Ameriprise Financial 10Q 2022 Q3 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		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.			1-32525


AMERIPRISE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

Delaware

13-3180631

(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 $0.01 per share)

AMP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

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

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller reporting company

☐

Emerging growth company

☐


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

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

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at October 21, 2022

Common Stock (par value $0.01 per share)

106,417,199 shares

AMERIPRISE FINANCIAL, INC.

FORM 10-Q

INDEX


Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
	Consolidated Statements of Operations — Three and nine months ended September 30, 2022 and 2021		3
	Consolidated Statements of Comprehensive Income — Three and nine months ended September 30, 2022 and 2021		3
	Consolidated Balance Sheets — September 30, 2022 and December 31, 2021		4
	Consolidated Statements of 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	13
	5.	Investments	18
	6.	Financing Receivables	23
	7.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	27
	8.	Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities	28
	9.	Variable Annuity and Insurance Guarantees	29
	10.	Debt	30
	11.	Fair Values of Assets and Liabilities	31
	12.	Offsetting Assets and Liabilities	43
	13.	Derivatives and Hedging Activities	45
	14.	Shareholders’ Equity	50
	15.	Income Taxes	52
	16.	Contingencies	53
	17.	Earnings per Share	55
	18.	Segment Information	55
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			57
Item 3. Quantitative and Qualitative Disclosures About Market Risk			88
Item 4. Controls and Procedures			88

Part II. Other Information			88
Item 1. Legal Proceedings			89
Item 1A. Risk Factors			89
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			89
Item 6. Exhibits			90
Signatures			91

AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except per share amounts)
Revenues
Management and financial advice fees	$	2,172	$	2,367	$	6,908	$	6,720
Distribution fees	506		458		1,410		1,368
Net investment income	349		773		897		1,428
Premiums, policy and contract charges	361		(805)		1,094		(94)
Other revenues	118		113		365		259
Total revenues	3,506		2,906		10,674		9,681
Banking and deposit interest expense	15		3		20		10
Total net revenues	3,491		2,903		10,654		9,671
Expenses
Distribution expenses	1,195		1,285		3,728		3,693
Interest credited to fixed accounts	157		172		443		455
Benefits, claims, losses and settlement expenses	370		(719)		663		338
Amortization of deferred acquisition costs	107		9		355		77
Interest and debt expense	52		64		136		149
General and administrative expense	925		822		2,766		2,475
Total expenses	2,806		1,633		8,091		7,187
Pretax income	685		1,270		2,563		2,484
Income tax provision	137		239		498		425
Net income	$	548	$	1,031	$	2,065	$	2,059

Earnings per share
Basic	$	4.96	$	8.86	$	18.42	$	17.42
Diluted	$	4.86	$	8.65	$	18.05	$	17.03

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	$	548	$	1,031	$	2,065	$	2,059
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities	(873)		(339)		(2,502)		(538)
Net unrealized gains (losses) on derivatives	—		—		(1)		—
Defined benefit plans	1		—		1		29
Foreign currency translation adjustment	(127)		(22)		(295)		(21)

Total other comprehensive income (loss), net of tax	(999)		(361)		(2,797)		(530)
Total comprehensive income (loss)	$	(451)	$	670	$	(732)	$	1,529

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	September 30, 2022		December 31, 2021
	(in millions, except share amounts)
Assets
Cash and cash equivalents	$	7,819	$	7,127
Cash of consolidated investment entities	174		121
Investments (allowance for credit losses: 2022, $39; 2021, $18)	40,072		35,810
Investments of consolidated investment entities, at fair value	2,378		2,184
Separate account assets	71,722		97,491
Receivables (allowance for credit losses: 2022, $66; 2021, $55)	16,008		16,205
Receivables of consolidated investment entities, at fair value	38		17
Deferred acquisition costs	2,998		2,782
Restricted and segregated cash, cash equivalents and investments	2,343		2,795
Other assets	9,800		11,444
Other assets of consolidated investment entities, at fair value	2		3
Total assets	$	153,354	$	175,979

Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims	$	35,482	$	35,750
Separate account liabilities	71,722		97,491
Customer deposits	28,137		20,227
Short-term borrowings	201		200
Long-term debt	2,822		2,832
Debt of consolidated investment entities, at fair value	2,401		2,164
Accounts payable and accrued expenses	2,058		2,527
Other liabilities	7,113		8,966
Other liabilities of consolidated investment entities, at fair value	161		137
Total liabilities	150,097		170,294
Equity:
Common shares (0.01 par value; shares authorized, 1,250,000,000; shares issued, 335,570,655 and 334,828,117, respectively)	3		3
Additional paid-in capital	9,434		9,220
Retained earnings	19,174		17,525
Treasury shares, at cost (228,877,044 and 223,967,107 shares, respectively)	(22,560)		(21,066)
Accumulated other comprehensive income (loss), net of tax	(2,794)		3
Total equity	3,257		5,685
Total liabilities and equity	$	153,354	$	175,979

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)


	Number of Outstanding Shares	Common Shares		Additional Paid-In Capital		Retained Earnings		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Total
	(in millions, except per share data)
Balances at July 1, 2022	108,438,618	$	3	$	9,380	$	18,767	$	(22,051)	$	(1,795)	$	4,304
Net income	—	—		—		548		—		—		548
Other comprehensive loss, net of tax	—	—		—		—		—		(999)		(999)
Dividends to shareholders	—	—		—		(141)		—		—		(141)
Repurchase of common shares	(1,931,209)	—		—		—		(509)		—		(509)
Share-based compensation plans	186,202	—		54		—		—		—		54
Balances at September 30, 2022	106,693,611	$	3	$	9,434	$	19,174	$	(22,560)	$	(2,794)	$	3,257

Balances at July 1, 2021	114,297,434	$	3	$	9,049	$	16,057	$	(19,883)	$	460	$	5,686
Net income	—	—		—		1,031		—		—		1,031
Other comprehensive loss, net of tax	—	—		—		—		—		(361)		(361)
Dividends to shareholders	—	—		—		(133)		—		—		(133)
Repurchase of common shares	(2,236,129)	—		—		—		(586)		—		(586)
Share-based compensation plans	336,282	—		69		—		1		—		70
Balances at September 30, 2021	112,397,587	$	3	$	9,118	$	16,955	$	(20,468)	$	99	$	5,707

Balances at January 1, 2022	110,861,010	$	3	$	9,220	$	17,525	$	(21,066)	$	3	$	5,685
Net income	—	—		—		2,065		—		—		2,065
Other comprehensive loss, net of tax	—	—		—		—		—		(2,797)		(2,797)
Dividends to shareholders	—	—		—		(416)		—		—		(416)
Repurchase of common shares	(5,655,820)	—		—		—		(1,565)		—		(1,565)
Share-based compensation plans	1,488,421	—		214		—		71		—		285
Balances at September 30, 2022	106,693,611	$	3	$	9,434	$	19,174	$	(22,560)	$	(2,794)	$	3,257

Balances at January 1, 2021	116,765,613	$	3	$	8,822	$	15,292	$	(18,879)	$	629	$	5,867
Net income	—	—		—		2,059		—		—		2,059
Other comprehensive loss, net of tax	—	—		—		—		—		(530)		(530)
Dividends to shareholders	—	—		—		(396)		—		—		(396)
Repurchase of common shares	(6,724,301)	—		—		—		(1,624)		—		(1,624)
Share-based compensation plans	2,356,275	—		296		—		35		—		331
Balances at September 30, 2021	112,397,587	$	3	$	9,118	$	16,955	$	(20,468)	$	99	$	5,707

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
	2022		2021
	(in millions)
Cash Flows from Operating Activities
Net income	$	2,065	$	2,059
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net	(11)		95
Deferred income tax expense (benefit)	177		63
Share-based compensation	127		124
Net realized investment (gains) losses	(5)		(627)
Net trading (gains) losses	8		3
Loss from equity method investments	25		58
Impairments and provision for loan and credit losses	93		2
Net (gains) losses of consolidated investment entities	5		(17)
Changes in operating assets and liabilities:
Restricted and segregated investments	(246)		(101)
Deferred acquisition costs	204		(128)
Policyholder account balances, future policy benefits and claims, net	754		1,174
Derivatives, net of collateral	465		(290)
Receivables	(132)		(360)
Brokerage deposits	(168)		(45)
Accounts payable and accrued expenses	(414)		146
Current income tax, net	(61)		(393)
Deferred taxes, net	10		(112)
Other operating assets and liabilities of consolidated investment entities, net	1		15
Other, net	293		108
Net cash provided by (used in) operating activities	3,190		1,774

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	738		555
Maturities, sinking fund payments and calls	5,849		8,992
Purchases	(15,452)		(10,047)
Proceeds from sales, maturities and repayments of mortgage loans	111		242
Funding of mortgage loans	(147)		(166)
Proceeds from sales, maturities and collections of other investments	48		155
Purchase of other investments	(75)		(73)
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 land, buildings, equipment and software	(126)		(86)
Cash paid for written options with deferred premiums	(411)		(314)
Cash received from written options with deferred premiums	141		60
Cash returned (paid) for acquisition of business, net of cash acquired	34		—
Cash paid for deposit receivables	(34)		(216)
Cash received for deposit receivables	393		132
Other, net	(13)		4
Net cash provided by (used in) investing activities	$	(9,241)	$	(1,373)
See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
	Nine Months Ended September 30,
	2022		2021
	(in millions)
Cash Flows from Financing Activities
Investment certificates:
Proceeds from additions	$	3,844	$	2,004
Maturities, withdrawals and cash surrenders	(2,942)		(3,320)
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)
Change in banking deposits, net	7,173		2,412
Cash paid for purchased options with deferred premiums	(159)		(94)
Cash received from purchased options with deferred premiums	230		580
Issuance of long-term debt	495		4
Repayments of long-term debt	(507)		(6)
Dividends paid to shareholders	(401)		(384)
Repurchase of common shares	(1,490)		(1,467)

Borrowings of consolidated investment entities	341		1,375
Repayments of debt by consolidated investment entities	(1)		(757)
Other, net	(19)		(11)
Net cash provided by (used in) financing activities	6,213		259
Effect of exchange rate changes on cash	(116)		(9)


Net increase (decrease) in cash and cash equivalents, including amounts restricted	46		651
Cash and cash equivalents, including amounts restricted, at beginning of period	9,569		8,903
Cash and cash equivalents, including amounts restricted, at end of period	$	9,615	$	9,554

Supplemental Disclosures:
Interest paid excluding consolidated investment entities	$	89	$	85
Interest paid by consolidated investment entities	49		73
Income taxes paid, net	367		867

Leased assets obtained in exchange for operating lease liabilities	42		63
Non-cash investing activity:

Investments transferred in connection with reinsurance transaction	—		7,527
Exchange of an investment that resulted in a realized gain and an increase to amortized cost	—		17

	September 30, 2022		December 31, 2021
	(in millions)
Reconciliation of cash and cash equivalents, including amounts restricted:
Cash and cash equivalents	$	7,819	$	7,127
Cash of consolidated investment entities	174		121
Restricted and segregated cash, cash equivalents and investments	2,343		2,795
Less: Restricted and segregated investments	(721)		(474)
Total cash and cash equivalents including amounts restricted per consolidated statements of cash flows	$	9,615	$	9,569
See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning, products and services that are designed to be utilized as solutions for clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. The foreign operations of Ameriprise Financial, Inc. are conducted primarily through Columbia Threadneedle Investments UK International Limited, TAM UK International Holdings Ltd and Ameriprise Asset Management Holdings Singapore (Pte.) Ltd and their respective subsidiaries (collectively, “Threadneedle”).

The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc., 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 results of operations and financial position 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.

In the first quarter of 2021, the Company recorded a favorable out-of-period correction of $29 million in OCI related to defined benefit plans.

The impact of these out-of-period adjustments, individually and in the aggregate, 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 (“SEC”) 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 results of operations and financial condition.

Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB updated the accounting standards to require an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue for Contracts with Customers (“Topic 606”). At the acquisition date, an acquirer is required to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements (if the acquiree prepared financial statements in accordance with GAAP). The amendments apply to all contract assets and contract liabilities acquired in a business combination that result from contracts accounted for under the principals of Topic 606. The standard is effective for interim and annual periods beginning after December 15, 2022. Early adoption is permitted, including adoption in an interim

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of the early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The adoption of the standard is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.

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.

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 tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the Consolidated Statements of Operations:



	Three Months Ended September 30, 2022
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	509	$	—	$	—	$	509	$	—	$	509
Institutional	—		159		—		—		159		—		159
Advisory fees	1,107		—		—		—		1,107		—		1,107
Financial planning fees	97		—		—		—		97		—		97
Transaction and other fees	93		51		15		—		159		—		159
Total management and financial advice fees	1,297		719		15		—		2,031		—		2,031
Distribution fees:
Mutual funds	180		56		—		—		236		—		236
Insurance and annuity	205		40		84		—		329		—		329
Other products	194		—		—		—		194		—		194
Total distribution fees	579		96		84		—		759		—		759
Other revenues	51		1		—		—		52		—		52
Total revenue from contracts with customers	1,927		816		99		—		2,842		—		2,842
Revenue from other sources (1)	225		7		687		117		1,036		(51)		985
Total segment gross revenues	2,152		823		786		117		3,878		(51)		3,827
Banking and deposit interest expense	(15)		—		—		(2)		(17)		—		(17)
Total segment net revenues	2,137		823		786		115		3,861		(51)		3,810
Elimination of intersegment revenues	(202)		(14)		(101)		1		(316)		(3)		(319)
Total net revenues	$	1,935	$	809	$	685	$	116	$	3,545	$	(54)	$	3,491

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)



	Three Months Ended September 30, 2021
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	587	$	—	$	—	$	587	$	—	$	587
Institutional	—		143		—		—		143		—		143
Advisory fees	1,189		—		—		—		1,189		—		1,189
Financial planning fees	91		—		—		—		91		—		91
Transaction and other fees	94		57		18		—		169		—		169
Total management and financial advice fees	1,374		787		18		—		2,179		—		2,179
Distribution fees:
Mutual funds	219		70		—		—		289		—		289
Insurance and annuity	246		50		104		—		400		—		400
Other products	96		—		—		—		96		—		96
Total distribution fees	561		120		104		—		785		—		785
Other revenues	46		1		—		1		48		—		48
Total revenue from contracts with customers	1,981		908		122		1		3,012		—		3,012
Revenue from other sources (1)	70		7		712		112		901		(605)		296
Total segment gross revenues	2,051		915		834		113		3,913		(605)		3,308
Banking and deposit interest expense	(3)		—		—		—		(3)		—		(3)
Total segment net revenues	2,048		915		834		113		3,910		(605)		3,305
Elimination of intersegment revenues	(261)		(12)		(122)		—		(395)		(7)		(402)
Total net revenues	$	1,787	$	903	$	712	$	113	$	3,515	$	(612)	$	2,903


	Nine Months Ended September 30, 2022
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	1,696	$	—	$	—	$	1,696	$	—	$	1,696
Institutional	—		527		—		—		527		—		527
Advisory fees	3,442		—		—		—		3,442		—		3,442
Financial planning fees	293		—		—		—		293		—		293
Transaction and other fees	282		160		46		—		488		—		488
Total management and financial advice fees	4,017		2,383		46		—		6,446		—		6,446
Distribution fees:
Mutual funds	570		179		—		—		749		—		749
Insurance and annuity	642		128		267		—		1,037		—		1,037

Other products	438		—		—		—		438		—		438
Total distribution fees	1,650		307		267		—		2,224		—		2,224
Other revenues	158		7		—		—		165		—		165
Total revenue from contracts with customers	5,825		2,697		313		—		8,835		—		8,835
Revenue from other sources (1)	430		24		2,005		352		2,811		43		2,854
Total segment gross revenues	6,255		2,721		2,318		352		11,646		43		11,689
Banking and deposit interest expense	(20)		—		—		(2)		(22)		—		(22)
Total segment net revenues	6,235		2,721		2,318		350		11,624		43		11,667
Elimination of intersegment revenues	(651)		(37)		(318)		1		(1,005)		(8)		(1,013)
Total net revenues	$	5,584	$	2,684	$	2,000	$	351	$	10,619	$	35	$	10,654

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Nine Months Ended September 30, 2021
	Advice & Wealth Management		Asset Management		Retirement & Protection Solutions		Corporate & Other		Total Segments		Non-operating Revenue		Total
	(in millions)
Management and financial advice fees:
Asset management fees:
Retail	$	—	$	1,685	$	—	$	—	$	1,685	$	—	$	1,685
Institutional	—		397		—		—		397		—		397
Advisory fees	3,330		—		—		—		3,330		—		3,330
Financial planning fees	272		—		—		—		272		—		272
Transaction and other fees	276		165		52		—		493		—		493
Total management and financial advice fees	3,878		2,247		52		—		6,177		—		6,177
Distribution fees:
Mutual funds	638		206		—		—		844		—		844
Insurance and annuity	738		146		304		—		1,188		—		1,188

Other products	306		—		—		—		306		—		306
Total distribution fees	1,682		352		304		—		2,338		—		2,338
Other revenues	146		9		—		2		157		—		157
Total revenue from contracts with customers	5,706		2,608		356		2		8,672		—		8,672
Revenue from other sources (1)	211		14		2,073		370		2,668		(472)		2,196
Total segment gross revenues	5,917		2,622		2,429		372		11,340		(472)		10,868
Banking and deposit interest expense	(10)		—		—		(1)		(11)		—		(11)
Total segment net revenues	5,907		2,622		2,429		371		11,329		(472)		10,857
Elimination of intersegment revenues	(777)		(39)		(356)		(1)		(1,173)		(13)		(1,186)
Total net revenues	$	5,130	$	2,583	$	2,073	$	370	$	10,156	$	(485)	$	9,671

(1) Revenues not included in the scope of the revenue from contracts with customers standard. The 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 on a consolidated basis.

Management and Financial Advice Fees

Asset Management Fees

The Company earns revenue for performing asset management services for retail and institutional clients. The revenue is earned based on a fixed or tiered rate applied, as a percentage, to assets under management. Assets under management vary with market fluctuations and client behavior. The asset management performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Asset management fees are accrued, invoiced and collected on a monthly or quarterly basis.

The Company’s asset management contracts for Open Ended Investment Companies (“OEICs”) in the United Kingdom (“U.K.”) and Société d'Investissement à Capital Variable (“SICAVs”) in Europe include performance obligations for asset management and fund distribution services. The amounts received for these services are reported as management and financial advice fees. The revenue recognition pattern is the same for both performance obligations as the fund distribution services revenue is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment) and not recognized until assets under management are known.

