Riversource Life Insurance 10-Q 2022 Q3 Quarterly report

0000727892us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMembersrt:ConsolidatedEntityExcludingVariableInterestEntitiesVIEMember2021-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM	10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		September 30, 2022
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 No. 033-28976

RIVERSOURCE LIFE INSURANCE COMPANY

(Exact name of registrant as specified in its charter)

Minnesota	41-0823832
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1099 Ameriprise Financial Center	Minneapolis	Minnesota	55474
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (612) 671-3131

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:
	Title of each class	Trading Symbol	Name of each exchange on which registered
	Common Stock (par value $30 per share)	None	None

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐ No ☒

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 November 2, 2022
	Common Stock (par value $30 per share)	100,000 shares
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

RIVERSOURCE LIFE INSURANCE COMPANY

FORM 10-Q

INDEX

Part I. Financial Information
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets — September 30, 2022 and December 31, 2021		3
	Consolidated Statements of Income — Three and nine months ended September 30, 2022 and 2021		4
	Consolidated Statements of Comprehensive Income — Three and nine months ended September 30, 2022 and 2021		4
	Consolidated Statements of Shareholder’s Equity — Three and nine months ended September 30, 2022 and 2021		5
	Consolidated Statements of Cash Flows — Nine months ended September 30, 2022 and 2021		6
	Notes to Consolidated Financial Statements		8
	1.	Basis of Presentation	8
	2.	Recent Accounting Pronouncements	8
	3.	Revenue from Contracts with Customers	9
	4.	Variable Interest Entities	10
	5.	Investments	15
	6.	Financing Receivables	19
	7.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	21
	8.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	22
	9.	Variable Annuity and Insurance Guarantees	23
	10.	Debt	24
	11.	Fair Values of Assets and Liabilities	25
	12.	Offsetting Assets and Liabilities	36
	13.	Derivatives and Hedging Activities	37
	14.	Shareholders’ Equity	41
	15.	Income Taxes	42
	16.	Contingencies	43
Item 2.  Management’s Narrative Analysis			45
Item 4.  Controls and Procedures			54
Part II.  Other Information			54
Item 1.  Legal Proceedings			54
Item 1A.  Risk Factors			54
Item 6.  Exhibits			55
Signatures			56

2

RIVERSOURCE LIFE INSURANCE COMPANY

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30, 2022		December 31, 2021
	(in millions, except share amounts)
Assets
Investments:
Available-for-Sale: Fixed maturities, at fair value (amortized cost: 2022, $16,809; 2021, $14,718) (allowance for credit losses: 2022, $22; 2021, $1)	$	15,389	$	16,239
Mortgage loans, at amortized cost (allowance for credit losses: 2022, $11; 2021, $12)	1,804		1,788
Policy loans	838		834
Other investments (allowance for credit losses: 2022, nil; 2021, nil)	224		230
Total investments	18,255		19,091
Investments of consolidated investment entities, at fair value	2,378		2,184
Cash and cash equivalents	2,559		3,200
Cash of consolidated investment entities	174		121
Reinsurance recoverables (allowance for credit losses: 2022, $18; 2021, $11)	4,422		4,529
Receivables	7,794		8,148
Receivables of consolidated investment entities, at fair value	38		17
Accrued investment income	145		124
Deferred acquisition costs	2,980		2,757
Other assets	5,047		7,084
Other assets of consolidated investment entities, at fair value	2		3
Separate account assets	68,177		92,238
Total assets	$	111,971	$	139,496
Liabilities and Shareholder’s Equity
Liabilities:
Policyholder account balances, future policy benefits and claims	$	35,475	$	35,744
Short-term borrowings	201		200
Debt of consolidated investment entities, at fair value	2,401		2,164
Long-term debt	500		500
Other liabilities	4,470		6,628
Other liabilities of consolidated investment entities, at fair value	161		137
Separate account liabilities	68,177		92,238
Total liabilities	111,385		137,611
Shareholder’s equity:
Common stock, $30 par value; 100,000 shares authorized, issued and outstanding	3		3
Additional paid-in capital	2,466		2,466
Accumulated deficit	(817)		(912)
Accumulated other comprehensive income (loss), net of tax	(1,066)		328
Total shareholder’s equity	586		1,885
Total liabilities and shareholder’s equity	$	111,971	$	139,496

See Notes to Consolidated Financial Statements.

3

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Revenues
Premiums	$	76	$	(1,098)	$	223	$	(945)
Net investment income	224		193		568		664
Policy and contract charges	522		590		1,626		1,715
Other revenues	155		177		492		436
Net realized investment gains (losses)	(92)		533		(90)		589
Total revenues	885		395		2,819		2,459
Benefits and expenses
Benefits, claims, losses and settlement expenses	368		(719)		660		337
Interest credited to fixed accounts	157		172		443		455
Amortization of deferred acquisition costs	104		6		343		69
Interest and debt expense	29		43		71		84
Other insurance and operating expenses	175		179		509		553
Total benefits and expenses	833		(319)		2,026		1,498
Pretax income (loss)	52		714		793		961
Income tax provision (benefit)	1		111		98		121
Net income (loss)	$	51	$	603	$	695	$	840

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Net income (loss)	$	51	$	603	$	695	$	840
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities	(424)		(321)		(1,394)		(519)
Total other comprehensive income (loss), net of tax	(424)		(321)		(1,394)		(519)
Total comprehensive income (loss)	$	(373)	$	282	$	(699)	$	321

See Notes to Consolidated Financial Statements.

4

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)

	Common Shares		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other  Comprehensive Income (Loss)		Total
	(in millions)
Balances at July 1, 2022	$	3	$	2,466	$	(768)	$	(642)	$	1,059
Net income (loss)	—		—		51		—		51
Other comprehensive income (loss), net of tax	—		—		—		(424)		(424)
Cash dividends to Ameriprise Financial, Inc.	—		—		(100)		—		(100)
Balances at September 30, 2022	$	3	$	2,466	$	(817)	$	(1,066)	$	586
Balances at July 1, 2021	$	3	$	2,466	$	(589)	$	722	$	2,602
Net income (loss)	—		—		603		—		603
Other comprehensive income (loss), net of tax	—		—		—		(321)		(321)
Cash dividends to Ameriprise Financial, Inc.	—		—		(925)		—		(925)
Balances at September 30, 2021	$	3	$	2,466	$	(911)	$	401	$	1,959
Balances at January 1, 2022	$	3	$	2,466	$	(912)	$	328	$	1,885
Net income (loss)	—		—		695		—		695
Other comprehensive income (loss), net of tax	—		—		—		(1,394)		(1,394)
Cash dividends to Ameriprise Financial, Inc.	—		—		(600)		—		(600)
Balances at September 30, 2022	$	3	$	2,466	$	(817)	$	(1,066)	$	586
Balances at January 1, 2021	$	3	$	2,466	$	(76)	$	920	$	3,313
Net income (loss)	—		—		840		—		840
Other comprehensive income (loss), net of tax	—		—		—		(519)		(519)
Cash dividends to Ameriprise Financial, Inc.	—		—		(1,675)		—		(1,675)
Balances at September 30, 2021	$	3	$	2,466	$	(911)	$	401	$	1,959

See Notes to Consolidated Financial Statements.

5

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Cash Flows from Operating Activities
Net income	$	695	$	840
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net	(147)		(50)
Deferred income tax (benefit) expense	122		(43)
Contractholder and policyholder charges, non-cash	(295)		(292)
Loss from equity method investments	37		56
Net realized investment (gains) losses	(4)		(602)
Impairments and provision for loan losses	87		1
Net losses (gains) of consolidated investment entities	5		(17)
Changes in operating assets and liabilities:
Deferred acquisition costs	197		(127)
Policyholder account balances, future policy benefits and claims, net	1,049		1,465
Derivatives, net of collateral	446		(316)
Reinsurance recoverables	77		20
Receivables	213		6
Accrued investment income	(21)		16
Current income tax, net	(77)		(401)
Payable for investment securities purchase	—		20
Other operating assets and liabilities of consolidated investment entities	1		15
Other, net	21		77
Net cash provided by (used in) operating activities	2,406		668
Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	741		555
Maturities, sinking fund payments and calls	1,349		2,396
Purchases	(4,235)		(2,680)
Proceeds from sales, maturities and repayments of mortgage loans	93		218
Funding of mortgage loans	(109)		(152)
Proceeds from sales and collections of other investments	15		88
Purchase of other investments	(44)		(31)
Purchase of investments by consolidated investment entities	(763)		(1,461)
Proceeds from sales, maturities and repayments of investments by consolidated investment entities	466		850
Purchase of equipment and software	(10)		(9)
Change in policy loans, net	(4)		10
Cash paid for deposit receivable	(34)		(216)
Cash received for deposit receivable	393		132
Advance on line of credit to Ameriprise Financial, Inc.	(1,034)		(1)
Repayment from Ameriprise Financial, Inc. on line of credit	1,034		1
Cash received from written options with deferred premiums	141		60
Cash paid for written options with deferred premiums	(411)		(314)
Other, net	(42)		(19)
Net cash provided by (used in) investing activities	$	(2,454)	$	(573)
See Notes to Consolidated Financial Statements.

6

RIVERSOURCE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
	Nine Months Ended September 30,
	2022		2021
	(in millions)
Cash Flows from Financing Activities
Policyholder account balances:
Deposits and other additions	$	766	$	1,131
Net transfers from (to) separate accounts	(128)		(206)
Surrenders and other benefits	(989)		(1,002)
Proceeds from line of credit with Ameriprise Financial, Inc.	—		5
Payments on line of credit with Ameriprise Financial, Inc.	—		(5)
Cash received for purchased options with deferred premiums	230		580
Cash paid for purchased options with deferred premiums	(159)		(94)
Borrowings by consolidated investment entities	341		1,375
Repayments of debt by consolidated investment entities	(1)		(757)
Cash dividends to Ameriprise Financial, Inc.	(600)		(1,675)
Net cash provided by (used in) financing activities	(540)		(648)
Net increase (decrease) in cash and cash equivalents	(588)		(553)
Cash and cash equivalents at beginning of period	3,321		3,285
Cash and cash equivalents at end of period	$	2,733	$	2,732
Supplemental Disclosures:
Income taxes paid (received), net	$	56	$	567
Interest paid excluding consolidated investment entities	1		—
Interest paid by consolidated investment entities	49		73
Non-cash investing activity:
Exchange of an investment that resulted in a realized gain and an increase to amortized cost	—		17
Investments transferred in connection with reinsurance transaction	—		7,527
See Notes to Consolidated Financial Statements.

7

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

RiverSource Life Insurance Company is a stock life insurance company with one wholly owned stock life insurance company subsidiary, RiverSource Life Insurance Co. of New York (“RiverSource Life of NY”). RiverSource Life Insurance Company is a wholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial”).

•RiverSource Life Insurance Company is domiciled in Minnesota and holds Certificates of Authority in American Samoa, the District of Columbia and all states except New York. RiverSource Life Insurance Company issues insurance and annuity products.

•RiverSource Life of NY is domiciled and holds a Certificate of Authority in New York. RiverSource Life of NY issues insurance and annuity products.

RiverSource Life Insurance Company also wholly owns RiverSource Tax Advantaged Investments, Inc. (“RTA”) and Columbia Cent CLO Advisors, LLC (“Columbia Cent”). RTA is a stock company domiciled in Delaware and is a limited partner in affordable housing partnership investments. Columbia Cent provides asset management services to collateralized loan obligations (“CLOs”).

The accompanying Consolidated Financial Statements include the accounts of RiverSource Life Insurance Company and companies in which it directly or indirectly has a controlling financial interest and variable interest entities (“VIEs”) in which it is the primary beneficiary (collectively, the “Company”). All intercompany transactions and balances have been eliminated in consolidation.

The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for fair statement of the consolidated financial position and results of operations for the interim periods have been made. All adjustments made were of a normal recurring nature.

In the second quarter of 2022, the Company recorded an out-of-period correction of $256 million, net of tax, in other comprehensive income (“OCI”) resulting in an increase to total equity and total comprehensive income, correcting the shadow unearned revenue liability balance associated with universal life insurance products.

The impact of this out-of-period adjustment was not material to any previously reported quarterly or annual financial statements and is not expected to be material to the 2022 annual financial statements.

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022 (“2021 10-K”).

The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. No subsequent events or transactions requiring recognition or disclosure were identified.

2. Recent Accounting Pronouncements

Future Adoption of New Accounting Standards

Financial Instruments – Credit Losses – Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the Financial Accounting Standards Board (“FASB”) proposed amendments to Accounting Standard Update No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”). The update removes the recognition and measurement guidance for Troubled Debt Restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, and modifies the disclosure requirements for certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty. Rather than applying the recognition and measurement for TDRs, an entity must apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. The update also requires entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The amendments are to be applied prospectively, but entities may apply a modified retrospective transition for changes to the recognition and measurement of TDRs. For entities that have adopted Topic 326, the amendments are effective for interim and annual periods beginning after December 15, 2022. Early adoption is permitted for entities that have adopted Topic 326, including adoption in an interim period. The adoption of the standard is not expected to have a material impact on the Company’s consolidated financial condition and results of operations.

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

In August 2018, the FASB updated the accounting standard related to long-duration insurance contracts. The guidance revises elements of the measurement models and disclosure requirements for long-duration insurance contracts issued by insurers. Adoption of the accounting standard will not impact overall cash flows, insurance subsidiaries’ dividend capacity, or regulatory capital requirements.

