It is no accident that the new chief executive of Australian wealth management and insurance giant AMP, Craig Dunn, was formerly head of the company’s wealth management arm.

It is no accident that the new chief executive of Australian wealth management and insurance giant AMP, Craig Dunn, was formerly head of the company’s wealth management arm. It is wealth management, after all, which is the company’s core business and which has seen it bounce back to health after a series of ruinous acquisitions during the 1990s went sour, and almost destroyed one of Australia’s premier financial brands, founded more than 150 years ago. The foray into the UK, where AMP attempted to become a national player through the acquisition of companies such as National Provident Institution and Henderson Investors, became a nightmare as the FT index plummeted in the early part of this decade, requiring several major capital injections. At home, the disastrous acquisition of Sydney-based insurer GIO was financial poison, costing A$3.5 billion but reaping only A$1.3 million when the viable parts were sold off. In between, AMP nearly merged with Westpac and was subject to a takeover bid from the National Australia Bank. Outgoing chief executive Andrew Mohl, who handed the baton over to Mr Dunn several weeks ago, is the man most credit with ensuring AMP’s survival. Mr Mohl took the hard decisions, writing off assets, abandoning the UK adventure and refocused on the company’s strengths, which were life insurance, pensions and wealth management in Australia and New Zealand. The turnaround, which many observers claimed would never happen, has been a remarkable success and is only gathering momentum. Last February, AMP posted a A$976 million net profit, compared with a record A$5.52 billion loss for the 2003 financial year. In August 2007, the interim result was up 27 per cent on the previous year to A$534 million, driven by record retail cashflow amid favourable equity market conditions. Analysts are now expecting a A$1 billion plus profit result next month. For the new AMP, the outlook is positive. With a total of A$130 billion in assets under management, the company is well placed in the fastest growing segments of the financial services industry, such as financial planning, superannuation, and retirement savings which are set to grow at a compound of 13 per cent over the next decade. Under Andrew Mohl, AMP has transformed from a traditional life insurance company to a modern wealth management group. Where previously it had all the capital intensive needs of a life insurance company, now it is about superannuation - the local term for retirement planning - and the fees associated with providing it. With a decade old compulsory pensions saving scheme, where 9 per cent of wages are saved into super, Australia now has the world’s sixth largest savings retirement pool. Government policy is geared to supporting this regime, and that is a boon to the wealth management providers. In addition, AMP has a cost ratio of less than 40 per cent, which is one of the lowest in the industry and its employee productivity revenue of A$4.06 million is around four times the industry average. With a network of nearly 2,000 financial advisors in Australia and New Zealand, AMP has the industry’s largest planning force. In four years under Craig Dunn, the AMP Financial Services arm saw its operational earnings climb by 50 per cent. AMP now has a goal of doubling its investment returns by 2009, and recent history suggests this might just be achievable.