-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AXIJX21cAZDGz6eaxpLNeyXtZGHBH/Z5h6TInxx0tdvoTGXhX4fD4zPz5bDm9UYT WaW4ky1uE6zNd92g/0POvA== 0001068800-07-001265.txt : 20070510 0001068800-07-001265.hdr.sgml : 20070510 20070510145224 ACCESSION NUMBER: 0001068800-07-001265 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070331 FILED AS OF DATE: 20070510 DATE AS OF CHANGE: 20070510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSOURCE LIFE INSURANCE CO CENTRAL INDEX KEY: 0000727892 IRS NUMBER: 410823832 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-28976 FILM NUMBER: 07837044 BUSINESS ADDRESS: STREET 1: 50605 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5299 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6126712237 MAIL ADDRESS: STREET 1: 50605 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5299 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE INSURANCE CO DATE OF NAME CHANGE: 19970414 FORMER COMPANY: FORMER CONFORMED NAME: IDS LIFE INSURANCE CO /MN DATE OF NAME CHANGE: 19920703 10-Q 1 riversource10q.txt RIVERSOURCE LIFE INSURANCE COMPANY UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007 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 NUMBER 333-114888 RIVERSOURCE LIFE INSURANCE COMPANY (Exact name of registrant as specified in its charter) MINNESOTA 41-0823832 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 55 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS, MINNESOTA 55474 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (612) 671-3131 NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No | | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer | | Accelerated filer | | Non-accelerated filer |X| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes | | No |X| Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AT MAY 10, 2007 - -------------------------------------- -------------------------------------- Common Stock (par value $30 per share) 100,000 shares THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. RIVERSOURCE LIFE INSURANCE COMPANY FORM 10-Q INDEX
PAGE NO. -------- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Balance Sheets - March 31, 2007 and December 31, 2006........................................ 1 Consolidated Statements of Income - Three Months Ended March 31, 2007 and 2006............................ 2 Consolidated Statements of Cash Flows - Three Months Ended March 31, 2007 and 2006........................ 3 Consolidated Statements of Shareholders' Equity - Three Months Ended March 31, 2007 and 2006.............. 4 Notes to Consolidated Financial Statements................................................................ 5-10 Item 2. Management's Discussion and Analysis......................................................................11-14 Item 4T. Controls and Procedures................................................................................... 15 PART II. OTHER INFORMATION: Item 1. Legal Proceedings......................................................................................... 15 Item 1A. Risk Factors.............................................................................................. 15 Item 6. Exhibits.................................................................................................. 15 Signatures......................................................................................................... 16 Exhibit Index...................................................................................................... E-1
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS RIVERSOURCE LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS (in millions, except share amounts)
MARCH 31, DECEMBER 31, 2007 2006 ------------ ------------- (UNAUDITED) ASSETS Investments: Available-for-Sale: Fixed maturities, at fair value (amortized cost: 2007, $24,173; 2006, $25,289)............ $ 23,990 $ 24,995 Common and preferred stocks, at fair value (cost: 2007 and 2006, $30)..................... 31 31 Mortgage loans on real estate, at cost (less allowance for loan losses: 2007 and 2006, $37)... 2,732 2,790 Policy loans.................................................................................. 647 642 Trading securities and other investments...................................................... 150 241 ------------ ------------- Total investments......................................................................... 27,550 28,699 Cash and cash equivalents..................................................................... 386 160 Reinsurance recoverables...................................................................... 1,174 1,137 Amounts due from brokers...................................................................... 24 7 Other accounts receivable..................................................................... 102 90 Accrued investment income..................................................................... 301 309 Deferred acquisition costs.................................................................... 4,255 4,411 Deferred sales inducement costs............................................................... 453 452 Other assets.................................................................................. 375 321 Separate account assets....................................................................... 51,731 49,287 ------------ ------------- Total assets.............................................................................. $ 86,351 $ 84,873 ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Future policy benefits........................................................................ $ 28,678 $ 29,561 Policy claims and other policyholders' funds.................................................. 99 93 Amounts due to brokers........................................................................ 140 132 Deferred income taxes, net.................................................................... 75 90 Other liabilities............................................................................. 461 440 Separate account liabilities.................................................................. 51,731 49,287 ------------ ------------- Total liabilities......................................................................... 81,184 79,603 ------------ ------------- Shareholders' equity: Common shares, $30 par value; 100,000 shares authorized, issued and outstanding......................................... 3 3 Additional paid-in capital.................................................................... 2,030 2,021 Retained earnings............................................................................. 3,287 3,455 Accumulated other comprehensive loss, net of tax.............................................. (153) (209) ------------ ------------- Total shareholders' equity................................................................ 5,167 5,270 ------------ ------------- Total liabilities and shareholders' equity................................................ $ 86,351 $ 84,873 ============ ============= See Notes to Consolidated Financial Statements.
