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A stormy year of increased life insurance claims, abrupt executive departures, and a huge drop in superannuation contributions have cost one financial services firm millions. Despite this, however, the firm is planning to reward loyal shareholders through a share buyback.
AMP has announced that it will buy back $500 million of shares starting this quarter, and would maintain its dividend for the final six months of last year despite posting a $344 million full-year loss, down from a net profit of $972 million last year.
Underlying profit fell 57% from last year’s $1.2 billion profit, largely thanks to a $415 million operating loss in its life insurance arm, according to a breakdown in The Australian.
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Industry conditions consistently deteriorated last year amid rising claims and lapsed policies causing AMP’s life insurance arm to suffer escalating losses, the report said.
“While first half claims experience was poor, we continue to focus on improving the outcomes for customers and shareholders in our wealth protection business, with actions underway to improve capital efficiency and reduce volatility,” chief executive Craig Meller told the publication.
In October last year, AMP said capitalised losses would hurt the underlying earnings of its wealth protection business by $500 million, and booked a goodwill impairment of about $668 million to reflect the decline of its embedded value.
The following month, its senior leadership team underwent major changes. It replaced its insurance executive and restructured business lines. AMP also lost its advice boss as well as its chairman Simon McKeon.
The year also saw AMP suffering from considerably lower flows into its wealth management business, which dropped 85% to $336 million.
