AMP has reported a 7.5% increase in annual premium income for its individual life insurance business for the year ending December 31.

Individual annual premiums in 2011 were $1.29 billion, compared to $1.2 billion in the previous financial year.

The company’s group life insurance business also reported an 8.1% increase in annual premium income to $346 million for the 2011 financial year.

AMP CEO Craig Dunn says the merger with Axa has delivered a number of benefits to the life insurance business in the company.

“Australian life insurance is now a larger part of the AMP business, contributing 26% of operating earnings, up from 18% prior to the merger,” he said. 

“AMP is now the largest provider of life insurance products to independent financial advisers in Australia.”

Mr Dunn says individual annual premiums had grown for both AMP and Axa products during the year and the company had also achieved consumer price index (CPI) increases as well.

The only negative was an increase in claims on income protection products, he says.

But dispute this negative, AMP’s wealth protection business, which includes both individual and group insurance, reported a 36% increase in profit margins to $206 million.

This was attributed to strong organic growth in the retail business and the nine-month contribution from Axa.

AMP has reported an increase in lapse rates during 2011, up 1.4% to 12.8%. It has blamed this on older clients cashing in their policies and the CPI premium increases.

Overall AMP has reported a decline in net profit for the 2011 year despite the merger with Axa in March.

The 2011 result was $688 million compared to $775 million for the year ending December 31 2010.

Mr Dunn says the figure includes the Axa takeover and integration costs and excluding these AMP’s underlying profit was $909 million for the year compared to $760 million in the previous year.

The estimated integration costs are still put at $310 million.

“The new AMP is stronger, has a more diversified, balanced mix of business, a powerful domestic franchise, and growing opportunities offshore,” he said.

“Our investment in growth initiatives, combined with the benefits of the merger with Axa, has put AMP in a market-leading position in key segments in our target markets. 

“The resilience of the business is evident from our growth in banking, life insurance and new wealth management products, despite the very challenging business conditions.”