2016 annual report

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Contents 1 Chairman’sforeword2 Five-yearfinancialsummary3 2016resultsataglance4 Whoweare5 Ourstrategy6 Whatwedo8 Corporatesustainability10 Ourboard13 Ourmanagementteam16 CorporategovernanceatAMP20 Directors’report28 Remunerationreport51 Analysisofshareholderprofit52 Financialreport53 Consolidatedincomestatement54 Consolidatedstatementofcomprehensiveincome55 Consolidatedstatementoffinancialposition56 Consolidatedstatementofchangesinequity57 Consolidatedstatementofcashflows58 Notestothefinancialstatements117 Directors’declaration118 Independentauditor’sreport123 SecurityholderinformationIBC Glossary

AMP Limited ABN 49 079 354 519

Unlessotherwisespecified,allamountsareinAustraliandollars.Informationinthisreportiscurrentasat9February2017.

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AMP 2016 annual report 1

ofworkingwithChinaLife,theworld’slargestlistedlifeinsurancegroupandaFortune500company.ThroughourjointventureswithChinaLifeandalsowithourJapanesepartner,MitsubishiUFJTrustandBankingCorporation(MUTB),wehavecontinuedtoattractinvestmentsandbuildondevelopmentopportunities.

Dividend and capital positionYourboardispleasedtohavedeliveredatotal2016dividendof28centspershareforshareholders,frankedat90%.Thisrepresentsafullyear2016dividendpayoutratioof85%ofunderlyingprofit.Wehavereturned$828milliontoshareholdersintheformofdividendsanddividendreinvestmentplan(DRP)sharesfortheyear.Ourunderlyingbusinesshasremainedstrongandwehavemaintainedastrongcapitalposition.At31December2016weheld$2.2billionincapitalaboveminimumregulatoryrequirements.ThestrengthofAMP’scapitalposition,followingthecompletionofareinsurancedealinourinsurancebusiness,hasfacilitatedanon-marketsharebuy-backofupto$500million.

Strengthening our boardFournewdirectorswereappointedtoourboardin2016.VanessaWallace,whohasover30years’consultingexperiencetothefinancialservicessector,joinedinMarch2016(andwaselectedatthe2016annualgeneralmeeting(AGM)),whileGeoffRoberts,whohaswide-reachingfinancialmanagementexperience,joinedinJuly2016.InsuranceexpertandexperiencedinvestmentmanagerMikeWilkinsjoinedinSeptember2016;andPeterVargheseAO,whohasextensivegovernmentandpublicadministrationexperience,joinedinOctober2016.Vanessa,Geoff,MikeandPetereachbringbroadskillsandcapabilitiesthatwillproveinvaluabletoourbusinessaswecontinuetopursueourstrategy.

YourboardisconfidentthatAMPistakingtherightactionsandpursuingthebeststrategytobuildasustainable,growingbusinessandimprovelong-termreturnstoshareholders.

Catherine BrennerChairman

28cps $2.2b

Total dividend

Capital surplus

$344m

Loss attributable to shareholders

$486m

Underlying profit

$500m

On-market share buy-back, up to

Chairman’s foreword

Our year2016 was a challenging year for AMP. The net loss we reported was largely driven by challenges in our insurance business and the actions that were taken to rebase and stabilise it going forwards.

Withoutdoubtour2016financialresultswereunsatisfactory.Asignificantfactorinthisresultwastheunderperformanceofourinsurancebusiness,drivenbyextremelychallengingoperatingconditionsintheinsurancesector.Wehavetakenactiontorebasethisbusinesstoprovidegreaterearningsstabilityatgrouplevel,protectourbalancesheetandfreeupcapital.ThisincludedareinsurancedealwithMunichRetoreleaseupto$500millionincapitalfromtheinsurancebusinessandtohelpreducefutureearningsvolatilityatagrouplevel.Wealsosignificantlystrengthenedourbestestimateassumptions.

Notwithstandingthesechallenges,wedeliveredagoodperformanceinAMPBank,inourNewZealandoperationsandinternationallythroughAMPCapital.OurAustraliansuperannuationandfinancialadvicebusinessesdeliveredlargelysteadyresultsinlow-growthmarketconditions,andwemadegoodprogresstobecomeamorecustomercentredorganisation.

YourboardremainsconfidentthatAMPiswellsetupforfuturesuccess,andalongwithAMP’smanagementandemployeesareunitedinourfocustorebalanceshort-termperformance,withasharperfocusoncashflows,costsandcapital,forlong-termgrowth.Ourstrategyistocapitaliseonlargeandgrowingmarketsandonbusinesseswherewehaveadistinctcompetitiveadvantagethankstoourscale,brand,distributionreachandinvestmentexpertise.

Oursuperannuationandfinancialadvicebusinessisinaverystrongposition.WearethelargestsuperannuationproviderinAustralia,basedonassetsundermanagement;andweplantogrowinthismarketoverthenextfiveyearsbyfocusingonourcustomers.Wearelisteningandrespondingtoourcustomers’needswithtechnologyandaccesstoadvicethathelpsthemreachtheirgoals.

Whilesuperannuationandfinancialadviceareimportanttoourcustomerfocus,AMPBankisapartofthatstorytoo.Thebankprovidesanimportantserviceinhelpingourcustomersachievetheirgoals,andwecontinuetoseegrowthinourresidentialhomeloansanddepositsasaresult.

