AMP LIMITED — Annual Report 2009

Feb 17, 2010

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ASX Announcement
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18 February 2010

Manager Manager Company Announcements Office Market Information Services Section Australian Securities Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand Announcement No: 05/2010

AMP Limited (ASX/NZX: AMP) (also for release to AMP Group Finance Services Limited (ASX: AQNHA & NZX: AQN010))

Part Two: Investor Presentation

AMP Limited (AMP) ASX Announcement AMP Limited Level 24, 33 Alfred Street Sydney NSW 2000 Australia

ABN 49 079 354 519

2009 full year results

Craig Dunn

Chief Executive Officer

Paul Leaming Chief Financial Officer

Executive summary

• Robust financial results reflect resilient business model 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 08 to A$837m

• Resilient net cashflows (A$2.2b in CWM for 2[nd ] consecutive year)

• Capital resources exceeding minimum regulatory requirements (MRR) by A$1.2b at 31 December 2009

• Substantial progress made in change program to reshape business to meet changing regulatory and consumer needs

Outline

 Group overview

 Business line review

 Financial overview  Outlook and strategy  Summary

Key performance measures

• Underlying return on equity 31.6%, down from 38.9% in FY 08, 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 Financial Services up 17% to A$1.7b; AMP Capital Investors external net cashflows of -A$1.1b, down from -A$804m in FY 08

• Value of risk new business[¹ ] down 11% to A$102m, impacted by

• higher bond yields (11% growth in risk VNB in Australia offset by deterioration in NZ)

• 67% of AUM met or exceeded benchmark over 12 months to 31

Overview – 2009 profit summary

	A$m	FY 09	FY 08	FY/FY	FY/FY
				% change
	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	738	773	-5%
	Groupoffice costs	(37)	(36)	+3%
	Total operating earnings	701	737	-5%
	Underlying investment income	126	140	-10%
	Interest expense on corporate debt	(71)	(82)	-13%
	AMP Limited tax loss recognition	16	15	+7%
	Underlying profit	772	810	-5%
	Market adjustment – investment income	(13)	(266)	-
	Other items2	10	73	-
	Seedpool valuation adjustments3	(30)	(42)	-
	Profit after income tax before timing differences	739	575	+29%
	Market adjustment – annuity fair value4	20	(117)	-
	Market adjustment – risk products4,5	(14)	6	-
	Loan hedge revaluations4	(5)	(41)	-
	Accounting mismatches4	(1)	157	-

Overview – assets under management

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140
128 129
120
122
117
114
112
106
105
100 104
97
80
A$b 60
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Overview – group cost performance

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900 871 879
837
812
800 780
81bps 79bps
700
72bps
75bps
68bps
600
41.7%
41.7% 41.3%
39.6% 39.7%
500
A$m 400
FY 05 FY 06 FY 07 FY 08 FY 09
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Overview – shareholder returns

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45 Underlying return on equity
40 38.9%
37.9%
35
31.6%
30.3%
30
25.0%
25
20
% 0
FY05 FY06 FY07 FY08 FY09
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• Underlying RoE remains high at 31.6%, despite capital raising to strengthen balance sheet

Overview – AXA update

• AXA remains attractive to us as an option to accelerate parts of our growth strategy, and will enhance industry competition

• Regulatory and other hurdles mean still a long way to go before any transaction is approved by AXA AP minority shareholders

• ACCC Statement of Issues highlights critical scrutiny of further consolidation in wealth management industry and identifies potential differences in outcomes of the two proposals

• Next step: respond to ACCC issues

Business line review

AMP Financial Services – FY 09 highlights

• Good result in tough environment, with operating earnings up 2% to A$647m

• CWM operating earnings of A$278m up 5% on FY 08, with strong cost control and resilient cashflows continuing to offset market downturn

• AMP Bank operating earnings up to A$35m from A$21m in FY 08

• CWP earnings up 7% to A$164m (13% on like-for-like basis[*] ), with strong new business growth

• Operating earnings for New Zealand down 4% to A$54m as difficult local risk insurance market conditions offset continued KiwiSaver growth

