Ameriprise Financial, Inc. (NYSE: AMP) today reported net income
of $237 million for the fourth quarter of 2009 compared to a net
loss of $369 million for the fourth quarter of 2008. Net income per
diluted share for the fourth quarter of 2009 was $0.90 compared to
a loss of $1.69 per share a year ago.
Fourth quarter 2009 net income was driven by increased
asset-based fees from market appreciation, net inflows in wrap
accounts and Asset Management, higher income from spread products
and re-engineering benefits. Excluding the broad negative impacts
of the equity and credit market dislocation from earnings in the
fourth quarter of 2008, core operating earnings grew 36 percent
year-over-year, driven by business growth and market
improvement.
Net revenues increased 70 percent to $2.3 billion in the fourth
quarter of 2009, compared to $1.3 billion in the fourth quarter of
2008 and $2.0 billion sequentially. Excluding net realized
gains/(losses) and increased loan reserves from both periods and
other credit-related impacts in the fourth quarter of 2008, net
revenues increased 28 percent from a year ago, primarily reflecting
higher asset-based fees from net inflows and market appreciation,
as well as higher investment yields and increased general account
balances.
The company achieved more than $120 million in re-engineering
benefits in the fourth quarter of 2009 and exceeded $400 million in
re-engineering benefits for the year. Underlying fourth quarter
2009 expenses remained well controlled.
As of December 31, 2009, the company’s excess capital position
was more than $2 billion, which included approximately $1 billion
for the company’s pending acquisition of Columbia Management’s
long-term asset management business. As of December 31, 2009, the
company had $0.7 billion in net unrealized investment gains,
reflecting the quality and diversity of its investment portfolio.
Book value per share increased to $35.82 at year-end, up from
$34.97 at September 30, 2009 and $28.29 a year ago.
Return on equity for the twelve months ended December 31, 2009
was 9.3 percent, which includes the June 2009 issuance of
approximately $1 billion in equity for the pending Columbia
Management acquisition.
"We generated solid results in the quarter, aided by the
improved market conditions and the strength of our diversified
business model," said Jim Cracchiolo, chairman and chief executive
officer. "While the market environment and economy remain
challenging, client activity and advisor productivity began to
improve, and I am pleased with the trends in our metrics. Our asset
flows have improved considerably, with strong net inflows in wrap
accounts and our asset management business.
"We continue to invest for growth, including our pending
Columbia Management acquisition. We're making steady progress
toward completing the transaction, and I remain confident that the
cultural fit and complementary investment capabilities of the two
organizations will create a strong asset manager."
Fourth Quarter 2009 Highlights
- Owned, managed and administered
assets reached $458 billion at December 31, 2009, a 23 percent
increase from a year ago, primarily due to market appreciation and
strong product flows.
- Total retail client assets
increased 22 percent to $294 billion, compared to a year ago, and
client retention remained strong at 93 percent.
- Net revenue per financial
advisor increased for the fourth consecutive quarter, to $73,000,
the highest level since the second quarter of 2008.
- Total advisors declined 4
percent year-over-year to 12,036, primarily from low-producing
advisors’ inability to meet productivity requirements. Franchise
advisor retention rates remain strong, and the company recruited
more than 500 experienced advisors in its branded channels during
2009.
- The company delivered strong
hedge fund performance in 2009, primarily in Seligman portfolios,
which generated a $30 million net pretax benefit in the
quarter.
- Total managed assets reached
$326 billion, an increase of 23 percent from a year ago, driven by
market appreciation and solid asset flows across product lines.
- Wrap net inflows of $2.6 billion
in the quarter and market appreciation increased total wrap assets
to approximately $95 billion, a 30 percent increase compared to a
year ago.
- Asset Management generated total
net inflows of $1.4 billion in the quarter, with net inflows in
both domestic and international businesses.
- Variable annuity net inflows
were $0.4 billion in the quarter.
- Life insurance in force was $193
billion at the end of the fourth quarter of 2009, which was
essentially flat compared to a year ago, consistent with the slow
sales environment for the industry.
- Fourth quarter 2009 variable
universal life sales, which had remained flat for the first three
quarters of 2009, increased 21 percent sequentially. Fourth quarter
2009 universal life sales more than doubled compared to the
year-ago period.
- Ameriprise Auto & Home
premiums increased 7 percent from the year-ago period, primarily
due to growth in policy counts.
