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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ameriprise Financial Inc | NYSE:AMP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
3.39 | 0.78% | 435.33 | 436.34 | 431.76 | 432.94 | 238,482 | 21:01:31 |
Third quarter 2016 net income(1) per diluted share was $1.30Operating EPS was $1.37
Third quarter 2016 return on equity excluding AOCI was 19.0 percentOperating ROE excluding AOCI was 21.5 percent
Excluding annual unlocking(2), operating EPS was $2.29Operating ROE excluding AOCI was 23.8 percent
Ameriprise Financial, Inc. (NYSE: AMP) today reported third quarter 2016 net income(1) of $215 million, or $1.30 per diluted share. Operating earnings were $227 million, with operating earnings per diluted share of $1.37. Excluding the non-cash impact of annual unlocking(2) in both periods, operating earnings per diluted share increased 4 percent to $2.29 with operating earnings of $380 million in the quarter.
GAAP ResultsNet revenues of $3.0 billion increased 4 percent reflecting the cumulative impact of wrap net inflows, higher average equity markets and an impact from annual unlocking, partially offset by asset management outflows and lower client transactional activity.
Expenses of $2.8 billion increased 14 percent as a result of higher expenses related to unlocking as general and administrative expenses remained well controlled.
Operating ResultsOperating net revenues of $3.0 billion increased 3 percent. Excluding annual unlocking in both quarters, operating net revenues were essentially flat, reflecting the cumulative impact of wrap net inflows and higher average equity markets compared to the year ago, offset by the cumulative impact of asset management outflows and lower client transactional activity.
Operating expenses of $2.7 billion increased 16 percent. Excluding annual unlocking in both quarters, operating expenses increased 1 percent from higher distribution expenses and well controlled general and administrative expenses.
In the quarter, the company continued to deliver a strong return to shareholders through share repurchases and dividends of $502 million.
(1)
Net income represents net income attributable to Ameriprise Financial.(2)
Unlocking represents the company’s annual review of insurance and annuity valuation assumptions and model changes and the long term care review.“Ameriprise delivered solid results in the third quarter on an operating basis, led by Advice and Wealth Management,” said Jim Cracchiolo, chairman and chief executive officer.
“With good inflows in investment advisory accounts, retail client assets grew to a record high. Experienced advisors continue to move their practices to Ameriprise as our advice value proposition, level of support and capital strength are attractive in this environment. In Asset Management, retail flows have improved in the U.S., and the July volatility in the UK and Europe subsided in the quarter.”
“In a more volatile climate and period of change for the industry, we are managing expenses well and have a strong business to serve our clients and advisors while consistently delivering meaningful shareholder value.”
Ameriprise Financial, Inc.Third Quarter Summary
(in millions, except per share amounts, unaudited)
Quarter EndedSeptember 30,
Per Diluted ShareQuarter EndedSeptember 30,
2016 2015% Better/(Worse)
2016 2015% Better/(Worse)
Net income from continuing operations attributable to Ameriprise Financial
$ 215 $ 397 (46 )% $ 1.30 $ 2.17 (40 )%Adjustments, net of tax (1)
(see reconciliation on p. 14)
12 32 0.07 0.18 Operating earnings (2) $ 227 $ 429 (47 )% $ 1.37 $ 2.35 (42 )% Less: annual unlocking impact, net of tax (1) (153 ) 27 (0.92 ) 0.15 Operating earnings, excluding annual unlocking $ 380 $ 402 (5 )% $ 2.29 $ 2.20 4 % Weighted average common shares outstanding: Basic 164.0 180.4 Diluted 165.8 182.7(1) After-tax is calculated using the statutory tax rate of 35%.
(2) The company believes the presentation of operating earnings best represents the economics of the business. 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 of hedges to offset interest rate changes on unrealized gains or losses for certain investments; and income or loss from discontinued operations.
