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Ameriprise Financial Reports Fourth Quarter and Full Year 2018 Results

Share:

Fourth quarter 2018 net income per diluted
share was $3.76

Adjusted operating EPS excluding items (1)
was $3.80

Full year 2018 net income per diluted share was $14.20
Adjusted
operating EPS excluding items
(1) was $14.94

Fourth quarter 2018 return on equity excluding AOCI was 36.0 percent
Adjusted
operating ROE excluding AOCI and items
(1) was
37.8 percent

Ameriprise Financial, Inc. (NYSE:AMP) today reported fourth quarter
2018 net income of $539 million, or $3.76 per diluted share. Adjusted
operating earnings excluding items(1) increased 12 percent to
$544 million, with adjusted operating earnings per diluted share
excluding items(1) up 21 percent to $3.80. Significant equity
and interest rate volatility resulted in non-cash mean reversion-related
impacts of an unfavorable $56 million after-tax in the Annuities and
Protection segments in the current quarter compared to a $13 million
favorable after-tax impact in the prior year quarter.

Full year 2018 net income per diluted share was $14.20. Adjusted
operating earnings per diluted share excluding items(1)
increased 27 percent to $14.94.

"Ameriprise delivered solid results in a volatile quarter with our
Advice and Wealth Management business driving our growth," said Jim
Cracchiolo, chairman and chief executive officer. "Ameriprise client
flows into fee-based investment advisory remained strong and cash
balances increased. As we serve more clients in advice relationships,
we're steadily growing advisor productivity."

"Equity market declines globally were clear challenges. U.S. equity
markets declined 14 percent in the quarter, which impacted our average
assets and related fees, increased non-cash annuity expenses and
heightened industry-wide asset management outflows. These market
challenges also create opportunities for Ameriprise as they reinforce
the need for personal financial planning and advice, where we are a
long-standing leader, and demonstrate a key differentiation—our balance
sheet strength and effective capital management.

"Our capital strength allows us to continue to invest for near- and
long-term growth and capture opportunities, including delivering
relevant, quality products and solutions, exceptional service to our
retail and institutional clients and accelerating our share repurchase
in the fourth quarter. For the year, we returned more than $2 billion to
shareholders through an increased dividend and repurchase of 11 million
shares while maintaining our balance sheet strength. We will continue to
benefit from our capital and expense discipline as we manage a
challenging market environment and further strengthen our market
position."

(1)

 

Excludes the one-time negative impact from the enactment of the
Tax Cuts and Jobs Act ("Tax Act") in the fourth quarter of 2017,
as well as unlocking and mean reversion-related items in both
periods, as applicable. There are two primary mean
reversion-related items that are influenced by markets—increased
DAC and DSIC amortization and increased reserve accrual for SOP
03-1 reserves for living benefit guarantees—both of which drove
the non-cash mean reversion-related impacts in the quarter.
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.

 

GAAP Results – Fourth quarter

Net revenues were $3.2 billion reflecting growth in Advice & Wealth
Management offset by market dislocation in the quarter.

Expenses of $2.5 billion decreased 2 percent, or $58 million, from a
year ago.

Adjusted Operating Results – Fourth quarter

Adjusted operating net revenues of $3.2 billion were flat to last year
excluding the Tax Act, driven by continued strength in Advice & Wealth
Management, which was offset by lower Asset Management revenue.

Adjusted operating expenses were $2.6 billion. Excluding mean
reversion-related impacts, adjusted operating expenses decreased 2
percent versus last year. General and administrative expense decreased 5
percent reflecting ongoing growth investments that were more than offset
by continued expense discipline and lower compensation-related expenses.

Taxes

The adjusted operating effective tax rate in the quarter was 16.9
percent and was within expectations. The lower effective tax rate
reflects the continued reduction in the federal income tax rate.

Ameriprise Financial, Inc.

Fourth Quarter Summary

(in millions, except per share amounts, unaudited)

 

Quarter Ended
December 31,

 

Per Diluted Share
Quarter Ended
December
31,

2018 2017

% Better/
(Worse)

2018   2017  

% Better/
(Worse)

GAAP net income $

539

$ 177 NM $ 3.76 $ 1.15 NM

Adjusted operating earnings excluding items (1)(2)(3)

(see reconciliation on p. 14) $ 544 $ 485 12

%

$ 3.80 $ 3.15 21 %
Percent of pretax adjusted operating earnings from Advice & Wealth
Management, excluding Corporate & Other and mean reversion-related
impacts
52 % 46 %
Percent of pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management, excluding Corporate & Other and
mean reversion-related impacts
73 % 75 %
Weighted average common shares outstanding:
Basic 141.5 151.0
Diluted 143.2 153.8
 

(1) There are two primary mean reversion-related items
that are influenced by markets–increased DAC and DSIC amortization
and increased reserve accrual for SOP 03-1 reserves for living
benefit guarantees–both of which drove the non-cash mean
reversion-related impacts in the quarter.