1 RIVERSOURCE LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in millions)
THREE MONTHS ENDED MARCH 31, ----------------------- 2007 2006 ---------- ---------- REVENUES Premiums: Traditional life insurance........................................................................ $ 17 $ 18 Disability income and long term care insurance.................................................... 76 74 ---------- ---------- Total premiums................................................................................. 93 92 Net investment income............................................................................... 382 447 Contractholder and policyholder charges............................................................. 164 153 Mortality and expense risk and other fees........................................................... 188 146 Net realized investment gains....................................................................... 7 6 ---------- ---------- Total revenues................................................................................. 834 844 ---------- ---------- BENEFITS AND EXPENSES Death and other benefits: Traditional life insurance........................................................................ 11 5 Investment contracts and universal life-type insurance............................................ 40 57 Disability income and long term care insurance.................................................... 21 21 Increase in liabilities for future policy benefits: Disability income and long term care insurance.................................................... 46 42 Interest credited to account values................................................................. 236 270 Amortization of deferred acquisition costs.......................................................... 112 105 Separation costs.................................................................................... 38 25 Other insurance and operating expenses.............................................................. 181 159 ---------- ---------- Total benefits and expenses.................................................................... 685 684 ---------- ---------- Income before income tax provision.................................................................. 149 160 Income tax provision................................................................................ 33 48 ---------- ---------- Net income..................................................................................... $ 116 $ 112 ========== ========== See Notes to Consolidated Financial Statements.
2 RIVERSOURCE LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in millions)
THREE MONTHS ENDED MARCH 31, ------------------------ 2007 2006 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income.......................................................................................... $ 116 $ 112 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred acquisition costs........................................................ 112 105 Amortization of deferred sales inducement costs................................................... 16 11 Capitalization of deferred acquisition costs...................................................... (180) (172) Capitalization of deferred sales inducement costs................................................. (32) (27) Amortization of premium, net...................................................................... 19 18 Deferred income taxes............................................................................. 35 10 Contractholder and policyholder charges, non-cash................................................. (57) (55) Net realized investment gains..................................................................... (7) (6) Net realized gain on trading securities and equity method investments in hedge funds.............. (2) (21) Change in operating assets and liabilities: Trading securities and equity method investments in hedge funds, net.............................. 78 69 Future policy benefits for traditional life, disability income and long term care insurance....... 78 78 Policy claims and other policyholders' funds...................................................... 7 (8) Policy loans, excluding universal life-type insurance: Repayment...................................................................................... 10 9 Issuance....................................................................................... (9) (9) Reinsurance recoverables.......................................................................... (37) (31) Other accounts receivable......................................................................... (12) 15 Accrued investment income......................................................................... 8 2 Other assets and liabilities, net................................................................. (133) 52 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES........................................................... 10 152 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Available-for-Sale securities: Proceeds from sales............................................................................... 766 396 Maturities, sinking fund payments and calls....................................................... 449 595 Purchases......................................................................................... (111) (810) Other investments, excluding policy loans: Proceeds from sales, maturities, sinking fund payments and calls.................................. 121 149 Purchases......................................................................................... (48) (129) Change in amounts due to and from brokers, net...................................................... (9) 1 ----------- ----------- NET CASH PROVIDED BY INVESTING ACTIVITIES........................................................... 1,168 202 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Activity related to investment contracts and universal life-type insurance: Considerations received........................................................................... 222 335 Interest credited to account values............................................................... 236 270 Surrenders and other benefits..................................................................... (1,254) (1,148) Policy loans: Repayment......................................................................................... 29 25 Issuance.......................................................................................... (35) (30) Cash dividend to Ameriprise Financial, Inc.......................................................... (150) - ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES............................................................... (952) (548) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................................ 226 (194) Cash and cash equivalents at beginning of period.................................................... 160 233 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.......................................................... $ 386 $ 39 =========== =========== Supplemental Disclosures: Income taxes paid................................................................................. $ 9 $ 13 See Notes to Consolidated Financial Statements.
3 RIVERSOURCE LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (in millions)
ACCUMULATED ADDITIONAL OTHER COMMON PAID-IN RETAINED COMPREHENSIVE SHARES CAPITAL EARNINGS INCOME/(LOSS) TOTAL ------------ ------------ ---------- ------------- ----------- BALANCES AT DECEMBER 31, 2005................................... $ 3 $ 2,020 $ 3,269 $ (130) $ 5,162 Other comprehensive loss: Net income................................................... - - 112 - 112 Change in unrealized holding losses on securities, net....... - - - (266) (266) Change in unrealized derivative losses, net.................. - - - 1 1 ----------- Total other comprehensive loss.................................. - - - - (153) ----------- ----------- ----------- ----------- ----------- BALANCES AT MARCH 31, 2006...................................... $ 3 $ 2,020 $ 3,381 $ (395) $ 5,009 =========== =========== =========== =========== =========== BALANCES AT DECEMBER 31, 2006................................... $ 3 $ 2,021 $ 3,455 $ (209) $ 5,270 Change in accounting principles................................. - - (134) - (134) Other comprehensive income: - Net income................................................... - - 116 - 116 Change in unrealized holding losses on securities, net....... - - - 56 56 ----------- Total other comprehensive income................................ - - - - 172 Cash dividend to Ameriprise Financial, Inc...................... - - (150) - (150) Non-cash capital contribution from Ameriprise Financial, Inc.... - 9 - - 9 ----------- ----------- ----------- ----------- ----------- BALANCES AT MARCH 31, 2007...................................... $ 3 $ 2,030 $ 3,287 $ (153) $ 5,167 =========== =========== =========== =========== =========== See Notes to Consolidated Financial Statements.
