The group's net profit after tax was down 2.5 per cent to $672 million as AMP's insurance division took a battering amid increased claims and policy lapses.
AMP's wealth protection arm recorded operating earnings of $64 million in 2013, down from $190 million in 2012.
AMP chief executive Craig Meller said the firm has undertaken a “comprehensive review” across all aspects of its life insurance business, resulting in initiatives that are designed to improve claims and lapse experience over the medium term.
“Re-engineering our wealth protection business is clearly one of our top priorities for 2014,” he said.
“We're already seeing the benefit of working more closely with our customers to help them get back to work after illness or injury, improving the financial outcome for both our customers and AMP,” said Mr Meller.
On the positive side, AMP Bank, the 'mature' division and New Zealand all increased their contributions to underlying profit, while AMP Capital was steady at $99 million in operating earnings.
Fortunately for AMP, wealth management took up much of the slack left by the life insurance business – with operating earnings up by 16 per cent to $330 million off the back of stronger net cash flows and improved investment markets.
“We’ve controlled costs despite this growth, including the additional investments we’ve made to support our North platform, the expanding SMSF business and our new MySuper products,” said Mr Meller.
North net cashflows were up 89 per cent on the 2012 full-year, and SMSF accounts grew at nine times system growth to 14,835 accounts (compared to 9,100 in 2012) via both organic growth and acquisitions.
Looking at an overview of the group's results, Mr Meller drew attention to two metrics he is targeting in 2014.
“The first is the cost to income ratio. It has moved higher [from 47.3 per cent to 49.4 per cent] because of our falling revenue, not because costs are higher. Indeed, controllable costs across the group are down 2.6 per cent from 2012,” he said.
“Second is our return on equity. What’s weighing it down [at 10.7 per cent compared to 12.7 per cent] are both profits and a higher capital base reflecting in part the requirement of more regulatory capital,” said Mr Meller.
“We need to improve the ratio, and improve management focus on this and add an ROE hurdle to our long-term incentive program,” he said.
The AMP board has declared a final dividend of 11.5 cents per share – the same as the 2013 interim dividend.
