The paragraph details the introduction to Ameriprise Financial's third quarter 2024 earnings call. The operator, Audra, initiates the call, introduces the speakers, and outlines the structure of the call, which includes a question-and-answer session. Alicia Charity, along with Jim Cracchiolo and Walter Berman, will lead the call. Alicia highlights the availability of earnings presentation materials on their website, discusses the use of non-GAAP financial measures for insight into company operations, and addresses the potential risks and uncertainties associated with forward-looking statements. Additionally, she emphasizes that these statements are valid as of the current date and directs listeners to their earnings release and annual reports for further details. Slide 3 contains GAAP financial results for the second quarter.

The paragraph discusses the strong financial performance of Ameriprise in the recent quarter, highlighting a 22% increase in assets under management and administration to $1.5 trillion. Adjusted operating net revenue grew by 11% to $4.4 billion, and earnings rose by 11%, with earnings per share up 17% excluding severance expenses. The company's return on equity improved to 50.7% from 49.6% a year prior. Ameriprise's success is attributed to strong client relationships and complementary businesses, particularly in Wealth Management, where client assets exceeded $1 trillion, driven by substantial net inflows and market activity. The company's goal-based advice continues to enhance client satisfaction and growth.

In the quarter, Ameriprise experienced significant growth in fee-based investment advisory wrap flows, reaching $8 billion, the highest in over two years. Total wrap assets increased by 28% to $569 billion, with transactional activity up 19% year-over-year. While cash balances are still high, there is a trend of shifting from term products to money market funds, with potential for clients to move funds into wraps and other solutions. The bank's assets grew by 7% to over $23 billion, with plans to introduce new savings and lending products next year. The firm is enhancing CRM capabilities and data-driven insights, boosting advisers' productivity, which has reached $997,000 per adviser. Ameriprise recruited 71 experienced advisers, is proud of its excellent client service, and had a record 21 advisers in Barron's Top 100 list. Overall, Ameriprise is recognized for trust and quality in the industry.

The paragraph discusses the positive financial performance and strategic focus of Ameriprise, highlighting growth in Retirement & Protection Solutions and Asset Management. In the former, sales of structured and variable annuities increased by 13%, and life and health product sales rose by 25%. The company is benefiting from efficient underwriting processes and continues to be a top profitable insurer. In Asset Management, assets under management grew by 14% to $672 billion, with strong performance in equities, fixed income, and multi-asset strategies. Net outflows improved 40% year-over-year to $2.4 billion, with gains in retail, North America, EMEA, ETFs, and model delivery sales.

The paragraph discusses how the firm has enhanced its investment capabilities by expanding its SMA and ETF businesses, focusing on both traditional and tax-efficient strategies. It highlights their success in becoming a top 10 player in model delivery and improving operational efficiency, especially in the EMEA region. The company emphasizes streamlining processes, leveraging technology, and reinvesting savings to drive growth. Despite flat institutional flows, the firm remains successful with strong financial results, marked by a 16% compound annual growth in EPS over five years and high returns on equity. Their solid balance sheet and the collaborative efforts of their teams contribute to a strong client value proposition.

The article discusses the unified efforts and consistent results of Ameriprise, emphasizing its decision to retain its long-term care portfolio in the interest of shareholders. It highlights the company's longevity, achievements, and awards, such as being recognized by the Wall Street Journal and Forbes. Ameriprise boasts high internal engagement scores and is committed to serving clients effectively while advancing the business. Walter Berman attributes the firm's success to its diversified business model, which supports strong growth and resilience, noting a 17% increase in adjusted operating EPS, excluding specific costs.

The paragraph discusses the company's financial performance, highlighting expenses incurred due to a severance program and transitioning to cloud-based technology. It reports a 22% increase in assets under management, resulting in an 11% revenue growth. Despite these expenses, operational efficiency is maintained, especially in Wealth Management. The company achieved a 27% consolidated margin, with a 51% return on equity. It emphasizes strong balance sheet fundamentals, stable cash flow, and a commitment to returning 80% of operating earnings to shareholders. The business model integrates three segments, leveraging them for consistent operating performance and shareholder growth.

