Ameriprise Financial Reports Second Quarter 2022 Results

Ameriprise Financial, Inc. (NYSE: AMP):

Current quarter GAAP results included $14 million of integration costs from the acquisition of BMO EMEA. GAAP results in the prior year quarter were negatively impacted by market changes that affected the valuation of derivatives.

Advice & Wealth Management adjusted operating net revenue grew 4 percent and pretax adjusted operating earnings increased 16 percent as client net inflows and higher interest rates more than offset lower transactional activity and market depreciation. Higher cash balances benefited from the initial lift from rising interest rates, which is expected to build more meaningfully over time. Pretax adjusted operating margin was 23.9 percent, up 250 basis points, reflecting our strategic focus on profitable growth, as well as the initial benefit to revenues from higher interest rates.

Distribution expenses declined 1 percent as market depreciation more than offset organic growth. General and administrative and other expense increased 4 percent, primarily from higher volume-related expense over the past year.

Total client assets declined 9 percent to $735 billion reflecting 15 percent market depreciation, which was partially offset by client inflows. Total client net flows were $8.6 billion in the quarter, a strong result in the face of volatile markets. Organic growth remained solid despite market dislocation and was driven by increased new client acquisition, continued experienced advisor recruiting and deepening relationships from existing clients. Wrap flows declined to $6.2 billion and transactional activity was 10 percent lower as clients remained defensively positioned and held higher cash balances. Cash balances increased 21 percent to $47.4 billion, which represents a significant revenue tailwind as interest rates rise, as well as an opportunity for clients to put cash back to work in the future when volatility subsides.

Adjusted operating net revenue per advisor on a trailing 12-month basis was $814,000, up 11 percent, from enhanced productivity and business growth. Total advisors increased 2 percent to 10,245, reflecting excellent advisor retention, as well as the addition of 99 experienced advisors in the quarter.

Asset Management pretax adjusted operating earnings declined 12 percent to $222 million as a result of the negative impact from equity and bond market depreciation and foreign exchange rates. Adjusted operating revenues were $881 million, unchanged from the prior year, as the addition of the BMO business was offset by the negative impacts associated with market depreciation and net outflows. Net pretax adjusted operating margin was 38.5 percent.

Distribution expenses decreased 11 percent primarily from market depreciation. General and administrative and other expenses grew 18 percent, driven by the addition of the BMO business partially offset by continued expense discipline and foreign exchange. Excluding the BMO business, general and administrative expenses declined 6 percent.

Total assets under management increased 1 percent to $598 billion from the addition of the BMO business offset by market depreciation and foreign exchange translation. Long term investment performance remained strong with more than 75 percent of funds above median on an asset-weighted basis over 3-, 5- and 10-year time periods across equity, fixed income and asset allocation strategies.

In the quarter, net outflows were $3.1 billion and included $1.2 billion of outflows related to legacy insurance partners. Institutional flows remained strong and partially offset elevated retail outflows in the quarter.

• Retail net outflows were $5.8 billion. In North America, there were outflows in equity and fixed income strategies from market volatility. In EMEA, outflows persisted as investor sentiment remains weak from higher interest rates and geopolitical strain.

• Global institutional net inflows were $3.9 billion primarily from fixed income and liability-driven investing mandates.

   

Retirement & Protection Solutions pretax adjusted operating earnings were $179 million, down 2 percent from last year, primarily from market depreciation. Overall claims remain within expected ranges.

Retirement & Protection Solutions sales decreased 29 percent to $1.2 billion, primarily from volatile markets and management actions to optimize our business mix.

• Protection sales decreased 23 percent to $65 million related to market volatility. The bulk of sales remain in higher-margin accumulation VUL products.

• Variable annuity sales decreased 29 percent to $1.1 billion reflecting the industry slowdown due to market dislocation in the quarter, as well as the discontinuation of sales with living benefit riders announced at year-end, which was completed in June. Sales of structured variable annuities increased 3 percent compared to a year ago.

Total Corporate & Other pretax adjusted operating loss was $53 million.

Corporate & Other, excluding Closed Blocks, pretax adjusted operating loss was $48 million, benefiting from lower compensation expense related to Ameriprise share price depreciation. Results in the prior year period included $7 million of affordable housing impairments.

Long Term Care pretax adjusted operating loss was in line with expectations at $1 million.

Fixed Annuities pretax adjusted operating loss was in line with expectations at $4 million.

Taxes

The operating effective tax rate increased to 20.8 percent for the second quarter and 19.0 percent on a year-to-date basis. In the second half of the year, the effective tax rate is expected to be in the 20 to 21 percent range with an expected full year operating effective tax rate of approximately 20 percent.

About Ameriprise Financial

At Ameriprise Financial, we have been helping people feel confident about their financial future for more than 125 years. With extensive advisory, asset management and insurance capabilities and a nationwide network of over 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors' financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com.

Ameriprise Financial Services, LLC offers financial planning services, investments, insurance and annuity products. Columbia Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA and managed by Columbia Management Investment Advisers, LLC. Threadneedle International Limited, Columbia Threadneedle Asset Managers Limited, Columbia Threadneedle (EM) Investments Limited, and Pyrford International Ltd, are SEC- and FCA-registered investment adviser affiliates of Columbia Management Investment Advisers, LLC based in the U.K. RiverSource insurance and annuity products are issued by RiverSource Life Insurance Company, and in New York only by RiverSource Life Insurance Co. of New York, Albany, New York. Only RiverSource Life Insurance Co. of New York is authorized to sell insurance and annuity products in the state of New York. These companies are part of Ameriprise Financial, Inc. CA License #0684538. RiverSource Distributors, Inc. (Distributor), Member FINRA.

Non-GAAP Financial Measures

The company believes the presentation of adjusted operating earnings and other non-GAAP financial measures, and the corresponding ratios, best represents the underlying performance of our core operations and facilitates a more meaningful trend analysis without the distortion of various adjustment items. Management uses non-GAAP financial measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors and to provide a valuable perspective for investors. These non-GAAP financial measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures. Non-GAAP financial measure reconciliations can be found on the subsequent pages.

Forward-Looking Statements

This news release contains forward-looking statements that reflect management’s plans, estimates and beliefs. Actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include:

• statements of the company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, general and administrative costs, consolidated tax rate, return of capital to shareholders, and excess capital position and financial flexibility to capture additional growth opportunities;

• other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets;

• statements estimating the expected second half of the year and full year operating effective tax rate and

• statements of assumptions underlying such statements.

The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “project,” ”continue,” “able to remain”, “resume,” “deliver,” “develop,” “evolve,” “drive,” ”enable,” “flexibility,” “commitment,” “scenario,” “case,” “appear,” “expands” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management cautions readers to carefully consider the risks described in the “Risk Factors” discussion under Part 1, Item 1A of and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2021 available at ir.ameriprise.com. Management undertakes no obligation to update publicly or revise any forward-looking statements.

The financial results discussed in this news release represent past performance only, which may not be used to predict or project future results. The financial results and values presented in this news release are based upon asset valuations that represent estimates as of the date of this news release and may be revised in the company’s Form 10-Q for the period ended June 30, 2022.

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.