Francesco De Ferrari

• Australian wealth management (AWM) assets under management (AUM) increased A$1.6 billion to A$125.7 billion during Q1 21, reflecting improved investment markets.
• AWM net cash outflows of A$1.5 billion in Q1 21 (Q1 20: A$1.7 billion), includes A$448 million in regular pension payments to clients.
• AMP Bank total loan book increased by A$0.2 billion to A$20.8 billion, driven by growth in owner-occupied loans in a highly competitive market.
• AMP Capital AUM reduced 1.7 per cent to A$186.5 billion (Q4 20: A$189.8 billion), primarily reflecting net cash outflows during the quarter from public markets, sale of the Global Companies capability and share of listed NZ REIT Precinct Properties New Zealand Limited.
• AMP Capital external net cash outflows of A$1.3 billion in Q1 21, driven primarily by fixed income outflows as well as planned divestments of assets in infrastructure equity closed-end funds. The divestments, reflected in cash outflows, delivered strong performance outcomes for clients.

AMP Chief Executive Francesco De Ferrari said: “Business performance remained resilient during the first quarter as we continued to make progress on delivery of our transformation strategy to become a simpler, client-led business.

“In Australian wealth management our cashflows are showing underlying signs of improvement, with a reduction in outflows from corporate super mandates and a reduced impact from Protecting Your Super legislation. The increase to our assets under management in our wealth management business reflects continued improvement in investment markets in Q1. We supported clients through the period with  A$448 million in pension payments, which are reflected in cash outflows.

“We saw an encouraging performance in AMP Bank, performing solidly in a highly competitive market with sustained loan book growth. It’s also pleasing to see clients impacted by COVID-19 are getting back on their feet with all home loan pauses now lifted.

“We continue to improve the capabilities of North to support both AMP aligned and external financial advisers in servicing their clients and to ensure it continues to be a leading platform.

“Our teams in AMP Capital have remained focused on delivering for clients, with continued deployment of capital in our infrastructure funds.

“We are accelerating change within AMP, having made strong progress on addressing our legacy issues, including our client remediation program, which is close to 90 per cent complete. We remain focused on delivering critical priorities to progress our transformation over the next quarter and continue positioning the business for future growth.”

AMP Australia

Australian wealth management

• AUM increased by A$1.6 billion to A$125.7 billion during Q1 21, reflecting stronger investment markets.
• AUM on the North platform increased A$1.7 billion to A$53.4 billion during Q1 21.
• AWM net cash outflows of A$1.5 billion in Q1 21, includes:
  • Cash inflows of A$5.2 billion, primarily driven by A$3.6 billion cash inflows on the North platform. North cash inflows were down on the previous year (Q1 20: A$4.0 billion) due to reduced adviser activity during the period.
  • Cash outflows of A$6.7 billion (Q1 20: A$7.6 billion), includes A$448 million in regular pension payments to clients in retirement and the exit of a corporate super mandate.

AMP Bank

• AMP Bank’s total loan book grew by A$0.2 billion to A$20.8 billion in Q1 21 driven by competitive owner-occupied pricing in a highly competitive market.
• Total deposits decreased by A$0.1 billion to A$16.0 billion in Q1 21, in line with AMP Bank’s strategy to optimise its funding mix.
• Home loan repayment pause program, available to support clients during COVID-19, has completed.

AMP Capital

• AUM declined 1.7 per cent to A$186.5 billion from A$189.8 billion in Q1 21, primarily reflecting net cash outflows for the period of A$2.9 billion.
• AMP Capital external net cash outflows of A$1.3 billion, driven primarily by fixed income outflows as well as planned divestment of assets in infrastructure equity closed-end funds. The divestments, reflected in cash outflows, delivered strong performance outcomes for clients.
• External net cash outflows were partially offset by continued inflows in infrastructure debt capability as investments were made. Real asset investment activity continues with committed capital of A$4.0 billion available for deployment as at 31 March 2021.
• China Life AMP Asset Management (CLAMP) joint venture continued to perform, generating A$646 million in cash inflows.
• AMP Capital AUM reduced by A$3.3 billion with A$2.4 billion attributable to internalisation of the management of listed NZ REIT Precinct Properties New Zealand Limited and sale of the Global Companies capability.

New Zealand wealth management

• New Zealand wealth management total AUM decreased to A$12.2 billion (Q4 20: A$12.4 billion), in part due to the exit of a large corporate superannuation client.
• New Zealand wealth management net cash outflows of A$102 million (Q1 20: A$56 million net outflow), driven by increased competitor activity, exit of a corporate superannuation client, and the ongoing impacts from COVID-19.

The post AMP Limited provides Q1 21 AUM and cashflows update appeared first on AdviserVoice.

Alexis George

AMP Limited has announced it has appointed Alexis George as its new group Chief Executive Officer (CEO), to take over from Francesco De Ferrari who will retire from the role as the company completes its portfolio review.

