Market Overview

Ameriprise Financial Reports Second Quarter 2018 Results

Share:

Second quarter 2018 net income per diluted
share was $3.10

Adjusted operating EPS was $3.60, up 29
percent

Second quarter 2018 return on equity excluding AOCI was 29.6 percent
Adjusted
operating ROE excluding AOCI was 31.1 percent, up 590 bps

Ameriprise Financial, Inc. (NYSE:AMP) today reported second quarter
2018 net income of $462 million, up 18 percent compared to a year ago,
or $3.10 per diluted share, up 24 percent. Adjusted operating earnings
were $536 million, up 22 percent compared to a year ago, with adjusted
operating earnings per diluted share of $3.60, up 29 percent.

"Ameriprise had a strong second quarter and a record first half of the
year for financial results," said Jim Cracchiolo, chairman and chief
executive officer. "In the quarter, we grew earnings per share by 29
percent and delivered a return on equity of 31.1 percent. We continue to
generate strong free cash flow that we invest in the business and return
to shareholders at a high level."

"We remain focused on delivering an exceptional client-advisor
experience and serving more clients in personal relationships.
Ameriprise was recognized as number one in trust and forgiveness in the
industry, and we continue to invest to further our leading advice-based
value proposition."

GAAP Results – Second quarter
Net
revenues of $3.2 billion increased 6 percent, or $184 million, from a
year ago primarily due to strong net revenue growth in Advice & Wealth
Management from growth in client assets.

Expenses of $2.6 billion increased 6 percent compared to a year ago
reflecting increased distribution expense from higher advisor
productivity.

Adjusted Operating Results – Second quarter
Adjusted
operating net revenues increased 6 percent to $3.1 billion. Advice &
Wealth Management net revenues increased 12 percent driven by growth in
client assets from continued strength in client net inflows and market
appreciation.

Adjusted operating expenses of $2.5 billion increased 5 percent
reflecting increased distribution expense from higher advisor
productivity. General and administrative expense increased 2 percent
reflecting ongoing expense discipline and growth investments.

 

Ameriprise Financial, Inc.
Second Quarter Summary

 

(in millions, except per share amounts, unaudited)

 

Quarter Ended
June 30,

 

Per Diluted Share
Quarter Ended
June 30,

2018   2017  

% Better/
(Worse)

2018   2017  

% Better/
(Worse)

GAAP net income $ 462 $ 393 18 % $ 3.10 $ 2.50 24 %

Adjusted operating earnings (1)

 (see reconciliation on p. 13)

$ 536 $ 441 22 % $ 3.60 $ 2.80 29 %
 
Percent of pretax adjusted operating earnings from Advice & Wealth
Management
50 % 44 %
 
Percent of pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management
75 % 71 %
 
Weighted average common shares outstanding:
Basic 147.0 155.1
Diluted 149.0 157.5
 
(1) The company believes the presentation of adjusted operating
earnings best represents the economics of the business. Adjusted
operating earnings, after-tax, exclude the consolidation of certain
investment entities; net realized investment gains or losses, net of
deferred sales inducement costs ("DSIC") and deferred acquisition
costs ("DAC") amortization, unearned revenue amortization and the
reinsurance accrual; integration and restructuring charges; the
market impact on variable annuity guaranteed benefits, net of hedges
and related DSIC and DAC amortization; the market impact on indexed
universal life benefits, net of hedges and related DAC amortization,
unearned revenue amortization, and the reinsurance accrual; the
market impact on fixed index annuity benefits, net of hedges and the
related DAC amortization; the market impact of hedges to offset
interest rate changes on unrealized gains or losses for certain
investments; and income or loss from discontinued operations.
 

Taxes

The adjusted operating effective tax rate in the quarter was 16.5
percent compared to 24.5 percent a year ago. The lower effective tax
rate reflects the reduction in the federal income tax rate. The company
estimates that its full year 2018 adjusted operating effective tax rate
will be approximately 17 percent.

