AMERIPRISE FINANCIAL INC Quarterly Report for Q2 Ended Jun 30, 2016

Summary

Ameriprise Financial, Inc. (AMP) reported a decrease in net income attributable to Ameriprise Financial for the second quarter of 2016, falling to $335 million ($1.97 per diluted share) from $415 million ($2.23 per diluted share) in the same period last year. This decline was primarily driven by lower net revenues across key segments like Management and Financial Advice Fees and Distribution Fees, impacted by a decrease in average Assets Under Management (AUM) and lower client activity. The company also saw a reduction in Net Investment Income due to lower invested assets and a less favorable market impact on investment hedges. Expenses also increased in certain areas, notably Benefits, Claims, Losses, and Settlement Expenses, partly due to higher auto and home insurance losses and a prior year favorable LTC reserve release. Despite the quarterly decrease, the company's financial position remains robust, with total assets of $142.7 billion as of June 30, 2016, and a solid capital base. The adoption of new accounting standards for consolidation (ASU 2015-02) led to the deconsolidation of several collateralized loan obligations and property funds, impacting reported figures but not the underlying business results. Management remains focused on strategic objectives, including growing AUM and enhancing advisor productivity, with a significant share repurchase authorization remaining. Investors should monitor the impact of evolving market conditions and regulatory changes, particularly the Department of Labor's fiduciary rule, on the company's future performance.

Key Highlights

• 1Net income attributable to Ameriprise Financial decreased by 19% to $335 million ($1.97/share) for Q2 2016, down from $415 million ($2.23/share) in Q2 2015.
• 2Total revenues decreased by 8% to $2.87 billion for Q2 2016, primarily due to lower management/financial advice fees and distribution fees, impacted by a 6% decrease in average Assets Under Management (AUM).
• 3Total expenses saw a slight decrease of 2% to $2.46 billion for Q2 2016, though Benefits, Claims, Losses, and Settlement Expenses increased by 10%.
• 4The company adopted new accounting standards for consolidation (ASU 2015-02), resulting in the deconsolidation of certain investment entities, which affected segment reporting but not underlying business performance.
• 5Advice & Wealth Management segment operating earnings remained flat year-over-year at $221 million, supported by net inflows into wrap accounts.
• 6Asset Management segment operating earnings decreased by 25% to $148 million, driven by net outflows, equity market depreciation, and a legacy legal matter expense.
• 7The company had $1.7 billion remaining under its share repurchase authorization as of June 30, 2016, indicating a commitment to returning capital to shareholders.
• 8The effective tax rate for Q2 2016 decreased to 18.4% from 22.6% in the prior year period, primarily due to tax audit resolutions and tax-preferred items.

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