Quarter of AMP's profit now from wealth management

AMP is making progress in diversifying its business following changes to life insurance tax with 25% of its most recent profit coming from wealth management.

Monday, August 24th 2015, 6:39AM

AMP reported operating earnings of $64.6 million for the six months to June 30. This is an increase of 9% from the same period last year.

The company has been working on growing the non-life insurance parts of its business in response to changes to life insurance tax.

AMP managing director Jack Regan says the changes, are likely to result in an ongoing reduction of approximately $10 million of profit margins in the second half, with a further $10 million to take effect from the first half of 2016.

“As we continue to grow our revenue base, closely manage our costs and refresh our channels we believe the business is in a good position to achieve a solid result for the full financial year,” Regan says.

For the first time the company has disclosed the make up if its results. AMP chief financial officer Simon Hoole says 54% came from wealth protection, 25% from wealth management and the balance from general insurance and its mature business which is in run-off.

AMP’s life insurance results in the first six months improved on the back of better claims management and improved lapse rates.

Experience profits were $4.3 million in comparison to an experience loss of $0.5 million in the corresponding period last year. The increase reflected overall improved management of claims, including helping claimants return to work and improved lapses, which decreased from 13.3% to 11.7% from the same time last year.

Annual premium income was down $7 million to $334 million. AMP chief financial officer Simon Hoole says this reflected “subdued new business sales” and the loss of a group-risk management account.

Hoole says the business was loss-making.

Regan says strong revenue growth was evident in AMP’s retail wealth management and general insurance distribution businesses in the first half.

Assets under management (AUM) grew by 10% from $13.5 billion in first half last year to $14.9 billion in the first half this year.

“KiwiSaver continues to be a strong growth engine for the wealth management business. AMP is the third largest KiwiSaver provider in New Zealand and reported AUM of $3.7 billion, up 20% from the same period last year.

“By maintaining our cost focus we have been able to deliver significant benefits to customers, including reduced fees for members.”

KiwiSaver net cash inflows grew by a further 4% to $163 million, up $6 million on the same period last year.

AMP has been granted a Class DIMS license and it expects this will attract more advisers and investors to wrap platform, WealthView.

In the first half of 2015 AMP:

Paid out $47.3 million in general insurance claims
Paid $55.2 million in life insurance claims to 961 families
Paid out $12.4 million in trauma claims
Supported 417 New Zealanders who were unable to return to work because of an illness or injury by paying out $9.29 million in income protection insurance
Wrote $266 million in new mortgages, and
Helped 20,495 New Zealanders by providing advice over the phone and made more than 195 phone calls a day.

Tags: AMP Jack Regan