Third quarter 2017 net income per diluted share
was a record $3.24Operating EPS was a record $3.53
Third quarter 2017 return on equity excluding
AOCI was 28.1 percentOperating ROE excluding AOCI was 30.8
percent
Excluding annual unlocking(1), operating EPS
was $3.12Operating ROE excluding AOCI was 29.8 percent
Ameriprise Financial, Inc. (NYSE: AMP) today reported third
quarter 2017 net income of $503 million, up $288 million compared
to a year ago, or $3.24 per diluted share, up $1.94. Operating
earnings were $548 million, up $321 million compared to a year ago,
with operating earnings per diluted share of $3.53, up $2.16.
Excluding the non-cash impact of annual unlocking(1) in both
periods, operating earnings were up 27 percent to $484 million in
the quarter and operating earnings per diluted share increased 36
percent to $3.12.
GAAP Results – Third quarterNet
revenues were $3.0 billion driven by strong growth in Advice &
Wealth Management that was more than offset by impacts from
unlocking and 12b-1 fees. Normalizing for those items, net revenues
increased 5 percent due to a strong increase in net revenue in
Advice & Wealth Management from growth in client assets.
Expenses of $2.4 billion decreased 15 percent, or $407 million,
from a year ago, reflecting the year-over-year benefit from annual
unlocking, partially offset by increased distribution expenses from
increased advisor productivity. General and administrative expenses
increased 3 percent.
Operating Results – Third
quarterOperating net revenue increased 6 percent to $3.0
billion after normalizing for the net impacts of unlocking and
12b-1 fees. Advice & Wealth Management net revenues increased
14 percent driven by growth in client assets.
Operating expenses of $2.3 billion decreased 16 percent, or $428
million, from a year ago, largely due to unlocking impacts. General
and administrative expenses increased 3 percent reflecting the
timing of accruals for performance-related compensation.
The company continued to deliver a strong return to shareholders
through share repurchases and dividends of $462 million in the
quarter.
“Ameriprise delivered a record third quarter driven by
significant momentum in our Advice & Wealth Management business
and asset growth across the firm,” said Jim Cracchiolo, chairman
and chief executive officer.
(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.
“We reported new highs in retail client flows, assets and
advisor productivity, and for the sixth consecutive quarter,
increased client net inflows into fee-based investment advisory
accounts. We’re serving more clients in our target markets of
the affluent and mass affluent, as well as attracting quality
advisors to Ameriprise.
“In Asset Management, we’re consistently delivering strong
investment performance for clients while managing industry change
and generating competitive financial results.
“We’re benefiting from our scale and effective expense
management and investing for near-and long-term growth. We’re also
consistently returning capital to shareholders through dividends
and share repurchases and achieved a new high for return on equity
at nearly 30 percent.”
Ameriprise Financial, Inc.Third
Quarter Summary
(in millions, except per share amounts,
unaudited)
Quarter EndedSeptember
30,
Per Diluted ShareQuarter
EndedSeptember 30,
2017 2016
% Better/(Worse)
2017 2016
% Better/(Worse)
GAAP net income $ 503 $ 215 NM $ 3.24 $ 1.30 NM
Operating earnings (1)
(see reconciliation on page 13) $ 548 $ 227 NM $ 3.53 $ 1.37 NM
Less: annual unlocking impact, net of tax (2) 64
(153 ) 0.41 (0.92 ) Operating earnings,
excluding annual unlocking $ 484 $ 380 27 % $ 3.12
$ 2.29 36 % Weighted average common shares
outstanding: Basic 153.0 164.0 Diluted 155.4 165.8
(1) 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.
(2) After-tax is calculated using the
statutory tax rate of 35%.
NM Not Meaningful — variance equal to or greater than 100%
In the third quarter of the year, the company conducts its
annual review of insurance and annuity valuation assumptions
relative to current experience and management expectations. To the
extent that expectations change as a result of this review,
the company updates valuation assumptions and models and the
impact is reflected as part of annual unlocking.
Operating results in the quarter included certain notable items
that are discussed in the segment commentary.
Third Quarter 2017 Highlights
Ameriprise is transforming its business mix
- Total assets under management and
administration increased 9 percent to $869 billion reflecting
ongoing strength in Ameriprise advisor client net inflows.
- Advice and Wealth Management and Asset
Management generated 68 percent of pretax operating earnings this
quarter, excluding unlocking.
