ASX Announcement 29 October 2007 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: 56/07 Asian Investor Roadshow Please find attached a copy of briefing materials that will be used by AMP Financial Services Managing Director Craig Meller and AMP Capital Investors Managing Director Stephen Dunne in an investor roadshow in Asia on 29-30 October 2007.
AMP Investor discussion pack Craig Meller Stephen Dunne Jill Craig Managing Director, AMP Financial Services Managing Director, AMP Capital Investors Director, Investor Relations October 2007
Outline Market dynamics AMP market position AMP business model Group performance overview Group performance first half 2007 Business line performance first half 2007 Capital management Summary 2
Market dynamics
Australian private pension market predicted to triple by 2015 Australian private pension market set to reach around US$2 trillion by 2015 Superannuation is the flagship product of the Australian financial services system US$1,908.7b Well entrenched system, in place for over two decades Flows are underpinned by mandatory super guarantee contributions 4
Legislative changes highly supportive of superannuation Successive governments have shaped superannuation as the preferred retirement savings vehicle. Major reforms during the past two years have cemented this positioning: 2005: removal of surcharge levy (incentive for higher income earners to increase voluntary contributions); co-contributions; spouse contribution splitting 2006: post-retirement withdrawals tax free at age 60 from 1 July 2007; abolition of Reasonable Benefit Limits (RBLs); post-retirement rules abolished (retirees no longer forced to exit super once they stop working); age based contributions limits replaced with flat $50k pa of deducted contributions (encourages earlier, larger contributions to super); undeducted contributions up to $150k pa or $450k over 3 years from July 2007 (previously constrained by RBLs); undeducted contributions up to $1m as one off opportunity to 30 June 2007 2007: Simpler Super reforms enacted; opportunity for significant undeducted contributions continues and increased pre-tax (deducted) contributions 5
Robust growth outlook for key market sectors $billion 800 700 600 500 400 Retirement savings projections to 2016 Post retirement - CAGR: 18.2% Retail - CAGR: 9.4% SMSF - CAGR: 9.5% Industry funds - CAGR: 12.3% 300 200 100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Pre-ret assets - industry Pre-ret assets - retail Pre-ret assets - SMSF Post retirement Source: Trowbridge Deloitte July 2007 report, commissioned by AMP 6
AMP market position
AMP has leading positions in 2 of 3 key super channels: employers, planners and accountants Superannuation market by channel Accountants / solicitors / stockbrokers / other 23% Financial planners 46% Employers 31% Source: AMP analysis and estimates based on Plan for Life Retail Funds Distribution, Dec 2006; APRA Quarterly Superannuation Performance, Dec 2006; Investment Trends SMSF Investor Report, Dec 2005. Includes all industry sectors (ie, retail funds, industry funds, corporate funds, SMSFs), other than public sector funds. 8
AMP has built a strong position in employer channel highest growth, market leadership 5.0 AMP fastest growing employer super provider Employer sponsored products by assets under management Net cashflow growth ($b) Dec 2002 to Dec 2006 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Asgard AMP Superleader MLC ERP AMP SignatureSuper CFS FC BT (total) Plum BT Bus MLC MK ING CS BT LS CBA (total) ANZ SA AMP CustomSuper Mercer ING (total) AMP (total) NAB (total) 0.0 (0.5) AMP FLS AXA (total) ING Integra 0 2 4 6 8 10 12 14 16 18 Assets under management ($b) at 31 Dec 2006 Source: Dexx&R Market Share Report, Dec 2006 and Dec 2005 9
AMP s aligned planner model has scale and is highly productive 1,600 1,400 PIS Planner numbers 1,200 1,000 800 600 Count Commonwealth FP AMP Financial Planning 400 Millennium 3 Genesys NAB FP Westpac FP ABN Amro Morgans 200 MLC FP / Garvan FP Bridges Lonsdale Hillross RetireInvest A$m 0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 IFA Dealer Group Survey Top 100, Dec 2006 Assets under management 10
