Edgar Filing: AMERIPRISE FINANCIAL INC

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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 June 30, 2012

o 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

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

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

Large Accelerated Filer x		Accelerated Filer o

Non-Accelerated Filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o 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 July 27, 2012
Common Stock (par value $.01 per share)		210,728,566 shares

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AMERIPRISE FINANCIAL, INC.

FORM 10-Q

INDEX

Part I.	Financial Information:

	Item 1.	Financial Statements

		Consolidated Statements of Operations – Three months and six months ended June 30, 2012 and 2011	3

		Consolidated Statements of Comprehensive Income – Three months and six months ended June 30, 2012 and 2011	4

		Consolidated Balance Sheets – June 30, 2012 and December 31, 2011	5

		Consolidated Statements of Equity – Six months ended June 30, 2012 and 2011	6

		Consolidated Statements of Cash Flows – Six months ended June 30, 2012 and 2011	7

		Notes to Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	84

	Item 4.	Controls and Procedures	84

Part II.	Other Information:

	Item 1.	Legal Proceedings	85

	Item 1A.	Risk Factors	85

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86

	Item 6.	Exhibits	86

	Signatures		87

	Exhibit Index		E-1

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AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenues
Management and financial advice fees	$	1,152		$	1,172		$	2,284		$	2,309
Distribution fees	396			416			798			813
Net investment income	472			498			1,003			1,013
Premiums	302			312			603			604
Other revenues	202			236			408			440
Total revenues	2,524			2,634			5,096			5,179
Banking and deposit interest expense	10			11			21			24
Total net revenues	2,514			2,623			5,075			5,155
Expenses
Distribution expenses	663			659			1,329			1,293
Interest credited to fixed accounts	209			212			415			420
Benefits, claims, losses and settlement expenses	396			405			888			788
Amortization of deferred acquisition costs	99			89			130			164
Interest and debt expense	72			75			141			150
General and administrative expense	776			774			1,551			1,545
Total expenses	2,215			2,214			4,454			4,360
Income from continuing operations before income tax provision	299			409			621			795
Income tax provision	128			118			201			210
Income from continuing operations	171			291			420			585
Loss from discontinued operations, net of tax	(1		)	(4		)	(2		)	(75		)
Net income	170			287			418			510
Less: Net loss attributable to noncontrolling interests	(53		)	(28		)	(49		)	(46		)
Net income attributable to Ameriprise Financial	$	223		$	315		$	467		$	556

Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic
Income from continuing operations	$	1.01		$	1.30		$	2.09		$	2.54
Loss from discontinued operations	—			(0.02		)	(0.01		)	(0.30		)
Net income	$	1.01		$	1.28		$	2.08		$	2.24
Diluted
Income from continuing operations	$	0.99		$	1.27		$	2.05		$	2.48
Loss from discontinued operations	—			(0.02		)	(0.01		)	(0.30		)
Net income	$	0.99		$	1.25		$	2.04		$	2.18

Cash dividends declared per common share	$	0.35		$	0.23		$	0.35		$	0.41

Supplemental Disclosures:
Total other-than-temporary impairment losses on securities	$	(14	)	$	(43	)	$	(19	)	$	(43	)
Portion of loss recognized in other comprehensive income (before taxes)	6			27			5			25
Net impairment losses recognized in net investment income	$	(8	)	$	(16	)	$	(14	)	$	(18	)

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011

Net income	$	170		$	287		$	418		$	510
Other comprehensive income, net of tax:
Foreign currency translation adjustment	(21		)	(1		)	10			27
Net unrealized gains on securities:
Net unrealized securities gains arising during the period	156			187			237			125
Reclassification of net securities (gains) losses included in net income	4			(3		)	5			(2		)
Impact on deferred acquisition costs, deferred sales inducement costs, benefit reserves and reinsurance recoverables	(59		)	(61		)	(62		)	(36		)
Total net unrealized gains on securities	101			123			180			87
Net unrealized gains (losses) on derivatives:
Net unrealized derivative gains arising during the period	—			—			10			1
Reclassification of net derivative gains included in net income	—			(18		)	(1		)	(22		)
Total net unrealized gains (losses) on derivatives	—			(18		)	9			(21		)
Total other comprehensive income, net of tax	80			104			199			93
Total comprehensive income	250			391			617			603
Less: Comprehensive loss attributable to noncontrolling interests	(64		)	(28		)	(41		)	(32		)
Comprehensive income attributable to Ameriprise Financial	$	314		$	419		$	658		$	635

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share amounts)

	June 30, 2012			December 31, 2011
Assets
Cash and cash equivalents	$	2,721		$	2,781
Cash of consolidated investment entities	551			470
Investments	38,874			38,775
Investments of consolidated investment entities, at fair value	4,690			4,789
Separate account assets	69,303			66,780
Receivables	5,499			5,559
Receivables of consolidated investment entities (includes $23 and $39, respectively, at fair value)	38			59
Deferred acquisition costs	2,431			2,440
Restricted and segregated cash and investments	1,763			1,793
Other assets	8,319			7,751
Other assets of consolidated investment entities, at fair value	1,081			1,110
Total assets	$	135,270		$	132,307

Liabilities and Equity
Liabilities:
Future policy benefits and claims	$	31,675		$	31,710
Separate account liabilities	69,303			66,780
Customer deposits	10,079			9,850
Short-term borrowings	498			504
Long-term debt	2,403			2,393
Debt of consolidated investment entities (includes $4,726 and $4,712, respectively, at fair value)	5,213			5,178
Accounts payable and accrued expenses	978			1,048
Accounts payable and accrued expenses of consolidated investment entities	24			17
Other liabilities	5,376			5,033
Other liabilities of consolidated investment entities (includes $75 and $85, respectively, at fair value)	108			100
Total liabilities	125,657			122,613

Equity:
Ameriprise Financial, Inc.:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 305,475,256 and 303,757,574, respectively)	3			3
Additional paid-in capital	6,287			6,237
Retained earnings	5,990			5,603
Appropriated retained earnings of consolidated investment entities	394			428
Treasury shares, at cost (92,788,323 and 81,814,591 shares, respectively)	(4,611		)	(4,034		)
Accumulated other comprehensive income, net of tax	942			751
Total Ameriprise Financial, Inc. shareholders’ equity	9,005			8,988
Noncontrolling interests	608			706
Total equity	9,613			9,694
Total liabilities and equity	$	135,270		$	132,307

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(in millions, except share data)

	Ameriprise Financial, Inc.
										Appropriated								Total
										Retained								Ameriprise
										Earnings of						Accumulated		Financial,
	Number of				Additional					Consolidated						Other Com-		Inc.			Non-
	Outstanding		Common		Paid-In		Retained			Investment			Treasury			prehensive		Shareholders’			controlling
	Shares		Shares		Capital		Earnings			Entities			Shares			Income		Equity			Interests			Total
Balances at January 1, 2011, previously reported	246,697,892		$	3	$	6,029	$	6,190		$	558		$	(2,620	)	$	565	$	10,725		$	560		$	11,285
Cumulative effect of change in accounting policies, net of tax	—		—		—		(1,420		)	—			—			85		(1,335		)	—			(1,335		)
Balances at January 1, 2011, as adjusted	246,697,892		3		6,029		4,770			558			(2,620		)	650		9,390			560			9,950
Comprehensive income:
Net income (loss)	—		—		—		556			—			—			—		556			(46		)	510
Other comprehensive income, net of tax	—		—		—		—			—			—			79		79			14			93
Total comprehensive income (loss)																		635			(32		)	603
Net loss reclassified to appropriated retained earnings	—		—		—		—			(64		)	—			—		(64		)	64			—
Dividends to shareholders	—		—		—		(103		)	—			—			—		(103		)	—			(103		)
Noncontrolling interests investments in subsidiaries	—		—		—		—			—			—			—		—			101			101
Distributions to noncontrolling interests	—		—		—		—			—			—			—		—			(36		)	(36		)
Repurchase of common shares	(12,972,436	)	—		—		—			—			(780		)	—		(780		)	—			(780		)
Share-based compensation plans	3,334,761		—		79		(8		)	—			81			—		152			23			175
Balances at June 30, 2011	237,060,217		$	3	$	6,108	$	5,215		$	494		$	(3,319	)	$	729	$	9,230		$	680		$	9,910

Balances at January 1, 2012	221,942,983		$	3	$	6,237	$	5,603		$	428		$	(4,034	)	$	751	$	8,988		$	706		$	9,694
Comprehensive income:
Net income (loss)	—		—		—		467			—			—			—		467			(49		)	418
Other comprehensive income, net of tax	—		—		—		—			—			—			191		191			8			199
Total comprehensive income (loss)																		658			(41		)	617
Net loss reclassified to appropriated retained earnings	—		—		—		—			(26		)	—			—		(26		)	26			—
Dividends to shareholders	—		—		—		(80		)	—			—			—		(80		)	—			(80		)
Noncontrolling interests investments in subsidiaries	—		—		—		—			—			—			—		—			62			62
Distributions to noncontrolling interests	—		—		—		—			—			—			—		—			(149		)	(149		)
Repurchase of common shares	(12,773,495	)	—		—		—			—			(666		)	—		(666		)	—			(666		)
Share-based compensation plans	3,517,445		—		50		—			—			89			—		139			4			143
Other	—		—		—		—			(8		)	—			—		(8		)	—			(8		)
Balances at June 30, 2012	212,686,933		$	3	$	6,287	$	5,990		$	394		$	(4,611	)	$	942	$	9,005		$	608		$	9,613

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)

	Six Months Ended June 30,
	2012			2011
Cash Flows from Operating Activities
Net income	$	418		$	510
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion, net	110			67
Deferred income tax expense	5			48
Share-based compensation	66			80
Net realized investment gains	(7		)	(21		)
Net unrealized trading losses	1			1
Loss from equity method investments	9			12
Other-than-temporary impairments and provision for loan losses	17			24
Net loss of consolidated investment entities	61			51
Changes in operating assets and liabilities:
Restricted and segregated cash and investments	62			(14		)
Deferred acquisition costs	(26		)	(7		)
Other investments, net	15			(73		)
Future policy benefits and claims, net	69			15
Receivables	(39		)	(157		)
Brokerage deposits	(68		)	48
Accounts payable and accrued expenses	(71		)	(75		)
Derivatives collateral, net	(372		)	61
Cash held by consolidated investment entities	(81		)	(7		)
Investment properties of consolidated investment entities	(11		)	(181		)
Other operating assets and liabilities of consolidated investment entities, net	26			21
Other, net	284			255
Net cash provided by operating activities	468			658

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	150			644
Maturities, sinking fund payments and calls	2,335			3,025
Purchases	(2,367		)	(4,111		)
Proceeds from sales, maturities and repayments of commercial mortgage loans	135			112
Funding of commercial mortgage loans	(106		)	(62		)
Proceeds from sales of other investments	98			88
Purchase of other investments	(206		)	(151		)
Purchase of investments by consolidated investment entities	(909		)	(1,785		)
Proceeds from sales, maturities and repayments of investments by consolidated investment entities	1,150			1,949
Purchase of land, buildings, equipment and software	(99		)	(89		)
Change in consumer banking loans and credit card receivables, net	(1		)	(216		)
Other, net	(7		)	—
Net cash provided by (used in) investing activities	173			(596		)

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)

(in millions)

	Six Months Ended June 30,
	2012			2011
	(in millions)
Cash Flows from Financing Activities
Investment certificates and banking time deposits:
Proceeds from additions	$	427		$	487
Maturities, withdrawals and cash surrenders	(472		)	(750		)
Change in other banking deposits	349			864
Policyholder and contractholder account values:
Consideration received	748			626
Net transfers to separate accounts	(24		)	(59		)
Surrenders and other benefits	(620		)	(712		)
Deferred premium options, net	(172		)	(125		)
Repayments of debt	—			(6		)
Change in short-term borrowings, net	(7		)	108
Dividends paid to shareholders	(139		)	(103		)
Repurchase of common shares	(666		)	(795		)
Exercise of stock options	45			49
Excess tax benefits from share-based compensation	28			37
Borrowings by consolidated investment entities	83			121
Repayments of debt by consolidated investment entities	(194		)	(180		)
Noncontrolling interests investments in subsidiaries	62			101
Distributions to noncontrolling interests	(149		)	(36		)
Other, net	(2		)	(1		)
Net cash used in financing activities	(703		)	(374		)
Effect of exchange rate changes on cash	2			4
Net decrease in cash and cash equivalents	(60		)	(308		)
Cash and cash equivalents at beginning of period	2,781			2,861
Cash and cash equivalents at end of period	$	2,721		$	2,553

Supplemental Disclosures:
Interest paid before consolidated investment entities	$	95		$	104
Income taxes paid, net	131			223
Non-cash investing activity:
Affordable housing partnership commitments not yet remitted	22			111

See Notes to Consolidated Financial Statements.

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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 its subsidiary, Threadneedle Asset Management Holdings Sàrl (“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”). The income or loss generated by consolidated entities which will not be realized by the Company’s shareholders is attributed to noncontrolling interests in the Consolidated Statements of Operations. Noncontrolling interests are the ownership interests in subsidiaries not attributable, directly or indirectly, to Ameriprise Financial, Inc. and are classified as equity within the Consolidated Balance Sheets. The Company excluding noncontrolling interests is defined as “Ameriprise Financial.” All intercompany transactions and balances have been eliminated in consolidation. See Note 3 for additional information related to VIEs.

The results of Securities America Financial Corporation and its subsidiaries (collectively, “Securities America”) have been presented as discontinued operations for all periods presented. The Company completed the sale of Securities America in the fourth quarter of 2011. See Note 14 for additional information on discontinued operations.

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications of prior period amounts have been made to conform to the current presentation. 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, 2011, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2012.

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.

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 results of operations and financial position for the interim periods have been made. Except for the adjustments described below, all adjustments made were of a normal recurring nature.

In the second quarter of 2012, the Company made a correction for a tax item related to prior periods, which resulted in a $32 million decrease to net income attributable to Ameriprise Financial. During the quarter, the Company discovered it had received incomplete data from a third-party service provider for securities lending activities that resulted in the miscalculation of the Company’s dividend received deduction and foreign tax credit, which resulted in an understatement of taxes payable and an overstatement of reported earnings in prior periods. Management has determined that the effect of this correction is not material to the Consolidated Financial Statements for all current and prior periods. The Company has resolved the data issue and has stopped the securities lending that negatively impacted its tax position.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

On January 1, 2012, the Company retrospectively adopted the new accounting standard for deferred acquisition costs (“DAC”) for insurance and annuity products. See Note 2 and Note 6 for further information on the new accounting standard and the resulting changes in the Company’s accounting policies on the deferral of acquisition costs. The following tables present the effect of the change on affected financial statement line items for prior periods retrospectively adjusted.

	Three Months Ended June 30, 2011
	Previously
	Reported			Effect of Change			As Adjusted
	(in millions)
Revenues
Total net revenues	$	2,623		$	—		$	2,623
Expenses
Distribution expenses	643			16			659
Interest credited to fixed accounts	212			—			212
Benefits, claims, losses and settlement expenses	406			(1		)	405
Amortization of deferred acquisition costs	138			(49		)	89
Interest and debt expense	75			—			75
General and administrative expense	750			24			774
Total expenses	2,224			(10		)	2,214
Income from continuing operations before income tax provision	399			10			409
Income tax provision	114			4			118
Income from continuing operations	285			6			291
Loss from discontinued operations, net of tax	(4		)	—			(4		)
Net income	281			6			287
Less: Net loss attributable to noncontrolling interests	(28		)	—			(28		)
Net income attributable to Ameriprise Financial	$	309		$	6		$	315

Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic
Income from continuing operations	$	1.28		$	0.02		$	1.30
Loss from discontinued operations	(0.02		)	—			(0.02		)
Net income	$	1.26		$	0.02		$	1.28
Diluted
Income from continuing operations	$	1.25		$	0.02		$	1.27
Loss from discontinued operations	(0.02		)	—			(0.02		)
Net income	$	1.23		$	0.02		$	1.25

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	Six Months Ended June 30, 2011
	Previously
	Reported			Effect of Change			As Adjusted
	(in millions)
Revenues
Total net revenues	$	5,155		$	—		$	5,155
Expenses
Distribution expenses	1,262			31			1,293
Interest credited to fixed accounts	419			1			420
Benefits, claims, losses and settlement expenses	788			—			788
Amortization of deferred acquisition costs	254			(90		)	164
Interest and debt expense	150			—			150
General and administrative expense	1,496			49			1,545
Total expenses	4,369			(9		)	4,360
Income from continuing operations before income tax provision	786			9			795
Income tax provision	207			3			210
Income from continuing operations	579			6			585
Loss from discontinued operations, net of tax	(75		)	—			(75		)
Net income	504			6			510
Less: Net loss attributable to noncontrolling interests	(46		)	—			(46		)
Net income attributable to Ameriprise Financial	$	550		$	6		$	556

Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic
Income from continuing operations	$	2.51		$	0.03		$	2.54
Loss from discontinued operations	(0.30		)	—			(0.30		)
Net income	$	2.21		$	0.03		$	2.24
Diluted
Income from continuing operations	$	2.46		$	0.02		$	2.48
Loss from discontinued operations	(0.30		)	—			(0.30		)
Net income	$	2.16		$	0.02		$	2.18

	December 31, 2011
	Previously
	Reported		Effect of Change			As Adjusted
	(in millions)
Assets
Deferred acquisition costs	$	4,402	$	(1,962	)	$	2,440
Other assets	7,468		283			7,751
Total assets	133,986		(1,679		)	132,307
Liabilities and Equity
Liabilities:
Future policy benefits and claims	31,723		(13		)	31,710
Other liabilities	5,432		(399		)	5,033
Total liabilities	123,025		(412		)	122,613
Equity:
Retained earnings	6,983		(1,380		)	5,603
Accumulated other comprehensive income, net of tax	638		113			751
Total equity	10,961		(1,267		)	9,694
Total liabilities and equity	$	133,986	$	(1,679	)	$	132,307

	December 31, 2010
	Previously
	Reported		Effect of Change			As Adjusted
	(in millions)
Retained earnings	$	6,190	$	(1,420	)	$	4,770
Accumulated other comprehensive income, net of tax	565		85			650
Total equity	$	11,285	$	(1,335	)	$	9,950

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

2. Recent Accounting Pronouncements

Adoption of New Accounting Standards

Comprehensive Income

In June 2011, the Financial Accounting Standards Board (“FASB”) updated the accounting standards related to the presentation of comprehensive income. The standard requires entities to present all nonowner changes in stockholders’ equity either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments do not affect how earnings per share is calculated or presented. The standard is effective for interim and annual periods beginning after December 15, 2011. The Company retrospectively adopted the standard in the first quarter of 2012. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial condition.

Fair Value

In May 2011, the FASB updated the accounting standards related to fair value measurement and disclosure requirements. The standard requires entities, for assets and liabilities measured at fair value in the statement of financial position which are Level 3 fair value measurements, to disclose quantitative information about unobservable inputs and assumptions used in the measurements, a description of the valuation processes in place, and a qualitative discussion about the sensitivity of the measurements to changes in unobservable inputs and interrelationships between those inputs if a change in those inputs would result in a significantly different fair value measurement. In addition, the standard requires disclosure of fair value by level within the fair value hierarchy for each class of assets and liabilities not measured at fair value in the statement of financial position but for which the fair value is disclosed. The standard is effective for interim and annual periods beginning on or after December 15, 2011. The Company adopted the standard in the first quarter of 2012. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial condition. See Note 3 and Note 10 for the required disclosures.

Transfers and Servicing: Reconsideration of Effective Control for Repurchase Agreements

In April 2011, the FASB updated the accounting standards related to accounting for repurchase agreements and other similar agreements. The standard modifies the criteria for determining when these transactions would be accounted for as secured borrowings as opposed to sales. The standard is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011. The Company adopted the standard in the first quarter of 2012. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial condition.

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the FASB updated the accounting standard for DAC. Under this new standard, only the following costs incurred in the acquisition of new and renewal insurance contracts are capitalizable as DAC: (i) incremental direct costs of a successful contract acquisition, (ii) portions of employees’ compensation and benefits directly related to time spent performing acquisition activities (that is, underwriting, policy issuance and processing, medical and inspection, and contract selling) for a contract that has been acquired, (iii) other costs related to acquisition activities that would not have been incurred had the acquisition of the contract not occurred, and (iv) advertising costs that meet the capitalization criteria in other GAAP guidance for certain direct-response marketing. All other acquisition related costs are expensed as incurred. The Company retrospectively adopted the new standard on January 1, 2012. The cumulative effect of the adoption reduced retained earnings by $1.4 billion after-tax and increased accumulated other comprehensive income by $113 million after-tax, totaling to a $1.3 billion after-tax reduction in total equity at January 1, 2012. See Note 1 and Note 6 for additional information on the adoption of this standard.

Future Adoption of New Accounting Standards

Balance Sheet

In December 2011, the FASB updated the accounting standards to require new disclosures about offsetting assets and liabilities. The standard requires an entity to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The standard is effective for interim and annual periods beginning on or after January 1, 2013 on a retrospective basis. The Company is currently evaluating the impact of the standard on its consolidated results of operations and financial condition.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

3. Consolidated Investment Entities

The Company provides asset management services to various collateralized debt obligations (“CDOs”) and other investment products (collectively, “investment entities”), which are sponsored by the Company for the investment of client assets in the normal course of business. Certain of these investment entities are considered to be VIEs while others are considered to be voting rights entities (“VREs”). The Company consolidates certain of these investment entities.

The CDOs managed by the Company are considered VIEs. These CDOs 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 CDO, offering investors various maturity and credit risk characteristics. The debt securities issued by the CDOs are non-recourse to the Company. The CDO’s debt holders have recourse only to the assets of the CDO. The assets of the CDOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CDO’s collateral pool. The Company generally earns management fees from the CDOs based on the par value of outstanding debt and, in certain instances, may also receive performance-based fees. In the normal course of business, the Company has invested in certain CDOs, generally an insignificant portion of the unrated, junior subordinated debt.

For certain of the CDOs, the Company has determined that consolidation is required as it has power over the CDOs and holds a variable interest in the CDOs for which the Company has the potential to receive significant benefits or the potential obligation to absorb significant losses. For other CDOs managed by the Company, the Company has determined that consolidation is not required as the Company does not hold a variable interest in the CDOs.

The Company provides investment advice and related services to private, pooled investment vehicles organized as limited partnerships, limited liability companies or foreign (non-U.S.) entities. Certain of these pooled investment vehicles are considered VIEs while others are VREs. 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 Company provides seed money occasionally to certain of these funds. For certain of the pooled investment vehicles, the Company has determined that consolidation is required as the Company stands to absorb a majority of the entity’s expected losses or receive a majority of the entity’s expected residual returns. For other VIE pooled investment vehicles, the Company has determined that consolidation is not required because the Company is not expected to absorb the majority of the expected losses or receive the majority of the expected residual returns. For the pooled investment vehicles which are VREs, the Company consolidates the structure when it has a controlling financial interest.

The Company also provides investment advisory, distribution and other services to the Columbia and Threadneedle mutual fund families. The Company has determined that consolidation is not required for these mutual funds.

