Alicia Charity - IR Jim Cracchiolo - Chairman and CEO Walter Berman - CFO.

Suneet Kamath - UBS Bill Katz - Citi Alex Blostein - Goldman Sachs Mike Zaremski - Balyasny.

Welcome to the Third Quarter 2014 Earnings Call. My name is Lauren and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Ms. Alicia Charity. Ms. Charity, you may begin..

Thank you and good morning. Welcome to Ameriprise Financial’s third quarter earnings call. On the call with me today are Jim Cracchiolo, Chairman and CEO; and Walter Berman, Chief Financial Officer. Following their remarks, we’ll be pleased to take your questions.

During the call, you will hear references to various non-GAAP financial measures, which we believe provide insight into the company’s operations. Reconciliation of the non-GAAP numbers to the respective GAAP numbers can be found in today’s materials available on our website.

Some statements that we make on the call may be forward-looking, reflecting management’s expectations about future events and operating plans and performance. These forward-looking statements speak only as of today’s date and involve a number of risks and uncertainties.

A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in today’s earnings release, our 2013 annual report to shareholders and our 2013 10-K report. We take no obligation to update publicly or revise these forward-looking statements.

With that, I’ll turn it over to Jim..

Good morning, everyone, and thank you for joining our third quarter earnings call. I’ll start with my thoughts on the business Walter will review the numbers in detail and then we’ll be happy to take your questions. It was another strong quarter for Ameriprise, continuing the trend we set in the first half of the year.

Our operating results were very strong with net revenue growth at 8%, excluding unlocking. Operating earnings and EPS growth were each over 20%. Assets under management and administration increased 8%, $797 billion reflecting strong advisory client flows as well as market appreciation.

Our capital and financial position is excellent and we continue to generate significant free cash flow to return to shareholders. During the quarter, we returned $442 million to shareholders through share repurchases and dividends.

Year-to-date through to the quarter end, we have returned $1.4 billion to shareholders which is 112% of year-to-date operating earnings. We’re on our way to four consecutive years of returning over 100% of our operating earnings to shareholders.

With our earnings growth and capital return, we again delivered record operating return on equity excluding AOCI of 22.1%, up 270 basis points from a year ago. Let’s move to the business and Advice & Wealth Management where we had another excellent quarter.

Operating net revenues grew 13% to $1.2 billion driven by strong growth and assets from client flows and equity market appreciation. As I mentioned, we’re seeing good levels of activity. Total client assets increased 11% to $434 billion with continued strong inflows of $3.8 billion into our investment advisory programs.

The combination of strong flows, asset growth, and productivity, as well as ongoing expense management led to a 35% increase in operating PTI and pre-tax operating margin up significantly to 16.9%. Our priority is to bring in new clients and assets to Ameriprise and to deepen relationships so we can continue to increase retail client flows.

In September, we were back on the air with a new commercial from our Real Questions, Real Answers advertising campaign featuring our confident retirement approach. A recent study showed that more than two-thirds of affluent consumers do not have a formal financial plan to reach their long-term goals.

We know that confident retirement not only tests well with the mass affluent, but also with affluent consumers, those with over $1 million in investable assets. In fact, we think there is a greater opportunity for us to serve more of the affluent consumer base.

I recently attended a conference with our private wealth advisors and they’re motivated to grow further in affluent market using the capabilities we offer that resonate well with these consumers. Overall, our advisor force is strong and our retention as well as satisfaction rates remain very high.

In terms of recruiting experienced advisors, we brought in another 81 in the quarter. The productivity of the advisors we’re attracting continues to grow and our recruiting pipeline so far in the fourth quarter looks quite good.

In terms of bringing in new clients and assets and AWM, we’re pleased with our confident retirement approaches engaging our existing clients, as well as prospects. Our advisors are finding it really helps to simplify the conversation so people better understand what they need to do to plan for a secure retirement and how Ameriprise can help.

