By Paul McBeth
Feb. 21 (BusinessDesk) - AMP's financial services unit in New Zealand reported flat annual earnings as rising insurance claims offset gains in its wealth management businesses. The local unit will stop using the Axa brand from the end of next month.
Underlying profit slipped to $119 million in the 12 months ended Dec. 31 from $120 million a year earlier, on a 3.5 percent increase in annual premium income to $298 million, the company said in a statement. In Australian dollar terms, the NZ unit showed a 3.9 percent fall to A$73 million. The Australian parent reported a 2.3 percent gain in net profit to A$704 million.
AMP Financial Services New Zealand managing director Jack Regan said the increased level of insurance claims "impacted" the result, with a spike in high value lump sum life insurance claims and a higher incidence of income protection claims.
Regan said the company will have to increase life insurance premiums because regulatory changes mean consumers won't be able to benefit from lower tax rates, and has already taken incremental steps to mitigate the future impact.
The New Zealand unit was the nation’s biggest retail fund manager with $30.9 billion under management as at Sept. 30 last year, and was the third-biggest KiwiSaver provider with $13 billion under management.
AMP's New Zealand business was the only unit to shed financial advisers, with 640 as at Dec. 31 from 704 a year earlier. The wealth manager put it down to how adviser numbers are reported under the new compliance regime.
Regan said the New Zealand unit was ahead of schedule in the Axa integration, and will stop using the brand after March 31. As part of that, the two KiwiSaver schemes, which are both default providers, will be merged, subject to regulatory approval.
In 2011, AMP completed its A$13.3 billion bid for rival Axa Asia Pacific’s Australian and New Zealand businesses, selling back the Asian units to French parent Axa SA.
AMP lifted underlying profit to A$955 million from A$909 million a year earlier, with wealth management the strongest performer. The board declared a final dividend of 12.5 Australian cents per share, taking the annual payment to 25 cents. The return is payable on April 11 with a March 8 record date.
The dual-listed shares gained 1.4 percent to $6.69 in trading on the NZX today.