The paragraph discusses the strong performance and growth in wealth management activities, highlighting high adviser and client satisfaction due to effective asset management and leveraging of corporate functions. Wealth management client assets reached $1 trillion, with wrap assets increasing by 28% and substantial net flows and market appreciation. Pre-tax adjusted operating earnings rose by 13% to $826 million, driven by core earnings growth despite lower cash sweep earnings, while the margin remained strong at 30%. Adjusted operating net revenues also increased by 14% to $2.7 billion, thanks to client asset growth, increased transactional activity, and higher net investment income in the bank. Revenue per adviser hit a new high of $997,000, and clients favored highly liquid, yield-oriented products like money market funds over term products. Total cash balances stood at $83 billion, representing over 8% of client assets.

The paragraph discusses financial trends and performance improvements across various sectors of a company's operations. Clients are increasing investments in wrap products on their platform as market conditions normalize, contributing to significant opportunities. Bank assets reached $23.2 billion, supporting sustainable investment income. The quarter saw a 14% rise in adjusted operating expenses, with notable increases in distribution costs due to business growth, while G&A expenses remained flat after adjusting for a prior regulatory accrual. Asset Management experienced a 14% increase in AUM, reaching $672 billion, and a 23% increase in operating earnings, with improved operating expense management. Retirement & Protection Solutions generated solid earnings and free cash flow, benefiting from strong markets and interest rates, despite higher distribution costs due to increased sales.

Ameriprise reported strong financial performance in the third quarter, achieving year-to-date pre-tax adjusted operating earnings of $603 million and projecting about $800 million annually. An actuarial assumption update led to a $90 million adverse pre-tax impact due to variable annuities persistency adjustments. Sales in Retirement & Protective Solutions grew, with protection and variable annuity sales increasing 25% and 13% respectively. The company maintains a robust balance sheet with $2 billion excess capital, enabling consistent capital returns and investment for growth, which drive long-term shareholder value. Over the last 12 months, Ameriprise saw 10% revenue growth, 14% EPS growth, a 110 basis point increase in return on equity, and returned $2.6 billion to shareholders. Over the past five years, trends of 7% revenue growth, 16% EPS CAGR, and $11.9 billion returned to shareholders reflect consistent long-term success.

The company has decided to retain its long-term care business after analyzing risk transfer opportunities and concluding that keeping the block is more beneficial for shareholders. The market for transferring such risks is not mature, and high-quality blocks like theirs are undervalued by potential counterparties. The long-term care business has exceeded expectations, generating $215 million in statutory earnings over the past five years, and is expected to continue performing well. The book of business has declined significantly, with most policies terminating without claims, and is expected to further run off over the next decade. Retaining this block allows for potential gains from investment portfolio adjustments, premium rate increases, and other improvements.

The paragraph discusses the company's strong financial position, emphasizing that they don't require a reinsurance transaction due to their high-quality block and substantial capital. They express confidence in their reserves and are not inclined to execute a risk transfer deal that would increase counterparty exposure. The company had a successful quarter and is optimistic about their future positioning. During the question-and-answer session, Suneet Kamath from Jefferies inquires about strategic efforts within Asset Management and Advice Wealth Management to enhance retail flows. Jim Cracchiolo responds, highlighting the long-established partnership with the AWM business and their focus on growing third-party and institutional distribution. He indicates there are ongoing efforts to introduce more products tailored to their solutions.

The paragraph discusses an opportunity for increased activity within a financial channel, with a focus on current and new solutions. Suneet Kamath inquires about the trend of client cash moving to money market funds instead of term products, suggesting advisors might be preparing for a switch to longer-duration products. Jim Cracchiolo explains there's been a significant increase in wrap flows in diversified portfolios, especially in fixed income, indicating a shift from brokered CDs to money markets. This shift suggests investors prefer more flexible investment vehicles, potentially transitioning back to longer-duration products. Alex Blostein from Goldman Sachs asks about the outlook for cash revenues within Asset and Wealth Management (AWM), referencing previous comments by Jim about maintaining stable or growing net interest income (NII) at the bank.

In the discussion about revenue trends for 2025, Walter Berman and Jim Cracchiolo express optimism for the bank's revenue growth, particularly in net interest income. They anticipate stability or an increase in earnings, driven largely by the bank's activities. Despite potential softening in CDs due to interest rate changes, they expect a shift from third-party money markets and CDs to bank products. Additionally, Cracchiolo outlines plans to introduce bank CDs, HELOCs, and checking accounts to attract more client cash activities, aiming to complement existing services and capture more savings and lending business from current bank account holders. This strategy is expected to gradually build the bank's client activities.