ThebusinesshascontinuedtogrowselectivelyinAsiaandinternationally,primarilythroughAMPCapital.InAsia,ourfocusisonhigh-growthpotentialmarkets,particularlyChina.OurconnectiontoChinaisstrong;wehavehadapresencethereforalmost20yearsandforthepastdecadewe’vehadtheprivilege

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AMP 2016 annual report2

Our results in summary

Our financial performance

Five-year financial summary

Year ended 31 December2016

$m2015

$m2014

$m2013

$m

Restated2012

$m

Consolidated income statement Netpremium,feeandotherrevenue 6,204 5,539 5,343 5,136 5,166

Investmentgains(losses) 8,567 8,483 12,244 14,963 12,258

Profit(loss)beforeincometaxfromcontinuingoperations 358 1,993 1,814 1,498 1,387Incometax(expense)credit (166) (280) (843) (782) (688)Non-controllinginterests (536) (741) (87) (44) (10)

Profit (loss) after tax attributable to shareholders of AMP Limited (344) 972 884 672 689

Consolidated statement of financial position Cashandcashequivalents 3,476 3,955 3,581 2,938 4,388Investmentassets 129,995 128,074 123,292 121,781 107,721Intangibles 3,199 3,983 4,042 4,136 4,502Assetsofdisposalgroups – – 100 42 187Otherassets 3,390 3,696 3,840 4,327 4,566

Totalassets 140,060 139,708 134,855 133,224 121,364

Interest-bearingliabilities 17,218 17,452 16,502 16,243 13,473Lifeinsurancecontractliabilities 24,225 23,871 24,403 24,934 25,055Investmentcontractliabilities 71,579 69,848 66,980 66,049 58,385Liabilitiesofdisposalgroups – – 69 8 74Otherliabilities 19,497 19,642 18,516 17,790 16,734

Totalliabilities 132,519 130,813 126,470 125,024 113,721

Net assets 7,541 8,895 8,385 8,200 7,643

Contributedequity 9,619 9,566 9,508 9,602 9,333Reserves (1,972) (1,866) (1,888) (1,973) (2,157)Retainedearnings (185) 819 566 461 332

TotalequityattributabletoshareholdersofAMPLimited 7,462 8,519 8,186 8,090 7,508Non-controllinginterests 79 376 199 110 135

Total equity 7,541 8,895 8,385 8,200 7,643

Year ended 31 December 2016 2015 2014 2013Restated

2012

Other financial data Basicearningsperordinaryshare ($ps) ($0.11) $0.33 $0.30 $0.23 $0.24Dilutedearningsperordinaryshare ($ps) ($0.11) $0.33 $0.30 $0.23 $0.24Dividendsperordinaryshare ($ps) $0.28 $0.28 $0.26 $0.23 $0.25Numberofordinaryshares (m) 2,958 2,958 2,958 2,958 2,930Assetsundermanagement ($b) 240 226 214 197 173

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AMP 2016 annual report 3

Net cashflows on AMP platformsNetcashflowsreflectchallengingdomesticmarketconditions.

AMP Capital external net cashflowsStrongflowsintoinfrastructureandrealestateassetclasseswereoffsetbychallengingdomesticmarketconditions.

Assets under managementWenowmanagemoremoneyforourcustomersaroundtheworld.

$1,778mdown 53%

$967mdown 78%

$240bup 6%

Total dividend for 2016

Thefinaldividendof14centspershareistobepaidon31March2017andwillbe90%franked.

$828 millionreturnedtoshareholdersintheformofdividendsanddividendreinvestmentplansharesfor2016.

Loss attributable to shareholders Underlying profit

UnderlyingprofitisAMP’spreferredmeasureofprofitabilityasitbestreflectstheunderlyingperformanceofthegroup.Itistheearningsbaseonwhichtheboarddeterminesthedividendpayment.

Themaindifferencebetweenprofit(loss)attributabletoshareholdersandunderlyingprofitcomesfrommovementsininvestmentmarketsandone-offcosts.Areconciliationofprofit(loss)attributabletoshareholdersandunderlyingprofitcanbefoundonpages21and63.

28cents per shareremained steady

$344mnet loss

$486mdown 56.6%

Cost to income ratioCostgrowthinlinewithguidance,beforeimpactofrestructurecostsandlowervariableremuneration.

Regulatory capital funds held above the minimum regulatory requirementAMPholdscapitalabovetheminimumrequirementtoprotectcustomers,creditorsandshareholdersagainstunexpectedlosses.Thisisanindicationofthestrengthofourbusiness.

Underlying return on equityThedecreaselargelyreflectstheimpactofinsuranceclaimsexperienceandcapitalisedlosses.

63.7%within target of 60%-65%

$2.2bdown 13%

5.6%decreased 7.6 percentage points

Dividends centspershare

Finaldividend Interimdividend

0

10

20

30

2015201420132012 2016

12.5 14 14

13.5 14 14

26

28 28

11.5

11.5

23

12.5

12.5

25

2015201420132012

2016

$884

m

($34

4m)

$972

m

$672

m

$689

m

0

250

500

750

1,000

1,200

Profit (loss) attributable to shareholders$million

0

250

500

750

1,000

1,200

2015201420132012 2016

$1,0

45m

$1,1

20m

$486

m

$849

m

$950

m

Underlying profit$million

2016 results at a glance

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AMP 2016 annual report4

Our business, vision and strategy

Who we areOur purpose is to help customers own their tomorrow, helping them take control of their money and achieve their financial goals.

