Ameriprise Financial 10-Q 2023-03-31

Filed 2023-05-02. 7 sections, 550K characters. Original on sec.gov · Markdown · JSON

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM									10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		March 31, 2023
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from_______________________to_______________________


Commission File No.			1-32525


AMERIPRISE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)


			Delaware						13-3180631
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


			1099 Ameriprise Financial Center						Minneapolis						Minnesota						55474
(Address of principal executive offices)															(Zip Code)


			Registrant’s telephone number, including area code:			(612)			671-3131


			Former name, former address and former fiscal year, if changed since last report:			Not Applicable


Securities registered pursuant to Section 12(b) of the Act:
	Title of each class		Trading Symbol	Name of each exchange on which registered
Common Stock (par value $0.01 per share)	AMP	New York Stock Exchange


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.			Yes			☒			No			☐


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).			Yes			☒			No			☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer			☒			Accelerated Filer			☐			Non-accelerated Filer			☐			Smaller reporting company			☐			Emerging growth company			☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).			Yes			☐			No			☒


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
	Class	Outstanding at April 21, 2023
Common Stock (par value $0.01 per share)	104,178,786 shares

AMERIPRISE FINANCIAL, INC.

FORM 10-Q

INDEX


Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
	Consolidated Statements of Operations — Three months ended March 31, 2023 and 2022		3
	Consolidated Statements of Comprehensive Income — Three ended March 31, 2023 and 2022		4
	Consolidated Balance Sheets — March 31, 2023 and December 31, 2022		5
	Consolidated Statements of Equity — Three months ended March 31, 2023 and 2022		6
	Consolidated Statements of Cash Flows — Three months ended March 31, 2023 and 2022		7
	Notes to Consolidated Financial Statements		9
	1.	Basis of Presentation	9
	2.	Summary of Significant Accounting Policies	9
	3.	Recent Accounting Pronouncements	12
	4.	Revenue from Contracts with Customers	15
	5.	Variable Interest Entities	18
	6.	Investments	23
	7.	Financing Receivables	27
	8.	Deferred Acquisition Costs and Deferred Sales Inducement Costs	31
	9.	Policyholder Account Balances, Future Policy Benefits and Claims	33
	10.	Separate Account Assets and Liabilities	44
	11.	Market Risk Benefits	45
	12.	Debt	50
	13.	Fair Values of Assets and Liabilities	51
	14.	Offsetting Assets and Liabilities	60
	15.	Derivatives and Hedging Activities	62
	16.	Shareholders’ Equity	66
	17.	Income Taxes	67
	18.	Contingencies	68
	19.	Earnings per Share	69
	20.	Segment Information	70
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			72
Item 3. Quantitative and Qualitative Disclosures About Market Risk			91
Item 4. Controls and Procedures			96

Part II. Other Information			96
Item 1. Legal Proceedings			96
Item 1A. Risk Factors			96
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			97
Item 6. Exhibits			98
Signatures			99

AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended March 31,
	2023		2022 (1)
		(in millions, except per share amounts)
Revenues
Management and financial advice fees			$	2,137	$	2,459
Distribution fees			517		446
Net investment income			698		261
Premiums, policy and contract charges			362		338
Other revenues			131		123
Total revenues			3,845		3,627
Banking and deposit interest expense			103		2
Total net revenues			3,742		3,625
Benefits and expenses
Distribution expenses			1,226		1,300
Interest credited to fixed accounts			164		141
Benefits, claims, losses and settlement expenses			301		32
Remeasurement (gains) losses of future policy benefit reserves			(5)		(6)
Change in fair value of market risk benefits			489		100
Amortization of deferred acquisition costs			62		65
Interest and debt expense			72		40
General and administrative expense			937		947
Total benefits and expenses			3,246		2,619
Pretax income			496		1,006
Income tax provision			79		181
Net income			$	417	$	825

Earnings per share
Basic			$	3.86	$	7.26
Diluted			$	3.79	$	7.10

(1) Certain prior period amounts have been restated. See Note 3 for more information.

