Ameriprise Financial, Inc. · NYSE:AMP
Ameriprise Financial — Q3 2020 Earnings Presentation
22 slides from Ameriprise Financial's earnings presentation, Oct 29, 2020
Slide 1: Third Quarter 2020 Conference Call
Ameriprise Financial Third Quarter 2020 Conference Call October 29, 2020 © 2020 Ameriprise Financial, Inc. All rights reserved.
Slide 2: Forward-looking statements
Forward-looking statements Some of the statements made in our October 28, 2020 earnings release and/or in this October 29, 2020 presentation constitute forward-looking statements. These statements reflect management's estimates, plans, beliefs and expectations, and speak only as of October 29, 2020.
Slide 3: Consolidated results
Consolidated results GAAP Q3 2020 Q3 2019 Over/(Under) Net Revenues ($M) $3,003 $3,317 (9%) Expenses ($M) $3,187 $2,676 (19%) Net Income ($M) ($140) $543 NM Diluted EPS ($1.14) $4.04 NM ROE, ex. AOCI (1) 30.6% 34.0% (340 bps) Adjusted Operating Q3 2020 Q3 2019 (3) Over/(Under) Net Revenues ($M) $2,9
Slide 4: Q3 2020 Business & Financial Results
Q3 2020 Business & Financial Results Walter Berman Chief Financial Officer © 2020 Ameriprise Financial, Inc. All rights reserved. 4
Slide 5: Strong underlying business performance offset impact of lower interest rates
Strong underlying business performance offset impact of lower interest rates Adjusted Operating Adjusted Operating • Performance was strong in current interest rate Total Net Revenue(1) EPS(1) environment on an absolute and relative basis $ in millions • Revenue and earnings absorbed $116 million of
Slide 6: Advice & Wealth organic growth and advisor productivity very strong
Advice & Wealth organic growth and advisor productivity very strong Wrap Net Flows Advisor Productivity $ in billions Trailing 12 months $ in thousands Reported up 3% $5.2 Excluding interest, up 8% 26% $668 $4.1 $650 Q3 2019 Q3 2020 Q3 2019 Q3 2020 © 2020 Ameriprise Financial, Inc. All rights reserv
Slide 7: AWM strong organic growth and flows muted by headwinds from lower rates
AWM strong organic growth and flows muted by headwinds from lower rates Adjusted Operating Pretax Adjusted • Organic growth drivers remain strong: Total Net Revenues Operating Earnings ― Client flows with wrap net inflows up 26% $ in millions $ in millions ― Improved advisor productivity ― Excellent
Slide 8: Asset Management profitability improves as we continue to demonstrate traction on flows
Asset Management profitability improves as we continue to demonstrate traction on flows Adjusted Operating Pretax Adjusted • Higher fee retail inflows continued and institutional flows Total Net Revenues Operating Earnings were positive excluding low basis point institutional $ in millions $ in mill
Slide 9: Retirement & Protection Solutions generate substantial free cash flow
Retirement & Protection Solutions generate substantial free cash flow with focus on prudent management Pretax Adjusted • Continue to implement strategies to narrow our focus and manage risk profile Operating Earnings (1) – Adjusted product features to reflect low interest rates Excluding Unlocking –
Slide 10: Strong balance sheet and free cash flow generation support continued capital return
Strong balance sheet and free cash flow generation support continued capital return Capital Returned to Shareholders • Strong balance sheet fundamentals $ in millions – $2.8 billion of parent company available liquidity $128 – Free cash flow generation of ~90% year-to-date $129 – $1.7 billion of exc
Slide 11: Appendix – LTC Annual Update: Long term care block characteristics
Appendix – LTC Annual Update Long term care block characteristics Data as of 9-30-20 First Generation Second Generation Issue Years 1989-1999 1997-2002 # of Policies 47,122 51,417 Average Attained Age of ALR / DLR 82 / 88 77 / 85 % with Lifetime Benefits 54% 36% Statutory Reserves $1.4 billion $1.2
