, the
percentage of estimated gross profits or portion of interest margins
used to amortize DAC might also change. A change in the required
amortization percentage is applied retrospectively; an increase in
amortization percentage will result in an increase in DAC amortization
expense while a decrease in amortization percentage will result in a
decrease in DAC amortization expense. The impact on results of
operations of changing assumptions with respect to the amortization of
DAC can be either positive or negative in any particular period and is
reflected in the period in which such changes are made.
13
During the first quarter of 2004 and in conjunction with the adoption
of SOP 03-1, IDS Life (1) established additional liabilities for
insurance benefits that may become payable under variable annuity death
benefit guarantees or on single pay universal life contracts, which
prior2006 compared to January 1, 2004, were expensed when payable; and (2) extended
the time periods over which DAC associated with certain insurance and
annuity products are amortized to coincide with the liability funding
periods in order to establish the proper relationships between these
liabilities and DAC associated with the same contracts. Asperiod a result,
IDS Life recognized a $108.6 million pretax charge due to accounting
change on establishing the future liability under death benefit
guarantees and recognized a $65.7 million pretax reduction in DAC
amortization expense to reflect the lengthening of the amortization
periods for certain products impacted by SOP 03-1.
DAC balances for various insurance and annuity products sold by IDS
Life are set forth below:
(Millions) June 30, 2005 December 31, 2004
------------- -----------------
(Unaudited)
Life and health insurance $1,807 $1,766
Annuities 1,942 1,872
------ ------
Total $3,749 $3,638
====== ======
year
ago.
11
LIQUIDITY AND CAPITAL RESOURCES
Risk Management
IDS Life and its subsidiaries through their respective Board of
Directors' investment committees or staff functions, review models
projecting different interest rate scenarios, risk/return measures, and
their effect on profitability. They also review the distribution of
assets in the portfolio by type and credit risk sector. The objective
is to structure the investment security portfolios based upon the type
and behavior of the liabilities underlying the products portfolios to
achieve targeted levels of profitability within defined risk parameters
and to meet contractual obligations.
IDS Life has developed an asset/liability management approach with
separate investment objectives to support specific product liabilities,
such as insurance and annuity. As part of this approach, IDS Life
develops specific investment guidelines outlining the minimum required
investment return and liquidity requirements to support future benefit
payments under its insurance and annuity obligations. These same
objectives must be consistent with management's overall investment
objectives for the general account investment portfolio.
IDS Life's owned investment securities are primarily invested in
long-term and intermediate-term fixed maturity securities to provide
clients with a competitive rate of return on their investments while
controlling risk. Investment in fixed maturity securities is designed
to provide IDS Life with a targeted margin between the yield earned on
investments and the interest rate credited to clients' accounts. IDS
Life does not trade in securities to generate short-term profits for
its own account.
As part of IDS Life's investment process, management, with the
assistance of its investment advisors, conducts a quarterly review of
investment performance. The review process conducted by IDS Life's
Investment Committee involves the review of certain invested assets
which the committee evaluates to determine whether or not any
investments are other than temporarily impaired and/or which specific
interest earning investments should be put on an interest non-accrual
basis.
14
Capital Strategy
The liquidity requirements of IDS Life are generally met by funds
provided by investment income, maturities and periodic repayments of
investments, deposits, premiums investment income,and proceeds from sales of investments,
as well as maturities and periodic repayments of
investments and capital contributions from Ameriprise Financial. 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. IDS
Life routinely reviews its sources and uses of funds in order to meet
its ongoing obligations. Funding StrategyIn connection with the separation, IDS Life
onreceived a consolidated basis, has available linescapital contribution of credit with$650 million from Ameriprise
Financial aggregating $295 million ($195 million committedduring the third quarter of 2005 to support its financial
strength ratings and to cover separation costs. On April 5, 2006, IDS
Life declared an extraordinary dividend of $100 million uncommitted).and has made
the required advance notice to the Minnesota Department of Commerce,
its primary state regulator. IDS Life received a response from the
Minnesota Department of Commerce stating that they do not object to the
payment of this dividend.
At June 30,March 31, 2006 and December 31, 2005, there were no line of
credit borrowings outstanding with Ameriprise Financial and noIDS Life had outstanding
reverse repurchase agreements. Both the line of creditagreements totaling $5.0 million and the$25.0 million,
respectively. The reverse repurchase agreements are used strictly as
short-term sources of funds.
