AMP New Zealand reports operating earnings up 7.5 per cent to $129.2m

18 February 2016

AMP Financial Services New Zealand (AMP New Zealand) has reported operating earnings of $129.2 million for the full year to December 2015, an increase of 7.5 per cent on the previous year.

Net cashflows have increased by 62.7 per cent to $477.4 million and assets under management have increased 4 per cent to $14.8 billion.

Jack Regan, Managing Director AMP New Zealand, said: “This is a strong result that reflects improved performance in wealth management driven by increased margins from higher assets under management, increased general insurance profit share and lower controllable costs.

“Despite the loss of transitional tax relief, which came into effect for all life insurance companies on 1 July 2015, AMP continued to diversify its earnings and is well positioned for continued growth. For the first time, more than 50 per cent of AMP’s operating earnings have been derived from business areas other than wealth protection.

“In 2016, AMP New Zealand will continue to execute our strategy and grow shareholder value by deepening customer relationships, enhancing our online and digital capabilities, further upgrading our wealth protection and wealth management solutions, building on our general insurance partnership and delivering a first class customer service experience.”

Performance against key measures:

Operating earnings: Operating earnings increased by 7.5 per cent to $129.2 million in 2015 mainly as a result of higher profit margins and experience profits, although this was partially offset by the reduction in transitional tax relief. Excluding the effect of transitional tax relief, operating earnings increased by 20 per cent.

Cost to income ratio: The cost to income ratio improved by 2.8 percentage points to 29.8 per cent compared to the previous year due to higher operating earnings and lower controllable costs. Controllable costs have decreased by $5 million (5 per cent) to $89.6 million. AMP New Zealand continues to focus on cost control including business reorganisation and product rationalisation.

Cashflows and assets under management (AUM): Net cashflows are $184 million (62.7 per cent) higher than the prior year reflecting strong KiwiSaver flows and the transfer of clients onto AMP New Zealand financial services platforms. KiwiSaver continues to be a key growth engine for AMP New Zealand’s wealth management business. AMP New Zealand is the third largest KiwiSaver Scheme provider, with 13 per cent of the total KiwiSaver market as at June 2015 and approximately 245,000 KiwiSaver customers. As at 31 December 2015, the AMP KiwiSaver Scheme had $3.9 billion in assets under management, which is an increase of 13 per cent on the previous year. AMP New Zealand’s total assets under management increased $546 million (4 per cent) to $14.8 billion as a result of positive market performance and net cashflows.

Experience profits, lapses and claims: Experience profits improved from $2.9 million to $14.1 million. This reflected overall improved management of claims, with an increased focus on helping customers return to work and a better lapse experience. Lapses improved by 1.8 percentage points from the prior year to 11.9 per cent as a result of a strong emphasis on lapse management.

Mr Regan noted: “In 2015, AMP New Zealand supported 2,048 families in times of need by paying out $108.5 million in life insurance and $26.3 million in trauma claims. AMP New Zealand also helped 486 New Zealanders who were unable to return to work because of an illness or injury by paying out $16.8 million in income protection insurance, and assisted 116 Kiwis to return to work following a major illness or injury.”

Total annual premium income (API): API decreased by $4 million to $337 million at year end. The marginal reduction reflected subdued new business sales and the closure of a particular loss-making Group Risk policy.

General insurance: General insurance profit share increased 48.5 per cent to $10.1 million on the previous year. In 2015, AMP New Zealand paid $79.7 million in general insurance claims.

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Other key highlights for AMP New Zealand include:

  • AMP is committed to being fully compliant with the requirements of the FMC Act regime ahead of the 1 December 2016 deadline.
  • AMP is now licensed as a provider of Discretionary Investment Management Services (DIMS). This allows AMP to provide an enhanced service to customers with investments on the Wealthview platform. 
  • AMP was granted a Manager of Managed Investment Schemes licence, which becomes effective on 26 February 2016.
  • AMP awarded 23 recipients a share of $200,000 to help them achieve their dreams as part of its AMP Scholarship Programme. Since 1998, AMP has awarded more than $2 million to help more than 160 Kiwis.
  • AMP’s first Amplify Festival explored leading edge-thinking, disruptive technologies and emerging trends that impact our business and featured ground-breaking talks by international speakers.
  • AMP’s Women in Leadership Programme, now in its fourth year, has been broadened to include participants from a number of AMP’s corporate partners. 
  • AMP provided $14,000 as part of its second AMP IGNITE competition to help PhD students on their innovative quests to change the world with their research. 
  • In its first three months since launch, more than 10,000 customers have downloaded AMP’s app to keep track of their AMP KiwiSaver Scheme and New Zealand Retirement Trust accounts, investments and insurances on the move.
  • The AMP KiwiSaver Scheme was again awarded a Silver Analyst Rating from Morningstar and a Platinum rating from SuperRatings for providing value for money for members.

Notes to Editors

  • AMP has supported the financial welfare of customers for more than 160 years.
  • AMP has one of the largest financial advice networks in New Zealand.
  • AMP’s customers hold more than 830,000 investment, savings and insurance products.
  • In 2015 and 2016 the AMP KiwiSaver Scheme received a Platinum rating from SuperRatings for providing 'best value for money'.
  • AMP is the third largest KiwiSaver Scheme provider with 13 per cent of the total KiwiSaver market and approximately 245,000 KiwiSaver customers. 
  • Since 1998, AMP has awarded more than $2 million through the AMP Scholarship Programme to help Kiwis achieve their dreams.

In 2015 AMP:

  • Supported 2,048 families in their time of need by paying out $108.5 million in life insurance and $26.3 million in trauma claims. 
  • Helped 486 New Zealanders who were unable to return to work because of an illness or injury by paying out $16.8 million in income protection insurance.
  • Assisted 116 Kiwis to return to work following a major illness or injury.
  • Paid $79.7 million in general insurance claims.
  • Wrote $504.2 million in new mortgages.
  • Helped 42,904 New Zealanders by providing advice over the phone.