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UPDATE 1-Australian wealth manager AMP flags $910 mln in charges, shares tumble

Published 28/10/2016, 11:55 am
© Reuters.  UPDATE 1-Australian wealth manager AMP flags $910 mln in charges, shares tumble
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* A$668 mln goodwill impairment charge for wealth protection unit

* Wealth protection unit sees another A$500 mln in one-off charges

* Shares slide 6 pct (Recasts, adds company and wealth adviser comment)

By Byron Kaye

SYDNEY, Oct 28 (Reuters) - Australia's biggest wealth manager AMP Ltd AMP.AX warned it would book $910 million in impairment and other one-off charges this financial year due to problems at its wealth protection unit, sending its shares sliding 6 percent.

AMP, also the country's biggest life insurer, has seen consistent deterioration in the insurance sector over the course of 2016, Chief Executive Officer Craig Meller said.

"It has significantly impacted the performance of our wealth protection business," he told reporters on call, saying that the unit which sells life insurance and income protection has come under unprecedented external scrutiny.

Cashflows had been hurt by ongoing uncertainty in superannuation legislation leading to lower consumer confidence in the system, a tougher regulatory environment and investment market volatility, the company said.

"It's a pretty poor announcement," APP Securities Pty Ltd private wealth adviser Matthew Felsman. "There is a reason for everything in this announcement, and not many answers."

A day earlier, AMP was among Australian finance companies the Australian Securities and Investments Commission said it was making refund customers fees for financial advice they never received. April, the head of Commonwealth Bank of Australia's CBA.AX insurance division said the company had used outdated and discredited definitions of heart attacks when denying claims to some policyholders. A$1.2 billion in AMP charges include a goodwill impairment charge of A$668 million and capitalised losses and other one-off items of A$500 million.

Shares in the company fell as much as 10 percent in early trading, their biggest one-day drop in three years, but later pared back losses.

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. reports annual results in February.

($1 = 1.3173 Australian dollars)

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