Investment securities include $2.2 billion, $2.3 billion and $2.7
billion of below investment grade securities (excluding net unrealized
appreciation and depreciation) at June 30, 2005, December 31, 2004 and
June 30, 2004, respectively. These investments represent 7 percent, 7
percent and 9 percent of IDS Life's investment portfolio at June 30,
2005, December 31, 2004 and June 30, 2004, respectively.
Separate account assets represent funds held for the exclusive benefit
of variable annuity contractholders and variable life insurance
policyholders. These assets are generally carried at market value, and
separate account liabilities are equal to separate account assets. IDS
Life earns fees from the related accounts.
During the second quarter 2005, IDS Life sold all of its retained
interest in a CDO securitization trust and recognized a net realized
gain of $24.9 million. As of December 31, 2004, the carrying value of
this retained interest was $526.2 million of which $389.9 million was
considered investment grade.
As of June 30, 2005, IDS Life continued to hold investments in
collateralized debt obligations (CDOs), some of which are also managed
by an affiliate, and were not consolidated pursuant to the adoption of
FIN 46 as IDS Life was not considered the primary beneficiary. IDS Life
invested in CDOs as part of its investment strategy in order to offer a
competitive rate to contractholders' accounts. IDS Life's exposure as
an investor is limited solely to its aggregate investment in the CDOs,
and it has no obligations or commitments, contingent or otherwise, that
could require any further funding of such investments. As of June 30,
2005, the carrying values of the CDO residual tranches, managed by an
affiliate, were $3.2 million. CDOs are illiquid investments. As an
investor in the residual tranche of CDOs, IDS Life's return correlates
to the performance of portfolios of high-yield bonds and/or bank loans
comprising the CDOs.
15
The carrying value of the CDO residual tranches, as well as derivatives
recorded on the balance sheet as a result of consolidating the two
secured loan trusts (SLTs), which are in the process of being
liquidated, and IDS Life's projected return are based on discounted
cash flow projections that require a significant degree of management
judgment as to assumptions primarily related to default and recovery
rates of the high-yield bonds and/or bank loans either held directly by
the CDOs or in the reference portfolio of the SLTs and, as such, are
subject to change. Although the exposure associated with IDS Life's
investment in CDOs is limited to the carrying value of such
investments, the CDOs have significant volatility associated with them
because the amount of the initial value of the loans and/or other debt
obligations in the related portfolios is significantly greater than IDS
Life's exposure. In the event of significant deterioration of a
portfolio, the relevant CDO may be subject to early liquidation, which
could result in further deterioration of the investment return or, in
severe cases, loss of the CDO carrying amount. The derivatives recorded
as a result of consolidating and now liquidating certain SLTs under FIN
46 are primarily valued based on the expected gains and losses from
liquidating a reference portfolio of high-yield loans. The overall
exposure to loss related to these derivatives is represented by the
pretax net assets of the SLTs, which is $164.6 million at June 30,
2005. However, because the portfolio has been substantially liquidated,
the net assets within the structure is cash and cash equivalents and,
as a result, the overall market exposure is considered negligible.
IMPACT OF MARKET VOLATILITY ON RESULTS OF OPERATIONS
As discussed above, various aspects of IDS Life's business are impacted
by equity market levels and other market-based events. Several areas in
particular involve DAC and deferred sales inducements, recognition of
guaranteed minimum death benefits (GMDB), guaranteed minimum withdrawal
benefits (GMWB) and certain other variable annuity benefits, asset
management fees and structured investments. The direction and magnitude
of the changes in equity markets can increase or decrease amortization
of DAC and deferred sales inducement benefits, incurred amounts under
GMDB, GMWB and other variable annuity benefit provisions and asset
management fees and correspondingly affect results of operations in any
particular period. Similarly, the value of IDS Life's structured
investment portfolios are impacted by various market factors.
Persistency of, or increases in, bond and loan default rates, among
other factors, could result in negative adjustments to the market
values of these investments in the future, which would adversely impact
results of operations.
OTHER REPORTING MATTERS
Accounting DevelopmentsACCOUNTING DEVELOPMENTS
See "Application of Recently Issued Accounting Standards" section of
Note 12 to the Consolidated Financial Statements.
1612
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
IDS Life 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 and pursuant to the regulations of the
Securities and Exchange Commission, including controls and procedures
designed to ensure that this information is accumulated and
communicated to IDS Life's management, including its Chief 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, IDS Life'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.