4 RIVERSOURCE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying Consolidated Financial Statements include the accounts of RiverSource Life Insurance Company and its wholly owned subsidiary, RiverSource Life Insurance Co. of New York. RiverSource Life Insurance Company is a wholly owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"). All significant intercompany accounts and transactions have been eliminated in consolidation. RiverSource Life Insurance Company and its subsidiary are referred to collectively in this Form 10-Q as "RiverSource Life". The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles. Certain reclassifications of prior period amounts have been made to conform to the current presentation. The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods have been made. All adjustments made were of a normal, recurring nature. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Annual Report on Form 10-K of RiverSource Life for the year ended December 31, 2006, filed with the Securities and Exchange Commission ("SEC") on February 28, 2007. 2. RECENT ACCOUNTING PRONOUNCEMENTS In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115" ("SFAS 159"). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of SFAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 requires entities to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS 159 also establishes presentation and disclosure requirements. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. RiverSource Life is currently evaluating whether or not it will elect to adopt SFAS 159. In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The provisions of SFAS 157 are required to be applied prospectively as of the beginning of the fiscal year in which SFAS 157 is initially applied, except for certain financial instruments as defined in SFAS 157 which will require retrospective application of SFAS 157. The transition adjustment, if any, will be recognized as a cumulative-effect adjustment to the opening balance of retained earnings for the fiscal year of adoption. RiverSource Life is currently evaluating the impact of SFAS 157 on its consolidated financial condition and results of operations. In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, "Accounting for Income Taxes." FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. RiverSource Life adopted FIN 48 as of January 1, 2007. The effect of adopting FIN 48 on RiverSource Life's consolidated financial condition and results of operations was not material. 5 RIVERSOURCE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 2. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED) In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments" ("SFAS 155"). SFAS 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") and SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"). SFAS 155: (i) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; (ii) clarifies which interest-only and principal-only strips are not subject to the requirements of SFAS 133; (iii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iv) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (v) amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. RiverSource Life adopted SFAS 155 as of January 1, 2007. The effect of adopting SFAS 155 on RiverSource Life's consolidated financial condition and results of operations was not material. In September 2005, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position ("SOP") 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts," ("SOP 05-1"). SOP 05-1 provides clarifying guidance on accounting for deferred acquisition costs ("DAC") associated with an insurance or annuity contract that is significantly modified or internally replaced with another contract. Prior to adoption, RiverSource Life accounted for many of these transactions as contract continuations and continued amortization of existing DAC against revenue from the new or modified contract. Effective on January 1, 2007, RiverSource Life adopted SOP 05-1 resulting in these transactions being prospectively accounted for as contract terminations. Consistent with this, RiverSource Life now anticipates these transactions in establishing amortization periods and other valuation assumptions. As a result of adopting SOP 05-1, RiverSource Life recorded as a cumulative change in accounting principle a pretax charge of $206 million, reducing DAC by $204 million, deferred sales inducement costs ("DSIC") by $11 million and liabilities for future policy benefits by $9 million. The after-tax decrease to retained earnings for these changes is $134 million. The adoption of SOP 05-1 is also expected to result in an increase to DAC and DSIC amortization in 2007. The expected increase to amortization expense may vary depending upon future changes in underlying valuation assumptions. 3. SEPARATION AND DISTRIBUTION OF AMERIPRISE FINANCIAL, INC. FROM AMERICAN EXPRESS Ameriprise Financial was formerly a wholly owned subsidiary of American Express Company ("American Express"). On February 1, 2005, the American Express Board of Directors announced its intention to pursue the disposition of 100% of its shareholdings in Ameriprise Financial (the "Separation") through a tax-free distribution to American Express shareholders. Effective as of the close of business on September 30, 2005, American Express completed the Separation and the distribution of Ameriprise Financial common shares to American Express shareholders (the "Distribution"). In connection with the Distribution, Ameriprise Financial entered into certain agreements with American Express to effect the Separation and to define the responsibility for obligations arising before and after the date of the Distribution, including, among others, obligations relating to transition services, taxes, and employees. Ameriprise Financial has incurred $739 million of pretax non-recurring separation costs since the Separation announcement through March 31, 2007 and expects to incur a total of approximately $875 million. These costs are primarily related to technology costs and marketing and rebranding. The majority of the technology related costs are expected to be incurred by June 30, 2007. RiverSource Life was allocated certain expenses incurred as a result of Ameriprise Financial becoming an independent company. RiverSource Life has been allocated $290 million in total pretax non-recurring separation costs since the Separation announcement through March 31, 2007 and expects to be allocated a significant portion of the remaining separation costs in 2007. RiverSource Life received a capital contribution of $650 million from Ameriprise Financial during the third quarter of 2005 to support its financial strength ratings and to cover separation costs. 