Second quarter 2017 net income per diluted
share increased 27 percent to $2.50Operating EPS increased 26
percent to $2.80
Second quarter 2017 return on equity excluding
AOCI was 23.0 percentOperating ROE excluding AOCI was 25.2 percent
or 27.7 percent before annual unlocking(1)
Ameriprise Financial, Inc. (NYSE: AMP) today reported second
quarter 2017 net income of $393 million, up 17 percent compared to
a year ago, or $2.50 per diluted share, up 27 percent. Operating
earnings were $441 million, up 16 percent compared to a year ago,
with operating earnings per diluted share of $2.80, up 26
percent.
GAAP Results – Second quarterNet
revenues of $3.0 billion increased 4 percent, or $114 million, from
a year ago, primarily due to strong revenue growth in Advice &
Wealth Management. Normalizing for the net impacts of transitioning
advisory accounts to share classes without 12b-1 fees, net revenues
increased 6 percent due to strong net revenue growth in Advice
& Wealth Management from growth in client assets.
Expenses of $2.5 billion increased 1 percent, or $13 million,
from a year ago, reflecting increased distribution expense from
higher advisor productivity, as well as the market impact on
variable annuity guaranteed benefits. General and administrative
expenses declined 3 percent reflecting ongoing expense
discipline.
Operating Results – Second
quarterNormalizing for the net impacts of transitioning
advisory accounts to share classes without 12b-1 fees, operating
net revenue increased 5 percent due to strong 13 percent net
revenue growth in Advice & Wealth Management from growth in
client assets. In total, operating net revenues of $3.0 billion
increased 3 percent, or $94 million.
Operating expenses of $2.4 billion decreased 1 percent, or $14
million, from a year ago. General and administrative expenses
declined 3 percent reflecting ongoing expense discipline.
The company continued to deliver a strong return to shareholders
through share repurchases and dividends of $481 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 delivered strong results in the second quarter led
by significant gains in wealth management,” said Jim Cracchiolo,
chairman and chief executive officer. “We’re generating good growth
that reflects the value of the advice and the solutions we provide
our clients. In this low volatility environment, clients are
putting their money to work, which fueled a record quarter for net
inflows in fee-based investment advisory accounts at $4.5 billion
and nice gains in advisor productivity.”
“We remain focused on serving our clients and supporting our
advisors while we execute our strategy for growth and long-term
value creation. As our fee-based businesses become even larger
contributors of our earnings, we’re generating strong free cash
flow that we invest for business growth and return to shareholders.
In 2017, we’ve returned nearly $1 billion to shareholders and our
return on equity remains among the highest in the industry.”
Ameriprise Financial, Inc. Second Quarter
Summary
(in millions, except per share amounts,
unaudited)
Quarter EndedJune 30,
Per Diluted ShareQuarter
EndedJune 30,
2017 2016
%Better/(Worse)
2017 2016
%Better/(Worse)
Net income $ 393 $ 335 17 % $ 2.50 $ 1.97 27 %
Adjustments, net of tax
(1) (see reconciliation on p. 15)
48 44 0.30 0.26 Operating earnings (2)
$ 441 $ 379 16 % $ 2.80 $ 2.23 26 %
Weighted average common shares
outstanding:
Basic
155.1 168.3 Diluted 157.5 170.1
(1) After-tax is calculated using the
statutory tax rate of 35%.
(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.
Results in the quarter included certain notable items that are
discussed in the segment commentary and detailed on page 14.
Taxes
The operating effective tax rate in the quarter was 24.5 percent
compared to 20.4 percent a year ago. Taxes in the current quarter
reflect the adoption of stock compensation accounting guidance,
which had a favorable $4 million impact in the quarter. The company
estimates that its full year 2017 operating effective tax rate will
be approximately 23 percent.
Second 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 7 percent to $835 billion from Ameriprise
advisor client net inflows.
- The company continued to deliver a
differentiated level of capital return to shareholders while
maintaining strong balance sheet fundamentals and excess capital
position. The company repurchased 2.8 million shares of common
stock for $352 million and paid $129 million in quarterly
dividends.
Wealth Management continues to demonstrate strong results,
including growth in fee-based assets, increased advisor
productivity and margin expansion
- Advice & Wealth Management client
assets increased to a record $512 billion from attracting more
clients in the company’s target market of $500,000 to $5 million in
investable assets and strong client net inflows.