AMP business model
AMP today a simple, scaleable model in a high growth industry focused on operational excellence Australasian wealth management group Integrated business model High growth industry Highly scaleable business Low cost manufacturing platform Reducing capital intensity Focusing on operational excellence Targeting growth in shareholder value at >15% pa 12
Key drivers and enablers of AMP business model Six drivers Brand Distribution Products & Platforms Cost Efficiency Asset Management Packaging Pre-eminent brand in retirement savings Largest planner force in Australia / New Zealand Large, scaleable contemporary platform > $45b Cost to income ratio < 37% Broadly based AUM > $130b Rapidly growing AUM > $25b Four enablers People & Culture Technology Operations & Risk Management Capital Management Increasingly constructive culture Close partnership with business and long record of program delivery Strong risk management framework Invest in core businesses, targeting A credit rating, with excess capital returned to shareholders 13
Model generates margins across the industry value chain Distribution Dealer groups / planners Products & Products & Platforms platforms Asset management Pricing - typical industry range for balanced growth fund 75 115 bps 40 95 bps 20 40 bps AMP retail platform with AMPCI investment AMP retail platform without AMPCI investment Non-AMP retail platform Third party retail products and advice only AMP corporate platform 14
Comparative advantage of AMP in planner distribution scale, quality and tenure Number of Australian financial planners June 2007 1800 1600 1400 1200 1000 800 600 400 200 1501* 645 1316 842 1123 1315 540 Compared to industry medians, AMP s planner groups have: lower planner turnover more experienced planners* 0 AMP ANZ/ING AXA CBA NAB WBC Source: Money Management, June 2007 Number of Certified Financial Planners* *Based on internal data at 30 June 2007. Includes AMP Financial Planning (Australia only) and Hillross. Source: Brennan Partners report, November 2005. This survey included 18 dealer groups representing approximately 45% of all planners in the Money Management Top 100 Dealer Groups (June 2005). *AMP s planner groups have a higher percentage of planners with 10+ years tenure, compared to industry medians. 15 7
AMP s cultural profile is increasingly constructive, more so than industry average Financial services industry comparison Base profile = AMP 2006 Overlay = Finance industry Source: Human Synergistics International Copyright 2005. All rights reserved 16
Group performance overview
Earnings from contemporary businesses have almost tripled in past four years 306 103 156 209 253 116 107 104 107 173 A$m 1H 03* 1H 04 1H 05 1H 06 1H 07 *1H 03 not restated for AIFRS Cobalt/Gordian and AFS Mature (businesses in run-off) AMP Capital Investors, AFS Contemporary Wealth Management, AFS Contemporary Wealth Protection, AFS New Zealand 18
Operating earnings now over five times underlying investment income 460 342 297 234 245 94 124 101 99 90 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 Total operating earnings Underlying investment income 19
Underlying EPS trend before and after impact of $2.25b of capital returns* 70 (*AMP conducted a $750m return of capital in June 2005, $750m in June 2006 and $750m in June 2007) Cents per share 60 50 40 30 43.9 43.9 34.8 34.8 43.0 43.9 47.7 50.6 59.5 54.3 55.0 61.2 20 10 0 2003 2004 2005 2006 2007 estimate** 2008 estimate** EPS as reported EPS after adding back foregone investment income **2007 and 2008 EPS estimates use analysts consensus information 20
Growing AUM coupled with increasing capital efficiency 14 140 130 12 11.5 120 110 10 8 100 80 78 83 96 6 4 4.6 4.1 3.8 3.2 60 40 2 20 A$b 0 1H 03* 1H 04 1H 05 1H 06 1H 07 A$b 0 1H 03 1H 04 1H 05 1H 06 1H 07 Total capital resources AUM *1H 03 total capital resources not restated for AIFRS 21
Strong AUM growth coupled with strong cost discipline 450 400 350 300 250 397 399 392 412 439 140 120 100 80 78 83 96 110 130 200 60 150 100 40 50 20 A$m 0 A$b 0 1H 03* 1H 04 1H 05 1H 06 1H 07 1H 03 1H 04 1H 05 1H 06 1H 07 Controllable costs AUM *1H03 not restated for AIFRS 22
