AMP: Profit up 15% on first half 2004

18 August 2005

AMP Financial Services NZ, focus on quality and growth, paying off.

Profit up 15% on first half 2004

-ƒnAnnual premium income on Risk Insurance business up 16% o Now number two in market share o Six consecutive quarters of growth in market share for Risk Insurance
- Retention of number one position in Workplace Savings

AMP Financial Services New Zealand today reported an underlying operating profit of NZ$27.7 million for the six months ended 30 June 2005, an increase of 15 per cent on the same period last year1.

At our 2004 full year result announcement, we reported good results following a repositioning of our business to focus on quality and growth,. said Greg Camm, Managing Director, AMP Financial Services NZ. .The last six months has been a period of consolidation and momentum building on the changes made, which are now paying off.

The results can be seen most clearly in our Risk Insurance business, which has seen strong growth and a very pleasing increase in market share for the sixth consecutive quarter. We have also seen continuing growth in our workplace savings business.

"The increase in first half 2005 profit has been driven by strong operating results across the main business areas of Risk Insurance and Workplace Savings.. AMP.s Risk Insurance business had a continued strong performance, and has now moved to second place in terms of overall market share of annual premium income, having grown at nearly twice the rate of the market over the last three years.

This growth can be attributed to increased sales alongside a focus on the quality of business written and an improved underwriting capability within a tight 1 AMP adopted International Financial Reporting Standards (IFRS) in 2005. 1H05 profit has been expressed in compliance with IFRS. The comparative figure for 2004 profit was $24.2m. 2 labour market. AMP.s already impressive customer retention rate also increased to 93.9 per cent from 92.9 per cent the same period last year (market average is 88.7 per cent). .

Our first half 2004 retention rate was 92.9 per cent so to improve on that is something we are pleased with as well as the news that we are now second in market share of overall annual premium income with nearly 16% year-on-year growth.

This represents a consumer endorsement of AMP.s ability to deliver wellpriced, high-quality risk insurance products backed by excellent service and a strong claims-paying ability,. said Mr Camm. AMP.s Lifetrack policy also continues to be rated New Zealand.s number one risk insurance policy product by independent researcher Plantech Consulting Pty Ltd. Research shows Advisers and independent brokers rate AMP.s Risk Insurance product 8.3 out of 10, which is considered an excellent score.

Total retail managed funds net cashflows in the first half of the year were negative NZ$56 million compared to negative NZ$15 million for the same period last year. This reflects the ongoing challenge in the retail savings and investment market, where New Zealand.s savings rate has driven a net market outflow of funds over recent years. According to Fundsource, the retail investment market in New Zealand overall experienced net cash outflows of NZ$383.9 million in the first half 2005.

Obviously the retail managed funds market is continuing to see a net outflow which indicates that there is still much ground to be covered in terms of addressing New Zealanders. saving habits. New Zealand stands apart as the only OECD country that does not provide some form of incentive or compulsion for retirement savings. We will continue to concentrate on employer-sponsored workplace savings, which is growing, and in which we have again performed well,. says Mr Camm.

In the workplace savings area, AMP has maintained its market-leading position in the corporate master trust market through its flagship product, the New Zealand Retirement Trust, with an increased share of this market to 27.1 per cent, up from 24.9 per cent at December 2004.

This increase in market share has occurred at a time of considerable activity in the workplace savings space. The Government has introduced a workplace savings scheme for its own employees, and also announced its intention to launch the KiwiSaver scheme. The Government's focus on this, together with continuing strong interest by the private sector, means we are likely to see further activity in terms of workplace savings and even stronger growth for AMP in the second half of 2005.. says Mr Camm.

A disciplined approach to expense management resulted in a decline in AMP.s overall cost to income ratio from 46.4 per cent in 1H04 to 40.6 per cent, with accountable expenses reduced to NZ$28.2 million from NZ$31.2 million As far as its distribution arm, AMP has been building on the work that began in 2004 to restructure the Adviser business practice composition, further improve training, education and compliance standards, and address remuneration terms.

We've also seen an increase in numbers with the recruitment of 20 new Advisers and recently seen research showing most AMP Advisers feel highly satisfied that being part of the AMP Adviser network adds value to their business. In fact, 56 per cent of Advisers gave a rating of 8 or more out of 10,. says Mr Camm. We are pleased with this response and, with the initiatives we have in place, we see it improving further.

These half-year results are the first to be announced since the appointment of AMP Financial Services New Zealand.s new Managing Director, Greg Camm, in March 2005.

ENDS

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