Ameriprise CEO Talks About RiverSource Deal Options

What You Need to Know

Ameriprise made an $8 billion RiverSource Life reinsurance deal with Global Atlantic before the end of the second quarter.
Now, the company is seeing many life and annuity offers.
Cracchiolo said one consideration that the RiverSource life and annuity operations generate strong returns.

Jim Cracchiolo gave a careful answer Tuesday to a securities analyst’s question about the future of Ameriprise Financial’s RiverSource Life unit.

Cracchiolo, Ameriprise’s chairman and CEO, was presiding over a conference call the Minneapolis-based company held to brief the analysts on the company’s second-quarter results. The second quarter ended June 30.

Ameriprise announced June 29 that it had agreed to “cede,” or transfer responsibility for, a large block of RiverSource annuity business to Global Atlantic. The block includes RiverSource fixed-rate annuities, income annuities and non-variable indexed annuities backed by $8 billion in reserves.

Ameriprise executives have said that many more life and annuity proposals have been coming in since the company announced the Global Atlantic reinsurance deal.

Tom Gallagher, an analyst with Evercore ISI, asked Cracchiolo during the earnings call whether Ameriprise executives are looking mainly at deals similar to the Global Atlantic deal, which might involve sales of slices of RiverSource life and annuity risk.

“Or would you be open to doing something far more strategic, like a full divestiture of RiverSource Life?” Gallagher said.

Gallagher said he believes owning RiverSource Life hurts the price of Ameriprise stock.

Cracchiolo’s Answer

Cracchiolo told Gallagher said that Ameriprise is “evaluating a lot of different aspects” when it reviews both big, strategic deals and deals that might optimize slices of business.

“It’s not as though we’re just being myopic at this point,” he said.

But Cracchiolo said that, except for the long-term care insurance business, the RiverSource life and annuity operations have been doing well.

Some parts of the life and annuity business, such as the indexed universal life book of business, may be generating lower returns than some other parts, “but even our annuity book has a very good return,” he said.

Ameriprise will think about the long-term financial implications, not just short-term financial implications, when evaluating life and annuity deal proposals, Cracchiolo concluded.