The third quarter of 2013 saw $567 million in net retail inflows – more than double the $229 million from the third quarter of 2012.
The overall wealth management business grew assets under management by five per cent to $96.7 billion with net cash flows of $206 million, down from $307 million in the third quarter of 2012.
The North platform saw $1.0 billion in net cash flows, up 58 per cent on the $644 million in the third quarter of 2012. North’s total assets under management (AUM) grew 22 per cent over the quarter, from $6.7 billion at 30 June to $8.2 billion as at 30 September 2013.
AMP Flexible Super’s AUM was up 10 per cent over the quarter to $9.7 billion. However, its corporate super offering saw increased outflows of $128 million, up from $116 million in outflows in the third quarter of 2012.
There was a slight increase over the quarter in the total number of self-managed super funds (SMSFs) administered from 9,650 to 9,800. This includes SuperIQ funds but does not yet account for funds picked up in the recent Tranzact deal.
There were also slight increases over the quarter in terms of risk insurance annual premium income (up four per cent to $2.1 billion) and AMP Capital AUM (up four per cent to $135.9 billion).
Lapses again hit the wealth protection business, with total experience losses for the quarter of $24 million. However, this was down from $37 million in the prior corresponding period. Lapse experience losses were $12 million, group insurance claims experience losses were $6 million and retail lump sum claims losses were $8 million. Income protection experience profits were $2 million, AMP stated.
AMP said it had brought forward its year-end review of experience for product areas that have the potential to impact the 2013 financial year operating results, anticipating a revision of incurred but not reported reserves (IBNR) for the group insurance business.
Strengthening the IBNR reserves is expected to increase experience losses by around $15 million in the final quarter of 2013, AMP stated.
“The trend in lapse experience in the NMLA [National Mutual Life Association, formerly AXA] income protection book has continued to worsen in the third quarter of 2013 and as a result, AMP will strengthen its lapse assumptions as part of its year-end review,” AMP stated.
“As this book is currently in loss recognition, the strengthened assumptions are expected to result in a capitalised loss in the range of $40-$50 million in the final quarter of 2013, which will reduce AMP’s operating result by the same amount.”
In total, the two adjustments are expected to result in a $55 to $65 million reduction in AMP’s operating results for the final quarter of 2013, in addition to any further experience outcomes in the fourth quarter, the group said.
Further changes in assumptions across the life insurance portfolio are likely at 31 December 2013, which could lead to adjustments to the embedded value of the business but are not expected to impact the 2013 financial year operating results, it added.
“AMP regards improving the performance of the wealth protection business as one of its highest priorities and continues to implement short- and medium-term actions to improve claims and lapse experience,” it said.