- Fee-based investment advisory (wrap)
net inflows were $4.5 billion in the quarter, bringing platform AUM
to $222 billion, one of the largest in the industry. Wrap inflows
grew for the fifth consecutive quarter and reached a new high.
- Ameriprise continues to improve the
productivity of its 9,640 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 remains an attractive
destination for seasoned and productive advisors, with 81
experienced advisors joining the firm during the quarter.
- Ameriprise Financial was recognized as
a leading financial services firm in the latest Temkin Group
rankings in key industry categories:
- #1 in the investment industry in
customer service
- #1 in forgiveness
- #2 in trust
- On July 1, the company closed its
acquisition of Investment Professionals, Inc., an independent
broker-dealer based in San Antonio, Texas specializing in the
on-site delivery of investment programs for financial institutions,
including banks and credit unions. The acquisition adds
approximately 200 financial advisors and approximately $8 billion
in assets and will be reflected in the company’s third quarter 2017
results.
Global asset management platform with broad capabilities and
competitive margins
- Asset Management operating earnings
increased 19 percent and adjusted net pretax operating margin was
37.7 percent reflecting AUM growth, stable fee rates and well
controlled expenses. Asset Management AUM grew to $473 billion,
reflecting market appreciation partially offset by net
outflows.
- The vast majority of outflows in the
quarter were related to low fee, former parent assets, most of
which were event driven. The company has significant relationships
with two large clients from previous acquisitions, and periodically
our partners adjust their portfolios or we make changes to enhance
financial performance that can result in an elevated level of
outflows.
- Investment performance in equity, fixed
income and multi-asset portfolios and institutional strategies
remains strong. At quarter end, the company had 114 four- and
five-star Morningstar-rated funds.
- Columbia Threadneedle Investments
launched the Threadneedle US Disciplined Core Equities Fund and the
Threadneedle European Social Bond Fund, which extends its social
bond franchise beyond the UK and U.S. to provide access to European
investors.
Values-based, client-focused firm
- Ameriprise was recognized as a Top 50
Best Place to Work by the employment site Indeed.com.
- Columbia Threadneedle Investments was
named the Employer of the Year at the 2017 Women in Finance awards
in the UK.
- Nearly 4,000 Ameriprise employees,
advisors and clients came together on June 16 to provide food for
people in need. Working at more than 200 hunger-relief events
across the country, Ameriprise volunteers packaged and prepared
meals to help the 1 in 8 Americans who struggle with hunger. The
events were the first of two nationwide service days Ameriprise
organizes in partnership with Feeding America® each year,
reflecting the company’s ongoing commitment to help ensure hungry
families and individuals have access to food.
Ameriprise Financial, Inc. Advice & Wealth
Management Segment Operating Results (in millions,
unaudited)
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Advice & Wealth
Management Net revenues $ 1,348 $ 1,250 8 % Expenses
1,057 1,029 (3 )% Pretax operating earnings $ 291 $ 221 32 %
Pretax operating margin 21.6 % 17.7 %
Quarter
Ended June 30,
% Better/(Worse)
2017 2016 Retail client assets (billions) $ 512 $ 462
11 % Wrap net flows (billions) $ 4.5 $ 2.3 94 % Brokerage cash
balance (billions) $ 25.6 $ 23.2 10 % Operating net revenue per
branded advisor (trailing 12 months - thousands) $ 541 $ 507 7 %
Operating net revenue per branded advisor
normalizing for the net impact of 12b-1 fee changes (quarterly -
thousands)
$ 139 $ 122 14 %
Advice & Wealth Management pretax operating earnings
increased 32 percent to $291 million driven by asset growth, higher
earnings on cash balances and well controlled expenses. This
resulted in strong 390 basis points of margin expansion and a
record pretax operating margin of 21.6 percent, up from 17.7
percent a year ago.
Operating net revenues were $1.3 billion reflecting strong net
inflows into wrap accounts, higher earnings on cash balances and
market appreciation. Operating net revenues grew 13 percent,
normalizing for the 12b-1 fee net impacts during the quarter.