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended March 31,
	2023		2022 (1)
		(in millions)
Net income			$	417	$	825
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities			430		(1,220)
Net unrealized gains (losses) on derivatives			2		1
Effect of changes in discount rate assumptions on certain long-duration contracts			(65)		362
Effect of changes in instrument-specific credit risk on market risk benefits			161		303

Foreign currency translation adjustment			33		(46)

Total other comprehensive income (loss), net of tax			561		(600)
Total comprehensive income (loss)			$	978	$	225

(1) Certain prior period amounts have been restated. See Note 3 for more information.

See Notes to Consolidated Financial Statements.

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	March 31, 2023		December 31, 2022 (1)
(in millions, except share amounts)
Assets
Cash and cash equivalents	$	8,386	$	6,964
Cash of consolidated investment entities	162		133
Investments (allowance for credit losses: 2023, $44; 2022, $39)	48,608		44,524
Investments of consolidated investment entities, at fair value	2,294		2,354
Market risk benefits	990		1,015
Separate account assets	75,941		73,962
Receivables (allowance for credit losses: 2023, $73; 2022, $75)	15,378		15,595
Receivables of consolidated investment entities, at fair value	23		20
Deferred acquisition costs	2,754		2,777
Restricted and segregated cash, cash equivalents and investments	1,984		2,229
Other assets	10,119		9,277
Other assets of consolidated investment entities, at fair value	1		2
Total assets	$	166,640	$	158,852

Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims	$	34,932	$	34,132
Market risk benefits	2,123		2,118
Separate account liabilities	75,941		73,962
Customer deposits	33,944		30,775
Short-term borrowings	201		201
Long-term debt	3,560		2,821
Debt of consolidated investment entities, at fair value	2,367		2,363
Accounts payable and accrued expenses	2,027		2,242
Other liabilities	7,315		6,316
Other liabilities of consolidated investment entities, at fair value

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1. Our Management’s Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023 (“2022 10-K”), as well as our current reports on Form 8-K and other publicly available information. References below to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries.

Overview

Ameriprise Financial is a diversified financial services company with a more than 125-year history of providing financial solutions. We are a long-standing leader in financial planning and advice with $1.2 trillion in assets under management and administration as of March 31, 2023. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives.

The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income. Revenues and net income are significantly affected by investment performance and the total value and composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.

We operate our business in the broader context of the macroeconomic forces around us, including the global and U.S. economies, the coronavirus disease 2019 (“COVID-19”) pandemic, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments. Financial markets and macroeconomic conditions have had and will continue to have a significant impact on our operating and performance results. In addition, the business, political and regulatory environments in which we operate are subject to elevated uncertainty and substantial, frequent change. Accordingly, we expect to continue focusing on our key strategic objectives and obtaining operational and strategic leverage from our core capabilities. The success of these and other strategies may be affected by the factors discussed in Item 1A, “Risk Factors” in our 2022 10-K and other factors as discussed herein.

Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the values of market risk benefits associated with our variable annuities and the values of derivatives held to hedge these benefits and the “spread” income generated on our deposit products, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and fixed deferred annuities. We have been operating in a historically low interest rate environment but have recently experienced a substantial increase in rates with uncertainty about where rates will go in the future. A higher (lower) interest rate environment may result in decreases (increases) to our long-duration contract reserves, which may impact our adjusted operating earnings after tax. For additional discussion on our interest rate risk, see Item 3. “Quantitative and Qualitative Disclosures About Market Risk.”

On June 2, 2021, we filed an application to convert Ameriprise Bank, FSB to a state-chartered industrial bank regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation. We also filed an application to transition the FSB’s personal trust services business to a new limited purpose national trust bank regulated by the Office of the Comptroller of the Currency. If the applications are approved, the proposed changes are not expected to impact our long-term strategy for the bank and should enable us to continue our strong lineup of banking solutions, including deposits, credit cards, mortgages and securities-based lending to our wealth management clients without interruption.

We consolidate certain variable interest entities for which we provide asset management services. These entities are defined as consolidated investment entities (“CIEs”). While the consolidation of the CIEs impacts our balance sheet and income statement, our exposure to these entities is unchanged and there is no impact to the underlying business results. For further information on CIEs, see Note 5 to our Consolidated Financial Statements. The results of operations of the CIEs are reflected in the Corporate & Other segment. On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in the fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in net investment income. We include the fees from these entities in the management and financial advice fees line within our Asset Management segment.