The Company may also earn performance-based management fees on institutional accounts, hedge funds, collateralized loan obligations (“CLOs”), OEICs, SICAVs and property and other funds based on a percentage of account returns in excess of either a benchmark index or a contractually specified level. This revenue is variable and impacted primarily by the performance of the assets being managed compared to the benchmark index or contractually specified level. The revenue is not recognized until it is probable that a significant reversal will not occur. Performance-based management fees are invoiced on a quarterly or annual basis.

Advisory Fees

The Company earns revenue for performing investment advisory services for certain brokerage customer’s discretionary and non-discretionary managed accounts. The revenue is earned based on a contractual fixed rate applied, as a percentage, to the market value of assets held in the account. The investment advisory performance obligation is considered a series of distinct services that are

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

substantially the same and are satisfied each day over the contract term. Advisory fees are billed on a monthly basis on the prior month end assets.

Financial Planning Fees

The Company earns revenue for providing financial plans to its clients. The revenue earned for each financial plan is either a fixed fee (received monthly, quarterly or annually) or a variable fee (received monthly) based on a contractual fixed rate applied, as a percentage, to the prior month end assets held in a client’s investment advisory account. The financial planning fee is based on the complexity of a client’s financial and life situation and his or her advisor’s experience. The performance obligation is satisfied at the time the financial plan is delivered to the customer. The Company records a contract liability for the unearned revenue when cash is received before the plan is delivered. The financial plan contracts with clients are annual contracts. Amounts recorded as a contract liability are recognized as revenue when the financial plan is delivered, which occurs within the annual contract period.

For fixed fee arrangements, revenue is recognized when the financial plan is delivered. The Company accrues revenue for any amounts that have not been received at the time the financial plan is delivered.

For variable fee arrangements, revenue is recognized for cash that has been received when the financial plan is delivered. The amount received after the plan is delivered is variably constrained due to factors outside the Company’s control including market volatility and client behavior. The revenue is recognized when it is probable that a significant reversal will not occur that is generally each month end as the advisory account balance uncertainty is resolved.

Contract liabilities for financial planning fees, which are included in Other liabilities, were $151 million and $157 million as of September 30, 2022 and December 31, 2021, respectively.

The Company pays sales commissions to advisors when a new financial planning contract is obtained or when an existing contract is renewed. The sales commissions paid to the advisors prior to financial plan delivery are considered costs to obtain a contract with a customer and are initially capitalized. When the performance obligation to deliver the financial plan is satisfied, the commission is recognized as distribution expense. Capitalized costs to obtain these contracts are reported in Other assets and were $121 million and $126 million as of September 30, 2022 and December 31, 2021, respectively.

Transaction and Other Fees

The Company earns revenue for providing customer support, shareholder and administrative services (including transfer agent services) for affiliated mutual funds and networking, sub-accounting and administrative services for unaffiliated mutual funds. The Company also receives revenue for providing custodial services and account maintenance services on brokerage and retirement accounts that are not included in an advisory relationship. Transfer agent and administrative revenue is earned based on either a fixed rate applied, as a percentage, to assets under management or an annual fixed fee for each fund position. Networking and sub-accounting revenue is earned based on either an annual fixed fee for each account or an annual fixed fee for each fund position. Custodial and account maintenance revenue is generally earned based on a quarterly or annual fixed fee for each account. Each of the customer support and administrative services performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Transaction and other fees (other than custodial service fees) are invoiced or charged to brokerage accounts on a monthly or quarterly basis. Custodial service fees are invoiced or charged to brokerage accounts on an annual basis. Contract liabilities for custodial service fees, which are included in Other liabilities, were $13 million and nil as of September 30, 2022 and December 31, 2021, respectively.

The Company earns revenue for providing trade execution services to franchise advisors. The trade execution performance obligation is satisfied at the time of each trade and the revenue is primarily earned based on a fixed fee per trade. These fees are invoiced and collected on a semi-monthly basis.

Distribution Fees

Mutual Funds and Insurance and Annuity Products

The Company earns revenue for selling affiliated and unaffiliated mutual funds, fixed and variable annuities and insurance products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value of the insurance policy or annuity contract. The ongoing 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 client behavior (such as how long clients hold their investment, insurance policy or annuity contract). This ongoing revenue may be recognized for many years after the initial sale. The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue for providing unaffiliated partners an opportunity to educate the Company’s advisors or to support availability and distribution of their products on the Company’s platforms. These payments allow the outside parties to train and support the advisors, explain the features of their products and distribute marketing and educational materials, and support trading and operational systems necessary to enable the Company’s client servicing and production distribution efforts. The Company earns

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

revenue for placing and maintaining unaffiliated fund partners and insurance companies’ products on the Company’s sales platform (subject to the Company’s due diligence standards). The revenue is primarily earned based on a fixed fee or 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 invoiced and collected on monthly basis.

Other Products

The Company earns revenue for selling unaffiliated alternative products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment and is earned generally based on a fixed rate applied, as a percentage, to the market value of the investment. The ongoing 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 client behavior (such as how long clients hold their investment). The revenue will not be recognized until it is probable that a significant reversal will not occur.

The Company earns revenue from brokerage clients for the execution of requested trades. The performance obligation is satisfied at the time of trade execution and amounts are received on the settlement date. The revenue varies for each trade based on various factors that include the type of investment, dollar amount of the trade and how the trade is executed (online or broker assisted).

The Company earns revenue for placing clients’ deposits in its brokerage sweep program with third-party banks. The amount received from the third-party banks is impacted by short-term interest rates. The performance obligation with the financial institutions that participate in the sweep program is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The revenue is earned daily and settled monthly based on a rate applied, as a percentage, to the deposits placed.

Other Revenues

The Company earns revenue from fees charged to franchise advisors for providing various services the advisors need to manage and grow their practices. The primary services include: licensing of intellectual property and software, compliance supervision, insurance coverage, technology services and support, consulting and other services. The services are either provided by the Company or third- party providers. The Company controls the services provided by third parties as it has the right to direct the third parties to perform the services, is primarily responsible for performing the services and sets the prices the advisors are charged. The Company recognizes revenue for the gross amount of the fees received from the advisors. The fees are primarily collected monthly as a reduction of commission payments.

Intellectual property and software licenses, along with compliance supervision, insurance coverage, and technology services and support are primarily earned based on a monthly fixed fee. These services are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The consulting and other services performance obligations are satisfied as the services are delivered and revenue is earned based upon the level of service requested.

Contract Costs Asset

The Company has an asset of $35 million and $39 million as of September 30, 2022 and December 31, 2021, respectively, related to the transition of investment advisory services under an arrangement with BMO Financial Group for clients that elected to transfer U.S. retail and institutional assets to the Company.

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 $525 million and $668 million as of September 30, 2022 and December 31, 2021, respectively.

4. Variable Interest Entities

The Company provides asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds and other private funds, property funds and certain non-U.S. series funds (such as OEICs and SICAVs) (collectively, “investment entities”), which 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 certain investment entities (collectively, “consolidated investment entities”) 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 other 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

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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.

Property Funds

The Company provides investment advice and related services to property funds, some of which are considered VIEs. For investment management services, the Company generally earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not have a significant economic interest and is not required to consolidate any of the property funds. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in property funds is reflected in other investments and was $55 million and $44 million as of September 30, 2022 and December 31, 2021, respectively.

Hedge Funds and other Private Funds

The Company does not consolidate hedge funds and other private funds which are sponsored by the Company and considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services and the Company does not have a significant economic interest in any fund. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in these entities is reflected in other investments and was nil as of both September 30, 2022 and December 31, 2021.

Non-U.S. Series Funds

The Company manages non-U.S. series funds, which are considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not consolidate these funds and its maximum exposure to loss is limited to its carrying value. The carrying value of the Company’s investment in these funds is reflected in other investments and was $29 million and $43 million as of September 30, 2022 and December 31, 2021, respectively.

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 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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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


	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.

AMERIPRISE FINANCIAL, INC.

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	$	—


	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)	$	—

AMERIPRISE FINANCIAL, INC.

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.

AMERIPRISE FINANCIAL, INC.

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

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 the changes in fair value of investments and gains and losses on sales of investments are also recorded in Net investment income. Interest expense on debt is recorded in Interest and debt expense with gains and losses related to the changes in 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.

5. Investments

The following is a summary of Ameriprise Financial investments:


	September 30, 2022		December 31, 2021
	(in millions)
Available-for-Sale securities, at fair value	$	36,386	$	32,050
Mortgage loans (allowance for credit losses: 2022, $12; 2021, $12)	1,986		1,953
Policy loans	838		835

Other investments (allowance for credit losses: 2022, $5; 2021, $5)	862		972
Total	$	40,072	$	35,810

Other investments primarily reflect the Company’s interests in affordable housing partnerships, trading securities, equity securities, seed money investments, syndicated loans, credit card receivables and certificates of deposit with original or remaining maturities at the time of purchase of more than 90 days.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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)
Investment income on fixed maturities	$	363	$	202	$	836	$	733
Net realized gains (losses)	(87)		546		(82)		627
Affordable housing partnerships	(11)		(20)		(37)		(58)
Other	51		1		110		28
Consolidated investment entities	33		44		70		98
Total	$	349	$	773	$	897	$	1,428

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


	September 30, 2022
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	9,777	$	125	$	(983)	$	(20)	$	8,899
Residential mortgage backed securities	15,825		5		(1,426)		—		14,404
Commercial mortgage backed securities	6,041		1		(436)		—		5,606
Asset backed securities	5,592		11		(195)		—		5,408
State and municipal obligations	782		56		(26)		(2)		810
U.S. government and agency obligations	1,174		—		(1)		—		1,173
Foreign government bonds and obligations	48		—		(5)		—		43

Other securities	45		1		(3)		—		43
Total	$	39,284	$	199	$	(3,075)	$	(22)	$	36,386


Description of Securities	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Corporate debt securities	$	8,737	$	1,243	$	(48)	$	—	$	9,932
Residential mortgage backed securities	10,927		67		(50)		—		10,944
Commercial mortgage backed securities	4,950		59		(23)		—		4,986
Asset backed securities	3,639		26		(11)		—		3,654
State and municipal obligations	850		244		(1)		(1)		1,092
U.S. government and agency obligations	1,301		—		—		—		1,301
Foreign government bonds and obligations	88		5		(1)		—		92
Other securities	49		—		—		—		49
Total	$	30,541	$	1,644	$	(134)	$	(1)	$	32,050

As of September 30, 2022 and December 31, 2021, accrued interest of $207 million and $140 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in Receivables.

As of September 30, 2022 and December 31, 2021, investment securities with a fair value of $3.6 billion and $3.1 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 90% and 89%, respectively, of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. As of September 30, 2022 and December 31, 2021,

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

the Company’s internal analysts rated $318 million and $400 million, respectively, of securities using criteria similar to those used by NRSROs.

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	$	27,655	$	25,629	70	%	$	20,563	$	20,625	64	%
AA	1,150		1,175		3		727		898		3
A	1,802		1,788		5		1,775		2,129		7
BBB	8,001		7,192		20		6,495		7,268		23
Below investment grade (1)	676		602		2		981		1,130		3
Total fixed maturities	$	39,284	$	36,386	100	%	$	30,541	$	32,050	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 29% and 30% of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities, respectively. No holdings of any issuer were greater than 10% of the Company’s total shareholder’s equity as of both 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	484	$	6,088	$	(694)	72	$	1,049	$	(289)	556	$	7,137	$	(983)
Residential mortgage backed securities	675	12,000		(1,057)		141	2,067		(369)		816	14,067		(1,426)
Commercial mortgage backed securities	273	4,064		(308)		61	941		(128)		334	5,005		(436)
Asset backed securities	152	4,981		(171)		12	262		(24)		164	5,243		(195)
State and municipal obligations	61	158		(18)		16	36		(8)		77	194		(26)
U.S. government and agency obligations	26	1,108		(1)		—	—		—		26	1,108		(1)
Foreign government bonds and obligations	13	38		(4)		1	1		(1)		14	39		(5)

Other securities	3	42		(3)		—	—		—		3	42		(3)
Total	1,687	$	28,479	$	(2,256)	303	$	4,356	$	(819)	1,990	$	32,835	$	(3,075)

AMERIPRISE FINANCIAL, INC.

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	110	$	2,056	$	(43)	14	$	81	$	(5)	124	$	2,137	$	(48)
Residential mortgage backed securities	206	5,808		(48)		56	191		(2)		262	5,999		(50)
Commercial mortgage backed securities	102	2,184		(22)		9	139		(1)		111	2,323		(23)
Asset backed securities	41	1,883		(11)		6	118		—		47	2,001		(11)
State and municipal obligations	26	64		(1)		—	—		—		26	64		(1)

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


Total	490	$	12,001	$	(125)	91	$	533	$	(9)	581	$	12,534	$	(134)

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 95% and 96%, respectively, of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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


	Corporate Debt Securities		Asset Backed 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	$	1	$	—	$	11
Additions for which credit losses were not previously recorded	—		—		1		1

Charge-offs	(10)		(1)		—		(11)
Balance at September 30, 2021	$	—	$	—	$	1	$	1

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Gross realized investment gains	$	2	$	508	$	24	$	573
Gross realized investment losses	(6)		(5)		(17)		(6)
Credit losses	(21)		(1)		(21)		(1)
Other impairments	(61)		—		(67)		(13)
Total	$	(86)	$	502	$	(81)	$	553

Credit losses for the three and nine months ended September 30, 2022 primarily related to recording an allowance for credit losses on a corporate debt security 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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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	$	1,680	$	1,671
Due after one year through five years	2,247		2,155
Due after five years through 10 years	3,662		3,086
Due after 10 years	4,237		4,056
	11,826		10,968
Residential mortgage backed securities	15,825		14,404
Commercial mortgage backed securities	6,041		5,606
Asset backed securities	5,592		5,408
Total	$	39,284	$	36,386

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.

6. Financing Receivables

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

Allowance for Credit Losses

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


	Commercial Loans		Consumer Loans		Total
	(in millions)


Balance at January 1, 2022	$	47	$	3	$	50
Provisions	6		2		8
Charge-offs	—		(1)		(1)


Balance at September 30, 2022	$	53	$	4	$	57


	Commercial Loans		Consumer Loans		Total
	(in millions)


Balance at January 1, 2021	$	66	$	2	$	68
Provisions	(14)		1		(13)
Charge-offs	(6)		(1)		(7)
Recoveries	—		1		1
Other	2		—		2
Balance at September 30, 2021	$	48	$	3	$	51

Accrued interest on commercial loans was $15 million and $13 million as of September 30, 2022 and December 31, 2021, respectively, and is recorded in Receivables 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 $360 million, respectively, of syndicated loans. During the nine months ended September 30, 2022 and 2021, the Company purchased $57 million and $37 million, respectively, of syndicated loans, and sold $1 million and $368 million, respectively, of syndicated loans.

During the three months ended September 30, 2022 and 2021, the Company purchased $11 million and $1 million, respectively, of residential mortgage loans, and sold nil and $3 million, respectively, of residential mortgage loans. During the nine months ended September 30, 2022 and 2021, the Company purchased $34 million and $7 million, respectively, of residential mortgage loans, and sold nil and $3 million, respectively, of residential mortgage loans. The allowance for credit losses for residential mortgage loans was not material as of both September 30, 2022 and 2021.

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

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Credit Quality Information

Nonperforming loans were $14 million and $9 million 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 the 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	$	3	$	40	$	47
80% - 100%	2		9		2		20		7		47		87
60% - 80%	35		89		17		52		10		98		301
40% - 60%	40		89		69		91		58		445		792
< 40%	16		12		30		47		86		502		693
Total	$	93	$	199	$	120	$	212	$	164	$	1,132	$	1,920


	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%	142		80		60		23		61		138		504
40% - 60%	42		33		86		74		57		401		693
< 40%	11		8		48		6		58		478		609
Total	$	204	$	123	$	223	$	115	$	176	$	1,075	$	1,916

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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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


	Loans				Percentage
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(in millions)
East North Central	$	208	$	194	11	%	10	%
East South Central	55		57		3		3
Middle Atlantic	110		122		6		6
Mountain	132		119		7		6
New England	24		28		1		2
Pacific	639		627		33		33
South Atlantic	496		497		26		26
West North Central	131		141		7		7
West South Central	125		131		6		7
	1,920		1,916		100	%	100	%
Less: allowance for credit losses	12		12
Total	$	1,908	$	1,904

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	$	509	$	496	26	%	26	%
Hotel	14		14		1		1
Industrial	318		319		17		17
Mixed use	66		68		3		3
Office	267		271		14		14
Retail	611		617		32		32
Other	135		131		7		7
	1,920		1,916		100	%	100	%
Less: allowance for credit losses	12		12
Total	$	1,908	$	1,904

Syndicated Loans

The recorded investment in syndicated loans as of September 30, 2022 and December 31, 2021 was $177 million and $149 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.

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	$	1	$	—	$	—	$	—	$	—	$	—	$	1
Risk 4	—		—		—		1		—		2		3
Risk 3	—		9		1		7		3		10		30
Risk 2	8		20		7		12		5		35		87
Risk 1	1		8		3		6		13		25		56
Total	$	10	$	37	$	11	$	26	$	21	$	72	$	177

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2021
Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	1	$	—	$	—	$	—	$	1
Risk 4	—		—		—		—		1		2		3
Risk 3	—		—		4		5		5		6		20
Risk 2	15		4		12		10		18		12		71
Risk 1	8		3		3		11		16		13		54
Total	$	23	$	7	$	20	$	26	$	40	$	33	$	149

Financial Advisor Loans

The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is highly dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. Accordingly, the primary risk factor for advisor loans is termination status. The allowance for credit losses related to loans to advisors that have terminated their relationship with the Company was $6 million and $5 million as of September 30, 2022 and December 31, 2021, respectively.

The tables below present the amortized cost basis of advisor loans by origination year and termination status:


	September 30, 2022
Termination Status	2022		2021		2020		2019		2018		Prior		Total
	(in millions)
Active	$	162	$	120	$	128	$	104	$	79	$	176	$	769
Terminated	—		1		1		2		1		6		11
Total	$	162	$	121	$	129	$	106	$	80	$	182	$	780


	December 31, 2021
Termination Status	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
Active	$	136	$	147	$	119	$	89	$	116	$	113	$	720
Terminated	1		1		—		—		—		6		8
Total	$	137	$	148	$	119	$	89	$	116	$	119	$	728

Consumer Loans

Credit Card Receivables

The credit cards are co-branded with Ameriprise Financial, Inc. and issued to the Company’s customers by a third party. FICO scores and delinquency rates are the primary credit quality indicators for the credit card portfolio. Delinquency rates are measured based on the number of days past due. Credit card receivables over 30 days past due were 1% of total credit card receivables as of both September 30, 2022 and December 31, 2021.

