Amp Limited · ASX:AMP
Amp — Non-Deal Roadshow (March 2010)
55 slides from Amp's roadshow presentation, Mar 30, 2010
Slide 1: ASX Announcement: Investor Roadshow Materials
ASX Announcement 30 March 2010 For personal use only Manager Manager Company Announcements Office Market Information Services Section Australian Stock Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand Announcemen
Slide 2: Investor discussion pack March 2010
For personal use only Investor discussion pack March 2010
Slide 3: AMP today
For personal use only AMP today 2
Slide 4: AMP today
AMP today AMP is a 160-year-old wealth management company operating For personal use only in Australia and New Zealand, with selected investment management activities in Asia One of the largest superannuation providers in the Australian market A leading investment manager in the region, with $
Slide 5: AMP Financial Services and AMP Capital Investors
AMP Financial Services AMP Capital Investors AMP Financial Services (AFS) provides AMP Capital Investors (AMPCI) For personal use only financial planning and advice to is a diversified investment manager customers in Australia and NZ, in the Asia Pacific region primarily through network of 2,000
Slide 6: AMP's structure
AMP’s structure AMP For personal use only AMP Financial Services AMP Capital Investors Primarily an Australian and New Zealand asset manager, investing across various Contemporary Wealth Management asset classes. AUM sourced from internal Unit linked retail and corporate superannuation and and exter
Slide 7: AMP's key performance measures
For personal use only AMP’s key performance measures Short term Longer term Underlying return on equity Over-arching goal to deliver top Underlying profit quartile TSR performance to shareholders Growth measures: Aim to be in top 25% of the Net cashflows in AMP Financial top 50 listed Au
Slide 8: AMP's competitive advantages
For personal use only AMP’s competitive advantages Products & Cost Asset Brand Distribution Packaging platforms efficiency management Large Large, Pre-eminent footprints in scaleable Cost to Broadly Growing brand in planner and contemporary income ratio based AUM AUM retirement 2 2 3 corporate platf
Slide 9: Business line contribution to FY earnings
For personal use only Business line contribution to FY 09 earnings In-force annual premium A$117m and AUM A$5bn In-force annual AUM A$18bn premium A$772m AFS NZ A$54m (7%) AFS Mature AUM A$97bn (externally and AFS Contemporary A$151m (21%) internally sourced) Wealth Protection A$164m (22%) AFS Conte
Slide 10: AMP's operating earnings by business line
For personal use only AMP’s operating earnings by business line AFS Contemporary Wealth Management AMP Capital Investors AFS Mature 150 190 190 306 136 266 278 115 171 244 92 91 161 187 151 A$m A$m A$m FY 05 FY 06 FY 07 FY 08 FY 09 FY 05 FY 06 FY 07 FY 08 FY 09 FY 05 FY 06 FY 07 FY 08 FY 09 AFS Cont
Slide 11: Total AMP assets under management
For personal use only Total AMP assets under management AMPCI managed (42%) Multi-manager (FDF) (24%) 51 CWM Externally managed (32%) AMP Banking (2%) 35 AMPCI external AMPCI managed (96%) Multi-manager (FDF) (4%) 18 Mature AMPCI managed (100%) 5 NZ AMPCI managed (75%) Externally managed (25%) 5 Gro
Slide 12: 2009 full-year financial results
For personal use only 2009 full-year financial results 11
Slide 13: 2009 full-year financial results summary
2009 full-year financial results summary Robust financial results reflect resilient business model For personal use only and decisive response to market conditions Underlying profit of A$772m, down 5% on FY 08 (A$810m), with earnings momentum improving in 2H 09 Controllable costs down 5% on FY
Slide 14: 2009 key performance measures
2009 key performance measures Underlying return on equity 31.6%, down from 38.9% in FY 08, For personal use only following November 08 capital raising to strengthen balance sheet Underlying profit A$772m, down 5% on FY 08 (2H 09 up 10% on 1H 09) Growth measures: Net cashflows in AMP Financia
Slide 15: 2009 overview of profit summary
