Ameriprise Financial, Inc. (NYSE: AMP) today reported net income
of $95 million for the second quarter of 2009, compared to $210
million for the second quarter of 2008. Earnings per diluted share
for the second quarter of 2009 were $0.41, compared to $0.93 for
the second quarter of 2008.
Core operating earnings per diluted share were $0.58 for the
second quarter of 2009, compared to $1.03 in the second quarter of
2008. Core operating earnings exclude market impacts on
amortization of deferred acquisition costs (DAC) and variable
annuity guarantee costs, acquisition-related integration charges
and net realized gains / losses. The company estimates that $0.51
of the year-over-year impact to core operating earnings resulted
from the market-driven decline in asset-based fees and the impact
of maintaining high liquidity levels.
"While the environment continued to impact our results, we�re
beginning to see signs of improvement, with increased client
activity and solid asset flows across our platform," said Chairman
and Chief Executive Officer Jim Cracchiolo. �In addition, we took
actions during the quarter to further enhance our strong capital
base, which puts us in a position to pursue additional growth
opportunities."
Net revenues declined 5 percent to $1.9 billion in the second
quarter of 2009, compared to $2.0 billion in the second quarter of
2008. Growth in fixed annuities was more than offset by the impact
on assets and fees of year-over-year equity market depreciation.
Net revenues grew 9 percent sequentially, primarily driven by a 10
percent increase in the average of the S&P 500 Index during the
quarter, as well as significantly improved retail net flows.
The company is mitigating market-driven revenue declines by
implementing expense reductions through re-engineering. The company
recognized approximately $110 million in benefits in the second
quarter of 2009, up from approximately $60 million in the first
quarter, and is on-track to exceed its $350 million full-year 2009
re-engineering savings target.
As of June 30, 2009, the company�s excess capital position was
more than $2 billion. This included $869 million in net equity
raised in the second quarter and reflects anticipated year-end
regulatory (VACARVM) and rating agency requirements for the
variable annuity business. In addition, the company�s recent tender
offer to purchase $450 million principal amount of its debt
maturing in 2010 is planned to be completed using proceeds from two
second quarter debt offerings. The company�s net unrealized
investment loss position declined to $577 million from $1.8 billion
at March 31, 2009. The after-tax net unrealized loss represented
approximately 4 percent of shareholders� equity, excluding
accumulated other comprehensive income.
Second Quarter 2009 Summary
Management believes the exclusion of after-tax impacts of
realized net investment gains / losses, non-recurring integration
costs and market impacts on DAC, and variable annuity guarantee
costs best reflects the underlying performance of the business. For
the non-GAAP presentation of after-tax amounts, the tax effect is
calculated using the statutory tax rate of 35 percent.
Ameriprise Financial, Inc. Second Quarter Summary � �
� � �
(in millions, unaudited)
2009 2008
%Change
Per Diluted Share
%Change
2009 �
2008
Net income attributable to
Ameriprise Financial
$ 95 $ 210 (55 )% $ 0.41 $ 0.93 (56 )%
Add: After-tax impacts:(1)
Investment (gains)/losses (4 ) 18 NM (0.02 ) 0.08 NM Integration
charges 16 � NM 0.07 � NM Other market impacts:
DAC and DSIC
(benefits)/charges
(29 ) 7 NM (0.12 ) 0.03 NM
Variable annuity guarantee
costs,�net of DAC and DSIC
� 55 � (3 ) NM � 0.24 � (0.01 ) NM Core operating earnings,
after-tax $ 133 $ 232 (43 )% $ 0.58 $ 1.03 (44 )%
Weighted average common shares
outstanding:
Basic 228.8 223.2 Diluted 230.0 226.0 � NM Not Meaningful
(1) For this non-GAAP
presentation, after-tax is calculated using the statutory tax rate
of 35%.
The following items are excluded from core operating earnings.
Each impact is presented after tax.
- $4 million benefit, or $0.02 per
share, in net realized investment gains, comprising $30 million in
realized investment gains, partially offset by $26 million in
other-than-temporary impairments on previously impaired non-agency
residential mortgage-backed securities and reserves for commercial
mortgage loans.
- $16 million expense, or $0.07
per share, in integration costs related to recent
acquisitions.
- $29 million benefit, or $0.12
per share, from lower DAC and deferred sales inducement cost (DSIC)
amortization due to favorable market conditions in the
quarter.