In the third quarter of the year, the company conducts its annual review of insurance and annuity valuation assumptions relative to current experience and management expectations. To the extent that expectations change as a result of this review, the company updates valuation assumptions and models and the impact is reflected as part of annual unlocking and the long term care review. As discussed in the segment commentary to follow, the continued low interest rate environment, as well as policyholder behavior impact on living benefit reserves, more than offset benefits from persistency on annuity contracts without living benefits and other model updates.
Catastrophe losses in the Auto and Home business were $29 million compared to $8 million a year ago. Catastrophe losses were $7 million in excess of our expectations for the third quarter.
Third quarter operating earnings also included the following after-tax items(1):
(in millions, except per share amounts, unaudited)
Quarter EndedSeptember 30,
Per Diluted ShareQuarter EndedSeptember 30,
2016 2015% Better/(Worse)
2016 2015% Better/(Worse)
Market Impact on DAC/DSIC 7 (20 ) NM 0.04 (0.11 ) NM Long term care claim reserve adjustment (19 ) 8 NM (0.11 ) 0.04 NM Life and health reinsurance premium correction —
(7
)
NM — (0.04 ) NM Auto & Home catastrophe losses (19 )(5
)
NM (0.11 ) (0.03 ) NM Auto & Home prior year reserve development 7 — NM 0.04 — NM DOL planning and implementation expenses (5 ) — NM (0.03 ) — NM Affordable housing investment adjustment (5 ) — NM (0.03 ) — NM Total items $ (34 ) $ (24 ) (42 )% $ (0.20 ) $ (0.14 ) (43 )%(1) All items are shown after-tax using the statutory tax rate of 35%.
NM Not Meaningful — variance equal to or greater than 100%
Third Quarter 2016 Business Highlights
Ameriprise Financial, Inc.Advice & Wealth Management Segment Operating Results
(in millions, unaudited) Quarter Ended September 30,% Better/(Worse)
2016 2015 Advice & Wealth Management Net revenues $ 1,272 $ 1,245 2 % Expenses 1,041 1,026 (1 )% Pretax operating earnings $ 231 $ 219 5 % Pretax operating margin 18.2 % 17.6 % Quarter Ended September 30,% Better/(Worse)
2016 2015 Retail client assets (billions) $ 476 $ 433 10 % Wrap net flows (billions) $ 2.8 $ 3.0 (8 )% Operating net revenue per branded advisor (trailing 12 months - thousands) $ 511 $ 514 (1 )%Advice & Wealth Management pretax operating earnings increased 5 percent to $231 million driven by growth in assets and higher earnings on cash balances. Third quarter 2016 pretax operating margin increased to 18.2 percent from 17.6 percent a year ago.
Operating net revenues of $1.3 billion increased 2 percent from wrap account net inflows and higher earnings on cash balances. Client asset growth remains good as the company continues to see asset growth in fee-based wrap accounts outpacing growth in brokerage account balances.
Operating expenses increased 1 percent to $1.0 billion primarily from higher distribution expenses related to increased wrap fees. General and administrative expenses were down 1 percent compared to a year ago. The company is dedicating significant internal resources to prepare for the Department of Labor fiduciary rule and maintaining targeted growth investments.
Total retail client assets increased to $476 billion, driven by client net inflows and new client acquisition, as well as market appreciation. Wrap net inflows were $2.8 billion in the quarter, which contributed to a 14 percent year-over-year increase in wrap balances to $197 billion. Total advisors were 9,747 reflecting strong retention and another successful recruiting quarter, with 80 experienced advisors moving their practices to Ameriprise. Operating net revenue per advisor decreased 1 percent on a trailing 12-month basis to $511,000.
