AMP LIMITED — Interim / Quarterly Report 2012

Aug 15, 2012

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16 August 2012

Manager ASX Market Announcements Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000

Manager

Market Information Services Section New Zealand Stock Exchange Level 24, NZX Centre, 11 Cable Street Wellington, New Zealand

Announcement No: 25/2012 AMP Limited (ASX/NZX: AMP) (also for release to AMP Group Finance Services Limited (ASX: AQNHA & NZX: AQN010))

Half Year Financial Results

Part One: Appendix 4D Part Two: 1H 12 results show AMP driving earnings growth

Part Three: Investor Presentation

Part Four: Investor Report

Part Five: Directors‘ Report and Financial Report.

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Public Affairs T 02 9257 6127 E media@amp.com.au W AMP.com.au/media AMP_AU

AMP Limited Level 24, 33 Alfred Street, Sydney NSW 2000 Australia ABN 49 079 354 519

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AMP Investor Report Half Year 2012

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Management and contact details

Executive management team

Craig Dunn	Managing Director and Chief Executive Officer
Colin Storrie	Chief Financial Officer
Craig Meller	Managing Director, AMP Financial Services
Stephen Dunne	Managing Director, AMP Capital
Lee Barnett	Chief Information Officer
Brian Salter	General Counsel
Jonathan Deane	General Manager, Strategy
Matthew Percival	General Manager, Public Affairs
Fiona Wardlaw	General Manager, Human Resources
Paul Sainsbury	Integration Director and Managing Director, AMP SMSF
Darryl Mackay	Company Secretary and Head of Secretariat

Investor relations

Howard Marks Director, Investor Relations Telephone 61 2 9257 7109 Email howard_marks@amp.com.au Stephen Daly Manager, Institutional Investor Relations Telephone 61 2 9257 5207 Email stephen_daly@amp.com.au

Online reports

This investor report is available online at www.amp.com.au/shareholdercentre along with other investor relations information.

AMP Limited ABN 49 079 354 519

AMP Investor Report 1H 12 Contents 1

Contents

AMP	1H 12 performance summary	2
	Financial summary	3
	Five year summary	5
	Strategic overview	6
AMP Financial Services (AFS)	AMP Financial Services financial summary	8
	Market share	9
	Australian contemporary wealth management (CWM)	10
	Australian contemporary wealth protection (CWP)	12
	Australian mature	14
	New Zealand	16
	Cashflows and assets under management (AUM)	18
	Embedded value (EV) and value of new business (VNB)	23
	EV and VNB sensitivities	26
	EV assumptions	27
AMP Capital	AMP Capital financial summary	28
	Cashflows and assets under management (AUM)	32
	Investment performance	34
Capital structure	Capital management	36
	Debt overview	40
Additional information	Group Office	41
	Sensitivities – profit and capital	44
Glossary of terms and independent review	Accounting treatment and definitions	46
	Definitions of business units (BUs) and exchange rates	48
	1H 12 financial results	49
	Independent review statement	50
	Information for shareholders	51

Important note

This Investor Report provides financial information reflecting after income tax results for shareholders. The principles of life insurance accounting are used in reporting the results of AFS. Information is provided on an operational basis (rather than statutory basis) to reflect a management view of the businesses and existing structures. Content is prepared using external market data and internal management information useful for investors. This Investor Report is not audited. In preparing the Investor Report, management has had its external auditor, Ernst & Young, prepare a review statement in relation to specific matters pertaining to some of the information presented herein for management’s purposes. This statement has been included in the document for the information of readers; however, it has been prepared solely for directors and management and should not be relied upon by any party other than the directors and management of AMP Limited.

Net profit attributable to shareholders of AMP Limited has been prepared in accordance with Australian accounting standards.

Forward looking statements in this Investor Report are based on management’s current views and assumptions and involve known and unknown risks and uncertainties, many of which are beyond AMP’s control and could cause actual results, performance or events to differ materially from those expressed. These forward looking statements are not guarantees or representations of future performance, and should not be relied upon.

This Investor Report is not an offer document and therefore has not been the subject of a full due diligence process typically used for an offer document. While AMP has sought to ensure that information in this Investor Report is accurate by undertaking a review process, it makes no representation or warranty as to the accuracy or completeness of any information or statement in this Investor Report. In particular, information and statements in this Investor Report do not constitute investment advice or a recommendation on any matter, and should not be relied upon.

AMP also provides statutory reporting prescribed under the Corporations Act 2001. Those accounts will be available from AMP’s website www.amp.com.au and reflect policyholder and shareholder interests.

2 AMP AMP Investor Report 1H 12

1H 12 performance summary

Underlying profit of A$491m and net profit attributable to shareholders of AMP Limited of A$383m in 1H 12 reflects robust operating earnings, underpinned by continued cost discipline[1]

• AFS contemporary wealth management operating earnings up 9% on 2H 11, AFS contemporary wealth protection up 25% on 2H 11, AMP Capital operating earnings up 18% on 2H 11

• AFS mature down 1% on 2H 11 and AFS New Zealand down 12% on 2H 11

• Underlying investment income up A$13m on 2H 11 to A$113m, reflecting a higher capital base following the formation of the MUTB strategic business and capital alliance in March 2012

Key performance measures

• 1H 12 underlying profit of A$491m, up 9% on 2H 11

Growth measures:

• AMP Financial Services net cashflows were A$301m, up from net cashflows of A$94m in 1H 11; AMP Capital external net cash outflows were A$1,345m, an increase in net cash outflows from A$371m for 1H 11[2]

• AFS value of risk new business up 19% on 1H 11 to A$112m[3]

• 80% of AMP CapitaI’s funds met or exceeded benchmark for the three years to 30 June 2012[4]

Underlying return on equity increased 0.6 percentage points to 13.5% in 1H 12 from 2H 11, reflecting the growth in underlying profit, partly offset by higher capital held

Profit and profit drivers

Cashflows, AUM, API and banking

Group AUM of A$159b in 1H 12, in line with FY 11

• AFS AUM up 3% to A$115b in 1H 12 from FY 11

• Contemporary wealth management net cashflows of A$647m, up from A$464m in 1H 11[2]

• AMP Flexible Super net cashflows of A$1.3b, down from A$1.5b in 1H 11; North net cashflows of A$636m, up from A$209m in 1H 11[2]

• AMP Capital AUM increased A$226m to A$123.3b in 1H 12 from FY 11

• AFS Australia individual risk API increased 7% on 1H 11 to A$1.3b, AFS Australia group risk API increased 6% on 1H 11 to A$354m, AFS NZ individual risk API increased 4% on 1H 11 to NZ$292m

• AMP Bank mortgage and deposit books up 8% and 20% in 1H 12 respectively

Controllable costs and cost ratios

Total controllable costs decreased by 5% on 2H 11 to A$666m, cost to income ratio down 4.4 percentage points to 46.2% in 1H 12

• AFS controllable costs decreased 5% on 2H 11 to A$463m (cost to income ratio 39.6%), AMP Capital controllable costs decreased 4% on 2H 11 to A$159m in 1H 12

• Controllable costs to AUM decreased to 83 bps from 2H 11

Capital management and dividend

• Excess capital over minimum regulatory requirements was A$2,046m in 1H 12, up A$503m from FY 11, reflecting 1H 12 profits, proceeds from the formation of the MUTB strategic business and capital alliance, share capital issued under the dividend reinvestment plan and an active capital protection strategy

• Interest cover (underlying) remains strong at 11.2 times

• Gearing on an S&P basis remains steady at 11%

• Interim dividend of 12.5 cents per share (cps) was declared for 1H 12, representing a dividend payout ratio of 73% of underlying profit

• 1 2H 11 has primarily been used throughout this document as the most appropriate prior period comparison, as both 1H 12 and 2H 11 include a full six months of AXA.

• 2 1H 11 cashflows, value of new business and API have been restated to include a full six months of AXA.

• 3 Represents value of new business for AFS’s Australian and New Zealand risk businesses.

• 4 Investment performance is on a three year rolling basis as this is the basis on which our investment professionals are remunerated. Refer to page 34 for one year, three year and five year investment performance.

AMP Investor Report 1H 12 AMP 3

Financial summary

			AMP +	AMP +
	AMP +	AMP +	3 months	9 months
	AXA	AXA	AXA	AXA
A$m	1H 12	2H 11	1H 111	FY 111	% 1H/2H
Profit and loss
Australian contemporary wealth management	164	151	171	322	8.6
Australian contemporary wealth protection	134	107	108	215	25.2
Australian mature	76	77	76	153	(1.3)
New Zealand	38	43	33	76	(11.6)
AMP Financial Services	412	378	388	766	9.0
AMP Capital2	45	38	45	83	18.4
BU operating earnings	457	416	433	849	9.9
GroupOffice costs	(31)	(31)	(26)	(57)	-
Total operating earnings	426	385	407	792	10.6
Underlying investment income2	113	100	83	183	13.0
Interest expense on corporate debt	(48)	(43)	(39)	(82)	(11.6)
AMP Limited tax loss recognition	-	8	8	16	n/a
Underlying profit	491	450	459	909	9.1
Market adjustment – investment income2	(1)	(47)	(3)	(50)	97.9
Market adjustment – annuity fair value	(10)	(3)	16	13	n/a
Market adjustment – risk products	23	58	(5)	53	(60.3)
Other items2,3	10	21	(17)	4	(52.4)
Profit after income tax before AXA merger adjustments	513	479	450	929	7.1
and accounting mismatches
M&A transaction costs4	(2)	(8)	(34)	(42)	75.0
AXA integration costs	(71)	(69)	(36)	(105)	(2.9)
Amortisation of AXA acquired intangible assets2	(50)	(50)	(25)	(75)	-
Accountingmismatches	(7)	(10)	(9)	(19)	30.0
Netprofit attributable to shareholders of AMP Limited	383	342	346	688	12.0

1 In March 2011, AMP merged with AXA Asia Pacific Holdings Limited’s Australian and New Zealand businesses (AXA). 1H 11 and FY 11 includes AXA operating earnings for the period from 31 March 2011. 1H 11 has been restated to incorporate AXA operating earnings into AFS and AMP Capital and incorporate FY 11 changes to the acquisition balance sheet.

• 2 Net of minority interests for the period from 1 March 2012 to 30 June 2012.

• 3 Other items principally comprise one-off and non-recurring items. Refer to page 42 for more detail.

• 4 FY 11 M&A transaction costs primarily relate to the merger with AXA. Refer to page 42 for more detail.

Movement in 2H 11 to 1H 12 underlying profit

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520
8
15
500 (6)
8 (8)
8 (7) 491
480 23
460
450
440
420
400
underlying profit2H 11Controllable cost1 Volumes,primarily riskAMP Capitalperformance feesCapitalisedloss reversals investment income,Underlying net of corporate debtminority interestMUTB AMP tax lossrecognition Other underlying profit1H 12
A$m
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1 A$23m includes A$15m of cost synergies.

4 AMP AMP Investor Report 1H 12

Financial summary cont’d

				AMP +	AMP +
		AMP +	AMP +	3 months	9 months
		AXA	AXA	AXA	AXA
		1H 12	2H 11	1H 11	FY 11
Earnings
EPS – underlying (cps)		17.1	15.9	18.6	34.3
EPS – actual (cps)		13.5	12.2	14.3	26.3
RoE – underlying		13.5%	12.9%	18.2%	15.1%
RoE – actual		10.5%	9.8%	13.7%	11.5%
Dividend
Dividend per share (cps)		12.5	14.0	15.0	29.0
Dividend payout ratio – underlying		73%	88%	80%	84%
Ordinary shares on issue (m)1		2,895	2,855	2,812	2,855
Weighted average number of shares on issue (m)1	– basic	2,874	2,830	2,462	2,648
	– fully diluted	2,895	2,845	2,476	2,663
Market capitalisation – endperiod(A$m)		11,145	11,619	13,749	11,619
Capital management
AMP shareholder equity (A$m)		7,554	7,014	6,991	7,014
Corporate debt (excluding AMP Bank debt) (A$m)		1,579	1,536	1,536	1,536
S&P gearing		11%	11%	11%	11%
Interest cover – underlying (times)		11.2	12.1	12.1	12.1
Interest cover – actual(times)		9.0	9.4	10.3	9.4
EV and VNB
AFS value of new business (A$m)2		208	253	190	443
AFS value of risk new business (3% dm) (A$m)2		112	121	94	215
AFS EV after transfers – AFS (3% dm) (A$m)3		11,480			11,023
AFS return on EV – AFS(3% dm)2		7.0%			11.0%
Cashflows and AUM
AFS cash inflows (A$m)4		11,795	12,066	11,257	23,323
AFS cash outflows (A$m)4		(11,494)	(12,741)	(11,163)	(23,904)
AFS net cashflows (A$m)4		301	(675)	94	(581)
AFS persistency4		87.7%	87.4%	88.5%	87.9%
AFS AUM – AMP Capital managed (A$b)		79	75	81	75
AFS AUM – non-AMP Capital managed (A$b)		36	36	34	36
AMP Capital net cashflows – external (A$m)4		(1,345)	(795)	(371)	(1,166)
AMP Capital net cashflows – internal (A$m)4		(1,436)	(2,424)	(1,575)	(3,999)
AMP Capital AUM (A$b)		123	123	130	123
Total AUM(A$b)		159	159	164	159
Investment performance – AMP Capital
Percentage of funds meetingor exceedingbenchmark – total AUM5		80%	69%	48%	69%
Controllable costs (pre-tax) and cost ratios
Operating costs (A$m)		618	641	515	1,156
Project costs (A$m)		48	58	43	101
Total controllable costs (A$m)		666	699	558	1,257
Cost to income ratio		46.2%	50.6%	44.8%	47.9%
Controllable costs to AUM(bps)		83	87	77	82

• 1 Number of shares has not been adjusted to remove treasury shares.

• 2 1H 11 and FY 11 AFS value of new business and return on EV includes AXA from 1 January 2011. Return on EV is not annualised for half year periods.

• 3 1H 12 transfers of A$310m (FY 11 A$860m).

• 4 FY 11 cashflows and persistency include AXA for the 12 months.

5 Performance figures are on a three year rolling basis for total AMP Capital AUM. 1H 12 and FY 11 investment performance includes AXA’s investment management business. 1H 11 has not been restated.

AMP Investor Report 1H 12 AMP 5

Five year summary

			AMP +
		AMP +	3 months
		AXA	AXA	AMP	AMP	AMP
		1H 12	1H 11	1H 10	1H 09	1H 08
Earnings
Total operating earnings (A$m)		426	407	347	332	394
Underlying profit (A$m)		491	459	383	367	437
Net profit attributable to shareholders of AMP Limited (A$m)		383	346	425	362	366
EPS – underlying (cps)		17.1	18.6	18.6	18.3	23.3
EPS – actual (cps)		13.5	14.3	20.9	18.2	14.8
RoE – underlying		13.5%	18.2%	27.4%	31.6%	40.5%
RoE – actual1		10.5%	13.7%	30.4%	31.2%	29.4%
Dividend
Dividend per share (cps)		12.5	15.0	15.0	14.0	22.0
Dividend per share – sale of Cobalt/Gordian business	(cps)					2.0
Dividend payout ratio – underlying		73%	80%	81%	77%	94%
Ordinary shares on issue (m)1		2,895	2,812	2,072	2,014	1,875
Weighted average number of shares on issue (m)1	– basic	2,874	2,462	2,059	2,008	1,875
	– fully diluted	2,895	2,476	2,069	2,018	1,883
Share price for the period (A$)	– low	3.73	4.67	5.21	3.59	6.49
	– high	4.40	5.78	6.77	5.66	9.98
EV and VNB
AFS value of new business (3% dm) (A$m)2		208	190	140	141	167
AFS value of risk new business (3% dm) (A$m)2		112	94	45	47	44
AFS return on EV(3% dm)2		7.0%		3.3%	2.7%	0.8%
Financial position
AMP shareholder equity (A$m)		7,554	6,991	2,891	2,357	2,037
Corporate debt (excluding AMP Bank debt) (A$m)		1,579	1,536	1,363	1,389	1,443
S&P gearing		11%	11%	15%	16%	13%
Interest cover – underlying (times)		11.2	12.1	12.3	10.0	13.5
Interest cover – actual(times)		9.0	10.3	12.5	8.0	11.6
Cashflows and AUM
AFS net cashflows (A$m)3		301	94	584	865	760
AFS persistency3		87.7%	88.5%	90.7%	90.3%	90.0%
AMP Capital net cashflows – external (A$m)3		(1,345)	(371)	1,855	192	369
AMP Capital AUM (A$b)		123	130	95	89	100
AUM non AMP Capital managed (A$b)		36	34	16	14	16
Total AUM(A$b)		159	164	111	103	116
Investment performance – AMP Capital
Percentage of funds meetingor exceedingbenchmark – total AUM4		80%	48%	45%	38%
Controllable costs (pre-tax) and cost ratios
Controllable costs (A$m)		666	558	426	413	442
Cost to income ratio		46.2%	44.8%	42.2%	42.4%	39.9%
Controllable costs to AUM(bps)		83	77	76	81	72
Staff numbers
AFS5		3,573	3,844	1,891	1,840	2,233
AMP Capital6		992	976	919	954	984
GroupOffice		1,295	1,392	867	876	949
Total staff numbers7		5,860	6,212	3,677	3,670	4,166

• 1 The number of shares has not been adjusted to remove treasury shares.

• 2 1H 11 VNB, risk VNB and return on EV includes AXA for six months to

• 30 June 2011. Comparatives have not been restated. Return on EV is not annualised for half year periods.

• 5 Excludes planners.

• 6 1H 12 includes 266 shopping centre FTEs (255 in 1H 11); however, the costs of these FTEs are recharged to shopping centres.

• 7 Total staff numbers exclude Cobalt/Gordian.

• 3 1H 11 cashflows and persistency include AXA for the six months.

• 4 Performance figures are on a three year rolling basis. 1H 12 performance figures include AXA’s investment management business.

6 AMP AMP Investor Report 1H 12

Strategic overview

AMP today

AMP is Australia and New Zealand’s leading independent wealth management company, with a retail banking business in Australia and a growing international investment management business.

AMP has a compelling set of advantages:

• scale and efficiency

• market-leading positions in financial advice and key product categories

• a large and diverse customer base

• a leading, broad distribution footprint

• high quality, award-winning products, platforms and investment capabilities

• a trusted brand.

AMP’s three operational business units are AMP Financial Services (AFS), AMP SMSF and AMP Capital. AMP SMSF forms part of AFS’s contemporary wealth management’s reported results.

Strategy

AMP is driving growth in business value by delivering on its five strategic priorities.

1. Delivering quality products and services that respond to the needs of fast-growing customer segments

AMP today serves five million retail customers in Australia and New Zealand, and 360 institutional clients in these markets, along with clients in Asia and Europe.

It is the number one provider of superannuation in Australia, where its flagship superannuation and retirement income product AMP Flexible Super generated A$1.3b in net cashflows in 1H 12 and assets under management (AUM) grew to A$5.7b.

The award-winning North platform’s net cashflows tripled to A$636m in 1H 12. The increase was driven by the platform’s enhanced functionality, along with its roll out to AMP Financial Planning and Hillross advisers. AUM increased to A$3.0b in 1H 12.

AMP is also Australia and New Zealand’s leading risk provider. Australian products AMP Flexible Protection and Elevate generated good sales, with individual risk API increasing 7% in 1H 12 on 1H 11.

AMP Bank continued to grow in 1H 12, with deposits increasing by 20% to A$8.6b and its mortgage book growing 8% to A$12.0b. Its competitive home loans drove mortgage growth of 1.4% each month, outpacing market growth of 0.5% per month. AMP Bank won the Bank of the Year 2012 award in Your Mortgage magazine’s annual Mortgage of the Year Awards.

AMP Capital’s highly-rated investment funds are on more than 50 platforms and on the approved lists of more than 50 external financial adviser dealer groups. During 1H 12, it:

• developed and launched the Global Listed Infrastructure Bond Fund

• achieved a final close of the Infrastructure Debt Fund with total commitments of €400m from 30 global institutional investors

• secured its first institutional investor for the new Multi-Asset Fund, and

• earned an ‘A’ rating[1] for its new concentrated Australian equities fund.

2. Building a professional aligned planner force with above-market growth and productivity

AMP’s aligned and employed financial planner and adviser networks offer financial advice under multiple brands, providing choice to both advisers and customers.

AMP has the largest aligned and employed financial advice network in Australia and New Zealand, with 4,259 financial planners and advisers. In Australia, adviser numbers increased by 147 on FY 11.

The number of AMP Financial Planning (AMPFP) advisers increased by 71 to 1,724, as a result of the strength of AMPFP’s value proposition, including a practice start-up offer, and the continuing success of the Horizons program. In 1H 12, 48 advice professionals graduated from Horizons, which recently introduced a new offer (in partnership with AMPFP) to attract aspiring planners in regional Australia. Hillross adviser numbers were stable, increasing by two to 320.

AXA advisers increased by 74 to 1,530. This reflects a 10% investment in Futuro Financial Services, which adds 78 advisers and 54 practices to the network.