 

(2) 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.

 

(3) The company believes the presentation of adjusted
operating earnings excluding Tax Act impacts, unlocking and market
impacts on DAC, DSIC and SOP reserves best represents the
economics of the business.

 

Fourth Quarter 2018 Highlights

Ameriprise delivered solid financial results and maintained a strong
balance sheet and capital position during a period of volatile markets
and returned $564 million to shareholders

  • Adjusted operating earnings per share excluding items(1)
    increased 21 percent in the quarter, and adjusted operating return on
    equity, excluding items(1) and AOCI reached 37.8 percent.
  • Equity markets declined significantly in the fourth quarter with the
    company's weighted equity index declining 14 percent point-to-point
    and 7 percent on average sequentially. The point-to-point decline
    drove significant negative mean reversion-related impacts. In
    addition, market depreciation drove lower average assets under
    management and administration in the quarter that impacted asset
    management fees and, to a lesser extent, lower fees for Advice &
    Wealth Management.
  • General and administrative expenses decreased 5 percent from focused
    expense discipline.
  • In the quarter, the company accelerated its share repurchase program
    with 3.6 million shares of common stock repurchased, up 50 percent
    from 2.4 million in the third quarter. The company repurchased $436
    million of stock and paid $128 million in quarterly dividends, which
    represented 104 percent of adjusted operating earnings(1).
    For the full year, Ameriprise repurchased 7 percent of shares
    outstanding and increased the dividend 8 percent. Balance sheet
    fundamentals remain strong with substantial free cash flow generation
    and excellent risk management discipline.
  • Excess capital was $1.5 billion, with an estimated risk-based capital
    ratio of approximately 500 percent.

The firm's comprehensive and personal client focus, combined with its
broad solution set, resulted in strong wealth management flows in a
challenging market environment

  • Ameriprise assets under management and administration were $823
    billion, reflecting advisor client net inflows that were more than
    offset by market depreciation and asset management outflows.
  • Ameriprise retail client assets were $539 billion, reflecting
    continued strength in investment advisory (wrap) net inflows that
    partially offset market depreciation in the fourth quarter.
  • Client demand for fee-based investment advisory products remains
    strong with net inflows of $4.5 billion in the quarter—the seventh
    consecutive quarter of wrap net inflows over $4 billion. Wrap assets
    grew to $251 billion, one of the largest platforms in the industry.
  • The company made continued progress on its plan to offer a range of
    banking and credit products by submitting applications to the Federal
    Reserve and the Office of Comptroller of the Currency (OCC) to convert
    its wholly owned OCC-chartered trust bank subsidiary to a federal
    savings bank.
  • Advisor productivity increased 9 percent to $620,000 per advisor on a
    trailing 12-month basis after normalizing for the net impact from
    eliminating 12b-1 fees in advisory accounts, reflecting the
    continuation of growth in advisor productivity over multiple years,
    our comprehensive, advice-based approach to serving clients and strong
    advisor retention.
  • Columbia Threadneedle assets under management declined to $431 billion
    from equity market depreciation and elevated outflows, consistent with
    the industry.
  • Variable annuity cash sales were $1 billion and for the full year cash
    sales increased 6 percent to $4.5 billion, in line with historic
    ranges.

(1)

 

Excludes the one-time negative impact from the Tax Act in the
fourth quarter of 2017, as well as unlocking and mean
reversion-related impacts in both periods.

 

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

  • The Ameriprise Financial brand and value proposition continues to
    resonate in the marketplace with consumer awareness remaining at a
    high level. Ameriprise launched new advertising as part of the
    evolution of its successful Be Brilliant® advertising and brand
    platform, highlighting the personalized, differentiated experience the
    firm deliver to clients.
  • Ameriprise continues to invest in expanding its distribution network
    by adding experienced advisors with strong productivity. 93
    experienced advisors joined the firm during the quarter, bringing the
    advisor count to 9,931.

Values-based, client-focused firm

  • As part of the company's efforts to help the more than 40 million
    Americans facing hunger, during the quarter the company's ninth
    National Day of Service included more than 7,600 Ameriprise employees,
    financial advisors and clients volunteering at food banks, pantries
    and warehouses to serve meals, sort donations and stock shelves at 400
    events nationwide. The company's efforts provided more than 1 million
    meals for people in need.
 
