Ameriprise Financial, Inc. (AMP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Ameriprise's third-quarter 2014 operating earnings surpassed the Zacks Consensus Estimate. Constant improvement in revenue generation, driven by sturdy performance of the Advice & Wealth Management as well as Asset Management segment continued to lift the results. Growth in assets under management (AUM) continued to be strong, while mounting expenses remained a concern. The company's ability to mould products to meet dynamic market needs is expected to keep the revenue momentum going. Further, Ameriprise's enhanced capital deployment activities continue to impress. However, weak expense management and net outflows in the Asset Management segment will likely put the financials under strain in the near term.

Overview:

Headquartered in Minneapolis, MN, Ameriprise Financial, Inc. was founded in 1894 under the name Investors Syndicate, which was changed to Investors Diversified Services Inc. (IDS) in 1949. In 1983, the company was formed as a Delaware corporation in connection with American Express' 1984 acquisition of IDS Financial Services from Alleghany Corporation. It further changed its name to American Express Financial Corporation in 1994 and finally to Ameriprise Financial Inc. in 2005. Since Sep 30, 2005, Ameriprise Financial Inc. has been operating independently of American Express Company.

As of Sep 30, 2014, the company owned, managed and administered assets worldwide totaled $796.8 billion, up 8% year over year.

Ameriprise is engaged in providing financial planning, products and services that are customized as solutions for cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs. Its client list comprises individuals, businesses and institutions. As of Sep 30, 2014, the company had a network of around 10,000 financial advisors and registered representatives.


Ameriprise operates primarily through 5 major segments:

The Advice & Wealth Management segment provides financial planning and advice, as well as full service brokerage and banking services, primarily to retail clients through the company's affiliated financial advisors. Its affiliated advisors utilize a diversified selection of both proprietary and non-proprietary products to help clients meet their financial needs.

The Asset Management segment provides investment advice and investment products to retail and institutional clients. Its subsidiary, Columbia Management, principally provides U.S. domestic products and services, and another subsidiary, Threadneedle Asset Management Holdings S rl and its affiliates primarily provide international investment products and services. The U.S. domestic retail products are largely distributed through its Advice & Wealth Management segment, and also through unaffiliated advisors. International retail products are primarily distributed through third parties. Institutional clients are served directly by RiverSource and Threadneedle personnel.

The Annuities segment provides RiverSource Life variable and fixed annuity products to retail clients, primarily distributed through the company's affiliated financial advisors, and to the retail clients of unaffiliated advisors and firms through third-party distributors.

The Protection segment provides a variety of protection products to address the protection and risk-management needs of the retail clients, including life, disability income and property-casualty insurance, primarily distributed through the affiliated financial advisors.

Ameriprise realizes net investment income on corporate level assets from its Corporate & Other segment. This includes excess capital held in RiverSource Life and other unallocated equity and revenues from various investments, as well as unallocated corporate expenses.

Since its inception, Ameriprise has grown significantly through acquisitions, sales and spin-offs. Late in 1990, the company expanded its offering of mutual funds of other companies to provide retail clients with a more comprehensive set of products and services. In 2003, Ameriprise acquired Threadneedle to enlarge its Asset Management business. In 2006, the company divested its defined contribution record-keeping business.

In 2008, Ameriprise acquired H&R Block Financial Advisors Inc., Brecek & Young Advisors Inc. and J. & W. Seligman & Co. Incorporated, each of which further expanded the retail distribution and asset management capabilities of the company.

In 2010, Ameriprise acquired the long-term asset management business of Columbia Management Group, a unit of the Bank of America, for $927 million.

In 2011, Ameriprise sold its independent broker-dealer business unit Securities America Financial Corp. and its subsidiaries to Miami-based Ladenburg Thalmann Financial Services Inc. for $150 million.

In 2013, Ameriprise completed the conversion of Ameriprise Bank, FSB, a federal savings bank subsidiary, to Ameriprise National Trust Bank a limited powers national trust bank.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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