Ms George will join AMP from ANZ where she has served as Deputy Chief Executive Officer, as well as Group Executive Wealth Australia, overseeing the sale of the business in 2018. She will join AMP Limited as CEO in Q3 this year, subject to required regulatory approvals.

Mr De Ferrari will continue to lead AMP during the interim period and ensure a smooth handover to Ms George. He will continue to work in partnership with the Board and lead AMP’s key strategic initiatives, including discussions on the proposed transaction for AMP Capital’s private markets business with Ares Management Corporation.

AMP Chair Debra Hazelton commented: “On behalf of the Board, I would like to thank Francesco for his significant service to AMP and recognise his commitment to a smooth leadership transition. We wish him every success for the future and know he will continue to be the exemplary leader he has been at AMP. As we noted last week, with our portfolio review reaching completion, the Board and Francesco agreed that it is an appropriate time to begin the transition to a new CEO to take AMP forward.

“Francesco has led AMP through an extraordinary period, responding to unprecedented external challenges, all while successfully executing a complex transformation program. His strategy has materially reshaped the group, simplified AMP and sharpened the focus of each of our businesses on their strongest growth opportunities. He led our business through the disruption of COVID-19 and successfully delivered key programs including client remediation and the completion of the sale of AMP Life.

“In Alexis George, we have a great leader and strong fit for the future of our company. On any measure, she has outstanding industry experience in wealth management and banking, and is committed to continue the transformation of AMP’s business, and importantly, our organisation’s culture. Alexis will work with our executive team to complete and build on the strategic initiatives started under Francesco’s leadership and take AMP forward to its next phase of growth.”

Francesco De Ferrari commented: “On our transformation journey we have taken bold steps to rebuild AMP as a simpler, client-led and growth-oriented business. We have completed the AMP Life sale, embarked on the reinvention of wealth management in Australia and repivoted AMP Capital towards its strength in private markets.

“The portfolio review concluded that unlocking the growth potential in private markets is best delivered either in partnership with a global player or via separation from the group. As a result, the future AMP will be largely focused on domestic wealth management and banking opportunities. I’m confident this will deliver the strongest outcome for our shareholders, however, it means the group will have a very different business mix and geographic profile requiring a different strategic focus from the CEO.

“While there is no optimal time for transition, the Board and I agreed that for AMP to deliver on the next phase of its ambitious transformation, at this juncture long-term certainty of leadership is critical for our business, our employees and our clients. Leading AMP, a business that is part of the fabric of Australia and New Zealand, is a privilege. I wish Alexis and AMP only the best and you can count on me to continue cheering for its success from the sidelines.”

Alexis George biography

Alexis has more than 25 years’ experience in the financial services industry in Australia and overseas.

She spent seven years at ANZ, including most recently as the Deputy Chief Executive Officer, working with the CEO to drive group-wide strategic initiatives in addition to responsibility for its shared service centres and banking services.

As the Group Executive Wealth Australia, Alexis led ANZ’s ~$4 billion wealth divestment program, including the separation and sale of its life insurance and superannuation businesses.

Prior to ANZ, Alexis spent ten years with ING Group in a number of senior roles including CEO Czech Republic and Slovakia responsible for banking, insurance and funds management and Regional COO Asia responsible for product, marketing, technology and operations.

Alexis is a member of the Institute of Chartered Accountants and a graduate of the Australian Institute of Company Directors. She is a member of Chief Executive Women.

Summary of new CEO contract

• Salary (including superannuation) of A$1.715 million per annum.
• Short-term incentive opportunity equivalent to 100% of salary for on-target performance, and 200% at maximum, subject to achievement of performance hurdles and other terms.
• A maximum long-term incentive opportunity with a target value equivalent to 100% of salary, subject to achievement of performance hurdles and other terms.
• Sign-on award with a face value of A$4.091 million to be delivered in AMP equity, to replace existing incentive arrangements foregone with previous employer, comprising:A$1,086,911 subject to a continued service condition.
  • A$750,862 subject to a Total Shareholder Return (TSR) condition, which will require compound annual growth in AMP’s TSR of 8.5% or greater for full vesting to occur. 50% of the award will vest if AMP’s TSR is positive with pro-rata straight line vesting between 50% and 100%.
  • A$2,252,669 subject to a relative TSR condition, with 100% vesting if AMP is in the 75th percentile or higher of ASX 100 Financials. 50% of the award will vest if AMP is in the 50th percentile of the ASX 100 Financials, with pro-rata straight line vesting between 50% and 100%.
  • All sign-on awards outlined above will vest in tranches over a three-year period (to November 2024), if required conditions are met.
• A further sign-on award with a face value of A$732,500, delivered in cash in December 2021 subject to a continued service condition.
• Either party can terminate the agreement with six months’ notice. The Company may summarily terminate the CEO’s employment without notice in certain circumstances.
• There is a post-employment restraint of 12 months.