Ameriprise Financial, Inc.
Advice & Wealth Management Segment Adjusted Operating Results
 
(in millions, unaudited)   Quarter Ended December 31,  

% Better/
(Worse)

2018   2017
Advice & Wealth Management
Net revenues $ 1,581 $ 1,509 5 %
Expenses   1,213   1,184 (2 )%
Pretax adjusted operating earnings $ 368 $ 325 13 %
 
Pretax adjusted operating margin 23.3 % 21.5 %
 
Quarter Ended December 31,

% Better/
(Worse)

2018 2017
Retail client assets (billions) $ 539 $ 560 (4 )%
Wrap net flows (billions) $ 4.5 $ 5.0 (10 )%
Brokerage cash balance (billions) $ 27.7 $ 26.2 6 %
Adjusted operating net revenue per advisor normalizing for the net
impact of 12b-1 fee changes (trailing 12 months - thousands)
$ 620 $ 569 9 %
 

Advice & Wealth Management pretax adjusted operating earnings
increased 13 percent to $368 million driven by continued strength in
client net inflows and increased earnings on cash balances partially
offset by markets. Pretax adjusted operating margin was 23.3 percent, up
180 basis points from a year ago. On a sequential basis, pretax adjusted
operating earnings were up 4 percent and margin increased 60 basis
points, as strong client flows and higher earnings on cash balances more
than offset lower fees from the equity market decline in the quarter.
Advice & Wealth Management represented 52 percent of the company's
pretax adjusted operating earnings(1).

Adjusted operating net revenues increased 5 percent to $1.6 billion,
despite flat average equity markets year-over-year, reflecting strong
client activity, increased advisor productivity and higher earnings on
cash balances. Management and financial advice fees in the quarter were
impacted by lower average equity markets given fees for advisory
accounts are assessed based primarily on average daily balances.

Adjusted operating expenses increased 2 percent to $1.2 billion. General
and administrative expenses were up 2 percent compared to a year ago
primarily due to investments in growth initiatives and disciplined
management of the expense base.

Total retail client assets decreased 4 percent to $539 billion. Client
net inflows remained strong and client acquisition momentum continued,
and this mitigated approximately half of the decline in retail client
assets from the point-to-point market depreciation in the fourth
quarter. Total wrap assets increased 1 percent to $251 billion from
continued strong wrap net inflows that more than offset market
depreciation. Client brokerage cash balances were $27.7 billion, up 6
percent from a year ago as clients prepared for tax season and responded
to the volatile market environment by accumulating cash.

Adjusted operating net revenue per advisor on a trailing 12-month basis
increased 9 percent to $620,000 after normalizing for the net impact
from eliminating 12b-1 fees in advisory accounts. Total advisors
increased to 9,931 and advisor retention remained strong. 93 experienced
advisors moved their practices to Ameriprise in the quarter, with higher
productivity than last year's experienced advisor recruits.

(1)

 

Excludes Corporate & Other and mean reversion-related impacts.

 
Ameriprise Financial, Inc.
Asset Management Segment Adjusted Operating Results
 
(in millions, unaudited)   Quarter Ended December 31,  

% Better/
(Worse)

2018   2017
Asset Management
Net revenues $ 706 $ 816 (13 )%
Expenses   553   606 9 %
Pretax adjusted operating earnings $ 153 $ 210 (27 )%
 
Pretax adjusted operating margin 21.7 % 25.7 %
Net pretax adjusted operating margin (1) 34.8 % 39.0 %
Items included in adjusted operating earnings:
Net performance fees and CLO unwinds $ 5 $ 28 (82 )%
 
Quarter Ended December 31,

% Better/
(Worse)

2018 2017
Total segment AUM (billions) $ 431 $ 495 (13 )%
 

Net Flows (billions)

Former parent company related net new flows $ (2.9 ) $ (2.5 ) (16 )%
Global Retail net flows, excl. former parent flows 1.3 5.1 (73 )%
Global Institutional net flows, excl. former parent flows (3.1 ) (5.6 ) 45 %
Inflows from acquisitions     5.4 NM
Total segment net flows $ (4.7 ) $ 2.4 NM

(1) See reconciliation on page 20

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

Asset Management pretax adjusted operating earnings were $153
million, down $57 million from the prior year period. Adjusted operating
net revenue and pretax adjusted operating earnings were lower as a
result of lower performance fees, markets and the cumulative impact of
outflows. The level of performance fees and CLO unwinds were elevated in
the prior year, with a lower benefit in the current period. The quarter
also included $8 million of costs associated with the implementation of
the company's Brexit strategy. General and administrative expenses
decreased 9 percent from lower performance fee compensation and $8
million of higher Brexit related costs. Adjusting for these items,
general and administrative expenses declined 6 percent. Fourth quarter
net pretax adjusted operating margin was 35 percent.

