Super falls help push AMP into first loss since 2003

AMP CEO Craig Meller cals time on losses.

AMP CEO Craig Meller cals time on losses. Photo:AAP

The uncertainty created by the long debate over the Turnbull government’s superannuation reforms last year has helped push financial giant AMP into its first loss in 13 years.

After  write-downs on its wealth protection and life insurance business the group declared a full-year loss of $344 million for 2016.

AMP said personal super contributions to its wealth management arm almost dried up last year savers chose against pouring cash into their future nest eggs.

Earlier it had also announced heavy losses and a $1.3 billion write down from its group superannuation operations which supply group life insurance products to super funds.

Last year AMP recorded a net profit of $972 million. It has taken action to restructure its wealth protection arm to counter a downturn in the income protection business last year.AMP said the wealth protection business suffered an earnings loss of $415 million, following $485 million in capitalised losses from an operational “reset”.

The wealth protection losses weighed on group underlying profit, which slid to $486 million from a $1.1 billion profit a year earlier.

The wealth protection division was also hit with a $668 million goodwill impairment.

Group revenue for the year ended December 31, 2016, rose five per cent to $14.8 billion.

Chief executive Craig Meller said in contrast AMP Capital, AMP Bank and its New Zealand businesses performed strongly over the year, and its Wealth Management division was resilient despite challenging market conditions.

“These results were overshadowed by a poor performance in Wealth Protection,” he said in a statement.

“The wealth protection market deteriorated in 2016 and we took action to reset 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.”

Mr Meller said he and other senior executives would receive little or no bonus due to the poor performance in 2016.

Despite the headline loss, AMP shares rose on Thursday after the company announced a $500 million share buyback in the first quarter of 2017 and maintained its final dividend at 14 cents a share, 90 per cent franked.

“These actions reflect our strong capital position and positive outlook for the business,” Mr Meller said.

AMP shares were up four per cent in afternoon trading at $5.23.


* Net loss of $344m vs net profit of $972m

* Revenue up 5 pct to $14.8b

* Final dividend flat at 14 cents, partially franked.

* Full-year dividend 28 cents per share.

*With reporting by Rod Myer

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