**UNITEDSTATESSECURITIES 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, 2007**                                              |
| ** ** |   | ** **                                                                                     |
| ** ** |   | **or**                                                                                         |
| ** ** |   | ** **                                                                                     |
| **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 number 333-114888**

**RIVERSOURCELIFE INSURANCE COMPANY**

(Exact name ofregistrant as specified in its charter)

| **Minnesota**                                               |   | **41-0823832**                        |
|-------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of                            |   | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)                             |   |                                  |
|                                                        |   |                                  |
| **55  Ameriprise Financial Center, Minneapolis, Minnesota** |   | **55474**                             |
| (Address of  principal executive offices)                   |   | (Zip Code)                            |

Registrant’stelephone number, including area code**                     (612)671-3131**

**NotApplicable**

(Former name, former address and former fiscal year,if changed since last report)

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.

Yes         x           No           o

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, or a non-accelerated filer.  

See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o |   | Accelerated  filer o |   | Non-accelerated filer x |
|---------------------------|--------|----------------------|--------|-------------------------|

 

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

Yes         o            No           x

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

| **Class**                               |   | **Outstanding  at August 7, 2007** |
|-----------------------------------------|--------|------------------------------------|
| Common Stock  (par value $30 per share) |   | 100,000 shares                     |

 

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONSH(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THEREDUCED DISCLOSURE FORMAT.

 

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**RIVERSOURCE LIFE INSURANCE COMPANY**

**FORM 10-Q**

**INDEX**
| ** **   | ** **                 | **Page No.**                                                                                         |
|--------------|----------------------------|------------------------------------------------------------------------------------------------------|
| **Part I.**  | **Financial Information:** | ** **                                                                                           |
|         | Item 1.                    | Financial Statements                                                                                 |   |
|         |                       | Consolidated Balance  Sheets – June 30, 2007 and December 31, 2006                              | 1 |
|         |                       | Consolidated  Statements of Income – Three months and six months ended June 30, 2007 and  2006  | 2 |
|         |                       | Consolidated  Statements of Cash Flows – Six months ended June 30, 2007 and 2006                | 3 |
|         |                       | Consolidated  Statements of Shareholder’s Equity – Six months ended June 30, 2007 and 2006 | 4 |
|         |                       | Notes to  Consolidated Financial Statements                                                          | 5-10 |
|         | Item 2.                    | Management’s  Narrative Analysis                                                                | 11-14 |
|         | Item 4T.                   | Controls and  Procedures                                                                             | 15 |
| **Part II.** | **Other Information:**     | ** **                                                                                           |
|         | Item 1.                    | Legal Proceedings                                                                                    | 15 |
|         | Item  1A.                  | Risk  Factors                                                                                        | 15 |
|         | Item  6.                   | Exhibits                                                                                             | 15 |
|         | Signatures                 | 16                                                                                                   |
|         | Exhibit  Index             | E-1                                                                                                  |

 

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**PARTI.  FINANCIAL INFORMATION**

**ITEM1.  FINANCIAL STATEMENTS**

**RIVERSOURCE LIFEINSURANCE COMPANY**

**CONSOLIDATED BALANCE SHEETS**

(in millions, except share amounts)
| ** **                                                                                   | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                   | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| ** **                                                                                   | ** ** | **(unaudited)**   | ** ** | ** **            | ** ** |
| **Assets**                                                                                   |       |              |       |                  |       |
| Investments:                                                                                 |       |              |       |                  |       |
| Available-for-Sale:                                                                          |       |              |       |                  |       |
| Fixed  maturities, at fair value (amortized cost: 2007, $22,278; 2006, $25,289)              |       | $                 | 21,729     |                  | $          | 24,995 |   |
| Common and  preferred stocks, at fair value (cost:  2007 and 2006, $30)                      |       | 30                |       | 31                    |       |
| Mortgage loans on real  estate, at cost (less allowance for loan losses: 2007 and 2006, $37) |       | 2,727             |       | 2,790                 |       |
| Policy loans                                                                                 |       | 660               |       | 642                   |       |
| Trading securities and  other investments                                                    |       | 117               |       | 241                   |       |
| Total  investments                                                                           |       | 25,263            |       | 28,699                |       |
|                                                                                         |       |              |       |                  |       |
| Cash and cash  equivalents                                                                   |       | 1,366             |       | 160                   |       |
| Reinsurance  recoverables                                                                    |       | 1,215             |       | 1,137                 |       |
| Amounts due from  brokers                                                                    |       | 12                |       | 7                     |       |
| Other accounts  receivable                                                                   |       | 114               |       | 90                    |       |
| Accrued investment  income                                                                   |       | 268               |       | 309                   |       |
| Deferred acquisition  costs                                                                  |       | 4,382             |       | 4,411                 |       |
| Deferred sales  inducement costs                                                             |       | 481               |       | 452                   |       |
| Deferred income taxes,  net                                                                  |       | 5                 |       | —                |       |
| Other assets                                                                                 |       | 406               |       | 321                   |       |
| Separate account assets                                                                      |       | 56,001            |       | 49,287                |       |
|                                                                                         |       |              |       |                  |       |
| Total assets                                                                                 |       | $                 | 89,513     |                  | $          | 84,873 |   |
|                                                                                         |       |              |       |                  |       |
| **Liabilities and Shareholder’s  Equity**                                               |       |              |       |                  |       |
| Liabilities:                                                                                 |       |              |       |                  |       |
| Future policy benefits                                                                       |       | $                 | 27,821     |                  | $          | 29,561 |   |
| Policy claims and other  policyholders’ funds                                           |       | 106               |       | 93                    |       |
| Amounts due to brokers                                                                       |       | 141               |       | 132                   |       |
| Deferred income taxes,  net                                                                  |       | —            |       | 90                    |       |
| Other liabilities                                                                            |       | 445               |       | 440                   |       |
| Separate account  liabilities                                                                |       | 56,001            |       | 49,287                |       |
| Total  liabilities                                                                           |       | 84,514            |       | 79,603                |       |
|                                                                                         |       |              |       |                  |       |
| Shareholder’s equity:                                                                   |       |              |       |                  |       |
| Common shares, $30 par  value;                                                               |       |              |       |                  |       |
| 100,000 shares  authorized, issued and outstanding                                           |       | 3                 |       | 3                     |       |
| Additional paid-in  capital                                                                  |       | 2,030             |       | 2,021                 |       |
| Retained earnings                                                                            |       | 3,300             |       | 3,455                 |       |
| Accumulated other  comprehensive loss, net of tax                                            |       | (334              | )          | (209                  | )          |
| Total  shareholder’s equity                                                             |       | 4,999             |       | 5,270                 |       |
|                                                                                         |       |              |       |                  |       |
| Total liabilities and  shareholder’s equity                                             |       | $                 | 89,513     |                  | $          | 84,873 |   |

 

*See Notes to ConsolidatedFinancial Statements.*

1

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**RIVERSOURCE LIFE INSURANCE COMPANY**

**CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)**

(in millions)
| ** **                                                      | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                      | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Revenues**                                                    | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Premiums:                                                       |       |                                            |       |                                          |       |   |   |   |   |
| Traditional life insurance                                      |       | $                                               | 20         |                                          | $          | 18 |   | $ | 37 |   | $ | 36 |   |
| Disability income and long term care insurance                  |       | 77                                              |       | 78                                            |       | 153 |   | 152 |   |
| Total premiums                                                  |       | 97                                              |       | 96                                            |       | 190 |   | 188 |   |
|                                                            |       |                                            |       |                                          |       |   |   |   |   |
| Net investment  income                                          |       | 387                                             |       | 417                                           |       | 769 |   | 864 |   |
| Contractholder  and policyholder charges                        |       | 169                                             |       | 173                                           |       | 333 |   | 326 |   |
| Mortality and  expense risk and other fees                      |       | 206                                             |       | 154                                           |       | 394 |   | 300 |   |
| Net realized  investment gains                                  |       | —                                          |       | 5                                             |       | 7 |   | 11 |   |
|                                                            |       |                                            |       |                                          |       |   |   |   |   |
| Total revenues                                                  |       | 859                                             |       | 845                                           |       | 1,693 |   | 1,689 |   |
|                                                            |       |                                            |       |                                          |       |   |   |   |   |
| **Benefits  and expenses**                                      | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Death and other  benefits:                                      |       |                                            |       |                                          |       |   |   |   |   |
| Traditional life insurance                                      |       | 7                                               |       | 7                                             |       | 18 |   | 13 |   |
| Investment contracts and universal life-type  insurance         |       | 55                                              |       | 70                                            |       | 94 |   | 126 |   |
| Disability income and long term care insurance                  |       | 22                                              |       | 20                                            |       | 43 |   | 41 |   |
| Increase  (decrease) in liabilities for future policy benefits: |       |                                            |       |                                          |       |   |   |   |   |
| Traditional life insurance                                      |       | —                                          |       | 3                                             |       | (1 | ) | 3 |   |
| Disability income and long term care insurance                  |       | 32                                              |       | 31                                            |       | 78 |   | 73 |   |
| Interest  credited to account values                            |       | 248                                             |       | 264                                           |       | 484 |   | 534 |   |
| Amortization of  deferred acquisition costs                     |       | 104                                             |       | 105                                           |       | 217 |   | 211 |   |
| Separation costs                                                |       | 26                                              |       | 31                                            |       | 64 |   | 55 |   |
| Other insurance  and operating expenses                         |       | 216                                             |       | 161                                           |       | 398 |   | 320 |   |
|                                                            |       |                                            |       |                                          |       |   |   |   |   |
| Total benefits and expenses                                     |       | 710                                             |       | 692                                           |       | 1,395 |   | 1,376 |   |
|                                                            |       |                                            |       |                                          |       |   |   |   |   |
| Income before  income tax provision                             |       | 149                                             |       | 153                                           |       | 298 |   | 313 |   |
| Income tax  provision                                           |       | 36                                              |       | 44                                            |       | 69 |   | 92 |   |
|                                                            |       |                                            |       |                                          |       |   |   |   |   |
| Net income                                                      |       | $                                               | 113        |                                          | $          | 109 |   | $ | 229 |   | $ | 221 |   |

 

*See Notes to Consolidated Financial Statements.*

2

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

(in millions)
| ** **                                                                                   | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                   | ** ** | **2007**                                      | ** ** | **2006** | ** ** |
| **Cash  Flows from Operating Activities**                                                    | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Net income                                                                                   |       | $                                             | 229        |   | $ | 221 |   |
| Adjustments to  reconcile net income to net cash provided by (used in) operating activities: |       |                                          |       |   |   |
| Amortization of deferred acquisition costs                                                   |       | 217                                           |       | 211 |   |
| Amortization of deferred sales inducement costs                                              |       | 30                                            |       | 23 |   |
| Capitalization of deferred acquisition costs                                                 |       | (365                                          | )          | (342 | ) |
| Capitalization of deferred sales inducement costs                                            |       | (66                                           | )          | (61 | ) |
| Amortization of premium, net                                                                 |       | 37                                            |       | 38 |   |
| Deferred income taxes                                                                        |       | 53                                            |       | 47 |   |
| Contractholder and policyholder charges, non-cash                                            |       | (101                                          | )          | (109 | ) |
| Net realized investment gains                                                                |       | (7                                            | )          | (11 | ) |
| Net realized gain on trading securities and equity  method investments in hedge funds        |       | (2                                            | )          | (29 | ) |
| Change in  operating assets and liabilities:                                                 |       |                                          |       |   |   |
| Trading securities and equity method investments in  hedge funds, net                        |       | 87                                            |       | 182 |   |
| Future policy benefits for traditional life,  disability income and long term care insurance |       | 140                                           |       | 141 |   |
| Policy claims and other policyholders’ funds                                            |       | 13                                            |       | 12 |   |
| Policy loans, excluding universal life-type  insurance:                                      |       |                                          |       |   |   |
| Repayment                                                                                    |       | 18                                            |       | 18 |   |
| Issuance                                                                                     |       | (19                                           | )          | (19 | ) |
| Reinsurance recoverables                                                                     |       | (78                                           | )          | (60 | ) |
| Other accounts receivable                                                                    |       | (24                                           | )          | 8 |   |
| Accrued investment income                                                                    |       | 41                                            |       | 3 |   |
| Other assets and liabilities, net                                                            |       | (265                                          | )          | (93 | ) |
|                                                                                         |       |                                          |       |   |   |
| **Net  cash provided by (used in) operating activities**                                     |       | (62                                           | )          | 180 |   |
| ** **                                                                                   |       |                                          |       |   |   |
| **Cash  Flows from Investing Activities**                                                    |       |                                          |       |   |   |
| Available-for-Sale  securities:                                                              | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Proceeds from sales                                                                          |       | 2,305                                         |       | 927 |   |
| Maturities, sinking fund payments and calls                                                  |       | 956                                           |       | 1,082 |   |
| Purchases                                                                                    |       | (279                                          | )          | (1,246 | ) |
| Other  investments, excluding policy loans:                                                  |       |                                          |       |   |   |
| Proceeds from sales, maturities, sinking fund  payments and calls                            |       | 291                                           |       | 244 |   |
| Purchases                                                                                    |       | (189                                          | )          | (212 | ) |
| Change in  amounts due to and from brokers, net                                              |       | 3                                             |       | 167 |   |
|                                                                                         |       |                                          |       |   |   |
| **Net  cash provided by investing activities**                                               |       | 3,087                                         |       | 962 |   |
| ** **                                                                                   |       |                                          |       |   |   |
| **Cash  Flows from Financing Activities**                                                    |       |                                          |       |   |   |
| Activity related  to investment contracts and universal life-type insurance:                 | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Considerations received                                                                      |       | 491                                           |       | 652 |   |
| Interest credited to account values                                                          |       | 484                                           |       | 534 |   |
| Surrenders and other benefits                                                                |       | (2,526                                        | )          | (2,398 | ) |
| Policy loans:                                                                                |       |                                          |       |   |   |
| Repayment                                                                                    |       | 56                                            |       | 48 |   |
| Issuance                                                                                     |       | (74                                           | )          | (63 | ) |
| Cash dividends to Ameriprise  Financial, Inc.                                                |       | (250                                          | )          | (100 | ) |
| **Net  cash used in financing activities**                                                   |       | (1,819                                        | )          | (1,327 | ) |
| ** **                                                                                   |       |                                          |       |   |   |
| **Net  increase (decrease) in cash and cash equivalents**                                    |       | 1,206                                         |       | (185 | ) |
| Cash and cash  equivalents at beginning of period                                            |       | 160                                           |       | 233 |   |
| **Cash  and cash equivalents at end of period**                                              |       | $                                             | 1,366      |   | $ | 48 |   |
| ** **                                                                                   |       |                                          |       |   |   |
| Supplemental  Disclosures:                                                                   |       |                                          |       |   |   |
| Income taxes paid                                                                            |       | $                                             | 47         |   | $ | 86 |   |
| Interest paid on  borrowings                                                                 |       | —                                        |       | 1 |   |