Our advisors, who are using it with their clients in the target age range, have had meaningful increase in net flows. We’re also investing in and helping our advisors take advantage of our technology, marketing, and social media capabilities to increase their productivity, gain new clients, and deepen current relationships.

We’re helping advisor offices operate more efficiently. Our paperless office tools like e-forms and electronic check scanning reduce expenses for advisors and the company, as well as the complexity and time needed to manage client documents.

We also have a new online tool for document creation and management making it easier for advisors and their teams to work and collaborate wherever they may be. And in terms of engaging clients, we’re also seeing success with our Total View, our account aggregation tool as a way to help deepen relationships.

Our advisors are also increasingly using our award-winning social media to expand their digital presence and acquire clients. Our social media capabilities can help advisors build a credible, robust online presence to encourage shared connections with prospective clients.

During the quarter, we received results from a client relationship study and satisfaction with both our advisors and with Ameriprise has increased 3 points to 92%, an all-time high. In addition, 93% of our clients said they’re likely to continue working with Ameriprise, also up 3%.

As a result of our efforts and the actions we’ve focused on to drive growth, advisory productivity, a metric we’ve consistently grown continues to increase. Compared to a year ago, it’s up double-digits to $483,000 on a trailing 12 month basis. Overall, it was another terrific quarter for Advice & Wealth Management.

Now let’s move to Asset Management, where we’re delivering good financial performance but we have more work to do from a flows perspective. Our assets under management grew to $505 billion, up 5% from a year ago mainly driven by positive equity markets as well as growth in our International business.

We had a strong quarter from an earnings perspective. Operating net revenues were up 8% and we’re managing expenses as we invest in the business. Pre-tax operating earnings were up 21% to $208 million and our adjusted pre-tax operating margin was a competitive 41.3%.

In terms of the business and our flows in the quarter, overall we experienced net outflows of about $4 billion. Nearly half of that came from ex-parent affiliated distribution including Zurich and Balboa. The remainder was due to domestic outflows and DCIO, RIA and sub-advisory. However, we’re seeing some stabilization in these flows.

We’ve also experienced net outflows from weaker European retail flows. As well, we were affected by PM moves earlier in the year. We believe that the impact of the PM change is largely behind us and there is good performance coming from the team.

This was somewhat offset by strong third party institutional flows of about $1 billion where winning key mandates from clients in North America, Europe, and Asia. The Institutional business is on track and I feel very good about our capabilities and global growth opportunity. We’ve also added Joe Kringdon, an industry veteran as Head of U.S.

Intermediary reporting to Ted. We’re refocusing our efforts on key client relationships where we can drive flows in the future and expect to gain traction over time.

In addition to our focus on gaining share in traditional products, we’re building our capabilities in global products and in multi-asset solutions for both our Retail and Institutional channels. We’re investing expanding in areas like adaptive risk parity, liquid alternatives, Asian equity and bonds, and global products.

And we think that over time we can gain good traction that would further add to our flows and complement our core business as we build our track record and awareness of these products and our capabilities. Overall, we have good talent, a growing product line and expanding distribution footprint.

We’re executing our plan and beginning to gain traction in key growth areas but there is more to do. Let’s move to annuities and protection, which help us deepen relationships with our clients across life stages and are important to our confident retiming approach.

Adjusting for unlocking, we’re generating good returns in our Annuities business with lower risk and volatility as we continue to grow at the moderate pace we want. In Variable Annuities, client account balances grew 5% due to market appreciation and we had good sales in our channel at about $1.2 billion.

As we work with clients to help ensure their retirement lifestyle through tax management and protection, we’re selling more variable annuities without living benefits. This complements sales with living benefits as a way for clients to cover essential living expenses.

In fact, sales of the variable annuities, without living benefits, increased to nearly 30% of total variable annuity sales in the quarter. In Fixed Annuities, underlying results are up from our re-pricing of the book and improved spread income.