AFS overview – FY 09 cashflows

• Resilient business model and strong mandated superannuation position continue to attract solid net cashflows

• Total net cashflows of A$1,661m, up 17% on FY 08

• Retail superannuation and pensions/annuities net cashflows down 33% to A$834m

• Corporate superannuation net cashflows (ex-mandate wins) up A$258m to A$812m, driven by regular employer contributions and lower outflows

• A$274m in new Corporate Super mandate wins in FY 09, down from A$507m in FY 08

• A$150m turnaround in retail investment cashflows, reflecting success of new SMA offer, Personalised Portfolio

• Net cashflows boosted by Hillross’s acquisition of Rabo Financial

AFS overview – FY 09 cashflows

• Aligned planner channel cashflows reflected ongoing lower discretionary inflows and effect of delayed retirement activity

• AMP Financial Planning net cashflows of A$748m in FY 09 compared to A$863m in FY 08

• Hillross net cashflows of A$318m compared to A$56m in FY 08, largely reflecting addition of new practices, including Rabo Financial Advisers, and greater flows from new products

• Persistency[¹ ] remains strong: 90.1% in FY 09 from 90.3% in FY 08

• Overall outflows improved, down 17% on FY 08

AFS – cost performance

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600
553 560
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
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FY 09

AFS Australian contemporary wealth management

Contemporary wealth management (CWM)

	FY 09	FY 08	Change
Operating earnings to AUM2 Net cashflows1 Average AUM (including capital)1,3 Return on equity Persistency Controllable costs Cost to income ratio Operating earnings	53bps A$2,189m A$45.7b 42.9% 90.0% 44.9% A$340m A$278m	48bps A$2,180m A$51.0b 46.5% 90.3% 46.5% A$354m A$266m	+ 5 basis points + A$9m - 11% - 3.6 percentage points - 0.3 percentage point - 4% - 1.6 percentage points + 5%

AFS Australian contemporary wealth protection

Contemporary wealth protection (CWP)

			FY 09		FY 08		Change
	Profit margins		A$144m		A$135m		+ 7%
	Experience profits		A$20m		A$19m		+ 5%
	Operating earnings¹		A$164m		A$154m		+ 7%
	Operating earnings / API²		22.5%		23.9%		- 1.4 percentage points
	Controllable costs		A$75m		A$78m		- 4%
	Individual risk API		A$607m		A$547m		+ 11%
	Individual risk lapse rate		11.1%		10.8%		+ 0.3 percentage point
	RoEV pre transfers @ 3% discount margin		12.4%		22.9%		- 10.5 percentage points
	VNB @ 3% discount margin		A$100m		A$90m		+ 11%
	Return on equity		30.1%		31.5%		- 1.4 percentage points

AFS Australian mature

	Mature	Mature
	FY 09	FY 08	Change
Operating earnings1 Controllable costs Controllable costs/AUM2 Net cashflows3 Persistency AUM (pre-capital)2,3 RoEV pre transfers @ 3% discount margin VNB @ 3% discount margin Average capital4	A$151m A$60m 32bps (A$1,201m) 89.5% A$18.1b 17.1% A$21m A$390m	A$161m A$64m 37bps (A$1,276m) 89.7% A$18.8b (19.6%) A$21m A$107m	- 6% - 6% - 5 basis points + 6% - 0.2 percentage point - 4% + 36.7 percentage points Steady + A$283m

AFS New Zealand

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New Zealand

	New Zealand	New Zealand	Change
	FY 09	FY 08	Change
Profit margins Experience profits / losses Operating earnings Controllable costs Cost to income ratio Individual risk API Lapse rates Net cashflows AUM (pre capital) RoEV pre transfers @ 3% discount margin¹ VNB @ 3% discount margin²	A$65m (A$11m) A$54m A$54m 37.9% A$117m 11.6% A$235m A$4.7b (10.1%) A$16m	A$50m A$6m A$56m A$64m 41.4% A$112m 8.2% A$126m A$4.5b 16.5% A$26m	+ 30% - A$17m - 4% - 16% - 3.5 percentage points + 5% + 3.4 percentage points + 87% + 4% - 26.6 percentage points - 39%