The total number of New Zealand advisers decreased by 19 to 685 at 1H 12, reflecting the impacts of a new compliance regime and the challenging market environment.

3. Capitalising on a broader, more productive domestic distribution footprint

In 1H 12, AMP created a new business unit AMP SMSF to establish itself in the fast-growing, A$416b[2] Australian self-managed superannuation fund (SMSF) market. In July 2012 it acquired The Cavendish Group, a leading SMSF administrator.

AMP SMSF will include:

• Cavendish, with approximately 5,000 funds

• Multiport, a SMSF administration, reporting and compliance service with approximately 2,800 funds

• SuperIQ, a market-leading SMSF technology and administration service 49% owned by AMP with 437 funds, and

• Ascend, a SMSF product and service offer, with approximately 300 funds.

The unit will focus on providing:

1. SMSF administration and platform offers to individuals, accountants, brokers, trustees and external financial advisers.

2. SMSF advice and packaged solutions to AMP’s aligned financial advice networks. AMP SMSF will leverage AFS and AMP Capital’s highly competitive product range and advice capability to deliver compelling packaged offers.

The unit’s revenues will be driven by scale and efficiency in administration; developing advice capabilities; broadening distribution; and packaged product offers.

The SMSF market is expected to grow to more than A$2.2t by 2030[3] .

4. Pursuing targeted international expansion of investment management business

AMP Capital’s global investment capabilities continue to be recognised internationally.

During 1H 12, AMP Capital sourced 6% of its AUM from Asia. This included A$7.1b it manages for clients in Japan, which is one of AMP Capital’s target markets.

• 1 From investment research provider van Eyk.

2 Quarterly Superannuation Performance, March 2012, APRA.

3 Dynamics of the Australian Superannuation System – The next 20 years: 2011-2030, Nov 2011, Deloitte Actuaries & Consultants.

AMP Investor Report 1H 12 AMP 7

Strategic overview cont’d

During June, AMP Capital launched its first product with Mitsubishi UFJ Asset Management (a member of our alliance partner group) to this market. Japanese retail investors contributed A$177m to the Global Listed Infrastructure Bond Fund by 30 June 2012.

In July, one of the largest public pension funds in the world, China’s National Council for Social Security Fund, selected AMP Capital to manage a global listed real estate mandate.

As part of its international expansion in 1H 12, AMP Capital:

• appointed a new Asian equities team to be based in Hong Kong, and

• scaled up its in-house global listed property and infrastructure capability, with the appointment of several new portfolio managers and a new team based in Chicago, complementing its existing teams in London, Hong Kong and Sydney.

5. Continuing to adapt to changing market conditions

through disciplined cost and capital management

AMP’s total controllable costs decreased 5% to A$666m in 1H 12 due to synergies from the AXA merger and a continued focus on operating costs.

1H 12 AFS controllable costs fell 5% from 2H 11 reflecting cost synergies, strong cost control and typically lower costs in the first half relative to second half. During 1H 12, the cost allocation methodology for AXA products was aligned to existing AMP methodology, resulting in movements in overhead allocations between Australian business segments.

AMP remains well capitalised, with A$2,046m in regulatory capital resources above minimum regulatory requirements. This is up A$503m on FY 11.

The company is actively managing its capital position and during 1H 12 implemented a number of tactical protection strategies, as set out on page 37.

The Australian Prudential Regulation Authority (APRA) is currently developing new capital standards for life and general insurers (‘LAGIC’). A number of final standards were issued in May 2012, while the remaining final standards are expected to be released by the fourth quarter of 2012. These are to be implemented by 1 January 2013.

Had the revised capital standards applied at 30 June, the impact of moving to these standards would have reduced the combined shareholder surplus above minimum requirements for the life companies’ statutory funds by approximately A$200m. The new capital requirements will be effective 1 January 2013 in full.

APRA is yet to confirm how LAGIC requirements will impact the proposed conglomerate proposals. Nonetheless, AMP has confirmed transitional arrangements with APRA for its subordinated debt. AMP’s current holdings of subordinated debt will continue to count in full towards regulatory capital resources until May 2014 (retail notes A$296m) and March 2016 (AXA Notes A$600m and sub debt A$83m).

Given these arrangements and the company’s capital position, AMP is well placed to manage the impact of prudential regulatory change.

For more information, refer to page 38.

AMP’s interim 2012 dividend is 12.5 cents per share franked to 55%. This represents a dividend payout ratio of 73% of underlying profit.

The company will offer its Dividend Reinvestment Plan (DRP) at a 1.5% discount and new shares will be issued on market.

Integration progress

AMP’s merger with AXA will be completed six months earlier than planned, as a result of the company accelerating many of its key integration initiatives during 1H 12. Sixty-four per cent of integration projects will be completed by the end of 2012. In 1H 12, 16% of these projects were completed.

This progress was achieved while delivering on AMP’s three integration objectives.

1. Maintaining business momentum.

• Business stability indicators remained strong with planner and adviser retention high. AXA Financial Planning (AXA FP), Genesys and Charter rated 1st, 2nd and 4th respectively as licensees with the highest level of adviser satisfaction, according to an external survey during the period[3] . The majority of AXA FP’s 170 practices successfully migrated to Charter during 1H 12, with 54% opting to use the AMP brand as part of their corporate identity.

• Customer satisfaction measures remained stable, while employee support for the merger continues to be positive.

2. Sharpening competitive edge by delivering synergies and drawing on competitive strengths of both organisations.

• Synergy run rate of A$90m post tax achieved in 1H 12, with synergy target upgraded to A$150m post tax from A$140m post tax as a result of recognising A$10m from lower assumed revenue attrition.

• Expected integration spend unchanged at A$310m post tax.

3. Building stronger platform for growth.

• Roll out of North to the AMPFP and Hillross networks and AMP Flexible Super to the AXA Financial Advice Network (FAN) generated more than A$200m in additional cash inflows.

• Roll out of AMP Bank term deposits on North and Summit platforms have generated over A$400m.

• New multi-manager capability created by combining the best of ipac investment services with AMP Capital’s existing capability.

For more information about the integration, refer to the 2012 half year results presentation.

Regulatory update

AMP has been actively positioning itself for a new regulatory environment, implementing many of the proposed and legislated regulatory reforms during the past two years.

The Future of Financial Advice (FoFA) legislation formally took effect on 1 July 2012. AMP moved to address many of these reforms two years ago and is well prepared to manage other associated FoFA reforms by the mandatory compliance date of 1 July 2013.

The Australian Parliament is expected to approve the Stronger Super reforms in 2H 12. AMP introduced a low-cost, default superannuation product in May 2010.

AMP expects the one off cost to the company of implementing the Future of Financial Advice, Stronger Super and other regulatory changes over the next 12 to 18 months to be in the range of A$60m to A$75m after tax, of which A$52m has been provisioned at 30 June 2012.

The final costs may vary from this depending on final legislation and regulatory guidance, market practice and the future competitive landscape.

3 CoreData Licensee Research, 2012.

8 AMP Financial Services AMP Investor Report 1H 12

AMP Financial Services financial summary

A$m	1H 12	2H 11	1H 11	FY 11	% 1H/2H
Profit and loss1
Australian contemporary wealth management	164	151	171	322	8.6
Australian contemporary wealth protection	109	111	95	206	(1.8)
Australian mature	75	71	76	147	5.6
New Zealand	37	38	30	68	(2.6)
Profit margins	385	371	372	743	3.8
Australian contemporarywealthprotection2	20	5	3	8	n/a
Capitalised loss reversals	20	5	3	8	n/a
Australian contemporary wealth protection	5	(9)	10	1	n/a
Australian mature	1	6	-	6	(83.3)
New Zealand	1	5	3	8	(80.0)
Experienceprofits/(losses)	7	2	13	15	n/a
Operating earnings	412	378	388	766	9.0
Underlyinginvestment income	83	80	59	139	3.8
Underlying operating profit after income tax	495	458	447	905	8.1
Controllable costs and cost ratios
Operating costs	423	441	333	774	(4.1)
Project costs	40	48	36	84	(16.7)
Total controllable costs	463	489	369	858	(5.3)
Cost to income ratio	39.6%	42.9%	36.6%	39.9%	n/a
Controllable costs to AUM(bps)3	81	87	77	82	n/a
Return on capital1
RoBUE	24.6%	23.4%	29.4%	26.0%	n/a
End period tangible capital resources – after transfers (A$m)	4,157	3,848	3,745	3,848	8.0
Cashflows, AUM and persistency4
AFS cash inflows (A$m)	11,795	12,066	11,257	23,323	(2.2)
AFS cash outflows (A$m)	(11,494)	(12,741)	(11,163)	(23,904)	9.8
AFS net cashflows (A$m)	301	(675)	94	(581)	n/a
AUM (pre-capital) (A$b)	114.8	111.2	115.7	111.2	3.2
Persistency	87.7%	87.4%	88.5%	87.9%	n/a
VNB – risk insurance and risk annual premium in-force (API)4
Value of risk new business (3% dm) (A$m)	112	121	94	215	(7.4)
Australian individual risk API (A$m)5	1,328	1,315	1,244	1,315	1.0
New Zealand individual risk API(NZ$m)	292	288	281	288	1.4

• 1 1H 11 and FY 11 includes AXA operating earnings for the period from 31 March 2011.

• 2 Refer to pages 12 and 13 for more detail on CWP capitalised loss reversals.

• 3 Average AUM in this measure includes acquired AXA products from 31 March 2011. Average AUM is based on monthly average AUM excluding capital.

• 4 1H 11 and FY 11 includes AXA for the period from 1 January 2011.

• 5 Individual risk API and Individual risk lapse rate restated for inclusion of stamp duty in API for AXA products.

AMP Investor Report 1H 12 AMP Financial Services 9

Market share – AFS

	March 2012	March 2012		March 2011	March 2011
	Total	Market	Market	Total	Market	Market
	market size	position	share	market size	position	share
Market share – Australia	A$b	(rank)	%	A$b	(rank)	%
Assets under management1
Superannuation including rollovers	251.2	1	23.6	250.8	1	23.6
Corporate superannuation master funds2	93.6	1	22.6	88.6	1	23.8
Retirement income	123.4	2	17.5	117.5	1	18.0
Unit trusts (excluding cash management trusts)	117.8	6	9.7	132.2	5	9.9
Total retail managed funds(excludingcash management trusts)	499.2	1	18.6	507.4	1	18.5
Total in-force annual premiums3
Individual risk	6.8	1	19.0	6.2	1	19.5
Grouprisk	3.6	4	10.3	3.1	5	9.6

1 Source: Plan for Life 31 March 2012 – QDS Retail & Wholesale. 3 Source: Plan for Life 31 March 2012 – Detailed Risk Statistics. In-force 2 Source: Plan for Life 31 March 2012 – Corporate Super Master Funds Report. premiums individual risk excludes single premiums.

	March 2012	March 2012		March 2011	March 2011
	Total	Market	Market	Total	Market	Market
	market size	position	share	market size	position	share
Market share – New Zealand	NZ$b	(rank)	%	NZ$b	(rank)	%
Assets under management
Retail superannuation1	4.0	1	46.0	4.7	1	40.8
Unit trusts1	10.2	2	17.3	9.3	2	18.7
Insurance bonds1	0.6	3	20.7	0.7	3	20.7
Total retail funds1	27.6	1	21.4	24.7	1	22.1
Corporate superannuation2	4.5	1	52.7	4.4	1	49.9
Conventional3	0.2	1	72.7	0.2	1	71.5
KiwiSaver1	11.3	3	18.4	7.9	3	19.9
Total in-force annual premiums
Individual risk	1.5	2	19.7	1.4	2	20.0

1 Measured by AUM: Source: Fund Source Research Limited March 2012. 3 Measured by in-force premium: Source: ISI Statistics March 2012.

2 Measured by AUM: Source: Eriksen’s Master Trust Survey March 2012.

10 AMP Financial Services AMP Investor Report 1H 12

Australian contemporary wealth management

A$m	1H 12	2H 11	1H 11	FY 11	% 1H/2H
Profit and loss
Revenue
Investment related1	505	507	453	960	(0.4)
Bank related	89	90	88	178	(1.1)
Other2	41	52	48	100	(21.2)
Total revenue	635	649	589	1,238	(2.2)
Investment management expense	102	103	97	200	(1.0)
Bank variable costs	24	25	23	48	(4.0)
Total variable costs	126	128	120	248	(1.6)
Controllable costs	274	305	227	532	(10.2)
Tax expense	71	65	71	136	9.2
Operating earnings	164	151	171	322	8.6
Underlyinginvestment income	17	15	12	27	13.3
Underlying operating profit after income tax	181	166	183	349	9.0
RoBUE	32.7%	30.1%	38.5%	34.0%	n/a
End period tangible capital resources – after transfers (A$m)	1,130	1,041	1,055	1,041	8.5
Net cashflows (A$m)3	647	(326)	464	138	n/a
AUM (pre-capital) (A$b)	82.3	79.3	82.7	79.3	3.8
Average AUM (pre-capital) (A$b)4	82.2	80.0	68.9	74.4	2.8
Persistency5	86.7%	86.5%	88.0%	87.3%	n/a
Cost to income ratio	51.4%	56.1%	46.5%	51.6%	n/a
Investment related revenue to AUM (bps)1,4,6	124	126	132	129	n/a
Investment management expense to AUM (bps)1,4,6	25	26	28	27	n/a
Investment related revenue less variable costs to AUM (bps)1,4,6,7	99	100	104	102	n/a
Controllable costs to AUM (bps)4.6.7	61	70	60	66	n/a
Operatingearnings to AUM(bps)4,6,7,8	33	30	41	35	n/a

• 1 Investment related refers to revenue on superannuation and allocated pension and investment products. Following the move to fee-for-advice, payments to planners for fees and commissions allocated on their behalf for clients are netted off against the fees and commissions received from clients within investment related revenue.

• 2 Other revenue includes product fees, platform fees and advice fees received by licensees on AFS contemporary wealth protection and movements in the value of client registers purchased from financial planners.

• 3 1H 11 and FY 11 net cashflows includes AXA for the period from 1 January 2011.

• 4 Average AUM in this measure includes acquired AXA products from 31 March 2011. Average AUM is based on monthly average AUM excluding capital.

• 5 1H 11 and FY 11 persistency includes AXA cash outflows and AUM from 1 January 2011.

• 6 Ratio based on 182 days in 1H 12, 181 days in 1H 11 and 184 in 2H 11.

• 7 Costs in this ratio exclude AMP Bank costs.

• 8 Operating earnings in this ratio exclude AMP Bank.

• 9 Contemporary wealth management EV and VNB are detailed on page 23.

Movement in 2H 11 to 1H 12 operating earnings

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■ AMP Bank
23 ■ CWM excluding
AMP Bank
29
150
30 (1) (1)
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121 (33 bps)
100 (30 bps)
50
operating earnings2H 11 AMP Bankearnings Investment related revenue lessvariable costs Other revenue Controllable costs operating earnings1H 12
A$m
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AMP Investor Report 1H 12 AMP Financial Services 11

Australian contemporary wealth management cont’d

Business overview

The contemporary wealth management (CWM) business is focused on providing customers with financial planning services (through aligned and owned advice businesses), superannuation, retirement income, investment, SMSF administration and banking products.

CWM’s key priorities are to:

• build a stronger growth platform whilst reducing the cost of servicing customers

• improve the quality of the advice experience and develop complementary advice channels

• improve adviser productivity and grow adviser numbers

• position AFS for a changing regulatory environment

• remain vigilant on cost control.

Operating earnings

Operating earnings increased by A$13m (9%) to A$164m in 1H 12 from A$151m in 2H 11. The increase in operating earnings was driven by lower controllable costs offset by lower other revenue.

The decline in other revenue was primarily a result of the sale of AMP’s general insurance business in 2H 11.

Investment related revenue to AUM

1H 12 investment related revenue to AUM was 124 bps, a 2 bps reduction from 2H 11. The reduction in investment related revenue to AUM was due to:

• change in product and fee mix, representing a higher proportion of cash and passive investment options selected by customers (-1 bps),

• higher rebates on low balance funds (-2 bps), offset by

• higher corporate superannuation (SuperLeader) participating profits (+1 bps)

1H 12 investment management expense to AUM declined 1 bp to 25 bps from 2H 11 due to the higher proportion of cash and passive investment options selected by customers.

AMP SMSF

In June 2012, AMP established a new business unit named AMP SMSF. AMP SMSF forms part of CWM’s consolidated reporting.

The drivers for SMSF success are expected to be scale and efficiency in administration, developing advice capabilities, broadening distribution reach and packaging product offers to appeal to SMSF customers. At 1H 12, AMP SMSF administered 3,537 member funds.

Multiport’s revenue is reported as part of investment related revenue while SuperIQ is equity accounted and forms part of other revenue.

AMP Bank

AMP Bank contributed A$29m to CWM’s 1H 12 operating earnings, down from A$30m in 2H 11.

Bank related revenue was down 1% in 1H 12, with the benefit of strong mortgage growth tempered by lower net interest margins. AMP Bank’s net interest margin in 1H 12 was 1.45%, down from 1.55% in 2H 11 due to higher funding costs.

Bank variable costs decreased by 4% in 1H 12, driven by lower securitisation costs, facility fees and other expenses. AMP Bank controllable costs were A$23m in 1H 12, up from A$21m in 2H 11. The cost to income ratio increased to 36% in 1H 12 (2H 11 33%) due mainly to lower net interest margins.

AMP’s mortgage book increased by A$0.9b (8%) to A$12.0b in 1H 12. Mortgage growth was above system growth in 1H 12, increasing on average 1.4% per month, compared to market growth of 0.5% per month. The growth in mortgages was largely funded by an increase in retail deposits. The deposit book increased by A$1.4b (20%) to A$8.6b in 1H 12.

AMP Bank’s return on capital was 13.4% in 1H 12, down from 15.2% in 2H 11 due mainly to the lower net interest margins and a 12% increase in average invested capital to support strong mortgage growth.

Controllable costs

CWM controllable costs decreased A$31m (10%) to A$274m in 1H 12 from A$305m in 2H 11.

CWM controllable costs are traditionally higher in the second half of the year due to the annual customer statements and associated administration. CWM controllable costs also decreased as a result of synergy benefits accruing from AMP’s merger with AXA, lower costs in the advice businesses partly driven by the sale of AMP’s general insurance business in 2H 11 and lower allocation of overheads in 2012 following the market driven AUM decline in FY 11.

The 1H 12 cost to income ratio fell by 4.7 percentage points to 51.4% as a result of lower controllable costs. Controllable costs to AUM decreased 9 bps to 61 bps in 1H 12.

Return on capital

RoBUE for 1H 12 was 32.7%, up from 30.1% in 2H 11, reflecting an increase in operating earnings partly offset by higher average capital reflecting business growth across AMP Bank and investment related products.

In July, AMP acquired Cavendish, the largest SMSF administrator in Australia with approximately 5,000 funds and 110 employees. Cavendish’s revenue will be reported as part of investment related revenue from 2H 12.

The contribution of AMP SMSF to 1H 12 CWM operating earnings was not material.

12 AMP Financial Services AMP Investor Report 1H 12

Australian contemporary wealth protection

A$m	1H 12	2H 11	1H 11	FY 11	% 1H/2H
Profit and loss
Profit margins	109	111	95	206	(1.8)
Capitalised loss reversals	20	5	3	8	n/a
Experienceprofits/(losses)	5	(9)	10	1	n/a
Operating earnings	134	107	108	215	25.2
Underlyinginvestment income	42	38	30	68	10.5
Underlying operating profit after income tax	176	145	138	283	21.4
RoBUE	19.1%	16.6%	22.5%	19.0%	n/a
End period tangible capital resources – after transfers (A$m)	1,970	1,742	1,738	1,742	13.1
VNB (3% dm) (A$m)1	112	117	91	208	(4.3)
EV – after transfers (3% dm) (A$m)	3,888			3,593	n/a
Return on EV (3% dm)2	8.8%			20.8%	n/a
Individual risk API (A$m)1,3	1,328	1,315	1,244	1,315	1.0
Group risk API (A$m)1	354	346	334	346	2.3
Individual risk lapse rate3,4	12.9%	13.6%	11.5%	12.6%	n/a
Profit margins/annual premium5	13.1%	13.4%	12.4%	12.9%	n/a
Operating earnings/annual premium5	16.1%	13.0%	14.0%	13.5%	n/a
Controllable costs (A$m)	105	92	72	164	14.1
Cost to income ratio	29.4%	30.7%	26.7%	28.8%	n/a
Controllable costs/annualpremium5	12.6%	11.1%	9.3%	10.3%	n/a

• 1 FY 11 and 1H 11 includes AXA restated from 1 January 2011.

• 2 Return on EV is not annualised for half year periods. FY 11 return on EV includes AXA restated for 12 months.

3 Individual risk API and Individual risk lapse rate restated for inclusion of stamp duty in API for AXA products.

4 FY 11 lapse rate includes AXA lapses and API for the 12 months to 31 December 2011. 1H 11 lapse rate includes AXA lapses and API for the six months to 30 June 2011.

• 5 Based on average annual premium in-force.

