In an announcement to the ASX, AMP said actions it took to stabilise the business announced last October, including strengthened assumptions, led to a one-off capitalised loss of $484 million.
It said total experience losses for the year were $105 million.
Further, AMP said the group’s reported earnings were also impacted by a $668 million charge for goodwill impairment as a consequence of declines in the potential recoverable amount of its Australian wealth protection business.
AMP chief executive Craig Meller said strong results from its other divisions were overshadowed by a poor performance in the wealth protection division.
“The wealth protection market deteriorated in 2016 and we took action to re-set and stabilise our business,” Mr Meller said.
“AMP’s partnerships with China Life are stronger than ever. Together, we are well-placed to support the rapidly evolving investment and pension needs of this growing market.
“We have announced an on-market share buyback of up to $500 million and maintained our dividend. These actions reflect our strong capital position and positive outlook for the business.”
Chief executive of Life Insurance Direct Australia, Russell Cain, said he believes AMP’s wealth protection performance may be a reflection of its large legacy book, and that could be presenting some problems and challenges.
“I think one of the key things that is quite unique with AMP is that they’ve got an extremely large legacy book, and some of the legacy books – the old AC&L [Australian Casualty & Life] income protection policies that have got lifetime benefits – that could well be causing a lot of issues around income protection claims and numbers,” Mr Cain said.
“As we’ve seen in the industry, and the APRA reports are showing, there’s a lot of pressure on profitability around income protection and we’ve seen a lot of price rises across the industry on income protection.”
