AMP Rises Most in 5 Months as Profit Outperforms: Sydney Mover

AMP Ltd., Australia’s largest life insurer and pension manager, rose the most in almost five months as profit beat estimates and it named the head of financial services Craig Meller as chief executive officer.

AMP shares climbed 3.9 percent, the most since March 27, to A$4.71 as of 11:54 a.m. The benchmark S&P/ASX200 Index dropped 0.1 percent. Net income rose to A$393 million ($359 million) in the six months to June 30 from A$373 million in the year earlier period, the Sydney-based company said. That beat a A$322 million median estimate of five analysts surveyed by Bloomberg News.

Underlying profit, which removes merger-related costs and some of the influence of market volatility, fell 10 percent to A$440 million. Rising insurance policy lapses led AMP to warn on June 24 underlying profit might drop to A$415 million to A$435 million. Such lapses had climbed to their highest level in a decade, it said in February.

“We remain confident in the longer term earnings outlook for Australia’s largest wealth management firm,” David Ellis, a Sydney-based analyst at Morningstar Inc. said. “Claims and lapses do not appear to have deteriorated since the end of May.”

Wealth protection, which includes life insurance, posted a 52 percent drop in first-half profit, AMP said.

“Improving the performance of the insurance business is an area of critical focus as we introduce a series of actions to improve both customer retention and the management of claims,” Chief Executive Officer Craig Dunn said in today’s statement.

Dunn, 49, who retires after six years as CEO will be replaced by Meller, 50, on Jan.1, AMP said. Meller, who has abseiled down the 26-story AMP building in Sydney three times in the past three years to raise money for charity, has headed AMP Financial Services since 2007.

AMP has dropped 1.8 percent this year compared with an 11 percent gain for the benchmark S&P ASX/200 Index.