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Ameriprise Closes Divestiture of Auto & Home Unit for $1.04B
Ameriprise Financial (AMP - Free Report) has completed the sale of its De Pere, WI-based Ameriprise Auto & Home (AAH) unit to American Family Insurance, a subsidiary of American Family Insurance Mutual Holding Company. The deal was announced on Apr 2, 2019.
This transaction is in line with the company’s effort to focus on core growth operations like the Advice & Wealth Management and Asset Management. Ameriprise’s decision to sell its AAH unit followed the strategic review.
The company received net cash proceeds of roughly $1.4 billion after the deduction of the payment to an affinity partner. The figure is still subject to certain post-closing financial adjustments.
Further, Ameriprise will have no contingent liability associated with this transaction, barring some customary post-closing financial adjustments and indemnification obligations.
Jim Cracchiolo, Ameriprise’s chairman and CEO at the time of the deal’s announcement had stated that the divestiture is in line with the company’s strategy to grow less capital-intensive businesses. He had also mentioned that the transaction would reduce the risk quotient and enhance the company’s capital flexibility.
Ameriprise has been restructuring its businesses through acquisitions, sales and spin-offs. Moreover, the company has converted its national trust bank to a federal savings bank in second-quarter 2019. These initiatives are likely to boost its financials.
Some other financial institutions are also resorting to divestitures in order to improve their operating efficiency and shed the less profitable businesses. Some of these companies include Affiliated Managers Group (AMG - Free Report) , JPMorgan (JPM - Free Report) , and PNC Financial (PNC - Free Report) , which have taken similar actions in the recent past.
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