8

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

When the Company adopts the standard as of January 1, 2021 (the “transition date”), opening equity will be adjusted for the adoption impacts to retained earnings and accumulated other comprehensive income (loss) (“AOCI”) and prior periods presented (i.e. 2021 and 2022) will be restated. The Company has updated its estimated adoption impact as of January 1, 2021 to be a reduction in total equity of $1.8 billion to $2.1 billion, of which a significant portion will be reflected in AOCI. However, as of September 30, 2022, the impact on total equity is estimated to be an increase of $400 million to $600 million as a result of changes in the equity, credit, and rate environment subsequent to the transition date.

The Company utilizes a governance framework to guide its adoption process and is managing a detailed implementation plan to support the timely application of the standard in the first quarter of 2023. The Company continues to refine its technology solutions and internal controls environment. These activities include, but are not limited to, modifications of actuarial valuation models, and accounting and financial reporting processes and systems. The estimated adoption impact at transition date and the impact to periods subsequent to transition date is subject to change as the Company completes its adoption process.

3. Revenue from Contracts with Customers

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Policy and contract charges
Affiliated	$	40	$	50	$	126	$	144
Unaffiliated	3		4		11		12
Total	43		54		137		156
Other revenues
Administrative fees
Affiliated	10		13		32		37
Unaffiliated	5		5		14		15
	15		18		46		52
Other fees
Affiliated	80		99		258		291
Unaffiliated	1		1		3		4
	81		100		261		295
Total	96		118		307		347
Total revenue from contracts with customers	139		172		444		503
Revenue from other sources (1)	746		223		2,375		1,956
Total revenues	$	885	$	395	$	2,819	$	2,459

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

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

Policy and contract charges

The Company earns revenue for providing distribution-related services to affiliated and unaffiliated mutual funds that are available as underlying investments in its variable annuity and variable life insurance products. The performance obligation is satisfied at the time the mutual fund is distributed. Revenue is recognized over the time the mutual fund is held in the variable product and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund. The revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control, including market volatility and how long the fund(s) remain in the insurance policy or annuity contract. The revenue will not be recognized until it is probable that a significant reversal will not occur. These fees are accrued and collected on a monthly basis.

Other revenues

Administrative fees

The Company earns revenue for providing customer support, contract servicing and administrative services for affiliated and unaffiliated mutual funds that are available as underlying instruments in its variable annuity and variable life insurance products. The transfer agent and administration revenue is earned daily based on a fixed rate applied, as a percentage, to assets under management.

9

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. These fees are accrued and collected on a monthly basis.

Other fees

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

Receivables

Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company has an unconditional right to the revenue. Receivables related to revenues from contracts with customers were $49 million and $62 million as of September 30, 2022 and December 31, 2021, respectively.

4. Variable Interest Entities

The Company provides asset management services to collateralized loan obligations (“CLOs”) which are considered to be VIEs that are sponsored by the Company. In addition, the Company invests in structured investments other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates the CLOs if the Company is deemed to be the primary beneficiary. The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment and existing future funding commitments, and the Company has not provided any support to these entities. The Company has unfunded commitments related to consolidated CLOs of $28 million and $27 million as of September 30, 2022 and December 31, 2021, respectively.

CLOs

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

The Company’s maximum exposure to loss with respect to non-consolidated CLOs is limited to its amortized cost, which was $1 million as of both September 30, 2022 and December 31, 2021. The Company classifies these investments as Available-for-Sale securities. See Note 5 for additional information on these investments.

Affordable Housing Partnerships and Other Real Estate Partnerships

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

A majority of the limited partnerships are VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in Other investments and was $105 million and $138 million as of September 30, 2022 and December 31, 2021, respectively. The Company has a liability of $7 million and $8 million as of September 30, 2022 and December 31, 2021, respectively, related to original purchase commitments not yet remitted to the VIEs. The Company has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the funding commitments.

Structured Investments

The Company invests in structured investments which are considered VIEs for which it is not the sponsor. These structured investments typically invest in fixed income instruments and are managed by third parties and include asset backed securities, and commercial and residential mortgage backed securities. The Company classifies these investments as Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to the size of the Company’s investment in

10

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

the entities and position in the capital structure of these entities. The Company’s maximum exposure to loss as a result of its investment in these structured investments is limited to its amortized cost. See Note 5 for additional information on these structured investments.

Fair Value of Assets and Liabilities

The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 11 for the definition of the three levels of the fair value hierarchy.

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

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	28	$	—	$	28
Common stocks	—		3		—		3
Syndicated loans	—		2,182		165		2,347
Total investments	—		2,213		165		2,378
Receivables	—		38		—		38
Other assets	—		2		—		2
Total assets at fair value	$	—	$	2,253	$	165	$	2,418
Liabilities
Debt (1)	$	—	$	2,401	$	—	$	2,401
Other liabilities	—		161		—		161
Total liabilities at fair value	$	—	$	2,562	$	—	$	2,562

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Common stocks	$	—	$	3	$	—	$	3
Syndicated loans	—		2,117		64		2,181
Total investments	—		2,120		64		2,184
Receivables	—		17		—		17
Other assets	—		—		3		3
Total assets at fair value	$	—	$	2,137	$	67	$	2,204
Liabilities
Debt (1)	$	—	$	2,164	$	—	$	2,164
Other liabilities	—		137		—		137
Total liabilities at fair value	$	—	$	2,301	$	—	$	2,301

(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $2.4 billion and $2.2 billion as of September 30, 2022 and December 31, 2021, respectively.    

11

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	Common Stocks		Syndicated Loans
	(in millions)
Balance at July 1, 2022	$	2	$	95
Total gains (losses) included in:
Net income	—		(4)		(1)
Purchases	—		42
Sales	—		(3)
Settlements	—		(1)
Transfers into Level 3	—		61
Transfers out of Level 3	(2)		(25)
Balance at September 30, 2022	$	—	$	165
Changes in unrealized gains (losses) included in net income relating to assets held at September 30, 2022	$	—	$	(5)	(1)

	Syndicated Loans
	(in millions)
Balance at July 1, 2021	$	112
Purchases	7
Sales	(4)
Settlements	(10)
Transfers into Level 3	5
Transfers out of Level 3	(47)
Deconsolidation of consolidated investment entities	(18)
Balance at September 30, 2021	$	45
Changes in unrealized gains (losses) included in net income relating to assets held at September 30, 2021	$	—	(1)

	Common Stocks		Syndicated Loans			Other Assets
	(in millions)
Balance at January 1, 2022	$	—	$	64		$	3
Total gains (losses) included in:
Net income	—		(7)		(1)	—
Purchases	—		64			—
Sales	—		(4)			—
Settlements	—		(8)			—
Transfers into Level 3	2		173			—
Transfers out of Level 3	(2)		(117)			(3)
Balance at September 30, 2022	$	—	$	165		$	—
Changes in unrealized gains (losses) included in net income relating to assets held at September 30, 2022	$	—	$	(5)	(1)	$	—

12

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	Syndicated Loans			Other Assets
	(in millions)
Balance at January 1, 2021	$	92		$	2
Total gains (losses) included in:
Net income	2		(1)	—
Purchases	88			—
Sales	(38)			—
Settlements	(49)			—
Transfers into Level 3	90			—
Transfers out of Level 3	(122)			(2)
Deconsolidation of consolidated investment entities	(18)			—
Balance at September 30, 2021	$	45		$	—
Changes in unrealized gains (losses) included in net income relating to assets held at September 30, 2021	$	—	(1)	$	—

(1) Included in Net investment income.

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

All Level 3 measurements as of September 30, 2022 and December 31, 2021 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Determination of Fair Value

Assets

Investments

The fair value of syndicated loans obtained from third-party pricing services using a market approach with observable inputs is classified as Level 2. The fair value of syndicated loans obtained from third-party pricing services with a single non-binding broker quote as the underlying valuation source is classified as Level 3. The underlying inputs used in non-binding broker quotes are not readily available to the Company. See Note 11 for a description of the Company’s determination of the fair value of corporate debt securities, common stocks and other investments.

Receivables

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

Liabilities

Debt

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

Other Liabilities

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

Fair Value Option

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

13

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	September 30, 2022		December 31, 2021
	(in millions)
Syndicated loans
Unpaid principal balance	$	2,513	$	2,233
Excess unpaid principal over fair value	(166)		(52)
Fair value	$	2,347	$	2,181
Fair value of loans more than 90 days past due	$	—	$	—
Fair value of loans in nonaccrual status	17		13
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	22		10
Debt
Unpaid principal balance	$	2,638	$	2,296
Excess unpaid principal over fair value	(237)		(132)
Carrying value (1)	$	2,401	$	2,164

(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $2.4 billion and $2.2 billion as of September 30, 2022 and December 31, 2021, respectively.

During the third quarter of 2022, the Company launched one new CLO and issued debt of $352 million.

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

Total net gains (losses) recognized in Net investment income related to the changes in fair value of investments the Company owns in the consolidated CLOs where it has elected the fair value option and collateralized financing entity accounting were immaterial for both the three and nine months ended September 30, 2022 and 2021.

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

	Carrying Value				Weighted Average Interest Rate
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(in millions)
Debt of consolidated CLOs due 2028-2034	$	2,401	$	2,164	4.1	%	1.7	%

The debt of the consolidated CLOs has both fixed and floating interest rates, which range from nil to 12.0%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and contractual interest rates.

14

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. Investments

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

Description of Securities	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities:
Corporate debt securities	$	9,093	$	125	$	(958)	$	(20)	$	8,240
Residential mortgage backed securities	2,944		—		(319)		—		2,625
Commercial mortgage backed securities	3,056		—		(258)		—		2,798
State and municipal obligations	768		57		(26)		(2)		797
Asset backed securities	908		11		(27)		—		892
Foreign government bonds and obligations	39		—		(3)		—		36
U.S. government and agency obligations	1		—		—		—		1
Total	$	16,809	$	193	$	(1,591)	$	(22)	$	15,389

Description of Securities	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities:
Corporate debt securities	$	8,447	$	1,238	$	(47)	$	—	$	9,638
Residential mortgage backed securities	2,226		36		(12)		—		2,250
Commercial mortgage backed securities	2,615		56		(15)		—		2,656
State and municipal obligations	832		244		(1)		(1)		1,074
Asset backed securities	517		22		(2)		—		537
Foreign government bonds and obligations	80		4		(1)		—		83
U.S. government and agency obligations	1		—		—		—		1
Total	$	14,718	$	1,600	$	(78)	$	(1)	$	16,239

As of September 30, 2022 and December 31, 2021, accrued interest of $139 million and $118 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in Accrued investment income.

The Company invested in AA and A rated asset backed securities issued by Ameriprise Advisor Financing, LLC (“AAF”) and in AA, A and BBB rated asset backed securities issued by Ameriprise Advisor Financing 2, LLC (“AAF 2”), both affiliates of the Company. The asset backed securities are collateralized by a portfolio of loans issued to advisors affiliated with AFS, an affiliated broker dealer. As of December 31, 2021, the fair value of these asset backed securities was $289 million. During the third quarter of 2022, the Company redeemed the outstanding AA and A rated securities issued by AAF at par and invested $564 million in new AA, A and BBB rated asset backed securities issued by AAF 2. As of September 30, 2022, the fair value of these asset backed securities was $555 million.

As of September 30, 2022 and December 31, 2021, investment securities with a fair value of $3.0 billion and $2.4 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which $373 million and $314 million, respectively, may be sold, pledged or rehypothecated by the counterparty.

As of September 30, 2022 and December 31, 2021, fixed maturity securities comprised approximately 84% and 85% of the Company’s total investments, respectively. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. As of September 30, 2022 and December 31, 2021, $256 million and $359 million, respectively, of securities were internally rated by Columbia Management Investment Advisers, LLC, an affiliate of the Company, using criteria similar to those used by NRSROs.

15

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

Ratings	September 30, 2022						December 31, 2021
	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	6,199	$	5,612	37	%	$	5,031	$	5,107	31	%
AA	1,071		1,111		7		757		932		6
A	1,443		1,438		9		1,662		2,013		12
BBB	7,431		6,635		43		6,293		7,063		44
Below investment grade (1)	665		593		4		975		1,124		7
Total fixed maturities	$	16,809	$	15,389	100	%	$	14,718	$	16,239	100	%

(1) The amortized cost and fair value of below investment grade securities includes interest in non-consolidated CLOs managed by the Company of $1 million and $2 million, respectively, as of both September 30, 2022 and December 31, 2021. These securities are not rated but are included in below investment grade due to their risk characteristics.

As of September 30, 2022 and December 31, 2021, approximately 36% and 40% of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities, respectively. As of September 30, 2022, the Company had holdings in AAF 2 totaling $555 million that was 95% of the Company’s total shareholder’s equity. Also, the Company had an additional 59 issuers with holdings totaling $6.3 billion that individually were between 10% and 33% of the Company’s total shareholder’s equity as of September 30, 2022. As of December 31, 2021, the Company had holdings in AAF totaling $289 million that was 16% of the Company’s total shareholder’s equity. Also, the Company had an additional four issuers with holdings totaling $903 million that individually were between 10% and 14% of the Company’s total shareholder’s equity as of December 31, 2021. There were no other holdings of any other issuer greater than 10% of the Company’s total shareholder’s equity as of September 30, 2022 and December 31, 2021.