6 RIVERSOURCE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 4. INVESTMENTS The following is a summary of Available-for-Sale securities by type:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR MARCH 31, 2007 COST GAINS LOSSES VALUE ----------------------------------------------------- ---------- ---------- ---------- ---------- (IN MILLIONS) Fixed maturities: Corporate debt securities............................ $ 11,580 $ 117 $ (215) $ 11,482 Mortgage and other asset-backed securities........... 8,985 32 (131) 8,886 Foreign corporate bonds and obligations.............. 3,045 42 (52) 3,035 U.S. government and agencies obligations............. 281 10 (4) 287 State and municipal obligations...................... 165 4 (4) 165 Foreign government bonds and obligations............. 117 18 - 135 ---------- ---------- ---------- ---------- Total fixed maturities............................... 24,173 223 (406) 23,990 Common and preferred stocks.......................... 30 1 - 31 ---------- ---------- ---------- ---------- Total ............................................... $ 24,203 $ 224 $ (406) $ 24,021 ========== ========== ========== ========== GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR DECEMBER 31, 2006 COST GAINS LOSSES VALUE ----------------------------------------------------- ---------- ---------- ---------- ---------- (IN MILLIONS) Fixed maturities: Corporate debt securities............................ $ 12,232 $ 119 $ (262) $ 12,089 Mortgage and other asset-backed securities........... 9,400 27 (175) 9,252 Foreign corporate bonds and obligations.............. 3,080 39 (68) 3,051 U.S. government and agencies obligations............. 295 13 (5) 303 State and municipal obligations...................... 165 4 (4) 165 Foreign government bonds and obligations............. 117 18 - 135 ---------- ---------- ---------- ---------- Total fixed maturities............................... 25,289 220 (514) 24,995 Common and preferred stocks.......................... 30 1 - 31 ---------- ---------- ---------- ---------- Total ............................................... $ 25,319 $ 221 $ (514) $ 25,026 ========== ========== ========== ==========
Gross realized investment gains and losses on Available-for-Sale securities and other-than-temporary impairments on Available-for-Sale securities included in net realized investment gains were as follows:
THREE MONTHS ENDED MARCH 31, ------------------ 2007 2006 -------- ------- (IN MILLIONS) Gross realized investment gains...................................................... $ 13 $ 11 Gross realized investment losses..................................................... (6) (5) Other-than-temporary impairments..................................................... - -
7 RIVERSOURCE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. DEFERRED ACQUISITION COSTS Effective January 1, 2007, RiverSource Life adopted SOP 05-1. SOP 05-1 provides clarifying guidance on accounting for DAC associated with an insurance or annuity contract that is significantly modified or internally replaced with another contract. Prior to adoption, RiverSource Life accounted for many of these transactions as contract continuations and continued amortization of existing DAC against revenue from the new or modified contract. RiverSource Life's adoption of SOP 05-1 resulted in these transactions being prospectively accounted for as contract terminations. As a result of adopting SOP 05-1, RiverSource Life recorded as a cumulative change in accounting principle a pretax reduction of $204 million and $11 million to DAC and DSIC, respectively. The balances of and changes in DAC were as follows:
2007 2006 ------------- ------------- (IN MILLIONS) Balance at January 1............................................................ $ 4,411 $ 4,036 Cumulative effect of SOP 05-1 adoption.......................................... (204) - Capitalization of acquisition costs............................................. 180 172 Amortization, excluding impact of changes in assumptions........................ (120) (100) Amortization, impact of other quarter changes in DAC-related assumptions........ 8 (5) Impact of changes in net unrealized securities losses (gains)................... (20) 42 ------------- ------------- Balance at March 31............................................................. $ 4,255 $ 4,145 ============= =============
The balances of and changes in DSIC were as follows:
2007 2006 ------------- ------------- (IN MILLIONS) Balance at January 1............................................................ $ 452 $ 370 Cumulative effect of SOP 05-1 adoption.......................................... (11) - Capitalization of sales inducements............................................. 32 27 Amortization.................................................................... (16) (11) Impact of change in net unrealized securities losses (gains).................... (4) 8 ------------- ------------- Balance at March 31............................................................. $ 453 $ 394 ============= =============
6. FUTURE POLICY BENEFITS, POLICY CLAIMS AND OTHER POLICYHOLDERS' FUNDS AND SEPARATE ACCOUNT LIABILITIES Future policy benefits and policy claims and other policyholders' funds consisted of the following:
March 31, December 31, 2007 2006 ------------- ------------- (IN MILLIONS) Fixed annuities................................................................. $ 16,233 $ 16,841 Equity indexed annuities accumulated host values................................ 263 267 Equity indexed annuities embedded derivative reserve............................ 48 50 Variable annuities fixed sub-accounts........................................... 5,674 5,975 Guaranteed minimum withdrawal benefits variable annuity guarantees.............. (29) (12) Other variable annuity guarantees............................................... 14 26 ------------- ------------- Total annuities............................................................. 22,203 23,147 Variable universal life ("VUL")/universal life insurance contract reserves...... 2,551 2,562 Other life, disability income and long term care insurance...................... 3,924 3,852 ------------- ------------- Total future policy benefits.................................................... 28,678 29,561 Policy claims and other policyholders' funds.................................... 99 93 ------------- ------------- Total future policy benefits and policy claims and other policyholders' funds...................................................... $ 28,777 $ 29,654 ============= =============
8 RIVERSOURCE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 6. FUTURE POLICY BENEFITS, POLICY CLAIMS AND OTHER POLICYHOLDERS' FUNDS AND SEPARATE ACCOUNT LIABILITIES (CONTINUED) Separate account liabilities consisted of the following:
MARCH 31, DECEMBER 31, 2007 2006 ------------- ------------- (IN MILLIONS) Variable annuity contract reserves................................................ $ 45,802 $ 43,515 VUL insurance contract reserves................................................... 5,929 5,772 ------------- ------------- Total separate account liabilities............................................ $ 51,731 $ 49,287 ============= =============
7. LINES OF CREDIT RiverSource Life has available a committed line of credit with Ameriprise Financial aggregating $200 million. The interest rate for any borrowings is established by reference to LIBOR plus 28 basis points. There were no amounts outstanding on this line of credit at March 31, 2007 and December 31, 2006. Also, RiverSource Life has a collateral loan agreement with Ameriprise Financial aggregating up to $75 million. The interest rate for any borrowings is equal to the preceding month's effective new money rate for RiverSource Life's permanent investments. There were no amounts outstanding at March 31, 2007 and 2006. 8. INCOME TAXES RiverSource Life's effective tax rate was 22% for the three months ended March 31, 2007, compared to 30% for the three months ended March 31, 2006. The decrease in the effective tax rate primarily reflects higher levels of tax advantaged items relative to pretax income for the three months ended March 31, 2007. RiverSource Life is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Included in RiverSource Life's deferred tax assets is a significant deferred tax asset relating to capital losses realized for tax return purposes and capital losses that have been recognized for financial statement purposes but not yet for tax return purposes. Under current U.S. federal income tax law, capital losses generally must be used against capital gain income within five years of the year in which the capital losses are recognized for tax purposes. RiverSource Life has $131 million in capital loss carryforwards that expire December 31, 2009, for which the benefit is reflected in deferred tax assets. Additionally, RiverSource Life has $45 million in capital loss carryforwards that expire December 31, 2009 as a result of the 2005 first short period tax return filed with American Express. Based on analysis of RiverSource Life's tax position, management believes it is more likely than not that the results of future operations and implementation of tax planning strategies will generate sufficient taxable income to enable RiverSource Life to utilize all of its deferred tax assets. Accordingly, no valuation allowance for deferred tax assets was established as of March 31, 2007 and December 31, 2006. Effective January 1, 2007, RiverSource Life adopted the provisions of FIN 48. The effect of adopting FIN 48 on the consolidated financial condition and results of operations was not material. As of the date of adoption, RiverSource Life had $73 million of gross unrecognized tax benefits. If recognized, approximately $27 million, net of federal tax benefits, would affect the effective tax rate. RiverSource Life recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. RiverSource Life had $10 million for the payment of interest and penalties accrued at both January 1, 2007 and March 31, 2007. It is reasonably possible that the total amounts of unrecognized tax benefits will change in the next 12 months. However, there are a number of open audits and the range cannot be quantified at this time. 9 RIVERSOURCE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. INCOME TAXES (CONTINUED) RiverSource Life or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. With few exceptions, RiverSource Life is no longer subject to U.S. federal or state and local income tax examinations by tax authorities for years before 1997. The Internal Revenue Service ("IRS"), as part of the overall examination of the American Express Company consolidated return, commenced an examination of RiverSource Life's U.S. income tax returns for 1997 through 2002 in the third quarter of 2005. In the first quarter of 2007, the IRS expanded the period of the exam to include 2003 through 2004. RiverSource Life or certain of its subsidiaries' state income tax returns are currently under examination by various jurisdictions for years ranging from 1998 through 2005. 9. COMMITMENTS AND CONTINGENCIES At March 31, 2007 and December 31, 2006, RiverSource Life had no material commitments to purchase investments other than mortgage loan fundings. The SEC, the National Association of Securities Dealers and several state authorities have brought proceedings challenging several mutual fund and variable product financial practices, generally including suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements. RiverSource Life has received requests for information and has been contacted by regulatory authorities concerning its practices and is cooperating fully with these inquiries. RiverSource Life is involved in the normal course of business in a number of other legal and arbitration proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material impact on results of operations in any particular reporting period as the proceedings are resolved. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS The following Management's Discussion and Analysis ("MD&A") should be read in conjunction with RiverSource Life Insurance Company's Consolidated Financial Statements and Notes presented in Item 1. RiverSource Life Insurance Company and its subsidiary are referred to collectively in this Form 10-Q as "RiverSource Life". This discussion may contain forward-looking statements that reflect RiverSource Life's plans, estimates and beliefs. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed under "Forward-Looking Statements." RiverSource Life believes it is useful to read its MD&A in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2006, filed with the Securities and Exchange Commission ("SEC") on February 28, 2007, as well as its current reports on Form 8-K and other publicly available information. RiverSource Life follows U.S. generally accepted accounting principles ("U.S. GAAP"), and the following discussion is presented on a consolidated basis consistent with U.S. GAAP. Management's narrative analysis of the results of operations is presented in lieu of MD&A, pursuant to General Instructions H(2) (a) of Form 10-Q. OVERVIEW RiverSource Life Insurance Company is a stock life insurance company with one wholly owned operating subsidiary, RiverSource Life Insurance Co. of New York ("RiverSource Life of NY"). RiverSource Life Insurance Company is a wholly owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"). o RiverSource Life Insurance Company is domiciled in Minnesota and holds Certificates of Authority in American Samoa, the District of Columbia and all states except New York. RiverSource Life Insurance Company issues insurance and annuity products. o RiverSource Life of NY is a stock life insurance company domiciled in New York, which holds Certificates of Authority in New York, North Dakota and Delaware. RiverSource Life of NY issues insurance and annuity products. Ameriprise Financial was formerly a wholly owned subsidiary of American Express Company ("American Express"). On February 1, 2005, the American Express Board of Directors announced its intention to pursue the disposition of 100% of its shareholdings in Ameriprise Financial (the "Separation") through a tax-free distribution to American Express shareholders. Effective as of the close of business on September 30, 2005, American Express completed the Separation and the distribution of Ameriprise Financial common shares to American Express shareholders (the "Distribution"). In connection with the Distribution, Ameriprise Financial entered into certain agreements with American Express to effect the Separation and to define the responsibility for obligations arising before and after the date of the Distribution, including, among others, obligations relating to transition services, taxes, and employees. Ameriprise Financial has incurred $739 million of pretax non-recurring separation costs since the Separation announcement through March 31, 2007 and expects to incur a total of approximately $875 million. These costs are primarily related to technology costs and marketing and rebranding. The majority of the technology related costs are expected to be incurred by June 30, 2007. RiverSource Life was allocated certain expenses incurred as a result of Ameriprise Financial becoming an independent company. RiverSource Life has been allocated $290 million in total pretax non-recurring separation costs since the Separation announcement through March 31, 2007 and expects to be allocated a significant portion of the remaining separation costs in 2007. RiverSource Life received a capital contribution of $650 million from Ameriprise Financial during the third quarter of 2005 to support its financial strength ratings and to cover separation costs. RECENT ACCOUNTING PRONOUNCEMENTS For information regarding recent accounting pronouncements and their expected impact on future consolidated financial condition or results of operations, see Note 2 to the Consolidated Financial Statements. RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2007 COMPARED TO THE QUARTER ENDED MARCH 31, 2006 Overview Consolidated net income was $116 million for the quarter ended March 31, 2007 compared to $112 million for the quarter ended March 31, 2006, an increase of $4 million. Income before income tax provision decreased $11 million to $149 million for the quarter ended March 31, 2007 from $160 million for the quarter ended March 31, 2006. The decrease was due to a decrease in net investment income partially offset by an increase in separate account fees. Total benefits and expenses were $685 million in the quarter ended March 31, 2007 compared to $684 million in the quarter ended March 31, 2006, with decreases in interest credited and death and other benefits offset by higher separation costs, DAC amortization and other expenses. The increase in consolidated net income reflects a decrease in the effective tax rate for the quarter ended March 31, 2007 compared to the prior year period. 