 

*See Notesto Consolidated Financial Statements.*

3

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED)SIX MONTHS ENDED JUNE 30, 2007 AND 2006**

(in millions)
| ** **                                                    | ** ** | **Common   Shares** | ** ** | **Additional   Paid-In   Capital** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Comprehensive  Income/(Loss)** | ** ** | **Total**  | ** ** |
|---------------------------------------------------------------|------------|--------------------------|------------|----------------------------------------------|------------|------------------------|------------|------------------------------------------------------|------------|------------|------------|
| **Balances at December 31, 2005**                             |       | $                        | 3          |                                         | $          | 2,020                  |       | $                                                    | 3,269      |       | $          | (130 | ) | $ | 5,162 |   |
| ** **                                                    |       |                     |       |                                         |       |                   |       |                                                 |       |       |       |
| Other  comprehensive loss:                                    |       |                     |       |                                         |       |                   |       |                                                 |       |       |       |
| Net income                                                    |       | —                   |       | —                                       |       | 221                    |       | —                                               |       | 221        |       |
| Change in unrealized holding  losses on securities, net       |       | —                   |       | —                                       |       | —                 |       | (468                                                 | )          | (468       | )          |
| Change in unrealized  derivative gains, net                   |       | —                   |       | —                                       |       | —                 |       | 3                                                    |       | 3          |       |
| Total other comprehensive  loss                               |       | —                   |       | —                                       |       | —                 |       | —                                               |       | (244       | )          |
| Cash dividend to Ameriprise Financial, Inc.                   |       | —                   |       | —                                       |       | (100                   | )          | —                                               |       | (100       | )          |
| **Balances at June 30, 2006**                                 |       | $                        | 3          |                                         | $          | 2,020                  |       | $                                                    | 3,390      |       | $          | (595 | ) | $ | 4,818 |   |
| ** **                                                    | ** ** | ** **               | ** ** | ** **                                   | ** ** | ** **             | ** ** | ** **                                           | ** ** | ** ** | ** ** |
| **Balances at December 31, 2006**                             |       | $                        | 3          |                                         | $          | 2,021                  |       | $                                                    | 3,455      |       | $          | (209 | ) | $ | 5,270 |   |
| Change in accounting principles                               |       | —                   |       | —                                       |       | (134                   | )          | —                                               |       | (134       | )          |
| Other  comprehensive income:                                  |       |                     |       |                                         |       |                   |       |                                                 |       |       |       |
| Net income                                                    |       | —                   |       | —                                       |       | 229                    |       | —                                               |       | 229        |       |
| Change in unrealized holding  losses on securities, net       |       | —                   |       | —                                       |       | —                 |       | (125                                                 | )          | (125       | )          |
| Total other comprehensive  income                             |       | —                   |       | —                                       |       | —                 |       | —                                               |       | 104        |       |
| Cash dividends to Ameriprise Financial, Inc.                  |       | —                   |       | —                                       |       | (250                   | )          | —                                               |       | (250       | )          |
| Non-cash capital contribution from Ameriprise Financial, Inc. |       | —                   |       | 9                                            |       | —                 |       | —                                               |       | 9          |       |
| **Balances  at June 30, 2007**                                |       | $                        | 3          |                                         | $          | 2,030                  |       | $                                                    | 3,300      |       | $          | (334 | ) | $ | 4,999 |   |

 

*See Notesto Consolidated Financial Statements.*

4

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**1.****              Basis ofPresentation**

The accompanying Consolidated Financial Statements include the accountsof RiverSource Life Insurance Company and its wholly owned operating subsidiary,RiverSource Life Insurance Co. of New York. RiverSource Life Insurance Company is a wholly owned subsidiary ofAmeriprise Financial, Inc. (“Ameriprise Financial”).  All significant intercompany accounts andtransactions have been eliminated in consolidation.  RiverSource Life Insurance Company and itssubsidiary are referred to collectively in this Form 10-Q as “RiverSource Life”.

The accompanying Consolidated Financial Statements are prepared inaccordance with U.S. generally accepted accounting principles (“GAAP”).  Certain reclassifications of prior periodamounts have been made to conform to the current presentation.  The interim financial information in thisreport has not been audited.  In theopinion of management, all adjustments necessary for a fair presentation of theconsolidated financial position and results of operations for the interimperiods have been made.  All adjustmentsmade were of a normal, recurring nature. Results of operations reported for interim periods are not necessarilyindicative of results for the entire year. These Consolidated FinancialStatements and Notes should be read in conjunction with the ConsolidatedFinancial Statements and Notes in the Annual Report on Form 10-K of RiverSourceLife for the year ended December 31, 2006, filed with the Securities andExchange Commission (“SEC”) on February 28, 2007.

**2.****              Recent Accounting****Pronouncements**

In February 2007, theFinancial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standards (“SFAS”) No. 159, “The Fair Value Option forFinancial Assets and Financial Liabilities – Including an amendment of FASBStatement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measuremany financial instruments and certain other items at fair value that are notcurrently required to be measured at fair value. The objective of SFAS 159 isto improve financial reporting by providing entities with the opportunity tomitigate volatility in reported earnings caused by measuring related assets andliabilities differently without having to apply complex hedge accountingprovisions. SFAS 159 requires entities to report unrealized gains and losses onitems for which the fair value option has been elected in earnings at eachsubsequent reporting date. SFAS 159 also establishes presentation anddisclosure requirements. SFAS 159 is effective as of the beginning of an entity’sfirst fiscal year that begins after November 15, 2007. RiverSource Life iscurrently evaluating whether or not it will elect to adopt SFAS 159.

In September 2006, theFASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which definesfair value, establishes a framework for measuring fair value and expandsdisclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require orpermit fair value measurements. Accordingly, SFAS 157 does not require any newfair value measurements. SFAS 157 is effective for fiscal years beginning afterNovember 15, 2007, and interim periods within those fiscal years. Theprovisions of SFAS 157 are required to be applied prospectively as of thebeginning of the fiscal year in which SFAS 157 is initially applied, except forcertain financial instruments as defined in SFAS 157 which will requireretrospective application of SFAS 157. The transition adjustment, if any, willbe recognized as a cumulative-effect adjustment to the opening balance ofretained earnings for the fiscal year of adoption. RiverSource Life iscurrently evaluating the impact of SFAS 157 on its consolidated financial condition andresults of operations.