Summary of Francesco De Ferrari’s exit arrangements

• Francesco has agreed to stay in the CEO role until at least 1 July 2021, after which time he will be available to the Company to assist with handover and ongoing support.
• All of Francesco’s incentives will be treated in accordance with his contract and the original offer terms, as previously disclosed.
• Francesco will remain eligible for his short-term incentive for 2021. In addition, he will receive a payment of A$300,000 (less applicable tax) in respect of the additional work he undertook in FY 2021 to support the AMP Capital business. He will not be eligible to receive any other incentive awards in respect of future years.
• Francesco will receive a lump sum of A$200,000 (gross) as reimbursement of some of his relocation costs. Francesco will also be entitled to be provided with taxation and visa advice.

The post Alexis George appointed as AMP Limited Chief Executive; Francesco De Ferrari to retire from AMP appeared first on AdviserVoice.

Francesco De Ferrari

AMP Limited (“AMP”) and Ares Management Corporation (NYSE: ARES) (“Ares”) today announced that they have entered into a non-binding Heads of Agreement to pursue the formation of a joint venture for AMP Capital’s private markets businesses of infrastructure equity and infrastructure debt, real estate and other minority investments (“Private Markets”).

Under the proposed transaction, Ares would acquire 60 per cent of Private Markets and assume management control, with AMP retaining 40 per cent. AMP and Ares will enter into a 30-day period of exclusivity, to work towards a binding transaction.

The partnership would facilitate an acceleration of the growth of Private Markets, while unlocking immediate value for AMP shareholders. Ares, with a current market capitalisation of more than US$13 billion, has a global footprint and capabilities in credit, private equity and real estate which are highly complementary to Private Markets.

The key components of the proposed transaction are as follows:

• A Private Markets joint venture valued at A$2.25 billion (excluding retained assets and contingent consideration outlined below) with Ares acquiring 60 per cent for A$1.35 billion and AMP retaining the residual 40 per cent (A$0.90 billion).
• The Private Markets joint venture businesses will include:
  • Infrastructure equity
  • Infrastructure debt
  • Real estate
  • Other minority investments.
• AMP to retain up to A$0.9 billion of assets and contingent consideration related to the current private markets businesses comprising:
  • Seed and sponsor and related investments of approximately A$0.5 billion
  • Surplus capital released of A$0.1 billion; and
  • Contingent consideration of up to A$0.3 billion related to future performance including carried interest from existing funds
• Total implied value for AMP Capital’s existing private markets business of up to A$3.15 billion.
• AMP will retain ownership of AMP Capital’s public markets businesses, which in FY 20 made a modest NPAT contribution. The public markets strategy will continue, including the Multi-Asset Group (“MAG”) being transformed and transferred to AMP Australia, and actively exploring sale or partnership opportunities for the Global Equities and Fixed Income (“GEFI”) business.
• The joint venture is expected to raise A$0.5 billion of debt to maximise capital efficiency which would reduce the pro rata equity contributions for each party in the joint venture. Therefore, under this assumption, Ares would fund A$1.05 billion in equity to the joint venture and AMP would receive expected gross cash proceeds of up to A$1.55 billion (before separation costs and capital release).
• The board of the Private Markets joint venture would initially comprise 10 board seats with six nominees from Ares and four from AMP.
• Ares and AMP to have structured call and put options, respectively, in relation to AMP’s residual holdings in Private Markets, commencing after five years.

The joint venture would enable the Private Markets business to benefit from Ares’ brand and global strengths in investment and distribution as well as already strong infrastructure and real estate capabilities, and continue to build upon AMP Capital’s well-established processes and investment capabilities, improving its scale and potential growth trajectory. At 31 December 2020, Ares had US$197 billion in assets under management (AUM), after growing both AUM and fee-related earnings in excess of 30 per cent over the year and fundraising a record US$41.2 billion. Ares managed US$18.3 billion in infrastructure and real estate AUM with over 100 investment professionals in North America and Europe.

The proposed partnership would enable AMP shareholders to benefit from both the anticipated accelerated growth of Private Markets through its 40 per cent shareholding, as well as realising value from Private Markets’ growth to date. Ares shareholders would benefit from the strategic global expansion of its infrastructure and real estate strategies which would total to over US$60 billion in total AUM, as of 31 December 2020 on a pro forma basis.

If agreed, the transaction will be subject to regulatory approvals, an Independent Expert’s Report, approval by AMP’s shareholders and other customary conditions precedent, including change of control approvals. AMP shareholders do not need to take any action at this stage.

The proposed transaction will mark the conclusion of AMP’s portfolio review.

During the exclusivity period, the AMP group must not directly or indirectly solicit, engage with or accept any competing proposal (including any proposal that may prevent, prejudice or jeopardise the transaction as well as a change in control of AMP), or any inquiries, indications of interest, offers or discussions with, or furnish any information to, any third party in relation to a competing proposal, or that could reasonably be expected to lead to a competing proposal or to AMP not proceeding with the transaction.

There is no certainty that a transaction will proceed, or the terms on which it would proceed.