While our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating earnings measures, which exclude net realized investment gains or losses, net of reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts), net of hedges and the reinsurance accrual; mean reversion related impacts (the impact on variable universal life (“VUL”) products for the difference between assumed and updated separate account investment

AMERIPRISE FINANCIAL, INC.

performance on the reinsurance accrual and additional insurance benefit reserves); the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impact; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis.

The market impact on non-traditional long-duration products includes changes in market risk benefits and embedded derivative values caused by changes in financial market conditions, net of changes in economic hedge values and unhedged items including the difference between assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and certain policyholder contract elections. The market impact also includes certain valuation adjustments made in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures, including the impact on embedded derivative values of discounting projected benefits to reflect a current estimate of our life insurance subsidiary’s nonperformance spread.

In the first quarter of 2023, management introduced an adjusted capital measure (“Available Capital for Capital Adequacy”), which management believes best reflects the available capital resources of our core operations and facilitates a meaningful trend analysis. Available Capital for Capital Adequacy adjusts GAAP total equity and excludes accumulated other comprehen

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Our primary market risk exposures are interest rate, equity price, foreign currency exchange rate and credit risk. Equity price and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the spread income generated on our brokerage client cash balances, banking deposits, face-amount certificate products, fixed portion of our variable annuities and variable insurance contracts, fixed annuity and insurance contracts, the value of market risk benefits and other liabilities associated with our variable annuities and the value of derivatives held to hedge related benefits.

The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the benefits. This approach works with the premise that matched sensitivities will produce a highly effective hedging result. Our comprehensive hedging program focuses mainly on first order sensitivities of assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho) and Volatility (Vega). Additionally, various second order sensitivities are managed. We use various options, swaptions, swaps and futures to manage risk exposures. The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary.

To evaluate interest rate and equity price risk we perform sensitivity testing which measures the impact on pretax income from the sources listed below for a 12-month period following a hypothetical 100 basis point increase in interest rates or a hypothetical 10% decline in equity prices. The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedging instruments, we assume no change in implied market volatility despite the 10% drop in equity prices.

The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of March 31, 2023 and December 31, 2022:


March 31, 2023
Equity Price Decline 10%	Equity Price Exposure to Pretax Income
Before Hedge Impact	Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(300)	$	3	$	(297)

Variable annuity and structured variable annuity benefits:



Market risk benefits	(986)		736		(250)
Indexing feature for structured variable annuities	568		(335)		233

Total variable annuity and structured variable annuity benefits	(418)		401		(17)


Certificates	2		(2)		—
IUL insurance	44		(42)		2
Total	$	(672)	$	360	$	(312)	(2)

AMERIPRISE FINANCIAL, INC.


Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
Before Hedge Impact	Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(54)	$	—	$	(54)
Variable annuity and structured variable annuity benefits:



Market risk benefits	1,602		(1,171)		431
Indexing feature for structured variable annuities	(29)		91		62

Total variable annuity and structured variable annuity benefits	1,573		(1,080)		493

Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	18		—		18
Banking deposits	32		—		32
Brokerage client cash balances	98		—		98

Certificates	(3)		—		(3)
IUL insurance	12		2		14
Total	$	1,676	$	(1,078)	$	598


December 31, 2022
Equity Price Decline 10%	Equity Price Exposure to Pretax Income
Before Hedge Impact	Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(285)	$	2	$	(283)

Variable annuity and structured variable annuity benefits:



Market risk benefits	(870)		648		(222)
Indexing feature for structured variable annuities	494		(291)		203

Total variable annuity and structured variable annuity benefits	(376)		357		(19)


Certificates	1		(1)		—
IUL insurance	39		(21)		18
Total	$	(621)	$	337	$	(284)	(2)


Interest Rate Increase 100 Basis Points	Interest Rate Exposure to Pretax Income
Before Hedge Impact	Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees (1)	$	(53)	$	—	$	(53)
Variable annuity and structured variable annuity benefits:



Market risk benefits	1,484		(1,028)		456
Indexing feature for structured variable annuities	(29)		82		53

Total variable annuity and structured variable annuity benefits	1,455		(946)		509

Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products	25		—		25
Banking deposits	28		—		28
Brokerage client cash balances	146		—		146

Certificates	(9)		—		(9)
IUL insurance	12		1		13
Total	$	1,604	$	(945)	$	659

(1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.