As we stated, our focus remains on the overall profitability of the book as we’re not currently adding to it. Overall, with folks still making it easier for clients and advisors to understand the benefits that annuities can provide in terms of reliable retirement income.

With regard to Protection, excluding unlocking, pre-tax operating earnings were up 10%. In Life Insurance, earnings were impacted by higher health claims although it was within our expected ranges. VUL/UL sales picked up a bit year-over-year with our RiverSource TrioSource product. VUL/UL ending account balances were up 6% largely from the markets.

TrioSource is an interesting UL product that combines a tax qualified long-term care rider that fits well with our financial planning approach. In Auto & Home, earnings improved and we’re seeing steady growth in policies, up 11% from a year ago. We’re seeing improved levels of loss ratios.

We have initiatives underway to enhance our modeling and pricing capabilities that we believe will get us back to a stronger position over the next number of quarters. Ameriprise Auto & Home is rated one of the best for client satisfaction in the second quarter.

And to complement that, we were recently ranked number two in California by a leading consumer publication that measured consumer satisfaction based on price, distribution, and policy offerings. We consistently earn high accolades for our offering.

To summarize, we had a strong third quarter with solid revenue growth, strong operating earnings growth, and operating ROE north of 22%. I feel good about our current position. Our diversified business provides great benefits for clients, advisors, and our shareholders.

We continue to grow the business consistent with our plan, expanding our fee based earnings, complemented by the stability and diversification of our spread business. At quarter end, about 64% of our pre-tax operating earnings, excluding unlocking, were driven by our low capital, Advice & Wealth Management and Asset Management businesses.

Like everyone, we’re paying close attention to global markets and providing our advisors with resources and thoughtful insights to use with clients understanding that while they’re focused on planning for the long term goals, the current markets are top of mind.

Our strong business results, excellent financial foundation, and ability to generate significant free cash flow provides the ability to continue to return to shareholders as we have in the past. With that, I'll pass the call to Walter, for a review of the numbers..

Thank you, Jim. Ameriprise delivered another quarter of excellent financial results. So let’s start with operating and net revenue growth on Page 3. In total, operating net revenues grew 8% due to strong market appreciation and wrap flows, partially offset by net outflows in Asset Management.

It should be noted that net investment income has been challenged by the low interest rate environment but the other revenue lines are up almost 10% from last year. Total assets under management and administration increased 8% to nearly $800 billion at the end of the quarter.

Solid revenue growth, combined with continued expense discipline, resulted in a record AWM and Asset Management margin of 16.9% and 41.3% respectively. Together, Advice & Wealth Management and Asset Management operating earnings grew 27% and accounted for 68% of earnings.

Excluding DAC unlocking, those segments account for 64% of the earnings, up from 59% last year demonstrating our continued business mix shift. Let's turn to EPS and return on equity on slide four. Operating return on equity continues to increase reaching another all-time high of 22.1% and in the upper end of our targeted range of 19% to 23%.

Operating earnings per share also reached a new record level of $2.10. Excluding unlocking in both periods, EPS was up 28% to $2.24. This is the result of solid business growth and fundamentals across all segments as well as continued capital redeployment. I’ll turn to slide five to take you through the details on Advice & Wealth Management.

We continued to deliver excellent business metrics and financial results in Advice & Wealth Management with 13% top line growth. Pre-tax operating earnings were up 35% to $205 million due to strong client flows, asset levels, and market appreciation.

As we have discussed previously, we are seeing continued improvement in the earnings and margins in both the employee and franchise channels. In total, margins reached a new record high of 16.9%, up 270 basis points. The spread earned on the $19 billion of brokerage cash was 19 basis points for this quarter.

So there remains substantial upside potential for an increase in short term rates going forward. Overall, the business continues to deliver consistent good results demonstrating the strength of our business model. We continue to invest for future growth, building on our brand and adding capabilities to support our clients and advisors.

