Ameriprise Financial, Inc. (NYSE: AMP):
Earnings ($M) | Earnings Per Diluted Share | Return on Equity, ex. AOCI | |||||
GAAP | $492 | GAAP | $3.57 | GAAP | 33.1% | ||
Adjusted Operating | $560 | Adjusted Operating | $4.06 | Adjusted Operating | 37.1% | ||
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“Our asset management, insurance and annuity businesses continue to generate competitive returns and consistent free cash flow, complementing wealth management. In addition to our ongoing investments, we’re taking strategic actions to free-up additional capital to invest further and return to shareholders at a differentiated level. This includes the recently announced sale of Ameriprise Auto & Home Insurance, which is on schedule to close in the fourth quarter.” |
Ameriprise Financial, Inc.
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(in millions, except per share amounts, unaudited) | Quarter Ended
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| % Over/
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| Per Diluted Share
| % Over/
| |||||||||||
2019 | 2018 |
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| 2019 | 2018 | ||||||||||||
GAAP net income | $ | 492 | $ | 462 | 6 | % | $ | 3.57 | $ | 3.10 | 15 | % | |||||
Adjusted operating earnings (see reconciliation on p. 8) | $ | 560 | $ | 530 | 6 | % | $ | 4.06 | $ | 3.56 | 14 | % | |||||
GAAP Return on Equity, ex. AOCI | 33.1 | % | 29.6 | % | |||||||||||||
Adjusted Operating Return on Equity, ex. AOCI | 37.1 | % | 30.4 | % | |||||||||||||
Percent of pretax adjusted operating earnings from Advice & Wealth Management, excluding Corporate & Other | 51 | % | 49 | % | |||||||||||||
Percent of pretax adjusted operating earnings from Advice & Wealth Management and Asset Management, excluding Corporate & Other | 74 | % | 74 | % | |||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 136.1 | 147.0 | |||||||||||||||
Diluted | 138.0 | 149.0 |
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Ameriprise Financial, Inc.
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(in millions, unaudited) | Quarter Ended
| % Over/
| ||||||
2019 | 2018 | |||||||
Net revenues | $ | 1,653 | $ | 1,543 | 7 | % | ||
Expenses | 1,277 | 1,193 | (7 | %) | ||||
Pretax adjusted operating earnings | $ | 376 | $ | 350 | 7 | % | ||
Pretax adjusted operating margin | 22.7 | % | 22.7 | % | ||||
(in billions, unless otherwise noted) | Quarter Ended
| % Over/
| ||||||
2019 | 2018 | |||||||
Advice & Wealth Management total client assets | $ | 608 | $ | 566 | 7 | % | ||
Wrap net flows | $ | 4.8 | $ | 5.3 | (8 | %) | ||
Brokerage cash balance | $ | 24.3 | $ | 24.5 | (1 | %) | ||
Adjusted operating net revenue per advisor (trailing 12 months - thousands) | $ | 638 | $ | 603 | 6 | % | ||
Advice & Wealth Advice Management pretax adjusted operating earnings increased 7 percent to $376 million driven by strength in client activity, increased earnings on cash balances and only 3 percent equity market appreciation year-over-year, partially offset by continued investments for growth and higher mark-to-market impact on advisor deferred compensation expenses. Pretax adjusted operating margin remained strong at 22.7 percent.
Adjusted operating net revenues increased 7 percent to $1.7 billion, reflecting strong client activity, increased advisor productivity and higher earnings on cash balances. Transactional activity grew 6 percent sequentially as client engagement continued to improve following recent market volatility. Adjusted operating expenses increased 7 percent to $1.3 billion, reflecting higher distribution expense and volume-related expense due to transactional activity, investments for growth and higher mark-to-market impact on advisor deferred compensation expense.
Advice & Wealth Management total client assets increased 7 percent to $608 billion. Organic growth remains strong with $4.8 billion of wrap net inflows. Total wrap assets increased 13 percent to $292 billion. Client brokerage cash balances were essentially flat to a year ago at $24.3 billion.
