Ameriprise Financial, Inc. (NYSE: AMP) today reported third
quarter 2011 net income from continuing operations attributable to
Ameriprise Financial of $271 million, or $1.12 per diluted share,
compared to $346 million, or $1.33 per diluted share, a year ago.
Operating earnings were $251 million, or $1.04 per diluted share,
compared to $352 million, or $1.35 per diluted share, a year
ago.
Third quarter results were impacted by a negative $106 million,
or $0.42 per diluted share, year-over-year change from the
unfavorable market impact on deferred acquisition costs (DAC) and
deferred sales inducement costs (DSIC), as well as the company's
annual review of insurance and annuity valuation assumptions and
models (unlocking). The negative unlocking impact in the third
quarter of 2011 primarily reflects lower near-term interest spread
assumptions.
Operating net revenues were $2.5 billion compared to $2.3
billion a year ago, primarily driven by double-digit growth in
management and distribution fees. Net investment income was
essentially flat year-over-year and reflected the low interest rate
environment.
Operating return on shareholders’ equity excluding accumulated
other comprehensive income was 13.4 percent for the 12 months ended
September 30, 2011, compared to 12.1 percent for the 12 months
ended September 30, 2010.
"We continued to demonstrate the strength and resilience of our
business despite a challenging market environment," said Jim
Cracchiolo, chairman and chief executive officer. "Operating net
revenues increased 8 percent, and we delivered solid underlying
business results, apart from the DAC-related impacts. Client
acquisition and advisor recruiting remained strong, and our advisor
productivity was near all-time highs.
"We are maintaining our investments for future growth while
managing expenses and our financial foundation prudently. Our
financial strength continues to enable us to return significant
capital to shareholders. In fact, our excess capital position
remains above $2.0 billion even after we accelerated our share
repurchase activity, allocating $447 million for share repurchases
in the quarter."
Third Quarter 2011 Summary
In the third quarter of the year, the company conducts an 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 the impact is reflected as part of annual
unlocking. In addition, lower than assumed returns in both equity
and bond funds in variable products resulted in an unfavorable
impact for the quarter.
The result of these two items negatively impacted the company’s
year-over-year results by $106 million, or $0.42 per diluted share.
The third quarter of 2011 unfavorable impact was $67 million, or
$0.27 per diluted share, compared to a benefit of $39 million, or
$0.15 per diluted share, a year ago.
Ameriprise Financial, Inc. Third Quarter
Summary
(in millions, except per share amounts,
unaudited)
Per Diluted Share 2011 2010
%Change
2011 2010
%Change
Net income from continuing operations attributable to Ameriprise
Financial $ 271 $ 346 (22 )% $ 1.12 $ 1.33 (16 )% Adjustments, net
of tax (see reconciliation on p. 14) (20 ) 6 NM
(0.08 ) 0.02 NM Operating earnings $ 251 $ 352 (29 )%
$ 1.04 $ 1.35 (23 )% Items included in operating earnings:
Market impact on DAC and DSIC benefits (expense),
after-tax((1)) $ (42 ) $ 25 NM $ (0.17 ) $ 0.10 NM Annual
unlocking, after-tax(1) (25 ) 14 NM (0.10 )
0.05 NM Total DAC-related $ (67 ) $ 39 NM $ (0.27 ) $ 0.15
NM Weighted average common shares outstanding: Basic 238.0
255.3 Diluted 242.0 259.9
(1) After-tax is calculated using the
statutory tax rate of 35%.
NM Not Meaningful – variance of greater than 100%
The company believes the presentation of operating earnings best
represents the economics of the business.
The third quarter of 2011 DAC-related impacts reflected:
- $42 million after-tax, or $0.17 per
diluted share, in DAC and DSIC amortization expenses, primarily
driven by equity market impacts on separate account balances.
- $25 million after-tax, or $0.10 per
diluted share, from annual unlocking.
