Alliance Capital Management ( AC), one of the largest U.S. money managers, reported a 39% rise in third-quarter earnings Wednesday amid a strong investment performance and higher assets under management. The New York-based firm said net income rose to $212 million, or 74 cents a unit, from $153 million, or 52 cents a unit, last year. The results beat the Thomson First Call mean analyst estimate of 67 cents a unit, as well as Alliance Capital's forecast of 60 cents to 70 cents. "Strong investment performance and above trend gains on investments related to assets held in deferred compensation plans caused earnings to exceed the high end of previously provided guidance," said Lew Sanders, chairman and chief executive of Alliance Capital, in a statement. The company said assets under management as of Sept. 30 were $555 billion, up 13.5% from a year ago, due primarily to strong investment performance and net inflows. Adjusted for the June sale of its cash management services business to Federated Investors ( FII), which accounted for about $29 billion in assets, assets under management rose by 20.6%. Net inflows for the quarter were $11.6 billion. Institutional investment management net inflows were $7.2 billion, retail net inflows were $2.3 billion and private client net inflows were $2.1 billion, the company said. Alliance Capital said it continues to expect higher net inflows from institutional clients in the fourth quarter. In addition, Alliance said private client inflows were above its expectations, and retail flows turned positive for the first time in many quarters due to strong growth outside the U.S., especially in Asia. "Although conditions in the fixed income markets were difficult, here too, most of our services outperformed their benchmarks in the quarter," Sanders said.
"Organic growth accelerated, primarily on the strength of global and international services. Growth and value equities experienced strong net inflows while fixed income services grew at a more moderate rate," he added. "Style blend services continued to grow rapidly." For the fourth quarter, Alliance Capital's holding company expects earnings of 75 cents to 90 cents a unit, including about 10 cents to 20 cents in performance-related fees. Analysts, on average, predict earnings of 80 cents a unit. Alliance units finished up 58 cents, or 1.2%, on Wednesday at $48.76.