10-QPeriod: Q1 FY2010

AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 4, 2010For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported a strong first quarter for 2010, with net income attributable to Ameriprise Financial increasing by 65% to $214 million, or $0.81 per diluted share, compared to $130 million, or $0.58 per diluted share, in the prior year period. This robust performance was driven by a significant increase in total net revenues, up 24% to $2.1 billion (excluding consolidated investment entities), fueled by market appreciation in assets under management and positive net inflows across various segments. The company's Advice & Wealth Management segment saw a substantial recovery, with pretax income swinging from a loss of $61 million to a gain of $51 million, largely due to improved market conditions and increased wrap account assets. The Asset Management segment also demonstrated strong growth, with pretax income rising to $18 million from a loss of $8 million, benefiting from higher management and financial advice fees. The Annuities segment, while experiencing a slight dip in pretax income to $120 million from $129 million, still delivered solid results, with net revenues up 22% driven by higher variable annuity fees. The Protection segment showed modest growth with pretax income increasing 6% to $119 million. The company also announced the completion of its acquisition of Columbia Management Group's long-term asset management business for approximately $1 billion, aimed at further enhancing its retail mutual fund and institutional management capabilities.

Financial Highlights

33 data points
Beta

Revenue

$2.29B

Net Income

$214.00M

9.3% Net Margin

EPS (Diluted)

$0.81

Total Assets

$122.38B

Cash & Equivalents

$4.82B

Free Cash Flow

$119.00M

Financial Statements
Beta
Revenue$2.29B
Operating Expenses$1.91B
Net Income$214.00M
EPS (Basic)$0.82
EPS (Diluted)$0.81
Shares Outstanding (Basic)260.80M
Shares Outstanding (Diluted)265.00M

Key Highlights

  • 1Net income attributable to Ameriprise Financial surged 65% to $214 million for the first quarter of 2010, compared to $130 million in the prior year.
  • 2Diluted earnings per share increased to $0.81 from $0.58 year-over-year.
  • 3Total net revenues (excluding consolidated investment entities) grew by 24% to $2.1 billion, driven by strong performance in asset-based fees and net inflows.
  • 4The Advice & Wealth Management segment returned to profitability, with pretax income of $51 million compared to a loss of $61 million in the prior year.
  • 5The company completed a significant acquisition of Columbia Management Group's asset management business for approximately $1 billion.
  • 6Total managed assets grew by 29% to $331.8 billion, reflecting market appreciation and increased client flows.
  • 7Ameriprise Financial maintained a strong liquidity position, with $4.8 billion in cash and cash equivalents at the end of the quarter.

Frequently Asked Questions

The significant increase in net income was primarily driven by higher asset-based revenues resulting from market appreciation and net inflows across the company's managed assets. Additionally, improved performance in the Advice & Wealth Management segment, which returned to profitability, and solid results from the Annuities and Protection segments contributed to the overall growth. The company also benefited from an increase in net investment income.

The acquisition of Columbia Management Group's long-term asset management business for approximately $1 billion was completed on April 30, 2010, after the reporting period. While the transaction was funded through cash on hand and is expected to enhance the company's retail mutual fund and institutional management businesses, its financial impact will be reflected in future reporting periods. The company did incur $12 million in pretax non-recurring acquisition and integration costs related to this transaction and other acquisitions during the first quarter of 2010.

Ameriprise Financial aims to increase shareholder value through on-average, over-time financial targets including net revenue growth (excluding consolidated investment entities) of 6% to 8%, earnings per diluted share growth of 12% to 15%, and return on equity (excluding consolidated investment entities) of 12% to 15%. The strong first quarter performance suggests positive momentum towards achieving these targets, particularly in earnings per share growth and net revenue growth, driven by market recovery and strategic initiatives.

Ameriprise Financial utilizes various strategies to manage market risk. The company actively manages its investment portfolio, including Available-for-Sale securities, and employs derivatives for risk management purposes. For variable annuity products, the company uses various equity and interest rate derivatives to economically hedge exposure related to guaranteed minimum death benefits (GMDB), guaranteed minimum income benefits (GMIB), and guaranteed minimum withdrawal benefits (GMWB). The company also monitors and manages nonperformance risk associated with its liabilities, adjusting valuations as necessary. The report notes that a significant portion of unrealized losses on Available-for-Sale securities were attributable to credit spreads, which tightened during the quarter.