Investor Roadshow Materials

Transcription

1 ASX Announcement 9 March 2009 Manager Company Announcements Office Australian Stock Exchange Level 4, 20 Bridge Street Sydney NSW 2000 Manager Market Information Services Section New Zealand Stock Exchange Level 2, NZX Centre, 11 Cable Street Wellington New Zealand Announcement No: 07/09 Investor Roadshow Materials Please find attached support materials for the offshore Investor Roadshow, which is being held from Monday 9 March 2009 Friday 13 March AMP Limited (AMP) ASX Announcement AMP Limited Level 24, 33 Alfred Street Sydney NSW 2000 Australia ABN

2 AMP financial strength and resilience in tough times Craig Dunn Chief Executive Officer March 2009

3 Executive summary Solid 2008 financial result underscores strength of AMP Diverse earnings streams proving resilient in challenging markets, with significant earnings leverage to market recovery Managing company tightly through current environment, while investing in its growth for the medium to longer term Aiming to deliver first quartile TSR performance over every five-year cycle 2

4 Outline AMP overview Business performance Capital management Outlook & strategy Summary 3

5 AMP overview 4

6 AMP is a leading Australasian wealth manager with selective investments in Asia Contemporary wealth management company with resilient business model built on Pre-eminent brand Low cost, scaleable manufacturing platform Large aligned financial planning channel Broad-based asset management and packaging business Cost and capital efficiency Market leader in Superannuation ranked #1 ¹ Retirement incomes ranked #2 ¹ Insurance ranked #4 ² Investment management ranked #2 ³ 1. Plan for Life Retail & Wholesale QDS, 30 September Plan for Life Detailed Risk Statistics (in-force premiums individual risk excludes single premiums) 30 September Rainmaker Roundup, September

7 AMP is financially strong Sound 2008 financial result in tough market Underlying profit of A$810m, with good profit growth in non-aum businesses Controllable cost growth kept to 1% Contemporary wealth management net cashflows over A$2b Proactive management of both capital and funding requirements have enhanced AMP s financial strength, despite ongoing volatility Capital resources exceed minimum regulatory requirements by A$898m All numbers at 31 December

8 Business performance Group 7

9 2008 full year performance Key performance measures mixed Underlying return on equity increased 1.0 percentage point to 38.9% Total operating earnings of A$737m, down 4% Cost ratio up to 41.3% from 39.7% in FY 07 Growth measures: Net cashflows in AMP Financial Services of A$1.4b, down from A$2.9b in FY 07; AMP Capital Investors external net cashflows A$(804m) down from A$1.7b Value of risk new business 1 up 41% to A$114m 63% of AUM met or exceeded benchmark over five years to 31 December 2008, impacted by extraordinary markets in 2008, when 17% of AUM met or exceeded benchmark 1. This is a combined value of new business measure for Contemporary Wealth Protection in Australia and risk insurance in New Zealand 8

10 Group assets under management A$b 0 FY 04 FY 05 FY 06 FY 07 FY 08 Open business Group Closed business AFS Mature business only. With sale of Cobalt/Gordian(CG) in 2007, all prior period numbers have been restated to remove CG AUM for comparative purposes 9

11 Group cost performance bps 45.8% 81bps 72bps 68bps 75bps % 39.6% 41.3% 39.7% FY 04 FY 05 FY 06 FY 07 FY 08 Controllable costs Cost to income ratio Controllable costs to AUM All prior period numbers have been restated to remove Cobalt/Gordian for comparative purposes and for reclassification of planner-related variable costs from controllable to variable 10

12 Business line contribution to FY 08 earnings In-force annual premium A$702m and AUM A$2bn AFS Contemporary Wealth Protection $154m (20%) In-force annual premium A$112m and AUM A$5bn AFS NZ $56m (7%) AFS Contemporary Wealth Management $266m (34%) AFS Mature $161m (21%) AUM A$16bn External AUM A$36bn Internal AUM A$56bn AMP Capital Investors $136m (18%) AUM A$43bn 11

13 Business performance - business lines 12

14 AMP Financial Services FY 08 highlights Diversified business delivered solid results in difficult environment, with operating earnings of A$637m, down 4% on FY 07, despite 19% fall in AUM Contemporary Wealth Management s operating earnings down 13% to A$266m reflecting impact of market turbulence Contemporary Wealth Protection s earnings up 29% as a result of strong new business growth and better claims experience Operating earnings for the New Zealand business up 17% driven by risk growth, improved claims experience, cost control and success in KiwiSaver 35.4% cost ratio reflects tight cost focus combined with continued long-term investment program 13