The table below presents the amortized cost basis of credit card receivables by FICO score:


	September 30, 2022		December 31, 2021
	(in millions)
> 800	$	29	$	30
750 - 799	25		24
700 - 749	26		25
650 - 699	16		14
< 650	5		5
Total	$	101	$	98

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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Margin Loans

The margin loans balance was $1.3 billion and $1.2 billion as of September 30, 2022 and December 31, 2021, respectively. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As of both September 30, 2022 and December 31, 2021, the allowance for credit losses on margin loans was not material.

Pledged Asset Lines of Credit

The pledged asset lines of credit balance was $612 million and $467 million as of September 30, 2022 and December 31, 2021, respectively. The Company monitors collateral supporting pledged asset lines of credit and requests additional collateral when necessary in order to mitigate the risk of loss. As of September 30, 2022 and December 31, 2021, there was no allowance for credit losses on pledged asset lines of credit.

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 the 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 universal life UL and VUL insurance products.

The balances of and changes in DAC were as follows:


	2022		2021
	(in millions)
Balance at January 1	$	2,782	$	2,532
Capitalization of acquisition costs	151		205
Amortization	(363)		(137)
Amortization, impact of valuation assumptions review	8		60
Impact of change in net unrealized (gains) losses on securities	420		75

Balance at September 30	$	2,998	$	2,735

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	$	189	$	189
Capitalization of sales inducement costs	1		1
Amortization	(35)		(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	$	172	$	188

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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	221		251
Total policyholder account balances, future policy benefits and claims	$	35,482	$	35,750

(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.

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
Threadneedle investment liabilities	3,545		5,253
Total	$	71,722	$	97,491

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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 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.

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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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


	GMDB & GGU		GMIB		GMWB (1)		GMAB (1)		UL
	(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

The balances and stated interest rates of outstanding debt of Ameriprise Financial were as follows:


	Outstanding Balance				Stated Interest Rate
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(in millions)
Long-term debt:
Senior notes due 2022	$	—	$	500	—	%	3.0	%
Senior notes due 2023	750		750		4.0		4.0
Senior notes due 2024	550		550		3.7		3.7
Senior notes due 2025	500		500		3.0		3.0
Senior notes due 2026	500		500		2.9		2.9
Senior notes due 2032	500		—		4.5		—
Finance lease liabilities	33		40		N/A		N/A
Other (1)	(11)		(8)		N/A		N/A
Total long-term debt	2,822		2,832

Short-term borrowings:
Federal Home Loan Bank (“FHLB”) advances	201		200		3.2	%	0.3	%
Total	$	3,023	$	3,032

(1) Includes adjustments for net unamortized discounts, debt issuance costs and other lease obligations.

N/A Not Applicable

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Long-Term Debt

The Company’s senior notes may be redeemed, in whole or in part, at any time prior to maturity at a price equal to the greater of the principal amount and the present value of remaining scheduled payments, discounted to the redemption date, plus accrued interest.

The Company repaid $500 million principal amount of its 3.0% senior notes at maturity on March 22, 2022.

On May 13, 2022, the Company issued $500 million of 4.5% unsecured senior notes due May 13, 2032 and incurred debt issuance costs of $5 million. Interest payments are due semi-annually in arrears on May 13 and November 13, commencing on November 13, 2022.

Short-Term Borrowings

The Company’s life insurance and bank subsidiaries are members of the FHLB of Des Moines which provides access to collateralized borrowings. The Company has pledged Available-for-Sale securities consisting of commercial mortgage backed securities and residential mortgage backed securities as collateral to access these borrowings. The fair value of the securities pledged is recorded in Investments and was $1.4 billion and $1.2 billion of commercial mortgage backed securities as of September 30, 2022 and December 31, 2021, respectively, and $501 million and $581 million of residential mortgage backed securities 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 stated interest rate of the FHLB advances is a weighted average annualized interest rate on the outstanding borrowings as of the balance sheet date.

In June 2021, the Company entered into an amended and restated credit agreement that provides for an unsecured revolving credit facility of up to $1.0 billion that expires in June 2026. Under the terms of the credit agreement for the facility, the Company may increase the amount of this facility up to $1.25 billion upon satisfaction of certain approval requirements. As of both September 30, 2022 and December 31, 2021, the Company had no borrowings outstanding and $1 million of letters of credit issued against the facility. The Company’s credit facility contains various administrative, reporting, legal and financial covenants. The Company was in compliance with all such covenants as of both September 30, 2022 and December 31, 2021.

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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables present the balances of assets and liabilities of Ameriprise Financial 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
Cash equivalents	$	1,369	$	3,593	$	—	$	4,962
Available-for-Sale securities:
Corporate debt securities	—		8,496		403		8,899
Residential mortgage backed securities	—		14,158		246		14,404
Commercial mortgage backed securities	—		5,606		—		5,606
Asset backed securities	—		5,384		24		5,408
State and municipal obligations	—		810		—		810
U.S. government and agency obligations	1,173		—		—		1,173
Foreign government bonds and obligations	—		43		—		43
Other securities	—		43		—		43
Total Available-for-Sale securities	1,173		34,540		673		36,386

Investments at net asset value (“NAV”)							9		(1)
Trading and other securities	184		16		—		200
Separate account assets at NAV							71,722		(1)
Investments and cash equivalents segregated for regulatory purposes	746		—		—		746
Receivables:
Fixed deferred indexed annuity ceded embedded derivatives	—		—		47		47
Other assets:
Interest rate derivative contracts	15		362		—		377
Equity derivative contracts	137		2,525		—		2,662
Credit derivative contracts	—		76		—		76
Foreign exchange derivative contracts	1		96		—		97
Total other assets	153		3,059		—		3,212
Total assets at fair value	$	3,625	$	41,208	$	720	$	117,284

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)
Customer deposits	—		2		—		2
Other liabilities:
Interest rate derivative contracts	3		582		—		585
Equity derivative contracts	155		2,360		—		2,515
Credit derivative contracts	—		3		—		3
Foreign exchange derivative contracts	2		22		—		24
Other	180		7		63		250
Total other liabilities	340		2,974		63		3,377
Total liabilities at fair value	$	340	$	2,979	$	1,214	$	4,533

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Cash equivalents	$	2,341	$	3,478	$	—	$	5,819
Available-for-Sale securities:
Corporate debt securities	—		9,430		502		9,932
Residential mortgage backed securities	—		10,944		—		10,944
Commercial mortgage backed securities	—		4,951		35		4,986
Asset backed securities	—		3,647		7		3,654
State and municipal obligations	—		1,092		—		1,092
U.S. government and agency obligations	1,301		—		—		1,301
Foreign government bonds and obligations	—		92		—		92
Other securities	—		49		—		49
Total Available-for-Sale securities	1,301		30,205		544		32,050

Investments at NAV							11		(1)
Trading and other securities	217		25		—		242
Separate account assets at NAV							97,491		(1)
Investments and cash equivalents segregated for regulatory purposes	600		—		—		600
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		4,135		—		4,293
Credit derivative contracts	—		9		—		9
Foreign exchange derivative contracts	1		19		—		20
Total other assets	160		5,414		—		5,574
Total assets at fair value	$	4,619	$	39,122	$	603	$	141,846

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)
Customer deposits	—		4		—		4
Other liabilities:
Interest rate derivative contracts	1		467		—		468
Equity derivative contracts	101		3,653		—		3,754

Foreign exchange derivative contracts	1		—		—		1
Other	212		4		61		277
Total other liabilities	315		4,124		61		4,500
Total liabilities at fair value	$	315	$	4,133	$	2,914	$	7,362

(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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(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.

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


	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 July 1, 2022	$	458	$	139	$	21	$	618		$	49
Total gains (losses) included in:
Net income	—		—		—		—			(2)
Other comprehensive income (loss)	(13)		(4)		—		(17)			—
Purchases	16		250		17		283			—


Settlements	(58)		—		—		(58)			—

Transfers out of Level 3	—		(139)		(14)		(153)			—
Balance at September 30, 2022	$	403	$	246	$	24	$	673		$	47


Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2022	$	(13)	$	(4)	$	—	$	(17)		$	—


	Policyholder Account Balances, Future Policy Benefits and Claims														Other Liabilities
	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)	(5)	$	1,408	$	61
Total (gains) losses included in:
Net income	(1)		(2)	(22)		(2)	(152)		(3)	(173)		(3)	(348)		—
Other comprehensive income (loss)	—			—			—			—			—		(2)
Issues	—			18			89			19			126		12
Settlements	(1)			(26)			(11)			3			(35)		(8)
Balance at September 30, 2022	$	43		$	689		$	932		$	(513)	(5)	$	1,151	$	63

Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2022	$	—		$	(22)	(2)	$	(146)	(3)	$	(173)	(3)	$	(341)	$	—

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	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	$	391	$	6		$	397			$	—
Total gains (losses) included in:
Net income	(1)		1			—		(1)		—
Other comprehensive income (loss)	(3)		—			(3)				—
Purchases	9		—			9				—
Sales	—		(1)			(1)				—
Issues	—		—			—				57
Settlements	(44)		(1)			(45)				(1)
Transfers into Level 3	168		2			170				—

Balance at September 30, 2021	$	520	$	7		$	527			$	56


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


	Policyholder Account Balances, Future Policy Benefits and Claims														Other Liabilities
	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	$	44
Total (gains) losses included in:
Net income	1		(2)	14		(2)	(69)		(3)	17		(3)	(37)		(5)		(4)
Issues	—			—			95			(7)			88		5
Settlements	(1)			(25)			37			(7)			4		(4)
Balance at September 30, 2021	$	54		$	917		$	1,436		$	217		$	2,624	$	40

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

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Available-for-Sale Securities										Receivables
	Corporate Debt Securities		Residential Mortgage Backed Securities		Commercial Mortgage Backed Securities		Asset Backed Securities		Total			Fixed Deferred Indexed Annuity Ceded Embedded Derivatives
	(in millions)
Balance at January 1, 2022	$	502	$	—	$	35	$	7	$	544		$	59
Total gains (losses) included in:
Net income	(1)		—		—		—		(1)		(1)	(10)
Other comprehensive income (loss)	(46)		(4)		—		—		(50)			—
Purchases	39		389		112		31		571			—


Settlements	(91)		—		—		—		(91)			(2)

Transfers out of Level 3	—		(139)		(147)		(14)		(300)			—
Balance at September 30, 2022	$	403	$	246	$	—	$	24	$	673		$	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)	$	(4)	$	—	$	—	$	(49)		$	—


	Policyholder Account Balances, Future Policy Benefits and Claims														Other Liabilities
	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	$	61
Total (gains) losses included in:
Net income	(10)		(2)	(162)		(2)	(727)		(3)	(939)		(3)	(1,838)		—
Other comprehensive income (loss)	—			—			—			—			—		(5)
Issues	—			26			260			37			323		26
Settlements	(3)			(80)			(87)			(17)			(187)		(19)
Balance at September 30, 2022	$	43		$	689		$	932		$	(513)	(5)	$	1,151	$	63

Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2022	$	—		$	(162)	(2)	$	(709)	(3)	$	(939)	(3)	$	(1,810)	$	—

AMERIPRISE FINANCIAL, INC.

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	$	772	$	9	$	32	$	813			$	—
Total gains (losses) included in:
Net income	(1)		—		—		(1)		(1)		—
Other comprehensive income (loss)	(6)		—		—		(6)				—
Purchases	76		78		—		154				—
Sales	—		—		(1)		(1)				—
Issues	—		—		—		—				57
Settlements	(73)		—		(2)		(75)				(1)
Transfers into Level 3	168		—		2		170				—
Transfers out of Level 3	(416)		(87)		(24)		(527)				—
Balance at September 30, 2021	$	520	$	—	$	7	$	527			$	56

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


	Policyholder Account Balances, Future Policy Benefits and Claims														Other Liabilities
	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	$	43
Total (gains) losses included in:
Net income	7		(2)	51		(2)	(1,273)		(3)	192		(3)	(1,023)		(4)		(4)
Issues	—			4			274			(22)			256		11
Settlements	(2)			(73)			119			(23)			21		(10)
Balance at September 30, 2021	$	54		$	917		$	1,436		$	217		$	2,624	$	40

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) Included in General and administrative expense.

(5) 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.

AMERIPRISE FINANCIAL, INC.

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)	$	403		Discounted cash flow	Yield/spread to U.S. Treasuries (1)	1.0%	–	3.6%	1.5%
Asset backed securities	$	2		Discounted cash flow	Annual short-term default rate (2)	0.8%			0.8%
					Annual long-term default rate (2)	3.5%			3.5%
					Discount rate	17.0%			17.0%
					Constant prepayment rate	10.0%			10.0%
					Loss recovery	63.6%			63.6%
Fixed deferred indexed annuity ceded embedded derivatives	$	47		Discounted cash flow	Surrender rate (4)	0.0%	–	66.8%	1.4%
IUL embedded derivatives	$	689		Discounted cash flow	Nonperformance risk (3)	125 bps			125 bps
Fixed deferred indexed annuity embedded derivatives	$	43		Discounted cash flow	Surrender rate (4)	0.0%	–	66.8%	1.4%
					Nonperformance risk (3)	125 bps			125 bps
GMWB and GMAB embedded derivatives	$	932		Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0%	–	48.0%	10.9%
					Surrender rate (4)	0.1%	–	55.7%	3.4%
					Market volatility (7) (8)	5.0%	–	17.5%	12.1%
					Nonperformance risk (3)	125 bps			125 bps
Structured variable annuity embedded derivatives	$	(513)	(10)	Discounted cash flow	Surrender rate (4)	0.8%	–	40.0%	0.9%
					Nonperformance risk (3)	125 bps			125 bps
Contingent consideration liabilities	$	63		Discounted cash flow	Discount rate (9)	0.0%	–	0.0%	0.0%

AMERIPRISE FINANCIAL, INC.

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)	$	502	Discounted cash flow	Yield/spread to U.S. Treasuries (1)	0.8%	–	2.4%	1.1%
Asset backed securities	$	2	Discounted cash flow	Annual short-term default rate (2)	0.8%			0.8%
				Annual long-term default rate (2)	3.5%			3.5%
				Discount rate	12.0%			12.0%
				Constant prepayment rate	10.0%			10.0%
				Loss recovery	63.6%			63.6%
Fixed deferred indexed annuity ceded embedded derivatives	$	59	Discounted cash flow	Surrender rate (4)	0.0%	–	66.8%	1.4%
IUL embedded derivatives	$	905	Discounted cash flow	Nonperformance risk (3)	65 bps			65 bps
Fixed deferred indexed annuity embedded derivatives	$	56	Discounted cash flow	Surrender rate (4)	0.0%	–	66.8%	1.4%
				Nonperformance risk (3)	65 bps			65 bps
GMWB and GMAB embedded derivatives	$	1,486	Discounted cash flow	Utilization of guaranteed withdrawals (5) (6)	0.0%	–	48.0%	10.6%
				Surrender rate (4)	0.1%	–	55.7%	3.6%
				Market volatility (7) (8)	4.3%	–	16.8%	10.8%
				Nonperformance risk (3)	65 bps			65 bps
Structured variable annuity embedded derivatives	$	406	Discounted cash flow	Surrender rate (4)	0.8%	–	40.0%	0.9%
				Nonperformance risk (3)	65 bps			65 bps
Contingent consideration liabilities	$	61	Discounted cash flow	Discount rate (9)	0.0%	–	0.0%	0.0%

(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 annual default rates of asset backed securities is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.

(3) 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.

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

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

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

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

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

(9) The weighted average discount rate represents the average discount rate across all contingent consideration liabilities, weighted based on the size of the contingent consideration liability.

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

Significant increases (decreases) in the annual default rate and discount 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 recovery in isolation would have resulted in a significantly lower (higher) fair value measurement.

Significant increases (decreases) in the constant prepayment rate in isolation would have resulted in a significantly lower (higher) fair value measurement.

AMERIPRISE FINANCIAL, INC.

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.

Significant increases (decreases) in the discount rate used in the fair value measurement of the contingent consideration liability in isolation would have resulted in a significantly lower (higher) fair value measurement.

Determination of Fair Value

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

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

Assets

Cash Equivalents

Cash equivalents include time deposits and other highly liquid investments with original or remaining maturities at the time of purchase of 90 days or less. Actively traded money market funds are measured at their NAV and classified as Level 1. U.S. Treasuries are also classified as Level 1. The Company’s remaining cash equivalents are classified as Level 2 and measured at amortized cost, which is a reasonable estimate of fair value because of the short time between the purchase of the instrument and its expected realization.

Investments (Available-for-Sale Securities, Equity Securities and Trading 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 equity securities and U.S. Treasuries.

Level 2 securities primarily include corporate bonds, residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, state and municipal obligations, foreign government securities and other 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 certain 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 certain 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

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

qualifications, control environment, analysis of asset-class specific valuation methodologies, and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.

Separate Account Assets

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

Investments and Cash Equivalents Segregated for Regulatory Purposes

Investments and cash equivalents segregated for regulatory purposes includes U.S. Treasuries that are classified as Level 1.

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, foreign currency forwards 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.

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.

Customer Deposits

The Company uses Black-Scholes models to determine the fair value of the embedded derivative liability associated with the provisions of its stock market certificates (“SMC”). The inputs to these calculations are primarily market observable and include interest rates, volatilities and equity index levels. As a result, these measurements are classified as Level 2.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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, foreign currency forwards and the majority of options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities 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.

Securities sold but not yet purchased represent obligations of the Company to deliver specified securities that it does not yet own, creating a liability to purchase the security in the market at prevailing prices. 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 nationally-recognized pricing services, or other model-based valuation techniques such as the present value of cash flows. Level 1 securities sold but not yet purchased primarily include equity securities and U.S. Treasuries traded in active markets. Level 2 securities sold but not yet purchased primarily include corporate bonds.

Contingent consideration liabilities consist of earn-outs and/or deferred payments related to the Company’s acquisitions. Contingent consideration liabilities are recorded at fair value utilizing a discounted cash flow model using an unobservable input (discount rate). Given the use of a significant unobservable input, the fair value of contingent consideration liabilities is classified as Level 3 within the fair value hierarchy.