11 Revenues Total revenues for the quarter ended March 31, 2007 were $834 million, a decrease of $10 million from the quarter ended March 31, 2006 total of $844 million. Total premiums increased $1 million or 1.1% to $93 million for the first quarter ended March 31, 2007. Premiums for disability income ("DI") and long term care ("LTC") insurance increased $2 million or 2.7% primarily as a result of higher DI insurance in force levels. Net investment income decreased $65 million or 14.5% to $382 million for the quarter ended March 31, 2007 reflecting a decrease in the average level of invested assets and the planned liquidation of externally managed hedge funds. The lower level of invested assets reflects declining fixed annuity account values due to a shift in sales from fixed to variable products. Another contributing factor was due to lower gains on derivatives economically hedging equity index annuities ("EIA"). Fluctuations in the EIA liability are reported in interest credited to account values on RiverSource Life's Consolidated Statements of Income. Partially offsetting the decrease is favorable mark-to-market adjustments on derivatives economically hedging guaranteed minimum withdrawal benefit ("GMWB") riders. Fluctuations in the value of the GMWB embedded derivative are reported in the death and other benefits for investment contracts and universal life-type insurance line item on RiverSource Life's Consolidated Statements of Income. Contractholder and policyholder charges increased $11 million or 7.2% to $164 million for the quarter ended March 31, 2007 primarily due to an increase in the cost of insurance charges on variable universal life products and charges for variable annuity GMWB riders. Mortality and expense risk and other fees increased $42 million or 28.8% to $188 million for the quarter ended March 31, 2007 reflecting higher average values of separate account assets due to positive net flows and market appreciation. Net realized investment gains were $7 million for the quarter ended March 31, 2007 compared to $6 million for the quarter ended March 31, 2006. For the quarter ended March 31, 2007, $13 million of gross realized investment gains were partially offset by $6 million of gross realized losses classified as Available-for-Sale. For the quarter ended March 31, 2006, $11 million of gross realized investment gains were partially offset by $5 million of gross realized investment losses classified as Available-for-Sale. Benefits and Expenses Death and other benefits for traditional life insurance increased $6 million to $11 million for the quarter ended March 31, 2007 primarily reflecting an increase in net claims during the quarter ended March 31, 2007. Death and other benefits for investment contracts and universal life-type insurance decreased $17 million or 29.8% to $40 million for the quarter ended March 31, 2007 primarily reflecting net decreases in guaranteed minimum accumulation benefit ("GMAB") and guaranteed minimum death benefit ("GMDB") costs of $12 million. Increase in liabilities for future policy benefits for DI and LTC insurance increased $4 million or 9.5% reflecting an unfavorable $12 million adjustment which was the net of a $24 million increase in reserves from revising certain valuation calculations and a $12 million benefit reflecting recent claims experience. This adjustment was offset by favorable DI and LTC claims experience compared to the prior year period. Interest credited to account values decreased by $34 million or 12.6% to $236 million for the quarter ended March 31, 2007 primarily due to lower interest crediting rates and lower average accumulation values of annuities. Amortization of deferred acquisition costs ("DAC") increased $7 million to $112 million for the quarter ended March 31, 2007 from $105 million for the quarter ended March 31, 2006. This reflects increased amortization of DAC associated with variable annuities. DAC amortization was higher in 2007 than in 2006 primarily due to growth in variable annuity business volumes, relatively less favorable equity market performance and the recurring impact of the adoption of SOP 05-1. Separation costs increased $13 million or 52.0% to $38 million for the quarter ended March 31, 2007. Separation costs primarily related to technology costs and marketing and rebranding. 12 Other insurance and operating expenses increased $22 million or 13.8% to $181 million for the quarter ended March 31, 2007 primarily reflecting increased sales and marketing expenses. Income Taxes RiverSource Life's effective tax rate was 22% for the quarter ended March 31, 2007 compared to 30% for the quarter ended March 31, 2006. The decrease in the effective tax rate primarily reflects higher levels of tax advantaged items relative to pretax income for the three months ended March 31, 2007. LIQUIDITY AND CAPITAL RESOURCES The liquidity requirements of RiverSource Life are generally met by funds provided by investment income, maturities and periodic repayments of investments, deposits, premiums and proceeds from sales of investments, as well as capital contributions from Ameriprise Financial. RiverSource Life has established repurchase agreements and an available line of credit with Ameriprise Financial aggregating $200 million. The primary uses of funds are policy benefits, commissions, other product-related acquisition and sales inducement costs, operating expenses, policy loans, dividends to Ameriprise Financial and investment purchases. RiverSource Life routinely reviews its sources and uses of funds in order to meet its ongoing obligations. During 2006, RiverSource Life paid $300 million of dividends to Ameriprise Financial comprised of $200 million of extraordinary cash dividends and $100 million of ordinary cash dividends. RiverSource Life of NY paid dividends to RiverSource Life Insurance Company in 2006 of $23 million. On March 20, 2007, RiverSource Life paid ordinary cash dividends of $150 million to Ameriprise Financial. RiverSource Life Insurance Company and its wholly-owned life insurance subsidiary are subject to regulatory capital requirements. Actual capital, determined on a statutory basis, and regulatory capital requirements, based on the most recent statutory risk-based capital filings for each of the life insurance entities, are as follows:
REGULATORY CAPITAL ACTUAL CAPITAL AS OF (a) REQUIREMENT ------------------------------- --------------- MARCH 31, DECEMBER 31, DECEMBER 31, 2007 2006 2006 ------------ ---------------- --------------- (IN MILLIONS) RiverSource Life Insurance Company............................... $ 3,381 $ 3,511 $ 590 RiverSource Life Insurance Co. of New York....................... 355 348 38 - -------------------------- (a) Actual capital, as defined by the National Association of Insurance Commissioners for purposes of meeting regulatory capital requirements, includes statutory capital and surplus, plus certain statutory valuation reserves.
