For AMP here, the word is resilient

By PAULA OLIVER

Bobbing around in a sea of red, AMP's New Zealand arm yesterday showed that it was still making money despite the woes of its global parent.

The New Zealand financial services business reported a profit for the half year to June 30 of $27.9 million, up slightly from $26.4 million in the previous corresponding period.

The result provided some heart for local shareholders who have endured a big drop in the value of their shares and watched as AMP's global group reported a huge loss of $2.45 billion in the half year.

New Zealand managing director Ross Kent was yesterday clearly keen to tell locals that the business was operating well.

"We have, as these results demonstrate, a very strong operation in New Zealand. It continues to show its resilience in the light of a volatile investment market as well as the controversy surrounding AMP, and it is likely to continue to show that resilience."

AMP's New Zealand arm is small in comparison with the wider group, making up 5 per cent to 10 per cent of it.

As the wider group wrestles with its troubled UK business and gears up for one of the biggest demergers, AMP's local arm is benefiting from having a lower proportion of its business in savings and investments.

Kent said that made it less sensitive to the downturn in investment markets than other parts of the group.

Difficult market conditions saw cash outflows continue from managed funds during the half year, but that eased in the last quarter, Kent said.

Retail investments were a weakness in the result because a recovery in investment markets had not yet filtered through to confidence.

Kent said that what was missing in the overall net policy cashflows was the kind of lump sum investments that people had, historically, committed to superannuation.

Industry statistics showed that some of that money was going into safer choices like term deposits, until investors felt that the volatility in investments had died down.

The lack of those lump-sum investments saw net policy cashflows register an overall outflow of $76.9 million. That compared with a negative result of $17.3 million in the previous corresponding period.

Kent said the jump was partly because of a mature book of life and endowment policies that were now in "run-off". Regular contributions into the money pots had continued, but the lump sums were being missed.

In the context of the market environments though, Kent argued the New Zealand results were good.

He said AMP had fielded local inquiries from people worried about the tumultuous nature of the group's business.

Staff had reassured people that policyholder funds were fundamentally distinct from shareholder funds, and there were strict regulatory obligations that had to be fulfilled in that area.

AMP's local business holds a significant market share of between 22 per cent and 25 per cent of total assets managed in the country.

Its local result was also helped by New Zealanders' apparent enthusiasm for insurance products. Kent said people were increasingly turning to insuring against illnesses such as cancer, or disabilities.