Catherine Brenner

AMP today announces Catherine Brenner has resigned as Chairman and will step down from the Board. Mike Wilkins has been appointed as Executive Chairman, effective immediately.

Mr Wilkins will lead the company as Executive Chairman for an interim period while the process for selecting a Chairman, and appointment of an additional new non-executive director, is conducted. This will further strengthen governance and ensure stability while a measured process of board renewal is undertaken.  Mr Wilkins will now lead the selection process for a new Chief Executive Officer, which is in progress.

AMP also announces that Group General Counsel and Company Secretary Brian Salter will leave the company.  His outstanding deferred remuneration will be forfeited as a result of the Board exercising its discretion.

The Board has received advice from Philip Crutchfield QC, Tamieka Spencer Bruce of Counsel, and Tim Bednall of King & Wood Mallesons in relation to certain issues raised in the Royal Commission concerning the preparation of the Clayton Utz report on AMP’s fee for no service issue.  The advice follows the establishment of the Board Committee chaired by Mr Wilkins to examine the issues relating to AMP’s advice business that have been raised in the Royal Commission.

Having considered and assessed the matters, the Board is satisfied that the former Chairman Catherine Brenner, former Chief Executive Officer Craig Meller and the other directors did not act inappropriately in relation to the preparation of the Clayton Utz report.

The Board, including the former Chairman, were unaware of and disappointed about the number of drafts and the extent of the Group General Counsel’s interaction with Clayton Utz during the preparation of the report.  The Board commissioned and received the report.  It was not a matter for the Board’s approval.

The Board announces the following further actions:

• Recognising collective governance accountability for the issues raised in the Royal Commission and for their impact on the reputation of AMP, the Board is reducing fees for all AMP Limited Board Directors by 25 per cent for the remainder of the 2018 calendar year; and
• The employment and remuneration consequences for the individuals within the business responsible for the fee for no service issue will be determined on finalisation of an ongoing external employment review, which is expected to complete shortly

Catherine Brenner said: “I am honoured to have been Chairman of AMP. I am deeply disappointed by the issues at hand and am particularly concerned for the impact they have had on our customers, employees, advisers and shareholders.

“As Chairman, I am accountable for governance. I have always sought to act in the best interests of the company and have been in discussions with the Board about the most appropriate course of action, including my resignation. The Board has now accepted my resignation as Chairman as a step towards restoring the trust and confidence in AMP.”

Mike Wilkins, Executive Chairman, AMP Limited said: “The Board acknowledges Catherine’s leadership and thanks her for her professionalism, integrity and dedication to the company over the past eight years. We will now begin a process of board renewal, including fast-tracking selection of a Chairman, and a new director. This process will help ensure stability and further strengthen governance.

“AMP respects the Royal Commission process. I can assure you that the evidence and submissions presented by Counsel Assisting are being treated extremely seriously by the Board. Appropriate steps are being taken to address the issues raised, and remediating our customers is being given utmost priority. On behalf of the Board, I reiterate our sincerest apology to our customers, and know we have significant work to do to rebuild their trust.”

AMP will be making a formal submission to the Royal Commission by Friday 4 May in response to the matters raised in closing submissions by Counsel Assisting the Royal Commission.

The post Catherine Brenner steps down from AMP Board appeared first on AdviserVoice.

Craig Meller

AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in the advice business.

The AMP Limited Board today announces the following actions to accelerate the necessary change within the organisation:

• The Board and the Chief Executive Officer, Craig Meller, have agreed that he will step down from his role with immediate effect.
• Mike Wilkins, a Non-Executive Director on the AMP Limited Board since September 2016 and a former CEO of IAG Limited, has been appointed as acting Chief Executive Officer until the search for the new CEO is completed.
• An immediate, comprehensive review of AMP’s regulatory reporting and governance processes will be undertaken. This work will be overseen by a retired judge or equivalent independent expert who will be appointed imminently.
• A Board Committee has been established to review the issues related to the advice business raised in the Royal Commission. The Committee is chaired by Mike Wilkins and will act with the assistance of external counsel, King & Wood Mallesons.
• The Group General Counsel, Brian Salter, has agreed to take leave while the review is undertaken. David Cullen, AMP General Counsel, Governance has been appointed as acting Group General Counsel.

AMP will be making a submission to the Royal Commission to respond to the issues raised. The submission will, among other matters, address the issue of the independence of the Clayton Utz report.

The Board will withdraw resolution four from its Notice of Meeting to the 2018 Annual General Meeting, which relates to an equity grant for the Chief Executive Officer.

The actions announced today build upon the existing program of work, instigated in 2017. The work underway includes:

• Customer remediation, with the program well progressed and 15,712 customers identified and $4.7 million fees refunded to date.
• An external review to ensure all fee for no service business practices have ceased. This review is now complete and has confirmed that the practices ceased in November 2016.
• An independent investigation into employee conduct. Based on the review’s findings, the Board will determine the employment and remuneration implications for any relevant individuals around the fee for no service matter.
• A review and complete overhaul of governance, systems and processes in the advice business.
• An enterprise-wide cultural audit conducted by an external consultant.
• An enterprise-wide review of risk governance, controls and culture also conducted by an external consultant.