Slide 12: Appendix – LTC Annual Update: Extensive experience used to establish expectations
Appendix – LTC Annual Update Extensive experience used to establish expectations for the future Policy Count (in thousands) 267 • 49% of issued policies have terminated without (132) claim • Extensive credible claims experience from 32,000 closed claims and 8,000 open claims, • Represents 30% of pol
Slide 13: Appendix – LTC Annual Update: Credible claims experience
Appendix – LTC Annual Update Credible claims experience Policy Count Distribution of Credible 103,000 Claims Experience 46% Extensive credible claims experience Historical claims provide extensive credible experience 38% Substantial credible claims experience 16% Developing experience Policy count a
Slide 14: Appendix: LTC Annual Update: Long term care sensitivity analysis
Appendix: LTC Annual Update Long term care sensitivity analysis compares favorably to peers GAAP Reserve Sensitivity as of 9-30-20 Current Change in Estimated Assumption Assumption Pretax Impact No improvement Morbidity Updated annually to reflect 5% change in incurred claims +/- $149M company exper
Slide 15: Reconciliation tables
Reconciliation tables Adjusted operating net revenues ($ in millions) Q3 Q3 % Over/ 2019 2020 (Under) Total net revenues $ 3,317 $ 3,003 (9)% Less: CIEs revenue 22 21 Less: Net realized investment gains (losses) (13) 4 Less: Market impact on indexed universal life benefits 17 1 Less: Mean Reversion
Slide 16: Reconciliation tables
Reconciliation tables Adjusted operating expenses ($ in millions) Q3 Q3 % Over/ 2019 2020 (Under) Total expenses $ 2,676 $ 3,187 (19)% Less: CIEs expenses 23 21 Less: Integration/restructuring charges 2 1 Less: Market impact on variable annuity guaranteed benefits 2 427 Less: Market impact on indexe
Slide 17: Reconciliation tables
Reconciliation tables Adjusted operating earnings per diluted share ($ in millions, except per share amounts) Per Diluted Share Q3 Q3 % Over/ Q3 Q3 % Over/ 2019 2020 (Under) 2019 2020 (Under) Net income $ 543 $ (140) NM $ 4.04 $ (1.14) NM Add: Basic to diluted share conversion - - - 0.02 Less: Net i
Slide 18: Reconciliation tables
Reconciliation tables Adjusted operating return on equity ($ in millions) Twelve Months Ended Twelve Months Ended September 30, September 30, 2019 2020 Net income $ 1,969 $ 1,820 Less: Adjustments (1) (214) 58 Adjusted operating earnings $ 2,183 $ 1,762 Less: Annual unlocking/loss recognition, net o
Slide 19: Reconciliation tables
Reconciliation tables Advice & Wealth Management pretax adjusted operating earnings ($ in millions) Q3 Q3 % Over/ 2019 2020 (Under) Pretax adjusted operating earnings $ 396 $ 320 (19)% Less: short-term interest rate impacts 116 - Pretax adjusted operating earnings excluding annual unlocking $ 280 $
Slide 20: Reconciliation tables
Reconciliation tables Asset Management net pretax adjusted operating margin ($ in millions) Q3 Q3 2019 2020 Adjusted operating total net revenues $ 742 $ 739 Less: Distribution pass through revenues 189 193 Less: Subadvisory and other pass through revenues 83 74 Net adjusted operating revenues $ 470
Slide 21: Reconciliation tables
Reconciliation tables Retirement and Protection Solutions pretax adjusted operating earnings ($ in millions) Q3 Q3 % Over/ 2019 2020 (Under) Net revenues 788 781 (1)% Less: Annual unlocking/loss recognition 5 2 (60)% Adjusted operating total net revenues excluding annual unlocking/loss recognition 7
Slide 22: Reconciliation tables
Reconciliation tables Pretax operating margin ($ in millions) Q3 Q3 2019 2020 Total net revenues $ 3,317 $ 3,003 Less: Revenues attributable to the CIEs 22 21 Less: Net realized investment gains (losses) (13) 4 Less: Market impact on indexed universal life benefits 17 1 Less: Mean reversion related