Second Quarter 2018 Highlights

Ameriprise delivered strong financial results and excess capital,
while returning $532 million to shareholders

  • Second quarter financial results demonstrated continued strong growth
    in profitability and effective capital management that delivered a 22
    percent increase in adjusted operating earnings, a 29 percent increase
    in adjusted operating EPS and a 590 basis point increase in adjusted
    operating return on equity.
  • Ameriprise returned nearly 100 percent of adjusted operating earnings
    to shareholders, reflecting strong balance sheet fundamentals,
    substantial free cash flow generation and excellent risk management
    discipline. The company repurchased 2.9 million shares of common stock
    for $400 million and paid $132 million in quarterly dividends, the 25th
    consecutive quarter returning over $400 million to shareholders
    through share repurchases and dividends.
  • Excess capital was $1.4 billion, with an RBC ratio of 532 percent, and
    a total of $470 million in dividends were paid from subsidiaries to
    the holding company during the quarter.

The firm's comprehensive and personal client focus, combined with its
broad solution set, resulted in strong client flows and asset growth

  • Ameriprise assets under management and administration increased 7
    percent to $891 billion, reflecting ongoing strength in Ameriprise
    advisor client net inflows.
  • Ameriprise retail client assets grew 10 percent to $566 billion, an
    all-time high.
  • Client demand for fee-based investment advisory (wrap) products
    remains strong with net inflows of $5.3 billion in the quarter – the
    fifth consecutive quarter of wrap net inflows over $4 billion. Wrap
    assets grew to $259 billion, one of the largest platforms in the
    industry.
  • Advisor productivity increased 12 percent to $599,000 per advisor on a
    trailing 12-month basis after normalizing for the net impact from
    eliminating 12b-1 fees in advisory accounts. Steady growth in advisor
    productivity reflects our comprehensive, advice-based approach to
    serving clients and strong advisor retention, all while advisors
    shifted their practices to adjust to the elimination of 12b-1 fees in
    advisory accounts.
  • Columbia Threadneedle investment performance in retail and
    institutional equity, fixed income and multi-asset portfolios and
    strategies remain strong. At quarter end, the company had 110 four-
    and five-star Morningstar-rated funds.
  • Net outflows at Columbia Threadneedle improved by $7.0 billion
    year-over-year and $5.9 billion sequentially.
  • Variable annuity cash sales increased 16 percent, with nearly 30
    percent of sales in products without living benefit guarantees.

Ameriprise continued to invest to drive productivity, business growth
and client satisfaction

  • The company continues to make multi-year investments to further
    develop its digital advice position and streamline the client-advisor
    experience, including big data diagnostic capabilities, enhancing
    relationship management tools and exploring adding banking
    capabilities.
  • Ameriprise continues to invest in expanding its distribution network
    by adding experienced advisors with strong productivity. 76
    experienced advisors joined the firm during the quarter.
  • Columbia Threadneedle is executing its plans to expand product
    offerings and distribution in key Continental European markets to
    complement its strength in the U.K.

Values-based, client-focused firm

  • During the quarter, Ameriprise was recognized in the 2018 Temkin Group
    rankings as a leader in the following categories:
    • #1 in trust in the investment firm category, up from #2 last year
    • #1 in consumer forgiveness in the investment firm category for the
      second year in a row
  • Eight Ameriprise financial advisors were named to Barron's® 2018 Top
    100 Women Financial Advisors list. The annual ranking reflects assets
    under management, revenue the advisors generate for their firms and
    the quality of their practices.
  • On June 15, more than 4,000 Ameriprise employees, advisors and clients
    worked to provide food for families and individuals in need. The
    volunteers prepared, sorted and served meals at over 200
    company-sponsored events across the U.S. to help the 41 million
    Americans, including nearly 13 million children and five million
    seniors, struggling with hunger.
  • The Minneapolis-St. Paul Business Journal recognized Ameriprise as a
    "Best Place to Work" for the ninth consecutive year.
 