Results in the quarter reflect the full impacts of the company’s
transition to share classes without 12b-1 fees in advisory
accounts, which reduced revenue by a net $54 million. Client asset
growth remains strong as the company continues to see asset growth
in fee-based wrap accounts outpacing growth in brokerage account
balances.
Operating expenses increased 3 percent to $1.1 billion primarily
from higher distribution expenses related to growth in client
assets. General and administrative expenses were flat compared to a
year ago, reflecting continued strong expense controls.
Total retail client assets increased to a high of $512 billion,
driven by client net inflows, client acquisition and market
appreciation. Wrap net inflows reached a new high of $4.5 billion
in the quarter, which contributed to a 17 percent year-over-year
increase in balances to $222 billion. Client cash balances were
$25.6 billion, up from a year ago, and certificates balances grew
to $6.2 billion.
Total advisors were 9,640 reflecting good recruiting and
retention of advisors, with 81 experienced advisors moving their
practices to Ameriprise in the quarter. Operating net revenue per
advisor on a trailing 12-month basis increased to $541,000.
Operating net revenue per advisor on a quarterly basis increased 14
percent after normalizing for the net impact from eliminating 12b-1
fees in advisory accounts.
Ameriprise Financial, Inc. Asset Management
Segment Operating Results
(in millions, unaudited)
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Asset Management Net revenues $ 748
$ 739 1 % Expenses 572 591 3 % Pretax
operating earnings $ 176 $ 148 19 % Pretax
operating margin 23.5 % 20 % Adjusted net pretax operating margin
(1) 37.7 % 33 % Item included in operating earnings: Resolution of
legal matter $ — $ (9 ) NM
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Total segment AUM (billions) $ 473 $ 460 3
%
Net Flows
(billions)
Former parent company related net new flows $ (7.0 ) $ (2.3 ) NM
Global Retail net flows, excl. former parent flows (0.6 ) 0.2 NM
Global Institutional net flows, excl. former parent flows
(1.1 ) (2.6 ) 58 % Total segment net flows $ (8.7 ) $ (4.7 )
(85 )%
(1) See reconciliation on page 17
NM Not Meaningful — variance equal to or greater than 100%
Asset Management reported strong pretax operating
earnings of $176 million, reflecting market appreciation partially
offset by the cumulative impact of net outflows. The year ago
quarter included a $9 million legal expense. Second quarter
adjusted net pretax operating margin grew to 37.7 percent from 33.0
percent a year ago.
Operating net revenues grew 1 percent to $748 million driven by
asset growth from market appreciation, partially offset by the
cumulative impact of net outflows. Normalizing for the 12b-1 fee
change, operating net revenues grew 3 percent. AUM increased 3
percent to $473 billion.
Operating expenses of $572 million decreased 3 percent
reflecting well managed general and administrative expenses, lower
distribution expenses from the 12b-1 fee change and the impact of
foreign exchange rates, as well as a legal expense in the prior
year period.
The vast majority of net outflows in the quarter were low fee,
former parent assets, most of which related to specific events. The
company has strong relationships with two large clients from
previous acquisitions that periodically adjust their portfolios. In
addition, we may make changes to enhance financial performance.
These actions can result in an elevated level of outflows as the
company experienced in the quarter.
- Zurich outflows were $4.5 billion in
the quarter and included $3.6 billion of low fee pension
assets.
- U.S. Trust outflows of $2.5 billion
were elevated in the quarter and included $1.5 billion related to
mutually agreed upon actions we took for low fee fixed income
products that will improve the economics of the business over
time.
In global third party institutional, outflows were $1.1 billion.
Equity and fixed income mandates funded as expected but these
inflows were more than offset by $800 million of CDO liquidations
and a $500 million outflow from a large client seeking
liquidity.
Global retail outflows were $600 million, excluding former
parent relationships. In U.S. retail, outflows were $1.1 billion,
reflecting industry pressures on active strategies and reinvested
dividends. In EMEA, net inflows were $500 million reflecting good
traction in European equity funds.
In the quarter, the company made progress on the multiple
strategies in place to address industry flow pressures, including
focusing our product offerings in categories where industry assets
are flowing and enhancing marketing and distribution effectiveness.
The Solutions platform is gaining traction, including gross sales
of more than $500 million for the Adaptive Risk Allocation fund in
the U.S. and the Dynamic Real Return fund in the UK.
