REPORTING SEASON: AMP Limited (AMP)
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Figure 1: AMP Limited 12 month chart
AMP Limited (AMP) breathes life back into its wealth protection division
Australia’s largest life insurer AMP Limited (AMP) reported a stronger than expected profit for the full year 2014. The 23% lift in underlying profit was driven by strong cost savings with higher demand and returns for its wealth units. AMP’s total Assets Under Management (AUM) increased by 9.1% to $215 billion.
Revenue fell over the year, down 12%, while margins increased and AMP’s cost to income ratio recorded a slight improvement. AMP’s Wealth Protection arm did see FY14 lapses improve to 14.4%. The life insurance sector had been hit hard over the last few years by low renewal rates (policy lapses). AMP’s business improvement plan in its Wealth Protection division is helping to reduce the number of customers leaving and giving AMP insights into patterns in this market.
AXA’s bottom line profit was impacted by more AXA integration costs of around $20 million and business efficiency cost of $100 million.
AMP’s Australian Wealth Management unit listed a solid lift in net cash to $2.3 billion by the end of 2014. AMP Bank lifted earnings and Net Interest Margin which is a positive sign.
AMP acquired a 19.9% stake in China Life Pension Company (CLPC) for $240 million in late 2014. CLPC is majority owned by China Life, the world’s largest life insurance company.
AMP will pay a $0.135 (within its target range of 70 to 80% of underlying profit) on 10 April 2015.