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Ameriprise Continues to Like Live-Human Advisors

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Ameriprise Financial Inc. still likes live-human advisors, and it wants to keep a strong book of annuity business.

Executives talked about the company’s annuity business with securities analysts Thursday, during a conference call the company held to discuss its earnings for the fourth quarter of 2017 and all of 2017.

Ameriprise reported Wednesday that it earned $181 million in net income for the quarter on $3.2 billion in revenue, compared with $400 million in net income on $3.1 billion in revenue for the fourth quarter of 2016. Excluding the effects of the new Tax Cuts and Jobs Act, earnings increased 13%, to $502 million.

Executives said during the call that:

  • Ameriprise added 99 advisors in the fourth quarter.

  • Cash flowed out of annuities and mutual funds, but rising stock prices pushed value in, and total retail client assets of all kinds increased by 17% between the fourth quarter of 2016 and the fourth quarter of 2017, to $560 billion.

  • Sales of the kinds of low-risk variable annuity contracts the company most wants to sell, variable annuity contracts without living benefits guarantees, increased 18%, year-over year.

  • Ameriprise wants to “main strong books of business in 2018″ but will tend to favor growth in fee-based products that require less capital.

A recording of the call is available here.

(Related: Ameriprise Spends 7% More on Annuity Distribution)

A year ago, Ameriprise and its advisors were worrying about the possible effects of the U.S. Department of Labor’s fiduciary rule. The DOL has announced an 18-month delay in applying fiduciary rule implementation and enforcement guidelines. 

Jim Cracchiolo, the Ameriprise chief executive officer, said during the conference call that the enforcement delay has helped advisors focus more on serving clients.

When Ameriprise opened up the line for questions, one analyst, Tom Gallagher, noted that the company reported a $13 million loss at its long-term care insurance (LTCI) runoff operation for the fourth quarter. Gallagher pointed out that General Electric Co. has taken a large charge at its LTCI reinsurance unit for the quarter.

Cracchiolo said that Ameriprise has a strong level risk-based capital, and that only 30% to 40% of the loss was the result of issues with claims. Some of the loss was the result of issues involved with the timing of certain transactions, such as policy lapses, he said.

“We feel extremely comfortable with reserves,” Cracchiolo said.

The company has put the LTCI reserves through extensive reviews and constantly monitors the LTCI unit, Cracchiolo said. 

— Read Ameriprise Continues ‘Be Brilliant’ Campaign on ThinkAdvisor.

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