2009 overview of profit summary A$m FY 09 FY 08 FY/FY % change For personal use only AFS Contemporary Wealth Management 278 266 +5% AFS Contemporary Wealth Protection¹ 164 154 +7% (+13%) AFS Mature¹ 151 161 -6% (-11%) AFS New Zealand 54 56 -4% AMP Capital Investors 91 136 -33% BU operating earnings
Slide 16: Value measures
For personal use only Value measures 15
Slide 17: Shareholder returns – underlying return on equity
Shareholder returns – underlying return on equity For personal use only % 45 40 38.9% 37.9% 35 31.6% 30.3% 30 25.0% 25 20 0 FY05 FY06 FY07 FY08 FY09 Fall in FY 09 underlying RoE not unexpected given the market cycle 16
Slide 18: Global insurance stocks ROEs
Global insurance stocks ROEs % For personal use only 35 30 AMP 25 20 2009-10 Ping An ROE Zurich Financial 15 Prudential ING China Life Allianz Travelers Standard Life AXA 10 Munich Re MetLife Swiss Re 5 0 % 0 5 10 15 20 25 30 35 2010-11 estimated ROE Source: Goldman Sachs Research 17
Slide 19: AMP's forward PE ratio
AMP’s forward PE ratio 23 For personal use only 21 19 17 Times 15 13 11 9 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 AMP ASX 200 18
Slide 20: Market environment
For personal use only Market environment 19
Slide 21: Australian superannuation market
Australian superannuation market (A$1.2 trillion) For personal use only Government Asia 6% Public sector Mainly distributed 15% by accountants, solicitors and financial planners Small managed super funds (SMSFs) 32% Retail funds 29% Mainly distributed by financial planners Industry funds and some em
Slide 22: Retail superannuation providers market share
Retail superannuation providers market share (market size A$240b) For personal use only Other 13% AMP 17% AWM 5% Mercer AXA 6% 6% WBC/BT/SGB 10% NAB/Aviva 20% CBA ANZ/ING 13% 10% Source: Plan for Life Retail & Wholesale QDS, Dec 2009 - based on AUM. 21
Slide 23: One of the fastest-growing wealth management markets
One of the fastest-growing wealth management markets (Source: Watson Wyatt Global Pensions Study, Jan 09) For personal use only Australian superannuation market - A$b 1,400 1,200 1,000 CAGR 11% Market forecast to 800 grow at a CAGR of 600 7% over the next 400 10 years 200 0 2004 2005 2006 2007 200
Slide 24: Highly supportive superannuation environment
Highly supportive superannuation environment Australia has world’s 14th largest economy, with 5th largest For personal use only private pension market One of the world’s fastest growing private pension markets, underpinned by government mandate All employed Australians must contribute 9% of th
Slide 25: Regulatory reviews
Regulatory reviews Ripoll review For personal use only Investigated issues associated with the collapse of Storm Financial, Opes Prime and MFS 11 recommendations handed down in November 2009 Recommendations include: o fiduciary duty for financial advisers o consult with industry to transitio
Slide 26: Henry Review
Henry Review Broad review of the Australian taxation system For personal use only Reported to the Federal Treasurer in December 2009 Recommendations yet to be released publicly Terms of reference Look at appropriate balance of taxation Improve tax and transfer payment system Enhance ta
Slide 27: Cooper Review
Cooper Review Overarching aim to maximise retirement incomes by For personal use only improving the efficiency of the superannuation system and lowering costs and fees A three-phased approach announced (governance, operation and efficiency, and structure). Governance interim report issued in D
Slide 28: For personal use only
x 03 = Ajuo esn jeuosJed JOS 27
Slide 29: Role of M&A in driving AMP's growth
Role of M&A in driving AMP’s growth Significant organic opportunities exist to drive growth For personal use only Current environment could also provide attractive inorganic opportunities, but not a ‘must-do’ Clear criteria: Strategic – must accelerate delivery of one or more key growth init
Slide 30: AXA update