The paragraph consists of a discussion among various financial analysts and company executives about the Asset Management business's margin sustainability and capital return strategy. Walter Berman highlights ongoing efficiency improvements that may sustain profitability, projecting margins in the 35-39% range despite market uncertainties. Furthermore, Alex Blostein mentions the company's capital return strategy, with Wilma Burdis raising a question about maintaining an 80% capital return level in 2025, to which Walter Berman responds affirmatively. Jim Cracchiolo adds that the company's excess capital position provides flexibility for 2025, contingent on market conditions and opportunities.

The paragraph is a discussion about financial projections and expenses related to cloud investments and severance at a company being analyzed by Steven Chubak from Wolfe Research. Walter Berman explains that expenses related to severance and cloud investments will continue over the next few quarters, but they aim to stabilize at around $90 million. Regarding the expense outlook, Berman mentions that General and Administrative (G&A) expenses, especially in Asset and Wealth Management (AWM), are expected to grow by 4% to 5%, while the overall enterprise expenses are expected to remain flat, excluding the severance and cloud investment costs. There's also a mention of industry flow trends and potential for investment based on those trends.

The paragraph involves a discussion on the competitive landscape and cost of acquiring sales associates (SAs) amidst rising rates, with Jim Cracchiolo expecting some adjustments as the environment stabilizes. He mentions that despite current conditions being a bit "frothy," they are still acquiring quality people with larger books even if the count has decreased. Steven Chubak thanks him for the insight. Craig Siegenthaler inquires about the decline in adviser count, to which Cracchiolo responds that growth is expected to return to normal and attributes the recent decline to changes in productivity dynamics, team adjustments, and turnover among advisers, particularly in AFA.

The paragraph discusses the challenges and limited options in the market for reinsuring or acquiring long-term care (LTC) blocks. Craig Siegenthaler asks about the types of entities interested in LTC, noting a lack of public insurer interest. Walter Berman highlights that the LTC market is not mature, resulting in limited beneficial opportunities. The participating entities are well-known but the market's immaturity leads to a lack of value creation. Jim Cracchiolo adds that while there are some private equity partners, they primarily collaborate with reinsurers, who apply large discounts due to LTC not being their core business. The reinsurance market for LTC is small, and while there's potential for capital needs or trades, the overall value remains in question from their perspective.

The paragraph discusses a conversation about long-term care (LTC) insurance during an investor call. Thomas Gallagher from Evercore ISI asks about the financial implications of a potential transaction similar to one by Manulife, where they incurred a negative fee to offload LTC. Walter Berman responds by emphasizing that their LTC book is profitable and beneficial to shareholder value. He indicates that while reinsurers might have other objectives, their current management of the LTC book is not a distraction but an asset, and they are confident in its contribution to their value. Jim Cracchiolo acknowledges the validity of the question.

The paragraph discusses the decision not to pursue a sale or restructuring of a mature insurance book due to the significant difference in value that would not justify the potential benefits. The speaker explains that the book is self-sustaining with manageable claims and has shown improvements over time. Discretionary reserves have been built and not utilized yet. The decision to retain the book is influenced by the lack of market applicability and the potential earnings loss if sold. Additionally, minor issues, if any, wouldn't significantly impact overall performance. The speaker reassures shareholders of the book's stability and highlights considerations like counterparty exposure, which supports retaining the book with confidence.

The paragraph features a discussion among Thomas Gallagher, Walter Berman, Jim Cracchiolo, and Kenneth Lee about the financial situation and strategy of a company. Thomas Gallagher notes a $300 million increase in excess capital for the quarter and asks if anything unusual caused this. Walter Berman responds, saying that the capital management is stable and there are no unique factors involved. Jim Cracchiolo adds that they are generating flexibility with their payouts. Kenneth Lee then inquires if changes in the rate environment might affect their strategy for the LTC block, to which Berman replies negatively and expresses confidence in their current position. Lee also asks about potential synergies between Asset Management, Advice Wealth Management, and insurance products, wondering if the asset management capabilities could expand to capture more value, though the paragraph does not provide a specific response to this.

The paragraph features Jim Cracchiolo discussing the integrated nature of the company's client relationships and asset management solutions. He highlights how different capabilities, such as asset management and hedging, are leveraged together to provide strong returns. Cracchiolo explains that these integrated capabilities allow assets to be managed internally rather than externally, benefiting various departments like RiverSource and Columbia. This synergy results in efficient asset allocation and cost-effective solutions for Asset and Wealth Management (AWM). He also notes that the AWM business evolved from being a proprietary manager for Ameriprise into an independent wealth manager, yet it still complements an open architecture. The conversation transitions to Kenneth Lee acknowledging the explanation and Ryan Krueger from KBW preparing to ask follow-up questions, with the operator facilitating the discussion.