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

Description of Securities	September 30, 2022
	Less than 12 Months					12 Months or More					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	429	$	5,438	$	(670)	70	$	1,039	$	(288)	499	$	6,477	$	(958)
Residential mortgage backed securities	212	2,098		(204)		25	493		(115)		237	2,591		(319)
Commercial mortgage backed securities	190	1,920		(187)		38	452		(71)		228	2,372		(258)
State and municipal obligations	52	149		(17)		16	36		(9)		68	185		(26)
Asset backed securities	36	779		(23)		2	31		(4)		38	810		(27)
Foreign government bonds and obligations	11	32		(2)		1	1		(1)		12	33		(3)
Total	930	$	10,416	$	(1,103)	152	$	2,052	$	(488)	1,082	$	12,468	$	(1,591)

16

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Description of Securities	December 31, 2021
	Less than 12 Months					12 Months or More					Total
	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(in millions, except number of securities)
Corporate debt securities	102	$	2,007	$	(42)	14	$	81	$	(5)	116	$	2,088	$	(47)
Residential mortgage backed securities	55	1,162		(12)		2	1		—		57	1,163		(12)
Commercial mortgage backed securities	60	809		(15)		3	13		—		63	822		(15)
State and municipal obligations	25	63		(1)		—	—		—		25	63		(1)
Asset backed securities	5	91		(2)		—	—		—		5	91		(2)
Foreign government bonds and obligations	5	6		—		6	4		(1)		11	10		(1)
Total	252	$	4,138	$	(72)	25	$	99	$	(6)	277	$	4,237	$	(78)

As part of the Company’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities for which an allowance for credit losses has not been recognized during the nine months ended September 30, 2022 is primarily attributable to the impact of higher interest rates and wider credit spreads driven by continued market volatility, with no specific credit concerns. The Company did not recognize these unrealized losses in earnings because it was determined that such losses were due to non-credit factors. The Company does not intend to sell these securities and does not believe that it is more likely than not that the Company will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of September 30, 2022 and December 31, 2021, approximately 93% and 92%, respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

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

	Corporate Debt Securities		State and Municipal Obligations		Total
	(in millions)
Balance at July 1, 2022	$	—	$	1	$	1
Additions for which credit losses were not previously recorded	20		—		20
Additional increases (decreases) on securities that had an allowance recorded in a previous period	—		1		1
Balance at September 30, 2022	$	20	$	2	$	22
Balance at July 1, 2021	$	—	$	—	$	—
Additions for which credit losses were not previously recorded	—		1		1
Balance at September 30, 2021	$	—	$	1	$	1
Balance at January 1, 2022	$	—	$	1	$	1
Additions for which credit losses were not previously recorded	20		—		20
Additional increases (decreases) on securities that had an allowance recorded in a previous period	—		1		1
Balance at September 30, 2022	$	20	$	2	$	22
Balance at January 1, 2021	$	10	$	—	$	10
Additions for which credit losses were not previously recorded	—		1		1
Charge-offs	(10)		—		(10)
Balance at September 30, 2021	$	—	$	1	$	1

17

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in Net realized investment gains (losses) were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Gross realized investment gains	$	2	$	505	$	24	$	568
Gross realized investment losses	(6)		(6)		(20)		(6)
Credit losses	(21)		(1)		(21)		(1)
Other impairments	(61)		—		(67)		(13)
Total	$	(86)	$	498	$	(84)	$	548

Credit losses for the three and nine months ended September 30, 2022 primarily related to recording an allowance for credit losses on corporate debt securities in the communications industry. Credit losses for the three and nine months ended September 30, 2021 primarily related to recording an allowance for credit losses on a state and municipal security. Other impairments for the three and nine months ended September 30, 2022 and the nine months ended September 30, 2021 related to Available-for-Sale securities which the Company intended to sell.

See Note 14 for a rollforward of net unrealized investment gains (losses) included in AOCI.

Available-for-Sale securities by contractual maturity as of September 30, 2022 were as follows:

	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	330	$	328
Due after one year through five years	1,675		1,607
Due after five years through 10 years	3,661		3,085
Due after 10 years	4,235		4,054
	9,901		9,074
Residential mortgage backed securities	2,944		2,625
Commercial mortgage backed securities	3,056		2,798
Asset backed securities	908		892
Total	$	16,809	$	15,389

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities were not included in the maturities distribution.

The following is a summary of Net investment income:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Fixed maturities	$	156	$	137	$	435	$	511
Mortgage loans	18		21		55		82
Other investments	55		40		92		86
	229		198		582		679
Less: investment expenses	5		5		14		15
Total	$	224	$	193	$	568	$	664

18

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. Financing Receivables

Financing receivables are comprised of commercial loans, policy loans and deposit receivables.

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses:

	Commercial Loans
	(in millions)
Balance at January 1, 2022	$	12
Provisions	(1)
Balance at September 30, 2022	$	11

	Commercial Loans
	(in millions)
Balance at January 1, 2021	$	35
Provisions	(21)
Balance at September 30, 2021	$	14

As of September 30, 2022 and December 31, 2021, accrued interest on commercial loans was $12 million and $11 million, respectively, and is recorded in Accrued investment income and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

There were no commercial mortgage loans sold for the three and nine months ended September 30, 2022. During the three and nine months ended September 30, 2021, the Company sold $746 million of commercial mortgage loans.

During the three months ended September 30, 2022 and 2021, the Company purchased nil syndicated loans, and sold nil and $350 million, respectively, of syndicated loans. During the nine months ended September 30, 2022 and 2021, the Company purchased $42 million and $26 million, respectively, of syndicated loans, and sold nil and $354 million, respectively, of syndicated loans.

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

Credit Quality Information

Nonperforming loans were $3 million and nil as of September 30, 2022 and December 31, 2021, respectively. All other loans were considered to be performing.

Commercial Loans

Commercial Mortgage Loans

The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Loan-to-value ratio is the primary credit quality indicator included in this review. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates when credit risk changes. Commercial mortgage loans which management has assigned its highest risk rating were less than 1% of total commercial mortgage loans as of both September 30, 2022 and December 31, 2021. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. Total commercial mortgage loans past due were $3 million and nil as of September 30, 2022 and December 31, 2021, respectively.

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

	September 30, 2022
Loan-to-Value Ratio	2022		2021		2020		2019		2018		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	2	$	2	$	—	$	39	$	43
80% - 100%	1		9		2		20		8		47		87
60% - 80%	35		87		17		52		10		95		296
40% - 60%	40		84		65		80		55		432		756
< 40%	15		8		27		43		78		462		633
Total	$	91	$	188	$	113	$	197	$	151	$	1,075	$	1,815

19

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	December 31, 2021
Loan-to-Value Ratio	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	20	$	10	$	—	$	29	$	59
80% - 100%	9		2		9		2		—		29		51
60% - 80%	141		76		59		15		58		133		482
40% - 60%	37		30		75		74		49		393		658
< 40%	6		8		46		—		47		443		550
Total	$	193	$	116	$	209	$	101	$	154	$	1,027	$	1,800

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

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

	Loans				Percentage
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(in millions)
East North Central	$	199	$	183	11	%	10	%
East South Central	52		54		3		3
Middle Atlantic	95		107		5		6
Mountain	122		111		7		6
New England	17		21		1		1
Pacific	603		589		33		33
South Atlantic	484		477		27		26
West North Central	127		136		7		8
West South Central	116		122		6		7
	1,815		1,800		100	%	100	%
Less: allowance for credit losses	11		12
Total	$	1,804	$	1,788

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

	Loans				Percentage
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(in millions)
Apartments	$	479	$	464	26	%	26	%
Hotel	14		15		1		1
Industrial	292		293		16		16
Mixed use	55		57		3		3
Office	250		254		14		14
Retail	593		589		33		33
Other	132		128		7		7
	1,815		1,800		100	%	100	%
Less: allowance for credit losses	11		12
Total	$	1,804	$	1,788

Syndicated Loans

The recorded investment in syndicated loans as of September 30, 2022 and December 31, 2021 was $76 million and $43 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were nil as of both September 30, 2022 and December 31, 2021. The Company assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.

20

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	September 30, 2022
Internal Risk Rating	2022		2021		2020		2019		2018		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Risk 4	—		—		—		—		—		—		—
Risk 3	—		5		—		3		—		2		10
Risk 2	5		13		2		5		—		15		40
Risk 1	1		5		1		3		5		11		26
Total	$	6	$	23	$	3	$	11	$	5	$	28	$	76

	December 31, 2021
Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Risk 4	—		—		—		—		—		—		—
Risk 3	—		—		—		—		—		1		1
Risk 2	11		—		4		1		8		4		28
Risk 1	4		—		—		3		3		4		14
Total	$	15	$	—	$	4	$	4	$	11	$	9	$	43

Policy Loans

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

Deposit Receivables

Deposit receivables were $7.5 billion and $7.9 billion as of September 30, 2022 and December 31, 2021, respectively. Deposit receivables are fully collateralized by the fair value of the assets held in trusts. Based on management’s evaluation of the nature of the underlying assets and the potential for changes in the collateral value, there was no allowance for credit losses for deposit receivables as of September 30, 2022 and December 31, 2021.

Troubled Debt Restructurings

There were no loans accounted for as a troubled debt restructuring by the Company during the three and nine months ended September 30, 2022 and 2021. There are no commitments to lend additional funds to borrowers whose loans have been restructured. 

7. Deferred Acquisition Costs and Deferred Sales Inducement Costs

During the third quarter of the year, management updated market-related inputs and implemented model changes related to the living benefit valuation. In addition, management conducted its annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. The impact of unlocking to deferred acquisition costs (“DAC”) in the third quarter of 2022 primarily reflected a $49 million increase from lower surrenders on variable annuities with living benefits and universal life (“UL”) and variable universal life (“VUL”) insurance products partially offset by a $27 million decrease from updating mortality assumptions for variable annuities and a $13 million decrease from updating the fair value discount rate for variable annuities. The impact of unlocking to DAC in the third quarter of 2021 primarily reflected a favorable impact from lower surrenders on variable annuities with living benefits and UL and VUL insurance products.

21

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The balances of and changes in DAC were as follows:

	2022		2021
	(in millions)
Balance at January 1	$	2,757	$	2,508
Capitalization of acquisition costs	146		196
Amortization	(351)		(129)
Amortization, impact of valuation assumptions review	8		60
Impact of change in net unrealized (gains) losses on securities	420		75
Balance at September 30	$	2,980	$	2,710

The balances of and changes in deferred sales inducement costs (“DSIC”), which is included in Other assets, were as follows:

	2022		2021
	(in millions)
Balance at January 1	$	187	$	187
Capitalization of sales inducement costs	1		1
Amortization	(34)		(15)
Amortization, impact of valuation assumptions review	2		2
Impact of change in net unrealized (gains) losses on securities	15		11
Balance at September 30	$	171	$	186

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

Policyholder account balances, future policy benefits and claims consisted of the following:

	September 30, 2022		December 31, 2021
	(in millions)
Policyholder account balances
Fixed annuities (1)	$	7,776	$	8,117
Variable annuity fixed sub-accounts	4,887		4,990
UL/VUL insurance	3,069		3,103
Indexed universal life (“IUL”) insurance	2,645		2,534
Structured variable annuities	5,314		4,440
Other life insurance	533		563
Total policyholder account balances	24,224		23,747
Future policy benefits
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	2,101		2,336
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)	64		(23)
Other annuity liabilities	316		67
Fixed annuity life contingent liabilities	1,215		1,278
Life and disability income insurance	1,106		1,139
Long term care insurance	5,187		5,664
UL/VUL and other life insurance additional liabilities	1,048		1,291
Total future policy benefits	11,037		11,752
Policy claims and other policyholders’ funds	214		245
Total policyholder account balances, future policy benefits and claims	$	35,475	$	35,744

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

(2) Includes the fair value of GMAB embedded derivatives that was a net asset as of December 31, 2021 and the amount is presented as a contra liability.

22

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Separate account liabilities consisted of the following:

	September 30, 2022		December 31, 2021
	(in millions)
Variable annuity	$	61,063	$	82,862
VUL insurance	7,090		9,343
Other insurance	24		33
Total	$	68,177	$	92,238

9. Variable Annuity and Insurance Guarantees

Most of the variable annuity contracts issued by the Company contain one or more guaranteed minimum death benefit (“GMDB”) provisions or death benefit provisions that gross up the amount payable by a certain percentage of contract earnings, which are referred to as gain gross-up (“GGU”) benefits. The Company discontinued new sales of substantially all GMWB and GMAB at the end of 2021. The Company also previously offered contracts containing guaranteed minimum income benefit (“GMIB”) provisions.

Certain UL policies offered by the Company provide secondary guarantee benefits. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.

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

Variable Annuity Guarantees by Benefit Type (1)	September 30, 2022							December 31, 2021
	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age
	(in millions, except age)
GMDB:
Return of premium	$	51,949	$	50,290	$	1,440	69	$	70,020	$	68,145	$	6	69
Five/six-year reset	6,652		3,986		277		69	8,309		5,612		6		68
One-year ratchet	4,612		4,306		1,019		72	6,177		5,858		13		71
Five-year ratchet	1,058		1,009		106		68	1,438		1,386		1		68
Other	964		950		284		75	1,302		1,286		38		74
Total — GMDB	$	65,235	$	60,541	$	3,126	69	$	87,246	$	82,287	$	64	69
GGU death benefit	$	966	$	909	$	139	72	$	1,260	$	1,198	$	184	72
GMIB	$	130	$	117	$	14	72	$	184	$	170	$	4	71
GMWB:
GMWB	$	1,351	$	1,346	$	54	75	$	1,900	$	1,895	$	1	75
GMWB for life	37,871		37,865		3,090		70	52,387		52,334		187		69
Total — GMWB	$	39,222	$	39,211	$	3,144	70	$	54,287	$	54,229	$	188	69
GMAB	$	1,391	$	1,391	$	187	62	$	2,005	$	2,005	$	—	62

(1) Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.