- $55 million expense, or $0.24
per share, from variable annuity guarantee costs, consisting of:
- $139 million expense, or $0.60
per share, net of DAC and DSIC, resulting from the impact of credit
default spread on the SFAS 157 valuation of living benefit
liabilities.
- $84 million benefit, or $0.36
per share, net of DAC and DSIC, from living benefit guarantees and
the favorable impact of equity market appreciation on death
benefits.
Core operating earnings for the second quarter of 2009 included
a $16 million expense, or $0.07 per share, in increased legal
reserves and a provision for a client settlement, as well as a $5
million gain, or $0.02 per share, on the repurchase of junior
subordinated notes.
In addition, compared to the second quarter of 2008, core
operating earnings included estimated negative impacts of $0.36 per
share from the market-driven decline in asset-based fees and $0.15
per share from maintaining high liquidity levels and lower
spreads.
Liquidity and Balance Sheet as of June 30, 2009
The company further strengthened its balance sheet and excess
capital position, enhancing its financial flexibility to capture
additional growth opportunities.
Conservative capital
management
- The company�s excess capital
position was more than $2 billion, which included $869 million in
net equity raised in the second quarter and reflects anticipated
year-end regulatory (VACARVM) and rating agency requirements for
the variable annuity business.
- The company will continue to use
enterprise risk management capabilities and product hedging to
anticipate and mitigate risk. The variable annuity hedging program
continues to perform well.
Substantial liquidity
- Cash and cash equivalents were
$4.5 billion, with $1.9 billion at the holding company level and
$3.8 billion in free cash.
- During the quarter, the company
redeployed approximately $1.5 billion of free cash into
higher-yielding, longer-dated investments.
- The company raised $500 million
in gross proceeds from two debt issuances during the quarter and
launched a tender offer to purchase $450 million principal amount
of its November 2010 debt maturities. The tender period ends July
29, 2009.
- The company continues to
generate substantial business cash flow and invested $5.7 billion
in long-term investments during the quarter.
High quality investment
portfolio
- The $30 billion
Available-for-Sale portfolio is both well-diversified and
high-quality.
- The net unrealized loss position
declined to $577 million from $1.8 billion at March 31, 2009.
- The total investment portfolio,
including cash and cash equivalents, increased to $39 billion
from$37 billion at March 31, 2009, and remains well-positioned.
Detailed information about the portfoliois available online at
ir.ameriprise.com.
Conservative capital
ratios
- The debt-to-total capital ratio
was 23.1 percent. The debt-to-total capital ratio excluding
non-recourse debt and with 75 percent equity credit for hybrid
securities was 19.9 percent, or 16.2 percent on a pro forma basis
for the retirement of $450 million principal amount of debt through
the company�s July 2009 tender offer.
Second Quarter 2009 Highlights
- Total advisors increased 9
percent to 12,508 compared to the second quarter of 2008,
reflecting acquisitions and continued strong advisor retention
rates.
- The company continued to attract
experienced advisors, with more than 200 experienced advisors
joining the firm�s branded advisor channels in the quarter.
- Owned, managed and administered
assets were $397 billion as of June 30, 2009, down 10 percent
compared to June 30, 2008, primarily due to the 28 percent decline
in the S&P 500. On a sequential basis, owned, managed and
administered assets grew 12 percent, primarily reflecting equity
market appreciation during the quarter and retail net inflows.
- Client activity began to
improve, resulting in solid asset flows across product lines.
- Wrap net inflows of $2.8 billion
in the quarter and market appreciation increased total wrap assets
by 16 percent sequentially.
- Total annuity net inflows in the
quarter were $1.1 billion. The company has announced variable
annuity product changes for new products to be marketed beginning
in the third quarter.
- Total Asset Management net flows
were slightly positive in the quarter, reflecting improved flows at
both RiverSource and Threadneedle. Second quarter 2009 flows were
approximately$5 billion greater than the second quarter of
2008.
- Ameriprise Auto & Home
premiums increased 6 percent from the prior year, primarily due to
growth in policy counts.
- The company generated
approximately $110 million in re-engineering saves in the second
quarter, primarily from enhanced operational efficiencies. For the
first half of 2009, the company generated approximately $170
million in re-engineering saves and is on pace to exceed its 2009
re-engineering target of $350 million.
