Slowing global economic growth, uncertain trade environments and volatile equity markets have investors looking for more advice and solutions.
Minneapolis-based Ameriprise Financial has capitalized on the general uncertainty, especially in its advice and wealth management segment, as the company exceeded analysts' expectations for its third-quarter revenue and earnings.
"In today's climate, our advice value proposition is more relevant than ever before, and we're innovating to serve more of our clients' and advisers' needs and strengthening our position further," CEO James Cracchiolo told analysts on Thursday's earnings call.
Amerprise released its third-quarter results late Wednesday and conducted an earnings call Thursday morning. The company saw an 8% increase in profits for the quarter ended Sept. 30. The financial management and advice firm earned $543 million compared with $503 million in same quarter last year.
The company's adjusted earnings per share grew faster, up 14% to $4.12 per share, 2 cents better than analyst expectations. The adjustments included some one-time items regarding annuities, hedges on investments, indexed universal life benefits and other related charges.
Once a year, Ameriprise also does an "unlocking," a review of its insurance and annuity valuations and its long-term care gross-premium valuations. Adjusting for those assumptions and business-model changes the company earned $570 million, or $4.24 per share. EPS, excluding the unlocking, was up 8% from the $3.92 in the third quarter last year.
"Ameriprise delivered an excellent quarter. Advice & Wealth Management is leading our growth," Cracchiolo said in a statement.
Revenue in the advice and wealth management segment rose 8% to $1.7 billion, while net revenue decreased slightly in its asset-management segment and annuities and protection segment, down 4% and 2% respectively compared with the third quarter of 2018.
Total client assets in advice and wealth management rose 4% to $612 billion and total assets under management and administration rose to $921 billion, both record highs for Ameriprise.
On Oct. 1, Ameriprise closed on the $1 billion sale of its auto and home insurance business to American Family Insurance. "With the successful completion of Ameriprise Auto and Home, we further strengthened our capital flexibility as we execute our plans," Cracchiolo said.
Ameriprise launched a new bank business, Ameriprise Bank, in the second quarter and added a new line of premium credit cards in September. Cracchiolo told analysts on the conference call that they will include new mortgage and savings solutions next year.
"We think the sale of auto and home insurance may be followed by other divestitures as AMP refines its business mix," wrote Catherine Seifert, an analyst who covers Ameriprise for CFRA Research. Seifert maintained her buy recommendation on Ameriprise.
Proceeds from the sale of the auto and home insurance business and any other divestitures may be directed at offering more banking services. "AMP's decision to roll out a suite of banking services will address the current hole in its product offerings and enable the firm to more directly compete with other large wealth managers," Seifert wrote in an e-mail.
During the quarter, Ameriprise returned $676 million to shareholders, up from the $484 million it returned to shareholders in the third quarter of 2018.
Shares of Ameriprise closed at $149.63 on Thursday, up 4.3%.
Year-to-date Ameriprise shares are up 43%. During the past 52 weeks, shares have traded between $95.69 and $153.97 per share.