Turning to Asset Management on slide six, revenues increased 8% to $839 million primarily from growth in assets under management from strong markets and performance fees at Threadneedle. And we remain focused on tightly managing expenses. We continue to deliver solid financial performance with earnings growth of 21% and our margin exceeding 40%.

Investment performance remains solid with 121 four and five star rated funds and we saw improvement across many styles at Columbia. Let’s turn to flows on slide seven. In the quarter, we experienced 4.1 billion of net outflows. We had net outflows of 3.5 billion in retail across Columbia and Threadneedle.

We had outflows in several areas we had discussed in the past, namely former parent affiliated distribution. In addition, we continue to face some challenges in Retail at Columbia particularly in the DCIO channel. We had Retail net outflows of $1 billion at Threadneedle due to industry weakness in Europe and from a portfolio manager change on the U.S.

equities team from earlier this year. U.S. equity performance remains solid and the level of outflows has declined. Institutional net outflows of $500 million were driven by strong $1.1 billion of third party net inflows at Columbia which were more than offset by several former parent related areas at both Columbia and Threadneedle.

The third party institutional pipeline remains solid looking over the next couple of quarters. Turning to annuities on slide eight, pre-tax operating earnings were $128 million, down from $205 million last year due to unlocking and re-reversion.

Excluding those items in both periods, pre-tax operating earnings were up 18%.Variable annuity pre-tax operating earnings grew 12% from a year ago to 119 million excluding unlocking and re-reversion. This was driven by higher fees from improved equity markets. The inflows [ph] block is solid with account values up $5% to $76 billion.

Our net amount at risk as a percent of account value is less than 1% in total for living benefits and death benefits.

We continue to write new business with a very attractive risk profile offering products with living benefit guarantees using our managed volatility funds and products without living benefits that provide tax advantage accumulation for our clients. In fact, 28% of our new sales in the quarter were without living benefits.

Fixed annuity pre-tax operating earnings increased 42% to $37 million excluding unlocking. This reflects the re-pricing of the majority of our five-year guaranteed block. Fixed annuity account values declined 8% to $12.4 billion with lapse rates in line with our expectations.

Turning to Protection on slide nine, pre-tax operating earnings were up 10% to $87 million excluding unlocking. Our Life & Health businesses were impacted by the continued low interest rate environment. Health claims were in line with expectation but at the higher end of the range. Auto & Home earnings continue to improve this quarter.

Our prior accident years are performing well and we have had no additional adverse loss development. Let’s turn to capital on Slide 10, our balance sheet remains strong with approximately $2.5 billion of excess capital.

Based upon our risk management assessment, we reduced our contingent capital for market dislocation from $500 million to $250 million which contributed to the increase in excess capital. We continue to return over 100% of operating earnings to shareholders with $442 million distributed through dividends and share repurchase in the quarter.

Our significant return on capital is an important driver of our ROE expansion reaching 22.1%. With that, we will take your questions..

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Suneet Kamath from UBS. Please, go ahead..

I just wanted to start with the Asset Management earnings for the quarter, I guess $208 million. If I look back over the past four quarters and take out the disclosed items that you typically give us, seems the range has been $178 million to $194 million, so 3Q 2014 was quite a bit above that range.

My first question was there anything either seasonal or unusual that drove the upside in 3Q versus what we've seen the past couple of quarters?.

Suneet, its Walter. The two things, we had performance fees and also the market gave us a lift and those are the two items that drove both the earnings up and the margin going up 40. .

Can you quantify the performance fees?.

It’s around $9 million. .

And that's not -- that's not a quarterly thing that happens? That's just a third quarter event?.

No. That actually happens throughout the quarters. And as we -- but that does happen throughout the quarters..

Okay. So we could see that again in 4Q, performance from Israel..

Absolutely..

Moving to Advice & Wealth Management, at your investor day, you gave us some good information about some of the margins by channel.

Could give us an update in terms of where you sit today?.