AMP Chairman Catherine Brenner said: “AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in our advice business. The Board is determined that we will meet these challenges head on, accelerating changes in both culture and performance at AMP.

“We have been driving much-needed change and improvement in our advice business, which has undergone significant leadership and governance renewal over the past year but we know we have much more to do to.”

Craig Meller said: “I am honoured to have been the CEO of AMP. I am personally devastated by the issues which have been raised publicly this week, particularly by the impact they have had on our customers, employees, planners and shareholders. This is not the AMP I know and these are not the actions our customers should expect from the company.

“I do not condone them or the misleading statements made to ASIC. However, as they occurred during my tenure as CEO, I believe that stepping down as CEO is an appropriate measure to begin the work that needs to be done to restore public and regulatory trust in AMP.”

The post AMP apologises unreservedly and acts to accelerate change appeared first on AdviserVoice.

Craig Meller

The AMP Board has announced Chief Executive Officer Craig Meller has confirmed his intention to retire around the end of 2018 and the Board will commence a search for his replacement.

The search, which will be led by Chairman Catherine Brenner, will consider internal and external candidates from both the domestic and international markets.

AMP Chairman, Catherine Brenner said: “Craig has led the transformation of AMP over the past five years. The business has a clear and compelling strategy for growth and is performing well.

As part of our regular discussions on succession, Craig indicated he would like to retire at the end of this year. As it’s important to have continuity of leadership to deliver on our longer-term growth ambitions, Craig and the Board jointly agreed the time is right to begin searching for his successor.

Our announcement today is designed to ensure the search process can be as transparent and comprehensive as possible. Craig will continue to drive the company and deliver on our strategy through 2018 and has indicated his flexibility to work with the Board to ensure a smooth and orderly leadership transition.”

Craig Meller said: “It has been a privilege to lead a company with the history and heritage of AMP. As we move into the next phase of growth, it is the right time to begin the process of moving to new leadership.

I remain very focused on executing our strategy and driving the performance of the business until my successor has been appointed and will support the Board to ensure a smooth handover.”

The post AMP announces CEO to retire at end 2018 appeared first on AdviserVoice.

• 

  Craig Meller

  FY 17 underlying profit[1] A$1,040 million (FY 16: A$486 million) and net profit[2] of A$848 million (FY 16: -A$344 million).

• Strong earnings momentum in AMP Bank (up 17 per cent) and AMP Capital (up 8 per cent).
• Resilient performance in Australian wealth management; net cashflows rose 177 per cent to A$931 million. Assets under management increased 8 per cent during FY 17 to A$130 billion.
• Wealth management performance strengthened by additional revenue in Advice and SMSF; achieved 10 per cent growth in other revenue in line with guidance.
• Australian wealth protection earnings recovered to A$110 million (FY 16: -A$415 million), reflecting steps taken to stabilise the business.
• Sustained cost management delivered 3 per cent reduction in controllable costs (ex AMP Capital).
• Portfolio review of manage for value businesses well progressed with all alternatives being considered. AMP is in discussions with a number of interested parties and will provide update at or before its AGM.
• Strong capital position with A$2.3 billion over minimum regulatory requirements. Capital management initiatives to be considered at conclusion of portfolio review of manage for value businesses.
• Final dividend 14.5 cents a share, franked at 90 per cent. Total FY 17 dividend 29 cents a share is within AMP’s payout range of 70 – 90 per cent of underlying profit.
• Underlying return on equity of 14.3 per cent in FY 17; moving towards target of 15 per cent in FY 18.

AMP Chief Executive Craig Meller said “In 2017, we delivered a strong recovery in underlying profits and solid operating performances across the business.

We’ve met our targets on reducing costs, driving new revenue from our Advice and SMSF businesses and managing margin compression in wealth management. We’ve stabilised and reinsured our life insurance business and we’ve stepped up our international growth, particularly in AMP Capital.

Our growing global capability in infrastructure and real estate investment has driven record external cashflows into AMP Capital, including a major contribution from one of our Chinese partnerships, China Life AMP Asset Management. AMP Capital has also partnered with US real estate investor, PCCP, which will further accelerate the growth of our real assets business.

In wealth management, we’ve delivered the next phase of our Goals 360 advice platform – the goals modelling engine – enabling advisers to show customers the achievability of their goals during the advice session. It takes the financial planning process to the next level.

We’ve driven double-digit growth in AMP Bank’s operating earnings while responding to tightening market regulation. We remain on track to double the value of the bank by full year 2021.
Overall, a solid result that shows the strong headway we’re making in delivering our strategy.”

Update on manage for value strategy: Australian wealth protection, New Zealand, Mature

In 2017, AMP announced a strategy to manage its Australian wealth protection, New Zealand and Mature businesses for value and capital efficiency. The completion of a comprehensive reinsurance program of Australian wealth protection, released circa A$1 billion in capital to the group. Disciplined cost management has driven efficiency in New Zealand and Mature.