AMP Capital Investors – FY 09 highlights

• Improving investment performance, with 67% of AUM meeting or exceeding benchmark in 12 months to 31 December 2009; 72% over the five years to 31 December 2009

• Operating earnings of A$91m (A$136m in FY 08) reflected lower performance and transaction fees

• Performance fees of A$32m down 52% on FY 08

 Lower transaction fees of A$6m from A$20m in FY 08 reflected less activity and reduced investor appetite for alternate assets

• Total management fees fell 12% to A$341m

• AUM up 6% to A$96.9b from A$91.8b in FY 08

• Disciplined cost management drove cost reduction of 5% to A$255m while investment in growth initiatives, particularly in

AMPCI overview – FY 09 key financial results

AMP Capital Investors (AMPCI)	AMP Capital Investors (AMPCI)	AMP Capital Investors (AMPCI)	AMP Capital Investors (AMPCI)
	FY 09	FY 08	Change
Operating earnings Management fees – AUM based Management fees – non-AUM based¹ Total performance & transaction fees Controllable costs Cost to income ratio External net cashflows Return on equity	A$91m A$284m A$57m A$38m A$255m 65.2% (A$1.1b) 60.8%	A$136m A$314m A$73m A$86m A$268m 56.3% (A$804m) 59.9%	- 33% - 10% - 22% - A$48m - 5% + 8.9 percentage points - A$273m + 0.9 percentage points

AMPCI – drivers of cashflows

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100
6.5
95 96.9
0.7 0.4 0.2
0.5
0.7
90 91.8 (0.5)
(1.6)
(1.8)
85
80
75 External Internal
A$b 70
AUM at Transfer of Australian Asian NZ market Australian AMP Australian NZ Investment AUM at
31 Dec Cobalt/ market flows distribution flows contemporary Group run-off Financial returns and 31 Dec
08 Gordian channels business Services other 09
mandate
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AMPCI – volumes and profit margins

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14.4bps
120
13.6bps
11.7bps
100
10.8bps 41.5 39.2 10.0bps
35.7
80 35.0
28.8
60
40
20
56.0 62.1 69.0 62.4 57.2
0
FY 05 FY 06 FY 07 FY 08 FY 09
A$b
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AMPCI – performance against benchmarks

72% of AUM met or exceeded benchmark over five years 48% over three years 67% over one year

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AMPCI managed Multi-manager and Multi-Asset Group
99 100
96
88
85
78 78
Target 73 75
75% 65 65 67
55
45
43
37
17
15
10
9
0
%
Australasian Australasian Infrastructure Property International International Diversified
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Property

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Australasian Australasian
equities fixed interest
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International
equities
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International
fixed interest
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Diversified

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equities
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and private equity

AMPCI – cost performance

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65.2%
300
57.8%
268
56.0% 257 255
250 56.3%
223 53.1%
198
200
27.7
26.4
23.3 22.8 23.3 bps bps
bps bps bps
150
100
50
A$m 0
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Financial overview

Paul Leaming Chief Financial Officer

Financial overview – key points on P&L

A$m	FY 09	2H 09	1H 09	FY 08
Underlying profit	772	405	367	810
Market adjustment – investment income	(13)	13	(26)	(266)
Other items	10	(43)	53	73
Seed pool valuation adjustments1	(30)	5	(35)	(42)
Profit after income tax before timing differences	739	380	359	575
Market adjustment – annuity fair value2	20	29	(9)	(117)
Market adjustment – risk products2,3	(14)	2	(16)	6
Loan hedge revaluations2	(5)	(1)	(4)	(41)
Accounting mismatches2	(1)	(33)	32	157
Net profit attributable to shareholders of AMP	739	377	362	580

• Investment income market adjustment reflects improved markets in 2H 09

 Other items include one-off costs such as restructure and redundancy costs

• Seed pool valuations reflect small write-back in 2H 09

Financial overview – capital management strategy

• AMP remains strongly capitalised, with A$1.2b in surplus capital above MRR at 31 December 2009