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	$	1,986	$	—	$	66	$	1,724	$	1,790
Policy loans	838		—		838		—		838
Receivables	10,533		177		1,893		7,085		9,155
Restricted and segregated cash	1,597		1,597		—		—		1,597
Other investments and assets	363		—		310		49		359

Financial Liabilities
Policyholder account balances, future policy benefits and claims	$	14,041	$	—	$	—	$	12,048	$	12,048
Investment certificate reserves	6,200		—		—		6,151		6,151
Banking and brokerage deposits	21,939		21,939		—		—		21,939
Separate account liabilities — investment contracts	3,833		—		3,833		—		3,833
Debt and other liabilities	3,237		230		2,892		7		3,129

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	December 31, 2021
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial Assets
Mortgage loans, net	$	1,953	$	—	$	49	$	1,990	$	2,039
Policy loans	835		—		835		—		835
Receivables	10,509		135		1,669		9,404		11,208
Restricted and segregated cash	2,195		2,195		—		—		2,195
Other investments and assets	368		—		319		49		368

Financial Liabilities
Policyholder account balances, future policy benefits and claims	$	12,342	$	—	$	—	$	13,264	$	13,264
Investment certificate reserves	5,297		—		—		5,290		5,290
Banking and brokerage deposits	14,931		14,931		—		—		14,931
Separate account liabilities — investment contracts	5,657		—		5,657		—		5,657
Debt and other liabilities	3,214		206		3,129		9		3,344

Receivables include deposit receivables, brokerage margin loans, securities borrowed, pledged asset lines of credit, and loans to financial advisors. Restricted and segregated cash includes cash segregated under federal and other regulations held in special reserve bank accounts for the exclusive benefit of the Company’s brokerage customers. Other investments and assets primarily include syndicated loans, credit card receivables, certificate of deposits with original or remaining maturities at the time of purchase of more than 90 days, the Company’s membership in the FHLB and investments related to the Community Reinvestment Act. See Note 6 for additional information on mortgage loans, policy loans, syndicated loans, credit card receivables 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. Investment certificate reserves represent customer deposits for fixed rate certificates and stock market certificates. Banking and brokerage deposits are amounts payable to customers related to free credit balances, funds deposited by customers and funds accruing to customers as a result of trades or contracts. Separate account liabilities are primarily investment contracts in pooled pension funds offered by Threadneedle. Debt and other liabilities include the Company’s long-term debt, short-term borrowings, securities loaned and future funding commitments to affordable housing partnerships and other real estate partnerships. See Note 10 for further information on the Company’s long-term debt and short-term borrowings.

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 and securities borrowing and lending agreements 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. Securities borrowed and loaned result from transactions between the Company’s broker dealer subsidiary and other financial institutions and are recorded at the amount of cash collateral advanced or received. Securities borrowed and securities loaned are primarily equity securities. The Company’s securities borrowed and securities loaned transactions generally do not have a fixed maturity date and may be terminated by either party under customary terms. The Company’s policy is to recognize amounts subject to master netting arrangements on a gross basis in the Consolidated Balance Sheets.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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


	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	$	2,989	$	—	$	2,989	$	(2,391)	$	(554)	$	(7)	$	37
OTC cleared	105		—		105		(105)		—		—		—
Exchange-traded	118		—		118		(79)		—		—		39
Total derivatives	3,212		—		3,212		(2,575)		(554)		(7)		76
Securities borrowed	177		—		177		(40)		—		(132)		5
Total	$	3,389	$	—	$	3,389	$	(2,615)	$	(554)	$	(139)	$	81


	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	$	5,387	$	—	$	5,387	$	(3,613)	$	(1,637)	$	(114)	$	23
OTC cleared	88		—		88		(41)		—		—		47
Exchange-traded	99		—		99		(91)		—		—		8
Total derivatives	5,574		—		5,574		(3,745)		(1,637)		(114)		78
Securities borrowed	135		—		135		(41)		—		(91)		3
Total	$	5,709	$	—	$	5,709	$	(3,786)	$	(1,637)	$	(205)	$	81

(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	$	2,836	$	—	$	2,836	$	(2,391)	$	(93)	$	(323)	$	29
OTC cleared	201		—		201		(105)		—		—		96
Exchange-traded	90		—		90		(79)		—		(9)		2
Total derivatives	3,127		—		3,127		(2,575)		(93)		(332)		127
Securities loaned	230		—		230		(40)		—		(182)		8
Total	$	3,357	$	—	$	3,357	$	(2,615)	$	(93)	$	(514)	$	135

AMERIPRISE FINANCIAL, INC.

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	$	4,091	$	—	$	4,091	$	(3,613)	$	(183)	$	(292)	$	3
OTC cleared	41		—		41		(41)		—		—		—
Exchange-traded	91		—		91		(91)		—		—		—
Total derivatives	4,223		—		4,223		(3,745)		(183)		(292)		3
Securities loaned	207		—		207		(41)		—		(160)		6
Total	$	4,430	$	—	$	4,430	$	(3,786)	$	(183)	$	(452)	$	9

(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. Securities borrowing and lending agreements are reflected in Receivables and Other liabilities, respectively. See Note 13 for additional disclosures related to the Company’s derivative instruments and Note 4 for information related to derivatives held by consolidated investment entities.

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, foreign exchange 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.

AMERIPRISE FINANCIAL, INC.

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 designated as hedging instruments

Equity contracts - cash flow hedges	$	9	$	—	$	1	$	19	$	—	$	—
Foreign exchange contracts – net investment hedges	85		6		—		58		—		—
Total qualifying hedges	94		6		1		77		—		—

Derivatives not designated as hedging instruments
Interest rate contracts	95,697		377		585		79,468		1,252		468
Equity contracts	68,520		2,662		2,514		61,142		4,293		3,754
Credit contracts	1,740		76		3		1,748		9		—
Foreign exchange contracts	2,748		91		24		2,380		20		1

Total non-designated hedges	168,705		3,206		3,126		144,738		5,574		4,223

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
SMC	N/A		—		2		N/A		—		4
Total embedded derivatives	N/A		47		1,156		N/A		59		2,862
Total derivatives	$	168,799	$	3,259	$	4,283	$	144,815	$	5,633	$	7,085

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. The fair value of the SMC embedded derivative liability is included in Customer deposits.

(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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Derivatives Not Designated as Hedges

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



	Net Investment Income		Banking and Deposit Interest Expense		Distribution Expenses		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses		Interest and Debt Expense		General and Administrative Expense
	(in millions)
Three Months Ended September 30, 2022
Interest rate contracts	$	—	$	—	$	—	$	—	$	(753)	$	—	$	—
Equity contracts	3		(1)		(41)		(23)		341		—		(5)
Credit contracts	—		—		1		—		92		—		—
Foreign exchange contracts	1		—		—		—		112		—		(8)

GMWB and GMAB embedded derivatives	—		—		—		—		71		—		—
IUL embedded derivatives	—		—		—		48		—		—		—

Structured variable annuity embedded derivatives	—		—		—		—		173		—		—
SMC embedded derivatives	—		1		—		—		—		—		—
Total gain (loss)	$	4	$	—	$	(40)	$	25	$	36	$	—	$	(13)

Three Months Ended September 30, 2021
Interest rate contracts	$	—	$	—	$	—	$	—	$	(171)	$	—	$	—
Equity contracts	—		—		(13)		—		1		—		(1)
Credit contracts	—		—		—		—		2		—		—
Foreign exchange contracts	(23)		—		—		—		—		—		—

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)	$	(23)	$	—	$	(13)	$	12	$	(249)	$	—	$	(1)

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Net Investment Income		Banking and Deposit Interest Expense		Distribution Expenses		Interest Credited to Fixed Accounts		Benefits, Claims, Losses and Settlement Expenses		Interest and Debt Expense		General and Administrative Expense
	(in millions)
Nine Months Ended September 30, 2022
Interest rate contracts	$	1	$	—	$	(3)	$	—	$	(2,815)	$	(1)	$	—
Equity contracts	10		(1)		(224)		(135)		1,066		—		(29)
Credit contracts	—		—		(2)		—		288		—		—
Foreign exchange contracts	2		—		—		—		219		—		(13)

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		—		—
SMC embedded derivatives	—		1		—		—		—		—		—
Total gain (loss)	$	13	$	—	$	(229)	$	110	$	248	$	(1)	$	(42)

Nine Months Ended September 30, 2021
Interest rate contracts	$	(23)	$	—	$	(1)	$	—	$	(1,125)	$	—	$	—
Equity contracts	—		1		67		55		(613)		—		11
Credit contracts	—		—		1		—		41		—		—
Foreign exchange contracts	(17)		—		—		—		6		—		(2)

GMWB and GMAB embedded derivatives	—		—		—		—		879		—		—
IUL embedded derivatives	—		—		—		22		—		—		—
Fixed deferred indexed annuity embedded derivatives	—		—		—		(7)		—		—		—
Structured variable annuity embedded derivatives	—		—		—		—		(192)		—		—
SMC embedded derivatives	—		(1)		—		—		—		—		—
Total gain (loss)	$	(40)	$	—	$	67	$	70	$	(1,004)	$	—	$	9

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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The deferred premium associated with certain of the above options and swaptions is paid or received semi-annually over the life of the contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options and swaptions as of 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, IUL and stock market certificate 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, IUL and stock market certificate products will positively or negatively impact earnings over the life of these products. The equity component of structured variable annuity, IUL and stock market certificate 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 interest rate swaps, index options and futures contracts.

The Company enters into futures, credit default swaps, commodity swaps, total return swaps and foreign currency forwards to manage its exposure to price risk arising from seed money investments in proprietary investment products. The Company enters into foreign currency forward contracts to economically hedge its exposure to certain foreign transactions. The Company enters into futures contracts, total return swaps and foreign currency forwards to economically hedge its exposure related to compensation plans. The Company enters into interest rate swaps to offset interest rate changes on unrealized gains or losses for certain investments.

Cash Flow Hedges

The Company has designated derivative instruments as a cash flow hedge for equity exposure of certain compensation-related liabilities and interest rate exposure on forecasted debt interest payments. For derivative instruments that qualify as cash flow hedges, the gains or losses on the derivative instruments are reported in AOCI and reclassified into earnings when the hedged item or transaction impacts earnings. The amount that is reclassified into earnings is presented within the same line item as the earnings impact of the hedged item in Interest and debt expense.

For the three and nine months ended September 30, 2022 and 2021, the amounts reclassified from AOCI to earnings related to cash flow hedges were immaterial. The estimated net amount recorded in AOCI as of September 30, 2022 that the Company expects to reclassify to earnings as a reduction to Interest and debt expense within the next twelve months is $1 million. Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is 13 years and relates to forecasted debt interest payments. See Note 14 for a rollforward of net unrealized gains (losses) on derivatives included in AOCI related to cash flow hedges.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Net Investment Hedges

The Company entered into, and designated as net investment hedges in foreign operations, forward contracts to hedge a portion of the Company’s foreign currency exchange rate risk associated with its investment in Threadneedle. As the Company determined that the forward contracts are effective, the change in fair value of the derivatives is recognized in AOCI as part of the foreign currency translation adjustment. For the three months ended September 30, 2022 and 2021, the Company recognized a gain of $8 million and a gain of $0.7 million, respectively, in OCI. For the nine months ended September 30, 2022 and 2021, the Company recognized a gain of $22 million and a loss of $0.2 million, respectively, in OCI.

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 debt rating (or based on the financial strength of the Company’s life insurance subsidiaries for contracts in which those subsidiaries are the counterparty). Additionally, certain of the Company’s derivative contracts contain provisions that allow the counterparty to terminate the contract if the Company’s debt does not maintain a specific credit rating (generally an investment grade rating) or the Company’s life insurance subsidiary does not maintain a specific financial strength rating. If these termination provisions were to be triggered, the Company’s counterparty could 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 $364 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 $342 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 $22 million and nil, respectively.

14. Shareholders’ 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)	$	(1,435)	$	321	$	(1,114)	$	(79)	$	21	$	(58)
Reclassification of net (gains) losses on securities included in net income (2)	86		(18)		68		(502)		105		(397)
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	219		(46)		173		147		(31)		116
Net unrealized gains (losses) on securities	(1,130)		257		(873)		(434)		95		(339)




Defined benefit plans:
Net gain (loss) arising during the period	1		—		1		—		—		—
Defined benefit plans	1		—		1		—		—		—
Foreign currency translation	(160)		33		(127)		(28)		6		(22)

Total other comprehensive income (loss)	$	(1,289)	$	290	$	(999)	$	(462)	$	101	$	(361)

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	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)	$	(4,467)	$	996	$	(3,471)	$	(433)	$	108	$	(325)
Reclassification of net (gains) losses on securities included in net income (2)	81		(17)		64		(553)		116		(437)
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	1,145		(240)		905		284		(60)		224
Net unrealized gains (losses) on securities	(3,241)		739		(2,502)		(702)		164		(538)
Net unrealized gains (losses) on derivatives:
Net unrealized gains (losses) on derivatives arising during the period	(1)		—		(1)		—		—		—

Net unrealized gains (losses) on derivatives	(1)		—		(1)		—		—		—
Defined benefit plans:
Net gains (losses)	1		—		1		37		(8)		29
Defined benefit plans	1		—		1		37		(8)		29
Foreign currency translation	(373)		78		(295)		(27)		6		(21)

Total other comprehensive income (loss)	$	(3,614)	$	817	$	(2,797)	$	(692)	$	162	$	(530)

(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 investment income.

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

AMERIPRISE FINANCIAL, INC.

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		Net Unrealized Gains (Losses) on Derivatives		Defined Benefit Plans		Foreign Currency Translation		Other		Total
	(in millions)
Balance at July 1, 2022	$	(1,311)	$	3	$	(151)	$	(335)	$	(1)	$	(1,795)

OCI before reclassifications	(941)		—		1		(127)		—		(1,067)
Amounts reclassified from AOCI	68		—		—		—		—		68
Total OCI	(873)		—		1		(127)		—		(999)
Balance at September 30, 2022	$	(2,184)	$	3	$	(150)	$	(462)	$	(1)	$	(2,794)

Balance at July 1, 2021	$	784	$	5	$	(175)	$	(153)	$	(1)	$	460

OCI before reclassifications	58		—		—		(22)		—		36
Amounts reclassified from AOCI	(397)		—		—		—		—		(397)
Total OCI	(339)		—		—		(22)		—		(361)
Balance at September 30, 2021	$	445	$	5	$	(175)	$	(175)	$	(1)	$	99

Balance at January 1, 2022	$	318	$	4	$	(151)	$	(167)	$	(1)	$	3

OCI before reclassifications	(2,566)		(1)		1		(295)		—		(2,861)
Amounts reclassified from AOCI	64		—		—		—		—		64
Total OCI	(2,502)		(1)		1		(295)		—		(2,797)
Balance at September 30, 2022	$	(2,184)	$	3	$	(150)	$	(462)	$	(1)	$	(2,794)

Balance at January 1, 2021	$	983	$	5	$	(204)	$	(154)	$	(1)	$	629

OCI before reclassifications	(101)		—		29		(21)		—		(93)
Amounts reclassified from AOCI	(437)		—		—		—		—		(437)
Total OCI	(538)		—		29		(21)		—		(530)
Balance at September 30, 2021	$	445	$	5	$	(175)	$	(175)	$	(1)	$	99

For the nine months ended September 30, 2022 and 2021, the Company repurchased a total of 5.0 million shares and 5.5 million shares, respectively, of its common stock for an aggregate cost of $1.4 billion and $1.3 billion, respectively. In August 2020, the Company’s Board of Directors authorized a repurchase of up to $2.5 billion for the repurchase of shares of the Company’s common stock through September 30, 2022, which was exhausted in the second quarter of 2022. In January 2022, the Company’s Board of Directors authorized an additional $3.0 billion for the repurchase of the Company’s common stock through March 31, 2024. As of September 30, 2022, the Company had $2.1 billion remaining under the share repurchase authorization.

The Company may also reacquire shares of its common stock under its share-based compensation plans related to restricted stock awards and certain option exercises. The holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligation. These vested restricted shares are reacquired by the Company and the Company’s payment of the holders’ income tax obligations are recorded as a treasury share purchase.

For the nine months ended September 30, 2022 and 2021, the Company reacquired 0.3 million shares and 0.3 million shares, respectively, of its common stock through the surrender of shares upon vesting and paid in the aggregate $99 million and $69 million, respectively, related to the holders’ income tax obligations on the vesting date. Option holders may elect to net settle their vested awards resulting in the surrender of the number of shares required to cover the strike price and tax obligation of the options exercised. These shares are reacquired by the Company and recorded as treasury shares. For the nine months ended September 30, 2022 and 2021, the Company reacquired 0.3 million shares and 0.9 million shares, respectively, of its common stock through the net settlement of options for an aggregate value of $87 million and $209 million, respectively.

During the nine months ended September 30, 2022 and 2021, the Company reissued 0.7 million and 0.4 million, respectively, treasury shares for restricted stock award grants, performance share units and issuance of shares vested under advisor deferred compensation plans.

15. Income Taxes

The Company’s effective tax rate was 20.0% and 18.8% for the three months ended September 30, 2022 and 2021, respectively. The Company’s effective tax rate was 19.4% and 17.1% for the nine months ended September 30, 2022 and 2021, respectively.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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 and the dividends received deduction, partially offset by state income taxes, net of federal benefit. The effective tax rate for the nine months ended September 30, 2022 was lower than the statutory tax rate as a result of tax preferred items including incentive compensation and low income housing tax credits, partially offset by state income taxes, net of federal benefit.

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, partially offset by state income taxes, net of federal benefit. The effective tax rate for the nine 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, incentive compensation and the dividends received deduction, partially offset by state income taxes, net of federal benefit.

The higher 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 an increase in state income taxes, net of federal benefit. The higher effective tax rate for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily the result of decreases in low income housing tax credits and foreign taxes, and an increase in state income taxes, net of federal benefit.

Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $12 million, net of federal benefit, which will expire beginning December 31, 2022 and foreign net operating losses of $31 million.

