Meller has hands full after AMP downgrade INCOMING AMP chief executive Craig Meller is to prioritise improving the company's life insurance business after the wealth giant issued its second profit warning in four months. AMP shares yesterday sank more than 5 per cent after the company revealed an at least $55 million to $65m hit after further losses in its wealth protection business. The one-offs will reduce AMP's underlying profit and Citi analyst Nigel Pittaway said "significant consensus downgrades" were likely. The company hasn't issued guidance for the year to December 31, but last year posted an underlying profit of $955m. In the first half, AMP's underlying profit was $440m as a 52 per cent slump in wealth protection earnings weighed on growth in other units. "AMP regards improving the performance of the wealth protection business as one of its highest priorities and continues to implement short and medium-term actions to improve claims and lapse experience," the company said yesterday. AMP shares ended down 2.83 per cent at $4.80 in a positive broader market. With Mr Meller taking the reins from Craig Dunn on January 1, Mr Pittaway said there was an element of "deck clearing," despite management refusing to suggest this was the end of the losses. It follows a profit warning in June because of a surge in income-protection claims, which, combined with people letting policies lapse, is lashing the life insurance industry and increasing the chances of consolidation. "It's a continuation of a theme really of what's been happening in the life insurance business for a while," said Andrew Martin, a fund manager at Alphinity Investment Management. The question is how much of it is one-off versus ongoing. Things could deteriorate further. Mr Martin added that Mr Meller would be having a "very close look" at the wealth protection problems given it is "the major issue" facing AMP. In the third-quarter update, AMP said losses were $24m, including $12m in lapses and $6m in claims. AMP also brought forward a review of products that could affect its full-year result, leading it to expect an increase in experience losses of about $15m in the fourth quarter. Due to a worsening in lapses in the loss-making National Mutual business acquired in its massive acquisition of AXA Asia Pacific, AMP will also take a capitalised loss of $40m to $50m. AMP will assess the second-half dividend in February "based on the conditions prevalent at that time."