In addition, results in the third quarter of 2011 included items
that resulted in a net after-tax benefit of $3 million, or $0.01
per diluted share, including:
- $25 million, or $0.10 per diluted
share, of additional bond discount amoritzation investment income
related to prior periods resulting from revisions to the accounting
classification of certain structured securities.
- $15 million, or $0.06 per diluted
share, in auto and home insurance catastrophe losses, primarily
from Hurricane Irene claims.
- $7 million, or $0.03 per diluted share,
in Threadneedle project implementation costs, primarily related to
a new transfer agency agreement.
Third Quarter 2011 Business Highlights
- Total assets under management and
administration were $600 billion at September 30, 2011, down 4
percent from a year ago, primarily driven by the point-to-point
decline in equity markets and Asset Management segment net
outflows, partially offset by retail client net inflows. Total
assets under management and administration exclude assets from
discontinued operations.
- Retail client assets in Advice &
Wealth Management increased 2 percent year-over-year to $293
billion, primarily reflecting growth in wrap assets, including $0.8
billion in net inflows in the quarter.
- The number of advisors increased by 51
sequentially to 9,714, reflecting the strongest quarter for
experienced advisor recruiting since the second quarter of 2009.
Operating net revenue per advisor increased 14 percent from a year
ago to $97,000 due to experienced advisor recruiting, higher
average assets under management and increased client activity.
- Asset Management net outflows were $4.8
billion, primarily from $3.1 billion of retail net outflows
reflecting the volatile equity markets in the quarter. In the
institutional business, Threadneedle had $0.4 billion of net
inflows, while Columbia remained in net outflows.
- Variable annuity ending account
balances were flat year-over-year at $59 billion and included $0.4
billion of net inflows in the Ameriprise channel in the quarter,
partially offset by net outflows from the closed book of variable
annuities sold through third-party channels.
- RiverSource Life introduced its indexed
universal life insurance product to further expand its permanent
insurance product suite.
- Auto and home results included $23
million of pretax catastrophe losses, primarily from storms in the
third quarter, including Hurricane Irene, which more than offset
lower reserves associated with the favorable development of bodily
injury losses.
- The company launched the next phase of
its MORE WITHIN REACH® brand platform, including television
advertising that highlights the company’s rich history, financial
strength and commitment to clients.
Balance Sheet Summary as of September 30, 2011
Excess capital and prudent capital management
- During the quarter, the company
repurchased 9.9 million shares of its common stock for $447
million. Through September 30, 2011, the company repurchased $1.2
billion of shares and has $1.7 billion available in its current
share repurchase authorization that expires in June 2013. Even
after the increased share repurchases in the quarter, the company
continued to maintain more than $2.0 billion in excess
capital.
- RiverSource Life Insurance Company’s
estimated risk-based capital ratio was above 600 percent.
- The company’s variable annuity hedging
program continues to perform well.
High-quality investment portfolio
- The total investment portfolio,
including cash and cash equivalents, was $41.3 billion and remains
well positioned. The company’s balance sheet has no holdings of
sovereign debt in financially troubled European countries.
- The company’s available-for-sale
portfolio ended the quarter with $2.0 billion in net unrealized
gains.
- Detailed information about the
company’s investment portfolio is available at
ir.ameriprise.com.
DAC accounting change – January 1, 2012
The company will adopt new accounting rules
for the deferral of insurance and annuity acquisition costs on
January 1, 2012 on a retrospective basis. The company estimates
that the change will reduce its DAC asset by a range of $2.0
billion to $2.2 billion, which will decrease book value by a range
of $1.3 billion to $1.4 billion after-tax. The change will not
impact the company’s strong excess capital position or cash flow.
The company estimates that the change will marginally benefit
operating earnings in 2012.
Taxes
The operating effective tax rate was 22.0 percent for the third
quarter of 2011 and 24.7 percent year-to-date. The company expects
its full-year 2011 operating effective tax rate to be 25 to 27
percent based upon currently forecasted profitability trends.