- The company delivered a differentiated
level of capital return to shareholders while maintaining strong
balance sheet fundamentals and excess capital position. In the
quarter, the company repurchased 2.3 million shares of common stock
for $333 million and paid $129 million in quarterly dividends.
Wealth manager generating strong results
- Advice & Wealth Management client
assets increased to a record $539 billion reflecting strong client
engagement and net inflows, as well as its acquisition of
Investment Professionals, Inc. (IPI).
- Fee-based investment advisory (wrap)
net inflows were $6.1 billion in the quarter, bringing platform AUM
to $235 billion, one of the largest in the industry. Wrap inflows
grew for the sixth consecutive quarter and reached a new high.
- Operating net revenue per advisor
increased 14 percent normalizing for net 12b-1 impacts and IPI
reflecting the full service financial planning advisors provide
clients with industry-leading technology and tools, as well as
dedicated field leadership and support. The company is an
attractive destination for productive advisors, with 88 experienced
advisors joining the firm during the quarter.
- On July 1, the company closed its
acquisition of IPI, an independent broker-dealer specializing in
the on-site delivery of investment programs for financial
institutions, including banks and credit unions. The
acquisition added 215 financial advisors and $8 billion in
assets.
Global asset manager with broad capabilities and competitive
margins
- Asset Management AUM grew to $484
billion, reflecting market appreciation partially offset by net
outflows.
- Investment performance in retail and
institutional equity, fixed income and multi-asset portfolios and
strategies remains strong. At quarter end, the company had 115
four- and five-star Morningstar-rated funds.
- On September 20, the company announced
its acquisition of Lionstone Investments, a leading national real
estate investment firm. The acquisition will add approximately $6
billion in assets and is expected to close later this year.
- Columbia Threadneedle continues to
build upon its multi-asset and strategic beta product offerings.
The Columbia Adaptive Risk Allocation Fund and the Threadneedle
Dynamic Real Return Fund had approximately $500 million in gross
sales in the U.S. and U.K., and in October, the company launched
its first fixed income strategic beta ETF – the Columbia
Diversified Fixed Income Allocation ETF.
Annuities and Protection businesses focused on our wealth
management clients
- Variable annuity account balances
increased 4 percent to $79 billion.
- Variable universal life/universal life
insurance sales grew 3 percent with ending account balances up 7
percent to $12 billion.
- The Auto & Home combined ratio
improved 5 points reflecting improved underlying loss performance
and effective risk mitigation of the recent hurricanes.
Values-based, client-focused firm
- Ameriprise advisors continue to earn
industry recognition: 12 Ameriprise advisors were named to the 2017
Barron’s Top 100 Independent Financial Advisors ranking, 13
Ameriprise advisors were named to Forbes America’s Top
Next-Generation Wealth Advisors list, seven Ameriprise advisors
were named to the 2017 Barron’s Top 100 Women Financial Advisors
list and eight Ameriprise advisors were recognized on a new
ranking, Working Mother Top Wealth Advisor Moms.
- Ameriprise has long supported hunger
and disaster relief efforts through ongoing philanthropic
partnerships with Feeding America, The American Red Cross and other
nonprofits, which is complemented by high levels of employee and
advisor volunteerism in the communities where we live and
work.
Ameriprise Financial, Inc.Advice
& Wealth Management Segment Operating Results
(in millions, unaudited)
Quarter Ended September
30,
% Better/(Worse)
2017 2016 Advice & Wealth
Management Net revenues $ 1,383 $ 1,272 9 % Expenses
1,085 1,041 (4 )% Pretax operating earnings $
298 $ 231 29 % Pretax operating margin 21.5 %
18.2 %
Quarter Ended September 30,
% Better/(Worse)
2017 2016 Retail client assets (billions) $ 539 $ 476
13 % Wrap net flows (billions) $ 6.1 $ 2.8 NM Brokerage cash
balance (billions) $ 25.5 $ 24.0 6 %
Operating net revenue per advisor
normalizing for the net impact of 12b-1 fee changes (1) (trailing
12 months - thousands)
$ 541 $ 484 12 %
Operating net revenue per advisor
normalizing for the net impact of 12b-1 fee changes (1) (quarterly
- thousands)
$ 141 $ 124 14 %
(1) Excludes IPI
NM Not Meaningful — variance equal to or
greater than 100%
Advice & Wealth Management pretax operating earnings
increased 29 percent to $298 million driven by asset growth, higher
earnings on cash balances and well-controlled expenses. This
resulted in strong 330 basis points of margin expansion and a
pretax operating margin of 21.5 percent, up from 18.2 percent a
year ago.