Adjusted operating net revenue per advisor on a trailing 12-month basis increased 6 percent to $638,000. Total advisors increased to 9,951 and advisor retention remained strong. 72 experienced advisors moved their practices to Ameriprise in the quarter, with 19 percent higher productivity than last year’s experienced advisor recruits.
Ameriprise Financial, Inc.
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(in millions, unaudited) | Quarter Ended
| % Over/
| ||||||
2019 | 2018 | |||||||
Net revenues | $ | 712 | $ | 755 | (6 | %) | ||
Expenses | 548 | 572 | 4 | % | ||||
Pretax adjusted operating earnings | $ | 164 | $ | 183 | (10 | %) | ||
Pretax adjusted operating margin | 23.0 | % | 24.2 | % | ||||
Net pretax adjusted operating margin (1) | 37.1 | % | 38.0 | % | ||||
(in billions) | Quarter Ended
| % Over/
| ||||||
2019 | 2018 | |||||||
Total segment AUM | $ | 468 | $ | 482 | (3 | %) | ||
Net Flows | ||||||||
Former parent company related net new flows | $ | (1.0 | ) | $ | (2.0 | ) | 51 | % |
Global Retail net flows, excl. former parent flows | 0.5 | 2.0 | (77 | %) | ||||
Global Institutional net flows, excl. former parent flows | (1.4 | ) | (1.5 | ) | 6 | % | ||
Total segment net flows | $ | (1.9 | ) | $ | (1.5 | ) | (28 | %) |
Assets Under Advisement Mandate (2) | $ | 0.8 | — | |||||
(1) See reconciliation on page 10 (2) Strategy added to an intermediary client home office model that is not included in flows | ||||||||
Asset Management pretax adjusted operating earnings were $164 million, down $19 million from the prior year period, reflecting a decline in net revenues offset by lower expenses. Second quarter net pretax adjusted operating margin was 37.1 percent.
Adjusted operating revenues declined 6 percent driven by the cumulative impact of net outflows, lower equity market appreciation, unfavorable foreign exchange translation and lower seed money gains, partially offset by higher performance fees. Adjusted operating expenses declined 4 percent reflecting lower distribution expenses, and well-managed general and administrative expenses, partially offset by Brexit and other regulatory-related costs.
Net outflows in the quarter were $1.9 billion, which included $2.9 billion of reinvested dividends. In North America, retail flows continued to improve on a sequential basis to $1.2 billion of inflows, reflecting continued market share gains at several large retail intermediaries. In EMEA, Brexit and geopolitical uncertainty continued to mute retail flows, however, there was improvement on a sequential basis to $0.7 billion of outflows. Global institutional outflows excluding former parent related assets were $1.4 billion. Former parent related outflows improved to $1.0 billion. In addition, during the quarter a strategy was added to a model portfolio and was funded initially for more than $800 million; this is considered assets under advisement and not included in net flows.
Ameriprise Financial, Inc.
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(in millions, unaudited) | Quarter Ended
| % Over/
| ||||||
2019 | 2018 | |||||||
Annuities | ||||||||
Net revenues | $ | 620 | $ | 622 | — | |||
Expenses | 491 | 500 | 2 | % | ||||
Pretax adjusted operating earnings | $ | 129 | $ | 122 | 6 | % | ||
Variable annuity pretax adjusted operating earnings | $ | 119 | $ | 110 | 8 | % | ||
Fixed annuity pretax adjusted operating earnings | 10 | 12 | (17 | %) | ||||
Total pretax adjusted operating earnings | $ | 129 | $ | 122 | 6 | % | ||
Protection | ||||||||
Net revenues | $ | 259 | $ | 255 | 2 | % | ||
Expenses | 194 | 192 | (1 | %) | ||||
Pretax adjusted operating earnings | $ | 65 | $ | 63 | 3 | % | ||
Quarter Ended
| % Over/
| |||||||
2019 | 2018 | |||||||
Variable annuity ending account balances (billions) | $ | 78.1 | $ | 78.3 | — | |||
Fixed deferred annuity ending account balances (billions) | $ | 8.5 | $ | 9.0 | (6 | %) | ||
Life insurance in force (billions) | $ | 195 | $ | 196 | — | |||
Annuities pretax adjusted operating earnings were $129 million, up 6 percent.