Ameriprise Financial, Inc.
Advice & Wealth
Management Segment Adjusted Operating Results

 
(in millions, unaudited)   Quarter Ended June 30,

% Better/
(Worse)

2018   2017
Advice & Wealth Management
Net revenues $ 1,543 $ 1,376 12 %
Expenses   1,193   1,085 (10 )%
Pretax adjusted operating earnings $ 350 $ 291 20 %
 
Pretax adjusted operating margin 22.7 % 21.1 %
 
 
Quarter Ended June 30,

% Better/
(Worse)

2018 2017
Retail client assets (billions) $ 566 $ 512 10 %
Wrap net flows (billions) $ 5.3 $ 4.5 18 %
Brokerage cash balance (billions) $ 24.5 $ 25.6 (4 )%
Adjusted operating net revenue per advisor normalizing for the net
impact of 12b-1 fee changes (trailing 12 months - thousands)
$ 599 $ 536 12 %
 

Advice & Wealth Management pretax adjusted operating earnings
increased 20 percent to $350 million driven by asset growth and higher
earnings on cash balances. Advice & Wealth Management represented 50
percent of the company's pretax adjusted operating earnings. Pretax
adjusted operating margin reached a new high of 22.7 percent, up 160
basis points from a year ago.

Adjusted operating net revenues increased 12 percent to $1.5 billion,
reflecting strong client activity, higher earnings on cash balances and
market appreciation.

Adjusted operating expenses increased 10 percent to $1.2 billion
primarily from higher distribution expenses related to growth in client
assets. General and administrative expenses were up 8 percent compared
to a year ago, approximately half of which were related to investments
for business growth.

Total retail client assets increased 10 percent to $566 billion driven
by client net inflows, client acquisition and market appreciation. Wrap
net inflows were $5.3 billion and total wrap assets increased 16 percent
to $259 billion. Client brokerage cash balances were $24.5 billion, down
slightly from a year ago as clients allocated cash to other investments.

Adjusted operating net revenue per advisor on a trailing 12-month basis
increased 12 percent to $599,000 after normalizing for the net impact
from eliminating 12b-1 fees in advisory accounts. Total advisors
increased to 9,906, with 76 experienced advisors moving their practices
to Ameriprise in the quarter and advisor retention remained strong.

 

Ameriprise Financial, Inc.
Asset Management Segment
Adjusted Operating Results

 
(in millions, unaudited)   Quarter Ended June 30,  

% Better/
(Worse)

2018   2017
Asset Management
Net revenues $ 755 $ 747 1 %
Expenses   572   571
Pretax adjusted operating earnings $ 183 $ 176 4 %
 
Pretax adjusted operating margin 24.2 % 23.6 %
Net pretax adjusted operating margin (1) 38.0 % 37.7 %
 
 
Quarter Ended June 30,

% Better/
(Worse)

2018 2017
Total segment AUM (billions) $ 482 $ 473 2 %
 

Net Flows (billions)

Former parent company related net new flows $ (2.2 ) $ (7.1 ) 68 %
Global Retail net flows, excl. former parent flows 2.0 (0.6 ) NM
Global Institutional net flows, excl. former parent flows   (1.5 )   (1.0 ) (39 )%
Total segment net flows $ (1.7 ) $ (8.7 ) 80 %
 

(1)See reconciliation on page 15

 
NM Not Meaningful — variance equal to or greater than 100%
 

Asset Management pretax adjusted operating earnings increased 4
percent to $183 million, reflecting market appreciation and disciplined
expense management, partially offset by the cumulative impact of net
outflows, increased investments for business growth and higher
regulatory related expense. Results in the prior year quarter included
higher CLO fees. Second quarter net pretax adjusted operating margin
grew to 38.0 percent from 37.7 percent a year ago.

Adjusted operating net revenues grew 1 percent to $755 million driven by
asset growth from market appreciation and the Lionstone acquisition,
partially offset by the cumulative impact of net outflows.

Adjusted operating expenses of $572 million were flat compared to a year
ago, reflecting lower distribution-related expenses and well-managed
general and administrative expenses. General and administrative expense
increased 2 percent and included the Lionstone acquisition and
investment for growth and higher regulatory expense.

