[April 24, 2017] |
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Ameriprise Financial Reports First Quarter 2017 Results
Ameriprise Financial, Inc. (NYSE: AMP) today reported first quarter 2017
net income of $403 million, up 11 percent compared to a year ago, or
$2.52 per diluted share, up 21 percent. Operating earnings were $432
million, up 14 percent compared to a year ago, with operating earnings
per diluted share of $2.70, up 24 percent.
GAAP Results - First quarter Net
revenues of $2.9 billion increased 5 percent, or $136 million, from a
year ago primarily due to strong net revenue growth in Advice & Wealth
Management from growth in client assets. Net investment income also
increased due to gains on investment securities in the quarter compared
to losses on securities and negative market impact of hedges on
investments a year ago.
Expenses of $2.4 billion increased 6 percent compared to a year ago
reflecting the market impact on variable annuity guaranteed benefits and
higher distribution expenses from increased advisor productivity.
General and administrative expense increased 3 percent compared to a
year ago and reflected the impacts of elevated DOL transition expenses,
a renegotiated vendor arrangement and the beneficial impact of foreign
exchange translation.
Operating Results - First quarter Operating
net revenues of $2.9 billion increased 3 percent, or $72 million,
compared to a year ago. Excluding the impact of transitioning advisory
accounts to share classes without 12b-1 fees, one fewer fee day and
foreign exchange, operating net revenue would have increased by 5
percent due to strong net revenue growth in Advice & Wealth Management
from growth in client assets.
Operating expenses of $2.3 billion increased 2 percent. General and
administrative expense increased 3 percent compared to a year ago and
reflected the impacts of elevated DOL transition expenses, a
renegotiated vendor arrangement and the beneficial impact of foreign
exchange translation.
The company continued to deliver a strong return to shareholders through
share repurchases and dividends of $478 million in the quarter.
(1) Unlocking represents the company's annual review of insurance and
annuity valuation assumptions and model changes and the long term care
review conducted in the third quarter.
"Ameriprise had a strong first quarter led by wealth management-the
primary growth engine of the company," said Jim Cracchiolo, chairman and
chief executive officer.
"Client activity was strong and assets increased across the firm. Net
inflows into fee-based investment advisory accounts more than doubled
from last year. Our advisors are growing productivity and benefiting
from both our position as the leader in advice as well as the
investments we've made in our technology, financial planning tools and
leadership support.
"Our fee-based businesses are growing and will be larger contributors to
our total earnings over time. This transition generates strong free cash
flow that we invest in the business and return to shareholders.
"Our operating return on equity is consistently among the best in the
industry. In fact, we've announced an additional $2.5 billion share
repurchase authorization and another increase to our quarterly dividend,
raising it 11 percent-the tenth increase in the past eight years."
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Ameriprise Financial, Inc.
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First Quarter Summary
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(in millions, except per share amounts, unaudited)
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Quarter Ended March 31,
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Per Diluted Share Quarter Ended March
31,
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2017
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2016
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% Better/ (Worse)
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2017
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2016
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% Better/ (Worse)
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Net income
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$
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403
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$
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364
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11
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%
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$
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2.52
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$
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2.09
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21
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%
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Adjustments, net of tax ((1))
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(see reconciliation on p. 14)
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29
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14
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0.18
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0.08
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Operating earnings (2)
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$
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432
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$
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378
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14
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%
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$
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2.70
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$
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2.17
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24
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%
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Weighted average common shares outstanding:
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Basic
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157.5
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172.6
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Diluted
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160.1
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174.4
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(1) After-tax is calculated using the statutory tax rate of 35%.
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(2) The company believes the presentation of operating earnings
best represents the economics of the business. Operating earnings,
after-tax, exclude the consolidation of certain investment
entities; net realized investment gains or losses, net of deferred
sales inducement costs ("DSIC") and deferred acquisition costs
("DAC") amortization, unearned revenue amortization and the
reinsurance accrual; integration and restructuring charges; the
market impact on variable annuity guaranteed benefits, net of
hedges and related DSIC and DAC amortization; the market impact on
indexed universal life benefits, net of hedges and related DAC
amortization, unearned revenue amortization, and the reinsurance
accrual; the market impact of hedges to offset interest rate
changes on unrealized gains or losses for certain investments; and
income or loss from discontinued operations.
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Results in the quarter included a number of notable items that are
discussed in the segment commentary and detailed on page 13.
Taxes
The operating effective tax rate in the quarter was 16.9 percent and
included a $28 million benefit related to the adoption of stock
compensation accounting guidance in the first quarter. Excluding this
benefit, the effective tax rate was 22.3 percent compared to 23.9
percent a year ago. The company estimates that its full year 2017
operating effective tax rate will be in the 22 to 24 percent range.
First Quarter 2017 Highlights
Ameriprise continues to transform its business mix, which enables a
differentiated return of capital to shareholders and consistent
investment in the business
-
Total assets under management and administration increased 6 percent
to $818 billion as Ameriprise advisor client net inflows and market
appreciation more than offset asset management net outflows and the
unfavorable impact of foreign exchange rates.
-
The company continued to deliver a differentiated level of capital
return to shareholders while maintaining strong balance sheet
fundamentals. Excess capital was nearly $2.0 billion at the end of the
quarter after the company repurchased 2.9 million shares of common
stock for $357 million and paid $121 million in quarterly dividends.
-
Given its strong balance sheet fundamentals and free cash flow
generation, the company increased its regular quarterly dividend 11
percent to $0.83 per share payable on May 19, 2017 to shareholders of
record as of May 8, 2017. In addition, the Board approved an
additional $2.5 billion share repurchase authorization that expires on
June 30, 2019.
