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Portfolio > Alternative Investments > Real Estate

Ameriprise Gets a Real Estate Exposure Question

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Ameriprise Financial Inc., an insurance and asset management company, posted solid results for the first quarter on Monday in spite of turmoil overseas, uncertainty on the fiduciary rule here in the United States, and creaking in the U.S. commercial real estate market.

An analyst on the firm’s earnings call responded to reports about problems at U.S. shopping centers by asking about the company’s investments in commercial retail properties.

“Our exposure is quite manageable,” CEO Jim Cracchiolo said.

In the company’s portfolio of direct investments in real estate, “we don’t have any exposure to large-box situations,” he said.

The Minneapolis-based company is one of the first life and health companies to release first-quarter earnings.

The company reported $403 million in net income for the quarter on $2.9 billion in revenue, up from $364 million in net income on $2.8 billion in revenue for the first quarter of 2016.

(Related: Three Life Insurers Report Fourth-Quarter Profits)

The annuities unit reported $139 million in operating earnings on $608 million in revenue, up from $124 million in operating earnings for the year-earlier quarter on $596 million in revenue.

The company increased operating earnings at the annuities unit in the face of strong headwinds.

The interest rates the company earned on its own investments and the rates it could offer annuity buyers stayed low.

The company also shifted toward more reliance on fee-based annuities, and less on commission-based products.

The net flow of cash out of the company’s annuities increased to $1.3 billion, from $560 million in net outflow in the year-earlier quarter.

The total ending balance for the company’s fixed annuites fell to $9.8 billion, from $10.5 billion, but the total ending balance for the variable annuities increased to $76.4 billion, from $74.2 billion.

The value of assets in variable annuity fixed sub-accounts rose to $5.2 billion, from $5 billion.

During the conference call with securities analysts, company executives took a question about President Donald Trump’s delay of the implementation of the U.S. Department of Labor’s fiduciary rule.

Cracchiolo said he wanted to hear more about a U.S. Securities and Exchange Commission proposal to have the SEC oversee all retirement product sales.

“Having one consistent regulatory regime would be great,” Cracchiolo said during the conference call.

The company also talked about its acquisition of Investment Professionals Inc., a broker-dealer that offers investment programs through branches of banks, credit unions and other financial institutions.

Ameriprise has posted a recording of the conference call on its website.

— Read Ameriprise to Buy $8B Broker-Dealer With 200 Reps, Tops Earnings Estimates on ThinkAdvisor.


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