Welcome to the Q3 2018 Earnings Call. My name is Paulette, 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 Alicia Charity. You may begin.

Thank you, Operator, 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, our Chief Financial Officer. Following their remarks, we'll be happy to take your questions. Turning to our earnings presentation materials that are available on our website, on slide 2, you will see a discussion of forward-looking statements. Specifically during the call, you will hear reference to various non-GAAP financial measures which we believe provide insights into the company's operations. Reconciliations of non-GAAP numbers to their respective GAAP numbers can be found in today's materials. Some statements that we make on this call may be forward-looking, reflecting management's expectations about future events and overall 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 actual results to be materially different from forward-looking statements can be found in our third quarter 2018 earnings release, our 2017 Annual Report to shareholders and our 2017 10-K report. We make no obligation to update publicly or revise these forward-looking statements. Turning to slide 3, you see our GAAP financial results at the top of the page for the third quarter. Below that, you see our operating results, followed by operating results excluding unlocking, which management believes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis. In the third quarter, we completed our annual unlocking. The comments that management makes on the call today will focus on operating financial results, excluding unlocking. And with that, I'll turn it over to Jim.

Hello and thank you for joining our earnings call. This morning, we'll discuss our strong results, give you an update on the business and our areas of focus today and going forward. Reflecting on the quarter, the macroeconomic and market picture has been positive for our clients and Ameriprise. The U.S. economy is strong, and that was punctuated by the Fed's decision to raise short-term interest rates again. However, Europe is showing signs of slower growth. Global trade issues and political uncertainty remain, including in the UK, especially as the deadline for Brexit nears. Recently, global equity markets have been more volatile. We're navigating that volatility and are very much focused on our clients. At the same time, consumer sentiment is strong. U.S. household wealth has reached a new high of over $100 trillion, which represents a significant long-term growth opportunity for Ameriprise. Turning to the company, over the years, we've built a strong business. We're well-positioned based on our broad advice capability and our integrated model allows us to leverage resources and generates consistent results through market cycles. Ameriprise delivered another strong quarter. On an adjusted operating basis, excluding unlocking, revenue increased nicely, up 5%. We continue to generate excellent EPS growth, the third consecutive quarter of 20% growth or better, building on last year's strong results. And our return on equity was also very strong, now at 32%. I am pleased with the quarter and our long-standing track record for delivering results of this caliber. In addition, our assets under management and administration are now over $900 billion. As you know, our business generates significant free cash flow and we're disciplined in our capital allocation. We continue to shift our earnings mix to less capital-intensive business lines, with more than 70% of pre-tax adjusted operating earnings coming from…

Thank you, Jim. Ameriprise delivered another excellent quarter, consistent with our longer-term performance. This is led by Advice & Wealth Management, which delivered 19% earnings growth and continued strong metric trends. Our other businesses are generating good, stable earnings. Asset Management is delivering good profitability as we navigate an environment and regulatory change agenda. Protection and Annuities are generating very good risk-adjusted returns that are in line with our expectations. In the quarter, we completed our unlocking and LTC experience review, which resulted in a marginal charge, well within historical ranges. As I previously indicated, Long Term Care will not impact our ability to deploy capital for business investments and return to shareholders. Turning to page 6, Ameriprise delivered strong results in the quarter. We're continuing to make significant progress in delivering our long-term shareholder objectives, as demonstrated by strong 5% growth in revenue, 20% growth in EPS, and a 32% return on equity. Let me take you through the details, beginning on slide 7. Overall, Ameriprise delivered strong revenue growth, up 5% in the quarter, largely driven by Advice & Wealth Management. Asset Management, Annuities and Protection had fairly stable revenue that was in line with expectations. Expenses continued to be well-managed across the firm, with G&A up only 1%. I will go into detail on expenses in each segment on the subsequent pages. In total, adjusted operating EPS was $4.05, excluding unlocking, fueled by Advice & Wealth Management, which now makes up 46% of our pre-tax adjusted operating earnings. Year-to-date, we returned over 90% of earnings to shareholders, a continuation of our track record of differentiated return. In the quarter, we returned $484 million to shareholders through buyback and dividends. Lastly, we have maintained $1.4 billion of excess capital while achieving a 32% return on equity, up 150…