15 AFS cashflow performance Resilient business model and strong mandated super position drove relative outperformance in cashflows, despite fall in member contributions Total net cashflows of A$1.4b compared with A$2.9b in FY 07 $2b in contemporary wealth management net cashflows Corporate super net cashflows ex-mandate wins up 57% to A$554m, largely driven by solid employer contributions NZ net cashflows increased to A$126m from A$73m in FY 07 Outflows down 18% to A$13b from $16b Persistency strengthened across the board improving to 90.3% from 88.6% 14

16 AFS Australian contemporary wealth management Contemporary wealth management Change FY 08 FY 07 Operating earnings A$266m A$306m - 13% Controllable costs 1 A$354m A$352m 1 + 1% Cost to income ratio % 42.7% percentage points Net cashflows A$2,077m A$4,086m -49% Operating earnings to AUM 2 48bps 54bps - 6 basis points Persistency 90.3% 88.5% percentage points AUM (pre capital) A$43.4b A$56.5b -23% Return on equity 46.5% 54.1% percentage points 1. Planner related variable costs previously included in controllable costs have been reclassified to variable costs. Comparatives have been restated (FY 07 A$9m) 2. Operating earnings to AUM exclude AMP Banking 15

17 AFS Australian contemporary wealth protection Contemporary wealth protection Change FY 08 FY 07 Profit margins A$135m A$115m + 17% Experience profits A$19m A$4m + A$15m Operating earnings A$154m A$119m + 29% Operating earnings / API % 20.7% percentage points Controllable costs Individual risk API A$78m A$547m A$73m A$469m + 7% + 17% Individual risk lapse rate 10.8% 10.6% percentage points RoEV pre 3% discount margin 22.9% 8.2% percentage points 3% discount margin² A$90m A$65m + 39% Return on equity 31.5% 28.9% percentage points 1. Based on average annual premium in force. 2. Comparatives restated for methodology and modelling changes. 16

18 AFS Australian mature Mature Change FY 08 FY 07 Operating earnings A$161m A$190m - 15% Controllable costs A$64m A$64m Steady Controllable costs/aum 1 37bps 34bps + 3 basis points Net cashflows (A$1,036m) (A$1,433m) + 28% Persistency 89.7% 87.0% percentage points AUM (pre-capital) A$16.1b A$18.4b - 13% RoEV pre 3% discount margin (19.6%) 18.9% percentage points 3% discount margin² A$21m A$32m -34% Return on equity 158.2% 193.3% percentage points 1. Based on monthly average AUM including capital 2. Comparatives restated for methodology and modelling changes 17

19 AFS New Zealand New Zealand Change FY 08 FY 07 Profit margins A$50m A$47m + 6% Experience profits A$6m A$1m + A$5m Operating earnings A$56m A$48m + 17% Controllable costs A$64m A$64m steady Cost to income ratio 41.4% 44.3% percentage points Individual risk API¹ A$112m A$104m + 8% Lapse rates 8.2% 7.1% percentage points Net cashflows A$126m A$73m + A$53m AUM (pre capital) A$4.5b A$4.7b -4% RoEV pre 3% discount margin² 16.5% 11.7% percentage points 3% discount margin 3,4 A$26m A$20m + 30% Return on equity 27.2% 27.6% percentage points 1. In NZ dollar terms, individual risk API has increased by 12% over FY In NZ dollar terms, RoEV is 21.7% 3. Comparatives restated for methodology and modelling changes 4. In NZ dollar terms, VNB increased by 34.8% on FY 07 18

20 AFS cost performance bps 87bps % 76bps 69bps 75bps % % 34.2% 35.4% FY 04 FY 05 FY 06 FY 07 FY 08 Controllable costs Cost to income ratio Controllable costs to AUM Planner related variable costs previously included in controllable costs have been reclassified to variable costs. 19

21 AMP Capital Investors FY 08 highlights Solid performance with operating earnings down 9% on FY 07 to A$136m Total management fees increased 3% to A$387m from A$375m, reflecting a change in product mix and growth in non-aum sourced income Performance and transaction fees of A$86m, down from A$94m AUM fell 17% to A$92b from A$111b in FY 07, driven by falling investment markets Tight cost control and lower staff remuneration held costs to 4% increase over FY 07 63% of AUM met or exceeded benchmark over five years to 31 December 2008, impacted by extraordinary markets in 2008, when 17% of AUM met or exceeded benchmark Key funds Australian Direct Property, Australian Fixed Interest, Balanced Growth have first quartile competitive rankings over five years to 31 December