Operating net revenues of $1.4 billion grew 14 percent,
normalizing for the 12b-1 fee net impacts, reflecting strong net
inflows into wrap accounts, higher earnings on cash balances and
market appreciation. Client asset growth remains strong with growth
in fee-based wrap accounts outpacing growth in brokerage account
balances.
Operating expenses increased 4 percent to $1.1 billion primarily
from higher distribution expenses related to growth in client
assets. General and administrative expenses were up 5 percent
compared to a year ago, reflecting the timing of accruals for
performance-related compensation, the addition of IPI in the
current quarter and investments in the business.
Total retail client assets increased to a high of $539 billion
driven by client net inflows, client acquisition, market
appreciation and the acquisition of IPI. Wrap net inflows reached a
new high of $6.1 billion in the quarter, which contributed to a 19
percent year-over-year increase in balances to $235 billion. Client
cash balances were $25.5 billion, up from a year ago, and
certificates balances grew 13 percent to $6.4 billion.
Operating net revenue per advisor on a trailing 12-month basis
increased to $541,000 after normalizing for the net impact from
eliminating 12b-1 fees in advisory accounts and IPI. Operating net
revenue per advisor on a quarterly basis increased 14 percent after
normalizing for those items.
Total advisors increased to 9,890 reflecting good recruiting and
retention of advisors, with 88 experienced advisors moving their
practices to Ameriprise in the quarter and 215 joining through the
IPI acquisition.
Ameriprise Financial, Inc.Asset
Management Segment Operating Results
(in millions, unaudited)
Quarter Ended September
30,
% Better/(Worse)
2017 2016 Asset Management Net revenues
$ 778 $ 740 5 % Expenses 578 585 1 %
Pretax operating earnings $ 200 $ 155 29 %
Pretax operating margin 25.7 % 20.9 % Adjusted net pretax operating
margin (1) 40.4 % 35.8 %
Quarter Ended September 30,
% Better/(Worse)
2017 2016 Total segment AUM (billions) $ 484 $ 468 3
%
Net Flows
(billions)
Former parent company related net new flows $ (3.0 ) $ (1.5 ) (98
)% Global Retail net flows, excl. former parent flows (1.1 ) (1.9 )
42 % Global Institutional net flows, excl. former parent flows (0.6
) (1.9 ) 69 % Inflows from acquisitions — 1.0
NM Total segment net flows $ (4.7 ) $ (4.3 ) (7 )%
(1) See reconciliation on page 17
NM Not Meaningful — variance equal to or
greater than 100%
Asset Management pretax operating earnings increased 29
percent to $200 million, reflecting market appreciation and expense
discipline, partially offset by the cumulative impact of net
outflows. Earnings in the quarter also included $18 million in
performance fees from property funds in the U.K. and the unwinding
of several CLOs. Third quarter adjusted net pretax operating margin
grew to 40.4 percent from 35.8 percent a year ago.
Operating net revenues grew 5 percent to $778 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 7 percent. AUM increased 3
percent to $484 billion.
Operating expenses of $578 million decreased 1 percent
reflecting well managed general and administrative expenses, lower
distribution expenses from the 12b-1 fee change and ongoing
investments in the business.
Net outflows of $4.7 billion in the quarter included $3.0
billion of former-parent assets, which represented 64 percent of
total outflows. Global retail net outflows were $1.1 billion,
excluding former parent relationships, and included net inflows of
$400 million in EMEA wholesale. Global third party institutional
net outflows were $600 million.