Ameriprise Financial, Inc.Asset Management Segment Operating Results
(in millions, unaudited) Quarter Ended September 30,% Better/(Worse)
2016 2015 Asset Management Net revenues $ 740 $ 782 (5 )% Expenses 585 602 3 % Pretax operating earnings $ 155 $ 180 (14 )% Pretax operating margin 20.9 % 23.0 % Adjusted net pretax operating margin (1) 35.8 % 39.1 % Quarter Ended September 30,% Better/(Worse)
2016 2015 Total segment AUM (billions) $ 468 $ 471 (1 )% Total segment net flows (billions) $ (4.3 ) $ (7.4 ) 41 % Global Retail net flows, excl. former parent flows $ (1.9 ) $ (3.5 ) 45 % Global Institutional net flows, excl. former parent flows $ (2.0 ) $ (1.3 ) (53 )% Former parent company related flows $ (1.4 ) $ (2.6 ) 44 % Inflows from acquisitions $ 1.0 $ — NM(1) See reconciliation on page 16
NM Not Meaningful — variance equal to or greater than 100%Asset Management pretax operating earnings decreased 14 percent to $155 million, primarily from the cumulative impact of net outflows. The decline in the British pound resulted in lower revenues and expenses but had a minimal impact to pretax operating earnings.
Third quarter pretax operating margin was 20.9 percent compared to 23.0 percent a year ago. Adjusted net pretax operating margin was 35.8 percent compared to 39.1 percent a year ago.
Operating net revenues declined to $740 million compared to a year ago, reflecting the impact of lower asset levels and foreign exchange rates. AUM declined 1 percent to $468 billion from net outflows and unfavorable foreign exchange rates, partially offset by higher equity markets.
Operating expenses of $585 million declined 3 percent due to well managed general and administrative expenses and lower distribution expenses.
Net outflows were $4.3 billion in the quarter compared to outflows of $7.4 billion a year ago. Global retail outflows, excluding former parent related assets, were $1.9 billion reflecting improvement in intermediary and RIA distribution despite continued industry pressure on active equity strategies in the U.S., as well as lower retail activity among UK and European investors in July following the UK referendum. Global institutional outflows were $2 billion, including $0.7 billion from Acorn strategies. Funding of global institutional mandates slowed in the quarter and is expected to improve in the fourth quarter. In addition, flows in the quarter included $1 billion of inflows related to the acquisition of Emerging Global Advisors and $1.4 billion of former parent related outflows, primarily from legacy insurance mandates.
Ameriprise Financial, Inc.Annuities Segment Operating Results
(in millions, unaudited) Quarter Ended September 30,% Better/(Worse)
2016 2015 Annuities Net revenues $ 631 $ 632 — Expenses 699 456 (53 )% Pretax operating earnings $ (68 ) $ 176 NM Variable Annuities: Pretax operating earnings $ (97 ) $ 151 NM Annual unlocking (220 ) 64 NM Pretax operating earnings, excluding annual unlocking 123 87 41 % Fixed Annuities: Pretax operating earnings 29 25 16 % Annual unlocking 5 2 NM Pretax operating earnings, excluding annual unlocking 24 23 4 % Total pretax operating earnings, excluding annual unlocking $ 147 $ 110 34 % Item included in operating earnings: Market impact on DAC and DSIC (mean reversion) $ 9 $ (29 ) NM Quarter Ended September 30,% Better/(Worse)
2016 2015 Variable annuity ending account balances (billions) $ 75.9 $ 72.8 4 % Variable annuity net flows (millions) $ (650 ) $ (259 ) NM Fixed annuity ending account balances (billions) $ 10.2 $ 10.9 (7 )% Fixed annuity net flows (millions) $ (240 ) $ (375 ) 36 % NM Not Meaningful — variance equal to or greater than 100%Annuities pretax operating loss was $68 million compared to earnings of $176 million a year ago, primarily reflecting the unfavorable unlocking. Excluding unlocking in both periods, operating earnings were $147 million, up 34 percent, reflecting a favorable market impact on DAC and DSIC.
Variable annuity operating loss was $97 million, reflecting an unfavorable $220 million annual unlocking impact, which was primarily driven by continued low interest rates and policyholder behavior. Variable annuity cash sales declined to $1.2 billion in the quarter, which is consistent with recent industry trends. Account balances increased 4 percent to $76 billion, reflecting market appreciation, partially offset by net outflows.