Movement in 2H 11 to 1H 12 operating earnings

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15
130 134
14
120 10
110
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(3)
100
90
80
operating earnings2H 11 business volumesGrowth in controllable costsHigher assumptions changesFY 11 claims Improved experience Capitalisedloss reversals operating earnings1H 12
A$m
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AMP Investor Report 1H 12 AMP Financial Services 13

Australian contemporary wealth protection cont’d

Business overview

Contemporary wealth protection (CWP) comprises individual and group term, disability and income protection risk products. Products can be bundled with a superannuation product or held independently.

In CWP’s individual risk business, 42% of in-force and 62% of new business is written within superannuation. Group risk is a key component of the corporate superannuation offer.

CWP’s key priorities are to:

• enhance and broaden the businesses’ product and service offering

• increase the proportion of superannuation customers who have adequate risk insurance coverage

• enable superannuation customers to consolidate their insurance cover into one superannuation account

• increase the profitability of the risk insurance business

• improve ease and profitability of writing AMP risk business for advisers/planners

• grow distribution through independent financial advisers and alliance channels

• improve the businesses’ operational leverage and cost efficiency.

Operating earnings

Operating earnings increased 25% to A$134m in 1H 12 from A$107m in 2H 11 as improved experience and capitalised loss reversals offset higher controllable costs.

Profit margins

Profit margins decreased A$2m to A$109m in 1H 12, reflecting organic growth in the retail business offset by strengthening of income protection claims assumptions for the AMP Life income protection book at FY 11 and higher controllable costs.

Profit margins as a percentage of average API were 13.1% in 1H 12, down from 13.4% in 2H 11.

Annual premium in-force (API)

Individual risk API increased 1% to A$1.3b in 1H 12 and 7% on 1H 11. 2H 11 API included the annual benefit from Consumer Price Index (CPI) and age premium increases on risk policies held within superannuation.

The increase in API reflected higher superannuation risk sales through AMP Flexible Protection and AXA Elevate.

1H 12 individual risk API comprised lump sum insurance (70%) and disability, including income protection (30%), with 33% of 1H 12 individual risk API sourced through independent financial advisers (IFAs).

Group risk API increased 2% to A$354m in 1H 12, from A$346m in 2H 11 and 6% on 1H 11. Growth in this segment was largely driven by stronger sales within AMP Flexible Super and SignatureSuper.

Lapse rates

1H 12 lapse rates were 12.9%, 0.7 percentage points lower than 2H 11. 2H lapse rates are traditionally higher than in the 1H due in part to annual age and CPI premium increases that come into effect from 1 July each year for policies written within superannuation.

The increase in lapse rates in 1H 12 from 1H 11 were primarily the result of the impact of the challenging economic environment.

Controllable costs

CWP controllable costs were A$105m in 1H 12, up from A$92m in 2H 11. 1H 12 controllable costs increased due to higher claims handling costs, greater focus on risk sales in the current environment and a higher allocation of overhead to CWP from aligning cost allocation methodology for AXA products to existing AMP methodology.

The cost to income ratio decreased 1.3 percentage points to 29.4% in 1H 12 due to the strong growth in underlying operating profit relative to the increase in controllable costs.

Capitalised loss reversals

AMP completed a review of income protection claims experience and trends in Q4 11 which resulted in it strengthening the Australian income protection morbidity claims assumptions for both AMP Life and NMLA. As a result of the review, the AXA Australian income protection book went into loss recognition with capital losses of A$74m (A$52m post tax), recognised on merger.

Reversals of capitalised losses can be driven by pricing increases, changes in claims assumptions, reductions in unit costs and growth in profitable business. In Q2 12, a pricing review was completed and selective increases approved for implementation during 2H 12, resulting in a A$20m post tax capitalised loss reversal.

Capitalised losses of A$32m post tax remain at 30 June 2012.

Experience

Experience profits increased by A$14m to A$5m in 1H 12, with the improvement driven by better individual income protection claims experience partly offset by worsening lump sum lapse rates.

Return on capital

1H 12 RoBUE increased to 19.1% from 16.6% in 2H 11, reflecting higher operating earnings, partly offset by higher average capital as a result of business growth.

Embedded value and value of new business – at the 3% discount margin

EV increased 8.8% before transfers in 1H 12 to A$3,909m.

Other than the expected return, EV increased as a result of a lower discount rate, growth in new business and product changes, partly offset by strengthening of lapse and trauma claims assumptions.

1H 12 VNB increased 23.1% to A$112m from A$91m in 1H 11 due to stronger new business growth, lower discount rates, partly offset by 1H 12 revised lapse assumptions and FY 11 income protection claims assumption changes.

1H 12 VNB was down 4% from 2H 11 as 2H 11 VNB reflects the full year impact of bond yield declines in 2H 11 on the FY 11 VNB.

For further details on EV and VNB, refer to pages 23 to 27.

14 AMP Financial Services AMP Investor Report 1H 12

Australian mature

A$m	1H 12	2H 11	1H 11	FY 11	% 1H/2H
Profit and loss
Profit margins	75	71	76	147	5.6
Experienceprofits/(losses)	1	6	-	6	(83.3)
Operating earnings	76	77	76	153	(1.3)
Underlyinginvestment income	12	17	11	28	(29.4)
Underlying operating profit after income tax	88	94	87	181	(6.4)
RoBUE	30.4%	31.1%	34.2%	32.6%	n/a
End period tangible capital resources – after transfers (A$m)	561	592	529	592	(5.2)
VNB (3% dm) (A$m)1	5	5	5	10	-
EV – after transfers (3% dm) (A$m)	1,855			1,906	n/a
Return on EV (3% dm)2	3.8%			(2.2%)	n/a
Net cashflows (A$m)3	(806)	(936)	(861)	(1,797)	13.9
AUM (pre-capital) (A$b)	22.9	22.7	23.7	22.7	0.9
Profit margins to AUM (bps)4	66	60	74	67	n/a
Persistency5	89.9%	88.8%	89.4%	89.2%	n/a
Controllable costs (A$m)	38	48	35	83	(20.8)
Cost to income ratio	23.2%	26.6%	21.8%	24.3%	n/a
Controllable costs to AUM(bps)4	34	41	34	38	n/a

• 1 1H 11 and FY 11 includes AXA from 1 January 2011.

2 Return on EV is not annualised for half year periods. FY 11 return on EV includes AXA restated for 12 months.

• 4 Based on monthly average AUM excluding capital.

• 5 1H 11 and FY 11 persistency includes AXA cash outflows and AUM from 1 January 2011.

3 1H 11 and FY 11 net cashflows includes AXA from 1 January 2011.

Movement in 2H 11 to 1H 12 operating earnings

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AMP Investor Report 1H 12 AMP Financial Services 15

Australian mature cont’d

Business overview

The Australian mature (mature) business is the largest closed life insurance business in Australia. Mature AUM supports capital guaranteed products (74%) and market linked products (26%). Mature products include whole of life, endowment, investment linked, investment account, Retirement Savings Account (RSA), Eligible Rollover Fund (ERF), annuities, insurance bonds, personal superannuation, guaranteed savings accounts and traditional participating products.

All products in mature are closed to new business with the exception of the AXA branded Guaranteed Savings Account (GSA) and AMP branded ERF. The GSA product is treated as a wholesale product and cashflows are not reported in AFS mature cashflows and VNB.

• Key priorities for management are to: – maintain capital efficiency

• manage prudently asset and liability risk

• maintain high persistency

• achieve greater cost efficiency.

Operating earnings

Operating earnings decreased by A$1m to A$76m in 1H 12 from A$77m in 2H 11. Operating earnings benefited from lower controllable costs (A$7m) offset by expected portfolio run-off (-A$3m) and lower experience profits (-A$5m).

1H 12 experience profits were A$1m, down from A$6m in 2H 11. The decline in experience profits was primarily a result of annuity experience losses driven by mortality experience.

AUM

1H 12 mature AUM was A$22.9b, up from A$22.7b in 2H 11. 1H 12 AUM benefited from marginally improved investment markets.

Despite market volatility continuing during 1H 12, persistency improved 1.1% to 89.9%.

Controllable costs

Controllable costs decreased A$10m to A$38m in 1H 12, driven by the run-off of the book and alignment of cost allocation methodology for AXA products to existing AMP methodology. Controllable costs to AUM decreased 7 bps to 34 bps.

Return on capital

1H 12 RoBUE was 30.4%, down from 31.1% in 2H 11, driven by lower underlying operating profit.

The capital position of this business remains strong. Refer to page 36 for AMP Life and NMLA Statutory Funds regulatory capital resources above minimum regulatory requirements (MRR).

Embedded value and value of new business – at the 3% discount margin

EV before transfers increased 3.8% in 1H 12 to A$1,979m primarily due to the expected return, offset by lower bond yields and investment markets.

1H 12 VNB of A$5m was in line with 1H 11 after accounting for the transfer of embedded value in respect of products now reported as part of CWM.

For further details on EV and VNB, refer to pages 23 to 27.

Business run-off profile

The mature business remains in slow decline but is expected to remain profitable for many years. It is expected to run off between 4% and 6% per annum. In volatile investment markets, this run-off rate can vary substantially.

The run-off of AUM mirrors policy liabilities, although there is potential for profit margins to be impacted differently. The runoff of mature AUM is anticipated to have an average duration of approximately 15 years, but will be impacted by investment markets.

Managing mature for investment market movements

The mature capital guaranteed products within AFS are held within AMP Life Statutory Fund No. 1 and NMLA Statutory Funds No.1 and No.4. Asset allocations supporting these products are struck prudently over the long term and have a bias toward income over growth assets. The long-term asset mix is set out on page 27.

AMP actively manages the equity exposure supporting capital guaranteed products (including relevant parts of CWM and New Zealand). AMP uses derivative strategies to provide protection from equity market declines. As at 30 June 2012, AMP had in place the following derivative strategies against the A$5.4b of equities held across these three Statutory Funds:

• long-term derivative strategies in both AMP Life and NMLA that use options and futures to provide a variable level of protection depending on market conditions

• tactical equity derivative positions in AMP Life, comprising put options, protecting A$2.5b of equities against market falls in excess of 10% from 30 June 2012 market levels.

AMP takes an active approach to implementing these derivative strategies.

In addition, AMP employs the following strategies designed to protect against changes in long-term interest rates:

• long-term derivative strategies using interest rate swaps and bond futures in both AMP Life and NMLA to lengthen the duration of the assets supporting this business

• tactical protection against falling long-term interest rates providing approximately A$1.7b of nominal protection within AMP Life.

Typically, the shareholder bears 20% of the cost of tactical derivative protection. 1H 12 shareholder cost of implementing tactical protection was A$7m (post tax).

The Life Statutory Funds capital sensitivities disclosed on page 45 include the impact of these protection strategies.

16 AMP Financial Services AMP Investor Report 1H 12

New Zealand

A$m	1H 12	2H 11	1H 11	FY 11	% 1H/2H
Profit and loss
Profit margins	37	38	30	68	(2.6)
Experienceprofits/(losses)	1	5	3	8	(80.0)
Operating earnings1	38	43	33	76	(11.6)
Underlyinginvestment income	12	10	6	16	20.0
Underlying operating profit after income tax	50	53	39	92	(5.7)
RoBUE	19.9%	23.2%	21.7%	22.6%	n/a
End period tangible capital resources – after transfers (A$m)	496	473	423	473	4.9
VNB (3% dm) (A$m)2,3	2	10	4	14	(80.0)
EV – after transfers (3% dm) (A$m)	1,022			983	n/a
Return on EV (3% dm) (A$m)4	5.9%			17.3%	n/a
Net cashflows (A$m)5	51	158	86	244	(67.7)
AUM (A$b)	9.5	9.2	9.3	9.2	3.3
Individual risk API (A$m)	229	219	217	219	4.6
Individual risk API (NZ$m)	292	288	281	288	1.4
Group risk API (A$m)	30	30	30	30	-
Group risk API (NZ$m)	38	39	38	39	(2.6)
Lapse rates6	9.9%	9.9%	9.3%	9.6%	n/a
Controllable costs (A$m)	46	44	35	79	4.5
Cost to income ratio	40.1%	37.1%	39.9%	38.3%	n/a
Controllable costs/annualpremium7	36.3%	34.5%	40.9%	37.1%	n/a

• 1 In NZ dollar terms, operating earnings were NZ$49m (2H 11 NZ$55m).

• 2 1H 11 and FY 11 includes AXA restated from 1 January 2011.

• 3 In NZ dollar terms, VNB has decreased by 80% on 2H 11.

• 5 1H 11 and FY 11 net cashflows includes AXA from 1 January 2011.

• 6 FY 11 and 1H 11 lapse rates include AXA lapses and API from 1 January 2011.

• 7 Based on monthly individual and group risk API.

• 4 Return on EV is not annualised for half year periods. FY 11 return on EV includes AXA restated for 12 months.

AMP Investor Report 1H 12 AMP Financial Services 17

New Zealand cont’d

Business overview

AFS NZ is principally focused on selling risk insurance business with a growing wealth management business. KiwiSaver is the key growth engine for the wealth management business. AFS NZ’s key priorities to increase shareholder value are:

• enhancing product features and offerings

• improving services to customers through developing market leading systems and processes

• building strong distribution relationships

• maximising cost efficiency.

Changes to the taxation of life insurance business in New Zealand, which will impact AFS NZ from 2015, are expected to result in a material increase in the amount of corporate tax paid by AFS NZ. These tax changes apply to all life insurance companies in New Zealand and are not specific to AFS NZ. To offset the impact of this change on operating earnings, AFS NZ is progressively growing its revenue base, reducing its overall costs and reducing the capital impacts of distributing life insurance.

Annual premium in-force (API)

1H 12 individual risk API was A$229m, up 5% from A$219m in 2H 11. In NZ dollar terms, individual risk API grew 1% to NZ$292m on 2H 11 and 4% on 1H 11.

Individual risk API increased despite a low growth economic environment, a competitive market and the continued impact of the Christchurch earthquake on all insurance costs.

Lapse rates

1H 12 lapse rates remain unchanged at 9.9% from 2H 11.

Lapse rates have remained resilient due to AMP’s strong aligned distribution network in the face of continued market and economic pressures. The New Zealand economic environment remains challenging and with further price increases likely across the industry to address the life insurance taxation changes, there is upward pressure on lapse rates.

AFS NZ’s lapse rates are significantly lower than the New Zealand life insurance industry average.

Operating earnings

Operating earnings decreased by A$5m (12%) to A$38m in 1H 12 from 2H 11 primarily as a result of lower experience profits in 1H 12.

Profit margins

Profit margins decreased by A$1m (3%) to A$37m, reflecting:

• the reclassification of A$1m from profit margins to underlying investment income, reflecting a change in assets backing shareholder capital, and

• higher controllable costs due to systems investment

offset by:

• higher wealth management operating earnings due to growth in KiwiSaver AUM (KiwiSaver AUM up 12% in 1H 12).

Experience profits

1H 12 experience profits reduced by A$4m to A$1m in 1H 12 from A$5m in 2H 11.

1H 12 experience profits were due to favourable term lapse experience, partly offset by morbidity losses in income protection as a result of higher incidence of claims. Higher 2H 11 experience profits were primarily driven by positive mortality experience.

Controllable costs

1H 12 controllable costs increased by A$2m to A$46m from 2H 11. Cost increases were largely driven by significant investment in systems to further integrate into Australian systems and processes to achieve greater efficiencies and improve customer, staff and adviser experience.

This increase in controllable costs was in part offset by synergy benefits from the further rationalisation of premises in Auckland, Wellington and Christchurch, major supplier contract negotiations and finalising organisational design across the business following the merger with AXA.

The cost to income ratio increased 3.0 percentage points to 40.1% due to the systems investment.

Return on capital

1H 12 RoBUE was 19.9% down from 23.2% in 2H 11, reflecting higher average capital and lower experience profits.

Embedded value and value of new business – at the 3% discount margin

EV increased 5.9% (in A$) before transfers in 1H 12 to A$1,041m.

Other than the expected return, the increase in EV is primarily due to the impact of currency movement, improvements in mortality and lapse assumptions partly offset by higher assumed investment management costs.

1H 12 VNB reduced to A$2m from A$4m in 1H 11 due to volume and mix impacts.

For further details on EV and VNB, refer to pages 23 to 27.

Advisers

There was a significant change for New Zealand advisers with the introduction of the New Zealand Financial Advisers Act on 1 July 2011. The changes created an enhanced compliance regime for all advisers. Total adviser numbers at 1H 12 were 685 compared to 704 at 2H 11, reflecting the impacts of the new compliance regime and the challenging market environment.

Definitional changes are anticipated in relation to the number of reported advisers following the implementation of the new regime, which are likely to lead to a lower number of reported advisers for FY 12.

KiwiSaver

The KiwiSaver market in New Zealand continues to grow strongly. The New Zealand Treasury is forecasting KiwiSaver AUM to grow to NZ$60b by 2021. This growth is underpinned by a move to 3% contributions from April 2012, government co-contributions matching employee contributions, and investment market growth.

As at 1H 12, AFS NZ had over 256,000 KiwiSaver customers and almost NZ$2.1b in AUM – an increase from 2H 11 of 3% for customer numbers and 9% for AUM. AMP AUM equates to 18.4%[1] of the current KiwiSaver market.

1 Based on 31 March industry data.

18 AMP Financial Services AMP Investor Report 1H 12

Cashflows and assets under management (AUM)

1H 12 cashfows1
Cashflows by product(A$m)	Cash inflows 1H 12 1H 11 % 1H/1H	Cash outflows 1H 12 1H 11 % 1H/1H	Net cashflows
			1H 12 1H 11 % 1H/1H
Australian contemporary wealth management AMP Flexible Super2 North3 SMSF4 Summit, Generations and iAccess (including Assure)5 Flexible Lifetime Super (superannuation and pension)6 Other retail investment andplatforms7	2,479 2,348 5.6 1,175 558 110.6 585 176 232.4 1,247 1,643 (24.1) 1,266 1,383 (8.5) 160 201 (20.4)	1,190 874 (36.2) 1,289 1,474 (12.6) 539 349 (54.4) 636 209 204.3 171 94 (81.9) 414 82 404.9 1,744 1,790 2.6 (497) (147) (238.1) 2,183 2,375 8.1 (917) (992) 7.6 351 340 (3.2) (191) (139) (37.4)
Total retail on AMP platforms Corporate superannuation and pensions8 Corporate superannuation mandate wins	6,912 6,309 9.6 1,767 1,738 1.7 - 104 (100.0)	6,178 5,822 (6.1) 734 487 50.7 1,505 1,442 (4.4) 262 296 (11.5) - - n/a - 104 (100.0)
Total corporate superannuation	1,767 1,842 (4.1)	1,505 1,442 (4.4) 262 400 (34.5)
Total retail and corporate super on AMPplatforms	8,679 8,151 6.5	7,683 7,264 (5.8) 996 887 12.3
Externalplatforms9	1,460 1,415 3.2	1,809 1,838 1.6 (349) (423) 17.5
Total Australian contemporary wealth management 10,139 9,566 6.0		9,492 9,102 (4.3) 647 464 39.4
Total Australian contemporary wealth protection Individual risk 625 584 7.0 Grouprisk 172 163 5.5		280 239 (17.2) 345 345 - 108 103 (4.9) 64 60 6.7
Total Australian contemporary wealthprotection 797 747 6.7		388 342 (13.5) 409 405 1.0
Total Australian contemporary 10,936 10,313 6.0 Australian mature 336 347 (3.2)		9,880 9,444 (4.6)1,056 869 21.5 1,142 1,208 5.5 (806) (861) 6.4
Total Australia 11,272 10,660 5.711,022 10,652 (3.5) 250 8 n/a New Zealand KiwiSaver 184 176 4.5 61 41 (48.8) 123 135 (8.9) Other 339 421 (19.5) 411 470 12.6 (72) (49) (46.9)
New Zealand 523 597 (12.4) 472 511 7.6 51 86 (40.7)
Total AFS cashflows 11,795 11,257 4.811,494 11,163 (3.0) 301 94 220.2
Australian contemporary wealth management – AMP Bank by product10 Deposits (Supercash, Super TDs & Platform TDs) 804 263 205.7 Deposits (retail) 626 498 25.7 Mortgages 863 876 (1.5)

• 1 Comparatives have been restated to include AXA.

• 2 AMP Flexible Super is a flexible all in one superannuation and retirement account for individual retail and SME business.

• 3 North is a market leading fully functioning wrap platform which includes guaranteed and non-guaranteed options.

• 4 SMSF includes Multiport, SuperIQ and Ascend administration platforms. SuperIQ is 49% owned by AMP.

• 5 Summit and Generations are owned and developed platforms. iAccess and Assure are ipac badges on Summit.

• 6 Flexible Lifetime Super (superannuation and pensions) was closed to new business from 1 July 2010. A small component of corporate superannuation schemes are included.

• 7 Other retail investment and platforms include Flexible Lifetime – Investments, AMP Personal Portfolio and Synergy.

• 8 Corporate superannuation and pensions comprise SignatureSuper, CustomSuper, SuperLeader and AXA Business Super.

