SYDNEY, Oct 28 (Reuters) - AMP Ltd AMP.AX , Australia's biggest retail wealth manager, said on Friday it will take an impairment charge of A$668 million ($507 million) for its wealth protection unit as structural changes reduce the division's earnings.
In a third-quarter trading update before the sharemarket opened, AMP Chief Executive Officer Craig Meller said the company has seen "consistent deterioration in the insurance sector over the course of 2016."
"It has significantly impacted the performance of our wealth protection business," he said.
Cashflows were impacted by "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," the company said.
AMP said it will cut the "embedded value" of its wealth protection unit, which includes life insurance and income protection, by about A$1 billion. It would take a goodwill impairment charge of A$668 million on that unit.
"This reflects a decline in the potential recoverable amount for the Australian wealth protection business in line with reductions in embedded value," AMP said.
AMP reports annual results in February. In August, the company reported a 10 percent decline in first half underlying profit, citing tough market conditions. Half-yearly earnings from its income protection unit fell 53 percent. = 1.3182 Australian dollars)