To continue to realise value from these businesses, AMP is well progressed with a portfolio review with all alternatives being considered. As a result, AMP is in discussions with a number of interested parties. While the portfolio review is yet to be concluded, AMP expects to provide a further update at or before its AGM.

Business unit results

Australian wealth management

Australian wealth management delivered a resilient performance during a period of high margin compression due to final transitions to MySuper. Operating earnings were 2.5 per cent lower at A$391 million. However, strong growth in net cashflows and 10 per cent growth in other revenue from Advice and SMSF demonstrates the underlying growth trajectory of the business.

Net cashflows increased 177 per cent on FY 16 to A$931 million, reflecting significant inflows from discretionary super contributions ahead of 1 July 2017 changes to non-concessional caps. The competitive strength of AMP’s corporate super platform also supported inflows, up A$436 million on FY 16 to A$717 million, with several mandate wins.

North, AMP’s flagship wrap platform, continued to perform with net flows of A$5.7 billion, up 14 per cent on FY 16 and up 28 per cent excluding a one-off significant transfer that occurred in FY 16. Assets under management rose 29 per cent to A$34.9 billion over the same period.

In 2017, AMP continued its leadership in the Australian retail superannuation sector and paid A$2.5 billion[3] in pensions to support customers in their retirement.

AMP Capital

AMP Capital external net cashflows increased significantly to A$5.5 billion (FY 16: A$967 million), the highest since the establishment of AMP Capital in 2003. Cashflows reflect strong international investor interest in AMP Capital’s fixed income, real estate and infrastructure capabilities. External assets under management fees rose by 6 per cent to A$266 million.

Operating earnings increased 8 per cent on FY 16 to A$156 million driven by growth in fee income and particularly in real assets. Controllable costs increased 5 per cent reflecting investment in real asset capabilities, growth initiatives and international expansion. AMP Capital’s cost to income ratio of 61.5 per cent remains within the full-year target of 60 – 65 per cent.

Direct international institutional clients grew 46 per cent to 291 over the year, with AMP Capital managing A$12 billion in assets on their behalf. During the period, AMP Capital established a partnership with, and purchased a minority stake in, US real estate investor, PCCP. The partnership brings together AMP Capital’s Asian distribution capability with PCCP’s US-based investment expertise.

China Life AMP Asset Management[4] (CLAMP) continues to grow rapidly with AUM increasing 59 per cent to RMB 183.3 billion (A$36 billion) in FY 17, supported by the launch of 25 new products including diversified, equity and fixed income funds. Total AUM for China Life Pension Company, the pensions joint venture in which AMP owns a 19.99 per cent stake, grew 41 per cent to RMB 531 billion (A$104.3 billion).

At 31 December 2017, AMP Capital had A$4.2 billion of committed real asset capital available for investment, up A$700m from 30 June 2017. AMP Capital invested A$5.6 billion in new infrastructure and real estate assets in 2017.

AMP Bank

AMP Bank operating earnings rose 17 per cent to A$140 million (FY 16: A$120 million). Performance was driven by a 14 per cent rise in residential lending to A$18.9 billion underpinned by a conservative credit policy. As expected, loan growth moderated in 2H 17 as the market adjusted to new regulatory requirements.

Controllable costs increased in FY 17, reflecting investment in people and technology to support growth, however, the cost to income ratio remained almost flat at 28.6 per cent (FY 16: 28.5 per cent).

Australian wealth protection

Performance in wealth protection stabilised following strengthening of best estimate assumptions and completion of a comprehensive reinsurance program, which occurred in FY 17, effectively reinsuring 65 per cent of AMP’s retail life insurance portfolio. Operating earnings improved to A$110 million in FY 17, with experience largely in line with expectations. Profit margins decreased on FY 16 to A$99 million reflecting the assumption changes and reinsurance program.

Focus remains on running an efficient and competitive business while maintaining high levels of customer service. In 2017, AMP paid A$1.1 billion in claims to support customers during their time of need.

New Zealand financial services

Operating earnings, down 1 per cent to A$125 million, reflect the depreciation of the New Zealand dollar relative to the Australian dollar. In NZ$ terms, operating earnings increased 1 per cent to NZ$135 million, driven by higher profit margins and disciplined focus on cost control.

AMP New Zealand financial services continues to hold market-leading positions in wealth protection and wealth management, in addition to being one of the largest KiwiSaver providers with NZ$5.1 billion in AUM, an increase of 16 per cent on FY 16.

Australian mature

Operating earnings of A$150 million reflect expected portfolio run-off offset by improved investment markets and favourable annuity experience.

Capital and dividend

AMP’s capital position remains strong, with level 3 eligible capital resources A$2,338 million above minimum regulatory requirements at 31 December 2017, up from A$2,195 million at 31 December 2016. The capital position was strengthened by the second reinsurance program announced at 1H 17. Potential for capital management initiatives will be considered at the conclusion of the portfolio review of AMP’s manage for value businesses. AMP expects to provide a further update at or before its AGM.