Fixed annuity operating earnings increased to $29 million from $25 million, as a small benefit from annual unlocking was partially offset by continued older policy lapses and the interest rate environment remains challenging for investment yields and new product sales.
Ameriprise Financial, Inc.Protection Segment Operating Results
(in millions, unaudited) Quarter Ended September 30,% Better/(Worse)
2016 2015 Protection Net revenues $ 679 $ 586 16 % Expenses 668 561 (19 )% Pretax operating earnings $ 11 $ 25 (56 )% Annual unlocking – other life and health 17 (24 ) NM Annual long term care review (37 ) — NM Pretax operating earnings, excluding unlocking $ 31 $ 49 (37 )% Items included in operating earnings: Market impact on DAC (mean reversion) $ 1 $ (2 ) NM Long term care claim reserve adjustment (29 ) 13 NM Life and health reinsurance premium correction — (11 ) NM Auto and Home catastrophe losses (29 ) (8 ) NM Auto and Home prior year reserve development 10 — NM Total protection impact $ (47 ) $ (8 ) NM Quarter Ended September 30,% Better/(Worse)
2016 2015 Life insurance in force (billions) $ 196 $ 196 — VUL/UL ending account balances (billions) $ 11.5 $ 10.9 5 % Auto & Home policies in force (thousands) 950 958 (1 )% NM Not Meaningful — variance equal to or greater than 100%Protection pretax operating earnings were $11 million compared to $25 million a year ago.
Life and Health insurance earnings, excluding long term care and the items noted above, increased from a year ago. VUL/UL cash sales declined to $70 million and VUL/UL account balances increased 5 percent.
Long term care had an operating loss of $73 million in the quarter driven by $66 million from two items: a $37 million impact primarily from loss recognition and an unfavorable $29 million correction related to a claim utilization assumption. The loss recognition related to low interest rates and higher reinsurance expense. Excluding these items, operating results were within expectations.
Auto & Home had a loss of $8 million driven by higher than anticipated catastrophe losses. The quarter included a $10 million favorable prior year reserve development reflecting improved trends from changes made to underwriting, claims and pricing. Management will continue to evaluate prior year and 2016 emerging loss experience to determine future actions.
Ameriprise Financial, Inc.Corporate & Other Segment Operating Results
(in millions, unaudited) Quarter Ended September 30,% Better/(Worse)
2016 2015 Corporate & Other Net revenues $ (15 ) $ (4 ) NM Expenses 57 38 (50 )% Pretax operating loss $ (72 ) $ (42 )(71
)% Items included in operating earnings: DOL planning and implementation expenses $ (7 ) $ — NM Affordable housing investment adjustment (7 ) — NM Total corporate impact $ (14 ) $ — NM NM Not Meaningful — variance equal to or greater than 100%Corporate & Other pretax operating loss was $72 million for the quarter compared to a $42 million loss a year ago. Included in the current quarter’s results was an adjustment for an affordable housing investment to align it with the remaining tax benefit cash flows that lowered net investment income by $7 million. Results in the quarter included $7 million of incremental expenses related to the planning and implementation of the Department of Labor’s fiduciary standard.
Taxes
The third quarter 2016 operating effective tax rate was 11.7 percent reflecting lower earnings in the quarter related to the unfavorable unlocking as well as discrete tax items, primarily from the finalization of the 2015 tax return. Excluding the impact from unlocking, the operating effective tax rate was 22.8 percent. The operating effective tax rate was 23.1 percent a year ago.
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 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:
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, 2015 available at ir.ameriprise.com and the “Risk Factors” discussion included in Part II, Item 1A and elsewhere in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2016 and March 31, 2016.
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 September 30, 2016. For information about Ameriprise Financial entities, please refer to the Third Quarter 2016 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.