AMP Chair Debra Hazelton and AMP Chief Executive Francesco De Ferrari commented: “We believe the proposed partnership with Ares would deliver strong outcomes for our clients, our shareholders and our broader business. We expect it would strengthen the business and significantly accelerate our strategy to grow private markets, while de-risking our international expansion plans, and bringing forward the value in AMP Capital for our shareholders. The joint venture would also enable AMP shareholders to participate in anticipated accelerated growth from a business with increased global scale and capability.

“The transaction will enable AMP to increase focus on the transformation of our wealth management business in Australia, drive the continued growth of AMP Bank and New Zealand wealth management and benefit from driving further efficiency. We look forward to working towards a binding agreement with Ares, which will mark the conclusion of the portfolio review.”

Ares Management Corporation Chief Executive Michael Arougheti commented: “We are excited to further expand our real estate and infrastructure investment capabilities through our partnership with AMP.  We believe we can add significant value through our global scale, relationship network, investor relationships and our broad, collaborative investment platform. We’ve been impressed by the growth of AMP Capital’s private markets business over the past several years and our time with the team as part of the portfolio review has further cemented our view on the intrinsic value of this business under our leadership. We expect that this transaction would be highly strategic and complementary to our business and financially accretive for our shareholders.”

The post AMP and Ares Management Corporation announce intention to pursue joint venture partnership for AMP Capital’s private markets businesses appeared first on AdviserVoice.

Francesco De Ferrari

FY 20 results

• Increasing momentum on delivery of AMP’s three-year transformation strategy, amid challenging market conditions in each business unit in FY 20.
• FY 20 NPAT (underlying)^[1] of A$295 million (FY 19: A$439 million) reflecting the impacts of COVID-19 on our clients, our business and the broader economy and financial markets. FY 20 statutory NPAT of A$177 million, reversing A$2.5 billion loss in FY 19.
• Assets under management (AUM) in Australian wealth management (down 8 per cent) and AMP Capital (down 7 per cent), reflecting volatile investment markets and net cash outflows, which included the Australian Government’s early release of super program (A$1.8 billion).
• Resilient performance in AMP Bank which maintained its position with A$20.2 billion residential mortgage book in a competitive lending market; maintained credit quality while supporting 11 per cent of our mortgage clients with home loan repayment pauses.
• Strong capital position maintained with surplus capital of A$521 million at 31 December 2020.
• As guided, the AMP Board has resolved not to declare a final dividend for FY 20, following A$344 million paid to shareholders in the form of a 10c per share special dividend at 1H 20. The board is committed to restarting the group’s capital management initiatives including the payment of dividends, share buyback and other capital initiatives in 2021. This is subject to the completion of the portfolio review, market conditions and business performance.
• Client remediation program is now 80 per cent complete and on schedule to fully complete in mid-2021.

Portfolio review

• AMP Limited today provides the following update on its portfolio review and engagement with Ares Management Corporation (“Ares”).
• Following detailed discussions, AMP has been advised last night by Ares that it does not intend to proceed with its non-binding indicative proposal for 100 per cent of AMP of $1.85 per share. AMP continues to engage constructively with Ares in relation to AMP Capital as part of the portfolio review.
• The review has confirmed AMP’s transformation strategy for the AMP Australia (Australian wealth management and AMP Bank) and New Zealand wealth management businesses is likely to be the optimal outcome for shareholders. The AMP Board has therefore concluded the review of these assets.
• AMP continues to review options for maximising the ability to grow and invest in AMP Capital including exploring partnership options.
• The Board will provide an update on the outcome of ongoing discussions as soon as possible.

AMP strategy

• Strategic delivery momentum in FY 20 despite challenging environment.
• Strong progress in reshaping advice network to a more compliant, professional and productive cohort with practice exits delivered to plan in FY 20.
• Successfully completed renovation of AMP Bank’s core technology platform on time and under budget, increasing operational capacity for future growth and improving client service.
• Significant simplification of New Zealand wealth management, laying foundations for future growth.
• Growing asset management business through pivot to private markets; completed repurchase of MUTB’s 15 per cent stake in AMP Capital to support strategy pivot.
• Acceleration of culture transformation: comprehensive set of actions announced to drive an inclusive and high-performing culture.
• Delivered A$121 million of cumulative gross cost savings in FY 20; remain committed to deliver A$300 million annual run-rate savings (ex AMP Capital) by FY 22.

AMP Chief Executive Francesco De Ferrari said: “2020 was a tough year across the world. COVID-19 unsettled our clients, our workplaces and the broader community.

“Volatility in markets and the economic downturn impacted the investments and financial security of many Australians and New Zealanders. True to our long-term purpose, AMP stepped up to support our clients navigate the uncertainty, providing early access to their super, pauses on their mortgage repayments, relief on their rent, and advice and guidance when needed.

“Within our business, it was also an extraordinary year, with significant internal change and the initiation of a portfolio review in 2H 20. The review has made good progress, assessing options for the group’s assets and businesses, and we are confident of bringing it to a conclusion in the near future.

“Amid all these events, I couldn’t be more proud of our teams who, working remotely, maintained a relentless focus on the execution of our strategic agenda. In 2020, we have laid the foundations of our transformation, delivering 90 per cent of our commitments to investors.

