AMP Financial Services profit up 15pc

Strong performances by AMP Financial Services New Zealand's insurance and workplace savings businesses hoisted its first-half profit 15 per cent to $27.7 million, a rate of growth it expects to maintain.

Managing director Greg Camm said yesterday that the six months to June 30 had been "a period of consolidation and momentum" after restructuring last year. The changes were now paying off.

"The results can be seen most clearly in our risk insurance business, which has now seen strong growth and a pleasing increase in market share for the sixth consecutive quarter."

Premium income from the company's insurance business was up 16 per cent or nearly twice the wider market's average rate over the past three years. AMP Financial Services is now the number two insurer in the New Zealand market, with a share of a little over 10 per cent.

Sovereign, owned by the Commonwealth Bank of Australia, leads the pack at 27 per cent.

AMP's retention rate, which measures how long policyholders remain on its books, crept to 93.9 per cent from 92.9.

General manager of finance Stewart McRobie said the company's risk business was benefiting from its strong Lifetrack product and an extended network of better-trained and motivated advisers.

Although he would not break down the headline profit number, the first the company has given under new IFRS (International Financial Reporting Standards), McRobie said AMP Financial Services' other big earner had been its workplace saving or corporate superannuation business, which was top of the heap.

AMP's New Zealand Retirement Trust fund increased its share of the corporate master trust market to 27.1 per cent from 24.9 in the six months to June.

It also experienced a net funds inflow of $10 million during the period which, combined with investment returns, saw it grow to $760 million.

"We've got a lot of momentum and interest by New Zealand corporates in superannuation generally," said McRobie.

Companies were offering the schemes as a means of retaining staff or to bring their employment packages into line with those offered by their overseas parents. That, combined with Government moves to encourage saving announced in the last Budget, "mean this area will continue to grow".

Helping AMP's bottom line was a reduction in its cost-to-income ratio to 40.6 per cent from 46.4 per cent at the same time last year. McRobie expected that ratio to tick higher over the next six months but it would be offset by growth in business.

He said the firm would be able to maintain the profit growth rate.

Binu Paul, of managed fund researcher Fundsource, said AMP had "taken a whole lot of steps in the right direction and there's performance flowing through" as a result.

Fundsource says AMP Financial Services' funds under management increased to $1.74 billion as of June this year, compared with $1.69 billion previously.