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Liquidity and Balance Sheet
Ameriprise continued to maintain strong balance sheet fundamentals, excess capital and financial flexibility to capture additional growth opportunities.
Conservative capital management
• As of March 31, 2010, the company’s excess capital position was more than $1.5 billion.
• RiverSource Life Insurance Company’s estimated risk-based capital ratio was above 585%.
• The company will continue to use enterprise risk management capabilities and product hedging to anticipate and mitigate risk. The company’s variable annuity hedging program continued to perform well.
Substantial liquidity
• Cash and cash equivalents were $2.5 billion, with $0.9 billion at the holding company level and $1.5 billion in free cash.
High-quality investment portfolio
• The company's available-for-sale portfolio ended the reported quarter with $1.4 billion in net unrealized gains.
• The total investment portfolio, including cash and cash equivalents, was $39.9 billion and remained well positioned. The company's asset liability management programs remained well positioned for a potential increase in interest rates.
Conservative capital ratios
• The debt-to-total capital ratio attributable to Ameriprise Financial was 17.9%. The debt-to-total capital ratio was 18.3% excluding non-recourse debt and the impact of consolidated investment entities.
• Return on equity, excluding accumulated other comprehensive income (AOCI), was 11.3% for the 12 months ended March 31, 2011. Operating return on equity was 13.6% for the same period.
Business Highlights for 1Q11
Advisor productivity, measured as operating net revenue per advisor, increased 23% y/y to $95,000 in the quarter. Growth was primarily driven by improved client activity, increased assets under management from market appreciation and retail client net inflows, as well as the company's focus on experienced advisors. Total advisors declined 3% y/y, reflecting the departure of lower producing advisors, partially offset by experienced advisor recruiting and strong advisor retention.
Total assets under management and administration were $693 billion as of March 31, 2011, up 50% y/y, as a result of the acquisition of Columbia Management, market appreciation and retail client net inflows.
Total branded client wrap assets grew 20% y/y to $103 billion in 1Q11, including $2.8 billion in net inflows in the quarter.
Total retail client assets in Advice & Wealth Management increased 13% y/y to $315 billion, reflecting market appreciation and strong retail client net inflows.
Asset Management segment’s AUM increased 89% to $465 billion, driven by the acquisition of Columbia Management and equity market appreciation, partially offset by net outflows. Columbia Management net outflows improved significantly to $2.0 billion in the reported quarter, driven by retail fund sales growth and lower institutional net outflows. At Threadneedle, $3.0 billion in net outflows in the reported quarter were driven by institutional outflows, mainly in lower-margin Zurich portfolios, and higher redemptions from European retail investors, reflecting market volatility.
Equity investment performance at Columbia Management and Threadneedle remained strong across one-, three- and five-year periods.
Variable annuity ending balances increased 14% to $65 billion from market appreciation and net inflows of $104 million in the reported quarter. 1Q11 variable annuity net inflows included strong sales in the Ameriprise channel. The company discontinued sales of variable annuities through non-Ameriprise channels in 4Q10 to further strengthen the risk return characteristics of the business, and the resulting outflows were in line with expectations.
Variable universal life/universal life (VUL/UL) policyholder account balances increased 8% y/y to $9.7 billion.
Share Repurchase
On June 15, 2011, Ameriprise announced that its board of directors has authorized a new share repurchase program, under which the company will be able to buyback its common shares worth $2 billion through June 28, 2013. The company stated that this new share repurchase authorization is an extension of its current program. The current program, announced in May 2010, authorizes the company to repurchase $1.5 billion worth of common stock.
During 1Q11, the company repurchased 6.5 million shares of its common stock for $395 million. The company has $531 million remaining from its $1.5 billion authorization announced in May 2010.
Dividend
On May 20, 2011, Ameriprise paid a quarterly cash dividend of $0.23 per share to shareholders of record as of May 6, 2011. This represented 28% rise from the prior-quarter dividend.
On February 25, 2011, Ameriprise paid a quarterly cash dividend of $0.18 per share to shareholders of record as of February 11, 2011.
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