“Most notably, we completed the sale of AMP Life, unlocking capital and simplifying our portfolio. In AMP Australia, we simplified our super business, substantially progressed the reshape of advice and delivered a major platform upgrade in AMP Bank enabling future growth. We also pivoted AMP Capital, increasing focus on private markets, where the strength of our real assets franchise continues to deliver.

“We have maintained focus on costs, with an acceleration of efficiency initiatives in 2H 20, following increased investment in client support in the first half.

“Underpinning our strategy, we have also accelerated our cultural transformation and are determined to drive a culture of inclusion, accountability and high performance.”   

AMP Australia

Australian wealth management

Australian wealth management navigated an unprecedented period of market volatility and industry disruption while increasing support for clients impacted by COVID-19. Assets under management (AUM) decreased 8 per cent to A$124.1 billion primarily due to net cash outflows.

Net cash outflows of A$8.3 billion in FY 20 includes A$1.8 billion in early release of super payments to support clients experiencing financial hardship during COVID-19, in addition to the previously announced exit of A$1.8 billion in corporate super mandates. Removing one-off impacts, underlying cashflows have improved on FY 19. Pension payments to clients in retirement were A$2.1 billion in FY 20.

AUM on North continued to grow, up from A$47.6 billion to A$51.6 billion in FY 20. North net cashflows of A$3.7 billion in FY 20, down 6 per cent on FY 19, reflects a slowdown in activity during COVID-19.

Net profit after tax of A$110 million (FY 19: A$195 million) reflects a decline in revenue predominantly from weaker investment markets and the impact of pricing and legislative changes.

AMP Bank

AMP Bank’s mortgage book was resilient despite the COVID-19 impact on borrowers and increasing residential mortgage competition. The residential mortgage book remained stable at A$20.2 billion in FY 20, with focus on maintaining credit quality.

Approximately 11 per cent of AMP Bank’s mortgage clients paused repayments during COVID-19. At FY 20, more than 80 per cent of these clients had resumed repayments or were in the process of restarting.

The bank’s credit loss provisioning increased by A$24 million (after tax) in 1H 20 predominantly reflecting expected economic impacts of COVID-19. Credit quality remains strong with 90+ days arrears at 0.62 per cent, which has improved from 0.66 per cent at FY 19.

Total deposits increased A$1.7 billion to A$16.1 billion, strengthening the bank’s deposit to loan ratio to 78 per cent, up from 70 per cent at FY 19.

Net profit after tax of A$119 million decreased A$22 million from FY 19, reflecting the increase in credit loss provisioning. Underlying this result, net interest income increased by A$4 million. Net interest margin declined 10 basis points to 1.59 per cent in FY 20 driven by higher funding and deposit costs.

AMP Capital

AMP Capital maintained momentum in real assets amid a challenging year in investment markets and significant internal change. Total AUM decreased to A$189.8 billion (FY 19: A$203.1 billion), driven by the economic impacts of COVID-19 on investment markets and an increase in internal cash outflows in Australian wealth management.

External net cash outflows were A$1.7 billion in FY 20 (FY 19: A$2.5 billion external net cashflows) due to an increase in public markets redemptions, partially offset by net cash inflows of A$2.7 billion from real assets (infrastructure and real estate) as committed capital was deployed. External cash outflows included the return of A$1.0 billion to investors as part of the life cycle of the AMP Capital Infrastructure Debt Fund series, with these funds delivering strong performance outcomes for clients.

Strong investor demand for AMP Capital’s real asset capabilities remains with A$4.1 billion committed capital available to deploy as at the end of FY 20.

FY 20 seed and sponsor capital investments were A$391 million, with the gain on investments declining compared to FY 19 due to lower valuations from underlying exposures including international airports.

Net profit after tax of A$139 million in FY 20 (FY 19: A$204 million) reflects lower income from performance and transaction fees, down A$33 million compared to FY 19, primarily due to market-related impacts of the pandemic. AUM-based earnings showed resilience in FY 20, delivering A$564 million of revenue compared to A$586 million in FY 19.

New Zealand wealth management

New Zealand wealth management showed continued stability during an unprecedented period for clients and businesses. AUM increased A$128 million to A$12.4 billion in FY 20 supported by an increase in KiwiSaver net cashflows, which were up 108 per cent to A$229 million. Total net cash outflows of A$57 million improved from FY 19 net cash outflows of A$433 million due to improved KiwiSaver performance.

FY 20 net profit after tax of A$36 million (FY 19: A$44 million) reflects a decline in revenue following the closure of two legacy products, and the COVID-related lockdown impacting the ability to generate advice-related income.

AMP’s client remediation program is 80 per cent complete at FY 20 in line with guidance. The program remains on track to complete in mid-2021.

Client remediation comprises the following components:

• Inappropriate advice: program approximately 97 per cent complete
• Fee for no service:
  • Active advisers: program approximately 80 per cent complete
  • Inactive advisers: program approximately 45 per cent complete
  • Overall fee for no service expected refund rate of 19 per cent (28 per cent including interest) of total ongoing service fees charged.