-
In the first quarter, the company continued to prepare advisors and
clients for the Department of Labor fiduciary rule that was scheduled
to be phased in beginning in April 2017. The Department has extended
the applicability dates of the rule and related exemptions and the
company is adjusting accordingly.
-
The company continues to invest for business growth. This includes
investments in advisor technology and tools and the evolution of the
company's Be Brilliant® advertising campaign. In addition,
the company is transitioning Columbia Threadneedle's front-, middle-
and back-office capabilities to create a global platform.
Wealth Management continues to demonstrate strong results, including
growth in fee-based assets, increased advisor productivity and margin
expansion
-
Advice & Wealth Management advisor client assets increased to a record
$0.5 trillion, reflecting continued strength in fee-based investment
advisory (wrap) net inflows, with net inflows of $3.9 billion in the
quarter bringing platform AUM to $213 billion, one of the largest in
the industry.
-
Advice & Wealth Management continued to improve profitability, with
pretax operating margin reaching 19.2 percent in the quarter, up from
17.1 percent a year ago. This growth reflects business initiatives
that are generating strong revenue growth and continued expense
discipline.
-
Ameriprise continues to improve the productivity of its 9,668 advisors
by ensuring its advisors can deliver full service financial planning
to clients through industry-leading technology and tools, as well as
dedicated field leadership and support. The company's exclusive Confident
Retirement® approach helps clients saving for and living in
retirement, as well as clients who are in the wealth building phase of
their lives, including younger investors. The company remains an
attractive destination for seasoned and productive advisors, with 98
experienced advisors joining the firm during the quarter.
-
Operating net revenue per advisor was $529,000 on a trailing
twelve-month basis. During the quarter, the company successfully
completed its transition to share classes without 12b-1 fees in
advisory accounts, reflecting the industry movement to this product
design. Operating net revenue per advisor on a quarterly basis
increased 9 percent, and adjusting for the change in 12b-1 fees in
both periods, operating net revenue per advisor increased 13 percent.
Global asset management platform with broad capabilities and
competitive margins
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Asset Management adjusted net pretax operating margin was 35.0 percent
reflecting AUM growth, stable fee rate and tight expense controls.
Asset Management AUM grew to $467 billion, reflecting market
appreciation partially offset by net outflows, which included expected
outflows of former parent assets.
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Investment performance in equity, fixed income and multi-asset
portfolios and institutional strategies remains strong. At quarter
end, the company had 111 four- and five-star Morningstar-rated funds
and five Columbia funds earned 2017 Lipper Fund Awards as
top-performing mutual funds in their respective Lipper classifications
for the period ended December 31, 2016.
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During the quarter, Columbia Threadneedle Investments launched a
global advertising campaign highlighting the benefits of its
consistent and collaborative approach to investing. The campaign
features print and digital ads that promote its belief in consistency
to drive investment success and are running in key markets in North
America, Europe and Asia-Pacific.
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The Columbia Adaptive Risk Allocation Fund, the #2 fund for net flows
in Morningstar's tactical allocation category in 2016, and The
Threadneedle UK Social Bond Fund have each established strong
three-year track records.
Values-based, client-focused firm
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During the quarter, Ameriprise Financial announced its philanthropic
results for 2016. Together with its employees and advisors, Ameriprise
gave $13 million and logged 81,000 hours volunteering at nonprofits
across the country. In keeping with its longstanding philanthropic
priorities, the firm directed much of its support to nonprofits aimed
at helping individuals meet basic needs like food and shelter.
In
addition, Ameriprise continued its seven-year national partnership
with Feeding America®, the country's largest hunger-relief
and food rescue organization. Through its partnership with Feeding
America and other hunger-relief nonprofits nationwide, Ameriprise
provided the equivalent of more than 8 million meals to families and
individuals in 2016.
-
Ameriprise advisors were named to multiple Top Advisor industry
rankings reflecting the strength of their practices, strong compliance
and/or involvement in their communities. This included nine Ameriprise
advisors who were named to the Forbes Top 200 Women Wealth Advisors
list, 61 advisors who were named to the Barron's annual Top Advisor
Rankings by State and 38 advisors who were named to the Financial
Times Top 400 Financial Advisors list.
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Ameriprise Financial, Inc.
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Advice & Wealth Management Segment Operating Results
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(in millions, unaudited)
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Quarter Ended March 31,
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% Better/ (Worse)
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2017
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2016
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Advice & Wealth Management
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Net revenues
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$
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1,295
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$
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1,198
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8
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%
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Expenses
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1,047
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993
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(5
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)%
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Pretax operating earnings
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$
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248
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$
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205
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21
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%
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Pretax operating margin
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19.2
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%
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17.1
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%
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Quarter Ended March 31,
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% Better/ (Worse)
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2017
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|
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2016
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Retail client assets (billions)
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$
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499
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$
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451
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11
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%
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Wrap net flows (billions)
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$
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3.9
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$
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1.8
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NM
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Brokerage cash balance (billions)
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$
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26.2
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$
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23.4
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12
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%
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Operating net revenue per branded advisor (trailing 12 months -
thousands)
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$
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529
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$
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510
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4
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%
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NM Not Meaningful - variance equal to or greater than 100%
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Advice & Wealth Management pretax operating earnings
increased 21 percent to $248 million driven by asset growth, higher
earnings on cash balances and well controlled expenses. This resulted in
strong margin expansion with a pretax operating margin of 19.2 percent,
up from 17.1 percent a year ago.