• Capital management strategy aims to deliver:

 strong balance sheet, with focus on capital preservation and capturing upside of market recovery

• business flexibility for growth

 optimised capital mix, subject to market conditions

 surplus to protect the business against extreme market volatility

• Dynamically managed the equity exposure in SF1 to participate in the upside of market recovery while maintaining downside protection in the event of further market falls

Financial overview – tactical equity protection for SF1

	Dec 08	Jun 09	Dec 09
Level of cover	$ 1.0 bn	$ 1.7 bn	$ 1.4 bn
Principal cover instrument	Short futures + call spreads Short futures		Equity collars
Maturity of cover	n/a	Sept 09 / Dec 09	Mar 10 / Jun 10
Effective equity exposure from benchmark
provided by protection strategy*	- 6%	- 7%	- 3%

• Position continues to be monitored weekly

• Cover instruments offer differing levels of protection – i.e. short futures more effective than spreads and collars, but don’t offer market upside

• Retain ability to act decisively if market deteriorates quickly

Financial overview – regulatory capital movements FY 09

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A$m
1,800
739 296
1,600
(100)
(53)
1,400 (48)
(296)
1,200 (194)
1,000
1,436
800 1,242
898898
600
400
Reg. capital above MRR at FY 08 Net profit attributable to shareholders of AMP Limited Dividends (net of DRP) AMP Notes issue Subordinated loan to AMP Bank Amortisation of subordinated debt Other movements in reg. capital resources Reg. capital above MRR before movement in MRR Movement in MRR Reg. capital above MRR at FY 09
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Financial overview – movements in MRR

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A$m
1,100
20
19
1,000 211 34
97
900
(123)
800
1,023
(64)
700
829
600
500
MRR at FY 08 Impact of investment markets and bond yields Asset mix changes(incl. protection strategies) Par business smoothing Net risk business capital requirements Movement in AMP Bank MRR Increase in investment-linked AUM Movement in other non-Life MRR MRR at FY 09
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Financial overview – capital sensitivity

• These sensitivities are a point-in-time view of the impact of movements in equity markets, bond yields and property values on the 31 December 2009 capital position

• AMP’s dynamic capital management framework includes market-related trigger points at which management will take action to reduce the impact of market movements on its capital po ~~s~~ ition

• These sensitivities do not make any allowance for these management actions

31 Dec 2009 capital sensitivities – regulatory capital resources above MRR A$m	AMP Life Statutory Funds	AMP Group¹
Actual 31 Dec 2009 (ASX 200 @ 4,871, Australian bond yields @ 5.7%)	1,125	1,242
Equity sensitivity – ASX 200 @ 5,500	220	230
Equity sensitivity – ASX 200 @ 5,000	50	50
Equity sensitivity – ASX 200 @ 4,500	(140)	(150)
Equity sensitivity – ASX 200 @ 4,000	(310)	(330)
Australian bond yield sensitivity - @ 6.5%	20	40
- @ 6.0%	0	10
- @ 5.5%	(20)	(30)
- @ 5.0%	(110)	(130)
Property sensitivity - 10% increase in unlisted property values	140	150

Property sensitivity - 10% increase in unlisted property values

Financial overview – dividend

 Final dividend of 16cps, franked to 50%, brings total 2009 dividend to 30cps

 Represents a final dividend payout ratio of 80% of underlying profit

• Dividend decision driven by:

 current cash earnings  target payout policy of 75% to 85% of underlying profit  preservation of capital and balance sheet strength

 DRP discount will be maintained at 2.5%; DRP will not be underwritten and new shares will be issued to satisfy program

Financial overview – corporate debt

	31 Dec 2009 Repayment (years)	31 Dec 2008 Repayment (years)
A$m
	0-1 1-2 2-5 5-10 10+ Total	0-1 1-2 2-5 5-10 10+ Total
Gross corporate debt¹	362 350 694 - 83 1,489	443 230 748 - 83 1,504
Loans to AMP Bank	(200) - (100) - - (300)	- - - - - -
Net corporate debt¹	162 350 594 - 83 1,189	443 230 748 - 83 1,504