Thank you. We will now begin the question-and-answer session. And our first question comes from Alex Blostein from Goldman Sachs. Please go ahead. Alexander Blostein - Goldman Sachs & Co. LLC: Thanks, guys. So maybe just to start with Advice & Wealth, so revenue growth, 1%, quarter-over-quarter, despite the fact that we got obviously benefit of higher rates and your asset growth and core metric continued pretty good. I'm assuming it's all kind of slower activity rates, but any incremental color what kind of slowed the implied fee rates in the quarter. And I guess more importantly, as you guys look into October, any sort of notable changes given the moves in the market in terms of client allocation or any noticeable moves back into cash or anything like that would be helpful.

Alex, so the third quarter was actually quite strong on a seasonal basis. As you would imagine, the summer months are always a little slower compared to the second quarter, and therefore, even the fourth quarter. I would actually even add a little more color to that because it was a very strong quarter, is in our third quarter, we have our National Conference, which takes our top 15% of advisors away for a week and some extend mainly for two weeks. And we also have our Chairman's Advisory Council, which is our very top advisors, and they were away for a week to two weeks as well in that quarter in addition to the National Conference. So that's a compounding which is our most productive advisors also out in the summertime for special events. So we think it was an exceptionally strong quarter. And I think if you look against the industry, you'll find that the stats are quite strong. Alexander Blostein - Goldman Sachs & Co. LLC: And October, kind of how things are trending so far.

And October, you know, listen, there's an experienced level of volatility. Our advisors are really engaged with their clients and they're sticking to their allocation methodologies, so we do not see a shift at this point. I mean, it's early in the quarter, et cetera, but it's part of the engagements that we have with the advisors, with their clients, and we give them a lot of support to work with their clients more thinking about it over a longer term. Alexander Blostein - Goldman Sachs & Co. LLC: Got it. And just my second question around Asset Management, so obviously the industry continues to be under a lot of pressure and, frankly, the market volatility's only adding fuel to the fire here. So we've seen some deals in the space. You signed off Oppenheimer. You guys have been in the past thinking about potentially pursuing acquisitions in the space. So given the fact that scale is becoming more critical and you guys have your own flow problems, but thinking about opportunities to consolidate in the industry, given the excess capital position and just kind of updated thoughts around M&A in the space.

So we continue to do a lot to improve the way we operate at Columbia Threadneedle with the capabilities we're installing, the front, middle and back office globally to give us efficiency. We do believe as we continue this journey, we'll be able to add more assets to our platforms in a more efficient and effective way. And we do look at opportunities that do arise, but we are very practical and appropriate in understanding where we can extract some really good shareholder value as well as add strategically to the business. So we'll evaluate those things as they come along. We have the means, capability, but more importantly, we want to ensure that we can really execute something, whatever we do, appropriately and leverage it appropriately, and so we will keep our eyes out for opportunities that may make sense for us that we can extract an appropriate return and add value to the business longer term. Alexander Blostein - Goldman Sachs & Co. LLC: Okay. Thanks, Jim.

Our next question comes from Nigel Dally from Morgan Stanley. Please go ahead. Nigel P. Dally - Morgan Stanley & Co. LLC: Great. Thanks and good morning. So with Long Term Care, we've seen one of your peers enter into a transaction to reduce their exposure. Given your block is seasoned with very credible experience, is a sale of your block also a possibility? And second, you provided all the gap sensitivities to the various factors, which is very helpful, just wanted to check whether the statutory impact would be roughly similar. Thanks.

So as relates to looking at alternatives, certainly we will evaluate it from that standpoint. And our statutory reserves are higher, but the impact will be pretty much the same. But the stat is a little higher than the gap. Nigel P. Dally - Morgan Stanley & Co. LLC: Okay, great. Thank you.

