10-QPeriod: Q1 FY2021

AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 10, 2021For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) reported a net income of $437 million for the first quarter of 2021, a significant decrease from $2,036 million in the same period of 2020. This decline was primarily driven by a substantial shift in the 'market impact on non-traditional long-duration products,' which was a benefit of $1.8 billion in Q1 2020 but an expense of $396 million in Q1 2021. Despite the decrease in net income, total net revenues grew 12% year-over-year to $3.4 billion, fueled by a 19% increase in management and financial advice fees to $2.1 billion, driven by higher average equity markets and increased wrap account net inflows. The company's assets under management and administration also saw robust growth, increasing 36% to $1.14 trillion. Ameriprise also announced a definitive agreement to acquire BMO Financial Group's European asset management business for approximately $845 million, expected to close in Q4 2021.

Financial Highlights

33 data points
Beta

Revenue

$3.35B

Net Income

$1.44B

42.9% Net Margin

EPS (Diluted)

$11.74

Total Assets

$165.74B

Cash & Equivalents

$7.54B

Free Cash Flow

-$1.00B

Financial Statements
Beta
Revenue$3.35B
Operating Expenses$1.58B
Net Income$1.44B
EPS (Basic)$11.98
EPS (Diluted)$11.74
Shares Outstanding (Basic)119.80M
Shares Outstanding (Diluted)122.20M

Key Highlights

  • 1Net income significantly decreased by 79% to $437 million in Q1 2021 compared to $2,036 million in Q1 2020, largely due to a $1.8 billion unfavorable swing in the 'market impact on non-traditional long-duration products'.
  • 2Total net revenues increased by 12% to $3.4 billion, driven by a 19% rise in management and financial advice fees to $2.1 billion.
  • 3Assets under management and administration (AUM/AUA) grew by 36% to $1.14 trillion as of March 31, 2021.
  • 4The company announced the acquisition of BMO Financial Group's European asset management business for approximately $845 million, expected to close in Q4 2021.
  • 5Adjusted operating earnings per diluted share were $5.43, largely in line with the prior year's $5.41, indicating underlying operational resilience.
  • 6The company repurchased approximately 1.7 million shares of its common stock for $363 million during the quarter under its $2.5 billion share repurchase program.

Frequently Asked Questions

The primary reason for the significant decrease in net income was a substantial unfavorable swing in the 'market impact on non-traditional long-duration products.' This item was a benefit of $1.8 billion in Q1 2020 but became an expense of $396 million in Q1 2021.

The Asset Management segment showed strong growth, with pretax adjusted operating earnings increasing by 45% to $228 million. This was driven by higher average Assets Under Management (AUM) from market appreciation and net inflows, with total managed assets growing 32% year-over-year.

The acquisition is expected to add approximately $124 billion of assets under management in Europe, expanding Ameriprise Financial's international footprint and enhancing its global asset management capabilities. The transaction is valued at approximately $845 million and is anticipated to close in the fourth quarter of 2021.

Ameriprise utilizes a comprehensive hedging program for its variable annuity guarantees, focusing on key sensitivities like equity market levels, interest rates, and volatility. The company also actively manages its investment portfolio and can adjust crediting rates on fixed products to mitigate the impact of low interest rates on its spread income. The acquisition of BMO's European asset management business also indicates a strategic move to diversify and grow revenue streams.