10-QPeriod: Q2 FY2007

AMERIPRISE FINANCIAL INC Quarterly Report for Q2 Ended Jun 30, 2007

Filed August 6, 2007For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported strong financial results for the second quarter and first half of 2007. Total revenues increased by 6% year-over-year to $2.2 billion for the quarter, driven by a significant 20% rise in management, financial advice, and service fees, along with a 28% increase in distribution fees. This growth reflects continued strong net inflows in fee-based products like wrap accounts and variable annuities, and positive market appreciation. Net income saw a substantial 39% increase to $196 million for the quarter, with diluted earnings per share rising to $0.81 from $0.57 in the prior year period. The company continues its strategic shift towards less capital-intensive, fee-based products, which is contributing to improved profitability and a growing focus on owned, managed, and administered assets that reached $483.9 billion. Despite ongoing separation costs from its spin-off from American Express, Ameriprise demonstrates robust operational performance and strategic execution.

Key Highlights

  • 1Total revenues for Q2 2007 increased 6% to $2.2 billion compared to Q2 2006.
  • 2Net income for Q2 2007 rose 39% to $196 million, with diluted EPS increasing to $0.81.
  • 3Management, financial advice, and service fees grew 20% year-over-year, indicating strength in fee-based services.
  • 4Distribution fees increased 28% for the quarter, boosted by strong advisor cash sales.
  • 5The company reported strong net inflows in wrap accounts and annuity variable accounts, highlighting a strategic shift towards fee-based products.
  • 6Owned, managed, and administered assets grew 13% to $483.9 billion.
  • 7Despite separation costs, adjusted earnings per diluted share increased by 24% for the quarter.

Frequently Asked Questions

The primary driver of revenue growth was the significant increase in fee-based businesses, specifically management, financial advice, and service fees (up 20%) and distribution fees (up 28%). This was largely due to strong net inflows in wrap accounts and annuity variable accounts, as well as market appreciation and increased advisor cash sales.

Net income for the second quarter of 2007 increased by 39% to $196 million, up from $141 million in the same period of 2006. Diluted earnings per share rose to $0.81 from $0.57, representing a 42% increase.

Ameriprise is strategically shifting towards less capital-intensive, fee-based products. This is evidenced by strong net inflows in wrap accounts and annuity variable accounts, and a decline in fixed annuity and certificate balances. This strategic shift is contributing to increased fee revenues and improved profitability.

Ameriprise incurred $63 million in separation costs during the second quarter of 2007, down from $84 million in the prior year period. The company expects to incur all remaining separation costs in the second half of 2007. Excluding these costs, adjusted earnings per diluted share increased by 24% for the quarter.