The final dividend has been maintained at 14.5 cents a share, franked at 90 per cent. The total FY 17 dividend is 29 cents a share and is within AMP’s stated target range of 70 to 90 per cent of underlying profit.

The post AMP reports FY 17 results   appeared first on AdviserVoice.

Craig Meller

Group delivers solid business performance, in line with guidance metrics.

AMP Chief Executive Craig Meller said: We have made good progress in the quarter and the business is tracking in line with expectations.

In Australian wealth management, as expected, cashflows reflect the high level of discretionary super contributions brought forward into Q2 17, ahead of 1 July 2017 changes to non-concessional caps.

AMP’s award-winning North platform continues to perform strongly, with cashflows increasing during the quarter.

AMP Capital has had a strong third quarter, increasing external net cashflows as well as putting investors’ money to work in its core infrastructure and real estate portfolio, including securing a record US$4.1 billion in commitments for its infrastructure debt strategy.

In Australian wealth protection, experience has been tracking in line with expectations, delivering another stable quarter for the business. Our second program of reinsurance agreements will take effect from 1 November 2017 adding further stability to earnings. The agreements will also release approximately A$500 million of capital to the group, subject to regulatory approval.

Commentary

Australian wealth management

• Net cash outflows of A$243 million in Q3 17 compared to net cash outflows of A$327 million in Q3 16. As expected, the Q3 17 result reflects high levels of discretionary super contributions brought forward into Q2 17 ahead of 1 July 2017 changes to non-concessional caps.
• AMP’s award-winning wrap platform, North, continued to perform strongly with Q3 17 net cashflows of A$1,282 million, increasing 13 per cent from A$1,136 million in Q3 16.
• Total Australian wealth management AUM increased A$211m to $125.3 billion, reflecting positive investment returns.
• AMP’s SMSF business SuperConcepts added approximately 1,475 funds across administration and software services during Q3 17. As at 30 September, it supported a total of 57,779 funds.
• Wealth management ‘other revenue’ is on target to deliver 10 per cent growth from Advice and SMSF in FY 17.
• Margin compression continues to track in line with guidance; it is expected to average around 5 per cent per annum to December 2017.

AMP Capital

• AMP Capital external net cashflows were A$616 million in Q3 17, an increase from A$498 million in Q3 16, driven by flows into real estate and infrastructure investments, and strong performance by CLAMP.
• AUM increased from A$178.9 billion at the end of Q2 17 to A$180.6 billion in Q3 17.
• Strong performance in real assets with record commitments of US$4.1 billion secured for the infrastructure debt strategy, including reaching final close on Infrastructure Debt Fund III (US$2 billion target). Commitments will flow through to AMP Capital’s external net cashflows when investments are made.
• AMP’s partnership with China Life continues to grow; AMP Capital’s share of CLAMP contributed net cashflows of A$682 million in Q3 17, taking net cashflows from the first three quarters of the year to more than A$1.4 billion.
• International institutional client numbers grew 10 per cent to 277 during the quarter, supporting AMP’s strategy to grow its global footprint in investment management.

AMP Bank

• Total loan book grew to A$19.2 billion at the end of Q3 17, an increase from A$18.8 billion in Q2 17.
• Retail deposit book increased by A$329 million in Q3 17 relative to Q2 17.

Australian wealth protection

• Stable quarter in wealth protection with experience tracking in line with expectations.
• New reinsurance arrangements are due to take effect on 1 November 2017, further stabilising wealth protection earnings and releasing approximately A$500 million of capital from the AMP retail life insurance portfolio to the group, subject to regulatory approval.

New Zealand financial services

• AMP New Zealand financial services’ net cashflows decreased to A$76 million in Q3 17, driven by elevated fund transfers in Q3 16 as a result of regulatory change (FMCA).
• Net cashflows in KiwiSaver remain largely unchanged at A$107 million (A$108 million in Q3 16).

Australian mature

• Australian mature net cash outflows in Q3 17 were A$356 million, compared to A$391 million in Q3 16, reflecting the run-off nature of the book.

The post AMP Limited provides Q3 17 cashflows update appeared first on AdviserVoice.

• 

  Craig Meller

  Underlying profit[1] A$533 million in 1H 17, up 4 per cent (1H 16: A$513 million), and net profit[2] of A$445 million (1H 16: A$523 million).

• Completion of reinsurance program delivers on strategy, with new arrangements to release approximately A$500 million of capital from AMP Life (subject to regulatory approval) further reducing the capital intensity of the wealth protection business.
• Strong continued growth momentum in AMP Bank and AMP Capital.
• Australian wealth management resilient amid elevated margin compression; net cashflows rose 76 per cent to A$1,023 million; growth in revenue from Advice and SMSF to accelerate from 2H 17.
• Australian wealth protection earnings increased 11 per cent to A$52 million (1H 16: A$47 million), reflecting steps taken to stabilise the business.
• Sustained cost management on track to deliver 3 per cent reduction in controllable costs (ex AMP Capital) by FY 17.
• Strong capital position with A$1.9 billion over minimum regulatory requirements. Interim dividend increased to 14.5 cents a share, franked to 90 per cent.
• Underlying return on equity was 14.5 per cent in the half, up from 11.9 per cent at 1H 16.

