AMERIPRISE FINANCIAL INC Quarterly Report for Q1 Ended Mar 31, 2023

Summary

Ameriprise Financial, Inc. (AMP) reported a decrease in net income for the first quarter of 2023 to $417 million, or $3.79 per diluted share, compared to $825 million, or $7.10 per diluted share, in the prior year period. This decline was primarily driven by significant unfavorable market impacts on non-traditional long-duration products, which resulted in a $475 million expense compared to a benefit in the prior year, and lower average equity markets. Despite the overall profit decline, net revenues saw a modest increase of 3% to $3.74 billion, bolstered by strong growth in banking and deposit interest income and higher distribution fees, reflecting rising interest rates. The company continues to focus on its core operations, with the Advice & Wealth Management segment showing robust growth in adjusted operating earnings due to higher interest rates benefiting bank and certificate products. However, the Asset Management segment experienced a decline in adjusted operating earnings, largely due to market depreciation and net outflows. The company maintained a strong capital position, with Available Capital for Capital Adequacy at $5.38 billion as of March 31, 2023, and continues to return capital to shareholders through dividends and share repurchases. Investors should note the significant impact of market fluctuations on the company's earnings, particularly the "market impact on non-traditional long-duration products." While net income declined year-over-year, the underlying business drivers, such as deposit growth and strategic repositioning of investment portfolios, demonstrate resilience in a higher interest rate environment. The company's focus on shifting its business mix away from products with living benefit guarantees is a key long-term strategic initiative to watch.

Key Highlights

• 1Net income decreased by 49% to $417 million compared to $825 million in Q1 2022, primarily due to unfavorable market impacts on long-duration products.
• 2Total net revenues increased by 3% to $3.74 billion, driven by growth in banking and deposit interest income and higher distribution fees.
• 3The Advice & Wealth Management segment's adjusted operating earnings increased by 58% to $693 million, benefiting from higher interest rates and deposit growth.
• 4The Asset Management segment's adjusted operating earnings decreased by 42% to $165 million, impacted by market depreciation and net outflows.
• 5The company maintained strong liquidity and capital resources, with Available Capital for Capital Adequacy at $5.38 billion.
• 6Ameriprise Financial continued returning capital to shareholders through dividends ($138 million) and share repurchases ($506 million) in the quarter.
• 7The company's focus on shifting its business mix away from products with living benefit guarantees is a key strategic initiative to monitor.

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