Ameriprise Financial, Inc. Annuities Segment
Operating Results (in millions, unaudited)
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Annuities Net revenues $ 627
$ 619 1 % Expenses 485 473 (3 )% Pretax operating
earnings $ 142 $ 146 (3 )% Variable annuity pretax operating
earnings $ 127 $ 118 8 % Fixed annuity pretax operating earnings
15 28 (46 )% Total pretax operating earnings $ 142 $
146 (3 )% Item included in operating earnings: Market impact on DAC
and DSIC (mean reversion) $ 9 $ 1 NM
Quarter Ended June
30,
% Better/(Worse)
2017 2016 Variable annuity ending account balances
(billions) $ 77.4 $ 74.6 4 % Variable annuity net flows (millions)
$ (1,009 ) $ (512 ) (97 )% Fixed annuity ending account balances
(billions) $ 9.6 $ 10.3 (7 )% Fixed annuity net flows (millions) $
(243 ) $ (256 ) 5 % NM Not Meaningful — variance equal to or
greater than 100%
Annuities pretax operating earnings were $142 million
compared to $146 million a year ago.
Variable annuity operating earnings were $127 million compared
to $118 million a year ago. Increased earnings reflect equity
market growth and a favorable market impact on DAC/DSIC, partially
offset by the ongoing impact of unlocking and a higher lapse rate.
Variable annuity account balances increased 4 percent to $77
billion due to market appreciation partially offset by net
outflows. Variable annuity net outflows increased to $1 billion due
to an 11 percent decline in cash sales and an increase in lapse
rates, both in line with industry trends.
Fixed annuity operating earnings decreased to $15 million
reflecting continued spread compression given the extended period
of low interest rates and lower account balances. In addition, the
prior year included a $4 million benefit from higher than expected
mortality rates for income annuity contract holders. Account
balances declined 7 percent from limited new product sales and
higher lapses.
Ameriprise Financial, Inc. Protection Segment
Operating Results (in millions,
unaudited)
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Protection Net revenues $ 517
$ 538 (4 )% Expenses 466 500 7 % Pretax
operating earnings $ 51 $ 38 34 % Life and
Health insurance net revenues $ 256 $ 257 — % Life and Health
insurance expenses 187 185 (1 )% Life
and Health insurance pretax operating earnings $ 69 $ 72
(4 )% Auto and Home net revenues $ 261 $ 281 (7 )%
Auto and Home expenses 279 315 11 %
Auto and Home pretax operating loss $ (18 ) $ (34 ) 47 %
Items included in operating earnings: Market impact on DAC (mean
reversion) $
— $ — — % Auto and Home catastrophe losses
(44 ) (37 ) (19 )% Total protection impact $ (44 ) $
(37 ) (19 )%
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Life insurance in force (billions) $ 196 $
196 — % VUL/UL ending account balances (billions) $ 12.0 $ 11.2 7 %
Auto and Home policies in force (thousands) 937 956 (2 )%
Protection pretax operating earnings were $51 million
compared to $38 million a year ago.
Life and Health insurance earnings declined to $69 million from
$72 million a year ago reflecting the low interest rate
environment. Overall claims experience remains within expected
ranges; the disability income loss ratio was worse than a year ago
when claims were unusually favorable. VUL/UL cash sales were up 18
percent to $78 million.
Auto & Home loss performance continued to improve from rate
increases, enhanced underwriting and claims processing, as well as
additional use of reinsurance to manage catastrophe risk. The $18
million loss in the quarter reflected improved underlying business
performance that was more than offset by $44 million of net
catastrophe losses. Consistent with the industry, catastrophe
losses were elevated from hail storms in Colorado, Texas and
Minnesota. Gross catastrophe losses were substantially mitigated by
reinsurance programs established earlier this year.
Ameriprise Financial, Inc. Corporate & Other
Segment Operating Results (in millions, unaudited)
Quarter Ended June 30,
% Better/(Worse)
2017 2016 Corporate &
Other, Excluding Long Term Care Pretax operating loss $ (73 ) $
(76 ) 4 %
Long Term Care Pretax operating loss $ (3 )
$ (1 ) NM Items included in operating earnings: DOL planning
and implementation expenses $ (8 ) $ (7 ) (14 )% Resolution of
legal matter — (14 ) NM Loss on sale of operations center real
estate — (4 ) NM Total corporate & other
impact $ (8 ) $ (25 ) 68 % NM Not Meaningful — variance
equal to or greater than 100%
Corporate & Other pretax operating loss excluding
long term care was $73 million for the quarter and included higher
compensation-related expenses and other timing differences.
