As fourth-quarter 2010 entered its third week, companies of interest to financial advisors reported a mixed bag of results, and many managed to announce a dividend.
Strong wealth management results and higher fees and commissions often helped boost earnings for insurance companies as well as pure-play asset management firms.
"The results are very mixed," said Tim Holland, a portfolio manager with Aston/TAMRO Diversified Equity Fund, in an interview on Thursday. "If you owned Hartford, you had a good day, if you owned Genworth the last couple of days, you're in a lot of trouble."
While Ameriprise and Genworth were off sharply in the stock market, insurance companies such as The Hartford and Lincoln reported good numbers and saw an uptick, Holland noted.
"It shows that investors are very discriminating now. It's really about fundamental execution," he said. "With Genworth, there are questions about credit quality and asset performance. Ameriprise had a very unpleasant number relative to expectations. Hartford and Lincoln reported good numbers. These are signs of a stock-picking market."
Standard & Poor's "marketweight" recommendation on the finance sector certainly reflects its mixed nature this quarter, compared with S&P's overweight opinion on industrials and information technology and its underweight opinions on the health care and utilities sectors.
For example, The Hartford is sitting on excess capital and may announce a share buyback later in the year, but Genworth saw a disappointing quarter, said S&P insurance analyst Bret Howlett in an interview on Thursday.
"Overall, the retirement business at Genworth is fine, but they're having mixed results in other areas such as long-term care and term life, which is putting a strain on the company," Howlett said. "But there has been a reserve increase on long-term care, and sales are strong. I suspect Genworth will do well on long-term care as other companies pull back from it."
The biggest company in the financial-advisor universe to report earnings this week, Ameriprise (AMP), missed estimates on Wednesday as average fees and commissions for advisors rose 21% with weaker FAs leaving the firm. Fourth-quarter 2010 net income was $305 million, or $1.18 per share, versus $237 million, or $0.90, for the fourth quarter of 2009. Analysts had expected the company to earn $1.31 per share and revenue of $2.67 billion.
The total number of Ameriprise financial advisorsdeclined by 554 to 11,482 in December 2010 from 12,036 in December 2009 by 126 from 11,608 in September 2010. The number of employee advisors dropped to 7,488 from 7,658, while the number of franchise or independent advisors fell to 9,656 from 10,103.
The asset management and advice and wealth management units had operating net revenues of $2.6 billion, up 19% from $2.2 billion a year ago "due to growth in asset-based fees driven by the Columbia Management acquisition, market appreciation and retail client net inflows, as well as increased client activity levels," the company said in a press release.
Despite the earnings miss, Ameriprise declared a quarterly cash dividend of $0.18 per common share—reflecting a theme of stock dividends being announced by a good number of companies. This week, along with Ameriprise, The Hartford, Symetra and Calamos all announced dividend. Genworth and Fiserv did not announce dividends.