AXA update AXA remains attractive as option to accelerate parts of our For personal use only growth strategy and will enhance industry competition Regulatory and other hurdles mean still a long way to go before any transaction approved by AXA AP minority shareholders Australian Competition and
Slide 31: AMP Financial Services
For personal use only AMP Financial Services 30
Slide 32: AMP Financial Services is a scaleable, flexible leading wealth management business
AMP Financial Services is a scaleable, flexible leading wealth management business For personal use only AMP Financial Services is a scaleable wealth management business, strongly positioned in superannuation in Australia and New Zealand Strong competitive distribution advantage, with the larges
Slide 33: AFS holds leading market positions in Australia
For personal use only AFS holds leading market positions in Australia December 2009 December 2008 December 2004 Market share - Australia Total Market Market Total Market Market Total Market Market market position share market position share market position share size A$b (rank) % size A$b (rank) % s
Slide 34: Corporate superannuation market share
Corporate superannuation market share (by AUM) For personal use only 25% 20.4% 21.0% 20% 19.6% 16.5% 15% 14.7%14.5% 14.3% 13.3% 10.0%10.2% 10% 6.1% 6.3% 5% 0% AMP ANZ Mercer NAB WBC CBA Dec 09 Dec 08 Source: Plan for Life Masterfunds Report, Dec 2009 33
Slide 35: Employer contributions represent a significant proportion of AFS superannuation inflows
Employer contributions represent a significant proportion of AFS superannuation inflows For personal use only Contemporary Wealth Management cash inflows (A$m) FY 09 FY 08 FY 07 Member contributions 1,034 1,389 2,854 Employer contributions 3,065 3,189 2,886 Total contributions 4,099 4,578 5,740 Tran
Slide 36: Australian financial planners
Australian financial planners AMP For personal use only 10% ANZ/ING 10% OTHER AXA 50% 8% CBA 7% WBC/SGB 7% NAB/MLC 8% Average age of an AMPFP planner is 45 (industry average age is 54) Over 200 graduates from AMP’s Horizon Financial Planning Academy (average age less than 35) 51% of planners h
Slide 37: AFS's aligned planner channel has scale and is highly productive
AFS’s aligned planner channel has scale and is highly productive 50 For personal use only FUA per Planner > Industry Average m 22.2 $ = ner a n Pl AMP e r 40 /P A e FU ag ver A Macquarie ry ust d In AUM ($bn) 30 CBA ANZ/ING WBC ABN AMRO AXA 20 NAB/MLC PIS GWM Adviser Count 10 Services Bridges AFS Gr
Slide 38: CWM – AUM by product type
For personal use only CWM – AUM by product type Retail Corporate External Total on AMP on AMP platform platform platform Superannuation 18.1 16.4 1.9 36.4 Allocated pension/annuities 7.2 0.2 2.1 9.5 Managed investments 2.2 - 3.0 5.2 Total 27.5 16.6 7.0 51.1 Over 70% of CWM AUM is in superannuation
Slide 39: CWM margins
For personal use only CWM margins 250 191 186 200 183 186 158 149 152 147 150 bps 100 52 54 53 48 50 FY 06 FY 07 FY 08 FY 09 Gross revenue margins – including planner payments Gross revenue margins – excluding planner payments Operating earnings margins 38
Slide 40: AFS – cost performance
For personal use only AFS – cost performance 600 560 553 533 535 529 500 87bps 400 76bps 75bps 76bps 69bps 300 38.5% 200 35.2% 35.4% 34.2% 34.0% 100 A$m 0 FY 05 FY 06 FY 07 FY 08 FY 09 Controllable costs Cost to income ratio Controllable costs to AUM 39
Slide 41: CWM – platform and asset manager split
CWM – platform and asset manager split For personal use only 49% of AUM (41% of cash inflows) sit on AMP’s platform and are managed by AMPCI 35% of AUM (25% of cash inflows) sit on AMP’s platform and are managed by external fund managers 2% of AUM (17% of cash inflows) sit on AMP’s platform and are
Slide 42: CWM – platform and asset manager split
CWM – platform and asset manager split For personal use only 2% AMP Banking 14% Asgard and other 27% platforms AMPCI Retail managed super, 4% AMPCI pension managed 72% and FLI AMP 14% Multi- platform manager (FLS + 58% (FDF)1 External FLI) 10% fund 15% External manager AFS fund contemporary manager
Slide 43: Capital efficiency of AMP businesses