Ameriprise Financial, Inc. Consolidated Income
Statements � � (in millions, unaudited)
Quarter Ended June
30, % Change 2009 �
2008
�
Revenues Management and financial advice fees
$ 606 $ 780 (22 )% Distribution fees 351 422 (17 ) Net
investment income 514 393 31 Premiums 269 257 5 Other revenues �
175 � 158 11 Total revenues 1,915 2,010 (5 ) Banking and deposit
interest expense � 38 � 42 (10 )
Total net revenues
1,877 1,968 (5 ) �
Expenses
Distribution expenses 425 506 (16 ) Interest credited to
fixed accounts 237 192 23 Benefits, claims, losses and settlement
expenses 587 294 100 Amortization of deferred acquisition costs
(125 ) 144 NM Interest and debt expense 28 28 � General and
administrative expense � 610 � 572 7
Total expenses
1,762 1,736 1 Pretax income 115 232 (50 )
Income tax provision � 28 � 27 4 �
Net income
� 87 � 205 (58 ) Less: Net loss attributable to noncontrolling
interest � (8 ) � (5 ) (60 )
Net income attributable to
Ameriprise Financial $ 95 $ 210
(55 )% NM Not Meaningful
Second Quarter 2009 Consolidated Results
The company reported net income of $95 million for the second
quarter of 2009, a 55 percent decline from net income of $210
million for the second quarter of 2008. The primary driver of the
decrease was the market-driven decline in asset-based fees and the
impact of maintaining high liquidity levels, partially offset by
retail net inflows and ongoing expense controls.
Total net revenues declined 5 percent, or $91 million, to $1.9
billion, driven by lower management and financial advice fees and
distribution fees, primarily as a result of the year-over-year
decline in equity markets and clients� preference for short-term
and fixed income investment products, partially offset by increased
net investment income driven by higher fixed annuity balances.
Management and financial advice fees declined 22 percent, or
$174 million, to $606 million, primarily due to lower equity
markets. On a sequential basis, management and financial advice
fees increased 9 percent, reflecting equity market appreciation
during the quarter and net inflows in advisor-managed wrap accounts
and improved asset management flows.
Distribution fees declined 17 percent, or $71 million, to $351
million, primarily due to lower equity markets and growth in cash
and deposit products, which resulted in slower sales and flows for
other products that generate distribution fees.
Net investment income increased 31 percent, or $121 million, to
$514 million, primarily from higher invested asset levels due to
fixed annuity net inflows, partially offset by the combination of
low short-term interest rates and high liquidity levels. In
addition, the current quarter included $6 million of net realized
investment gains, compared to $27 million of net realized
investment losses in the second quarter of 2008.
Premiums increased 5 percent, or $12 million, to $269 million,
primarily due to growth in Auto & Home premiums compared to the
prior year.
Other revenues increased 11 percent, or $17 million, to $175
million, primarily due to an $8 million gain on the repurchase of
junior subordinated notes.
Banking and deposit interest expense decreased 10 percent, or $4
million, to $38 million, primarily due to lower crediting rates on
certificates, partially offset by higher certificate balances.
Expenses
Consolidated expenses increased 1 percent, or $26 million, to
$1.8 billion. Core consolidated expenses decreased 2 percent, or
$32 million, to $1.7 billion, reflecting market-driven declines in
distribution expenses and cost controls, partially offset by growth
in fixed annuity interest credited expense.
Distribution expenses declined 16 percent, or $81 million, to
$425 million, reflecting decreased advisor compensation, primarily
due to year-over-year market depreciation on assets.
Interest credited to fixed accounts increased 23 percent, or $45
million, reflecting higher annuity fixed account balances and
higher average crediting rates compared to the prior year.
Benefits, claims, losses and settlement expenses increased 100
percent, or $293 million, to $587 million. The current quarter was
impacted by $340 million in variable annuity death and living
benefit expenses, which included $604 million in expenses from the
non-cash impact of the credit default spread on the SFAS 157
valuation of living benefit liabilities. The line also reflects $49
million in related lower DSIC amortization. Net of the related $206
million DAC amortization offset, DSIC and tax, total variable
annuity guarantees lowered earnings by $55 million.
Amortization of DAC was a net benefit of $125 million for the
current quarter, compared to a $144 million expense in the
prior-year period. The current quarter included $206 million in
lower DAC amortization offsetting higher variable annuity benefit
expenses and $39 million in lower amortization related to the
impact of higher policyholder account balances as a result of
market appreciation in the quarter.