(2) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is $(297) million as of March 31, 2023 and $(283) million as of December 31, 2022, respectively.

Net impacts shown in the above tables from market risk benefits result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions. Our hedging is based on our determination of economic risk, which excludes certain items in the liability valuation.

Actual results could and likely will differ materially from those illustrated above as fair values have a number of estimates and assumptions. For example, the illustration above includes assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve. Furthermore, we have not tried to

AMERIPRISE FINANCIAL, INC.

anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in the above scenarios.

The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events. Impacts of larger or smaller changes in interest rates or equity prices will not be proportional to those shown for a 100 basis point increase in interest rates or a 10% decline in equity prices.

Asset-Based Management and Distribution Fees

We earn asset-based management fees and distribution fees on our assets under management. As of March 31, 2023, the value of our assets under management was $1.0 trillion. These sources of revenue are subject to both interest rate and equity price risk since the value of these assets and the fees they earn fluctuate inversely with interest rates and directly with equity prices. We currently only hedge certain equity price risk for this exposure, primarily using futures and swaps. We currently do not hedge any of the interest rate risk for this exposure.

Market Risk Benefits

The total contract value of all variable annuities as of March 31, 2023 was $76.8 billion. See Note 11 for details of the reserves associated with market risk benefits. The changes in fair value of variable annuity market risk benefits are recorded through earnings, with the exception of the portion of the change in fair value due to a change in the Company’s nonperformance risk, which is recognized in other comprehensive income. Fair value is calculated based on projected, discounted cash flows over the life of the contract, including projected, discounted benefits and fees.

Equity Price Risk

The variable annuity guaranteed benefits guarantee payouts to the annuity holder under certain specific conditions regardless of the performance of the investment assets. For this reason, when equity prices decline, the returns from the separate account assets coupled with guaranteed benefit fees from annuity holders may not be sufficient to fund expected payouts. In that case, reserves must be increased with a negative impact to earnings.

The core derivative instruments with which we hedge the equity price of risk these benefits are longer dated put and call options; these core instruments are supplemented with equity futures and total return swaps. See Note 15 to our Consolidated Financial Statements for further information on our derivative instruments.

Interest Rate Risk

Increases in interest rates reduce the fair value of the liabilities and may result in market risk benefits in an asset position. The interest rate exposure is hedged with a portfolio of interest rate swaps, futures and swaptions. We have entered into interest rate swaps according to risk exposures along maturities, thus creating both fixed rate payor and variable rate payor terms. If interest rates were to increase, we would have to pay more to the swap counterparty, and the fair value of our equity puts would decrease, resulting in a negative impact to our pretax income.

Structured Variable Annuities

Structured variable annuities offer the contractholder the ability to allocate account value to either an account that earns fixed interest (fixed account) or an account that is impacted by the performance of various equity indices (indexed account). Our earnings are based upon the spread between investment income earned and the credits made to the fixed account and benefits reflected in an indexed account of the structured variable annuities. As of March 31, 2023, we had $7.4 billion in liabilities related to structured variable annuities.

Equity Price Risk

The equity-linked return to contractholders creates equity price risk as the amount paid to contractholders depends on changes in equity prices. The equity price risk for structured variable annuities is evaluated together with the variable annuity riders as part of a hedge program using the derivative instruments consistent with our hedging on variable annuity riders.

Interest Rate Risk

The fair value of the embedded derivative associated with structured variable annuities is based on a discounted cash flow approach. Changes in interest rates impact the discounting of the embedded derivative liability. The spread between the investment income earned and amounts transferred to contractholders is also affected by changes in interest rates. These interest rate risks associated with structured variable annuities are not currently hedged.

