Shares in AMP fell hard after the financial services giant wrote down the value of its life insurance business.
A short time ago, it shares were down almost 9% to $4.69.
The company says the insurance losses in the third quarter were $44 million and losses for the second half of 2016 are likely to be $75 million.
The 2017 profit margins are expected to be reduced by $90 million.
Capitalised losses and other one off items could be as high as $500 million for 2016. The goodwill impairment is expected to be $668 million for the full year.
“We’ve seen consistent deterioration in the insurance sector over the course of 2016 and, despite the progress on claims transformation to date, it has significantly impacted the performance of our wealth protection business,” says AMP chief executive Craig Meller.
“While cashflows remained subdued during the third quarter, they were impacted by the ongoing uncertainty in superannuation legislation leading to lower consumer confidence in the system, advisers adjusting to the enhanced regulatory environment and recent investment market volatility.
“However AMP is optimistic that the recent superannuation reforms will reverse this trend.”
AMP in August reported a 10% drop to $513 million in underlying profits for the half year, about $12 million below analyst expectations.
The result was pulled down by higher claims in the wealth protection insurance business, a volatile investment market and uncertainty brought about by the federal government’s changes to superannuation.
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