- The company expects to complete
the acquisition of Columbia Management’s long-term asset management
business in the spring of 2010. Operational and financial
expectations are on track.
Fourth Quarter 2009 Summary
Management provides core financial measures, which exclude
certain after-tax impacts such as realized net investment
gains/(losses), non-recurring integration costs and other market
impacts listed below, to facilitate year-over-year comparisons and
evaluate business trends. 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. Fourth Quarter
Summary
(in millions, except per share
amounts, unaudited)
2009
2008
%Change
Per Diluted Share
%Change
2009
2008
Net income (loss) attributable to
Ameriprise Financial
$ 237 $ (369 ) NM $ 0.90 $ (1.69 )(2) NM
Add: After-tax impacts:(1)
Investment (gains)/losses (12 ) 273 NM (0.05 ) 1.24 NM
Restructuring and integration charges 15 51 (71
)%
0.06 0.24 (75
)%
Other market impacts:
DAC and DSIC (benefits)/ charges
[mean reversion]
(3 ) 164 NM (0.01 ) 0.75 NM Variable annuity guarantees, net of DAC
and DSIC 3 57 (95 ) 0.01 0.26 (96 )
Core operating earnings, after-tax $ 240 $ 176 36 % $ 0.91 $ 0.80
14 %
Core operating earnings per
diluted share, after-tax, excluding 36 million shares issued to
pre-fund the company’s acquisition
$ 1.06
Weighted average common shares
outstanding:
Basic 258.9 218.5 Diluted 263.3 220.3 NM Not Meaningful
(1) For this non-GAAP
presentation, after-tax is calculated using the statutory tax rate
of 35%.
(2) Diluted shares used in this
calculation represent basic shares due to the net loss. Using
actual diluted shares would result in anti-dilution.
Fourth quarter 2008 net income included broad negative impacts
from the credit market dislocation as detailed above. The net
impact of these items in the fourth quarter of 2009 was immaterial.
Management believes the reported $0.90 net income per diluted share
in the fourth quarter of 2009 reflected the underlying strength of
the business.
In addition to the items in the table above, fourth quarter 2009
earnings included the following unusual expense items: a $12
million after-tax charge, or $0.05 per diluted share, from the
final settlement of a client dispute and a $9 million after-tax
charge, or $0.03 per diluted share, related to updated valuation
assumptions for insurance claim reserves.
Full Year 2009 Summary
For the year, the company reported net income of $722 million,
or $2.95 per diluted share, on net revenues of $7.8 billion. This
compares to a net loss of $38 million, or $0.17 per share, on net
revenues of $6.9 billion in 2008. Adjusted for extraordinary
market-related impacts, as well as restructuring and integration
charges, 2009 core operating earnings were $769 million, compared
to $889 million for 2008. The decline in 2009 core operating
earnings was primarily due to the impact of the 22 percent decline
in the daily average S&P 500 Index on fee-based revenues, lower
short-term interest rates and lower client activity. These factors
were partially offset by growth in spread products, net inflows in
wrap accounts and Asset Management, and expense controls.
Liquidity and Balance Sheet as of December 31, 2009
The company continued to maintain strong balance sheet
fundamentals, excess capital and financial flexibility to capture
additional growth opportunities.
Conservative capital
management
- The company’s excess capital
position was more than $2 billion, which included approximately $1
billion for the Columbia Management acquisition.
- RiverSource Life Insurance
Company’s preliminary estimate of its risk based capital ratio
(RBC) was more than 400 percent.
- The company will continue to use
enterprise risk management capabilities and product hedging to
anticipate and mitigate risk. The variable annuity hedging program
continued to perform well.
Substantial liquidity
- Cash and cash equivalents were
$3.1 billion, with $0.9 billion at the holding company level and
$1.8 billion in free cash.
High-quality investment
portfolio
- The $33 billion
available-for-sale portfolio remained well diversified and high
quality.
- The company’s investment
portfolio remained in a net unrealized gain position, with $0.7
billion in net unrealized gains.
- The total investment portfolio,
including cash and cash equivalents, was $40.1 billion and remained
well positioned. Detailed information about the portfolio is
available online at ir.ameriprise.com.
Conservative capital
ratios
- The debt-to-total capital ratio
was 19.5 percent. The debt-to-total capital ratio excluding
non-recourse debt and with 75 percent equity credit for hybrid
securities was 14.5 percent.
