AMP recharging itself

AMP is to concentrate on growing its Auckland business and building its risk insurance portfolio to survive the current harsh investment market, says New Zealand chief executive, Ross Kent.

Despite pulling out of banking in New Zealand, Kent also said that AMP was on the verge of announcing an alliance to retain a “brand” in the banking market.

He was not prepared to narrow down the “interested parties”, but said it might appeal to an operation with its own loan book or an aspiration to grow in New Zealand.

An announcement could come before Easter.

AMP’s existing loan portfolio is worth in the region of $2 billion.

Kent says this would provide a buyer with an existing revenue stream but would also open up ways to drive future revenue streams through AMP’s existing client relationships.

With core business being the mantra of most ailing financial services companies, it was hardly a surprise when Kent said one of the company’s three key goals was to refocus on its risk insurance business.

Although AMP worldwide announced a loss of $NZ971 million last year, its New Zealand operation recorded a $50 million profit, down from $56 million the year before.

Sales from its risk insurance business - including life insurance, income protection and critical cover – were up 35 per cent on the previous year. AMP says it has also increased market share in the risk area.

Unlike long term savings products, Kent said insurance contracts seemed to “resonate” with the New Zealand market.

“I think that has to do in part with the improved attractiveness of the products which are much more flexible than they were historically and they are capable of quite a lot of adaptation during a client’s life”.

He says a reliance on the New Zealand superfund seems to be at least one factor in people putting off saving for their retirement.

As part of AMP’s refocus on insurance, Kent says the company’s risk general manager, John McMurdo, has already relocated to Auckland to spearhead the company’s expansion in the region.

However, he is quick to point out that Auckland growth will not be at the cost of the Wellington office.

The growth will be some expansion in the Auckland advisor network and more marketing and sales staff to backup that expansion.

But there is no quick fix for AMP.

Kent says it is going to take time for people to regain faith in the investment market - the main driver of profits in financial services companies - and even when the market picks up, there will be a time lag before people are confident to start investing.

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