Benefits, claims, losses and settlement expenses decreased $253 million or 21% to $950 million for the year ended December 31, 2011 compared to $1.2 billion in the prior year. Benefits, claims, losses and settlement expenses for the year ended December 31, 2011 included a benefit of $40 million from updating valuation assumptions and models compared to an expense of $249 million in the prior year. The market impact on variable annuity guaranteed living benefits, net of hedges and DSIC amortization, increased benefits expense by $71 million in 2011 compared to $64 million in the prior year. The market impact in both periods was primarily driven by the impact of nonperformance credit spread on the valuation of living benefit liabilities, which the Company does not hedge. These decreases were partially offset by an unfavorable change in reserves relative to the prior year for immediate annuities with life contingencies, driven by higher premiums. In addition, benefits, claims, losses and settlement expenses increased as a result of higher UL claims and an increase in ongoing reserve levels for UL products with secondary guarantees compared to the prior year. The market impact to DSIC was an expense of $2 million in 2011 compared to a benefit of $3 million in the prior year. Benefits, claims, losses and settlement expenses for the prior year included a $17 million expense, net of DSIC, as a result of the implementation of
As of December 31, 2011, the outstanding balance under the lines of credit with Ameriprise Financial was $300 million. As of December 31, 2010, the outstanding balance under the lines of credit with Ameriprise Financial was $3 million which was repaid in full with a payment in January 2011.
· changes in and the adoption of relevant accounting standards, as well as changes in the litigation and regulatory environment, including ongoing legal proceedings and regulatory actions, the frequency and extent of legal claims threatened or initiated by clients, other persons and regulators and developments in regulation and legislation, including the rules and regulations implemented or to be implemented in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act;
· the impacts of Ameriprise Financial’s efforts to improve distribution economics and realize benefits from reengineering and tax planning;
At December 31, 2011 and 2010, land, buildings, equipment and software were $182 million and $191 million, respectively, net of accumulated depreciation of $75 million and $59 million, respectively. Depreciation and amortization expense for the years ended December 31, 2011, 2010 and 2009 was $16 million, $14 million and $8 million, respectively.
In April 2011, the FASB updated the accounting standards related to accounting for repurchase agreements and other similar agreements. The standard modifies the criteria for determining when these transactions would be accounted for as secured borrowings as opposed to sales. The standard is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011. The adoption of the standard is not expected to have a material impact on the Company’s consolidated financial condition and results of operations.