IDS Life's management, with the participation of IDS Life'sits Chief Executive
Officer and Chief Financial Officer, has evaluated the effectiveness of
IDS Life's disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this report. Based on suchupon that evaluation, IDS Life's
Chief Executive Officer and Chief Financial Officer have concluded that
as of the end of such period, IDS Life's disclosure controls and procedures are effective. There have not been anywere effective at a
reasonable level of assurance as of March 31, 2006.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
American Express Company ("American Express") has historically provided
a variety of corporate and other support services for Ameriprise
Financial and its subsidiaries, including information technology,
treasury, accounting, financial reporting, tax administration, human
resources, marketing, legal, procurement and other services. American
Express continues to provide Ameriprise Financial and its subsidiaries
with some of these services pursuant to a transition services agreement
for a transition period of up to two years following the Distribution.
For the quarter ended December 31, 2005, IDS Life noted that many of
these services performed by American Express had an impact on its
financial reporting processes, which it considered a material change in
its internal control over financial reporting. Since the quarter ended
December 31, 2005, Ameriprise Financial has increased the staffing of
its accounting and reporting functions and has taken steps to perform
these functions on a basis independent from American Express. IDS Life
considers this reduction in reliance on American Express to perform
accounting and financial reporting related services a material change
in its internal control over financial reporting.
Other than the changes mentioned above, no other changes in IDS Life'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, IDS Life's internal control
over financial reporting.
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements, which are subject to
risks and uncertainties. The words "believe," "expect," "anticipate,"
"optimistic," "intend," "plan," "aim," "will," "may," "should,"
"could," "would," "likely," and similar expressions are intended to
identify 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. IDS Life undertakes no obligation
to update or revise any forward-looking statements. Factors that could
cause actual results to differ materially from these forward-looking
statements include, but are not limited to:to, the following: the success,
timeliness and financial impact (including the amount of intercompany
costs allocated to IDS Life, cost savings and other benefits including
increased revenues), both in the short-term and over time, of
reengineering initiatives being implemented or considered by Ameriprise
Financial that could impact IDS Life, including cost management,
structural and strategic measures such as vendor, process, facilities
and operations consolidation and outsourcing (including, among others,
technologies operations); the ability to control and manage operating
infrastructure, advertising and promotion expenses as business expands
or changes; a downturn in IDS Life's businesses and/or negative changes
in IDS Life's credit or financial strength ratings, which could result
in decreased liquidity, negative impact on marketing and sale of
products, and higher borrowing costs; IDS Life's ability to improve
investment performance, including attracting and retaining high-quality
personnel, and reduce outflows of invested funds; IDS Life's ability to
develop and introduce new and attractive products to clients in a
timely manner and effectively manage the economics in selling a growing
volume of non-proprietary mutual funds and other retail financial
products to clients; fluctuation in the
13
equity and fixed income markets, which can affect the amount and types
of investment products sold by IDS Life, and other fees received based
on the value of those assets; IDS Life's ability to recover Deferred
Policy Acquisition Costs (DAC),DAC, as
well as the timing of such DAC amortization, in connection with the
sale of annuity and insurance products; the level of GMDB or living
benefits paid to clients; changes in assumptions relating to DAC, which
could impact the amount of DAC amortization; theIDS Life's ability to
improveavoid deterioration in its high-yield portfolio in order to mitigate
losses in its investment performanceportfolio; fluctuations in interest rates,
which impact IDS Life's borrowing costs, return on lending products and
spreads in the insurance and annuity products; accuracy of estimates
for the fair value of the assets in IDS Life's businesses, including attractinginvestment portfolio
and, retaining high-quality personnel; the success, timeliness and financial
impact, including costs, cost savings and other benefits including
increased revenues, of reengineering initiatives being implemented or
considered by IDS Life, including cost management, structural and
strategic measures such as vendor, process, facilities and operations
consolidation, outsourcing (including, among others, technologies
operations), relocating certain functions to lower-cost overseas
locations, moving internal and external functions to the Internet to
save costs, and planned staff reductions relating to certain of such
reengineering actions; the ability to control and manage operating,
infrastructure, advertising and promotion and other expenses as
business expands or changes, including balancing the need for
longer-term investment spending;in particular, those investments that are not readily marketable;
the potential negative effect on IDS Life's businesses and
infrastructure, including information technology, of terrorist attacks,
disasters or other catastrophic events in the future; IDS Life's ability to developchanges in laws
or government regulations, including changes in tax laws or regulations
that could result in the elimination of certain tax benefits; outcomes
and roll out newcosts associated with litigation and attractive
products to clients in a timely manner;compliance and regulatory
matters; successfully cross-selling insurance and annuity products and
services to Ameriprise Financial's customer base; fluctuations in interest rates, which impacts IDS Life's
spreads in the insurance and annuity businesses; credit trends and the
rate of bankruptcies which can affect returns on IDS Life's investment
portfolios; lower than
anticipated spreads in the insurance and annuity business; the typestype and
the value of certain death benefit features on variable annuity contracts;
the affect of assessments and other surcharges for guaranty funds; the
response of reinsurance companies under reinsurance contracts; the
impact of the separation of Ameriprise Financial from American Express;
the impact of reinsurance rates and the availability and adequacy of
reinsurance to protect IDS Life against
losses; negative changesreinsurance; and competitive pressures in IDS Life Insurance Company's and its four
life insurance company subsidiaries' credit ratings; increasing
competition in all of IDS Life's insurance and annuity business; the
adoption of recently issued rules related to the consolidation of
variable interest entities, including those involving SLTs that IDS
Life invests in which could affect both IDS Life's financial condition
and results of operations; changes in laws or government regulations;
outcomes associated with litigation and compliance and regulatory
matters.business. A
further description of these and other risks and 17
uncertainties can be
found under "Item 1A - Risk Factors" and elsewhere in IDS Life's Annual
Report on Form 10-K for the year ended December 31, 2004,2005, and its other
reports filed with the Securities and Exchange Commission (SEC).