Wealth protection: reinsurance update

AMP yesterday announced a series of new reinsurance agreements, delivering on its strategy to release capital from the Australian wealth protection business and reduce future earnings volatility.
Releasing approximately A$500 million in capital from AMP Life (subject to regulatory approval), the new reinsurance agreements include:

• A new quota share agreement with General Reinsurance Life Australia Limited (Gen Re) to cover 60 per cent of the NMLA retail portfolio, which was merged with AMP Life on 1 January 2017.
• An extension to the existing agreement with Munich Reinsurance Company of Australasia Limited (Munich Re) to cover 60 per cent (up from 50 per cent) of the AMP Life retail portfolio.
•  A new surplus cover agreement with Gen Re to assist in managing risk and volatility in individual retail claims.
• Recapture of 35 existing reinsurance treaties, simplifying AMP’s overall reinsurance arrangements.

The new reinsurance agreements will commence on 1 November 2017 and, when combined with the first tranche of reinsurance completed in 2016, effectively means 65 per cent of AMP’s retail life insurance portfolio will be reinsured for claims incurred from 1 November 2017.

AMP Chief Executive Craig Meller said: In the first half, we’ve made good progress on the delivery of our strategy.

In wealth protection, we’ve completed a set of comprehensive reinsurance agreements, which will release capital from AMP Life and reduce earnings volatility.

We’ve continued to drive strong growth in the bank, growing above system while maintaining a conservative lending approach.

In wealth management, we’ve delivered a solid performance, managing margin compression effectively and showing our strength as the market leader for superannuation during a period of heightened market activity due to MySuper transitions.

And we’ve driven international growth with AMP Capital growing strongly and underlining its emerging reputation as a global leader in real estate and infrastructure investments with strong flows to these asset classes. Our partnerships in China are also performing well, growing both cashflows and assets under management.

Overall, it’s a solid performance underpinned by strong cost management that steps us toward our strategy of transitioning to a higher-growth, capital-light business with a more internationally diverse revenue profile.

Australian wealth management

Australian wealth management operating earnings, down 1 per cent to A$193 million, were resilient. The result demonstrates effective margin management during the final transitions to low-cost MySuper funds and amid significant activity across the superannuation industry. MySuper transitions completed in 1H 17 with margin compression expected to continue to be around 5 per cent this year.

Net cashflows were significantly higher in 1H 17, with stronger inflows from discretionary super contributions ahead of 1 July changes to non-concessional caps. The transition of corporate super mandates also supported inflows, with one mandate bringing more than 3,700 new customers to AMP. During the period, AMP paid A$1.3 billion in pensions to help customers through their retirement.

AMP’s flagship North platform performed well in 1H 17, with flows up 8 per cent and AUM up 13 per cent on FY 16. North now has more than A$30 billion in assets under management.

To offset the impact of margin compression, AMP is targeting additional revenue growth from its Advice and SMSF businesses, which is reported in the Other revenue line. AMP expects Other revenue to increase by 10 per cent in FY 17, with growth in Advice and SMSF revenues emerging in 2H 17 and accelerating into 2018. This will support the delivery of AMP’s target of 5 per cent overall revenue growth in Australian wealth management through the cycle.

AMP Capital

AMP Capital delivered strong growth in operating earnings, up 11 per cent to A$92 million, benefiting from good growth in fee income. External assets under management fees rose by 6 per cent to A$132 million and non-AUM based management fees also increased, benefiting from growth in real estate development fee revenue.

External net cashflows increased to A$2.4 billion, with significant cash inflows into fixed income and higher-margin real assets. Real assets proved popular with investors wanting exposure to leading infrastructure and real estate investments.

Delivering on its strategy to expand internationally, AMP Capital grew its number of direct international institutional clients from 199 at FY 16 to 252 in 1H 17 and now manages A$10 billion in assets on their behalf. In China, AMP Capital’s asset management joint venture, China Life AMP Asset Management (CLAMP), continues to grow rapidly with AUM increasing 22 per cent to RMB 141 billion (A$27.1 billion) in 1H 17. Total AUM for China Life Pension Company, the pensions joint venture in which AMP owns a 19.99 per cent stake, grew 8 per cent to RMB 408.2 billion (A$78.5 billion) in 1H 17.

At 30 June 2017, AMP Capital had A$3.5 billion of committed funds available for investment including funds raised in its Infrastructure Debt Fund III (IDFIII), which has attracted strong international interest.

AMP Bank

Strong growth momentum continued in AMP Bank, with operating earnings up 10 per cent to A$65 million, driven by 17 per cent growth in lending to A$18.8 billion. The bank maintained a conservative credit policy and asset quality remains high. Mortgage sales through AMP’s aligned adviser channel increased 49 per cent on 1H 16. Net interest margin declined 4 basis points from 1H 16 but improved 4 basis points on 2H 16.