22 AMPCI overview AMPCI Change FY 08 FY 07 Operating earnings A$136m A$150m - 9% Internal management fees A$176m A$170m + 4% External management fees A$211m A$205m + 3% Total performance & 1 A$86m A$94m -9% transaction fees Controllable costs A$268m A$257m + 4% Cost to income ratio 56.3% 53.1% percentage points External net cashflows (A$804m) A$1.71b Return on equity 59.9% 64.2% percentage points 1. Total performance and transaction fees fell by 54% in 2H 08 on 1H 08, reflecting material worsening of markets 21

23 AMPCI volumes and profit margins $Ab 0 FY 04 FY 05 FY 06 FY 07 FY 08 Average external AUM Average internal AUM Operating earnings after tax to average AUM (bps) 22

24 Capital management 23

25 Capital management strength & strategy AMP remains strongly capitalised, with A$898m in excess capital above minimum regulatory requirements (MRR) at 31 Dec 2008, reflecting disciplined and dynamic capital management approach Current debt security offer expected to raise A$300m; will take excess above MRR to A$1.2b (2.4 times) on pro forma basis as at 31 Dec 2008 Assuming A$300m raised, group gearing will remain low on a pro forma basis at 17% on an S&P basis, while underlying interest cover will be high at 9.2 times on pro forma basis Capital management strategy aims to deliver: strong balance sheet in a challenging market, with focus on capital preservation business flexibility for growth optimised capital mix through Tier 2 raising Overall bias toward holding more capital rather than less in current markets will continue 24

26 Capital management actions Proactive management of both capital and funding requirements have enhanced AMP s financial strength, despite ongoing volatility Improving efficiency of capital mix and strengthening capital base through current offer of debt securities expect to raise A$300m (offer closes 7 April) Raised A$559m in equity in Nov/Dec through over-subscribed institutional and retail raisings Raised A$350m in senior debt in May, as part of ongoing program of refinancing corporate debt maturities well ahead of time Range of other capital management initiatives to limit market impacts on capital requirements Final dividend of 16cps takes FY 08 dividend to 38cps a payout ratio of 89% of underlying profit Future dividend payout likely to be in range of 75%-85% of underlying profits, targeting 85% franking DRP (uncapped, issued not bought) offered at 2.5% discount Discount expected to raise DRP participation to 30%, supported by partial underwrite to that level 25

27 Outlook & strategy 26

28 Short term outlook Continued market volatility means more challenging outlook for 2009 Prudently managing costs, liquidity and capital to protect our financial position in the short term AFS costs expected to be around 3% lower in FY 09 on FY 08, as continued investment in growth initiatives is offset by cost efficiencies AMPCI costs will be managed closely, contingent on market opportunities and conditions, and variables such as staff remuneration and increased technology spend Group office costs expected to remain flat New opportunities for strong, well-capitalised industry participants 27

29 Short term strategic priorities Acting on opportunities to sustain and improve revenues in current market, by Growing revenues in non AUM-based businesses - eg banking and risk insurance Improving investment performance Focusing strongly on customer retention Continuing investment to increase scale and productivity of our distribution footprint Renewing core superannuation product to improve tailoring opportunities for customers and cost efficiencies - New modular offering to suit all customer profiles, from simple, low-cost needs to complex, sophisticated needs, with appropriate pricing 28

30 Medium to long term outlook Longer-term growth outlook for wealth management sectors in Australia, New Zealand and selected Asian markets remains strong underpinned by: Ageing demographics Bi-partisan party support for mandatory superannuation regime in Australia super now tax free after age 60 KiwiSaver and PIE initiatives in New Zealand Economic, social and political development in selected Asian markets, opening up new sources of funds and assets 29

31 Growth goal Over-arching goal to deliver top quartile TSR performance to shareholders Aim to be in top 25% of the top 50 listed Australian industrials in terms of total shareholder returns over every five-year cycle Strong alignment between shareholder goal and long term incentive (LTI) for executives Requires prudent and pragmatic management of costs, capital and liquidity in current market, while maintaining investment in critical growth initiatives for medium to long term (and as markets recover) 30

32 Strategic response Continuing to invest today in improving distribution and enhancing products and services to drive strong value growth over the longer term by: 1. Growing planner capacity and broadening distribution 2. Expanding to Asia through AMP Capital Investors 3. Growing customers in high-value segments 4. Reshaping AMP Capital Investors into a high value-add investment manager 5. Building our capacity for profitable growth 31

33 Summary Sound FY 08 results in testing environment demonstrates fundamental resilience of AMP s business model, planner base and brand Managing AMP tightly through short-term volatility while investing to set company up for stronger growth over the medium to longer term Capital preservation and balance sheet strength a key priority, to enable company to withstand market volatility and provide strong base for future growth Remain confident of long-term prospects for wealth management sectors in Australia, NZ and selected Asian markets AMP well positioned for medium to longer term 32