Financial services giant AMP has booked its worst result in 13 years after writedowns on its wealth protection and life insurance business resulted in a full-year loss of $344 million.
A year after posting a net profit of $972 million, AMP recorded its first loss since 2003 on the back of a restructure in its wealth protection arm, undertaken to counter a downturn in the income protection business last year.
AMP said the wealth protection business suffered an earnings loss of $415 million, following $485 million in capitalised losses from an operational "reset".
The wealth protection losses weighed on group underlying profit, which slid to $486 million from a $1.1 billion profit a year earlier.
The wealth protection division was also hit with a $668 million goodwill impairment.
Group revenue for the year ended December 31, 2016, rose five per cent to $14.8 billion.
Chief executive Craig Meller said in contrast AMP Capital, AMP Bank and its New Zealand businesses performed strongly over the year, and its Wealth Management division was resilient despite challenging market conditions.
"These results were overshadowed by a poor performance in Wealth Protection," he said in a statement.
"The wealth protection market deteriorated in 2016 and we took action to reset and stabilise our business.
"Our strategy is focused on directing capital to areas of our portfolio that will deliver the strongest growth including Australian Wealth Management, AMP Capital and AMP Bank."
Mr Meller said he and other senior executives would receive little or no bonus due to the poor performance in 2016.
Despite the headline loss, AMP shares rose on Thursday after the company announced a $500 million share buyback in the first quarter of 2017 and maintained its final dividend at 14 cents a share, 90 per cent franked.
"These actions reflect our strong capital position and positive outlook for the business," Mr Meller said.
AMP shares were up four per cent in afternoon trading at $5.23.
AMP'S WORST RESULT IN 13 YEARS:
* Net loss of $344m vs net profit of $972m
* Revenue up 5 pct to $14.8b
* Final dividend flat at 14 cents, partially franked.
* Full-year dividend 28 cents per share.
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