Throughouroffers,solutionsandexpertfinancialadvice,wearehelpingourcustomersexplore,plan,trackandrealisetheirgoalssotheycanownabettertomorrow.Tosupportourcustomers,wearebuildingonourcurrentstrengths,transformingourbusinesstoplaceourcustomersatthecentreofeverythingwedo,andbecomingmoreagileandefficient.Wearecapitalisingonourstrongpartnershipswithinternationalmarketleaders,particularlyinChinaandJapan,tocontinueexpandingouroverseasgrowthwithretailandinstitutionalinvestors.

We are Australia and New Zealand’s leading specialist wealth management company. For 168 years, we have dedicated ourselves to helping our customers achieve their financial goals with quality products and expert advice. The world has changed immeasurably since our founding days; and while we have evolved and grown to keep pace, our purpose has steadfastly remained to help people own a better tomorrow.

Over

5,400 employees

More than

46,000people have an AMP Bank home loan

More than

3,500 financial advisers in Australia and New Zealand

Established in

1849 as a mutual life insurance company

Over

4 million customers

$13.8b returned to shareholders since AMP demutualised in 1998F

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AMP 2016 annual report 5

Our strategyOur purpose is to help people own a better tomorrow.

Invest to growManage for value

and capital efficiency

Superannuation, retirement and financial advice Banking Investments Insurance New Zealand

Short term

Drivecashflowsby:

– liftingproductivityinouradvisernetwork

– activatingunadvisedcustomers

– winningmorecorporatesupermandates

– diversifyingchannels

Sustainbusinessefficiencies

Continuetoactivateouradvisernetwork

Improvethecustomerexperience

Continuetargetedpricingactivity

Continuetogrowthroughthebrokernetwork

Continuetappingglobalinvestorappetiteforinvestmentexpertise,particularlyinrealestateandinfrastructure

Stabiliseearningsandreleasecapitalthroughreinsurance

Sustainbusinessefficiencies

Promotenewinsuranceoffer

Driveearningsandvaluefromstrongmarketpositionsandcontinuedefficiencies

Medium term

Continuetoinvestindigitaltogivecustomersagreaterchoiceofchannels,includingdirectandroboadvice

Scaleupnewgoals-basedadvicemodel

Investtomaintainandenhanceplatformcompetitiveness

Realiseself-managedsuperannuationfunds(SMSF)efficienciesfromscaleanddriveorganicgrowth

Investtodrivestepchangeinoperationalcapacitytosupportgrowth

Maximisecapitalefficiency

China:growandextendthepartnershipwithChinaLife

Japan:reframeanddrivevaluefromMitsubishiUFJTrustandBanking(MUTB)partnership

DrivefurtherinternationalgrowthinAsia,EuropeandNorthAmerica

Manageforvalueandcapitalefficiency

Tilttocapital-lightbusinesses

Focus on customers, costs and capital

Wearepursuingaclearstrategyforlong-termgrowthbytiltingourinvestmenttohighergrowth,lesscapitalintensivebusinesseswithintheportfoliogrouptofocusonourcorebusinesseswherewehavestrongpositionsingrowingmarkets.WearetransformingourcoreAustralianbusinessestohelpourcustomersowntomorrow,reducingcoststocontinuegrowingprofitablyinamargin-compressedworld,andexpandinginternationallythroughselectedpartnershipsinChinaandJapan.WearealsoattractingstrongnewinvestmentflowsintorealassetsinAustraliaandglobally.Theseobjectivesaredeliveredthroughourbusinesslinesasfollows:

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Our business, vision and strategy

What we doAustralians and New Zealanders know us best for superannuation, investments and advice, but we are growing fast in retail banking in Australia, and internationally with strong partnerships in China and Japan and investments around the globe.

WeareproudtobeAustraliaandNewZealand’sleadingspecialistwealthmanagementcompany.

Superannuation, retirement and adviceWehelpourcustomerssaveforandlivewellinretirementwithourrangeofaward-winningsuperannuationproducts,includingself-managedsuperannuationfunds(SMSFs).WeareAustralia’sleadingsuperannuationproviderandoperateinarapidlygrowingindustry,withtheAustraliansuperannuationmarketexpectedtodoubleinsizeby2026.1

AMPfinancialadvisersprovidequalityfinancialadvicetohelppeopletakecontroloftheirfinancesandreachtheirgoals.Ouradvisersaresupportedwithtraining,researchandongoingdevelopmenttoensurethattheyareequippedwiththeknowledge,expertiseandexperiencetheyneedtohelpourcustomersachievetheirgoals.

OurSMSFbusiness,SuperConcepts,helpscustomersinAustraliaestablishSMSFsandprovidesthemwithadministration,compliancemanagementsupport,softwaresolutionsandtechnicaleducation.Italsoprovidesaccesstoavarietyofprovidersspecialisingininvestmentproducts,insurance,cashhubs,termdepositsandlendingservices.OurSMSFbusinessincludesthebrandsAMPSMSF,Ascend,Cavendish,DesktopSuper,Multiport,Justsuper,SuperConcepts,SuperIQ,SuperMateandyourSMSF.

