AXA funds management up

AXA’s Australian and New Zealand funds management division has booked a 32 per cent increase on first half operating profits to $29 million.

The improvement in the group's operating was one of the key drivers, along with the group's health insurance operations, for a 12 per cent growth in first half operating earnings to $166 million.

Total funds under management at March 31 this year stood at $37.5 billion, a rise of 16 per cent on the same time last year. The rise included a $140 million rise in retail funds under management to $12.8 billion.

The funds under management growth occurred on the back of strong growth in personal superannuation and retirement income products, with similar growth in unit trust sales via discretionary master trusts.

The number of financial advisers operating under the AXA banner fell marginally to 1109 after strong growth the previous year.

Group chief executive Les Owen said the launch of 13 mezzanine unit trusts in March in a joint venture with AXA subsidiary Alliance Capital was received warmly by the ratings houses, which he said, should lead to increasing fund flows as the year progresses.

He said the group also plans to launch a further 13 retail unit trusts released in July which will provide improved service features and adviser commission options.

However, one superannuation product which has not been performing well has been the RSP superannuation product which continues to experience significant outflows. Les Owen said AXA will later this year begin a campaign to turn the super fund around which was to target high income superannuants. RSP currently has a client base of 250,000 and more than $3.5 billion under management.

Another blip on the AXA profit report is the losses stemming from its income protection business, particularly from the market leading AC&L division. While AXA remains the biggest player in Australia's risk market, its income protection business lost $5.7 million in the half year, down on last year's $8 million. The number of income protection claims open stands at 3403, up 16 per cent on the number open at this time last year.

AXA chief finance officer Matthew Slater says management is still working hard to improve its performance which has suffered in the past due to large portfolio of business written on product definitions and features that sparked higher than anticipated claims costs.

New business is being written based on a new underwriting approach introduced late last year and was profitable, he says.

"What we are still carrying the legacy of is business that was written over the last two or three years. It was poorly written with poor underwriting standards."

AXA's master trust flagship, Summit, has experienced inflows of $433 million for the half year with funds under administration standing at $2.37 billion. AXA attributes the growth to enhancements made to the master trust in the previous year plus the launching of non-superannuation investor directed portfolio service Money Master, which includes online trading and integrated margin lending options.

AXA expects the Summit master trust to penetrate the independent adviser ranks, while being a valuable tool for its own advisers.