Operating net revenues of $1.3 billion increased 8 percent reflecting
net inflows into wrap accounts, higher earnings on cash balances and
market appreciation. During the quarter, the company successfully
completed its transition to share classes without 12b-1 fees in advisory
accounts, which reduced revenue by $34 million. Normalizing for the
12b-1 fee impact and one less fee day during the quarter, revenue growth
was 12 percent. Client asset growth remains strong as the company
continues to experience growth in fee-based wrap assets.
Operating expenses increased 5 percent to $1.0 billion primarily from
higher distribution expenses related to growth in wrap accounts. General
and administrative expenses were up 3 percent compared to a year ago,
reflecting continued strong expense controls.
Total retail client assets increased to a record $499 billion, driven by
client net inflows, client acquisition and market appreciation. Wrap net
inflows were $3.9 billion in the quarter, which contributed to a 16
percent year-over-year increase in balances to $213 billion. Client cash
balances increased to $26.2 billion and certificates balances grew to
$6.1 billion.
Total advisors were 9,668 reflecting good retention and another
successful recruiting quarter, with 98 experienced advisors moving their
practices to Ameriprise. Operating net revenue per advisor on a trailing
12-month basis was $529,000. Operating net revenue per advisor on a
quarterly basis increased 9 percent, and after adjusting for the change
made during the quarter to eliminate 12b-1 fees in advisory accounts, it
increased 13 percent.
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Ameriprise Financial, Inc.
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Asset Management Segment Operating Results
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(in millions, unaudited)
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Quarter Ended March 31,
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% Better/ (Worse)
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2017
|
|
|
2016
|
|
|
|
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Asset Management
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Net revenues
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$
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726
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$
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724
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-
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Expenses
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576
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|
|
|
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575
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|
|
-
|
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Pretax operating earnings
|
|
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$
|
150
|
|
|
|
$
|
149
|
|
|
|
1
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%
|
|
|
|
|
|
|
|
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|
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Pretax operating margin
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20.7
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%
|
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20.6
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%
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Adjusted net pretax operating margin (1)
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35.0
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%
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34.7
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%
|
|
|
|
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|
|
|
Quarter Ended March 31,
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% Better/ (Worse)
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2017
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|
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2016
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|
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Total segment AUM (billions)
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$
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467
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$
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464
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1
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%
|
|
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|
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|
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Net Flows (billions)
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Global Retail net new flows, excl. former parent flows
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$
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(3.4
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)
|
|
|
$
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(3.0
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)
|
|
|
(13
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)%
|
Reinvested dividends
|
|
|
|
0.4
|
|
|
|
|
0.4
|
|
|
|
4
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%
|
Global Retail net flows, excl. former parent flows
|
|
|
|
(3.0
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)
|
|
|
|
(2.6
|
)
|
|
|
(14
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)%
|
Global Institutional net flows, excl. former parent flows
|
|
|
|
(0.2
|
)
|
|
|
|
(0.6
|
)
|
|
|
47
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%
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Former parent company related net new flows
|
|
|
|
(2.4
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)
|
|
|
|
(4.3
|
)
|
|
|
45
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%
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Total segment net flows
|
|
|
$
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(5.6
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)
|
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$
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(7.5
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)
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|
25
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%
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(1 )See reconciliation on page 16
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Asset Management reported solid pretax operating earnings
of $150 million, which were impacted by one less fee day in the quarter
and $6 million in lower performance fees compared to a year ago. First
quarter margin reflected effective expense management-pretax operating
margin was 20.7 percent compared to 20.6 percent a year ago. Adjusted
net pretax operating margin remains competitive at 35.0 percent compared
to 34.7 percent a year ago.
Operating net revenues of $726 million were essentially unchanged
compared to a year ago reflecting market appreciation offset by one less
fee day in the quarter, net outflows and foreign exchange translation.
AUM increased 1 percent to $467 billion.
Operating expenses of $576 million were flat to last year and general
and administrative expenses improved 3 percent compared to last year
reflecting continued expense discipline and foreign exchange.
Net outflows were $5.6 billion in the quarter and included $2.4 billion
of lower fee, former parent related assets. Retail net outflows,
excluding former parent flows, were $3.0 billion and were consistent
with industry outflows in active strategies and improving trends among
UK and European investors following the Brexit vote disruption. Global
institutional outflows, excluding former parent assets, included inflows
of several large mandates that funded during the quarter that had been
anticipated, that were essentially offset by a $1.1 billion outflow from
an institutional client that continued a pattern of redeeming assets for
liquidity purposes that started in 2015.
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Ameriprise Financial, Inc.
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Annuities Segment Operating Results
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(in millions, unaudited)
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|
Quarter Ended March 31,
|
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% Better/ (Worse)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuities
|
|
|
|
|
|
|
|
|
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Net revenues
|
|
|
$
|
608
|
|
|
|
$
|
596
|
|
|
|
2
|
%
|
Expenses
|
|
|
|
469
|
|
|
|
|
472
|
|
|
|
1
|
%
|
Pretax operating earnings
|
|
|
$
|
139
|
|
|
|
$
|
124
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable annuity pretax operating earnings
|
|
|
$
|
116
|
|
|
|
$
|
100
|
|
|
|
16
|
%
|
Fixed annuity pretax operating earnings
|
|
|
|
23
|
|
|
|
|
24
|
|
|
|
(4
|
)%
|
Total pretax operating earnings
|
|
|
$
|
139
|
|
|
|
$
|
124
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
Item included in operating earnings:
|
|
|
|
|
|
|
|
|
|
Market impact on DAC and DSIC (mean reversion)
|
|
|
|
10
|
|
|
|
|
(6
|
)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31,
|
|
|
% Better/ (Worse)
|
|
|
2017
|
|
|
2016
|
|
|
Variable annuity ending account balances (billions)
|
|
|
$
|
76.4
|
|
|
|
$
|
74.2
|
|
|
|
3
|
%
|
Variable annuity net flows (millions)
|
|
|
$
|
(1,070
|
)
|
|
|
$
|
(311
|
)
|
|
|
NM
|
|
Fixed annuity ending account balances (billions)
|
|
|
$
|
9.8
|
|
|
|
$
|
10.5
|
|
|
|
(7
|
)%
|
Fixed annuity net flows (millions)
|
|
|
$
|
(266
|
)
|
|
|
$
|
(249
|
)
|
|
|
(7
|
)%
|
|
NM Not Meaningful - variance equal to or greater than 100%
|
|
Annuities pretax operating earnings were $139 million compared to
$124 million a year ago.
