Ameriprise Financial Reports Third Quarter 2022 Results

Ameriprise Financial, Inc. (NYSE: AMP):

⁽¹⁾ Return on equity excluding AOCI is calculated on a trailing 12-month basis.

⁽²⁾ Unlocking impacts reflect the company’s annual review of insurance and annuity valuation assumptions and model changes, and the Long Term Care (LTC) gross premium valuation.

Current quarter GAAP results after tax included $9 million of integration costs from the acquisition of BMO EMEA and net realized investment losses of $73 million primarily from portfolio repositioning to capture the benefit of higher interest rates. GAAP results in the prior year quarter were positively impacted by net realized gains on investments that transferred as part of the fixed annuity reinsurance transaction that closed in that period.

The company completed its annual actuarial assumption update in the quarter, which resulted in an unfavorable $134 million, or $1.19 per share, impact on operating results.

Advice & Wealth Management pretax adjusted operating earnings increased 30 percent driven by client net inflows and higher interest rates, partially offset by continued market dislocation and lower activity levels. Pretax adjusted operating margin was 27.8 percent, up 540 basis points.

Net revenues grew 4 percent as strong client flows, bank growth and higher interest rates more than offset the impact of market depreciation on fee-based revenues and lower activity levels consistent with the industry.

Adjusted operating expenses of $1.5 billion were 3 percent lower than the year ago quarter. Distribution expenses declined 7 percent, while G&A and other expenses were $393 million, reflecting investments for business growth and higher volume-related activity from continued cumulative net flows. In addition, G&A expenses a year ago were unusually low as a result of the timing of expenses, lower staffing levels and limited T&E expense. On year-to-date basis, G&A expenses increased 7 percent, which was in line with management expectations.

The Wealth Management business delivered strong fundamental growth in the quarter with total client net flows up 11 percent to $11.2 billion in the face of volatile markets. Clients and advisors remained engaged and focused on defensively positioning portfolios to help meet financial planning goals.

• Total client net flows included $6.4 billion of flows into wrap accounts and $4.8 billion into non-advisory accounts, a mix shift that reflects the current market environment.
• Cash balances increased 16 percent from the prior year to $46.3 billion and decreased 2 percent on a sequential basis.
• Ameriprise Bank grew to $18.6 billion, up $8.8 billion from a year ago. The Bank provides important flexibility to enhance earnings in a rising interest rate environment.
• Adjusted operating net revenue per advisor on a trailing 12-month basis was $819,000, up 7 percent from enhanced productivity and business growth.
• Total advisors increased 2 percent to 10,282, reflecting excellent advisor retention, as well as the addition of 89 experienced advisors in the quarter.

Asset Management pretax adjusted operating earnings declined 33 percent to $191 million primarily from equity and bond market depreciation, unfavorable FX translation and net outflows. Adjusted operating net revenues declined 10 percent to $823 million. Net pretax adjusted operating margin was 35.6 percent, above our targeted range of 31 percent to 35 percent.

Normalized for the BMO business, adjusted operating expenses declined 13 percent and G&A declined 7 percent from continued expense discipline and a benefit from foreign exchange. Distribution expenses decreased 17 percent primarily from market depreciation and lower sales.

Total assets under management decreased 6 percent to $546 billion as market depreciation and foreign exchange translation more than offset the addition of the BMO business. Long term investment performance remained strong with more than 70 percent of funds above median on an asset-weighted basis over 3-, 5- and 10-year time periods across equity, fixed income and asset allocation strategies.

In the quarter, net outflows were $2.4 billion and included $1.0 billion of outflows related to legacy insurance partners. Institutional inflows continued to partially offset elevated retail outflows.

• Retail net outflows were $5.3 billion. In North America, there were outflows in equity and fixed income strategies from market volatility. In EMEA, outflows persisted as investor sentiment remained weak from higher interest rates and geopolitical strain.
• Global institutional net inflows were $3.9 billion primarily from fixed income and liability-driven investing mandates.

Retirement & Protection Solutions pretax adjusted operating earnings excluding unlocking were $203 million versus $192 million last year, a strong and stable result in this market environment. The business continued to generate strong free cash flow and a high return on capital.

Retirement & Protection Solutions sales continued to reflect muted overall industry sales levels due to market volatility, as well as management actions to optimize our business mix. Protection sales decreased 29 percent to $65 million primarily related to market volatility. The majority of sales remain in higher margin accumulation VUL products. Variable annuity sales decreased 35 percent to $948 million, reflecting the discontinuation of sales with living benefit riders that was completed in June, as well as industry slowdown due to market dislocation.

Total Corporate & Other pretax adjusted operating loss was $79 million.

Corporate & Other, excluding Closed Blocks, pretax adjusted operating loss was $73 million, in line with the prior year period.

Long Term Care pretax adjusted operating loss was in line with expectations at $3 million.

Fixed Annuities pretax adjusted operating loss excluding unlocking was in line with expectations at $6 million.

Taxes

The operating effective tax rate increased to 19.9 percent for the third quarter and 19.3 percent on a year-to-date basis. The effective tax rate is expected to be approximately 20 percent for the full year.

About Ameriprise Financial

At Ameriprise Financial, we have been helping people feel confident about their financial future for more than 125 years. With extensive advisory, 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 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 estimating the expected full year 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, 2021 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 September 30, 2022.

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.