Variable annuity pretax adjusted operating earnings were up 8 percent to $119 million. Variable annuity sales declined 16 percent year-over-year to $1.0 billion, however, sales improved 19 percent on a sequential basis following volatile markets in late 2018. Annuity net amount at risk as a percent of account values was 0.6 percent for living benefits and 0.1 percent for death benefits, one of the lowest among major variable annuity writers.
Fixed annuity pretax adjusted operating earnings were $10 million, reflecting continued spread compression from the extended period of low interest rates, lower account balances and the reinsurance of 20 percent of the block in the first quarter. Account balances declined 6 percent from limited new product sales and continued lapses.
Protection pretax adjusted operating earnings increased to $65 million compared to $63 million a year ago. Overall claims were within expected ranges, though life claims were unfavorable to the year ago quarter. VUL/UL cash sales were $70 million, down 7 percent, primarily due to lower indexed universal life lump sum and installment sales.
Ameriprise Financial, Inc.
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(in millions, unaudited) | Quarter Ended June 30, | % Over/
| ||||||
2019 | 2018 | |||||||
Pretax adjusted operating earnings/(loss): | ||||||||
Corporate & Other (ex. LTC and Auto & Home) | $ | (79 | ) | $ | (60 | ) | (32 | %) |
Long Term Care | $ | 4 | $ | (5 | ) | NM | ||
Auto & Home | $ | 14 | $ | (19 | ) | NM | ||
Items included in adjusted operating earnings/(loss): | ||||||||
Auto and Home catastrophe losses | $ | (18 | ) | $ | (40 | ) | 55 | % |
DOL planning and implementation expenses | — | (3 | ) | NM | ||||
NM Not Meaningful — variance equal to or greater than 100% | ||||||||
Corporate & Other pretax adjusted operating loss excluding Long Term Care and Auto & Home was in line with expectations at $79 million, primarily related to the higher mark-to-market impact on share-based compensation expenses and investments in growth initiatives.
Long Term Care pretax adjusted operating earnings improved to $4 million in the quarter, reflecting slower reserve growth related to premium rate increases and expanded benefit reduction offerings, as well as higher mortality.
Auto & Home pretax adjusted operating earnings were $14 million in the quarter. Catastrophe losses were $18 million.
Taxes
The adjusted operating effective tax rate in the quarter was 16.8 percent, in line with the prior year. The full year adjusted operating effective tax rate is estimated to be in the 16 percent range.
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 that the company expects its full year adjusted operating effective rate to be in the 16 percent range;
- the statement that the company expects to close the sale of its Auto & Home Insurance business in the fourth quarter of 2019;
- statements of the company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, general and administrative costs, consolidated tax rate, return of capital to shareholders, and excess capital position and financial flexibility to capture additional growth opportunities;
- other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and
- statements of assumptions underlying such statements.
The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “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. 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 cautions readers to carefully consider the risks described in 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, 2018, and subsequent Quarterly Reports on From 10-Q, available at ir.ameriprise.com. Management undertakes no obligation to update publicly or revise any forward-looking statements and
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 Form 10-Q for the quarter ended June 30, 2019. For information about Ameriprise Financial entities, please refer to the Second Quarter 2019 Statistical Supplement available at ir.ameriprise.com and the tables that follow in this news release.
Ameriprise Financial announces financial and other information to investors through the company’s investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this release or in any other report or document the company furnishes or files with the SEC.
Ameriprise Financial, Inc.