Variable annuity operating earnings were $116 million compared to $100
million a year ago. Earnings improved reflecting equity market growth
and a favorable market impact on DAC/DSIC offset by the ongoing impact
of unlocking. Variable annuity account balances increased 3 percent to
$76 billion as market appreciation was partially offset by net outflows.
Variable annuity cash sales declined to $0.9 billion in the quarter.
Lapse rates were higher in the quarter, reflecting increased client
asset transfers from variable annuities to fee-based investment advisory
accounts, as well as from run-off of a closed block of policies
distributed through third parties.
Fixed annuity operating earnings decreased to $23 million from $24
million a year ago due to continued spread compression and lower account
balances reflecting the low interest rate environment. Account balances
declined 7 percent from limited new product sales and lapses of older
policies.
|
Ameriprise Financial, Inc.
|
Protection Segment Operating Results
|
|
(in millions, unaudited)
|
|
|
Quarter Ended March 31,
|
|
|
% Better/ (Worse)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Protection
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
521
|
|
|
|
$
|
542
|
|
|
|
(4
|
)%
|
Expenses
|
|
|
|
458
|
|
|
|
|
474
|
|
|
|
3
|
%
|
Pretax operating earnings
|
|
|
$
|
63
|
|
|
|
$
|
68
|
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
Life and Health insurance net revenues
|
|
|
$
|
262
|
|
|
|
$
|
260
|
|
|
|
1
|
%
|
Life and Health insurance expenses
|
|
|
|
194
|
|
|
|
|
179
|
|
|
|
(8
|
)%
|
Life and Health insurance pretax operating earnings
|
|
|
$
|
68
|
|
|
|
$
|
81
|
|
|
|
(16
|
)%
|
|
|
|
|
|
|
|
Auto and Home net revenues
|
|
|
$
|
259
|
|
|
|
$
|
282
|
|
|
|
(8
|
)%
|
Auto and Home expenses
|
|
|
|
264
|
|
|
|
|
295
|
|
|
|
11
|
%
|
Auto and Home pretax operating loss
|
|
|
$
|
(5
|
)
|
|
|
$
|
(13
|
)
|
|
|
62
|
%
|
|
|
|
|
|
|
|
Items included in operating earnings:
|
|
|
|
|
|
|
Market impact on DAC (mean reversion)
|
|
|
$
|
1
|
|
|
|
$
|
(1
|
)
|
|
|
NM
|
|
Life and Health reinsurance recapture and model changes
|
|
|
|
-
|
|
|
|
|
6
|
|
|
|
NM
|
|
Auto and Home catastrophe losses
|
|
|
|
(25
|
)
|
|
|
|
(23
|
)
|
|
|
(9
|
)%
|
Total protection impact
|
|
|
$
|
(24
|
)
|
|
|
$
|
(18
|
)
|
|
|
(33
|
)%
|
|
|
|
|
Quarter Ended March 31,
|
|
|
% Better/ (Worse)
|
|
|
2017
|
|
|
2016
|
|
|
Life insurance in force (billions)
|
|
|
$
|
196
|
|
|
|
$
|
196
|
|
|
|
-
|
|
VUL/UL ending account balances (billions)
|
|
|
$
|
11.8
|
|
|
|
$
|
11.2
|
|
|
|
5
|
%
|
Auto and Home policies in force (thousands)
|
|
|
|
940
|
|
|
|
|
957
|
|
|
|
(2
|
)%
|
|
NM Not Meaningful - variance equal to or greater than 100%
|
|
Protection pretax operating earnings were $63 million compared to
$68 million a year ago.
Life and Health insurance earnings declined to $68 million from $81
million a year ago. The decrease related to the disclosed reinsurance
recapture last year and higher life and disability insurance claims
relative to favorable experience last year. Overall claims remain within
our expectations.
Auto & Home earnings improved substantially in the quarter from improved
loss performance trends that reflected changes made to product, pricing,
underwriting and claims management. The loss ratio improved to 88
percent from 92 percent a year ago. Catastrophe losses were higher than
anticipated at $25 million reflecting several storms in March. The
company entered into new reinsurance arrangements at the beginning of
the year to reduce catastrophe risk. These arrangements, combined with
other changes, are expected to reduce catastrophe loss volatility going
forward.
|
Ameriprise Financial, Inc.
|
Corporate & Other Segment Operating Results
|
|
(in millions, unaudited)
|
|
|
Quarter Ended March 31,
|
|
|
% Better/ (Worse)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Other, Excluding Long Term Care
|
|
|
|
|
|
|
|
|
|
Pretax operating loss
|
|
|
$
|
(81
|
)
|
|
|
$
|
(50
|
)
|
|
|
(62
|
)%
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
|
|
|
|
|
|
|
|
|
|
Pretax operating earnings
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Items included in operating earnings:
|
|
|
|
|
|
|
|
|
|
DOL planning and implementation expenses
|
|
|
$
|
(10
|
)
|
|
|
$
|
(5
|
)
|
|
|
NM
|
|
Renegotiated vendor arrangement
|
|
|
|
(9
|
)
|
|
|
|
-
|
|
|
|
NM
|
|
Total corporate & other impact
|
|
|
$
|
(19
|
)
|
|
|
$
|
(5
|
)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
NM Not Meaningful - variance equal to or greater than 100%
|
|
Corporate & Other pretax operating loss excluding long term
care was $81 million for the quarter compared to a $50 million loss a
year ago. The increase in expense was primarily related to incremental
Department of Labor expense of $10 million, the renegotiation of a
vendor arrangement, and higher amortization relating to an increase in
low income housing assets.
