Shares in financial services giant AMP were sold off today after it surprised with a weaker than expected interim result.
The shares lost more than 5% in early trading to just under $5.50 since the most recent high on Monday of this week of $5.85.
The company reported a weaker than expected first underlying half profit of $513 million, below market forecasts for a profit of $525 million.
The company blamed the result on "higher claims in Australian wealth protection and volatile investment market conditions".
The problems were in the company’s wealth protection business where earnings halved from $99 million to $47 million, while in wealth management earnings eased 6% to $195 million.
There was better news elsewhere, with AMP Capital’s earnings up 15% to $83 million and, there was an 18% jump at the AMP Bank to $59 million.
Statutory net profit was $523 million up 3% on the first half of 2015 (The company has a calendar financial year).
The company said it will pay an unchanged interim dividend of 14 cents a share.
AMP CEO Craig Meller said the company was continuing to address problems in its underperforming “wealth protection”, or life insurance, business – they have been troubling the company and others in the life sector now for three years or more.
“To address performance in the insurance business AMP is strengthening income protection assumptions, repricing, continuing the transformation of claims management and accelerating our capital management initiatives,” he said in today’s statement which was issued before trading started on the ASX.