Evergreen goal to deliver 15% pa growth in value over each five year cycle Cornerstone assumptions underpinning goal: Equity markets growing at 6% pa plus dividends AUM growth > 10% pa Revenue margin contraction in CWM of 2-3% pa Group costs growth around cost of living type increases Expectations on key performance metrics: Underlying return on equity strong trend improvement Value metrics overall growth of 15% pa Operating earnings double digit growth pa Cost ratio continuing trend reduction Investment performance 75% of AUM > benchmark Alignment with short term and long term management incentives 23
Group performance first half 2007
Focused strategy is driving shareholder value Strategic focus is to run the business better than it s ever been run before Key performance measures tracking well Underlying return on equity up from 26.6% to 38.7% Operating earnings up 35% to A$460m Cost ratio down from 40.1% to new low of 36.5% Embedded value up 12.4% 1 in half-year, before transfers, and value of new business up 30% 1 over year 76% of AUM at or exceeding benchmarks in year to June and top ranking balanced and conservative diversified funds 1 Traditional basis, @ 3% discount margin, recurring contributions methodology 25
Focused strategy is driving shareholder value Powerful platform for growth Record retail net cashflows up 62% to A$2.1b Group assets under management up 18% to A$130b Revenue growth easily outstripping costs driving operating leverage AFS Contemporary Wealth Management 16% v 2% AMP Capital Investors 28% v 19% Strong balance sheet and capital management Underlying interest cover up to 18.4 times; S&P gearing down to 8% Third successive capital return of 40 cents completed Interim dividend up 3 cents to 22 cents (85% franked) High free cashflow of earnings with strongly rising return on equity Evergreen medium term goal to grow value at 15% pa over cycle 26
Group cost ratios 397 399 392 412 439 50 45 40 46.5% 101bps 43.9% 41.9% 40.1% 101bps 36.5% 120 100 35 30 25 84bps 77bps 70bps 80 60 20 15 40 10 5 20 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 % 0 1H 03 1H 04 1H 05 1H 06 1H 07 0 bps Controllable costs Cost to income ratio Cost to AUM ratio 27
Group assets under management 130 110 96 78 83 A$b 1H 03 1H 04 1H 05 1H 06 1H 07 28
Underlying return on equity 50 48.4% 40 38.7% 30 20 21.0% 22.9% 26.6% 10 % 0 6.9% 1H 03* 1H 04 1H 05 1H 06 1H 07 1H 07 assuming capital return on 1 Jan 07 * Pre-demerger Underlying return on equity 29
Growth in shareholder value Value of an investment* in AMP has grown 85% from June 2005 to June 2007 (81% in TSR terms based on actual share price) 25 2.4 21.4 23.2 20 17.9 0.4 0.7 16.2 15 13.5 A$b 11.6 10 5 0 Opening value June 2005 Opening value Dec 2005 Opening value June 2006 Opening value Dec 2006 Dividends Capital return 1H 07 Valuation uplift Closing value June 2007 2009 Goal * Increase in value of an investment in AMP is calculated by adding the value of dividends and capital returns paid to shareholders to changes in enterprise value. Measure of enterprise value is the median of the major stockbroking analyst valuations of AMP for each period, beginning June 2005 30
Business line performance first half 2007
AMP s earnings by business lines AFS Contemporary Wealth Management operating earnings 116 145 AMP Capital Investors operating earnings AFS Mature operating earnings 25 62 89 34 35 42 55 78 89 88 83 92 95 A$m 1H 03* 1H 04* 1H 05 1H 06 1H 07 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 AFS Contemporary Wealth Protection operating earnings AFS New Zealand operating earnings Cobalt/Gordian operating earnings 78 55 59 59 21 41 23 18 23 23 24 27 19 21 15 A$m 1H 03* 1H 04* 1H 05 1H 06 1H 07 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 *Management estimate Open business Closed business 32
