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Reinsurance Helps Stabilize Ameriprise Protection Earnings

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Annuity and life insurance operations were a source of stability at Ameriprise Financial Inc. in the fourth quarter of 2021.

The Minneapolis-based financial services company says its Retirement & Protection Solutions division performed about as well in the latest quarter as it did in the fourth quarter of 2019, in spite of the COVID-19 pandemic and the effects of the pandemic on the economy.


Ameriprise as a whole reported $177 million in net income for the latest quarter on $3.2 billion in revenue, compared with $463 million in net income on $3.3 billion in revenue for the fourth quarter of 2019.

The Retirement & Protection Solutions unit recorded $180 million in pretax adjusted operating income on $799 million in revenue, up from $179 million in operating earnings on $786 million in revenue for the year-earlier quarter.

The unit benefited “from higher fees and higher ending market levels, partially offset by lower interest rates,” the company said.

The company coped with lower rates by shifting to a focus on the sale of variable annuities without significant benefits guarantees.

Sales of variable annuities increased 20%, to $1.3 billion, the company said.

Variable annuities without living benefits guarantees now amount to 58% of variable annuity sales, and the annuity net amount at risk for living benefits is just 0.4% of account value, the company said.

Because of the effects of low interest rates and pricing changes, sales of indexed universal life (IUL) products fell, and sales of variable universal life (VUL) products doubled, the company said.

Total life insurance in forced increased to $196 billion, from $195 billion.

“Though the number of life insurance claims was elevated as a result of COVID-19, the financial impact was limited as a significant portion of mortality risk is reinsured,” Ameriprise said.

Life Reinsurance Details

Ameriprise said in its Form 10-K annual report for 2019 that it has reinsured 90% of new IUL death benefit liability from 2002 to Aug. 31, 2013, and 90% of new VUL death benefit liability from 2002 to Dec. 31, 2013.

The company cut its reinsurance level to 50% of death benefits for IUL policies starting Sept. 1, 2013, and for VUL policies starting Jan. 1, 2014.

Ameriprise rarely retains more than $1.5 million of insurance risk on a single life or a flexible-premium survivorship life policy, the company said.

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