Fixed Annuities, Fixed Insurance and Fixed Portion of Variable Annuities and Variable Insurance Contracts

Our earnings from fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts are based upon the spread between rates earned on assets held and the rates at which interest is credited to accounts. We primarily invest in fixed rate securities to fund the rate credited to clients. We guarantee an interest rate to the holders of these products. Investment assets and client liabilities generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments. Therefore, in an

AMERIPRISE FINANCIAL, INC.

increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income. While interest rates under the current environment have relieved some pressure from the liability guaranteed minimum interest rates (“GMIRs”), there are still some GMIRs above current levels. Hence, liability credited rates will move more slowly under a modest rise in interest rates while projected asset purchases would capture the full increase in interest rates. This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business. Of the $34.9 billion in Policyholder account balances, future policy benefits and claims as of March 31, 2023, $17.8 billion is related to liabilities created by these products. We do not hedge this exposure.

As a result of the current market environment, reinvestment yields are becoming more aligned with the current portfolio yield. We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods under the current environment. The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through March 31, 2025 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $4.3 billion and 4.5%, respectively, as of March 31, 2023. In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $17.7 billion and had a weighted average yield of 3.9% as of March 31, 2023. While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields. In addition to the interest rate environment, the mix of benefit payments versus product sales as well as the timing and volumes associated with such mix may impact our investment yield. Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion. The average yield for investment purchases during the year ended March 31, 2023 was approximately 5.6%.

The reinvestment of proceeds from maturities, calls and prepayments at rates near the current portfolio yield will have limited impact to future operating results. In this volatile rate environment, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework. In addition, we may update the crediting rates on our fixed products when warranted, subject to guaranteed minimums.

See Note 9 for more information on the account values of fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of GMIRs and the range of the difference between rates credited to policyholders and contractholders as of March 31, 2023 and December 31, 2022 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated.

Banking Deposits and Brokerage Client Cash Balances

We pay interest on banking deposits and certain brokerage client cash balances and have the ability to reset these rates from time to time based on prevailing economic and business conditions. We earn revenue to fund the interest paid from interest-earning assets or fees from off-balance sheet deposits at Federal Deposit Insurance Corporation insured institutions, which are indexed to short-term interest rates. In general, the change in interest paid lags the change in revenues earned.

Certificate Products

Fixed Rate Certificates

We have interest rate risk from our investment certificates generally ranging in amounts from $1 thousand to $2 million with interest crediting rate terms ranging from 3 to 36 months. We guarantee an interest rate to the holders of these products. Payments collected from clients are primarily invested in fixed income securities to fund the client credited rate with the spread between the rate earned from investments and the rate credited to clients recorded as earned income. Client liabilities and investment assets generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients generally reset at shorter intervals than the yield on underlying investments. This exposure is not currently hedged although we monitor our investment strategy and make modifications based on our changing liabilities and the expected interest rate environment. Of the $33.9 billion in customer deposits as of March 31, 2023, $10.9 billion related to reserves for our fixed rate certificate products.

Stock Market Certificates

Stock market certificates are purchased for amounts generally from $1 thousand to $2 million for terms of 52 weeks, 104 weeks or 156 weeks, which can be extended to a maximum of 15 years depending on the term. For each term the certificate holder can choose to participate 100% in any percentage increase in the S&P 500® Index up to a maximum return or choose partial participation in any increase in the S&P 500® Index plus a fixed rate of interest guaranteed in advance. If partial participation is selected, the total of equity-linked return and guaranteed rate of interest cannot exceed the maximum return. Liabilities for our stock market certificates are included in Customer deposits. As of March 31, 2023, we had $225 million in reserves related to stock market certificates. The equity-linked return to investors creates equity price risk exposure. We seek to minimize this exposure with purchased futures and call spreads that replicate what we must credit to client accounts. This risk continues to be fully hedged. Stock market certificates have some interest rate risk as changes in interest rates affect the fair value of the payout to be made to the certificate holder. This risk is not currently hedged and was immaterial as of March 31, 2023.

AMERIPRISE FINANCIAL, INC.

Indexed Universal Life

IUL insurance is similar to UL in many regards, although the rate of credited interest above the minimum guarantee for funds allocated to an indexed account is linked to the performance of the specified index for the indexed account (subject to stated account parameters, which include a cap and floor, or a spread and floor). The policyholder may allocate all or a portion of the policy value to a fixed or any available indexed account. As of March 31, 2023, we had $2.5 billion in liabilities related to the indexed accounts of IUL.