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Quarter Ended
| Per Diluted Share
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(in millions, except per share amounts, unaudited) | 2019 | 2018 | 2019 | 2018 | ||||||||
Net income | $ | 492 | $ | 462 | $ | 3.57 | $ | 3.10 | ||||
Less: Net income (loss) attributable to consolidated investment entities | 1 | — | 0.01 | — | ||||||||
Add: Integration/restructuring charges (1) | 2 | 4 | 0.02 | 0.03 | ||||||||
Add: Market impact on variable annuity guaranteed benefits (1) | 60 | 80 | 0.43 | 0.53 | ||||||||
Add: Market impact on fixed index annuity benefits (1) | (1 | ) | — | (0.01 | ) | — | ||||||
Add: Mean reversion-related impacts (1) | (18 | ) | (8 | ) | (0.13 | ) | (0.05 | ) | ||||
Add: Market impact on indexed universal life benefits (1) | 26 | 20 | 0.19 | 0.13 | ||||||||
Add: Market impact of hedges on investments (1) | 18 | (5 | ) | 0.13 | (0.03 | ) | ||||||
Add: Net realized investment (gains) losses (1) | — | (5 | ) | — | (0.03 | ) | ||||||
Add: Tax effect of adjustments (2) | (18 | ) | (18 | ) | (0.13 | ) | (0.12 | ) | ||||
Adjusted operating earnings | $ | 560 | $ | 530 | $ | 4.06 | $ | 3.56 | ||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 136.1 | 147.0 | ||||||||||
Diluted | 138.0 | 149.0 | ||||||||||
(1) Pretax adjusted operating adjustment.
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Ameriprise Financial, Inc.
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Quarter Ended
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(in millions, unaudited) | 2019 | 2018 | ||||
Total net revenues | $ | 3,245 | $ | 3,196 | ||
Less: CIEs revenue | 24 | 49 | ||||
Less: Integration/restructuring charges | — | — | ||||
Less: Net realized investment gains (losses) | — | 5 | ||||
Less: Market impact on indexed universal life benefits | (8 | ) | (10 | ) | ||
Less: Market impact of hedges on investments | (18 | ) | 5 | |||
Adjusted operating total net revenues | $ | 3,247 | $ | 3,147 | ||
Total expenses | $ | 2,658 | $ | 2,648 | ||
Less: CIEs expenses | 23 | 49 | ||||
Less: Integration/restructuring charges | 2 | 4 | ||||
Less: Market impact on variable annuity guaranteed benefits | 60 | 80 | ||||
Less: Market impact on indexed universal life benefits | 18 | 10 | ||||
Less: Market impact on fixed index annuity benefits | (1 | ) | — | |||
Less: Mean reversion-related impacts | (18 | ) | (8 | ) | ||
Less: DAC/DSIC offset to net realized investment gains (losses) | — | — | ||||
Adjusted operating expenses | $ | 2,574 | $ | 2,513 | ||
Pretax income | $ | 587 | $ | 548 | ||
Pretax adjusted operating earnings | $ | 673 | $ | 634 | ||
Pretax income margin | 18.1% | 17.1% | ||||
Pretax adjusted operating margin | 20.7% | 20.1% | ||||
Ameriprise Financial, Inc.
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Quarter Ended
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(in millions, unaudited) | 2019 | 2018 | ||||||
General and administrative expense | $ | 823 | $ | 788 | ||||
Less: CIEs expenses | 1 | — | ||||||
Less: Integration/restructuring charges | 2 | 4 | ||||||
Adjusted operating general and administrative expense | $ | 820 | $ | 784 | ||||
Ameriprise Financial, Inc.
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Quarter Ended June 30, 2019 | ||||||||
(in millions, unaudited) | GAAP | Adjusted
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Pretax income | $ | 587 | $ | 673 | ||||
Income tax provision | $ | 95 | $ | 113 | ||||
Effective tax rate | 16.1 | % | 16.8 | % | ||||
Ameriprise Financial, Inc.
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Quarter Ended June 30, 2018 | ||||||||
(in millions, unaudited) | GAAP | Adjusted
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Pretax income | $ | 548 | $ | 634 | ||||
Income tax provision | $ | 86 | $ | 104 | ||||
Effective tax rate | 15.7 | % | 16.4 | % | ||||
Ameriprise Financial, Inc.