13 FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that reflect RiverSource Life's plans, estimates and beliefs. RiverSource Life's actual results could differ materially from those described in these forward-looking statements. The words "believe," "expect," "anticipate," "optimistic," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely" and similar expressions are intended to identify forward-looking statements 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. RiverSource Life cautions the reader that the following list of factors is not exhaustive. There may also be other risks that RiverSource Life 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. RiverSource Life undertakes no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: o changes in the interest rate, equity market and other financial market environments; o changes in the litigation and regulatory environment and judicial or legislative developments, including the increasing focus on customer suitability, sales practices and disclosure, as well as ongoing legal proceedings and regulatory actions; o RiverSource Life's investment management performance and consumer acceptance of RiverSource Life's products; o effects of competition in the financial services industry and changes in RiverSource Life's product distribution mix and distribution channels; o RiverSource Life's capital structure as a subsidiary of Ameriprise Financial, including the ability of its parent to support its financial strength and ratings; o risks of default by issuers of investments RiverSource Life owns or by counterparties to derivative or reinsurance arrangements; o experience deviations from RiverSource Life's assumptions regarding morbidity, mortality and persistency in certain annuity and insurance products; o successfully cross-selling insurance and annuity products and services to Ameriprise Financial's customer base; o RiverSource Life's ability to effectively hedge risks relating to guaranteed benefit riders and certain other products; o the impact of the separation of Ameriprise Financial from American Express; o the impact of intercompany allocations to RiverSource Life from Ameriprise Financial and its affiliates; o Ameriprise Financial's ability to attract, recruit and retain qualified advisors and employees and its ability to distribute RiverSource Life's products through current and future distribution channels; o the impact of Ameriprise Financial's efforts to improve distribution economics and of RiverSource Life's efforts to grow third party distribution, and RiverSource Life's ability to establish its new brands; o changes in U.S. federal income or estate tax laws potentially making RiverSource Life's products less attractive to clients; o RiverSource Life's ability to recover from catastrophes, both natural and man-made; and o general economic and political factors, including consumer confidence in the economy. A further description of these and other risks and uncertainties can be found under "Item 1A - Risk Factors" and elsewhere in RiverSource Life's Annual Report on Form 10-K for the year ended December 31, 2006, filed on February 28, 2007 and its other reports filed with the SEC. 14 ITEM 4T. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES RiverSource Life maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to RiverSource Life's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, RiverSource Life's disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met. RiverSource Life's management, with the participation of RiverSource Life's 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, RiverSource Life's Chief Executive Officer and Chief Financial Officer have concluded that RiverSource Life's disclosure controls and procedures were effective at a reasonable level of assurance as of March 31, 2007. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There have not been any changes in RiverSource Life's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, RiverSource Life's internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The information set forth in Note 9 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference. ITEM 1A. RISK FACTORS There have been no material changes in the risk factors provided in Part I, Item 1A of RiverSource Life's Annual Report on Form 10-K for the year ended December 31, 2006 filed with the SEC on February 28, 2007. ITEM 6. EXHIBITS The list of exhibits required to be filed as exhibits to this report are listed on page E-1 hereof, under "Exhibit Index," which is incorporated herein by reference. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RIVERSOURCE LIFE INSURANCE COMPANY ---------------------------------- (Registrant) Date: May 10, 2007 By /s/ Mark E. Schwarzmann ----------------------------------- Mark E. Schwarzmann Director, Chairman of the Board and Chief Executive Officer Date: May 10, 2007 By /s/ Brian J. McGrane ----------------------------------- Brian J. McGrane Executive Vice President and Chief Financial Officer 16 EX-99 2 exindex.txt EXHIBIT INDEX EXHIBIT INDEX The following exhibits are filed as part of this Quarterly Report: EXHIBIT DESCRIPTION - --------- --------------------------------------------------------------------- *31.1 Certification of Mark E. Schwarzmann pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. *31.2 Certification of Brian J. McGrane pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. *32.1 Certification of Mark E. Schwarzmann and Brian J. McGrane pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * Filed electronically herewith. E-1 EX-31.1 3 ex31p1.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 CERTIFICATION ------------- I, Mark E. Schwarzmann, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of RiverSource Life Insurance Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 10, 2007 /s/ Mark E. Schwarzmann ----------------------- Mark E. Schwarzmann Chief Executive Officer EX-31.2 4 ex31p2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 31.2 CERTIFICATION ------------- I, Brian J. McGrane, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of RiverSource Life Insurance Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 10, 2007 /s/ Brian J. McGrane -------------------- Brian J. McGrane Chief Financial Officer EX-32.1 5 ex32p1.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of RiverSource Life Insurance Company (the "Company") for the quarterly period ended March 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Mark E. Schwarzmann, as Chief Executive Officer of the Company, and Brian J. McGrane as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Mark E. Schwarzmann - -------------------------- Name: Mark E. Schwarzmann Title: Chief Executive Officer Date: May 10, 2007 /s/ Brian J. McGrane - -------------------------- Name: Brian J. McGrane Title: Chief Financial Officer Date: May 10, 2007 -----END PRIVACY-ENHANCED MESSAGE-----