Ameriprise Financial,
Inc.Annuities Segment Operating Results
(in millions, unaudited)
Quarter Ended September
30,
% Better/(Worse)
2017 2016 Annuities Net revenues $ 626
$ 631 (1 )% Expenses 345 699 51 %
Pretax operating earnings $ 281 $ (68 ) NM Excluding
unlocking: Net revenues $ 626 $ 631 (1 )% Expenses 465
484 4 % Pretax operating earnings $ 161
$ 147 10 % Variable Annuities: Pretax operating
earnings $ 262 $ (97 ) NM Annual unlocking 120
(220 ) NM Pretax operating earnings, excluding annual unlocking 142
123 15 % Fixed Annuities: Pretax operating earnings 19 29 (34 )%
Annual unlocking — 5 NM Pretax
operating earnings, excluding annual unlocking 19
24 (21 )% Total pretax operating earnings, excluding
annual unlocking $ 161 $ 147 10 % Item
included in operating earnings:
Market impact on DAC and DSIC (mean
reversion)
$ 12 $ 9 33 %
Quarter Ended September 30,
% Better/(Worse)
2017 2016 Variable annuity ending account balances
(billions) $ 78.7 $ 75.9 4 % Variable annuity net flows (millions)
$ (885 ) $ (650 ) (36 )% Fixed deferred annuity ending account
balances (billions) $ 9.5 $ 10.2 (7 )% Fixed deferred annuity net
flows (millions) $ (213 ) $ (240 ) 11 % NM Not Meaningful —
variance equal to or greater than 100%
Annuities pretax operating earnings were $281 million
compared to a pretax loss of $68 million a year ago. Adjusting for
unlocking, earnings increased 10 percent to $161 million. The
year-over-year improvement in unlocking was primarily related to
client behavioral experience that was more in line with our
expectations and updated market-related assumptions.
Variable annuity earnings, excluding unlocking, increased 15
percent to $142 million from growth in account balances and market
appreciation. Variable annuity account balances increased 4 percent
to $79 billion due to market appreciation, partially offset by net
outflows.
Fixed annuity operating earnings decreased to $19 million
reflecting continued spread compression given the extended period
of low interest rates and lower account balances. Account balances
declined 7 percent from limited new product sales and continued
lapses.
Ameriprise Financial,
Inc.Protection Segment Operating Results
(in millions, unaudited)
Quarter Ended September
30,
% Better/(Worse)
2017 2016 Protection Net revenues
$
478 $ 613 (22 )% Expenses 423 529 20 %
Pretax operating earnings
$
55
$
84 (35 )% Excluding unlocking: Net revenues $ 525 $
549 (4 )% Expenses 450 482 7 % Pretax
operating earnings $ 75 $ 67 12 % Life and
Health insurance: Net revenues $ 209 $ 327 (36 )% Expenses
161 235 31 % Pretax operating earnings 48 92
(48 )% Annual unlocking (20 ) 17 NM Pretax
operating earnings, excluding annual unlocking $ 68 $ 75
(9 )% Auto and Home: Operating net revenues $ 269 $
286 (6 )% Expenses 262 294 11 % Pretax
operating earnings/(loss) $ 7 $ (8 ) NM Items
included in operating earnings: Market impact on DAC (mean
reversion) $ 1 $ 1
—
Auto and Home catastrophe losses (15 ) (29 ) 48 % Auto and Home
prior year reserve development
—
10 NM Total protection impact $ (14 ) $ (18 )
22 %
Quarter Ended September 30,
% Better/(Worse)
2017 2016 Life insurance in force (billions)
$
196
$ 196
—
VUL/UL ending account balances (billions)
$
12.2
$ 11.5 7 % Auto and Home policies in force (thousands)
939
950 (1 )% NM Not Meaningful — variance equal to or greater
than 100%
Protection pretax operating earnings were $55 million
compared to $84 million a year ago. Pretax operating earnings
increased 12 percent to $75 million excluding unlocking.
Life and Health insurance earnings, excluding unlocking,
declined to $68 million from $75 million a year ago reflecting the
low interest rate environment. Overall claims experience remains
within expected ranges. VUL/UL cash sales increased 3 percent to
$72 million. The unfavorable year-over-year impact from unlocking
was primarily related to updates to mortality experience.
Auto & Home results improved, with earnings of $7 million in
the quarter compared to an $8 million loss a year ago that included
$10 million of favorable reserve development. Results reflected the
benefit of continued rate increases, enhanced underwriting and
claims processing, as well as additional use of reinsurance to
manage catastrophe risk. Net catastrophe losses in the quarter were
$15 million, primarily related to Hurricanes Harvey and Irma. There
was a substantial benefit in the period from the reinsurance
arrangements established earlier this year.