Incremental DOL expenses were $8 million, down from $10 million in
the first quarter of 2017. DOL-related expenses are expected to
continue to trend down in the second half of the year as the
company prepares for the January 2018 effective date.
Long Term Care pretax operating loss was $3 million 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 statement that the company
estimates that its full year 2017 operating effective tax rate will
be approximately 23 percent;
- the statement that DOL-related expenses
are expected to trend down in the second half of the year;
- 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 June 30, 2017. For
information about Ameriprise Financial entities, please refer to
the Second 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
(in millions, except per share amounts,
unaudited)
Quarter EndedJune 30,
2017
Per Diluted ShareQuarter
EndedJune 30, 2017
Auto & Home catastrophe losses $ (29 ) $ (0.18 ) Market
Impact on DAC/DSIC $ 6 $ 0.04 Tax benefit from adopting new
accounting standard $ 4 $ 0.03 DOL planning and implementation
expenses $ (5 ) $ (0.03 ) (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
Quarter EndedJune 30,
Per Diluted ShareQuarter
EndedJune 30,
(in millions, except per share amounts, unaudited)
2017
2016 2017 2016
Net income $ 393 $ 335 $ 2.50 $ 1.97 Less: Net income (loss)
attributable to consolidated investment entities — — — —
Add: Market impact on variable annuity
guaranteed benefits (1)
80 58 0.51 0.34 Add: Market impact on indexed universal life
benefits (1) 6 (5 ) 0.04 (0.03 ) Add: Market impact of hedges on
investments (1) 8 19 0.05 0.11 Add: Net realized investment (gains)
losses (1) (20 ) (5 ) (0.13 ) (0.03 ) Add: Tax effect of
adjustments (2) (26 ) (23 ) (0.17 )
(0.13 ) Operating earnings $ 441 $ 379 $ 2.80
$ 2.23 Weighted average common shares outstanding: Basic
155.1 168.3 Diluted 157.5 170.1
(1) Pretax operating adjustment.
(2) Calculated using the statutory tax
rate of 35%.
Ameriprise Financial, Inc. Reconciliation
Table: Total Net Revenues
Quarter EndedJune 30,
(in millions, unaudited)
2017 2016
Total net revenues $ 2,985 $ 2,871 Less: CIEs revenue 25 26
Less: Net realized investment gains (losses) 21 5 Less: Market
impact on indexed universal life benefits (3 ) 3 Less: Market
impact of hedges on investments (8 ) (19 ) Operating
total net revenues 2,950 2,856 Less: Net impacts of transitioning
advisory accounts to share classes without 12b-1 fees 10
64 Operating total net revenues excluding
12b-1 impact $ 2,940 $ 2,792
Ameriprise Financial, Inc. Reconciliation Table: Total
Expenses
Quarter
Ended June 30,
(in millions, unaudited)
2017 2016
Total expenses $ 2,474 $ 2,461 Less: CIEs expenses 24 25
Less: Market impact on variable annuity guaranteed benefits 80 58
Less: Market impact on indexed universal life benefits 3 (2 ) Less:
DAC/DSIC offset to net realized investment gains (losses) 1
— Operating expenses $ 2,366 $ 2,380
Ameriprise Financial, Inc.
Reconciliation Table:
Pretax Operating Earnings
Quarter EndedJune 30,
(in millions, unaudited)
2017 2016
Operating total net revenues $ 2,950 $ 2,856 Operating
expenses 2,366 2,380 Pretax operating earnings $ 584
$ 476
Ameriprise Financial, Inc.
Reconciliation Table: General and Administrative Expense
Quarter
Ended June 30,
(in millions, unaudited)
2017 2016
General and administrative expense $ 739 $ 763 Less: CIEs
expenses 2 1 Operating general and administrative
expense $ 737 $ 762
Ameriprise Financial, Inc.