On a sequential basis, earnings declined $44 million, half of which was
related to lower asset-based fees from equity market declines, as well
as $9 million of lower performance fees and $8 million of Brexit-related
costs.

Total segment AUM declined 13 percent, reflecting the 14 percent
point-to-point market decline in the quarter and continued outflows.

Net outflows in the quarter were elevated at $4.7 billion reflecting
significant market dislocation in both the U.S. and EMEA. Retail fund
outflow rates in the quarter were consistent with other active managers
and reflected weakened market sentiment across all regions related to
heightened market volatility from global economic concerns and Brexit,
as well as higher year-end tax selling. Third party institutional
outflows reflected lower sales and higher redemptions of equity and
fixed income mandates. Outflows from former-parent company relationships
increased primarily related to the market environment.

Ameriprise Financial, Inc.
Annuities Segment Adjusted Operating Results
 
(in millions, unaudited)   Quarter Ended December 31,  

% Better/
(Worse)

2018   2017
Annuities
Net revenues $ 613 $ 638 (4 )%
Expenses   562   490 (15 )%
Pretax adjusted operating earnings $ 51 $ 148 (66 )%
Variable annuity pretax adjusted operating earnings $ 47 $ 134 (65 )%
Mean reversion-related impacts   (68 )   20 NM
Total variable annuity pretax adjusted operating earnings excluding
mean reversion-related impacts
$ 115 $ 114 1 %
Fixed annuity pretax adjusted operating earnings $ 4 $ 14 (71 )%
 
Quarter Ended December 31,

% Better/
(Worse)

2018 2017
Variable annuity ending account balances (billions) $ 72.0 $ 80.3 (10 )%
Variable annuity net flows (billions) $ (0.8 ) $ (0.9 ) 12 %
Fixed deferred annuity ending account balances (billions) $ 8.7 $ 9.3 (7 )%
Fixed deferred annuity net flows (billions) $ (0.2 ) $ (0.2 ) 7 %
 
NM Not Meaningful — variance equal to or greater than 100%
 

Annuities pretax adjusted operating earnings excluding mean
reversion-related impacts were $119 million, reflecting the declining
fixed annuity earnings as that block runs off.

Variable annuity pretax adjusted operating earnings were $115 million,
excluding the $68 million unfavorable mean reversion-related impacts,
which are calculated based on the change in ending market level. There
are two primary mean reversion-related impacts that are influenced by
markets: increased DAC and DSIC amortization and increased accruals for
SOP 03-1 reserves for living benefit guarantees, both of which drove the
non-cash mean reversion-related impacts in the quarter. Underlying
performance remained within expectations.

Variable annuity account balances were $72 billion. Variable annuity net
amount at risk as a percent of account values was 1.7 percent for living
benefits and 1.6 percent for death benefits, which increased in the
quarter but remained one of the lowest among major variable annuity
writers.

Fixed annuity pretax adjusted operating earnings were $4 million,
reflecting continued spread compression from the extended period of low
interest rates and lower account balances, as well as lower income
annuity mortality rates. 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 December 31,  

% Better/
(Worse)

2018   2017
Protection
Net revenues $ 543 $ 528 3 %
Expenses   476   481 1 %
Pretax adjusted operating earnings $ 67 $ 47 43 %
 
Life and Health pretax adjusted operating earnings $ 64 $ 73 (12 )%

Mean reversion-related impacts

  (3 )   NM
Pretax adjusted operating earnings excluding mean reversion-related
impacts
$ 67 $ 73 (8

)%

 
Auto & Home pretax adjusted operating earnings/(loss) $ 3 $ (26 ) NM
 
Items included in adjusted operating earnings:
Auto and Home catastrophe losses (12 ) (38 ) 68 %

 

Quarter Ended December 31,

% Better/
(Worse)

2018 2017
Life insurance in force (billions) $ 195 $ 196
VUL/UL ending account balances (billions) $ 12.0 $ 12.5 (5 )%
Auto and Home policies in force (thousands) 861 942 (9 )%
 
NM Not Meaningful — variance equal to or greater than 100%
 

Protection pretax adjusted operating earnings were $67 million
compared to $47 million a year ago.