Our next question comes from Humphrey Lee from Dowling & Partners. Please go ahead. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: Good morning and thank you for taking my questions. In terms of kind of the fees in A&WM, you've talked about for transactional fees, there's some seasonality in the third quarter. But how should we think about the financial planning fees? In your disclosure, there seems to be some volatility throughout the years. Just wondering if there's some kind of seasonality there that we should be thinking about going into the fourth quarter.

No, you know, on actual financial planning fees, I mean, it's really depends on how the advisor on a rotating basis they do their annual fees and renewals with their clients, so it does vary based upon the time of year that they've actually executed those. So I have not looked at that. We can look at it, but I don't see there is any material changes that we would expect from year-to-year. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: Okay. Got it. And then in terms of the productivity, I do believe kind of being able to do more financial planning is one of the drivers to get to a stronger productivity number. But I was just wondering is there any kind of metric that you can share in terms of kind of the penetration of financial planning activities in your customer base?

Yeah, so we are very much, to your point, it's an excellent question. We are investing even more today so that we can ensure that we can deliver a consistent level of advice to even all of our clients as we go forward. What an advisor does today is they'll do an annual plan at some time in that relationship, and so roughly 40-plus percent of our clients have a full comprehensive plan, and then there are a lesser percentage of that that do that on an ongoing annual basis. So what we're looking to do is increase the number of clients and the consistency of that financial planning methodology being applied, and we think that's a great opportunity. So we're investing a bit more in our capabilities to digitally enable all that advice with online goal tracking and ensuring that, in an interactive way, our clients can deliver that seamlessly to more of their clients, because it does take a bit more work and engagement. And so this is one of the things I'm really excited about as we move into 2019 and I think it could be a big opportunity for us. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: So just to kind of put some context into that opportunity, like if we were to think back kind of a couple of years ago, like where would that number be in terms of clients with comprehensive financial planning?

Yeah, so our annual increase in the planning activities is more in probably the high single digits a year increase. So we're looking to see if we can get that even upstated a bit more. But it's consistent with our overall productivity. We do have a good penetration compared to anyone in the industry in that regard, but it's one that I think is still an opportunity for us based on our value proposition. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: Got it. Appreciate the color. Thank you.

Our next question comes from Thomas Gallagher from Evercore. Please go ahead.

Morning. Just a few Long Term Care questions, Walter, when you think about capital allocation and you think about potential risk transfer for Long Term Care, do you think you'd be able to fund that with current excess capital or would you likely have to slow or stop the buyback?

No. I do not have to use excess because I believe we are adequately covered. And certainly, as I indicated, we feel comfortable with where we are at that position. So I have no assumption on using excess capital at all.

No, my question is for potential risk transfer, not for the current maintaining the book. Do you think...

So if you're referring to the CNO and doing risk transfers through that sort of method, obviously, again, different discount elements are used, but that would be one of the evaluation elements, but we certainly have the capacity if that was something we wanted to pursue. But the answer is, again, we would have to evaluate the facts and circumstances associated with any of those transactions.

But we don't foresee even in a risk transfer that it would affect our buyback capability on any quarter basis.

No. That would be a consideration that we would certainly evaluate and we don't feel that's an implication.

Got it. That's helpful. And then in terms of the morbidity experience that you are seeing, can you give a little more color for what's going on below the surface or is it frequency? Is it claim durations? Is it severity? A little more color there would be helpful.

Yeah, that's fine. It's, again, as we talked about, this is a meticulous process that we use looking at it on a consistent basis. So it's all of the above as they move through their issue age to attained age. So it's a combination of all of it. And so this is actually progressing exactly what we thought, but it's all those components together. There's no one factor that stands out. It's a combination.

Okay. And then, just on the morbidity, the fact that you're not including morbidity improvement in your reserves but you're actually seeing adverse morbidity trends, is this informing you that your baseline morbidity assumptions are too aggressive? Is that something you're going to have to revisit or you still feel comfortable with those?

I guess the short answer, we feel comfortable and this is actually the process that we follow. We don't anticipate improvement, but we evaluate the actual experience and we feel very comfortable this is the way we derived our best estimate with that knowledge.