18
Commission.
PART II -II. OTHER INFORMATION
IDS LIFE INSURANCE COMPANY
Item 1. Legal Proceedings
The Securities and Exchange Commission (SEC), the National
Association of Securities Dealers (NASD) and several state
attorneys general have brought proceedings challenging several
mutual fund and variable account financial practices, generally
including suitability, late trading, market timing, disclosure of
revenue sharing arrangements and inappropriate sales of B shares.
IDS Life and its subsidiaries have received requests for
information andset forth in Note 6 to Consolidated
Financial Statements in Part I, Item 1 is incorporated
herein by reference.
Item 1A. Risk Factors
There have been contacted by regulatory authorities
concerning its practices and is cooperating fully with these
inquiries.no material changes in the risk factors
provided in Part I, Item 1A of IDS Life and its subsidiaries are involved in a number of other
legal and arbitration proceedings concerning matters arising in
connectionLife's Annual Report on
Form 10-K for the year ended December 31, 2005 filed with
the conduct of their respective business
activities. IDS Life believes it has meritorious defenses to each
of these actions and intends to defend them vigorously. IDS Life
believes that it is not a party to, nor are any of its properties
the subject of, any pending legal or arbitration proceedings that
would have a material adverse effect on IDS Life's consolidated
financial condition, results of operations or liquidity. However,
it is possible that the outcome of any such proceedings could have
a material impact on results of operations in any particular
reporting period as the proceedings are resolved.SEC.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on page E-1 hereof.
(b) Reports on Form 8-K.
Form 8-K, filed May 23, 2005, item 5.02, reporting that on May
18, 2005, Arthur H. Berman resigned his position as Executive
Vice President - Finance of the Company. Mr. Berman resigned
to assume the role of Senior Vice President and Treasurer of
American Express Financial Advisors, Inc. (n/k/a Ameriprise
Financial Services, Inc.) and American Express Financial
Corporation (n/k/a Ameriprise Financial, Inc.) and not due to
any disagreements with the Board, auditors or officers of the
Company. In the interim period, Jeryl A. Millner will assume the
role of Executive Vice President - Finance of the company until
the board of the Company can appoint a new Executive Vice
President - Finance. Mr. Berman will continue to serve upon the
board of the Company.
1914
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.
IDS LIFE INSURANCE COMPANY
--------------------------
(Registrant)
Date: August 11, 2005May 9, 2006 By /s/ Mark E. Schwarzmann
-----------------------------------------------------------------------
Mark E. Schwarzmann
Director, Chairman of the Board and
Chief Executive Officer
Date: August 11, 2005May 9, 2006 By /s/ Jeryl A. Millner
------------------------------------
Jeryl A. MillnerBrian J. McGrane
-----------------------------------
Brian J. McGrane
Executive Vice President-FinancePresident and
Chief Financial Officer
2015
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report:
Exhibit DescriptionEXHIBIT DESCRIPTION
- ------- -----------
31.1----------------------------------------------------------------
*31.1 Certification of Mark E. Schwarzmann pursuant to Rule 13a-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended.
31.2*31.2 Certification of Jeryl A. MillnerBrian J. McGrane pursuant to Rule 13a-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended.
32.1*32.1 Certification of Mark E. Schwarzmann and Jeryl A. MillnerBrian J. McGrane
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
* Filed electronically herewith.
E-1