In addition, the Company may invest in structured investments including 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, commercial mortgage backed securities and residential mortgage backed securities. The Company includes these investments in Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to its relative size, position in the capital structure of these entities and the Company’s lack of power over the structures. The Company’s maximum exposure to loss as a result of its investment in structured investments that it does not consolidate is limited to its carrying value. The Company has no obligation to provide further financial or other support to these structured investments nor has the Company provided any support to these structured investments. See Note 4 for additional information about these structured investments.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Fair Value of Assets and Liabilities

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

	June 30, 2012
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	280	$	4	$	284
Common stocks	89		27		12		128
Other structured investments	—		57		—		57
Syndicated loans	—		4,052		169		4,221
Total investments	89		4,416		185		4,690
Receivables	—		23		—		23
Other assets	—		1		1,080		1,081
Total assets at fair value	$	89	$	4,440	$	1,265	$	5,794
Liabilities
Debt	$	—	$	—	$	4,726	$	4,726
Other liabilities	—		75		—		75
Total liabilities at fair value	$	—	$	75	$	4,726	$	4,801

	December 31, 2011
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Investments:
Corporate debt securities	$	—	$	314	$	4	$	318
Common stocks	75		25		13		113
Other structured investments	—		54		—		54
Syndicated loans	—		3,962		342		4,304
Total investments	75		4,355		359		4,789
Receivables	—		39		—		39
Other assets	—		2		1,108		1,110
Total assets at fair value	$	75	$	4,396	$	1,467	$	5,938
Liabilities
Debt	$	—	$	—	$	4,712	$	4,712
Other liabilities	—		85		—		85
Total liabilities at fair value	$	—	$	85	$	4,712	$	4,797

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

	Corporate
	Debt		Common			Syndicated			Other
	Securities		Stocks			Loans			Assets			Debt
						(in millions)
Balance, April 1, 2012	$	4	$	8		$	195		$	1,035		$	(4,769	)
Total gains (losses) included in:
Net income	—		—			1		(1)	(25		)(2)	(16		)(1)
Other comprehensive income	—		—			—			(19		)	—
Purchases	—		—			27			96			—
Sales	—		(2		)	(2		)	(7		)	—
Settlements	—		—			(32		)	—			59
Transfers into Level 3	—		12			41			—			—
Transfers out of Level 3	—		(6		)	(61		)	—			—
Balance, June 30, 2012	$	4	$	12		$	169		$	1,080		$	(4,726	)
Changes in unrealized losses included in income relating to assets and liabilities held at June 30, 2012	$	—	$	—		$	(1	)(1)	$	(27	)(2)	$	(15	)(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in other revenues in the Consolidated Statements of Operations.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	Corporate					Other
	Debt		Common			Structured		Syndicated			Other
	Securities		Stocks			Investments		Loans			Assets			Debt
	(in millions)
Balance, April 1, 2011	$	6	$	26		$	—	$	216		$	920		$	(5,333	)
Total gains (losses) included in:
Net income	—		(1		)(1)	—		—			—			(31		)(1)
Other comprehensive income	—		—			—		—			1			—
Purchases	—		—			3		68			184			—
Sales	—		—			—		(4		)	—			—
Issues	—		—			—		—			—			(17		)
Settlements	—		—			—		(54		)	—			147
Transfers into Level 3	—		3			—		67			—			—
Transfers out of Level 3	—		(5		)	—		(47		)	(8		)	—
Balance, June 30, 2011	$	6	$	23		$	3	$	246		$	1,097		$	(5,234	)
Changes in unrealized gains (losses) included in income relating to assets and liabilities held at June 30, 2011	$	—	$	(1	)(1)	$	—	$	1	(1)	$	—		$	(27	)(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

	Corporate
	Debt		Common			Syndicated			Other
	Securities		Stocks			Loans			Assets			Debt
	(in millions)
Balance, January 1, 2012	$	4	$	13		$	342		$	1,108		$	(4,712	)
Total gains (losses) included in:
Net income	—		(1		)(1)	4		(1)	(52		)(2)	(141		)(1)
Other comprehensive income	—		—			—			13			—
Purchases	—		6			34			108			—
Sales	—		(4		)	(7		)	(97		)	—
Issues	—		—			—			—			—
Settlements	—		—			(62		)	—			127
Transfers into Level 3	—		13			127			—			—
Transfers out of Level 3	—		(15		)	(269		)	—			—
Balance, June 30, 2012	$	4	$	12		$	169		$	1,080		$	(4,726	)
Changes in unrealized losses included in income relating to assets and liabilities held at June 30, 2012	$	—	$	—	(1)	$	(1	)(1)	$	(61	)(2)	$	(140	)(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in other revenues in the Consolidated Statements of Operations.

	Corporate						Other
	Debt			Common			Structured			Syndicated			Other
	Securities			Stocks			Investments			Loans			Assets			Debt
	(in millions)
Balance, January 1, 2011	$	6		$	11		$	22		$	—		$	887		$	(5,171	)
Total gains (losses) included in:
Net income	—			5		(1)	(1		)(1)	4		(1)	4		(2)	(215		)(1)
Other comprehensive income	—			—			—			—			25			—
Purchases	—			—			3			93			196			—
Sales	(1		)	—			—			(6		)	(15		)	—
Issues	—			—			—			—			—			(27		)
Settlements	—			—			—			(56		)	1			179
Transfers into Level 3	1			14			—			258			7			—
Transfers out of Level 3	—			(7		)	(21		)	(47		)	(8		)	—
Balance, June 30, 2011	$	6		$	23		$	3		$	246		$	1,097		$	(5,234	)
Changes in unrealized gains (losses) included in income relating to assets and liabilities held at June 30, 2011	$	—		$	3	(1)	$	(1	)(1)	$	3	(1)	$	(1	)(1)	$	(211	)(1)

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in other revenues in the Consolidated Statements of Operations.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Securities and loans transferred from Level 2 to Level 3 represent securities with fair values that are now based on a single non-binding broker quote. Securities and loans transferred from Level 3 to Level 2 represent securities with fair values that are now obtained from a third party pricing service with observable inputs. For assets and liabilities held by consolidated investment entities at the end of the reporting period that are measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2.

The following table provides 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 held by consolidated investment entities at June 30, 2012:

	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(in millions)

Other assets	$	1,080	Discounted cash	Equivalent yield	4.3% - 10.8% (7.1%)
			flow/market comparables	Expected rental value	$4 - $298 ($21)
				(per square foot)

Debt	$	4,726	Discounted cash flow	Annual default rate	2.5% - 4.5% (2.5%)
				Discount rate	2.2% - 45.0% (3.8%)
				Constant prepayment rate	5.0% - 10.0% (9.6%)
				Loss recovery	36.4% - 63.6% (62.0%)

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

Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs

Generally, a significant increase (decrease) in the expected rental value used in the fair value measurement of properties held by consolidated investment entities in isolation would result in a significantly higher (lower) fair value measurement and a significant increase (decrease) in the equivalent yield in isolation would result in a significantly lower (higher) fair value measurement.

Generally, a significant increase (decrease) in the annual default rate and discount rate used in the fair value measurement of the CDO’s debt in isolation could result in a significantly lower (higher) fair value measurement and a significant increase (decrease) in loss recovery in isolation could result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the constant prepayment rate in isolation could result in a significantly higher (lower) fair value measurement.

Determination of Fair Value

Assets

Investments

The fair value of syndicated loans obtained from third party pricing services with multiple non-binding broker quotes as the underlying valuation source 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.

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 loans 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 the third party pricing services. The Company’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.

See Note 10 for a description of the Company’s determination of the fair value of corporate debt securities, common stocks and other structured investments.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Receivables

For receivables of the consolidated CDOs, 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.

Other Assets

Other assets consist primarily of properties held in consolidated pooled investment vehicles managed by Threadneedle. The fair value of these properties is calculated by a third party appraisal service by discounting future cash flows generated by the expected market rental value for the property using the equivalent yield of a similar investment property. Inputs used in determining the equivalent yield and expected rental value of the property may include: rental cash flows, current occupancy, historical vacancy rates, tenant history and assumptions regarding how quickly the property can be occupied and at what rental rates. Management reviews the valuation report and assumptions used to ensure that the valuation was performed in accordance with applicable independence, appraisal and valuation standards. Given the significance of the unobservable inputs to these measurements, these assets are classified as Level 3.

For other assets of the consolidated CDOs, the carrying value approximates fair value as the nature of these assets has historically been short term. The fair value of these assets is classified as Level 2.

Liabilities

Debt

The fair value of the CDO’s debt is determined using a discounted cash flow model. Inputs used to determine the expected cash flows include assumptions about default, discount, prepayment and recovery rates of the CDO’s underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the CDO debt is classified as Level 3.

Other Liabilities

Other liabilities consist primarily of securities purchased but not yet settled held by consolidated CDOs. 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.

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

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

	June 30, 2012			December 31, 2011
	(in millions)
Syndicated loans
Unpaid principal balance	$	4,402		$	4,548
Excess unpaid principal over fair value	(181		)	(244		)
Fair value	$	4,221		$	4,304

Fair value of loans more than 90 days past due	$	20		$	18
Fair value of loans in nonaccrual status	20			18
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both	25			16

Debt
Unpaid principal balance	$	5,208		$	5,335
Excess unpaid principal over fair value	(482		)	(623		)
Fair value	$	4,726		$	4,712

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

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Total net losses recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $(35) million and $(33) million for the three months ended June 30, 2012 and 2011, respectively. Total net losses recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $(26) million and $(66) million for the six months ended June 30, 2012 and 2011, respectively. The majority of the syndicated loans and debt have floating rates; as such, changes in their fair values are primarily attributable to changes in credit spreads.

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

	Carrying Value				Weighted Average Interest Rate
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
	(in millions)
Debt of consolidated CDOs due 2012-2021	$	4,726	$	4,712	1.0	%	0.9	%
Floating rate revolving credit borrowings due 2014	355		378		3.1		3.2
Floating rate revolving credit borrowings due 2015	109		88		2.8		3.0
Floating rate revolving credit borrowings due 2017	23		—		4.8		—
Total	$	5,213	$	5,178

The debt of the consolidated CDOs has both fixed and floating interest rates, which range from 0% to 13.2%. The interest rates on the debt of consolidated investment entities are weighted average rates based on the outstanding principal and contractual interest rates. The carrying value of the debt of the consolidated CDOs represents the fair value of the aggregate debt. The carrying value of the floating rate revolving credit borrowings represents the outstanding principal amount of debt of certain consolidated pooled investment vehicles managed by Threadneedle. The fair value of this debt was $487 million and $466 million as of June 30, 2012 and December 31, 2011, respectively. The consolidated pooled investment vehicles have entered into interest rate swaps and collars to manage the interest rate exposure on the floating rate revolving credit borrowings. The fair value of these derivative instruments was a liability of $18 million and $20 million as of June 30, 2012 and December 31, 2011, respectively. The overall effective interest rate reflecting the impact of the derivative contracts was 4.9% and 5.0% as of June 30, 2012 and December 31, 2011, respectively.

4. Investments

The following is a summary of Ameriprise Financial investments:

	June 30, 2012		December 31, 2011
	(in millions)
Available-for-Sale securities, at fair value	$	34,590	$	34,505
Commercial mortgage loans, net	2,551		2,589
Policy loans	750		742
Other investments	983		939
Total	$	38,874	$	38,775

The following is a summary of net investment income:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Investment income on fixed maturities	$	444		$	457		$	891		$	927
Net realized gains (losses)	(5		)	6			(7		)	7
Affordable housing partnerships	(4		)	(8		)	(12		)	(15		)
Other	23			26			56			50
Consolidated investment entities	14			17			75			44
Total net investment income	$	472		$	498		$	1,003		$	1,013

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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

	June 30, 2012
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI (1)
	(in millions)
Corporate debt securities	$	16,551	$	1,915	$	(41	)	$	18,425	$	—
Residential mortgage backed securities	7,210		286		(262		)	7,234		(126		)
Commercial mortgage backed securities	4,146		297		(1		)	4,442		—
Asset backed securities	1,978		72		(35		)	2,015		(14		)
State and municipal obligations	2,009		210		(47		)	2,172		—
U.S. government and agencies obligations	58		10		—			68		—
Foreign government bonds and obligations	190		26		—			216		—
Common stocks	6		4		—			10		—
Other debt obligations	8		—		—			8		—
Total	$	32,156	$	2,820	$	(386	)	$	34,590	$	(140	)

	December 31, 2011
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI (1)
	(in millions)
Corporate debt securities	$	16,380	$	1,741	$	(81	)	$	18,040	$	—
Residential mortgage backed securities	7,440		287		(331		)	7,396		(139		)
Commercial mortgage backed securities	4,430		291		(2		)	4,719		—
Asset backed securities	1,968		61		(44		)	1,985		(15		)
State and municipal obligations	2,026		162		(58		)	2,130		—
U.S. government and agencies obligations	61		10		—			71		—
Foreign government bonds and obligations	126		19		(1		)	144		—
Common stocks	5		4		—			9		—
Other debt obligations	11		—		—			11		—
Total	$	32,447	$	2,575	$	(517	)	$	34,505	$	(154	)

(1) Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income. Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.

At both June 30, 2012 and December 31, 2011, fixed maturity securities comprised approximately 89% 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. At June 30, 2012 and December 31, 2011, the Company’s internal analysts rated $1.4 billion and $1.2 billion, respectively, of securities, using criteria similar to those used by NRSROs. A summary of fixed maturity securities by rating was as follows:

	June 30, 2012						December 31, 2011
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	10,958	$	11,564	33	%	$	11,510	$	12,105	35	%
AA	1,774		1,961		6		1,942		2,087		6
A	5,508		6,075		18		5,012		5,442		16
BBB	11,823		13,160		38		11,818		13,050		38
Below investment grade	2,087		1,820		5		2,160		1,812		5
Total fixed maturities	$	32,150	$	34,580	100	%	$	32,442	$	34,496	100	%

At June 30, 2012 and December 31, 2011, approximately 39% and 36%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. No holdings of any other issuer were greater than 10% of total equity.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2012
	Less than 12 months						12 months or more						Total
	Number of	Fair		Unrealized			Number of	Fair		Unrealized			Number of	Fair		Unrealized
Description of Securities	Securities	Value		Losses			Securities	Value		Losses			Securities	Value		Losses
	(in millions, except number of securities)
Corporate debt securities	51	$	528	$	(14	)	15	$	332	$	(27	)	66	$	860	$	(41	)
Residential mortgage backed securities	55	630		(10		)	165	1,010		(252		)	220	1,640		(262		)
Commercial mortgage backed securities	13	104		(1		)	2	39		—			15	143		(1		)
Asset backed securities	21	219		(3		)	38	191		(32		)	59	410		(35		)
State and municipal obligations	9	30		—			20	160		(47		)	29	190		(47		)
Total	149	$	1,511	$	(28	)	240	$	1,732	$	(358	)	389	$	3,243	$	(386	)

	December 31, 2011
	Less than 12 months						12 months or more						Total
	Number of	Fair		Unrealized			Number of	Fair		Unrealized			Number of	Fair		Unrealized
Description of Securities	Securities	Value		Losses			Securities	Value		Losses			Securities	Value		Losses
	(in millions, except number of securities)
Corporate debt securities	124	$	1,647	$	(40	)	10	$	259	$	(41	)	134	$	1,906	$	(81	)
Residential mortgage backed securities	105	1,269		(33		)	141	717		(298		)	246	1,986		(331		)
Commercial mortgage backed securities	14	182		(2		)	5	29		—			19	211		(2		)
Asset backed securities	49	543		(11		)	33	155		(33		)	82	698		(44		)
State and municipal obligations	—	—		—			53	229		(58		)	53	229		(58		)
Foreign government bonds and obligations	6	28		(1		)	—	—		—			6	28		(1		)
Total	298	$	3,669	$	(87	)	242	$	1,389	$	(430	)	540	$	5,058	$	(517	)

As part of Ameriprise Financial’s ongoing monitoring process, management determined that a majority of the gross unrealized losses on its Available-for-Sale securities are attributable to movement in credit spreads.

The following table presents a rollforward of the cumulative amounts recognized in the Consolidated Statements of Operations for other-than-temporary impairments related to credit losses on securities for which a portion of the securities’ total other-than-temporary impairments was recognized in other comprehensive income:

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
	(in millions)
Beginning balance	$	306		$	283	$	303		$	297
Credit losses for which an other-than-temporary impairment was not previously recognized	1			13		1			13
Credit losses for which an other-than-temporary impairment was previously recognized	8			3		13			5
Reductions for securities sold during the period (realized)	(21		)	—		(23		)	(16		)
Ending balance	$	294		$	299	$	294		$	299

The change in net unrealized securities gains (losses) in other comprehensive income includes three components, net of tax: (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 other-than-temporary impairment losses to credit losses; and (iii) other items primarily consisting of adjustments in asset and liability balances, such as DAC, deferred sales inducement costs (“DSIC”), 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.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table presents a rollforward of the net unrealized securities gains (losses) on Available-for-Sale securities included in accumulated other comprehensive income:

	Net						Accumulated Other
	Unrealized						Comprehensive Income
	Securities			Deferred			Related to Net Unrealized
	Gains (Losses)			Income Tax			Securities Gains (Losses)
	(in millions)
Balance at January 1, 2011	$	946		$	(331	)	$	615
Cumulative effect of accounting change	131			(46		)	85		(1)
Net unrealized securities gains arising during the period (2)	190			(65		)	125
Reclassification of net securities gains included in net income	(3		)	1			(2		)
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables	(55		)	19			(36		)
Balance at June 30, 2011	$	1,209		$	(422	)	$	787	(3)

Balance at January 1, 2012	$	1,358		$	(475	)	$	883	(1)
Net unrealized securities gains arising during the period (2)	369			(132		)	237
Reclassification of net securities losses included in net income	7			(2		)	5
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables	(95		)	33			(62		)
Balance at June 30, 2012	$	1,639		$	(576	)	$	1,063	(3)

(1) The Company retrospectively adopted a new accounting standard on January 1, 2012 for DAC. See Note 1 and 2 for additional information on the adoption impact.

(2) Includes other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income during the period.

(3) Includes $69 million and $64 million of noncredit related impairments on securities and net unrealized securities losses on previously impaired securities at June 30, 2012 and 2011, respectively.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Gross realized gains	$	3		$	21		$	8		$	39
Gross realized losses	—			(1		)	(1		)	(18		)
Other-than-temporary impairments	(8		)	(16		)	(14		)	(18		)
Total	$	(5	)	$	4		$	(7	)	$	3

Other-than-temporary impairments for the three months and six months ended June 30, 2012 and 2011 primarily related to credit losses on non-agency residential mortgage backed securities.

Available-for-Sale securities by contractual maturity at June 30, 2012 were as follows:

	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	1,406	$	1,432
Due after one year through five years	6,012		6,299
Due after five years through 10 years	6,715		7,567
Due after 10 years	4,683		5,591
	18,816		20,889
Residential mortgage backed securities	7,210		7,234
Commercial mortgage backed securities	4,146		4,442
Asset backed securities	1,978		2,015
Common stocks	6		10
Total	$	32,156	$	34,590

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, as well as common stocks, were not included in the maturities distribution.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

5. Financing Receivables

The Company’s financing receivables include commercial mortgage loans, syndicated loans, consumer bank loans, policy loans and margin loans. Commercial mortgage loans, syndicated loans and policy loans are reflected in investments. Consumer bank loans and margin loans are reflected in receivables. Policy loans do not exceed the cash surrender value of the policy at origination. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses for policy loans. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As there is minimal risk of loss related to margin loans, the allowance for loan losses is immaterial.

Allowance for Loan Losses

The following tables present a rollforward of the allowance for loan losses for the six months ended and the ending balance of the allowance for loan losses by impairment method and type of loan:

	June 30, 2012
	Commercial						Consumer
	Mortgage			Syndicated			Bank
	Loans			Loans			Loans			Total
	(in millions)
Beginning balance	$	35		$	9		$	16		$	60
Charge-offs	(2		)	(2		)	(5		)	(9		)
Recoveries	—			—			1			1
Provisions	—			—			3			3
Ending balance	$	33		$	7		$	15		$	55

Individually evaluated for impairment	$	10		$	1		$	2		$	13
Collectively evaluated for impairment	23			6			13			42

	June 30, 2011
	Commercial						Consumer
	Mortgage			Syndicated			Bank
	Loans			Loans			Loans			Total
	(in millions)
Beginning balance	$	38		$	10		$	16		$	64
Charge-offs	(2		)	—			(6		)	(8		)
Provisions	—			(1		)	7			6
Ending balance	$	36		$	9		$	17		$	62

Individually evaluated for impairment	$	10		$	1		$	2		$	13
Collectively evaluated for impairment	26			8			15			49

The recorded investment in financing receivables by impairment method and type of loan was as follows:

	June 30, 2012
	Commercial				Consumer
	Mortgage		Syndicated		Bank
	Loans		Loans		Loans		Total
	(in millions)
Individually evaluated for impairment	$	58	$	3	$	10	$	71
Collectively evaluated for impairment	2,526		348		1,357		4,231
Total	$	2,584	$	351	$	1,367	$	4,302

	December 31, 2011
	Commercial				Consumer
	Mortgage		Syndicated		Bank
	Loans		Loans		Loans		Total
	(in millions)
Individually evaluated for impairment	$	68	$	5	$	11	$	84
Collectively evaluated for impairment	2,556		359		1,369		4,284
Total	$	2,624	$	364	$	1,380	$	4,368

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

As of June 30, 2012 and December 31, 2011, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $23 million and $13 million, respectively. Unearned income, unamortized premiums and discounts, and net unamortized deferred fees and costs are not material to the Company’s total loan balance.

Purchases and sales of loans were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
	(in millions)
Purchases
Consumer bank loans	$	—	$	108	$	51	$	221
Syndicated loans	24		40		53		103
Total loans purchased	$	24	$	148	$	104	$	324

Sales
Consumer bank loans	$	58	$	45	$	121	$	140
Syndicated loans	—		1		—		2
Total loans sold	$	58	$	46	$	121	$	142

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

Credit Quality Information

Nonperforming loans, which are generally loans 90 days or more past due, were $17 million and $20 million as of June 30, 2012 and December 31, 2011, respectively. All other loans were considered to be performing.

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. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were 2% and 3% of total commercial mortgage loans at June 30, 2012 and December 31, 2011, respectively. 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. 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
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
	(in millions)
East North Central	$	253	$	252	10	%	10	%
East South Central	64		65		2		2
Middle Atlantic	214		223		8		9
Mountain	290		284		11		11
New England	143		141		6		5
Pacific	571		584		22		22
South Atlantic	660		648		26		25
West North Central	227		244		9		9
West South Central	162		183		6		7
	2,584		2,624		100	%	100	%
Less: allowance for loan losses	33		35
Total	$	2,551	$	2,589

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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

	Loans				Percentage
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
	(in millions)
Apartments	$	410	$	392	16	%	15	%
Hotel	50		51		2		2
Industrial	483		480		19		18
Mixed use	42		42		1		2
Office	640		694		25		26
Retail	830		845		32		32
Other	129		120		5		5
	2,584		2,624		100	%	100	%
Less: allowance for loan losses	33		35
Total	$	2,551	$	2,589

Syndicated Loans

The Company’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans at June 30, 2012 and December 31, 2011 were $2 million and $3 million, respectively.

Consumer Bank Loans

The Company considers the credit worthiness of borrowers (FICO score), collateral characteristics such as loan-to-value (“LTV”) and geographic concentration in determining the allowance for loan losses for residential mortgage loans, credit cards and other consumer bank loans. At a minimum, management updates FICO scores and LTV ratios semiannually.

As of June 30, 2012 and December 31, 2011, approximately 6% and 7%, respectively, of residential mortgage loans and credit cards and other consumer bank loans had FICO scores below 640. At both June 30, 2012 and December 31, 2011, approximately 2% of the Company’s residential mortgage loans had LTV ratios greater than 90%. The Company’s most significant geographic concentration for consumer bank loans is in California representing 38% of the portfolio as of both June 30, 2012 and December 31, 2011. No other state represents more than 10% of the total consumer bank loan portfolio.

Troubled Debt Restructurings

The following table presents the number of loans restructured by the Company during the period and the recorded investment in restructured loans at the end of the period:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	Number	Recorded		Number	Recorded		Number	Recorded		Number	Recorded
	of Loans	Investment		of Loans	Investment		of Loans	Investment		of Loans	Investment
	(in millions, except number of loans)
Commercial mortgage loans	1	$	1	5	$	23	1	$	1	6	$	29
Syndicated loans	—	—		—	—		2	2		2	—
Consumer bank loans	13	—		26	1		39	—		58	1
Total	14	$	1	31	$	24	42	$	3	66	$	30

The troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for the three months and six months ended June 30, 2012 and 2011. There are no material commitments to lend additional funds to borrowers whose loans have been restructured.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

6. Deferred Acquisition Costs and Deferred Sales Inducement Costs

As described in Note 1 and Note 2, the Company retrospectively adopted a new accounting standard for DAC in the first quarter of 2012. The impact of adoption resulted in a reduction in the DAC balance of $2.0 billion and $2.1 billion at January 1, 2012 and 2011, respectively, and a reduction in DAC capitalization of $78 million and DAC amortization of $90 million for the six months ended June 30, 2011.

The Company incurs costs in connection with acquiring new and renewal insurance and annuity businesses. The portion of these costs which are incremental and direct to the acquisition of a new insurance or annuity contract are deferred. Significant costs capitalized by the Company include sales based compensation related to the acquisition of new and renewal insurance policies and annuity contracts, medical inspection costs for successful sales, and a portion of employee compensation and benefit costs based upon the amount of time spent on successful sales. Sales based compensation paid to affiliated advisors and employees and third-party distributers is capitalized. Employee compensation and benefits costs which are capitalized under the new accounting standard relate primarily to sales efforts, underwriting and processing. All other costs which are not incremental direct costs of acquiring an insurance or annuity contract are expensed as incurred.

The balances of and changes in DAC (subsequent to the adjustment for the new accounting standard) were as follows:

	2012			2011
	(in millions)
Balance at January 1	$	2,440		$	2,556
Capitalization of acquisition costs	156			171
Amortization	(130		)	(164		)
Impact of change in net unrealized securities gains	(35		)	(19		)
Balance at June 30	$	2,431		$	2,544

The balances of and changes in DSIC, which is included in other assets, were as follows:

	2012			2011
	(in millions)
Balance at January 1	$	464		$	545
Capitalization of sales inducement costs	4			5
Amortization	(22		)	(30		)
Impact of change in net unrealized securities gains	(6		)	(5		)
Balance at June 30	$	440		$	515

7. Future Policy Benefits and Claims and Separate Account Liabilities

As described in Note 1 and Note 2, the Company retrospectively adopted a new accounting standard on DAC in the first quarter of 2012.