• 9 External platforms comprise Asgard, BT Wrap, Macquarie Wrap, Solar and other margin earning platforms used by Genesys.

• 10 Represents movements in AMP Bank’s deposits and mortgage books.

AMP Investor Report 1H 12 AMP Financial Services 19

Cashflows and assets under management (AUM) cont’d

Cashflows by distribution channel(A$m)	Cash inflows 1H 12 1H 11 % 1H/1H	Cash outflows 1H 12 1H 11 % 1H/1H	Net cashflows
			1H 12 1H 11 % 1H/1H
AMP Financial Planning Hillross AXA Financial Planning/Charter Financial Planning Jigsaw advisers ipac group advisers and Tynan Mackenzie Genesys group advisers Direct (including corporate superannuation) Centrally managed clients and other 3rdpartydistributors	4,422 4,412 0.2 921 893 3.1 1,559 1,572 (0.8) 116 137 (15.3) 857 718 19.4 572 478 19.7 896 931 (3.8) 721 403 78.9 1,208 1,116 8.2	4,228 4,101 (3.1) 930 958 2.9 1,435 1,528 6.1 158 138 (14.5) 970 924 (5.0) 573 459 (24.8) 684 621 (10.1) 568 510 (11.4) 1,476 1,413 (4.5)	194 311 (37.6) (9) (65) 86.2 124 44 181.8 (42) (1) n/a (113) (206) 45.1 (1) 19 n/a 212 310 (31.6) 153 (107) n/a (268) (297) 9.8
Total Australia 11,272 10,660 5.7 11,022 10,652 (3.5) New Zealand 523 597 (12.4) 472 511 7.6			250 8 n/a 51 86 (40.7)
Total AFS cashflows 11,795 11,257 4.8 11,494 11,163 (3.0)			301 94 220.2
Cash inflows Australian contemporary wealth management cash inflows(A$m) 1H 12 1H 11
Member contributions 1,120 1,104 Employer contributions 2,026 1,920
Total contributions 3,146 3,024 Transfers and roll-overs in1 6,811 6,325 Other cash inflows 182 217
Total CWM 10,139 9,566

1 Transfers and roll-overs in includes the transfer of accumulated member balances into AMP from both internal (eg retail superannuation to allocated pension/annuities) and external products.

20 AMP Financial Services AMP Investor Report 1H 12

Cashflows and assets under management (AUM) cont’d

Overview

AFS cashflows and AUM movements are restated to include AXA for the six months to 30 June 2011.

AFS net cashflows increased by A$207m to a net inflow of A$301m for 1H 12. The improvement in net cashflows was generated by stronger flows on AMP’s platforms (up by A$247m), lower net outflows from Mature (down by A$55m) offset by lower corporate superannuation net cashflows (down by A$138m).

AFS cash inflows increased by 4.8% (A$538m) to A$11.8b in 1H 12. Cash outflows increased by 3.0% (A$331m) to A$11.5b.

AMP’s reported cash inflow and outflow numbers are significantly impacted by internal movements between products. Most internal flows occur within the contemporary wealth management segment as customers move between wealth management products, including superannuation and pension products. Internal flows across CWM products were A$4.2b (1H 11 A$4.2b), representing approximately 42% (1H 11 43%) of total CWM cash inflows. CWM cash inflows increased by 6.0% (A$0.6b) and CWM cash outflows increased by 4.3% (A$0.4b).

AMP retail platforms

AMP’s retail platforms comprise platforms which are owned, developed and operated by AMP. AMP retail platforms net cashflows increased by A$247m (51%) to A$734m in 1H 12. Retail platform cash inflows increased by A$603m (10%) to A$6.9b and cash outflows increased by A$356m (6%) to A$6.2b.

AMP Flexible Super

AMP Flexible Super is a flexible all-in-one superannuation and retirement product, launched in May 2010. At 30 June 2012, there were approximately 136,000 customers, up from 70,000 at 30 June 2011. In 1H 12, AMP Flexible Super AUM increased by A$1.4b to A$5.7b, driven by strong cash inflows.

AMP Flexible Super net cashflows were A$1.3b in 1H 12, down from A$1.5b in 1H 11, reflecting higher pension payments to customers, with the superannuation account contributing A$0.7b and the pension account contributing A$0.6b.

AMP Flexible Super cash inflows were A$2.5b in 1H 12, up 6% from A$2.3b in 1H 11. 62% of AMP Flexible Super cash inflows were contributions to superannuation accounts and 38% of contributions were to retirement accounts. Cash inflows to superannuation accounts increased by A$150m to A$1.5b and are sourced from both internal and external sources. The growth in AMP Flexible Super – Superannuation cash inflows is due to the growth in customer numbers and existing customers consolidating their superannuation into AMP Flexible Super. Cash inflows from discretionary member contributions were higher, driven by the larger customer base and an improved traction in writing business in the small and medium sized employer market. AMP Flexible Super – Superannuation customers increased to 119,000 at 30 June 2012 from 93,000 at 31 December 2011.

AMP Flexible Super – Superannuation offering to small and medium sized businesses continues to attract strong interest. At 30 June 2012 there were 19,800 customers and A$233m of AUM, up from 13,500 customers and A$149m of AUM at 31 December 2011.

1H 12 cash inflows includes A$117m (1% of CWM cash inflows) relating to pre-retirement customers moving from AMP’s closed retail superannuation product (Flexible Lifetime – Super) to AMP Flexible Super – Superannuation. Only A$8m of the A$117m was invested in the core option (A$60m in the select option and A$49m in the choice option). The AMP Flexible Super – choice option has similar pricing to the closed Flexible Lifetime – Super product.

AMP Flexible Super – Superannuation cash outflows were A$857m in 1H 12, up from A$776m in 1H 11. AMP Flexible Super – Superannuation outflows includes A$0.7b of outflows representing customers moving from AMP Flexible Super – Superannuation to AMP Flexible Super – Retirement. Only A$40m of AMP Flexible Super – Superannuation outflows represent transfers to competitors.

38% of AMP Flexible Super cash inflows were contributions to retirement accounts. In June 2010 AMP closed its retail pension product (Flexible Lifetime – allocated pension) to new business. Therefore, when customers move from accumulation to pension phase, they are now required to use a AMP Flexible Super – Retirement account. AMP Flexible Super – Retirement cash inflows decreased by A$19m to A$950m in 1H 12, with inflows mainly sourced from internal movements from other AMP products. Retirement account customers increased to 17,400 at 30 June 2012 up from 13,000 at 31 December 2011.

AMP Flexible Super – Retirement cash outflows were A$333m in 1H 12 (A$98m in 1H 11), with A$128m being transfers back into AMP Flexible Super – Superannuation. External AMP Flexible Super – Retirement cash outflows primarily relate to pension payments to customers.

During 1H 12, 105 of the 767 AXA and Charter Financial Planning advisers wrote business using the AMP Flexible Super product. In 1H 12, A$10m of net cashflows was sourced from this channel.

North platform

The North platform is a full service wrap platform which offers a protected growth guarantee product and non-guarantee product.

North net cashflows increased by A$427m to A$636m in 1H 12. The strong growth in North net cashflows since 1H 11 was due to the release of the wrap service in March 2011, which offers a full range of investment options. Cash inflows achieved strong momentum in 1H 12 with non-guaranteed cash inflows in particular growing strongly. These represented 78% of 1H 12 total North cash inflows, up from 63% in 1H 11.

North non-guaranteed net cashflows were A$581m (91%) of total netflows in 1H 12, up from A$160m (77%) in 1H 11. Nonguaranteed cash inflows increased by A$564m in 1H 12 to A$918m. The increase in non-guaranteed flows was driven by stronger cash inflows from aligned advisers (85% of cash inflows) particularly from AMP Financial Planning and Hillross. North non-guaranteed cash outflows increased by A$143m in 1H 12 due to higher pension payments to customers, reflecting the growth in the product. Superannuation outflows also increased, reflecting growth from the inforce book and clients transitioning into the pension phase.

Net cashflows of North guaranteed options were A$55m (9%) of total netflows in 1H 12, up from A$49m (23%) in 1H 11.

AMP Investor Report 1H 12 AMP Financial Services 21

Cashflows and assets under management (AUM) cont’d

AMP Bank Platform Term Deposits were added to AXA’s North and Summit platforms in 2011 – to North in April, and to Summit in June. Since this date, over A$400m of new term deposits were acquired by AMP Bank through the North and Summit platforms. In 1H 12, term deposits of A$176m (A$58m from North, and A$118m from Summit) have been sourced.

During 1H 12, AMP Financial Planning and Hillross planners were able to use the North Platform for their clients. In 1H 12, from these planner groups, A$190m (16%) of cash inflows were sourced. This compares to A$2m in 1H 11.

AMP SMSF

AMP SMSF includes Multiport and Ascend administration platforms and a 49% interest in SuperIQ. In July 2012, AMP acquired Cavendish, the largest SMSF administrator in Australia with approximately 5,000 funds and 110 employees. Cavendish will form part of AMP SMSF.

The drivers for SMSF success are expected to be scale and efficiency in administration, broadening distribution reach and packaging product offers to appeal to customers. At 30 June 2012, AMP SMSF, through Multiport, SuperIQ and Ascend, managed approximately 3,537 funds respectively.

Multiport net cashflows increased by A$45m in 1H 12 to A$127m. Cash inflows increased by A$113m to A$289m, due to increased business development support and growth in customers. Cash outflows increased by A$68m to A$162m, driven by increased movement between Multiport superannuation and pension products.

The SMSF service, SuperIQ, was launched in October 2011, in which AMP owns 49%. SuperIQ net cashflows for 1H 12 were A$287m with A$431m in AUM at 30 June 2012.

Other retail platforms

Summit, Generations and iAccess net cashflows decreased by A$350m in 1H 12 to a net outflow of A$497m. The decrease in net cashflows was largely a result of lower cash inflows (down A$396m) as a result of the challenging investment environments and new business increasingly flowing to the North platform. Cash outflows declined by A$46m to A$1.7b and includes A$85m of transfers to North.

Flexible Lifetime Super and Flexible Lifetime Pension are AMP’s closed retail superannuation and pension products. As a result of these products being closed, both cash inflows and cash outflows have reduced, with inflows decreasing by A$117m in 1H 12 to A$1.3b. Cash outflows decreased by A$192m in 1H 12 to A$2.2b due to lower pension payments to customers and less superannuation customers moving from accumulation to pension phase following the closure of this product in 2010.

Other retail investment and platforms represents AMP’s Flexible Lifetime Investments product, AMP Personalised Portfolio Service and Synergy, a platform used by Genesys advisers. Other retail investment and platform net cash outflows were A$191m in 1H 12, up from a net outflow of A$139m in 1H 11. Retail investment cashflows have been impacted by weak investor sentiment and volatile equity markets while Synergy net flows decreased as a result of a reduction in adviser numbers in FY 11.

Corporate super

Corporate super net cashflows (excluding mandate wins) fell A$34m to A$262m in 1H 12.

Cash inflows (excluding mandate wins) increased by A$29m to A$1.8b in 1H 12. Cash inflows increased (2%) due to resilient Superannuation Guarantee Contributions (SGCs), reflecting the nature of these cash inflows.

Cash outflows (excluding mandate wins) increased by A$63m to A$1.5b in 1H 12. The increase in cash outflows was due to higher outflows of funds on the SignatureSuper and SuperLeader products. Cash outflows increased for these products due to higher external withdrawals.

There were no corporate super mandate wins in 1H 12 (1H 11 A$104m).

External platforms

External platforms represent superannuation, pension and investment products on the Asgard, Macquarie, BT Wrap platforms and other external platforms used by Genesys. External platform flows are largely driven by the Hillross, Genesys and Tynan Mackenzie licensees.

External platform net outflows improved by A$74m in 1H 12 to a net cash outflow of A$349m. Cash inflows increased by A$45m in 1H 12 to A$1.5b while cash outflows fell by A$29m in 1H 12 to A$1.8b. External platform flows benefited from the transfer of a financial planning business to Hillross which contributed A$90m to net flows. Cash inflows and outflows on Asgard suffered from an uncompetitive cash option on its platform.

External platform net cashflows were also impacted by lower Solar cash inflows. The Solar platform is a badged version of BT wrap used by Genesys advisers. Solar cash netflows fell by A$29m, impacted by lower Genesys adviser numbers.

Mature

Mature net cash outflows decreased by A$55m to A$806m in 1H 12. Cash inflows decreased by A$11m while cash outflows fell A$66m due to lower run-off of the AMP term annuities book, which was closed to new business in 2009 as well as improvement in the retention of funds in RSA/ERF and investment linked products.

New Zealand

AFS New Zealand net cashflows decreased by A$35m to A$51m in 1H 12. In NZ dollar terms, net cashflows decreased by NZ$44m. KiwiSaver cash inflows increased by A$8m and AMP’s KiwiSaver products have now over 256,000 customers and A$1.6b of AUM. Cash outflows from KiwiSaver increased A$20m due to continued competition from the major banks and higher first home withdrawals. Higher member balances also contributed to the higher outflows.

Other net cashflows, which includes other wealth management products and mature products, decreased by A$23m to a net outflow of A$72m. Cash inflows fell due to continued poor investor sentiment and challenging market conditions across the industry. 1H 11 also benefited from a one-off corporate super inflow. Cash outflows improved due to lower payments on the closed mortgage products, however additional outflows are expected in 2H 12 following positive resolution of a number of the underlying assets allowing further capital payments to investors.

22 AMP Financial Services AMP Investor Report 1H 12

Cashflows and assets under management (AUM) cont’d

AMP Bank

AMP Bank’s deposit book grew strongly in 1H 12, increasing by A$1.4b (20%) to A$8.6b. The growth in deposits was as a result of improved distribution capability and competitive pricing. 52% of deposits are sourced from retail, 39% sourced from AMP superannuation cash and term deposits and the remaining 9% mainly from AMP managed investment fund platforms including North and Summit. The proportion of deposits sourced from superannuation and investment fund platforms continues to grow as customers continue to increase their allocation to cash.

AMP Bank’s mortgage book increased by A$0.9b (8%) in 1H 12 to A$12.0b. Mortgage demand was strong across all distribution channels, especially from mortgage brokers.

Persistency

Excluding major internal product flows from the persistency calculations, total AFS persistency in 1H 12 was 87.7% (FY 11 87.9%).

1H 12 AUM[1]

AUM(A$m) FY 11 AUM	1H 12 net cashflows Super- annuation Pension Investment Other Total net cashflows Other movements2 1H 12 AUM
Australian contemporary wealth management AMP Flexible Super 4,265 North 2,240 SMSF 1,323 Summit, Generations and iAccess (including Assure) 13,433 Flexible Lifetime (superannuation and pension) 23,158 Other retail investment andplatforms 3,194	672 617 - - 1,289 102 5,656 319 259 58 - 636 78 2,954 405 - 9 - 414 177 1,914 (176) (145) (176) - (497) 397 13,333 (312) (605) - - (917) 712 22,953 (35) (40) (116) - (191) 62 3,065
Total retail on AMPplatforms 47,613	873 86 (225) - 734 1,528 49,875
Total corporate superannuation 19,175	238 24 - - 262 502 19,939
Total retail and corporate superannuation on AMPproducts 66,788	1,111 110 (225) - 996 2,030 69,814
Externalplatforms 12,471	(89) (154) (106) - (349) 373 12,495
Total Australian contemporary wealth management 79,259	1,022 (44) (331) - 647 2,403 82,309
Australian contemporary wealthprotection -	- - - 409 409 (409) -
Australian mature 22,718	(324) (138) (15) (329) (806) 995 22,907
Total Australia 101,977	698 (182) (346) 80 250 2,989 105,216
New Zealand KiwiSaver 1,462 Other 7,775	123 - - - 123 57 1,642 7 (2) (96) 19 (72) 191 7,894
New Zealand 9,237	130 (2) (96) 19 51 248 9,536
Total AUM 111,214	828 (184) (442) 99 301 3,237 114,752
Australian contemporary wealth management – AMP Bank Deposits (Supercash, Super TDs and Platform TDs) 3,301 Deposits (retail) 3,860 Mortgages 11,173	by product 804 4,105 626 4,486 863 12,036
Australian contemporary wealth management – AUM by asset class Cash and fixed interest 32% 33% Australian equities 35% 34% International equities 23% 22% Property 6% 6% Other 4% 5%
Total 100% 100%

1 Reported AUM excludes shareholder capital.

2 Other movements includes fees, investment returns, taxes, as well as foreign currency movements on New Zealand AUM.

AMP Investor Report 1H 12 AMP Financial Services 23

Embedded value (EV) and value of new business (VNB)

AFS embedded value(A$m)1	3% dm 4% dm 5% dm
Embedded value as at FY 11 Expected return Investment returns, bond yields and other VNB Net transfers out	11,023 10,300 9,659 355 381 404 204 167 141 208 178 150 (310) (310) (310)
Embedded value as at 1H 12	11,480 10,716 10,044
Return on embedded value as at 1H 122	7.0% 7.0% 7.2%
Embedded value comprises Adjusted net assets3 Value of in-force business4	899 899 899 10,581 9,817 9,145
AFS embedded value(A$m) at the 3% dm	Wealth management Wealth protection Mature New Zealand Total
Embedded value as at FY 11 Expected return Investment returns, bond yields and other VNB Net transfers out	4,541 3,593 1,906 983 11,023 146 116 62 31 355 85 88 6 25 204 89 112 5 2 208 (146) (21) (124) (19) (310)
Embedded value as at 1H 12	4,715 3,888 1,855 1,022 11,480
Return on embedded value as at 1H 122	7.0% 8.8% 3.8% 5.9% 7.0%
AFS embedded value(A$m) at the 4% dm
Embedded value as at FY 11 Expected return Investment returns, bond yields and other VNB Net transfers out	4,249 3,320 1,808 923 10,300 157 124 67 33 381 66 66 15 20 167 77 98 3 - 178 (146) (21) (124) (19) (310)
Embedded value as at 1H 12	4,403 3,587 1,769 957 10,716
Return on embedded value as at 1H 122	7.1% 8.7% 4.7% 5.7% 7.0%
AFS embedded value(A$m) at the 5% dm
Embedded value as at FY 11 Expected return Investment returns, bond yields and other VNB Net transfers out	3,994 3,071 1,723 871 9,659 168 129 72 35 404 53 51 21 16 141 66 83 2 (1) 150 (146) (21) (124) (19) (310)
Embedded value as at 1H 12	4,135 3,313 1,694 902 10,044
Return on embedded value as at 1H 122	7.2% 8.6% 5.5% 5.7% 7.2%
AFS value of new business(A$m)1,5	3% dm 4% dm 5% dm
	1H 12 1H 11 1H 12 1H 11 1H 12 1H 11
Value of new business by business line Wealth management Wealth protection Mature New Zealand	89 90 77 79 66 68 112 91 98 80 83 69 5 5 3 5 2 5 2 4 - 3 (1) 2
Total	208 190 178 167 150 144

1 AMP Bank is excluded.

• 2 Return on EV not annualised for half year periods.

• 3 Adjusted net assets are shareholder assets in excess of regulatory capital requirements (allocated at product level), at face value.

• 4 Value of in-force business discounts the value of shareholder net assets

• (A$2,847m at face value) to reflect expected time of release.

• 5 1H 11 VNB includes AXA for six months and includes the impact of FY 11 restatements.

24 AMP Financial Services AMP Investor Report 1H 12

Embedded value (EV) and value of new business (VNB) cont’d

Embedded value

1H 12 embedded value (EV) increased 7.0% (not annualised) before transfers at the 3% discount margin to A$11,790m.

Net transfer of A$310m include capital and AFS profits, franking credits (at 70% of face value) and other value transferred to AMP Group.

Apart from the expected return, the positive increase in 1H 12 embedded value was the result of:

• Product changes (A$56m). This was driven by better than expected outcomes from the income protection pricing review as well improved pricing for some lump sum risk products.

• Persistency and claims assumptions (-A$92m). The primary contributors to this are an overall increase in the assumed rate of discontinuance for lump sum risk products and increased trauma claim assumptions.

• Other (A$65m). This includes $30m from changes in Australian/ New Zealand exchange rates.

• Investment and bond yields (A$175m). This is primarily driven by lower discount rates benefiting the value of the in-force contemporary wealth protections (CWP) and contemporary wealth management (CWM) books, with a partial offset due to weaker investment markets on CWM. For mature, the benefit of lower discount rates was more than offset by the fall in shareholder’s share of future participating business investment returns due to lower bond rates as well as the impact of weaker investment markets.

Change in AFS embedded value FY 11 to 1H 12 (A$m)

(at a discount rate of 3% above the bond yield)

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----- Start of picture text -----

12,000
65
11,800 208 56
11,790
11,600 175 (92)
355 (310) 11,480
11,400
11,200
11,000
11,023
10,800
10,600
FY 11 EV Expected returnInvestment andbond yields1H 12 new businessPersistency andclaims assumptionsProduct changesincluding repricing Other (before transfers)1H 12 EV Net transfers out (after transfers)1H 12 EV
A$m
----- End of picture text -----

AMP Investor Report 1H 12 AMP Financial Services 25

Embedded value (EV) and value of new business (VNB) cont’d

Value of new business

1H 12 value of new business (VNB) increased 9.5% to A$208m at the 3% discount margin.