General and administrative expense increased 7 percent, or $38
million, to $610 million. Excluding $91 million in integration
costs and ongoing expenses from acquisitions closed in the fourth
quarter of 2008, and $23 million in increased legal expenses and a
provision for a client settlement, general and administrative
expense decreased 13 percent.
Taxes
The effective tax rate on net income in the second quarter of
2009 was 24.4 percent, up from 13.3 percent from the first quarter
of 2009. The second quarter 2009 effective tax rate brings the
year-to-date effective tax rate in line with the company�s
full-year forecast of 20 percent. The higher forecasted effective
tax rate reflects higher pretax income estimates for the full
year.
Ameriprise Financial, Inc. Segment Results (in
millions, unaudited) �
Quarter Ended June 30, �
%
Change 2009 � �
2008
Pretax income (loss) excluding
net loss attributable�to noncontrolling interest
� Certificates and Banking $ 20 $ (24 ) NM Wealth Management and
Distribution � (23 ) � 75 NM Advice & Wealth Management (3 ) 51
NM Asset Management (12 ) 42 NM Annuities 94 77 22 % Protection 110
113 (3 ) Corporate & Other � (66 ) � (46 ) (43 )
Pretax income excluding net
loss�attributable to noncontrolling interest
123 237 (48 ) Income tax provision � 28 � 27 4
Net income
attributable to Ameriprise Financial $ 95
$ 210 (55 )% NM Not Meaningful
Second Quarter 2009 Segment Financial Highlights
Advice & Wealth Management reported a pretax loss of
$3 million for the quarter, compared to pretax income of $51
million for the second quarter of 2008. Core operating earnings
were $21 million in the current quarter, compared to $72 million in
the second quarter of 2008. The decrease was primarily due to an
estimated $57 million market-driven decline in asset-based fees and
the impact of maintaining high liquidity levels. Core operating
earnings were also impacted by reduced client activity and sales of
lower-margin products compared to the year-ago period, partially
offset by expense controls.
Asset Management reported a pretax loss of $12 million
for the quarter, compared to pretax income of $42 million for the
second quarter of 2008. The core operating loss, which excludes
integration charges, was $3 million and included a $16 million
provision for a client settlement. The decline in core operating
earnings was primarily due to an estimated $49 million decrease in
asset-based fees, partially offset by continued re-engineering
expense initiatives.
Annuities reported pretax income of $94 million for the
quarter, compared to pretax income of $77 million for the second
quarter of 2008. Core operating earnings for the segment were $132
million, compared to $88 million in the prior year, driven by
growth in fixed annuity account values and higher spreads. The
decline in market-driven asset-based fees lowered year-over-year
pretax income by approximately $36 million in the quarter.
Protection reported pretax income of $110 million,
compared to $113 million for the second quarter of 2008. The
decline was primarily driven by a higher loss ratio in Auto &
Home. Second quarter 2009 permanent insurance cash sales improved
36 percent compared to the first quarter of 2009, reflecting
increased sales of universal life insurance and flat sales of more
market-sensitive variable universal life insurance.
Corporate & Other reported a pretax loss of $66
million, compared to a pretax loss of $46 million for the second
quarter of 2008. Segment results for the current quarter included
an $8 million gain from the repurchase of junior subordinated notes
as well as $7 million in net realized investment gains. In
addition, results included an estimated $34 million negative impact
from lower short-term interest rates on the company�s
enterprise-wide liquidity pool.
Dividend
The Ameriprise Financial Board of Directors declared a quarterly
cash dividend of $0.17 per common share payable on August 17, 2009
to shareholders of record at the close of business on August 3,
2009.
Ameriprise Financial, Inc. is a diversified financial services
company serving the comprehensive financial planning needs of the
mass affluent and affluent. For more information, visit
ameriprise.com.
RiverSource mutual funds are distributed by RiverSource
Distributors, Inc. and RiverSource Fund Distributors, Inc., Members
FINRA, and managed by RiverSource Investments, LLC. For complete
mutual fund ranking data and other important disclosures please
refer to Exhibit A �RiverSource Mutual Fund Performance and Lipper
Ranking� in the Second Quarter 2009 Statistical Supplement
available at ir.ameriprise.com.
