Ameriprise Financial Reports Second Quarter 2023 Results

Ameriprise Financial, Inc. (NYSE: AMP):

Second quarter 2023 GAAP results were positively impacted by market changes that affected the valuation of derivatives and market risk benefits. The current quarter also included $20 million of after-tax integration costs related to the acquisition of BMO EMEA, a portion of which was related to the consolidation of the majority of our London-based teams into a single location at the end of June.

Advice & Wealth Management pretax adjusted operating earnings increased 49 percent and pretax adjusted operating margin reached a record high of 31.2 percent. Spread revenues increased year-over-year and are expected to remain a sustainable driver of revenue going forward.

Net revenues increased 14 percent to $2.3 billion from strong client flows, higher investment income from continued growth in the bank and certificate companies, as well as from higher short term rates on off balance sheet cash.

Adjusted operating expenses increased 3 percent to $1.6 billion compared to a year ago. Distribution expenses increased 1 percent. General and administrative expense was $410 million, reflecting continued expense discipline while investing for business growth and higher business volume. In the first half of 2022, general and administrative expense was muted as a result of the pandemic.

The Wealth Management business continued to deliver robust organic growth. Clients and advisors remained engaged and focused on positioning portfolios to meet financial planning goals through the market cycle.

• Total client net flows increased 10 percent to $9.4 billion, with $5.6 billion of flows into wrap accounts and $3.8 billion into other products.
• AWM cash balances were $42.0 billion, down 5 percent sequentially primarily related to a normal seasonal draw down on cash associated with tax payments with limited cash sorting.
• Ameriprise Bank and Ameriprise Certificate Company assets grew 53 percent year-over-year.
• Total advisors increased to 10,274 from excellent advisor retention coupled with the addition of 99 experienced advisors in the quarter.
• Adjusted operating net revenue per advisor on a trailing 12-month basis was $874,000, up 7 percent from enhanced productivity, business growth and market impacts.

   

Asset Management adjusted operating net revenues and pretax adjusted operating earnings were $808 million and $162 million, respectively. Financial results reflect the cumulative impact of net outflows, a decline in fixed income markets and lower performance fees, which were partially offset by improved equity markets. Net pretax adjusted operating margin was 30 percent.

Adjusted operating expenses decreased 2 percent. G&A expenses increased 2 percent primarily from the mark-to-market of share-based compensation expense. Distribution expenses decreased 8 percent reflecting lower average assets under management.

Total assets under management increased 3 percent to $617 billion as equity market appreciation was partially offset by fixed income market depreciation as well as net outflows. Long term investment performance remained strong with 115 funds with 4- and 5-star Morningstar ratings.

In the quarter, net outflows were $5.3 billion and included $1.4 billion of outflows related to legacy insurance partners.

• Retail net outflows were $4.7 billion as gross sales remained pressured while redemptions slowed versus the prior year. In addition, reinvested dividends were $2 billion lower than the year ago quarter.
• Global institutional had strong inflows into high yield and property mandates that more than offset outflows in liability driven investing strategies (LDI) leading to net inflows of $0.8 billion.

Retirement & Protection Solutions pretax adjusted operating earnings increased 13 percent to $189 million primarily from rising interest rates and prior period investment portfolio repositioning. Results in the quarter included $7 million of unfavorable unusual and timing-related items. These high-quality books of business continued to generate strong free cash flow and return on capital with a differentiated risk profile.

Retirement & Protection Solutions sales declined 10 percent, primarily from a decline in variable annuity sales as a result of the discontinuation of the sale of living benefit riders. Protection sales improved 18 percent to $77 million with the majority of sales in higher margin accumulation VUL products.

Total Corporate & Other pretax adjusted operating loss was $60 million, which included a net $8 million favorable impact from a benefit related to a low income housing partnership investment partially offset by an unfavorable mark-to-market share-based compensation expense.

Long Term Care pretax adjusted operating earnings improved to $1 million as a result of higher investment yields from rising interest rates and prior period investment portfolio repositioning.

Fixed Annuities pretax adjusted operating loss was consistent with expectations at $5 million.

Taxes

The operating effective tax rate was 21.0 percent in the quarter. The operating effective tax rate is expected to be in the 20 to 21 percent range for the second half and full year of 2023.

About Ameriprise Financial

At Ameriprise Financial, we have been helping people feel confident about their financial future for more than 125 years. With extensive investment advice, asset management and insurance capabilities and a nationwide network of over 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors' financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com.

Ameriprise Financial Services, LLC offers financial planning services, investments, insurance and annuity products. Columbia Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA and managed by Columbia Management Investment Advisers, LLC. Threadneedle International Limited, Columbia Threadneedle Asset Managers Limited, Columbia Threadneedle (EM) Investments Limited, and Pyrford International Ltd, are SEC- and FCA-registered investment adviser affiliates of Columbia Management Investment Advisers, LLC based in the U.K. 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 part of Ameriprise Financial, Inc. CA License #0684538. RiverSource Distributors, Inc. (Distributor), Member FINRA.

Non-GAAP Financial Measures

The company believes the presentation of adjusted operating earnings, available capital for capital adequacy and other non-GAAP financial measures, and the corresponding ratios, best represents the underlying performance of our core operations and facilitates a more meaningful trend analysis without the distortion of various adjustment items. Management uses non-GAAP financial measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors and to provide a valuable perspective for investors. These non-GAAP financial measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures. Non-GAAP financial measure reconciliations can be found on the subsequent pages.

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 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, net pretax adjusted operating margin, 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;
• statements about spread revenues being a sustainable driver going forward;
• statements estimating the expected second half and full year 2023 operating effective tax rate; 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,” ”continue,” “able to remain”, “resume,” “deliver,” “develop,” “evolve,” “drive,” ”enable,” “flexibility,” “commitment,” “scenario,” “case,” “appear,” “expands” 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, 2022 available at ir.ameriprise.com. Management undertakes no obligation to update publicly or revise any forward-looking statements.

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 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 period ended June 30, 2023.

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.