In June 2006, theFASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in IncomeTaxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48clarifies the accounting for uncertainty in income taxes recognized inaccordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48prescribes a recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken or expected to betaken in a tax return.  FIN 48 alsoprovides guidance on derecognition, classification, interest and penalties,accounting in interim periods, disclosure and transition.  RiverSource Life adopted FIN 48 as of January 1, 2007.  The effect of adopting FIN 48 on RiverSourceLife’s consolidated financial condition and results of operations was not material.

5

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (UNAUDITED) (Continued)**

**2.****              Recent Accounting Pronouncements (Continued)**

In February 2006, the FASB issued SFASNo. 155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS 155”).SFAS 155 amends SFAS No. 133, “Accounting for Derivative Instruments andHedging Activities” (“SFAS 133”) and SFAS No. 140, “Accounting for Transfersand Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS140”). SFAS 155: (i) permits fair value remeasurement for any hybrid financialinstrument that contains an embedded derivative that otherwise would requirebifurcation; (ii) clarifies which interest-only and principal-only strips arenot subject to the requirements of SFAS 133; (iii) establishes a requirement toevaluate interests in securitized financial assets to identify interests thatare freestanding derivatives or that are hybrid financial instruments thatcontain an embedded derivative requiring bifurcation; (iv) clarifies thatconcentrations of credit risk in the form of subordination are not embeddedderivatives; and (v) amends SFAS 140 to eliminate the prohibition on aqualifying special-purpose entity from holding a derivative financialinstrument that pertains to a beneficial interest other than another derivativefinancial instrument. RiverSource Life adopted SFAS 155 as of January 1,2007.  The effect of adopting SFAS 155 onRiverSource Life’s consolidated financial condition and results of operationswas not material.

In September 2005, theAmerican Institute of Certified Public Accountants (“AICPA”) issued Statementof Position (“SOP”) 05-1, “Accounting by Insurance Enterprises for DeferredAcquisition Costs in Connection With Modifications or Exchanges of InsuranceContracts,” (“SOP 05-1”).  SOP 05-1provides clarifying guidance on accounting for deferred acquisition costs (“DAC”)associated with an insurance or annuity contract that is significantly modifiedor internally replaced with another contract. Prior to adoption, RiverSource Life accounted for many of thesetransactions as contract continuations and continued amortizing existing DACagainst revenue from the new or modified contract.  Effective on January 1, 2007, RiverSourceLife adopted SOP 05-1 resulting in these transactions being prospectivelyaccounted for as contract terminations. Consistent with this, RiverSource Life now anticipates thesetransactions in establishing amortization periods and other valuationassumptions.  As a result ofadopting SOP 05-1, RiverSource Life recorded as a cumulative change inaccounting principle a pretax charge of $206 million, reducing DAC by $204million, deferred sales inducement costs (“DSIC”) by $11 million andliabilities for future policy benefits by $9 million.  The after-tax decrease to retained earningsfor these changes was $134 million.  Theadoption of SOP 05-1 is also expected to result in an increase to DAC and DSICamortization in 2007.

**3.****              Separation andDistribution of Ameriprise Financial, Inc. from American Express**

Ameriprise Financial was formerly a wholly ownedsubsidiary of American Express Company (“American Express”).  On February 1, 2005, the American ExpressBoard of Directors announced its intention to pursue the disposition of 100% ofits shareholdings in Ameriprise Financial (the “Separation”) through a tax-freedistribution to American Express shareholders. Effective as of the close of business on September 30, 2005, AmericanExpress completed the Separation and the distribution of Ameriprise Financialcommon shares to American Express shareholders (the “Distribution”).  In connection with the Distribution, AmeripriseFinancial entered into certain agreements with American Express to effect theSeparation and to define the responsibility for obligations arising before andafter the date of the Distribution, including, among others, obligationsrelating to transition services, taxes, and employees.  Ameriprise Financial has incurred $802million of pretax non-recurring separation costs since the Separationannouncement through June 30, 2007 and expects to incur a total of approximately$875 million by the end of 2007.  Thesecosts are primarily related to technology costs and marketing andrebranding.  The majority of thetechnology related costs were incurred as of June 30, 2007.  RiverSource Life was allocated certainexpenses incurred as a result of Ameriprise Financial becoming an independentcompany.  RiverSource Life has beenallocated $316 million in total pretax non-recurring separation costs since theSeparation announcement through June 30, 2007 and expects to be allocated asignificant portion of the remaining separation costs in 2007. RiverSource Lifereceived a capital contribution of $650 million from Ameriprise Financialduring the third quarter of 2005 to support its financial strength ratings andto cover separation costs.

6

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**RIVERSOURCE LIFE INSURANCECOMPANY**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (UNAUDITED) (Continued)**

**4.****              Investments**

The following is a summary of Available-for-Sale securities by type:
| June 30, 2007                     | ** ** | **Amortized  Cost**    | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
|---------------------------------------------|------------|------------------------|------------|------------------------------|------------|-------------------------------|------------|-----------------|------------|
| ** **                                  | ** ** | **(in millions)** | ** ** |
| Fixed  maturities:                          |       |                   |       |                         |       |                          |       |            |       |
| Corporate debt  securities                  |       | $                      | 10,905     |                         | $          | 69                            |       | $               | (361       | ) | $ | 10,613 |   |
| Mortgage and  other asset-backed securities |       | 8,140                  |       | 17                           |       | (232                          | )          | 7,925           |       |
| Foreign  corporate bonds and obligations    |       | 2,671                  |       | 27                           |       | (82                           | )          | 2,616           |       |
| U.S. government  and agencies obligations   |       | 280                    |       | 8                            |       | (6                            | )          | 282             |       |
| State and  municipal obligations            |       | 165                    |       | 2                            |       | (5                            | )          | 162             |       |
| Foreign  government bonds and obligations   |       | 117                    |       | 14                           |       | —                        |       | 131             |       |
| Total fixed  maturities                     |       | 22,278                 |       | 137                          |       | (686                          | )          | 21,729          |       |
| Common and  preferred stocks                |       | 30                     |       | —                       |       | —                        |       | 30              |       |
| Total                                       |       | $                      | 22,308     |                         | $          | 137                           |       | $               | (686       | ) | $ | 21,759 |   |

 
| December 31, 2006                 | ** ** | **Amortized  Cost**    | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
|---------------------------------------------|------------|------------------------|------------|------------------------------|------------|-------------------------------|------------|-----------------|------------|
| ** **                                  | ** ** | **(in millions)** | ** ** |
| Fixed  maturities:                          |       |                   |       |                         |       |                          |       |            |       |
| Corporate debt  securities                  |       | $                      | 12,232     |                         | $          | 119                           |       | $               | (262       | ) | $ | 12,089 |   |
| Mortgage and  other asset-backed securities |       | 9,400                  |       | 27                           |       | (175                          | )          | 9,252           |       |
| Foreign  corporate bonds and obligations    |       | 3,080                  |       | 39                           |       | (68                           | )          | 3,051           |       |
| U.S. government  and agencies obligations   |       | 295                    |       | 13                           |       | (5                            | )          | 303             |       |
| State and municipal  obligations            |       | 165                    |       | 4                            |       | (4                            | )          | 165             |       |
| Foreign  government bonds and obligations   |       | 117                    |       | 18                           |       | —                        |       | 135             |       |
| Total fixed  maturities                     |       | 25,289                 |       | 220                          |       | (514                          | )          | 24,995          |       |
| Common and  preferred stocks                |       | 30                     |       | 1                            |       | —                        |       | 31              |       |
| Total                                       |       | $                      | 25,319     |                         | $          | 221                           |       | $               | (514       | ) | $ | 25,026 |   |