AUM increased 2 percent to $482 billion. Total net outflows in the
quarter improved by $7.0 billion to $1.7 billion of net outflows
compared to $8.7 billion of net outflows a year ago. Flows in the prior
year quarter included elevated former parent-related outflows. Flows in
the current quarter reflect improved global retail flows and favorable
rebalances in model portfolios. Third party institutional net outflows
were $1.5 billion, primarily from $1.1 billion of CLO redemptions.

 

Ameriprise Financial, Inc.
Annuities Segment
Adjusted Operating Results

 
(in millions, unaudited)   Quarter Ended June 30,  

% Better/
(Worse)

2018   2017
Annuities
Net revenues $ 622 $ 627 (1 )%
Expenses   493   485 (2 )%
Pretax adjusted operating earnings $ 129 $ 142 (9 )%
 
Variable annuity pretax adjusted operating earnings $ 117 $ 127 (8 )%
Fixed annuity pretax adjusted operating earnings   12   15 (20 )%
Total pretax adjusted operating earnings $ 129 $ 142 (9 )%
 
Item included in adjusted operating earnings:
Market impact on DAC and DSIC (mean reversion) $ 2 $ 9 (78 )%
 
 
Quarter Ended June 30,

% Better/
(Worse)

2018 2017
Variable annuity ending account balances (billions) $ 78.3 $ 77.4 1 %
Variable annuity net flows (billions) $ (0.8 ) $ (1.0 ) 24 %
Fixed deferred annuity ending account balances (billions) $ 9.0 $ 9.6 (7 )%
Fixed deferred annuity net flows (billions) $ (0.2 ) $ (0.2 ) 12 %
 

Annuities pretax adjusted operating earnings were $129 million
compared to $142 million a year ago.

Variable annuity earnings of $117 million were lower primarily from a
decline in the benefit from the market impact on DAC and DSIC compared
to the year ago period, as well as higher sales. Variable annuity cash
sales continued to have positive momentum, up 16 percent, with nearly 30
percent of sales without living benefit features. Variable annuity
account balances increased 1 percent to $78 billion from market
appreciation, partially offset by net outflows. Variable annuity net
amount at risk as a percent of account values was 0.5 percent for living
benefits and 0.2 percent for death benefits, which is one of the lowest
among major variable annuity writers.

Fixed annuity adjusted operating earnings were $12 million reflecting
continued spread compression from the extended period of low interest
rates and lower account balances. Account balances declined 7 percent
from limited new product sales and continued lapses.

 

Ameriprise Financial, Inc.
Protection Segment
Adjusted Operating Results

 
(in millions, unaudited)   Quarter Ended June 30,  

% Better/
(Worse)

2018   2017
Protection
Net revenues $ 533 $ 517 3 %
Expenses   488   466 (5 )%
Pretax adjusted operating earnings $ 45 $ 51 (12 )%
 
Life and Health insurance:
Net revenues $ 255 $ 256
Expenses   191   187 (2 )%
Pretax adjusted operating earnings $ 64 $ 69 (7 )%
 
Auto and Home:
Net revenues $ 278 $ 261 7 %
Expenses   297   279 (6 )%
Pretax adjusted operating loss $ (19 ) $ (18 ) (6 )%
 
Items included in adjusted operating earnings:
Market impact on DAC (mean reversion) $ 1 $ NM
Auto and Home catastrophe losses   (40 )   (44 ) 9 %
Total protection impact $ (39 ) $ (44 ) 11 %

 

 
Quarter Ended June 30,

% Better/
(Worse)

2018 2017
Life insurance in force (billions) $ 196 $ 196
VUL/UL ending account balances (billions) $ 12.5 $ 12.0 4 %
Auto and Home policies in force (thousands) 911 937 (3 )%
 
NM Not Meaningful — variance equal to or greater than 100%
 

Protection pretax adjusted operating earnings were $45 million
compared to $51 million a year ago.

Life and Health insurance earnings were $64 million reflecting the low
interest rate environment and increased net claims expense as a result
of claims that had limited reinsurance coverage. Overall claims were
within expected ranges. VUL/UL cash sales were $75 million, down 4
percent.