Okay. And then my final question, just given what's going on with Genworth and your reinsurance on Long Term Care with them, I understand that if Genworth does go bankrupt, you've commented that you have enhanced asset protection. But what if Genworth needs to bolster its reserves backing the Long Term Care reinsurance contract? I'm assuming that's where there would be a potential shortfall for you in the event of a Genworth bankruptcy. Am I thinking about that correctly, or is there any other offset to think about?

I guess the short answer is no, I don't think you are thinking about it correctly because we are comfortable with their reserves and we understand it. We work well with them. And so we don't think that is in a major exposure.

I mean, Walter, my one reaction to that is the company is selling themselves and saying this is their best option, which to me they're signaling very clearly to the market that there is an overall very big reserve deficiency. So just based on what their actions, I think they're implying to the market that there is a very big deficiency there. Is your block different than the rest? I'm just a little confused on how to interpret that.

Well, again, you're making a lot of assumptions on that basis. I do look at certainly they are sitting on surplus. And certainly we work with them. They do all our claims handling. They do our claims administration. We certainly work with their actuary. So we feel comfortable that with the process that we have in place with them that that should not be a major issue.

Okay. Thank you.

Our next question comes from John Nadel from UBS. Please go ahead.

Hey, good morning. I'll go away from Long Term Care. Can you speak about your expectations for G&A growth in Advice & Wealth Management? And I think last quarter you had indicated that for the full year we should expect a range of G&A growth versus 2017 of about 4% to 6%. If I've got the numbers right, you're running maybe a touch above 7% through the first nine months. Should we be thinking about that 4% to 6% range as still a good way to think about the full year or should we think about being maybe above that range?

I think, listen, these are difficult areas, especially when you talk about splitting the difference between 1%, but we think it's totally consistent. We've had good volume growth. And a lot of those expenses are tied to that volume and certainly we are investing. So I think it is totally consistent with the outcome that we believe it will be. It may go up a little; it may go down. But we certainly feel that range is good, whether it's 6%, 7%. The deviations factors are pretty small when you get to that. But the ability to drive our margins and really drive and having good growth, that's the factor.

Okay. And then, Jim, I've got a bigger picture question for you. As you look out over the next couple of years, what are your strategic priorities? And I ask this, Jim, because a good part of the narrative on your company and on your stock has really been about potential structural opportunities with a few of your businesses, already earlier in the Q&A some discussion about Long Term Care, potential risk transfer. You've talked about the Auto and Home business and the improvement needed there to maybe pursue something, maybe something that can be done in combination with your Annuities business as we think about companies like Apollo and Athene that have openly talked about a willingness to do multiple product line kinds of transactions. So with the continued discount in your stock valuation, I know it's early today, but your stock is underperforming again, is there any increased sense of urgency to pursue any of these kinds of paths?

Yes. So, first of all, thank you for the question because I think it's a very important one as we think through it. As we have highlighted to you a number of years ago and I tried to mention that in my opening comments, what we continue to do is be very much focused on the strategic growth of our business and generate really good returns for shareholders. I mean, we have a 32% ROE, one of the highest in the industry, with all amortization, all costs included in it. Others look at EBITDA and everything else. So from our perspective, we're doing exactly what we told you we would do a number of years ago and we've executed quite well on it. Our growth has been consistent. Growth of our business is really in the forte as the Advice & Wealth Management. It's almost 50% of the total business earnings right now and continues to grow nicely. We have a nice complement with the Asset Management that we manage assets for advice, as well as the same thing with the Insurance and Annuities. We have a good complement with the insurance annuities that are solutions against our retail client base, no additional acquisition costs, per se. We've got the client relationship. And we reduced, as I promised we would do, reduced the I&A business and the balance sheet requirements tremendously over the years. It's less than 30% of our total earnings. The balance sheet is quite well risk managed and it generates a reasonably good return with cash generated. So we actually did what we said we would do, and we'll continue to do. Now, with that, to your point, we'll always evaluate strategically opportunities. We have very good discussions with our board to see what would generate longer term shareholder value, not a quarterly basis, but longer term. And we'll make those informed decisions as those opportunities kind of rise or that we think there's a structure that makes sense for us for risk transfer. So, definitely, we'll evaluate that as we continue to move forward. But, clearly, I would say I think sometimes we overlook what we're generating overall, the type of earnings. I mean, AWM, just as an example, excellent quarter. I know models are there for a certain reason, but consistently strong performance. And the business itself is generating great cash flow that we're returning to you and investing. We have the opportunities for inorganic growth. And, yes, we will look at some adjustment of risk transfer in some of the businesses you'd mentioned, if it makes sense from a shareholder perspective. And we do evaluate that. We both bring people in to evaluate and we do, do it internally. So it's exactly what we do. It's a good question and I can understand why you're asking it. And if an opportunity comes along that makes sense strategically for us longer term, we will evaluate it.