Ameriprise Financial, Inc. Consolidated Income
Statements (in millions, unaudited)
Quarter
Ended December 31, % Change 2009
2008 Revenues
Management and financial advice
fees
$ 855 $ 607 41 % Distribution fees 391 334 17 Net investment income
(loss) 535 (32 ) NM Premiums 287 271 6 Other revenues 229
202 13 Total revenues 2,297 1,382 66 Banking and deposit
interest expense 28 47 (40 )
Total net
revenues 2,269 1,335 70
Expenses
Distribution expenses
504 413 22 Interest credited to fixed accounts 229 203 13 Benefits,
claims, losses and settlement expenses 349 331 5 Amortization of
deferred acquisition costs 120 395 (70 ) Interest and debt expense
28 28 — General and administrative expense 708 636 11
Total expenses 1,938 2,006 (3 )
% Pretax income (loss) 331 (671 ) NM Income tax provision
(benefit) 57 (272 ) NM
Net income (loss)
274 (399 ) NM Less: Net
income (loss) attributable to noncontrolling interest 37
(30 ) NM
Net income (loss) attributable to Ameriprise
Financial $ 237 $ (369 )
NM NM Not Meaningful
Fourth Quarter 2009 Consolidated Results
The company reported net income of $237 million for the fourth
quarter of 2009 compared to a net loss of $369 million for the
fourth quarter of 2008. Fourth quarter 2009 net earnings were
driven by increased asset-based fees from market appreciation, net
inflows in wrap accounts and Asset Management, higher income from
spread products and re-engineering benefits. Excluding the broad
negative impacts of the equity and credit market dislocation in the
fourth quarter of 2008, core operating earnings grew 36 percent,
driven by strong underlying business growth.
Revenues
Total net revenues increased 70 percent, or $934 million, to
$2.3 billion, compared to a year ago. The fourth quarter of 2008
included $420 million in pre-tax realized net investment losses.
Core net revenues increased $496 million, or 28 percent, to $2.3
billion, reflecting growth in spread products and yields, higher
asset-based fees due to growth in assets from market appreciation,
net inflows and strong hedge fund performance.
Management and financial advice fees increased 41 percent, or
$248 million, to $855 million, driven by a 20 percent
year-over-year increase in the daily average S&P 500 Index,
higher hedge fund performance fees, and net inflows in Asset
Management and advisor-managed wrap accounts.
Distribution fees increased 17 percent, or $57 million, to $391
million, primarily reflecting equity market appreciation in the
quarter and increased per advisor productivity.
Net investment income was $535 million, an increase of $567
million from a loss a year ago. Excluding net realized gains in the
fourth quarter of 2009 and net realized losses in the year-ago
period, core net investment income/(loss) increased 33 percent, or
$129 million, to $517 million, primarily driven by net inflows in
fixed annuities and higher yields on longer-term fixed income
investments in the company’s investment portfolio.
Premiums increased 6 percent, or $16 million, to $287 million,
primarily due to growth in auto and home premiums as the business
increased sales through Ameriprise advisors and direct
channels.
Other revenues increased 13 percent, or $27 million, to $229
million. In the 2009 quarter, other revenues included $43 million
from consolidated managed property funds, which was entirely offset
by related expenses and net income attributable to noncontrolling
interests. The fourth quarter of 2008 included $36 million in
proceeds from the sale of certain operating assets and $19 million
from the repurchase of a portion of the company’s junior
subordinated securities. Business growth was primarily driven by
increased variable annuity rider fees.
Banking and deposit interest expense declined 40 percent, or $19
million, to $28 million, primarily due to lower crediting rates on
certificates and deposit products.
Expenses
Total expenses declined 3 percent, or $68 million, to $1.9
billion, compared to a year ago. The fourth quarter of 2008
included $419 million in additional expenses, primarily as a result
of the market dislocation. Fourth quarter 2009 total expenses
reflected business growth, the impact of acquisitions, increased
performance-based compensation and investments in the business,
partially offset by re-engineering benefits and cost controls.
Distribution expenses increased 22 percent, or $91 million, to
$504 million, reflecting equity market appreciation and improved
advisor productivity.
Interest credited to fixed accounts increased 13 percent, or $26
million, to $229 million, reflecting higher annuity fixed account
balances and higher average crediting rates compared to a year
ago.
