New CEO Meller banks on making mark at AMP
Incoming AMP chief executive Craig Meller will position the financial services major to capture a greater share of Australia's banking market, as well as focus on growing demand for low-cost wealth products.
Mr Meller will next year replace Craig Dunn as CEO and managing director of the $13.8 billion superannuation and financial planning company. He has been the head of AMP's biggest business unit, AMP Financial Services, since 2007 and formerly worked at London-based Lloyds TSB and UK financial services group Virgin Direct.
Mr Dunn, who has led AMP through the global financial crisis and its $4.1 billion purchase of AXA Asia Pacific's Australian operations, said he planned to have a good break after his exit and he was pleased with the results now coming from the AXA takeover. He has been at AMP for 13 years, and CEO for six.
Brokerage Deutsche Bank said in a note to clients that Mr Dunn's departure was surprising, but his successor would "likely be well received by the market".
The change in leadership coincided with AMP's results for the six months to June 30, which showed a $440 million underlying profit, down from $488 million the previous corresponding period.
The underlying profit - a figure that strips out items such as AXA integration costs - came in slightly above the company's own recent guidance and analyst consensus.
AMP shares rose on Thursday by 3.5 per cent, or 16¢, to $4.70, against a flat broader sharemarket.
Mr Meller told BusinessDay that AMP was reshaping to reflect changing consumer habits - particularly around technology; just as he did not have an iPad a few years ago, now he couldn't imagine life without one.
Mr Dunn said he would leave behind a business in good shape while a key question on the Australian economy was how quickly non-mining parts would compensate for a slowdown in mining.
The latest result was pressured by weakness in investment income and its wealth protection arm - disability and income protection insurance products - where earnings fell by 52 per cent, or $70 million, to $64 million.
The income protection business is not expected to turn around in the short term. AMP said it did not have plans to buy ANZ's wealth protection business, which is rumoured to be on the market.
Income protection products, which guarantee a portion of a policyholder's salary for a period of time if they are unable to work, have been causing headaches for life insurers as claims rise in line with job losses among white-collar workers.
A slowing economy has also prompted some people to opt out of life insurance products such as death and disability cover.
Mr Dunn said challenges in the superannuation sector reflect the "complexity of people's lives", as well as people claiming more and churning through policies faster than in the past. The dividend was cut to 11.5¢, 70 per cent franked, down from 12.5¢ at the same time in 2012 but slightly above expectations. Analysts tipped AMP might cut its dividend after it announced a downgrade in May.
Morningstar analyst David Ellis described the first-half result as disappointing. "But we remain confident in the longer-term earnings outlook for Australia's largest wealth management firm," Mr Ellis said, adding that he was sticking to a full-year underlying profit forecast for AMP of $890 million.