Super uncertainty impacts AMP cash flows

Continuing uncertainty around proposed changes to superannuation played a role in subduing cash flows into AMP Limited corporate super platforms, according to the company's half-year results released today.

Those results revealed that higher claims experience and a volatile investment market have seen the company report a net profit of $523 million for the half year to 30 June, up three per cent on $507 million for the first half of last financial year, but its underlying profit was $513 million compared with $570 million, down 10 per cent year on year.

The board declared an interim dividend of 14 cents per share, in line with the 2015 interim dividend.

Commenting on the result, AMP chief executive, Craig Meller said AMP Capital, AMP Bank and the company's New Zealand business had performed strongly, while Australian wealth management "has demonstrated resilient performance in a difficult market environment".

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"While first half claims experience was poor, we continue to focus on improving the outcomes for customers and shareholders in our wealth protection business, with actions underway to improve capital efficiency and reduce volatility," he said.

The challenges which confronted AMP were revealed in its cash flows, with Australian wealth management net cash flows standing at $582 million in the first half, down from $1,152 million for the same period last year.

It said retail and corporate super platform net cash flows were subdued reflecting investment market volatility and weaker investor confidence given uncertainty around proposed changes to superannuation.

The company said its Australian wealth management operating earnings for were $195 million, down six per cent compared with the first-half last year, driven by challenging investment market conditions but partially offset by disciplined cost control.

Australian wealth protection operating earnings were $47 million compared with $99 million in the first half last year with the performance impacted by poor claims experience across income protection, lump sum and group insurance.

"To address performance in the insurance business AMP is strengthening income protection assumptions, repricing, continuing the transformation of claims management and accelerating our capital management initiatives," Meller said.