AMP FY profit falls 10.6 pct on weak wealth protection unit

SYDNEY Wed Feb 19, 2014 4:26pm EST

SYDNEY Feb 20 (Reuters) - Australia's AMP Ltd said on Thursday its full-year profit fell 10.6 percent, missing analyst expectations as a decline in shareholder fund investment income and lapses in life insurance policies outweighed strong growth in wealth management.

Australia's third-biggest retail funds manager said underlying profit was A$849 million ($766.90 million) for the year to December 31, compared to A$950 million the previous year.

Analysts surveyed by Reuters had on average forecast AMP's annual profit to be A$938 million.

AMP has been trying to stem a sales decline at its wealth protection unit, whose products pay part of a person's salary if they are unable to work, after it was hit by more claims and as people dropped policies because of the weaker economy.

AMP declared a final dividend of A$0.115 per share, the same as last year.

The company's shares have dropped about a quarter in eight months after AMP gave two warnings about the wealth protection unit's shrinking profits. The shares last closed on Wednesday at A$4.50.

($1 = 1.1071 Australian dollars) (Reporting By Byron Kaye; additional reporting by Reshma Apte)