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Ameriprise Provides Q3 Guidance, Mentions Unlocking Impact

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Ameriprise Financial, Inc. (AMP - Free Report) has provided third-quarter 2020 guidance. The company expects adjusted operating earnings in the to-be-reported quarter to include an after-tax non-cash unfavorable impact of $350 million as a result of the annual review of insurance and annuity valuation assumptions and models.

Notably, the reduction of the company’s 10-year Treasury rate assumption to 3.5% and extension of the grading period to 6.5 years with no grading in 2020, accounts for the vast majority of the impact.

Nevertheless, the reduction in the interest rate assumption is not expected to have any impact on the company’s excess capital since that is determined on a statutory basis.

As a result of unlocking and hedging, third-quarter operating effective tax rate is anticipated to be elevated.

For 2020, operating effective tax rate is anticipated to be 16-18%.

Notably, in the second quarter of 2020, Ameriprise recorded adjusted operating earnings per share of $2.64, which was 35% lower than the year-ago quarter’s reported number.

The quarter’s results were primarily hurt by a decline in revenues, partly offset by lower expenses. However, an improvement in assets under management and assets under administration balance were tailwinds.

The company’s continued focus on core operations and efforts to improve revenues through restructuring initiatives are expected to keep aiding profitability in the quarters ahead.

So far this year, shares of Ameriprise have lost 9% compared with a decline of 8.7% recorded by the industry.

Currently, the company carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the finance space are mentioned below.

Navient Corporation (NAVI - Free Report) has witnessed an upward earnings estimate revision of 14.9% for the current year over the past 60 days. Also, its shares have gained 17.3% over the past three months. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Credit Acceptance Corporation’s (CACC - Free Report) earnings estimates have been revised 23.1% upward for the current year in the past 60 days. Over the past three months, the Zacks Rank #2 stock has declined 23.3%.

SLM Corporation’s (SLM - Free Report) earnings estimates for the current year have been unchanged over the past 60 days. Its shares have witnessed a rise of 13.3% over the past three months. The company currently carries a Zacks Rank #2.

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