AMP's NZ unit lifts annual profit by 7.5% on Kiwisaver inflows, increased insurance returns

AMP Financial Services New Zealand [NZX: AMP], the local operation of the Australian fund manager and insurer, said inflows of Kiwisaver funds and improved returns from insurance lifted profit in calendar 2015.

Annual operating earnings rose 7.5 percent to $129.2 million, the Auckland-based company said in a statement. Cash flow rose 63 percent to $477 million, with Kiwisaver assets under management increasing 13 percent to $3.9 billion, a significant chunk of the $14.8 billion in total assets managed by the company.

AMP is the third-largest Kiwisaver provider with 13 percent of the market, or about 245,000 customers.

In reporting its first-half figures in August, AMP New Zealand's managing director Jack Regan warned the local division's profit would be eroded by $10 million in the second half of the financial year, and a further $10 million in the first half of 2016 due to tax changes on the assessment of life insurance. Operating profit in the six months ended June 30 was $64.6 million.

Today, Regan said that despite the loss of that transitional tax relief, AMP was well-positioned for continued growth.

"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," Regan said.

The company made more money from its insurance business than expected, with experience profits improving from $2.9 million to $14.1 million. Experience profits are made when actual claims fall short of what insurance companies have projected. Lapses improved by 1.8 percentage points to 11.9 percent as a result of a strong emphasis on managing unpaid premiums, Regan said.

AMP's group profit jumped 10 percent to A$972 million, with underlying profit up 7 percent to $1.12 billion, and total assets under management up 6 percent to A$226 billion, the parent company reported today. The board declared a dividend of 14 Australian cents per share, payable on April 8, with a March 3 record date.

The dual-listed shares rose 3.2 percent to $5.80 on the NZX, and last traded at A$5.18 on the ASX.

(BusinessDesk)