The Corporate & Other segment now includes the closed block of LTC
insurance, which generated $1 million of earnings in the quarter.
At Ameriprise Financial, we have been helping people feel confident
about their financial future for more than 120 years. With a nationwide
network of 10,000 financial advisors and extensive asset management,
advisory and insurance capabilities, we have the strength and expertise
to serve the full range of individual and institutional investors'
financial needs. For more information, visit ameriprise.com.
Ameriprise Financial Services, Inc. offers financial planning services,
investments, insurance and annuity products. Columbia Funds are
distributed by Columbia Management Investment Distributors, Inc., member
FINRA and managed by Columbia Management Investment Advisers, LLC.
Threadneedle International Limited is an SEC- and FCA-registered
investment adviser affiliate of Columbia Management Investment Advisers,
LLC based in the U.K. Auto and home insurance is underwritten by IDS
Property Casualty Insurance Company, or in certain states, Ameriprise
Insurance Company, both in De Pere, WI. RiverSource insurance and
annuity products are issued by RiverSource Life Insurance Company, and
in New York only by RiverSource Life Insurance Co. of New York, Albany,
New York. Only RiverSource Life Insurance Co. of New York is authorized
to sell insurance and annuity products in the state of New York. These
companies are all part of Ameriprise Financial, Inc. CA License
#0684538. RiverSource Distributors, Inc. (Distributor), Member FINRA.
Forward-Looking Statements
This news release contains forward-looking statements that reflect
management's plans, estimates and beliefs. Actual results could differ
materially from those described in these forward-looking statements.
Examples of such forward-looking statements include:
-
The statement in this news release that the fee-based businesses will
become larger contributors to total earnings over time;
-
the statements that the company estimates that its full year 2017
operating effective tax rate, will be in the 22 to 24 percent range,
-
the statement that reinsurance arrangements, combined with business
changes, are expected to reduce the Auto & Home earnings volatility
related to catastrophe losses;
-
statements of the company's plans, intentions, positioning,
expectations, objectives or goals, including those relating to asset
flows, mass affluent and affluent client acquisition strategy, client
retention and growth of our client base, financial advisor
productivity, retention, recruiting and enrollments, the introduction,
cessation, terms or pricing of new or existing products and services,
acquisition integration, general and administrative costs,
consolidated tax rate, return of capital to shareholders, and excess
capital position and financial flexibility to capture additional
growth opportunities;
-
other statements about future economic performance, the performance of
equity markets and interest rate variations and the economic
performance of the United States and of global markets; and
-
statements of assumptions underlying such statements.
The words "believe," "expect," "anticipate," "optimistic," "intend,"
"plan," "aim," "will," "may," "should," "could," "would," "likely,"
"forecast," "on pace," "project" and similar expressions are intended to
identify forward-looking statements but are not the exclusive means of
identifying such statements. Forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ
materially from such statements.
Such factors include, but are not limited to:
-
conditions in the interest rate, credit default, equity market and
foreign exchange environments, including changes in valuations,
liquidity and volatility;
-
changes in and the adoption of relevant accounting standards and
securities rating agency standards and processes, 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, exemptions and regulations implemented or that may be
implemented or modified in connection with the Dodd-Frank Wall Street
Reform and Consumer Protection Act or in light of the U.S. Department
of Labor rule and exemptions pertaining to the fiduciary status of
investment advice providers to 401(k) plan, plan sponsors, plan
participants and the holders of individual retirement or health
savings accounts;
-
investment management performance and distribution partner and
consumer acceptance of the company's products;
-
effects of competition in the financial services industry, including
pricing pressure, the introduction of new products and services and
changes in product distribution mix and distribution channels;
-
changes to the company's reputation that may arise from employee or
advisor misconduct, legal or regulatory actions, perceptions of the
financial services industry generally, improper management of
conflicts of interest or otherwise;
-
the company's capital structure, including indebtedness, limitations
on subsidiaries to pay dividends, and the extent, manner, terms and
timing of any share or debt repurchases management may effect as well
as the opinions of rating agencies and other analysts and the
reactions of market participants or the company's regulators,
advisors, distribution partners or customers in response to any change
or prospect of change in any such opinion;
-
changes to the availability and cost of liquidity and the Company's
credit capacity that may arise due to shifts in market conditions, the
Company's credit ratings and the overall availability of credit;
-
risks of default, capacity constraint or repricing by issuers or
guarantors of investments the company owns or by counterparties to
hedge, derivative, insurance or reinsurance arrangements or by
manufacturers of products the company distributes, experience
deviations from the company's assumptions regarding such risks, the
evaluations or the prospect of changes in evaluations of any such
third parties published by rating agencies or other analysts, and the
reactions of other market participants or the company's regulators,
advisors, distribution partners or customers in response to any such
evaluation or prospect of changes in evaluation;
-
experience deviations from the company's assumptions regarding
morbidity, mortality and persistency in certain annuity and insurance
products, or from assumptions regarding market returns assumed in
valuing or unlocking DAC and DSIC or market volatility underlying our
valuation and hedging of guaranteed living benefit annuity riders, or
