AMP Life has posted a loss of $415 million for the 2016 financial year brought on in part by negative claims experiences and captilalised losses in its wealth protection business.
The loss follows AMP Life posting a $185 million profit in the 2015 financial year with AMP Chief Executive, Craig Meller stating the bulk of the downturn was due to a one-off capitalised loss of $484 million.
Mellor said AMP Life had experienced losses of $105 million for the year and had reviewed its forward assumptions and, according to accounting requirements for life insurance, had booked the future losses in advance.
Mellor added that AMP Life had already moved to stabilise the business, pointing to the consolidation of the AMP Life and NMLA businesses within AMP which released $145 million in capital on 1 January 2017.
He also pointed to a reinsurance agreement for 50 per cent of the AMP Life portfolio, announced in October 2017, which would free up a further $500 million in capital to be used in an on-market share buy-back.
Overall, AMP posted a net loss of $344 million for the 2016 financial year, down from a net profit of $972 million in 2015 while underlying profit also fell dramatically from $1.12 billion in 2015 to $486 million in 2016.
In related news, Suncorp also posted a downturn in its life insurance divisions reporting a net profit after tax of $11 million for the 2017 half year compared to a $23 million profit at the 2016 half year mark.
Much of the downturn was the result of negative claims experience and market adjustments which resulted in more than $11 million is losses, however, Suncorp stated it had reduced that impact due to a conservative approach in setting assumptions.
While total new business declined marginally from $38 million (2016 half year) to $33 million (2017 half year), total in-force annual premiums grew from $798 million to $801 million, from the 2016 half year to 2017 half year.
Suncorp also stated it would optimise its Australian Life insurance business “…to improve competitiveness and achieve better outcomes for customers and intermediaries” and was currently exploring strategies to meet “…to better meet customer needs and maximise shareholder value”.