As we indicated on the employee channel, that is certainly heading into the high single digits, and that is improving, as we talked about. And certainly on our franchise channel is performing in the high teens. .

Okay. And then on the recruited advisors of 81, has there been any change? My understanding is over the past several quarters it’s been about 50-50 between which channels the EARs go into.

Is that about where you continue to be?.

That’s approximately right. Yes..

Then my last question and I'll re-queue, is just on the earnings mix. So 64% from Advice & Wealth Management and Asset Management, if you exclude the unlocks, that seems to be coming in higher than at least where I thought it would be at this stage in the story.

Where do you see that going over the next couple years in terms of the earnings contribution from A&WM and Asset Management?.

As Jim has indicated and we indicated, certainly we see that it could hit 70%. We see it going up. And we talked about 70%, and certainly again into that range. So, and it is tracking. We’re doing well in the two areas..

Okay. It just seems to me that we could push above 70%, particularly if short-term interest rates start to give you some help..

One could, yes..

All right. I’ll re-queue. Thanks. .

Thank you. And our next question comes from Bill Katz from Citi. Please, go ahead. .

Thank you very much. Good morning. I appreciate you taking the questions. Just staying on the Asset Management business for a moment. Your adjusted margin was over 40%. I think it's a bit higher, you called out some performance fees, but I assume there's some comp against that.

So, when you look on a go-forward basis, just given some of the new product development that you have coming down the pike, how are you thinking about margin opportunity from here?.

The margin opportunity, as we said, we were in the ranges of the upper 30s, and I think that again is a market driven and other things, and certainly as the products take on, you get mix shifts also coming between fixed and equity so there’s a lot of moving parts to it.

But certainly staying in the upper teens and 40 range is certainly something that is possible. Again, it’s subjects to market, so if the mix shift as it relates to where it's fixed or its equity..

In terms of the flow dynamics, I'm sort of curious. A lot of volatility through the end of the third quarter and into October. Any sort of update on real time trends of what's happening? Then the broader question would be, [you listed offers here at] sort of five or six initiatives maybe even more than that.

When do you think that you could start to see some unit growth filtering into net flows from those initiatives?.

Well, what we see, this is Jim. What we see right now is we still have a good strong pipeline and institutional business. We’ve been expanding some of our mandates on a more global basis, and winning business there. We are building new products and capabilities, both our global as well as our asset allocation, risk parody, et cetera.

And we see flows starting to come in, in that type of area. Probably as we go into the 2015 and the quarters in 2015 that that would hopefully start to add to our flow picture as those products come more online and we build up the sales channel for it. The retail, we see some improvements.

Retail sales slowed a bit in the third quarter because of Europe. I think you'll find that across the industry. It’s more of a slowing on the sales, but that has bounced back in the past as things settled. So we’re expecting hopefully that over the next number of months to continue to turn around again. And if we look at the U.S.

side of it, we think there is a large opportunity for us to get really focused. We have a new leadership. We are really looking at our various channels and our products right now. So hopefully we’ll gain some traction.

We see some traction being gained, but unfortunately we had some additional outflows that we experienced in the third quarter from some of the DCIO et cetera that we think is starting to stem. .

Thank you. And our next question comes from Alex Blostein from Goldman Sachs. Please, go ahead..

Great. Hey, Jim, Walter, good morning, guys. The first question I'm going to have is around the AWM business, one of the larger independent players in the space has been facing some challenges more recently with respect to compliance and regulation-related issues.

I was just wondering whether or not when you look at your financial advisor pipeline you starting to potentially gain more traction? Partially due to these sort of dislocations in the industry seeing how you guys have been somehow more immune from some of these compliance issues..

We have a very good compliance model in place, good technology, good supervision. We have very good expertise, particularly in some of these alternative products that we offer. So we feel very comfortable about that from a compliance and regulatory perspective.