AFS Australian contemporary wealth management Contemporary wealth management Change 1H 07 1H 06 Operating earnings A$145m A$116m + 25% Controllable costs A$178m A$175m + 2% Cost to income ratio 43.8% 48.5% - 4.7 percentage points Retail net cashflows A$2,100m A$1,294m + 62% Corporate super net cashflows A$864m A$2,015m - 57% Persistency 80.9% 83.1% - 2.2 percentage points AUM (pre capital) A$55.4b A$44.7b + 24% RoEV pre transfers @ 3% discount margin 13.8% 10.4% +3.4 percentage points VNB @ 3% discount margin A$144m A$110m + 31% Return on equity 1 49.0% 37.6% + 11.4 percentage points 1 Return on BU equity, ungeared, excluding goodwill. Based on monthly average capital numbers. 33
AFS contemporary wealth management significant operational leverage 400 350 325 341 360 383 300 299 250 200 172 185 175 184 178 150 100 50 A$m 0 1H 05 2H 05 1H 06 2H 06 1H 07 Revenue less variable costs Controllable costs 34
AFS Australian contemporary wealth protection Contemporary wealth protection Change 1H 07 1H 06 Profit margins A$57m A$49m + 16% Experience profits A$2m A$10m -80% Operating earnings A$59m A$59m steady Operating earnings / API 1 20.9% 22.6% - 1.7 percentage points Controllable costs A$33m A$31m + 7% Individual risk annual premium income A$433m A$403m + 7% Individual risk lapse rate 10.0% 9.6% + 0.4 percentage points RoEV pre transfers @ 3% discount margin 9.5% 13.6% - 4.1 percentage points VNB @ 3% discount margin A$40m A$24m + 67% Return on equity 2 29.3% 28.2% + 1.1 percentage points 1 Based on average annual premium income. 2 Return on BU equity, ungeared, excluding goodwill. Based on monthly average capital numbers. 35
AFS Australian contemporary wealth protection 1H 07 earnings impacted by: fall in experience profits due to less favourable claims experience lower API growth due to price reduction coupled with lower than expected sales as planners focused on superannuation opportunities Business initiatives: improving ease and profitability of writing AMP risk products by automated underwriting, online lodgement, automatic acceptance for small business plans, product enhancements and improved medical limits premium increases and product improvements in income protection risk sales and marketing activities increasing post 30 June super deadline 36
AFS Australian mature Mature Change 1H 07 1H 06 Operating earnings A$95m A$92m + 3% Controllable costs A$33m A$30m + 10% Controllable costs/aum 1 35bps 32bps + 3bps Net cashflows (A$615m) (A$564m) -9% Persistency 87.6% 87.7% - 0.1 percentage point AUM (pre capital) A$18.9b A$18.2b + 4% RoEV pre transfers @ 3% discount margin 14.0% 15.8% -1.8 percentage points VNB @ 3% discount margin A$20m A$20m steady Return on equity 2 201.1% 82.5% + 118.6 percentage points 1 Based on monthly average AUM, including capital. 2 Return on BU equity, ungeared, excluding goodwill. Based on monthly average BU capital numbers. 37
AFS New Zealand New Zealand Change 1H 07 1H 06 Profit margins A$26m A$22m + 18% Experience profits (A$2m) A$1m - Operating earnings A$24m A$23m + 4% Controllable costs A$29m A$31m -6% Cost to income ratio 42.5% 44.4% - 1.9 percentage points Individual risk annual premium income 1 A$101m A$79m + 28% Lapse rate 7.1% 6.9% + 0.2 percentage points AUM (pre capital) A$4.9b A$4.2b + 17% RoEV pre transfers @ 3% discount margin 7.4% (3.6%) 2 - VNB @ 3% discount margin A$11m A$11m steady Return on equity 3 29.8% 23.0% + 6.8 percentage points 1 In NZ dollar terms, individual risk API has increased by 15% over 1H 06. 2 Restated for methodology and modelling changes. RoEV 6.7% in 1H 06 in NZ$ (not restated). 3 Return on BU equity, ungeared, excluding goodwill. Based on monthly average capital numbers. 38
AFS cost efficiency 282 274 262 267 274 45 40 42.1% 41.8% 38.6% 36.1% 34.3% 140 120 35 30 116bps 104bps 100 25 20 89bps 78bps 69bps 80 60 15 10 40 5 20 A$m 1H 03 1H 04 1H 05 1H 06 1H 07 % 0 1H 03 1H 04 1H 05 1H 06 1H 07 0 bps Controllable costs Cost to income ratio Cost to AUM ratio 39
AFS 1H 07 cashflows Total retail net cashflows up 62% to A$2.1b Retail superannuation and annuities/pensions net cashflows up 75% to A$1.63b External platforms net cashflows up 44% to A$0.55b Total corporate super net cashflows down 57% to A$0.9b Net cashflows in corporate super (excluding major mandate wins in both periods) up 44% to A$452m Strong growth in planner channels Net cashflows through AMP Financial Planning up 66% to A$1.45b Net cashflows through Hillross up 37% to A$0.5b Allowing for internal product flows, persistency fell slightly Retail super 91.0% (up 0.5% from 1H06) Allocated pensions/annuities 86.6% (down 0.6%) Corporate super 93.0% (down 0.8%) Around 50% of FLS outflows are retained in AMP Around two thirds of corporate super outflows are retained in AMP 40