• Gearing remains low at 13% on an S&P basis, while underlying interest cover is high at 11.9 times

• AMP has access to significant liquidity through a Group cash portfolio of more than A$600m and undrawn bank liquidity facilities of A$700m

• A$362m of 0-1 year debt comprises:

• A$230m senior debt maturing in November 2010

Financial overview – summary

• Dynamic management of capital resources has strengthened AMP’s capital position and captured upside through turbulent market conditions

• Management retains significant capacity to act quickly to preserve capital against further market downturn and capture further upside as market recovery continues

• Bias remains to hold more capital rather than less as early recovery solidifies

• Intent to optimise capital mix, as market conditions permit

• Balance sheet strength key to maintaining investment in

Outlook & strategy

Craig Dunn Chief Executive Officer

Outlook

Short term:

• Economic outlook improving but markets still subject to volatility

• Subdued retail investor sentiment may take some time to recover fully

• Ongoing regulatory change creating challenges and opportunities

Medium to long term:

• Robust growth outlook for core wealth management markets

• Growth driven by:

• Ageing demographics

• Bi-partisan support for mandatory superannuation regime in Australia

• KiwiSaver and PIE initiatives in New Zealand

Short term outlook – cost outcomes

 Continuing to manage costs tightly across the company, to drive cost-efficient growth

 AFS 2010 costs expected to be 4-5% higher in 2010, reflecting continued investment in growth initiatives including Horizons planner academy and practice, AMP Bank and improving presence in high net worth segment

• AMPCI 2010 costs will continue to be managed closely, dependent on market conditions and opportunities, and variables such as staff remuneration and technology spend

Focused growth strategy underpins flexibility and responsiveness

• AMP’s five growth platforms are key to future success

• Growing planner capacity and broadening distribution

• Expanding to Asia through AMP Capital Investors

• Growing customers in high-value segments

• Reshaping AMP Capital Investors into a high value-add investment manager

• Investing in key growth enablers

 Investment in growth platforms has continued over past two years, despite market conditions

• Ongoing investment program has enabled fast, flexible

Focused growth strategy gaining traction

 : In past 12 months, AMP has

• added 48 more planners and 26 more practices in total in Australia

 completed largest-ever rollout of new planner software to AMPFP and Hillross planners to drive productivity improvements

• launched highly rated, award-winning new products and funds which have attracted over A$350m in initial new flows

 gained traction on Asian expansion

• sourced new regional talent and partnerships

• acquired bolt-on businesses and funds

• attracted over A$715m in cashflows from Japanese retail investors

• moved to new operational platform to better facilitate international funds management

• moved quickly to reshape business to succeed in no-commission world for new superannuation and investments business

• completed planner fee-for-service capability diagnostic; planner training scheduled to be completed by 30 June

Role of M&A and alliances in AMP’s growth strategy

• Current environment is providing attractive inorganic opportunities

• Several bolt-on acquisitions completed and alliances formed in 2009:

• Acquired Rabo Financial Advisers – A$231m in additional AUM

• Acquired remaining interest in Gemini Advisors Securities Investments Company Limited (Japan)

• Acquired 50% stake in manager of Singapore REIT – >S$600m in real estate assets in Singapore

• Formed AMP Capital Brookfield, a A$6b global listed real estate and infrastructure joint venture with Brookfield Investment Management Inc.

• Signed MOU with world’s largest listed life insurer, China Life Insurance Group, to focus on pensions and asset management

• Acquisitions satisfied criteria to be strategic, economic and within risk

Reshaping the business

1. Growing planner capacity and broadening distribution

• Added 48 more planners in total in Australia – driven by Horizons and acquisition of Rabo Financial Advisers

• Improved planner efficiency through rollout of new financial planning software to all AMPFP and Hillross practices – 30% efficiencies expected in medium term

• Horizons training model delivered new planners 50% more productive than new planners who joined from other sources

• Extended paraplanning services to 275 practices, increasing planners’ ability to spend “face time” with customers