from assumptions regarding interest rates assumed in our loss
recognition testing of our Long Term Care business, or from
assumptions regarding anticipated claims and losses relating to our
automobile and home insurance products;
-
changes in capital requirements that may be indicated, required or
advised by regulators or rating agencies;
-
the impacts of the company's efforts to improve distribution economics
and to grow third-party distribution of its products;
-
the ability to pursue and complete strategic transactions and
initiatives, including acquisitions, divestitures, restructurings,
joint ventures and the development of new products and services;
-
the ability to realize the financial, operating and business
fundamental benefits of strategic transactions and initiatives the
company has completed, is pursuing or may pursue in the future, which
may be impacted by the ability to obtain regulatory approvals, the
ability to effectively manage related expenses and by market, business
partner and consumer reactions to such strategic transactions and
initiatives;
-
the ability and timing to realize savings and other benefits from
re-engineering and tax planning;
-
interruptions or other failures in our communications, technology and
other operating systems, including errors or failures caused by third
party service providers, interference or failures caused by third
party attacks on our systems, or the failure to safeguard the privacy
or confidentiality of sensitive information and data on such systems;
and
-
general economic and political factors, including consumer confidence
in the economy and the financial industry, the ability and inclination
of consumers generally to invest as well as their ability and
inclination to invest in financial instruments and products other than
cash and cash equivalents, the costs of products and services the
company consumes in the conduct of its business, and applicable
legislation and regulation and changes therein (such as the June 2016
UK referendum on membership in the European Union and the uncertain
regulatory environment in the U.S. after the recent U.S. election),
including tax laws, tax treaties, fiscal and central government
treasury policy, and policies regarding the financial services
industry and publicly held firms, and regulatory rulings and
pronouncements.
Management cautions the reader that the foregoing list of factors is not
exhaustive. There may also be other risks that management is unable to
predict at this time that may cause actual results to differ materially
from those in forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date on which they are made. Management undertakes no
obligation to update publicly or revise any forward-looking statements.
The foregoing list of factors should be read in conjunction with the
"Risk Factors" discussion under Part 1, Item 1A of and elsewhere in our
Annual Report on Form 10-K for the year ended December 31, 2016
available at ir.ameriprise.com.
The financial results discussed in this news release represent past
performance only, which may not be used to predict or project future
results. The financial results and values presented in this news release
and the below-referenced Statistical Supplement are based upon asset
valuations that represent estimates as of the date of this news release
and may be revised in the company's Quarter Report on Form 10-Q for the
quarter ended March 31, 2017. For information about Ameriprise Financial
entities, please refer to the First quarter 2017 Statistical Supplement
available at ir.ameriprise.com and the tables that follow in this news
release.
Ameriprise Financial announces financial and other information to
investors through the company's investor relations website at
ir.ameriprise.com, as well as SEC filings, press releases, public
conference calls and webcasts. Investors and others interested in the
company are encouraged to visit the investor relations website from time
to time, as information is updated and new information is posted. The
website also allows users to sign up for automatic notifications in the
event new materials are posted. The information found on the website is
not incorporated by reference into this release or in any other report
or document the company furnishes or files with the SEC.
|
Ameriprise Financial, Inc.
|
After-tax(1) Items Included in
Operating Earnings
|
|
|
|
|
|
|
|
Per Diluted Share
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
|
March 31, 2017
|
|
|
March 31, 2017
|
(in millions, except per share amounts, unaudited)
|
|
|
|
|
|
|
Market impact on DAC/DSIC
|
|
|
$
|
7
|
|
|
|
$
|
0.04
|
|
Auto & Home catastrophe losses
|
|
|
$
|
(16
|
)
|
|
|
$
|
(0.10
|
)
|
DOL planning and implementation expenses
|
|
|
$
|
(7
|
)
|
|
|
$
|
(0.04
|
)
|
Renegotiation of a vendor arrangement
|
|
|
$
|
(6
|
)
|
|
|
$
|
(0.04
|
)
|
Tax benefit from adopting new accounting standard
|
|
|
$
|
28
|
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)All items except the tax benefit are shown after-tax
using the statutory tax rate of 35%.
|
|
Reconciliation Tables
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Earnings
|
|
|
|
|
|
|
|
Per Diluted Share
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
(in millions, except per share amounts, unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
403
|
|
|
|
$
|
364
|
|
|
|
$
|
2.52
|
|
|
|
$
|
2.09
|
|
Less: Net income (loss) attributable to consolidated investment
entities
|
|
|
|
1
|
|
|
|
|
(1
|
)
|
|
|
|
0.01
|
|
|
|
|
-
|
|
Add: Market impact on variable annuity guaranteed benefits (1)
|
|
|
|
63
|
|
|
|
|
(17
|
)
|
|
|
|
0.40
|
|
|
|
|
(0.09
|
)
|
Add: Market impact on indexed universal life benefits (1)
|
|
|
|
-
|
|
|
|
|
(19
|
)
|
|
|
|
-
|
|
|
|
|
(0.11
|
)
|
Add: Market impact of hedges on investments (1)
|
|
|
|
(1
|
)
|
|
|
|
40
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.23
|
|
Add: Net realized investment (gains) losses (1)
|
|
|
|
(16
|
)
|
|
|
|
16
|
|
|
|
|
(0.10
|
)
|
|
|
|
0.09
|
|
Add: Tax effect of adjustments (2)
|
|
|
|
(16
|
)
|
|
|
|
(7
|
)
|
|
|
|
(0.10
|
)
|
|
|
|
(0.04
|
)
|
Operating earnings
|
|
|
$
|
432
|
|
|
|
$
|
378
|
|
|
|
$
|
2.70
|
|
|
|
$
|
2.17
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
157.5
|
|
|
|
|
172.6
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
160.1
|
|
|
|
|
174.4
|
|
|
|
|
|
|
|
|
(1) Pretax operating adjustment.
|
|
(2) Calculated using the statutory tax rate of 35%.