Total program spend at FY 20, including program costs and money repaid to clients, is A$405 million. Payments to clients are expected to accelerate in 1H 21 as the program completes. Overall remediation costs remain broadly in line with original estimate provided in November 2018.

AMP remains well-capitalised with surplus capital of A$521 million above target capital requirements as at 31 December 2020, down from A$529 million at 31 December 2019.

The completion of the AMP Life sale on 30 June 2020 enabled a fundamental reset of AMP’s capital framework, which released A$913 million of surplus capital. Allocation of surplus capital in FY 20 included:

• A$344 million paid to shareholders in the form of a 10 cents per share special dividend.
• A$418 million to repurchase MUTB’s 15 per cent stake in AMP Capital to enable the acceleration of AMP Capital’s growth strategy.

AMP anticipates the remaining capital surplus will fund the completion of the three-year transformation strategy.

To maintain balance sheet strength and prudent capital management during a period of transformation, the board has resolved not to declare a final dividend for FY 20. The board is committed to restarting the group’s capital management initiatives including the payment of dividends, share buyback and other capital initiatives in 2021. This is subject to the completion of the portfolio review, market conditions and business performance.

AMP has completed the first full year of its three-year transformation strategy to become a simpler, client-led, growth-oriented business. Progress in FY 20 includes:

Simplify portfolio

• AMP Life: sale successfully completed on 30 June 2020, de-risking AMP and enabling a fundamental reset of our capital framework.

• New Zealand wealth management: following decision to retain, significant progress has been made to further simplify the business, laying the foundation for future growth. NZWM announced it will move to a predominantly index-based investment approach in 1H 21, providing a simpler and more cost-effective investment structure that aims to improve performance for clients.

Reinvent wealth management in Australia

• Reshape advice: practice exits delivered to plan in FY 20 with program now 75 per cent complete. During FY 20, approximately 85,000 advice clients were transitioned to new Annual Advice and Service Agreements.
• Build best-in-class retail super business: successfully delivered next phase of superannuation simplification program, reducing number of products from approximately 70 to 11.
• Grow successful platform business: continued to enhance functionality and products.
• Maintain growth momentum in AMP Bank: successfully completed the renovation of AMP Bank’s core technology platform on time and under budget, increasing business efficiency and operational capacity for future growth.
• Leadership: Scott Hartley was appointed as Chief Executive of AMP Australia to drive transformation of the business.

AMP Capital: grow successful asset management franchise

• Private markets: momentum maintained in real assets with A$2.8 billion of capital deployed in quality infrastructure assets on behalf of investors in FY 20. A further A$4.1 billion of uncalled committed capital is available to be deployed as at FY 20. Direct international institutional clients grew by 42 to 400 in FY 20, with AMP Capital managing A$22 billion on their behalf.
• Public markets: continued to explore partnership opportunities to maximise shareholder value. Delivered strong investment performance during period of extreme market volatility with 94 per cent of Global Equities and Fixed Income AUM outperforming benchmark over three years.
• Leadership: David Atkin announced as Deputy CEO, assuming operational leadership of AMP Capital in an interim capacity until June 2021.

Create a simpler, leaner business

• Reshape cost base: delivered A$121 million of cumulative gross cost savings in FY 20. Program on track to deliver A$300 million annual run-rate savings (ex AMP Capital) by the end of FY 22.
• Strengthen risk management, controls and governance: continued to deploy A$100 million (pre-tax) investment program to further strengthen risk management, internal controls and governance.
• Transform culture: AMP progressed several initiatives to accelerate its culture transformation during 2H 20, including:
  • A Board Culture Working Group, chaired by AMP Chair Debra Hazelton to oversee and guide our program of work
  • Established an employee Inclusion Taskforce, which has collaborated to develop a group-wide inclusion and diversity framework and 2021 inclusion plan
  • Rolled out an inclusive leadership program with AMP’s Executive Committee and all senior leaders
  • Reviewed workplace conduct, assessed against five best practice pillars, which will inform further actions to be launched this year.

The post AMP announces FY 20 results and provides portfolio review update appeared first on AdviserVoice.

Mr Hartley, who was CEO of Sunsuper from 2014-19, will take over from Blair Vernon, who was the Acting CEO of AMP Australia, while an executive search was conducted. Mr Vernon will return to his previous role as CEO of AMP’s New Zealand Wealth Management business, as planned.

Mr Hartley will report to AMP CEO Francesco De Ferrari and lead the strategic transformation of AMP Australia already in-flight across the business’ financial advice, superannuation and platforms, and AMP Bank operations.

Mr Hartley brings the valued experience of leading the transformation of Sunsuper’s culture, technology, investment, and multi-channel growth capabilities. This transformation enabled Sunsuper to grow its market share to become Australia’s fourth largest^[1] superannuation and retirement business, a highly regarded industry leader, and most importantly to deliver leading customer outcomes and experience.

Prior to Sunsuper, Mr Hartley led the corporate and institutional wealth business at MLC/NAB Wealth leading three businesses to market leading positions and significantly growing the company’s share of corporate superannuation.