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

23

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	September 30, 2022			December 31, 2021
	Net Amount at Risk		Weighted Average Attained Age	Net Amount at Risk		Weighted Average Attained Age
	(in millions, except age)
UL secondary guarantees	$	6,496	69	$	6,564	68
Structured variable annuity GMDB	$	723	64	$	3	63

    

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

Changes in additional liabilities (contra liabilities) for variable annuity and insurance guarantees were as follows:

	GMDB & GGU		GMIB		GMWB (1)		GMAB (1)		UL
	(in millions)
Balance at January 1, 2022	$	36	$	5	$	2,336	$	(23)	$	1,020
Incurred claims	40		2		(235)		87		87
Paid claims	(15)		—		—		—		(31)
Balance at September 30, 2022	$	61	$	7	$	2,101	$	64	$	1,076
Balance at January 1, 2021	$	24	$	6	$	3,049	$	1	$	916
Incurred claims	12		1		(793)		(15)		106
Paid claims	(3)		(1)		—		—		(27)
Balance at September 30, 2021	$	33	$	6	$	2,256	$	(14)	$	995

    

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

The liabilities for guaranteed benefits are supported by general account assets.

The following table summarizes the distribution of separate account balances by asset type for variable annuity contracts providing guaranteed benefits:

	September 30, 2022		December 31, 2021
	(in millions)
Mutual funds:
Equity	$	38,594	$	49,183
Bond	21,012		24,998
Other	6,224		8,316
Total mutual funds	$	65,830	$	82,497

10. Debt

Short-Term Borrowings

RiverSource Life Insurance Company is a member of the Federal Home Loan Bank (“FHLB”) of Des Moines which provides access to collateralized borrowings. The Company has pledged Available-for-Sale securities consisting of commercial mortgage backed securities to collateralize its obligation under these borrowings. The fair value of the securities pledged is recorded in Investments and was $1.3 billion and $1.0 billion as of September 30, 2022 and December 31, 2021, respectively. The amount of the Company’s liability including accrued interest was $201 million and $200 million as of September 30, 2022 and December 31, 2021, respectively. The remaining maturity of outstanding FHLB advances was less than three months as of both September 30, 2022 and December 31, 2021. The weighted average annualized interest rate on the FHLB advances held as of September 30, 2022 and December 31, 2021 was 3.2% and 0.3%, respectively.

Long-Term Debt

The Company has a $500 million unsecured 3.5% surplus note due December 31, 2050 to Ameriprise Financial. The outstanding balance was $500 million as of both September 30, 2022 and December 31, 2021 and is recorded in Long-term debt.

24

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. Fair Values of Assets and Liabilities

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressed sale.

Valuation Hierarchy

The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are defined as follows:

Level 1    Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.

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

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

25

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis (See Note 4 for the balances of assets and liabilities for consolidated investment entities):

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Available-for-Sale securities:
Corporate debt securities	$	—	$	7,846	$	394	$	8,240
Residential mortgage backed securities	—		2,625		—		2,625
Commercial mortgage backed securities	—		2,798		—		2,798
State and municipal obligations	—		797		—		797
Asset backed securities	—		336		556		892
Foreign government bonds and obligations	—		36		—		36
U.S. government and agency obligations	1		—		—		1
Total Available-for-Sale securities	1		14,438		950		15,389
Cash equivalents	1,155		1,318		—		2,473
Receivables:
Fixed deferred indexed annuity ceded embedded derivatives	—		—		47		47
Other assets:
Interest rate derivative contracts	15		362		—		377
Equity derivative contracts	137		2,519		—		2,656
Foreign exchange derivative contracts	1		88		—		89
Credit derivative contracts	—		76		—		76
Total other assets	153		3,045		—		3,198
Separate account assets at net asset value (“NAV”)							68,177		(1)
Total assets at fair value	$	1,309	$	18,801	$	997	$	89,284
Liabilities
Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives	$	—	$	3	$	43	$	46
IUL embedded derivatives	—		—		689		689
GMWB and GMAB embedded derivatives	—		—		932		932		(2)
Structured variable annuity embedded derivatives	—		—		(513)		(513)		(3)
Total policyholder account balances, future policy benefits and claims	—		3		1,151		1,154		(4)
Other liabilities:
Interest rate derivative contracts	3		582		—		585
Equity derivative contracts	153		2,328		—		2,481
Foreign exchange derivative contracts	2		12		—		14
Total other liabilities	158		2,922		—		3,080
Total liabilities at fair value	$	158	$	2,925	$	1,151	$	4,234

26

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Available-for-Sale securities:
Corporate debt securities	$	—	$	9,142	$	496	$	9,638
Residential mortgage backed securities	—		2,250		—		2,250
Commercial mortgage backed securities	—		2,656		—		2,656
State and municipal obligations	—		1,074		—		1,074
Asset backed securities	—		246		291		537
Foreign government bonds and obligations	—		83		—		83
U.S. government and agency obligations	1		—		—		1
Total Available-for-Sale securities	1		15,451		787		16,239
Cash equivalents	1,985		1,191		—		3,176
Receivables:
Fixed deferred indexed annuity ceded embedded derivatives	—		—		59		59
Other assets:
Interest rate derivative contracts	1		1,251		—		1,252
Equity derivative contracts	158		4,080		—		4,238
Foreign exchange derivative contracts	1		17		—		18
Credit derivative contracts	—		9		—		9
Total other assets	160		5,357		—		5,517
Separate account assets at NAV							92,238		(1)
Total assets at fair value	$	2,146	$	21,999	$	846	$	117,229
Liabilities
Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives	$	—	$	5	$	56	$	61
IUL embedded derivatives	—		—		905		905
GMWB and GMAB embedded derivatives	—		—		1,486		1,486		(5)
Structured variable annuity embedded derivatives	—		—		406		406
Total policyholder account balances, future policy benefits and claims	—		5		2,853		2,858		(6)
Other liabilities:
Interest rate derivative contracts	1		467		—		468
Equity derivative contracts	101		3,610		—		3,711
Foreign exchange derivative contracts	1		—		—		1
Total other liabilities	103		4,077		—		4,180
Total liabilities at fair value	$	103	$	4,082	$	2,853	$	7,038

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

(2) The fair value of the GMWB and GMAB embedded derivatives included $1.2 billion of individual contracts in a liability position and $224 million of individual contracts in an asset position (recorded as a contra liability) as of September 30, 2022.

(3) The fair value of the structured variable annuity embedded derivatives was a net asset as of September 30, 2022 and the amount is presented as a contra liability.

(4) The Company’s adjustment for nonperformance risk resulted in a $778 million cumulative decrease to the embedded derivatives as of September 30, 2022.

(5) The fair value of the GMWB and GMAB embedded derivatives included $1.6 billion of individual contracts in a liability position and $133 million of individual contracts in an asset position (recorded as a contra liability) as of December 31, 2021.

(6) The Company��s adjustment for nonperformance risk resulted in a $598 million cumulative decrease to the embedded derivatives as of December 31, 2021.

27

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	Available-for-Sale Securities				Receivables
	Corporate Debt Securities		Asset Backed Securities			Total		Fixed Differed Indexed Annuity Ceded Embedded Derivatives
	(in millions)
Balance at July 1, 2022	$	458	$	236		$	694	$	49
Total gains (losses) included in:
Net income	—		—			—		(2)
Other comprehensive income (loss)	(13)		(3)			(16)		—
Purchases	6		564			570		—
Settlements	(57)		(241)			(298)		—
Balance at September 30, 2022	$	394	$	556		$	950	$	47
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2022	$	(13)	$	(10)		$	(23)	$	—

	Policyholder Account Balances, Future Policy Benefits and Claims
	Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
	(in millions)
Balance at July 1, 2022	$	45		$	719		$	1,006		$	(362)	(4)	$	1,408
Total (gains) losses included in:
Net income	(1)		(2)	(22)		(2)	(152)		(3)	(173)		(3)	(348)
Issues	—			18			89			19			126
Settlements	(1)			(26)			(11)			3			(35)
Balance at September 30, 2022	$	43		$	689		$	932		$	(513)	(4)	$	1,151
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2022	$	—		$	(22)	(2)	$	(146)	(3)	$	(173)	(3)	$	(341)

	Available-for-Sale Securities				Receivables
	Corporate Debt Securities		Asset Backed Securities		Total			Fixed Deferred Indexed Annuity Ceded Embedded Derivatives
	(in millions)
Balance at July 1, 2021	$	385	$	336	$	721		$	—
Total gains (losses) included in:
Net income	(1)		—		(1)		(1)	—
Other comprehensive income (loss)	(3)		—		(3)			—
Purchases	9		—		9			—
Issues	—		—		—			57
Settlements	(44)		(20)		(64)			(1)
Transfers into Level 3	168		2		170			—
Balance at September 30, 2021	$	514	$	318	$	832		$	56
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2021	$	(4)	$	—	$	(4)		$	—

28

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	Policyholder Account Balances, Future Policy Benefits and Claims
	Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
	(in millions)
Balance at July 1, 2021	$	54		$	928		$	1,373		$	214		$	2,569
Total (gains) losses included in:
Net income	1		(2)	14		(2)	(69)		(3)	17		(3)	(37)
Issues	—			—			95			(7)			88
Settlements	(1)			(25)			37			(7)			4
Balance at September 30, 2021	$	54		$	917		$	1,436		$	217		$	2,624
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2021	$	—		$	14	(2)	$	(60)	(3)	$	—		$	(46)

	Available-for-Sale Securities						Receivables
	Corporate Debt Securities		Commercial Mortgage Backed Securities		Asset Backed Securities		Total			Fixed Deferred Indexed Annuity Ceded Embedded Derivatives
	(in millions)
Balance at January 1, 2022	$	496	$	—	$	291	$	787		$	59
Total gains (losses) included in:
Net income	(1)		—		—		(1)		(1)	(10)
Other comprehensive income (loss)	(46)		—		(14)		(60)			—
Purchases	29		30		564		623			—
Settlements	(84)		—		(285)		(369)			(2)
Transfers out of Level 3	—		(30)		—		(30)			—
Balance at September 30, 2022	$	394	$	—	$	556	$	950		$	47
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2022	$	(1)	$	—	$	—	$	(1)	(1)	$	—
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2022	$	(45)	$	—	$	(10)	$	(55)		$	—

	Policyholder Account Balances, Future Policy Benefits and Claims
	Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
	(in millions)
Balance at January 1, 2022	$	56		$	905		$	1,486		$	406		$	2,853
Total (gains) losses included in:
Net income	(10)		(2)	(162)		(2)	(727)		(3)	(939)		(3)	(1,838)
Issues	—			26			260			37			323
Settlements	(3)			(80)			(87)			(17)			(187)
Balance at September 30, 2022	$	43		$	689		$	932		$	(513)	(4)	$	1,151
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2022	$	—		$	(162)	(2)	$	(709)	(3)	$	(939)	(3)	$	(1,810)

29

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	Policyholder Account Balances, Future Policy Benefits and Claims
	Fixed Deferred Indexed Annuity Embedded Derivatives			IUL Embedded Derivatives			GMWB and GMAB Embedded Derivatives			Structured Variable Annuity Embedded Derivatives			Total
	(in millions)
Balance at January 1, 2021	$	49		$	935		$	2,316		$	70		$	3,370
Total (gains) losses included in:
Net income	7		(2)	51		(2)	(1,273)		(3)	192		(3)	(1,023)
Issues	—			4			274			(22)			256
Settlements	(2)			(73)			119			(23)			21
Balance at September 30, 2021	$	54		$	917		$	1,436		$	217		$	2,624
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2021	$	—		$	51	(2)	$	(1,236)	(3)	$	—		$	(1,185)

(1) Included in Net investment income.

(2) Included in Interest credited to fixed accounts.

(3) Included in Benefits, claims, losses and settlement expenses.

(4) The fair value of the structured variable annuity embedded derivatives was a net asset as of both June 30, 2022 and September 30, 2022 and the amounts are presented as contra liabilities.

The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $(37) million and $1 million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the three months ended September 30, 2022 and 2021, respectively.

The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $182 million and $(138) million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the nine months ended September 30, 2022 and 2021, respectively.

Securities transferred from Level 3 primarily represent securities with fair values that are now obtained from a third-party pricing service with observable inputs or fair values that were included in an observable transaction with a market participant. Securities transferred to Level 3 represent securities with fair values that are now based on a single non-binding broker quote.