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Total Net Revenues
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
$
|
2,901
|
|
|
$
|
2,765
|
|
Less: CIEs revenue
|
|
|
|
22
|
|
|
|
24
|
|
Less: Net realized investment gains (losses)
|
|
|
|
17
|
|
|
|
(16
|
)
|
Less: Market impact on indexed universal life benefits
|
|
|
|
1
|
|
|
|
9
|
|
Less: Market impact of hedges on investments
|
|
|
|
1
|
|
|
|
(40
|
)
|
Operating total net revenues
|
|
|
|
2,860
|
|
|
|
2,788
|
|
Less: Impact of transitioning advisory accounts to share classes
without 12b-1 fees
|
|
|
|
-
|
|
|
|
34
|
|
Less: Impact of one fewer fee day
|
|
|
|
-
|
|
|
|
15
|
|
Less: Foreign exchange translation
|
|
|
|
(15
|
)
|
|
|
-
|
|
Operating total net revenues excluding 12b-1, fee day and foreign
exchange impacts
|
|
|
$
|
2,875
|
|
|
$
|
2,739
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Total Expenses
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Total expenses
|
|
|
$
|
2,426
|
|
|
$
|
2,290
|
|
Less: CIEs expenses
|
|
|
|
21
|
|
|
|
26
|
|
Less: Market impact on variable annuity guaranteed benefits
|
|
|
|
63
|
|
|
|
(17
|
)
|
Less: Market impact on indexed universal life benefits
|
|
|
|
1
|
|
|
|
(10
|
)
|
Less: DAC offset to net realized investment gains (losses)
|
|
|
|
1
|
|
|
|
-
|
|
Operating expenses
|
|
|
$
|
2,340
|
|
|
$
|
2,291
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Pretax Operating Earnings
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
2016
|
Operating total net revenues
|
|
|
$
|
2,860
|
|
|
$
|
2,788
|
Operating expenses
|
|
|
|
2,340
|
|
|
|
2,291
|
Pretax operating earnings
|
|
|
$
|
520
|
|
|
$
|
497
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Effective Tax Rate
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2017
|
(in millions, unaudited)
|
|
|
GAAP
|
|
|
Operating
|
|
|
|
|
|
|
|
Pretax Income
|
|
|
$
|
475
|
|
|
|
$
|
520
|
|
Income tax provision
|
|
|
$
|
72
|
|
|
|
$
|
88
|
|
Effective tax rate
|
|
|
|
15.2
|
%
|
|
|
|
16.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Effective Tax Rate
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
|
|
Pretax operating earnings
|
|
|
$
|
520
|
|
|
|
|
|
Operating income tax provision
|
|
|
$
|
88
|
|
Benefit from adoption of stock compensation accounting guidance
|
|
|
|
(28
|
)
|
Operating income tax provision excluding benefit
|
|
|
$
|
116
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
16.9
|
%
|
|
|
|
|
|
|
Effective tax rate excluding income tax benefit
|
|
|
|
22.3
|
%
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Effective Tax Rate
|
|
|
|
|
Quarter Ended March 31, 2016
|
(in millions, unaudited)
|
|
|
GAAP
|
|
|
Operating
|
|
|
|
|
|
|
|
Pretax Income
|
|
|
$
|
475
|
|
|
|
$
|
497
|
|
Income tax provision
|
|
|
$
|
111
|
|
|
|
$
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
23.3
|
%
|
|
|
|
23.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Advice & Wealth Management Operating Net
Revenues
|
|
|
|
|
|
|
|
Quarter Ended March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Operating net revenues
|
|
|
$
|
1,295
|
|
|
$
|
1,198
|
Less: Impact of transitioning advisory accounts to share classes
without 12b-1 fees
|
|
|
|
-
|
|
|
|
34
|
Less: Impact of one fewer fee day
|
|
|
|
-
|
|
|
|
6
|
Operating total net revenues excluding 12b-1 and fee day impacts
|
|
|
$
|
1,295
|
|
|
$
|
1,158
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Asset Management Adjusted Net Pretax
Operating Margin
|
|
|
|
|
Quarter Ended March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Operating total net revenues
|
|
|
$
|
726
|
|
|
|
$
|
724
|
|
Less: Distribution pass through revenues
|
|
|
|
206
|
|
|
|
|
199
|
|
Less: Subadvisory and other pass through revenues
|
|
|
|
92
|
|
|
|
|
87
|
|
Adjusted operating revenues
|
|
|
$
|
428
|
|
|
|
$
|
438
|
|
|
|
|
|
|
|
|
Pretax operating earnings
|
|
|
$
|
150
|
|
|
|
$
|
149
|
|
Less: Operating net investment income
|
|
|
|
4
|
|
|
|
|
3
|
|
Add: Amortization of intangibles
|
|
|
|
4
|
|
|
|
|
6
|
|
Adjusted operating earnings
|
|
|
$
|
150
|
|
|
|
$
|
152
|
|
|
|
|
|
|
|
|
Pretax operating margin
|
|
|
|
20.7
|
%
|
|
|
|
20.6
|
%
|
Adjusted net pretax operating margin
|
|
|
|
35.0
|
%
|
|
|
|
34.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
Reconciliation Table: Return on Equity (ROE) Excluding Accumulated
|
Other Comprehensive Income "AOCI"
|
|
|
|
|
Twelve Months Ended
|
|
|
|
March 31,
|
(in millions, unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