VNB in 1H 12 of A$208m was A$45m below 2H 11 primarily as a result of 2H 11 VNB reflecting a full year impact of bond yield declines in 2H 11.

The increase in 1H 12 primarily reflects the benefit of a lower risk discount rate following the fall in bond yields from 1H 11 with the 10 year Australian Government bond yield down from 5.3% to 3.1%, along with lower controllable costs.

Change in AFS value of new business 1H 11 to 1H 12 (A$m)

(at a discount rate of 3% above the bond yield)

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----- Start of picture text -----

6
225 32
(11)
200 (4) (3) 208
195
(5) 190
(2)
175
150
125
100
75
1H 11 VNB Restatements1H 11 VNB restated1 Volume and mixinvestment assumptionsFuture economic/ ExpensesPersistency, claim and other assumptionsProduct changes Other 1H 12 VNB
A$m
----- End of picture text -----

1 Restatements reflect the impact of FY 11 restatements on reported 1H 11 VNB.

26 AMP Financial Services AMP Investor Report 1H 12

EV and VNB sensitivities

	Wealth	Wealth		New
1H 12 change in embedded value(A$m)	management	protection	Mature	Zealand	Total
5% reduction in AFS controllable costs	105	45	27	13	190
10% reduction in discontinuance rates	258	365	46	69	738
1% (100 bps) decrease in long-term bond yields	84	194	(71)	25	232
1% (100 bps) increase in long-term bond yields	(82)	(177)	54	(27)	(232)
10% increase in Australian equities	77	-	48	-	125
10% increase in international equities	45	-	14	13	72
1% reduction in investment fees	(87)	-	(7)	(4)	(98)
	Wealth	Wealth		New
1H 12 change in value of new business(A$m)	management	protection	Mature	Zealand	Total
5% reduction in AFS controllable costs	7	5	-	2	14
10% reduction in discontinuance rates	11	21	1	2	35
1% (100 bps) decrease in long-term bond yields	2	11	-	1	14
1% (100 bps) increase in long-term bond yields	(2)	(10)	-	-	(12)
5% increase in sales (all costs variable)	4	5	-	-	9
5% increase in sales (acquisition controllable costs fixed)	6	8	-	1	15
1% reduction in investment fees	(4)	-	-	-	(4)

Key assumptions

The tables illustrate the sensitivity of the embedded and new business values to various economic and business variables.

The sensitivities can at best be only indicative because:

• they are not always linear or symmetrical, due to the asymmetric nature of risks facing insurance companies, including the scope for policyholders to exercise options against the company or to benefit from guarantees

• they assume that the movement in a particular variable is independent of all others; for the change in discontinuance rates, unit costs are assumed unchanged; for the 5% increase in sales (all costs variable), unit costs are assumed unchanged; for the 5% increase in sales (controllable costs fixed), unit costs are assumed to reduce because of the increase in business volumes

• they show the average movement for the risk discount margin range, ie 4%

• they are based on the 1H 12 position, ie not “forward looking”, and make no allowance for events subsequent to 30 June 2012

• they are based on the 1H 12 sales product mix.

Note, at 1H 12 the VNB sensitivities are against the six month value of new business.

The benefit of future synergies following the merger with AXA has only been reflected to the extent that they appear as a cost reduction in the 2012 budget. Further synergies are expected to predominantly emerge in AFS controllable costs. To determine the impact of further synergies on EV and VNB, the most appropriate sensitivity to use is the reduction in controllable costs.

The 10% reduction in discontinuance rates is based on a uniform reduction in lapses in all future years (eg a 15% lapse rate changes to 13.5%).

The 10% increase in Australian equities assumes all Australian shares increase in value by 10%.

Investment fees are defined as all ongoing fees (including member fees and rebates) on investment products with explicit fees. The investment fee sensitivity assumes no corresponding reduction in funds management costs.

For wealth protection, lower discount rates due to lower long-term bond yields increases the present value of the margins in future wealth protection premiums and EV. For mature, the benefit of lower discount rates due to lower long-term bond yields is more than offset by the associated decrease in future participating business investment returns.

The 1% increase in long-term government bond yields is assumed to be accompanied by a 0.5% increase in Consumer Price Index (CPI) and other associated changes in economic assumptions, bonus rates, risk discount rates and bond values. For equities, the assumed future earning rate is assumed to increase by 1% (ie the equity risk premium is unchanged).

AMP Investor Report 1H 12 AMP Financial Services 27

EV assumptions

Economic assumptions

Risk discount rates are based on the yield on long-term government bonds plus a discount margin.

Annualised 10 year Government bond yields	1H 12	FY 11
Australia	3.1%	3.7%
New Zealand	3.4%	3.8%

Assumed investment returns gross of income tax (% pa) are set at risk premiums over long-term government bond rates:

Risk premiums	1H 12	FY 11
Local equities1	4.5%	4.5%
International equities	3.5%	3.5%
Property	2.5%	2.5%
Fixed interest2	0.8%	0.8%
Cash	(0.5%)	(0.5%)

• 1 Includes allowance for franking credits on equity income.

• 2 The risk premium depends on the duration and credit rating of the underlying bond portfolios and hence can vary. The premium shown is the average across all portfolios.

For the purpose of setting future investment assumptions, the broad asset mixes assumed for participating business (A$19b) in Australia are:

Australia	1H 12	FY 11
Equities	32%	32%
Property	12%	12%
Fixed interest	38%	38%
Cash	18%	18%

These asset mixes are not necessarily the same as the actual asset mix at the valuation date, as they reflect long-term future assumptions. The mixes shown are the weighted average across all Australian participating business, which is mostly in the mature business.

Annual inflation rates assumed are:

Inflation rate		1H 12	FY 11
Australia	– CPI	2.4%	2.6%
Australia	– Expenses	3.0%	3.0%
New Zealand	– CPI	2.5%	2.5%
New Zealand	– Expenses	3.0%	3.0%

Operating assumptions

Future mortality, morbidity and discontinuance rates are based on an analysis of recent AFS experience, general industry experience and, in some cases, population experience.

Changes since 31 December 2011 include:

• lower future mortality claim assumptions for AMP Life Australian and New Zealand Conventional

• increases to the cost of trauma claims

• changes to the discontinuance assumptions for retail lump sum Risk products, with an overall increase in the assumed rate of discontinuance

• a reduction in KiwiSaver discontinuance assumptions

• a reduction in the assumed rate of rollover of funds from SignatureSuper to AMP Flexible Super and Flexible Lifetime Superannuation.

Maintenance unit costs are derived from 2012 budgets. Allowance is made for future inflation but potential cost improvements arising after 2012 are ignored. Note that only synergies expected to be captured in 2012 from the purchase of AXA have been allowed for.

Future rates of bonus for participating business were set at levels that were supportable by the assets backing the respective product sub-funds as at 30 June 2012.

Acquisition costs for VNB are the actual costs incurred in 1H 12.

Franking credits are valued at 70% of face value for Australia.

The continuation of the existing tax and regulatory framework is assumed and no additional allowance for regulatory change (including Future of Financial Advice, Stronger Super and LAGIC) is made other than the A$52m post tax provision for regulatory changes (refer to page 7).

Further details

Assumptions are consistent with the best estimate assumptions used in calculating policy liabilities for AMP Life and NMLA. A more detailed description of these assumptions and their 31 December 2011 values can be found in the notes to the 2011 AMP Limited Financial Report. As all relevant business is projected for the embedded value, the description of the assumptions in the notes applies even where that business is not valued by projection methods for profit reporting.

These inflation rates are used for indexation of premiums and benefits, where appropriate, and for expense inflation.

28 AMP Capital AMP Investor Report 1H 12

AMP Capital financial summary

A$m	1H 12	2H 111	1H 111	FY 111	% 1H/2H
Profit and loss
Internal AUM based management fees	89	85	78	163	4.7
External AUM based management fees	88	90	89	179	(2.2)
Non-AUM based management fees	23	27	25	52	(14.8)
Performance and transaction fees	23	12	20	32	91.7
Fee income	223	214	212	426	4.2
Controllable costs	(159)	(166)	(152)	(318)	4.2
Tax expense	(17)	(10)	(16)	(26)	(70.0)
Operating earnings before net seed pool income	47	38	44	82	23.7
Net seedpool income	4	-	1	1	n/a
Operating earnings before minority interests	51	38	45	83	34.2
Minorityinterests in operatingearnings2	(6)	-	-	-	n/a
Operating earnings	45	38	45	83	18.4
Underlyinginvestment income3	3	3	2	5	-
Underlying operating profit after income tax	48	41	47	88	17.1
Controllable costs
Employee related	92	85	81	166	8.2
Investment operations and other	59	71	64	135	(16.9)
Total operating costs	151	156	145	301	(3.2)
Project costs	8	10	7	17	(20.0)
Total controllable costs	159	166	152	318	(4.2)
Cost to income ratio	68.2%	76.0%	70.1%	73.2%	n/a
Controllable costs to average AUM (bps)4	25.6	26.5	26.4	26.5	n/a
AUM (A$b)	123.3	123.0	129.6	123.0	0.2
Average AUM (A$b) – total4	124.3	125.1	115.2	120.1	(0.6)
Average AUM (A$b) – internal4	83.9	83.3	74.0	78.7	0.7
Average AUM (A$b) – external4	40.4	41.8	41.2	41.5	(3.3)
AUM based management fees to AUM (bps) – internal4	21.3	20.5	21.1	20.7	n/a
AUM based management fees to AUM (bps) – external4	43.5	43.0	43.4	43.2	n/a
Performance and transaction fees to AUM (bps)4	3.6	1.8	3.5	2.6	n/a
End period tangible capital resources – after transfers (A$m)	210	271	249	271	(22.5)
RoBUE	50.0%	32.3%	38.5%	35.4%	n/a

• 1 2011 includes AXA investment management business for the period 31 March 2011 to 31 December 2011.

• 2 Minority interest for the period 1 March 2012 to 30 June 2012.

• 3 Underlying investment income is disclosed net of minority interest for the period 1 March 2012 to 30 June 2012.

• 4 Based on average of monthly average AUM.

AMP Investor Report 1H 12 AMP Capital 29

AMP Capital financial summary cont’d

Business overview

AMP Capital is a diversified investment manager, managing investments across major asset classes including equities, fixed interest, infrastructure, property, diversified funds, multi-manager and multi-asset funds.

On 1 March 2012, AMP Capital and Mitsubishi UFJ Trust and Banking Corporation (MUTB) completed the transaction which formed the strategic business and capital alliance between the two parties. As a result of the transaction, MUTB is entitled to 15% of AMP Capital Holdings Limited’s statutory after income tax profit. For Investor Report purposes, AMP Capital has reported 100% of its fee income and costs and deducted MUTB’s 15% minority interest from operating earnings and from underlying investment income.

On 1 April AMP Capital dissolved its joint venture, AMP Capital Brookfield (ACB). AMP Capital now delivers portfolio management in-house for the listed real estate and listed infrastructure asset classes.

Operating earnings

AMP Capital’s 1H 12 operating earnings before minority interests were A$51m, up from A$38m in 2H 11. AMP Capital’s operating earnings increased as a result of cost efficiencies, including merger synergies, resulting in lower controllable costs; investment performance driving higher performance fees; and a strong contribution from seed pool investments.

Fee income

Fee income increased A$9m (4%) in 1H 12 to A$223m from A$214m in 2H 11. The increase in 1H 12 fee income was driven by an A$11m (92%) increase in performance and transaction fees and a A$2m (1%) increase in AUM based management fees, partially offset by lower non-AUM based management fees (down A$4m, 15%).

AUM based management fees increased A$2m (1%) while average AUM decreased A$0.8b (1%) in 1H 12. Revenue synergies of A$4m were generated in 1H 12 as AMP Capital continued to transition asset management activities from external managers.

Internal AUM based management fees increased A$4m (5%) to A$89m in 1H 12. The increase was primarily due to a 4% increase in internal AUM based management fees to AUM and a 1% increase in average internal AUM. Internal AUM based management fees to AUM increased from 20.5 bps in 2H 11 to 21.3 bps in 1H 12 as the proportion of AUM managed by external investment managers, including AllianceBernstein and the ACB joint venture, decreased, consequently reducing external manager costs. It is expected the ongoing transition of investment management services from AllianceBernstein to AMP Capital and a full period of internalised management of assets previously managed through the ACB joint venture will continue to reduce AMP Capital’s external investment management costs.

External AUM based management fees decreased A$2m (2%) to A$88m in 1H 12. The decrease was primarily due to a 3% decrease in average external AUM partly offset by a 1% increase in external AUM based management fees to AUM.

External AUM based management fees to AUM increased by 0.5 bps to 43.5 bps as the AUM managed by the ACB joint venture was brought in house, partly offset by a reduction in high margin Infrastructure AUM due to a separately managed account client internalising management of a mandate.

Non-AUM based management fees include property asset management, development and leasing fees and bond lending fees. Non-AUM based management fees decreased by A$4m to A$23m, primarily due to lower property leasing fees. Lower property leasing fees reflect large lease renewals in 2H 11 not repeated in 1H 12 coupled with high occupancy levels across the property portfolio.

1H 12 performance fees were A$21m, up from A$8m in 2H 11. The improvement in performance fees was primarily due to outperformance of the listed infrastructure fund, DUET (A$6m), and timing of fees generated from Infrastructure funds which are predominantly only entitled to recognise performance fees in the first half of the year. Performance fees were also generated across fixed income, Australian equities and alternative assets.

In July, AMP Capital and DUET announced they had agreed to internalise the management of DUET conditional on approval of DUET’s unitholders. If approved, AMP Capital will provide support services up to 30 June 2013 but would cease to be entitled to performance fees from 30 June 2012. Consideration payable to AMP Capital for the internalisation, if approved, will be recognised as part of Group Office other items (refer to page 42 for details).

1H 12 transaction fees were A$2m, down from A$4m in 2H 11. Transaction fees predominantly relate to debt advisory services which fluctuate with the timing and quantum of debt maturities.

Controllable costs

Controllable costs decreased by A$7m (4%) in 1H 12 to A$159m from A$166m in 2H 11. A A$4m increase in costs associated with bringing operations of the ACB joint venture in-house from 1 April 2012 was more than offset by a continued focus on improving the cost efficiency of the business as well as synergy realisation.

Employee costs increased by A$7m (8%) in 1H 12 predominantly due to higher variable remuneration costs reflecting improved financial performance. Costs also increased as staff previously employed within the ACB joint venture were brought in-house. These cost increases were partially offset by synergy realisation.

Investment operations and other costs decreased by A$12m (17%) in 1H 12. The decrease in costs reflects lower discretionary spend, decreased IT spend through efficiency initiatives as well as synergy realisation as assets were transitioned to a single custodian. These cost reductions were partially offset by operating costs for activities previously undertaken within the ACB joint venture.

Project costs decreased by A$2m in 1H 12 to A$8m. Project costs represent the amortisation cost for new and upgraded operating platforms as well as funding of growth initiatives.

The cost to income ratio decreased by 7.8 percentage points to 68.2%.

30 AMP Capital AMP Investor Report 1H 12

AMP Capital financial summary cont’d

Tax expense

AMP Capital’s effective tax rate in 1H 12 was 26.9% (2H 11 22.7%), which is lower than the Australian corporate tax rate (30%) due to tax concessions as a result of undertaking offshore activities and the receipt of joint venture (JV) income.

AMP Capital’s effective tax rate increased following the settlement of the MUTB transaction as AMP Capital is no longer wholly-owned by AMP and the amount of tax concessions claimed as a result of undertaking offshore activities reduced. Further, the dissolution of the ACB joint venture decreased the level of JV income as a proportion of total profits, consequently increasing the effective tax rate.

Future effective tax rates will be impacted by the proportion of earnings generated from offshore activities and JV income.

Return on capital

RoBUE increased to 50.0% in 1H 12 due to higher operating earnings and lower average capital. Whilst higher levels of capital are being retained within the business in advance of implementation of the revised ASIC financial requirements for responsible entities, this was more than offset by the reduction in capital as the funding mix of the seed pool was restructured under the MUTB strategic business and capital alliance to be predominantly debt.

AUM and cashflows

AUM increased by A$0.3b to A$123.3b in 1H 12, due to positive investment returns (+A$3.0b), largely offset by negative net cashflows (-A$2.8b).

AMP Capital AUM includes A$4b of AXA AUM for which AllianceBernstein is the asset manager and A$6.7b which transitioned to AMP Capital management over 1H 12 and 2H 11. It is expected that during 2H 12, asset management for a further A$2b of AUM will transition to AMP Capital. The transfer of investment management services to AMP Capital will continue to reduce external investment manager costs. AllianceBernstein is expected to remain as the asset manager of approximately A$2b of AXA AUM for a number of years.

External AUM decreased by A$0.9b (2%) in 1H 12 to A$40.2b, due to negative net cashflows (-A$1.3b) partly offset by positive investment returns (+A$0.5b). External cash outflows were predominantly driven by a separately managed account client internalising management of an Infrastructure mandate (-A$0.8b), net outflows from Japanese retail clients (-A$0.7b) and net outflows from AXA equity products managed by an external investment manager (-A$0.2b). These outflows were partly offset by a number of mandate wins from domestic and international clients including flows into the Multi-Asset Fund, the Australian Equity Concentrated Fund, the Infrastructure Debt Fund and Fixed Income funds.

In June 2012, AMP Capital launched its first retail product into the Japanese market under the strategic business and capital alliance with MUTB. The product attracted A$177m in net cashflows to the end of 1H 12. AMP Capital continues to work closely with MUTB on the development and release of products for both institutional and retail Japanese investors. AMP Capital is also working closely with its existing Japanese distributors to develop new products and broaden distribution. AMP Capital continues to manage over A$7.1b in AUM for clients from Japan. The Japanese market continues to be a key distribution focus as AMP Capital partners with MUTB and its extensive distribution network.

Internal AUM increased by A$1.1b (1%) in 1H 12 to A$83.1b, due to strong investment returns (+A$2.5b), partly offset by negative net cashflows (-A$1.4b).

Internal net cashflows include AMP Group payments such as dividend payments to shareholders and inflows/outflows from AFS products including products in run-off. Net cashflows from AFS are net of wealth management fees and taxes. AMP Capital manages all of AMP Life’s and part of NMLA’s Mature AUM, which is expected to run-off between 4% and 6% per annum. Internal net cashflows are being impacted by weak investor sentiment, which results in lower discretionary contributions into AFS products and in turn lower AMP Capital net cashflows. Internal net cashflows are also impacted by flows to cash investment options managed by AMP Bank.

Refer to the tables on page 32 for more detail on external and internal cashflows.

Net seed pool income

The seed pool is designed to assist business growth by seeding funds with assets and by investing initial equity in new funds.

During 1H 12, the seed pool funding mix shifted to being predominantly debt funded rather than funded by shareholder equity. AMP and MUTB contribute debt funding based on their respective ownership of AMP Capital Holdings Limited.

At 30 June 2012, the seed pool held investment assets of A$97m, the largest of which was a 14.3% stake in Singapore Exchange listed AIMS AMP Capital Industrial REIT.

Given the variable mix of short-term asset holdings and longer term cornerstone investments, the seed pool result will vary from year to year. Over the medium term, the seed pool is expected to break even. The 1H 12 net seed pool profit of A$4m was due to distributions received and an increase in the valuation of investment assets held. This was partially offset by the increase in funding costs as the seed pool moved to being predominantly debt funded.

Cashflows from Japan have been impacted by negative investor sentiment similar to that seen domestically with a shift in funds towards bank deposits and similar products. Regulatory reviews of the managed funds industry have also weighed on investor sentiment. The six month period to the end of March 2012 saw net cash outflows across the whole managed funds industry in Japan although cashflows have stabilised more recently.

AMP Investor Report 1H 12 AMP Capital 31

AMP Capital financial summary cont’d

Movement in operating earnings 2H 11 to 1H 12

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60
7
4
50 11
2 (7) (6) 45
40
38
(4)
30
20
10
0
operating earnings2H 11Higher AUM based management feesLower non-AUM based management feesHigher performanceand transaction fees controllable costsLower Higher taxexpense seed pool incomeHigher net Minority interest operating earnings1H 12
A$m
----- End of picture text -----

Average AUM and AUM based management fees

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----- Start of picture text -----

42.7 43.4 43.0 43.5
100 23.8
21.1 21.3
20.5
$83.3b $83.9b
80
$74.0b
$59.6b
60
92% 93% 94% 94%
other other other other
$41.2b $41.8b $40.4b
40 $37.4b
56% 59% 60% 59% Other =
other other other other equities, fixed
interest and
20 direct
investments
44% P&I 41% P&I 40% P&I 41% P&I
P&I =
property and
infrastructure
0 8% P&I 7% P&I 6% P&I 6% P&I
2H 10 1H 11 [1] 2H 11 1H 12
Average external AUM Average internal AUM
External AUM based management fees bps Internal AUM based management fees bps
Average AUM A$b
----- End of picture text -----

1 1H 11 average AUM and AUM based management fees include a three month contribution from AXA IM.