– In2016,AMPFlexibleSuperwontheCANSTAROutstandingValueaward

– Wehelpedourcustomersthriveinretirementbypayingout$2.4billioninAustralianretirementpaymentsin2016

– Weprovidedsuperannuationservicestocloseto60,000companiesinAustralia

– OuradvicenetworkisthelargestinAustraliaandNewZealand,withmorethan3,500alignedandemployedadvisers

– Acrossadministrationandsoftwareservices,SuperConceptsaddedaround15,500fundsduring2016andnowsupports53,570funds,representing9.2%oftheSMSFmarket

– AMP’sadvicenetworkspansmultiplebrandsincludingAMPFinancialPlanning,AMPAdvice,Hillross,Charter,Spicers,AdviceFirst,SMSFAdviceandJigsaw.

BankingAMPBankisagrowingbusiness.ThebankhelpsAustralianswithresidentialandinvestmentpropertyhomeloans,anddepositandtransactionaccounts,alongwithself-managedsuperannuationfundproducts.ThebankalsoprovidesloanstoAMP-alignedfinancialadviserpractices.Customerschoosehowtheywanttoaccessthebank’sproducts,whichareavailableoverthephone,online,orthroughAMPfinancialadvisersormortgagebrokers.

– Wehelpcloseto100,000Australianswiththeirbankingneeds

– In2016,wehelpedover9,500customersbuyahome

– Wewelcomedover20,400newcustomerstoAMPBankin2016.

53,570customers with SMSF admin and software services

$1,193min insurance payments helped our customers

$2.4bin Australian retirement payments in 2016F

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1 DynamicsoftheAustralianSuperannuationSystem,TheNext20Years:2015–2035,Deloitte,November2015.

AMP 2016 annual report 7

InvestmentsWehelpinvestorsaroundtheworldinvestinequities,fixedincome,infrastructureandrealestate,anddiversified,multi-managerandmulti-assetfundsthroughAMPCapital.AMPCapitalalsomanagesrealestateandinfrastructureassetsincludingshoppingcentres,airports,trainsandpipelines.InAsia,wehavestrongpartnershipswithnationalchampionsinChinaandJapan,wheretheretirementmarketisrapidlygrowing.

– AMPCapitalisoneofthelargestdirectrealestatefundmanagersinAsiaPacific,with$23billioninassetsundermanagement.Onbehalfofinvestors,AMPCapitalmanagedrealestatefundsandaportfolioofassetsincludingSydney’sMacquarieCentre,AngelPlaceand200GeorgeStreet;Melbourne’sBourkePlaceand700BourkeStreet;andQueensland’sPacificFairandCoronationDriveOfficePark.AMPCapitalalsomanageddiversifiedandsector-specificportfoliosofassetsinAustralia,NewZealand,SingaporeandtheUnitedStates.In2016,$1.3billionofnewequitywasraised,including$334millioninnewequityfromoffshoreinvestorsandafurther$440millionsecondaryunitstradedacrossthepooledfundplatform.

– AMPCapitalisoneofthelargestinfrastructuremanagersintheworld,managing$12billioninassetsincludingMelbourneAirport,PowercoinNewZealandandAngelTrainsintheUnitedKingdom.

– AMPCapitalholdsa15%stakeinChinaLifeAMPAssetManagementCompanyLimited(CLAMP),whichmanagesover$23billionforChineseinvestorsthroughmutualfundproducts,includingmoneymarket,fixedincome,balancedandequityfunds.

InsuranceWesupportourcustomersandtheirfamiliesduringtoughtimeswithouraward-winninginsuranceproducts,includinglifeinsurance,incomeprotectionanddisabilityinsuranceproducts.AMPisaleadinginsurerandprovidespoliciesthatareheldbyindividualsorincludedinasuperannuationfund.In2016overtwomillionpolicies,protectingover1.5millioncustomers,werein-force.

– In2016,wewerenamedLifeInsuranceCompanyoftheYearattheAustralianandNewZealandInstituteofInsuranceandFinanceInsuranceIndustryAwards.WealsowonanawardforExcellenceandInnovationinReturntoWorkfromtheAustralasianLifeUnderwritingandClaimsAssociationandSwissRe,andwewerearunner-upintheBestClaimsOutcomeandCustomerExperiencecategoryatthe14thAnnualAustralianInsuranceAwards

– Wehelpedourcustomersbypayingout$1,193millionininsuranceclaimsin2016

– In2016welaunchedournewAMPMyLifeoffer,throughourAMPAdvicepractices.

Mature insurance and superannuationThroughourAustralianmaturebusiness,weexpertlymanageclosedinsuranceandsuperannuationproductsthatarenolongersoldbyAMP.AllproductsinAustralianmatureareclosedtonewbusinesswiththeexceptionoftheEligibleRolloverFund.TheAustralianmaturebusinessisthelargestclosedlifeinsurancebusinessinAustraliaandincludeswholeoflife,endowment,investmentlinked,investmentaccount,RetirementSavingsAccount,annuities,insurancebonds,personalsuperannuationandguaranteedsavingsaccounts.

– Australianmatureassetsundermanagementcomprisecapitalguaranteedproductsandmarketlinkedproducts.In2016thisrepresentedover$1.7millionpoliciesand$21billioninfundsundermanagement

– Wehelpedourcustomersbypayingout$2.0billioninclaimsandmaturitiesin2016.

New Zealand financial servicesInNewZealandwehaveleadingpositionsinsuperannuationandinsuranceandprovidecustomerswithtailoredfinancialproductsandservices,directlyandthroughoneofthelargestnetworksoffinancialadvisersinthecountry.