Life and Health insurance adjusted operating earnings excluding mean
reversion-related impacts were $67 million, impacted by continued low
interest rates. Overall claims remain within expected ranges. VUL/UL
cash sales were $75 million, down 11 percent.

Auto and Home pretax adjusted operating earnings were $3 million in the
quarter, including a benefit from the sale of subrogation rights related
to the 2017 and 2018 California wildfires. Gross catastrophe losses were
$62 million and net catastrophe losses were $12 million, primarily
mitigated by the company's effective reinsurance programs. Excluding the
impact of net catastrophe losses, pretax adjusted operating earnings
were $15 million.

 
Ameriprise Financial, Inc.

Corporate & Other Segment Adjusted Operating Results

 
(in millions, unaudited)   Quarter Ended December 31,  

% Better/
(Worse)

2018   2017
Corporate & Other, Excluding Long Term Care
Pretax adjusted operating loss $ (47 ) $ (121 ) 61 %
Tax Act impact on low income housing assets     (51 ) NM
Pretax adjusted operating loss excluding the Tax Act impact $ (47 ) $ (70 ) 33 %
 
Long Term Care
Pretax adjusted operating loss $ (5 ) $ (13 ) 62 %
 
Items included in adjusted operating loss:
DOL planning and implementation expenses $ (1 ) $ (6 ) 83 %
Severance expense   (1 )   (7 ) 86 %
Total corporate & other impact $ (2 ) $ (13 ) 85 %
 
NM Not Meaningful — variance equal to or greater than 100%
 

Corporate & Other pretax adjusted operating loss excluding
long term care was $47 million, primarily related to low income housing
benefits, lower compensation expenses and lower operating expenses,
reducing the loss by approximately $16 million.

Long Term Care pretax adjusted operating loss was $5 million in the
quarter. Claims activity remains within expected ranges.

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:

  • 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) plans, 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 Annual Report on Form 10-K for the
year ended December 31, 2018. For information about Ameriprise Financial
entities, please refer to the Fourth 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,
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Ameriprise Financial, Inc.

Full Year Summary

(in millions, except per share amounts, unaudited)

 

Year Ended
December 31,

 

Per Diluted Share
Year Ended
December
31,

2018   2017

% Better/
(Worse)

2018   2017  

% Better/
(Worse)

GAAP net income $ 2,098 $ 1,480 42 % $ 14.20 $ 9.44 50 %

Adjusted operating earnings excluding items (1)(2)

(see reconciliation on p. 16) $ 2,207 $ 1,842 20 % $ 14.94 $ 11.75 27 %

Percent of pretax adjusted operating earnings from Advice & Wealth
Management, excluding Corporate & Other, unlocking and mean
reversion

48 % 44 %

Percent of pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management, excluding Corporate & Other,
unlocking and mean reversion

74 % 72 %
Weighted average common shares outstanding:
Basic 145.6 154.1
Diluted 147.7 156.7
 

(1) 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.

 

(2) The company believes the presentation of adjusted
operating earnings excluding Tax Act impacts, unlocking and market
impacts on DAC, DSIC and SOP reserves best represents the
economics of the business.

 
Ameriprise Financial, Inc.
Reconciliation Table: Earnings
 

Quarter Ended
December 31,

 

Per Diluted Share
Quarter Ended
December
31,

(in millions, except per share amounts, unaudited) 2018   2017 2018   2017
Net income $ 539 $ 177 $ 3.76 $ 1.15
Less: Net income (loss) attributable to consolidated investment
entities
(1 ) (0.01 )
Add: Integration/restructuring charges (1) 3 4 0.02 0.03

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

(99 ) 34 (0.69) 0.22
Add: Market impact on fixed index annuity benefits (1) (1 ) (0.01 )

Add: Market impact on indexed universal life benefits (1)

9 (20 ) 0.07 (0.13 )
Add: Market impact of hedges on investments (1) 16 (6 ) 0.11 (0.04 )
Add: Net realized investment (gains) losses (1) 6 (11 ) 0.04 (0.07 )
Add: Tax effect of adjustments (2)   14     0.10  
Adjusted operating earnings 488 178 3.41 1.16
 
Tax Act impact:
Less: Tax impact on low income housing assets (51 ) (0.33 )
Less: Tax effect of adjustments (3)     (269 )     (1.75 )
Total Tax Act impact (320 ) (2.08 )
 
Excluded items:

Less: Mean reversion-related impacts

(71 ) 20 (0.50 ) 0.13
Less: Tax effect of excluded items (2)   15   (7 )   0.11   (0.04 )
Total excluded items   (56 )   13   (0.39 )   0.09
 
Adjusted operating earnings excluding items $ 544 $ 485 $ 3.80 $ 3.15
Weighted average common shares outstanding:
Basic 141.5 151.0
Diluted 143.2 153.8
 

(1) Pretax adjusted operating adjustment.