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 as of September 30, 2022, management believes it is more likely than not that the Company will not realize certain state net operating losses of $11 million, state deferred tax assets of $3 million and foreign net operating losses of $14 million; therefore, a valuation allowance has been established. The valuation allowance was $28 million and $32 million as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022 and December 31, 2021, the Company had $137 million and $125 million, respectively, of gross unrecognized tax benefits. If recognized, approximately $105 million and $95 million, net of federal tax benefits, of unrecognized tax benefits as of September 30, 2022 and December 31, 2021, respectively, 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 $40 million in the next 12 months primarily due to Internal Revenue Service (“IRS”) settlements and state exams.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized nil and a net increase of $2 million in interest and penalties for the three and nine months ended September 30, 2022, respectively. The Company recognized nil and a net decrease of $1 million in interest and penalties for the three and nine months ended September 30, 2021, respectively. As of September 30, 2022 and December 31, 2021, the Company had a payable of $12 million and $10 million, respectively, related to accrued interest and penalties.

The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign 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 the Company’s U.S. income tax returns for 2016 through 2020. 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 subsidiaries 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 as a diversified financial services firm. 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, leases 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 financial services industry generally.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

As with other financial services firms, the level of regulatory activity and inquiry concerning the Company’s businesses remains elevated. From time to time, the Company receives requests for information from, and/or has been subject to examination or claims by, the SEC, the Financial Industry Regulatory Authority, the OCC, the U.K. Financial Conduct Authority, the Federal Reserve Board, state insurance and securities regulators, state attorneys general and various other domestic or foreign governmental and quasi-governmental authorities on behalf of themselves or clients concerning the Company’s business activities and practices, and the practices of the Company’s financial advisors. The Company typically has numerous pending matters which include information requests, exams or inquiries regarding certain subjects, including from time to time: sales and distribution of mutual funds, exchange traded funds, annuities, equity and fixed income securities, real estate investment trusts, insurance products, and financial advice offerings, including managed accounts; wholesaler activity; supervision of the Company’s financial advisors and other associated persons; administration of insurance and annuity claims; security of client information; trading activity and the Company’s monitoring and supervision of such activity; and transaction monitoring systems and controls. The Company has 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 results of operations, financial condition 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.

Guaranty Fund Assessments

RiverSource Life and RiverSource Life Insurance Co. of New York (“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.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

17. Earnings per Share

The computations of basic and diluted earnings per share were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except per share amounts)
Numerator:
Net income	$	548	$	1,031	$	2,065	$	2,059

Denominator:
Basic: Weighted-average common shares outstanding	110.5		116.4		112.1		118.2
Effect of potentially dilutive nonqualified stock options and other share-based awards	2.2		2.8		2.3		2.7
Diluted: Weighted-average common shares outstanding	112.7		119.2		114.4		120.9

Earnings per share:
Basic	$	4.96	$	8.86	$	18.42	$	17.42
Diluted	$	4.86	$	8.65	$	18.05	$	17.03

The calculation of diluted earnings per share excludes the incremental effect of nil and nil options for the three months ended September 30, 2022 and 2021, respectively, and 0.2 million and nil options for the nine months ended September 30, 2022 and 2021, respectively, due to their anti-dilutive effect.

18. Segment Information

The Company’s four reporting segments are Advice & Wealth Management, Asset Management, Retirement & Protection Solutions and Corporate & Other.

The accounting policies of the segments are the same as those of the Company, except for operating adjustments defined below, the method of capital allocation, the accounting for gains (losses) from intercompany revenues and expenses and not providing for income taxes on a segment basis.

Management uses segment adjusted operating measures in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by some securities analysts and investors. Consistent with GAAP accounting guidance for segment reporting, adjusted operating earnings is the Company’s measure of segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. The Company believes the presentation of segment adjusted operating earnings, as the Company measures it for management purposes, enhances the understanding of its business by reflecting the underlying performance of its core operations and facilitating a more meaningful trend analysis.

Management excludes mean reversion related impacts from the Company’s adjusted operating measures. The mean reversion related impact is defined as the impact on variable annuity and VUL 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.

Adjusted operating earnings is defined as adjusted operating net revenues less adjusted operating expenses. Adjusted operating net revenues and adjusted operating expenses exclude net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual); the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and the related DSIC and DAC amortization, unearned revenue amortization, and the reinsurance accrual; mean reversion related impacts (the impact on variable annuity and VUL 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); the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impacts; integration and restructuring charges; and the impact of consolidating CIEs. The market impact on non-traditional long-duration products includes changes in embedded derivative values caused by changes in financial market conditions, net of changes in economic hedge values and unhedged items including the difference between assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and certain policyholder contract elections, net of related impacts on DAC and DSIC amortization. The market impact also includes certain valuation adjustments made in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures, including the impact on embedded derivative values of discounting projected benefits to reflect a current estimate of the Company’s life insurance subsidiary’s nonperformance spread.

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables summarize selected financial information by segment and reconcile segment totals to those reported on the consolidated financial statements:


	September 30, 2022		December 31, 2021
	(in millions)
Advice & Wealth Management	$	32,078	$	24,986
Asset Management	8,629		10,990
Retirement & Protection Solutions	95,017		119,469
Corporate & Other	17,630		20,534
Total assets	$	153,354	$	175,979


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Adjusted operating net revenues:
Advice & Wealth Management	$	2,137	$	2,048	$	6,235	$	5,907
Asset Management	823		915		2,721		2,622
Retirement & Protection Solutions	786		834		2,318		2,429
Corporate & Other	115		113		350		371
Elimination of segment revenues (1)(2)	(316)		(395)		(1,005)		(1,173)
Total segment adjusted operating net revenues	3,545		3,515		10,619		10,156
Net realized gains (losses)	(100)		14		(98)		81
Revenue attributable to consolidated investment entities	31		42		68		92
Market impact on non-traditional long-duration products, net	15		(1)		66		25
Mean reversion related impacts	—		—		(1)		1
Market impact of hedges on investments	—		(23)		—		(40)
Block transfer reinsurance transaction impacts	—		(644)		—		(644)
Total net revenues per consolidated statements of operations	$	3,491	$	2,903	$	10,654	$	9,671

1) Represents the elimination of intersegment revenues recognized for the three months ended September 30, 2022 and 2021 in each segment as follows: Advice & Wealth Management ($202 million and $261 million, respectively); Asset Management ($14 million and $12 million, respectively); Retirement & Protection Solutions ($101 million and $122 million, respectively); and Corporate & Other ($(1) million and nil, respectively).

(2) Represents the elimination of intersegment revenues recognized for the nine months ended September 30, 2022 and 2021 in each segment as follows: Advice & Wealth Management ($651 million and $777 million, respectively); Asset Management ($37 million and $39 million, respectively); Retirement & Protection Solutions ($318 million and $356 million, respectively); and Corporate & Other ($(1) million and $1 million, respectively).


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Adjusted operating earnings:
Advice & Wealth Management	$	595	$	459	$	1,527	$	1,271
Asset Management	191		285		698		766
Retirement & Protection Solutions	31		187		401		552
Corporate & Other	(79)		(81)		(208)		(179)
Total segment adjusted operating earnings	738		850		2,418		2,410
Net realized gains (losses)	(92)		12		(90)		78
Net income (loss) attributable to consolidated investment entities	(3)		2		(2)		(1)
Market impact on non-traditional long-duration products, net	132		(94)		571		(577)
Mean reversion related impacts	(79)		9		(299)		107
Market impact of hedges on investments	—		(23)		—		(40)
Block transfer reinsurance transaction impacts	—		521		—		521
Integration and restructuring charges	(11)		(7)		(35)		(14)
Pretax income per consolidated statements of operations	$	685	$	1,270	$	2,563	$	2,484

AMERIPRISE FINANCIAL, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1. Our Management’s Discussion and Analysis should be read in conjunction with our 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 our current reports on Form 8-K and other publicly available information. References below to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries.

Overview

Ameriprise Financial is a diversified financial services company with a more than 125-year history of providing financial solutions. We are a long-standing leader in financial planning and advice with $1.1 trillion in assets under management and administration as of September 30, 2022. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives.

The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income. Revenues and net income are significantly affected by investment performance and the total value and composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.

We operate our business in the broader context of the macroeconomic forces around us, 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 our operating and performance results. In addition, the business, political and regulatory environments in which we operate are subject to elevated uncertainty and substantial, frequent change. Accordingly, we expect to continue focusing on our key strategic objectives and obtaining operational and strategic leverage from our core capabilities. The success of these and other strategies may be affected by the factors discussed in Item 1A, “Risk Factors” in our 2021 10-K and other factors as discussed herein.

Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits and the “spread” income generated on our deposit products, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and fixed deferred annuities. We have been operating in a historically low interest rate environment but have recently experienced a substantial increase in rates with uncertainty about where rates will go in the future. A higher (lower) interest rate environment may result in decreases (increases) to our reserves and changes in various rate assumptions we use to amortize DAC and DSIC, which may impact our adjusted operating earnings after tax. For additional discussion on our interest rate risk, see Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and the information set forth in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk.”

In the third quarter, we updated our market-related assumptions and implemented model changes related to our living benefit valuation. In addition, we conducted our 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. We also reviewed our future policy benefit reserve adequacy for our long term care (“LTC”) business in the third quarter. See our Consolidated and Segment Results of Operations sections for the pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.

On June 2, 2021, we filed an application to convert Ameriprise Bank, FSB to a state-chartered industrial bank regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation. We also filed an application to transition the FSB’s personal trust services business to a new limited purpose national trust bank regulated by the Office of the Comptroller of the Currency. If the applications are approved, the proposed changes are not expected to impact our long-term strategy for the bank and should enable us to continue our strong lineup of banking solutions, including deposits, credit cards, mortgages and securities-based lending to our wealth management clients without interruption.

We consolidate certain variable interest entities for which we provide asset management services. These entities are defined as consolidated investment entities (“CIEs”). While the consolidation of the CIEs impacts our balance sheet and income statement, our 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 our Consolidated Financial Statements. The results of operations of the CIEs are reflected in the Corporate & Other

AMERIPRISE FINANCIAL, INC.

segment. On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in the fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in net investment income. We include the fees from these entities in the management and financial advice fees line within our Asset Management segment.

While our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; 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 DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; mean reversion related impacts (the impact on variable annuity and variable universal life (“VUL”) 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); the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impacts; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. Management uses these non-GAAP measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors. Also, certain of these non-GAAP measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Throughout our Management’s Discussion and Analysis, these non-GAAP measures are referred to as adjusted operating measures. These non-GAAP measures should not be viewed as a substitute for U.S. GAAP measures.

It is management’s priority to increase shareholder value over a multi-year horizon by achieving our on-average, over-time financial targets.

Our financial targets are:

•Adjusted operating earnings per diluted share growth of 12% to 15%, and

•Adjusted operating return on equity excluding accumulated other comprehensive income (“AOCI”) of over 30%.

AMERIPRISE FINANCIAL, INC.

The following tables reconcile our GAAP measures to adjusted operating measures:


					Per Diluted Share
	Three Months Ended September 30,				Three Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except per share amounts)
Net income (loss)	$	548	$	1,031	$	4.86	$	8.65

Less: Net realized investment gains (losses) (1)	(92)		12		(0.82)		0.10
Add: Market impact on non-traditional long-duration products (1)	(132)		94		(1.18)		0.79
Add: Mean reversion related impacts (1)	79		(9)		0.70		(0.08)
Add: Market impact of hedges on investments (1)	—		23		—		0.19
Less: Block transfer reinsurance transaction impacts (1)	—		521		—		4.37
Add: Integration/restructuring charges (1)	11		7		0.10		0.06
Less: Net income (loss) attributable to CIEs	(3)		2		(0.03)		0.02
Tax effect of adjustments (2)	(10)		88		(0.09)		0.74
Adjusted operating earnings	$	591	$	699	$	5.24	$	5.86

Weighted average common shares outstanding:
Basic	110.5		116.4
Diluted	112.7		119.2


					Per Diluted Share
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except per share amounts)
Net income (loss)	$	2,065	$	2,059	$	18.05	$	17.03
Less: Net realized investment gains (losses) (1)	(90)		78		(0.79)		0.65
Add: Market impact on non-traditional long-duration products (1)	(571)		577		(5.00)		4.78
Add: Mean reversion related impacts (1)	299		(107)		2.61		(0.89)
Add: Market impact of hedges on investments (1)	—		40		—		0.33
Less: Block transfer reinsurance transaction impacts (1)	—		521		—		4.31
Add: Integration/restructuring charges (1)	35		14		0.31		0.12
Less: Net income (loss) attributable to CIEs	(2)		(1)		(0.02)		(0.01)
Tax effect of adjustments (2)	31		16		0.27		0.13
Adjusted operating earnings	$	1,951	$	2,001	$	17.05	$	16.55

Weighted average common shares outstanding:
Basic	112.1		118.2
Diluted	114.4		120.9

(1) Pretax adjusted operating adjustments.

(2) Calculated using the statutory federal tax rate of 21%.

AMERIPRISE FINANCIAL, INC.

The following table reconciles the trailing twelve months’ sum of net income to adjusted operating earnings and the five-point average of quarter-end equity to adjusted operating equity:


	Twelve Months Ended September 30,
	2022		2021
	(in millions)
Net income	$	2,766	$	2,236
Less: Adjustments (1)	92		(324)
Adjusted operating earnings	2,674		2,560

Total Ameriprise Financial, Inc. shareholders’ equity	4,793		5,766
Less: AOCI, net of tax	(1,076)		404
Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI	5,869		5,362
Less: Equity impacts attributable to CIEs	1		3
Adjusted operating equity	$	5,868	$	5,359



Return on equity, excluding AOCI	47.1	%	41.7	%
Adjusted operating return on equity, excluding AOCI (2)	45.6	%	47.8	%

(1) Adjustments reflect the sum of after-tax net realized investment gains/losses, net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; mean reversion related impacts; the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impacts; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and net income (loss) from consolidated investment entities. After-tax is calculated using the statutory tax rate of 21%.

(2) Adjusted operating return on equity, excluding AOCI is calculated using adjusted operating earnings in the numerator, and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory tax rate of 21%.

Critical Accounting Estimates

The accounting and reporting policies that we use affect our Consolidated Financial Statements. Certain of our accounting and reporting policies are critical to an understanding of our consolidated results of operations and financial condition and, 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 our Consolidated Financial Statements. These accounting policies are discussed in detail in “Management’s Discussion and Analysis — Critical Accounting Estimates” in our 2021 10-K.

Recent Accounting Pronouncements

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

Economic Environment

Global equity market conditions could materially affect our results of operations and financial condition. The following table presents relevant market indices:


	Three months ended September 30,			Nine Months Ended September 30,
	2022	2021	Change	2022	2021	Change
S&P 500
Daily average	3,983	4,425	(10)%	4,185	4,158	1%
Period end	3,586	4,308	(17)%	3,586	4,308	(17)%
Weighted Equity Index (“WEI”) (1)
Daily average	2,606	2,983	(13)%	2,754	2,836	(3)%
Period end	2,347	2,909	(19)%	2,347	2,909	(19)%

(1) Weighted Equity Index is an Ameriprise calculated proxy for equity market movements calculated using a weighted average of the S&P 500, Russell 2000, Russell Midcap and MSCI EAFE indices based on North America distributed equity assets.

See our segment results of operations discussion below for additional information on how changes in the economic environment have and may continue to impact our results. For further information regarding the impact of the economic environment on our results of operations and financial condition, and potentially material effects, see Part 1 - Item 1A “Risk Factors” of our 2021 10-K.

AMERIPRISE FINANCIAL, INC.

Assets Under Management and Administration

Assets under management (“AUM”) include external client assets for which we provide investment management services, such as the assets of the Columbia Threadneedle Investments funds, institutional clients and clients in our advisor platform held in wrap accounts as well as assets managed by sub-advisors selected by us. AUM also includes certain assets on our Consolidated Balance Sheets for which we provide investment management services and recognize management fees in our Asset Management segment, such as the assets of the general account and the variable product funds held in the separate accounts of our life insurance subsidiaries and CIEs.

Assets under administration (“AUA”) include assets for which we provide administrative services such as client assets invested in other companies’ products that we offer outside of our wrap accounts. These assets include those held in clients’ brokerage accounts. We generally record revenues received from administered assets as distribution fees. We do not exercise management discretion over these assets and do not earn a management fee. These assets are not reported on our Consolidated Balance Sheets. AUA also includes certain assets on our Consolidated Balance Sheets for which we do not provide investment management services and do not recognize management fees, such as investments in non-affiliated funds held in the separate accounts of our life insurance subsidiaries.

AUM and AUA do not include assets under advisement, for which we provide advisory services such as model portfolios but do not have full discretionary investment authority.

The following table presents detail regarding our AUM and AUA:


	September 30,				Change
	2022		2021
	(in billions)
Assets Under Management and Administration
Advice & Wealth Management AUM	$	382.4	$	431.8	$	(49.4)	(11)	%
Asset Management AUM	546.5		583.4		(36.9)		(6)
Corporate AUM	0.2		0.1		0.1		NM
Eliminations	(35.6)		(42.0)		6.4		15
Total Assets Under Management	893.5		973.3		(79.8)		(8)
Total Assets Under Administration	208.0		233.0		(25.0)		(11)
Total AUM and AUA	$	1,101.5	$	1,206.3	$	(104.8)	(9)	%
NM Not Meaningful.

Total AUM decreased $79.8 billion, or 8%, to $893.5 billion as of September 30, 2022 compared to $973.3 billion as of September 30, 2021 due to a $49.4 billion decrease in Advice & Wealth Management AUM driven by equity market depreciation, partially offset by wrap account net inflows, and a $36.9 billion decrease in Asset Management AUM driven by equity and bond market depreciation and an unfavorable foreign currency translation, partially offset by the acquisition of the BMO Global Asset Management (EMEA) business. See our segment results of operations discussion below for additional information on changes in our AUM.

AMERIPRISE FINANCIAL, INC.

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

The following table presents our consolidated results of operations:


	Three Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	2,172	$	2,367	$	(195)	(8)	%
Distribution fees	506		458		48		10
Net investment income	349		773		(424)		(55)
Premiums, policy and contract charges	361		(805)		1,166		NM
Other revenues	118		113		5		4
Total revenues	3,506		2,906		600		21
Banking and deposit interest expense	15		3		12		NM
Total net revenues	3,491		2,903		588		20
Expenses
Distribution expenses	1,195		1,285		(90)		(7)
Interest credited to fixed accounts	157		172		(15)		(9)
Benefits, claims, losses and settlement expenses	370		(719)		1,089		NM
Amortization of deferred acquisition costs	107		9		98		NM
Interest and debt expense	52		64		(12)		(19)
General and administrative expense	925		822		103		13
Total expenses	2,806		1,633		1,173		72
Pretax income	685		1,270		(585)		(46)
Income tax provision	137		239		(102)		(43)
Net income	$	548	$	1,031	$	(483)	(47)	%
NM Not Meaningful.

