Financial services giant AMP said its full-year underlying profit slumped by $634 million, or 56.6 per cent, after efforts were made last year to stabilise its ailing life insurance business.
The result, unveiled on Thursday morning, showed underlying profit of $486 million in the 12 months ended December 31, down from $1.1 billion in the prior year.
On a statutory basis AMP reported a net loss of $344 million, down from a net profit of $972 million in the prior year.
At the same time AMP will buy back $500 million in shares.
In October last year, Australia's largest listed wealth company announced $1.3 billion of write-downs and losses as it grappled with issues in in its life insurance division.
Losses from higher claims and lapsed policies were far worse than expected in the third quarter of 2016 as more customers lodged claims, increasingly citing mental health problems and back pain.
Chief executive Craig Meller said that good results from AMP Capital, AMP Bank, New Zealand and the wider wealth management business were overshadowed by the poor performance of its wealth protection or insurance arm.
"The wealth protection market deteriorated in 2016 and we took action to re-set and stabilise our business," Mr Meller said.
The full-year result underlined the extent of the deterioration. AMP saw a $415 million loss in it insurance business which reflects negative claims experience and capitalised losses.
"Our strategy is focused on directing capital to areas of our portfolio that will deliver the strongest growth including Australian Wealth Management, AMP Capital and AMP Bank," Mr Meller added.
AMP said that the performance of Australian of its wealth protection, or insurance, business was impacted by negative experience and the actions made to stabilise the business led to a one-off capitalised loss of $484 million.
As a result total experienced losses for the year were $105 million and AMP said that claims experience in the fourth quarter of 2016, capitalised and other one-off losses, and the reduction in embedded value were all within guidance provided in October 2016.
While assets under management were up by 5 per cent to $121 billion in its Australian wealth management arm the impact of difficult trading conditions remained and saw total net cash flows drop to $336 million compared to $2.2 billion in the year ended December 31, 2015.
However cashflow was up 11 per cent on 2015 for AMP's flagship North platform and assets under management were up 30 per cent.
"Casflows from AMP Flexible Super reduced as flows switched to North as expected. Corporate super cashflows were lower reflecting the lumpy nature of mandates," AMP said in a statement.
The Australian Financial Review recently revealed that wealth giant was actively seeking more business in the corporate superannuation space.
AMP Capital showed strong performance which AMP said was due to increased fee income driven by growth in real estate and infrastructure investments.
External net cashflows were $967 million (compared to $4.4 billion last year) and were impacted by challenging market conditions in Australia and Japan, partly offset by good institutional flows into real estate and infrastructure asset classes.
The board declared a final dividend, partially franked, of 14¢ a share, taking payouts for the year to 28¢.
