Equity markets buffet AMP

By Phil Boeyen, ShareChat Business News Editor

Thursday 3rd January 2002

Insurance giant AMP (NZSE: AMP) is warning that its investment income for the second half of the year could dip into the red.

Early in December the company advised that investment income for the six months ended December 2001 would be consistent with the figures for the first half of the year, if markets ended the year at November levels.

However AMP now says that based on the levels of international markets at the end of December, its preliminary expectation is that investment income for 2001 could be marginally negative.

Chief financial officer, Marc de Cure, says that investment returns, particularly losses in UK equity markets, will negatively impact headline profit.

In the first half of 2001 AMP's net profit fell to A$403 million from A$525 million the previous year, mainly because of a drop in investment income in the UK.

However Mr de Cure adds that the company remains on track to deliver double digit growth in core recurring operating margins in 2001 compared with 2000, excluding divested businesses.

"With shareholder capital of over A$10 billion invested in global markets, even minor movements in investment indices can significantly impact investment earnings and headline profit, as detailed in sensitivity tables previously published by AMP."

AMP is due to report its 2001 financial results at the end of next month.

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