AMP's new business levels hammered

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AMP's new business in the four key insurance products fell precipitously in the June quarter as its lapses and surrenders soared.

Wednesday, August 22nd 2012, 8:10AM 6 Comments

by Jenny Ruth

While AMP remains the second largest life insurer, accounting for 19.53% of in force business at June 30, it accounted for only 4.49% of new business, or just $2.14 million, written in the latest quarter in term, trauma, replacement income and lump sum disablement policies. The percentage figures include the 12 Financial Services Council members and Partners Life.

AMP had accounted for 8.45%, or $3.32 million, of the industry's new business in these products in the March quarter.

AMP's lapses and surrenders soared to $9.79 million in the quarter, up from $8.12 million in the previous quarter.

The company’s only response to these results was: “The numbers are within expectations.”

Last week, the company reports some shrinkage in agent numbers but this doesn't appear near significant enough to account for the decline. Overall, agent numbers fell to 685 at June 30 from 704 at December 31 last year with AMP agents dropping to 310 from 325 and Axa agents easing to 375 from 379.

AMP didn't respond to a question as to why it, and the now combined Axa business, has been losing market share since at least December 2006.

However, market heavyweight Sovereign, which accounts for 30.5% of in force premiums, had its best quarter since the June 2010 quarter. Its $12.95 million in new business in the four products accounted for 27.17% of the total, up from $9.6 million, or 24.41%, in the March quarter. New business compared with $12.44 million written in the June quarter last year and $16.7 million in the June quarter of 2010.

“We're pretty pleased with how things are going,” says Sovereign marketing and product general manager David Drillien, but says there isn't any single reason for the pick-up. “It's a combination of a number of factors – just doing things as well as we can, providing good levels of service.”

Partners Life had another good quarter, although, as it gains scale, it's rate of growth is slowing. Its new business of $7.9 million, 16.58% of the industry total, was up from $6.29 million in the March quarter and $1.88 million in the June quarter last year.

In previous quarters, much of Partners Life's growth had come at the expense of the now ANZ Bank-owned OnePath, also founded by Ballantine, but its new business jumped to $6.18 million in the June quarter from $4.78 million in the March quarter, its best quarter since the September 2011 quarter when new business totalled $6.67 million.

OnePath's share of new business rose to 12.96% in the June quarter from 12.14% in the March quarter compared with its 9.31% share of in force business. OnePath's share of new business peaked at 19.4% in the March 2011 quarter and fell as low as 11.83% in the December 2011 quarter.

“We had a bit of a trough,” says Jeremy Nicoll, OnePath wealth distribution general manager. “Hopefully, this is the start of climbing out of that trough.”

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