AMP delivers NZ$99million operating earnings

AMP Financial Services New Zealand has reported operating earnings of NZ$99million for the year ending 31 December 2011.

This included a nine-month contribution from AXA following its merger with AXA’s New Zealand business that came into effect on 30 March 2011.

This result was underpinned by growth in assets under management from strong cash flows into KiwiSaver, solid life insurance margins, improved customer retention and a one-off gain of NZ$3million when AMP and AXA aligned assumptions.

Profit margins were impacted by lower bond yields and additional investment in systems and support for aligned Advisers into their newly regulated environment. No profit share from general insurance distribution following the Christchurch earthquakes also impacted profit margins.

Operating expenses of NZ$103million reflected very strong cost discipline as the business continued to invest in improved systems and support for Advisers to comply with the Financial Advisers Act.

Individual life annual premium income grew to NZ$288million, despite the challenging economic environment, the impact of the Christchurch earthquakes and a competitive market. Net cash flows of NZ$318 million benefited from increasing flows into KiwiSaver.

The life insurance persistency rate or customer retention rate for the combined business is 90.4 per cent and 2 per cent higher than the industry average. The life insurance persistency rate is an important measure of customer satisfaction and profitability.

AMP Financial Services New Zealand Managing Director, Jack Regan said the results reflected resilience in difficult times.

“Despite unprecedented challenges in the market, the result, when adjusted for one off impacts, compares favourably to last year’s. Operating as one business post merger is happening sooner than planned. Already cost savings are evident and our people and our Advisers are functioning as single units. Customers, too, benefit as we draw on the strengths of both businesses to build a stronger growth platform.”

AMP introduced a market-leading system called “Easywrite” to simplify the process for customers seeking life insurance and invested in more support for KiwiSavers to help them better understand their options.

“Last year saw a generational change in financial services and Adviser regulation. After a period of intense focus and support, we’re pleased with the number of Advisers who opted for the higher level of accreditation. AMP has the highest number of industry associated Authorised Financial Advisers.

“The diversity of distribution and depth of capability as a result of the merger gives AMP an industry leading position to deliver the very best solutions to clients in this new regulated environment," Mr Regan said.

“In March we transition into the Prudential regulatory regime when the Reserve Bank issues provisional licences to AMP and AXA to operate as Life Insurance companies because they meet the standards required under the new Insurance Prudential Supervision Act.

“We welcome the on-going regulatory programme. It includes the Financial Markets Conduct Bill, Anti Money Laundering Bill and the Countering Financing of Terrorism Act. These are important steps to strengthen consumer confidence in the New Zealand market.

“Last year we invested heavily in the integration of two of New Zealand’s longest standing companies. This investment is paying off, providing greater efficiencies to the business while delivering new capabilities and benefits to customers and Advisers,” Mr Regan said.

The merged business had 704 Financial Advisers on 31 December 2011.

Ends

Media contact:
Veronica Ruddenklau
AMP Financial Services
09 337 7723 or 021 960 864