Ameriprise Financial Reports Fourth Quarter 2022 Results

Ameriprise Financial, Inc. (NYSE: AMP):

Current quarter GAAP results after tax were impacted by the valuation of derivatives and included $12 million of integration costs from the acquisition of BMO EMEA. GAAP results in the prior year quarter were modestly impacted by the market changes that negatively affected credit spreads and the valuation of derivatives.

Advice & Wealth Management pretax adjusted operating earnings increased 41 percent to $665 million, and the pretax adjusted operating margin reached a new record of 30 percent. This strong performance was a result of continued significant organic growth with flows into advisory and brokerage accounts. The strategy to expand Ameriprise Bank and Certificate Company drove 59 percent asset growth for these businesses. The advisor base continues to build with excellent advisor retention, strong recruiting and increased productivity.

Net revenues increased 5 percent as client inflows, higher investment income from bank growth and rising interest rates more than offset lower fees related to market depreciation and lower client activity, consistent with industry trends.

Adjusted operating expenses declined 5 percent to $1.6 billion compared to a year ago. Distribution expenses declined 10 percent primarily from lower markets. G&A and other expenses were $408 million, reflecting investments for business growth, including the bank, as well as higher volume-related activity from client inflows. Prior year G&A expenses included unusually low staffing levels and limited travel and entertainment expense. The company continues to manage expenses prudently.

Wealth Management delivered robust organic growth. Clients and advisors remained engaged and focused on positioning portfolios to meet financial planning goals in the face of a challenging market environment.

• Total client net flows were strong at $12.4 billion, evenly split between flows into advisory and non-advisory accounts, a mix shift that was consistent with the current market environment. For the full year, total client flows hit a new high of $42.5 billion.
• Total AWM cash balances increased 8 percent to $47.2 billion and 2 percent on a sequential basis. These cash balances provide important flexibility to drive sustainable financial benefits.
• Adjusted operating net revenue per advisor on a trailing 12-month basis was up 4 percent to $827,000, reflecting the impact of the market environment.
• Total advisors increased 2 percent to 10,269 with excellent advisor retention and the addition of 72 experienced advisors in the quarter.

Asset Management results in the quarter were impacted, like the industry, by the challenging market environment and $12 million of negative mark-to-market impacts.

Pretax adjusted operating earnings and adjusted operating net revenues declined to $146 million and $785 million, respectively, primarily from lower fee revenue resulting from market depreciation and net outflows, as well as mark-to-market impacts in the quarter and timing of performance fees. Earnings from performance fees were $30 million higher in the prior year. Net pretax adjusted operating margin was 29 percent in the quarter.

Adjusted operating expenses decreased 12 percent. G&A and other expenses continue to be well managed, down 6 percent. Distribution expenses decreased 22 percent primarily from market depreciation and lower sales.

Total AUM decreased 23 percent to $584 billion primarily from market depreciation. Investment performance remained strong in a volatile environment with 131 funds with 4- and 5-star Morningstar ratings.

In the quarter, net outflows were $0.4 billion and included $1.7 billion of outflows related to legacy insurance partners. Institutional inflows continued to offset elevated retail outflows.

• Retail net outflows were $3.7 billion, which included reinvested dividends. In North America, there were outflows in equity and fixed income strategies, similar to industry trends. In EMEA, outflows persisted as investor sentiment remained weak from higher interest rates and geopolitical strain.
• Global institutional net inflows were $5.0 billion primarily from liability-driven investing mandates.

Retirement & Protection Solutions continues to generate strong free cash flow with a differentiated risk profile. We took strategic actions in the quarter to reposition the investment portfolio to extend duration to capture benefits from higher interest rates, a portion of which was recognized in the quarter.

Pretax adjusted operating earnings were $229 million, up 25 percent from last year, primarily due to higher investment income, lower amortization of deferred acquisition cost and lower sales levels.

Retirement & Protection Solutions sales continued to reflect muted overall industry sales levels as well as management actions to optimize our business mix. Protection sales decreased 30 percent to $68 million, primarily related to the market environment. The majority of sales remain in higher-margin accumulation VUL products. Variable annuity sales decreased 39 percent to $0.9 billion, reflecting the discontinuation of sales with living benefit riders that was completed in June, as well as the industry slowdown due to market dislocation.

Total Corporate & Other pretax adjusted operating loss was $67 million, a $24 million improvement from the prior year.

Corporate & Other, excluding Closed Blocks, pretax adjusted operating loss was $81 million, a $7 million improvement from the prior year, which included a $15 million unfavorable impact from share price appreciation on compensation-related expense.

Long Term Care pretax adjusted operating earnings were $18 million, reflecting the repositioning of the investment portfolio, impacts from premium rate increases and benefit reductions, and improved underlying claims experience, as well as a benefit from a claims processing catch-up by our third-party vendor.

Fixed Annuities pretax adjusted operating loss was in line with expectations at $4 million.

Taxes

The operating effective tax rate increased to 20.6 percent for the fourth quarter and 19.7 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 investment advice, asset management and insurance capabilities and a nationwide network of more than 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; 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-K for the period ended December 31, 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.

J.D. Power 2022 Certified Customer Service Program^SM recognition is based on successful completion of an evaluation and exceeding a customer satisfaction benchmark through a survey of recent servicing interactions. Ameriprise advisors evaluated the firm’s performance in these factors: satisfaction with the IVR routing process, and the customer service representative which includes knowledge, courtesy, concern, call duration/transfers/hold time, and timeliness of resolution in addition to overall satisfaction. Ameriprise paid a fee to J.D. Power to be independently evaluated through this program and cite the results. Ameriprise’s use of results of the evaluation is subject to a license fee. For more information, visit https://www.jdpower.com/ccc.