The Threadneedle group of companies constitutes the Ameriprise
Financial international investment platform. The group consists of
wholly owned subsidiaries of Ameriprise Financial, Inc. and
provides services independent from Ameriprise Financial Services,
Inc., including Ameriprise Financial Services� broker-dealer
business.
Ameriprise Certificates are issued by Ameriprise Certificate
Company and distributed by Ameriprise Financial Services, Inc.,
Member FINRA.
Ameriprise Financial Services, Inc. offers financial planning
services, investments, insurance and annuity products. 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.
This announcement is neither an offer to purchase nor a
solicitation of an offer to sell the company�s 5.35% Senior Notes
due November 15, 2010 (the �Notes�) or any other securities. The
tender offer is made only by and pursuant to the terms of the Offer
to Purchase dated July 1, 2009 and the related Letter of
Transmittal. The tender offer is not being made to holders in any
jurisdiction in which the making or acceptance thereof would be
unlawful. None of Ameriprise Financial, Inc., the dealer managers,
the depositary or the information agent makes any recommendation as
to whether holders should tender their Notes in response to the
tender offer. Holders must make their own decisions as to whether
to tender Notes and, if so, the principal amount of Notes to
tender.
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. The company has made various
forward-looking statements in this report. Examples of such
forward-looking statements include:
- the statement of belief in this
news release that the company is positioned to pursue additional
growth opportunities;
- the statement of belief in this
news release that the company will exceed $350 million of expense
savings in 2009;
- the statement of belief in this
news release that pretax income estimates for the current year are
sequentially increased, and the implications thereof and the first
and second fiscal quarters on estimated 2009 full-year effective
tax rate;
- the statement of belief in this
news release that the company expects its 2009 full-year effective
tax rate will be approximately 20 percent;
- the statement about the
company�s debt to total capital ratio on a pro forma basis for the
retirement of $450 million principal amount of debt through the
company�s pending tender offer;
- statements of the company�s
plans, intentions, expectations, objectives or goals, including
those relating to asset flows, mass affluent and affluent client
acquisition strategy, client retention, financial advisor
retention, recruiting and enrollments, general and administrative
costs, consolidated tax rate; and excess capital position;
- 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� 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:
- changes in the valuations,
liquidity and volatility in the interest rate, credit default,
equity market, and foreign exchange environments;
- 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;
- investment management
performance and consumer acceptance of the company�s products;
- effects of competition in the
financial services industry and changes in product distribution mix
and distribution channels;
- 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 (including the completion of
the company�s July 2009 tender offer) 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;
- risks of default 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 DAC and
DSIC or market volatility underlying our valuation and hedging of
guaranteed living benefit annuity riders;
- 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 company�s ability to realize
the financial, operating and business fundamental benefits or to
obtain regulatory approvals regarding integration we plan for the
acquisitions we have completed;
- the ability and timing to
realize savings and other benefits from re-engineering and tax
planning;
- changes in the capital markets
and competitive environments induced or resulting from the partial
or total ownership or other support by central governments of
certain financial services firms or financial assets; and
- general economic and political
factors, including consumer confidence in the economy, 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, 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 included as Part 1, Item 1A of and
elsewhere in our Annual Report on Form 10-K for year-end 2008 at
ir.ameriprise.com/phoenix.zhtml?c=191716&p=irol-forwardLookingStatement.
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 Quarterly
Report on Form 10-Q for the quarter ended June 30, 2009. For
information about Ameriprise Financial entities, please refer to
the Second Quarter 2009 Statistical Supplement available at
ir.ameriprise.com and the tables that follow in this news
release.
