Ameriprise Sees 11% Increase in Advisor Productivity

Pretax operating earnings fell 12% at the asset management business, to $222 million, but increased 16% at the Advice & Wealth Management unit, to $492 million.

The Retirement & Protection Solutions unit, which runs the company's insurance operations, is reporting $179 million in pretax adjusted operating earnings on $760 million in revenue, compared with $182 million in operating earnings on $808 million in revenue for the year-earlier quarter.

Although sales of traditional variable annuities were down, sales of registered index-linked annuities, which Ameriprise calls structured variable annuities, increased 3%.

The Shift Away From Guarantees

Ameriprise and many competitors have reduced exposure to life and annuity guarantees in recent years because of concerns that low interest rates on bonds have been making efforts to use bond portfolios to support the guarantees unsustainable.

The Federal Reserve Board has pushed a key interest rate parameter it controls, the target for the federal funds rate, up a total of 2.25 percentage points since February, to a range of 2.25% to 2.5%.

In spite of that increase, many insurers are continuing to follow the same risk-reduction strategies they adopted when the federal funds rate target was lower.

Risk Transfer

Ameriprise would like to complete one or more deals that would help it shed some life, annuity and long-term care insurance risk.

On the conference call, Thomas Gallagher, an analyst from Evercore ISI, asked Walter Berman, Ameriprise's chief financial officer, about the company's effort to find attractive risk transfer deals.

"We certainly have interest," Berman said. "I think it's clear to us that the value and the quality of what we have is being recognized.  But, as you know, these are long-tailed evaluations, and they're continuing."

Pictured: James Cracchiolo. (Photo: Ameriprise)