Ameriprise Financial,
Inc.Corporate & Other Segment Operating Results
(in millions, unaudited)
Quarter Ended September
30,
% Better/(Worse)
2017 2016 Corporate & Other,
Excluding Long Term Care Pretax operating loss $ (78 ) $ (72 )
(8 )%
Long Term Care Pretax operating loss $
(58 ) $ (73 ) 21 % Loss recognition/annual unlocking (58 )
(37 ) (57 )% Pretax operating loss excluding loss
recognition/annual unlocking $ — $ (36 ) NM
Items included in operating earnings: DOL planning and
implementation expenses $ (5 ) $ (7 ) 29 % Affordable housing
investment adjustment (4 ) (7 ) 43 % Long term care reserve
adjustment — (29 ) NM Total corporate &
other impact $ (9 ) $ (43 ) 79 % NM Not Meaningful —
variance equal to or greater than 100%
Corporate & Other pretax operating loss excluding
long term care was $78 million for the quarter. Incremental DOL
expenses were $5 million, down from $7 million a year ago.
Long Term Care pretax operating loss was $58 million in
the quarter due to a reserve increase driven by loss recognition
testing.
Taxes
The operating effective tax rate in the quarter was 21.5 percent
compared to 11.7 percent a year ago. Taxes in the current quarter
reflect the adoption of stock compensation accounting guidance in
the first quarter of 2017, which had a favorable $25 million impact
in the quarter. Excluding this impact, the operating effective tax
rate was 25.1 percent. The company estimates that its full year
2017 operating effective tax rate will be approximately 22
percent.
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 acquisition of Lionstone Investments is expected to close later
this year;
- the statement that the company
estimates that its full year 2017 operating effective tax rate will
be approximately 22 percent;
- 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 (such as the pending acquisition of
Lionstone Investments which is subject to customary closing
conditions);
- 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 September 30, 2017. For
information about Ameriprise Financial entities, please refer to
the Third 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.Reconciliation Table: Earnings
(in millions, except per share amounts,
unaudited)
Quarter EndedSeptember
30,
Per Diluted ShareQuarter
EndedSeptember 30,
2017 2016 2017 2016
Net income $ 503 $ 215 $ 3.24 $ 1.30 Less: Net income (loss)
attributable to consolidated investment entities — — — — Add:
Integration/restructuring charges (1) 1 — 0.01 —
Add: Market impact on variable
annuity guaranteed benefits (1)
55 37 0.35 0.22 Add: Market impact on indexed universal life
benefits (1) 10 (7 ) 0.06 (0.04 ) Add: Market impact of hedges on
investments (1) 1 (5 ) 0.01 (0.03 ) Add: Net realized investment
(gains) losses (1) 3 (6 ) 0.02 (0.04 ) Add: Tax effect of
adjustments (2) (25 ) (7 ) (0.16 )
(0.04 ) Operating earnings 548 227 3.53 1.37 Less: Pretax impact of
unlocking 99 (235 ) 0.64 (1.42 ) Less: Tax effect of unlocking (2)
(35 ) 82 (0.23 ) 0.50
Operating earnings excluding unlocking $ 484 $ 380 $
3.12 $ 2.29 Weighted average common shares
outstanding: Basic 153.0 164.0 Diluted 155.4 165.8
(1) Pretax operating adjustment.
(2) Calculated using the statutory tax
rate of 35%.