Jim, I totally appreciate the response. Thank you.

Our next question comes from Erik Bass from Autonomous Research. Please go ahead.

Thank you. Deposit betas have been a big (49:41-49:49). Any pressure to share more of the benefit...

We can't hear you. Could you...

Sorry. Is that better?

Yes, thank you.

Much better.

Thanks. I just had a question on sort of your deposit betas because that's been a big theme for banks and realizing your deposit balance was relatively flat quarter-over-quarter, but just are you seeing any pressure to share more of the benefit from higher rates with clients, and do you have an estimate for how much of the benefit from additional rate hikes you expect to drop to the bottom line going forward?

We continually evaluate that. We have extensive reviews of competitive elements, and we have not seen any particular pressure at this stage. We're still evaluating it. So we do anticipate maybe in the future, more will be shared. But – as we indicated, but right now, we are not seeing that.

Okay. And then, you mentioned the plans to launch a Federal Savings Bank next year. Can you just provide an update on your thinking about the revenue opportunity there and potential bottom line impact, both near and intermediate term?

Sure. Yes. Our intentions are to certainly start the bank next year, as Jim has indicated. We've indicated when we exited the bank several years ago, at that point, we were earning around $60 million pre-tax. Our best estimates now, again, for internal sources to serve our clients in a very prudent way, that we could get up to in five years in the range of $100 million pre-tax.

Okay. Thank you.

Our next question comes from Ryan Krueger from KBW. Please go ahead. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Hi. Thanks. Good morning. I had a follow-up on asset management M&A from the earlier question. I guess in recent years, you've been primarily focused on adding pretty small bolt-on deals that give you new capabilities. Is that still your focus, or would you contemplate something that would be more financially motivated that had cost savings opportunities but was less strategic when it came to new capabilities?

You're correct. We've been looking at more of bolt-on strategically in product areas that we're not playing in, and we will continue to do that. We think that will be appropriate for us to continue to build out rather than organically build some areas where we don't have the expertise. But no, we would entertain an appropriate larger deal. As we said, we're putting in the capabilities so that we can put more assets onto the platform more efficiently. We've been able to execute those larger deals, like Columbia, and get real good efficiencies. We've globalized now Threadneedle, so even there gives us an opportunity as we think about adding international capabilities more easily. So yes, we would entertain that. Of course, it always looks at what the seller's looking for and we want to make sure that it's appropriate for us, what the seller's requiring versus just the idea that we can do an acquisition. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Understood. And then, just on debt capacity, I mean, how do you evaluate how much debt capacity you have? Because I think if you look at your balance sheet like a life insurance company, your debt-to-capital ratio is not particularly low, but if you look at it more like a fee-based company and debt-to-EBITDA, it would look like you have a fair amount of capacity.

We do have a fair amount of capacity. And, obviously, from that standpoint, this is reviewed with the agencies once a year. But you're correct. You can look at it both from the insurance standpoint and each agency has their own, but we do have a fair amount of debt capacity. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Okay. Thank you.

Our next question comes from Adam Klauber from William Blair. Please go ahead. Adam Klauber - William Blair & Co. LLC: Thanks. Good morning. This year and last year, you're doing a great job of growing earnings per share, obviously plus 20%. It's a very good growth rate. What about next year? I mean, if the asset growth slows down or flattens, what additional levers can you pull to get earnings growth or EPS growth at least in the low to mid-teens?