 

Gross realized investment gains and losses onAvailable-for-Sale securities and other-than-temporary impairments onAvailable-for-Sale securities included in net realized investment gains were asfollows:
|                                   | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                        | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                        | ** ** | **(in millions)**                          | ** ** |
| Gross realized investment gains   |       | $                                               | 15         |                                          | $          | 9 |   | $ | 28 |   | $ | 20 |   |
| Gross realized investment losses  |       | (13                                             | )          | (4                                            | )          | (19 | ) | (9 | ) |
| Other-than-temporary  impairments |       | (2                                              | )          | —                                        |       | (2 | ) | — |   |
|                                   |            |                                                 |            |                                               |            |  |  |  |  |  |  |  |  |

 

7

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (UNAUDITED) (Continued)**

**5.****              Deferred AcquisitionCosts**

Effective January 1, 2007, RiverSource Life adopted SOP 05-1. SOP 05-1provides clarifying guidance on accounting for DAC associated with an insuranceor annuity contract that is significantly modified or internally replaced withanother contract.  Prior to adoption,RiverSource Life accounted for many of these transactions as contractcontinuations and continued amortization of existing DAC against revenue fromthe new or modified contract. RiverSource Life’s adoption of SOP 05-1 resulted in these transactionsbeing prospectively accounted for as contract terminations.  As a result of adopting SOP 05-1, RiverSourceLife recorded as a cumulative change in accounting principle a pretax reductionof $204 million and $11 million to DAC and DSIC, respectively.

The balances of and changes in DAC were as follows:
|                                                                           | ** ** | **2007**               | ** ** | **2006** | ** ** |
|---------------------------------------------------------------------------|------------|------------------------|------------|----------|------------|
| ** **                                                                | ** ** | **(in millions)** | ** ** |
| Balance at  January 1                                                     |       | $                      | 4,411      |     | $          | 4,036 |   |
| Cumulative  effect of SOP 05-1 adoption                                   |       | (204                   | )          | —   |       |
| Capitalization  of acquisition costs                                      |       | 365                    |       | 342      |       |
| Amortization,  excluding impact of changes in assumptions                 |       | (230                   | )          | (225     | )          |
| Amortization,  impact of other quarter changes in DAC-related assumptions |       | 13                     |       | 14       |       |
| Impact of  changes in net unrealized securities losses                    |       | 27                     |       | 74       |       |
| Balance at June 30                                                        |       | $                      | 4,382      |     | $          | 4,241 |   |

 

The balances of and changes in DSIC were as follows:
|                                                       | ** ** | **2007**               | ** ** | **2006** | ** ** |
|-------------------------------------------------------|------------|------------------------|------------|----------|------------|
| ** **                                            | ** ** | **(in millions)** | ** ** |
| Balance at  January 1                                 | ** ** | $                      | 452        |     | $          | 370 |   |
| Cumulative  effect of SOP 05-1 adoption               |       | (11                    | )          | —   |       |
| Capitalization  of sales inducements                  |       | 66                     |       | 61       |       |
| Amortization                                          |       | (30                    | )          | (23      | )          |
| Impact of change  in net unrealized securities losses |       | 4                      |       | 12       |       |
| Balance at June 30                                    |       | $                      | 481        |     | $          | 420 |   |

**6.****              Future PolicyBenefits, Policy Claims and Other Policyholders’ Funds and Separate AccountLiabilities**

Future policy benefits and policy claims andother policyholders’ funds consisted of the following:
|                                                                                                 | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                                                      | ** ** | **(in millions)**  | ** ** |
| Fixed annuities                                                                                 |       | $                       | 15,583     |                        | $          | 16,841 |   |
| Equity indexed  annuities accumulated host values                                               |       | 259                     |       | 267                         |       |
| Equity indexed  annuities embedded derivatives                                                  |       | 58                      |       | 50                          |       |
| Variable  annuities fixed sub-accounts                                                          |       | 5,416                   |       | 5,975                       |       |
| Guaranteed  minimum withdrawal benefits variable annuity guarantees                             |       | (40                     | )          | (12                         | )          |
| Other variable  annuity guarantees                                                              |       | 14                      |       | 26                          |       |
|   Total annuities                                                                     |       | 21,290                  |       | 23,147                      |       |
| Variable  universal life (“VUL”)/universal life insurance                             |       | 2,554                   |       | 2,562                       |       |
| Other life,  disability income and long term care insurance                                     |       | 3,977                   |       | 3,852                       |       |
| Total future  policy benefits                                                                   |       | 27,821                  |       | 29,561                      |       |
| Policy claims  and other policyholders’ funds                                              |       | 106                     |       | 93                          |       |
|   Total  future policy benefits and policy claims and other policyholders’ funds |       | $                       | 27,927     |                        | $          | 29,654 |   |

 

8

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)**

**6.     FuturePolicy Benefits, Policy Claims and Other Policyholders’ Funds and SeparateAccount Liabilities (Continued)**

Separate accountliabilities consisted of the following:

|                                         | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                              | ** ** | **(in millions)**  | ** ** |
| Variable annuity  variable sub-accounts |       | $                       | 49,677     |                        | $          | 43,515 |   |
| VUL insurance  variable sub-accounts    |       | 6,324                   |       | 5,772                       |       |
| Total separate  account liabilities     |       | $                       | 56,001     |                        | $          | 49,287 |   |

**7.****              Lines of Credit**

RiverSource Life has available a committed line of credit withAmeriprise Financial aggregating $200 million. The interest rate for any borrowings is established by reference toLIBOR plus 28 basis points.  There wereno amounts outstanding on this line of credit at June 30, 2007 and December 31,2006.

Also, RiverSource Life has a collateral loan agreement with AmeripriseFinancial aggregating up to $75 million. The interest rate for any borrowings is equal to the preceding month’seffective new money rate for RiverSource Life’s permanent investments.  There were no amounts outstanding at June 30,2007 and December 31, 2006.

**8.****              Income Taxes**

RiverSource Life’seffective tax rates were 24% and 23% for the three months and six months endedJune 30, 2007, respectively, compared to 29% for both the three months and sixmonths ended June 30, 2006. The decrease in the effective tax rates primarilyreflect higher levels of tax advantaged items relative to pretax income for thethree months and six months ended June 30, 2007.