30

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables provide a summary of the significant unobservable inputs used in the fair value measurements developed by the Company or reasonably available to the Company of Level 3 assets and liabilities:

	September 30, 2022
	Fair Value			Valuation Technique	Unobservable Input	Range			Weighted Average
	(in millions)
Corporate debt securities (private placements)	$	394		Discounted cash flow	Yield/spread to U.S. Treasuries (1)	1.0%	–	3.6%	1.5%
Asset backed securities	$	556		Discounted cash flow	Annual default rate	2.6%			2.6%
					Loss severity	25.0%			25.0%
					Yield/spread to U.S. Treasuries (2)	270 bps	–	450 bps	277 bps
Fixed deferred indexed annuity ceded embedded derivatives	$	47		Discounted cash flow	Surrender rate (5)	0.0%	–	66.8%	1.4%
IUL embedded derivatives	$	689		Discounted cash flow	Nonperformance risk (4)	125 bps			125 bps
Fixed deferred indexed annuity embedded derivatives	$	43		Discounted cash flow	Surrender rate (5)	0.0%	–	66.8%	1.4%
					Nonperformance risk (4)	125 bps			125 bps
GMWB and GMAB embedded derivatives	$	932		Discounted cash flow	Utilization of guaranteed withdrawals (6) (7)	0.0%	–	48.0%	10.9%
					Surrender rate (5)	0.1%	–	55.7%	3.4%
					Market volatility (8) (9)	5.0%	–	17.5%	12.1%
					Nonperformance risk (4)	125 bps			125 bps
Structured variable annuity embedded derivatives	$	(513)	(10)	Discounted cash flow	Surrender rate (5)	0.8%	–	40.0%	0.9%
					Nonperformance risk (4)	125 bps			125 bps

31

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	December 31, 2021
	Fair Value		Valuation Technique	Unobservable Input	Range			Weighted Average
	(in millions)
Corporate debt securities (private placements)	$	496	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	0.8%	–	2.4%	1.1%
Asset backed securities	$	291	Discounted cash flow	Annual default rate	5.8%			5.8%
				Loss severity	25.0%			25.0%
				Yield/spread to swap rates (3)	175 bps	–	275 bps	182 bps
Fixed deferred indexed annuity ceded embedded derivatives	$	59	Discounted cash flow	Surrender rate (5)	0.0%	–	66.8%	1.4%
IUL embedded derivatives	$	905	Discounted cash flow	Nonperformance risk (4)	65 bps			65 bps
Fixed deferred indexed annuity embedded derivatives	$	56	Discounted cash flow	Surrender rate (5)	0.0%	–	66.8%	1.4%
				Nonperformance risk (4)	65 bps			65 bps
GMWB and GMAB embedded derivatives	$	1,486	Discounted cash flow	Utilization of guaranteed withdrawals (6) (7)	0.0%	–	48.0%	10.6%
				Surrender rate (5)	0.1%	–	55.7%	3.6%
				Market volatility (8) (9)	4.3%	–	16.8%	10.8%
				Nonperformance risk (4)	65 bps			65 bps
Structured variable annuity embedded derivatives	$	406	Discounted cash flow	Surrender rate (5)	0.8%	–	40.0%	0.9%
				Nonperformance risk (4)	65 bps			65 bps

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

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

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

(4) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives. During the third quarter of 2022, the Company changed to using a U.S. Treasury curve as its observable discount rate curve reflecting the evolution of LIBOR discontinuation as an observable reference rate used by market participants.

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

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

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

(8) Market volatility represents the implied volatility of fund of funds and managed volatility funds.

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

(10) The fair value of the structured variable annuity embedded derivatives was a net asset as of September 30, 2022 and the amount is presented as a contra liability.

Level 3 measurements not included in the tables above are obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.

Uncertainty of Fair Value Measurements

Significant increases (decreases) in the yield/spread to U.S. Treasuries used in the fair value measurement of Level 3 corporate debt securities and asset backed securities in isolation would have resulted in a significantly lower (higher) fair value measurement.

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

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

32

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

Significant increases (decreases) in nonperformance risk used in the fair value measurement of the IUL embedded derivatives in isolation would have resulted in a significantly lower (higher) fair value measurement.

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

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

Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value. Utilization of guaranteed withdrawals and surrender rates vary with the type of rider, the duration of the policy, the age of the contractholder, the distribution channel and whether the value of the guaranteed benefit exceeds the contract accumulation value.

Determination of Fair Value

The Company uses valuation techniques consistent with the market and income approaches to measure the fair value of its assets and liabilities. The Company’s market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s income approach uses valuation techniques to convert future projected cash flows to a single discounted present value amount. When applying either approach, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

Assets

Available-for-Sale Securities

When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from third-party pricing services, non-binding broker quotes, or other model-based valuation techniques.

Level 1 securities primarily include U.S. Treasuries.

Level 2 securities primarily include corporate bonds, residential mortgage backed securities, commercial mortgage backed securities, state and municipal obligations, asset backed securities and foreign government securities. The fair value of these Level 2 securities is based on a market approach with prices obtained from third-party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes. The fair value of securities included in an observable transaction with a market participant are also considered Level 2 when the market is not active.

Level 3 securities primarily include certain corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and asset backed securities with fair value typically based on a single non-binding broker quote. The underlying inputs used for some of the non-binding broker quotes are not readily available to the Company. The Company’s privately placed corporate bonds are typically based on a single non-binding broker quote. The fair value of affiliated asset backed securities is determined using a discounted cash flow model. Inputs used to determine the expected cash flows include assumptions about discount rates and default, prepayment and recovery rates of the underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the fair value of the investment in the affiliated asset backed securities is classified as Level 3.

In consideration of the above, management is responsible for the fair values recorded on the financial statements. Prices received from third-party pricing services are subjected to exception reporting that identifies investments with significant daily price movements as well as no movements. The Company reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. The Company also performs subsequent transaction testing. The Company performs annual due diligence of third-party pricing services. The Company’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies, and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.

Cash Equivalents

Cash equivalents include time deposits and other highly liquid investments with original or remaining maturities at the time of purchase of 90 days or less. Actively traded money market funds are measured at their NAV and classified as Level 1. U.S. Treasuries are also classified as Level 1. The Company’s remaining cash equivalents are classified as Level 2 and measured at amortized cost,

33

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

which is a reasonable estimate of fair value because of the short time between the purchase of the instrument and its expected realization.

Receivables

The Company reinsured its fixed deferred indexed annuity products which have an indexed account that is accounted for as an embedded derivative. The Company uses discounted cash flow models to determine the fair value of these ceded embedded derivatives. The fair value of fixed deferred indexed annuity ceded embedded derivatives includes significant observable interest rates, volatilities and equity index levels and significant unobservable surrender rates. Given the significance of the unobservable surrender rates, these embedded derivatives are classified as Level 3.

Other Assets

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial as of both September 30, 2022 and December 31, 2021. See Note 12 and Note 13 for further information on the credit risk of derivative instruments and related collateral.

Separate Account Assets

The fair value of assets held by separate accounts is determined by the NAV of the funds in which those separate accounts are invested. The NAV is used as a practical expedient for fair value and represents the exit price for the separate account. Separate account assets are excluded from classification in the fair value hierarchy.

Liabilities

Policyholder Account Balances, Future Policy Benefits and Claims

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

The Company values the embedded derivatives attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value as the present value of future expected benefit payments less the present value of future expected rider fees attributable to the embedded derivative feature. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to implied volatility as well as contractholder behavior assumptions that include margins for risk, all of which the Company believes a market participant would expect. The fair value also reflects a current estimate of the Company’s nonperformance risk specific to these embedded derivatives. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3. The embedded derivatives attributable to these provisions are recorded in Policyholder account balances, future policy benefits and claims.

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

The Company uses discounted cash flow models to determine the fair value of the embedded derivatives associated with the provisions of its fixed deferred indexed annuity, structured variable annuity and IUL products. The structured variable annuity product is a limited flexible purchase payment annuity that offers 45 different indexed account options providing equity market exposure and a fixed account. Each indexed account includes a protection option (a buffer or a floor). If the index has a negative return, contractholder losses will be reduced by a buffer or limited to a floor. The portion allocated to an indexed account is accounted for as an embedded derivative. The fair value of fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives includes significant observable interest rates, volatilities and equity index levels and significant unobservable surrender rates and the estimate of the Company’s nonperformance risk. Given the significance of the unobservable surrender rates and the nonperformance risk assumption, the fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives are classified as Level 3.

The embedded derivatives attributable to these provisions are recorded in Policyholder account balances, future policy benefits and claims.

Other Liabilities

Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded, are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active OTC markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial as of both

34

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

September 30, 2022 and December 31, 2021. See Note 12 and Note 13 for further information on the credit risk of derivative instruments and related collateral.

Fair Value on a Nonrecurring Basis

The Company assesses its investment in affordable housing partnerships for impairment. The investments that are determined to be impaired are written down to their fair value. The Company uses a discounted cash flow model to measure the fair value of these investments. Inputs to the discounted cash flow model are estimates of future net operating losses and tax credits available to the Company and discount rates based on market condition and the financial strength of the syndicator (general partner). The balance of affordable housing partnerships measured at fair value on a nonrecurring basis was $63 million and $93 million as of September 30, 2022 and December 31, 2021, respectively, and is classified as Level 3 in the fair value hierarchy.

Assets and Liabilities Not Reported at Fair Value

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

	September 30, 2022
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial Assets
Mortgage loans, net	$	1,804	$	—	$	—	$	1,627	$	1,627
Policy loans	838		—		838		—		838
Other investments	94		—		72		21		93
Receivables	7,528		—		—		6,264		6,264
Financial Liabilities
Policyholder account balances, future policy benefits and claims	$	14,041	$	—	$	—	$	12,048	$	12,048
Short-term borrowings	201		—		201		—		201
Long-term debt	500		—		313		—		313
Other liabilities	8		—		—		7		7
Separate account liabilities — investment contracts	288		—		288		—		288

	December 31, 2021
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial Assets
Mortgage loans, net	$	1,788	$	—	$	—	$	1,872	$	1,872
Policy loans	834		—		834		—		834
Other investments	61		—		40		21		61
Receivables	7,876		—		—		8,630		8,630
Financial Liabilities
Policyholder account balances, future policy benefits and claims	$	12,342	$	—	$	—	$	13,264	$	13,264
Short-term borrowings	200		—		200		—		200
Long-term debt	500		—		498		—		498
Other liabilities	9		—		—		9		9
Separate account liabilities — investment contracts	403		—		403		—		403

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

Policyholder account balances, future policy benefits and claims include fixed annuities in deferral status, non-life contingent fixed annuities in payout status, indexed and structured variable annuity host contracts, and the fixed portion of a small number of variable annuity contracts classified as investment contracts. See Note 8 for additional information on these liabilities. Short-term borrowings include FHLB borrowings. Long-term debt includes the surplus note with Ameriprise Financial. See Note 10 for further information on short-term borrowings and long-term debt. Other liabilities include future funding commitments to affordable housing partnerships and other real estate partnerships. Separate account liabilities are related to certain annuity products that are classified as investment contracts.

35

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. Offsetting Assets and Liabilities

Certain financial instruments and derivative instruments are eligible for offset in the Consolidated Balance Sheets. The Company’s derivative instruments are subject to master netting and collateral arrangements and qualify for offset. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. The Company’s policy is to recognize amounts subject to master netting arrangements on a gross basis in the Consolidated Balance Sheets.

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

	September 30, 2022
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
							Financial Instruments (1)		Cash Collateral		Securities Collateral
	(in millions)
Derivatives:
OTC	$	2,975	$	—	$	2,975	$	(2,386)	$	(552)	$	(7)	$	30
OTC cleared	105		—		105		(105)		—		—		—
Exchange-traded	118		—		118		(79)		—		—		39
Total derivatives	$	3,198	$	—	$	3,198	$	(2,570)	$	(552)	$	(7)	$	69

    

	December 31, 2021
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
							Financial Instruments (1)		Cash Collateral		Securities Collateral
	(in millions)
Derivatives:
OTC	$	5,330	$	—	$	5,330	$	(3,571)	$	(1,623)	$	(114)	$	22
OTC cleared	88		—		88		(41)		—		—		47
Exchange-traded	99		—		99		(91)		—		—		8
Total derivatives	$	5,517	$	—	$	5,517	$	(3,703)	$	(1,623)	$	(114)	$	77

(1) Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

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

	September 30, 2022
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
							Financial Instruments (1)		Cash Collateral		Securities Collateral
	(in millions)
Derivatives:
OTC	$	2,791	$	—	$	2,791	$	(2,386)	$	(70)	$	(322)	$	13
OTC cleared	201		—		201		(105)		—		—		96
Exchange-traded	88		—		88		(79)		—		(9)		—
Total derivatives	$	3,080	$	—	$	3,080	$	(2,570)	$	(70)	$	(331)	$	109

36

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	December 31, 2021
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets						Net Amount
							Financial Instruments (1)		Cash Collateral		Securities Collateral
	(in millions)
Derivatives:
OTC	$	4,048	$	—	$	4,048	$	(3,571)	$	(181)	$	(293)	$	3
OTC cleared	41		—		41		(41)		—		—		—
Exchange-traded	91		—		91		(91)		—		—		—
Total derivatives	$	4,180	$	—	$	4,180	$	(3,703)	$	(181)	$	(293)	$	3

(1) Represents the amount of liabilities that could be offset by assets with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.

In the tables above, the amount of assets or liabilities presented are offset first by financial instruments that have the right of offset under master netting or similar arrangements, then any remaining amount is reduced by the amount of cash and securities collateral. The actual collateral may be greater than amounts presented in the tables.

When the fair value of collateral accepted by the Company is less than the amount due to the Company, there is a risk of loss if the counterparty fails to perform or provide additional collateral. To mitigate this risk, the Company monitors collateral values regularly and requires additional collateral when necessary. When the value of collateral pledged by the Company declines, it may be required to post additional collateral.

Freestanding derivative instruments are reflected in Other assets and Other liabilities. Cash collateral pledged by the Company is reflected in Other assets and cash collateral accepted by the Company is reflected in Other liabilities. See Note 13 for additional disclosures related to the Company’s derivative instruments.

13. Derivatives and Hedging Activities

Derivative instruments enable the Company to manage its exposure to various market risks. The value of such instruments is derived from an underlying variable or multiple variables, including equity and interest rate indices or prices. The Company primarily enters into derivative agreements for risk management purposes related to the Company’s products and operations.