– AMPisthefourth-largestKiwiSaverSchemeproviderwith12%ofthetotalKiwiSavermarketandapproximately238,000KiwiSavercustomers

– In2016,operatingearningsincreasedby$6million(5%)to$126million.F

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AMP 2016 annual report8

Corporate sustainability

Corporate sustainabilityWe are one of Australia’s oldest companies, and since the beginning we have been committed to improving the communities in which we operate. We believe that our success is linked to the prosperity of our shareholders, customers, advisers, employees and our communities.

Webelieveinmanagingourbusinesssustainablyfortodayandforthelongterm;tobuildsharedvalueandcreateabetter,moreprosperoustomorrowforourcommunities.

Sharing our expertise Webelieveintakingthemysteryoutofmanagingmoney,tomakethecomplexsimpleandhelppeoplemakeinformedfinancialdecisions.Whenpeoplehaveabetterunderstandingandgreatercontroloftheirfinancialwellbeing,theyfeelmoresecureandindependent.Wehelpbygivingpeopletheknow-howandtoolstotakecontroloftheirfinances.

ThroughourQ&AMPinfocentrewebsite,peoplecanusetheonlinetooltoexplore,prioritiseandcreateatimelinetomaptheirgoals.Thereare13commongoalstochoosefrom,rangingfromretireright,bedebtfree,andgivemykidsthebestchance,tosimplifymyfinances,pursueapassionorbuyahome.Afterattributingagradeofimportancetoeachgoal,thegoalexplorerprovidesagoalstimelineandquestionstothinkaboutforachievingeachgoal.

Ourwebsitealsofeaturesbudgetplanners,debt-reductioncalculatorsandfinancialnews.

Since2002,wehavepartneredwiththeNationalCentreforSocialandEconomicModelling(NATSEM)toproduceaseriesofreportsthatopenwindowsonAustraliansociety–thewayweliveandwork–andourfinancialandpersonalaspirations.Wepublishthesereportstohelpthecommunitymakeinformed

financialandlifestyledecisionsandtocontributetoimportantsocialandeconomicpolicydebate.In2016,wepublishedareportonthefinancialimplicationsassociatedwithdivorce,calledForRicher,ForPoorer:DivorceinAustralia.

In2016,weinvitedshareholderstoafreeinformationsessionattheannualgeneralmeeting(AGM)tohearfromsomeofourexpertsandbenefitfromtheirinsightsandexpertise.Thesessionwaswellreceivedandwillbeheldagainatthisyear’sAGMinSydneyon11May2017.Allshareholdersareinvitedtoparticipateinpersonoronline.Youcanfindfurtherdetailsoftheeventinthe2016shareholderreviewor2017noticeofmeeting.

Encouraging good corporate responsibility through responsible investingAMPCapitalisamajorinvestorincompaniesandassetsonbehalfofourcustomers,andassuch,iswellplacedtoraisethecorporateresponsibilitybarandinfluencebetteroutcomesforinvestors.Wehavelongrecognisedthestronglinkbetweenanorganisation’senvironmentalandsocialimpacts,thequalityofitscorporategovernance,anditslong-termbusinesssuccess.

AkeypartofAMPCapital’sinvestmentprocessisassessingenvironmental,socialandgovernance(ESG)factors.WeareasignatorytotheUNPrinciplesofResponsibleInvestment,andthemostrecentreportcardonhowweareprogressingonourcommitmentsisavailableatampcapital.com.au/esg.

Close to

$86mdonated to improve the lives of Australians and New Zealanders since 1992

CO2AMP has been carbon neutral since 20131

$1mgiven to 53 amazing Australians through the AMP Tomorrow Fund

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AMP 2016 annual report 9

ThroughourdedicatedESGteam,weactivelyengagewiththeboardsandmanagementteamsofcompaniesonarangeofESGissuestoencouragesounddecisionmakingandriskmanagement,appropriatecapitalallocation,goodboardcomposition,genderdiversity,fairremunerationandopenandhonestdisclosure.Weuseourvotingpowertoencouragecorporatebehaviourthatwilldeliverbetterresultsforinvestors,shareholdersandthecommunityasawhole.

Inclusion and diversityWebelieveinaninclusiveculturewherearichandvariedarrayofthoughts,ideasandexperiencesdrivebetterperformanceforourcustomersandshareholders.Bydrawingonthestrengthsandskillsofourpeopleandempoweringthemtobethebesttheycanbe,wearebetterplacedtohelpothersowntomorrow.

AMP’sfourpillarsofinclusionremainunchanged.

– Committed and inclusive leadership–leadersaresupportedtocreateaninclusiveculturethathelpspeopleplaytotheirstrengths.

– Merit-based policies and practices–wefocusonequalitywhenwerecruit,develop,promoteandpayourpeople,aswellaswhenwerecogniseandrewardtheirperformance.

– Decision-making and voice–weleveragethediversethinkingacrossourbusinesstobetterunderstandourcustomersandmeettheirneeds.

– Measurement, accountability and rewards–wesetchallengingdiversitytargetsandbelievethatmeetingthesetargetswilldeliverbetterresultsforourbusiness.

Genderequalityisattheforefrontofourinclusionanddiversitywork,andwehavemadestrongprogressinincreasingthenumberofwomeninAMP’smostseniorrolesasaresult.In2016,weappointedfournewwomentoAMP’smanagementteamandwereproudtoappointCatherineBrennerasthefirstfemaleChairmanoftheAMPLimitedBoard.