RiverSource Life is required to establish a valuationallowance for any portion of the deferred tax assets that management believeswill not be realized.  Included inRiverSource Life’s deferred tax assets is a significant deferred tax assetrelating to capital losses realized for tax return purposes and capital lossesthat have been recognized for financial statement purposes but not yet for taxreturn purposes. Under current U.S. federal income tax law, capital lossesgenerally must be used against capital gain income within five years of theyear in which the capital losses are recognized for tax purposes. RiverSourceLife has $140 million in capital loss carryforwards that expire December 31,2009, for which the benefit is reflected in deferred tax assets.  Additionally, RiverSource Life has $45million in capital loss carryforwards that expire December 31, 2009 as a resultof the 2005 first short period tax return filed with American Express.  Based on analysis of RiverSource Life’s taxposition, management believes it is more likely than not that the results offuture operations and implementation of tax planning strategies will generatesufficient taxable income to enable RiverSource Life to utilize all of itsdeferred tax assets. Accordingly, no valuation allowance for deferred taxassets was established as of June 30, 2007 and December 31, 2006.

Effective January 1, 2007, RiverSource Life adoptedthe provisions of FIN 48.  The effect ofadopting FIN 48 on the consolidated financial condition and results ofoperations was not material.  As of thedate of adoption, RiverSource Life had $73 million of gross unrecognized taxbenefits.  If recognized, approximately$27 million, net of federal tax benefits, would affect the effective tax rate.

RiverSource Life recognizes interest and penaltiesrelated to unrecognized tax benefits as a component of the income taxprovision.  RiverSource Life recognized anet reduction of interest and penalties of $4 million for both the three monthsand six months ended June 30, 2007.  RiverSourceLife had $10 million and $6 million for the payment of interest and penaltiesaccrued at January 1, 2007 and June 30, 2007, respectively.

It is reasonably possible that the total amounts ofunrecognized tax benefits will change in the next 12 months.  However, there are a number of open auditsand the range cannot be quantified at this time.

9

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**RIVERSOURCE LIFEINSURANCE COMPANY**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(Continued)**

**8.     Income Taxes (Continued)**

RiverSource Life or one or more of its subsidiariesfiles income tax returns in the U.S. federal jurisdiction, and various statejurisdictions. With few exceptions, RiverSource Life is no longer subject toU.S. federal or state and local income tax examinations by tax authorities foryears before 1997. The Internal Revenue Service (“IRS”), as part of the overallexamination of the American Express Company consolidated return, commenced anexamination of RiverSource Life’s U.S. income tax returns for 1997 through 2002in the third quarter of 2005. In the first quarter of 2007, the IRS expandedthe period of the exam to include 2003 through 2004. RiverSource Life orcertain of its subsidiaries’ state income tax returns are currently underexamination by various jurisdictions for years ranging from 1998 through 2005.

**9.****              Commitments andContingencies**

At June 30, 2007 and December 31, 2006, RiverSource Life had nomaterial commitments to purchase investments other than mortgage loan fundings.

The SEC, the National Association of Securities Dealers and severalstate authorities have brought proceedings challenging several mutual fund andvariable product financial practices, generally including suitability, latetrading, market timing, compensation and disclosure of revenue sharingarrangements.  RiverSource Life hasreceived requests for information and has been contacted by regulatoryauthorities concerning its practices and is cooperating fully with theseinquiries.

RiverSource Life is involved in the normal course of business in anumber of other legal and arbitration proceedings concerning matters arising inconnection with the conduct of its business activities.  RiverSource Life believes that it is not aparty to, nor are any of its properties the subject of, any pending legal,arbitration or regulatory proceedings that would have a material adverse effecton its consolidated financial condition, results of operations orliquidity.  However, it is possible thatthe outcome of any such proceedings could have a material impact on results ofoperations in any particular reporting period as the proceedings are resolved.

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**ITEM 2.****                       MANAGEMENT’SNARRATIVE ANALYSIS**

The following information should be read inconjunction with RiverSource Life Insurance Company’s Consolidated FinancialStatements and Notes presented in Item 1. RiverSource Life Insurance Company and its subsidiary are referred tocollectively in this Form 10-Q as “RiverSource Life”.  This discussion may contain forward-lookingstatements that reflect RiverSource Life’s plans, estimates and beliefs.  Actual results could differ materially fromthose discussed in these forward-looking statements.  Factors that could cause or contribute tothese differences include, but are not limited to, those discussed under “Forward-LookingStatements.”  RiverSource Life believesit is useful to read its MD&A in conjunction with its Annual Report on Form10-K for the year ended December 31, 2006, filed with the Securities andExchange Commission (“SEC”) on February 28, 2007, as well as its currentreports on Form 8-K and other publicly available information.

RiverSource Life follows U.S. generally acceptedaccounting principles (“U.S. GAAP”), and the following discussion is presentedon a consolidated basis consistent with U.S. GAAP.

Management’s narrative analysis of the results ofoperations is presented in lieu of management’s discussion and analysis offinancial condition and results of operations, pursuant to General InstructionsH(2) (a) of Form 10-Q.

**Overview**

RiverSource Life Insurance Company is a stock lifeinsurance company with one wholly owned operating subsidiary, RiverSource LifeInsurance Co. of New York (“RiverSource Life of NY”).  RiverSource Life Insurance Company is awholly owned subsidiary of Ameriprise Financial, Inc. (“Ameriprise Financial”).

·                        RiverSourceLife Insurance Company is domiciled in Minnesota and holds Certificates ofAuthority in American Samoa, the District of Columbia and all states except NewYork.  RiverSource Life Insurance Companyissues insurance and annuity products.

·                        RiverSourceLife of NY is a stock life insurance company domiciled in New York, which holdsCertificates of Authority in New York, North Dakota and Delaware.  RiverSource Life of NY issues insurance andannuity products.

Ameriprise Financial was formerly a wholly ownedsubsidiary of American Express Company (“American Express”).  On February 1, 2005, the American ExpressBoard of Directors announced its intention to pursue the disposition of 100% ofits shareholdings in Ameriprise Financial (the “Separation”) through a tax-freedistribution to American Express shareholders. Effective as of the close of business on September 30, 2005, AmericanExpress completed the Separation and the distribution of Ameriprise Financialcommon shares to American Express shareholders (the “Distribution”).  In connection with the Distribution,Ameriprise Financial entered into certain agreements with American Express toeffect the Separation and to define the responsibility for obligations arisingbefore and after the date of the Distribution, including, among others,obligations relating to transition services, taxes, and employees.  Ameriprise Financial has incurred $802million of pretax non-recurring separation costs since the Separationannouncement through June 30, 2007 and expects to incur a total ofapproximately $875 million by the end of 2007. These costs are primarily related to technology costs and marketing andrebranding.  The majority of thetechnology related costs were incurred as of June 30, 2007.  RiverSource Life was allocated certainexpenses incurred as a result of Ameriprise Financial becoming an independentcompany.  RiverSource Life has beenallocated $316 million in total pretax non-recurring separation costs since theSeparation announcement through June 30, 2007 and expects to be allocated asignificant portion of the remaining separation costs in 2007. RiverSource Lifereceived a capital contribution of $650 million from Ameriprise Financialduring the third quarter of 2005 to support its financial strength ratings andto cover separation costs.

**Recent Accounting Pronouncements**

For information regarding recent accountingpronouncements and their expected impact on future consolidated financialcondition or results of operations, see Note 2 to the Consolidated FinancialStatements.