Future policy benefits and claims (subsequent to the adjustment for the new accounting standard) consisted of the following:

	June 30, 2012		December 31, 2011
	(in millions)
Fixed annuities	$	16,325	$	16,401
Equity indexed annuity (“EIA”) accumulated host values	41		58
EIA embedded derivatives	2		2
Variable annuity fixed sub-accounts	4,829		4,852
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	1,258		1,377
Variable annuity guaranteed minimum accumulation benefits (“GMAB”)	180		237
Other variable annuity guarantees	10		14
Total annuities	22,645		22,941
Variable universal life (“VUL”)/universal life (“UL”) insurance	2,708		2,662
Indexed universal life (“IUL”) accumulated host values	19		4
IUL embedded derivatives	22		3
VUL/UL insurance additional liabilities	264		220
Other life, disability income and long term care insurance	5,477		5,339
Auto, home and other insurance	415		420
Policy claims and other policyholders’ funds	125		121
Total	$	31,675	$	31,710

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Separate account liabilities consisted of the following:

	June 30, 2012		December 31, 2011
	(in millions)
Variable annuity variable sub-accounts	$	60,437	$	57,556
VUL insurance variable sub-accounts	5,792		5,575
Other insurance variable sub-accounts	41		43
Threadneedle investment liabilities	3,033		3,606
Total	$	69,303	$	66,780

8. Variable Annuity and Insurance Guarantees

The majority of the variable annuity contracts offered by the Company contain guaranteed minimum death benefit (“GMDB”) provisions. The Company also offers variable annuities with 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. In addition, the Company offers contracts with GMWB and GMAB provisions. The Company previously offered contracts containing guaranteed minimum income benefit (“GMIB”) provisions.

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

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

	June 30, 2012							December 31, 2011
Variable Annuity Guarantees by Benefit Type(1)	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk(2)		Weighted Average Attained Age	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk(2)		Weighted Average Attained Age
	(in millions, except age)
GMDB:
Return of premium	$	42,890	$	41,149	$	165	63	$	40,011	$	38,275	$	382	63
Five/six-year reset	11,406		8,901		205		63	11,631		9,118		350		63
One-year ratchet	7,297		6,855		250		64	7,233		6,777		479		64
Five-year ratchet	1,541		1,489		11		61	1,472		1,418		25		61
Other	830		803		78		68	759		732		93		68
Total — GMDB	$	63,964	$	59,197	$	709	63	$	61,106	$	56,320	$	1,329	63

GGU death benefit	$	937	$	885	$	82	63	$	920	$	868	$	78	63

GMIB	$	441	$	412	$	89	65	$	463	$	433	$	106	65

GMWB:
GMWB	$	3,886	$	3,867	$	108	66	$	3,887	$	3,868	$	236	65
GMWB for life	26,281		26,152		527		64	23,756		23,625		863		64
Total — GMWB	$	30,167	$	30,019	$	635	64	$	27,643	$	27,493	$	1,099	64

GMAB	$	3,614	$	3,609	$	22	57	$	3,516	$	3,509	$	63	56

(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.

(2) Represents the current guaranteed benefit amount in excess of the current contract value. GMIB, GMWB and GMAB benefits are subject to waiting periods and payment periods specified in the contract.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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

	GMDB & GGU			GMIB			GMWB			GMAB			UL
	(in millions)
Balance at January 1, 2011	$	5		$	8		$	337		$	104		$	68
Incurred claims	3			—			(68		)	(33		)	25
Paid claims	(3		)	—			—			—			(5		)
Balance at June 30, 2011	$	5		$	8		$	269		$	71		$	88

Balance at January 1, 2012	$	5		$	9		$	1,377		$	237		$	111
Incurred claims	2			—			(119		)	(57		)	33
Paid claims	(5		)	(1		)	—			—			(5		)
Balance at June 30, 2012	$	2		$	8		$	1,258		$	180		$	139

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:

	June 30, 2012		December 31, 2011
	(in millions)
Mutual funds:
Equity	$	31,887	$	30,738
Bond	25,225		23,862
Other	2,296		1,969
Total mutual funds	$	59,408	$	56,569

9. Debt

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

	Outstanding Balance						Stated Interest Rate
	June 30, 2012			December 31, 2011			June 30, 2012		December 31, 2011
	(in millions)
Senior notes due 2015	$	752	(1)	$	753	(1)	5.7	%	5.7	%
Senior notes due 2019	346		(1)	341		(1)	7.3		7.3
Senior notes due 2020	811		(1)	805		(1)	5.3		5.3
Senior notes due 2039	200			200			7.8		7.8
Junior subordinated notes due 2066	294			294			7.5		7.5
Total long-term debt	2,403			2,393
Short-term borrowings	498			504			0.3		0.3
Total	$	2,901		$	2,897

(1) Amounts include adjustments for fair value hedges on the Company’s long-term debt and any unamortized discounts. See Note 11 for information on the Company’s fair value hedges.

The Company’s junior subordinated notes due 2066 (“junior notes”) and credit facility contain various administrative, reporting, legal and financial covenants. The Company was in compliance with all such covenants at both June 30, 2012 and December 31, 2011. The Company had no borrowings outstanding under its credit facility as of both June 30, 2012 and December 31, 2011.

Short-term Borrowings

The Company enters into repurchase agreements in exchange for cash, which it accounts for as secured borrowings. The Company has pledged Available-for-Sale securities consisting of agency residential mortgage backed securities and commercial mortgage backed securities to collateralize its obligation under the repurchase agreements. The fair value of the securities pledged is recorded in investments and was $512 million and $521 million at June 30, 2012 and December 31, 2011, respectively. The stated interest rate of the short-term borrowings is a weighted average annualized interest rate on repurchase agreements held as of the balance sheet date.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

10. 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.

The following tables present the balances of assets and liabilities of Ameriprise Financial measured at fair value on a recurring basis:

	June 30, 2012
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Cash equivalents	$	17	$	2,335	$	—	$	2,352
Available-for-Sale securities:
Corporate debt securities	—		16,940		1,485		18,425
Residential mortgage backed securities	—		7,012		222		7,234
Commercial mortgage backed securities	—		4,373		69		4,442
Asset backed securities	—		1,814		201		2,015
State and municipal obligations	—		2,172		—		2,172
U.S. government and agencies obligations	22		46		—		68
Foreign government bonds and obligations	—		216		—		216
Common stocks	2		3		5		10
Other debt obligations	—		8		—		8
Total Available-for-Sale securities	24		32,584		1,982		34,590
Trading securities	1		22		—		23
Separate account assets	—		69,303		—		69,303
Investments segregated for regulatory purposes	—		75		—		75
Other assets:
Interest rate derivative contracts	—		2,417		—		2,417
Equity derivative contracts	387		1,207		—		1,594
Foreign currency derivative contracts	—		2		—		2
Commodity derivative contracts	—		1		—		1
Total other assets	387		3,627		—		4,014
Total assets at fair value	$	429	$	107,946	$	1,982	$	110,357

Liabilities
Future policy benefits and claims:
EIA embedded derivatives	$	—	$	2	$	—	$	2
IUL embedded derivatives	—		22		—		22
GMWB and GMAB embedded derivatives	—		—		1,406		1,406
Total future policy benefits and claims	—		24		1,406		1,430		(1)
Customer deposits	—		8		—		8
Other liabilities:
Interest rate derivative contracts	—		1,589		—		1,589
Equity derivative contracts	286		1,330		—		1,616
Foreign currency derivative contracts	4		3		—		7
Other	—		9		—		9
Total other liabilities	290		2,931		—		3,221
Total liabilities at fair value	$	290	$	2,963	$	1,406	$	4,659

(1) The Company’s adjustment for nonperformance risk resulted in a $506 million cumulative decrease to the embedded derivative liability.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	December 31, 2011
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Cash equivalents	$	20	$	2,287	$	—	$	2,307
Available-for-Sale securities:
Corporate debt securities	—		16,685		1,355		18,040
Residential mortgage backed securities	—		7,198		198		7,396
Commercial mortgage backed securities	—		4,669		50		4,719
Asset backed securities	—		1,779		206		1,985
State and municipal obligations	—		2,130		—		2,130
U.S. government and agencies obligations	22		49		—		71
Foreign government bonds and obligations	—		144		—		144
Common stocks	2		2		5		9
Other debt obligations	—		11		—		11
Total Available-for-Sale securities	24		32,667		1,814		34,505
Trading securities	1		30		—		31
Separate account assets	—		66,780		—		66,780
Investments segregated for regulatory purposes	—		293		—		293
Other assets:
Interest rate derivative contracts	—		1,958		—		1,958
Equity derivative contracts	274		1,077		—		1,351
Credit derivative contracts	—		1		—		1
Foreign currency derivative contracts	—		7		—		7
Commodity derivative contracts	—		2		—		2
Total other assets	274		3,045		—		3,319
Total assets at fair value	$	319	$	105,102	$	1,814	$	107,235

Liabilities
Future policy benefits and claims:
EIA embedded derivatives	$	—	$	2	$	—	$	2
IUL embedded derivatives	—		3		—		3
GMWB and GMAB embedded derivatives	—		—		1,585		1,585
Total future policy benefits and claims	—		5		1,585		1,590		(1)
Customer deposits	—		6		—		6
Other liabilities:
Interest rate derivative contracts	—		1,209		—		1,209
Equity derivative contracts	297		764		—		1,061
Foreign currency derivative contracts	3		10		—		13
Other	—		2		—		2
Total other liabilities	300		1,985		—		2,285
Total liabilities at fair value	$	300	$	1,996	$	1,585	$	3,881

(1) The Company’s adjustment for nonperformance risk resulted in a $506 million cumulative decrease to the embedded derivative liability.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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:

																			Future Policy
	Available-for-Sale Securities																		Benefits and
				Residential			Commercial												Claims: GMWB
	Corporate			Mortgage			Mortgage			Asset									and GMAB
	Debt			Backed			Backed			Backed			Common						Embedded
	Securities			Securities			Securities			Securities			Stocks			Total			Derivatives
	(in millions)
Balance, April 1, 2012	$	1,422		$	224		$	89		$	208		$	6		$	1,949		$	(840	)
Total gains (losses) included in:
Net income	—			(8		)	—			—			—			(8		)(1)	(528		)(2)
Other comprehensive income	1			11			—			1			—			13			—
Purchases	95			22			7			—			—			124			—
Sales	—			—			—			—			—			—			—
Issues	—			—			—			—			—			—			(43		)
Settlements	(43		)	(15		)	—			(8		)	—			(66		)	5
Transfers into Level 3	10			16			—			—			—			26			—
Transfers out of Level 3	—			(28		)	(27		)	—			(1		)	(56		)	—
Balance, June 30, 2012	$	1,485		$	222		$	69		$	201		$	5		$	1,982		$	(1,406	)

Changes in unrealized losses relating to assets and liabilities held at June 30, 2012 included in:
Net investment income	$	—		$	(8	)	$	—		$	—		$	—		$	(8	)	$	—
Benefits, claims, losses and settlement expenses	—			—			—			—			—			—			(535		)

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.

																		Future Policy
	Available-for-Sale Securities																	Benefits and
				Residential			Commercial						Common					Claims: GMWB
	Corporate			Mortgage			Mortgage			Asset			and					and GMAB
	Debt			Backed			Backed			Backed			Preferred					Embedded
	Securities			Securities			Securities			Securities			Stocks		Total			Derivatives
	(in millions)
Balance, April 1, 2011	$	1,315		$	4,093		$	26		$	488		$	5	$	5,927		$	(190	)
Total gains (losses) included in:
Net income	7			—			—			1			—		8		(1)	(88		)(2)
Other comprehensive income	11			(11		)	—			(4		)	—		(4		)	—
Purchases	36			349			74			41			—		500			—
Sales	—			—			—			—			—		—			—
Issues	—			—			—			—			—		—			(36		)
Settlements	(93		)	(278		)	—			(28		)	—		(399		)	(2		)
Transfers into Level 3	—			—			—			—			—		—			—
Transfers out of Level 3	(2		)	(56		)	(36		)	—			—		(94		)	—
Balance, June 30, 2011	$	1,274		$	4,097		$	64		$	498		$	5	$	5,938		$	(316	)

Changes in unrealized gains (losses) relating to assets and liabilities held at June 30, 2011 included in:
Net investment income	$	—		$	(1	)	$	—		$	2		$	—	$	1		$	—
Benefits, claims, losses and settlement expenses	—			—			—			—			—		—			(90		)

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

																			Future Policy
	Available-for-Sale Securities																		Benefits and
				Residential			Commercial												Claims: GMWB
	Corporate			Mortgage			Mortgage			Asset									and GMAB
	Debt			Backed			Backed			Backed			Common						Embedded
	Securities			Securities			Securities			Securities			Stocks			Total			Derivatives
	(in millions)
Balance, January 1, 2012	$	1,355		$	198		$	50		$	206		$	5		$	1,814		$	(1,585	)
Total gains (losses) included in:
Net income	—			(13		)	—			—			—			(13		)(1)	256		(2)
Other comprehensive income	5			26			2			2			—			35			—
Purchases	210			45			9			—			1			265			—
Sales	—			—			—			—			—			—			—
Issues	—			—			—			—			—			—			(82		)
Settlements	(95		)	(28		)	(2		)	(14		)	—			(139		)	5
Transfers into Level 3	10			22			37			7			—			76			—
Transfers out of Level 3	—			(28		)	(27		)	—			(1		)	(56		)	—
Balance, June 30, 2012	$	1,485		$	222		$	69		$	201		$	5		$	1,982		$	(1,406	)

Changes in unrealized gains (losses) relating to assets and liabilities held at June 30, 2012 included in:
Net investment income	$	—		$	(13	)	$	—		$	—		$	—		$	(13	)	$	—
Benefits, claims, losses and settlement expenses	—			—			—			—			—			—			234

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.

																		Future Policy
	Available-for-Sale Securities																	Benefits and
				Residential			Commercial						Common					Claims: GMWB
	Corporate			Mortgage			Mortgage			Asset			and					and GMAB
	Debt			Backed			Backed			Backed			Preferred					Embedded
	Securities			Securities			Securities			Securities			Stocks		Total			Derivatives
	(in millions)
Balance, January 1, 2011	$	1,325		$	4,247		$	51		$	476		$	5	$	6,104		$	(421	)
Total gains included in:
Net income	7			7			—			3			—		17		(1)	175		(2)
Other comprehensive income	12			2			—			1			—		15			—
Purchases	73			499			89			70			—		731			—
Sales	—			(3		)	—			—			—		(3		)	—
Issues	—			—			—			—			—		—			(68		)
Settlements	(131		)	(599		)	(1		)	(52		)	—		(783		)	(2		)
Transfers into Level 3	—			—			2			—			—		2			—
Transfers out of Level 3	(12		)	(56		)	(77		)	—			—		(145		)	—
Balance, June 30, 2011	$	1,274		$	4,097		$	64		$	498		$	5	$	5,938		$	(316	)

Changes in unrealized gains relating to assets and liabilities held at June 30, 2011 included in:
Net investment income	$	—		$	17		$	—		$	4		$	—	$	21		$	—
Benefits, claims, losses and settlement expenses	—			—			—			—			—		—			167

(1) Included in net investment income in the Consolidated Statements of Operations.

(2) Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.

The impact to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its GMWB and GMAB embedded derivatives was an increase of $115 million and $24 million, net of DAC and DSIC amortization, for the three months ended June 30, 2012 and 2011, respectively. The impact to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its GMWB and GMAB embedded derivatives was nil and an increase of $1 million, net of DAC and DSIC amortization, for the six months ended June 30, 2012 and 2011, respectively.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Securities transferred from Level 3 to Level 2 represent securities with fair values that are now obtained from a third party pricing service with observable inputs. Securities transferred from Level 2 to Level 3 represent securities with fair values that are now based on a single non-binding broker quote. The Company recognizes transfers between levels of the fair value hierarchy as of the beginning of the quarter in which each transfer occurred. For assets and liabilities held at the end of the reporting period that are measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2.

	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(in millions)
Corporate debt securities	$	1,455	Discounted cash flow	Yield/spread to U.S. Treasuries	1.0% - 9.5% (2.5%)
(private placements)

Residential mortgage	$	200	Discounted cash flow	Constant prepayment rate	0.5% - 12.0% (2.9%)
backed securities				Annual default rate	1.2% - 19.7% (11.9%)
				Loss severity	34.0% - 75.0% (58.0%)
				Yield/spread to U.S. Treasuries	6.3% - 20.0% (8.8%)

Asset backed securities	$	16	Discounted cash flow	Constant prepayment rate	2.3% - 7.7% (3.0%)
(sub-prime residential				Annual default rate	3.2% - 12.5% (7.5%)
mortgage backed				Loss severity	65.0% - 100.0% (74.0%)
securities)				Yield/spread to U.S. Treasuries	6.6% - 12.9% (11.0%)

GMWB and GMAB	$	1,406	Discounted cash flow	Utilization of guaranteed	0% - 90%
embedded derivatives				withdrawals
				Surrender rate	0% - 56.3%
				Market volatility (1)	6.1% - 23.9%
				Nonperformance risk (2)	114 bps

(1) Market volatility is implied volatility of fund of funds.

(2) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.

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

Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs

Except for prepayment inputs, significant increases (decreases) in the unobservable inputs used in the fair value measurement of Level 3 corporate debt, residential mortgage backed and asset backed securities in isolation could result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in the constant prepayment rate in isolation could result in a significantly higher (lower) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumptions used for loss severity and yield/spread to U.S. Treasuries and a directionally opposite change in the assumption used for prepayment rates.

Significant increases (decreases) in utilization and volatility used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would result in a significantly higher (lower) fair value measurement. Significant increases (decreases) in surrender rate and nonperformance risk used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would result in a significantly lower (higher) fair value measurement. 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 system and whether the value of the guaranteed benefit exceeds the contract accumulation value.

Determination of Fair Value

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

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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 highly liquid investments with original maturities of 90 days or less. Actively traded money market funds are measured at their net asset value (“NAV”) and 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 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 U.S. Treasuries. Level 2 securities primarily include residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, municipal and corporate bonds, and U.S. agency and foreign government securities. The fair value of these Level 2 securities is based on a market approach with prices obtained from third party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes. Level 3 securities primarily include certain non-agency residential mortgage backed securities, asset backed securities, commercial mortgage backed securities and corporate bonds. The fair value of corporate bonds, commercial mortgage backed securities and certain asset backed securities classified as Level 3 is 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 fair value of certain asset backed securities and non-agency residential mortgage backed securities classified as Level 3 is obtained from third party pricing services who use significant unobservable inputs to estimate the fair value.

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

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 represents the exit price for the separate account. Separate account assets are classified as Level 2 as they are traded in principal-to-principal markets with little publicly released pricing information.

Investments Segregated for Regulatory Purposes

Other Assets

Derivatives that are measured using quoted prices in active markets, such as foreign currency forwards, or derivatives that are exchange-traded are classified as Level 1 measurements. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets are generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial at June 30, 2012 and December 31, 2011. See Note 11 for further information on the credit risk of derivative instruments and related collateral.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Liabilities

Future Policy Benefits and Claims

The Company values the embedded derivative liability attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value by discounting expected cash flows from benefits plus margins for profit, risk and expenses less embedded derivative fees. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to contractholder behavior assumptions and margins for risk, profit and expenses that the Company believes an exit market participant would expect. The fair value of these embedded derivatives also reflects a current estimate of the Company’s nonperformance risk specific to these liabilities. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3. The embedded derivative liability attributable to these provisions is recorded in future policy benefits and claims.

The Company’s Corporate Actuarial Department calculates the fair value of the GMWB and GMAB embedded derivatives on a monthly basis. During this process, control checks are performed to validate the completeness of the data. Actuarial management approves various components of the valuation along with the final results. The change in the fair value of the embedded derivatives is reviewed monthly with senior management. The Level 3 inputs into the valuation are consistent with the pricing assumptions and updated as experience develops. Significant unobservable inputs that reflect policyholder behavior are reviewed quarterly along with other valuation assumptions.

The Company uses various Black-Scholes calculations to determine the fair value of the embedded derivative liability associated with the provisions of its equity indexed annuity and indexed universal life products. 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.

Customer Deposits

The Company uses various Black-Scholes calculations to determine the fair value of the embedded derivative liability associated with the provisions of its stock market certificates. 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.

Other Liabilities

Derivatives that are measured using quoted prices in active markets, such as foreign currency forwards, or derivatives that are exchange-traded, are classified as Level 1 measurements. The fair value of derivatives that are traded in less active OTC markets are generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial at June 30, 2012 and December 31, 2011. See Note 11 for further information on the credit risk of derivative instruments and related collateral.

Securities sold but not yet purchased include highly liquid investments which are short-term in nature. Securities sold but not yet purchased are measured using 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 and are classified as Level 2.

During the reporting periods, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table provides the carrying value and the estimated fair value of financial instruments that are not reported at fair value. All other financial instruments that are reported at fair value have been included above in the table with balances of assets and liabilities Ameriprise Financial measured at fair value on a recurring basis.

	June 30, 2012										December 31, 2011
	Carrying		Fair Value								Carrying
	Value		Level 1		Level 2		Level 3		Total		Value		Fair Value
	(in millions)
Financial Assets
Commercial mortgage loans, net	$	2,551	$	—	$	—	$	2,758	$	2,758	$	2,589	$	2,772
Policy and certificate loans	750		—		2		723		725		742		715
Receivables	2,423		140		921		1,044		2,105		2,444		2,148
Restricted and segregated cash	1,688		1,688		—		—		1,688		1,500		1,500
Other investments and assets	376		—		341		37		378		390		388
Financial Liabilities
Future policy benefits and claims	$	14,960	$	—	$	—	$	16,100	$	16,100	$	15,064	$	16,116
Investment certificate reserves	2,715		—		—		2,712		2,712		2,766		2,752
Banking and brokerage customer deposits	7,356		2,273		5,085		—		7,358		7,078		7,091
Separate account liabilities	3,399		—		3,399		—		3,399		3,966		3,966
Debt and other liabilities	3,097		148		3,061		206		3,415		3,180		3,412

Commercial Mortgage Loans, Net

The fair value of commercial mortgage loans, except those with significant credit deterioration, is determined by discounting contractual cash flows using discount rates that reflect current pricing for loans with similar remaining maturities and characteristics including loan-to-value ratio, occupancy rate, refinance risk, debt-service coverage, location, and property condition. For commercial mortgage loans with significant credit deterioration, fair value is determined using the same adjustments as above with an additional adjustment for the Company’s estimate of the amount recoverable on the loan. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3.

Policy and Certificate Loans

The fair value of policy loans and certificate loans is determined using discounted cash flows. Policy loans on insurance contracts are classified as Level 3 as the discount rate used may be adjusted for the underlying performance of individual policies. The fair value of certificate loans is classified as Level 2 as the discount rate used to determine fair value is based on market interest rates.

Receivables

The fair value of consumer bank loans is determined by discounting estimated cash flows and incorporating adjustments for prepayment, administration expenses, severity and credit loss estimates, with discount rates based on the Company’s estimate of current market conditions. The fair value of consumer bank loans is classified as Level 3 as the valuation includes significant unobservable inputs.

Loans held for sale are measured at the lower of cost or market and fair value is based on what secondary markets are currently offering for loans with similar characteristics and are classified as Level 2.

Brokerage margin loans are measured at outstanding balances, which are a reasonable estimate of fair value because of the sufficiency of the collateral and short term nature of these loans. Margin loans that are sufficiently collateralized are classified as Level 2. Margin loans that are not sufficiently collateralized are classified as Level 3.

Securities borrowed require the Company to deposit cash or collateral with the lender. As the market value of the securities borrowed is monitored daily, the carrying value is a reasonable estimate of fair value. The fair value of securities borrowed is classified as Level 1 as the value of the underlying securities is based on unadjusted prices for identical assets.

Restricted and Segregated Cash

Restricted and segregated cash is generally set aside for specific business transactions and restrictions are specific to the Company and do not transfer to third party market participants; therefore, the carrying amount is a reasonable estimate of fair value.

Amounts segregated under federal and other regulations may also reflect resale agreements and are measured at the cost at which the securities will be sold. This measurement is a reasonable estimate of fair value because of the short time between entering into the transaction and its expected realization and the reduced risk of credit loss due to pledging U.S. government-backed securities as collateral.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The fair value of restricted and segregated cash is classified as Level 1.

Other Investments and Assets

Other investments and assets primarily consist of syndicated loans. The fair value of syndicated loans is obtained from a third party pricing service or non-binding broker quotes. Syndicated loans that are priced by multiple non-binding broker quotes are classified as Level 2 and loans priced using a single non-binding broker quote are classified as Level 3.

Other investments and assets also include the Company’s membership in the Federal Home Loan Bank of Des Moines and investments related to the Community Reinvestment Act. The fair value of these assets is approximated by the carrying value and classified as Level 3 due to restrictions on transfer and lack of liquidity in the primary market for these assets.

Future Policy Benefits and Claims

The fair value of fixed annuities, in deferral status, is determined by discounting cash flows using a risk neutral discount rate with adjustments for profit margin, expense margin, early policy surrender behavior, a provision for adverse deviation from estimated early policy surrender behavior and the Company’s nonperformance risk specific to these liabilities. The fair value of other liabilities including non-life contingent fixed annuities in payout status, equity indexed annuity host contracts and the fixed portion of a small number of variable annuity contracts classified as investment contracts is determined in a similar manner. Given the use of significant unobservable inputs to these valuations, the measurements are classified as Level 3.

Investment Certificate Reserves

The fair value of investment certificate reserves is determined by discounting cash flows using discount rates that reflect current pricing for assets with similar terms and characteristics, with adjustments for early withdrawal behavior, penalty fees, expense margin and the Company’s nonperformance risk specific to these liabilities. Given the use of significant unobservable inputs to this valuation, the measurement is classified as Level 3.

Banking and Brokerage Customer Deposits

Banking and brokerage customer deposits excluding certificates of deposit are liabilities with no defined maturities and fair value is the amount payable on demand at the reporting date. The fair value of these deposits is classified as Level 1. Certificates of deposit are valued based on discounted cash flows using market rates for similar certificates of deposit issued by other banks. The fair value of certificates of deposit is classified as Level 2.