Auto and Home had a pretax adjusted operating loss in the quarter driven
by net catastrophe losses of $40 million, primarily from wind and hail
storms in Colorado and Texas in June. Gross catastrophe losses were $46
million, which reflects a lower benefit from reinsurance. If catastrophe
activity continues in the balance of the year, reinsurance will provide
significant protection to the company. Favorable development from
product management, pricing, underwriting and claims improvements to
date has not been fully reflected in reserve estimates and management
will continue to monitor development as the year progresses.

 

Ameriprise Financial, Inc.
Corporate & Other
Segment Adjusted Operating Results

 
(in millions, unaudited)   Quarter Ended June 30,  

% Better/
(Worse)

2018   2017
Corporate & Other, Excluding Long Term Care
Pretax adjusted operating loss $ (60 ) $ (73 ) 18 %
 
 
Long Term Care
Pretax adjusted operating loss $ (5 ) $ (3 ) (67 )%
 
 
Item included in adjusted operating earnings:
DOL planning and implementation expenses $ (3 ) $ (8 ) 63 %
 

Corporate & Other pretax adjusted operating loss excluding
long term care improved to $60 million from lower losses on tax
preferenced investments. In addition, DOL-related expenses and
compensation-related accruals were lower compared to a year ago.

Long Term Care pretax adjusted operating loss was $5 million in the
quarter primarily from lower portfolio yields. Overall claims experience
was within expected ranges. The company continues to diligently manage
this closed block of business with a consistent strategy for premium
increases, application of extensive credible actuarial experience to
determine reserves and significant protections related to the portion of
the block that is reinsured to a third party.

At Ameriprise Financial, we have been helping people feel confident
about their financial future for more than 120 years. With a nationwide
network of 10,000 financial advisors and extensive asset management,
advisory and insurance capabilities, we have the strength and expertise
to serve the full range of individual and institutional investors'
financial needs. For more information, visit ameriprise.com.

Ameriprise Financial Services, Inc. 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. Auto and home insurance is underwritten by IDS
Property Casualty Insurance Company, or in certain states, Ameriprise
Insurance Company, both in De Pere, WI. 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:

  • the statement that the company expects its full year 2018 adjusted
    operating effective tax rate to be approximately 17 percent;
  • the statement that reinsurance will provide significant protection to
    the company if catastrophe activity continues in the rest of the year;
  • 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;
  • 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 pace," "project" 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.

Such factors include, but are not limited to:

  • conditions in the interest rate, credit default, equity market and
    foreign exchange environments, including changes in valuations,
    liquidity and volatility;
  • changes in and the adoption of relevant accounting standards and
    securities rating agency standards and processes, as well as changes
    in the litigation and regulatory environment, including ongoing legal
    proceedings and regulatory actions, the frequency and extent of legal
    claims threatened or initiated by clients, other persons and
    regulators, and developments in regulation and legislation, including
    the rules, exemptions and regulations implemented or that may be
    implemented or modified in connection with the Dodd-Frank Wall Street
    Reform and Consumer Protection Act or in light of the U.S. Department
    of Labor rule and exemptions pertaining to the fiduciary status of
    investment advice providers to 401(k) plan, plan sponsors, plan
    participants and the holders of individual retirement or health
    savings accounts (as well as similar SEC, Certified Financial Planner
    Board and state fiduciary rules and standards);
  • investment management performance and distribution partner and
    consumer acceptance of the company's products;
  • effects of competition in the financial services industry, including
    pricing pressure, the introduction of new products and services and
    changes in product distribution mix and distribution channels;
  • changes to the company's reputation that may arise from employee or
    advisor misconduct, legal or regulatory actions, cybersecurity
    incidents, perceptions of the financial services industry generally,
    improper management of conflicts of interest or otherwise;
  • the company's capital structure, including indebtedness, limitations
    on subsidiaries to pay dividends, and the extent, manner, terms and
    timing of any share or debt repurchases management may effect as well
    as the opinions of rating agencies and other analysts and the
    reactions of market participants or the company's regulators,
    advisors, distribution partners or customers in response to any change
    or prospect of change in any such opinion;
  • changes to the availability and cost of liquidity and the Company's
    credit capacity that may arise due to shifts in market conditions, the
    company's credit ratings and the overall availability of credit;
  • risks of default, capacity constraint or repricing by issuers or
    guarantors of investments the company owns or by counterparties to
    hedge, derivative, insurance or reinsurance arrangements or by
    manufacturers of products the company distributes, experience
    deviations from the company's assumptions regarding such risks, the
    evaluations or the prospect of changes in evaluations of any such
    third parties published by rating agencies or other analysts, and the
    reactions of other market participants or the company's regulators,
    advisors, distribution partners or customers in response to any such
    evaluation or prospect of changes in evaluation;
  • experience deviations from the company's assumptions regarding
    morbidity, mortality and persistency in certain annuity and insurance
    products, or from assumptions regarding market returns assumed in
    valuing or unlocking DAC and DSIC or market volatility underlying our
    valuation and hedging of guaranteed living benefit annuity riders, or
    from assumptions regarding interest rates assumed in our loss
    recognition testing of our Long Term Care business, or from
    assumptions regarding anticipated claims and losses relating to our
    automobile and home insurance products;
  • changes in capital requirements that may be indicated, required or
    advised by regulators or rating agencies;
  • the impacts of the company's efforts to improve distribution economics
    and to grow third party distribution of its products;
  • the ability to pursue and complete strategic transactions and
    initiatives, including acquisitions, divestitures, restructurings,
    joint ventures and the development of new products and services;
  • the ability to realize the financial, operating and business
    fundamental benefits of strategic transactions and initiatives the
    company has completed, is pursuing or may pursue in the future, which
    may be impacted by the ability to obtain regulatory approvals, the
    ability to effectively manage related expenses and by market, business
    partner and consumer reactions to such strategic transactions and
    initiatives;
  • the ability and timing to realize savings and other benefits from
    re-engineering and tax planning;
  • interruptions or other failures in our communications, technology and
    other operating systems, including errors or failures caused by third
    party service providers, interference or failures caused by third
    party attacks on our systems (or other cybersecurity incidents), or
    the failure to safeguard the privacy or confidentiality of sensitive
    information and data on such systems; and
  • general economic and political factors, including consumer confidence
    in the economy and the financial industry, the ability and inclination
    of consumers generally to invest as well as their ability and
    inclination to invest in financial instruments and products other than
    cash and cash equivalents, the costs of products and services the
    company consumes in the conduct of its business, and applicable
    legislation and regulation and changes therein (such as the ongoing
    negotiations following the June 2016 U.K. referendum on membership in
    the European Union and the uncertain regulatory environment in the
    U.S. after the 2016 presidential election), including tax laws, tax
    treaties, fiscal and central government treasury policy, and policies
    regarding the financial services industry and publicly held firms, and
    regulatory rulings and pronouncements.

Management cautions the reader that the foregoing list of factors is not
exhaustive. There may also be other risks that management is unable to
predict at this time that may cause actual results to differ materially
from those in forward-looking 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 undertakes no
obligation to update publicly or revise any forward-looking statements.
The foregoing list of factors should be read in conjunction with 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, 2017
available at ir.ameriprise.com.

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 Quarterly Report on Form 10-Q for
the quarter ended June 30, 2018. For information about Ameriprise
Financial entities, please refer to the Second Quarter 2018 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.

Temkin ratings based on responses to a consumer survey as part of the
2018 Temkin Trust Ratings, www.temkinratings.com.

 

Ameriprise Financial, Inc.
Reconciliation Table:
Earnings

 
 

Quarter Ended
June 30,

 

Per Diluted Share
Quarter Ended
June 30,

(in millions, except per share amounts, unaudited) 2018   2017 2018   2017
Net income $ 462 $ 393 $ 3.10 $ 2.50
Less: Net income (loss) attributable to consolidated investment
entities
Add: Integration/restructuring charges (1) 4 0.03

Add: Market impact on variable annuity guaranteed benefits (1)

80 80 0.53 0.51
Add: Market impact on indexed universal life benefits (1) 20 6 0.13 0.04
Add: Market impact of hedges on investments (1) (5 ) 8 (0.03 ) 0.05
Add: Net realized investment (gains) losses (1) (5 ) (20 ) (0.03 ) (0.13 )
Add: Tax effect of adjustments (2)   (20 )   (26 )   (0.13 )   (0.17 )
Adjusted operating earnings $ 536 $ 441 $ 3.60 $ 2.80
 
Weighted average common shares outstanding:
Basic 147.0 155.1
Diluted 149.0 157.5
 

(1) Pretax adjusted operating adjustment.

