Ameriprise Posts 45% Jump in Variable Annuity Sales

Strong sales of registered index-linked annuities helped Ameriprise Financial push total annuity sales to $1.5 billion in the second quarter. Volume was 45% higher than in the second quarter of 2023, the company reported last week.

Life insurance sales increased 21% from last year to $93 million. The main driver was demand for the kind of variable universal life products that affluent clients can use to build cash value.

Ameriprise no longer sells new long-term care insurance, but operating profits for those policies still on the books at the company’s Retirement & Protection Solutions business rose to $12 million, from $1 million a year ago, thanks in part to the effects of relatively high interest rates on the bond portfolio that supports the LTCI benefits obligations.

Ameriprise CEO Jim Cracchiolo told securities analysts that the company is happy with the insurance business results.

“I think the business will be a good, strong, consistent contributor,” Cracchiolo said.

What it means: Life insurance and annuities are now moneymakers for companies like Ameriprise.

Strong life and annuity business performance could lead to better product options and prices for your clients.

Earnings: Ameriprise executives talked about the company’s insurance business Thursday, during a conference call that the Minneapolis-based company held to discuss second-quarter results with analysts.

Ameriprise as a whole reported $829 million in net income for the quarter on $4.2 billion in revenue, compared with $890 million in net income on $3.9 billion in revenue for the second quarter of 2023.

Adjusted operating earnings, which exclude the effects of fluctuations in total asset and benefits obligation values, increased to $882 million from $807 million in the year-ago period.

In Q2’24, the insurance business reported $196 million in pretax adjusted operating earnings on $928 million in operating revenue, up from $189 million operating earnings on $858 million in revenue in Q2’23.

Like other insurers, the insurance business puts the cost of the commission payments tied to new annuity sales in its earnings when it records the sales. This means strong annuity sales temporarily hurt earnings.

“Over time, that increase in sales volume will add to the earnings mix,” Cracchiolo said during the analyst call.

Advisors: Ameriprise said its Advice and Wealth Management unit added 118 advisors over the past 12 months, giving it 10,392 advisors as of June 30.

Total client assets increased 17% from the second quarter of 2023, to $972 billion.

The advisory unit reported $822 million in pretax profits for the latest quarter on $2.6 billion in adjusted revenue, up from $731 million in pretax profits on $2.3 billion in adjusted revenue for the year-earlier quarter.

Client net flows fell 30% year over year to $6.6 billion, and cash sweep balances fell 3% to $40.6 billion.

Janet Levaux contributed to this report.

(Credit: Bloomberg)