Equity Price Risk

The equity-linked return to investors creates equity price risk as the amount credited depends on changes in equity prices. Most of the proceeds received from IUL insurance are invested in fixed income securities. To hedge the equity exposure, a portion of the investment earnings received from the fixed income securities is used to purchase call spreads which generate returns to replicate what we must credit to client accounts.

Interest Rate Risk

As mentioned above, most of the proceeds received from IUL insurance are invested in fixed income securities with the return on those investments intended to fund the purchase of call spreads and options. There are two risks relating to interest rates. First, we have the risk that investment returns are such that we do not have enough investment income to purchase the needed call spreads. Second, in the event the policy is surrendered we pay out a book value surrender amount and there is a risk that we will incur a loss upon having to sell the fixed income securities backing the liability (if interest rates have risen). This risk is not currently hedged.

Foreign Currency Risk

We have foreign currency risk through our net investment in foreign subsidiaries and our operations in foreign countries. We are primarily exposed to changes in British Pounds related to our net investment in Threadneedle, which was approximately £1.4 billion as of March 31, 2023. We also have exposure related to operations in foreign countries to Euros, Indian Rupees and other currencies. We monitor the foreign exchange rates that we have exposure to and enter into foreign currency forward contracts to mitigate risk when economically prudent. As of March 31, 2023, the notional value of outstanding contracts and our remaining foreign currency risk related to operations in foreign countries were not material.

Interest Rate Risk on External Debt

The stated interest rates on our $3.6 billion of senior unsecured notes are fixed.

Credit Risk

We are exposed to credit risk within our investment portfolio, including our loan portfolio, and through our derivative and reinsurance activities. Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the financial instrument or contract. We consider our total potential credit exposure to each counterparty and its affiliates to ensure compliance with pre-established credit guidelines at the time we enter into a transaction which would potentially increase our credit risk. These guidelines and oversight of credit risk are managed through a comprehensive enterprise risk management program that includes members of senior management.

We manage the risk of credit-related losses in the event of nonperformance by counterparties by applying disciplined fundamental credit analysis and underwriting standards, prudently limiting exposures to lower-quality, higher-yielding investments, and diversifying exposures by issuer, industry, region and underlying investment type. We remain exposed to occasional adverse cyclical economic downturns during which default rates may be significantly higher than the long-term historical average used in pricing.

We manage our credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master netting arrangements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Generally, our current credit exposure on over-the-counter derivative contracts is limited to a derivative counterparty’s net positive fair value of derivative contracts after taking into consideration the existence of netting arrangements and any collateral received. This exposure is monitored and managed to an acceptable threshold level.

The counterparty risk for centrally cleared over-the-counter derivatives is transferred to a central clearing party through contract novation. The central clearing party requires both daily settlement of mark-to-market and initial margin. Because the central clearing party monitors open positions and adjusts collateral requirements daily, we have minimal credit exposure from such derivative instruments.

Exchange-traded derivatives are effected through regulated exchanges that require contract standardization and initial margin to transact through the exchange. Because exchange-traded futures are marked to market and generally cash settled on a daily basis, we have minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments. Other exchange-traded derivatives would be exposed to nonperformance by counterparties for amounts in excess of initial margin requirements only if the exchange is unable to fulfill the contract.

AMERIPRISE FINANCIAL, INC.

We manage our credit risk related to reinsurance treaties by evaluating the financial condition of reinsurance counterparties prior to entering into new reinsurance treaties. In addition, we regularly evaluate their financial strength during the terms of the treaties. As of March 31, 2023, our largest reinsurance credit risks are related to coinsurance treaties with Commonwealth and with life insurance subsidiaries of Genworth Financial, Inc.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in and pursuant to SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, our company’s disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of March 31, 2023.

Changes in Internal Control over Financial Reporting

Commensurate with the implementation of Targeted Improvements to the Accounting for Long-Duration Contracts accounting standard (“ASU 2018-12”) which was effective on January 1, 2023 (including the restatement periods), we converted to a new actuarial valuation system for impacted insurance and annuity products. The new valuation system is designed to provide for an efficient and well-controlled valuation process under the new standard and leverages a single actuarial modeling platform for our valuation, risk modeling and insurance product pricing needs. In connection with the adoption of ASU 2018-12 and the conversion to the new valuation system, certain internal controls over financial reporting related to long duration accounting have been modified, automated, or implemented and utilize enhanced software capabilities ensuring an effective control environment. We will continue to monitor and ensure effectiveness of the financial reporting controls over long duration accounting. There were no other changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 18 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference.