The cost to income ratio rose slightly to 29 per cent, with controllable costs increasing by A$4 million reflecting ongoing investment to support growth. Lending growth in the bank is expected to moderate in the second half as the market adjusts to new regulatory requirements.

Australian wealth protection

Actions undertaken in 2016 to stabilise and reset the business are working and have delivered an improved result. Operating earnings rose 11 per cent, with improved experience offsetting lower profit margins.

The announcement of further reinsurance agreements, completing the strategic reinsurance program, lessens exposure to retail claims volatility and will further stabilise wealth protection earnings. AMP continued to support customers during their time of need, paying A$575 million in claims during the six months to 30 June

New Zealand financial services

Operating earnings, up 5 per cent to A$65 million, reflect higher experience profits. AUM increased 6.9 per cent to A$15.5 billion on positive markets.

A strong focus on cost management supported a reduction in controllable costs by 3 per cent to A$38 million and improved the cost to income ratio by 1.4 percentage points to 27.2 per cent.

Australian mature

Operating earnings are up A$6 million from 1H 16 to A$75 million due to strong markets, lower controllable costs and improved experience.

Capital and dividend

AMP’s capital position remains strong, with level 3 eligible capital resources A$1,887 million above minimum regulatory requirements at 30 June 2017, down from A$2,195 million at 31 December 2016. The reduction largely reflects capital returned to shareholders through an on-market share buy back and investment in business growth during the period. The new reinsurance agreements are expected to release up to an additional A$500 million from AMP Life (subject to regulatory approval).

The interim dividend has been increased to 14.5 cents per share, franked at 90 per cent. The 1H 17 dividend payout is within AMP’s stated target range of 70 to 90 per cent of underlying profit.

The post AMP reports 1H 17 results; announces new reinsurance agreements appeared first on AdviserVoice.

Craig Meller

AMP has provided an update on its group strategy and growth opportunities at its Investor Strategy Day, being held in Sydney.

The strategy was direct investment towards higher-growth businesses in wealth management, AMP Bank and AMP Capital; leverage AMP’s strengths in overseas markets; and maintain focus on driving cost efficiency.

Key elements of the strategy include:

• Tilt investment to higher-growth, less capital-intensive businesses. Release and recycle capital from lower-growth business lines to fund growth and returns.
• Grow wealth management by broadening its revenue streams via increasing contributions from advice and SMSF, while continuing to invest in product and platform development.
• Build and integrate a goals-based advice operating system across face-to-face, phone, digital and corporate super employer channels.  Explore options to extend advice capability and systems into international markets.
• Leverage AMP Capital’s investment management expertise in fixed income, infrastructure and real estate to selected international markets, including Europe, North America and Asia.
• Continue the rapid growth and increasing contribution of China businesses.
• Manage Australian wealth protection, New Zealand and mature for capital efficiency and value, emerging embedded value as soon as possible.
• Continue focus on costs to drive operational leverage.

AMP Chief Executive Craig Meller said: “Our strategy continues AMP’s shift from a product and distribution business to a customer-led organisation focused on helping our customers achieve their personal goals.”

“We are uniquely positioned to benefit from favourable domestic and global thematics including the mandated growth of the Australian superannuation system, a growing banking market and the structural increase in demand for investment yield as the world’s population ages.

“The strategy is focused on realising our potential while adapting to an increasingly competitive market place and technology-driven disruption.

“In Australia, we will continue to lead the wealth management market, changing the sector’s traditional economics by driving greater revenue from advice and self-managed super fund (SMSF) services.  We will help more Australians get more advice, more often through our transformed goals-based operating system.

“We will also diversify and drive revenue growth internationally through investment management, particularly infrastructure and real estate, and by extending our unique wealth operating system to offshore players.  Our partnerships with market leaders in China (China Life) and Japan (MUTB) provide strong platforms for future growth.

“The approach for our Australian wealth protection, New Zealand and mature businesses is to manage them for value and capital efficiency.  These businesses have significant embedded value and we continue to look for ways to economically accelerate the realisation of this value.

“The strategy will be underpinned by a continuing focus on operational efficiency and cost discipline right across the group.”

The post AMP provides update on growth strategy appeared first on AdviserVoice.

Craig Meller

AMP Limited (ASX: AMP; ADR: AMLYY) yesterday reported cashflows and assets under management (AUM) for the first quarter to 31 March 2017 and provided an update on its Australian wealth protection business.

• Q1 17 Australian wealth management inflows increased 11 per cent from Q1 16 to A$6.4 billion. This was offset by a 19 per cent increase in outflows resulting in net cash outflows of A$199 million.
• Outflows primarily driven by increased consolidation activity across the superannuation sector and as customers transitioned to MySuper.
• Net cashflows on AMP retail platforms were A$188 million in Q1 17. North continues to perform well, with net cashflows up 27 per cent from Q1 16.
• AMP Capital net external cashflows of A$228 million driven by strong cashflows from China Life AMP Asset Management.
• AMP Bank’s mortgage book grew by 5 per cent over the quarter.
• Positive Q1 17 Australian wealth protection claims and lapse experience, with the business performing in line with revised assumptions.
• Cashflows strong since beginning of Q2 with wealth management net cashflows now positive year to date.