For personal use only Capital efficiency of AMP businesses Business Capital 31 Dec 2009 Comment requirements tangible capital CWM Low A$775m Capital requirements increase as unit-linked superannuation and retirement products increase AMP Bank (part of CWM) Medium A$258m Capital requirements linked t
Slide 44: Mature capital requirements
For personal use only Mature capital requirements Market cycle Capital requirements Comment Level of tactical equity protection Bull market Low Strength of policyholder assets Low backing guarantees in liabilities results in a surplus of policyholder assets providing capital support Very little shar
Slide 45: AMP Capital Investors
For personal use only AMP Capital Investors 44
Slide 46: AMP Capital Investors is a leading specialist investment manager
AMP Capital Investors is a leading specialist investment manager For personal use only AMP Capital Investors is a significant diversified investment manager in the Asia Pacific region with A$97bn* in assets under management Specialist investment manager focused on Asia Pacific equities, credit,
Slide 47: External v internal average AUM and AUM-based management fees
External v internal average AUM and AUM- based management fees (bps) For personal use only 44.5 44.4 43.6 42.8 100 23.4 23.0 22.7 22.3 80 69.0 Average AUM A$b 91% 62.4 other 59.5 60 90% 55.0 other 91% 90% other other 41.5 39.2 40 67% 34.6 35.3 other 58% other 53% 57% Other = other other equities, fi
Slide 48: AMPCI – non AUM-based management fee income
AMPCI – non AUM-based management fee income For personal use only 80 A$73m Down A$57m A$57m 22% 60 A$94m A$41m A$40m A$m 40 20 0 FY 05 FY 06 FY 07 FY 08 FY 09 Non-AUM based income includes property asset management, property development and property leasing fees FY 09 non-AUM based management fe
Slide 49: AMPCI – performance fees (absolute vs relative)
AMPCI – performance fees (absolute vs relative) 70 A$66m For personal use only 60 50 A$35m 40 A$m A$32m 30 A$15m 20 A$31m 10 A$17m 0 FY 08 FY 09 Relative return performance fees Absolute return performance fees Majority of absolute return performance fees come from alternative asset classes includ
Slide 50: AMPCI – controllable costs and cost to income ratio
AMPCI – controllable costs and cost to income ratio For personal use only % 350 70% 65.2% 330 65% 57.8% 310 Medium-term cost 60% Controllable costs A$m 56.0% 56.3% to income ratio 53.1% target 290 55% 270 50% 268 250 257 45% 255 230 40% 223 210 35% 190 198 30% 170 25% 150 20% FY 05 FY 06 FY 07 FY 08
Slide 51: AMPCI – controllable costs and cost to income ratio
AMPCI – controllable costs and cost to income ratio For personal use only Rise in cost to income ratio not unexpected given lower AUM- related revenue following market declines Medium-term cost to income ratio target of between 55% and 60%; however, given fall in AUM-related revenue, achieving t
Slide 52: AMPCI – performance against benchmarks
AMPCI – performance against benchmarks 72% of AUM met or exceeded benchmark over five years 48% over three years For personal use only 67% over one year AMPCI managed* Multi-manager and Multi-Asset Group 99 100 96 88 85 78 78 73 75 Target 75% 65 65 67 55 45 43 37 17 15 10 9 0 % Australasian Australa
Slide 53: AMPCI – diversified asset base
AMPCI – diversified asset base Direct investment 1% For personal use only Alternative assets 1% Infrastructure 5% Australian equities 25% Property 16% International equities Fixed interest 20% 32% Based on assets under management at 31 Dec 2009. 52
Slide 54: AMPCI – AUM by source
For personal use only AMPCI – AUM by source Rest of the world 1% Asia 6% New Zealand 11% Australia 82% Based on assets under management at 31 Dec 2009. 53
Slide 55: AMPCI market share by asset class
For personal use only AMPCI market share by asset class 12% #2 #3 8% Rank # 2 #4 6.5% - total AUM market share #7 # 11 4% 0% Total AMPCI Property Australian Australian International International fixed interest equities equities fixed interest Source: Rainmaker Roundup – Sep 2009. 54