 

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

 

(3) Amounts represent the impact of the Tax Act
including remeasurement of net deferred tax assets using the
lowered corporate tax rate, repatriation tax and the tax effect of
low income housing assets.

 

Ameriprise Financial, Inc.
Reconciliation Table: Earnings
 
 

Year Ended
December 31,

 

Per Diluted Share
Year Ended
December
31,

(in millions, except per share amounts, unaudited) 2018   2017 2018   2017
Net income $ 2,098 $ 1,480 $ 14.20 $ 9.44
Less: Net income (loss) attributable to consolidated investment
entities
(1 ) 1 (0.01 )
Add: Integration/restructuring charges (1) 19 5 0.13 0.03

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

31 232 0.21 1.48
Add: Market impact on fixed index annuity benefits (1) (1 ) (0.01 )
Add: Market impact on indexed universal life benefits (1) 17 (4 ) 0.12 (0.02 )
Add: Market impact of hedges on investments (1) (11 ) 2 (0.08 ) 0.01
Add: Net realized investment (gains) losses (1) (9 ) (44 ) (0.06 ) (0.28 )
Add: Tax effect of adjustments (2)   (10 )   (67 )   (0.07 )   (0.43 )
Adjusted operating earnings 2,135 1,603 14.45 10.23
 
Tax Act impact:
Less: Tax impact on low income housing assets (51 ) (0.32 )
Less: Tax effect of adjustments (3)     (269 )     (1.72 )
Total Tax Act impact     (320 )     (2.04 )
 
Excluded items:

Less: Mean reversion-related impacts

(33 ) 83 (0.22 ) 0.53
Less: Unlocking (58 ) 42 (0.39 ) 0.27
Less: Tax effect of excluded items (2)   19   (44 )   0.12   (0.28 )
Total excluded items   (72 )   81   (0.49 )   0.52
 
Adjusted operating earnings excluding items $ 2,207 $ 1,842 $ 14.94 $ 11.75
Weighted average common shares outstanding:
Basic 145.6 154.1
Diluted 147.7 156.7
 

(1) Pretax adjusted operating adjustment.

 

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

 

(3) Amounts represent the impact of the Tax Act
including remeasurement of net deferred tax assets using the
lowered corporate tax rate, repatriation tax and the tax effect of
low income housing assets.

 
Ameriprise Financial, Inc.
Reconciliation Table: Total Net Revenues
 
 

Quarter Ended
December 31,

(in millions, unaudited)

   2018   

 

   2017   

Total net revenues $ 3,179 $ 3,180
Less: CIEs revenue 34 24
Less: Net realized investment gains (losses) (5 ) 11
Less: Market impact on indexed universal life benefits (2 ) 8
Less: Market impact of hedges on investments   (16 )   6
Adjusted operating total net revenues 3,168 3,131
Less: Tax impact on low income housing assets     (51 )
Adjusted operating total net revenues excluding tax impact $ 3,168 $ 3,182
 
Ameriprise Financial, Inc.
Reconciliation Table: Total Expenses
 
  Quarter Ended

December 31,

(in millions, unaudited)

   2018   

 

   2017   

Total expenses $ 2,527 $ 2,585
Less: CIEs expenses 35 24
Less: Integration/restructuring charges 3 4
Less: Market impact on variable annuity guaranteed benefits (99 ) 34
Less: Market impact on indexed universal life benefits 7 (12 )
Less: Market impact on fixed index annuity benefits (1 )
Less: DAC/DSIC offset to net realized investment gains (losses)   1  
Adjusted operating expenses 2,581 2,535

Less: Mean reversion-related impacts

  71   (20 )

Adjusted operating expenses excluding mean reversion-related
impacts

$ 2,510 $ 2,555
 
Ameriprise Financial, Inc.
Reconciliation Table: Pretax Adjusted Operating Earnings
 
 

Quarter Ended
December 31,

(in millions, unaudited)

   2018   

   

   2017   

Adjusted operating total net revenues $ 3,168 $ 3,131
Adjusted operating expenses   2,581   2,535
Pretax adjusted operating earnings $ 587 $ 596
 
Ameriprise Financial, Inc.
Reconciliation Table: General and Administrative Expense
 
  Quarter Ended

December 31,

(in millions, unaudited)

   2018   

   

   2017   

General and administrative expense $ 792 $ 833
Less: CIEs expenses 3
Less: Integration/restructuring charges   3   4
Adjusted operating general and administrative expense $ 786 $ 829
 
Ameriprise Financial, Inc.