Benefits, claims, losses and settlement expenses increased 5
percent, or $18 million, to $349 million. Core benefits, claims,
losses and settlement expenses increased 12 percent, or $38
million, to $344 million, primarily driven by updated valuation
assumptions for insurance claim reserves and higher auto and home
loss costs from increased business volumes and weather-related
losses.
Amortization of DAC declined 70 percent, or $275 million, to
$120 million. The 2008 quarter included $315 million in
amortization from lower equity market levels, primarily from
unlocking equity market assumptions. Core amortization of DAC was
$124 million, an increase of $44 million compared to a year ago,
primarily driven by higher expected profits from the annuities
business.
General and administrative expense increased 11 percent, or $72
million, to $708 million. Higher expenses in the fourth quarter of
2009 were primarily driven by hedge fund performance compensation
and the year-over-year increase in the company’s performance
compensation pool, primarily due to the reversal of prior accruals
in the 2008 quarter from the unexpected downturn in profitability.
In addition, the fourth quarter of 2009 included higher legal
expenses and a full three months of expenses from entities acquired
in November 2008. The year-ago quarter included a restructuring
charge. Adjusting for these items, the company achieved its 10
percent expense reduction target for the full year.
Taxes
The effective tax rate on net income, including net income
(loss) attributable to noncontrolling interest, was 17.1 percent
for the fourth quarter of 2009 and 19.9 percent for the full year.
The company expects the effective tax rate to increase in 2010 to
approximately 28 to 30 percent due to higher expected pretax
earnings.
Ameriprise Financial, Inc. Reconciliation Table:
GAAP Segment Results to Core Segment Results
(in millions, unaudited)
Quarter Ended December 31, 2009 Quarter Ended December
31, 2008
GAAP Earnings
Adjustments Core Operating Earnings
GAAP Earnings Adjustments Core
Operating Earnings Advice & Wealth Management
Net revenues
$ 873 $ 2
(1)
$ 875 $ 578 $ 194
(5)
$ 772 Expenses 855 (15
)
(2)
840 765 (12
)
(6)
753 Pretax income (loss) $ 18 $ 17 $ 35 $ (187 ) $ 206 $ 19
Asset Management Net revenues $ 505 $ — $ 505
$
265 $ (1
)
(5)
$ 264 Expenses 398 (7
)
(2)
391 293 (5
)
(6)
288 Pre-tax income (loss) 107 7 114 (28 ) 4 (24 )
Less: Net income (loss)
attributable to noncontrolling interests
37 — 37 (30 ) —
(30
)
Pre-tax income attributable to
Ameriprise Financial
$ 70 $ 7 $ 77 $ 2 $ 4 $ 6
Annuities Net revenues $
620 $ (16
)
(1)
$ 604 $ 310 $ 169
(5)
$ 479 Expenses 463 (2
)
(3)
461 682 (291
)
(3)
391 Pre-tax income (loss) $ 157 $ (14
)
$ 143 $ (372 ) $ 460 $ 88
Protection Net revenues $
528 $ (13
)
(1)
$ 515 $ 450 $ 44
(5)
$ 494 Expenses 399 1
(4)
400 417 (49
)
(4)
368 Pre-tax income $ 129 $ (14
)
$ 115 $ 33 $ 93 $ 126
Corporate & Other Net
revenues $ (11 ) $ 9
(1)
$ (2
)
$ (15 ) $ 14
(5)
$ (1 ) Expenses 69 — 69 102 (62
)
(6)
40 Pre-tax loss $ (80 ) $ 9 $ (71
)
$ (117 ) $ 76 $ (41 )
(1) Includes net realized gains
and losses on available-for-sale securities and an increase in
reserves on commercial mortgage loans.
(2) Includes integration
charges.
(3) Includes the impact on DAC and
DSIC amortization from market performance and the market impact on
variable annuity living and death benefit costs, net of hedges.
(4) Includes the market impact on
DAC amortization from market performance.
(5) Includes net realized gains
and losses on available-for-sale securities, an increase in
reserves on bank loans and the fair value adjustment on low income
housing investments.
(6) Includes integration and
restructuring charges.
