Ameriprise Financial Inc.’s (AMP) fourth quarter core operating earnings per share of 91 cents were substantially ahead of the Zacks Consensus Estimate of 75 cents and 80 cents in the prior-year quarter. Core operating results exclude realized net investment gains/losses, non-recurring integration costs and other market impacts. 

Results for the quarter primarily benefited from increased asset-based fees from market appreciation, net inflows in wrap accounts and asset management and higher income from spread products as a result of its expense re-engineering effort. 

Ameriprise’s GAAP net income came in at $237 million or 90 cents per share for the reported quarter of 2009, compared to a net loss of $369 million or $1.69 per share in the prior-year quarter. 

Net revenues increased 70% over the prior-year quarter to $2.27 billion. The year-over-year growth reflects the substantial improvement in net investment income, primarily driven by net investment losses in the earlier year. Additionally, advisory and distribution fees and premiums also added significantly to the ascent in top-line growth. 

Total advisors declined 4% to 12,036 compared to the fourth quarter of 2008, reflecting low-producing advisors’ inability to meet productivity requirements. Owned, managed and administered assets were $458 billion during the quarter, up 4% sequentially and 23% compared to year-ago quarter, primarily due to strong product flows, bond market appreciation and recent net inflows. 

Total asset management net inflows were $1.4 billion in the quarter, reflecting improved flows at both domestic and international businesses. Total annuity net inflows in the quarter were $0.4 billion, resulting almost entirely from variable annuity net inflows. 

Expenses declined 3% year-over-year to $1.94 billion, while core operating expenses increased 20.7% year-over-year to $1.92 million. These reflected business growth, the impact of acquisitions, increased performance-based compensation and investments in the business, partially offset by re-engineering benefits and cost controls. 

During the reported quarter, Ameriprise recognized approximately $120 million in re-engineering benefits. For 2009, Ameriprise exceeded $400 million in re-engineering benefits, higher than the expectations of $350 million. 

For full year 2009, Ameriprise’s core operating earnings were $769 million or $3.15 per share compared to $889 million or $3.95 per share in 2008. GAAP net income was $722 million or $2.95 per share compared to a net loss of $38 million or 17 cents per share in 2008. Total net revenue increased 13% over 2008 to $7.8 billion. 

Ameriprise continues to maintain a strong liquidity, which we think will help it grow through acquisitions. During the reported quarter, Ameriprise’s excess capital position was more than $2 billion, including $1 billion for the company’s pending acquisition of Columbia Management’s long-term asset management business. As of Dec 31, 2009, the company had $0.7 billion in net unrealized investment gains. 

Ameriprise’s book value per share increased to $35.82 from $34.97 at the end of prior quarter and $28.29 at the end of prior-year quarter. Cash and cash equivalents were $3.1 billion for the reported quarter, with $0.9 billion at the holding company level and $1.8 billion in free cash. At the end of 2009, the debt-to-total capital ratio was 19.5%. The debt-to-total-capital ratio excluding non-recourse debt and with 75% equity credit for hybrid securities was 14.5%. 

Dividend Update 

On Feb 3, 2010, the Board of Ameriprise declared a quarterly cash dividend of 17 cents per common share payable on Feb 26, 2010 to shareholders of record as on Feb 12, 2010. 

Columbia Update 

Ameriprise expects to complete the acquisition of long-term asset management business of Bank of America Corporation’s Columbia Management unit in the spring of 2010. In Sep 2009, Ameriprise had agreed to purchase this unit for approximately $1 billion. Operational and financial expectations are on track. The transaction will provide far-reaching product distribution opportunities and will be accretive to earnings and return on equity within one year.
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