AMERIPRISE FINANCIAL, INC. FORM 10-Q

Ameriprise Financial’s Solid Performance Amid Market Volatility

Ameriprise Financial, a leading financial services firm, has reported its financial results for the three months ended March 31, 2025. Despite facing some market challenges, the company has demonstrated resilience and continued growth in key areas of its business.

Overview of Financial Performance

Ameriprise Financial’s pretax income decreased by 44% to $687 million for the three months ended March 31, 2025, compared to the prior year period. This decline was primarily driven by the market impact on the company’s non-traditional long-duration products, such as variable and fixed deferred annuity contracts, which resulted in a $460 million expense. Additionally, the cumulative impact of net outflows in the Asset Management segment also contributed to the decrease in pretax income.

However, the company’s performance was bolstered by several positive factors. The average Weighted Equity Index, a proxy for equity market movements, increased by 15% compared to the prior year period, which had a favorable impact on the company’s results. Furthermore, the company’s Advice & Wealth Management segment saw continued growth in wrap account net inflows and improved transactional activity, contributing to the overall performance.

Revenue and Profit Trends

Ameriprise Financial’s total net revenues increased by 5% to $4.4 billion for the three months ended March 31, 2025, compared to the prior year period. This growth was driven by several key factors:

1. Management and Financial Advice Fees: These fees increased by 8% to $2.6 billion, reflecting market appreciation and continued wrap account net inflows, partially offset by the cumulative impact of Asset Management net outflows and higher performance fees in the prior year period.

2. Distribution Fees: These fees increased by 3% to $522 million, primarily due to market appreciation and higher transactional activity, partially offset by lower fees on off-balance sheet brokerage cash.

3. Net Investment Income: This decreased by 4% to $868 million, primarily reflecting the unfavorable impact of declining investment portfolio yields, partially offset by the favorable impact of growth in Ameriprise Bank customer deposits and structured variable annuities products.

On the expense side, Ameriprise Financial’s total expenses increased by 25% to $3.7 billion for the three months ended March 31, 2025, compared to the prior year period. This was mainly due to the following:

1. Distribution Expenses: These expenses increased by 14% to $1.6 billion, primarily reflecting higher advisor compensation from higher average wrap account assets and higher transactional activity, as well as investments in recruiting experienced advisors.

2. Benefits, Claims, Losses and Settlement Expenses: These expenses increased by 29% to $381 million, primarily reflecting a $102 million increase in expense from market impacts on structured variable annuity embedded derivatives, net of hedging activity.

3. Change in Fair Value of Market Risk Benefits: This expense increased by $515 million, primarily due to unfavorable changes in the market impact on variable annuity guaranteed benefits, net of hedges.

Strengths and Weaknesses

Strengths:

• Continued growth in the Advice & Wealth Management segment, driven by wrap account net inflows and improved transactional activity
• Favorable impact from higher average equity markets
• Effective expense management initiatives, leading to a decrease in general and administrative expenses

Weaknesses:

• Significant market impact on non-traditional long-duration products, resulting in a $460 million expense
• Cumulative impact of net outflows in the Asset Management segment
• Increase in distribution expenses due to higher advisor compensation and investments in recruiting

Outlook and Future Prospects

Looking ahead, Ameriprise Financial remains focused on executing its strategic priorities to drive long-term growth and shareholder value. The company is well-positioned to navigate the current market environment and capitalize on opportunities in the wealth management and asset management spaces.

The company’s Advice & Wealth Management segment is expected to continue benefiting from the shift towards wrap account assets and increased transactional activity. The Asset Management segment, while facing net outflows in the current period, is expected to leverage its strong investment performance and product offerings to attract new clients and assets over time.

Ameriprise Financial is also actively managing its exposure to market risks, such as interest rate and equity price fluctuations, through its comprehensive hedging program. This approach aims to mitigate the impact of market volatility on the company’s variable annuity and structured variable annuity products.

Furthermore, the company’s focus on enhancing operational efficiency and effectiveness is expected to contribute to its profitability and ability to invest in strategic initiatives. The company’s strong liquidity position and access to various funding sources provide it with the financial flexibility to navigate potential market challenges and pursue growth opportunities.

Conclusion

Ameriprise Financial’s financial performance for the three months ended March 31, 2025 reflects the company’s ability to navigate a challenging market environment. While facing some headwinds, the company has demonstrated resilience and continued growth in key areas of its business, such as the Advice & Wealth Management segment. Looking ahead, Ameriprise Financial remains well-positioned to capitalize on opportunities and deliver long-term value for its shareholders.