AMP NZ 2015 half year results

20 August 2015

AMP NZ 2015 half year results: operating earnings up 9% to $64.6m

Leading life insurer and retirement savings provider, AMP Financial Services New Zealand (AMP) has today announced operating earnings of NZ$64.6 million for the half year to 30 June 2015. This is an increase of 9% from the same time last year and was predominantly driven by ongoing cost leadership, strong asset growth, lower life insurance lapses and improved claims management.

Experience profits were $4.3 million in comparison to an experience loss for 1H 14 of $0.5 million. 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.

The cost to income ratio improved by 1.3 percentage points to 30.3% on slightly higher controllable costs, which increased marginally from $44.6 million in 1H 14 to $45.9 million in 1H 15. While a focus on cost control was maintained, including business reorganisation and product rationalisation initiatives, strong revenue growth was evident in AMP’s retail wealth management and general insurance distribution businesses.

Jack Regan, Managing Director, of AMP New Zealand says: “We are pleased with the momentum we have built through the first half with an agenda for growth and change ahead of us for the remainder of the year.

“As we look towards the second half we still have to account for the changes to the taxation regime as it applies to the life insurance business. These changes impacted all life insurance companies in New Zealand from 1 July 2015 and 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,” continues Regan.

“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,” points out Regan.

“While costs remain a focus, we’ve also reinvested in the business. Examples include developing an app which will help to put AMP in the pockets of our customers, a new website delivering an enhanced customer experience and preparing us for the implementation of the changes under the Financial Markets Conduct Act, enabling wealth management to make an increasing contribution to the business. We have been granted a Class DIMS license from FMA, which we expect will attract more advisers and investors to our contemporary wrap platform, WealthView,” he continues.

Net cashflows increased by 6% from $202.2 million in 1H 14 to $214.6 million in 1H 15, reflecting strong KiwiSaver flows and the further transfer of clients to AMP’s New Zealand financial services platform.

Assets Under Management (AUM) grew by 10% from $13.5 billion in 1H 14 to $14.9 billion in 1H 15 reflecting positive market performance and net cashflows.

“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 of our highly awarded KiwiSaver scheme. AMP KiwiSaver was awarded Platinum by SuperRatings and last week had its Silver rating confirmed again by Morningstar. KiwiSaver net cash inflows grew by a further 4% to $163 million, up $6 million on the same period last year,” points out Regan.

“It has been a pleasing start to the year, as we look to drive the business hard and deliver for our customers and advisers. Key priorities to achieve this and grow shareholder value include deepening customer relationships, enhancing our digital and online capability, further upgrading our wealth protection and wealth management solutions, and delivering a first class customer service experience. We will also focus on market opportunities created by regulatory change, evolving the advice and distribution capability of the business and building on our general insurance partnership,” concludes Regan.

ENDS

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