MINNEAPOLIS–(BUSINESS WIRE)–Ameriprise Financial, Inc. (NYSE: AMP):

The company believes the presentation of adjusted operating earnings excluding annual unlocking best represents the economics of the business. GAAP results were negatively impacted from substantial market volatility on variable annuity hedges and change in our credit spreads. In the table above, management provides both quarterly and year-to-date GAAP and adjusted operating results, excluding the non-cash impact of unlocking, to show the underlying performance of the business both in the quarter and for the year-to-date to facilitate a more meaningful trend analysis.

Advice & Wealth Management pretax adjusted operating earnings were $320 million. The year-over-year decline was driven by $116 million of lower revenue from the reduction in interest rates, primarily the Federal Funds effective rate, partially offset by strong wrap net inflows and continued expense management. Excluding the decline in short-term interest rates, adjusted operating earnings increased 14 percent. Pretax adjusted operating margin was 19.2 percent, a 160-basis point sequential improvement.

Adjusted operating net revenues were $1.7 billion and included $116 million of lower revenue from the reduction in interest rates. Excluding the decline in short-term interest rates, revenues increased 6 percent reflecting strong wrap net inflows and market appreciation. On a sequential basis, revenues increased 8 percent.

Total expenses were $1.3 billion. General and administrative expense was well managed and increased 3 percent. Excluding the bank, general and administrative expenses increased 2 percent, which was in line with expectations as planned investments for future growth were offset by expense reengineering.

The company continues to meet client needs efficiently and effectively. Total client assets grew 9 percent to $667 billion. Organic growth remained very strong with wrap flows of $5.2 billion in the quarter. Cash balances remain elevated at $39.4 billion with a substantial opportunity for clients to put cash back to work in the future.

Adjusted operating net revenue per advisor on a trailing 12-month basis was impacted by low interest rates and increased 3 percent to $668,000. Excluding the decline in short-term interest rates, adjusted net revenue per advisor increased 8 percent. Total advisors were 9,905, with strong advisor retention and experienced advisor recruiting. Experienced advisor recruiting hit a three-year high with 99 productive advisors added in the quarter.

Asset Management pretax adjusted operating earnings were $198 million, up 14 percent, reflecting the cumulative impact of improved flows, well managed expenses and market appreciation, as well as $18 million of lower performance fees than the prior year period. The net pretax adjusted operating margin was 43.9 percent.

Adjusted operating revenues were unchanged year-over-year at $739 million as the benefit from the cumulative impact of improved flows and higher markets was offset by higher performance fees in the prior year period. Excluding performance fee revenue of $33 million in the year ago quarter, revenues increased 4 percent. The overall fee rate improved sequentially to over 52 basis points as higher-fee gross sales more than offset lower-fee redemptions.

Adjusted operating expenses declined 5 percent. General and administrative expenses remain well managed. Expenses in the prior year period included elevated performance fee compensation.

Flows in the quarter were strong, a continuation of the trends in the first half of 2020, with wins in higher-fee mandates. In the quarter, net outflows were $1.6 billion, which included $0.6 billion of former parent outflows and $4.4 billion of outflows related to two low-fee institutional redemptions. Excluding these items, net inflows were $3.4 billion, a $3.4 billion improvement year-over-year.

• Retail net inflows were $1.7 billion, with $1.5 billion of net inflows in the U.S. and $0.2 billion of net inflows in EMEA with strong performance, distribution effectiveness and improved retail sentiment in EMEA.
• Global institutional net inflows were $1.7 billion, with strong gross sales across multiple regions and product offerings.

   

Retirement & Protection Solutions pretax adjusted operating earnings excluding unlocking increased $25 million to $206 million, from higher ending market levels, as well as lower surrenders and withdrawals that reduced the amortization of deferred acquisition costs. Protection claims remained within expected ranges. Unlocking was an unfavorable $295 million, substantially driven by changes in interest rate assumptions.

Sales of retirement products improved 2 percent year-over-year to $1.1 billion. Retirement sales without living benefit guarantees more than doubled to 56 percent of sales up from 25 percent a year ago, driven by our recently launched, lower-risk structured product in combination with our RAVA 5 product without living benefit guarantees. This sales trend is expected to continue over time and meaningfully shift the mix of the business to lower-risk products that do not have living benefit guarantees. Annuity net amount at risk as a percent of account values was 0.8 percent for living benefits and 0.2 percent for death benefits, which we believe is one of the lowest among major variable annuity writers, reflecting the high quality of the book.

Sales of protection products declined 30 percent from a year ago with an overall product mix shift that is consistent with our focused approach. Sales of higher-margin accumulation VUL products increased 58 percent and sales of indexed UL products declined 68 percent as expected given pricing changes made to reflect low interest rates.

Corporate & Other pretax adjusted operating loss was $58 million, a $15 million improvement from the prior year period from lower project expense.

Long term care pretax adjusted operating earnings excluding unlocking was $6 million. The unlocking was primarily interest rate related with limited changes to assumptions regarding morbidity, mortality and lapse, which was in line with management expectations.

Fixed annuities pretax adjusted operating loss excluding unlocking was $3 million. The company discontinued sales of fixed annuities and fixed indexed annuities in the second quarter of 2020 and the block was placed into run-off.

Taxes

The third quarter adjusted operating effective tax rate was 18.9 percent. On a year-to-date basis, the adjusted operating effective tax rate was 16.8 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 approximately 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors’ financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com.

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

Forward-Looking Statements

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

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

• statements about the expected trend in the shift of the retirement product sales business to lower risk products without living benefit guarantees over time;

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

• statements of assumptions underlying such statements.

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

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management cautions readers to carefully consider the risks described in the “Risk Factors” discussion under Part 1, Item 1A of and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019, Part 1, Item 1A of and elsewhere in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and subsequent Quarterly Reports on Form 10-Q, available at ir.ameriprise.com. Management undertakes no obligation to update publicly or revise any forward-looking statements.

The financial results discussed in this news release represent past performance only, which may not be used to predict or project future results. The financial results and values presented in this news release and the below-referenced Statistical Supplement are based upon asset valuations that represent estimates as of the date of this news release and may be revised in the company’s Form 10-Q for the quarter ended September 30, 2020. For information about Ameriprise Financial entities, please refer to the Third Quarter 2020 Statistical Supplement available at ir.ameriprise.com and the tables that follow in this news release.

Ameriprise Financial announces financial and other information to investors through the company’s investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this release or in any other report or document the company furnishes or files with the SEC.