AFS net cashflows by major channel on rolling 12 month basis (A$m) Corporate Super direct AMP Financial Planning 3,500 Corporate Super Direct incl SignatureSuper mandate wins Corporate Super Direct excl SignatureSuper mandate wins 3,000 2,300 1,800 2,500 2,000 1,300 1,500 800 1,000 500 300 0 (200) 41 Q2 07 Q3 07 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 2,300 Hillross New Zealand 2,300 1,800 1,800 1,300 1,300 800 800 300 300 (200) (200) Q2 07 Q3 07 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Excludes cashflows from CCC, 3PD, GID and other
AFS net cashflows by wealth management product line on rolling 12 month basis (A$m) Corporate Super 1 AMP-manufactured retail products 2 Corporate Super Direct incl SignatureSuper mandate wins 3,500 Corporate Super Direct excl SignatureSuper mandate wins 3,000 2,500 2,000 1,500 2,500 2,000 1,500 1,000 500 0 1,000 500 (500) (1,000) 0 (1,500) (2,000) 42 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 1 Includes Corporate Super sales through direct sales force and through planners 2 Australia only, excludes New Zealand. 2,500 2,000 1,500 1,000 External platforms Mature and closed products 2,500 2,000 1,500 1,000 500 500 0 0 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 (500) (1,000) (1,500) (2,000) (500) (1,000) (1,500) (2,000) (2,500)
Super contribution pattern in first half 2007 consistent with AMP market positioning 1,200 Total super contributions FLS, Corporate Super*, external platforms 1,000 800 600 400 200 A$m 0 $0 - $1000 $1000 - $100K $100K - $250K $250K - $450K $450K - $1M $1M+ Super contribution amount FLS, Corporate Super*, external platforms *Corporate Super excludes employer contributions 1H 06 1H 07 43
Strong growth in allocated pensions / annuities net cashflows 450 400 350 300 250 200 150 100 50 A$m 0 (50) 1H04 2H04 1H05 2H05 1H06 2H06 1H07 44
AMP Capital Investors (AMPCI) AMPCI Change 1H 07 1H 06 Operating earnings A$78m A$55m + 42% Internal management fees A$91m A$80m +14% External management fees A$93m A$67m +39% Total performance & transaction fees A$48m A$34m +41% Controllable costs A$124m A$104m + 19% Cost to income ratio 51.4% 55.2% - 3.8 percentage points External net cashflows A$1,261m A$1,144m + 10% AUM (pre capital) A$111.6b A$96.4b + 16% Return on equity 1 71.6% 60.0% + 11.6 percentage points 1 Return on BU equity, ungeared, excluding intangibles 45
AMPCI volumes and profit margins 120 109.1 20 18 100 94.5 16 80 70 70.4 81.3 13.9bps 14 12 60 9.9bps 9.7bps 10.3bps 11.6bps 10 8 40 6 20 4 2 A$b 0 1H 03 1H 04 1H 05 1H 06 1H 07 0 Basis points pa Average AUM in period Operating earnings after tax basis points pa before net seed pool 46
AMPCI out performance against benchmarks Weighted AUM % at or above benchmark 99% 95% 96% 93% June-07 Dec-06 Target 75% 74% 76% 86% 71% 64% 83% 76% 78% Listed assets Infrastructure Private equity Property Future Directions Total AUM at June 07 A$72.9b A$3.8b A$1.1b A$17.0b funds A$16.8b A$111.6b % indicates assets under management meeting or exceeding benchmarks 47
AMPCI out performance in diversified funds AMP Capital Balanced Growth Fund AMP Capital Conservative Fund Return Ranking Return Ranking Year 1 17.5% 1 Year 1 10.6% 1 Year 3 16.9% 1 Year 3 10.3% 1 Year 5 12.7% 1 Year 5 8.7% 1 Source: Mercer Pooled Fund Survey of institutional funds for periods ended 30 June 2007 Source: Mercer Capital Stable Fund Survey of institutional funds for periods ended 30 June 2007 48
Cobalt/Gordian operating earnings 74 67 58 51 53 31 32 52 78 27 19 21 15 A$m FY 03 FY 04 FY 05 FY 06 1H 07 1H 2H 49
Cobalt/Gordian capital position 349 125 492 237 615 511 585 484 499 423 309 255 224 159 137 A$m FY 03 FY 04 FY 05 FY 06 1H 07 Minimum capital requirement } Surplus capital held in licensed insurers Loans to Group office * Excludes capital held in non-licensed entities and capital held as deferred tax assets; A$48.3m at June 2007. 50
