10-QPeriod: Q1 FY2015

AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 4, 2015For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported first-quarter 2015 results showing a slight decrease in net income attributable to Ameriprise Financial shareholders to $393 million, or $2.08 per diluted share, compared to $400 million, or $2.01 per diluted share, in the prior year. Total net revenues saw a modest increase of 2% to $3.1 billion, driven primarily by higher management and financial advice fees and premiums. However, total expenses rose by 4%, largely due to increased distribution expenses and higher benefits, claims, losses, and settlement expenses. The company also saw a significant increase in long-term care reserves, impacting profitability. Despite these headwinds, Ameriprise maintained a strong liquidity position with $2.8 billion in cash and cash equivalents and saw growth in its Advice & Wealth Management segment's assets under management and administration. Key segments showed mixed performance. Advice & Wealth Management reported a 16% increase in operating earnings, benefiting from wrap account growth. Asset Management's operating earnings saw a modest increase, while Annuities experienced a slight decrease in operating earnings due to a one-time benefit in the prior year. The Protection segment's operating earnings declined, significantly impacted by an increase in long-term care reserves. Overall, the company navigated a challenging market environment characterized by low interest rates and market volatility, with a continued focus on expense management and strategic growth initiatives.

Financial Highlights

34 data points
Beta

Revenue

$3.06B

Net Income

$393.00M

12.8% Net Margin

EPS (Diluted)

$2.08

Total Assets

$151.45B

Cash & Equivalents

$2.81B

Free Cash Flow

$913.00M

Financial Statements
Beta
Revenue$3.06B
Operating Expenses$2.44B
Operating Income$393.00M
Net Income$393.00M
EPS (Basic)$2.11
EPS (Diluted)$2.08
Shares Outstanding (Basic)186.30M
Shares Outstanding (Diluted)189.10M

Key Highlights

  • 1Net income attributable to Ameriprise Financial decreased by 2% to $393 million in Q1 2015 compared to $400 million in Q1 2014.
  • 2Diluted earnings per share increased to $2.08 in Q1 2015 from $2.01 in Q1 2014.
  • 3Total net revenues increased by 2% to $3.1 billion, driven by higher management and financial advice fees and premiums.
  • 4Total expenses increased by 4% to $2.4 billion, primarily due to higher distribution expenses and benefits, claims, losses, and settlement expenses.
  • 5The company reported a $32 million increase in Long-Term Care (LTC) reserves in Q1 2015.
  • 6Assets under management and administration (AUM/AUA) increased by 4% to $814.8 billion.
  • 7The Advice & Wealth Management segment saw a 16% increase in operating earnings, driven by growth in wrap account assets.

Frequently Asked Questions

The primary drivers for the 4% increase in total expenses were higher distribution expenses, largely due to increased advisor compensation reflecting growth in assets under management, and higher benefits, claims, losses, and settlement expenses. A significant portion of this increase was also attributed to a $32 million increase in Long-Term Care (LTC) reserves.

Total Assets Under Management and Administration (AUM/AUA) increased by 4% to $814.8 billion as of March 31, 2015, compared to $782.8 billion as of March 31, 2014. This growth was primarily driven by a $20.6 billion increase in Advice & Wealth Management AUM, fueled by wrap account net inflows and market appreciation.

The low interest rate environment continued to impact the company by compressing interest rate spreads on fixed annuities and other interest-sensitive products, leading to lower net investment income. This also influenced decisions to re-price certain fixed annuity guarantee blocks and contributed to higher lapse rates as new sales were limited. The company's management indicated that a modest rise in interest rates could potentially widen spreads due to guaranteed minimum interest rates on existing liabilities.

The Advice & Wealth Management segment showed strong performance with a 16% increase in operating earnings, driven by wrap account growth. Asset Management operating earnings increased slightly, while the Annuities segment's operating earnings saw a small decrease primarily due to a prior year benefit. The Protection segment's operating earnings declined, significantly impacted by a $32 million increase in LTC reserves. The Corporate & Other segment reported an increased operating loss.