32 AMP Capital AMP Investor Report 1H 12

Cashflows and assets under management (AUM)

Cashflows by asset class(A$m)1	Cash inflows 1H 12 1H 11 % 1H/1H	Cash outflows 1H 12 1H 11 % 1H/1H	Net cashflows
			1H 12 1H 11 % 1H/1H
External Australian equities International equities Fixed interest Infrastructure Direct investments Property Alternative assets	350 759 (53.9) 451 1,069 (57.8) 1,387 1,548 (10.4) 265 130 103.8 - - - 28 406 (93.1) 23 1 n/a	475 858 (44.6) 996 1,157 (13.9) 1,500 1,623 (7.6) 812 32 n/a - 3 (100.0) 65 610 (89.3) 1 1 -	(125) (99) (26.3) (545) (88) n/a (113) (75) n/a (547) 98 n/a - (3) n/a (37) (204) n/a 22 - n/a
Total external	2,504 3,913 (36.0)	3,849 4,284 (10.2) (1,345) (371) n/a
Internal Australian equities International equities Fixed interest Infrastructure Direct investments Property Alternative assets	1,341 1,160 15.6 1,225 1,395 (12.2) 4,419 4,499 (1.8) 15 13 15.4 6 5 20.0 40 104 (61.5) 96 95 1.1	1,480 1,442 2.6 (139) (282) 50.7 1,032 2,123 (51.4) 193 (728) n/a 5,554 4,904 13.3 (1,135) (405) (180.2) 61 48 27.1 (46) (35) (31.4) 20 24 (16.7) (14) (19) 26.3 101 276 (63.4) (61) (172) 64.5 330 29 n/a (234) 66 n/a
Total internal	7,142 7,271 (1.8)	8,578 8,846 (3.0) (1,436) (1,575) 8.8
Total	9,646 11,184 (13.8) 12,427 13,130 (5.4) (2,781) (1,946) (42.9)
AUM by asset class(A$m)	FY 11 Net cashflows Investment returns and other2 1H 12 %
External Australian equities 3,574 (125) (57) 3,392 8 International equities 7,615 (545) 418 7,488 19 Fixed interest 12,627 (113) (187) 12,327 31 Infrastructure 4,644 (547) 246 4,343 11 Direct investments 36 - (11) 25 - Property3 12,522 (37) 72 12,557 31 Alternative assets4 7 22 13 42 -
Total external 41,025 (1,345) 494 40,174 100
Internal Australian equities 21,808 (139) 636 22,305 27 International equities 17,254 193 144 17,591 21 Fixed interest 35,775 (1,135) 1,432 36,072 43 Infrastructure 1,375 (46) 85 1,414 2 Direct investments 532 (14) 40 558 1 Property3 3,484 (61) 149 3,572 4 Alternative assets4 1,776 (234) 27 1,569 2
Total internal 82,004 (1,436) 2,513 83,081 100
Total Australian equities 25,382 (264) 579 25,697 21 International equities 24,869 (352) 562 25,079 20 Fixed interest 48,402 (1,248) 1,245 48,399 40 Infrastructure 6,019 (593) 331 5,757 5 Direct investments 568 (14) 29 583 - Property3 16,006 (98) 221 16,129 13 Alternative assets4 1,783 (212) 40 1,611 1
Total 123,029 (2,781) 3,007 123,255 100
AUM by source of client(A$m) FY 11 1H 12 %
Australia 99,781 101,230 82 New Zealand 13,457 13,004 11 Asia (including Middle East) 8,959 8,144 6 Rest of world 832 877 1
Total 123,029 123,255 100

1 1H 11 cashflows includes AXA investment management business for the 6 months to 30 June 2011.

2 Other includes distributions, taxes and foreign exchange movements.

3 Property AUM comprises Australian (A$14.2b), NZ (A$1.5b) and Asian (A$0.4b) managed assets. Australian property AUM is invested in office (39%), retail (50%) and industrial (7%) and other (4%).

• 4 Alternative assets refer to a range of investments that fall outside of the traditional asset classes and includes investments in commodities and absolute return funds.

AMP Investor Report 1H 12 AMP Capital 33

Cashflows and assets under management (AUM) cont’d

Movement in AUM by channel FY 11 to 1H 12[1]

==> picture [513 x 472] intentionally omitted <==

----- Start of picture text -----

124 3.0
122 123.0 (0.7) 0.0 0.1 0.2 123.3
(0.7)
(0.6)
120 (0.7)
(0.3)
118
116
114
112 External Internal
110
1 AMP Capital cash inflows reported net of fees and taxes.
External AUM by asset class Internal AUM by asset class
(A$40b AUM) (A$83b AUM)
Direct investments 1% Alternative assets 2%
(FY 11 1%) (FY 11 2%)
Property 4%
(FY 11 4%)
Australian equities 8%
(FY 11 9%)
Infrastructure 2%
(FY 11 2%)
Property 31%
Australian
(FY 11 30%)
equities 27%
International (FY 11 27%)
equities 19%
(FY 11 19%)
Fixed interest 43%
(FY 11 43%)
International
Infrastructure 11% Fixed interest 31% equities 21%
(FY 11 11%) (FY 11 31%) (FY 11 21%)
AUM at FY 11 Australia market flows distribution channelsAsian New Zealandmarket flows Rest of the worldAustralian contemporary AMP Group run-off businessAustralian New Zealandmarket flows returns and otherInvestment AUM at 1H 12
A$b
----- End of picture text -----

External AUM by asset class (A$40b AUM)

34 AMP Capital AMP Investor Report 1H 12

Investment performance

Eighty per cent of AUM met or exceeded benchmark over three years and 56% over five years to 30 June 2012. The target for the business is 75% of AUM meeting or exceeding benchmark over a three year period.

The competitive rankings of AMP Capital’s funds remain strong over the five year period to 30 June 2012, with first quartile rankings for the Wholesale Australian Bond Fund, Corporate Bond Fund, Australian Core Property Portfolio, Global Listed Property Trust and Australian equities – Value and Enhanced Index styles, along with second quartile rankings for Capital and Active Quant styles.

Eighty-three per cent of AMP Capital managed Asia-Pacific equities met or exceeded benchmarks for the five years to 30 June 2012 and 72% over three years to 30 June 2012. The Capital, Value, and Enhanced Index styles all added value over one, three and five year periods against their passive benchmark. Over five years, the Capital, Quant, and Value investment styles have beaten their benchmarks by 1.8%, 1.2%, and 2.0% respectively, along with a first quartile competitor ranking for the Value style and a second quartile ranking for the Capital and Quant styles, according to the Mercer Sector Survey to 30 June 2012.

Ninety-five per cent of AMP Capital managed Asia-Pacific fixed interest met or exceeded benchmark for the five years to 30 June 2012 and 99% over three years to 30 June 2012. The Wholesale Australian Bond Fund ranked in the first quartile according to the Mercer Sector Survey for one, three and five years. The Corporate Bond Fund ranked in the first quartile according to the Mercer Sector Survey for three and five years.

Thirty-eight per cent of Australasian direct property met or exceeded benchmark for the three years and 42% for the 12 months to 30 June 2012. Against competitors, the Australian Core Property Portfolio recorded first quartile rankings over the five year period along with second quartile rankings over one and three years to 30 June 2012. Approximately 65% of AMP Capital property fund benchmarks are related to the government bond yield plus a margin (eg 3%).

Over three years to 30 June 2012, 85% of International listed property funds met or exceeded benchmark, while 88% met or exceeded benchmarks for the 12 months to 30 June 2012. The Global Listed Property Securities Fund recorded a first quartile ranking over one and five years and a second quartile ranking over three years to 30 June 2012.

Thirty-eight per cent of International equities met or exceeded benchmark for the 12 months to 30 June 2012. This result was largely due to underperformance in 4 of the 6 underlying managers in the last 6 months of 2011, within the Core fund. The Core fund manager line-up was restructured in the first half of 2012. Over three years 80% of funds met or exceeded benchmark.

International fixed interest portfolios were overweight spreadbased securities and hence were unfavourably impacted by uncertainty in the Eurozone region, resulting in 16% of funds meeting or exceeding benchmark for the 12 months to 30 June 2012. Over three years, 100% of funds met or exceeded benchmark.

Fifty-two per cent of Infrastructure and direct investments met or exceeded benchmark for the three years and 62% for the 12 months to 30 June 2012. Falling bond yields have led to improved valuations particularly for infrastructure assets.

Investmentperformance –period ended 30 June 2012
Percentage of funds meeting or exceeding benchmark(%)	1year	3years	5years
AMP Capital managed
Asia-Pacific equities	66%	72%	83%
Asia-Pacific fixed interest	67%	99%	95%
Infrastructure and direct investments	62%	52%	38%
Australasian property – direct	42%	38%	13%
Internationalproperty– listed	88%	85%	60%
Total AMP Capital managed	60%	72%	60%
Multi-manager and Multi Assets Group
Australasian equities	85%	88%	82%
Australasian fixed interest	72%	100%	100%
International equities	38%	80%	44%
International fixed interest	16%	100%	5%
Diversified	28%	85%	55%
Total multi-manager and Multi Assets Group	33%	85%	53%
Total AMP Capital	44%	80%	56%

AMP Investor Report 1H 12 AMP Capital 35

Investment performance cont’d

A summary of investment performance for the one, three and five years to 30 June 2012 across the various funds/styles is shown in the table below. In instances where there is more than one fund for an investment style, investment performance of the flagship fund has been quoted.

Investment performance across funds/styles		1year			3years			5years
	Absolute	Excess	Competitor	Absolute	Excess	Competitor	Absolute	Excess	Competitor
	return1	return	quartile	return1	return	quartile	return1	return	quartile
Equities	(%)	(%)	ranking2	(%)	(%)	ranking2	(%)	(%)	ranking2
Fund/style name
Fundamental – Capital	(6.4)	0.3	Q2	6.4	0.7	Q2	(2.2)	1.8	Q2
Fundamental – SRI	(7.7)	(1.0)	Q3	5.1	(0.6)	Q2	(5.1)	(1.1)	Q4
Multi-Strategy – Active quant	(7.3)	(0.6)	Q2	6.1	0.4	Q2	(2.8)	1.2	Q2
Multi-Strategy – Value	(5.8)	1.0	Q2	6.7	1.0	Q1	(2.0)	2.0	Q1
Multi-Strategy – Enhanced index	(6.4)	0.3	Q2	6.3	0.7	Q1	(3.4)	0.6	Q1
New Zealand equities	0.7	0.6	Q1	8.4	0.2	Q3	(1.0)	1.9	Q3
Fixed interest
Fund/style name
Wholesale Australian Bond Fund	13.3	0.9	Q1	10.4	1.9	Q1	9.2	1.0	Q1
Enhanced yield	9.2	4.7	n/a	5.9	1.5	n/a	5.6	0.5	n/a
Corporate bond	9.2	(0.8)	Q3	11.0	3.3	Q1	8.2	0.5	Q1
New Zealand fixed interest	11.3	0.3	Q1	9.3	0.7	Q2	10.6	1.6	Q1
International funds(multi-manager)
Fund/style name
International equities (unhedged)3	(1.5)	(1.0)	Q3	3.0	0.5	Q3	(7.4)	(0.7)	Q4
International fixed interest	8.6	(3.0)	Q4	12.7	2.7	Q3	7.3	(2.2)	Q3
Property (direct and listed)
Fund/style name
Australian Core Property Portfolio	8.5	1.5	Q2	8.3	0.4	Q2	5.4	(2.8)	Q1
AMP Wholesale Office Fund3	6.3	(1.2)	Q4	8.2	(0.3)	Q4	3.8	(4.9)	Q3
AMP Shopping Centre Fund3	9.4	1.9	Q1	8.7	0.3	Q4	5.3	(3.4)	Q3
New Zealand Direct Property	8.9	n/a	n/a	(5.2)	n/a	n/a	(4.4)	n/a	n/a
Australian Listed Property Trusts4	10.9	(0.2)	Q3	12.4	0.1	Q3	(12.3)	(0.1)	Q2
Global Listed Property Trusts4	8.3	0.8	Q1	26.0	0.4	Q2	(0.8)	2.0	Q1
Infrastructure
Fund/style name
Infrastructure Equity Fund	13.6	5.1	Q1	10.0	0.6	Q3	2.6	(7.1)	Q4
Core Infrastructure Fund3	9.5	2.2	Q3	11.9	3.7	Q4	n/a	n/a	n/a
Australia Pacific Airports Fund	11.2	(0.8)	n/a	13.5	1.5	n/a	14.1	2.1	n/a

1 Absolute returns are annualised for periods greater than one year.

3 For this fund competitor quartile ranking, an indicative ranking was done.

• 2 Competitor quartile ranking determined using relevant Mercer Sector Surveys. 4 For this fund competitor quartile ranking, a composite return was used.

36 Capital structure AMP Investor Report 1H 12

Capital management

30 June 2012[1]

30 June 20121
		AMP Life	NMLA
		Statutory	Statutory	AMP	Other	Total	AMP	Group
A$m	Total AMP	Funds	Funds	Bank2	AFS3	AFS	Capital	Office
Total capital resources	9,133	2,222	1,178	451	3,733	7,584	430	1,119
Intangibles4	(3,809)	-	-	(40)	(3,387)	(3,427)	(250)	(132)
Tangible capital resources	5,324	2,222	1,178	411	346	4,157	180	987
Senior debt5	(700)							(700)
Other deductions6	(19)	-	-	(19)	-	(19)	-	-
Regulatorycapital resources	4,605	2,222	1,178	392	346	4,138	180	287
Shareholder minimum regulatory capital	3,221	1,790	947	343	110	3,190	31	-
requirements(MRR)
Shareholder regulatory capital resources	1,384	432	231	49	236	948	149	287
above MRR
Participating policyholder capital resources	662	662	-	-	-	662	-	-
above MRR
Total regulatory capital resources above MRR	2,046	1,094	231	49	236	1,610	149	287

31 December 2011[1]

31 December 20111
		AMP Life	NMLA
		Statutory	Statutory	AMP	Other	Total	AMP	Group
A$m	Total AMP	Funds	Funds	Bank2	AFS3	AFS	Capital	Office
Total capital resources	8,550	2,071	1,077	425	3,733	7,306	555	689
Intangibles4	(3,841)	-	-	(35)	(3,423)	(3,458)	(284)	(99)
Tangible capital resources	4,709	2,071	1,077	390	310	3,848	271	590
Senior debt5	(657)							(657)
Other deductions6	-							-
Regulatorycapital resources	4,052	2,071	1,077	390	310	3,848	271	(67)
Shareholder minimum regulatory capital	3,062	1,680	850	326	118	2,974	88	-
requirements(MRR)
Shareholder regulatory capital resources	990	391	227	64	192	874	183	(67)
above MRR
Participating policyholder capital resources	553	553	-	-	-	553	-	-
above MRR
Total regulatory capital resources above MRR	1,543	944	227	64	192	1,427	183	(67)

1 Excludes minority interests.

2 AMP Bank capital resources eliminates the impact of AIFRS cashflow hedge fair value movements.

3 Includes AFS accountable component of the AMP Life Shareholders fund, NMLA Shareholders fund and AFS subsidaries (eg AMPFP, Hillross). Other AFS also includes the North product.

4 Refer to page 46 for definition of intangibles. Intangibles includes capitalised costs. AXA acquired intangibles have been allocated between Other AFS and AMP Capital.

• 5 Refer to debt overview page 40 for more details.

• 6 Other deductions includes AMP Bank securitisation deductions.

AMP Investor Report 1H 12 Capital structure 37

Capital management cont’d

Capital management framework

AMP holds capital to protect customers, creditors and shareholders against unexpected losses. There are a number of ways AMP assesses the adequacy of its capital position. Primarily, AMP aims to:

• maintain a sufficient surplus above minimum regulatory requirements, known as Target Surplus. Target Surplus is a guide to the level of excess capital that AMP seeks to carry to reduce the risk of breaching MRR

• hold sufficient liquidity within Group Office (outside business units), to ensure that AMP has sufficient access to liquid funds, even under stress situations

• maintain the Group’s credit rating.

These metrics form part of AMP’s risk appetite.

A number of the operating entities within the AMP group of companies are regulated. This includes an authorised deposit-taking institution, life insurance companies, approved superannuation trustees and a number of companies that hold Australian Financial Services Licences. These companies are regulated primarily by APRA and/or ASIC. These regulated businesses are required to hold minimum levels of regulatory capital, as set by the appropriate regulator.

Each business maintains capital targets, reflecting the material risks within each business (including financial risk, insurance and product risk and operational risk) and AMP’s risk appetite. The Target Surplus is a management guide to the level of excess capital that AMP seeks to carry.

AMP’s current dividend policy, as approved by the AMP Limited Board, is to pay dividends based on a payout ratio in the range of 70% to 80% of underlying profit and franked to the maximum extent possible. The dividend payout ratio is set to ensure that AMP will retain sufficient profits to fund the expected growth in the capital requirements of its business, and is reviewed periodically.

AMP aims to meet larger non-recurring capital requirements through other capital management initiatives, including the use of the Dividend Reinvestment Plan.

Capital position

At 30 June 2012, total regulatory capital resources above MRR were A$2,046m (A$1,543m at 31 December 2011).

The increase in regulatory capital resources above MRR was a result of 1H 12 profits, proceeds from the formation of the MUTB strategic business and capital alliance, share capital issued under the dividend reinvestment plan and an active capital protection strategy. This was offset by capital required to support business growth, the cost of integration of the AXA business along with the impact of negative investment markets.

Regulatory capital resources above MRR vary throughout the year due to a range of factors including investment market movements, dividend payments and profits.

Regulatory capital resources above MRR have been split between the amount attributable to shareholders and the amount attributable to participating policyholders. The amount attributable to participating policyholders is available to absorb market and other impacts on the capital position of participating business. The movement in policyholder surplus is primarily driven by lower future mortality assumptions for AMP Life’s participating Conventional products.

The following capital initiatives were undertaken during 1H 12:

• increase in the tactical down-side equity protection backing AMP Life’s guaranteed business, now covering about A$2.5b of listed equities

• restructuring of $1b of protection against falling bond yields through using bond futures and interest rate swaps to increase the duration of the $6.5b fixed interest portfolios supporting AMP Life’s participating business by two years

• maintenance of the remaining A$1.7b to protect against falling bond yields within AMP Life’s mature book

• lengthening of maturity dates for both down-side equity protection and tactical interest rate protection across 2012.

Movement from FY 11 to 1H 12 regulatory capital resources above MRR

==> picture [493 x 192] intentionally omitted <==

----- Start of picture text -----

3,000 ■ Shareholder regulatory capital resources above MRR
■ Participating policyholder capital resources above MRR
2,500 Movements in Shareholder MRR (-A$159m)
491 380 32 61 109 2,046
2,000 (40) (21) (63) 662
(100) (35)
1,543 (240) (71)
1,500
553
1,384
Movements in regulatory
1,000 capital resources (+A$553m)
990
500
0
FY 11 Underlying profit Dividend(net of DRP)Integration costs MUTB strategicallianceMovement in definedbenefit deficit1Capitalised costsand acquisitions (excld. markets)OtherShareholder marketimpact on lifestatutory funds2Business growthCapital efficiencies3Other shareholderimpacts Policyholdersurplus 1H 12
A$m
----- End of picture text -----

• 1 Includes the impact of discount rates and markets on defined benefit deficit/(surplus). During 1H 12 AMP changed the estimated rates for discounting Australian defined benefit plan liabilities from using market yields on Commonwealth Government bonds to those on State Government bonds. This resulted in a decrease in the Australian defined benefit plan liabilities of A$95m after tax, however this decrease was largely offset by movements in market yields during the period, resulting in a net reduction of A$12m after tax to the Australian defined benefit plan liabilities due to all changes in discount rates and other market impacts.

• 2 This impact reflects the impact of markets on profit (A$22m) offset by impacts on shareholder MRR (-A$85m).

• 3 Capital efficiencies includes the impact of the sale of AMP Bank B Notes and restructure of internal loan arrangements.

38 Capital structure AMP Investor Report 1H 12

Capital management cont’d

In addition, there are a number of long-term protection strategies in place within both AMP Life and NMLA which reduce sensitivities to equity markets and interest rates. These include strategies involving:

• equity options and futures relating to A$5.4b in policyholder equity portfolios

• interest rate options, futures and swaps.

AMP’s interim 2012 dividend is 12.5 cents per share franked to 55%. The dividend payout ratio for 1H 12 is 73% of underlying profit.

AMP will offer a discount of 1.5% to DRP participants. The DRP will not be underwritten and new shares will be issued.

APRA is also developing a supervision framework for conglomerate groups (“Conglomerate”). The implementation of these standards has been deferred until 1 January 2014, with no changes to existing supervision until that date. Draft standards are expected to be available Q4 12 at the earliest.

APRA is yet to confirm how the LAGIC requirements will affect the Conglomerate proposals. Nonetheless, APRA has confirmed transitionary arrangements with AMP that non-complying Tier 2 capital held at a Group level will continue to be 100% recognised as eligible capital under the revised standards until the earlier of each relevant instrument’s first call date or March 2016.

