Ameriprise Financial Reports Third Quarter 2023 Results

Ameriprise Financial, Inc. (NYSE: AMP):

Current quarter GAAP results included after-tax net realized investment losses of $30 million primarily from continued investment portfolio repositioning to capture the benefit of higher interest rates and $9 million of integration costs, primarily related to the acquisition of BMO EMEA. In October, the company accomplished a major milestone in the BMO integration with the completion of the order management system platform conversion.

The company completed its annual actuarial assumption update in the quarter, which resulted in an unfavorable after-tax impact of $78 million or $0.72 per share. This was primarily related to updated persistency assumptions for variable annuities.

Advice & Wealth Management pretax adjusted operating earnings were strong at $729 million, up 23 percent. Results included a $20 million accrual for an industry-wide regulatory matter relating to electronic communication recordkeeping requirements. Excluding the accrual, pretax adjusted operating earnings increased 26 percent with a pretax adjusted operating margin of 31.1 percent.

Adjusted operating net revenues increased 13 percent to $2.4 billion from continued growth in client assets in both wrap and brokerage accounts, as well as higher investment earnings from cash products, which is expected to remain a sustainable driver of revenue going forward.

Adjusted operating expenses increased 9 percent to $1.7 billion compared to a year ago. Distribution expenses increased 9 percent. General and administrative expense was $419 million and included the regulatory accrual. Excluding the accrual, general and administrative expense was $399 million, up 2 percent and the company continues to expect mid-single-digit growth for the full year.

The Wealth Management business delivered continued balanced profitable organic growth. Clients and advisors remained engaged and focused on positioning portfolios to meet financial planning goals through the market cycle. Clients remain heavily concentrated in yield-oriented products and have not begun putting cash back to work given the current environment.

• Total client net flows were $9 billion in the quarter and were $43 billion over the past year.
• Bank and certificate assets grew 37 percent year-over-year to $35 billion, and cash sorting slowed throughout the quarter.
• Advisor headcount was 10,258, reflecting good advisor retention coupled with the addition of 64 experienced advisors in the quarter.
• Adjusted operating net revenue per advisor on a trailing 12-month basis was $901,000, up 10 percent from enhanced productivity, business growth and market appreciation.

Asset Management adjusted operating net revenues were $826 million and pretax adjusted operating earnings were $199 million, up 4 percent in a challenging environment. Financial results reflected equity market appreciation, disciplined expense management and $7 million of favorable timing-related items, which more than offset the cumulative impact of net outflows. Net pretax adjusted operating margin was 36 percent and above the company’s targeted range of 31 to 35 percent.

Adjusted operating expenses decreased 1 percent, with general and administrative expenses down $1 million. The company has begun implementing more comprehensive expense management initiatives in light of the environment and its objective to improve the margin. Excluding the impact of foreign exchange translation, general and administrative expenses were down 3 percent.

Total assets under management increased 7 percent to $587 billion as equity market appreciation and foreign exchange translation were partially offset by net outflows. The fee rate remained stable on a sequential basis. Long term 3-, 5- and 10-year investment performance remained strong and there was notable improvement in 1-year fixed income performance.

In the quarter, net outflows were $4.2 billion reflecting the challenging market environment. Flows included $0.9 billion of outflows related to legacy insurance partners.

• Retail net outflows were $3.8 billion reflecting continued weak gross sales consistent with the industry that were partially offset by a significant improvement in redemptions.
• Global institutional inflows were $0.5 billion with fundings primarily in liability-driven investment and emerging market equity mandates.

Retirement & Protection Solutions pretax adjusted operating earnings excluding unlocking were $204 million versus $197 million last year, with strong sales growth. The business continued to generate strong free cash flow and a high return on capital.

Retirement & Protection Solutions sales improved in the quarter, with protection sales up 22 percent to $79 million primarily in higher-margin VUL products. Variable annuity sales grew 18 percent to $1.1 billion with the majority of sales in structured variable annuities.

Total Corporate & Other pretax adjusted operating loss was $72 million.

Corporate & Other, excluding Closed Blocks, pretax adjusted operating loss was $74 million, which was in line with the prior year period. The loss included $7 million of severance expense related to the company’s expense management initiatives and are designed to improve operating efficiency and effectiveness, which commenced in the quarter.

Long Term Care pretax adjusted operating earnings excluding unlocking were in line with expectations at $5 million.

Fixed Annuities pretax adjusted operating loss was in line with expectations at $8 million.

Taxes

The operating effective tax rate increased to 22.1 percent for the third quarter and 20.5 percent on a year-to-date basis. Excluding the impact from the regulatory accrual, the operating effective tax rate in the quarter was 21.6 percent. The effective tax rate is expected to be at the higher end of the 20 to 21 percent range 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 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 measures, 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 the closing date of the partnership with Comerica;
• statements about higher investment earnings from cash product being a sustainable driver of revenue going forward;
• statements regarding general and administrative expenses in Advice & Wealth Management;
• statements estimating 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 September 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.