So I think we have a few levers, as again, if the markets slow down on a more consistent that we believe is going to go to go into a slower environment, we've been very able over the past, as we've reflected to you, to adjust our expense base appropriately, slow down investments, slow down some of the things that we just execute on an ongoing basis, like our advertising and various things such as that. So there's those levers we pull. We actually can accelerate our reengineering, which gets to some more structural and other things that we've been able to execute as well and we can ramp that up. Right now, we wanted to be a little more in the investment mode because we had spent a bit amount of time on the regulation and compliance over the last few years, so we've reenergized the machine there. But we could definitely make adjustments and still keep those investments going. So that's part of the lever. We also have a very good balance sheet right now. And we have a good excess capital that could be utilized as well if the price of the stock even goes lower on a more appropriate basis. And we could do some acquisitions as prices drop. So there's a few different levers that we would look to apply. Adam Klauber - William Blair & Co. LLC: Thanks a lot.

Our next question comes from Andrew Kligerman from Credit Suisse. Please go ahead. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Hey, finally. All right. So a couple of quick questions, brokerage sweep fees, you came in at 173 basis points this quarter versus 157 last quarter and 111 last year. Where do you think a good normalized number could settle in?

That strictly depends on where the Fed goes, right? Again, they've talked about doing two or three more. So certainly I think the trajectory is up, but I can't tell you how high, Andrew.

Yeah, I would just say, Andrew, as we continue to see rates go up, we will be passing more onto the client. We look at that very competitively, as Walter has said, because they started so low, the increases that you usually see off of a base that usually was there, would have been greater share in. But because you're sort of recovering from what that low point is, it hasn't been shared as much. But I see as those rates continue to rise now, getting into the little higher 2% to 3% range here, that you'll start to see a greater amount to share in. So we'll pick up some, but I don't think we'll pick up to the extent that we picked up previously. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Got it. And then, in the Auto and Home area, you mentioned favorable reserve development. Could you elaborate a little bit on maybe how much potentially there is in favorable reserve development?

Yeah, listen, I can't get into the exact number. What I can say is we've looked at this and certainly looked at our prior year and looked at the redundancies there, they have built. And we're seeing actually very favorable trends across both the Auto and Home aspects of it. So we're feeling very comfortable that the rates that we have set up and certainly looking at the frequency and severity trends that are coming in. Some are longer tail. Some are shorter tail. We have built reserves. Now we have to assess when to say they are a redundancy. But we are in a very good position at this stage. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Got it. And then lastly, the consolidated tax rate, it looks like it's trending to about 16% this year. Where do you think it could go next year?

I think it's, again, as we talked about this when this first came out, that we would be between 17% and 19%, so again, it's based on that, but that range is probably a good range. And again, might tend to the lower end of it. But certainly I would say I would keep the 17% to 19% until we refine it and then we will try to give some view of it. Andrew Kligerman - Credit Suisse Securities (USA) LLC: And what's keeping it lower right now, Walter?

We basically had discrete adjustments which came in from that basis. As we tell you, these are a part of the way we operate the business. You get it wherever it's discussed, settlements of different things or estimates. They come in. They're part of the effective tax rate, and that's what happened. We picked up a large one in third quarter. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Okay. 17% to 19%. Thanks a lot. Have a great day.

Thank you.

Our next question comes from Suneet Kamath from Citi. Please go ahead.

Thanks. Starting with Long Term Care, Walter, I think to Tom's question earlier, you had said you'd be able to do a reinsurance solution without any excess capital, if I'm understanding your response correctly. So I guess what's the hold up? If it doesn't cost you any additional capital, the sensitivities here don't look that significant, so why not pursue something? I can't image there'd be a big overhang on your stock.

Let me clarify. What I'm saying is, listen, I can tell you we watched, certainly saw the CNO, and certainly discount rates there. What we're saying is obviously you're going to evaluate from the standpoint they'll evaluate the book. They'll look at the discount rates. We will assess then the improvement that you can see. So we have the capacity because, again, depends on what it takes to make the deal correct. We believe right now we are appropriate so, therefore, the issue is, at some point depending on when we make the deal, it could have some impact and we don't know. But we have the capacity. That's all I was saying. So I'm sorry. I didn't mean to – if that was the interpretation.

