10-QPeriod: Q2 FY2019

AMERIPRISE FINANCIAL INC Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 5, 2019For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported solid financial results for the second quarter and first half of 2019. The company demonstrated revenue growth driven by its Advice & Wealth Management segment, which benefited from higher assets under management and increased brokerage cash earnings due to rising interest rates. Total net revenues saw a modest increase of 2% year-over-year for the quarter, with pretax income up 7%. However, the Asset Management segment experienced a decline in revenue and earnings due to net outflows and foreign currency translation impacts. The Annuities segment showed a slight increase in adjusted operating earnings, supported by higher fee income on variable annuity guarantees, though net investment income was impacted by lower average invested assets. Operationally, Ameriprise Financial is strategically refocusing on its core growth areas, evidenced by the announced sale of its Auto & Home insurance business. The company also made progress in its banking strategy by converting Ameriprise National Trust Bank into a federal savings bank. Despite some headwinds in asset management, the overall financial performance indicates a resilient business model with continued growth initiatives.

Financial Highlights

34 data points
Beta

Revenue

$3.28B

Net Income

$492.00M

15.0% Net Margin

EPS (Diluted)

$3.57

Total Assets

$148.68B

Cash & Equivalents

$6.74B

Free Cash Flow

$980.00M

Financial Statements
Beta
Revenue$3.28B
Operating Expenses$2.66B
Net Income$492.00M
EPS (Basic)$3.61
EPS (Diluted)$3.57
Shares Outstanding (Basic)136.10M
Shares Outstanding (Diluted)138.00M

Key Highlights

  • 1Total net revenues for the second quarter of 2019 increased by 2% to $3.245 billion compared to the prior year period.
  • 2Pretax income increased by 7% to $587 million for the second quarter of 2019, driven by higher average equity markets and improved brokerage cash earnings.
  • 3The Advice & Wealth Management segment saw a 7% increase in adjusted operating earnings to $376 million, supported by growth in wrap account assets and higher earnings on brokerage cash.
  • 4Asset Management segment adjusted operating earnings decreased by 10% to $164 million due to net outflows and negative foreign currency translation impacts.
  • 5Net income for the second quarter of 2019 was $492 million, an increase of 6% from $462 million in the prior year period.
  • 6The company announced the sale of its Auto & Home insurance business, aligning with its strategy to focus on core growth areas.
  • 7Ameriprise Financial completed the conversion of Ameriprise National Trust Bank to a federal savings bank, advancing its banking strategy.

Frequently Asked Questions

Ameriprise Financial reported an increase in total net revenues by 2% to $3.245 billion and a 7% increase in pretax income to $587 million for the second quarter of 2019 compared to the same period in the prior year. Net income rose by 6% to $492 million.

The Advice & Wealth Management segment showed strong performance with a 7% increase in adjusted operating earnings, driven by growth in assets under management and higher brokerage cash earnings. The Asset Management segment experienced a 10% decline in adjusted operating earnings due to net outflows and foreign currency impacts. The Annuities segment saw a 6% increase in adjusted operating earnings, while the Protection segment reported a 3% increase. The Corporate & Other segment continued to report an adjusted operating loss, though it decreased compared to the prior year.

The company announced the definitive agreement to sell its Auto & Home insurance business, a strategic move to focus on core growth areas. Additionally, Ameriprise Financial successfully converted Ameriprise National Trust Bank into a federal savings bank, marking a step forward in its banking strategy.

The company's financial results are significantly impacted by market conditions, including equity prices and interest rates. While higher short-term interest rates benefited brokerage cash earnings, the low interest rate environment continues to put pressure on spread income from fixed annuities. The company employs hedging strategies to manage risks associated with variable annuity guarantees and other market exposures.