• Advice 2010 program preparing planners for new regulatory world – 70% of AMPFP and 75% of Hillross planners can now charge on fee-for-service basis for new superannuation and investments business

• Retained leadership of Australian and NZ corporate superannuation markets

• Launched AMP Private Wealth Management, new distribution channel targeting specific segments of HNW market

• Grew direct presence: FL Super Easy and AMP First now available over the phone or online, as well as through planners, with more product to be offered directly in 2010

• Grew third-party presence through relationships with Aussie Home Loans (distributing Loan

Reshaping the business

2. Expanding to Asia through AMP Capital Investors

• Growing FUM sourced from Asia; currently 6%

• Appointed Hong Kong-based head of international business to drive expansion in region; also appointed managing director, South East Asia and Middle East and managing director, Japan

• Attracted A$715m in net cashflows from Japanese retail investors through Australian bond and global REIT products

• Acquired Gemini Advisors Securities Investments Company in Japan; acquisition will help drive expanded distribution

• Products now distributed in Japan, Singapore, Malaysia and South Korea

• Building pan-Asian and country-specific investment capability, e.g. pan-Asian equities capability and country-specific infrastructure and property capabilities

• Acquired 50% stake in manager of Singapore Exchange-listed MacarthurCook Industrial REIT (now called AIMS AMP Capital Industrial REIT)

• Became first foreign financial institution to sign MOU for strategic cooperation with world’s largest listed life insurer, China Life; agreement outlines potential for partnerships in pensions and asset management

Reshaping the business

3. Growing customers in high-value segments

 Launched new products and services targeting new market segments

• Flexible Lifetime – Super Easy, award-winning, simple, low-cost super product for 25-50 year olds with no built-in commissions

• Flexible Lifetime – Super Easy Employer for small to medium businesses

• AMP First – new, high-interest, low-fee deposit account which has attracted new demographics (both younger and retirees)

• AMP Ascend for self-managed super fund investors

• AMP Personalised Portfolio, separately managed account offer for HNW investors

• Definitive Wrap, alternative wrap product for Hillross customers using a Macquarie platform; contributed A$111m to AFS net cashflows in FY 09

• AMP Private Wealth Management – new employed-planner offering in pilot

• AMP Capital Asian Equity Growth and AMP Capital Corporate Bond Funds

 Products, funds and services independently recognised as high quality

• Flexible Lifetime – Super Easy named 2010 Best New Product by Super Ratings

• Loan Cover named Innovative Product of the Year in 2009 Australian Banking and Finance Awards

• AMPCI awarded 2009 Best Global Listed Property Fund by AFR Smart Investor

• AMP Bank named Broker Bank of the Year 2009 by Mortgage Professional Australia magazine

• AMP Bank’s eASYCash Management account awarded Cash Management of the Year by the AFR Smart Investor

• AMP Capital Corporate Bond Fund rated 4 stars

Reshaping the business

4. Reshaping AMP Capital investors into a high value-add investment manager

• Extended partnership with Brookfield Investment Management to form A$6b joint venture giving investors access to global listed real estate and infrastructure opportunities; AMP Capital Brookfield is a top 10 manager of listed real estate and infrastructure securities globally

• Secured new A$500m mandate to invest in direct property through AMPCI’s Property Portfolio Service; increased allocations from existing property mandates

• Continued shopping centre redevelopment program; DA approval received for redevelopment of Sydney’s Macquarie Centre and third stage of Brisbane’s Mt Ommaney centre completed

• Raised US$95m for first close of Asian Giants Infrastructure Fund and €50m for the Strategic Infrastructure Trust of Europe

• Completed transition to new strategic platform; two new credit mandates totalling more than A$500m secured in FY 09 – and new systems noted as key differentiator by investment consultants

Reshaping the business for success

• Successful execution of growth strategy will enable AMP to deliver

• quality, flexible, transparently-priced wealth management products that respond to the needs of fast-growing consumer segments in Australia and New Zealand

• a highly professional and productive planner force that enjoys abovemarket growth rates