Ameriprise Financial,
Inc.Reconciliation Table: Total Net Revenues
(in millions, unaudited)
Quarter EndedSeptember
30,
2017 2016 Total net revenues $ 2,981 $
2,998 Less: CIEs revenue 23 27 Less: Net realized investment gains
(losses) (3 ) 6 Less: Market impact on indexed universal life
benefits (5 ) 6 Less: Market impact of hedges on investments
(1 ) 5 Operating total net revenues 2,967 2,954 Less:
Unlocking (47 ) 64 Less: Net impacts of transitioning advisory
accounts to share classes without 12b-1 fees 10
64 Operating total net revenues excluding unlocking
and 12b-1 impact $ 3,004 $ 2,826
Ameriprise Financial,
Inc.Reconciliation Table: Total Net Revenues
(in millions, unaudited)
Quarter Ended
September 30,
2017 2016 Total net revenues $ 2,981 $
2,998 Less: Unlocking (47 ) 64 Less: Net impacts of transitioning
advisory accounts to share classes without 12b-1 fees 10
64 Total net revenues excluding unlocking and
12b-1 impact $ 3,018 $ 2,870
Ameriprise Financial,
Inc.Reconciliation Table: Total Expenses
(in millions, unaudited)
Quarter Ended
September 30,
2017 2016 Total expenses $ 2,353 $ 2,760 Less:
CIEs expenses 23 27 Less: Integration/restructuring charges 1 —
Less: Market impact on variable annuity guaranteed benefits 55 37
Less: Market impact on indexed universal life benefits 5 (1 ) Less:
DAC/DSIC offset to net realized investment gains (losses) —
— Operating expenses 2,269 2,697 Less:
Unlocking (146 ) 299 Operating expenses
excluding unlocking $ 2,415 $ 2,398
Ameriprise Financial,
Inc.Reconciliation Table: Pretax Operating Earnings
(in millions, unaudited)
Quarter Ended
September 30,
2017 2016 Operating total net revenues $ 2,967
$ 2,954 Operating expenses 2,269 2,697
Pretax operating earnings $ 698 $ 257
Ameriprise Financial,
Inc.Reconciliation Table: General and Administrative
Expense
(in millions, unaudited)
Quarter EndedSeptember
30,
2017 2016 General and administrative expense $
753 $ 731 Less: CIEs expenses 1 2 Less: Integration/restructuring
charges 1 — Operating general and
administrative expense $ 751 $ 729
Ameriprise Financial,
Inc.Reconciliation Table: Advice & Wealth Management and
Asset ManagementPercent of Pretax Operating
Earnings(1)
Quarter EndedSeptember
30,
(in millions, unaudited)
2017 Advice & Wealth
Management and Asset Management pretax operating earnings $ 498
Less: Unlocking —
Advice & Wealth Management and Asset
Management pretax operating earnings excluding unlocking
$ 498 Annuities and Protection pretax operating
earnings $ 336 Less: Unlocking 100 Annuities and
Protection pretax operating earnings excluding unlocking $ 236
Percent pretax operating earnings from Advice &
Wealth Management and Asset Management 60 % Percent pretax
operating earnings from Annuities and Protection 40 % Percent
pretax operating earnings from Advice & Wealth Management and
Asset Management excluding unlocking 68 % Percent pretax operating
earnings from Annuities and Protection excluding unlocking 32 %
(1) Excludes Corporate & Other
segment
Ameriprise Financial,
Inc.Reconciliation Table: Effective Tax Rate
Quarter Ended September 30, 2017 (in millions,
unaudited)
GAAP Operating Pretax income
$ 628 $ 698 Income tax provision $ 125 $ 150 Effective tax
rate 19.9 % 21.5 %
Ameriprise Financial,
Inc.Reconciliation Table: Effective Tax Rate
Quarter Ended September 30, 2016 (in millions,
unaudited)
GAAP Operating Pretax income $ 238
$ 257 Income tax provision $ 23 $ 30 Effective tax rate 9.7
% 11.7 %
Ameriprise Financial,
Inc.Reconciliation Table: Effective Tax Rate
(in millions, unaudited)
Quarter EndedSeptember 30,
2017
Pretax operating earnings $ 698 Operating income tax
provision $ 150 Benefit from adoption of stock compensation
accounting guidance (25 ) Operating income tax provision
excluding benefit $ 175 Operating effective tax rate
21.5 % Operating effective tax rate excluding income tax
benefit 25.1 %
Ameriprise Financial,
Inc.Reconciliation Table: Advice & Wealth Management
Operating Net Revenues
Quarter Ended September 30, (in millions, unaudited)
2017 2016 Operating net revenues $
1,383 $ 1,272 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 1,373 1,208 Less:
IPI 12 — Operating total net revenues normalized for
12b-1 impact and IPI $ 1,361 $ 1,208
Ameriprise Financial,
Inc.Reconciliation Table: Advice & Wealth Management