***Resultsof Operations for the Six MonthsEnded June 30, 2007 and 2006***

*Overview*

Consolidated net income was $229 million for the sixmonths ended June 30, 2007 comparedto $221 million for the six months endedJune 30, 2006, an increase of $8 million.  Income before income tax provision decreased$15 million to $298 million for the six months ended June 30, 2007 from $313million for the six months ended June 30, 2006. The decrease was due to an increase of $19 million in total benefits andexpenses for the six months ended June 30, 2007 compared to the same period inthe prior year.  Increases in separationcosts, deferred acquisition costs (“DAC”) amortization and other insurance andoperating expenses were partially offset by decreases in interest credited anddeath and other benefits.  The increasein consolidated net income reflects a decrease in the effective tax rate forthe six months ended June 30, 2007 compared to the same period in 2006.

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*Revenues*

Total revenues remained unchangedat $1.7 billion for both the six monthsended June 30, 2007 and June 30, 2006. Total premiums increased $2 million or 1.1 % to $190 million for the sixmonthsended June 30, 2007.

Net investment income decreased $95 million or 11.0% to $769 million forthe six months ended June 30,2007 primarily driven by lower average account balances in annuity fixedaccounts and the planned liquidation of externally managed hedge funds.  As expected, annuity fixed accounts aredeclining as clients choose other products in the current interest rateenvironment.  The decrease also reflectsunfavorable mark-to-market adjustments on derivatives hedging guaranteedminimum withdrawal benefits (“GMWB”) offset by higher gains on derivativeshedging equity indexed annuities (“EIA”). Fluctuations in the value of the GMWB embedded derivative are reportedin the death and other benefits for investment contracts and universallife-type insurance line item on RiverSource Life’s Consolidated Statements ofIncome.  Fluctuations in the EIAliability are reported in interest credited to account values on RiverSourceLife’s Consolidated Statements of Income.

Contractholder andpolicyholder charges increased $7 million or 2.2% to $333 million for the six months ended June 30, 2007 primarily due toan increase in the cost of insurance charges on variable universal lifeproducts as a result of volume increases and charges for variable annuity GMWB and guaranteed minimum accumulation benefit (“GMAB”)provisions.  This is partiallyoffset by $18 million from recognizing previously deferred cost of insurancerevenues during the second quarter of 2006.

Mortality and expenserisk and other fees increased $94million or 31.3% to $394 million forthe six months ended June 30,2007 reflecting higher average values of separate account assets due topositive net flows and market appreciation.

Net realized investmentgains were $7 million for the sixmonths ended June 30, 2007 comparedto $11 million for the six months ended June 30, 2006.  Forthe six months ended June 30,2007, $28 million of gross realized investment gains were partiallyoffset by $19 million of grossrealized losses as well as $2 million of other-than-temporary impairment losseson investments, classified as Available-for-Sale.  For the six months ended June 30,2006, $20 million of gross realized investment gains were partiallyoffset by $9 million of gross realized investment losses classified asAvailable-for-Sale.

*Benefitsand Expenses*

Deathand other benefits fortraditional life insurance increased $5 million to $18 million for the six months ended June 30, 2007 primarily reflecting an increase in netclaims during the six months endedJune 30, 2007.

Death and other benefitsfor investment contracts and universal life-type insurance decreased $32million or 25.4% to $94 million for the sixmonths ended June 30, 2007 primarily reflecting net decreases in GMAB,guaranteed minimum death benefit (“GMDB”) and GMWB costs of $19 million.  In addition, there was a decrease of $9million due to lower net claims and a $7 million negative impact fromrecognizing previously deferred cost of insurance revenues during the secondquarter of 2006.

Increase in liabilitiesfor future policy benefits for disability income (“DI”) and long term care (“LTC”)insurance increased $5 millionor 6.8% reflecting an unfavorable $12 million adjustment in DI reserves offsetby favorable DI claims experience compared to the prior year period.

Interest credited toaccount values decreased by $50 million or 9.4% to $484 million for the six months ended June 30, 2007primarily due to lower average accumulation values of annuities.

Amortization of DACincreased $6 million to $217 million for the six months ended June 30, 2007 from $211 million for the six months ended June 30, 2006.  DAC amortization was higher in 2007 than in2006 primarily due to growth in variable annuity product volumes and therecurring impact of adopting SOP 05-1, “Accounting by Insurance Enterprises forDeferred Acquisition Costs in Connection With Modifications or Exchanges ofInsurance Contracts”, partially offset by the favorable impact of equitymarkets.

Separation costsincreased $9 million or 16.4% to $64 million for the six months ended June 30, 2007. Separation costs in 2007 primarily related to technology costs.  All remaining separation costs are expectedto be incurred in the second half of 2007.

Other insuranceand operating expenses increased $78 millionor 24.4% to $398 million for the sixmonths ended June 30, 2007 primarily reflecting increased sales andmarketing expenses and corporate overhead expenses.

*IncomeTaxes*

RiverSource Life’seffective tax rate was 23% for the sixmonths ended June 30, 2007 compared to 29% for the six months ended June 30, 2006. Thedecrease in the effective tax rate primarily reflects higher levels of taxadvantaged items relative to pretax income for the six months ended June 30,2007.

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**Liquidityand Capital Resources**

The liquidityrequirements of RiverSource Life are generally met by funds provided byinvestment income, maturities and periodic repayments of investments, deposits,premiums and proceeds from sales of investments, as well as capitalcontributions from Ameriprise Financial. RiverSource Life has established an available line of credit withAmeriprise Financial aggregating $200 million and also has repurchaseagreements available with outside third parties.  The primary uses of funds are policybenefits, commissions, other product-related acquisition and sales inducementcosts, operating expenses, policy loans, dividends to Ameriprise Financial andinvestment purchases.  RiverSource Liferoutinely reviews its sources and uses of funds in order to meet its ongoingobligations.

On March 20, 2007 andJune 25, 2007, RiverSource Life paid cash dividends of $150 million and $100million, respectively, to Ameriprise Financial. Also, on June 25, 2007 RiverSource Life of NY paid cash dividends of $83million to RiverSource Life Insurance Company. During 2006, RiverSource Life paid $300 million of cash dividends toAmeriprise Financial and RiverSource Life of NY paid $25 million of cash dividendsto RiverSource Life Insurance Company.

RiverSourceLife Insurance Company and its wholly-owned life insurance subsidiary aresubject to regulatory capital requirements. Actual capital, determined on a statutory basis, and regulatory capitalrequirements, based on the most recent statutory risk-based capital filings foreach of the life insurance entities, are as follows:
|                                             | ** ** | **Actual Capital as of (a)** | ** ** | **Regulatory  Capital  Requirement** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                  | ** ** | **June 30,  2007**                          | ** ** | **December 31,  2006**          | ** ** | **December 31,  2006** | ** ** |
| ** **                                  | ** ** | **(in millions)**                           | ** ** |
| RiverSource Life  Insurance Company         |       | $                                                | 3,381      |                                 | $          | 3,511 |   | $ | 590 |   |
| RiverSource Life  Insurance Co. of New York |       | 281                                              |       | 348                                  |       | 38 |   |
|                                             |            |                                                  |            |                                      |            |  |  |  |  |  |

 

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| (a) | Actual capital, as defined  by the National Association of Insurance Commissioners for purposes of  meeting regulatory capital requirements, includes statutory capital and  surplus, plus certain statutory valuation reserves. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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**Forward-LookingStatements**

This report containsforward-looking statements that reflect RiverSource Life’s plans, estimates andbeliefs.  RiverSource Life’s actualresults could differ materially from those described in these forward-lookingstatements.  The words “believe,” “expect,”“anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,”“would,” “likely” and similar expressions are intended to identifyforward-looking statements but are not the exclusive means of identifying suchstatements.  Forward-looking statementsare subject to risks and uncertainties which could cause actual results todiffer materially from such statements. RiverSource Life cautions the reader that the following list of factorsis not exhaustive.  There may also beother risks that RiverSource Life is unable to predict at this time that maycause actual results to differ materially from those in forward-lookingstatements.  Readers are cautioned not toplace undue reliance on these forward-looking statements, which speak only asof the date on which they are made.  RiverSource Life undertakes no obligation to update or revise anyforward-looking statements.