Overall

Pretax income decreased $585 million, or 46%, for the three 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 three months ended September 30, 2021 primarily reflecting the net realized gains on the investments sold to the reinsurer.

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

•An unfavorable impact from lower average equity markets for the three months ended September 30, 2022 compared to the prior year period.

•Net realized investment losses of $87 million for the three months ended September 30, 2022 compared to net realized gains of $12 million for the prior year period primarily due to the repositioning of a portion of our fixed maturity bond portfolio in response to recent market conditions.

•The mean reversion related impact was an expense of $79 million for the three months ended September 30, 2022 compared to a benefit of $9 million for the prior year period.

•The market impact on non-traditional long duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual was a benefit of $132 million for the three months ended September 30, 2022 compared to an expense of $94 million for the prior year period.

•A favorable impact from the continued increase in short-term interest rates.

AMERIPRISE FINANCIAL, INC.

The following table presents the total pretax impacts on our revenues and expenses attributable to unlocking for the three months ended September 30:


Pretax Increase (Decrease)	2022		2021
	(in millions)
Distribution fees	$	—	$	2
Premiums, policy and contract charges	1		17
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 (1)	$	(161)	$	17

(1) Includes an $8 million net benefit and $25 million net benefit related to the market impact on variable annuity guaranteed benefits for the three months ended September 30, 2022 and 2021, respectively, which is excluded from adjusted operating earnings. Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking and LTC loss recognition.

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.

Net Revenues

Management and financial advice fees decreased $195 million, or 8%, for the three months ended September 30, 2022 compared to the prior year period reflecting lower average equity markets and an unfavorable foreign exchange impact, partially offset by revenue associated with the acquisition of the BMO Global Asset Management (EMEA) business and continued wrap account net inflows.

Distribution fees increased $48 million, or 10%, for the three months ended September 30, 2022 compared to the prior year period due to higher fees on off-balance sheet brokerage cash due to an increase in short-term interest rates, partially offset by lower average equity markets and continued decreasing transactional activity.

Net investment income decreased $424 million, or 55%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the following items:

•Net realized investment losses of $87 million for the three months ended September 30, 2022 compared to net realized investment gains of $546 million for the prior year period. Net realized investment losses for three months ended September 30, 2022 were primarily driven by impairments on securities we intend to sell as we repositioned a portion of our fixed maturity bond portfolio in response to recent market conditions and credit losses on corporate debt securities. Net realized investment gains for the three months ended September 30, 2021 included net realized gains of $502 million on Available-for-Sale securities and a $42 million net gain related to commercial mortgage loans primarily due to the 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.

•The favorable impact of the recent trend in rising interest rates on the investment portfolio yield.

•The favorable impact of higher average invested assets.

Premiums, policy and contract charges increased $1.2 billion for the three 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.

Expenses

Distribution expenses decreased $90 million, or 7%, for the three months ended September 30, 2022 compared to the prior year period primarily due to lower average equity markets and decreased transactional activity.

Interest credited to fixed accounts decreased $15 million, or 9%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the following items:

•A $4 million increase in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The unfavorable impact of the nonperformance credit spread was $6 million for the three months ended September 30, 2022 compared to an unfavorable impact of $2 million for the prior year period.

AMERIPRISE FINANCIAL, INC.

•A $13 million decrease in expense from other market impacts on IUL benefits, net of hedges, which was a benefit of $6 million for the three months ended September 30, 2022 compared to an expense of $7 million for the prior year period. The decrease in expense was primarily due to a decrease in the IUL embedded derivative in the current period, which reflected lower option costs due to a higher discount rate.

Benefits, claims, losses and settlement expenses increased $1.1 billion for the three 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 $62 million increase in expense primarily reflecting the impact of year-over-year changes in the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits.

•A $298 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 $339 million change in the market impact on variable annuity guaranteed living benefits reserves, partially offset by an unfavorable $41 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits. 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 three 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 an expense for the three months ended September 30, 2022 compared to a benefit for 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 an expense for the three months ended September 30, 2022 compared to a benefit for the prior year period.

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

•The impact of unlocking excluding LTC was an expense of $170 million for the three months ended September 30, 2022 compared to an expense of $59 million for the prior year period.

•The annual review of LTC future policy benefit reserve in the third quarter of 2022 resulted in unlocking of nil compared to unlocking of $3 million in the prior year period.

•The mean reversion related impact was an expense of $50 million for the three months ended September 30, 2022 compared to a benefit of $6 million for the prior year period.

Amortization of DAC increased $98 million, for the three 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 $37 million for the three months ended September 30, 2022 compared to a benefit of $2 million for the prior year period.

•The mean reversion related impact was an expense of $29 million for the three months ended September 30, 2022 compared to a benefit of $3 million for the prior year period.

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

Interest and debt expense decreased $12 million, or 19%, for the three months ended September 30, 2022 compared to the prior year period primarily due to a decrease in interest expense of CIEs.

General and administrative expense increased $103 million, or 13%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, partially offset by a favorable foreign exchange impact on expenses.

Income Taxes

Our effective tax rate was 20.0% for the three months ended September 30, 2022 compared to 18.8% for the prior year period. The higher 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 an increase in state taxes, net of federal benefit. See Note 15 to our Consolidated Financial Statements for additional discussion on income taxes.

AMERIPRISE FINANCIAL, INC.

Results of Operations by Segment for the Three Months Ended September 30, 2022 and 2021

Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. We believe the presentation of segment adjusted operating earnings as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. See Note 18 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating earnings.

The following table presents summary financial information by segment:


	Three Months Ended September 30,
	2022		2021
	(in millions)
Advice & Wealth Management
Net revenues	$	2,137	$	2,048
Expenses	1,542		1,589
Adjusted operating earnings	$	595	$	459
Asset Management
Net revenues	$	823	$	915
Expenses	632		630
Adjusted operating earnings	$	191	$	285
Retirement & Protection Solutions
Net revenues	$	786	$	834
Expenses	755		647
Adjusted operating earnings	$	31	$	187
Corporate & Other
Net revenues	$	115	$	113
Expenses	194		194
Adjusted operating loss	$	(79)	$	(81)

The following table presents the segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking for the three months ended September 30:


Segment Pretax Operating Increase (Decrease)	2022				2021
	Retirement & Protection Solutions		Corporate		Retirement & Protection Solutions		Corporate
	(in millions)
Distribution fees	$	—	$	—	$	2	$	—
Premiums, policy and contract charges	3		(2)		17		—
Total revenues	3		(2)		19		—

Benefits, claims, losses and settlement expenses
LTC unlocking and loss recognition	—		—		—		3
Unlocking impact, excluding LTC	180		(1)		89		—
Total benefits, claims, losses and settlement expenses	180		(1)		89		3
Amortization of DAC	(5)		(4)		(65)		—
Total expenses	175		(5)		24		3
Pretax income	$	(172)	$	3	$	(5)	$	(3)

AMERIPRISE FINANCIAL, INC.

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the three months ended September 30:


	2022		2021
	(in billions)
Beginning balance	$	399.3	$	430.0
Net flows	6.4		9.4
Market appreciation (depreciation) and other	(20.5)		(4.0)
Ending balance	$	385.2	$	435.4

Advisory wrap account assets ending balance (1)	$	381.1	$	430.5
Average advisory wrap account assets (2)	$	407.8	$	432.9

(1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.

(2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the three months ended September 30, 2022 and 2021.

Ending wrap account assets decreased $14.1 billion, or 4%, to $385.2 billion during the three months ended September 30, 2022 due to market depreciation of $20.5 billion, partially offset by net inflows of $6.4 billion. Average advisory wrap account assets decreased $25.1 billion, or 6%, compared to the prior year period primarily reflecting market depreciation, partially offset by net inflows.

The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:


	Three Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	1,297	$	1,374	$	(77)	(6)	%
Distribution fees	579		561		18		3
Net investment income	219		62		157		NM
Other revenues	57		54		3		6
Total revenues	2,152		2,051		101		5
Banking and deposit interest expense	15		3		12		NM
Total net revenues	2,137		2,048		89		4
Expenses
Distribution expenses	1,149		1,238		(89)		(7)
Interest and debt expense	3		3		—		—
General and administrative expense	390		348		42		12
Total expenses	1,542		1,589		(47)		(3)
Adjusted operating earnings	$	595	$	459	$	136	30	%
NM Not Meaningful.

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $136 million, or 30%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the benefit from higher short-term interest rates and wrap account net inflows, partially offset by market depreciation. Pretax adjusted operating margin increased to 27.8% for the three months ended September 30, 2022 compared to 22.4% for the prior year period, reflecting the benefit of higher short-term interest rates. Client brokerage cash balances increased to $46.3 billion given the market volatility.

Ameriprise Bank, FSB is continuing its deposit growth trend, with cash sweep balances increasing $8.8 billion from the prior year period to $18.6 billion and brokerage client pledged asset lines of credit increasing $204 million from the prior year period to $612 million as of September 30, 2022. Profitability at the bank increased compared to the prior year period reflecting trend in deposit growth and increased interest rates.

Net Revenues

Management and financial advice fees decreased $77 million, or 6%, for the three months ended September 30, 2022 compared to the prior year period primarily due to the decrease in average wrap account assets. Average advisory wrap account assets decreased $25.1 billion, or 6%, compared to the prior year period reflecting market depreciation, partially offset by net inflows.

AMERIPRISE FINANCIAL, INC.

Distribution fees increased $18 million, or 3%, for the three months ended September 30, 2022 compared to the prior year period reflecting $95 million of higher fees on off-balance sheet brokerage cash primarily due to an increase in short-term interest rates, partially offset by continued decreasing transactional activity.

Net investment income, which excludes net realized investment gains or losses, increased $157 million for the three months ended September 30, 2022 compared to the prior year period primarily due to higher average invested assets due to increased bank deposits and the favorable impact of increasing short-term interest rates, including higher investment yields on the investment portfolio supporting the bank and certificate products.

Banking and deposit interest expense increased $12 million for the three months ended September 30, 2022 compared to the prior year period primarily due to increased average crediting rates on certificates.

Expenses

Distribution expenses decreased $89 million, or 7%, for the three months ended September 30, 2022 compared to the prior year period reflecting market depreciation and decreased transactional activity.

General and administrative expense increased $42 million, or 12%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting higher volume related expenses in the current year period and lower staffing levels and limited travel and entertainment expenses in the prior year period.

Asset Management

The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds, including funds recently acquired through the BMO Global Asset Management (EMEA) acquisition, as of September 30, 2022:


Retail Fund Rankings in Top 2 Quartiles or Above Index Benchmark - Asset Weighted(1)	1 year	3 year	5 year	10 year
Equity	61%	83%	74%	87%
Fixed Income	38%	71%	62%	86%
Asset Allocation	56%	62%	68%	90%

4- or 5-star Morningstar rated funds(2)	Overall	3 year	5 year	10 year
Number of rated funds	130	102	91	100
Percent of rated assets	56%	51%	47%	60%

(1) Retail Fund performance rankings for each fund are measured on a consistent basis against the most appropriate peer group or index. Peer groupings of Columbia funds are defined by Lipper category and are based on the Primary Share Class (i.e. Institutional if available, otherwise Advisor or Instl3 share class), net of fees. Peer groupings of Threadneedle funds are defined by either IA or Morningstar index and are measured gross of fees.

To calculate asset weighted performance, the sum of the total assets of the funds with above median ranking are divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.

Aggregated Asset Allocation Funds may include funds that invest in other Columbia or Threadneedle branded mutual funds included in both equity and fixed income.

(2) Columbia funds are available for purchase by U.S. customers. Out of 104 Columbia funds rated (based on primary share class), 19 received a 5-star Overall Rating and 30 received a 4-star Overall Rating. Out of 155 Threadneedle funds rated (based on highest-rated share class), 24 received a 5-star Overall Rating and 57 received a 4-star Overall Rating. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Rating metrics.

AMERIPRISE FINANCIAL, INC.


The following table presents global managed assets by type:									Average (1)				Change
	As of September 30,				Change				Three Months Ended September 30,
	2022		2021						2022		2021
	(in billions)
Equity	$	278.5	$	332.7	$	(54.2)	(16)	%	$	305.1	$	340.8	$	(35.7)	(10)	%
Fixed income	194.6		198.7		(4.1)		(2)		214.3		200.1		14.2		7
Money market	21.3		5.8		15.5		NM		18.5		5.8		12.7		NM
Alternative	35.2		23.4		11.8		50		37.0		23.4		13.6		58
Hybrid and other	16.9		22.8		(5.9)		(26)		18.4		23.2		(4.8)		(21)
Total managed assets (2)	$	546.5	$	583.4	$	(36.9)	(6)	%	$	593.3	$	593.3	$	—	—
NM Not Meaningful.

(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.

(2) In the fourth quarter of 2021, the definition of Alternative AUM was changed to now include real estate, CLOs, private equity, hedge funds (direct and fund of funds), infrastructure and commodities to better demonstrate our underlying business and the additional assets from the acquisition of the BMO Global Asset Management (EMEA) business. Prior periods have been restated to reflect this change.

The following table presents the changes in global managed assets:


	Three Months Ended September 30,
	2022		2021
	(in billions)
Global Retail Funds
Beginning assets	$	323.0	$	359.5
Inflows	11.7		16.4
Outflows	(17.6)		(15.5)
Net VP/VIT fund flows	(1.0)		(1.1)
Net new flows	(6.9)		(0.2)
Reinvested dividends	1.6		2.0
Net flows	(5.3)		1.8
Distributions	(1.9)		(2.1)

Market appreciation (depreciation) and other	(15.3)		(2.3)
Foreign currency translation (1)	(4.3)		(1.2)
Total ending assets	296.2		355.7

Global Institutional
Beginning assets	275.2		233.9
Inflows (2)	14.9		9.4
Outflows (2)	(12.0)		(7.3)
Net flows	2.9		2.1

Market appreciation (depreciation) and other (3)	(17.8)		(5.9)
Foreign currency translation (1)	(10.0)		(2.4)
Total ending assets	250.3		227.7
Total managed assets	$	546.5	$	583.4

Total net flows	$	(2.4)	$	3.9

Legacy insurance partners net flows (4)	$	(1.0)	$	(1.4)

(1) Amounts represent local currency to US dollar translation for reporting purposes.

(2) Global Institutional inflows and outflows include net flows from our RiverSource Structured Annuity product and Ameriprise Bank, FSB.

(3) Included in Market appreciation (depreciation) and other for Global Institutional is the change in affiliated general account balance, excluding net flows related to our structured variable annuity product and Ameriprise Bank, FSB.

(4) Legacy insurance partners assets and net flows are included in the rollforwards above.

AMERIPRISE FINANCIAL, INC.

Total segment AUM decreased $51.7 billion, or 9%, during the three months ended September 30, 2022 primarily due to equity and bond market depreciation and the negative impact of foreign currency translation. Net outflows were $2.4 billion in the third quarter of 2022, a $6.3 billion decrease compared to the prior year period. Global retail net outflows were $5.3 billion. Global institutional net inflows were $2.9 billion and included $1.0 billion of outflows from legacy insurance partners assets.

The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:


	Three Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	723	$	794	$	(71)	(9)	%
Distribution fees	96		120		(24)		(20)
Net investment income	2		1		1		NM
Other revenues	2		—		2		—
Total revenues	823		915		(92)		(10)
Banking and deposit interest expense	—		—		—		—
Total net revenues	823		915		(92)		(10)
Expenses
Distribution expenses	238		288		(50)		(17)
Amortization of deferred acquisition costs	2		3		(1)		(33)
Interest and debt expense	1		1		—		—
General and administrative expense	391		338		53		16
Total expenses	632		630		2		—
Adjusted operating earnings	$	191	$	285	$	(94)	(33)	%
NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $94 million, or 33%, for the three months ended September 30, 2022 compared to the prior year period primarily due to equity market depreciation, net outflows and an unfavorable foreign exchange impact, partially offset by the acquisition of the BMO Global Asset Management (EMEA) business.

Net Revenues

Management and financial advice fees decreased $71 million, or 9%, for the three months ended September 30, 2022 compared to the prior year period primarily due to lower average equity markets, the cumulative impact from net outflows and the impact of foreign exchange rates, partially offset by the acquired BMO Global Asset Management (EMEA) business.

Distribution fees decreased $24 million, or 20%, for the three months ended September 30, 2022 compared to the prior year period reflecting lower average equity markets and the cumulative impact from net outflows.

Expenses

Distribution expenses decreased $50 million, or 17%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting lower average equity markets and the cumulative impact from net outflows.

General and administrative expense increased $53 million, or 16%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, partially offset by the cumulative impact from net outflows and the impact of foreign exchange rates.

AMERIPRISE FINANCIAL, INC.

Retirement & Protection Solutions

The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:


	Three Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	189	$	239	$	(50)	(21)	%
Distribution fees	101		125		(24)		(19)
Net investment income	151		114		37		32
Premiums, policy and contract charges	342		353		(11)		(3)
Other revenues	3		3		—		—
Total revenues	786		834		(48)		(6)
Banking and deposit interest expense	—		—		—		—
Total net revenues	786		834		(48)		(6)
Expenses
Distribution expenses	103		134		(31)		(23)
Interest credited to fixed accounts	97		99		(2)		(2)
Benefits, claims, losses and settlement expenses	414		323		91		28
Amortization of deferred acquisition costs	49		5		44		NM
Interest and debt expense	10		9		1		11
General and administrative expense	82		77		5		6
Total expenses	755		647		108		17
Adjusted operating earnings	$	31	$	187	$	(156)	(83)	%
NM Not Meaningful.

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on non-traditional long-duration products (including variable annuity contracts and IUL contracts, net of hedges and the related DSIC and DAC amortization, unearned amortization and the reinsurance accrual), mean reversion related impacts, and block transfer reinsurance transaction impacts decreased $156 million, or 83%, for the three months ended September 30, 2022 compared to prior year period, primarily reflecting the impact of unlocking.

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 our 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.

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

Net Revenues

Management and financial advice fees decreased $50 million, or 21%, for the three months ended September 30, 2022 compared to the prior year period primarily due to lower average equity markets and the cumulative impact from net outflows.

Distribution fees decreased $24 million, or 19%, for the three months ended September 30, 2022 compared to the prior year period reflecting lower average equity markets and the cumulative impact from net outflows.

Net investment income, which excludes net realized investment gains or losses, increased $37 million, or 32%, for the three months ended September 30, 2022 compared to the prior year period primarily due to higher average invested assets as well has higher interest rates.