Certain of the Company’s freestanding derivative instruments are subject to master netting arrangements. The Company’s policy on the recognition of derivatives on the Consolidated Balance Sheets is to not offset fair value amounts recognized for derivatives and collateral arrangements executed with the same counterparty under the same master netting arrangement. See Note 12 for additional information regarding the estimated fair value of the Company’s freestanding derivatives after considering the effect of master netting arrangements and collateral.

37

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	September 30, 2022						December 31, 2021
	Notional		Gross Fair Value				Notional		Gross Fair Value
			Assets (1)		Liabilities (2)(3)				Assets (1)		Liabilities (2)(3)
	(in millions)
Derivatives not designated as hedging instruments
Interest rate contracts	$	95,693	$	377	$	585	$	79,459	$	1,252	$	468
Equity contracts	67,418		2,656		2,481		59,763		4,238		3,711
Credit contracts	1,684		76		—		1,717		9		—
Foreign exchange contracts	2,516		89		14		2,239		18		1
Total non-designated hedges	167,311		3,198		3,080		143,178		5,517		4,180
Embedded derivatives
GMWB and GMAB (4)	N/A		—		932		N/A		—		1,486
IUL	N/A		—		689		N/A		—		905
Fixed deferred indexed annuities and deposit receivables	N/A		47		46		N/A		59		61
Structured variable annuities (5)	N/A		—		(513)		N/A		—		406
Total embedded derivatives	N/A		47		1,154		N/A		59		2,858
Total derivatives	$	167,311	$	3,245	$	4,234	$	143,178	$	5,576	$	7,038

N/A  Not applicable.

(1) The fair value of freestanding derivative assets is included in Other assets and the fair value of ceded embedded derivative assets related to deposit receivables is included in Receivables.

(2) The fair value of freestanding derivative liabilities is included in Other liabilities. The fair value of GMWB and GMAB, IUL, fixed deferred indexed annuity and structured variable annuity embedded derivatives is included in Policyholder account balances, future policy benefits and claims.

(3) The fair value of the Company’s derivative liabilities after considering the effects of master netting arrangements, cash collateral held by the same counterparty and the fair value of net embedded derivatives was $1.6 billion and $3.2 billion as of September 30, 2022 and December 31, 2021, respectively. See Note 12 for additional information related to master netting arrangements and cash collateral.

(4) The fair value of the GMWB and GMAB embedded derivatives as of September 30, 2022 included $1.2 billion of individual contracts in a liability position and $224 million of individual contracts in an asset position. The fair value of the GMWB and GMAB embedded derivatives as of December 31, 2021 included $1.6 billion of individual contracts in a liability position and $133 million of individual contracts in an asset position.

(5) The fair value of the structured variable annuity embedded derivatives was a net asset as of September 30, 2022 and the amount is presented as a contra liability.

See Note 11 for additional information regarding the Company’s fair value measurement of derivative instruments.

As of September 30, 2022 and December 31, 2021, investment securities with a fair value of $7 million and $123 million, respectively, were received as collateral to meet contractual obligations under derivative contracts, of which $7 million and $123 million, respectively, may be sold, pledged or rehypothecated by the Company. As of both September 30, 2022 and December 31, 2021, the Company had sold, pledged, or rehypothecated none of these securities. In addition, as of both September 30, 2022 and December 31, 2021, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.

38

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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

	Net Investment Income		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses
	(in millions)
Three Months Ended September 30, 2022
Interest rate contracts	$	—	$	—	$	(753)
Equity contracts	—		(23)		341
Credit contracts	—		—		92
Foreign exchange contracts	—		—		112
GMWB and GMAB embedded derivatives	—		—		71
IUL embedded derivatives	—		48		—
Structured variable annuity embedded derivatives	—		—		173
Total gain (loss)	$	—	$	25	$	36
Three Months Ended September 30, 2021
Interest rate contracts	$	—	$	—	$	(171)
Equity contracts	—		—		1
Credit contracts	—		—		2
GMWB and GMAB embedded derivatives	—		—		(64)
IUL embedded derivatives	—		11		—
Fixed deferred indexed annuity embedded derivatives	—		1		—
Structured variable annuity embedded derivatives	—		—		(17)
Total gain (loss)	$	—	$	12	$	(249)

	Net Investment Income		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses
	(in millions)
Nine Months Ended September 30, 2022
Interest rate contracts	$	—	$	—	$	(2,815)
Equity contracts	—		(135)		1,066
Credit contracts	—		—		288
Foreign exchange contracts	—		—		219
GMWB and GMAB embedded derivatives	—		—		551
IUL embedded derivatives	—		242		—
Fixed deferred indexed annuity and deposit receivables embedded derivatives	—		3		—
Structured variable annuity embedded derivatives	—		—		939
Total gain (loss)	$	—	$	110	$	248
Nine Months Ended September 30, 2021
Interest rate contracts	$	—	$	—	$	(1,125)
Equity contracts	1		55		(613)
Credit contracts	—		—		41
Foreign exchange contracts	—		—		6
GMWB and GMAB embedded derivatives	—		—		879
IUL embedded derivatives	—		22		—
Fixed deferred indexed annuity embedded derivatives	—		(7)		—
Structured variable annuity embedded derivatives	—		—		(192)
Total gain (loss)	$	1	$	70	$	(1,004)

39

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The Company holds derivative instruments that either do not qualify or are not designated for hedge accounting treatment. These derivative instruments are used as economic hedges of equity, interest rate, credit and foreign currency exchange rate risk related to various products and transactions of the Company.

Certain annuity contracts contain GMWB or GMAB provisions, which guarantee the right to make limited partial withdrawals each contract year regardless of the volatility inherent in the underlying investments or guarantee a minimum accumulation value of consideration received at the beginning of the contract period, after a specified holding period, respectively. The indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. The Company economically hedges the aggregate exposure related to the indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions using options, swaptions, swaps and futures.

The deferred premium associated with certain of the above options and swaptions is paid or received semi-annually over the life of the contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options and swaptions as of September 30, 2022:

	Premiums Payable		Premiums Receivable
	(in millions)
2022 (1)	$	37	$	62
2023	50		43
2024	130		23
2025	118		20
2026	249		88
2027 - 2029	77		—
Total	$	661	$	236

(1) 2022 amounts represent the amounts payable and receivable for the period from October 1, 2022 to December 31, 2022.

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

The Company has a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on its statutory surplus and to cover some of the residual risks not covered by other hedging activities. As a means of economically hedging these risks, the Company may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives may contain settlement provisions linked to both equity returns and interest rates. The Company’s macro hedge derivatives that contain settlement provisions linked to both equity returns and interest rates, if any, are shown in other contracts in the tables above.

Structured variable annuity and IUL products have returns tied to the performance of equity markets. As a result of fluctuations in equity markets, the obligation incurred by the Company related to structured variable annuity and IUL products will positively or negatively impact earnings over the life of these products. The equity component of structured variable annuity and IUL product obligations are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and futures contracts.

Cash Flow Hedges

During both the three and nine months ended September 30, 2022 and 2021, the Company held no derivatives that were designated as cash flow hedges. During both the three and nine months ended September 30, 2022 and 2021, no hedge relationships were discontinued due to forecasted transactions no longer being expected to occur according to the original hedge strategy.

Credit Risk

Credit risk associated with the Company’s derivatives is the risk that a derivative counterparty will not perform in accordance with the terms of the applicable derivative contract. To mitigate such risk, the Company has established guidelines and oversight of credit risk through a comprehensive enterprise risk management program that includes members of senior management. Key components of this program are to require preapproval of counterparties and the use of master netting and collateral arrangements whenever practical. See Note 12 for additional information on the Company’s credit exposure related to derivative assets.

Certain of the Company’s derivative contracts contain provisions that adjust the level of collateral the Company is required to post based on the Company’s financial strength rating (or based on the debt rating of the Company’s parent, Ameriprise Financial). Additionally, certain of the Company’s derivative contracts contain provisions that allow the counterparty to terminate the contract if the Company does not maintain a specific financial strength rating or Ameriprise Financial’s debt does not maintain a specific credit rating (generally an investment grade rating). If these termination provisions were to be triggered, the Company’s counterparty could

40

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

require immediate settlement of any net liability position. As of September 30, 2022 and December 31, 2021, the aggregate fair value of derivative contracts in a net liability position containing such credit contingent provisions was $350 million and $383 million, respectively. The aggregate fair value of assets posted as collateral for such instruments as of September 30, 2022 and December 31, 2021 was $338 million and $383 million, respectively. If the credit contingent provisions of derivative contracts in a net liability position as of September 30, 2022 and December 31, 2021 were triggered, the aggregate fair value of additional assets that would be required to be posted as collateral or needed to settle the instruments immediately would have been $12 million and nil as of September 30, 2022 and December 31, 2021, respectively.

14. Shareholder’s Equity

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

	Three Months Ended September 30,
	2022						2021
	Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
	(in millions)
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	$	(842)	$	178	$	(664)	$	(57)	$	14	$	(43)
Reclassification of net (gains) losses on securities included in net income (2)	86		(19)		67		(498)		104		(394)
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	219		(46)		173		147		(31)		116
Net unrealized gains (losses) on securities	(537)		113		(424)		(408)		87		(321)
Total other comprehensive income (loss)	$	(537)	$	113	$	(424)	$	(408)	$	87	$	(321)

	Nine Months Ended September 30,
	2022						2021
	Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
	(in millions)
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	$	(3,004)	$	639	$	(2,365)	$	(396)	$	86	$	(310)
Reclassification of net (gains) losses on securities included in net income (2)	84		(18)		66		(548)		115		(433)
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	1,145		(240)		905		284		(60)		224
Net unrealized gains (losses) on securities	(1,775)		381		(1,394)		(660)		141		(519)
Total other comprehensive income (loss)	$	(1,775)	$	381	$	(1,394)	$	(660)	$	141	$	(519)

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

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

Other comprehensive income (loss) related to net unrealized gains (losses) on securities includes three components: (i) unrealized gains (losses) that arose from changes in the fair value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit impairments to credit losses; and (iii) other adjustments primarily consisting of changes in insurance and annuity asset and liability balances, such as DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

41

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table presents the changes in the balances of each component of AOCI, net of tax:

	Net Unrealized Gains (Losses) on Securities			Other		Total
	(in millions)
Balance at July 1, 2022	$	(641)		$	(1)	$	(642)
OCI before reclassifications	(491)			—		(491)
Amounts reclassified from AOCI	67			—		67
Total OCI	(424)			—		(424)
Balance at September 30, 2022	$	(1,065)		$	(1)	$	(1,066)
Balance at July 1, 2021	$	723		$	(1)	$	722
OCI before reclassifications	73			—		73
Amounts reclassified from AOCI	(394)			—		(394)
Total OCI	(321)			—		(321)
Balance at September 30, 2021	$	402		$	(1)	$	401
Balance at January 1, 2022	$	329		$	(1)	$	328
OCI before reclassifications	(1,460)			—		(1,460)
Amounts reclassified from AOCI	66			—		66
Total OCI	(1,394)			—		(1,394)
Balance at September 30, 2022	$	(1,065)	(1)	$	(1)	$	(1,066)
Balance at January 1, 2021	$	921		$	(1)	$	920
OCI before reclassifications	(86)			—		(86)
Amounts reclassified from AOCI	(433)			—		(433)
Total OCI	(519)			—		(519)
Balance at September 30, 2021	$	402	(1)	$	(1)	$	401

(1) Includes nil of noncredit related impairments on securities and net unrealized gains (losses) on previously impaired securities as of both September 30, 2022 and 2021.

15. Income Taxes

The Company’s effective tax rate was 1.4% and 15.6% for the three months ended September 30, 2022 and 2021, respectively. The Company’s effective tax rate was 12.3% and 12.7% for the nine months ended September 30, 2022 and 2021, respectively.

The effective tax rate for the three months ended September 30, 2022 was lower than the statutory tax rate as a result of tax preferred items including low income housing tax credits, the dividends received deduction, and taxes applicable to prior years. The effective tax rate for the three months ended September 30,2021 was lower than the statutory tax rate as a result of tax preferred items including low income housing tax credits and the dividends received deduction. The effective tax rate for both the nine months ended September 30, 2022 and 2021 was lower than the statutory tax rate as a result of tax preferred items including low income housing tax credits, foreign tax credits, and the dividends received deduction.

The decrease in the effective tax rate for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was primarily the result of lower pretax income.

Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $9 million, net of federal benefit, which will expire beginning December 31, 2022.

The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Significant judgment is required in determining if a valuation allowance should be established, and the amount of such allowance if required. Factors used in making this determination include estimates relating to the performance of the business. Consideration is given to, among other things in making this determination, (i) future taxable income exclusive of reversing temporary differences and carryforwards, (ii) future reversals of existing taxable temporary differences, (iii) taxable income in prior carryback years, and (iv) tax planning strategies. Based on analysis of the Company’s tax position, management believes it is more likely than not that the results of future operations and implementation of tax planning strategies will not allow the Company to realize certain

42

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

state deferred tax assets of $2 million and state net operating losses of $9 million; therefore, a valuation allowance of $11 million has been established as of both September 30, 2022 and December 31, 2021.

