Some securities analysts are skeptical about the near-term prospects for investments in Ameriprise Financial Inc.[@@]
American Express Company, New York, is in the process of converting Ameriprise – the old American Express Financial Advisors == into a stand-alone company.
Ameriprise, Minneapolis, will start out with a network of 10,000 “branded advisors.” Many of those advisors have strong relationships with highly affluent clients.
Standard & Poor’s, New York, says it will be adding Ameriprise to its flagship S&P 500 Index.
But Suneet Kamath, a life insurance analyst at Sanford C. Bernstein for Bernstein Research, made much the same point when he wrote that the fact Ameriprise generated close to 60% of its 2004 revenues from life insurance businesses would portend an ROE in the range just approaching the double digits, rather than the nearly 50% higher range that is the norm for more investment-oriented financial services businesses.
Fox-Pitt, Kelton made that prediction in a research note to investors last week noting, among other factors, that the growth-oriented investment styles of its American Express shareholder owners will lead them to sell Ameriprise shares after distribution of the dividend by the parent company.
American Express Inc., New York, spun offthe sector of the company that distributes asset management, insurance, brokerage and banking products through its more than 10,000 branded advisers to its shareholders. It is now being traded as Ameriprise Financial Inc.
“Even if Ameriprise is added to the S&P 500 immediately, the weighting will be much lower than that of American Express, implying that index funds may trim positions in Ameriprise to reflect its lower weighting in the composite,” wrote FPK.