Reconciliation Tables
Ameriprise Financial, Inc.Reconciliation Table: Earnings
Quarter EndedSeptember 30,
Per Diluted ShareQuarter EndedSeptember 30,
(in millions, except per share amounts, unaudited) 2016 2015 2016 2015 Net income attributable to Ameriprise Financial $ 215 $ 397 $ 1.30 $ 2.17 Less: Net income (loss) attributable to consolidated investment entities — — — — Add: Integration/restructuring charges(1) — 3 — 0.02Add: Market impact on variable annuity guaranteed benefits(1)
37 5 0.22 0.03 Add: Market impact on indexed universal life benefits(1) (7 ) 1 (0.04 ) 0.01 Add: Market impact of hedges on investments(1) (5 ) 31 (0.03 ) 0.17 Add: Net realized investment (gains) losses(1) (6 ) 10 (0.04 ) 0.05 Add: Tax effect of adjustments (2) (7 ) (18 ) (0.04 ) (0.10 ) Operating earnings 227 429 1.37 2.35 Less: Pretax impact of unlocking (235 ) 42 (1.42 ) 0.23 Less: Tax effect of unlocking (2) 82 (15 ) 0.50 (0.08 ) Operating earnings excluding unlocking $ 380 $ 402 $ 2.29 $ 2.20 Weighted average common shares outstanding: Basic 164.0 180.4 Diluted 165.8 182.7(1) Pretax operating adjustment.
(2) Calculated using the statutory tax rate of 35%.
Ameriprise Financial, Inc.Reconciliation Table: Total Net Revenues
Quarter EndedSeptember 30,
(in millions, unaudited) 2016 2015 Total net revenues $ 2,998 $ 2,886 Less: CIEs revenue 27 43 Less: Net realized investment gains (losses) 6 (10 ) Less: Market impact on indexed universal life benefits 6 9 Less: Market impact of hedges on investments 5 (31 ) Operating total net revenues 2,954 2,875 Less: Unlocking 64 (8 ) Operating total net revenues excluding unlocking $ 2,890 $ 2,883Ameriprise Financial, Inc.Reconciliation Table: Total Expenses
Quarter EndedSeptember 30,
(in millions, unaudited) 2016 2015 Total expenses $ 2,760 $ 2,423 Less: CIEs expenses 27 88 Less: Integration/restructuring charges — 3 Less: Market impact on variable annuity guaranteed benefits 37 5 Less: Market impact on indexed universal life benefits (1 ) 10 Operating expenses 2,697 2,317 Less: Unlocking 299 (50 ) Operating expenses excluding unlocking $ 2,398 $ 2,367Ameriprise Financial, Inc.Reconciliation Table: Pretax Operating Earnings
Quarter EndedSeptember 30,
(in millions, unaudited) 2016 2015 Operating total net revenues $ 2,954 $ 2,875 Operating expenses 2,697 2,317 Pretax operating earnings $ 257 $ 558Ameriprise Financial, Inc.Reconciliation Table: General and Administrative Expense
Quarter EndedSeptember 30,
(in millions, unaudited) 2016 2015 General and administrative expense $ 731 $ 744 Less: CIEs expenses 2 20 Less: Integration/restructuring charges — 3 Operating general and administrative expense $ 729 $ 721Ameriprise Financial, Inc.Reconciliation Table: Effective Tax Rate
Quarter Ended September 30, 2016 (in millions, unaudited) GAAP Operating Pretax Income $ 238 $ 257 Income tax provision $ 23 $ 30 Effective tax rate 9.7 % 11.7 % Ameriprise Financial, Inc. Reconciliation Table: Effective Tax Rate Quarter Ended September 30, 2016 (in millions, unaudited) Operating Pretax Income $ 257 Less: Pretax income attributable to unlocking (235 ) Pretax income excluding unlocking $ 492 Income tax provision $ 30 Less: Income tax provision attributable to unlocking (82 ) Income tax provision excluding unlocking $ 112 Effective tax rate 11.7 % Effective tax rate excluding unlocking 22.8 %Ameriprise Financial, Inc.Reconciliation Table: Effective Tax Rate