Ameriprise Financial, Inc. Advice &
Wealth Management Segment Results
(in millions, unaudited)
Quarter Ended September
30, 2011 Quarter Ended September 30, 2010 GAAP
Less:Adjustments(1)
Operating GAAP
Less:Adjustments(1)
Operating
%Change
Advice & Wealth Management Net revenues $ 936 $ (2 ) $
938 $ 830 $ — $ 830 13 % Expenses 822 — 822
742 1 741 11 Pretax income $ 114 $ (2 ) $ 116
$ 88 $ (1 ) $ 89 30 Item included in operating earnings:
Investment income recognition $ 6 $ — NM
Quarter Ended Quarter
Ended % September 30, 2011
September 30, 2010 Change Retail client assets
(billions) $ 293 $ 288 2 % Mutual fund wrap net flows (billions) $
0.8 $ 1.6 (48 )% Operating net revenue per advisor (thousands) $ 97
$ 85 14 %
(1) Includes net realized losses and
integration/restructuring charges.
Advice & Wealth Management pretax operating earnings
increased 30 percent to $116 million due to improved advisor
productivity and new client flows. Pretax operating margin
increased to 12.4 percent compared to 10.7 percent a year ago.
Operating net revenues increased 13 percent to $938 million due
to higher management and distribution fees from growth in assets
under management and increased client activity.
Operating expenses increased 11 percent to $822 million due to
higher advisor compensation from business growth and investments in
the business, including costs of implementing a new brokerage
platform.
Retail client assets grew 2 percent to $293 billion, with strong
retail client flows, partially offset by market declines in the
quarter.
The company continued to increase the productivity of its
advisors. Operating net revenue per advisor was $97,000 in the
quarter, a 14 percent increase compared to a year ago, primarily
driven by higher average assets under management and increased
client activity. The number of branded advisors increased for the
second consecutive quarter, driven by the strongest quarter for
experienced advisor recruiting since the second quarter of 2009 and
continued strong advisor retention.
Ameriprise Financial, Inc. Asset Management
Segment Results
(in millions, unaudited)
Quarter Ended September 30, 2011 Quarter Ended September
30, 2010 GAAP
Less:Adjustments(1)
Operating GAAP
Less:Adjustments(1)
Operating
%Change
Asset Management Net revenues $ 707 $ 2 $ 705 $ 662 $ 1 $
661 7 % Expenses 610 24 586 558
18 540 9 Pretax income $ 97 $ (22 ) $ 119 $ 104 $ (17 ) $
121 (2 ) Item included in operating earnings: Threadneedle
project implementation costs $ (10 ) $ — NM
Quarter Ended Quarter Ended %
September 30, 2011 September 30, 2010 Change
Total segment ending AUM(2) (billions) $ 417 $ 445 (6 )% Columbia
Management AUM $ 325 $ 347 (6 )% Threadneedle AUM $ 96 $ 102 (5 )%
Flows(2) (billions) $ (4.8 ) $ (1.8 ) NM Columbia Management net
flows $ (4.1 ) $ (2.8 ) (44 )% Threadneedle net flows $ (0.8 ) $
1.1 NM
(1)
Includes net realized gains and integration/restructuring
charges.
(2)
Total segment asset and flow results eliminate $9 million of
net outflows and $4.1 billion of assets in the 2011 quarter and $32
million of net flows and $4.0 billion of assets in the 2010 quarter
due to subadvisory relationships between Threadneedle and Columbia
Management.
NM Not Meaningful — variance of greater than 100%
Asset Management pretax operating earnings declined 2
percent to $119 million compared to the prior year. Results in the
quarter include a $10 million expense primarily related to
Threadneedle changing its transfer agent provider, which is
expected to enhance margins over time. Adjusted net pretax
operating margin, which excludes pass-through distribution
expenses, was 32.7 percent for the third quarter of 2011, compared
to 33.0 percent a year ago. The Threadneedle project expenses in
the quarter lowered adjusted net pretax operating margin by 2.4
percentage points.
Operating net revenues increased 7 percent to $705 million,
reflecting increased management fees, primarily due to growth in
average assets, partially offset by net outflows.
