10-QPeriod: Q1 FY2016

AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported net income attributable to Ameriprise Financial of $364 million for the first quarter of 2016, a decrease from $393 million in the same period of 2015. This decline was primarily driven by lower net investment income and a decrease in management and financial advice fees. The company's total revenues also saw a decline, primarily due to lower asset-based fees reflecting a decrease in average assets under management, impacted by market depreciation and net outflows. Despite the revenue pressures, the company managed its expenses effectively, leading to a decrease in total expenses. The Advice & Wealth Management segment remained a significant contributor to operating earnings. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. However, investors should note the ongoing impact of the low interest rate environment on net investment income and potential spread compression.

Financial Highlights

33 data points
Beta

Revenue

$2.77B

Net Income

$364.00M

13.1% Net Margin

EPS (Diluted)

$2.09

Total Assets

$140.25B

Cash & Equivalents

$2.65B

Free Cash Flow

$616.00M

Financial Statements
Beta
Revenue$2.77B
Operating Expenses$2.29B
Net Income$364.00M
EPS (Basic)$2.11
EPS (Diluted)$2.09
Shares Outstanding (Basic)172.60M
Shares Outstanding (Diluted)174.40M

Key Highlights

  • 1Net income attributable to Ameriprise Financial decreased by 7% to $364 million in Q1 2016 compared to $393 million in Q1 2015.
  • 2Total net revenues decreased by 9% to $2.765 billion in Q1 2016 compared to $3.053 billion in Q1 2015.
  • 3Management and financial advice fees, a key revenue stream, decreased by 6% to $1.386 billion.
  • 4Net investment income saw a significant decrease of 32% to $331 million, impacted by lower earnings from consolidated investment entities and hedging impacts.
  • 5Total expenses decreased by 6% to $2.290 billion, driven by lower distribution expenses and interest credited to fixed accounts.
  • 6The company repurchased 5.1 million shares of common stock for $451 million during the quarter, reflecting ongoing capital return initiatives.
  • 7Total Assets Under Management and Administration (AUM/AUA) decreased by 5% to $772.7 billion.

Frequently Asked Questions

The decrease in net income attributable to Ameriprise Financial from $393 million in Q1 2015 to $364 million in Q1 2016 was primarily due to lower net investment income, a decrease in management and financial advice fees, and a reduction in distribution fees. These were partially offset by lower expenses, including reduced interest credited to fixed accounts and lower benefits, claims, losses, and settlement expenses.

Total net revenues decreased by 9% to $2.765 billion in Q1 2016 compared to $3.053 billion in Q1 2015. Management and financial advice fees decreased by 6% to $1.386 billion, distribution fees decreased by 7% to $435 million, and net investment income saw a significant decrease of 32% to $331 million. Premiums increased slightly by 4% to $368 million.

Ameriprise Financial continued its share repurchase program during the first quarter of 2016, repurchasing 5.1 million shares of its common stock for approximately $451 million. The company also paid regular quarterly dividends to shareholders, totaling $117 million for the quarter. These actions demonstrate a commitment to returning capital to shareholders.

The low interest rate environment negatively impacts Ameriprise Financial through reduced net investment income and potential spread compression in its interest-sensitive product lines. The company noted that reinvestment yields are generally lower than current portfolio yields, and this trend is expected to continue if interest rates remain low, which could negatively affect future operating results.