Fourth Quarter 2009 Segment Financial Highlights
Advice & Wealth Management reported pretax income of
$18 million for the quarter compared to a pretax loss of $187
million for the fourth quarter of 2008. Segment core operating
earnings were $35 million in the fourth quarter of 2009, up $16
million compared to the year-ago period.
Excluding realized gains/(losses), core net revenues increased
13 percent, or $103 million, driven by market appreciation and net
inflows in advisor wrap accounts and other products, partially
offset by the impact of the year-over-year decline in short-term
interest rates. Excluding integration costs, core expenses
increased 12 percent as a result of higher distribution expenses
and higher performance compensation accruals.
Asset Management reported pretax income of $70 million
for the quarter, compared to $2 million for the fourth quarter of
2008. Excluding integration charges, segment core operating
earnings were $77 million in the fourth quarter of 2009, up $71
million from the year-ago period.
Net revenues grew 58 percent, or $170 million, excluding the
impact of consolidation of managed property funds on revenues in
both periods. Growth was driven by market appreciation and net
inflows in both domestic and international businesses, as well as
higher hedge fund performance fees. In addition, the fourth quarter
of 2008 included $36 million in revenue from the sale of certain
operating assets as part of the company’s re-engineering efforts.
Excluding integration costs, core expenses increased 36 percent, or
$103 million, driven by higher performance based compensation,
higher distribution expenses and additional operating costs related
to acquisitions.
Annuities reported pretax income of $157 million for the
quarter, compared to a pretax loss of $372 million for the fourth
quarter of 2008. Segment core operating earnings were $143 million
in the fourth quarter of 2009, up $55 million from the year-ago
period.
Excluding realized gains/(losses), core net revenues grew 26
percent or $125 million, driven by market appreciation, net inflows
and higher investment yields. Excluding market-driven impacts to
DAC, DSIC and variable annuity benefits, core expenses grew 18
percent, or $70 million, primarily due to increased DAC
amortization driven by higher expected profits and increased
interest credited expense from growth in fixed annuities.
Protection reported pretax income of $129 million for the
quarter compared to $33 million for the fourth quarter of 2008.
Segment core operating earnings were $115 million in the fourth
quarter of 2009, down $11 million compared to the year-ago period,
primarily due to a $14 million pretax charge related to updated
valuation assumptions for insurance claim reserves.
Excluding net investment gains/(losses), core net revenues grew
4 percent, or $21 million, primarily reflecting higher investment
income and premium growth in auto and home. Core expenses increased
9 percent, or $32 million, reflecting higher benefits expense
driven by the updated valuation assumptions for insurance claim
reserves, higher auto and home loss costs from increased business
volumes and weather related losses, and higher DAC
amortization.
Corporate & Other reported a pretax loss of $80
million for the quarter. The quarter included $19 million in
general and administrative expenses related to the final settlement
of a client dispute.
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.
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. 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 of belief in this
news release that the company is expected to deploy $1 billion of
excess capital to acquire the long-term asset management business
of Columbia Management;
- the statement of belief in this
news release that the transaction with Columbia Management is
expected to be completed in the spring of 2010 and that related
operational and financial expectations are on track;
- the statement of belief in this
news release that the company expects its 2010 full-year effective
tax rate will be approximately 28 to 30 percent;
- the statement of management’s
confidence in trends in client activity and advisor productivity
metrics;
- the statement of belief in this
news release that the company expects higher profits in the
annuities business;
- 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,” “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:
- 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;
- changes to the company’s
reputation that may arise from employee or affiliated advisor
misconduct, legal or regulatory actions, 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;
- 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 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 ability to complete the
acquisition opportunities the company negotiates (including the
transaction with Columbia Management);
- the company’s ability to realize
the financial, operating and business fundamental benefits or to
obtain regulatory approvals regarding integrations we plan for the
acquisitions we have completed or have contracted to complete, as
well as the amount and timing of integration expenses;
- 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 the year ended
December 31, 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 Annual
Report on Form 10-K for the year ended December 31, 2009. For
information about Ameriprise Financial entities, please refer to
the Fourth Quarter 2009 Statistical Supplement available at
ir.ameriprise.com and the tables that follow in this news
release.