Mr Hartley and Mr Vernon will work together as part of AMP’s executive committee.

AMP Chief Executive Francesco De Ferrari commented: “Scott has an excellent track record in transforming and growing wealth and investment businesses in Australia, and we’re delighted to welcome him to AMP. At Sunsuper he developed a collaborative and inclusive culture that drove the outstanding performance of the organisation. His appointment will strengthen our executive team as we drive forward our transformation of the business.

“Scott will build on the high-quality work that Blair Vernon has performed in his four months as Acting CEO. Blair stepped into the role at short notice and has been decisive in keeping our transformation activity moving and managing the complex legacy issues of the business. He has earned tremendous respect within AMP Australia and will remain a key member of my leadership team.”

Incoming AMP Australia CEO, Scott Hartley commented: “I’m excited to be joining AMP at a pivotal time for the company. The business is in the midst of a transformation, to which I can bring my experience and capability. AMP has played an important role in the lives of many Australians for over 170 years and I look forward to working with and developing the entire AMP Australia team to fulfill AMP’s purpose of helping its clients realise their ambitions.”

———-

[1] Measured by customer numbers

The post AMP Limited announces AMP Australia CEO appointment appeared first on AdviserVoice.

Mr Atkin, previously the CEO of Cbus Super for 12 years, will assume operational leadership of AMP Capital in an interim capacity until June 2021, while AMP continues its search for a permanent CEO to drive AMP Capital’s growth strategy.

Mr Atkin is a highly respected leader in Australia’s wealth and investment management sector with a demonstrated ability to lead change and deliver growth, including more than tripling funds under management during his time at Cbus.

Mr Atkin has led significant business transformations in previous roles including changing the investment strategy and substantially upgrading client technology. He has taken a leading role in sustainability and responsible investment within the superannuation industry in Australia, as well as globally.

Mr Atkin will report to AMP CEO Francesco De Ferrari who will continue in a dual role as AMP Limited CEO and Interim AMP Capital CEO, leading the strategic transformation of AMP and ensuring focus on the ongoing portfolio review.

AMP Chief Executive Francesco De Ferrari commented: “David is a highly regarded leader within our industry, and I’m pleased we have been able to appoint an executive of his calibre into this interim role to help drive our transformation and deliver our strategy.

“Having led three major superannuation funds in the Australian market, David brings a deep knowledge and understanding of clients and their expectations. He has delivered improved and sustainable results in each of the organisations he has led and achieved respect through a values-based approach.

“David will bring his accumulated experience of wealth and investment management and of reshaping organisational culture, including expertise in building diverse and inclusive leadership. We are pleased he will join us immediately, strengthening AMP Capital’s leadership team as we implement our strategy.”

David Atkin commented: “AMP Capital is a high-quality asset management business, which has earnt the respect of its clients around the world over many years. I look forward to supporting Francesco deliver AMP Capital’s transformation strategy and working with the highly capable team to take the organisation forward.”

The post AMP appoints David Atkin as AMP Capital Deputy CEO appeared first on AdviserVoice.

Francesco De Ferrari

1H 20 results

• 1H 20 underlying profit[1] of A$149 million (1H 19: A$256 million) reflects COVID-19 impacts, as previously advised. 1H 20 net profit attributable to shareholders of A$203 million.
• Business unit 1H 20 operating earnings affected by COVID-19: Australian wealth management A$59 million (-43 per cent); AMP Capital A$72 million (-40 per cent); AMP Bank A$50 million (-30 per cent); New Zealand wealth management A$18 million (-18 per cent).
• Strong capital position post AMP Life sale with surplus capital (above Board target capital level) of A$1.4 billion at 30 June 2020.
• Return to shareholders of up to A$544 million comprising:
  • A$344 million via a fully franked, special dividend of 10 cents per share; and
  • Up to A$200 million via an on-market share buy-back during the next 12 months, subject to market conditions.
• Following payment of the special dividend the Board does not expect to declare a final FY 20 dividend.

Strategy update

• AMP Life sale complete, simplifying portfolio, releasing capital and positioning AMP for the future.
• Announced repurchase of MUTB’s 15 per cent shareholding in AMP Capital to position business for next phase of growth under new leadership.
• New AMP Capital strategy increases focus on significant growth opportunity in global private markets – infrastructure, real estate and adjacent private markets; refocuses public markets business to better support strategic partners and increases scale to accelerate growth.
• Strong progress in delivering AMP’s three-year transformational strategy while supporting clients through unprecedented COVID-19 period.
• Delivered client-focused strategic priorities in AMP Australia including super and platform simplification; continued focus on building a more professional and productive advice network.
• On track for target of A$300 million annual run-rate savings by FY 22; increase in 1H 20 costs reflect investment in people to support clients during the pandemic.
• Client remediation on track to be 80 per cent complete by end of FY 20 and fully complete in 2021.

The post AMP announces 1H 20 results and return of capital appeared first on AdviserVoice.

