AMP Financial Services New Zealand (AMP New Zealand) has reported operating earnings of $66.4 million for the half year to 30 June 2016, a 2.8 per cent increase on the same period in the prior year, despite the loss of transitional tax relief. Excluding the effect of the tax relief reduction, operating earnings increased by 20.2 per cent.
1H 16 assets under management (AUM) increased 2 per cent from 1H 15 to $15.2 billion, reflecting positive market performance and net cashflows. At 30 June 2016, the AMP KiwiSaver Scheme reached $4.1 billion in AUM, an increase of 10 per cent from 30 June 2015.
Jack Regan, Managing Director AMP New Zealand, said: “This strong result reflects improved performance mainly in our wealth management business driven by increased margins on higher assets under management as well as higher general insurance profit share and lower controllable costs.
“In the second half of the year we will continue to grow our revenue base, closely manage costs through ongoing business reorganisation and product rationalisation and evolve our distribution channels.
“In addition, we will seek to take advantage of opportunities to further grow our wealth management business related to those providers choosing not to enter into the updated regulatory regime required by the Financial Markets Conduct Act.”
Performance against key measures:
Operating earnings: Operating earnings increased by $1.8 million (2.8 per cent) to $66.4 million in 1H 16 from 1H 15 mainly as a result of higher profit margins and experience profits, partially offset by the reduction in transitional tax relief.
Cost to income ratio: The cost to income ratio improved by 1.7 percentage points to 28.6 per cent in 1H 16 from 1H 15 as a result of higher underlying operating profit and lower controllable costs.
Cashflows and assets under management (AUM): 1H 16 AUM increased $328 million (2.2 per cent) from 1H 15, reflecting positive market performance and net cashflows. Cashflow from a pipeline of new superannuation mandates is expected in 2H 16 related to managers choosing not to enter the updated regulatory regime required by the Financial Markets Conduct Act.
Experience profits, lapses and claims: 1H 16 experience profits were $5.7 million, an improvement of $1.4 million against 1H 15 experience, reflecting overall improved management of claims, with an increased focus on helping customers return to work, and better lapse experience. 1H 16 lapse rates were 11.1 per cent, an improvement of 0.6 of a percentage point from 1H 15 as a result of strong focus on, and investment in, lapse management.
Mr Regan noted: “In the first half of 2016, AMP New Zealand supported 945 families in times of need by paying out $76.1 million in life insurance and $16.2 million in trauma claims. AMP also helped 562 New Zealanders who were unable to return to work because of an illness or injury by paying out $9.4 million in income protection insurance, and assisted 68 Kiwis to return to work following a major illness or injury.”
Total annual premium income (API): Total API in 1H 16 increased by $5 million to $339 million from 1H 15.
General insurance: General insurance profit share increased 37.8 per cent to $6.2 million on the previous year. In the first half of 2016, AMP’s general insurance customers were paid $34.8 million in general insurance claims.
Other key highlights for AMP New Zealand include:
- AMP Essentials launched in April – New Zealand’s first combined life, trauma and temporary disablement insurance product (linked with the AMP KiwiSaver Scheme) to help tackle the issue of underinsurance in New Zealand head on.
- In July, AMP made 16 new funds available within its AMP KiwiSaver Scheme providing members access to a total of 27 funds managed by five of the industry’s leading fund managers to create one of the most compelling KiwiSaver schemes in the market. The new range includes single sector and diversified fund options and a responsible investment option for the increasing number of Kiwis who want to invest in a socially responsible way.
- AMP is a leader in workplace savings with $2.5 billion in its New Zealand Retirement Trust (NZRT). In July, AMP launched 9 new fund options within NZRT.
- AMP received its licence to receive transfers from UK pension schemes and in August launched a Qualifying Recognised Overseas Pension Scheme (QROPS) product within NZRT, enabling customers to transfer their UK pensions to New Zealand and to AMP from existing QROPS in New Zealand.
- More than 15,000 customers have downloaded the My AMP App to keep track of their AMP KiwiSaver Scheme and NZRT accounts, investments and insurances on the move. AMP is set to launch a new look My AMP App and enhancements to further evolve its My AMP customer portal..
- 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.
- Since 2014, AMP has provided $52,000 to support PhD students on their innovative quests to change the world with their research through AMP Ignite. This year AMP awarded $16,000 to help PhD students further their studies.
- AMP has been granted a Manager of Managed Investment Schemes licence, has registered its AMP KiwiSaver Scheme and Future Lifestyle Plan (FLP) and is on track 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.