- CFO says the unit failed to meet profitability targets
- Ameriprise third-quarter net income falls 5.5 percent
Ameriprise Financial Inc., which is celebrating the 10th anniversary of its spinoff from American Express Co., is abandoning an unprofitable push into travel insurance.
“We had a loss associated with the travel-accident program, a small program we piloted,” Chief Financial Officer Walter Berman said in a third-quarter earnings call Thursday. “Therefore, we are in the process of exiting this business.”
Travel insurance can reimburse clients for trip interruption or lost baggage. Warren Buffett’s Berkshire Hathaway Inc. has expanded in the business in recent years, helped by John Noel, an industry pioneer who sold an earlier venture to American International Group Inc.
Ameriprise relies more on businesses like wealth management and providing financial advice. The Minneapolis-based company said that the travel operation hurt results at a subsidiary that also sells auto and home insurance. That unit incurred $1.08 in claims and expenses for every premium dollar in the third quarter.
Travel insurance “did not meet our profitability targets,” Berman said in the call.
Ameriprise’s third-quarter net income fell 5.5 percent to $397 million as volatile markets and currency fluctuations pressured results at the asset-management unit. Operating earnings were $2.35 a share, beating by 6 cents the average estimate in a Bloomberg survey of analysts.
Ameriprise gained 2 percent to $113.83 at 2:16 p.m. in New York trading, narrowing its loss for the year to 14 percent.