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Quarter Ended June 30, | ||||||||
(in millions, unaudited) | 2019 | 2018 | ||||||
Adjusted operating total net revenues | $ | 712 | $ | 755 | ||||
Less: Distribution pass through revenues | 186 | 196 | ||||||
Less: Subadvisory and other pass through revenues | 81 | 88 | ||||||
Net adjusted operating revenues | $ | 445 | $ | 471 | ||||
Pretax adjusted operating earnings | $ | 164 | $ | 183 | ||||
Less: Adjusted operating net investment income | 3 | 8 | ||||||
Add: Amortization of intangibles | 4 | 4 | ||||||
Net adjusted operating earnings | $ | 165 | $ | 179 | ||||
Pretax adjusted operating margin | 23.0 | % | 24.2 | % | ||||
Net pretax adjusted operating margin | 37.1 | % | 38.0 | % | ||||
Ameriprise Financial, Inc.
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Twelve Months Ended
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(in millions, unaudited) | 2019 | 2018 | ||||
Net income | $ | 1,929 | $ | 1,740 | ||
Less: Adjustments (1) | (229 | ) | (47 | ) | ||
Adjusted operating earnings | $ | 2,158 | $ | 1,787 | ||
Total Ameriprise Financial, Inc. shareholders’ equity | $ | 5,742 | $ | 6,004 | ||
Less: Accumulated other comprehensive income, net of tax | (82 | ) | 131 | |||
Total Ameriprise Financial, Inc. shareholders’ equity excluding AOCI | 5,824 | 5,873 | ||||
Less: Equity impacts attributable to the consolidated investment entities | 1 | 1 | ||||
Adjusted operating equity | $ | 5,823 | $ | 5,872 | ||
Return on equity excluding AOCI | 33.1 | % | 29.6 | % | ||
Adjusted operating return on equity excluding AOCI (2) | 37.1 | % | 30.4 | % | ||
(1) Adjustments reflect the trailing twelve months’ sum of after-tax net realized investment gains/losses, net of deferred sales inducement costs (“DSIC”) and deferred acquisition costs (“DAC”) amortization, unearned revenue amortization and the reinsurance accrual; market impact on variable annuity guaranteed benefits, net of hedges and related DSIC and DAC amortization; the market impact on indexed universal life benefits, net of hedges and related DAC amortization, unearned revenue amortization, and the reinsurance accrual; the market impact on fixed index annuity benefits, net of hedges and the related DAC amortization; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; mean reversion related impacts; integration/restructuring charges; and the impact of consolidating certain investment entities. After-tax is calculated using the statutory tax rate of 21%.
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Ameriprise Financial, Inc.
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(in millions, unaudited) | Quarter Ended June 30, |
| % Over/
| |||||
2019 |
| 2018 |
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Revenues | ||||||||
Management and financial advice fees | $ | 1,732 | $ | 1,691 | 2 | % | ||
Distribution fees | 490 | 465 | 5 | % | ||||
Net investment income | 368 | 419 | (12 | %) | ||||
Premiums | 376 | 357 | 5 | % | ||||
Other revenues | 316 | 284 | 11 | % | ||||
Total revenues | 3,282 | 3,216 | 2 | % | ||||
Banking and deposit interest expense | 37 | 20 | (85 | %) | ||||
Total net revenues | $ | 3,245 | $ | 3,196 | 2 | % | ||
Expenses | ||||||||
Distribution expenses | $ | 948 | $ | 902 | (5 | %) | ||
Interest credited to fixed accounts | 186 | 180 | (3 | %) | ||||
Benefits, claims, losses and settlement expenses | 584 | 635 | 8 | % | ||||
Amortization of deferred acquisition costs | 58 | 63 | 8 | % | ||||
Interest and debt expense | 59 | 80 | 26 | % | ||||
General and administrative expense | 823 | 788 | (4 | %) | ||||
Total expenses | 2,658 | 2,648 | — | |||||
Pretax income | 587 | 548 | 7 | % | ||||
Income tax provision | 95 | 86 | (10 | %) | ||||
Net income | $ | 492 | $ | 462 | 6 | % | ||
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190724005818/en/
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