Separate Account Liabilities

Certain separate account liabilities are classified as investment contracts and are carried at an amount equal to the related separate account assets. The NAV of the related separate account assets represents the exit price for the separate account liabilities. Separate account liabilities are classified as Level 2 as they are traded in principal-to-principal markets with little publicly released pricing information. A nonperformance adjustment is not included as the related separate account assets act as collateral for these liabilities and minimize nonperformance risk.

Debt and Other Liabilities

The fair value of long-term debt is based on quoted prices in active markets, when available. If quoted prices are not available fair values are obtained from third party pricing services, broker quotes, or other model-based valuation techniques such as present value of cash flows. The fair value of long-term debt is classified as Level 2.

The fair value of short-term borrowings is obtained from a third party pricing service. A nonperformance adjustment is not included as collateral requirements for these borrowings minimize the nonperformance risk. The fair value of short-term borrowings is classified as Level 2.

The fair value of future funding commitments to affordable housing partnerships is determined by discounting cash flows. The fair value of these commitments is classified as Level 3 as the discount rate is adjusted.

Securities loaned require the borrower to deposit cash or collateral with the Company. As the market value of the securities loaned is monitored daily, the carrying value is a reasonable estimate of fair value. Securities loaned are classified as Level 1 as the fair value of the underlying securities is based on unadjusted prices for identical assets.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

11. 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.

Freestanding derivative instruments are recorded at fair value and are reflected in other assets or other liabilities. The Company’s policy on the recognition of derivatives on the Consolidated Balance Sheet is to not offset fair value amounts recognized for derivatives and collateral arrangements executed with the same counterparty under the same master netting arrangement. The following table presents the estimated fair value of the Company’s freestanding derivatives after considering the effect of master netting arrangements and collateral:

	June 30, 2012						December 31, 2011
	Net Derivative			Net Derivative			Net Derivative			Net Derivative
	Assets			Liabilities			Assets			Liabilities
	(in millions)
Fair value of OTC derivatives after application of master netting agreements	$	889		$	250		$	1,025		$	142
Cash collateral on OTC derivatives	(439		)	(48		)	(767		)	(34		)
Fair value of OTC derivatives after application of master netting agreements and cash collateral	450			202			258			108

Securities collateral on OTC derivatives	(435		)	(148		)	(186		)	(95		)
Fair value of OTC derivatives after application of master netting agreements and cash and securities collateral	15			54			72			13

Fair value of exchange-traded derivatives	165			—			155			—
Total fair value of derivatives after application of master netting agreements and cash and securities collateral	$	180		$	54		$	227		$	13

In April 2012, the Financial Stability Oversight Council (“FSOC”) approved the final rule and interpretive guidance that provides the framework it will follow to determine if a nonbank financial company is a Systemically Important Financial Institution (“SIFI”). The framework includes a three-stage process to help narrow down the pool of nonbank financial companies for review and possible designation. Stage 1 criteria include having at least $50 billion in assets and meeting one of five additional quantitative measures. One of the five thresholds is $3.5 billion of derivative liabilities after considering the effects of master netting arrangements and cash collateral held with the same counterparty. The following table presents the Company’s derivative liabilities as defined by the rule:

	June 30, 2012		December 31, 2011
	(in millions)
Fair value of OTC derivative liabilities after application of master netting agreements and cash collateral	$	202	$	108
Fair value of embedded derivative liabilities	1,438		1,596
Fair value of CIE derivative liabilities	18		20
Fair value of derivative liabilities after application of master netting agreements and cash collateral	$	1,658	$	1,724

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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

Asset

Liability

Derivatives designated as

Balance Sheet

June 30,

December 31,

Balance Sheet

June 30,

December 31,

hedging instruments

Location

2012

2011

Location

2012

2011

(in millions)

Cash flow hedges

Interest on debt

Other assets

—

Other liabilities

—

Fair value hedges

Fixed rate debt

Other assets

167

157

Other liabilities

—

Total qualifying hedges

167

157

—

Derivatives not designated as
hedging instruments
GMWB and GMAB
Interest rate contracts	Other assets	2,250		1,801		Other liabilities	1,589		1,198
Equity contracts	Other assets	1,534		1,314		Other liabilities	1,569		1,031
Credit contracts	Other assets	—		1		Other liabilities	—		—
Foreign currency contracts	Other assets	2		7		Other liabilities	3		10
Embedded derivatives (1)	N/A	—		—		Future policy benefits and claims	1,406		1,585
Total GMWB and GMAB		3,786		3,123			4,567		3,824

Other derivatives:
Equity
EIA embedded derivatives	N/A	—		—		Future policy benefits and claims	2		2
IUL	Other assets	3		1		Other liabilities	1		—
IUL embedded derivatives	N/A	—		—		Future policy benefits and claims	22		3
Stock market certificates	Other assets	54		34		Other liabilities	46		29
Stock market certificates embedded derivatives	N/A	—		—		Customer deposits	8		6
Ameriprise Financial Franchise Advisor Deferred Compensation Plan	Other assets	3		2		Other liabilities	—		—
Seed money	Other assets	—		—		Other liabilities	—		1
Foreign exchange
Foreign currency	Other assets	—		—		Other liabilities	3		3
Seed money	Other assets	—		—		Other liabilities	1		—
Commodity
Seed money	Other assets	1		2		Other liabilities	—		—
Total other		61		39			83		44
Total non-designated hedges		3,847		3,162			4,650		3,868
Total derivatives		$	4,014	$	3,319		$	4,650	$	3,879

N/A Not applicable.

(1) The fair values of GMWB and GMAB embedded derivatives fluctuate based on changes in equity, interest rate and credit markets.

See Note 10 for additional information regarding the Company’s fair value measurement of derivative instruments.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Derivatives Not Designated as Hedges

The following table presents a summary of the impact of derivatives not designated as hedging instruments on the Consolidated Statements of Operations:

		Amount of Gain (Loss) on
		Derivatives Recognized in Income
		Three Months Ended						Six Months Ended
Derivatives not designated as	Location of Gain (Loss) on	June 30,						June 30,
hedging instruments	Derivatives Recognized in Income	2012			2011			2012			2011
		(in millions)
GMWB and GMAB
Interest rate contracts	Benefits, claims, losses and settlement expenses	$	328		$	87		$	103		$	62
Equity contracts	Benefits, claims, losses and settlement expenses	188			5			(507		)	(250		)
Credit contracts	Benefits, claims, losses and settlement expenses	1			(5		)	(2		)	(7		)
Foreign currency contracts	Benefits, claims, losses and settlement expenses	(3		)	(4		)	1			(6		)
Embedded derivatives(1)	Benefits, claims, losses and settlement expenses	(566		)	(125		)	179			105
Total GMWB and GMAB		(52		)	(42		)	(226		)	(96		)

Other derivatives:
Interest rate
Interest rate lock commitments	Other revenues	—			—			—			(1		)
Equity
EIA	Interest credited to fixed accounts	—			(1		)	1			—
EIA embedded derivatives	Interest credited to fixed accounts	—			1			—			1
Stock market certificates	Banking and deposit interest expense	(1		)	—			4			3
Stock market certificates embedded derivatives	Banking and deposit interest expense	(1		)	1			3			(2		)
Seed money	Net investment income	2			—			(3		)	(3		)
Ameriprise Financial
Franchise Advisor Deferred
Compensation Plan	Distribution expenses	(2		)	(2		)	1			—
Foreign exchange
Foreign currency	Net investment income	(1		)	1			—			1
Total other		(3		)	—			6			(1		)
Total derivatives		$	(55	)	$	(42	)	$	(220	)	$	(97	)

(1) The fair values of GMWB and GMAB embedded derivatives fluctuate based on changes in equity, interest rate and credit markets.

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 Company economically hedges the exposure related to non-life contingent GMWB and GMAB provisions primarily using various futures, options, interest rate swaptions, interest rate swaps, total return swaps, variance swaps and credit default swaps. At June 30, 2012 and December 31, 2011, the gross notional amount of derivative contracts for the Company’s GMWB and GMAB provisions was $124.6 billion and $104.7 billion, respectively.

The deferred premium associated with certain of the above options is paid or received semi-annually over the life of the option contract. The following is a summary of the payments the Company is scheduled to make and receive for these options:

	Premiums Payable		Premiums Receivable
	(in millions)
2012(1)	$	187	$	20
2013	358		29
2014	332		27
2015	305		25
2016	274		18
2017-2026	978		40

(1) 2012 amounts represent the amounts payable and receivable for the period from July 1, 2012 to December 31, 2012.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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

EIA, 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 EIA, IUL and stock market certificate products will positively or negatively impact earnings over the life of these products. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and futures contracts. The gross notional amount of these derivative contracts was $1.3 billion at both June 30, 2012 and December 31, 2011.

The Company enters into forward contracts, futures, total return swaps and commodity swaps to manage its exposure to price risk arising from seed money investments in proprietary investment products. The gross notional amount of these contracts was $117 million and $123 million at June 30, 2012 and December 31, 2011, respectively.

The Company enters into foreign currency forward contracts to economically hedge its exposure to certain receivables and obligations denominated in non-functional currencies. The gross notional amount of these contracts was $21 million and $26 million at June 30, 2012 and December 31, 2011, respectively.

In 2010, the Company entered into a total return swap to economically hedge its exposure to equity price risk of Ameriprise Financial, Inc. common stock granted as part of its Ameriprise Financial Franchise Advisor Deferred Compensation Plan (“Franchise Advisor Deferral Plan”). In the fourth quarter of 2011, the Company extended the contract through 2012. As part of the contract, the Company expects to cash settle the difference between the value of a fixed number of shares at the contract date (which may be increased from time to time) and the value of those shares over an unwind period ending on December 31, 2012. The gross notional value of this contract was $18 million and $17 million at June 30, 2012 and December 31, 2011, respectively.

Embedded Derivatives

Certain annuities contain GMAB and non-life contingent GMWB provisions, which are considered embedded derivatives. In addition, the equity component of the EIA, IUL and stock market certificate product obligations are also considered embedded derivatives. These embedded derivatives are bifurcated from their host contracts and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. As discussed above, the Company uses derivatives to mitigate the financial statement impact of these embedded derivatives.

Cash Flow Hedges

The Company has designated and accounts for the following as cash flow hedges: (i) interest rate swaps to hedge interest rate exposure on debt, (ii) interest rate lock agreements to hedge interest rate exposure on debt issuances and (iii) swaptions used to hedge the risk of increasing interest rates on forecasted fixed premium product sales. The Company previously designated and accounted for as cash flow hedges interest rate swaps to hedge certain asset-based distribution fees.

During the six months ended June 30, 2012 and 2011, the Company reclassified gains from accumulated other comprehensive income into earnings of $3 million and $27 million, respectively, on interest rate hedges put in place in anticipation of issuing debt. The gains were reclassified due to the forecasted transactions not occurring according to the original hedge strategy. For the three months and six months ended June 30, 2012 and 2011, amounts recognized in earnings related to cash flow hedges due to ineffectiveness were not material. The estimated net amount of existing pretax losses on June 30, 2012 that the Company expects to reclassify to earnings within the next twelve months is $2 million, which consists of $4 million of pretax gains to be recorded as a reduction to interest and debt expense and $6 million of pretax losses to be recorded in net investment income. The following tables present the impact of the effective portion of the Company’s cash flow hedges on the Consolidated Statements of Operations and the Consolidated Statements of Equity:

	Amount of Gain Recognized in Other
	Comprehensive Income on Derivatives
	Three Months Ended June 30,				Six Months Ended June 30,
Derivatives designated as hedging instruments	2012		2011		2012		2011
	(in millions)
Interest on debt	$	—	$	—	$	14	$	—
Asset-based distribution fees	—		—		—		1
Total	$	—	$	—	$	14	$	1

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	Amount of Gain (Loss) Reclassified from Accumulated
	Other Comprehensive Income into Income
Location of Gain (Loss) Reclassified from Accumulated	Three Months Ended June 30,						Six Months Ended June 30,
Other Comprehensive Income into Income	2012			2011			2012			2011
	(in millions)
Other revenues	$	—		$	27		$	3		$	27
Interest and debt expense	1			1			2			2
Distribution fees	—			4			—			9
Net investment income	(1		)	(2		)	(3		)	(3		)
Total	$	—		$	30		$	2		$	35

Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is 23 years and relates to forecasted debt interest payments.

Fair Value Hedges

During the first quarter of 2010, the Company entered into and designated as fair value hedges three interest rate swaps to convert senior notes due 2015, 2019 and 2020 from fixed rate debt to floating rate debt. The swaps have identical terms as the underlying debt being hedged so no ineffectiveness is expected to be realized. The Company recognizes gains and losses on the derivatives and the related hedged items within interest and debt expense. The following table presents the amounts recognized in income related to fair value hedges:

Amount of Gain Recognized in Income on Derivatives

Derivatives designated

Location of Gain

Three Months Ended June 30,

Six Months Ended June 30,

as hedging instruments

Recorded into Income

2012

2011

2012

2011

(in millions)

Fixed rate debt

Interest and debt expense

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 arrangements and collateral arrangements whenever practical. As of June 30, 2012 and December 31, 2011, the Company held $462 million and $802 million, respectively, in cash and cash equivalents and recorded a corresponding liability in other liabilities for collateral the Company is obligated to return to counterparties. As of June 30, 2012 and December 31, 2011, the Company had accepted additional collateral consisting of various securities with a fair value of $502 million and $186 million, respectively, which are not reflected on the Consolidated Balance Sheets. As of June 30, 2012 and December 31, 2011, the Company’s maximum credit exposure related to derivative assets after considering netting arrangements with counterparties and collateral arrangements was approximately $15 million and $72 million, respectively.

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. At June 30, 2012 and December 31, 2011, the aggregate fair value of derivative contracts in a net liability position containing such credit contingent provisions was $157 million and $112 million, respectively. The aggregate fair value of assets posted as collateral for such instruments as of June 30, 2012 and December 31, 2011 was $142 million and $103 million, respectively. If the credit contingent provisions of derivative contracts in a net liability position at June 30, 2012 and December 31, 2011 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 $15 million and $9 million, respectively.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

12. Income Taxes

The Company’s effective tax rate on income from continuing operations was 42.8% and 29.0% for the three months ended June 30, 2012 and 2011, respectively. The Company’s effective tax rate on income from continuing operations was 32.4% and 26.5% for the six months ended June 30, 2012 and 2011, respectively. The significant increase in the effective tax rates for the three months and six months ended June 30, 2012 compared to the prior year periods is primarily a result of a $32 million correction of tax related to securities lending activities. See Note 1 for additional information on the out-of-period correction.

The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Included in deferred tax assets is a significant deferred tax asset relating to 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. 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 including the ability to generate capital gains. Consideration is given to, among other things in making this determination, (i) future taxable income exclusive of reversing temporary differences and carryforwards, (ii) future reversals of existing taxable temporary differences, (iii) taxable income in prior carryback years and (iv) tax planning strategies. Based on analysis of the Company’s tax position, management believes it is more likely than not that the Company will not realize the full benefit of certain state net operating losses and therefore a valuation allowance has been established. The valuation allowance was $5 million at both June 30, 2012 and December 31, 2011.

Included in the Company’s deferred income tax assets are tax benefits related to capital loss carryforwards of $35 million which will expire beginning December 31, 2015 and state net operating losses of $39 million which will expire beginning December 31, 2014.

As of June 30, 2012 and December 31, 2011, the Company had $103 million and $184 million, respectively, of gross unrecognized tax benefits. The significant decrease in the amount of gross unrecognized tax benefits is a result of reaching an agreement with the Internal Revenue Service (“IRS”) on the treatment of certain items under audit. If recognized, approximately $34 million and $38 million, net of federal tax benefits, of unrecognized tax benefits as of June 30, 2012 and December 31, 2011, respectively, would affect the effective tax rate.

It is reasonably possible that the total amounts of unrecognized tax benefits will change in the next 12 months. Based on the current audit position of the Company, it is estimated that the total amount of gross unrecognized tax benefits may decrease by $78 million in the next 12 months.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized a net increase of $1 million and a net reduction of $4 million of interest and penalties for the three months and six months ended June 30, 2012, respectively. The Company recognized $49 million and $65 million of interest and penalties for the three months and six months ended June 30, 2011, respectively. At June 30, 2012 and December 31, 2011, the Company had a payable of $33 million and $37 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 states and foreign jurisdictions. The IRS had previously completed its field examination of the 1997 through 2007 tax returns in recent years as part of the overall examination of the American Express Company consolidated returns. However, for federal income tax purposes, these years, except for 2007, continue to remain open as a consequence of certain issues under appeal. The IRS is currently auditing the Company’s U.S. income tax returns for 2008 and 2009. The Company’s or certain of its subsidiaries’ state income tax returns are currently under examination by various jurisdictions for years ranging from 1999 through 2009. The Company’s federal and state income tax returns remain open for the years after 2009.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

13. Contingencies

The Company is required by law to be a member of the guaranty fund association in every state where it is 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 financial crisis of 2008 and 2009 and subsequent uncertainty and volatility in the U.S. economy and financial markets have weakened the financial condition of numerous insurers, including insurers currently in receiverships, increasing the risk of triggering guaranty fund assessments.

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 (“NOLHGA”) 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.

Executive Life Insurance Company of New York (“ELNY”) was placed into rehabilitation by a New York state court in 1991. On April 16, 2012, the court issued an order converting the rehabilitation into a liquidation proceeding under a plan submitted by the New York insurance regulator with support from the NOLHGA and the industry. The order has been appealed and the timing of a decision on the appeal is not certain.

As of June 30, 2012, the Company established a liability of $30 million for estimated guaranty fund assessments and a related premium tax asset of $24 million, primarily associated with ELNY. The expected period over which the assessments will be made and the related tax credits recovered is not known. At December 31, 2011, the net liability was not considered material.

The Company and its subsidiaries are involved in the normal course of business in legal, regulatory and arbitration proceedings, 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 litigation 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.

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, FINRA, the Federal Reserve Bank, the OCC, the Financial Services Authority, 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. During recent periods, the Company has received information requests, exams or inquiries regarding certain matters, including: sales of, or disclosures pertaining to, mutual funds, annuities, equity and fixed income securities, low priced securities, insurance products, brokerage services and financial advice offerings; trading practices within the Company’s asset management business; supervision of the Company’s financial advisors; and company procedures and information security. The Company is also responding to regulatory audits, market conduct examinations and other inquiries (including inquiries from the states of Minnesota and New York) relating to an industry-wide investigation of unclaimed property and escheatment practices and procedures. The number of reviews and investigations has increased in recent years with regard to many firms in the financial services industry, including Ameriprise Financial. The Company has cooperated and will continue to cooperate with the applicable regulators regarding their inquiries.

These legal and regulatory proceedings and disputes are subject to uncertainties and, as such, it is inherently difficult to determine whether any loss is probable or even possible, or to reasonably estimate the amount of any loss. The Company cannot predict with certainty if, how or when such proceedings will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, and by addressing unsettled legal questions relevant to the proceedings in question, before a loss or range of loss can be reasonably estimated for any proceeding. An adverse outcome in one or more of these proceedings could eventually result in adverse judgments, settlements, fines, penalties or other relief, in addition to further claims, examinations or adverse publicity that could have a material adverse effect on the Company’s consolidated financial condition or results of operations.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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. 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 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.

Certain legal and regulatory proceedings are described below.

In November 2010, the Company’s J. & W. Seligman & Co. Incorporated subsidiary (“Seligman”) received a governmental inquiry regarding an industry insider trading investigation, as previously stated by the Company in general media reporting. The Company continues to cooperate fully with that inquiry, responding to requests for information from both the SEC and U.S. Attorney’s office. Neither the Company nor Seligman has been accused of any wrongdoing, and the government has confirmed that neither the Company nor any of its affiliated entities is a target of its investigation into potential insider trading. The Company cannot reasonably estimate the range of loss, if any, that may result from this matter given the procedural status of the matter, the difficulty in predicting the direction of the government’s inquiry and the government’s indication of the Company’s status relative to the investigation.

In October 2011, a putative class action lawsuit entitled Roger Krueger, et al. vs. Ameriprise Financial, et al. was filed in the United States District Court for the District of Minnesota against the Company, certain of its present or former employees and directors, as well as certain fiduciary committees on behalf of participants and beneficiaries of the Ameriprise Financial 401(k) Plan. The alleged class period is from October 1, 2005 to the present. The action alleges that Ameriprise breached fiduciary duties under ERISA by selecting and retaining primarily proprietary mutual funds with allegedly poor performance histories, higher expenses relative to other investment options and improper fees paid to Ameriprise Financial, Inc. or its subsidiaries. The action also alleges that the Company breached fiduciary duties under ERISA because it used its affiliate Ameriprise Trust Company as the Plan trustee and record-keeper and improperly reaped profits from the sale of the record-keeping business to Wachovia Bank, N.A. Plaintiffs allege over $20 million in damages. Plaintiffs filed an amended complaint on February 7, 2012. On April 11, 2012, the Company filed its motion to dismiss the Amended Complaint. The Court held a hearing on the motion to dismiss on June 13, 2012, and the Company is awaiting the decision. The Company cannot reasonably estimate the range of loss, if any, that may result from this matter due to the early procedural status of the case, the pending motion to dismiss, the absence of class certification, the lack of a formal demand on the Company by the plaintiffs and plaintiffs’ failure to allege any specific, evidence-based damages.

14. Discontinued Operations

The components of loss from discontinued operations of Securities America were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Total net revenues	$	—		$	118		$	—		$	240

Loss from discontinued operations	$	—		$	(3	)	$	—		$	(119	)
Reduction of gain on sale	(1		)	—			(3		)	—
Income tax expense (benefit)	—			1			(1		)	(44		)
Loss from discontinued operations, net of tax	$	(1	)	$	(4	)	$	(2	)	$	(75	)

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

15. Earnings per Share Attributable to Ameriprise Financial, Inc. Common Shareholders

The computations of basic and diluted earnings per share attributable to Ameriprise Financial, Inc. common shareholders are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions, except per share amounts)
Numerator:
Income from continuing operations	$	171		$	291		$	420		$	585
Less: Loss attributable to noncontrolling interests	(53		)	(28		)	(49		)	(46		)
Income from continuing operations attributable to Ameriprise Financial	224			319			469			631
Loss from discontinued operations, net of tax	(1		)	(4		)	(2		)	(75		)
Net income attributable to Ameriprise Financial	$	223		$	315		$	467		$	556

Denominator:
Basic: Weighted-average common shares outstanding	221.7			245.5			224.5			248.5
Effect of potentially dilutive nonqualified stock options and other share-based awards	3.9			5.5			4.1			5.8
Diluted: Weighted-average common shares outstanding	225.6			251.0			228.6			254.3

Earnings per share attributable to Ameriprise Financial, Inc. common shareholders:
Basic:
Income from continuing operations	$	1.01		$	1.30		$	2.09		$	2.54
Loss from discontinued operations	—			(0.02		)	(0.01		)	(0.30		)
Net income	$	1.01		$	1.28		$	2.08		$	2.24
Diluted:
Income from continuing operations	$	0.99		$	1.27		$	2.05		$	2.48
Loss from discontinued operations	—			(0.02		)	(0.01		)	(0.30		)
Net income	$	0.99		$	1.25		$	2.04		$	2.18

For the six months ended June 30, 2012 and 2011, the dilutive effect of nonqualified stock options and other share based-awards excludes 7.7 million and 3.9 million options, respectively, from the computation of earnings per share attributable to Ameriprise Financial, Inc. common shareholders. The inclusion of the options would have been anti-dilutive.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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 recasted due to the Company’s adoption of the new accounting standard for DAC as discussed in Note 1 and Note 2.

Prior to 2012, the Chief Operating Decision Makers 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, beginning in 2012, operating earnings have become the measure of segment profit or loss management uses to evaluate segment performance. The segment results for the three months and six months ended June 30, 2012 are presented on an operating basis and the prior periods have been recast.

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 on variable annuity guaranteed living benefits includes changes in the GMWB and GMAB embedded derivative liability values caused by changes in financial market conditions, net of changes in associated economic hedge values. 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 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 primarily 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. Beginning in the second quarter of 2012, integration and restructuring charges also include expenses related to the Company’s intention to transition its federal savings bank subsidiary, Ameriprise Bank, FSB, to a non-depository national trust bank by year-end 2012.

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

	June 30, 2012		December 31, 2011
	(in millions)
Advice & Wealth Management	$	12,715	$	12,293
Asset Management	6,181		6,863
Annuities	89,293		86,598
Protection	18,311		18,304
Corporate & Other	8,770		8,249
Total assets	$	135,270	$	132,307

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Operating net revenues:
Advice & Wealth Management	$	953		$	957		$	1,907		$	1,870
Asset Management	707			753			1,418			1,490
Annuities	628			665			1,256			1,308
Protection	528			522			1,050			1,038
Corporate & Other	7			22			15			16
Eliminations (1) (2)	(305		)	(327		)	(617		)	(636		)
Total segment operating revenues	2,518			2,592			5,029			5,086
Net realized gains (losses)	(5		)	6			(7		)	7
Revenues of CIEs	1			25			53			62
Total net revenues per consolidated statements of operations	$	2,514		$	2,623		$	5,075		$	5,155

(1) Represents the elimination of intersegment revenues recognized for the three months ended June 30, 2012 and 2011 in each segment as follows: Advice & Wealth Management ($218 and $242, respectively); Asset Management ($12 and $11, respectively); Annuities ($66 and $64, respectively); Protection ($9 and $9, respectively); and Corporate & Other (nil and $1, respectively).