AMPhaschallenginggenderdiversitytargets.Bytheendof2020,wewantwomentoholdhalfofourmiddle-managementrolesand47%ofseniorexecutiveroles.Wearealsoaimingforgenderbalanceonourboardswitha40:40:20target,wherebyboardsaremadeupof40%women,40%menand20%eitherwomenormen.AMPconductsanannualpayequityreviewtoidentify,analyseandaddresspotentialareasofgenderinequity.ThiscommitmentisexpresslyoutlinedinAMP’sremunerationpolicy.

In2016,AMPwasagainnamedanEmployerofChoiceforGenderEqualitybytheAustralianGovernment’sWorkplaceGenderEqualityAgency.

Lookingahead,AMPwillfocusonflexibleworkasakeypriorityacrossallemployeedemographics.Inclusionremainstheunderlyingfoundationofourinclusionanddiversitystrategy.

Protecting our environmentMinimisingourimpactontheenvironmentisasimportantforourcompanyasitisforthecommunitiesinwhichweoperate.WeactivelyassesstheenvironmentalrisksandopportunitiesacrossourbusinessandtheinvestmentsmanagedbyAMPCapital.In2016,wecontinuedtomakeprogressagainstourenvironmentalprioritiesandtargets,remainingcarbonneutralinourownoperations(tenantedsitesandairtravel).From2013to2016,wereducedourgreenhousegasemissionsby25%.

The AMP FoundationThroughtheAMPFoundationwehelptoprovideabettertomorrowforeveryone,especiallypeoplewhofacechallengesaccessingeducationandemploymentopportunities.Since1992,theAMPFoundationhasdistributedcloseto$86milliontohelpcharitiesandindividualsmakeapositiveimpactoncommunitiesinAustraliaandNewZealand.

TheAMPFoundationworksintwoways.Ithelpspeopletohelpthemselvesbysupportingnon-profitorganisationsthatgivedisadvantagedAustralianslife-changinglearningandworkopportunities.ItalsohelpspeopletohelpothersbysupportingAMPemployeesandfinancialadviserstosharetheirtime,skillsandresourceswithpeopleinneedandthroughAMP’sTomorrowFundgrants.

In2016,theAMPFoundationdistributed$5.2milliontothecommunity,includingmorethan$1millioningrantsthroughAMP’sTomorrowFundtohelp53amazingAustraliansachievetheirgoals.

Wealsopresentedscholarshipsto28equallyextraordinaryNewZealanders.

Whiletheserecipientsallhaveverydifferentinterests,likeAMP,theyareallstrivingtogiveback.

Youcanfindfurtherinformationonourenvironmentalperformance,corporategovernanceworkandAMPFoundationactivitiesatamp.com.au/corporatesustainability.

Roles 2020 target 2016 target 31 December 2016 31 December 2015

AMP Limited Board 40% 40% 40% 33%

Senior executives 47% 40% 40% 37%

Middle managers 50% 42% 41% 39%

All employees n/a n/a 52% 52%

Representation of women at AMP

1 AMPiscarbonneutralinitsownoperations(tenantedsitesandairtravel).

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AMP 2016 annual report10

AMP Limited Board and management team as at 9 February 2017

Our board

Catherine Brenner1

Independent ChairmanBEc,LLB,MBACatherinewasappointedtotheAMPLimitedBoardinJune2010andassumedtheroleofChairmaninJune2016.ShebecameChairmanoftheNominationandGovernanceCommitteeinMay2013andamemberofthePeopleandRemunerationCommitteeinJune2016.CatherineservedasaDirectorofAMPLifeLimitedfromMay2009andTheNationalMutualLifeAssociationofAustralasiaLimitedfromMarch2011,servingbothcompaniesuntilMay2016andasChairmanforthelastfiveyears.

ExperienceCatherinehasextensivecorporatefinanceandpubliccompanyexperienceandisaformerseniorinvestmentbankerandcorporatelawyerwithabackgroundincorporateadvisoryandequitycapitalmarkets.Shehasservedonpubliccompanyboardsintheresources,propertyandbiotechsectorsforoveradecade.CatherinehasalsopreviouslyservedasamemberoftheTakeoversPanelandasaboardmemberandtrusteeofnot-for-profitandgovernmentorganisations,includingtheSydneyOperaHouse.

Listed directorships– DirectorofBoralLimited(appointedSeptember2010)– DirectorofCoca-ColaAmatilLimited(appointedApril2008)

Government and community involvement– DirectorofSCEGGSDarlinghurstLimited– Trustee,ArtGalleryofNSW

Craig Meller2

Chief Executive OfficerBSc(Hons)CraigwasappointedChiefExecutiveOfficer(CEO)inJanuary2014.HehasbeenaDirectorofAMPLifeLimitedsinceOctober2007,aDirectorofTheNationalMutualLifeAssociationofAustralasiaLimitedsinceMarch2011andaDirectorofAMPCapitalHoldingsLimitedsinceJanuary2014.

ExperiencePriortobecomingCEO,CraigwasManagingDirector(MD)ofAMPFinancialServicesfrom2007to2013.CraigstartedwiththeAMPgroup’sUnitedKingdom(UK)businessin2001beforecomingtoAustraliain2002totakeuptheroleofMD,AMPBanking.HemovedtotheroleofDirectorofProductManufacturingin2003.

CraigstartedhiscareeratLloydsTSBintheUKwherehespentmorethan14yearsworkingacrossthebusinessinanumberofmanagementroles.From1998heworkedatVirginDirectwherehewasMDfrom1999to2001.

