25 Jun 2013

AMP shares fall on profit warning

7:03 am on 25 June 2013

Shares in AMP fell more than 9% on Monday after the company forecast its underlying profit will fall after a turbulent time for its Australian insurance business.

Australasia's largest wealth manager expects its profit will decline by between 11% and 15%.

Shares tumbled 55 cents to $5.30 on the New Zealand stock exchange on Monday, its lowest level since September last year and well below level of almost $7 reached last month.

AMP said its underlying profit will fall to between $A415 - $A435 million for the six months to the end of June.

That's compared with the A$491 million of underlying profit the company made for the same six months last year.

The company said its Australian wealth protection business has been hit by $32 million of claims and lapses in insurance policies which has seen profit from that division more than halve.

About half of the insurance claims were from income protection policies.

AMP said the industry is experiencing increased pressure on insurance claims and policy lapses, but it expects future premium rate increases will offset rising income protection claims.

However, the insurance company said its New Zealand arm produced stronger operating results.