Reconciliation Tables
�
Ameriprise Financial, Inc. Reconciliation Table: GAAP
Income Statement to Core Operating Earnings � (in millions,
unaudited)
Quarter Ended June 30, 2009 Quarter Ended June
30, 2008
GAAPEarnings
�
Adjustments �
CoreOperatingEarnings
GAAPEarnings
Adjustments �
CoreOperatingEarnings
Revenues
Management and financial advice
fees
$ 606 $ � $ 606 $ 780 $ �
�
$ 780 Distribution fees 351 � 351 422 � 422 Net investment income
514 (6 )(1) 508 393 27 (1) 420 Premiums 269 � 269 257 � 257 Other
revenues � 175 � � � 175 � 158 � � � 158 Total revenues 1,915 (6 )
1,909 2,010 27 2,037 Banking and deposit interest expense � 38 � �
� 38 � 42 � � � 42
Total net revenues 1,877 (6
) 1,871 1,968 27 1,995
Expenses
Distribution expenses
425 � 425 506 � 506 Interest credited to fixed accounts 237 � 237
192 � 192 Benefits, claims, losses and settlement expenses 587 (285
)(2) 302 294 13 (4) 307 Amortization of deferred acquisition costs
(125 ) 245 (3) 120 144 (20 )(5) 124 Interest and debt expense 28 �
28 28 � 28 General and administrative expense � 610 � (25 )(6) �
585 � 572 � � � 572
Total expenses 1,762 (65
) 1,697 1,736 (7 ) 1,729
Pretax income 115 59 174 232 34 266 Income tax provision � 28 � 21
(7) � 49 � 27 � 12 (7) � 39
Net income
� 87 � 38 � 125 � 205 � 22 � 227 Less: Net loss attributable to
noncontrolling interest � (8 ) � � � (8 ) � (5 ) � � � (5 )
Net income attributable to
Ameriprise Financial
$ 95 $ 38 $ 133 $
210 $ 22 $ 232
�
(1)
� Includes net realized gains and losses on Available-for-Sale
securities and other securities and an increase in reserves on
commercial mortgage loans.
(2)
Includes variable annuity living benefit costs net of hedges and
DSIC impact, a net release of GMDB reserves and a decrease in DSIC
amortization from higher period ending account values.
(3)
Includes decreases in DAC amortization from higher period ending
account values and from the impact of variable annuity living
benefit costs, net of hedges.
(4)
Includes GMDB and other unhedged variable annuity guaranteed
benefit costs, an increase in DSIC amortization from lower period
ending account values and the impact of variable annuity living
benefit riders, net of hedges and DSIC.
(5)
Includes increases in DAC amortization from lower period ending
account values and from the impact of variable annuity living
benefit riders, net of hedges.
(6)
Includes integration charges.
(7)
Reflects tax at the statutory rate of 35%.
Ameriprise Financial,
Inc. Reconciliation Table: GAAP Pretax Segment Income to
Core Operating Earnings � (in millions, unaudited)
Quarter
Ended June 30, 2009
GAAPEarnings
�
Adjustments �
CoreOperatingEarnings
Pretax income (loss) excluding
net loss attributable to noncontrolling interest
Certificates and Banking $ 20 $ 8 $ 28 Wealth Management and
Distribution � (23 ) � 16 � (7 ) Advice & Wealth Management (3
) 24 21 Asset Management (12 ) 9 (3 ) Annuities 94 38 132
Protection 110 (5 ) 105 Corporate & Other � (66 ) � (7 ) � (73
) Pretax income excluding net loss attributable to noncontrolling
interest 123 59 182 Income tax provision � 28 � 21 � 49
Net
income attributable to Ameriprise Financial $ 95
$ 38 $ 133 � �
Ameriprise Financial,
Inc. Reconciliation Table: GAAP Pretax Segment Income to
Core Operating Earnings � (in millions, unaudited)
Quarter
Ended June 30, 2008
GAAPEarnings
Adjustments
CoreOperatingEarnings
Pretax income (loss) excluding
net loss attributable to noncontrolling interest
Certificates and Banking $ (24 ) $ 21 $ (3 ) Wealth Management and
Distribution � 75 � � � 75 Advice & Wealth Management 51 21 72
Asset Management 42 � 42 Annuities 77 11 88 Protection 113 2 115
Corporate & Other � (46 ) � � � (46 ) Pretax income excluding
net loss attributable to noncontrolling interest 237 34 271 Income
tax provision � 27 � 12 � 39
Net income attributable to
Ameriprise Financial $ 210 $ 22
$ 232 Ameriprise Financial, Inc.
Reconciliation Table: Debt to Total Capital June 30,
2009 (in millions, unaudited) �
GAAPMeasure
�
Non-recourseDebt
�
Debt
LessNon-recourseDebt
�
Impact of 75%Equity
Credit(1)
�
Debt
LessNon-recoursewith EquityCredit
(1)
�
Debt
$ 2,435 $ 123 $
2,312
$ 242 $ 2,070 �
Total Capital
$ 10,545 $ 123 $ 10,422 $ 10,422 �
Debt to Total Capital
23.1 % 22.2 % 19.9 %
�
(1)
� The company�s junior subordinated notes receive an equity credit
of at least 75% by the majority of the rating agencies.
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