Government and community involvement– Member,FinancialSectorAdvisoryCouncil

Patricia (Patty) Akopiantz3

Independent DirectorBA,MBAPattywasappointedtotheAMPLimitedBoardandthePeopleandRemunerationCommitteeinMarch2011,becomingChairmanofthatcommitteeinAugust2014.ShejoinedtheNominationandGovernanceCommitteeinAugust2015andtheRiskCommitteeinFebruary2017.PattywasappointedaDirectorofAMPBankLimitedinNovember2011andChairmaninNovember2015.ShebecameamemberoftheAMPBankAuditCommitteeandtheAMPBankRiskCommitteeinNovember2014.

ExperiencePattyhasextensiveexperienceinretailandconsumer-facingindustriesinternationally,havingspentover25yearsinseniormanagementandconsultancyrolesinAustraliaandoverseas.ShehasservedasGeneralManagerofMarketingatDavidJones,VicePresidentforaUnitedStatesapparelmanufacturerandasamanagementconsultantwithMcKinsey,advisingsomeofAustralia’sleadingcompaniesonstrategyandorganisationalchange.

Overthelast15years,PattyhasservedonnumerousboardsincludingAXAAsiaPacificHoldingsandColesGroup.In2003,shewasawardedaCentenaryMedalforservicestoAustraliansocietyinbusinessleadership.

Listed directorships– DirectorofRamsayHealthCareLimited(appointedApril2015)

Government and community involvement– DirectorofBelvoirStTheatre

Holly Kramer4

Independent Director BA,MBAHollywasappointedtotheAMPLimitedBoardinOctober2015andwasappointedamemberoftheAuditCommitteeinNovember2015.HollyservedasaDirectorofAMPLifeLimitedandTheNationalMutualLifeAssociationofAustralasiaLimitedandasamemberoftheirAuditCommitteesandRiskCommitteesfromMay2016untilFebruary2017.

ExperienceHollyhasconsiderableretail,marketinganddigitalexperiencewithmorethan20yearsspentingeneralmanagement,marketingandsalesforcustomer-focusedorganisations.Mostrecently,HollywasChiefExecutiveOfficerofapparelretailerBest&Less,whereshetransformedthebusinessandreturnedittogrowthandprofitability.HollyhasalsoheldseniorexecutiveandmarketingroleswithPacificBrands,Telstra,eCorpandtheFordMotorCompany.

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We have a diverse and highly skilled board with the right mix of skills and experience to help deliver our strategy.

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Listed directorships– DirectorofWoolworthsLimited(appointedFebruary2016)– DirectorofNineEntertainmentCo.HoldingsLimited

(May2015toFebruary2017)

Government and community involvement– DirectorofAustraliaPost– DirectorofSouthernPhoneCompanyLimited– DirectorofTheGOFoundation

Trevor Matthews5

Independent Director MATrevorwasappointedtotheAMPLimitedBoardinMarch2014,becameamemberofitsAuditCommitteeinMay2014andamemberoftheRiskCommitteeinNovember2014.TrevorjoinedtheAMPLifeLimitedandTheNationalMutualLifeAssociationofAustralasiaLimitedBoardsinJune2014andwasappointedChairmanofthoseboardsinMay2016.HeisalsoamemberoftheAuditCommitteeandRiskCommitteeofeachofthoseboards.

ExperienceTrevor,anactuarywithmorethan40years’experienceinfinancialservices,hasexpertiseinlifeinsurance,generalinsurance,wealthmanagement,banking,investmentmanagementandrisk.HehasheldlifeandgeneralinsurancechiefexecutiverolesinAustralia,NorthAmerica,AsiaandEurope.HereturnedtoAustraliain2013after15yearsoverseasandhasassembledaportfolioofnon-executivedirectorships.HislastoverseaspositionwasasanexecutivedirectorofAvivaplc,aleadinggloballifeandgeneralinsurer.HewasalsochairmanofitsUKandFrenchbusinesses.PriortothathewasGroupCEOofFriendsProvidentplc.

Listed directorships– DirectorofCover-MoreGroupLimited(appointed

December2013)– Chairmanof1stGroupLimited(appointedFebruary2015)

Government and community involvement– ChairmanoftheNSWStateInsuranceRegulatoryAuthority

Geoff Roberts6

Independent DirectorBCom,MBAGeoffwasappointedtotheAMPLimitedBoardandasChairmanoftheAuditCommitteeinJuly2016.HewasaDirectorofAMPLifeLimitedandTheNationalMutualLifeAssociationofAustralasiaLimitedandamemberoftheAuditCommitteeofeachfromJuly2011untilMarch2012.

ExperienceGeoffhasmorethan30years’experienceinfinancialservices

acrossAustralia,AsiaandEurope,withaparticularfocusonaccounting,financialmanagementandstrategicadvice.HewasappointedGroupCFOofSEEKLimitedinJune2015andpriortothatheldthepositionsofManagingPartnerofDeloitteVictoriaandDirectorofDeloitteAustralia,andGroupCFOofAXAAsiaPacificHoldings.GeoffisaFellowofCharteredAccountantsAustraliaandNewZealandandhasalsoservedthenot-for-profitsectorasChairmanoftheReachFoundationandaDirectorofVisionAustralia.