Item 1A. RISK FACTORS

There have been no material changes in the risk factors provided in Part I, Item 1A of our 2022 10-K.

AMERIPRISE FINANCIAL, INC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents the information with respect to purchases made by or on behalf of Ameriprise Financial, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the first quarter of 2023:


Period		(a)		(b)		(c)	(d)
Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 1 to January 31, 2023
Share repurchase program (1)		268,342		$	331.65	268,342	$	1,492,601,574
Employee transactions (2)		223,547		$	336.81	N/A	N/A

February 1 to February 28, 2023
Share repurchase program (1)		412,782		$	349.14	412,782	$	1,348,483,507
Employee transactions (2)		206,320		$	349.57	N/A	N/A

March 1 to March 31, 2023
Share repurchase program (1)		888,218		$	307.43	888,218	$	1,075,420,572
Employee transactions (2)		9,600		$	325.42	N/A	N/A

Totals
Share repurchase program (1)		1,569,342		$	322.54	1,569,342
Employee transactions (2)		439,467		$	342.55	N/A
		2,008,809				1,569,342

N/A Not applicable.

(1) In January 2022, our Board of Directors authorized an expenditure of up to $3.0 billion for the repurchase of our common stock through March 31, 2024. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means.

(2) Includes restricted shares withheld pursuant to the terms of awards under the Company’s share-based compensation plans to offset tax withholding obligations that occur upon vesting and release of restricted shares. The value of the restricted shares withheld is the closing price of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs. Also includes shares withheld pursuant to the net settlement of Non-Qualified Stock Option (“NQSO”) exercises to offset tax withholding obligations that occur upon exercise and to cover the strike price of the NQSO. The value of the shares withheld pursuant to the net settlement of NQSO exercises is the closing price of common stock of Ameriprise Financial, Inc. on the day prior to the date the relevant transaction occurs.

AMERIPRISE FINANCIAL, INC.

Item 6. EXHIBITS

Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed certain agreements as exhibits to this Quarterly Report on Form 10-Q. These agreements may contain representations and warranties by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe our actual state of affairs at the date hereof and should not be relied upon.

The following exhibits are filed as part of this Quarterly Report on Form 10-Q. The exhibit numbers followed by an asterisk (*) indicate exhibits electronically filed herewith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference.


Exhibit			Description

3.1			Amended and Restated Certificate of Incorporation of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 1-32525, filed on May 1, 2014).
3.2			Amended and Restated Bylaws of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K, File No. 1-32525, filed on February 24, 2021).
4.1			Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Form 10 Registration Statement, File No. 1-32525, filed on August 19, 2005). Other instruments defining the rights of holders of long-term debt securities of the registrant are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The registrant agrees to furnish copies of these instruments to the SEC upon request.
10.1*†			Severance Plan for William Davies
10.2†			Ameriprise Financial 2005 Incentive Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 1-32525, filed on April 28, 2023).
31.1*			Certification of James M. Cracchiolo pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*			Certification of Walter S. Berman pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*			Certification of James M. Cracchiolo and Walter S. Berman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following materials from Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2023 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022; (ii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022; (iii) Consolidated Balance Sheets at March 31, 2023 and December 31, 2022; (iv) Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022; and (vi) Notes to the Consolidated Financial Statements.
104			The cover page from Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2023 is formatted in iXBRL and contained in Exhibit 101.
** Filed electronically herewithin.*
† Management contract or compensation plan or arrangement.

AMERIPRISE FINANCIAL, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


									AMERIPRISE FINANCIAL, INC.
(Registrant)


Date:	May 2, 2023	By:	/s/ Walter S. Berman
	Walter S. Berman
	Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)


Date:	May 2, 2023	By:	/s/ Dawn M. Brockman
	Dawn M. Brockman
			Senior Vice President and Controller
			(Principal Accounting Officer)