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AMP reinvigorating its adviser proposition

AMP Financial Services’ New Zealand business lifted operating earnings 22% to $66.5 million in calendar 2008, attributing the rise to increased life insurance profits and cost control.

Friday, February 20th 2009, 6:20AM

by Jenny Ruth

By contrast, its Australian parent’s net profit fell 41% to A$580 million ($727.3 million) although it said underlying profit of A$810 million was down only 8% on the previous year.

The New Zealand company says its greater than expected KiwiSaver inflows helped boost net cash flows which were up 74% at $150.2m. AMP says its KiwiSaver market share rose from 11.4% to 15.2% from 11.4%.

However, that growth came at a cost. AMP NZ says costs rose 4% to $76 million, partly due to moving its headquarters from Wellington to Auckland but also because of costs associated with servicing an additional 100,000 KiwiSaver customers.

Total life insurance new business was up 15% "in a challenging market" while life insurance annual premium income was up 12%. The Australian parent company said New Zealand lapse rates rose 1.1 percentage points to 8.2% due to price increases in protection products in 2007 and deteriorating market conditions "which have led to increased policy cancellations as policyholders seek to reduce discretionary spending."

General insurance premiums rose 5% to $91 million while home loan sales grew 1.5% to nearly $750 million.

"AMP remains a financially strong company with management taking a prudent approach to the overall capital strategy of maintaining a strong balance sheet in a challenging market," says New Zealand managing director Jack Regan.

"Our business improvement program has delivered stronger performance across most areas of the New Zealand business … during what has been a period of unprecedented volatility and uncertainty in the financial markets," Regain says.

AMP will find growth challenging in the current environment but "we intend to come through the current turbulence more resilient than ever."

Its parent company says the New Zealand subsidiary is "reinvigorating its adviser value proposition to leverage the significant wealth management opportunity emerging in New Zealand." Its partnership offer to the planner network had been well received, it said.

The New Zealand company recruited 67 advisers in 2008, bringing total advisers to 348 operating out of 80 adviser businesses.

Total aligned intermediaries were 376 at December 30 including 28 Roost mortgage and insurance advisers operating from 22 franchises.

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