AMP Chief Executive Craig Meller said: “Q1 17 cashflows reflect an extraordinarily high level of activity across Australia’s superannuation industry as customers transitioned to MySuper prior to 1 July 2017, consolidate their funds and allocate more investments to SMSFs, amid a changing regulatory environment. As a result, both Australian wealth management cash inflows and outflows were higher.

“Cashflows into North increased, reflecting our continued investment in the market leading platform. AMP’s SMSF business, SuperConcepts, also increased its assets under administration as it builds on its market-leading position.

“Wealth management cashflows have been strong since the beginning of Q2 as we near the 1 July 2017 effective date for superannuation contribution changes and from the transition of a large corporate super mandate to AMP. Final MySuper transitions were completed in April and net cashflows in wealth management are positive for the year to date.

“Q1 claims and lapse experience in Australian wealth protection indicate that the measures we’ve taken to stabilise the performance of the business are working.”

The post AMP Limited reports first quarter cashflows, AUM and provides Australian wealth protection update appeared first on AdviserVoice.

Craig Meller

FY 16 net loss of A$344 million (FY 15 net profit: A$972 million) and underlying profit of  A$486 million (FY 15: A$1,120 million) reflecting actions announced in October 2016 to stabilise Australian Wealth Protection.

Up to A$500 million to be returned to shareholders through on-market share buy-back to begin in Q1 2017. Final dividend maintained at 14 cents a share, franked to 90 per cent. FY 16 dividend 28 cents a share.

Strong performances by AMP Capital, AMP Bank and New Zealand. Australian Wealth Management resilient in volatile market.

A$415 million loss in Wealth Protection reflects negative claims experience and capitalised loss; business stabilised and capital released following reinsurance and Part 9 initiatives.

International expansion in China, Europe and North America continues. China Life AMP Asset Management Company (CLAMP) is the fastest-growing investment manager in China, with assets under management (AUM) rising 55 per cent year on year.

Disciplined cost management: A$200 million, three-year efficiency program completed in 2016; new efficiency target for 2017.

Strong capital position with A$2.3 billion surplus on 1 January 2017 following consolidation of life companies. Underlying return on equity 5.6 per cent, down from 13.2 per cent in 2015, reflecting Wealth Protection performance.

AMP Chief Executive Craig Meller said: The year saw strong results from AMP Capital, AMP Bank, New Zealand and a resilient performance from Wealth Management despite challenging market conditions. However, these results were overshadowed by a poor performance in Wealth Protection.
The wealth protection market deteriorated in 2016 and we took action to re-set and stabilise our business.

Our strategy is focused on directing capital to areas of our portfolio that will deliver the strongest growth including Australian Wealth Management, AMP Capital and AMP Bank.

International expansion is gaining momentum, particularly in China as well as in Europe and North America, where we are exporting our home-grown investment and pension expertise.

AMP’s partnerships with China Life – China’s largest listed insurance group, institutional investor and corporate pension manager – are stronger than ever. Together we are well placed to support the rapidly-evolving investment and pension needs of this growing market.

We have announced an on-market share buy-back of up to A$500 million and maintained our dividend. These actions reflect our strong capital position and positive outlook for the business.

Australian Wealth Management

The impact of difficult trading conditions was partly offset by effective cost and margin management. AUM was up 5 per cent to A$121 billion following a strong end to the year. Total net cashflows of A$336 million (FY 15: A$2.2 billion) were lower, consistent with an industry-wide slow down amid market and regulatory uncertainty. Improving customer sentiment underpinned a lift in discretionary contributions in Q4 2016.

Targeted product enhancements supported strong cashflows on AMP’s flagship North platform, with net cashflows up 11 per cent on FY 15 and AUM up 30 per cent. Cashflows from AMP Flexible Super reduced as flows switched to North as expected. Corporate super cashflows were lower reflecting the lumpy nature of mandates. AMP’s developing omni-channel advice network, campaigns to capitalise on a more favourable market environment, corporate super pipeline and further product enhancements are expected to support cashflows in 2017 and beyond.

AMP deliberately reduced adviser numbers in 2016 by tightening the classification of authorised representatives. A higher-than-usual number of advisers also decided to retire or leave the industry in the face of challenging industry conditions and increasing education and professional requirements.

AMP Capital

AMP Capital’s strong performance reflected increased fee income driven by growth in real estate and infrastructure investments. Controllable costs increased as the business continued to invest in international growth and build its distribution capability.

External net cashflows were A$967 million (FY 15: A$4.4 billion) and were impacted by challenging market conditions in Australia and Japan, partly offset by good institutional flows into real estate and infrastructure asset classes. FY 16 finished with a strong origination pipeline, including A$3.1 billion of available investor commitments. In China, CLAMP’s AUM increased 55 per cent year on year.

