Summary
Ameriprise Financial Inc. (AMP) filed an 8-K on January 17, 2018, primarily to disclose the estimated financial impact of the Tax Cuts and Jobs Act (Tax Legislation) enacted on December 22, 2017. The company estimates a one-time, largely non-cash charge of $320 million in its fourth quarter 2017 earnings. This charge is mainly due to the remeasurement of net deferred tax assets at the new, lower corporate tax rate, a repatriation tax, and reduced future tax benefits. Despite this significant one-time charge, the new tax law is expected to provide an ongoing benefit to Ameriprise's earnings and cash flow, with an estimated ongoing effective tax rate in the 17-19% range in the near term. The company anticipates earning back the initial charge within two years. In addition to the tax-related impact, Ameriprise also expects to report approximately $25 million in after-tax net catastrophe losses in its fourth quarter 2017 results, largely attributable to California wildfires impacting its auto and home insurance business. Investors should note that these figures are estimates and subject to change as year-end financial statements are finalized, and forward-looking statements carry inherent risks and uncertainties.
Key Highlights
- 1Ameriprise Financial estimates a $320 million unfavorable impact on Q4 2017 earnings due to the Tax Cuts and Jobs Act.
- 2The $320 million charge is primarily a one-time, non-cash accounting adjustment related to deferred tax assets and repatriation tax.
- 3The Tax Legislation is expected to provide an ongoing benefit to Ameriprise's future earnings and cash flow.
- 4The company anticipates its near-term ongoing effective tax rate will be between 17% and 19%.
- 5Ameriprise expects to recover the initial charge within two years through the ongoing benefits of the Tax Legislation.
- 6Q4 2017 results will also include an estimated $25 million after-tax net catastrophe loss, mainly from California wildfires.