AMP Trading Update

Submitted by Craig Strzelecki on 7 May, 2007 - 20:52

AMP remains the preferred exposure to the Australian Insurance industry from sharemarket analyst Macquarie Research Equities. Last week, the CEO of AMP, Andrew Mohl, presented at Macquarie's Australian Leaders Conference. In the analyst's view the industry is poised for very strong and low risk growth over the next decade. Key points to emerge from the conference presentation included: The robust growth outlook in all key super segments; The business transformation that has taken place since 2003. Some of the highlights include growth in business profits relative to investment income, contemporary product earnings relative to mature businesses, significant increase in Assets Under Management ($122bn from $76b in 2003), dramatic improvement in the cost to income ratio (76bp from 107bp in 2003) and the considerable improvement in ROE (31% from 18.1% in 2003). At the same time, AMP released its 1Q07 cashflow figures. Gross and net cashflows increased by 28% and 100% to $3.4bn and $753m respectively, reflecting especially strong growth in lower margin corporate super. Retail super flows rose by a solid but not spectacular 11% (in line with AXA) with some lingering impact of operational changes implemented during the period plus the deferral of contributions as customers consider the June 30 transitional arrangements in more detail. Following significant business profit growth and $1.5bn of capital returns, AMP's earnings quality has improved considerably over the past five years, with business profits accounting for 80% of FY06 underlying profit compared with only 61% in FY02. On this basis, the analyst reiterates their outperform recommendation. Although 1Q07 cashflows were solid but not spectacular, momentum is expected to accelerate in 2Q07 and beyond as the recent superannuation legislative amendments bite.

AMP Limited is listed on the Australian Stock Exchange (ASX) under stock code AMP. You can view their investor website here. AMP was listed on the ASX on 15 June, 1998. The company is a provider of life insurance, superannuation, pensions and other financial services in Australia and New Zealand. Peter Edward Mason is the Chairman for AMP and Andrew Max Mohl is the CEO. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade AMP. Check your charts and good luck with your share trading!