(2) Represents the elimination of intersegment revenues recognized for the six months ended June 30, 2012 and 2011 in each segment as follows: Advice & Wealth Management ($447 and $474, respectively); Asset Management ($22 and $21, respectively); Annuities ($129 and $122, respectively); Protection ($18 and $18, respectively); and Corporate & Other ($1 and $1, respectively).

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Operating earnings:
Advice & Wealth Management	$	111		$	108		$	205		$	207
Asset Management	130			146			261			282
Annuities	116			154			305			326
Protection	109			92			216			203
Corporate & Other	(67		)	(41		)	(132		)	(106		)
Total segment operating earnings	399			459			855			912
Net realized gains (losses)	(5		)	6			(7		)	7
Net loss attributable to noncontrolling interests	(53		)	(28		)	(49		)	(46		)
Market impact on variable annuity living benefits, net of hedges, DSIC and DAC amortization	(16		)	(7		)	(129		)	(28		)
Integration and restructuring charges	(26		)	(21		)	(49		)	(50		)
Income from continuing operations before income tax provision per consolidated statements of operations	$	299		$	409		$	621		$	795

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

The following discussion and analysis of our consolidated financial condition and results of operations 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, 2011 filed with the Securities and Exchange Commission (“SEC”) on February 24, 2012 (“2011 10-K”), as well as our current reports on Form 8-K and other publicly available information. Prior year amounts have been adjusted for the retrospective adoption of new accounting rules on deferred acquisition costs (“DAC”). In addition, certain reclassifications of prior year amounts have been made to conform to the current presentation. 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

We are a diversified financial services company with $654.8 billion in assets under management and administration as of June 30, 2012. We serve individual investors’ and institutions’ financial needs, hold leadership positions in financial planning, wealth management, retirement, asset management, annuities and insurance, and we maintain a strong operating and financial foundation.

Ameriprise is in a strong position to capitalize on significant demographic and market trends, which we believe will continue to drive increased demand for our services. Our emphasis on deep client-advisor relationships has been central to the success of our business model, including through the extreme market conditions of the past few years, and we believe it will help us navigate future market and economic cycles. We continue to strengthen our position as a retail financial services leader as we focus on meeting the financial needs of the mass affluent and affluent, as evidenced by our leadership in financial planning, a client retention percentage rate of 95% and our status as a top ten ranked firm within core portions of our four main business segments, including the size of our U.S. advisor force, and assets in long-term U.S. mutual funds, variable annuities and variable universal life (“VUL”) insurance.

We offer financial planning, products and services designed to be used as solutions for our clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. Our model for delivering product solutions is built on long-term, personal relationships between our clients and our financial advisors and registered representatives (“affiliated advisors”). Our focus on personal relationships, together with our discipline in financial planning and strengths in product development and advice, allow us to address the evolving financial and retirement-related needs of our clients, including our primary target market segment, the mass affluent and affluent, which we define as households with investable assets of more than $100,000. The financial product solutions we offer through our affiliated advisors include both our own products and services and the products of other companies. Our affiliated advisor network is the primary channel through which we offer our life insurance and annuity products and services, as well as a range of banking and protection products.

Our affiliated advisors are focused on using a financial planning and advisory process designed to provide comprehensive advice that focuses on all aspects of our clients’ finances. This approach allows us to recommend actions and a broad range of product solutions, including investment, annuity, insurance, banking and other financial products that can help clients attain a return or form of protection over time while accepting what they determine to be an appropriate range and level of risk. We believe our focus on meeting clients’ needs through personal financial planning results in more satisfied clients with deeper, longer lasting relationships with our company and higher retention of our affiliated advisors.

As of June 30, 2012, we had a network of more than 9,800 affiliated advisors. The financial product solutions we offer through our affiliated advisors include both our own products and services and the products of other companies. Our affiliated advisor network is the primary channel through which we offer our life insurance and annuity products and services, as well as a range of banking and protection products. We offer our affiliated advisors training, tools, leadership, marketing programs and other field and centralized support to assist them in delivering advice and product solutions to clients. We believe our comprehensive and client-focused approach not only improves the products and services we provide to their clients, but also allows us to reinvest in enhanced services for clients and increase support for financial advisors.

We have four main operating segments: Advice & Wealth Management, Asset Management, Annuities and Protection, as well as our Corporate & Other segment. Our four main operating segments are aligned with the financial solutions we offer to address our clients’ needs. 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.

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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 “spread” income generated on our annuities, banking and deposit products and universal life (“UL”) insurance products, the value of 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.

On July 10, 2012, we announced our intention to transition our federal savings bank subsidiary, Ameriprise Bank, FSB, to a non-depository national trust bank by year-end 2012, subject to regulatory approvals. With this change, Ameriprise Financial would not be considered a savings and loan holding company. We expect to incur approximately $20 million of one-time, non-operating expenses from this change, with the majority recognized in 2012. In addition, the transition releases approximately $375 million of required capital, which we anticipate using to repurchase shares throughout 2013. In the fourth quarter of 2012, we will no longer generate the revenue and earnings associated with the bank’s activities as we transition the portfolios to third parties. We estimate that this will reduce our Advice & Wealth Management segment earnings by $45 to $50 million pretax in 2013 and decrease margins by 80 to 100 basis points on an annualized basis. At the enterprise level, we anticipate that the earnings per share impact will be immaterial, as we redeploy the excess capital to shareholders through share repurchases throughout 2013.

We consolidate certain collateralized debt obligations and other investment products (collectively, “investment entities”) for which we provide asset management services to and sponsor for the investment of client assets in the normal course of business. These entities are defined as consolidated investment entities (“CIEs”). For further information on CIEs, see Note 4 to our Consolidated Financial Statements. Changes in the valuation of the CIE assets and liabilities impact pretax income. The net income (loss) of the CIEs is reflected in net income (loss) attributable to noncontrolling interests. The results of operations of the CIEs are reflected in the Corporate & Other 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 assets and liabilities related to the CIEs, primarily debt and underlying syndicated loans, are reflected in net investment income. We continue to include the fees 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 operating measures, which exclude net realized gains or losses; the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization; 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 certain of 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 operating measures. 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. The CIEs we manage have the following characteristics:

· They were formed on behalf of institutional investors to obtain a diversified investment portfolio and were not formed in order to obtain financing for Ameriprise Financial.

· Ameriprise Financial receives customary, industry standard management fees for the services it provides to these CIEs and has a fiduciary responsibility to maximize the investors’ returns.

· Ameriprise Financial does not have any obligation to provide financial support to the CIEs, does not provide any performance guarantees of the CIEs and has no obligation to absorb the investors’ losses.

· Management excludes the impact of consolidating the CIEs on assets, liabilities, pretax income and equity for setting our financial performance targets and annual incentive award compensation targets.

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:

· Operating total net revenue growth of 6% to 8%,

· Operating earnings per diluted share growth of 12% to 15%, and

· Operating return on equity excluding accumulated other comprehensive income of 15% to 18%.

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GAAP Measures

Net revenues decreased $80 million, or 2%, for the six months ended June 20, 2012 compared to the prior year period primarily due to lower investment income from continued low interest rates and volatile equity markets. In addition, the prior year period included a $27 million gain from an interest rate hedge. Net income from continuing operations attributable to Ameriprise Financial per diluted share decreased 17% for the six months ended June 20, 2012 compared to the prior year period. Net income from continuing operations attributable to Ameriprise Financial decreased $162 million, or 26%, for the six months ended June 20, 2012 compared to the prior year period reflecting the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization), an unfavorable impact from a tax-related item primarily related to an out-of-period correction and a $37 million negative impact from continued low interest rates, as well as an $18 million after-tax gain from an interest rate hedge in the prior year period. The market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization), after-tax, was a decrease to earnings of $83 million, or $0.36 per diluted share, for the six months ended June 20, 2012 compared to a decrease of $18 million, or $0.07 per diluted share, for the prior year period. The tax-related item was a decrease to earnings of $40 million, or $0.17 per diluted share, for the six months ended June 30, 2012.

Operating Measures

The following tables reconcile certain GAAP measures to operating measures:

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
	(in millions)					(in millions)
Total net revenues	$	2,514		$	2,623	$	5,075		$	5,155
Less: CIEs revenue	1			25		53			62
Less: Net realized gains (losses)	(5		)	6		(7		)	7
Operating total net revenues	$	2,518		$	2,592	$	5,029		$	5,086

							Per Diluted Share
	Three Months Ended June 30,						Three Months Ended June 30,
	2012			2011			2012			2011
	(in millions, except per share amounts)
Net income	$	170		$	287
Less: Net loss attributable to noncontrolling interests	(53		)	(28		)
Net income attributable to Ameriprise Financial	223			315			$	0.99		$	1.25
Less: Loss from discontinued operations, net of tax	(1		)	(4		)	—			(0.02		)
Net income from continuing operations attributable to Ameriprise Financial	224			319			0.99			1.27
Add: Market impact on variable annuity guaranteed living benefits, net of tax (1)	9			4			0.04			0.02
Add: Integration charges, net of tax (1)	17			14			0.08			0.06
Less: Net realized gains (losses), net of tax (1)	(4		)	4			(0.02		)	0.02
Operating earnings	$	254		$	333		$	1.13		$	1.33


Weighted average common shares outstanding:
Basic	221.7			245.5
Diluted	225.6			251.0

(1) Calculated using the statutory tax rate of 35%.

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							Per Diluted Share
	Six Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions, except per share amounts)
Net income	$	418		$	510
Less: Net loss attributable to noncontrolling interests	(49		)	(46		)
Net income attributable to Ameriprise Financial	467			556			$	2.04		$	2.18
Less: Loss from discontinued operations, net of tax	(2		)	(75		)	(0.01		)	(0.30		)
Net income from continuing operations attributable to Ameriprise Financial	469			631			2.05			2.48
Add: Market impact on variable annuity guaranteed living benefits, net of tax (1)	83			18			0.36			0.07
Add: Integration charges, net of tax (1)	32			33			0.14			0.13
Less: Net realized gains (losses), net of tax (1)	(5		)	5			(0.03		)	0.02
Operating earnings	$	589		$	677		$	2.58		$	2.66

Weighted average common shares outstanding:
Basic	224.5			248.5
Diluted	228.6			254.3

(1) Calculated using the statutory tax rate of 35%.

The following table reconciles the trailing twelve months’ sum of net income from continuing operations attributable to Ameriprise Financial to operating earnings and the five-point average of quarter-end equity to operating equity:

	Twelve Months Ended June 30,
	2012			2011
	(in millions)
Net income from continuing operations attributable to Ameriprise Financial	$	1,014		$	1,156
Add: Market impact on variable annuity guaranteed living benefits, net of tax	105			43
Add: Integration charges, net of tax	61			65
Less: Net realized gains (losses), net of tax	(6		)	19
Operating earnings	$	1,186		$	1,245

Total Ameriprise Financial, Inc. shareholders’ equity	$	9,072		$	9,359
Less: Assets and liabilities held for sale	16			51
Less: Accumulated other comprehensive income, net of tax	804			743
Total Ameriprise Financial, Inc. shareholders’ equity from continuing operations excluding AOCI	8,252			8,565
Less: Equity impacts attributable to CIEs	427			558
Operating equity	$	7,825		$	8,007

Return on equity from continuing operations, excluding AOCI	12.3		%	13.5		%
Operating return on equity excluding CIEs and AOCI (1)	15.2		%	15.5		%

(1) Operating return on equity excluding consolidated investment entities and accumulated other comprehensive income is calculated using the trailing twelve months of earnings excluding the after-tax net realized gains/losses; market impact on variable annuity guaranteed living benefits, net of hedges and related DSIC and DAC amortization; integration/restructuring charges; and discontinued operations in the numerator, and Ameriprise Financial shareholders’ equity excluding accumulated other comprehensive income; the impact of consolidating investment entities; and the assets and liabilities held for sale using a five-point average of quarter-end equity in the denominator.

Operating net revenues decreased $74 million, or 3%, for the second quarter of 2012 compared to the prior year period primarily due to lower investment income from continued low interest rates and volatile equity markets. These market-driven impacts were partially offset by growth in fee-based revenues driven by Ameriprise advisor client net inflows. In addition, the prior year period included a $27 million gain from an interest rate hedge. Operating earnings per diluted share decreased 15% for the second quarter of 2012 compared to the prior year period. Operating earnings decreased $79 million, or 24%, for the second quarter of 2012 compared to the prior year period reflecting an unfavorable impact from a tax-related item primarily related to an out-of-period correction, a $16 million negative impact from continued low interest rates and an $18 million after-tax gain from an interest rate hedge in the prior year period. The tax-related item was a decrease to earnings of $40 million, or $0.18 per

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diluted share, for the second quarter of 2012. Operating return on equity excluding CIEs and accumulated other comprehensive income was 15.2% for the twelve months ended June 30, 2012 compared to 15.5% for the prior year period.

Operating net revenues decreased $57 million, or 1%, for the six months ended June 30, 2012 compared to the prior year period primarily due to lower investment income from continued low interest rates and volatile equity markets. In addition, the prior year period included a $27 million gain from an interest rate hedge. Operating earnings per diluted share decreased 3% for the six months ended June 30, 2012 compared to the prior year period. Operating earnings decreased $88 million, or 13%, for the six months ended June 30, 2012 compared to the prior year period reflecting a $40 million unfavorable impact from a tax-related item primarily related to an out-of-period correction and a $37 million negative impact from continued low interest rates, as well as an $18 million after-tax gain from an interest rate hedge in the prior year period.

Earnings, as well as operating earnings, will continue to be negatively impacted by the ongoing low interest rate environment. In addition to continuing spread compression in our interest sensitive product lines, there is also the potential for interest rate related impacts to DAC and DSIC amortization and the level of reserves as a result of our ongoing review of various actuarial related assumptions, which could be material. Currently, we estimate that low interest rates will reduce 2012 earnings by approximately $55 million compared to last year. In 2013, we estimate that low interest rates will reduce earnings by an additional $40 million. In 2014, the incremental impact is much lower, at less than $10 million, as we have a large block of fixed annuities that come out of the guarantee period and we are able to reset crediting rates which will improve spreads.

Critical Accounting Policies

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 Policies” in our 2011 10-K.

We adopted new accounting rules for DAC on January 1, 2012 on a retrospective basis. See Note 1 and Note 6 to our Consolidated Financial Statements for the impact of the adoption on prior period results of operations and financial condition and our updated accounting policies on the deferral of acquisition costs.

A decrease of 100 basis points in various rate assumptions is likely to result in an increase in DAC and DSIC amortization and an increase in benefits and claims expense from variable annuity guarantees. The following table presents the estimated impact to current period pretax income:

	Estimated Impact to Pretax Income(1)
	(in millions)
Decrease in future near and long-term fixed income returns by 100 basis points	$	(28	)

Decrease in future near-term equity fund growth returns by 100 basis points	$	(25	)
Decrease in future long-term equity fund growth returns by 100 basis points	(17		)
Decrease in future near and long-term equity returns by 100 basis points	$	(42	)

(1) An increase in the above assumptions by 100 basis points would result in an increase to pretax income for approximately the same amount.

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.

We adopted new accounting rules for DAC on January 1, 2012 on a retrospective basis. See Note 1 to our Consolidated Financial Statements for the impact of the adoption on prior period results of operations and financial condition.

Assets Under Management and Administration

Assets under management (“AUM”) include assets for which we provide investment management services, such as the assets of the Columbia funds and Threadneedle funds, assets of institutional clients and assets of clients in our affiliated advisor platform held in wrap accounts as well as assets managed by sub-advisers 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, RiverSource variable product funds held in separate accounts of our life insurance subsidiaries and client assets of CIEs. These assets do not include assets under advisement, for which we provide model portfolios but do not have full discretionary investment authority.

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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 fees 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. These assets do not include assets under advisement, for which we provide model portfolios but do not have full discretionary investment authority.

The following table presents detail regarding our AUM and AUA:

	June 30,
	2012			2011			Change
	(in billions)
Assets Under Management and Administration
Advice & Wealth Management AUM	$	114.7		$	105.9		$	8.8		8	%
Asset Management AUM	445.8			467.2			(21.4		)	(5	)
Eliminations	(16.9		)	(13.4		)	(3.5		)	(26	)
Total Assets Under Management	543.6			559.7			(16.1		)	(3	)
Total Assets Under Administration	111.2			110.5			0.7			1
Total AUM and AUA	$	654.8		$	670.2		(15.4		)	(2	)%

Total AUM decreased $16.1 billion, or 3%, to $543.6 billion as of June 30, 2012 compared to the prior year period due to a $21.4 billion decrease in Asset Management AUM, partially offset by an $8.8 billion increase in Advice & Wealth Management AUM. See our segment results of operations discussion below for additional information on changes in our AUM.

Consolidated Results of Operations for the Three Months Ended June 30, 2012 and 2011

The following table presents our consolidated results of operations:

	Three Months Ended June 30,
	2012			2011			Change
	(in millions)
Revenues
Management and financial advice fees	$	1,152		$	1,172		$	(20	)	(2	)%
Distribution fees	396			416			(20		)	(5	)
Net investment income	472			498			(26		)	(5	)
Premiums	302			312			(10		)	(3	)
Other revenues	202			236			(34		)	(14	)
Total revenues	2,524			2,634			(110		)	(4	)
Banking and deposit interest expense	10			11			(1		)	(9	)
Total net revenues	2,514			2,623			(109		)	(4	)
Expenses
Distribution expenses	663			659			4			1
Interest credited to fixed accounts	209			212			(3		)	(1	)
Benefits, claims, losses and settlement expenses	396			405			(9		)	(2	)
Amortization of deferred acquisition costs	99			89			10			11
Interest and debt expense	72			75			(3		)	(4	)
General and administrative expense	776			774			2			—
Total expenses	2,215			2,214			1			—
Income from continuing operations before income tax provision	299			409			(110		)	(27	)
Income tax provision	128			118			10			8
Income from continuing operations	171			291			(120		)	(41	)
Loss from discontinued operations, net of tax	(1		)	(4		)	3			75
Net income	170			287			(117		)	(41	)
Less: Net loss attributable to noncontrolling interests	(53		)	(28		)	(25		)	(89	)
Net income attributable to Ameriprise Financial	$	223		$	315		$	(92	)	(29	)%

Income from continuing operations decreased $120 million, or 41%, to $171 million for the second quarter of 2012 compared to the prior year period reflecting a $40 million unfavorable impact from a tax-related item primarily related to an out-of-period correction,

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a $16 million negative impact from continued low interest rates, an $18 million after-tax gain from an interest rate hedge in the prior year period and a $21 million decrease in other revenues of CIEs.

Net revenues decreased $109 million, or 4%, for the second quarter of 2012 compared to the prior year period primarily due to lower investment income from continued low interest rates and volatile equity markets. These market-driven impacts were partially offset by growth in fee-based revenues driven by Ameriprise advisor client net inflows. In addition, the prior year period included a $27 million gain from an interest rate hedge. Net revenues of CIEs decreased $24 million compared to the prior year period primarily due to lower other revenues of CIEs. Management and financial advice fees decreased $20 million, or 2%, for the second quarter of 2012 compared to the prior year period due to lower asset-based fees driven by a decline in average AUM. Average AUM decreased $4.0 billion, or 1%, compared to the prior year period. See our discussion on the changes in AUM in our segment results of operations section below. Distribution fees decreased $20 million, or 5%, for the second quarter of 2012 compared to the prior year period due to lower asset-based fees driven by a decline in average AUM and lower transactional revenues. Net investment income decreased $26 million, or 5%, compared to the prior year period reflecting a decrease in investment income on fixed maturity securities from continued low interest rates. Premiums decreased $10 million, or 3%, compared to the prior year period driven by a decrease in sales of immediate annuities with life contingencies, partially offset by an increase in Auto and Home premium growth compared to the prior year period. Other revenues decreased $34 million, or 14%, compared to the prior year period due to a $21 million decrease in other revenues of CIEs and a $27 million gain on an interest rate hedge put in place in anticipation of issuing debt that was reclassified from accumulated other comprehensive income into earnings in the second quarter of 2011, partially offset by higher fees from variable annuity guarantees driven by higher volumes, as well as higher fee rates.

Total expenses remained flat compared to the prior year period. Benefits, claims, losses and settlement expenses decreased $9 million, or 2%, compared to the prior year period due to a $9 million benefit from a life insurance reserve release in the second quarter of 2012, favorable claims in life and disability income insurance and lower reserves related to lower sales of immediate annuities with life contingencies, partially offset by a $12 million expense from fixed annuity valuation adjustments, a $3 million negative impact from markets on DSIC and higher reserves related to higher fees from variable annuity guarantees compared to the prior year period. Amortization of DAC increased $10 million, or 11%, compared to the prior year period due to the market impact on amortization of DAC. The market impact on amortization of DAC was an expense of $9 million in the second quarter of 2012 compared to a benefit of $3 million in the prior year period.

Income Taxes

Our effective tax rate on income from continuing operations including income attributable to noncontrolling interests was 42.8% for the three months ended June 30, 2012, compared to 29.0% for the prior year period. Our effective tax rate on income from continuing operations excluding income attributable to noncontrolling interests was 36.4% for the three months ended June 30, 2012, compared to 27.1% for the prior year period. The significant increase in the effective tax rate for the second quarter of 2012 compared to the prior year period is primarily a result of a $32 million correction of tax related to securities lending activities. During the second quarter of 2012, we discovered we had received incomplete data from a third-party service provider for securities lending activities that resulted in the miscalculation of our dividend received deduction and foreign tax credit, which resulted in an understatement of taxes payable and an overstatement of reported earnings in prior periods. We have resolved the data issue and stopped the securities lending that negatively impacted our tax position.

Our operating effective tax rate was 36.3% for the three months ended June 30, 2012, compared to 27.5% for the prior year period. The following table presents a reconciliation of our operating effective tax rate:

	Three Months Ended June 30,
	2012						2011
	GAAP			Operating			GAAP			Operating
	(in millions)
Income from continuing operations before income tax provision	$	299		$	399		$	409		$	459
Less: Pretax loss attributable to noncontrolling interests	(53		)	—			(28		)	—
Income from continuing operations before income tax provision excluding CIEs	$	352		$	399		$	437		$	459

Income tax provision from continuing operations	$	128		$	145		$	118		$	126

Effective tax rate	42.8		%	36.3		%	29.0		%	27.5		%
Effective tax rate excluding noncontrolling interests	36.4		%	36.3		%	27.1		%	27.5		%

It is possible there will be corporate tax reform in the next few years. While impossible to predict, corporate tax reform is likely to include a reduction in the corporate tax rate coupled with reductions in tax preferred items. Potential tax reform may also affect the U.S. tax rules regarding international operations. Any changes could have a material impact on our income tax expense and deferred tax balances.

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Results of Operations by Segment for the Three Months Ended June 30, 2012 and 2011

Operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Operating earnings should not be viewed as a substitute for GAAP income from continuing operations before income tax provision. We believe the presentation of segment 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 16 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of operating earnings.

The following table presents summary financial information by segment:

	Three Months Ended June 30,
	2012			2011
	(in millions)
Advice & Wealth Management
Net revenues	$	953		$	957
Expenses	842			849
Operating earnings	$	111		$	108
Asset Management
Net revenues	$	707		$	753
Expenses	577			607
Operating earnings	$	130		$	146
Annuities
Net revenues	$	628		$	665
Expenses	512			511
Operating earnings	$	116		$	154
Protection
Net revenues	$	528		$	522
Expenses	419			430
Operating earnings	$	109		$	92
Corporate & Other
Net revenues	$	7		$	22
Expenses	74			63
Operating earnings	$	(67	)	$	(41	)

Advice & Wealth Management

Our Advice & Wealth Management segment provides financial planning and advice, as well as brokerage and banking services, primarily to retail clients through our affiliated advisors. Our affiliated advisors have access to a diversified selection of both affiliated and non-affiliated products to help clients meet their financial needs. A significant portion of revenues in this segment is fee-based, driven by the level of client assets, which is impacted by both market movements and net asset flows. We also earn net investment income on invested assets primarily from certificate and banking products. This segment earns revenues (distribution fees) for distributing non-affiliated products and earns intersegment revenues (distribution fees) for distributing our affiliated products and services to our retail clients. Intersegment expenses for this segment include expenses for investment management services provided by the Asset Management segment.

In addition to purchases of affiliated and non-affiliated mutual funds and other securities on a stand-alone basis, clients may purchase mutual funds, among other securities, in connection with investment advisory fee-based “wrap account” programs or services, and pay fees based on a percentage of their assets.

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

	2012			2011
	(in billions)
Beginning balance	$	113.1		$	103.1
Net flows	2.6			2.3
Market appreciation (depreciation) and other	(2.3		)	0.5
Ending balance	$	113.4		$	105.9

Average balance	$	113.3		$	104.5

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Wrap account assets increased $0.3 billion during the three months ended June 30, 2012 due to net inflows of $2.6 billion and market depreciation and other of $2.3 billion. Average wrap account assets increased $8.8 billion, or 8%, to $113.3 billion for the second quarter of 2012 compared to the prior year period primarily due to net inflows.