Quarter Ended September 30, 2015 (in millions, unaudited) GAAP Operating Pretax Income $ 463 $ 558 Less: Pretax income attributable to noncontrolling interests (45 ) — Pretax income excluding consolidated investment entities $ 508 $ 558 Income tax provision $ 111 $ 129 Effective tax rate 24.1 % 23.1 % Effective tax rate excluding noncontrolling interests 21.9 % 23.1 %Ameriprise Financial, Inc.Reconciliation Table: Asset Management Adjusted Net Pretax Operating Margin
Quarter Ended September 30,(in millions, unaudited)
2016
2015 Operating total net revenues $ 740 $ 782 Less: Distribution pass through revenues 211 214 Less: Subadvisory and other pass through revenues 85 95 Adjusted operating revenues $ 444 $ 473 Pretax operating earnings $ 155 $ 180 Less: Operating net investment income 1 1 Add: Amortization of intangibles 5 6 Adjusted operating earnings $ 159 $ 185 Pretax operating margin 20.9 % 23.0 % Adjusted net pretax operating margin 35.8 % 39.1 %Ameriprise Financial, Inc.Reconciliation Table: Return on Equity (ROE) Excluding AccumulatedOther Comprehensive Income “AOCI”
Twelve Months EndedSeptember 30,
(in millions, unaudited)
2016 2015 Net income attributable to Ameriprise Financial $ 1,271 $ 1,630 Less: Loss from discontinued operations, net of tax — (1 )Net income from continuing operations attributable to Ameriprise Financial, as reported
1,271 1,631 Less: Adjustments (1) (154 ) (84 ) Operating earnings 1,425 1,715 Less: Unlocking, net of tax (2) (153 ) 27 Operating earnings excluding unlocking $ 1,578 $ 1,688 Total Ameriprise Financial, Inc. shareholders’ equity $ 7,165 $ 8,017 Less: Accumulated other comprehensive income, net of tax 478 615 Total Ameriprise Financial, Inc. shareholders’ equity excluding AOCI 6,687 7,402 Less: Equity impacts attributable to the consolidated investment entities 62 250 Operating equity $ 6,625 $ 7,152 Return on equity excluding AOCI 19.0 % 22.0 % Operating return on equity excluding AOCI (3) 21.5 % 24.0 % Operating return on equity excluding AOCI and unlocking 23.8 % 23.6 %(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 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 35%.
(2) After-tax is calculated using the statutory tax rate of 35%.
(3) 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 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 35%.
Ameriprise Financial, Inc.Consolidated GAAP Results
(in millions, unaudited) Quarter Ended September 30,% Better/(Worse)
2016 2015 Revenues Management and financial advice fees $ 1,464 $ 1,465 — % Distribution fees 455 451 1 Net investment income 387 321 21 Premiums 374 360 4 Other revenues 330 296 11 Total revenues 3,010 2,893 4 Banking and deposit interest expense 12 7 (71 ) Total net revenues 2,998 2,886 4 Expenses Distribution expenses 798 806 1 Interest credited to fixed accounts 161 171 6 Benefits, claims, losses and settlement expenses 855 471 (82 ) Amortization of deferred acquisition costs 163 133 (23 ) Interest and debt expense 52 98 47 General and administrative expense 731 744 2 Total expenses 2,760 2,423 (14 ) Pretax income 238 463 (49 ) Income tax provision 23 111 79 Net income 215 352 (39 )Less: Net income attributable to noncontrolling interests
— (45 ) NM Net income attributable to Ameriprise Financial $ 215 $ 397 (46 ) NM Not Meaningful — variance equal to or greater than 100%
View source version on businesswire.com: http://www.businesswire.com/news/home/20161025006639/en/
Ameriprise FinancialInvestor Relations:Alicia A. Charity, 612-671-2080alicia.a.charity@ampf.comorChad J. Sanner, 612-671-4676chad.j.sanner@ampf.comorMedia Relations:Paul W. Johnson, 612-671-0625paul.w.johnson@ampf.com
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