Reconciliation Table: Advice & Wealth Management and Asset
Management Percent of Pretax Adjusted Operating Earnings
(1)

 
 

Quarter Ended
December 31,

(in millions, unaudited)

   2018   

 

   2017   

Advice & Wealth Management pretax adjusted operating earnings $ 368 $ 325

Less: Mean reversion-related impacts

   

Advice & Wealth Management pretax adjusted operating earnings
excluding mean reversion-related impacts

$ 368 $ 325
Advice & Wealth Management and Asset Management pretax adjusted
operating earnings
$ 521 $ 535

Less: Mean reversion-related impacts

   

Advice & Wealth Management and Asset Management pretax adjusted
operating earnings excluding mean reversion-related impacts

$ 521 $ 535
Annuities and Protection pretax adjusted operating earnings $ 118 $ 195

Less: Mean reversion-related impacts

  (71 )   20

Annuities and Protection pretax adjusted operating earnings
excluding mean reversion-related impacts

$ 189 $ 175
 
Percent pretax adjusted operating earnings from Advice & Wealth
Management
58 % 45 %
Percent pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management
82 % 73 %
Percent pretax adjusted operating earnings from Annuities and
Protection
18 % 27 %

Percent pretax adjusted operating earnings from Advice & Wealth
Management excluding mean reversion-related impacts

52 % 46 %

Percent pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management excluding mean reversion-related
impacts

73 % 75 %

Percent pretax adjusted operating earnings from Annuities and
Protection excluding mean reversion-related impacts

27 % 25 %
 

(1) Excludes Corporate & Other segment

 
Ameriprise Financial, Inc.

Reconciliation Table: Advice & Wealth Management and Asset
Management Percent of Pretax Adjusted Operating Earnings
(1)

 
  Year Ended

December 31,

(in millions, unaudited)

   2018   

 

   2017   

Advice & Wealth Management pretax adjusted operating earnings $ 1,389 $ 1,163
Less: Unlocking

Less: Mean reversion-related impacts

   

Advice & Wealth Management pretax adjusted operating earnings
excluding unlocking and mean reversion-related impacts

$ 1,389 $ 1,163

Advice & Wealth Management and Asset Management pretax adjusted
operating earnings

$ 2,117 $ 1,903
Less: Unlocking

Less: Mean reversion-related impacts

   

Advice & Wealth Management and Asset Management pretax adjusted
operating earnings excluding unlocking and mean reversion-related
impacts

$ 2,117 $ 1,903
Annuities and Protection pretax adjusted operating earnings $ 708 $ 926
Less: Unlocking (6 ) 100

Less: Mean reversion-related impacts

  (33 )   83

Annuities and Protection pretax adjusted operating earnings
excluding unlocking and mean reversion-related impacts

$ 747 $ 743
 
Percent pretax adjusted operating earnings from Advice & Wealth
Management
49 % 41 %
Percent pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management
75 % 67 %
Percent pretax adjusted operating earnings from Annuities and
Protection
25 % 33 %

Percent pretax adjusted operating earnings from Advice & Wealth
Management excluding unlocking and mean reversion-related impacts

48 % 44 %

Percent pretax adjusted operating earnings from Advice & Wealth
Management and Asset Management excluding unlocking and mean
reversion-related impacts

74 % 72 %

Percent pretax adjusted operating earnings from Annuities and
Protection excluding unlocking and mean reversion-related impacts

26 % 28 %
 

(1) Excludes Corporate & Other segment

 
Ameriprise Financial, Inc.
Reconciliation Table: Effective Tax Rate
 
  Quarter Ended December 31, 2018
(in millions, unaudited) GAAP  

Adjusted
Operating

Pretax income $ 652 $ 587
Income tax provision $ 113 $ 99
Effective tax rate 17.3 % 16.9 %
 
Ameriprise Financial, Inc.