 

(2) Calculated using the statutory tax rate of 21% in
2018 and 35% in 2017.

 
   

Ameriprise Financial, Inc.
Reconciliation Table:
Total Net Revenues

 

Quarter Ended
June 30,

(in millions, unaudited) 2018   2017
Total net revenues $ 3,196 $ 3,012
Less: CIEs revenue 49 25
Less: Net realized investment gains (losses) 5 21
Less: Market impact on indexed universal life benefits (10 ) (3 )
Less: Market impact of hedges on investments   5     (8 )
Adjusted operating total net revenues $ 3,147   $ 2,977

 

 

Ameriprise Financial, Inc.
Reconciliation Table:
Total Expenses

 

Quarter Ended
June 30,

(in millions, unaudited) 2018   2017
Total expenses $ 2,648 $ 2,501
Less: CIEs expenses 49 24
Less: Integration/restructuring charges 4
Less: Market impact on variable annuity guaranteed benefits 80 80
Less: Market impact on indexed universal life benefits 10 3
Less: DAC/DSIC offset to net realized investment gains (losses)       1
Adjusted operating expenses $ 2,505   $ 2,393
 
 

Ameriprise Financial, Inc.
Reconciliation Table:
Pretax Adjusted Operating Earnings

 

Quarter Ended
June 30,

(in millions, unaudited) 2018   2017
Adjusted operating total net revenues $ 3,147 $ 2,977
Adjusted operating expenses   2,505     2,393
Pretax adjusted operating earnings $ 642   $ 584
 
 

Ameriprise Financial, Inc.
Reconciliation Table:
General and Administrative Expense

 

Quarter Ended
June 30,

(in millions, unaudited) 2018   2017
General and administrative expense $ 788 $ 767
Less: CIEs expenses 2
Less: Integration/restructuring charges   4    
Adjusted operating general and administrative expense $ 784   $ 765
 
 

Ameriprise Financial, Inc.
Reconciliation Table:
Effective Tax Rate

 
 

Quarter Ended June 30, 2018

(in millions, unaudited) GAAP  

Adjusted
Operating

Pretax income $ 548 $ 642
Income tax provision $ 86 $ 106
 
Effective tax rate 15.7 % 16.5 %
 
 

Ameriprise Financial, Inc.
Reconciliation Table:
Effective Tax Rate

 

Quarter Ended June 30, 2017

(in millions, unaudited) GAAP

Adjusted
Operating

Pretax income $ 511 $ 584
Income tax provision $ 118 $ 143
 
Effective tax rate 23.1 % 24.5 %
 
 

Ameriprise Financial, Inc.
Reconciliation Table:
Advice & Wealth Management Adjusted Operating Net Revenues
(trailing 12 months)

 
  Quarter Ended June 30,
(in millions, unaudited) 2018   2017
Adjusted operating net revenues $ 5,963 $ 5,341
Less: Net impact of transitioning advisory accounts to share classes
without 12b-1 fees
  40   164
Adjusted operating total net revenues normalized for 12b-1 impact $ 5,923 $ 5,177

 

 

Ameriprise Financial, Inc.
Reconciliation Table:
Asset Management Net Pretax Adjusted Operating Margin

 
Quarter Ended June 30,

(in millions, unaudited)

2018 2017
Adjusted operating total net revenues $ 755 $ 747
Less: Distribution pass through revenues 196 194
Less: Subadvisory and other pass through revenues   88   91
Net adjusted operating revenues $ 471 $ 462
 
Pretax adjusted operating earnings $ 183 $ 176
Less: Adjusted operating net investment income 8 6
Add: Amortization of intangibles   4   4
Net adjusted operating earnings $ 179 $ 174
 