1,353
|
|
|
|
$
|
1,533
|
|
Less: Adjustments (1)
|
|
|
|
(128
|
)
|
|
|
|
(149
|
)
|
Operating earnings
|
|
|
|
1,481
|
|
|
|
|
1,682
|
|
Less: Unlocking, net of tax (2)
|
|
|
|
(153
|
)
|
|
|
|
27
|
|
Operating earnings excluding unlocking
|
|
|
$
|
1,634
|
|
|
|
$
|
1,655
|
|
|
|
|
|
|
|
|
Total Ameriprise Financial, Inc. shareholders' equity
|
|
|
$
|
6,684
|
|
|
|
$
|
7,576
|
|
Less: Accumulated other comprehensive income, net of tax
|
|
|
|
419
|
|
|
|
|
472
|
|
Total Ameriprise Financial, Inc. shareholders' equity excluding AOCI
|
|
|
|
6,265
|
|
|
|
|
7,104
|
|
Less: Equity impacts attributable to the consolidated investment
entities
|
|
|
|
-
|
|
|
|
|
170
|
|
Operating equity
|
|
|
$
|
6,265
|
|
|
|
$
|
6,934
|
|
|
|
|
|
|
|
|
Return on equity excluding AOCI
|
|
|
|
21.6
|
%
|
|
|
|
21.6
|
%
|
Operating return on equity excluding AOCI (3)
|
|
|
|
23.6
|
%
|
|
|
|
24.3
|
%
|
Operating return on equity excluding AOCI and unlocking
|
|
|
|
26.1
|
%
|
|
|
|
23.9
|
%
|
|
(1) Adjustments reflect the trailing twelve months' sum of
after-tax net realized investment gains/losses, net of deferred
sales inducement costs ("DSIC") and deferred acquisition costs
("DAC") amortization, unearned revenue amortization and the
reinsurance accrual; market impact on variable annuity guaranteed
benefits, net of hedges and related DSIC and DAC amortization; the
market impact on indexed universal life benefits, net of hedges
and related DAC amortization, unearned revenue amortization, and
the reinsurance accrual; the market impact of hedges to offset
interest rate changes on unrealized gains or losses for certain
investments; integration/restructuring charges; and the impact of
consolidating certain investment entities. After-tax is calculated
using the statutory tax rate of 35%.
|
|
(2) After-tax is calculated using the statutory tax rate of 35%.
|
|
(3) Operating return on equity excluding accumulated other
comprehensive income (AOCI) is calculated using the trailing
twelve months of earnings excluding the after-tax net realized
investment gains/losses, net of deferred sales inducement costs
("DSIC") and deferred acquisition costs ("DAC") amortization,
unearned revenue amortization and the reinsurance accrual; market
impact on variable annuity guaranteed benefits, net of hedges and
related DSIC and DAC amortization; the market impact on indexed
universal life benefits, net of hedges and related DAC
amortization, unearned revenue amortization, and the reinsurance
accrual; the market impact of hedges to offset interest rate
changes on unrealized gains or losses for certain investments;
integration/restructuring charges; the impact of consolidating
certain investment entities; and discontinued operations in the
numerator, and Ameriprise Financial shareholders' equity excluding
AOCI and the impact of consolidating investment entities using a
five-point average of quarter-end equity in the denominator.
After-tax is calculated using the statutory tax rate of 35%.
|
|
|
Ameriprise Financial, Inc.
|
Consolidated GAAP Results
|
|
(in millions, unaudited)
|
|
|
Quarter Ended March 31,
|
|
|
% Better/ (Worse)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Management and financial advice fees
|
|
|
$
|
1,482
|
|
|
$
|
1,386
|
|
|
7
|
%
|
Distribution fees
|
|
|
|
443
|
|
|
|
435
|
|
|
2
|
|
Net investment income
|
|
|
|
391
|
|
|
|
331
|
|
|
18
|
|
Premiums
|
|
|
|
339
|
|
|
|
368
|
|
|
(8
|
)
|
Other revenues
|
|
|
|
256
|
|
|
|
254
|
|
|
1
|
|
Total revenues
|
|
|
|
2,911
|
|
|
|
2,774
|
|
|
5
|
|
Banking and deposit interest expense
|
|
|
|
10
|
|
|
|
9
|
|
|
(11
|
)
|
Total net revenues
|
|
|
|
2,901
|
|
|
|
2,765
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Distribution expenses
|
|
|
|
823
|
|
|
|
770
|
|
|
(7
|
)
|
Interest credited to fixed accounts
|
|
|
|
162
|
|
|
|
146
|
|
|
(11
|
)
|
Benefits, claims, losses and settlement expenses
|
|
|
|
567
|
|
|
|
482
|
|
|
(18
|
)
|
Amortization of deferred acquisition costs
|
|
|
|
72
|
|
|
|
110
|
|
|
35
|
|
Interest and debt expense
|
|
|
|
50
|
|
|
|
55
|
|
|
9
|
|
General and administrative expense
|
|
|
|
752
|
|
|
|
727
|
|
|
(3
|
)
|
Total expenses
|
|
|
|
2,426
|
|
|
|
2,290
|
|
|
(6
|
)
|
Pretax income
|
|
|
|
475
|
|
|
|
475
|
|
|
-
|
|
Income tax provision
|
|
|
|
72
|
|
|
|
111
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
403
|
|
|
$
|
364
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170424006609/en/
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