Ameriprise Financial Reports Third Quarter 2019 Results

Ameriprise Financial, Inc. (NYSE: AMP):

Advice & Wealth Advice Management pretax adjusted operating earnings increased 12 percent to $396 million driven by strength in client activity and equity market appreciation year-over-year of only 1 percent. Pretax adjusted operating margin remained strong at 23.5 percent.

Adjusted operating net revenues increased 8 percent to $1.7 billion, reflecting strong client activity and increased advisor productivity. Adjusted operating expenses increased 6 percent to $1.3 billion, reflecting higher distribution expense and volume-related expense, as well as continued investments for growth. Excluding the bank, general and administrative expenses increased 4 percent.

Total client assets increased 4 percent to $612 billion. Organic growth remains strong with $4.1 billion of wrap net inflows. Total wrap assets increased 9 percent to $298 billion. Client brokerage cash balances were down slightly from a year ago to $24.0 billion.

Adjusted operating net revenue per advisor on a trailing 12-month basis increased 5 percent to $650,000. Total advisors were 9,930, demonstrating solid advisor retention and experienced advisor recruiting with 96 advisors moving their practices to Ameriprise in the quarter.

Asset Management pretax adjusted operating earnings were $173 million, down $24 million from the prior year period, reflecting the cumulative impact of net outflows and only 1 percent year-over-year equity market appreciation. Third quarter net pretax adjusted operating margin was 38.3 percent.

Adjusted operating revenues declined 4 percent driven by the cumulative impact of net outflows, unfavorable foreign exchange translation and limited 1 percent equity market appreciation. Adjusted operating expenses declined 1 percent reflecting lower distribution expenses and well-managed general and administrative expenses.

Net outflows in the quarter were $1.3 billion, a $6.0 billion improvement from the year ago quarter. Excluding former parent flows, net flows were break even. Global retail outflows were $1.3 billion, reflecting substantial improvement in North America with outflows of only $0.4 billion and ongoing negative investor sentiment in EMEA related to geopolitical uncertainties. Global institutional inflows were $1.3 billion and included a $1.8 billion mandate from a large U.K. wealth management client.

Annuities pretax adjusted operating earnings excluding unlocking were $119 million, down 8 percent. Annuities unlocking was a favorable $1 million as the net benefits from equity market and policyholder behavior assumptions offset the impact from changes in interest rate assumptions.

Variable annuity pretax adjusted operating earnings excluding unlocking were down 8 percent to $108 million reflecting lower interest rates and outflows. Variable annuity sales improved 2 percent year-over-year to $1.1 billion.

Fixed annuity pretax adjusted operating earnings excluding unlocking were $11 million, reflecting continued spread compression and lower account balances. Account balances declined 5 percent from limited new product sales and continued lapses.

Protection pretax adjusted operating earnings excluding unlocking increased to $70 million compared to $65 million a year ago. Protection unlocking was an unfavorable $13 million, primarily due to lower interest rates. Overall claims were within expected ranges. VUL/UL cash sales were $71 million, down 7 percent, primarily due to lower indexed universal life sales.

Corporate & Other pretax adjusted operating loss excluding Long Term Care and Auto & Home was $73 million, including a gain on the sale of real estate and a low income housing impairment.

Long Term Care pretax adjusted operating earnings excluding loss recognition was essentially flat in the quarter. Strong benefits from higher premium rate increases and benefit reduction offerings more than offset changes in morbidity; this net favorable impact was more than offset by interest rate changes, resulting in a total unlocking/loss recognition of an unfavorable $8 million.

Auto & Home pretax adjusted operating loss was $10 million in the quarter. Catastrophe losses were $33 million, which were $17 million higher than the prior year.

Taxes
The adjusted operating effective tax rate in the quarter was 15.4 percent. The full year adjusted operating effective tax rate is estimated to be in the 16 percent range.

Forward-Looking Statements

This news release contains forward-looking statements that reflect management's plans, estimates and beliefs. Actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include:

• the statement that the company expects its full year adjusted operating effective tax rate to be in the 16 percent range;
• statements of the company's plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, general and administrative costs, consolidated tax rate, return of capital to shareholders, and excess capital position and financial flexibility to capture additional growth opportunities;
• other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and
• statements of assumptions underlying such statements.

The words "believe," "expect," "anticipate," "optimistic," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely," "forecast," "on track," "project" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management cautions readers to carefully consider the risks described in the "Risk Factors" discussion under Part 1, Item 1A of and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2018, and subsequent Quarterly Reports on Form 10-Q, available at ir.ameriprise.com. Management undertakes no obligation to update publicly or revise any forward-looking statements.

The financial results discussed in this news release represent past performance only, which may not be used to predict or project future results. The financial results and values presented in this news release and the below-referenced Statistical Supplement are based upon asset valuations that represent estimates as of the date of this news release and may be revised in the company's Form 10-Q for the quarter ended September 30, 2019. For information about Ameriprise Financial entities, please refer to the Third Quarter 2019 Statistical Supplement available at ir.ameriprise.com and the tables that follow in this news release.

Ameriprise Financial announces financial and other information to investors through the company's investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this release or in any other report or document the company furnishes or files with the SEC.