The Motley Fool

Ouch! AMP underlying profit down 13.5%

AMP (ASX: AMP) released an update (link saves as PDF) on its first half 2013 earnings today, and the numbers weren’t pretty. The company reported underlying profit of $425 million, or 13.5% below first half 2012’s $491 million. Ouch.

Apparently, AMP’s Australian Wealth Protection division is the culprit behind the cash squeeze.

“Poor claims and lapse experience” in the second quarter pulled profits down to just $54 million, compared to 2012’s $134 million in first half profit. (It should be noted that the $80 million drop was partially offset by an $48 million increase in other operating margins.)

According to AMP, the company is not alone in feeling this squeeze. The overall insurance industry is feeling more pressure on insurance claims and policy lapses.

Although AMP’s update provides investors with important information, the company makes clear that its release is unaudited, with finalized numbers expected after the completion of the 30 June half year accounts.

Looking ahead, AMP will be implementing new claims management policies, earlier intervention strategies, and improved support to help customers return to work more quickly. Still, the shares have fallen over 10% today, versus a near 1.5% drop in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO).

For investors, it may well be time to forget large cap clunkers. Two of Australia’s most promising small companies are still flying under the radar. Discover these two exciting ASX investments in our brand-new special FREE report, “2 Small Cap Superstars”. Click here now, it’s free!

More reading

Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!