Ameriprise Financial Reports First Quarter 2020 Results

Ameriprise Financial, Inc. AMP:

Ameriprise announced that it raised its quarterly dividend 7 percent to $1.04 per share.

Taxes

The first quarter adjusted operating effective tax rate was negative 6.4 percent, or $42 million. The primary driver of the tax rate in the quarter was the forecasted utilization of NOLs that will be applied to prior year tax filings during 2020. The first quarter benefit associated with these NOLs was $144 million, or 65 percent of the forecasted full year 2020 total NOL benefit.

Advice & Wealth Management demonstrated continued strength with an 8 percent increase in pretax adjusted operating earnings from strong client activity and higher average equity markets that more than offset the decline in short term interest rates. Pretax adjusted operating margin of 22.3 percent remained strong.

The company's business continuity capabilities ensured that advisors have the tools and information necessary to meet and exceed client needs in this volatile environment. Our excellent client service and strong technology foundation enable advisors to provide full-service transaction and advisory services to clients.

Adjusted operating net revenues increased 9 percent to $1.7 billion. Strong organic growth and higher average equity markets more than offset lower cash sweep revenue related to short term interest rate cuts in March. Quarter-to-date through February 2020, revenue increased 14 percent, with the market depreciation in March reducing the growth rate for the quarter. Bank assets increased $2.4 billion in the quarter to $6.2 billion. The bank substantially increased its fixed term investment strategy as credit spreads widened during the quarter, which will increase interest earnings going forward.

Strong business performance and higher activity levels drove an 11 percent increase in distribution expenses. General and administrative expenses, excluding bank-related expenses, increased 2 percent. This was in line with expectations as planned investments for future growth were partially offset by ongoing expense reengineering.

Total client assets grew 6 percent to $616 billion through February from strong client flows, however, total client assets ended the quarter at $560 billion following the market depreciation in March. Organic growth remained very strong with growth in client inflows as wrap flows reached a high of $6.1 billion in the quarter. Client brokerage cash balances increased 29 percent to $32.7 billion, with a significant increase in March as clients reallocated portfolios.

Adjusted operating net revenue per advisor on a trailing 12-month basis increased 8 percent to $680,000. Total advisors were 9,878, demonstrating solid advisor retention and experienced advisor recruiting with 80 advisors moving their practices to Ameriprise in the quarter.

Asset Management pretax adjusted operating earnings were $157 million, up $11 million, reflecting higher average equity markets. Excluding a performance fee adjustment, pretax adjusted operating earnings were $172 million, up 18 percent. First quarter net pretax adjusted operating margin remained strong at 37.9 percent.

Adjusted operating revenues increased 2 percent versus last year, excluding the performance fee adjustment, as growth in average equity markets and higher fee net inflows more than offset the cumulative impact of net outflows. Through February, adjusted operating revenues grew 9 percent, however, the market dislocation in March resulted in revenues for the quarter that were flat to a year ago.

Adjusted operating expenses decreased 3 percent as a 7 percent decline in general and administrative and other expenses was partially offset by higher distribution expenses.

In the quarter, retail gross sales increased 50 percent, reflecting strong execution of business growth strategies, which reduced net outflows to $2.5 billion, a $4.7 billion improvement from a year ago. Net inflows in January and February were $2.1 billion⁽²⁾, with elevated redemptions in March resulting in net outflows for the quarter. Global institutional inflows were $1.0 billion. Excluding former parent flows, total net outflows were $1.7 billion, including a $1.3 billion very low fee institutional redemption that was anticipated.

(2) Excluding former parent flows

Annuities pretax adjusted operating earnings were $95 million, down $33 million from the prior year.

Variable annuity pretax adjusted operating earnings decreased to $93 million. Operating net revenues increased 2 percent driven by market appreciation, which more than offset net outflows. Expenses increased 9 percent reflecting higher expected reserve accruals for living benefits that were compounded by market dislocation, as well as lower DAC amortization in the year ago quarter. Variable annuity sales improved 24 percent year-over-year to $1.1 billion and benefited from the launch of a structured product that accounted for approximately 10 percent of sales in the quarter.

Fixed annuity pretax adjusted operating earnings were $2 million, down from $13 million a year ago and $7 million last quarter, primarily reflecting continued low interest rates. Account balances declined 5 percent from limited new product sales and continued lapses.

Protection pretax adjusted operating earnings were $72 million compared to $74 million a year ago. Overall claims were slightly favorable but within expected ranges. VUL/UL cash sales were flat at $56 million as higher VUL sales offset lower indexed universal life sales.

Corporate & Other pretax adjusted operating loss⁽¹⁾ was $52 million, down $26 million from the prior year, primarily due to the impact of share price depreciation on compensation expense and lower investment expenses.

Long Term Care pretax adjusted operating earnings were $2 million.

(1) Excluding Long Term Care and Auto & Home

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 approximately 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 is an SEC- and FCA-registered investment adviser affiliate 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 all part of Ameriprise Financial, Inc. CA License #0684538. RiverSource Distributors, Inc. (Distributor), Member FINRA.

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, consolidated tax rate, return of capital to shareholders, and excess capital position and financial flexibility to capture additional growth opportunities;
• statements of the company's position, future performance and ability to pursue business strategy and return of capital to shareholders relative to the spread and impact of the COVID-19 pandemic and the related market, economic, client, governmental and healthcare system response environments;
• statements about the forecasted full year 2020 total NOL benefit;

• 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," "scenario, "case" 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, 2019, and subsequent Quarterly Reports on Form 10-Q, 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 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 March 31, 2020. For information about Ameriprise Financial entities, please refer to the First Quarter 2020 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.

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