Other regulatory capital reviews underway include:

Minimum regulatory requirements

The minimum regulatory capital requirement (MRR) for AMP’s businesses are:

• AMP Life and NMLA – solvency, capital adequacy and management capital requirements as specified under the APRA Life Insurance Prudential Standards

• AMP Bank – capital requirements as specified under the APRA Banking Prudential Standards

• Other AFS – capital requirements under AFSL, APRA requirements and capital held for the North guarantee, and

• AMP Capital – capital requirements under AFSL.

Revised capital standards are currently being implemented for life and general insurers (known as LAGIC). APRA released a number of final prudential standards in May 2012, with the remaining final prudential standards and draft prudential practice guides expected to be released by October 2012. AMP has assessed the impact of these revised prudential standards on its regulatory capital position. Had the revised capital standards applied at 30 June 2012, the impact of moving to these standards would have reduced the combined shareholder surplus above minimum requirements for the Statutory Funds of AMP Life and NMLA by around $200m.

The revised prudential standards also apply to the North guarantee product and to the life company shareholder funds, but management actions, which are currently being progressed for implementation during 2012, including those relating to internal arrangements, are expected to offset the combined impact of the revised prudential standards on North and on the life company shareholder funds.

This impact is primarily driven by increased requirements relating to asset stresses, more onerous requirements for operational risk, revised treatment of excess policyholder capital and more onerous treatment of deferred tax assets. This is partially offset by a reduction in insurance risk capital. LAGIC also introduces Common Equity Tier 1 (CET1), Tier 1 and Tier 2 definitions to life insurers. AMP has no hybrid instruments or subordinated debt within its life insurance businesses.

• ASIC’s review of financial requirements for responsible entities, with changes to be effective from 1 November 2012. These changes are expected to increase AMP’s capital requirements by A$70m. AMP aims to reduce this impact over time.

• The Reserve Bank of New Zealand has completed new solvency standards for NZ life insurers. AMP has been confirmed as exempt on the basis of its compliance with Australian capital standards.

• The Basel Committee on Banking Supervision review of global banking supervision (Basel III) and APRA revisions to Australian banking standards. Implementation will begin January 2013.

• The introduction of APRA prudential standards for superannuation funds that are expected to commence 1 July 2013.

Target Surplus

The Target Surplus for both AMP Life and NMLA is set by reference to a probability of breaching regulatory capital requirements. This is a two tiered test under which the Target Surplus is set as the greater of the amount required for a:

• 1% probability of breaching solvency requirements over one year, or

• 10% probability of breaching capital adequacy requirements over one year.

AMP Bank’s Target Surplus reflects an additional 0.75% of risk weighted assets above APRA’s minimum requirements.

AMP Capital’s Target Surplus is set to cover the seed pool investment risk and operational risks.

Other components of AMP’s Target Surplus include:

• Target Surplus relating to the North guarantee product set by reference to a 10% probability of breaching North MRR

• Group Office investment risks

• defined benefit fund mismatch risks, and

• operational risks.

Target Surplus methodology will be reviewed as new prudential standards are implemented.

AMP is able to manage the expected increase in regulatory capital requirements through it holding a strengthened capital position in anticipation of these changes.

AMP Investor Report 1H 12 Capital structure 39

Capital management cont’d

Regulatory capital resources(A$m)	30 June 2012	31 December 2011
AMP shareholder equity	7,554	7,014
Allowable hybrid Tier 1 instruments	-	-
Less: goodwill and other intangibles	(3,809)	(3,841)
Less: other deductions1	(19)	-
Tier 1	3,726	3,173
Allowable upper Tier 2 instruments	-	-
Allowable lower Tier 2 instruments	879	879
Tier 2	879	879
Total regulatory capital(Tier 1 + Tier 2)	4,605	4,052
Total capital resources by asset class(A$m)	30 June 2012	31 December 2011
International equities2	1	(25)
Australian equities	70	97
Property	314	291
International fixed interest	50	45
Australian fixed interest	242	183
Cash3	2,042	1,778
Implicit DAC	2,108	1,954
Total shareholder funds	4,827	4,323
Other4	497	386
Tangible capital resources	5,324	4,709
Intangibles	3,809	3,841
Total capital resources	9,133	8,550

1 Other deductions includes AMP Bank securitisation deductions.

2 International equities includes A$65m of international equities and

-A$64m in relation to equity down-side protection.

3 Cash includes cash balances held as bank deposits, short-term fixed interest securities and floating rate securities.

4 Other includes A$338m (FY 11 A$398m) of cash held backing liabilities, seed pool assets of A$97m (FY 11 A$79m) and A$62m (FY 11 -A$91m) of other assets and liabilities.

Nominal versus effective exposure

The asset allocations above reflect the effective exposure of shareholder funds after consideration of the effects of derivative positions.

Management of market risks in the shareholder funds

Total shareholder funds (A$4,827m) comprise direct shareholder funds (A$4,391m) where the shareholder can determine the asset mix and co-mingled shareholder funds (A$436m) that are invested in the same asset mix as participating policyholder funds.

The investment of shareholder funds provides management with the ability to manage the overall market risk within the AMP Group. Changes are made to the asset mix of shareholder funds to achieve the desired level of overall market risk exposure across the AMP Group. Less than 2% of AMP shareholder funds are invested in equities.

The majority of the international equity exposures are not hedged for currency. Property exposures relate primarily to a 65% interest in AMP’s head office at 33 Alfred Street, Sydney.

Implicit DAC

The implicit DAC relates to the wealth protection businesses, and is similar to a loan from shareholder capital to the wealth protection business (for both Australia and New Zealand) to fund the upfront costs associated with acquiring new risk insurance business. The implicit DAC asset generates an investment return equivalent to the average short-term interest rates.

Underlying investment income

AMP calculates the underlying investment income that is allocated to the business units (BUs) and Group Office by applying an underlying rate of return to BU and Group Office shareholder assets invested in income producing investment assets (as opposed to operating assets). The underlying after tax rate of return used for 1H 12 is 4.25% pa (FY 11 4.25% pa) and is based on the long-term target asset mix and assumed long-term rates of return.

Underlying investment income is calculated on shareholder funds invested in income producing assets. Shareholder funds invested in income producing assets may be higher or lower than business unit capital due to the working capital requirements of the business unit.

The shareholder fixed interest portfolio is split approximately 53% in sovereign exposures and 47% in corporate exposures. Corporate exposures are invested in AAA (15%), AA (28%), A (39%), BBB (18%) and sub-investment grade and unrated (less than 1%).

40 Capital structure AMP Investor Report 1H 12

Debt overview

		30 June 2012		31	December 2011
	Corporate			Corporate
A$m	debt	AMP Bank1	Total	debt	AMP Bank1	Total
Subordinated bonds/notes	83	-	83	83	-	83
AMP Notes2	296	-	296	296	-	296
Subordinated loan from Group Office to AMP Bank	(100)	100	-	(100)	100	-
AXA subordinated notes	600	-	600	600	-	600
Total subordinated debt(Tier 2)	879	100	979	879	100	979
Domestic commercial paper, NCDs and repos	-	611	611	59	964	1,023
Euro medium-term notes	-	-	-	398	-	398
Domestic medium-term notes	200	695	895	200	1,003	1,203
Syndicated loan	500	-	500	-	-	-
Total senior debt	700	1,306	2,006	657	1,967	2,624
Deposits3	-	8,898	8,898	-	7,460	7,460
Total debt	1,579	10,304	11,883	1,536	9,527	11,063
Corporate gearing ratios
S&P gearing	11%			11%
Interest cover – underlying (times)	11.2			12.1
Interest cover – actual(times)	9.0			9.4
		Corporate debt by		year of repayment4
A$m	0 - 1year	1 - 2years	2 - 5years	5 - 10years	10+years	Total
Corporate debt at 30 June 2012	-	296	1,300	-	83	1,679
Loan from GroupOffice to AMP Bank	-	(100)	-	-	-	(100)
Total corporate debt at 30 June 2012	-	196	1,300	-	83	1,579
Total corporate debt at 31 December 2011	457	-	996	-	83	1,536

• 1 This excludes debt issued by securitisation vehicles.

• 2 The AMP Notes 10 year subordinated debt, with a call date in 2014, has been structured to qualify as Lower Tier 2 capital for APRA purposes.

3 Deposits include AMP Bank retail and wholesale deposits (A$4.5b), AMP Super Cash and Super TDs (A$3.7b). North and Summit (A$0.4b) and other AMP Life policyholder deposits (A$0.3b).

• 4 Based on the earlier of the maturity date and the first call date.

Corporate debt

Corporate debt increased by A$43m in 1H 12 due to:

• repayment of A$398m Euro medium-term notes in June 2012

• repayment of A$59m in outstanding commercial paper

• offset by A$500m of the syndicated loan that was drawn down in February 2012.

At 30 June 2012, approximately 50% of corporate debt was effectively at fixed rates.

At 30 June 2012, AMP had access to significant liquidity through Group cash of A$912m and an undrawn syndicated loan of A$500m.

AMP Bank

AMP Bank utilises a diverse range of funding sources including securitisation, deposits and short and long-term wholesale borrowings to manage its funding and liquidity requirements.

The securitisation of residential mortgage backed securities (RMBS) is a source of funding and capital relief for AMP Bank. Securitisation funding is non-recourse to AMP Bank and the AMP Group. AMP Bank completed a A$650m RMBS in May 2012. Total securitised funds as at 30 June 2012 were A$3.5b.

AMP Group continues to provide a guarantee covering AMP Bank’s liabilities.

AMP Investor Report 1H 12 Additional information 41

Group Office

A$m	1H 12	2H 11	1H 11	FY 11	% 1H/2H
Group Office costs not recovered from business units	(31)	(31)	(26)	(57)	-
Underlying investment income on Group Office capital	27	17	22	39	58.8
Interest expense on corporate debt	(48)	(43)	(39)	(82)	(11.6)
AMP Limited tax loss recognition	-	8	8	16	n/a
Market adjustment – investment income	(1)	(47)	(3)	(50)	97.9
Market adjustment – annuity fair value	(10)	(3)	16	13	n/a
Market adjustment – risk products	23	58	(5)	53	(60.3)
Other items	10	21	(17)	4	(52.4)
M&A transaction costs	(2)	(8)	(34)	(42)	75.0
AXA integration costs	(71)	(69)	(36)	(105)	(2.9)
Amortisation of AXA acquired intangible assets	(50)	(50)	(25)	(75)	-
Accountingmismatches	(7)	(10)	(9)	(19)	30.0
Interest expense summary
Average volume of corporate debt	1,795	1,536	1,315	1,433
Weighted average cost of corporate debt	7.64%	8.00%	8.47%	8.17%
Tax rate	30%	30%	30%	30%
Interest expense on corporate debt1	48	43	39	82
Franking credits
AMP dividend frankingcredits at face value at end ofperiod2	141	165	118	165

1 Includes fees associated with undrawn liquidity facilities.

2 Balance of franking account adjusted for franking credits which will arise from the payment of income tax provided for in the financial statements. After franking the interim dividend (55%), the balance of franking credits will be A$56m.

1H 12 Group Office costs not recovered from business units were A$31m, in line with 2H 11. Group Office cost synergies arising from the integration of AXA group functions, are primarily passed onto AFS and AMP Capital through lower group charges.

Underlying investment income on Group Office capital was A$27m in 1H 12, up from A$17m in 2H 11. 1H 12 underlying investment income was higher than in 2H 11 due to higher investment assets associated with the proceeds from the formation of the MUTB strategic business and capital alliance as well as the drawdown and investment of the syndicated loan facility in February creating a temporary increase in income producing investment assets prior to the repayment of the A$398m Euro medium-term notes in June 2012.

Market adjustment – investment income

Market adjustment – investment income represents the excess (or shortfall) between underlying investment income and actual return on shareholder assets invested in income producing assets.

The 1H 12 market adjustment – investment income was -A$1m reflecting the shortfall in underlying investment income relative to actual shareholder investment income due to lower short-term interest rates partly offset by valuation gains on fixed interest assets and net valuation gains on derivatives protecting the shareholder capital position.

1H 12 interest expense on corporate debt was A$48m, up from A$43m in 2H 11. Interest expense increased following the drawdown of the syndicated loan facility in February to repay the A$398m Euro medium-term notes which matured in June 2012, partly offset by lower average interest rates.

AMP Limited tax loss recognition

AMP Limited tax loss recognition relates to the gradual recoupment of carried forward tax losses. Recognition of the tax benefit is linked to overall AMP Group taxable earnings (both ordinary policyholder and shareholder) and the rate at which tax losses can be utilised.

Following the merger with AXA, the tax utilisation rate significantly reduced, hence no benefit was recognised for tax loss recognition. AMP Limited does not expect to recognise any tax losses in FY 12.

At 30 June 2012, the amount of carried forward tax losses to be recouped was approximately A$110m.

42 Additional information AMP Investor Report 1H 12

Group Office cont’d

Market adjustment – annuity fair value

1H 12 market adjustment – annuity fair value was -A$10m (2H 11 -A$3m).

Market adjustment – annuity fair value relates to the net impact of investment markets on AMP’s annuity portfolio. AMP’s annuity portfolio comprises fixed term and lifetime annuity products, with Australian fixed term liabilities of A$0.5b and Australian lifetime annuity liabilities of A$1.6b. The Australian annuity portfolio is managed on a matched basis, with fixed interest assets matched to expected annuity cash outflows. Equities are not used by AMP to match its Australian annuity book.

The assets supporting AMP’s Australian annuity book comprise a mixture of government bonds, semi-government bonds and corporate bonds. These assets are principally exposed to Australian credit markets. The asset mix is required to achieve the matching of assets to expected cash annuity outflows. Ultimately, the matching should remove any interest rate or reinvestment risk, but credit risk remains.

For fixed term annuities, accounting standards require the liabilities and the assets that back them both to be valued consistently on a fair value basis.

For lifetime annuities, accounting standards require the liabilities to be valued based on the risk-free rate of return and the assets to be valued on a fair value basis. Therefore, in the absence of any defaults, changes in credit spreads and deterioration in the quality of individual assets can lead to timing differences.

As the assets are held to maturity, gains/losses due to changes in credit spreads or credit deterioration should reverse over time, to the extent that there are no asset defaults. In 1H 12 there were no asset defaults.

The assets that support AMP’s Australian annuity book comprise a mixture of government bonds and cash (7%), semi-government bonds (48%) and corporate bonds (45%). The average duration of the portfolio is six years. Corporate bond exposures are invested in AAA (13%), AA (40%), A (42%), BBB (4%) and CCC+ (1%).

market related economic assumptions affect policy liabilities and current year profit. For information on changes in market economic assumptions in 1H 12, refer to page 27.

Other items

1H 12 other items were A$10m (2H 11 A$21m).

Other items include one-off and non-recurring revenues and costs.

In 1H 12 other items was primarily comprised of:

• A$52m in respect of a provision for a proportion of the anticipated costs of implementing regulatory change associated with the Federal Government’s FOFA and Stronger Super legislation. AMP expects the one off cost to the company of implementing the Future of Financial Advice, Stronger Super and other regulatory changes over the next 12 to 18 months to be in the range of A$60m to A$75m after tax. The final costs may vary from this depending on final legislation and regulatory guidance, market practice and the future competitive landscape.

• A$51m in respect of tax provisions released mainly due to the favourable resolution of Australian Tax Office activity.

• Loan hedge revaluation gains of A$4m (2H 11 A$3m). Under Australian Accounting Standards, AMP is required to recognise the movements in fair value of debt, to the extent it is an effective fair value hedge relationship, and associated derivatives. This can give rise to an accounting gain or loss which will reverse over time.

In 2H 12 AMP expects to record a profit in relation to DUET of around A$24m (post tax) subject to DUET unitholders approving the proposal to internalise management. The profit will be reported as part of Group Office other items.

M&A transaction costs

1H 12, M&A transaction costs were A$2m (2H 11 A$8m).

1H 12 and 2H 11 M&A transaction costs primarily relate to costs associated with the MUTB strategic business and capital alliance and the sale of AMP’s general insurance distribution business.

AXA integration costs

Market adjustment – risk products

1H 12 market adjustment – risk products was A$23m (2H 11 A$58m) due to the fall in government bond yields.

Market adjustment – risk products relates to the net impact of changes in market economic assumptions (bond yields and CPI) on the valuation of risk insurance liabilities. For AXA, this also included the impact of changes in the market value of equities up until June 2011. Equities were removed from backing the asset allocation in June 2011 following the merger. Under Australian accounting standards, life insurance business is accounted for using Margin on Services (MoS).

Under MoS, the profits that are expected to be earned on life insurance contracts emerge over the life of the business as services are provided and income received. MoS involves projecting future cashflows (premiums, benefits and costs after allowing for inflation), and discounting future cashflows to their present value using the appropriate risk free discount rate. Changes to

1H 12 AXA integration costs were A$71m (post tax) and relate to the integration of AXA following the merger. AMP expects total integration costs to be A$310m (post tax).

AMP expects to realise synergies as a result of the merger with AXA of A$150m (post tax) per annum.

Amortisation of AXA acquired intangible assets

The difference between the purchase consideration for AXA (A$4.3b) and AXA net tangible assets (A$1.2b) represents AXA intangible assets (A$1.0b) and goodwill (A$2.1b). AXA intangible assets primarily comprise rights to future income and the value of acquired software.

AXA intangible assets are required to be amortised over their expected useful life; goodwill is not required to be amortised.

1H 12 amortisation of AXA acquired intangible assets was A$50m.

AMP Investor Report 1H 12 Additional information 43

Group Office cont’d

Accounting mismatches

Under Australian Accounting Standards, some assets held on behalf of policyholders (and related tax balances) are included in the financial statements at different values to the value used in the calculation of policy liabilities in respect of the same asset. Movements in these policyholder assets flow through to shareholder profit. These differences have no impact on the true operational profits and losses of the Group.

Mismatch items that may impact the profit and loss arise from policyholder interests in the following:

• treasury shares (AMP Limited shares held by the statutory funds on behalf of policyholders) (1H 12 +A$4m)

• owner-occupied properties (1H 12 -A$1m)

• life company statutory funds’ investments in controlled entities (1H 12 -A$5m)

• AMP Life statutory funds’ superannuation products invested with AMP Bank (1H 12 -A$5m).

44 Additional information AMP Investor Report 1H 12

Sensitivities – profit and capital

FY 12 profit sensitivities (A$m)

FY 12profit sensitivities(A$m)
	Operating earnings CWM CWP Mature NZ Total AFS AMP Capital Group Office Total Investment income
Investment market variables 10% increase in Australian equities 10% decrease in Australian equities 10% increase in international equities 10% decrease in international equities 10% increase in property 10% decrease in property 1% (100 bps) increase in 10 year Australian bond yields 1% (100 bps) decrease in 10 year Australian bond yields 1% increase in cash rate 1% decrease in cash rate	10 - 4 - 14 2 16 4 (10) - (4) - (14) (2) (16) - 6 - 2 2 10 2 12 11 (6) - (2) (2) (10) (2) (12) (4) 3 - 2 1 6 2 8 26 (3) - (2) (1) (6) (2) (8) (26) (1) - 3 - 2 (1) 1 (22) 1 - (3) - (2) 1 (1) 28 1 - - - 1 - 1 18 (1) - - - (1) - (1) (18)
Business variables AMP Financial Services 5% increase in AUM 5% increase in sales volumes 1% increase in persistency AMP Capital 5% increase in average external AUM 5% increase in average internal AUM AMP Limited 5% reduction in controllable costs	18 - 5 4 27 3 1 - 1 5 3 7 (2) 1 9
	6 6 20 7 3 3 33 11 2 46

All profit sensitivities shown are a full year impact.

The profit and capital sensitivities are only indicative, because:

• they are not always linear or symmetrical, because of the asymmetric nature of risks facing insurance companies, including the scope for policyholders to exercise options against the company or to benefit from guarantees

• they assume that the particular variable moves independently of all others

• they are based on the 1H 12 position, ie not “forward looking”, and make no allowances for events subsequent to 30 June 2012

• in general, for profit sensitivities, they assume the movement occurs evenly over the year; for capital sensitivities, they assume the movement occurs at 30 June 2012.

Other assumptions include:

• parent company shareholders’ equity is fully invested and there are no adjustments for investments which are outside index weightings

• currency movements in investments in self-sustaining operations do not impact profit

• sales sensitivity assumes the same product mix as in underlying sales during 1H 12

• investment income sensitivity is based on the amount of investments held at 30 June 2012

• property sensitivities relate to unlisted property; listed property trusts are included in equities

• bond yield sensitivities relate to both government and corporate bond yields for both Australian and international bonds

• profit sensitivities exclude the impact of movements in credit spreads in corporate and semi-government debt

• AMP Bank net interest margin assumed to move in line with changes in cash rate.

Important considerations when using these sensitivities

Profit sensitivities

The sensitivities set out above apply to FY 12 operating earnings and investment income, assuming changes in a range of hypothetical economic or business variables.

Operating earnings – investment linked business

For investment linked business, fee income is largely based on the level of AUM, which in turn is directly impacted by investment markets.