We are seeing a good pipeline of people both coming from independence as well as from the warehouses into our channel. One of the things that we sort of focus on is making sure that we do a very good compliant business, but we also are very focused from our client perspective. One of the keys that we really look for is high client satisfaction.

As we mentioned, we just completed our annual study there, and our client satisfaction is quite strong, both for the advisor and the firm. And that’s some of the things that we really focus on. And when we put the tools, the capabilities, the programs we have in place and the advice type of model.

So that’s what we're looking to continue to attract here for new people joining us..

Got it.

And since you mentioned, just curious if you guys would be willing to tell what -- when look at the OEM revenues, how much are non-traded REITs, have been contributing so far this year?.

I don’t have that off the top of my head, but I think it’s actually a bit lower than it has been in the past based on just the market situation for some of those products, less on the compliant end for us. That hasn’t been an issue. It’s just more on the type of product in this market environment..

Got it. Thanks. Second question for Walter. Clearly G&A has been really well controlled both in AWM and Asset Management.

Maybe taking a step back, kind of bigger picture, if you could talk a little bit about how should we think about the growth in the G&A expense in both of these segments from here into 2015?.

Again, we it’s one of the focuses is, Alex, of the way we manage the business both to invest in the business and reengineer, and that continually is being done. So we do look at that as something that we manage and contain relative to the opportunity and relative to our revenue growth.

So you should see it being controlled going forward as we look into 2015. .

Got it. Good to know. Then the last one for me, I noticed the amount of excess capital increased due to some of the reasons you guys discussed in the press release. Sort of additional $500 million relative to where you were last quarter.

At the same time and not that anybody's complaining, but the amount in dollar terms of your kind of total buybacks and dividends has gone down over the last few quarters relative to what you were doing in 2013.

So I guess when you kind of put these two things together, how should we think about deployment of that extra $500 million that showed up in your excess capital?.

Okay. Obviously we continue to evaluate the situation. But we certainly are committed to returning to our shareholders. And right now we’re close to 110%. It is lower than it has been. As Jim said and we’ve said, we will certainly manage it as we see the stock price, as we see the situation and being optimistic about it.

But you see the trend line increasing as we indicated going forward, as what they that. So it will be something that, again we will continue to evaluate, but certainly it should be on a good trend line..

Thank you. And our next question comes from a follow-up from Suneet Kamath from UBS. Please, go ahead. .

Thanks for the second question.

Just to clarify on the performance fees at Threadneedle, the $9 million, Walter, that you cited, was that a revenue number or a pretax earnings number?.

That was pre-tax..

Pretax earnings, okay. Then I guess on the annuity business, particularly the variable annuity business. I guess if I look at your capital allocation, it's only about $564 million or about 0.7% of account value. That just seems like a very low capital allocation versus what I'm used to seeing from other companies.

And I know your mix of business might be different from other companies. But I guess I'm just trying to understand how you get comfortable with only allocating that much capital to the business? That certainly has tail risk as we've seen in recent periods..

This has been consistent as we’ve evaluated our strategy of offering product, and certainly the way we hedge the product, and certainly as we’ve gone into a more macro hedging. It has been something that has been. I would say the cornerstone of how we approach this business, which does distinguish us, I believe, from others.

So we have evaluated the situation using the approach that I told you, multiple stress, looking at it.

But you have to take a look at the product construct that we have, both the historic, and then just switching to the managed file, now more nonliving benefits and certainly the stability of the network and solution sector and the hedging that we’ve deployed again.

So we actually do feel very comfortable in evaluating and we’re taking down from 500 to 250 looking at the situations. And we’ve been very consistent. I do feel very comfortable with it..

Pretax earnings, okay. Then I guess on the annuity business, particularly the variable annuity business. I guess if I look at your capital allocation, it's only about $564 million or about 0.7% of account value. That just seems like a very low capital allocation versus what I'm used to seeing from other companies.

And I know your mix of business might be different from other companies. But I guess I'm just trying to understand how you get comfortable with only allocating that much capital to the business? That certainly has tail risk as we've seen in recent periods..

