Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information

Segment Information

16.  Segment Information

The Company’s segments are Advice & Wealth Management, Asset Management, Annuities, Protection and Corporate & Other. The prior period results for the Protection and Annuities segments have been adjusted due to the Company’s adoption of the new accounting standard for DAC as discussed in Note 1 and Note 2.

Historically the Chief Operating Decision Makers have received segment results prepared on a GAAP basis and on an operating basis and the Company has presented segment results in the Segment footnote on a GAAP basis. Operating results have become more relevant in how management measures segment performance and determines compensation. Accordingly operating earnings have become the measure of segment profit or loss management uses to evaluate segment performance. The segment results for the three months ended March 31, 2012 are presented on an operating basis and the prior period has been recasted.

Management uses segment 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, operating earnings is the Company’s measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for GAAP income from continuing operations before income tax provision. The Company believes the presentation of segment 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.

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.

Operating earnings is defined as operating net revenues less operating expenses. Operating net revenues and operating expenses exclude the results of discontinued operations and the impact of consolidating CIEs. Operating net revenues also exclude net realized gains or losses. Operating expenses exclude the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) and integration and restructuring charges. The market impact includes changes in the GMWB and GMAB embedded derivative liability values caused by changes in financial market conditions, net of changes in associated hedge asset values. The market impact also includes certain valuation adjustments made in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“FAS 157”), including the impact on GMWB and GMAB embedded derivative liability values of discounting projected benefits to reflect a current estimate of the Company’s life insurance subsidiary’s nonperformance spread. Integration and restructuring charges relate to the Company’s acquisition of the long-term asset management business of Columbia Management Group on April 30, 2010. The costs include system integration costs, proxy and other regulatory filing costs, employee reduction and retention costs, and investment banking, legal and other acquisition costs.

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

	March 31, 2012		December 31, 2011
	(in millions)
Advice & Wealth Management	$	12,549	$	12,293
Asset Management	6,853		6,863
Annuities	90,210		86,598
Protection	18,240		18,304
Corporate & Other	8,905		8,249
Total assets	$	136,757	$	132,307

	Three Months Ended March 31,
	2012			2011
	(in millions)
Operating net revenues:
Advice & Wealth Management	$	954		$	913
Asset Management	711			737
Annuities	628			643
Protection	522			516
Corporate & Other	8			(6		)
Eliminations (1)	(312		)	(309		)
Total segment operating revenues	2,511			2,494
Net realized gains (losses)	(2		)	1
Revenues of CIEs	52			37
Total net revenues per consolidated statements of operations	$	2,561		$	2,532

(1)Represents the elimination of intersegment revenues recognized for the three months ended March 31, 2012 and 2011 in each segment as follows: Advice & Wealth Management ($229 and $232, respectively); Asset Management ($10 and $10, respectively); Annuities ($63 and $58, respectively); Protection ($9 and $9, respectively); and Corporate & Other ($1 and nil, respectively).

	Three Months Ended March 31,
	2012			2011
	(in millions)
Operating earnings:
Advice & Wealth Management	$	94		$	99
Asset Management	131			136
Annuities	189			172
Protection	107			111
Corporate & Other	(65		)	(65		)
Total segment operating earnings	456			453
Net realized gains (losses)	(2		)	1
Net income (loss) attributable to non-controlling interests	4			(18		)
Market impact on variable annuity living benefits, net of hedges, DSIC and DAC amortization	(113		)	(21		)
Integration and restructuring charges	(23		)	(29		)
Income from continuing operations before income tax provision per consolidated statements of operations	$	322		$	386