AMP growth spurt brings huge rewards

By BRIAN FALLOW

WELLINGTON - Propelled by an expanding market share, AMP's superannuation and life insurance businesses in New Zealand lifted tax-paid earnings 70 per cent to $34 million last year.

New business increased by 52 per cent and costs fell 6 per cent.

Sales of retail managed funds rose 67 per cent to $401 million, employer-sponsored superannuation by 32 per cent to $109 million, regular premium life insurance 27 per cent to $14 million and single premium life 18 per cent to $62 million.

A Morning Star market share report for the year to September put AMP's new business share in single premium products at 23 per cent and regular premium products at 25 per cent - both up from 17 per cent in 1998.

Costs fell to $105 million from $112 million as the number of employees shrank 9 per cent.

General insurance business, whose results are not reported separately from its Australian parent, made a loss last year because of the flooding in Central Otago.

Since April last year AMP has been selling vehicle, home and contents insurance over the internet. Sales have been encouraging, New Zealand general manager John Drabble said.

He expected AMP to be able to launch an internet banking operation in the next few months.

The bank's loan book grew to $2.3 billion from $1.8 billion a year ago as AMP captured a 7 per cent share of new residential lending.

"Writing new business is relatively expensive. On average, it takes about four years for a mortgage to become profitable."

But the banking business, now four years old, was on track to yield a maiden profit in 2001. The company was convinced the potential for growth was significant.

Its financial services businesses in New Zealand delivered a return on capital of 24 per cent last year, in line with 1998 and well above the Australasian result of 11 per cent.