Pretax adjusted operating margin 24.2 % 23.6 %
Net pretax adjusted operating margin 38.0 % 37.7 %
 
 

Ameriprise Financial, Inc.
Reconciliation Table:
Return on Equity (ROE) Excluding Accumulated

Other
Comprehensive Income "AOCI"

 
 

Twelve Months Ended
June 30,

(in millions, unaudited)

2018   2017
Net income $ 1,740 $ 1,410
Less: Adjustments (1)   (89 )   (132 )
Adjusted operating earnings $ 1,829 $ 1,542
 
Total Ameriprise Financial, Inc. shareholders' equity $ 6,004 $ 6,518
Less: Accumulated other comprehensive income, net of tax   131   390
Total Ameriprise Financial, Inc. shareholders' equity excluding AOCI 5,873 6,128
Less: Equity impacts attributable to the consolidated investment
entities
  1   1
Adjusted operating equity $ 5,872 $ 6,127
 
Return on equity excluding AOCI 29.6 % 23.0 %
Adjusted operating return on equity excluding AOCI (2) 31.1 % 25.2 %
 

(1) Adjustments reflect the trailing twelve months' sum
of after-tax net realized investment gains/losses, net of deferred
sales inducement costs ("DSIC") and deferred acquisition costs
("DAC") amortization, unearned revenue amortization and the
reinsurance accrual; market impact on variable annuity guaranteed
benefits, net of hedges and related DSIC and DAC amortization; the
market impact on indexed universal life benefits, net of hedges
and related DAC amortization, unearned revenue amortization, and
the reinsurance accrual; the market impact on fixed index annuity
benefits, net of hedges and the related DAC amortization; the
market impact of hedges to offset interest rate changes on
unrealized gains or losses for certain investments;
integration/restructuring charges; and the impact of consolidating
certain investment entities. After-tax is calculated using the
statutory tax rate of 21% in 2018 and 35% in 2017.

 

(2) Adjusted operating return on equity excluding
accumulated other comprehensive income (AOCI) is calculated using
the trailing twelve months of earnings excluding the after-tax net
realized investment gains/losses, net of deferred sales inducement
costs ("DSIC") and deferred acquisition costs ("DAC")
amortization, unearned revenue amortization and the reinsurance
accrual; market impact on variable annuity guaranteed benefits,
net of hedges and related DSIC and DAC amortization; the market
impact on indexed universal life benefits, net of hedges and
related DAC amortization, unearned revenue amortization, and the
reinsurance accrual; the market impact on fixed index annuity
benefits, net of hedges and the related DAC amortization; the
market impact of hedges to offset interest rate changes on
unrealized gains or losses for certain investments;
integration/restructuring charges; the impact of consolidating
certain investment entities; and discontinued operations in the
numerator, and Ameriprise Financial shareholders' equity excluding
AOCI and the impact of consolidating investment entities using a
five-point average of quarter-end equity in the denominator.
After-tax is calculated using the statutory tax rate of 21% in
2018 and 35% in 2017.

 
 

Ameriprise Financial, Inc.
Consolidated GAAP Results

 
(in millions, unaudited)   Quarter Ended June 30,  

% Better/
(Worse)

2018   2017
Revenues
Management and financial advice fees $ 1,691 $ 1,568 8 %
Distribution fees 465 425 9
Net investment income 419 391 7
Premiums 357 348 3
Other revenues   284   292 (3 )
Total revenues 3,216 3,024 6
Banking and deposit interest expense   20   12 (67 )
Total net revenues 3,196 3,012 6
 
Expenses
Distribution expenses 902 831 (9 )
Interest credited to fixed accounts 180 171 (5 )
Benefits, claims, losses and settlement expenses 635 611 (4 )
Amortization of deferred acquisition costs 63 69 9
Interest and debt expense 80 52 (54 )
General and administrative expense   788   767 (3 )
Total expenses 2,648 2,501 (6 )
Pretax income 548 511 7
Income tax provision   86   118 27
 
Net income $ 462 $ 393 18 %
 

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