Ameriprise Financial, Inc.

Welcome to the Q1 2023 earnings call. My name is Beau, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you do have a question, please press star 1 on your touchtone phone. And as a reminder, the conference is being recorded. I will now turn the call over to Alicia Charity. Alicia, you may begin.

Thank you, and good morning. Welcome to Ameriprise Financial's first quarter earnings call. On the call with me today are Jim Cracciolo, Chairman and CEO, and Walter Berman, our Chief Financial Officer. Following their remarks, we'd be happy to take your questions. Turning to our earnings presentation materials that are available on our website, on slide two you will see a discussion of four looking statements. Specifically, during the call, You will have references to various non-GAAP financial measures, which we believe provide insight into the company's operations. Reconciliation of non-GAAP numbers to their respective GAAP numbers can be found in today's materials and on our website. Some statements that we make on this call may be forward-looking, reflecting management's expectations about future events and overall operating plans and performance. These forward-looking statements speak only as of today's date and involve a number of risks and uncertainties. A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in our first quarter 2023 earnings release, our 2022 annual report to shareholders, and our 2022 10-K report. We make no obligation to publicly update or revise these forward-looking statements. On slide three, You see our GAAP financial results at the top of the page for the first quarter. Below that, you see our adjusted operating results, which management believes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis. Many of the comments that management makes on the call today will focus on adjusted operating results. And with that, I'll turn it over to Jim.

