Lapse rates up; profit down at AMP Life

AMP Life’s profit has halved in the 12 months to December 31.

Monday, February 17th 2020, 3:18PM

Blair Vernon

The company’s life business has been separated out from wealth management while it works through the sale to Resolution Life. This sale is expected to be completed by June 30.

AMP last week announced its results and its New Zealand insurance business saw its profit fall 55% from A$51 million to A$23 million.

Annual premium income for individual risk products was down 11.1% over the 12 month period.

Experience profits recorded a loss of $2 million.

Meanwhile, lapse rates went from 11.9% in the previous financial year to 13.3%.

No one was available from AMP Life to discuss the results. However, in the notes to the accounts AMP said the implementation of New Zealand reinsurance arrangements at December 31, and lower bond yields had an impact on the results.

It also said the decline in profit "was partially offset by the cessation of internal distribution arrangements between AMP Life and Australian and New Zealand wealth management due to the Resolution Life transaction".

However, the story was better for AMP’s on-the-block wealth management division, which includes AdviceFirst.

The company said discussions with a number of interested parties "were ongoing and [it] expects to provide a further update at or before interim results in six months time".

AMP New Zealand managing director Blair Vernon said, “this would enable our business to pursue further growth opportunities in the local market as we continue to improve our product and service offering for our clients locally.

“We have a strong and dedicated team with a track record of quality execution, which positions our business for this logical next step as we continue to respond to the demands of the changing market and regulatory landscape to build a sustainable business. We continue to be a profitable and highly capital efficient business.”

Last year AMP restructured its advice distribution network by re-contracting 281 advisers previously part of its AMP Financial Advice Network (AFAN) with standard IFA agreements.

Most of these advisers joined Wealthpoint, which was created by the AMP Advisers Association.

These advisers are now responsible for their own advice and compliance in preparation for the new financial advice legislation.

While this group wrote a significant portion of business for AMP, they are now able to recommend more products from other providers.

Vernon does not expect this change to have a material impact on AMP. He says in the past AMP had to compete for business from these advisers as the company ran an open sourcing arrangement.

Tags: AMP AMP Life Blair Vernon Resolution Life Wealthpoint