As of both September 30, 2022 and December 31, 2021, the Company had $37 million of gross unrecognized tax benefits. If recognized, approximately $20 million, net of federal tax benefits, of unrecognized tax benefits as of both September 30, 2022 and December 31, 2021 would affect the effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. The Company estimates that the total amount of gross unrecognized tax benefits may decrease by approximately $32 million in the next 12 months primarily due to Internal Revenue Service (“IRS”) settlements.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized nil in interest and penalties for the three and nine months ended September 30, 2022 and 2021. As of both September 30, 2022 and December 31, 2021, the Company had a payable of $3 million related to accrued interest and penalties.

The Company files income tax returns as part of its inclusion in the consolidated federal income tax return of Ameriprise Financial in the U.S. federal jurisdiction and various state jurisdictions. The federal statute of limitations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The IRS is currently auditing Ameriprise Financial’s U.S. income tax returns for 2016 through 2020. Ameriprise Financial’s or its subsidiaries’, including the Company’s, state income tax returns are currently under examination by various jurisdictions for years ranging from 2015 through 2020.

16. Contingencies

Contingencies

The Company and its affiliates are involved in the normal course of business in legal proceedings which include regulatory inquiries, arbitration and litigation, including class actions, concerning matters arising in connection with the conduct of its activities. These include proceedings specific to the Company as well as proceedings generally applicable to business practices in the industries in which it operates. The Company can also be subject to legal proceedings arising out of its general business activities, such as its investments, contracts, and employment relationships. Uncertain economic conditions, heightened and sustained volatility in the financial markets and significant financial reform legislation may increase the likelihood that clients and other persons or regulators may present or threaten legal claims or that regulators increase the scope or frequency of examinations of the Company or the insurance industry generally.

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

These legal proceedings are subject to uncertainties and, as such, it is inherently difficult to determine whether any loss is probable or even reasonably possible, or to reasonably estimate the amount of any loss. The Company cannot predict with certainty if, how or when any such proceedings will be initiated or resolved. Matters frequently need to be more developed before a loss or range of loss can be reasonably estimated for any proceeding. An adverse outcome in one or more proceedings could eventually result in adverse judgments, settlements, fines, penalties or other sanctions, in addition to further claims, examinations or adverse publicity that could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

In accordance with applicable accounting standards, the Company establishes an accrued liability for contingent litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. The Company discloses the nature of the contingency when management believes there is at least a reasonable possibility that the outcome may be material to the Company’s consolidated financial statements and, where feasible, an estimate of the possible loss. In such cases, there still may be an exposure to loss in excess of any amounts reasonably estimated and accrued. When a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability, but continues to monitor, in conjunction with any outside counsel handling a matter, further developments that would make such loss contingency both probable and reasonably estimable. Once the Company establishes an accrued liability with respect to a loss contingency, the Company continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established, and any appropriate adjustments are made each quarter.

43

RIVERSOURCE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Guaranty Fund Assessments

RiverSource Life Insurance Company and RiverSource Life of NY are required by law to be a member of the guaranty fund association in every state where they are licensed to do business. In the event of insolvency of one or more unaffiliated insurance companies, the Company could be adversely affected by the requirement to pay assessments to the guaranty fund associations. The Company projects its cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations and the amount of its premiums written relative to the industry-wide premium in each state. The Company accrues the estimated cost of future guaranty fund assessments when it is considered probable that an assessment will be imposed, the event obligating the Company to pay the assessment has occurred and the amount of the assessment can be reasonably estimated.

The Company has a liability for estimated guaranty fund assessments and a related premium tax asset. As of both September 30, 2022 and December 31, 2021, the estimated liability was $12 million. As of both September 30, 2022 and December 31, 2021, the related premium tax asset was $10 million. The expected period over which guaranty fund assessments will be made and the related tax credits recovered is not known.

44

RIVERSOURCE LIFE INSURANCE COMPANY

ITEM 2. MANAGEMENT’S NARRATIVE ANALYSIS

Overview

RiverSource Life Insurance Company (“RiverSource Life”) and its subsidiaries are referred to collectively in this Form 10-Q as the “Company”. The following discussion and management’s narrative analysis of the financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements” that follow, the Consolidated Financial Statements and Notes presented in Item 1 and its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 (“2021 10-K”), as well as any current reports on Form 8-K and other publicly available information.

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

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

The Company operates its business in the broader context of the macroeconomic forces around it, including the global and U.S. economies, the coronavirus disease 2019 (“COVID-19”) pandemic, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments. Financial markets and macroeconomic conditions have had and will continue to have a significant impact on the Company’s operating and performance results. The Company’s success may be affected by the factors discussed in Item 1A, “Risk Factors” in the Company’s 2021 10-K and other factors as discussed herein.

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

Critical Accounting Estimates

The accounting and reporting policies that the Company uses affect its Consolidated Financial Statements. Certain of the Company’s accounting and reporting policies are critical to an understanding of the Company’s financial condition and results of operations. In some cases, the application of these policies can be significantly affected by the estimates, judgments and assumptions made by management during the preparation of the Consolidated Financial Statements. These accounting policies are discussed in detail in “Management’s Narrative Analysis — Critical Accounting Estimates” in the Company’s 2021 10-K.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements and their expected impact on the Company’s future consolidated financial condition or results of operations, see Note 2 to the Consolidated Financial Statements.

45

RIVERSOURCE LIFE INSURANCE COMPANY

Consolidated Results of Operations for the Nine Months Ended September 30, 2022 and 2021

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

	Nine Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Premiums	$	223	$	(945)	$	1,168	NM
Net investment income	568		664		(96)		(14)	%
Policy and contract charges	1,626		1,715		(89)		(5)
Other revenues	492		436		56		13
Net realized investment gains (losses)	(90)		589		(679)		NM
Total revenues	2,819		2,459		360		15
Benefits and expenses
Benefits, claims, losses and settlement expenses	660		337		323		96
Interest credited to fixed accounts	443		455		(12)		(3)
Amortization of deferred acquisition costs	343		69		274		NM
Interest and debt expense	71		84		(13)		(15)
Other insurance and operating expenses	509		553		(44)		(8)
Total benefits and expenses	2,026		1,498		528		35
Pretax income (loss)	793		961		(168)		(17)
Income tax provision (benefit)	98		121		(23)		(19)
Net income (loss)	$	695	$	840	$	(145)	(17)	%
NM  Not Meaningful.

Overall

Net income decreased $145 million, or 17%, for the nine months ended September 30, 2022 compared to the prior year period. Pretax income decreased $168 million, or 17%, for the nine months ended September 30, 2022 compared to the prior year period.

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

•The prior year impact of the block transfer reinsurance transaction resulted in $521 million of pretax income for the nine months ended September 30, 2021 primarily reflecting the net realized gains on the investments sold to the reinsurer.

•The impact on variable annuity and variable universal life products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves (“mean reversion related impact”) was an expense of $299 million for the nine months ended September 30, 2022 compared to a benefit of $107 million for the prior year period.

•The unfavorable impact of unlocking was $161 million for the nine months ended September 30, 2022 compared to a favorable impact of $17 million for the prior year period.

•A $51 million unfavorable impact due to more normalized long term care (“LTC”) insurance claims in the current period compared to the benefit of COVID-19 related impacts in the year ago period.

•Net realized investment losses of $90 million for the nine months ended September 30, 2022 were primarily driven by impairments on securities the Company intends to sell as it repositioned a portion of its fixed maturity bond portfolio in response to recent market conditions and credit losses on corporate debt securities.

•The market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts), net of hedges and the related deferred sales inducement costs (“DSIC”) and deferred acquisition costs (“DAC”) amortization, unearned revenue amortization and the reinsurance accrual was a benefit of $571 million for the nine months ended September 30, 2022 compared to an expense of $577 million for the prior year period.

Variable annuity account balances decreased 20% to $71.3 billion as of September 30, 2022 compared to the prior year period due to market depreciation and net outflows of $2.0 billion. Variable annuity sales decreased 35% compared to the prior year period reflecting a decrease in sales of variable annuities with living benefit guarantees. The risk profile of its in force block continues to improve, with account values with living benefit riders down to 58% as of September 30, 2022 compared to 62% a year ago. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.

46

RIVERSOURCE LIFE INSURANCE COMPANY

The Company continues to optimize its risk profile and shift its business mix to lower risk offerings. During the fourth quarter of 2021, the Company made the decision to discontinue new sales of substantially all of its variable annuities with living benefit guarantees at the end of 2021, and has fully stopped issuing new contracts as of June 30, 2022. In addition, the Company has discontinued new sales of its universal life insurance with secondary guarantees and its single-pay fixed universal life with a long term care rider products at the end of 2021.

Fixed deferred annuity account balances declined 5% to $7.3 billion as of September 30, 2022 compared to the prior year period as surrender trends continue. During the third quarter of 2021, the Company closed on a transaction to reinsure RiverSource Life’s fixed deferred and immediate annuity policies.

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

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

Pretax Increase (Decrease)	2022		2021
	(in millions)
Policy and contract charges	$	1	$	19
Total revenues	1		19
Benefits, claims, losses and settlement expenses:
LTC unlocking	—		3
Unlocking impact, excluding LTC	170		59
Total benefits, claims, losses and settlement expenses	170		62
Amortization of DAC	(8)		(60)
Total expenses	162		2
Pretax income	$	(161)	$	17

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

•Mortality assumption on variable annuities with living benefit guarantees resulted in a higher expense in the third quarter of 2022 compared to the prior year period.

•Equity market volatility and correlation assumptions on variable annuities resulted in an unfavorable impact in the third quarter of 2022 compared to a favorable impact in the prior year period.

Revenues

Premiums increased $1.2 billion for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting ceded premiums of $1.2 billion associated with the reinsurance transaction for the life contingent immediate annuity policies in the year ago period.

Net investment income decreased $96 million, or 14%, for the nine months ended September 30, 2022 compared to the prior year period reflecting lower average invested assets due to the sale of investments in the prior year period to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction and lower net investment income of consolidated CIEs.

Policy and contract charges decreased $89 million, or 5%, for the nine months ended September 30, 2022 compared to the prior year period reflecting lower mortality and expense fees due to market depreciation.

Other revenues increased $56 million, or 13%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the yield on deposit receivables arising from reinsurance transactions.

Net realized investment losses were $90 million for the nine months ended September 30, 2022 compared to net realized investment gains of $589 million for the prior year period. The nine months ended September 30, 2022 were primarily driven by impairments on securities the Company intends to sell as it repositioned a portion of its fixed maturity bond portfolio in response to recent market conditions and credit losses on corporate debt securities. The nine months ended September 30, 2021 included net realized gains of $548 million on Available-for-Sale securities and net realized gains of $56 million primarily related to commercial mortgage loans and syndicated loans. These net realized gains are primarily due to sale of securities and loans to the reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction that closed in the third quarter 2021. Also included in net realized investment gains are $15 million of losses in the consolidated CIEs.

47

RIVERSOURCE LIFE INSURANCE COMPANY

Benefits and Expenses

Benefits, claims, losses and settlement expenses increased $323 million, or 96%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the following items:

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

•A $211 million decrease in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits.

•A $986 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This decrease was the result of a favorable $449 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits and a favorable $537 million change in the market impact on variable annuity guaranteed living benefits reserves. The main market drivers contributing to these changes are summarized below:

•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the nine months ended September 30, 2022 compared to an expense for the prior year period.

•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the nine months ended September 30, 2022 compared to the prior year period.

•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower expense for the nine months ended September 30, 2022 compared to the prior year period.

•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net expense for the nine months ended September 30, 2022 compared to a net benefit for the prior year period.

•The unlocking impact excluding LTC for the nine months ended September 30, 2022 was an expense of $170 million primarily reflecting continued lower surrender rates and updated mortality assumptions for variable annuities with living benefits compared to an expense of $59 million in the prior year period which was also driven by lower surrender rates.

•The mean reversion related impact was an expense of $174 million for the nine months ended September 30, 2022 compared to a benefit of $65 million for the prior year period.

•A $50 million increase in expense on LTC insurance as claims returned to more normalized levels compared to the prior year period which benefited from COVID-19 related impacts.

Interest credited to fixed accounts decreased $12 million, or 3%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the following items:

•A $70 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The favorable impact of the nonperformance credit spread was $54 million for the nine months ended September 30, 2022 compared to an unfavorable impact of $16 million for the prior year period.

•A $74 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $29 million for the nine months ended September 30, 2022 compared to a benefit of $45 million for the prior year period. The increase in expense was primarily due to an increase in the IUL embedded derivative in the current year period, which reflected higher option costs due to a higher new money rate, compared to a decrease in the IUL embedded derivative in the prior year period, which reflected lower option costs due to higher discount rates.

Amortization of DAC increased $274 million for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the following items:

•The impact of unlocking in the third quarter of 2022 was a benefit of $8 million compared to a benefit of $60 million in the prior year period.

•The DAC offset to the market impact on non-traditional long-duration products was an expense of $74 million for the nine months ended September 30, 2022 compared to a benefit of $42 million for the prior year period.

•The mean reversion related impact was an expense of $124 million for the nine months ended September 30, 2022 compared to a benefit of $41 million for the prior year period.

•A decrease in amortization reflecting lower than expected client exit rates.

Interest and debt expense decreased $13 million, or 15%, or the nine months ended September 30, 2022 compared to the prior year period primarily reflecting lower expenses of consolidated CIEs.

Other insurance and operating expenses decreased $44 million, or 8%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting lower distribution expenses and lower expenses from the consolidation of CIEs.

48

RIVERSOURCE LIFE INSURANCE COMPANY

Income Taxes

The Company’s effective tax rate was 12.3% for the nine months ended September 30, 2022 compared to 12.7% for the prior year period. See Note 15 to the Consolidated Financial Statements for additional discussion on income taxes.