Expenses

Distribution expenses decreased $31 million, or 23%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting decreased variable annuity sales and market depreciation.

AMERIPRISE FINANCIAL, INC.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity contracts (net of hedges and the related DSIC amortization), mean reversion related impacts and the DSIC offset to net realized investment gains or losses, increased $91 million, or 28%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the impact of unlocking. The unlocking impact for the third quarter of 2022 was an expense of $180 million primarily reflecting continued lower surrender rates and updated mortality assumptions for variable annuities with living benefits compared to an expense of $89 million in the prior year period which was also driven by lower surrender rates.

Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity contracts and IUL contracts and the DAC offset to net realized investment gains or losses, increased $44 million for the three months ended September 30, 2022 compared to the prior year period primarily reflecting the impact of unlocking due to lower surrender rates, partially offset by a lower level of normalized amortization. The unlocking impact for the third quarter of 2022 was a benefit of $5 million compared to a benefit of $65 million in the prior year period.

Corporate & Other

The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:


	Three Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues


Net investment income	$	35	$	31	$	4	13	%
Premiums, policy and contract charges	25		26		(1)		(4)
Other revenues	57		56		1		2
Total revenues	117		113		4		4
Banking and deposit interest expense	2		—		2		—
Total net revenues	115		113		2		2
Expenses
Distribution expenses	(2)		(2)		—		—
Interest credited to fixed accounts	61		64		(3)		(5)
Benefits, claims, losses and settlement expenses	64		59		5		8
Amortization of deferred acquisition costs	(2)		1		(3)		NM
Interest and debt expense	17		16		1		6
General and administrative expense	56		56		—		—
Total expenses	194		194		—		—
Adjusted operating loss	$	(79)	$	(81)	$	2	2	%
NM Not Meaningful.

Our Corporate & Other segment includes our closed blocks of LTC insurance and fixed annuity and fixed indexed annuity (“FA”) business.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss decreased $2 million for the three months ended September 30, 2022 compared to the prior year period.

LTC insurance had a pretax adjusted operating loss of $3 million for the three months ended September 30, 2022 compared to pretax adjusted operating loss of $1 million for the prior year period.

FA business had a pretax adjusted operating loss of $3 million for the three months ended September 30, 2022 compared to a pretax adjusted operating loss of $7 million. 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, we closed on a transaction to reinsure RiverSource Life’s fixed deferred and immediate annuity policies.

Net Revenues

AMERIPRISE FINANCIAL, INC.

restructuring charges, and the impact of consolidating CIEs, increased $4 million, or 13%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting lower amortization in our affordable housing partnerships and a higher portfolio yield from increasing interest rates.

Expenses

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, increased $5 million, or 8%, for the three months ended September 30, 2022 compared to the prior year period primarily reflecting a net favorable out-of-period correction in the prior year period. The unlocking impact for the third quarter of 2022 was a benefit of $1 million compared to an unlocking expense of $3 million in the prior year period.

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

The following table presents our consolidated results of operations:


	Nine Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	6,908	$	6,720	$	188	3	%
Distribution fees	1,410		1,368		42		3
Net investment income	897		1,428		(531)		(37)
Premiums, policy and contract charges	1,094		(94)		1,188		NM
Other revenues	365		259		106		41
Total revenues	10,674		9,681		993		10
Banking and deposit interest expense	20		10		10		NM
Total net revenues	10,654		9,671		983		10
Expenses
Distribution expenses	3,728		3,693		35		1
Interest credited to fixed accounts	443		455		(12)		(3)
Benefits, claims, losses and settlement expenses	663		338		325		96
Amortization of deferred acquisition costs	355		77		278		NM
Interest and debt expense	136		149		(13)		(9)
General and administrative expense	2,766		2,475		291		12
Total expenses	8,091		7,187		904		13
Pretax income	2,563		2,484		79		3
Income tax provision	498		425		73		17
Net income	$	2,065	$	2,059	$	6	—
NM Not Meaningful.

Overall

Pretax income increased $79 million, or 3%, for the nine months ended September 30, 2022 compared to the prior year period.

•The market impact on non-traditional long duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and the related DSIC and 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.

•A favorable impact from the continued increase in short-term interest rates.

•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 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.

•An unfavorable impact from lower average equity markets for the nine months ended September 30, 2022 compared to the prior year period.

AMERIPRISE FINANCIAL, INC.

See our Consolidated Results of Operations for the three months ended September 30, 2022 and 2021 for a table and discussion of total pretax impacts on our revenues and expenses attributable to unlocking.

Net Revenues

Management and financial advice fees increased $188 million, or 3%, for the nine months ended September 30, 2022 compared to the prior year period reflecting revenue associated with the acquisition of the BMO Global Asset Management (EMEA) business, continued wrap account net inflows, and an increase in performance fees of $43 million, partially offset by market depreciation and an unfavorable foreign exchange impact.

Distribution fees increased $42 million, or 3%, for the nine months ended September 30, 2022 compared to the prior year period due to higher fees on off-balance sheet brokerage cash primarily due to an increase in short-term interest rates, partially offset by lower transactional activity and market depreciation.

Net investment income decreased $531 million, or 37%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting:

•Net realized investment losses of $82 million for the nine months ended September 30, 2022 compared to net realized investment gains of $627 million for the prior year period. Net realized investment losses for the nine months ended September 30, 2022 were primarily driven by impairments on securities we intend to sell as we repositioned a portion of our fixed maturity bond portfolio in response to recent market conditions and credit losses on corporate debt securities. Net realized investment gains for the nine months ended September 30, 2021 included net realized gains of $553 million on Available-for-Sale securities and a $55 million net gain related to commercial mortgage loans primarily due to the 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, as well as a $15 million gain on a strategic investment.

•The unfavorable impact of lower average invested assets due to the sale of investments as a result of the fixed deferred and immediate annuity reinsurance transaction.

•The favorable impact of increased bank deposits and rising short-term interest rates.

Premiums, policy and contract charges 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.

Other revenues increased $106 million, or 41%, 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.

Expenses

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.

Benefits, claims, losses and settlement expenses increased $325 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:

AMERIPRISE FINANCIAL, INC.

•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 in 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 impact of unlocking excluding LTC was an expense of $170 million for the nine months ended September 30, 2022 compared to an expense of $59 million for the prior year period.

•The annual review of LTC future policy benefit reserve in the third quarter of 2022 resulted in unlocking of nil compared to unlocking of $3 million in the prior year period.

•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.

Amortization of DAC increased $278 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.

General and administrative expense increased $291 million, or 12%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business, higher performance fee related compensation, and $35 million of integration related expenses, partially offset by a favorable change in the mark-to-market impact on share-based compensation and a favorable foreign exchange impact.

Income Taxes

Our effective tax rate was 19.4% for the nine months ended September 30, 2022 compared to 17.1% for the prior year period. The higher effective tax rate for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily the result of a decrease in low income housing tax credits and foreign taxes, and an increase in state income taxes net of federal benefit. See Note 15 to our Consolidated Financial Statements for additional discussion on income taxes.

AMERIPRISE FINANCIAL, INC.

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

The following table presents summary financial information by segment:


	Nine Months Ended September 30,
	2022		2021
	(in millions)
Advice & Wealth Management
Net revenues	$	6,235	$	5,907
Expenses	4,708		4,636
Adjusted operating earnings	$	1,527	$	1,271
Asset Management
Net revenues	$	2,721	$	2,622
Expenses	2,023		1,856
Adjusted operating earnings	$	698	$	766
Retirement & Protection Solutions
Net revenues	$	2,318	$	2,429
Expenses	1,917		1,877
Adjusted operating earnings	$	401	$	552
Corporate & Other
Net revenues	$	350	$	371
Expenses	558		550
Adjusted operating loss	$	(208)	$	(179)

See our Results of Operations by Segment for the three months ended September 30, 2022 and 2021 for a table of segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.

Advice & Wealth Management

The following table presents the changes in wrap account assets and average balances for the nine months ended September 30:


	2022		2021
	(in billions)
Beginning balance	$	464.7	$	380.0
Net flows (1)	21.3		29.9
Market appreciation (depreciation) and other (1)	(100.8)		25.5
Ending balance	$	385.2	$	435.4

Advisory wrap account assets ending balance (2)	$	381.1	$	430.5
Average advisory wrap account assets (3)	$	426.4	$	406.6

(1) Beginning in the first quarter of 2021, wrap net flows is calculated including dividends and interest less fees which were previously recorded in Market appreciation (depreciation) and other. Net flows excludes short-term and long-term capital gain distributions. Prior periods have been restated.

(2) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.

(3) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the nine months ended September 30, 2022 and 2021.

Ending wrap account assets decreased $79.5 billion, or 17%, to $385.2 billion during the nine months ended September 30, 2022 due to market depreciation and other of $100.8 billion, partially offset by net inflows of $21.3 billion. Average advisory wrap account assets increased $19.8 billion, or 5%, compared to the prior year period primarily reflecting net inflows, partially offset by market depreciation.

AMERIPRISE FINANCIAL, INC.

The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:


	Nine Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	4,017	$	3,878	$	139	4	%
Distribution fees	1,650		1,682		(32)		(2)
Net investment income	417		189		228		NM
Other revenues	171		168		3		2
Total revenues	6,255		5,917		338		6
Banking and deposit interest expense	20		10		10		NM
Total net revenues	6,235		5,907		328		6
Expenses
Distribution expenses	3,566		3,567		(1)		—

Interest and debt expense	8		8		—		—
General and administrative expense	1,134		1,061		73		7
Total expenses	4,708		4,636		72		2
Adjusted operating earnings	$	1,527	$	1,271	$	256	20	%
NM Not Meaningful.

Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $256 million, or 20%, for the nine months ended September 30, 2022 compared to the prior year period due to higher average wrap account balances and higher earnings on bank and brokerage cash as a result of increasing short-term interest rates. Pretax adjusted operating margin was 24.5% for the for the nine months ended September 30, 2022 compared to 21.5% for the prior year period.

Net Revenues

Management and financial advice fees increased $139 million, or 4%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $19.8 billion, or 5%, compared to the prior year period primarily reflecting net inflows, partially offset by market depreciation.

Distribution fees decreased $32 million, or 2%, for the nine months ended September 30, 2022 compared to the prior year period reflecting decreased transactional activity, partially offset by $134 million of higher fees on off-balance sheet brokerage cash primarily due to an increase in short-term interest rates.

Net investment income, which excludes net realized investment gains or losses, increased $228 million for the nine months ended September 30, 2022 compared to the prior year period primarily due to higher average invested assets due to increased bank deposits and the favorable impact of increased short-term interest rates.

Expenses

General and administrative expense increased $73 million, or 7%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to higher volume related expenses and investments for business growth.

AMERIPRISE FINANCIAL, INC.

Asset Management


The following table presents global managed assets by type:									Average (1)				Change
	As of September 30,				Change				Nine Months Ended September 30,
	2022		2021						2022		2021
	(in billions)
Equity	$	278.5	$	332.7	$	(54.2)	(16)	%	$	341.4	$	326.3	$	15.1	5	%
Fixed income	194.6		198.7		(4.1)		(2)		239.3		198.3		41.0		21
Money market	21.3		5.8		15.5		NM		15.6		5.9		9.7		NM
Alternative	35.2		23.4		11.8		50		38.4		23.0		15.4		67
Hybrid and other	16.9		22.8		(5.9)		(26)		20.5		22.2		(1.7)		(8)
Total managed assets (2)	$	546.5	$	583.4	$	(36.9)	(6)	%	$	655.2	$	575.7	$	79.5	14	%
NM Not Meaningful.

(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.

AMERIPRISE FINANCIAL, INC.

The following table presents the changes in global managed assets:


	Nine Months Ended September 30,
	2022		2021
	(in billions)
Global Retail Funds (1)
Beginning assets	$	409.4	$	323.5
Inflows	49.1		58.4
Outflows	(64.6)		(50.2)
Net VP/VIT fund flows	(3.1)		(3.1)
Net new flows (2)	(18.6)		5.1
Reinvested dividends	5.7		5.5
Net flows	(12.9)		10.6
Distributions	(6.5)		(6.4)
Market appreciation (depreciation) and other	(84.2)		29.0
Foreign currency translation (3)	(9.6)		(1.0)
Total ending assets	296.2		355.7

Global Institutional (1)
Beginning assets	344.7		223.1
Inflows (4)	43.8		26.5
Outflows (4)	(37.0)		(21.6)
Net flows	6.8		4.9
Market appreciation (depreciation) and other (5)	(75.9)		1.4
Foreign currency translation (3)	(25.3)		(1.7)
Total ending assets	250.3		227.7
Total managed assets	$	546.5	$	583.4

Total net flows	$	(6.1)	$	15.5

Legacy insurance partners net flows (6)	$	(2.9)	$	(4.0)

(1) The beginning balances as of January 1, 2022 for Global Retail Funds and Global Institutional were corrected by $8.9 billion due to a reclassification of assets. Total AUM as of January 1, 2022 remained unchanged.

(2) First quarter 2022 net flows included $2.5 billion of retail and $0.1 billion of institutional net flows from the US asset transfer in connection with our acquisition of the BMO Global Asset Management (EMEA) business.

(3) Amounts represent local currency to US dollar translation for reporting purposes.

(4) Global Institutional inflows and outflows include net flows from our RiverSource Structured Annuity product and Ameriprise Bank, FSB.

(5) Included in Market appreciation (depreciation) and other for Global Institutional is the change in affiliated general account balance, excluding net flows related to our structured variable annuity product and Ameriprise Bank, FSB.

(6) Legacy insurance partners assets and net flows are included in the rollforwards above.

Total segment AUM decreased $207.6 billion, or 28%, during the nine months ended September 30, 2022 primarily due to equity and bond market depreciation. Net outflows were $6.1 billion for the nine months ended September 30, 2022, a decrease of $21.6 billion compared to the prior year period.

AMERIPRISE FINANCIAL, INC.

The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:


	Nine Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	2,398	$	2,265	$	133	6	%
Distribution fees	307		352		(45)		(13)
Net investment income	6		4		2		50
Other revenues	10		1		9		NM
Total revenues	2,721		2,622		99		4
Banking and deposit interest expense	—		—		—		—
Total net revenues	2,721		2,622		99		4
Expenses
Distribution expenses	767		838		(71)		(8)
Amortization of deferred acquisition costs	8		9		(1)		(11)
Interest and debt expense	3		3		—		—
General and administrative expense	1,245		1,006		239		24
Total expenses	2,023		1,856		167		9
Adjusted operating earnings	$	698	$	766	$	(68)	(9)	%
NM Not Meaningful.

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $68 million, or 9%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to market depreciation, an unfavorable foreign exchange impact and net outflows.

Net Revenues

Management and financial advice fees increased $133 million, or 6%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to the acquired BMO Global Asset Management (EMEA) business and an increase in performance fees of $43 million, partially offset by market depreciation, the cumulative impact from net outflows and the impact of foreign exchange rates.

Distribution fees decreased $45 million, or 13%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to market depreciation and the cumulative impact from net outflows.

Other revenues increased $9 million for the nine months ended September 30, 2022 compared to the prior year period primarily due to the acquired BMO Global Asset Management (EMEA) business.

Expenses

Distribution expenses decreased $71 million, or 8%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to market depreciation and the cumulative impact from net outflows.

General and administrative expense increased $239 million, or 24%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business and higher performance fee related compensation, partially offset by the cumulative impact from net outflows and the impact of foreign exchange rates.

AMERIPRISE FINANCIAL, INC.

Retirement & Protection Solutions

The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:


	Nine Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues
Management and financial advice fees	$	604	$	695	$	(91)	(13)	%
Distribution fees	319		363		(44)		(12)
Net investment income	389		367		22		6
Premiums, policy and contract charges	996		1,001		(5)		—
Other revenues	10		3		7		NM
Total revenues	2,318		2,429		(111)		(5)
Banking and deposit interest expense	—		—		—		—
Total net revenues	2,318		2,429		(111)		(5)
Expenses
Distribution expenses	337		397		(60)		(15)
Interest credited to fixed accounts	289		293		(4)		(1)
Benefits, claims, losses and settlement expenses	877		798		79		10
Amortization of deferred acquisition costs	156		138		18		13
Interest and debt expense	28		28		—		—
General and administrative expense	230		223		7		3
Total expenses	1,917		1,877		40		2
Adjusted operating earnings	$	401	$	552	$	(151)	(27)	%
NM Not Meaningful.

Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual), mean reversion related impacts, and block transfer reinsurance transaction impacts decreased $151 million, or 27%, for the nine months ended September 30, 2022 compared to the prior year period.

Net Revenues

Management and financial advice fees decreased $91 million, or 13%, for the nine months ended September 30, 2022 compared to the prior year period primarily due to market depreciation and variable annuity net outflows.

Distribution fees decreased $44 million, or 12%, for the nine months ended September 30, 2022 compared to the prior year period due to market depreciation.

Expenses

Distribution expenses decreased $60 million, or 15%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting lower variable annuity sales and market depreciation.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization) and mean reversion related impacts, increased $79 million, or 10%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the impact of unlocking. The unlocking impact for the third quarter of 2022 was an expense of $180 million primarily reflecting continued lower surrender rates and updated mortality assumptions for variable annuities with living benefits compared to an expense of $89 million in the prior year period which was also driven by lower surrender rates.

Amortization of DAC, which excludes mean reversion related impacts and the DAC offset to the market impact on variable annuity guaranteed benefits, increased $18 million, or 13%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the impact of unlocking due to lower surrender rates, partially offset by a lower level of normalized amortization and lower than expected client exit rates. The unlocking impact for the third quarter of 2022 was a benefit of $5 million compared to a benefit of $65 million in the prior year period.

AMERIPRISE FINANCIAL, INC.

Corporate & Other

The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:


	Nine Months Ended September 30,				Change
	2022		2021
	(in millions)
Revenues


Net investment income	$	107	$	210	$	(103)	(49)	%
Premiums, policy and contract charges	73		75		(2)		(3)
Other revenues	172		87		85		98
Total revenues	352		372		(20)		(5)
Banking and deposit interest expense	2		1		1		NM
Total net revenues	350		371		(21)		(6)
Expenses
Distribution expenses	(6)		(6)		—		—
Interest credited to fixed accounts	182		187		(5)		(3)
Benefits, claims, losses and settlement expenses	177		126		51		40
Amortization of deferred acquisition costs	1		7		(6)		(86)
Interest and debt expense	48		48		—		—
General and administrative expense	156		188		(32)		(17)
Total expenses	558		550		8		1
Adjusted operating loss	$	(208)	$	(179)	$	(29)	(16)	%
NM Not Meaningful.

Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impact, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss increased $29 million, or 16%, for the nine months ended September 30, 2022 compared to the prior year period.

LTC insurance had a pretax adjusted operating loss of $3 million for the nine months ended September 30, 2022 compared to a pretax adjusted operating earnings of $48 million for the prior year period primarily reflecting the return to more normalized results compared to the COVID-19 related impacts in the prior year period.

FA business had a pretax adjusted operating loss of $12 million for the nine months ended September 30, 2022 compared to a pretax adjusted operating loss of $17 million for the prior year period.

Net Revenues

Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $103 million, or 49%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting lower average invested assets due to the sale of investments to a reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction and a $15 million gain on a strategic investment in the prior year period.

Other revenues increased $85 million, or 98%, 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.

Expenses

Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, increased $51 million, or 40%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting more normalized claims on LTC insurance, which benefited from COVID-19 related impacts in the prior year period, and the impacts from unlocking. The unlocking impact for the third quarter of 2022 was a benefit of $1 million compared to an unlocking expense of $3 million in the prior year period.

General and administrative expense, which excludes integration and restructuring charges, decreased $32 million, or 17%, for the nine months ended September 30, 2022 compared to the prior year period primarily reflecting the favorable mark-to-market impact on share-based compensation expense.

AMERIPRISE FINANCIAL, INC.

Market Risk

Our primary market risk exposures are interest rate, equity price, foreign currency exchange rate and credit risk. Equity price and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the spread income generated on our fixed insurance, brokerage client cash balances, banking deposits, face-amount certificate products, fixed portion of our variable annuities and variable insurance contracts, the value of DAC and DSIC assets, the value of liabilities for guaranteed benefits associated with our variable annuities and the value of derivatives held to hedge these benefits.

Our 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. We primarily invest in fixed rate securities to fund the rate credited to clients. We guarantee 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 non-structured fixed maturity securities and commercial mortgage loans 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 $2.7 billion and 3.2%, 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 $14.4 billion and had a weighted average yield of 3.0% 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 our 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 3.8%.

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, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework. In addition, we may update the crediting rates on our fixed products when warranted, subject to guaranteed minimums.

In addition to the fixed rate exposures noted above, RiverSource Life 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. Our 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. We use 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.

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

To evaluate interest rate and equity price risk we perform 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

AMERIPRISE FINANCIAL, INC.

staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedge assets, we assume no change in implied market volatility despite the 10% drop in equity prices.

The following tables present our 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 management and distribution fees (1)	$	(267)	$	2	$	(265)
DAC and DSIC amortization (2)(3)	(56)		—		(56)
Variable annuities:
GMDB and GMIB (3)	(42)		—		(42)
GMWB (3)	(554)		534		(20)
GMAB	(34)		34		—
Structured variable annuities	432		(400)		32
DAC and DSIC amortization (4)	N/A		N/A		7
Total variable annuities	(198)		168		(23)
Macro hedge program (5)	—		195		195


IUL insurance	13		(18)		(5)
Total	$	(507)	$	346	$	(154)	(6)
N/A Not Applicable.


Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
	Before Hedge Impact		Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(51)	$	—	$	(51)
Variable annuities:

GMWB	742		(922)		(180)
GMAB	3		(5)		(2)
Structured variable annuities	(35)		177		142
DAC and DSIC amortization (4)	N/A		N/A		16
Total variable annuities	710		(750)		(24)
Macro hedge program (5)	—		(252)		(252)
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	58		—		58
Banking deposits	35		—		35
Brokerage client cash balances	160		—		160

Certificates	(5)		—		(5)
IUL insurance	16		2		18
Total	$	923	$	(1,000)	$	(61)
N/A Not Applicable.

(1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.

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

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

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

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

(6) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is approximately $(265) million.

The above results compare to an estimated negative net impact to pretax income of $190 million related to a 10% equity price decline and an estimated positive net impact to pretax income of $80 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.

AMERIPRISE FINANCIAL, INC.

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 our risk of nonperformance specific to these liabilities. Our hedging is based on our 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, we have not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we 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

We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives and 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. We include actual market prices, or observable inputs, in our fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. We validate 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 our 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 our obligations of our variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, we consider the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, we adjust the valuation of variable annuity riders, fixed deferred indexed annuities, structured 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 our nonperformance risk. The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries 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 our 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

Overview

We maintained substantial liquidity during the nine months ended September 30, 2022. At September 30, 2022 and December 31, 2021, we had $7.8 billion and $7.1 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.

At September 30, 2022 and December 31, 2021, the parent company had $760 million and $841 million, respectively, in cash, cash equivalents, and unencumbered liquid securities. Liquid securities predominantly include U.S. government agency mortgage backed securities. Additional sources of liquidity include a line of credit with an affiliate up to $729 million and an unsecured revolving committed credit facility for up to $1.0 billion that expires in June 2026. Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of September 30, 2022 was $2.0 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.

Under the terms of the committed credit facility, we can increase the availability to $1.25 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At September 30, 2022, we had no outstanding borrowings under this credit facility and had $1 million of letters of credit issued against the facility. Our credit facility contains various administrative, reporting, legal and financial covenants. We remain in compliance with all such covenants at September 30, 2022.

In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances. Our subsidiaries, RiverSource Life Insurance Company (“RiverSource Life”), and Ameriprise Bank, FSB are members of the FHLB of Des Moines, which provides access to collateralized borrowings. As of September 30, 2022 and

AMERIPRISE FINANCIAL, INC.

December 31, 2021, we had $8.5 billion and $8.1 billion, respectively, under the FHLB facilities, 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 and residential mortgage backed securities.

There have been no material changes to our contractual obligations disclosed in our 2021 10-K.

We repaid $500 million principal amount of our 3.0% senior notes at maturity on March 22, 2022. We issued $500 million of 4.5% unsecured senior notes on May 13, 2022. See Note 10 to our Consolidated Financial Statements for further information about our long-term debt maturities.

We believe cash flows from operating activities, available cash balances, our availability of revolver borrowings and dividends from our subsidiaries will be sufficient to fund our short-term and long-term operating liquidity needs and stress requirements.

We continue to monitor and respond to the ongoing COVID-19 pandemic. Our risk management strategy is designed to provide proactive protection during stress events such as the current pandemic. We believe our process is working as intended, and our liquidity and capital resources have remained a source of balance sheet strength during the nine months ended September 30, 2022.

On August 16, 2022, federal legislation commonly referred to as the Inflation Reduction Act of 2022 (“IRA”) was enacted. We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax (“CAMT”) and the share repurchase excise tax. Both the CAMT and share repurchase tax provisions are effective beginning in 2023. We expect to be an applicable corporation required to compute CAMT; however, we have not determined if we will be liable for the CAMT in 2023. We will be a covered corporation subject to the share repurchase excise tax. We do not expect the IRA legislation to have a material impact on our consolidated financial statements. As the Internal Revenue Service issues additional guidance related to the IRA, we will continue to evaluate any impact to our consolidated financial statements.

Dividends from Subsidiaries

Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly-owned subsidiaries. Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding, LLC, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc. (“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment Advisers, LLC, TAM UK International Holdings Ltd., which includes Threadneedle Asset Management Holdings Sàrl and Ameriprise International Holdings GmbH within its organizational structure, and Columbia Threadneedle Investments UK International Ltd. The payment of dividends by many of our subsidiaries is restricted and certain of our subsidiaries are subject to regulatory capital requirements.

Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were as follows:


	Actual Capital				Regulatory Capital Requirements
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(in millions)
RiverSource Life (1)(2)	$	2,998	$	3,419	N/A		$	502
RiverSource Life of New York (1)(2)	168		310		N/A		42
ACC (4)(5)	357		304		$	331	283
TAM UK International Holdings Ltd. (6)	411		330		205		248

Ameriprise Bank, FSB (4) (7)	1,397		853		946		589
AFS (3)(4)	132		103		#		#
Ameriprise Captive Insurance Company (3)	37		39		11		10
Ameriprise Trust Company (3)	52		47		36		44
AEIS (3)(4)	189		155		29		29
RiverSource Distributors, Inc. (3)(4)	11		10		#		#
Columbia Management Investment Distributors, Inc. (3)(4)	20		14		#		#
Columbia Threadneedle Investments UK International Ltd. (8)	297		348		140		170

N/A Not applicable as only required to be calculated annually.

# Amounts are less than $1 million.

(1) Actual capital is determined on a statutory basis.

AMERIPRISE FINANCIAL, INC.

(2) Regulatory capital requirement is the company action level and is based on the statutory risk-based capital filing.

(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of September 30, 2022 and December 31, 2021.

(4) Actual capital is determined on an adjusted GAAP basis.

(5) ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.

(6) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation.

(7) Regulatory capital requirement is based on minimum requirements for well capitalized banks in accordance with the Office of the Comptroller of the Currency (“OCC”).

(8) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation.

In addition to the particular regulations restricting dividend payments and establishing subsidiary capitalization requirements, we take into account the overall health of the business, capital levels and risk management considerations in determining a strategy for payments to our parent holding company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries.

During the nine months ended September 30, 2022, the parent holding company received cash dividends or a return of capital from its subsidiaries of $2.2 billion (including $600 million from RiverSource Life) and contributed cash to its subsidiaries of $512 million (including $375 million to Ameriprise Bank, FSB). During the nine months ended September 30, 2021, the parent holding company received cash dividends or a return of capital from its subsidiaries of $3.0 billion (including $1.7 billion from RiverSource Life) and contributed cash to its subsidiaries of $158 million (including $42 million to Ameriprise Bank, FSB).

In 2009, RiverSource Life established an agreement to protect its exposure to Genworth Life Insurance Company (“GLIC”) for its reinsured 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 our domiciliary regulator and rating agencies. GLIC is domiciled in Delaware, so in the event GLIC was 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 we have with GLIC have been tested and respected in Delaware and elsewhere in the United States, and as a result we believe our 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, we believe the correct way to think about the risks represented by our 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 our credit protections). Thus, management believes that our agreement and offsetting non-LTC legacy arrangements with Genworth will enable RiverSource Life to recover on all net exposure in all material respects in the event of a rehabilitation or insolvency of GLIC.

Dividends Paid to Shareholders and Share Repurchases

We paid regular quarterly dividends to our shareholders totaling $416 million and $396 million for the nine months ended September 30, 2022 and 2021, respectively. On October 25, 2022, we announced a quarterly dividend of $1.25 per common share. The dividend will be paid on November 18, 2022 to our shareholders of record at the close of business on November 7, 2022.

In January 2022, the Company’s Board of Directors authorized us to repurchase up to $3.0 billion for the repurchase of the Company’s common stock through March 31, 2024. As of September 30, 2022, we had $2.1 billion remaining under the share repurchase authorization. We intend to fund share repurchases through existing working capital, future earnings and other customary financing methods. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means. During the nine months ended September 30, 2022, we repurchased a total of 5.0 million shares of our common stock at an average price of $274.55 per share.

Cash Flows

Cash flows of CIEs and restricted and segregated cash and cash equivalents are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities. Cash held by CIEs is not available for general use by Ameriprise Financial, nor is Ameriprise Financial cash available for general use by its CIEs. Cash and cash equivalents segregated under federal and other regulations is held for the exclusive benefit of our brokerage customers and is not available for general use by Ameriprise Financial.

Operating Activities

Net cash provided by operating activities increased $1.4 billion to $3.2 billion for the nine months ended September 30, 2022 compared to $1.8 billion for the prior year period primarily reflecting a $755 million increase in derivatives, net of collateral, a $500 million decrease in income taxes paid, and a $332 million increase in deferred acquisition costs, partially offset by a $560 million decrease in accounts payable and accrued expenses.

AMERIPRISE FINANCIAL, INC.

Investing Activities

Our investing activities primarily relate to our Available-for-Sale investment portfolio. Further, this activity is significantly affected by the net flows of our investment certificate, fixed annuity and universal life products reflected in financing activities.

Net cash used in investing activities increased $7.9 billion to $9.2 billion for the nine months ended September 30, 2022 compared to $1.4 billion for the prior year period primarily reflecting a $5.4 billion increase in cash used for purchases of Available-for-Sale securities, and a $3.1 billion decrease in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities.

Financing Activities

Net cash provided by financing activities increased $6.0 billion to $6.2 billion for the nine months ended September 30, 2022 compared to $259 million for the prior year period primarily reflecting a $4.8 billion increase in banking deposits, a $2.2 billion increase in net cash flows from investment certificates and $491 million increase in issuance of long-term debt, partially offset by a $1 billion decrease in borrowings by CIEs and a $501 million increase in repayments of long-term debt.

Forward-Looking Statements

This report contains forward-looking statements that reflect management’s plans, estimates and beliefs. 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, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth opportunities;

•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;

•statements about the outcomes from the application to convert Ameriprise Bank, FSB to a state-chartered bank and national trust bank or the anticipated deposit growth or impacts from possible future interest rate increases;

•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 our 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 our products;

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

•adverse capital and credit market conditions or any downgrade in our credit ratings;

•effects of competition and our larger competitors’ economies of scale;

•declines in our investment management performance;

•our ability to compete in attracting and retaining talent, including financial advisors;

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

•the ability to maintain our unaffiliated third-party distribution channels and the impacts of sales of unaffiliated products;

•changes in valuation of securities and investments included in our assets;

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

•the illiquidity of our investments;

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

•failures by other insurers that lead to higher assessments we owe to state insurance guaranty funds;

•failures or defaults by counterparties to our reinsurance arrangements;

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

•deviations from our assumptions regarding morbidity, mortality and persistency affecting our insurance profitability;

•changes to our reputation arising from employee or advisor misconduct or otherwise;

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

AMERIPRISE FINANCIAL, INC.

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

•interruptions or other errors in our telecommunications or data processing systems;

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

• ability of our subsidiaries to transfer funds to us to pay dividends;

• changes in exchange rates and other risks in connection with our international operations and earnings and income generated overseas;

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

• risks in acquisition transactions, such as the integration of the BMO Global Asset Management (EMEA) business, or other potential strategic acquisitions or divestitures;

• legal and regulatory actions brought against us;

• changes to laws and regulations that govern operation of our business;

• supervision by bank regulators and related regulatory and prudential standards as a savings and loan holding company that may limit our activities and strategies;

• changes in corporate tax laws and regulations and interpretations and determinations of tax laws impacting our products;

• protection of our intellectual property and claims we infringe the intellectual property of others; and

•changes in and the adoption of new accounting standards.

Management cautions the reader that the foregoing list of factors is not exhaustive. There may also be other risks that management 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. Management 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 our 2021 10-K.

Ameriprise Financial announces financial and other information to investors through the Company’s investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this report or in any other report or document the Company furnishes or files with the SEC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk” in this report is incorporated herein by reference. These disclosures should be read in conjunction with the “Quantitative and Qualitative Disclosures About Market Risk” discussion included as Part II, Item 7A of our 2021 10-K filed with the SEC on February 25, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain 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 SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, our 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.

Our management, under the supervision and with the participation of our Chief 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, our company’s Chief Executive Officer and Chief Financial Officer have concluded that our 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 our 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, our company’s internal control over financial reporting.

PART II. OTHER INFORMATION

AMERIPRISE FINANCIAL, INC.

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 our 2021 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents the information with respect to purchases made by or on behalf of Ameriprise Financial, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the third quarter of 2022:


Period	(a)	(b)		(c)	(d)
	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1 to July 31, 2022
Share repurchase program (1)	433,520	$	239.78	433,520	$	2,441,774,716
Employee transactions (2)	33,917	$	238.92	N/A	N/A

August 1 to August 31, 2022
Share repurchase program (1)	716,552	$	277.66	716,552	$	2,242,812,381
Employee transactions (2)	32,665	$	275.50	N/A	N/A

September 1 to September 30, 2022
Share repurchase program (1)	701,650	$	269.38	701,650	$	2,053,804,310
Employee transactions (2)	9,472	$	275.34	N/A	N/A

Totals
Share repurchase program (1)	1,851,722	$	265.65	1,851,722
Employee transactions (2)	76,054	$	259.17	N/A
	1,927,776			1,851,722

N/A Not applicable.

(1) In January 2022, our Board of Directors authorized an expenditure of up to $3.0 billion for the repurchase of our common stock through March 31, 2024. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means.

(2) Includes restricted shares withheld pursuant to the terms of awards under the Company’s share-based compensation plans to offset tax withholding obligations that occur upon vesting and release of restricted shares. The value of the restricted shares withheld is the closing price of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs. Also includes shares withheld pursuant to the net settlement of Non-Qualified Stock Option (“NQSO”) exercises to offset tax withholding obligations that occur upon exercise and to cover the strike price of the NQSO. The value of the shares withheld pursuant to the net settlement of NQSO exercises is the closing price of common stock of Ameriprise Financial, Inc. on the day prior to the date the relevant transaction occurs.

AMERIPRISE FINANCIAL, INC.

ITEM 6. EXHIBITS

Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed certain agreements as exhibits to this Quarterly Report on Form 10-Q. These agreements may contain representations and warranties by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe our actual state of affairs at the date hereof and should not be relied upon.

The following exhibits are filed as part of this Quarterly Report on Form 10-Q. The exhibit numbers followed by an asterisk (*) indicate exhibits electronically filed herewith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference.


Exhibit			Description

3.1			Amended and Restated Certificate of Incorporation of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 1-32525, filed on May 1, 2014).
3.2			Amended and Restated Bylaws of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K, File No. 1-32525, filed on February 24, 2021).
4.1			Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Form 10 Registration Statement, File No. 1-32525, filed on August 19, 2005). Other instruments defining the rights of holders of long-term debt securities of the registrant are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The registrant agrees to furnish copies of these instruments to the SEC upon request.

31.1*			Certification of James M. Cracchiolo pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*			Certification of Walter S. Berman pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*			Certification of James M. Cracchiolo and Walter S. Berman 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 Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021; (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021; (iii) Consolidated Balance Sheets at September 30, 2022 and December 31, 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 Ameriprise Financial, Inc.’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.

AMERIPRISE FINANCIAL, INC.

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.


									AMERIPRISE FINANCIAL, INC.
									(Registrant)


Date:	November 2, 2022	By:	/s/ Walter S. Berman
			Walter S. Berman
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)


Date:	November 2, 2022	By:	/s/ Dawn M. Brockman
			Dawn M. Brockman
			Senior Vice President and Controller
			(Principal Accounting Officer)

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Ameriprise Financial (AMP) 10-Q2022 Q3 Quarterly report

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