Good morning everyone and thanks for joining today's call. As you saw in our release, Ameriprise had an excellent first quarter building on a strong year in 2022. As you know, equity markets were choppy, up for the quarter but still down 9% from a year ago, and interest rates were up strongly year over year. However, questions around whether we'll see a hard or soft landing continues to play in the background, and the failure of certain regional banks and another large financial institution caused investor concern. To confirm, Ameriprise has no exposure to the recently affected banks. With regard to our bank, our deposit base is extremely stable, our investment portfolio is high quality with a short duration, and it's all held as available for sale. In addition, all of our client cash suite deposits and wealth management and the bank are FDIC or SIPC insured. As we reflect on the quarter, I'd like to reinforce some important points. Ameriprise remains strong and stable. We navigate environmental uncertainty extremely well for our clients in the business, and we demonstrated that again. Ameriprise is a diversified business with wealth management representing two-thirds of the firm's earnings, complemented by our retirement protection solutions and asset management businesses. This diversity enables us to generate strong results and multiple revenue streams across market cycles and offsets pressures. We can also quickly capitalize on opportunities and deal with risk. Last and importantly, our financial foundation, risk management, and expense discipline are all excellent. We're able to consistently invest in business growth across market cycles and return to shareholders at attractive levels. With that as background, I'll discuss the strong adjusted operating results we achieved in the first quarter. Revenues grew 3% to $3.7 billion, driven by double-digit growth in advice and wealth management. Earnings were up nicely, with pre-tax adjusted operating earnings up 20% and EPS up 25%, which is significant. And the return on equity, excluding AOCI, was 50%. Our return on equity continues to be among the best across financial services. Our assets under management and administration ended the quarter at $1.2 trillion. It's down from a year ago due to lower markets and a negative impact from foreign exchange translation, which was partially offset by our strong client flows. Let's turn to business highlights. In advice and wealth management, we delivered another excellent quarter. We're bringing in strong flows as we focus on providing more advice to more clients and deepening our relationships. Client inflows continue to be robust, more than $12 billion in the quarter, up 18%, and very close to an all-time high. And this builds on our record year in 2022. Both RAC flows and transactional activities were impacted due to market volatility. We expect to see a pickup in RAC and other solutions as markets and the environment settle over time. The Ameriprise client experience helps drive leading client engagement. Our advisors are supporting clients with our excellent market volatility resources and advice-based client experience. Even during this period of heightened uncertainty, client satisfaction remains very high at 4.9 out of 5 stars. Our advisor value proposition is another differentiator. Ameriprise advisory attention is among the best. and productivity continues to grow nicely, increasing 5% to $847,000. Advisors continue to tell us that they love our technology, tools, and support. For example, we're rolling out a great new capability called eMeeting that reduces advisor meeting prep time down to just a matter of minutes and generates a highly personalized professional presentation focused on client goal achievement. In addition to our legacy advisors, Our experienced advisor recruits appreciate our client and advisor value propositions, as well as the firm's financial strength. Another 83 experienced advisors joined us in the first quarter. The quality of the people we're bringing in continues to build in terms of practice size and productivity, and we're seeing a nice recruiting pipeline ahead. As you know, we began building the Ameriprise Financial Institutions Group channel a few years ago. Since then, we partnered with a number of quality financial institutions who want to work with a firm like Ameriprise that can provide excellent client and advisor service. In the quarter, we announced a new bank partner, Comerica Bank. This partnership will bring approximately 100 financial advisors and $18 billion in assets by the end of the year. Regarding our bank, it's growing nicely. We're adding additional deposits that have grown it to $20 billion in just a few years. It's an attractive complement to gain spread revenue in this rate environment. And we've had strong growth in our certificate business with assets now close to $12 billion, as well as good growth in our pledge loan business. At the end of the quarter, we launched a new savings product, and we'll follow that with our home broker CD in May, as well as preferred savings vehicle later in the year. As we grow in the marketplace, we continue to build on our strong brand awareness. In the quarter, we launched the next phase of our advertising to further promote our referable advice value proposition and the excellent client satisfaction we consistently earn. And the Ameriprise team and I are also immensely proud to be recognized for how we operate and do business. Some of our recent awards include being ranked as one of the most trusted wealth managers by Investors Business Daily. Ameriprise is also ranked number two in trust on Forrester's U.S. Customer Trust Index. In addition, we were named one of America's best customer service companies for 2023 by Newsweek. And for the fourth consecutive year, J.D. Powers recognized Ameriprise for providing an outstanding customer service experience for our phone support for advisors. Overall, for our wealth management business, earnings were up strongly again. 58% year over year, and our margin was 30.6%, a new record for Ameriprise. Turning to retirement and protection, we continue to perform nicely while adding value and stability in this environment. This business consistently generates good returns and strong free cash flow. We maintain solid books, and our investment portfolios are high quality. With the improved interest rate environment, we're able to reposition our portfolio, And as investments mature, we're able to reinvest and generate better returns. In terms of priorities, as you know, we are very much focused on asset accumulation products that align with our client needs and our risk profile, which results in a very solid liability base. Our structured annuity product is our bestseller, combined with our Rava annuities without living benefits. And in our life business, we've shifted to concentrate on VUL and disability products that are appropriate for clients in this environment and generate strong returns. Sales are down, but we are similar to the industry. Even with slowest sales, we continue to generate good earnings up to 11% from a year ago. In fact, last year, Alive Company was ranked as the second highest returning company in the industry. Now let's turn to our asset management business. We've been impacted by market volatility and industry-wide sales pressure. However, the business continues to perform well and generated good returns and margin. Assets under management were $608 billion at the end of the first quarter, down 13% from a year ago, largely driven by lower markets and the impact of negative foreign exchange translation. Regarding flows, total outflows were $1.7 billion, excluding legacy insurance partner flows. In U.S. retail, like others in active management, we remain in net outflows as gross sales were pressured from market volatility. That said, redemptions are better sequentially. In EMEA, our flows improved a bit from a year ago. In institutional, we had another good quarter. We had inflows of $2.8 billion, excluding legacy insurance partner flows, driven by wins in fixed income, real estate, and LDI. Expanding our alternatives capability is a long-term priority, including global real estate where we are building out the business and earned a large mandate in the quarter. With regard to investment performance, we continue to have stronger long-term performance across equities, fixed income, and asset allocation strategies. While our one-year numbers were impacted by market volatility, primarily in certain fixed income strategies, We're starting to see those numbers come back this year as interest rates stabilize and given our strength in credit. And we maintain 118 four and five Morningstar rated funds globally. Across regions, we're earning important recognition, including recent LIPA awards and other accolades. In addition to focusing on investment performance, we continue to work through our EMEA integration. We plan to complete much of it by the latter part of the year, and look forward to deriving additional synergies. In asset management, we also continue to manage G&A tightly. So overall, I feel very good about the firm, how we're engaging clients, and the results we're driving. We have not had to divert from our charted costs, and we're generating strong growth and returns in a rocky climate. We continue to have strong free cash flow, as well as the ability to return to shareholders. In the quarter, we returned another $641 million in buyback and dividends, and we just announced another dividend increase up 8%, our 19th increase since going public in 2005. To close, Ameriprise delivered an excellent quarter, and we're well positioned to continue to navigate the environment, manage expenses well, while investing for growth. Now, Walter will provide further detail on our financials. and we'll answer your questions after his remarks. Walter?