The following table presents the changes in wrap account assets for the twelve months ended June 30:

	2012			2011
	(in billions)
Beginning balance	$	105.9		$	83.0
Net flows	7.7			8.4
Market appreciation (depreciation) and other	(0.2		)	14.5
Ending balance	$	113.4		$	105.9

Wrap account assets increased $7.5 billion, or 7%, from the prior year period primarily reflecting net inflows of $7.7 billion.

Management believes that operating measures, which exclude net realized gains or losses for our Advice & Wealth Management segment, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. See our discussion on the use of these operating measures in the Overview section above.

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

	Three Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	430	$	408	$	22		5	%
Distribution fees	454		484		(30		)	(6	)
Net investment income	64		61		3			5
Other revenues	15		15		—			—
Total revenues	963		968		(5		)	(1	)
Banking and deposit interest expense	10		11		(1		)	(9	)
Total net revenues	953		957		(4		)	—
Expenses
Distribution expenses	565		574		(9		)	(2	)
General and administrative expense	277		275		2			1
Total expenses	842		849		(7		)	(1	)
Operating earnings	$	111	$	108	$	3		3	%

Our Advice & Wealth Management segment pretax operating earnings, which excludes net realized gains or losses, increased $3 million, or 3%, to $111 million for the three months ended June 30, 2012 compared to $108 million for the prior year period primarily due to strong growth in wrap account assets, as well as higher invested asset balances, partially offset by a $10 million impact from low interest rates, as well as lower transactional revenues. Pretax operating margin was 11.6% for the three months ended June 30, 2012 compared to 11.3% for the prior year period.

Net Revenues

Net revenues exclude net realized gains or losses. Net revenues were essentially flat at $953 million, reflecting client net inflows, as well as higher invested asset balances, offset by the impact of a lower asset earnings rate on cash balances and lower transactional volumes related to volatile markets and lower sales of variable annuities. Operating net revenue per branded advisor was $97,000 for the second quarter of 2012, down 2% from the prior year period, reflecting the volatile market environment that impacted transactional-based revenues. Total branded advisors increased 1% to 9,803 at June 30, 2012 compared to 9,663 at June 30, 2011.

Management and financial advice fees increased $22 million, or 5%, to $430 million for the three months ended June 30, 2012 compared to $408 million for the prior year period driven by growth in wrap account assets. Average wrap account assets increased $8.8 billion, or 8%, to $113.3 billion for the second quarter of 2012 compared to the prior year period primarily due to net inflows. See our discussion of the changes in wrap account assets above.

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Distribution fees decreased $30 million, or 6%, to $454 million for the three months ended June 30, 2012 compared to $484 million for the prior year period due to lower transactional volumes related to volatile markets and lower sales of variable annuities.

Expenses

Total expenses decreased $7 million, or 1%, to $842 million for the three months ended June 30, 2012 compared to $849 million for the prior year period due to a decrease in distribution expenses. Distribution expenses decreased $9 million, or 2%, to $565 million for the three months ended June 30, 2012 compared to $574 million for the prior year period primarily due to lower advisor compensation from lower transactional volumes.

Asset Management

Our Asset Management segment provides investment advice and investment products to retail and institutional clients. We provide our products and services on a global scale through two complementary asset management businesses: Columbia Management Investment Advisers, LLC (“Columbia” or “Columbia Management”) and Threadneedle Asset Management Holdings Sàrl (“Threadneedle”). Columbia Management predominantly provides U.S. domestic products and services and Threadneedle predominantly provides international investment products and services. We provide clients with Columbia retail products through unaffiliated third party financial institutions and through our Advice & Wealth Management segment. We provide institutional products and services through our institutional sales force. We provide Threadneedle retail products primarily through third parties. Retail products include mutual funds and variable product funds underlying insurance and annuity separate accounts. Institutional asset management services are designed to meet specific client objectives and may involve a range of products including those that focus on traditional asset classes, separately managed accounts, individually managed accounts, collateralized loan obligations, hedge funds, collective funds and property funds. Revenues in this segment are primarily earned as fees based on managed asset balances, which are impacted by both market movements and net asset flows. In addition to the products and services provided to third party clients, management teams serving our Asset Management segment provide all intercompany asset management services. The fees for such services are reflected within the Asset Management segment results through intersegment transfer pricing. Intersegment expenses for this segment include distribution expenses for services provided by our Advice & Wealth Management, Annuities and Protection segments.

On April 30, 2010, we completed the acquisition of the long-term asset management business of the Columbia Management Group from Bank of America. The acquisition significantly enhanced the capabilities of the Asset Management segment by increasing its scale, broadening its retail and institutional distribution capabilities and strengthening and diversifying its lineup of retail and institutional products. The integration of the Columbia Management business, which was completed in the second quarter of 2012, involved organizational changes to our portfolio management and analytical teams and to our operational, compliance, sales and marketing support staffs. This integration also involved the streamlining of our U.S. domestic product offerings. As a result of the integration, we combined RiverSource Investments, our legacy U.S. asset management business, with Columbia Management, under the Columbia brand. Total U.S. retail assets and number of funds under the Columbia brand as of June 30, 2012 were $211.4 billion and 217 funds, respectively.

From time to time, fee waivers have been provided to the Columbia Money Market Funds (the “Funds”) by Columbia Management and certain other subsidiaries performing services for the Funds for the purposes of reducing the expenses charged to a Fund in a given period to maintain or improve a Fund’s net yield in that period. Our subsidiaries may enter into contractual arrangements with the Funds identifying the specific fees to be waived and/or expenses to be reimbursed, as well as the time period for which such waivers will apply. In aggregate, we voluntarily waived fees of $2.9 million and $3.3 million for the three months ended June 30, 2012 and 2011, respectively.

Threadneedle remains our primary international investment management platform. Threadneedle manages seven Open Ended Investment Companies (“OEICs”) and one Societe d’Investissement A Capital Variable (“SICAV”) offering. The seven OEICs are Threadneedle Investment Funds ICVC (“TIF”), Threadneedle Specialist Investment Funds ICVC (“TSIF”), Threadneedle Focus Investment Funds (“TFIF”), Threadneedle Advantage Portfolio Funds (“TPAF”), Threadneedle Investment Funds ICVC II (“TIF II”), Threadneedle Investment Funds ICVC III (“TIF III”) and Threadneedle Investment Funds ICVC IV (“TIF IV”). TIF, TSIF, TFIF, TPAF, TIF II, TIF III and TIF IV are structured as umbrella companies with a total of 72 (33, 14, 2, 2, 6, 9 and 6, respectively) sub funds covering the world’s bond and equity markets. The SICAV is the Threadneedle (Lux) SICAV (“T(Lux)”). T(Lux) is structured as an umbrella company with a total of 29 sub funds covering the world’s bond, commodities and equity markets. In addition, Threadneedle manages 13 unit trusts, 10 of which invest into the OEICs, eight property unit trusts and one property fund of funds.

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The following tables present the mutual fund performance of our retail Columbia and Threadneedle funds as of June 30, 2012:

Columbia

Mutual Fund Rankings in top 2 Lipper Quartiles

Domestic Equity	Equal weighted	1 year	43	%
		3 year	56	%
		5 year	60	%
	Asset weighted	1 year	62	%
		3 year	76	%
		5 year	75	%

International Equity	Equal weighted	1 year	63	%
		3 year	41	%
		5 year	57	%
	Asset weighted	1 year	84	%
		3 year	15	%
		5 year	73	%

Taxable Fixed Income	Equal weighted	1 year	75	%
		3 year	45	%
		5 year	74	%
	Asset weighted	1 year	82	%
		3 year	53	%
		5 year	81	%

Tax Exempt Fixed Income	Equal weighted	1 year	90	%
		3 year	95	%
		5 year	90	%
	Asset weighted	1 year	83	%
		3 year	85	%
		5 year	98	%

Asset Allocation Funds	Equal weighted	1 year	91	%
		3 year	71	%
		5 year	52	%
	Asset weighted	1 year	92	%
		3 year	90	%
		5 year	90	%

Number of funds with 4 or 5 Morningstar star ratings		Overall	56
		3 year	53
		5 year	45

Percent of funds with 4 or 5 Morningstar star ratings		Overall	47	%
		3 year	45	%
		5 year	41	%

Percent of assets with 4 or 5 Morningstar star ratings		Overall	64	%
		3 year	40	%
		5 year	43	%

Mutual fund performance rankings are based on the performance of Class Z fund shares for Columbia branded mutual funds. In instances where a fund’s Class Z shares do not have a full one, three or five year track record, performance for an older share class of the same fund, typically Class A shares, is utilized for the period before Class Z shares were launched. No adjustments to the historical track records are made to account for differences in fund expenses between share classes of a fund.

Equal Weighted Rankings in Top 2 Quartiles: Counts the number of funds with above median ranking divided by the total number of funds. Asset size is not a factor.

Asset Weighted Rankings in Top 2 Quartiles: Sums the total assets of the funds with above median ranking (using Class Z and appended Class Z) 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 data includes all Columbia branded mutual funds.

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Threadneedle

Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index Benchmark

Equity	Equal weighted	1 year	65	%
		3 year	85	%
		5 year	80	%
	Asset weighted	1 year	87	%
		3 year	91	%
		5 year	86	%

Fixed Income	Equal weighted	1 year	67	%
		3 year	64	%
		5 year	64	%
	Asset weighted	1 year	39	%
		3 year	41	%
		5 year	68	%

Allocation (Managed) Funds	Equal weighted	1 year	0	%
		3 year	67	%
		5 year	100	%
	Asset weighted	1 year	0	%
		3 year	78	%
		5 year	100	%

The performance of each fund is measured on a consistent basis against the most appropriate benchmark — a peer group of similar funds or an index.

Equal weighted: Counts the number of funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total number of funds. Asset size is not a factor.

Asset weighted: Sums the assets of the funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total sum of assets in the funds. Funds with more assets will receive a greater share of the total percentage above or below median or index.

Aggregated Allocation (Managed) Funds include funds that invest in other funds of the Threadneedle range including those funds that invest in both equity and fixed income.

Aggregated Threadneedle data includes funds on the Threadneedle platform sub-advised by Columbia as well as advisors not affiliated with Ameriprise Financial, Inc.

The following table presents the ending balances and average managed assets:

												Average
	June 30,											Three Months Ended June 30,
	2012			2011			Change					2012			2011			Change
	(in billions)											(in billions)
Columbia managed assets	$	331.9		$	362.0		$	(30.1	)	(8	)%	$	338.0		$	362.5		$	(24.5	)	(7	)%
Threadneedle managed assets	116.6			110.4			6.2			6		120.0			108.6			11.4			10
Less: Sub-advised eliminations	(2.7		)	(5.2		)	2.5			48		(3.6		)	(4.8		)	1.2			25
Total managed assets	$	445.8		$	467.2		$	(21.4	)	(5	)%	$	454.4		$	466.3		$	(11.9	)	(3	)%

The following table presents managed asset net flows:

	Three Months Ended June 30,
	2012			2011			Change
	(in billions)
Columbia managed asset net flows	$	(5.4	)	$	(1.0	)	$	(4.4	)	NM
Threadneedle managed asset net flows (1)	(2.4		)	1.7			(4.1		)	NM
Less: Sub-advised eliminations (1)	1.2			(1.0		)	2.2			NM
Total managed asset net flows	$	(6.6	)	$	(0.3	)	$	(6.3	)	NM

(1) Threadneedle net flows in Q2 2012 include $1.2 billion of outflows primarily due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.

NM Not Meaningful.

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The following table presents managed assets by type:

	June 30,
	2012		2011		Change
	(in billions)
Equity	$	213.4	$	247.6	$	(34.2	)	(14	)%
Fixed income	204.3		190.4		13.9			7
Money market	6.9		6.3		0.6			10
Alternative	8.8		10.7		(1.9		)	(18	)
Hybrid and other	12.4		12.2		0.2			2
Total managed assets by type	$	445.8	$	467.2	$	(21.4	)	(5	)%

The following tables present the changes in Columbia and Threadneedle managed assets:

	Three Months Ended June 30,
Columbia Managed Assets Rollforward	2012			2011
	(in billions)
Retail Funds
Beginning assets	$	221.4		$	226.4
Mutual fund inflows	9.2			9.7
Mutual fund outflows	(14.8		)	(11.9		)
Net VP/VIT fund flows	(0.1		)	0.4
Net new flows	(5.7		)	(1.8		)
Reinvested dividends	2.0			2.1
Net flows	(3.7		)	0.3
Distributions	(2.3		)	(2.5		)
Market appreciation (depreciation) and other (1)	(4.0		)	1.2
Total ending assets	211.4			225.4

Institutional
Beginning assets	75.0			89.8
Inflows	3.7			4.7
Outflows	(5.1		)	(5.7		)
Net flows	(1.4		)	(1.0		)
Market appreciation (depreciation) and other	(0.8		)	0.6
Total ending assets	72.8			89.4

Alternative
Beginning assets	8.3			9.6
Inflows	0.2			0.1
Outflows	(0.5		)	(0.4		)
Net flows	(0.3		)	(0.3		)
Market appreciation (depreciation) and other	(0.2		)	0.1
Total ending assets	7.8			9.4

Affiliated General Account Assets	40.1			38.1

Other and Eliminations	(0.2		)	(0.3		)

Total Columbia managed assets	$	331.9		$	362.0

Total Columbia net flows	$	(5.4	)	$	(1.0	)

(1) Included in Market appreciation (depreciation) and other for retail funds in the 2nd quarter of 2012 are $3B due to the transfer of Active Diversified Portfolio assets from non-proprietary to proprietary funds.

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	Three Months Ended June 30,
	2012			2011
	(in billions)
Threadneedle Managed Assets Rollforward
Retail Funds
Beginning assets	$	36.3		$	34.3
Mutual fund inflows	3.3			5.2
Mutual fund outflows (2)	(4.6		)	(3.3		)
Net new flows	(1.3		)	1.9
Reinvested dividends	0.1			0.1
Net flows	(1.2		)	2.0
Distributions	(0.2		)	(0.2		)
Market appreciation (depreciation)	(1.2		)	0.3
Foreign currency translation (1)	(0.6		)	—
Other	0.2			0.2
Total ending assets	33.3			36.6

Institutional
Beginning assets	85.9			71.1
Inflows	1.9			2.6
Outflows	(3.1		)	(2.7		)
Net flows	(1.2		)	(0.1		)
Market appreciation (depreciation)	(1.6		)	0.8
Foreign currency translation (1)	(1.6		)	0.1
Other	0.8			0.6
Total ending assets	82.3			72.5

Alternative
Beginning assets	1.1			1.3
Inflows	—			—
Outflows	—			(0.2		)
Net flows	—			(0.2		)
Market appreciation (depreciation)	—			—
Foreign currency translation (1)	—			—
Other	(0.1		)	0.2
Total ending assets	1.0			1.3

Total Threadneedle managed assets	$	116.6		$	110.4

Total Threadneedle net flows	$	(2.4	)	$	1.7

(1)	Amounts represent British Pound to US dollar conversion.
(2)	Retail fund outflows in Q2 2012 include $1.2 billion due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.

Total segment AUM declined $17.2 billion, or 4%, to $445.8 billion as of June 30, 2012 from $463.0 billion at March 31, 2012, due to a decrease in both Columbia and Threadneedle managed assets. Columbia managed assets declined $12.1 billion, or 4%, to $331.9 billion as of June 30, 2012 from $344.0 billion at March 31, 2012, primarily due to a decrease in retail funds. Columbia retail funds decreased $10.0 billion, or 5%, during the second quarter of 2012 due to net outflows of $3.7 billion, distributions of $2.3 billion and market depreciation and other of $4.0 billion. Columbia retail fund net outflows of $3.7 billion in the second quarter of 2012 included $1.9 billion of previously announced net outflows in former parent company portfolios and $2.1 billion of net outflows in New York 529 program assets. Columbia institutional AUM decreased $2.2 billion, or 3%, during the second quarter of 2012 due to net outflows of $1.4 billion and market depreciation and other of $0.8 billion. Columbia institutional net outflows of $1.4 billion in the second quarter of 2012 included $1.2 billion of previously announced net outflows in former parent company portfolios. Columbia continued to experience net outflows from a third-party subadvisor and in a portfolio where there was a manager retirement.

Threadneedle managed assets decreased $6.7 billion, or 5%, to $116.6 billion as of June 30, 2012 from $123.3 billion at March 31, 2012 due to decreases in both retail and institutional AUM. Threadneedle retail funds decreased $3.0 billion, or 8%, during the second quarter of 2012 primarily due to net outflows of $1.2 billion and market depreciation of $1.2 billion. Threadneedle retail net outflows of $1.2 billion resulted from a change in the subadvisory relationship between Threadneedle and Columbia. Threadneedle institutional AUM decreased $3.6 billion, or 4%, during the second quarter of 2012 due to net outflows of

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$1.2 billion, market depreciation of $1.6 billion and a negative impact from foreign currency translation of $1.6 billion. Threadneedle institutional net outflows of $1.2 billion included $0.7 billion of outflows from a closed book of insurance assets.

Underlying flow trends at Columbia have improved despite the challenging markets. We are making good progress distributing through intermediary channels and are in net inflows in our Focus Funds. In the institutional channel, Columbia continues to grow its third-party business, has a strong new business pipeline and asset retention and win rates remain strong. At Threadneedle, market volatility and weak investor sentiment in Europe caused a slowdown in the funding of institutional mandates.

Total segment AUM declined $21.4 billion, or 5%, from the prior year period primarily reflecting net outflows of $12.7 billion, distributions of $6.6 billion and weighted-equity market depreciation. Average segment AUM decreased 3% for the second quarter of 2012 compared to the prior year period due to net outflows, distributions and weighted-equity market depreciation.

Management believes that operating measures, which exclude net realized gains or losses and integration charges for our Asset Management segment, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. See our discussion on the use of these operating measures in the Overview section above.

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

	Three Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	592	$	627	$	(35	)	(6	)%
Distribution fees	111		123		(12		)	(10	)
Net investment income	2		3		(1		)	(33	)
Other revenues	3		—		3			NM
Total revenues	708		753		(45		)	(6	)
Banking and deposit interest expense	1		—		1			NM
Total net revenues	707		753		(46		)	(6	)
Expenses
Distribution expenses	272		277		(5		)	(2	)
Amortization of deferred acquisition costs	5		6		(1		)	(17	)
General and administrative expense	300		324		(24		)	(7	)
Total expenses	577		607		(30		)	(5	)
Operating earnings	$	130	$	146	$	(16	)	(11	)%

NM Not Meaningful.

Our Asset Management segment pretax operating earnings, which exclude net realized gains or losses and integration charges, decreased $16 million, or 11%, to $130 million for the three months ended June 30, 2012 compared to $146 million for the prior year period reflecting a decline in assets under management, partially offset by continued expense controls. Pretax operating margin was 18.4% for the three months ended June 30, 2012 compared to 19.4% for the prior year period.

Net Revenues

Net revenues decreased $46 million, or 6%, to $707 million for the three months ended June 30, 2012 compared to $753 million for the prior year period primarily driven by lower average assets under management due to net outflows and market depreciation.

Management and financial advice fees decreased $35 million, or 6%, to $592 million for the three months ended June 30, 2012 compared to $627 million for the prior year period driven by a 3% decline in average assets under management due to net outflows and market depreciation. See our discussion above on the changes in assets under management.

Distribution fees decreased $12 million, or 10%, to $111 million for the three months ended June 30, 2012 compared to $123 million for the prior year period primarily due to a 3% decline in average assets under management.

Expenses

Total expenses, which exclude integration charges, decreased $30 million, or 5%, to $577 million for the three months ended June 30, 2012 compared to $607 million for the prior year period primarily due to a $24 million decrease in general and administrative expense primarily due to lower compensation-related expense. Expenses remain well controlled and reflected our focus on re-engineering to fund investments in the business.

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Annuities

Our Annuities segment provides variable and fixed annuity products of RiverSource Life companies to retail clients. We provide our variable annuity products through our affiliated advisors. We provide our fixed annuity products through affiliated advisors as well as unaffiliated advisors through third-party distribution. Revenues for our variable annuity products are primarily earned as fees based on underlying account balances, which are impacted by both market movements and net asset flows. Revenues for our fixed annuity products are primarily earned as net investment income on invested assets supporting fixed account balances, with profitability significantly impacted by the spread between net investment income earned and interest credited on the fixed account balances. We also earn net investment income on invested assets supporting reserves for immediate annuities and for certain guaranteed benefits offered with variable annuities and on capital supporting the business. Intersegment revenues for this segment reflect fees paid by the Asset Management segment for marketing support and other services provided in connection with the availability of RiverSource Variable Series Trust, Columbia Funds Variable Insurance Trust, Columbia Funds Variable Insurance Trust I and Wanger Advisors Trust funds under the variable annuity contracts. Intersegment expenses for this segment include distribution expenses for services provided by the Advice & Wealth Management segment, as well as expenses for investment management services provided by the Asset Management segment.

Management believes that operating measures, which exclude net realized gains or losses and the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization, for our Annuities segment, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. See our discussion on the use of these operating measures in the Overview section above.

The following table presents the results of operations of our Annuities segment on an operating basis:

	Three Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	159	$	161	$	(2	)	(1	)%
Distribution fees	78		80		(2		)	(3	)
Net investment income	287		308		(21		)	(7	)
Premiums	28		49		(21		)	(43	)
Other revenues	76		67		9			13
Total revenues	628		665		(37		)	(6	)
Banking and deposit interest expense	—		—		—			—
Total net revenues	628		665		(37		)	(6	)
Expenses
Distribution expenses	97		101		(4		)	(4	)
Interest credited to fixed accounts	174		177		(3		)	(2	)
Benefits, claims, losses and settlement expenses	121		119		2			2
Amortization of deferred acquisition costs	57		54		3			6
General and administrative expense	63		60		3			5
Total expenses	512		511		1			—
Operating earnings	$	116	$	154	$	(38	)	(25	)%

Our Annuities segment pretax operating income, which excludes net realized gains or losses and the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization, decreased $38 million, or 25%, to $116 million for the three months ended June 30, 2012 compared to $154 million for the prior year period primarily due to a decline in net investment income reflecting low interest rates impacting both the variable and fixed businesses and the negative impact from markets on DAC and DSIC and fixed annuity valuation model adjustments. The decrease in premiums from lower sales of immediate annuities with life contingencies was mostly offset by lower related expenses. The increase in other revenues due to higher fees from variable annuity guarantees was offset by a net $6 million expense related to projected insurance industry guaranty fund assessments, as well as higher reserves related to higher fees.

RiverSource variable annuity account balances were unchanged compared to the prior year period at $65.2 billion. Variable annuity net outflows of $147 million in the second quarter of 2012 reflected the closed book of annuities sold through third parties and $94 million of net inflows in the Ameriprise channel. Slower sales in the second quarter of 2012 reflected the impact of the introduction of a new variable annuity rider in May and the suspension or restriction of certain product offerings during the quarter. RiverSource fixed annuity account balances declined 1% compared to the prior year period to $14.1 billion due to ongoing net outflows resulting from low client demand given current interest rates.

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Net Revenues

Net revenues, which exclude net realized gains or losses, decreased $37 million, or 6%, to $628 million for the three months ended June 30, 2012 compared to $665 million for the prior year period primarily due to decreases in net investment income and premiums, partially offset by higher fees from variable annuity guarantees.

Net investment income, which excludes net realized gains or losses, decreased $21 million, or 7%, to $287 million for the three months ended June 30, 2012 compared to $308 million for the prior year period reflecting low interest rates impacting both the variable and fixed businesses.

Premiums decreased $21 million, or 43%, to $28 million for the three months ended June 30, 2012 compared to $49 million for the prior year period due to lower sales of immediate annuities with life contingencies.

Other revenues increased $9 million, or 13%, to $76 million for the three months ended June 30, 2012 compared to $67 million for the prior year period due to higher fees from variable annuity guarantees primarily driven by higher volumes, as well as higher fee rates.

Expenses

Total expenses, which exclude the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization, were essentially flat at $512 million as decreases in expenses from lower sales were offset by unfavorable impacts from the market on DAC and DSIC, fixed annuity valuation model adjustments and the insurance industry guaranty fund assessments.

Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC amortization, increased $2 million, or 2%, to $121 million for the three months ended June 30, 2012 compared to $119 million for the prior year period due to fixed annuity valuation model adjustments, as well as the market impact to DSIC amortization and higher reserves related to higher fees from variable annuity guarantees, partially offset by lower reserves resulting from lower sales of immediate annuities with life contingencies. The impact of fixed annuity valuation model adjustments was a $12 million expense in the second quarter of 2012 compared to nil for the prior year period. The market impact to DSIC was an expense of $3 million in the second quarter of 2012 compared to nil in the prior year period.

Amortization of DAC, which excludes the DAC offset to the market impact on variable annuity guaranteed living benefits, increased $3 million, or 6%, to $57 million for the three months ended June 30, 2012 compared to $54 million for the prior year period primarily due to the market impact on amortization of DAC, partially offset by improved policyholder persistency. The market impact on amortization of DAC was an expense of $8 million in the second quarter of 2012 compared to a benefit of $3 million in the prior year period.

General and administrative expense increased $3 million, or 5%, to $63 million for the three months ended June 30, 2012 compared to $60 million for the prior year period due to an expense related to projected insurance industry guaranty fund assessments. In the second quarter of 2012, we recognized a net $6 million charge for estimated future assessments from state insurance guaranty funds, primarily associated with the liquidation of Executive Life Insurance Company of New York. See Note 13 to our Consolidated Financial Statements for additional information on insurance industry guaranty fund assessments.