Operating expenses increased 9 percent to $586 million.
Adjusting for the Threadneedle transfer agent costs, operating
expenses increased 7 percent, driven by higher distribution
expenses as a result of higher year-over-year average retail
balances. General and administrative expenses remain well
controlled.
Total segment ending AUM was $417 billion, down 6 percent from a
year ago driven by net outflows and market depreciation.
Columbia Management had $4.1 billion of net outflows in the
quarter, evenly divided between retail and institutional channels.
Retail outflows were primarily in equity portfolios and were in
line with industry trends. Institutional outflows at Columbia
Management were primarily comprised of lower-fee, former
parent-company relationships where the assets are expected to
continue to transition over time and fluctuate quarter to
quarter.
Threadneedle had a total of $0.8 billion of net outflows in the
quarter, comprised of $1.2 billion of retail outflows primarily
from European clients, partially offset by $0.4 billion of
institutional net inflows. Institutional net flows were positive as
new mandates in the Middle East more than offset continued run-off
of low-margin Zurich assets.
Ameriprise Financial, Inc. Annuities
Segment Results
(in millions, unaudited)
Quarter Ended September 30, 2011
Quarter Ended September 30, 2010 GAAP
Less:Adjustments(1)
Operating GAAP
Less:Adjustments(1)
Operating
%Change
Annuities Net revenues $ 686 $ (2 ) $ 688 $ 626 $ (1 ) $ 627
10 % Expenses 550 (56 ) 606 362
(8 ) 370 64 Pretax income $ 136 $ 54 $ 82 $ 264 $ 7 $ 257
(68 ) Items included in operating earnings: Market impact on
DAC and DSIC benefits (expense) $ (58 ) $ 29 NM Annual unlocking
(25 ) 71 NM Total DAC-related $ (83 ) $ 100 NM
Investment income recognition $ 33 $ — NM
Quarter Ended Quarter Ended
% September 30, 2011 September 30, 2010
Change Variable annuity ending account balances (billions) $
58.9 $ 59.0 —
Variable annuity net flows(2)
(millions)
$ 179 $ 484
(63 )% Fixed annuity ending account balances (billions) $ 14.2 $
14.5 (2 )% Fixed annuity net flows (millions) $ (160 ) $ (159 ) (1
)%
(1)
Includes net realized losses and market impact on variable
annuity guaranteed living benefits net of DAC and DSIC.
(2)
3Q10 variable annuity net inflows include sales in both
Ameriprise and third-party channels. The company discontinued new
sales of variable annuities in third-party channels in the fourth
quarter of 2010.
NM Not Meaningful — variance of greater than 100%
Annuities pretax operating earnings declined 68 percent
to $82 million reflecting the unfavorable $183 million
year-over-year change in DAC-related impacts, partially offset by a
benefit from investment income recognition. In addition, operating
earnings were negatively impacted by spread compression in fixed
annuities and higher distribution expenses.
Operating net revenues increased 10 percent to $688 million,
driven by the benefit of recognizing certain investment income in
the quarter, as well as higher management fees from increased
average separate account balances and higher variable annuity rider
fees. This growth was partially offset by the impact of the low
interest rate environment on net investment income.
Operating expenses increased 64 percent to $606 million
reflecting the significant year-over-year change from market-driven
impacts on DAC and DSIC, as well as unlocking. Excluding these
impacts, expenses reflected higher variable annuity distribution
expenses and DAC amortization from the higher separate account
balances, partially offset by lower interest credited.
RiverSource variable annuity net inflows in the Ameriprise
channel declined 16 percent from a year ago to $0.4 billion. Fixed
annuities remained in net outflows due to low client demand given
current interest rates.