Ameriprise Financial, Inc. Full Year Summary
(in millions, except per share
amounts, unaudited)
2009 2008
%Change
Per Diluted Share
%Change
2009 2008
Net income (loss) attributable to
Ameriprise Financial
$ 722 $ (38 ) NM $ 2.95 $ (0.17
)(2)
NM
Add: After-tax impacts:(1)
Investment (gains)/losses (34 ) 520 NM (0.14 ) 2.31 NM
Restructuring and integration charges 64 51 25 % 0.26 0.23 13 %
Other market impacts:
DAC and DSIC (benefits)/charges
[mean reversion]
(20 ) 218 NM (0.08 ) 0.97
NM
Variable annuity guarantees, net
of DAC and DSIC
22 50 (56 ) 0.09 0.22 (59 )
RiverSource 2a-7 money market
funds support costs
7 57 (88 ) 0.03 0.25 (88 )
Expenses related to unaffiliated
money market funds
—
31
NM — 0.14 NM Debt retirement costs 8 — NM 0.04
— NM
Core operating earnings,
after-tax
$ 769 $ 889 (13 )% $ 3.15 $ 3.95 (20 )%
Core operating earnings per
diluted share, after-tax, excluding 36 million shares issued to
pre-fund the company’s acquisition
$ 3.42
Weighted average common shares
outstanding:
Basic 242.2 222.3 Diluted 244.4 224.9 NM Not Meaningful
(1) For this non-GAAP
presentation, after-tax is calculated using the statutory tax rate
of 35%.
(2) Diluted shares used in this
calculation represent basic shares due to the net loss. Using
actual diluted shares would result in anti-dilution.
Ameriprise Financial, Inc. Consolidated
Income Statements (in millions, unaudited)
Year Ended December 31,
%Change
2009 2008 Revenues
Management and financial advice
fees
$ 2,704 $ 2,899 (7 )% Distribution fees 1,420 1,565 (9 ) Net
investment income 2,002 817 NM Premiums 1,098 1,048 5 Other
revenues 722 766 (6 ) Total revenues 7,946 7,095 12
Banking and deposit interest expense 141 179 (21 )
Total net revenues 7,805 6,916 13
Expenses
Distribution expenses
1,782 1,912 (7 ) Interest credited to fixed accounts 903 790 14
Benefits, claims, losses and settlement expenses 1,342 1,125 19
Amortization of deferred acquisition costs 217 933 (77 ) Interest
and debt expense 127 109 17 General and administrative expense
2,514 2,472 2
Total expenses 6,885
7,341 (6 ) % Pretax income (loss) 920 (425 )
NM Income tax provision (benefit) 183 (333 ) NM
Net income (loss)
737 (92 ) NM Less: Net
income (loss) attributable to noncontrolling interest 15
(54 ) NM
Net income (loss) attributable to Ameriprise
Financial $ 722 $ (38 )
NM NM Not Meaningful
Ameriprise
Financial, Inc. Reconciliation Table: GAAP Income Statement
to Core Operating Earnings (in millions,
unaudited)
Quarter Ended December 31, 2009 Quarter Ended
December 31, 2008 GAAP Earnings
Adjustments Core Operating Earnings GAAP
Earnings Adjustments Core Operating
Earnings Revenues
Management and financial advice
fees
$ 855 $ — $ 855 $
607
$ —
$ 607 Distribution fees 391 — 391 334 — 334 Net investment income
(loss) 535 (18
)(1)
517 (32 ) 420
(5)
388 Premiums 287 — 287 271 — 271 Other revenues 229 —
229 202 — 202
Total revenues
2,297 (18 ) 2,279 1,382 420 1,802
Banking and deposit interest
expense
28 — 28 47 — 47
Total
net revenues 2,269 (18 ) 2,251
1,335 420 1,755 Expenses
Distribution expenses
504 — 504 413 — 413 Interest credited to fixed accounts 229 — 229
203 — 203 Benefits, claims, losses and settlement expenses 349 (5)
(2)
344 331 (25 )(2) 306 Amortization of deferred acquisition costs 120
4
(3)
124 395 (315 )(3) 80 Interest and debt expense 28 — 28 28 — 28
General and administrative expense 708 (22
)(4)
686 636 (79 )(6) 557
Total
expenses 1,938 (23 ) 1,915
2,006 (419 ) 1,587 Pretax income (loss)
331 5 336 (671 ) 839 168 Income tax provision (benefit) 57
2
(7)
59 (272 ) 294 (7) 22
Net income (loss)
274 3 277
(399 ) 545 146 Less: Net
income (loss) attributable to noncontrolling interest 37
— 37 (30 ) — (30 )
Net income (loss) attributable
to Ameriprise Financial
$ 237 $ 3 $ 240 $
(369 ) $ 545 $ 176
(1) Includes net realized gains
and losses on available-for-sale securities and an increase in
reserves on commercial mortgage loans.