Protection

Our Protection segment offers a variety of protection products to address the protection and risk management needs of our retail clients including life, disability income and property-casualty insurance. Life and disability income products are primarily provided through affiliated advisors. Our property-casualty products are provided direct, primarily through affinity relationships. We issue insurance policies through our life insurance subsidiaries and the property casualty companies. The primary sources of revenues for this segment are premiums, fees and charges we receive to assume insurance-related risk. We earn net investment income on invested assets supporting insurance reserves and capital supporting the business. We also receive fees based on the level of assets supporting VUL separate account balances. This segment earns intersegment revenues from fees paid by the Asset Management segment for marketing support and other services provided in connection with the availability of RiverSource Variable Series Trust, Columbia Funds Variable Insurance Trust, Columbia Funds Variable Insurance Trust I and Wanger Advisors Trust funds under the VUL contracts. Intersegment expenses for this segment include distribution expenses for services provided by the Advice & Wealth Management segment, as well as expenses for investment management services provided by the Asset Management segment.

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Management believes that operating measures, which exclude net realized gains or losses for our Protection segment, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. See our discussion on the use of these operating measures in the Overview section above.

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

	Three Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	13	$	15	$	(2	)	(13	)%
Distribution fees	23		23		—			—
Net investment income	106		109		(3		)	(3	)
Premiums	278		267		11			4
Other revenues	108		108		—			—
Total revenues	528		522		6			1
Banking and deposit interest expense	—		—		—			—
Total net revenues	528		522		6			1
Expenses
Distribution expenses	18		17		1			6
Interest credited to fixed accounts	35		35		—			—
Benefits, claims, losses and settlement expenses	264		279		(15		)	(5	)
Amortization of deferred acquisition costs	32		29		3			10
General and administrative expense	70		70		—			—
Total expenses	419		430		(11		)	(3	)
Operating earnings	$	109	$	92	$	17		18	%

Our Protection segment pretax operating income, which excludes net realized gains or losses, increased $17 million, or 18%, to $109 million for the three months ended June 30, 2012, compared to $92 million for the prior year period driven by favorable claims in life and disability income insurance, an improved auto and home combined ratio and a $9 million benefit from a life insurance reserve release. These benefits were partially offset by lower long term care earnings and a modest decline in life insurance in force.

Net Revenues

Net revenues, which exclude net realized gains or losses, increased $6 million, or 1%, to $528 million for the three months ended June 30, 2012 compared to $522 million for the prior year period due to Auto and Home premium growth, partially offset by a decline in life and health revenues resulting from a modest decline in life insurance in force. Life insurance in force declined 1% to $190.7 billion compared to the prior year period.

Premiums increased $11 million, or 4%, to $278 million for the three months ended June 30, 2012 compared to $267 million for the prior year period due to growth in Auto and Home premiums driven by higher volumes. Auto and Home policy counts increased 7% period-over-period.

Expenses

Total expenses decreased $11 million, or 3%, to $419 million for the three months ended June 30, 2012 compared to $430 million for the prior year period due to a decrease in benefits, claims, losses and settlement expenses.

Benefits, claims, losses and settlement expenses decreased $15 million, or 5%, to $264 million for the three months ended June 30, 2012 compared to $279 million for the prior year period due to a $9 million benefit from a life insurance reserve release in the second quarter of 2012 and lower life and disability income insurance claims, partially offset by higher long term care claims compared to the prior year period. An increase in benefits, claims, losses and settlement expenses related to Auto and Home premium growth was offset by higher auto liability reserves in the prior year period reflecting elevated reserve levels based on late 2010 experience.

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Corporate & Other

Our Corporate & Other segment consists of net investment income or loss on corporate level assets, including excess capital held in our subsidiaries and other unallocated equity and other revenues as well as unallocated corporate expenses. The Corporate & Other segment excludes revenues and expenses of the CIEs.

Management believes that operating measures, which exclude net realized gains or losses, the impact of consolidating CIEs and restructuring charges for our Corporate & Other segment, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. See our discussion on the use of these operating measures in the Overview section above.

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

	Three Months Ended June 30,
	2012			2011			Change
	(in millions)
Revenues
Net investment income (loss)	$	4		$	(6	)	$	10		NM
Other revenues	3			28			(25		)	(89	)%
Total revenues	7			22			(15		)	(68	)
Banking and deposit interest expense	—			—			—			—
Total net revenues	7			22			(15		)	(68	)
Expenses
Distribution expenses	—			1			(1		)	NM
Interest and debt expense	24			24			—			—
General and administrative expense	50			38			12			32
Total expenses	74			63			11			17
Operating loss	$	(67	)	$	(41	)	$	(26	)	(63	)%

NM Not Meaningful.

Our Corporate & Other segment pretax operating loss excludes net realized gains or losses, the impact of consolidating CIEs and restructuring charges. Our Corporate & Other segment pretax operating loss was $67 million for the three months ended June 30, 2012 compared to $41 million for the prior year period.

Net revenues, which exclude revenues or losses of CIEs and net realized gains or losses, decreased $15 million, or 68%, to $7 million for the three months ended June 30, 2012 compared to $22 million for the prior year period primarily due to a decrease in other revenues, partially offset by net investment income of $4 million in the second quarter of 2012 compared to net investment loss of $6 million in the prior year period.

Other revenues, which exclude other revenues or losses of CIEs, decreased $25 million, or 89%, to $3 million for the three months ended June 30, 2012 compared to $28 million for the prior year period due to a $27 million gain on an interest rate hedge put in place in anticipation of issuing debt that was reclassified from accumulated other comprehensive income into earnings in the second quarter of 2011.

Total expenses, which exclude expenses of CIEs and restructuring charges, increased $11 million, or 17%, to $74 million for the three months ended June 30, 2012 compared to $63 million for the prior year period due to an increase in general and administrative expense resulting from an $8 million expense from a tax-related item in the second quarter of 2012.

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Consolidated Results of Operations for the Six Months Ended June 30, 2012 and 2011

The following table presents our consolidated results of operations:

	Six Months Ended June 30,
	2012			2011			Change
	(in millions)
Revenues
Management and financial advice fees	$	2,284		$	2,309		$	(25	)	(1	)%
Distribution fees	798			813			(15		)	(2	)
Net investment income	1,003			1,013			(10		)	(1	)
Premiums	603			604			(1		)	—
Other revenues	408			440			(32		)	(7	)
Total revenues	5,096			5,179			(83		)	(2	)
Banking and deposit interest expense	21			24			(3		)	(13	)
Total net revenues	5,075			5,155			(80		)	(2	)
Expenses
Distribution expenses	1,329			1,293			36			3
Interest credited to fixed accounts	415			420			(5		)	(1	)
Benefits, claims, losses and settlement expenses	888			788			100			13
Amortization of deferred acquisition costs	130			164			(34		)	(21	)
Interest and debt expense	141			150			(9		)	(6	)
General and administrative expense	1,551			1,545			6			—
Total expenses	4,454			4,360			94			2
Income from continuing operations before income tax provision	621			795			(174		)	(22	)
Income tax provision	201			210			(9		)	(4	)
Income from continuing operations	420			585			(165		)	(28	)
Loss from discontinued operations, net of tax	(2		)	(75		)	73			97
Net income	418			510			(92		)	(18	)
Less: Net loss attributable to noncontrolling interests	(49		)	(46		)	(3		)	(7	)
Net income attributable to Ameriprise Financial	$	467		$	556		$	(89	)	(16	)%

Income from continuing operations decreased $165 million, or 28%, for the six months ended June 30, 2012 compared to the prior year period reflecting the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization), a $37 million negative impact from continued low interest rates, a $40 million unfavorable impact from a tax-related item primarily related to an out-of-period correction and an $18 million after-tax gain from an interest rate hedge that benefited revenues in the prior year period. The market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization), after-tax, was a negative impact of $83 million for the first half of 2012 compared to a negative impact of $18 million for the prior year period. Loss from discontinued operations, net of tax, was $2 million for the six months ended June 30, 2012 compared to $75 million for the prior year period. Loss from discontinued operations, net of tax, for the prior year period included a $77 million after-tax charge related to previously disclosed legal expenses.

Net revenues decreased $80 million, or 2%, for the six months ended June 30, 2012 compared to the prior year period due to lower investment income from continued low interest rates and volatile equity markets. In addition, the prior year period included a $27 million gain from an interest rate hedge. Management and financial advice fees decreased $25 million, or 1%, for the six months ended June 30, 2012 compared to the prior year period due to lower asset-based fees driven by a decline in average AUM. Average AUM decreased $7.4 billion, or 1%, compared to the prior year period. See our discussion on the changes in AUM in our segment results of operations section below. Distribution fees decreased $15 million, or 2%, for the six months ended June 30, 2012 compared to the prior year period due to lower asset-based fees driven by a decline in average AUM and lower transactional revenues. Net investment income decreased $10 million, or 1%, compared to the prior year period reflecting a decrease in investment income on fixed maturity securities from continued low interest rates, partially offset by a $31 million increase in investment income of CIEs. Other revenues decreased $32 million, or 7%, compared to the prior year period due to a $40 million decrease in other revenues of CIEs and a $27 million gain on an interest rate hedge put in place in anticipation of issuing debt that was reclassified from accumulated other comprehensive income into earnings in the second quarter of 2011, partially offset by higher fees from variable annuity guarantees driven by higher volumes, as well as higher fee rates.

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Total expenses increased $94 million, or 2%, compared to the prior year period primarily due to the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization). Benefits, claims, losses and settlement expenses increased $100 million, or 13%, compared to the prior year period primarily due to the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC amortization), as well as higher reserves related to higher fees from variable annuity guarantees compared to the prior year period, partially offset by the impact of valuation model adjustments, a $9 million benefit from a life insurance reserve release in the second quarter of 2012 and lower reserves resulting from lower sales of immediate annuities with life contingencies. Benefits, claims, losses and settlement expenses in the first half of 2012 included an expense of $160 million for the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC amortization) compared to an expense of $34 million for the prior year period. Benefits, claims, losses and settlement expenses in the first half of 2012 included an $11 million benefit from the impact of valuation model adjustments compared to a $7 million benefit for the prior year period.

Amortization of DAC decreased $34 million, or 21%, compared to the prior year period primarily due to the DAC offset to the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC amortization). The DAC offset to the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC amortization) was a $31 million benefit in the first half of 2012 compared to a $6 million benefit in the prior year period.

Income Taxes

Our effective tax rate on income from continuing operations including income attributable to noncontrolling interests was 32.4% for the six months ended June 30, 2012, compared to 26.5% for the prior year period. Our effective tax rate on income from continuing operations excluding income attributable to noncontrolling interests was 30.0% for the six months ended June 30, 2012, compared to 25.0% for the prior year period. The significant increase in the effective tax rate for the first half of 2012 compared to the prior year period is primarily a result of a $32 million correction of tax related to securities lending activities. During the second quarter of 2012, we discovered we had received incomplete data from a third-party service provider for securities lending activities that resulted in the miscalculation of our dividend received deduction and foreign tax credit, which resulted in an understatement of taxes payable and an overstatement of reported earnings in prior periods. We have resolved the data issue and stopped the securities lending that negatively impacted our tax position.

Our operating effective tax rate was 31.1% for the six months ended June 30, 2012, compared to 25.8% for the prior year period. The following table presents a reconciliation of our operating effective tax rate:

	Six Months Ended June 30,
	2012						2011
	GAAP			Operating			GAAP			Operating
	(in millions)
Income from continuing operations before income tax provision	$	621		$	855		$	795		$	912
Less: Pretax loss attributable to noncontrolling interests	(49		)	—			(46		)	—
Income from continuing operations before income tax provision excluding CIEs	$	670		$	855		$	841		$	912

Income tax provision from continuing operations	$	201		$	266		$	210		$	235

Effective tax rate	32.4		%	31.1		%	26.5		%	25.8		%
Effective tax rate excluding noncontrolling interests	30.0		%	31.1		%	25.0		%	25.8		%

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Results of Operations by Segment for the Six Months Ended June 30, 2012 and 2011

The following table presents summary financial information by segment:

	Six Months Ended June 30,
	2012			2011
	(in millions)
Advice & Wealth Management
Net revenues	$	1,907		$	1,870
Expenses	1,702			1,663
Operating earnings	$	205		$	207
Asset Management
Net revenues	$	1,418		$	1,490
Expenses	1,157			1,208
Operating earnings	$	261		$	282
Annuities
Net revenues	$	1,256		$	1,308
Expenses	951			982
Operating earnings	$	305		$	326
Protection
Net revenues	$	1,050		$	1,038
Expenses	834			835
Operating earnings	$	216		$	203
Corporate & Other
Net revenues	$	15		$	16
Expenses	147			122
Operating earnings	$	(132	)	$	(106	)

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Advice & Wealth Management

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

	2012		2011
	(in billions)
Beginning balance	$	103.4	$	97.5
Net flows	5.5		5.1
Market appreciation and other	4.5		3.3
Ending balance	$	113.4	$	105.9

Average balance	$	110.0	$	102.2

Wrap account assets increased $10.0 billion, or 10%, during the six months ended June 30, 2012 due to net inflows of $5.5 billion and market appreciation and other of $4.5 billion. Average wrap account assets increased $7.8 billion, or 8%, to $110.0 billion for the first half of 2012 compared to the prior year period primarily due to net inflows. Wrap account assets increased $7.5 billion, or 7%, from the prior year period primarily reflecting net inflows of $7.7 billion.

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

	Six Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	842	$	794	$	48		6	%
Distribution fees	925		945		(20		)	(2	)
Net investment income	128		124		4			3
Other revenues	33		31		2			6
Total revenues	1,928		1,894		34			2
Banking and deposit interest expense	21		24		(3		)	(13	)
Total net revenues	1,907		1,870		37			2
Expenses
Distribution expenses	1,139		1,115		24			2
General and administrative expense	563		548		15			3
Total expenses	1,702		1,663		39			2
Operating earnings	$	205	$	207	$	(2	)	(1	)%

Our Advice & Wealth Management segment pretax operating earnings, which excludes net realized gains or losses, decreased $2 million, or 1%, to $205 million for the six months ended June 30, 2012 compared to $207 million for the prior year period due to a $21 million negative impact from low interest rates, lower transactional revenues, higher distribution expenses and increased spending on growth initiatives, largely offset by higher asset-based fees primarily due to wrap account net inflows and higher invested asset balances. Pretax operating margin was 10.7% for the six months ended June 30, 2012 compared to 11.1% for the prior year period.

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Net Revenues

Net revenues exclude net realized gains or losses. Net revenues increased $37 million, or 2%, to $1.9 billion for the six months ended June 30, 2012 driven by higher asset-based fees primarily due to wrap account net inflows, as well as higher invested asset balances, partially offset by the impact of lower asset earnings rates on cash products and lower transactional revenues related to volatile markets and lower sales of variable annuities. Operating net revenue per branded advisor was $195,000 for the first half of 2012, up 1% from the prior year period. Total branded advisors increased 1% to 9,803 at June 30, 2012 compared to 9,663 at June 30, 2011.

Management and financial advice fees increased $48 million, or 6%, to $842 million for the six months ended June 30, 2012 compared to $794 million for the prior year period driven by growth in average wrap account assets. Average wrap account assets increased $7.8 billion, or 8%, to $110.0 billion for the first half of 2012 compared to the prior year period primarily due to net inflows. See our discussion on the changes in wrap account assets above.

Distribution fees decreased $20 million, or 2%, to $925 million for the six months ended June 30, 2012 compared to $945 million for the prior year period driven by lower transactional volumes related to volatile markets and lower sales of variable annuities.

Expenses

Total expenses increased $39 million, or 2%, to $1.7 billion for the six months ended June 30, 2012 primarily due to an increase in distribution expenses, as well as increased spending on growth initiatives.

Distribution expenses increased $24 million, or 2%, to $1.1 billion for the six months ended June 30, 2012 primarily due to higher advisor compensation from business growth.

General and administrative expense increased $15 million, or 3%, to $563 million for the six months ended June 30, 2012 compared to $548 million for the prior year period primarily due to an increase in investment spending, including costs to recruit experienced advisors and transition advisors to a new brokerage technology platform.

Asset Management

In aggregate, we voluntarily waived fees to the Funds of $5.7 million and $6.6 million for the six months ended June 30, 2012 and 2011, respectively. See our discussion on fee waivers within our Asset Management Results of Operations for the three months ended June 30, 2012.

The following table presents the ending balances and average managed assets:

												Average
	June 30,											Six Months Ended June 30,
	2012			2011			Change					2012			2011			Change
	(in billions)											(in billions)
Columbia managed assets	$	331.9		$	362.0		$	(30.1	)	(8	)%	$	334.0		$	360.2		$	(26.2	)	(7	)%
Threadneedle managed assets	116.6			110.4			6.2			6		117.8			107.6			10.2			9
Less: Sub-advised eliminations	(2.7		)	(5.2		)	2.5			48		(3.7		)	(4.6		)	0.9			20
Total managed assets	$	445.8		$	467.2		$	(21.4	)	(5	)%	$	448.1		$	463.2		$	(15.1	)	(3	)%

The following table presents managed asset net flows:

	Six Months Ended June 30,
	2012			2011			Change
	(in billions)
Columbia managed asset net flows	$	(10.5	)	$	(3.3	)	$	(7.2	)	NM
Threadneedle managed asset net flows (1)	(2.2		)	(1.3		)	(0.9		)	(69	)%
Less: Sub-advised eliminations (1)	1.4			(0.9		)	2.3			NM
Total managed asset net flows	$	(11.3	)	$	(5.5	)	$	(5.8	)	NM

NM Not Meaningful.

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The following tables present the changes in Columbia and Threadneedle managed assets:

	Six Months Ended June 30,
	2012			2011
	(in billions)
Columbia Managed Assets Rollforward
Retail Funds
Beginning assets	$	204.8		$	218.5
Mutual fund inflows	19.9			21.1
Mutual fund outflows	(29.1		)	(24.6		)
Net VP/VIT fund flows	0.2			0.8
Net new flows	(9.0		)	(2.7		)
Reinvested dividends	2.4			2.4
Net flows	(6.6		)	(0.3		)
Distributions	(2.8		)	(3.1		)
Market appreciation and other (1)	16.0			10.3
Total ending assets	211.4			225.4

Institutional
Beginning assets	73.3			89.4
Inflows	7.9			9.5
Outflows	(11.2		)	(11.8		)
Net flows	(3.3		)	(2.3		)
Market appreciation and other	2.8			2.3
Total ending assets	72.8			89.4

Alternative
Beginning assets	8.1			10.0
Inflows	0.3			0.3
Outflows	(0.9		)	(1.0		)
Net flows	(0.6		)	(0.7		)
Market appreciation and other	0.3			0.1
Total ending assets	7.8			9.4
Affiliated General Account Assets	40.1			38.1
Other and Eliminations	(0.2		)	(0.3		)
Total Columbia managed assets	$	331.9		$	362.0
Total Columbia net flows	$	(10.5	)	$	(3.3	)

(1) Included in Market appreciation and other for retail funds in the 2nd quarter of 2012 are $3B due to the transfer of Active Diversified Portfolio assets from non-proprietary to proprietary funds.

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	Six Months Ended June 30,
	2012			2011
	(in billions)
Threadneedle Managed Assets Rollforward
Retail Funds
Beginning assets	$	31.8		$	33.4
Mutual fund inflows	7.8			9.3
Mutual fund outflows (2)	(7.9		)	(8.0		)
Net new flows	(0.1		)	1.3
Reinvested dividends	—			0.1
Net flows	(0.1		)	1.4
Distributions	(0.2		)	(0.2		)
Market appreciation (depreciation)	1.2			0.8
Foreign currency translation (1)	0.4			0.9
Other	0.2			0.3
Total ending assets	33.3			36.6

Institutional
Beginning assets	80.6			70.9
Inflows	4.6			3.9
Outflows	(6.6		)	(6.4		)
Net flows	(2.0		)	(2.5		)
Market appreciation (depreciation)	1.5			1.1
Foreign currency translation (1)	0.8			2.0
Other	1.4			1.0
Total ending assets	82.3			72.5

Alternative
Beginning assets	1.1			1.3
Inflows	—			0.1
Outflows	(0.1		)	(0.3		)
Net flows	(0.1		)	(0.2		)
Market depreciation	—			—
Foreign currency translation (1)	—			—
Other	—			0.2
Total ending assets	1.0			1.3

Total Threadneedle managed assets	$	116.6		$	110.4

Total Threadneedle net flows	$	(2.2	)	$	(1.3	)

(1) Amounts represent British Pound to US dollar conversion.

(2) Retail fund outflows in Q2 2012 include $1.2 billion due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.

Total segment AUM increased $10.3 billion, or 2%, to $445.8 billion as of June 30, 2012 from $435.5 billion at December 31, 2011, due to an increase in both Columbia and Threadneedle managed assets. Columbia managed assets increased $5.8 billion, or 2%, to $331.9 billion as of June 30, 2012 from $326.1 billion at December 31, 2011, primarily due to an increase in retail funds. Columbia retail funds increased $6.6 billion, or 3%, during the first half of 2012 due to market appreciation and other of $16.0 billion, partially offset by net outflows of $6.6 billion and distributions of $2.8 billion. Columbia retail fund net outflows of $6.6 billion in the first half of 2012 included $4.2 billion of previously announced net outflows in former parent company portfolios and $2.1 billion of net outflows in New York 529 program assets. Columbia institutional AUM decreased $0.5 billion, or 1%, during the first half of 2012 due to net outflows of $3.3 billion, partially offset by market appreciation and other of $2.8 billion. Columbia institutional net outflows of $3.3 billion in the first half of 2012 included $1.5 billion of previously announced net outflows in former parent company portfolios. Columbia continued to experience net outflows from a third-party subadvisor and in a portfolio where there was a manager retirement.

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Threadneedle managed assets increased $3.0 billion, or 3%, to $116.6 billion as of June 30, 2012 from $113.6 billion at December 31, 2011 due to increases in both retail and institutional AUM. Threadneedle retail funds increased $1.5 billion, or 5%, during the first half of 2012 primarily due to market appreciation of $1.2 billion. Threadneedle institutional AUM increased $1.7 billion, or 2%, during the first half of 2012 due to market appreciation of $1.5 billion, a positive impact from foreign currency translation of $0.8 billion and other of $1.4 billion, partially offset by net outflows of $2.0 billion. Threadneedle institutional net outflows of $2.0 billion included $1.5 billion of outflows from a closed book of insurance assets.

Total segment AUM declined $21.4 billion, or 5%, from the prior year period primarily reflecting net outflows of $12.7 billion and distributions of $6.6 billion. Average segment AUM decreased 3% for the first half of 2012 compared to the prior year period primarily due to net outflows and distributions.

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

	Six Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	1,178	$	1,247	$	(69	)	(6	)%
Distribution fees	222		238		(16		)	(7	)
Net investment income	7		4		3			75
Other revenues	12		2		10			NM
Total revenues	1,419		1,491		(72		)	(5	)
Banking and deposit interest expense	1		1		—			—
Total net revenues	1,418		1,490		(72		)	(5	)
Expenses
Distribution expenses	546		552		(6		)	(1	)
Amortization of deferred acquisition costs	8		10		(2		)	(20	)
General and administrative expense	603		646		(43		)	(7	)
Total expenses	1,157		1,208		(51		)	(4	)
Operating earnings	$	261	$	282	$	(21	)	(7	)%

NM Not Meaningful.

Our Asset Management segment pretax operating earnings, which exclude net realized gains or losses and integration charges, decreased $21 million, or 7%, to $261 million for the six months ended June 30, 2012 compared to $282 million for the prior year period reflecting a decline in assets under management, partially offset by continued expense controls. Pretax operating margin was 18.4% for the six months ended June 30, 2012 compared to 18.9% for the prior year period.

Net Revenues

Net revenues decreased $72 million, or 5%, to $1.4 billion for the six months ended June 30, 2012 compared to $1.5 billion for the prior year period primarily driven by lower average assets under management.

Management and financial advice fees decreased $69 million, or 6%, to $1.2 billion for the six months ended June 30, 2012 driven by a 3% decline in average assets under management. See our discussion above on the changes in assets under management.

Distribution fees decreased $16 million, or 7%, to $222 million for the six months ended June 30, 2012 compared to $238 million for the prior year period driven by a 3% decline in average assets under management.

Expenses

Total expenses, which exclude integration charges, decreased $51 million, or 4%, to $1.2 billion for the six months ended June 30, 2012 primarily due to a decrease in general and administrative expense.

General and administrative expense, which excludes integration charges, decreased $43 million, or 7%, to $603 million for the six months ended June 30, 2012 compared to $646 million for the prior year period primarily due to continued expense controls, including lower compensation-related expense, the impact of the change in Threadneedle’s estimated market valuation attributable to its employee incentive compensation program, and Threadneedle’s partial refund of the 2011 industry-wide Financial Services Authority levy. General and administrative expense in the first half of 2012 included a benefit of $4 million from the Threadneedle-related items compared to an expense of $17 million in the prior year period.