Ameriprise Financial, Inc. Protection
Segment Results
(in millions, unaudited)
Quarter Ended September 30, 2011 Quarter Ended September
30, 2010 GAAP
Less:Adjustments(1)
Operating GAAP
Less:Adjustments
Operating
%Change
Protection Net revenues $ 501 $ (1 ) $ 502 $ 500 $ — $ 500 —
Expenses 437 — 437 433 —
433 1 % Pretax income $ 64 $ (1 ) $ 65 $ 67 $ — $ 67 (3 )
Items included in operating earnings: Annual unlocking $ (14 ) $
(49 ) 71 % Market impact on DAC benefit (expense) (7 )
10 NM Total DAC-related $ (21 ) $ (39 ) 46 % Auto
& Home catastrophe losses $ (23 ) — NM
Quarter Ended Quarter
Ended % September 30, 2011
September 30, 2010 Change Life insurance in force
(billions) $ 191 $ 192 — VUL/UL ending account balances (billions)
$ 8.9 $ 9.1 (2 )% Auto & home policies in force (thousands) 687
639 8 %
(1)
Includes net realized losses.
NM Not Meaningful — variance of greater than 100%
Protection pretax operating earnings declined 3 percent
to $65 million driven by auto and home catastrophe losses,
partially offset by lower DAC-related items and improved life and
health claims experience.
Operating net revenues were flat at $502 million as auto and
home premium growth was largely offset by a decline in life and
health revenues.
Operating expenses were up slightly to $437 million. In life and
health, expenses declined from reduced claims as well as from lower
year-over-year DAC-related impacts. In auto and home, expenses
increased, reflecting $23 million in catastrophe losses. On a
sequential basis, reported auto losses and loss frequency have
continued to improve since the fourth quarter of 2010. These trends
were partially reflected in third quarter results and will be
monitored and reflected in reserves in future periods, as
appropriate.
Life insurance in force remained essentially flat compared to a
year ago at $191 billion, and Auto & Home continued to grow its
policy count, up 8 percent compared to a year ago.
Ameriprise Financial, Inc. Corporate &
Other Segment Results
(in millions, unaudited)
Quarter Ended September 30, 2011 Quarter Ended September
30, 2010 GAAP
Less:Adjustments(1)
Operating GAAP
Less:Adjustments(1)
Operating
%Change
Corporate & Other Net revenues $ (49 ) $ (42 ) $ (7 ) $
32 $ 28 $ 4 NM Expenses 115 62 53 109
58 51 4 % Pretax loss $ (164 ) $ (104 ) $ (60 ) $ (77
) $ (30 ) $ (47 ) (28 )
(1)
Includes revenues and expenses of the consolidated
investment entities and net realized gains.
NM Not Meaningful — variance of greater than 100%
Corporate & Other pretax operating loss was $60
million for the quarter compared to a loss of $47 million a year
ago.
At Ameriprise Financial, we have been helping people feel
confident about their financial future for over 115 years. With a
network of 10,000 financial advisors and outstanding asset
management, advisory and insurance capabilities, we have the
strength and expertise to serve the full range of consumer
financial needs. For more information, or to find an Ameriprise
financial advisor, 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:
- statements in this news release
regarding the adoption of a new accounting standard for the
deferral of insurance and annuity costs and the expected impact of
such new accounting rules on the company’s DAC asset, book value,
capital position, cash flows and earnings;
- the statement of belief in this news
release that the company expects its full-year 2011 operating
effective tax rate to be in the 25 to 27 percent range;
- the statement in this news release that
Threadneedle’s transition to a new transfer agent provider is
expected to enhance margins over time;
- the statement in this news release
regarding expected outflows and volatility in assets managed by
Columbia Management in connection with lower-fee, former parent
company relationships;
- 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, 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:
- changes in the valuations, liquidity
and volatility in the interest rate, credit default, equity market
and foreign exchange environments;
- changes in capital and credit market
conditions including the availability and cost of capital;
- changes in and adoption of relevant
accounting standards, 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
and regulations implemented or to be implemented in connection with
the Dodd-Frank Wall Street Reform and Consumer Protection Act;
- 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 or
unlocking DAC and DSIC or market volatility underlying our
valuation and hedging of guaranteed living benefit annuity riders,
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 company’s ability to pursue and
complete strategic transactions and initiatives, including
acquisitions, divestitures, including the divestiture of Securities
America, joint ventures and the development of new products and
services;
- 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 may pursue and contract to
complete in the future, 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 under Part 1, Item 1A of and elsewhere in
our Annual Report on Form 10-K for the year ended December 31, 2010
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 Quarterly
Report on Form 10-Q for the quarter ended September 30, 2011. For
information about Ameriprise Financial entities, please refer to
the Third Quarter 2011 Statistical Supplement available at
ir.ameriprise.com and the tables that follow in this news
release.