Market Risk

The Company’s primary market risk exposures are interest rate, equity price and credit risk. Equity price and interest rate fluctuations can have a significant impact on the Company’s results of operations, primarily due to the effects on asset-based fees and expenses, the “spread” income generated on its fixed insurance, fixed portion of its variable annuities and variable insurance contracts, and the fixed deferred annuities, the value of DAC and DSIC assets, the value of liabilities for guaranteed benefits associated with its variable annuities and the value of derivatives held to hedge these benefits.

The Company’s earnings from fixed insurance, the fixed portion of variable annuities and variable insurance contracts, and fixed deferred annuities are based upon the spread between rates earned on assets held and the rates at which interest is credited to accounts. The Company primarily invests in fixed rate securities to fund the rate credited to clients. The Company guarantees an interest rate to the holders of these products. Investment assets and client liabilities generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments. Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income. While interest rates under the current environment have relieved some pressure from the liability guaranteed minimum interest rates (“GMIRs”), there are still some GMIRs above current levels. Hence, liability credited rates will move more slowly under a modest rise in interest rates while projected asset purchases would capture the full increase in interest rates. This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business.

As a result of the current market environment, reinvestment yields are becoming more aligned with the current portfolio yield. We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods under the current environment. The carrying value and weighted average yield of total non-structured fixed maturity securities and commercial mortgage loans in the Company’s investment portfolio that may generate proceeds to reinvest through September 30, 2024 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $0.9 billion and 4.0%, respectively, as of September 30, 2022. In addition, residential mortgage-backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $2.6 billion and had a weighted average yield of 2.9% as of September 30, 2022. While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields. In addition to the interest rate environment, the mix of benefit payments versus product sales as well as the timing and volumes associated with such mix may impact the Company’s investment yield. Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion. The average yield for investment purchases during the nine months ended September 30, 2022 was approximately 4.5%.

The reinvestment of proceeds from maturities, calls and prepayments at rates near the current portfolio yield will have limited impact to future operating results. In this volatile rate environment, the Company assesses reinvestment risk in its investment portfolio and monitors this risk in accordance with its asset/liability management framework. In addition, the Company may update the crediting rates on its fixed products when warranted, subject to guaranteed minimums.

In addition to the fixed rate exposures noted above, the Company also has the following variable annuity guarantee benefits: guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying invested assets.

The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the liabilities. This approach works with the premise that matched sensitivities will produce a highly effective hedging result. The Company’s comprehensive hedging program focuses mainly on first order sensitivities of assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho) and Volatility (Vega). Additionally, various second order sensitivities are managed. The Company uses various options, swaptions, swaps and futures to manage risk exposures. The exposures are measured and monitored daily and adjustments to the hedge portfolio are made as necessary.

The Company has a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on its statutory surplus and to cover some of the residual risks not covered by other hedging activities. The Company assesses this residual risk under a range of scenarios in creating and executing the macro hedge program. As a means of economically hedging these risks, the Company may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts. The macro hedge program could result in additional earnings volatility as changes in the value of the macro hedge

49

RIVERSOURCE LIFE INSURANCE COMPANY

derivatives, which are designed to reduce statutory capital volatility, may not be closely aligned to changes in the variable annuity guarantee embedded derivatives.

To evaluate interest rate and equity price risk, the Company performs sensitivity testing which measures the impact on pretax income from the sources listed below for a 12-month period following a hypothetical 100 basis point increase in interest rates or a hypothetical 10% decline in equity prices. The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuity riders, indexed annuities, IUL insurance and the associated hedge assets, the Company assumed no change in implied market volatility despite the 10% drop in equity prices.

The following tables present the Company’s estimate of the impact on pretax income from the above defined hypothetical market movements as of September 30, 2022:

Equity Price Decline 10%	Equity Price Exposure to Pretax Income
	Before Hedge Impact		Hedge Impact		Net Impact
	(in millions)
Asset-based fees and expenses	$	(51)	$	—	$	(51)
DAC and DSIC amortization (1) (2)	(55)		—		(55)
Variable annuities:
GMDB and GMIB (2)	(42)		—		(42)
GMWB (2)	(554)		534		(20)
GMAB	(34)		34		—
Structured variable annuities	432		(400)		32
DAC and DSIC amortization (3)	N/A		N/A		8
Total variable annuities	(198)		168		(22)
Macro hedge program (4)	—		195		195
IUL insurance	13		(18)		(5)
Total	$	(291)	$	345	$	62

Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
	Before Hedge Impact		Hedge Impact		Net Impact
	(in millions)
Asset-based fees and expenses	$	(12)	$	—	$	(12)
Variable annuities:
GMWB	742		(922)		(180)
GMAB	3		(5)		(2)
Structured variable annuities	(35)		177		142
DAC and DSIC amortization (3)	N/A		N/A		15
Total variable annuities	710		(750)		(25)
Macro hedge program (4)	—		(252)		(252)
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	58		—		58
IUL insurance	16		2		18
Total	$	772	$	(1,000)	$	(213)

N/A Not Applicable.

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

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

(3) Market impact on DAC and DSIC amortization related to variable annuities is modeled net of hedge impact.

(4) The market impact of the macro hedge program is modeled net of any related impact to DAC and DSIC amortization.

The above results compare to an estimated positive net impact to pretax income of $98 million related to a 10% equity price decline and an estimated negative net impact to pretax income of $170 million related to a 100 basis point increase in interest rates as of December 31, 2021. The change in interest rate exposure as of September 30, 2022 compared to December 31, 2021 was driven by additional downside rate protection added in the macro hedge program.

50

RIVERSOURCE LIFE INSURANCE COMPANY

Net impacts shown in the above table from GMWB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions and with discount rates increased to reflect a current market estimate of the Company’s risk of nonperformance specific to these liabilities. The Company’s hedging is based on its determination of economic risk, which excludes certain items in the liability valuation including the nonperformance spread risk.

Actual results will differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve. Furthermore, the Company has not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor has the Company tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in these scenarios.

The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events. Impacts of larger or smaller changes in interest rates or equity prices may not be proportional to those shown for a 100 basis point increase in interest rates or a 10% decline in equity prices.

Fair Value Measurements

The Company reports certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives, most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or distressed sale. The Company includes actual market prices, or observable inputs, in its fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. The Company validates prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 11 to the Consolidated Financial Statements for additional information on the Company’s fair value measurements.

Fair Value of Liabilities and Nonperformance Risk

Companies are required to measure the fair value of liabilities at the price that would be received to transfer the liability to a market participant (an exit price). Since there is not a market for the Company’s obligations of its variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, the Company considers the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, the Company adjusts the valuation of variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance by updating certain contractholder assumptions, adding explicit margins to provide for risk, and adjusting the rates used to discount expected cash flows to reflect a current market estimate of the Company’s nonperformance risk. The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of the Company not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the U.S. Treasury curve as of September 30, 2022. As the Company’s estimate of this spread widens or tightens, the liability will decrease or increase. If this nonperformance credit spread moves to a zero spread over the U.S. Treasury curve, the reduction to future net income would be approximately $548 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on September 30, 2022 credit spreads.

Liquidity and Capital Resources

Liquidity Strategy

The liquidity requirements of the Company are generally met by funds provided by investment income, maturities and periodic repayments of investments, premiums and proceeds from sales of investments, fixed annuity and fixed insurance deposits as well as capital contributions from its parent, Ameriprise Financial Inc. (“Ameriprise Financial”). Other liquidity sources the Company has established are short-term borrowings and available lines of credit with Ameriprise Financial aggregating $854 million.

The Company enters into short-term borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances to reduce reinvestment risk. Short-term borrowings allow the Company to receive cash to reinvest in longer-duration assets, while maintaining the flexibility to pay back the short-term debt with cash flows generated by the fixed income portfolio. RiverSource Life Insurance Company is a member of the FHLB of Des Moines, which provides RiverSource Life Insurance Company access to collateralized borrowings. As of September 30, 2022 and December 31, 2021, the Company had estimated maximum borrowing capacity of $4.1 billion and $4.0 billion under the FHLB facility, respectively, of which $201 million and $200 million was outstanding as of September 30, 2022 and December 31, 2021, respectively, and is collateralized with commercial mortgage backed securities.

There have been no material changes to the Company’s contractual obligations disclosed in the Company’s 2021 10-K.

See Note 10 to the Consolidated Financial Statements for further information about the Company’s long-term debt.

51

RIVERSOURCE LIFE INSURANCE COMPANY

The primary uses of funds are policy benefits, commissions, other product-related acquisition and sales inducement costs, operating expenses, policy loans, dividends to Ameriprise Financial and investment purchases. The Company routinely reviews its sources and uses of funds in order to meet its ongoing obligations. The Company believes these cash flows will be sufficient to fund its short-term and long-term operating liquidity needs and dividends to Ameriprise Financial.

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

Capital Activity

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

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Paid to Ameriprise Financial	$	600	$	1,675
Received from RiverSource Life Insurance Co. of New York (“RiverSource Life of NY”)	63		—
Received from RiverSource Tax Advantaged Investments, Inc.	—		50

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

Regulatory Capital

RiverSource Life Insurance Company and RiverSource Life of NY are subject to regulatory capital requirements. Actual capital, determined on a statutory basis, and regulatory capital requirements for each of the life insurance entities were as follows:

	Actual Capital (1)				Regulatory Capital Requirements (2)
	September 30, 2022		December 31, 2021		December 31, 2021
	(in millions)
RiverSource Life Insurance Company	$	2,998	$	3,419	$	502
RiverSource Life of NY	168		310		42

(1) Actual capital, as defined by the National Association of Insurance Commissioners for purposes of meeting regulatory capital requirements, includes statutory capital and surplus, plus certain statutory valuation reserves.

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

52

RIVERSOURCE LIFE INSURANCE COMPANY

Forward-Looking Statements

This report contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include: 

•statements of the Company’s plans, intentions, expectations, objectives, or goals, including those related to the introduction, cessation, terms or pricing of new or existing products and services and the consolidated tax rate;

•statements about the expected trend in the shift to lower-risk products, including the exit from variable annuities with living benefit riders and the discontinuance of new sales of universal life insurance with secondary guarantees;

•other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and

•statements of assumptions underlying such statements.

The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “project,” “continue,” “able to remain,” “resume,” “deliver,” “develop,” “evolve,” “drive,” “enable,” “flexibility,” “scenario,” “case”, “appear”, “expand” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements.

Such factors include, but are not limited to: 

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

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

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

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

•effects of competition and the Company’s larger competitors’ economies of scale;

•declines in the Company’s investment management performance;

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

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

•poor performance of the Company’s variable products;

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

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

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

•the illiquidity of the Company’s investments;

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

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

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

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

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

•direct or indirect effects of or responses to climate change;

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

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

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

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

•legal and regulatory actions brought against the Company;

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

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

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

•changes in and the adoption of new accounting standards.

The Company cautions the reader that the foregoing list of factors is not exhaustive. There may also be other risks that the Company is unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statements. The foregoing list of factors should be read in conjunction with the “Risk Factors” discussion included in Part I, Item 1A of the Company’s 2021 10-K.

53

RIVERSOURCE LIFE INSURANCE COMPANY

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in and pursuant to Securities and Exchange Commission regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to the Company’s management, including its principal executive officer and chief financial officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, the Company’s disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

The Company’s management, under the supervision and with the participation of the Company’s principal executive officer and chief financial officer, evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures were effective at a reasonable level of assurance as of September 30, 2022.

Changes in Internal Control over Financial Reporting

There have not been any changes to RiverSource Life Insurance Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, RiverSource Life Insurance Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 16 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference. 

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors provided in Part I, Item 1A of RiverSource Life Insurance Company’s 2021 10-K.

54

RIVERSOURCE LIFE INSURANCE COMPANY

ITEM 6. EXHIBITS

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

Exhibit	Description
3.1	Copy of Certificate of Incorporation of IDS Life Insurance Company, filed as Exhibit 3.1 to Post-Effective Amendment No. 5 to Registration Statement No. 33-28976, is incorporated by reference.
3.1.1	Copy of Certificate of Amendment of Certificate of Incorporation of IDS Life Insurance Company dated June 22, 2006, filed as Exhibit 3.1 to Form 8-K filed on January 5, 2007, is incorporated by reference.
3.2	Copy of Amended and Restated By-Laws of RiverSource Life Insurance Company dated June 22, 2006, filed as Exhibit 27(f)(2) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777, is incorporated by reference.
31.1*	Certification of Gumer C. Alvero, Chairman and President, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Brian E. Hartert, Chief Financial Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*	Certification of Gumer C. Alvero, Chairman and President and Brian E. Hartert, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from RiverSource Life Insurance Company on Form 10-Q for the period ended September 30, 2022 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2022 and December 31, 2021; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021; (iv) Consolidated Statements of Equity for the three and nine months ended September 30, 2022 and 2021; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021; and (vi) Notes to the Consolidated Financial Statements.
104	The cover page from RiverSource Life Insurance Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 is formatted in iXBRL and contained in Exhibit 101.
* Filed electronically herewithin.

55

RIVERSOURCE LIFE INSURANCE COMPANY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RIVERSOURCE LIFE INSURANCE COMPANY

(Registrant)

Date:	November 2, 2022	By:	/s/ Gumer C. Alvero
			Gumer C. Alvero Chairman and President

Date:	November 2, 2022	By:	/s/ Brian E. Hartert
			Brian E. Hartert Chief Financial Officer

56