In the conversation, Walter Berman and Ryan Krueger discuss financial projections for 2024 and 2025, specifically regarding severance costs and how they might impact financial outcomes. Berman indicates that while some severance costs will persist in 2025, they will likely be at a lower level than in 2024. The discussion then shifts to the bank's floating rate assets, with Krueger noting that expected declines in short-term interest rates could pressure spread income. Berman responds by explaining that the bank has repositioned its asset portfolio to have a longer duration, which should help maintain net interest income despite rate declines. Michael Cyprys from Morgan Stanley then asks about the company's capital deployment strategy, noting the anticipated buildup of a $2 billion excess capital position if 80% of earnings are paid out.

In the paragraph, Jim Cracchiolo and Walter Berman discuss their company's strategy for managing excess capital amid an uncertain market environment. Cracchiolo highlights their high returns and the flexibility they have as they approach 2025, mentioning potential buybacks or inorganic growth opportunities depending on market conditions. Berman adds that they are increasing their bank's capital and investing in severance and expenses, which will eventually yield returns. They are also investing in seeding new products in Asset Management, indicating ongoing evaluation and strategic deployment of excess capital.

The paragraph discusses Jim Cracchiolo's response to a question about how his company plans to address longevity trends and the potential for people to outlive their resources. Jim mentions that the company is developing new product initiatives and solutions to help advisers manage client portfolios more effectively, especially concerning retirement income and drawdown strategies. These products aim to optimize clients' financial planning in consideration of longevity and tax benefits. Additionally, there is ongoing investment in creating these products, which are expected to be launched within the next year. Following this discussion, John Barnidge from Piper Sandler asks about whether the company's risk transfer analysis considered a full sale of RiverSource or was limited to liabilities in the corporate segment.

In this discussion, Walter Berman talks about the analysis of long-term care reinsurance, mentioning some considerations about transferring in life books. Jim Cracchiolo indicates that these are the best reinsurance transactions. John Barnidge asks about the direction of distribution expenses in Asset and Wealth Management (AWM) in light of rate changes and product shifts. Cracchiolo explains that distribution expenses are part of General and Administrative (G&A) expenses and notes that volume increases are included there, such as FDIC insurance costs. He says their G&A is stable and that they are actively investing in technology, solutions, and innovations, using methods like AI, robotics, and analytics to maintain investments and margins. Lastly, Brennan Hawken from UBS inquires about strategies to protect spreads in different rate environments, highlighting a focus on lending and an increase in pledge loan products.

The paragraph involves a discussion about growth and developments in financial products, specifically regarding pledge loans and residential mortgages. Jim Cracchiolo notes that there has been a positive increase in pledge loans, driven by a newly launched fixed pledge product, as well as plans to introduce HELOCs. Additionally, the business is working with a new mortgage provider to expand further in the lending sector. Brennan Hawken shifts the focus to the company's insurance business, noting that investors often see it as an obstacle to buying the stock rather than valuing its return profile or cash flows, given its difference from typical wealth management firms.

The paragraph discusses Ameriprise's financial performance and strategic decision-making regarding its long-term care insurance segment. Jim Cracchiolo emphasizes that Ameriprise has consistently delivered strong shareholder returns, outperforming competitors despite market challenges. He highlights that their insurance business generates significant free cash flow, which is used to buy back stock, and does not hinder returns. Cracchiolo also notes that their closed long-term care book, which has been closed for over 25 years, still generates value with minimal capital allocation, contributing positively to client retention and the company's overall financial health.

In this paragraph, the speaker addresses concerns about market pressures and interest rates, asserting that wealth managers and the company are performing well, with strong growth and high returns on equity. Walter Berman discusses the careful evaluation of potential shareholder reactions and risks, emphasizing that any action taken must generate long-term shareholder value. Jim Cracchiolo adds that the company consulted with reputable firms, which recommended maintaining the current course for the benefit of shareholders. Brennan Hawken acknowledges this explanation, noting it was not his intention to stir controversy with his question.

Jim Cracchiolo emphasizes his commitment to generating shareholder returns, engaging employees, and serving clients. He stresses the importance of making strategic decisions for the company's long-term success, referencing the disposal of certain assets to reduce risk and ensure shareholder value. Cracchiolo is open to future opportunities if market conditions change. Brennan Hawken acknowledges the thorough response to his question, and the conference concludes with no further questions.

This summary was generated with AI and may contain some inaccuracies.