10-QPeriod: Q1 FY2007

AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2007

Filed May 9, 2007For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported solid financial results for the first quarter ending March 31, 2007, demonstrating revenue growth and improved profitability compared to the same period in the prior year. Total revenues increased by 6% to $2.06 billion, driven by strong performance in management, financial advice and service fees, and distribution fees. This growth reflects the company's strategic focus on less capital-intensive, fee-based products, evidenced by net inflows in wrap accounts and variable annuities. Net income rose by 14% to $165 million, or $0.68 per diluted share. The company continued its commitment to returning capital to shareholders with significant share repurchase authorizations, demonstrating confidence in its ongoing strategy. While the company incurred separation costs, its adjusted earnings highlight the underlying strength and growth trajectory of its core operations. Management remains focused on driving shareholder value through continued revenue and earnings growth, and maintaining a strong return on equity.

Key Highlights

  • 1Total revenues increased 6% to $2.06 billion for Q1 2007 compared to Q1 2006.
  • 2Net income grew 14% to $165 million, with diluted EPS rising to $0.68.
  • 3Management, financial advice and service fees increased by 11% to $791 million, driven by growth in fee-based businesses and strong net inflows in wrap accounts and variable annuities.
  • 4The company announced an additional $1 billion share repurchase authorization, underscoring its commitment to capital return to shareholders.
  • 5Owned, managed, and administered assets grew 6% year-over-year to $473.9 billion.
  • 6Separation costs, while present, are being managed as the company transitions fully from American Express, with adjusted earnings showing a 16% increase.
  • 7The company's strategic shift towards less capital-intensive, fee-based products is evident in the growth of its AA&I segment, particularly in wrap accounts and variable annuities.

Frequently Asked Questions

Revenue growth was primarily driven by increases in 'Management, financial advice and service fees' (up 11%) and 'Distribution fees' (up 14%). This was fueled by strong net inflows in fee-based products like wrap accounts and variable annuities, as well as continued advisor productivity and market appreciation.

Ameriprise Financial is actively returning capital through share repurchases. In March 2007, the company authorized an additional $1 billion for share repurchases. This demonstrates management's confidence in the company's financial position and future prospects.

Ameriprise Financial incurred $85 million in separation costs in Q1 2007. While these costs affect reported net income, the company also reports 'adjusted earnings' which exclude these non-recurring costs, showing a 16% increase year-over-year. This highlights the underlying operational performance of the business.

The company's total owned, managed, and administered assets increased by 6% to $473.9 billion. This growth was supported by significant net inflows in its fee-based offerings, such as wrap accounts and variable annuities, indicating a positive client reception to its product strategy.