• ongoing industry cost leadership

• the ability for customers to pay for products and services, and interact with AMP, in a manner that best meets their needs

• products distributed through a broad range of channels, including workplace, third party and direct, as well as aligned planners

• more of AMPCI’s net cashflows sourced internationally

• increased penetration of Australia’s retail investment market

• flexibility to take advantage of suitable inorganic growth opportunities as they arise

Summary

 Entering 2010 in stronger and better position owing to early, decisive calls on balance sheet, costs and business evolution

• Change program successfully reshaping business to meet demands of an evolving market

• Realising early success in growth initiatives while maintaining tight cost discipline

• Business well positioned to capitalise on industry

Appendices

Further information

Further	Further	information
Topic			Chart
	AMP’s earnings by business line		49
	AFS cashflows by channel and product line		50-51
	AMP Bank
		Business and funding model	52
		Business profile	53
	Non-listed	asset valuations	54-55
	Shareholder funds portfolio		56
	Franking		57
	Dividends and capital returns over five years		58
	Change in	AFS Wealth Protection VNB	59

AMP’s operating earnings by business line

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AFS Contemporary Wealth Management
306
278
266
244
187
A$m
FY 05 FY 06 FY 07 FY 08 FY 09
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AFS Contemporary Wealth Protection
164
154
121 119
107
A$m
FY 05 FY 06 FY 07 FY 08 FY 09
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AMP Capital Investors
150
136
115
92 91
A$m
FY 05 FY 06 FY 07 FY 08 FY 09
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AFS New Zealand
56
54
52
50 48
A$m
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AFS Mature
190 190
171
161
151
A$m
FY 05 FY 06 FY 07 FY 08 FY 09
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AFS net cashflows by major channel on rolling 12-month basis

(A$m)

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Corporate Super direct AMP Financial Planning
3,500
2,500
Corporate Super – exc. mandate wins
3,000 Corporate Super
2,000
2,500
1,500
2,000
1,000
1,500
1,000 500
500 0
0 -500
02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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Hillross
Hillross New Zealand
800 300
250
700
200
600
150
500 100
400 50
0
300
-50
200
-100
100 -150
-200
0 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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AFS net cashflows by wealth management product line on rolling 12-month basis

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(A$m)
Corporate Super 1 AMP-manufactured retail products 2
Corporate Super – exc. mandate wins
Corporate Super 2,500
3,500
3,000
2,000
2,500
1,500
2,000
1,500 1,000
1,000
500
500
0 0
02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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External platforms Mature
1,000
0
800
-200
-400
600
-600
-800
400
-1,000
-1,200
200
-1,400
0 -1,600
-1,800
-200 -2,000
02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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AMP Bank – business and funding model

• Direct Australian bank offering residential mortgages, deposits and white-labeled credit cards

• Direct and third-party distribution, including AMPFP and mortgage brokers

• Operating earnings of A$35m in FY09 (A$21m at FY 08)

• Capital adequacy ratio of 11.3% at 31 December 09

• A$9.8b mortgage book (57% mortgage insured); 1% market share of residential lending

• Less than 3% of mortgages are classified as low doc and are 100% mortgage-insured

• Weighted average LVR for the total mortgage portfolio is 63%

• Loans with LVR >80% at origination are mortgage-insured

• 90+ day arrears at 0.30% FY 09 (0.57% at FY 08)

• Historical bad debt experience totals A$3.9m over past 5 years

• Doubtful debt provision of A$0.6m; specific provision of A$1.3m as at December 09

• Strong investor demand for Progress 2010-1 Trust RMBS in January saw transaction upsized to A$1.0 billion attracting a diversified investor base at good pricing

• A$7.1b in on balance sheet funding:

• 34% retail deposits, 23% superannuation deposits and 43% wholesale deposits

• A$3.6b in off-balance sheet funding at December 09 (increased to A$4.2b at January 10)

• Net interest margin 1.40% (FY08 1.31%)

AMP Bank – business profile

Deposit mix (excluding wholesale)