Ameriprise Financial, Inc. Reconciliation
Table: GAAP Income Statement to Operating Income Statement
(in millions, unaudited)
Quarter Ended September 30, 2011 Quarter Ended September
30, 2010 GAAP
Less:Adjustments(1)
Operating GAAP
Less:Adjustments(1)
Operating
%Change
Revenues Management and financial advice fees $ 1,127 $ (9 )
$ 1,136 $ 996 $ (9 ) $ 1,005 13 % Distribution fees 389 — 389 349 —
349 11 Net investment income 445 (67 ) 512 525 19 506 1 Premiums
311 — 311 303 — 303 3 Other revenues 195 22
173 176 9 167 4 Total revenues 2,467 (54 )
2,521 2,349 19 2,330 8 Banking and deposit interest expense
12 — 12 15 — 15 (20 )
Total
net revenues 2,455 (54 ) 2,509 2,334 19 2,315 8
Expenses Distribution expenses 624 — 624 519 — 519 20
Interest credited to fixed accounts 213 — 213 227 — 227 (6 )
Benefits, claims, losses and settlement expenses 257 (119 ) 376 636
(18 ) 654 (43 ) Amortization of deferred acquisition costs 318 63
255 (246 ) 10 (256 ) NM Interest and debt expense 71 47 24 74 45 29
(17 ) General and administrative expense 725 30
695 678 23 655 6
Total expenses
2,208 21 2,187 1,888 60 1,828 20 Income from continuing operations
before income tax provision 247 (75 ) 322 446 (41 ) 487 (34 )
Income tax provision 81 10 71 132
(3 ) 135 (47 ) Income from continuing operations 166
(85 ) 251 314 (38 ) 352 (29 ) Income (loss) from discontinued
operations, net of tax 2 2 — (2 )
(2 ) — —
Net income 168 (83 ) 251 312 (40 )
352 (29 ) Less: Net loss attributable to noncontrolling interests
(105 ) (105 ) — (32 ) (32 )
— —
Net income attributable to Ameriprise
Financial $ 273 $ 22 $ 251 $ 344 $ (8 ) $ 352 (29 ) %
(1)
Includes the elimination of management fees earned by the
company from the consolidated investment entities and the related
expense; revenues and expenses of the consolidated investment
entities; net realized gains/losses; market impact on variable
annuity guaranteed living benefits net of DAC and DSIC;
integration/restructuring charges and income/loss from discontinued
operations. Income tax provision is calculated using the statutory
tax rate of 35% on applicable adjustments.
NM Not Meaningful — variance of greater than 100%
Ameriprise Financial, Inc. Reconciliation
Table: Effective Tax Rate Quarter Ended
September 30, 2011 (in millions, unaudited)
GAAP
Operating Income from continuing operations before income
tax provision $ 247 $ 322 Less: Pretax loss attributable to
noncontrolling interests (105 ) — Income from
continuing operations before income tax provision excluding
consolidated investment entities (CIEs) $ 352 $ 322 Income
tax provision from continuing operations $ 81 $ 71 Effective
tax rate 32.5 % 22.0 % Effective tax rate excluding noncontrolling
interests 22.9 % 22.0 %
Year to Date September 30,
2011 (in millions, unaudited)
GAAP Operating
Income from continuing operations before income tax provision $
1,033 $ 1,221 Less: Pretax loss attributable to noncontrolling
interests (151 ) — Income from continuing operations
before income tax provision excluding consolidated investment
entities (CIEs) $ 1,184 $ 1,221 Income tax provision from
continuing operations $ 288 $ 301 Effective tax rate 27.8 %
24.7 % Effective tax rate excluding noncontrolling interests 24.3 %
24.7 %
Ameriprise Financial, Inc.