Blair Vernon, CEO of New Zealand Wealth Management (NZWM), has been appointed Acting CEO of AMP Australia while a process is conducted to find a permanent replacement.

Mr Vernon, who has led major change as CEO of NZWM, will commence in the role immediately, and Jeff Ruscoe will replace him as Acting CEO, NZWM.

AMP Chief Executive Francesco De Ferrari said: “We have a strong team in AMP Australia, who have been transforming the business, managing the successful separation of AMP Life, reshaping advice and increasing our focus on clients.

“I’m pleased we are able to call on an experienced executive in Blair Vernon to lead this team and continue to drive our strategy forward.”

The post AMP Australia leadership update appeared first on AdviserVoice.

Francesco De Ferrari

AMP Limited has announced the completion of the sale of its life insurance business, AMP Life, to Resolution Life for A$3.0 billion delivering a key priority in AMP’s transformation strategy.

The total sale proceeds are A$3.0 billion comprising:

• A$2.5 billion cash; and
• A$500 million equity interest in Resolution Life Australia^[1], a new Australian-domiciled, Resolution Life-controlled holding company that is now the owner of AMP Life.

The final cash proceeds from the sale are subject to a number of post completion adjustments, however AMP expects the net proceeds to increase AMP’s capital in excess of target surplus by approximately A$1.1 billion.

AMP anticipates that any capital in excess of target surplus post completion will first be used to fund delivery of the new AMP strategy. Beyond this, AMP will assess all capital management options with the intent of returning the excess above target surplus to shareholders, subject to unforeseen circumstances and current economic and business conditions.

AMP will provide an update on its future capital framework and strategy at its Interim Results on 13 August 2020.

The separation of AMP Life will significantly simplify AMP’s group structure. The internal separation process included the transfer of approximately A$55 billion of client funds via several successor fund transfers. Collectively these transfers represented one of the largest fund transfers of this kind and enables AMP to focus on its strategic simplification of its wealth management platforms and products.

In addition to its residual 20 per cent holding in Resolution Life Australia, AMP will continue to provide technology and administrative services to AMP Life for a two-year period under a transitional services agreement. All customers’ terms and conditions will remain unchanged through the separation.

AMP Chief Executive Francesco De Ferrari said: “The sale of the Life business is a foundational step in our strategic transformation to become a simpler, client-led and growth-oriented organisation.

“The sale is a major milestone for AMP demonstrating our ability to execute complex projects including through the difficulties of COVID-19.

“It is also a historic moment as AMP ceases to be a life insurer after 170 years. Our Life teams will move to Resolution Life and will continue to support clients who will see no changes in their policy terms or conditions.

“We are pleased to partner with an experienced operator in Resolution Life and deliver an outcome that is in the best interests of our clients, policy holders and shareholders.”

———-

[1] Resolution Life NOHC Pty Ltd.

The post AMP completes sale of life insurance business to Resolution Life appeared first on AdviserVoice.

Mr Pahari will succeed Adam Tindall who will retire from AMP after almost five years leading AMP Capital. During his time as CEO, AMP Capital has grown assets under management by approximately A$43 billion^[1]  and increased the operating earnings of the business by more than 43 per cent^[2].

Mr Pahari is currently AMP Capital’s Global Head of Infrastructure Equity and Director, North-West Region (UK, Europe and the Americas).

He joined AMP Capital in 2010 and has led the development and global expansion of the Infrastructure Equity business, which at FY 2019 had A$23 billion in assets under management, and has been a key driver in AMP Capital’s growth over the past five years. As part of his wider responsibilities as AMP Capital CEO, Mr Pahari will continue to oversee the Infrastructure Equity business.

Mr Tindall will work with Mr Pahari through a transition period to ensure an orderly handover.

AMP Chief Executive Francesco De Ferrari commented: “AMP Capital operates in globally competitive markets in which scale and differentiated capabilities have become fundamental. With Adam’s decision to retire, we have sought to appoint a leader with a global view and track record for growth. Boe has led the international expansion of our Infrastructure Equity business over the past six years, demonstrating his capability and strategic acumen. As incoming CEO, Boe’s mandate will be to continue to grow the business, capitalising on its strengths and the opportunities in infrastructure and real assets.

“I would like to thank Adam for his dedicated and thoughtful leadership of AMP Capital over the past five years. AMP Capital has continued its growth under his watch, and he leaves with our best wishes.”

Boe Pahari, incoming AMP Capital CEO commented: “I’m honoured to have been appointed as CEO of AMP Capital and to be entrusted with the task of leading its continued growth. We have substantial scope to expand globally, further leveraging our strengths, particularly in infrastructure and real assets. I’m firmly focused on ensuring AMP Capital maintains the unwavering commitment to clients it has had under Adam’s leadership, and continues to adapt to deliver the investment capabilities they need. I’m looking forward to getting started.”

———

[1] AMP Capital total AUM from FY15-FY19
[2] AMP Capital operating profit from FY15-FY19

The post AMP Capital leadership transition appeared first on AdviserVoice.