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Life insurance sales boost earnings at AMP

A rush on life insurance sales to beat the July 1 tax changes helped drive the almost 40% rise in half-year earnings for AMP Financial Services.The wealth manager and insurer today revealed operating earnings of $41 million for the six months to June 30

Georgina Bond
Thu, 19 Aug 2010

A rush on life insurance sales to beat the July 1 tax changes helped drive the almost 40% rise in half-year earnings for AMP Financial Services.

The wealth manager and insurer today revealed operating earnings of $41 million for the six months to June 30 – up $12 million or just under 39% on the same time last year.

AMP’s New Zealand managing director Jack Regan said the increase was driven by strong new business sales, disciplined cost management and a one-off tax benefit from lower corporate taxes.

Life insurance sales grew 36% due to a surge in sales before the July 1 life tax changes came into effect. Customer retention rates also rose 0.9% to 89.9% - ahead of the industry average of 87.2% - with individual risk annual premium income up 6%.

In New Zealand, AMP provides superannuation, investment, life insurance and financial planning products and services.

Mr Regan said tight cost control helped bring down operating expenses by 7% to $31 million. The reduction was also helped by the consolidation of Wellington operations into Auckland.

Retail assets under management grew 15% to $5.9 billion.

Strong cashflows from KiwiSaver offset a soft retail investment market and underlying flows were stronger than the same period last year when they benefited from nearly $10 million of corporate superannuation mandates.

Mr Regan said consequences of the global financial crises, including investment market volatility and consumer uncertainty, were still being felt and retail investor sentiment remained flat because of depressed returns and market volatility.

AMP had shed 16% of its advisers to 345, as fewer joined the financial advice industry and more left the industry as it entered a period of significant change, he said.

“Market and legislative change add to our challenges. Right now we are implementing a new tax regime for life insurance companies and financial adviser regulation, as well as preparing for expected licensing requirements arising from prudential supervision legislation,” Mr Regan said.

“At the same time we have a significant change programme underway to re-engineer the business to improve efficiency, products and service for our customers and to deliver expected returns to our 65,000 New Zealand shareholders.”

Shares in AMP were trading at $6.72 this morning, having fetched between $8.5 and $6.1 this year.

Georgina Bond
Thu, 19 Aug 2010
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Life insurance sales boost earnings at AMP
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