For changes in market variables which impact AUM levels, it is assumed that the change in the variable occurs evenly across the entire year. That is, the analysis is point to point, assuming the movement from one point (eg beginning of the year equity markets) to another point (eg end of the year equity markets) occurs evenly over the year. It is similar to assuming a one-off movement in the variable half way through the year. For large movements that do not occur half way through the year, the profit sensitivities need to be extrapolated. For example, a 10% increase/ decrease in equity markets at the start of the year would have double the impact on FY 12 operating earnings than set out in the table above.

The sensitivities are based on the 1H 12 position and are not forward looking. If using the sensitivities as forward looking (eg applying 1H 12 profit sensitivities for FY 12 or FY 13), an allowance for changes in AUM levels should be made. Refer to page 10 (CWM) and page 28 (AMP Capital) for average AUM levels that applied in 1H 12.

The AMP Capital operating earning sensitivities are net of minority interests and assume no change to performance and transaction fees and do not include seed pool investments.

AMP Investor Report 1H 12 Additional information 45

Sensitivities – profit and capital cont’d

Operating earnings – risk insurance and annuity business

For risk insurance and annuity business, movements in economic variables (bond yields, CPI) impact to the extent that the valuations of assets and liabilities are mismatched. These impacts are included in market adjustment – annuity fair value and market adjustment – risk products and have no effect on BU operating earnings but are included in EV sensitivities.

Operating earnings – participating business

For participating business, profit margins are dependent on the level of future bonuses supported by both the value of available assets and the assumed future investment earnings (largely driven by prevailing bond yields). As the effect of movements in investment markets is absorbed by bonuses over a number of years, only a portion of the impact is recognised in the current reporting period and is allocated between policyholders and shareholders.

Investment income

The analysis is based on a point in time and indicates the impact a change in the market variable would have on AMP’s FY 12 total investment income (ie underlying investment income plus investment income market adjustment).

The cash rate sensitivities show the impact of changes in the cash rate on FY 12 total investment income. The impact assumes the change in the cash rate occurs evenly over the year.

The investment income sensitivities do not include any allowance for investment gains/losses on assets that back AMP’s annuity book (refer to page 42 for details) or the impact of changes in economic variables (bond yields, CPI) on the valuation of risk insurance liabilities. The impacts of investment market variables are not always symmetrical as they are inclusive of the impacts of long-term and tactical protection strategies.

The sensitivities assume that the guarantees on the North products are effectively hedged under current hedging procedures.

AMP regulatory capital sensitivities – regulatory capital resources above MRR

The analysis is a point in time view of the capital impact of movements in equity markets, bond yields and property values on the 30 June 2012 capital position inclusive of long-term and tactical protection strategies. The regulatory capital sensitivities make no allowance for management actions taken post 30 June 2012. The regulatory capital resources above MRR are based on 30 June 2012 equity markets, bond yields and property values and correspond to the disclosure in the capital management section (refer to page 36).

Regulatory capital requirements are met by shareholder assets and a combination of both policyholder and shareholder assets for participating business.

		AMP Life	NMLA
		Statutory	Statutory	AMP
30 June 2012 capital sensitivities – regulatory capital resources above MRR(A$m)1		Funds	Funds	Group
Actual 30 June 2012(ASX 200@4,095;Australian bondyields@3.1%)		1,094	231	2,046
Equity sensitivity	– 20% increase (ASX 200 @ 4,914)	260	50	400
	– 10% increase (ASX 200 @ 4,504)	130	20	200
	– 10% decrease (ASX 200 @ 3,685)	(90)	(20)	(150)
	– 20% decrease(ASX 200@3,276)	(140)	(50)	(250)
Australian bond yields sensitivity	– 100bps increase (Australian bond yields @ 4.1%)	50	(100)	60
	– 50bps increase (Australian bond yields @ 3.6%)	40	(50)	50
	– 50bps decrease (Australian bond yields @ 2.6%)	(20)	50	(30)
	– 100bps decrease(Australian bondyields@2.1%)	(80)	60	(130)
Property sensitivity2	– 10% increase in unlisted property values	140	10	160
	– 10% decrease in unlistedpropertyvalues	(140)	(10)	(160)

1 These sensitivities are a point in time (as at 30 June 2012) and do not make any allowance for subsequent management actions.

2 Property sensitivity relates to unlisted property. Listed property is included in the equity sensitivity.

Sensitivities include the profit/loss impact from changes in investment market variables on total shareholder funds. Changes in BU operating earnings are not reflected.

The capital sensitivities for AMP Life Statutory Funds include guaranteed products (the majority of which are contained within the AFS mature business), risk insurance products and unit linked products.

The capital sensitivities for NMLA Statutory Funds include guaranteed products, risk insurance products and unit linked products.

AMP actively manages both the asset mix and the associated capital. Market movements and trends are carefully monitored and adjustments made accordingly.

AMP’s capital management framework includes market related trigger points at which management will take action to reduce the impact of market movements on AMP’s capital position. The sensitivities contained in the table above do not make any allowance for management actions subsequent to 30 June 2012, which can have a significant impact on these sensitivities.

AMP Group sensitivities are AMP Life and NMLA Statutory Funds plus movements in group shareholder capital held outside the AMP/NMLA Life Statutory Funds, plus the effect on capital from defined benefit funds and the North product.

46 Glossary of terms and independent review AMP Investor Report 1H 12

Accounting treatment and definitions

Accounting mismatches – Refer to page 43.

AFS value of new business – A calculation of the economic value of the shareholder profits expected to emerge from the new business written over a particular period for AFS, net of the cost of providing supporting capital.

AFS value of risk new business – Value of new business for AFS contemporary wealth protection and New Zealand risk business.

Controllable costs – Include operational and project costs and exclude variable costs, provision for bad and doubtful debts and interest on corporate debt.

Controllable costs to AUM – Calculated as controllable costs divided by average of monthly average AUM.

Corporate debt – Borrowings used to fund shareholder activities of the AMP Group including the impact of any cross-currency swaps entered into to convert the debt into A$, but excluding limited recourse debt in investment entities controlled by AMP Life policyholder funds and debt used to fund AMP Bank activities. Refer to page 40 for more detail.

Cost to income ratio – Calculated as controllable costs divided by gross margin. Gross margin is calculated as total operating earnings and underlying investment income before tax expense plus controllable costs.

Deferred acquisition costs (DAC) – Margin on Services (MoS) is the financial reporting methodology developed to report life insurance business in Australia. Under MoS, the profits that are expected to be earned on life insurance contracts emerge over the life of the business as services are provided and income received. Under MoS all costs associated with acquiring new business (including planner payments, controllable costs and stamp duty) are allowed for in determining profit margins and policy liabilities. For wealth protection business, this normally results in negative policy liabilities for new business. The amount of this negative policy liability is often referred to as DAC or implicit DAC.

Defined benefit scheme – A scheme that provides a retirement benefit, usually based on salary and/or a predetermined formula for calculating that benefit. Unlike an accumulation scheme, the retirement benefit and method of calculation is known to the member at all times.

Discontinuance rates – The assumed future rates for voluntary discontinuance (lapse) of contracts for the purposes of determining embedded value. These rates vary by individual product or product groups and, where appropriate, by other factors such as duration in-force or age attained.

Dividend payout ratio – Calculated as dividend per share divided by EPS (underlying).

Embedded value – A calculation of the economic value of the shareholder capital in the AFS business and the shareholder profits expected to emerge from the AFS business in-force.

EPS (actual) – Calculated as net profit attributable to shareholders of AMP Limited divided by the basic weighted average number of ordinary shares. The weighted average number of ordinary shares has been adjusted to remove treasury shares.

EPS (underlying) – Calculated as underlying profit divided by the basic weighted average number of ordinary shares.

External AUM (AMP Capital) – Assets managed by AMP Capital sourced from institutional clients (including corporate, public sector and industry superannuation funds, and large non-superannuation funds), non-AMP dealer groups, private clients and international clients and partnerships.

Group cash – Cash and cash equivalents held outside business units.

Group risk API – Contractual annual premium payable on all in-force group risk policies.

Individual risk API – Contractual annual premium payable on all in-force individual risk policies.

Individual risk lapse rate – Calculated as annualised voluntary cancellations as a percentage of average annual premium in-force prior to cancellations. Policies expiring due to maturities, death or disablement are excluded from the calculation.

Intangibles – Represents acquired goodwill, acquired identifiable intangibles on merging with AXA, acquired asset management mandates and capitalised costs.

Interest cover (actual) – Calculated on a rolling 12 month after tax basis as net profit attributable to shareholders of AMP Limited before interest expense on corporate debt for the year divided by interest expense on corporate debt for the same period.

Interest cover (underlying) – Calculated on a rolling 12 month after tax basis as underlying profit before interest expense on corporate debt for the year divided by interest expense on corporate debt for the same period.

Internal AUM (AMP Capital) – Assets managed by AMP Capital sourced from AFS and Group Office.

Investment performance (AMP Capital) – The percentage of AUM meeting or exceeding their benchmarks.

Loan hedge revaluations – Refer to page 42.

Market adjustment – annuity fair value – Refer to page 42.

Market adjustment – investment income – The excess (or shortfall) between underlying investment income and actual return on shareholder assets invested in income producing investment assets (as opposed to income producing operating assets).

Market adjustment – risk products – Refer to page 42.

Minimum regulatory capital requirements (MRR) – Refer to page 38.

Net interest margin (AMP Bank) – Net interest income divided by the average mortgage book for the period.

Net seed pool income (AMP Capital) – Income on seed pool assets, including normal valuation movements and net profit/loss on sales, offset by funding costs.

Operating earnings – Represent shareholder attributable profits or losses that relate to the performance of the BU. The principles of life insurance accounting are used in reporting the results of AFS. Operating earnings exclude investment earnings on shareholder capital and one-off items.

Glossary of terms and independent review AMP Investor Report 1H 12 47

Accounting treatment and definitions cont’d

Persistency – Calculated as opening AUM less cash outflows during the period divided by opening AUM. AFS and CWM total cash outflows are adjusted to exclude internal flows so as to reflect external cash outflows only.

Return on embedded value – Calculated as the increase in embedded value in the period before transfers, divided by embedded value at the beginning of the period.

RoBUE – Return on BU equity is calculated as BU underlying operating profit after income tax (including underlying investment income) divided by the BU’s average of monthly average tangible capital resources. No allowance is made for the benefit of gearing, which occurs at the Group level.

RoE (actual) – Calculated as annualised net profit attributable to shareholders of AMP Limited divided by the average of the monthly average shareholder equity for the period.

RoE (underlying) – Calculated as annualised underlying profit divided by the average of the monthly average shareholder equity for the period.

S&P gearing – Senior debt plus non-allowable hybrids divided by Economic Capital Available plus hybrids plus senior debt. Economic Capital Available is as defined by Standard & Poor’s and includes AMP shareholders’ equity (including goodwill and acquired AXA intangibles but excluding acquired asset management mandates and capitalised costs) and 100% of future AMP Life shareholder profits.

Underlying investment income – The investment income on

shareholder assets invested in income producing investment assets (as opposed to income producing operating assets) attributed to the BUs (including Group Office) has been normalised in order to bring greater clarity to the results by eliminating the impact of short-term market volatility on underlying performance. The excess (or shortfall) between the underlying return and the actual return is disclosed separately as market adjustment – investment income. Underlying returns are set based on long-term expected returns for each asset class. The return on AMP Bank income producing investment assets is included in contemporary wealth management operating earnings.

Underlying profit – AMP’s key measure of business profitability, as it smooths investment market volatility stemming from shareholder assets invested in investment markets and aims to reflect the trends in the underlying business performance of the AMP Group. The components of underlying profit are listed on page 3.

Variable costs – Include costs that vary directly with the level of related business (eg investment management fees and banking commissions and securitisation costs).

Tier 1 capital – Comprises the highest quality components of capital that fully satisfy all of the following essential characteristics: a) provide a permanent and unrestricted commitment of funds

• b) are freely available to absorb losses

• c) do not impose any unavoidable servicing charge against earnings, and

• d) rank behind the claims of depositors, policyholders and other creditors in the event of winding-up.

Tier 2 capital – Includes other components of capital that, to varying degrees, fall short of the quality of Tier 1 capital but nonetheless contribute to the overall strength of an entity as a going concern. It is divided into:

• a) Upper Tier 2 capital – comprising components of capital that are essentially permanent in nature, including some forms of hybrid capital instrument, and

• b) Lower Tier 2 capital – comprising components of capital that are not permanent, ie dated or limited life instruments.

Total capital resources – Total capital invested in BUs and Group Office including both tangible and intangible capital.

48 Glossary of terms and independent review AMP Investor Report 1H 12

Definitions of business units (BUs) and exchange rates

AMP

AMP Financial Services, AMP Capital, AMP SMSF and Group Office.

AMP Financial Services

AMP Financial Services provides a range of products and services to customers in Australia and New Zealand. These products and services are primarily distributed through self-employed financial planners and advisers, as well as through extensive relationships with independent financial advisers.

• AMP Financial Services is reported as four separate divisions: – Contemporary wealth management (CWM) – Financial planning services (including owned advice businesses), platform administration, unit-linked superannuation, retirement income and managed investment products business. Superannuation products include personal and employer sponsored plans. CWM includes the North product and platform.

CWM includes AMP Bank, which is a direct Australian bank offering residential mortgages, deposits and transactional banking.

AMP Capital

AMP Capital is a diversified investment manager, providing investment services for domestic and international customers. Through a team of in-house investment professionals and a carefully selected global network of investment partners, AMP Capital manages investments across major asset classes including equities, fixed interest, property, infrastructure and multi-manager and multi-asset funds. AMP Capital also provides commercial, industrial and retail property management services.

AMP Capital has established operations in Australia and New Zealand and a growing international presence with offices in Bahrain, China, Hong Kong, India, Japan, Luxembourg, Singapore, the United Kingdom and the United States, allowing it to source competitive offshore opportunities.

On 1 March 2012, AMP Capital and Mitsubishi UFJ Trust and Banking Corporation (MUTB) completed the transaction which formed the strategic business and capital alliance between the two parties and resulted in MUTB acquiring a 15% ownership interest in AMP Capital.

AMP SMSF

• Contemporary wealth protection (CWP) – Includes personal and group term, disability and income protection insurance products. Products can be bundled with a superannuation product or held independently of superannuation.

• Mature – A business comprising products which are mainly in run-off. Closed products include whole of life, endowment, investment linked, investment account, RSA, annuities and personal superannuation.

• AMP Financial Services New Zealand (AFS NZ) – A risk insurance business and mature book (traditional participating business), with a growing wealth management business driven by KiwiSaver.

AMP SMSF was formed in June 2012 and comprises AMP’s existing administration businesses, including Multiport, Ascend and Super IQ (49% owned by AMP).

AMP SMSF will also include Cavendish, acquired in July 2012. Cavendish is the largest SMSF administrator in Australia.

AMP SMSF forms part of AFS’s contemporary wealth management’s reported results.

Group Office

Group Office comprises: – Group Office operations – Corporate debt.

Exchange rates			AUD/NZD
2012	1H 12	– closing	1.2755
		– average	1.2835
2011	FY 11	– closing	1.3142
		– average	1.3059
	2H 11	– closing	1.3142
		– average	1.2875
	1H 11	– closing	1.2963
		– average	1.3229

Glossary of terms and independent review AMP Investor Report 1H 12 49

1H 12 financial results

	AMP
	Financial	AMP	Group
Analysis of operating results(A$m)	Services	Capital	Office	Total
BU operating earnings	412	45	-	457
GroupOffice costs	-	-	(31)	(31)
Total operating earnings	412	45	(31)	426
Underlying investment income	83	3	27	113
Interest expense on corporate debt	-	-	(48)	(48)
Underlying profit	495	48	(52)	491
Market adjustment – investment income	-	-	(1)	(1)
Market adjustment – annuity fair value	-	-	(10)	(10)
Market adjustment – risk products	-	-	23	23
Other items	-	-	10	10
Profit after income tax before AXA merger adjustments	495	48	(30)	513
and accounting mismatches
M&A costs	-	-	(2)	(2)
AXA integration costs	-	-	(71)	(71)
Amortisation of AXA acquired intangible assets	-	-	(50)	(50)
Accountingmismatches	-	-	(7)	(7)
Netprofit attributable to shareholders of AMP Limited	495	48	(160)	383
Total capital resources by equity class(A$m)		30 June 2012	31 December 2011
Contributed equity		9,233		9,080
Equity contribution reserve		1,019		1,019
Other reserves		402		32
Retained earnings		271		283
Demerger loss reserve		(3,585)		(3,585)
Total AMP statutory equity attributable to shareholders		7,340		6,829
Accountingmismatches and cashflow hedge reserve		214		185
Total AMP shareholder equity		7,554		7,014
Corporate debt		1,579		1,536
Total capital resources		9,133		8,550

50 Glossary of terms and independent review AMP Investor Report 1H 12

Independent Auditor’s Review Report to the Board of AMP Limited

We have reviewed selected information presented in the AMP Limited Investor Report for the half year ended 30 June 2012 (“Investor Report”).

The analysis of results, capital resources and embedded value information have been prepared for inclusion in the Investor Report and are used as a measure of financial performance and position.

Management’s Responsibility for the Investor Report

Management is responsible for the preparation of the Investor Report, inclusive of pages 23, 26, 27 [Embedded Value], 36 [Capital Management] and 49 [1H 12 financial results] (collectively ‘the financial information’) and has determined that the accounting, presentation and disclosure criteria used are appropriate to the needs of financial users. This responsibility includes establishing and maintaining internal control relevant to the preparation of the 30 June 2012 Investor Report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on selected information set out in the 30 June 2012 Investor Report based on our review. We have conducted our review in accordance with the Standard on Review Engagements ASRE 2405 Review of Historical Financial Information Other than a Financial Report in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that:

• the analysis of financial results on page 49 and total capital resources on page 39 of the Investor Report are not materially consistent with the definitions of operating earnings, underlying investment income and total capital resources set out on pages 46 and 47.

– the embedded value assumptions stated on pages 26 and 27 are not reasonable for their intended purpose in all material respects.

No opinion is expressed as to whether the accounting, presentation and disclosure criteria used are appropriate to the needs of the Directors of AMP Limited.

ASRE 2405 requires us to comply with the requirements of the applicable code of professional conduct of a professional accounting body.

The financial information has been prepared for inclusion in the Investor Report for the half year ended 30 June 2012. We disclaim any assumption of responsibility for any reliance on this review report or on the Investor Report to which it relates to any person other than the Directors of AMP Limited.

Our review of the analysis of financial results included making enquiries, primarily of AMP Limited’s personnel responsible for financial and accounting matters, review of the reconciliation of financial information on page 49 and total capital resources on page 39 to the Financial Report of AMP Limited, review of the determination of the operating earnings, underlying investment income and total capital resources in accordance with the definitions set out on pages 46 and 47, and analytical procedures.

Our review of the embedded value assumptions was limited to the review of AMP Limited’s documentation to support the embedded value assumptions, making enquiries, primarily of AMP Limited’s personnel responsible for financial and actuarial matters, and analytical procedures applied to financial data used by management to derive embedded value assumptions.

A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

We are independent of AMP Limited and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Conclusion

Analysis of Operating Results

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the analysis of financial results set out on page 49 and total capital resources on page 39 of the Investor Report for the half year ended 30 June 2012 are not materially consistent with the definitions of operating earnings, underlying investment income and total capital resources as set out on pages 46 and 47.

Embedded Value

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the embedded value assumptions set out on page 27 of the Investor Report for the half year ended 30 June 2012 are not reasonable for their intended purpose in all material respects.

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Ernst & Young Sydney 16 August 2012

Glossary of terms and independent review AMP Investor Report 1H 12 51

Information for shareholders

3 September 2012	Ex-dividend date for interim 2012 dividend (Australia)
5 September 2012	Ex-dividend date for interim 2012 dividend (New Zealand)
7 September 2012	Record date for interim 2012 dividend
10 September - 14 September 2012	Pricing period for interim 2012 dividend reinvestment plan
12 October 2012	Payment date for interim 2012 dividend
26 October 2012	Third quarter 2012 cashfow and AUM announcement
21 February 2013	FY 12 results announced
4 March 2013	Ex-dividend date for fnal 2012 dividend (Australia)
6 March 2013	Ex-dividend date for fnal 2012 dividend (New Zealand)
8 March 2013	Record date for fnal 2012 dividend
11 April 2013	Payment date for fnal 2012 dividend
9 May 2013	First quarter 2013 cashfow and AUM announcement
9 May 2013	Annual General Meeting

Registered Office: Level 24 33 Alfred St SyDNEy NSW 2000 AustrAlIA

www.amp.com.au

Website

For additional 2012 half year results information, visit AMP’s website at www.amp.com.au/shareholdercentre

You will find:

– Background information on AMP, business units, management and policies.

– Statutory reporting at the AMP Limited level (incorporating shareholder, policyholder and non-controlling interests).

– Archived webcasts of presentations to investors and analysts.

– Archived ASX announcements and historical information.

– Definitions, details of assumptions and calculations of key ratios.

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NS1679 08/12