Reconciliation Table: Effective Tax Rate
Quarter Ended June 30,
2017
(in millions, unaudited)
GAAP Operating
Pretax income $ 511 $ 584 Income tax provision $ 118 $ 143
Effective tax rate 23.1 % 24.5 %
Ameriprise
Financial, Inc. Reconciliation Table: Effective Tax Rate
Quarter Ended June 30,
2016
(in millions, unaudited)
GAAP Operating Pretax
income $ 410 $ 476 Income tax provision $ 75 $ 97 Effective
tax rate 18.4 % 20.4 %
Ameriprise Financial,
Inc. Reconciliation Table: Advice & Wealth Management
Operating Net Revenues
Quarter Ended June
30,
(in millions, unaudited)
2017 2016
Operating net revenues $ 1,348 $ 1,250 Less: Net impact of
transitioning advisory accounts to share classes without 12b-1 fees
10 64 Operating total net revenues normalized for
12b-1 impact $ 1,338 $ 1,186
Ameriprise Financial,
Inc. Reconciliation Table: Asset Management Operating Net
Revenues
Quarter Ended June
30,
(in millions, unaudited)
2017 2016
Operating net revenues $ 748 $ 739 Less: Net impact of
transitioning advisory accounts to share classes without 12b-1 fees
— 13 Operating total net revenues normalized for
12b-1 impact $ 748 $ 726
Ameriprise Financial,
Inc. Reconciliation Table: Asset Management Adjusted Net
Pretax Operating Margin
Quarter Ended June 30,
(in millions, unaudited)
2017 2016 Operating total net
revenues $ 748 $ 739 Less: Distribution pass through revenues 195
203 Less: Subadvisory and other pass through revenues 91
88 Adjusted operating revenues $ 462 $
448 Pretax operating earnings $ 176 $ 148 Less:
Operating net investment income 6 5 Add: Amortization of
intangibles 4 5 Adjusted operating
earnings $ 174 $ 148 Pretax operating margin
23.5 % 20.0 % Adjusted net pretax operating margin 37.7 % 33.0 %
Ameriprise Financial, Inc. Reconciliation Table:
Return on Equity (ROE) Excluding Accumulated Other
Comprehensive Income “AOCI”
Twelve Months EndedJune
30,
(in millions, unaudited)
2017 2016 Net income $ 1,411 $ 1,453 Less:
Adjustments (1) (132 ) (174 ) Operating earnings
1,543 1,627 Less: Unlocking, net of tax (2) (153 ) 27
Operating earnings excluding unlocking $ 1,696 $
1,600 Total Ameriprise Financial, Inc. shareholders’
equity $ 6,520 $ 7,355 Less: Accumulated other comprehensive
income, net of tax 390 459 Total
Ameriprise Financial, Inc. shareholders’ equity excluding AOCI
6,130 6,896
Less: Equity impacts attributable to the
consolidated investment entities
— 114 Operating equity $ 6,130 $
6,782 Return on equity excluding AOCI 23.0 % 21.1 %
Operating return on equity excluding AOCI (3) 25.2 % 24.0 %
Operating return on equity excluding AOCI and unlocking 27.7 % 23.6
%
(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 June 30,
% Better/(Worse)
2017 2016 Revenues
Management and financial advice fees $ 1561 $ 1,439 8 %
Distribution fees 430 448 (4 ) Net investment income 391 372 5
Premiums 348 372 (6 ) Other revenues 267 248 8 Total
revenues 2,997 2,879 4 Banking and deposit interest expense
12 8 (50 )
Total net revenues 2,985 2,871 4
Expenses Distribution expenses 832 803 (4 ) Interest
credited to fixed accounts 171 158 (8 ) Benefits, claims, losses
and settlement expenses 611 597 (2 ) Amortization of deferred
acquisition costs 69 87 21 Interest and debt expense 52 53 2
General and administrative expense 739 763 3
Total
expenses 2,474 2,461 (1 ) Pretax income 511 410 25 Income tax
provision 118 75 (57 )
Net income $ 393
$ 335 17
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170725006432/en/
Ameriprise FinancialInvestor Relations:Alicia A. Charity,
612-671-2080alicia.a.charity@ampf.comorChad J. Sanner,
612-671-4676chad.j.sanner@ampf.comorMedia Relations:Paul W.
Johnson, 612-671-0625paul.w.johnson@ampf.com
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