Reconciliation Table: Asset Management Adjusted Net Pretax
Operating Margin Quarter Ended
September 30, September 30, (in millions,
unaudited)
2011 2010 Total net revenues $ 707 $ 662
Less: Realized gains 2 1 Operating total net revenues
705 661 Less: Distribution pass through revenues 207 184 Less:
Subadvisory and other pass through revenues 91 89
Adjusted operating revenues $ 407 $ 388 Pretax income $ 97 $
104 Less: Realized gains 2 1 Add: Integration/restructuring charges
24 18 Pretax operating earnings 119 121 Less:
Operating net investment income (loss) (4 ) 5 Add: Amortization of
intangibles 10 12 Adjusted operating earnings $ 133 $
128 Adjusted net pretax operating margin 32.7 % 33.0 %
Ameriprise Financial, Inc.
Reconciliation Table: Net Income from Continuing
Operations Attributable to Ameriprise Financial
Per Diluted Share Quarter Ended Quarter
Ended September 30, September 30,
September 30, September 30, (in millions,
unaudited)
2011 2010 2011 2010 Net
income attributable to Ameriprise Financial $ 273 $ 344 $ 1.13 $
1.32 Less: Income (loss) from discontinued operations, net of tax
2 (2 ) 0.01 (0.01 ) Net income from
continuing operations attributable to Ameriprise Financial 271 346
1.12 1.33 Add: Market impact on variable annuity guaranteed living
benefits,
net of tax(1)
(37 ) (5 ) (0.15 ) (0.02 ) Add: Integration charges, net of tax(1)
15 12 0.06 0.04 Less: Net realized gains (losses), net
of tax(1)
(2 ) 1 (0.01 ) — Operating earnings $
251 $ 352 $ 1.04 $ 1.35 Weighted average common shares
outstanding: Basic 238.0 255.3 Diluted 242.0 259.9
(1) After-tax is calculated using the
statutory tax rate of 35%.
Ameriprise Financial, Inc. Return on Equity
(ROE) Excluding Accumulated Other Comprehensive Income
“AOCI” Twelve Months Ended September
30, September 30, (in millions, unaudited)
2011 2010 Net income from continuing operations
attributable to Ameriprise Financial, as reported $ 1,202 $ 1,052
Less: Adjustments (1) (58 ) (38 ) Operating earnings
$ 1,260 $ 1,090 Total Ameriprise Financial, Inc. shareholders’
equity $ 10,609 $ 9,973 Less: Assets and liabilities held for sale
50 103 Less: Accumulated other comprehensive income, net of tax
655 483 Total Ameriprise Financial, Inc.
shareholders’ equity from continuing operations excluding AOCI
9,904 9,387 Less: Equity impacts attributable to the consolidated
investment entities 510 344 Operating equity $ 9,394
$ 9,043 Return on equity from continuing operations,
excluding AOCI 12.1 % 11.2 % Operating return on equity excluding
CIEs and AOCI (2) 13.4 % 12.1 %
(1)
Adjustments reflect the trailing twelve months’ sum of
after-tax net realized gains/losses, market impact on variable
annuity guaranteed living benefits net of DAC and DSIC, and
integration/restructuring charges.
(2)
Operating return on equity excluding consolidated investment
entities and accumulated other comprehensive income is calculated
using the trailing twelve months of earnings excluding the
after-tax net realized gains/losses, market impact on variable
annuity guaranteed living benefits net of DAC and DSIC,
integration/restructuring charges, and discontinued operations in
the numerator, and Ameriprise Financial shareholders’ equity
excluding accumulated other comprehensive income, the impact of
consolidating investment entities, and the assets and liabilities
held for sale using a five point average of quarter-end equity in
the denominator.
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