Capital management
AMP Financial Services profit and capital releases A$m AFS operating earnings (1) AFS underlying investment income (1,2) Investment income market adjustment (1,2) Additional transfers (3,4) Cash transfer from AFS (5) 2000 322 258 243 176 999 2001 311 234 (94) (271) 180 2002 272 221 (258) 736 971 2003 368 169 42 461 1,040 2004 415 96 111 849 1,471 2005 515 81 22 23 641 2006 607 82 13 193 895 1H 2007 323 44 5 (10) 362 Total 3,133 1,185 84 2,157 6,559 1. 2006, 2005 and 2004 AFS operating earnings, underlying investment income and investment income market adjustment are on an AIFRS basis. All other years are on an AGAAP basis. Operating earnings have been restated to exclude transitional tax relief. 2. Actual investment income on capital is split between underlying investment income reported in AFS and investment income market adjustment. 3. Includes capital transfers in and out, transitional tax relief, movements in retained profits of operating subsidiaries, AIFRS adjustments in 2004 and impact of restructuring provisions not included in operating earnings. 4. 2002 transfers include A$750m of capital release relating to the removal of AMP UK plc preference shares from AMP Life statutory funds. 5. Transfer from AFS is embedded value transfers, net of franking credits. Transfers reported in the 2000 Investor Report were for AMP Life statutory funds only and excluded A$334m of transfers from other legal entities. 52
Financial strength metrics 20 30 June 2007 18 16 Underlying interest cover 14 12 10 8 6 31 Dec 2003 30 June 2006 31 Dec 2006 31 Dec 2005 30 June 2005 31 Dec 2004 30 June 2004 4 30 June 2003 2 0 60% 50% 40% 30% 20% 10% 0% S&P gearing S&P indicative A range Notes: AMP s A credit rating is driven by a two-notch difference to AMP Life, which is rated AA minus. AMP Life s financial strength rating is based on S&P s capital adequacy assessment. S&P changed its methodology during 2H 06 to include 50% of the value of future AMP Life shareholder profits in the denominator of its gearing calculation. The methodology was again changed in 1H 07 to include 100% of the value of in-force AFS business in the denominator of its gearing calculation. 53
Capital management Capital management strategy since 2004 has driven: Significant increase in dividends per share A$2,250m in capital returns to shareholders A$500m reduction in group debt Capital management strategy going forward: AMP s surplus regulatory capital position remains above its target range post June 07 capital return following strong profits, share markets and investment out performance in 1H 07 Capital management strategy now focusing on optimising capital mix Future capital initiatives will continue to be framed against the objective to maintain the Group s A range credit rating Previous guidance that future capital initiatives are likely to be less frequent and/or significantly smaller in scale stands Underlying return on equity now approaching 40% and set to rise substantially in FY 08 and beyond 54
Dividends and capital returns since first half 2003 40 40 40 Cents per share 22 19 13 14 7 1H 03 1H 04 1H 05 1H 06 1H 07 15% franked 75% franked 75% franked 85% franked 85% franked Interim dividend Capital return 55
Summary
Summary Powerful platform for growth Industry growth high, buoyed by Simpler Super reforms Flexible, robust and scaleable business model Sharp focus on core business The better we get at running the business, the more opportunities we find to improve Broad basis to grow Retail super, corporate super, retirement income products, risk insurance, retail and institutional funds Strong balance sheet and cash flow High free cashflow of earnings with rising return on equity Evergreen medium term goal to grow value at 15% pa over cycle 57
Appendix
