Ameriprise Financial Reports First Quarter 2023 Results, Raises Quarterly Dividend 8 Percent

Ameriprise Financial, Inc. (NYSE: AMP):

First quarter 2023 GAAP results were negatively impacted by market changes that affected the valuation of derivatives and market risk benefits, and included $8 million of after tax integration costs from the acquisition of BMO EMEA. GAAP results in the prior year quarter benefited from market changes that impacted the valuation of derivatives.

The company introduced a new non-GAAP measure of available capital for capital adequacy, which reflects management’s view of the underlying performance of our operations. Available capital for capital adequacy utilizes a GAAP basis for our non-insurance businesses, net of goodwill, intangibles and other adjustments, and a statutory basis for RiverSource Life. A reconciliation of this non-GAAP measure can be found on page 25.

Advice & Wealth Management pretax adjusted operating earnings increased 58 percent and pretax adjusted operating margin reached a record high of 30.6 percent. Advisors remained highly engaged with clients throughout the market dislocation in the quarter, driving deep relationships and a referable experience. Spread revenues are expected to drive sustainable financial benefits going forward.

Net revenues increased 11 percent to $2.3 billion as strong client flows and higher investment income from continued bank and certificate growth and rising interest rates more than offset market depreciation on fee-based revenues.

Adjusted operating expenses declined 2 percent to $1.6 billion compared to a year ago. Distribution expenses declined 5 percent primarily from lower markets. General and administrative expense was in line with expectations at $392 million, reflecting continued expense discipline while investing for business growth and higher business volume.

The Wealth Management business delivered robust organic growth. Clients and advisors remained engaged and focused on positioning portfolios to meet financial planning goals in the face of a challenging market environment.

• Total client net flows increased 18 percent to $12.3 billion, with $6.2 billion of flows into wrap accounts and $6.1 billion into other products, reflecting higher interest rates and more volatile equity markets.
• AWM cash balances were $44.3 billion, down only 3 percent year-over-year.
• Ameriprise Bank and Ameriprise Certificate Company assets grew 67 percent year-over-year to $32.9 billion.
• Total advisors increased 1 percent to 10,259, with excellent advisor retention, as well as the addition of 83 experienced advisors in the quarter.
• Adjusted operating net revenue per advisor on a trailing 12-month basis was $847,000, up 5 percent from enhanced productivity, business growth and market impacts.

Asset Management adjusted operating net revenues and pretax adjusted operating earnings declined to $799 million and $165 million, respectively, primarily from equity and fixed income market depreciation, unfavorable foreign exchange translation and net outflows, as well as lower performance fees. Net pretax adjusted operating margin remained in our target range at 31 percent.

Adjusted operating expenses decreased 13 percent. G&A expenses were down 11 percent from lower performance fee compensation, foreign exchange translation and disciplined expense management. Distribution expenses decreased 17 percent primarily from market depreciation and lower gross sales.

Total assets under management decreased 13 percent to $608 billion from market depreciation, net outflows and negative foreign exchange translation. Long term investment performance remained strong with 118 funds with 4- and 5-star Morningstar ratings.

In the quarter, net outflows were $2.5 billion and included $0.8 billion of outflows related to legacy insurance partners.

• Retail net outflows were $4.5 billion. In North America, redemptions improved sequentially, but gross sales remained pressured from continued market volatility. In EMEA, net outflows improved as gross sales increased sequentially and more than offset elevated redemptions.
• Global institutional net inflows were $2.8 billion primarily from fixed income, liability-driven investing and real estate mandates.

Retirement & Protection Solutions pretax adjusted operating earnings increased 11 percent to $194 million. Results reflected the negative impact from the new LDTI accounting change that was effective January 1, 2023 and prior periods have been recast. Free cash flow and return on capital remained strong.

Adjusted operating net revenues increased 7 percent from higher net investment income as a result of investment portfolio repositioning and increased structured variable annuity balances that more than offset lower equity markets.

General and administrative expenses grew $13 million, primarily related to several one-time expense adjustments, including an accrual for an anticipated guarantee fund assessment that will impact the industry.

Retirement & Protection Solutions sales declined, reflecting market volatility consistent with the industry, as well as management actions to optimize our business mix. Protection sales decreased 17 percent to $60 million with the majority of sales in higher margin accumulation VUL products. Variable annuity sales decreased 16 percent to $0.9 billion, primarily reflecting the discontinuation of sales with living benefit riders.

Total Corporate & Other pretax adjusted operating loss was $74 million.

Long Term Care pretax adjusted operating earnings improved to $8 million as a result of higher investment yields from rising interest rates and investment portfolio repositioning, as well as improved claims. Results reflect the new LDTI accounting change that was effective January 1, 2023 and prior periods have been recast.

Fixed Annuities pretax adjusted operating loss was $9 million. Results reflect the new LDTI accounting change that was effective January 1, 2023 and prior periods have been recast.

Taxes

The operating effective tax rate was 18.4 percent, reflecting favorable share based accounting benefits in the quarter. The operating effective tax rate is expected to be approximately 21 percent for full year 2023.

About Ameriprise Financial

At Ameriprise Financial, we have been helping people feel confident about their financial future for more than 125 years. With extensive advisory, asset management and insurance capabilities and a nationwide network of over 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors' financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com.

Ameriprise Financial Services, LLC offers financial planning services, investments, insurance and annuity products. Columbia Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA and managed by Columbia Management Investment Advisers, LLC. Threadneedle International Limited, Columbia Threadneedle Asset Managers Limited, Columbia Threadneedle (EM) Investments Limited, and Pyrford International Ltd, are SEC- and FCA-registered investment adviser affiliates of Columbia Management Investment Advisers, LLC based in the U.K. RiverSource insurance and annuity products are issued by RiverSource Life Insurance Company, and in New York only by RiverSource Life Insurance Co. of New York, Albany, New York. Only RiverSource Life Insurance Co. of New York is authorized to sell insurance and annuity products in the state of New York. These companies are part of Ameriprise Financial, Inc. CA License #0684538. RiverSource Distributors, Inc. (Distributor), Member FINRA.

Non-GAAP Financial Measures

The company believes the presentation of adjusted operating earnings, available capital for capital adequacy and other non-GAAP financial measures, and the corresponding ratios, best represents the underlying performance of our core operations and facilitates a more meaningful trend analysis without the distortion of various adjustment items. Management uses non-GAAP financial measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors and to provide a valuable perspective for investors. These non-GAAP financial measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures. Non-GAAP financial measure reconciliations can be found on the subsequent pages.

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:

• 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, net pretax adjusted operating margin, 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;
• statements about the expected benefits from and closing date of the partnership with Comerica as its new Investment Program Provider;
• statements about spread revenues driving sustainable financial benefits going forward;
• statements estimating the expected full year operating effective tax rate; 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,” ”continue,” “able to remain”, “resume,” “deliver,” “develop,” “evolve,” “drive,” ”enable,” “flexibility,” “commitment,” “scenario,” “case,” “appear,” “expands” 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, 2022 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 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 period ended March 31, 2023.

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.