Yeah, Suneet, I think to just complement Walter, and clarification, it would not affect our ability to buy back. Would it use some of the excess capital? Yes, depending on what the discount is in this marketplace for this time as people are perceiving what that risk is. We feel very good about the risk we have in the book and how we're reserved for it. Doesn't mean that if you executed a deal today, there wouldn't be a discount based on other factors that are out there. You would have think about long-term interest rates, as an example. If they continue to rise, that's a benefit. If you factor in rate increases above our very conservative, that's a benefit. On the other side, do you factor in certain risk, as people say, of the unknown? So those are the things that we take into account. We also look at the sort of complement of who we're doing that with to make sure strategically it makes sense for us. So those things, it's more of at a point in time rather than the idea that over time the book has a certain level of value. But, yes, even if there was that discount factor applied, we can afford it out of some of the excess capital without an issue that it would affect our buyback, as Walter continued to say, as an example and still leave us a good level of what we would call conservative nature of our balance sheet.

Yeah, the only thing I would add, just to make clear, because obviously we understand the asset earning rates. We understand discount rates. You can't understand why. The discount rate would be applied on an acquisition or an acquiring of the book. That's why it's a variable. I'm sorry if that was a misunderstanding. Hopefully, that clarified it.

No, it does. And I can follow-up. Just slide 22 I thought was really interesting where you show the policy count and how much it's come down. I guess over what period is that? How many years? And then, as we think about, say, over the next five years, where does that policy count number end up going? I would imagine it comes down at a faster clip, just given the age of the block, but any just sensitivity around that?

I can't give you a sensitivity, but I can till this is – clearly, that will happen and certainly I can't just give you the precision of the numbers of what's going to happen. That's obviously detailed actuarial, but it will happen. And then, the question, obviously, they factored that into, as we've said, our estimates here.

Okay.

One other thing just, and I think you're all asking very good questions. So we're not opposed to a risk transfer. We will evaluate it depending on what the opportunity and the interest that's out there in the marketplace. We're also, as we said, even for some of the other business lines you mentioned, we'll always evaluate if there's a good opportunity that strategically makes sense for the business and for Ameriprise. So there's not the idea that we would not. We just want to make sure that it's in the long-term interest and strategically it's good for our clients. It's good for everyone involved. And that's the way we would look at it. But if there's a risk transfer on this particular piece of the business, appropriate with appropriate party that would buy it, we would be open to have a good discussion.

Yeah, last one just on the overall environment, I think there was a question on this earlier, but just to clarify. If revenues are flat in 2019, do you think you have enough leverage on the expense side to reduce expenses or are these investments that you're making of the type where it's really hard to pull back now that you've started them?

Yeah, so I guess it's more of a timing. If you recollect, as we went into a previous down market or a period where things soften up, the revenue comes about a little quicker than the expense. So in a quarterly basis, you've got a lag effect, but it's more of making a decision of whether that continues and then what you adjust going forward. So I would just say over a reasonable period, we're able to adjust, but in a one quarter period or a two quarter period, you're going to have a timing lag where the revenue hits you quick because you're managing assets and your expense base, you have to make adjustments and slow down. You can't just say all the expense goes away that period. I know you know that. But I'm saying it's more of a timing issue and more of what your length of view is on that slowdown.

So, Suneet, as a reference point...

I was asking about 2019. I get your comment about the quarter. I was actually asking more about 2019.

Yeah, so the answer is, listen, our expense base is quite large. And, as you're aware, but there's a very large portion of variable in there that is for dealed different sort of growth initiatives, where different is that we have flexibility to certainly do and, as Jim said, depends on when it happens in the year. But if assuming coming into 2019 we certainly had the capacity, I'll just remind you, doesn't mean history will repeat. Right after 2008, we actually took out a substantial amount, which we demonstrated to everybody that we had that capacity, without impacting customers. We basically as relates to growth initiatives, we reengineered it and it was a reasonable amount, so we really do have capacity to do it. Cannot say it will negate everything, but we certainly have capacity.

All right. Thank you, guys.

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