10-KPeriod: FY2020

AMERIPRISE FINANCIAL INC Annual Report, Year Ended Dec 31, 2020

Filed February 24, 2021For Securities:AMP

Summary

In 2020, Ameriprise Financial, Inc. demonstrated resilience amidst the COVID-19 pandemic, with total net revenues of $11.9 billion, a decrease of 8% from the prior year, primarily due to lower interest rates impacting net investment income and distribution fees. Despite the challenging economic environment, the company saw growth in its Advice & Wealth Management segment's net revenues, driven by higher wrap account net inflows and market appreciation. Net income for the year was $1.53 billion, a 19% decrease from 2019, impacted by significant unlocking and Long-Term Care (LTC) loss recognition, lower short-term interest rates, and a gain on disposal of business in the prior year. The company maintained a strong capital position, with total assets of $165.9 billion and total equity of $5.9 billion as of December 31, 2020. Ameriprise continued its commitment to shareholder returns through dividends and share repurchases, reflecting a strategy focused on its core growth areas of Advice & Wealth Management and Asset Management.

Financial Highlights

38 data points
Beta

Revenue

$11.96B

Net Income

$1.53B

12.8% Net Margin

EPS (Diluted)

$12.20

Total Assets

$165.88B

Cash & Equivalents

$8.90B

Free Cash Flow

$4.62B

Financial Statements
Beta
Revenue$11.96B
Operating Expenses$10.07B
Net Income$1.53B
EPS (Basic)$12.39
EPS (Diluted)$12.20
Shares Outstanding (Basic)123.80M
Shares Outstanding (Diluted)125.70M

Key Highlights

  • 1Total net revenues of $11.9 billion, down 8% year-over-year, impacted by lower interest rates and the sale of Auto & Home insurance business.
  • 2Net income of $1.53 billion, down 19% year-over-year, influenced by market conditions and specific accounting adjustments.
  • 3Assets Under Management and Administration (AUM/AUA) grew 13% to $1.1 trillion, driven by market appreciation and net inflows.
  • 4Advice & Wealth Management segment showed resilience with a 1% increase in net revenues and growth in advisory wrap account assets by 20%.
  • 5Asset Management segment's adjusted operating earnings increased 5% due to market appreciation and expense management, despite a slight dip in net revenues.
  • 6Retirement & Protection Solutions segment saw a 34% decrease in adjusted operating earnings, largely due to adverse impacts from interest rate assumptions and changes in business mix.
  • 7The company maintained strong capital and liquidity, ending the year with $6.8 billion in cash and cash equivalents and a significant capital buffer in its insurance subsidiaries.

Frequently Asked Questions

In 2020, Ameriprise Financial reported total net revenues of $11.9 billion, a decrease of 8% compared to 2019, primarily due to the impact of lower interest rates on net investment income and distribution fees, as well as the prior year's gain from the sale of the Auto & Home insurance business. Net income was $1.53 billion, a decrease of 19% from 2019, impacted by various factors including unlocking and LTC loss recognition, lower interest rates, and market conditions. Despite these challenges, the company's assets under management and administration grew to $1.1 trillion.

Ameriprise Financial acknowledged the significant economic and market disruptions caused by the COVID-19 pandemic. The company adapted by implementing a work-from-home protocol for most of its workforce and focusing on client service and employee safety. The pandemic impacted various segments, leading to reduced interest income from lower rates and volatility in equity markets, affecting fee income and investment performance. The company stated it was well-prepared to manage through the impacts due to strategic investments and strong risk management.

Ameriprise Financial is executing a strategy to shift its business mix towards lower capital, fee-based businesses. This is evidenced by the growth in the Advice & Wealth Management segment and the continued strength in Asset Management. The company's focus on financial planning and advice, coupled with its robust advisor network, positions it to capitalize on demographic trends driving demand for financial advice.

Ameriprise Financial maintained a strong liquidity and capital position throughout 2020. The company paid regular quarterly dividends to shareholders and continued its share repurchase program. As of December 31, 2020, the company had $2.3 billion remaining under its share repurchase authorization, indicating a commitment to returning capital to shareholders while investing in its core businesses.