(2) Includes the market impact on
variable annuity living and death benefits and DSIC amortization,
net of hedges.
(3) Includes the impact on DAC
amortization from market performance and variable annuity living
benefit costs, net of hedges.
(4) Includes integration
charges.
(5) Includes net realized gains
and losses on available-for-sale securities, an increase in
reserves on bank loans and the fair value adjustment on low income
housing investments.
(6) Includes integration and
restructuring charges.
(7) Reflects tax at the statutory
rate of 35%.
Ameriprise Financial, Inc. Reconciliation
Table: GAAP Income Statement to Core Operating Earnings
(in millions, unaudited)
Year Ended December 31, 2009
Year Ended December 31, 2008 GAAP Earnings
Adjustments Core Operating Earnings GAAP
Earnings Adjustments Core Operating Earnings
Revenues
Management and financial advice
fees
$ 2,704 $ — $ 2,704 $ 2,899 $ — $ 2,899 Distribution fees 1,420 —
1,420 1,565 12
(6)
1,577 Net investment income 2,002 (53 )(1) 1,949 817 804 (7) 1,621
Premiums 1,098 — 1,098 1,048 — 1,048 Other revenues 722
— 722 766 — 766 Total revenues
7,946 (53 ) 7,893 7,095 816 7,911 Banking and deposit interest
expense 141 — 141 179 —
179
Total net revenues 7,805 (53 )
7,752 6,916 816 7,732
Expenses
Distribution expenses
1,782 — 1,782 1,912 — 1,912 Interest credited to fixed accounts 903
— 903 790 — 790 Benefits, claims, losses and settlement expenses
1,342 (144 )(2) 1,198 1,125 (14 )(2) 1,111 Amortization of deferred
acquisition costs 217 139 (3) 356 933 (404 )(3) 529 Interest and
debt expense 127 (13 )(4) 114 109 — 109 General and administrative
expense 2,514 (108 )(5) 2,406 2,472
(192 )(8) 2,280
Total expenses 6,885
(126 ) 6,759 7,341 (610 )
6,731 Pretax income (loss) 920 73 993 (425 ) 1,426 1,001
Income tax provision (benefit) 183 26 (9) 209
(333 ) 499 (9) 166
Net income (loss)
737 47 784
(92 ) 927 835 Less: Net
income (loss) attributable to noncontrolling interest 15
— 15 (54 ) — (54 )
Net income (loss) attributable
to Ameriprise Financial
$ 722 $ 47 $ 769 $
(38 ) $ 927 $ 889
(1) Includes net realized gains
and losses on available-for-sale securities and an increase in
reserves on commercial mortgage loans.
(2) Includes the market impact on
variable annuity living and death benefits and DSIC amortization,
net of hedges.
(3) Includes the impact on DAC
amortization from market performance and variable annuity living
benefit costs, net of hedges.
(4) Includes costs related to the
early retirement of $450 million of the company’s notes due
2010.
(5) Includes integration charges
and support costs related to RiverSource 2a-7 money market
funds.
(6) Includes write-off of
distribution revenue receivable from unaffiliated money market
funds.
(7) Includes net realized gains
and losses on available-for-sale securities, an increase in
reserves on bank loans, the fair value adjustment on low income
housing investments and realized losses related to other
securities.
(8) Includes integration and
restructuring charges and support costs related to RiverSource 2a-7
money market funds and unaffiliated money market funds.
(9) Reflects tax at the statutory
rate of 35%.
Ameriprise Financial, Inc. Reconciliation
Table: Debt to Total Capital December 31, 2009
Debt Less Debt Less
Impact of 75%
Non-recourse
GAAP
Non-recourse Non-recourse
Equity
with Equity
(in millions, unaudited)
Measure
Debt Debt
Credit (1)
Credit (1)
Debt
$ 2,249 $ 387 $ 1,862 $ 242 $ 1,620
Total Capital
$ 11,522 $ 387 $ 11,135 $ 11,135
Debt to Total Capital
19.5 % 16.7 % 14.5 %
(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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