10-QPeriod: Q1 FY2018

AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 2, 2018For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported strong financial results for the first quarter of 2018, with net income increasing by 47% to $594 million, or $3.91 per diluted share, compared to the same period in 2017. Total net revenues grew 8% to $3.17 billion, driven by a 12% increase in management and financial advice fees, reflecting growth in assets under management and administration, and a 6% rise in distribution fees. The company's Advice & Wealth Management segment saw a notable 27% increase in adjusted operating earnings, supported by strong net inflows into wrap accounts and market appreciation. The Asset Management segment also performed well, with a 30% increase in adjusted operating earnings, driven by market appreciation and a favorable vendor credit, despite some net outflows. While the Annuities segment experienced a slight 5% decrease in adjusted operating earnings due to lower investment income and impacts from market performance, the Protection segment showed an 11% increase in adjusted operating earnings, primarily due to reduced catastrophe losses and disability income claims. Overall, Ameriprise demonstrated robust performance and effective management of its diverse business segments.

Financial Highlights

33 data points
Beta

Revenue

$3.18B

Net Income

$594.00M

18.7% Net Margin

EPS (Diluted)

$3.91

Total Assets

$144.76B

Cash & Equivalents

$4.47B

Free Cash Flow

-$188.00M

Financial Statements
Beta
Revenue$3.18B
Operating Expenses$2.47B
Net Income$594.00M
EPS (Basic)$3.97
EPS (Diluted)$3.91
Shares Outstanding (Basic)149.50M
Shares Outstanding (Diluted)152.10M

Key Highlights

  • 1Net income surged by 47% to $594 million, or $3.91 per diluted share, in Q1 2018 compared to Q1 2017.
  • 2Total net revenues increased by 8% to $3.17 billion, fueled by growth in management and financial advice fees (up 12%) and distribution fees (up 6%).
  • 3Advice & Wealth Management segment adjusted operating earnings grew by a significant 27% to $316 million, driven by robust wrap account growth and market appreciation.
  • 4Asset Management segment adjusted operating earnings increased by 30% to $195 million, benefiting from market appreciation and a vendor credit.
  • 5The company's assets under management and administration (AUM/AUA) grew by 9% to $887.2 billion.
  • 6Shareholder returns were enhanced through a $125 million dividend payment and $2.4 million shares repurchased under the company's share repurchase program.
  • 7Effective tax rate for Q1 2018 was 14.7%, reflecting benefits from tax-preferred items and the Tax Cuts and Jobs Act.

Frequently Asked Questions

The significant increase in net income was primarily driven by strong growth in management and financial advice fees, which rose 12% due to an increase in assets under management and administration (AUM), and a 6% increase in distribution fees. This was complemented by improved performance across key business segments, particularly Advice & Wealth Management and Asset Management, which saw substantial year-over-year growth in adjusted operating earnings. Market appreciation also contributed positively to the company's financial results.

Total assets under management and administration (AUM/AUA) increased by 9% to $887.2 billion as of March 31, 2018. This growth was primarily driven by a substantial increase in Advice & Wealth Management AUM, attributed to wrap account net inflows and market appreciation, as well as an increase in Asset Management AUM due to market appreciation and positive foreign currency translation, partly offset by net outflows and retail fund distributions.

The company notes that the ongoing low interest rate environment has had and continues to have a negative impact on spread income in its interest-sensitive product lines. While a modest rise in interest rates could potentially widen spreads given current guarantees, current reinvestment yields are generally lower than portfolio yields. Management expects portfolio income yields to decline if interest rates remain low. The company actively monitors reinvestment risk and may adjust crediting rates on fixed products to mitigate unfavorable impacts.

Ameriprise Financial adopted the new accounting standard for revenue recognition on a retrospective basis on January 1, 2018. For the three months ended March 31, 2017, this resulted in an increase in total revenues by $25 million and an increase in general and administrative expenses by $25 million. This change did not materially impact net income for the period presented, but it did lead to restatements of prior period amounts to ensure comparability.