Credit quality improving

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2008 2009
Cash Management 9% 3% 7%
2%
Business Saver 10% 4%
Investment accts 3% 41%
46% 4%
Transaction accts
23%
Savings accts
16%
Term deposits
Super deposits 12% 20%
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90+ days past due
1.00%
0.90%
0.80%
0.70%
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09
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Deposit growth relative to market

Mortgage growth relative to market

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AMP Bank Limited Total market
10.00%
6.00%
2.00%
-2.00%
-6.00%
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AMP Bank Limited Total market
1.20%
0.80%
0.40%
0.00%
-0.40%
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Non-listed asset valuations

	Asset type	Portfolio size		Valuation approach in current market		Outcome
	Property	AMP Life		In stable markets, valuation cycle yearly, with		High quality core property portfolio
		A$6.9b		major properties valued every 6 months Given prevailing volatile conditions, most assets		Gross values of the Australian assets have fallen over the past twelve months
				valued quarterly in 2009		by around 9.6% due to softening in
		SF1 A$1.9b		Independent external valuers use a range of market data to arrive at fair value, including comparable sales analysis, discounted cashflow		capitalisation rates, discount rates and rental growth forecasts Similar trend was experiencedin the NZ
				analysis and capitalisation of income approach		portfolio
						Australian office fund occupancy rate at
						98.2%; average lease life approx6.1
						years;arrears remain below 2% of
						income billed
	Infrastructure	AMP Life		Independent valuations undertaken every six		Valuations have generally improved in 6
		A$0.8b		months Valuations primarily based on discounted		months to December, mainly due to softer-than-expected fallout from the
				cashflow models, with a consideration of any		global financial crisis
		SF1		relevant market transactions		Availability of bank debt has increased
		A$0.55b		Two factors influenced infrastructure valuations		and bank margins eased accordingly
				in the period:
				 more favourable business conditions than
				forecast in earlier budgets
				increased availability of debt financing

Non-listed asset valuations

Asset type	Portfolio size	Valuation approach in current market	Outcome
Private equity	AMP Life A$0.48b SF1 A$0.21b	 Valuations prepared every six months  Interest in largest asset valued by independent expert on discounted cashflow  Private equity valued using a multiple of sustainable earnings  AMPCI-managed direct private equity investments valued internally, subject to peer review and ratified by Private Equity Investment Committee  Externally managed private equity investments are valued on net asset valuation as supplied by the manager and reviewed by Private Equity Investment Committee	 AMPCI managed private equity valuations, in the past 12 months, have declined by 14% on average, reflecting falling comparable listed company earnings multiples and continued pressure on earnings
Debt	AMP Life A$0.5b SF1 A$0.5b	 Direct investments held at fair value	 No material changes in values as credit margins have stabilised

Shareholder funds portfolio – how invested

	Dec 2009	Dec 2008
Cash	56%	57%
Fixed Interest	25%	21%
Equities	8%	11%
Property	11%	11%

Key changes in FY 09

• In view of the equity market exposure in the business (e.g. through fees on AUM), AMP continued to reduce its direct exposure to equities in the shareholders’ fund, which had commenced in late 2008.

• Shareholders will continue to be exposed to equities through shareholders’ funds within AMP Life SF1 that are invested in the same asset mix as policyholder funds.

Franking

• Taxable profit and franking capacity has been affected by market conditions and temporary differences to accounting profit

FY 08 FY 09	Underlying profit Drives dividend declaration	Net profit after tax (NPAT)	Taxable profit 1 Generates franking capacity
	A$810m A$772m	A$580m A$739m	A$338m A$285m

• As markets recover, taxable profits likely to increase, allowing an increased franking rate

Dividends and capital returns

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46
2
40 40
2
32
22 30
21 16
18
16
40 40 40
22 22
19
14 14
Cents
2005 2006 2007 2008 2009
per
share
75% franked 75% franked 85% franked 85% franked 50% franked
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Change in AFS Wealth Protection VNB

• Australia and New Zealand

• At a discount rate of 3% above the bond yield

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144
136
128
120 114
112 9 4
102
104
(1)
96 (5)
88 (19)
80
72
64
56
48
40
32
24
16
8
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