Reconciliation Table: Advice & Wealth Management Adjusted
Operating Net Revenues (trailing 12 months)

 
  Quarter Ended December 31,
(in millions, unaudited)

   2018   

 

   2017   

Adjusted operating net revenues $ 6,189 $ 5,616
Less: Net impact of transitioning advisory accounts to share classes
without 12b-1 fees
  40   60
Adjusted operating total net revenues normalized for 12b-1 impact $ 6,149 $ 5,556
 
Ameriprise Financial, Inc.
Reconciliation Table: Asset Management Net Pretax Adjusted
Operating Margin
 
  Quarter Ended December 31,  

(in millions, unaudited)

   2018   

   2017   

Adjusted operating total net revenues $ 706 $ 816
Less: Distribution pass through revenues 180 202
Less: Subadvisory and other pass through revenues   81   94
Net adjusted operating revenues $ 445 $ 520
 
Pretax adjusted operating earnings $ 153 $ 210
Less: Adjusted operating net investment income 2 12
Add: Amortization of intangibles   4   5
Net adjusted operating earnings $ 155 $ 203
 
Pretax adjusted operating margin 21.7 % 25.7 %
Net pretax adjusted operating margin 34.8 % 39.0 %
 
Ameriprise Financial, Inc.
Reconciliation Table: Asset Management Adjusted Operating General
and Administrative Expense
 
 

Quarter Ended
December 31,

(in millions, unaudited)

   2018   

   

   2017   

Adjusted operating general and administrative expense $ 316 $ 348
Less: Brexit related costs 8
Less: Performance fee and CLO compensation   2   21
Adjusted operating general and administrative expense excluding items $ 306 $ 327
 
Ameriprise Financial, Inc.
Reconciliation Table: Return on Equity (ROE) Excluding Accumulated
Other Comprehensive Income "AOCI"
 
  Twelve Months Ended

December 31,

(in millions, unaudited)

2018

2017
Net income $ 2,098 $ 1,480
Less: Adjustments (1)   (37 )   (123 )
Adjusted operating earnings 2,135 1,603

Less: Unlocking, net of tax (2)

(46 ) 27

Less: Mean reversion-related impacts, net of tax (2)

(26 ) 54
Less: Tax Act impact     (320 )

Adjusted operating earnings excluding unlocking, mean
reversion-related impacts and Tax Act impact

$ 2,207 $ 1,842
 
Total Ameriprise Financial, Inc. shareholders' equity $ 5,735 $ 6,212
Less: Accumulated other comprehensive income, net of tax   (98 )   252
Total Ameriprise Financial, Inc. shareholders' equity excluding AOCI 5,833 5,960
Less: Equity impacts attributable to the consolidated investment
entities
  1  
Adjusted operating equity $ 5,832 $ 5,960
 
Return on equity excluding AOCI 36.0 % 24.8 %
Adjusted operating return on equity excluding AOCI (3) 36.6 % 26.9 %

Adjusted operating return on equity excluding AOCI, unlocking,
mean reversion-related impacts and Tax Act impact

37.8 % 30.9 %
 

(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) After-tax is calculated using the statutory tax
rate of 21% in 2018 and 35% in 2017.

 

(3) 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 December 31,  

% Better/
(Worse)

2018   2017
Revenues
Management and financial advice fees $ 1,677 $ 1,721 (3 )%
Distribution fees 474 456 4
Net investment income 395 355 11
Premiums 363 359 1
Other revenues   299   303 (1 )
Total revenues 3,208 3,194
Banking and deposit interest expense   29   14 NM
Total net revenues 3,179 3,180
Expenses
Distribution expenses 910 893 (2 )
Interest credited to fixed accounts 175 147 (19 )
Benefits, claims, losses and settlement expenses 444 581 24
Amortization of deferred acquisition costs 142 78 (82 )
Interest and debt expense 64 53 (21 )
General and administrative expense   792   833 5
Total expenses 2,527 2,585 2
Pretax income 652 595 10
Income tax provision   113   418 73 %
Net income $ 539 $ 177 NM
NM Not Meaningful — variance equal to or greater than 100%
 
Ameriprise Financial, Inc.
Consolidated GAAP Results
 
(in millions, unaudited)   Year Ended December 31,  

% Better/
(Worse)

2018   2017
Revenues
Management and financial advice fees $ 6,776 $ 6,415 6 %
Distribution fees 1,877 1,757 7
Net investment income 1,596 1,509 6
Premiums 1,426 1,394 2
Other revenues   1,249   1,105 13
Total revenues 12,924 12,180 6
Banking and deposit interest expense   89   48 (85 )
Total net revenues 12,835 12,132 6
Expenses
Distribution expenses 3,637 3,397 (7 )
Interest credited to fixed accounts 674 656 (3 )
Benefits, claims, losses and settlement expenses 2,302 2,233 (3 )
Amortization of deferred acquisition costs 322 267 (21 )
Interest and debt expense 245 207 (18 )
General and administrative expense   3,171   3,158
Total expenses 10,351 9,918 (4 )
Pretax income 2,484 2,214 12
Income tax provision   386   734 47
Net income $ 2,098 $ 1,480 42 %

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