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Annuities

The following table presents the results of operations of our Annuities segment on an operating basis:

	Six Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	319	$	316	$	3		1	%
Distribution fees	154		156		(2		)	(1	)
Net investment income	580		631		(51		)	(8	)
Premiums	60		83		(23		)	(28	)
Other revenues	143		122		21			17
Total revenues	1,256		1,308		(52		)	(4	)
Banking and deposit interest expense	—		—		—			—
Total net revenues	1,256		1,308		(52		)	(4	)
Expenses
Distribution expenses	197		200		(3		)	(2	)
Interest credited to fixed accounts	345		350		(5		)	(1	)
Benefits, claims, losses and settlement expenses	199		216		(17		)	(8	)
Amortization of deferred acquisition costs	91		102		(11		)	(11	)
Interest and debt expense	1		—		1			NM
General and administrative expense	118		114		4			4
Total expenses	951		982		(31		)	(3	)
Operating earnings	$	305	$	326	$	(21	)	(6	)%

NM Not Meaningful.

Our Annuities segment pretax operating income, which excludes net realized gains or losses and the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization, decreased $21 million, or 6%, to $305 million for the six months ended June 30, 2012 compared to $326 million for the prior year period primarily due to a decline in net investment income reflecting dividends paid to the holding company in 2011 and low interest rates impacting both the variable and fixed businesses and a net $6 million expense related to projected insurance industry guaranty fund assessments, partially offset by higher fees from variable annuity guarantees and lower amortization of DAC. The decrease in premiums from lower sales of immediate annuities with life contingencies was mostly offset by lower related expenses.

Net Revenues

Net revenues, which exclude net realized gains or losses, decreased $52 million, or 4%, to $1.3 billion for the six months ended June 30, 2012 primarily due to decreases in net investment income and premiums, partially offset by higher fees from variable annuity guarantees.

Net investment income, which excludes net realized gains or losses, decreased $51 million, or 8%, to $580 million for the six months ended June 30, 2012 compared to $631 million for the prior year period reflecting dividends paid to the holding company in 2011 and low interest rates.

Premiums decreased $23 million, or 28%, to $60 million for the six months ended June 30, 2012 compared to $83 million for the prior year period due to lower sales of immediate annuities with life contingencies.

Other revenues increased $21 million, or 17%, to $143 million for the six months ended June 30, 2012 compared to $122 million for the prior year period due to higher fees from variable annuity guarantees primarily driven by higher volumes, as well as higher fee rates.

Expenses

Total expenses, which exclude the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization, decreased $31 million, or 3%, to $951 million for the six months ended June 30, 2012 compared to $982 million for the prior year period primarily due to decreases in benefits, claims, losses and settlement expenses and amortization of DAC.

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Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC amortization, decreased $17 million, or 8%, to $199 million for the six months ended June 30, 2012 compared to $216 million for the prior year period due to lower reserves resulting from lower sales of immediate annuities with life contingencies, as well as valuation model adjustments, partially offset by higher reserves related to higher fees from variable annuity guarantees. The impact of valuation model adjustments was an $11 million benefit in the first half of 2012 compared to a $7 million benefit for the prior year period.

Amortization of DAC, which excludes the DAC offset to the market impact on variable annuity guaranteed living benefits, decreased $11 million, or 11%, to $91 million for the six months ended June 30, 2012 compared to $102 million for the prior year period primarily due to improved policyholder persistency.

Protection

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

	Six Months Ended June 30,
	2012		2011		Change
	(in millions)
Revenues
Management and financial advice fees	$	27	$	29	$	(2	)	(7	)%
Distribution fees	46		46		—			—
Net investment income	212		216		(4		)	(2	)
Premiums	551		529		22			4
Other revenues	215		218		(3		)	(1	)
Total revenues	1,051		1,038		13			1
Banking and deposit interest expense	1		—		1			NM
Total net revenues	1,050		1,038		12			1
Expenses
Distribution expenses	33		31		2			6
Interest credited to fixed accounts	70		70		—			—
Benefits, claims, losses and settlement expenses	529		538		(9		)	(2	)
Amortization of deferred acquisition costs	62		58		4			7
General and administrative expense	140		138		2			1
Total expenses	834		835		(1		)	—
Operating earnings	$	216	$	203	$	13		6	%

NM Not Meaningful.

Our Protection segment pretax operating income, which excludes net realized gains or losses, increased $13 million, or 6%, to $216 million for the six months ended June 30, 2012, compared to $203 million for the prior year period driven by favorable claims in life and disability income insurance, an improved auto and home combined ratio and a $9 million benefit from a life insurance reserve release. These benefits were partially offset by lower long term care earnings and a modest decline in life insurance in force.

Net Revenues

Net revenues, which exclude net realized gains or losses, increased $12 million, or 1%, to $1.1 billion for the six months ended June 30, 2012 due to higher premiums, partially offset by a decline in life and health revenues resulting from a modest decline in life insurance in force. Life insurance in force declined 1% to $190.7 billion compared to the prior year period. Premiums increased $22 million, or 4%, to $551 million for the six months ended June 30, 2012 compared to $529 million for the prior year period due to growth in Auto and Home premiums driven by higher volumes. Auto and Home policy counts increased 7% period-over-period.

Expenses

Total expenses were essentially flat at $834 million. Benefits, claims, losses and settlement expenses decreased $9 million, or 2%, to $529 million for the six months ended June 30, 2012 compared to $538 million for the prior year period due to a $9 million benefit from a life insurance reserve release and lower life and disability income claims, partially offset by higher long term care claims compared to the prior year period. An increase in benefits, claims, losses and settlement expenses related to Auto and Home premium growth was offset by higher auto liability reserves in the prior year period reflecting elevated reserve levels based on late 2010 experience.

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Corporate & Other

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

	Six Months Ended June 30,
	2012			2011			Change
	(in millions)
Revenues
Net investment income (loss)	$	8		$	(13	)	$	21		NM
Other revenues	7			29			(22		)	(76	)%
Total revenues	15			16			(1		)	(6	)
Banking and deposit interest expense	—			—			—			—
Total net revenues	15			16			(1		)	(6	)
Expenses
Distribution expenses	—			1			(1		)	NM
Interest and debt expense	46			49			(3		)	(6	)
General and administrative expense	101			72			29			40
Total expenses	147			122			25			20
Operating loss	$	(132	)	$	(106	)	$	(26	)	(25	)%

NM Not Meaningful.

Our Corporate & Other segment pretax operating loss excludes net realized gains or losses, the impact of consolidating CIEs and restructuring charges. Our Corporate & Other segment pretax operating loss was $132 million for the six months ended June 30, 2012 compared to $106 million for the prior year period.

Net revenues, which exclude revenues or losses of CIEs and net realized gains or losses, decreased $1 million, or 6%, to $15 million for the six months ended June 30, 2012 compared to $16 million for the prior year period due to a decrease in other revenues, partially offset by an increase in net investment income.

Net investment income, which excludes net investment income or loss of the CIEs and net realized gains or losses, was $8 million for the six months ended June 30, 2012 compared to a loss of $13 million for the prior year period reflecting dividends paid to the holding company in 2011.

Other revenues decreased $22 million, or 76%, to $7 million for the six months ended June 30, 2012 compared to $29 million for the prior year period due to a $27 million gain on an interest rate hedge put in place in anticipation of issuing debt that was reclassified from accumulated other comprehensive income into earnings in the second quarter of 2011.

Total expenses, which exclude expenses of CIEs and restructuring charges, increased $25 million, or 20%, to $147 million for the six months ended June 30, 2012 compared to $122 million for the prior year period due to an increase in general and administrative expense.

General and administrative expense, which excludes expenses of the CIEs and restructuring charges, increased $29 million, or 40%, to $101 million for the six months ended June 30, 2012 compared to $72 million for the prior year period primarily due to higher investment spending, including higher advertising and technology-related expenses, higher severance and an $8 million expense from a tax-related item in the second quarter of 2012.

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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 annuities, banking, brokerage client cash balances and face amount certificate products and UL insurance products, the value of DAC and DSIC assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits.

The guaranteed benefits associated with our variable annuities are guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these guaranteed benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying investment assets.

We continue to utilize 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 index options across the term structure, interest rate swaps and swaptions, total return swaps and futures to manage the risk exposures. The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary.

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 staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuity riders, equity indexed annuities, stock market certificates, indexed universal life insurance and the associated hedge assets, we assumed 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 these hypothetical market movements as of June 30, 2012:

	Equity Price Exposure to Pretax Income
Equity Price Decline 10%	Before Hedge Impact			Hedge Impact			Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(179	)	$	4		$	(175	)
DAC and DSIC amortization (2) (3)	(90		)	—			(90		)
Variable annuity riders:
GMDB and GMIB (3)	(42		)	—			(42		)
GMWB	(129		)	106			(23		)
GMAB	(52		)	42			(10		)
DAC and DSIC amortization (4)	N/A			N/A			10
Total variable annuity riders	(223		)	148			(65		)
Equity indexed annuities	1			(1		)	—
Stock market certificates	4			(4		)	—
Indexed universal life insurance	1			(1		)	—
Total	$	(486	)	$	146		$	(330	)

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	Interest Rate Exposure to Pretax Income
Interest Rate Increase 100 Basis Points	Before Hedge Impact			Hedge Impact			Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(39	)	$	—		$	(39	)
Variable annuity riders:
GMWB	577			(707		)	(130		)
GMAB	45			(52		)	(7		)
DAC and DSIC amortization (4)	N/A			N/A			32
Total variable annuity riders	622			(759		)	(105		)
Fixed annuities, fixed portion of variable annuities and fixed insurance products	73			—			73
Brokerage client cash balances	85			—			85
Flexible savings and other fixed rate savings products	39			—			39
Indexed universal life insurance	4			—			4
Total	$	784		$	(759	)	$	57

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 on DAC and DSIC amortization resulting from lower projected profits, we have not changed our assumed equity asset growth rates. This is a significantly more conservative estimate than if we assumed management follows its mean reversion guideline and increased near-term rates to recover the drop in equity values over a five-year period. We make this same conservative assumption in estimating the impact from GMDB and GMIB riders.

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

The above results compare to an estimated negative net impact to pretax income of $319 million related to a 10% equity price decline and an estimated positive net impact to pretax income of $61 million related to a 100 basis point increase in interest rates as of December 31, 2011.

Net impacts shown in the above table from GMWB and GMAB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with key policyholder behavior assumptions loaded to provide risk margins and with discount rates increased to reflect a current market estimate of our risk of nonperformance specific to these liabilities. For variable annuity riders introduced prior to mid-2009, management elected to hedge based on best estimate policyholder behavior assumptions. For riders issued since mid-2009, management has been hedging on a basis that includes risk margins related to policyholder behavior. The nonperformance spread risk is not hedged.

Actual results could 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%, that management does not increase assumed equity asset growth rates to anticipate recovery of the drop in equity values when valuing DAC, DSIC and GMDB and GMIB liability values 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 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.

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Fair Value Measurements

We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives, properties held by our consolidated property funds, and most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions. Companies are not permitted to use market prices that are 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 10 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, 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 by updating certain contractholder assumptions, adding explicit margins to provide for profit, risk and expenses, 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 broker quotes for credit default swaps that are 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 LIBOR swap curve as of June 30, 2012. 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 LIBOR swap curve, the reduction to net income would be approximately $265 million, net of DAC and DSIC amortization and income taxes, based on June 30, 2012 credit spreads.

Liquidity and Capital Resources

Overview

We maintained substantial liquidity during the six months ended June 30, 2012. At June 30, 2012, we had $2.7 billion in cash and cash equivalents compared to $2.8 billion at December 31, 2011. We have additional liquidity available through an unsecured revolving credit facility for up to $500 million that expires in November 2015. Under the terms of the underlying credit agreement, we can increase this facility to $750 million upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. We have had no borrowings under this credit facility and had $2 million of outstanding letters of credit at June 30, 2012. Our junior subordinated notes due 2066 and credit facility contain various administrative, reporting, legal and financial covenants. We were in compliance with all such covenants at both June 30, 2012 and December 31, 2011.

Our subsidiaries, Ameriprise Bank, FSB and RiverSource Life Insurance Company (“RiverSource Life”) are members of the Federal Home Loan Bank (“FHLB”) of Des Moines, which provides these subsidiaries with access to collateralized borrowings. As of June 30, 2012, we had no borrowings from the FHLB. We enter into repurchase agreements to reduce reinvestment risk from higher levels of expected annuity net cash flows. Repurchase agreements allow us to receive cash to reinvest in longer-duration assets, while paying back the short-term debt with cash flows generated by the fixed income portfolio. The balance of repurchase agreements at June 30, 2012 was $498 million, which is collateralized with agency residential mortgage backed securities and commercial mortgage backed securities from our investment portfolio. We believe cash flows from operating activities, available cash balances and our availability of revolver borrowings will be sufficient to fund our operating liquidity needs.

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 Corporation, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, Inc. (“AFSI”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc. (“AEIS”), our Auto and Home insurance subsidiary, IDS Property Casualty Insurance Company (“IDS Property Casualty”), doing business as Ameriprise Auto & Home Insurance, our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment Advisers, LLC, and Threadneedle. The payment of dividends by many of our subsidiaries is restricted and certain of our subsidiaries are subject to regulatory capital requirements.

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

	Actual Capital				Regulatory Capital Requirements
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
	(in millions)
RiverSource Life(1)(2)	$	3,171	$	3,058	N/A		$	619
RiverSource Life of NY(1)(2)	260		254		N/A		41
IDS Property Casualty(1)(3)	457		431		$	154	148
Ameriprise Insurance Company(1)(3)	42		41		2		2
ACC(4)(5)	162		164		148		151
Threadneedle(6)	194		218		156		170
Ameriprise Bank, FSB(7)	435		402		420		391
AFSI(3)(4)	135		115		2		2
Ameriprise Captive Insurance Company(3)	48		43		18		16
Ameriprise Trust Company(3)	46		44		43		41
AEIS(3)(4)	106		122		40		42
RiverSource Distributors, Inc.(3)(4)	29		27		#		#
Columbia Management Investment Distributors, Inc.(3)(4)	35		30		#		#

NA Not applicable.

# Amounts are less than $1 million.

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

(2) Regulatory capital requirement is based on the statutory risk-based capital filing.

(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of June 30, 2012 and December 31, 2011.

(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. The actual capital and the regulatory capital requirements at June 30, 2012 represent management’s assessment at December 31, 2011 of the risk based requirements, as specified by FSA regulations and submitted to the FSA in March 2012.

(7) Ameriprise Bank is required to maintain capital in compliance with the Office of the Comptroller of Currency (“OCC”) regulations and policies.

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 dividend strategy for payments to our company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries.

During the six months ended June 30, 2012, the parent holding company received cash dividends or a return of capital from its subsidiaries of $761 million (including $550 million from RiverSource Life) and contributed cash to its subsidiaries of $41 million. During the six months ended June 30, 2011, the parent holding company received cash dividends or a return of capital from its subsidiaries of $841 million (including $600 million from RiverSource Life) and contributed cash to its subsidiaries of $87 million.

Dividends Paid to Shareholders and Share Repurchases

We paid regular quarterly dividends to our shareholders totaling $142 million and $103 million for the six months ended June 30, 2012 and 2011, respectively. On July 25, 2012, our Board of Directors declared a quarterly dividend of $0.35 per common share. The dividend will be paid on August 17, 2012 to our shareholders of record at the close of business on August 3, 2012.

On June 15, 2011, we announced that our Board of Directors authorized an expenditure of up to $2.0 billion for the repurchase of shares of our common stock through June 28, 2013. 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 six months ended June 30, 2012, we repurchased a total of 12.4 million shares of our common stock at an average price of $52.47 per share. As of June 30, 2012, we had $822 million remaining under our share repurchase authorization.

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Cash Flows

Cash flows of CIEs 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. As such, the operating, investing and financing cash flows of the CIEs have no impact to the change in cash and cash equivalents.

Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2012 decreased $190 million to $468 million compared to $658 million for the six months ended June 30, 2011. In the first half of 2012, operating cash decreased $372 million due to a decrease in net cash collateral held related to derivative instruments compared to an increase of $51 million in the prior year period due to the change in market value of our net over-the-counter derivatives after master netting arrangements. See Note 11 to our Consolidated Financial Statements for further information on our derivative instruments and collateral arrangements. These decreases were partially offset by a $169 million increase in cash due to lower net purchases of investment properties of CIEs and a $92 million increase in cash from lower taxes paid, net compared to the prior year period due to a tax refund received in the first half of 2012 resulting from an overpayment of taxes in 2011.

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 provided by investing activities was $173 million for the six months ended June 30, 2012 compared to net cash used in investing activities of $596 million for the six months ended June 30, 2011. The increase in cash of $769 million compared to the prior year period was primarily due to a $1.7 billion decrease in purchases of Available-for-Sale securities, partially offset by a $1.2 billion decrease in proceeds from sales and maturities, sinking fund payments and calls of Available-for-Sale securities, as well as a $215 million increase in cash from changes in consumer banking loans and credit card receivables, net primarily due to lower purchases of consumer bank loans compared to the prior year period.

Financing Activities

Net cash used in financing activities increased $329 million to $703 million for the six months ended June 30, 2012 compared to $374 million for the six months ended June 30, 2011, primarily due to a $515 million decrease in cash from changes in other banking deposits, partially offset by a $218 million increase in cash from changes in investment certificates and banking time deposits primarily driven by lower maturities and cash surrenders of investment certificates compared to the prior year period. In the 2011 period, banking deposits were higher to support growth in consumer bank loans. Net cash inflows related to policyholder and contractholder account values were $104 million for the first half of 2012 compared to net cash outflows of $145 million for the prior year period driven by lower fixed annuity net cash outflows and higher net cash inflows related to our universal life products. Net cash used in financing activities related to CIEs was $198 million for the first half of 2012 compared to net cash provided by financing activities of $6 million in the prior year period, primarily driven by higher distributions to noncontrolling interests. A decrease in cash of $115 million from the change in repurchase agreements compared to the period year period was offset by a $129 million increase in cash due to lower repurchases of our common stock compared to the prior year period. In addition, dividends paid to shareholders increased $36 million for the first half of 2012 compared to the prior year period.

Contractual Commitments

There have been no material changes to our contractual obligations disclosed in our 2011 10-K.

Off-Balance Sheet Arrangements

There have been no material changes in our off-balance sheet arrangements disclosed in our 2011 10-K.

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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, acquisition integration, general and administrative costs, consolidated tax rate, return of capital to shareholders, and excess capital position and financial flexibility to capture additional growth opportunities;

· 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 pace,” “project” 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:

· conditions in the interest rate, credit default, equity market and foreign exchange environments, including changes in valuations, liquidity and volatility;

· changes in and adoptions of relevant accounting standards, as well as changes in the litigation and regulatory environment, including ongoing legal proceedings and regulatory actions, the frequency and extent of legal claims threatened or initiated by clients, other persons and regulators, and developments in regulation and legislation, including the rules and regulations implemented or to be implemented in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act;

· investment management performance and consumer acceptance of the Company’s products;

· effects of competition in the financial services industry and changes in product distribution mix and distribution channels;

· changes to the Company’s reputation that may arise from employee or affiliated advisor misconduct, legal or regulatory actions, improper management of conflicts of interest or otherwise;

· the Company’s capital structure, including indebtedness, limitations on subsidiaries to pay dividends, and the extent, manner, terms and timing of any share or debt repurchases management may effect as well as the opinions of rating agencies and other analysts and the reactions of market participants or the Company’s regulators, advisors, distribution partners or customers in response to any change or prospect of change in any such opinion;

· changes to the availability of liquidity and the Company’s credit capacity that may arise due to shifts in market conditions, the Company’s credit ratings and the overall availability of credit;

· risks of default, capacity constraint or repricing by issuers or guarantors of investments the Company owns or by counterparties to hedge, derivative, insurance or reinsurance arrangements or by manufacturers of products the Company distributes, experience deviations from the Company’s assumptions regarding such risks, the evaluations or the prospect of changes in evaluations of any such third parties published by rating agencies or other analysts, and the reactions of other market participants or the Company’s regulators, advisors, distribution partners or customers in response to any such evaluation or prospect of changes in evaluation;

· with respect to VIE pooled investments the Company has determined do not require consolidation under GAAP, the Company’s assessment that it does not have the power over the VIE or hold a variable interest in these investments for which the Company has the potential to receive significant benefits or to absorb significant losses;

· experience deviations from the Company’s assumptions regarding morbidity, mortality and persistency in certain annuity and insurance products, or from assumptions regarding market returns assumed in valuing or unlocking DAC and DSIC or market volatility underlying the Company’s valuation and hedging of guaranteed living benefit annuity riders; or from assumptions regarding anticipated claims and losses relating to the Company’s automobile and home insurance products;

· changes in capital requirements that may be indicated, required or advised by regulators or rating agencies;

· the impacts of the Company’s efforts to improve distribution economics and to grow third-party distribution of its products;

· the Company’s ability to pursue and complete strategic transactions and initiatives, including acquisitions, divestitures, joint ventures and the development of new products and services;

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· the Company’s ability to realize the financial, operating and business fundamental benefits or to obtain regulatory approvals regarding integrations we plan for the acquisitions we have completed or may pursue and contract to complete in the future, as well as the amount and timing of integration expenses;

· the ability and timing to realize savings and other benefits from re-engineering and tax planning;

· changes in the capital markets and competitive environments induced or resulting from the partial or total ownership or other support by central governments of certain financial services firms or financial assets; and

· general economic and political factors, including consumer confidence in the economy, the ability and inclination of consumers generally to invest as well as their ability and inclination to invest in financial instruments and products other than cash and cash equivalents, the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation and changes therein, including tax laws, tax treaties, fiscal and central government treasury policy, and policies regarding the financial services industry and publicly-held firms, and regulatory rulings and pronouncements.

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 2011 10-K.

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 Annual Report on Form 10-K for 2011 filed with the SEC on February 24, 2012.

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 June 30, 2012.

Changes in Internal Control over Financial Reporting

There have not been any changes in 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.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 13 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 2011 10-K; however, the risk factor relating to system interruptions and operating errors is updated as set forth below:

Protection from system interruptions and operating errors is important to our business. If we experience a sustained interruption to our telecommunications or data processing systems, or other failure in operational execution, it could harm our business.

System or network interruptions could delay and disrupt our ability to develop, deliver or maintain our products and services, causing harm to our business and reputation and resulting in loss of affiliated advisors, clients or revenue. Interruptions could be caused by operational failures arising from employee or advisor error or malfeasance, interference by third parties, including hackers, our implementation of new technology, as well from our maintenance of existing technology. Our financial, accounting, data processing or other operating systems and facilities may fail to operate or report data properly or become disabled as a result of events that are wholly or partially beyond our control, adversely affecting our ability to process transactions or provide products and services to our clients. These interruptions can include fires, floods, earthquakes and other natural disasters, power losses, equipment failures, failures of internal or vendor software or systems and other events beyond our control. Further, we face the risk of operational failure (including, without limitation, failure caused by an inaccuracy, untimeliness or other deficiency in data reporting), termination or capacity constraints of any of the clearing agents, exchanges, clearing houses or other financial intermediaries that we use to facilitate or are component providers to our securities transactions and other product manufacturing and distribution activities. These risks are heightened by our deployment in response to both investor interest and evolution in the financial markets of increasingly sophisticated products, such as those which incorporate automatic asset re-allocation, long/short trading strategies or multiple portfolios or funds, and business-driven hedging, compliance and other risk management or investment or financial management strategies. Any such failure, termination or constraint could adversely impact our ability to effect transactions, service our clients, manage our exposure to risk, or otherwise achieve desired outcomes. For example, in the second quarter of fiscal 2012, our results were unfavorably impacted from a tax-related item that resulted from our discovery that we had received incomplete data from a third-party service provider for securities lending activities that resulted in the miscalculation of our dividend received deduction and foreign tax credit, which resulted in an understatement of taxes payable and an overstatement of reported earnings in prior periods.

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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 second quarter of 2012:

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs(1)	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
April 1 to April 30, 2012
Share repurchase program(1)	1,084,767	$	54.40	1,084,767	$	1,111,827,338
Employee transactions(2)	54	$	56.68	N/A	N/A

May 1 to May 31, 2012
Share repurchase program(1)	3,246,767	$	49.42	3,246,767	$	951,384,746
Employee transactions(2)	16,538	$	52.80	N/A	N/A

June 1 to June 30, 2012
Share repurchase program(1)	2,673,176	$	48.59	2,673,176	$	821,506,182
Employee transactions(2)	189	$	45.81	N/A	N/A

Totals
Share repurchase program	7,004,710	$	49.87	7,004,710
Employee transactions	16,781	$	52.74	N/A
	7,021,491			7,004,710

N/A Not applicable.

(1) On June 15, 2011, we announced that our board of directors authorized us to repurchase up to $2.0 billion worth of our common stock through June 28, 2013. 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) 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 shares withheld shall be the closing price of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs.

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.

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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: August 8, 2012	By	/s/ Walter S. Berman
		Walter S. Berman
		Executive Vice President and
		Chief Financial Officer


Date: August 8, 2012	By	/s/ David K. Stewart
		David K. Stewart
		Senior Vice President and
		Controller
		(Principal Accounting Officer)

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EXHIBIT INDEX

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 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 April 30, 2010).

3.2		Amended and Restated Bylaws of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, File No. 1-32525, filed on April 26, 2012).

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 June 30, 2012, formatted in XBRL: (i) Consolidated Statements of Operations for the three months and six months ended June 30, 2012 and 2011; (ii) Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2012 and 2011; (iii) Consolidated Balance Sheets at June 30, 2012 and December 31, 2011; (iv) Consolidated Statements of Equity for the six months ended June 30, 2012 and 2011; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011; and (vi) Notes to the Consolidated Financial Statements.

E-1