Two distinct planner groups create powerful presence in market AMP Financial Planning (AMPFP) 1,216 self-employed planners; 754 practices 1 495 Certified Financial Planners 1 Average planner age 43 1 49% in industry 10+ years, compared to industry median of 31% 2 49% with dealer group 10+ years, compared to median of 17% 2 AUM per practice $56.8 1 Focus on mass and mass affluent customers Network institutionally branded and owned AMP owns client register 62% of AFS contemporary wealth management net cashflows (ex SignatureSuper) 1 Hillross (including Arrive and Magnify) 285 self-employed planners; 109 practices 1 150 Certified Financial Planners 1 Average planner age 45 1 35% in industry 10+ years, compared to industry median of 31% 2 21% with dealer group 10+ years, compared to median of 17% 2 AUM per practice $89.1m 1 Focus on mass affluent and high net worth customers Non-institutionally branded and client owns client 21% of AFS contemporary wealth management net cashflows (ex SignatureSuper) 1 1 30 June 2007 2 Brennan Partners report, November 2005. This survey included 18 dealer groups representing approximately 45% of all planners in the Money Management Top 100 Dealer Groups (June 2005). 59
Pre-tax operating earnings relative to FUM Wealth management operating earnings per dollar of retail FUM indexed to AMP 1.2 1.0 1.00 0.96 0.86 0.8 0.76 Index 0.6 0.4 0.48 0.39 0.45 0.2 0.14 0.0 AMP CBA NAB WBC ANZ / ING SGB MBL AXA Source: Based on internal analysis by AMP, using company financial reports and Plan for Life data. Operating earnings exclude investment earnings and grossed up before tax based on notional corporate tax rate of 30%. Operating earnings for AMP, CBA (CFS) and AXA (A&NZ) are for 12 months to Dec 2006. Operating earnings for NAB (MLC), WBC (BT), ANZ / ING JV, SGB (Asgard) and MBL Wealth Management are for 12 months to March 2007. Periods may not align to the company s reported full year period end. No adjustments have been made to remove overseas and non wealth management businesses. Operating earnings expressed relative to average Plan for Life marketer view of retail and regular premium funds under management and then indexed to AMP. 60
AFS embedded value RoEV Traditional basis, @ 3% discount margin 1H 03 5.8% 1H 04 9.3% 1H 05 11.1% 176 17 4 115 47 8,178 (456) 1H 06 11.2% 1H 07 12.4% 327 215 7,722 759 7,277 6,518 A$6,000m FY 06 EV Restatement* FY 06 EV restated Expected return 1H 07 new business Investment & bond yields Unit cost reductions Persistency & claim assumptions Pricing & product changes Other 1H 07 EV (before transfers) Net transfers out 1H 07 EV (after transfers) *Restated for methodology and modelling changes 61
AFS value of new business VNB Traditional basis, @ 3% discount margin 1H 03 $100m 1H 04 $125m 1H 05 $134m 1H 06 $165m 42 (8) 2 9 4 1 215 1H 07 $215m 164 1 165 A$120m 1H 06 VNB Restatement* 1H 06 VNB restated Volume & mix Future economic / investment assumptions Expense assumptions Persistency & claim assumptions Pricing & product changes NZ exchange rate 1H 07 VNB *Restated for methodology and modelling changes 62
Organisational culture inventory (OCI) measuring 12 behaviour styles ACHIEVEMENT SELF- ACTUALISING HUMANISTIC- ENCOURAGING AFFILIATIVE Members are expected to set challenging but realistic goals and solve problems effectively Members are expected to gain enjoyment from their work and produce high quality products/services Members are expected to be supportive, constructive, and open to influence in dealing with others Members are expected to be friendly, open, and sensitive to the satisfaction of the work group APPROVAL CONVENTIONAL DEPENDENT AVOIDANCE Members are expected to agree with, gain the approval of, and be liked by others Members are expected to conform, follow the rules, and make a good impression Members are expected to do what they are told and clear all decisions with their superiors Members are expected to shift responsibilities to others and avoid being blamed for mistakes OPPOSITIONAL POWER COMPETITIVE PERFECTIONISTIC Members are expected to gain status and influence by being critical and constantly challenging one another Members are expected to take charge and control others, and make decisions autocratically Members are expected to operate in a win-lose framework and work against their peers to be noticed Members are expected to avoid making mistakes, work long hours, and keep on top of everything 63