AllianceBernstein Q3 Earnings Decline on Stock Losses, Net Outflows

Firm reports EPS of $0.36, down 25% from third-quarter 2009

AllianceBernstein (AB) released third-quarter financial results on Thursday, reporting earnings per share of $0.36 versus analysts’ consensus of $0.41, down 25% from EPS of $0.48 in third-quarter 2009 and down 3% from $0.37 in second-quarter 2010.

Total assets under management as of Sept. 30, 2010 were $484 billion, up $26 billion, or 6%, from June 30, but down $14 billion, or 3%, compared to Sept. 30, 2009. Net revenues were reported at $758 million, 6% lower than the $806 million of revenues reported in the third quarter a year ago.

The AUM increase versus the prior quarter was a result of positive investment performance, partially offset by net outflows mainly in AllianceBernstein’s Institutions channel, according to AllianceBernstein’s Q3 2010 release.

A Q3 breakdown of total AUM showed Institutions losing $15.2 billion in net flows in the quarter, Retail losing $3.2 billion, and Private Client losing $500 million.

The global investment management firm, an affiliate of French insurer Axa with its U.S. headquarters in New York, delivered a mixed performance for the quarter due to only a modest recovery in the stock market after losses experienced earlier in the year.

"As investors continue to rebalance their portfolios away from risk assets and into bond funds, we are benefitting in our U.S. and global bond services, where our performance has been strong over the last several years," said Chairman and CEO Peter Kraus in a statement. "Despite our equity services’ improved performance relative to the second quarter, net flows in the third quarter proved to be more challenging.”

Net outflows in the Institutions channel were $15.2 billion, compared to $3.7 billion in Q2 2010. Q3 gross sales fell sequentially to $4.2 billion from $8.1 billion. The pipeline of awarded but unfunded institutional mandates increased $1.2 billion to $6.2 billion in Q3, largely due to the defined contribution pipeline, which had several Customized Retirement Strategies wins.

The Retail channel saw net outflows of $3.2 billion, compared to Q2’s $0.9 billion. Gross sales declined sequentially to $7.3 billion from $8.6 billion. Net outflows in the Private Client channel were $0.5 billion compared to net outflows of $0.1 billion in Q2, as gross sales declined sequentially to $1.6 billion from $2.1 billion.

However, Kraus noted that the overall direction of AllianceBernstein’s flows remained positive, with year-to-date 2010 net outflows clearly improved over 2009.

“In addition,” he said, “assets under management in our defined contribution business topped $10 billion, we continue to add to our alternatives business with the recent acquisition of the SunAmerica platform, and in our sell-side business we are driving a significant expansion of our research and trading capabilities in Asia.”

On Oct. 1, AllianceBernstein announced the acquisition of SunAmerica’s alternative investments group, a team that manages a portfolio of hedge fund and private equity fund investments. SunAmerica, based in Woodland Hills, Calif., is a financial services firm that sells annuities and other retirement products.

Read about AllianceBernstein’s Q2 2010 earnings at AdvisorOne.com.

Reprints Discuss this story
This is where the comments go.