Australian Wealth Protection

Performance was impacted by negative experience and the actions to stabilise the business announced in October 2016, including strengthened assumptions, which led to a one-off capitalised loss of A$484 million. Total experience losses for the year were A$105 million. Claims experience in Q4 2016, capitalised and other one-off losses, and the reduction in embedded value were all within guidance provided in October 2016. AMP group’s reported earnings were also impacted by a A$668 million charge for goodwill impairment as a consequence of declines in the potential recoverable amount of the Australian Wealth Protection business.

The consolidation of AMP Life and NMLA – a Part 9 transfer – released A$145 million in regulatory capital on 1 January 2017, while a reinsurance agreement for 50 per cent of the AMP Life portfolio (25 per cent of total exposure) released a further A$500 million of regulatory capital. These actions underpinned the board’s decision to return capital to shareholders through an on-market share buy-back. The process for a second tranche of reinsurance is now underway.

AMP Bank

Above system growth in residential mortgages and expansion in net interest margin contributed to
15 per cent growth in operating profit. The bank is investing in operational capacity to support continued growth, with retail mortgage sales via the aligned adviser channel up 24 per cent on FY 15.
The bank’s cost to income ratio fell to 29 per cent as the bank benefitted from increased scale.

New Zealand Financial Services

Performance was driven by improved margins in wealth management and experience profits in the life insurance business. Excluding the effect of the loss of transitional tax relief, operating earnings increased 14 per cent, with tight cost management improving the business’s cost to income ratio. AUM increased 9 per cent, reflecting positive market performance and net cashflows.

Australian Mature

Operating earnings of A$151 million reflected anticipated portfolio run off and lower bond yields, partly offset by cost control and better persistency.

Capital management

AMP continues to actively manage capital with Level 3 eligible capital resources A$2,195 million above minimum regulatory requirements at 31 December 2016, up from A$1,917 million at
1 July 2016. Effective 1 January 2017, the consolidation of AMP’s two life companies (AMP Life and NMLA) increased excess regulatory capital by a further A$145 million.

The strengthened capital position also reflects the execution of the reinsurance agreement.

Capital released from reinsurance provides the capacity for capital to be returned to shareholders.
An on-market share buy-back of up to A$500 million will begin in Q1 2017.

A FY 16 final dividend has been maintained at 14 cents per share, franked at 90 per cent, with the unfranked amount being declared as conduit foreign income. The total FY 16 dividend is 28 cents a share. This reflects the largely non-cash nature of the one-off losses incurred in Australian Wealth Protection. AMP’s dividend policy target range is 70 to 90 per cent of underlying profit. The dividend reinvestment plan will be neutralised by on-market purchases.

Cost program

AMP’s three-year business efficiency program completed in FY 16 with A$200 million in pre-tax recurring run rate cost benefits delivered in line with expectations.

AMP is committed to a 3 per cent reduction in controllable costs in 2017, excluding AMP Capital and allowing for continued investment in growth businesses and channel experiences. AMP Capital will be managed on a cost to income basis, which is appropriate for the profile and growth ambitions of this business.

The post AMP reports FY 16 results; announces on-market share buy-back appeared first on AdviserVoice.

AMP Chief Executive Craig Meller said the new group structure delivers sharper  focus on performance in the core Australian businesses, drives efficiency  across the group and provides increased emphasis on the growth drivers in the portfolio.

The key changes to the group leadership team are:

• Wealth Solutions and Customer: Paul Sainsbury will lead a new division bringing together customer, wealth  management and product solutions.
• Advice and New Zealand: Jack Regan, currently Managing Director New Zealand, will lead an expanded  portfolio, assuming responsibility for AMP’s advice businesses. Mr Regan will retain responsibility for the  management of AMP New Zealand.
• AMP Bank: Sally Bruce will join the  group leadership team as Group Executive, AMP Bank.
• Insurance: Megan Beer will be appointed Group Executive, Insurance, bringing single point accountability to the stabilisation and management of the insurance business.
• Technology and Operations: Craig Ryman will become Group Executive, Technology and Operations, assuming an expanded portfolio combining IT and operations.
• Enterprise Risk Management: Saskia Goedhart, Chief Risk Officer, will join the group leadership team.

The leadership changes are effective 1 January 2017.  Management of the other divisions remain  unchanged.  An updated structure chart and biographies are attached.

As a  result of the changes, three executives will leave the organisation: Pauline Blight-Johnston, Group Executive, Insurance, Super and Risk Management; Rob Caprioli, Group Executive, Advice and Banking; and Wendy Thorpe, Group Executive Operations. Ms Thorpe had previously advised her intent to retire and will leave the business in early  2017 after helping to ensure the smooth transition of the operations  function.  Ms Thorpe will also shortly  join the board of AMP Bank as a Non-Executive Director.

“I would like to thank those  executives who are leaving the organisation for their contribution to AMP and  to the transformation of our core Australian business during the past three  years.  I wish each of them well for the future,” said Mr Meller.

The post AMP realigns business to focus on performance and growth appeared first on AdviserVoice.