AMP lapse problems to stay for now
Lapse rates plaguing AMP’s life insurance business will likely get worse before they get better, the company’s CEO has said.
Commenting on AMP’s annual results, which saw net profit fall 11 per cent to $672 million in the year to 31 December 2013, CEO Craig Meller said a plan was in operation to combat the life insurance issues that have hit its bottom line.
However, on the lapse front, there could be some short-term pain as the company institutes its longer-term reforms, which AMP hopes will deliver improvement in 2015, he said.
“We don’t expect these changes to deliver a quick turnaround in wealth protection and there’s no doubt that from here recovery is likely to be bumpy, with volatility that is characteristic of the industry,” Meller told a briefing yesterday.
“We’ve been encouraged by some very early signs of progress, but we still have a long way to go.”
Measures to improve lapse include “putting prices up or taking action against planners whose business characteristics (AMP) finds unattractive,” Meller said.
AMP’s wealth protection business recorded a significant decline last year, dropping from $190 million in 2012 to $64 million in 2013, according to a statement on the Australian Securities Exchange (ASX).
Meller said he broadly expected claim levels to remain the same in 2014.
Recommended for you
In this new episode of The Manager Mix, host Laura Dew speaks to Nick Paul, institutional portfolio manager at MFS Investment Management to delve into everything small and mid-cap equities.
In this episode of Relative Return, host Laura Dew chats with Kellie Wood, head of fixed income and deputy head of fixed income and multi-asset at Schroders Australia, to discuss why fixed income is returning to favour after a 12-year wait.
In this episode of Relative Return, host Laura Dew speaks with Michael Hunstad, deputy chief investment officer and chief investment officer of global equities at Northern Trust Asset Management, to debunk myths around index investing.
In this episode of Relative Return, host Maja Garaca Djurdjevic chats with Robin Tsui, APAC gold strategist at State Street Global Advisors, to discuss gold’s role as a diversifier in portfolios.