This has been consistent as we’ve evaluated our strategy of offering product, and certainly the way we hedge the product, and certainly as we’ve gone into a more macro hedging. It has been something that has been I would say the cornerstone of how we approach this business, which does distinguish us, I believe, from others.

So we have evaluated the situation using the approach that I told you, multiple stress, looking at it.

But you have to take a look at the product construct that we have, both the historic, and then just switching to the managed file, now more nonliving benefits and certainly the stability of the network and solution sector and the hedging that we’ve deployed again.

So we actually do feel very comfortable in evaluating and we’re taking down from 500 to 250 looking at the situations. And we’ve been very consistent. I do feel very comfortable with it..

Got it. And then I guess of the improvement in excess capital from I guess roughly $2 billion to $2.5 billion. So clearly $250 million of the $500 million is your decision to take down the contingent.

But the remaining $250 million, whatever the number is, is that really just market movements between hedges and variable annuity liabilities that could reverse? Particularly if interest rates rise over the next couple quarters?.

Yes, that’s part of it. And I would say the other part is a small portion of the debt that we just issued, went into that too. Because again, as we talked about, we are planning on certainly taking advantage of the rate situation and to use that for future maturities, but it is that and a small piece of it is the debt..

Right.

So if rates move up by the time we get to 4Q that would have a negative impact on the $2.5 billion of excess?.

It will have somewhat of a negative, but again, looking at our hedging strategy, looking at the other elements within it, it is certainly manageable within that.

And so when we look at it, and I’ll candid, taking it down from 500 to 250, we’ve looked over -- nobody can predict everything, but we looked up for multiple periods to ensure that we’d be able to feel comfortable about that. .

Thank you. And our next question comes from Mike Zaremski from Balyasny. Please go ahead..

Hi, thanks. It's Mike Zaremski from Balyasny. Two quick questions. In auto and home, you mentioned catastrophe levels were similar to last year's levels.

On an absolute basis, are those levels above or below plan for Q3? And also just curious, the equity volatility that we've seen in October, does that have any kind of meaningful impact on activity levels or anything in AWM or Asset Management outside of obvious equity markets sensitivity to earnings?.

Yeah. On the Auto & Home, it was within ranges, a couple of main dials, but it was pretty close with what it would be..

Just on the impact from the equity markets, we have not seen any material change in regard to the retail business at AWM or in regard to asset management in general.

What we did see and did talk about was a little more of the European slowdown from the volatility or the concerns that were in Europe and so that we have seen as a little bit of an effect, particularly on the retail flows in Europe. .

Thank you. .

Thank you. And our next question comes from a follow up from Alex Blostein from Goldman Sachs. Please go ahead..

Thanks for the follow-up, guys. Just a quick one for you. When you look at short-term funds or the balances you disclosed on the AWM slide, $23 billion of which the $19 billion is in the brokerage sweep.

I guess my question is where's the remaining $4 billion? And as we think about the sensitivity to higher interest rates for this business, do we -- do you guys usually talk about the $19 billion or the whole $23 billion? Maybe help square that away.

I don't know if it's in money market funds where you get the few dollars back or something of that nature..

It’s Walter, Alex. It’s in certificates. Short term certificates and it so it will have an impact as the markets go up and in given us better spreads. But again, it’s in the calculation. It will not be as rapid as certainly a big sweep accounts, but certainly we'll get benefit from it..

How does the sensitivity work in that $4 billion?.

You mean sensitivity, obviously they’re in three months, six months, nine months maturity depending on where they in the cycle and depending on where the rates go, that's where we will pick it up. It's less reactive than sweep..

Got it, but the magnitude overall, you would say is somewhat similar?.

Most of it's in the sweep, really..

No? Okay. All right..

It's more [indiscernible]..

All right. Thank you..

You’re welcome..

Thank you. And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating, you may now disconnect..