Factors that could causeactual results to differ materially from these forward-looking statementsinclude, but are not limited to, the following:

·                  changesin the interest rate, equity market and other financial market environments;

·                  changesin the litigation and regulatory environment and judicial or legislativedevelopments, including the increasing focus on customer suitability, salespractices and disclosure, as well as ongoing legal proceedings and regulatory actions;

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

·                  effectsof competition in the financial services industry and changes in RiverSourceLife’s product distribution mix and distribution channels;

·                  RiverSourceLife’s capital structure as a subsidiary of Ameriprise Financial, including theability of its parent to support its financial strength and ratings;

·                  risksof default by issuers of investments RiverSource Life owns or by counterpartiesto derivative or reinsurance arrangements;

·                  experiencedeviations from RiverSource Life’s assumptions regarding morbidity, mortalityand persistency in certain annuity and insurance products;

·                  successfullycross-selling insurance and annuity products and services to AmeripriseFinancial’s customer base;

·                  RiverSourceLife’s ability to effectively hedge risks relating to guaranteed benefit ridersand certain other products;

·                  theimpact of the separation of Ameriprise Financial from American Express;

·                  theimpact of intercompany allocations to RiverSource Life from AmeripriseFinancial and its affiliates;

·                  AmeripriseFinancial’s ability to attract, recruit and retain qualified advisors andemployees and its ability to distribute RiverSource Life’s products throughcurrent and future distribution channels;

·                  theimpact of Ameriprise Financial’s efforts to improve distribution economics andof RiverSource Life’s efforts to grow third party distribution, and RiverSourceLife’s ability to establish its new brands;

·                  changesin U.S. federal income or estate tax laws potentially making RiverSource Life’sproducts less attractive to clients;

·                  RiverSourceLife’s ability to recover from catastrophes, both natural and man-made; and

·                  general economicand political factors, including consumer confidence in the economy.

A further description ofthese and other risks and uncertainties can be found under “Item 1A – RiskFactors” and elsewhere in RiverSource Life’s Annual Report on Form 10-K for theyear ended December 31, 2006, filed on February 28, 2007 and its other reportsfiled with the SEC.

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**ITEM 4T. CONTROLS AND PROCEDURES**

**Disclosure Controls andProcedures**

RiverSource Lifemaintains disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”))designed to provide reasonable assurance that the information required to bereported in the Exchange Act filings is recorded, processed, summarized andreported within the time periods specified and pursuant to SEC regulations,including controls and procedures designed to ensure that this information isaccumulated and communicated to RiverSource Life’s management, including its principalexecutive officer and chief financial officer, as appropriate, to allow timelydecisions regarding the required disclosure. It should be noted that, because of inherent limitations, RiverSourceLife’s disclosure controls and procedures, however well designed and operated,can provide only reasonable, and not absolute, assurance that the objectives ofthe disclosure controls and procedures are met.

RiverSource Life’smanagement, with the participation of RiverSource Life’s principal executive officerand chief financial officer, evaluated the effectiveness of the disclosurecontrols and procedures as of the end of the period covered by thisreport.  Based upon that evaluation,RiverSource Life’s principal executive officer and chief financial officer haveconcluded that RiverSource Life’s disclosure controls and procedures wereeffective at a reasonable level of assurance as of June 30, 2007.

**Changes in Internal Control overFinancial Reporting**

There have not been anychanges in RiverSource Life’s internal control over financial reporting (assuch 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 materiallyaffected, or are reasonably likely to materially affect, RiverSource Life’s internalcontrol over financial reporting.
| **PART II.**                                                                                                                                                                                                               | **OTHER  INFORMATION** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|
| ** **                                                                                                                                                                                                                 | ** **             |
| **ITEM 1.**                                                                                                                                                                                                                | **LEGAL PROCEEDINGS**  |
| ** **                                                                                                                                                                                                                 | ** **             |
| The information set forth in Note 9 to the  Consolidated Financial Statements in Part I, Item 1 is incorporated herein by  reference.                                                                                      |
|                                                                                                                                                                                                                       |                   |
| **ITEM 1A.**                                                                                                                                                                                                               | **RISK FACTORS**       |
| ** **                                                                                                                                                                                                                 | ** **             |
| There have been no material changes in the risk  factors provided in Part I, Item 1A of RiverSource Life’s Annual Report on  Form 10-K for the year ended December 31, 2006 filed with the SEC on February  28, 2007. |
|                                                                                                                                                                                                                       |                   |
| **ITEM 6.**                                                                                                                                                                                                                | **EXHIBITS**           |
| ** **                                                                                                                                                                                                                 | ** **             |
| The list of exhibits required to be filed as  exhibits to this report are listed on page E-1 hereof, under “Exhibit Index,”  which is incorporated herein by reference.                                          |

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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.
|                                 | RIVERSOURCE  LIFE INSURANCE COMPANY |
|---------------------------------|-------------------------------------|
|                            | (Registrant)                        |   |
|                            |                                |   |
|                            |                                |
| Date:  August 7, 2007 | By                                  | /s/  Timothy V. Bechtold |   |
|                            |                                | Timothy V. Bechtold |
|                            |                                | President |
|                            |                                |   |
|                            |                                |   |
| Date:  August 7, 2007 | By                                  | /s/ Brian  J. McGrane |   |
|                            |                                | Brian J. McGrane |
|                            |                                | Executive Vice President and |
|                            |                                | Chief Financial Officer |
|                                 |                                     |  |  |  |

 

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**EXHIBITINDEX**

The following exhibits are filed as part of thisQuarterly Report:
| Exhibit    | ** ** | **Description**                                                                                                                                                       |
|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                                            |
| *31.1      |       | Certification  of Timothy V. Bechtold pursuant to Rule 13a-14(a) promulgated under the  Securities Exchange Act of 1934, as amended.                                  |
|       | ** ** | ** **                                                                                                                                                            |
| *31.2      |       | Certification  of Brian J. McGrane pursuant to Rule 13a-14(a) promulgated under the  Securities Exchange Act of 1934, as amended.                                     |
|       | ** ** | ** **                                                                                                                                                            |
| *32.1      |       | Certification  of Timothy V. Bechtold and Brian J. McGrane pursuant to 18 U.S.C. Section 1350,  as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

 

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*          Filed electronically herewith.

E-1

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