Operating Net Revenues (trailing 12 months)
(in millions, unaudited)
Quarter Ended September 30,
2017 2016 Operating net revenues $
5,342 $ 4,986 Less: IPI 12 — Less: Net impact of transitioning
advisory accounts to share classes without 12b-1 fees 111
260 Operating total net revenues normalized for IPI and
12b-1 impact $ 5,219 $ 4,726
Ameriprise Financial,
Inc.Reconciliation Table: Asset Management Operating Net
Revenues
(in millions, unaudited)
Quarter Ended September 30,
2017 2016 Operating net revenues $ 778 $ 740
Less: Net impact of transitioning advisory accounts to share
classes without 12b-1 fees — 13 Operating total net
revenues normalized for 12b-1 impact $ 778 $ 727
Ameriprise Financial,
Inc.Reconciliation Table: Asset Management Adjusted Net
Pretax Operating Margin
Quarter Ended September 30,
(in millions, unaudited)
2017 2016 Operating total net revenues
$ 778 $ 740 Less: Distribution pass through revenues 197 211 Less:
Subadvisory and other pass through revenues 91
85 Adjusted operating revenues $ 490 $ 444
Pretax operating earnings $ 200 $ 155 Less: Operating net
investment income 6 1 Add: Amortization of intangibles 4
5 Adjusted operating earnings $ 198 $
159 Pretax operating margin 25.7 % 20.9 % Adjusted
net pretax operating margin 40.4 % 35.8 %
Ameriprise Financial,
Inc.Reconciliation Table: Annuities Excluding
Unlocking
Quarter Ended September 30, (in millions, unaudited)
2017 2016 Operating net revenues $ 626
$ 631 Less: Unlocking — — Operating net
revenues excluding unlocking $ 626 $ 631
Operating expenses $ 345 $ 699 Less: Unlocking (120 )
215 Operating expenses excluding unlocking $ 465
$ 484 Pretax operating earnings $ 281 $ (68 )
Less: Unlocking 120 (215 ) Pretax operating
earnings excluding unlocking $ 161 $ 147
Ameriprise Financial,
Inc.Reconciliation Table: Protection Excluding
Unlocking
Quarter Ended September 30, (in millions,
unaudited)
2017 2016 Operating net
revenues $ 478 $ 613 Less: Unlocking (47 ) 64
Operating total net revenues excluding unlocking $ 525 $ 549
Operating expenses $ 423 $ 529 Less: Unlocking
(27 ) 47 Operating expenses excluding unlocking $ 450
$ 482 Pretax operating earnings $ 55 $ 84
Less: Unlocking (20 ) 17 Pretax operating
earnings excluding unlocking $ 75 $ 67
Ameriprise Financial,
Inc.Reconciliation Table: Return on Equity (ROE) Excluding
AccumulatedOther Comprehensive Income “AOCI”
Twelve Months EndedSeptember
30,
(in millions, unaudited)
2017 2016 Net income $ 1,699 $ 1,271
Less: Adjustments (1) (165 ) (154 ) Operating
earnings 1,864 1,425 Less: Unlocking, net of tax (2) 64
(153 ) Operating earnings excluding unlocking $ 1,800
$ 1,578 Total Ameriprise Financial, Inc.
shareholders’ equity $ 6,369 $ 7,139 Less: Accumulated other
comprehensive income, net of tax 325 478
Total Ameriprise Financial, Inc. shareholders’ equity
excluding AOCI 6,044 6,661 Less: Equity impacts attributable to the
consolidated investment entities 1 62
Operating equity $ 6,043 $ 6,599 Return on
equity excluding AOCI 28.1 % 19.1 %
Operating return on equity excluding AOCI
(3)
30.8 % 21.6 % Operating return on equity excluding AOCI and
unlocking 29.8 % 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 September 30,
% Better/(Worse)
2017 2016 Revenues Management and
financial advice fees $ 1,626 $ 1,464 11 % Distribution fees 437
455 (4 ) Net investment income 372 387 (4 ) Premiums 348 374 (7 )
Other revenues 210 330 (36 ) Total revenues 2,993
3,010 (1 ) Banking and deposit interest expense 12 12
—
Total net revenues 2,981 2,998 (1 )
Expenses
Distribution expenses 850 798 (7 ) Interest credited to fixed
accounts 176 161 (9 ) Benefits, claims, losses and settlement
expenses 474 855 45 Amortization of deferred acquisition costs 48
163 71 Interest and debt expense 52 52 — General and administrative
expense 753 731 (3 )
Total expenses 2,353
2,760 15 Pretax income 628 238 NM Income tax provision 125
23 NM
Net income $ 503 $ 215 NM NM Not
Meaningful — variance equal to or greater than 100%
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171024006630/en/
Ameriprise Financial, Inc.Investor Relations:Alicia A.
Charity, 612-671-2080alicia.a.charity@ampf.comorStephanie Rabe,
612-671-0485stephanie.m.rabe@ampf.comorMedia Relations:Paul W.
Johnson, 612-671-0625paul.w.johnson@ampf.com
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