Professor Peter Shergold AC7

Independent DirectorBA(Hons),MA,PhDPeterwasappointedtotheAMPLimitedBoardinMay2008,asChairmanofitsRiskCommitteeinNovember2014andasamemberoftheNominationandGovernanceCommitteeinAugust2016.PeterwasappointedtotheAMPLifeLimitedBoardinAugust2008andTheNationalMutualLifeAssociationofAustralasiaLimitedBoardinMarch2011.HewasalsoappointedaDirectorofAMPBankLimitedinFebruary2016.

ExperiencePeterhasextensivepublicpolicyandseniorgovernmentaffairsexperienceandpreviouslyservedasSecretaryoftheDepartmentofthePrimeMinisterandCabinet.PeterwasalsoCEO,AboriginalandTorresStraitIslanderCommission,PublicServiceCommissioner,SecretaryoftheDepartment,Employment,WorkplaceRelationsandSmallBusiness,SecretaryoftheDepartment,Education,ScienceandTraining,andCEO,Comcare,theFederalGovernmentagencyresponsibleforworkplacesafety,rehabilitationandcompensation.

PeterisChancellorandChairoftheboardoftrusteesofWesternSydneyUniversityandservesonanumberofprivatesector,governmentandnot-for-profitboards,includingasChairmanofOpalAgedCare.

HewasappointedaMemberoftheOrderofAustraliain1996,awardedaCentenaryMedalin2003andmadeaCompanionoftheOrderofAustraliain2007,eachbeingforpublicservice.

Listed directorships– DirectorofVedaGroupLimited(October2013to

February2016)

Government and community involvement– ChairmanoftheNationalCentreforVocational

EducationResearch– ChairmanoftheNSWPublicServiceCommission

AdvisoryBoard– NSWCoordinator-GeneralforRefugeeResettlement

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AMP Limited Board and management team as at 9 February 2017

Peter Varghese AO8

Independent Director BA(Hons)PeterwasappointedtotheAMPLimitedBoardandasamemberofitsRiskCommitteeinOctober2016.PeterwasalsoappointedtotheAMPCapitalHoldingsLimitedBoardandasamemberofitsAuditandRiskCommitteeinOctober2016.

ExperiencePeterhasextensiveexperienceinpublicadministrationandgovernmentalandinternationalaffairs,whichspans38yearsandincludesseniorpositionsinforeignaffairs,tradepolicyandintelligence.Mostrecently,PeterwasSecretaryoftheDepartmentofForeignAffairsandTradewherehewasCEOofacomplexglobaloperationincluding100overseasposts.HispreviousappointmentsincludeHighCommissionertoIndia,HighCommissionertoMalaysia,Director-GeneraloftheOfficeofNationalAssessments,andsenioradviser(international)tothePrimeMinisterofAustralia.HealsowasamemberoftheAustralia-ChinaHighLevelDialogueandwastheMinister(Political)attheAustralianEmbassyinJapan.PeterisChancelloroftheUniversityofQueensland.

PeterwasmadeanOfficeroftheOrderofAustraliain2010fordistinguishedservicetopublicadministration.HewasawardedanHonoraryDoctorateofLettersfromtheUniversityofQueenslandinrecognitionofhisdistinguishedservicetodiplomacyandAustralianpublicservice.

Vanessa Wallace9

Independent DirectorBCom,MBAVanessawasappointedtotheAMPLimitedBoardandasamemberofthePeopleandRemunerationCommitteeinMarch2016.ShewasappointedChairmanoftheAMPCapitalHoldingsLimitedBoardinAugust2016,havingjoinedtheboardanditsAuditandRiskCommitteeinMay2016.

ExperienceVanessahaswide-rangingexperienceinfinancialservicesstrategy,havingspentover30yearsconsultingtothefinancialservicessectoracrossAsiaPacific.MostrecentlyVanessawasExecutiveChairmanofStrategy&JapanInc,whichformedfromthemergerofPwCandBooz&Company.PreviouslyshewasBooz&Company’sfinancialservicespracticeleaderandheld

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multiplegovernancerolesatthehighestlevelwithinBooz’sglobalpartnership,includingasamemberofitsboard.Shewasactivelyinvolvedinthefirm’sstrategyandcustomer,channelsandmarketsactivitieswhichfocusedonareassuchascustomerexperience,offerdesignandchannelstomarketacrossanumberofindustries.Vanessaalsohasexperienceinmergersandacquisitionsandpost-mergerintegration.

Listed directorships– DirectorofWesfarmersLimited(appointedJuly2010)

Government and community involvement– MemberoftheChairman’sCounciloftheAustralian

ChamberOrchestraPtyLtd– MemberoftheMSResearchAustraliaLeadershipCouncil

Mike Wilkins10

Independent DirectorBCom,MBAMikewasappointedtotheAMPLimitedBoardandasamemberofitsAuditandRiskCommitteesinSeptember2016.HewasalsoappointedtotheAMPLifeLimitedandTheNationalMutualLifeAssociationofAustralasiaLimitedBoardsinOctober2016andasamemberoftheirAuditandRiskCommitteesinNovember2016,becomingChairmanofthoseRiskCommitteesinFebruary2017.

ExperienceMikehasmorethan30years’experienceinfinancialservicesinAustraliaandAsia,includinglifeinsuranceandinvestmentmanagement.Mikehasmorethan20years’experienceasCEOforASX100companies.Mostrecently,heservedasManagingDirectorandCEOofInsuranceAustraliaGroupLimited(IAG).HeistheformerManagingDirectorandCEOofProminaGroupLimitedandTyndallAustraliaLimited.

MikehasservedasadirectorofAlintaLimited,Maple-BrownAbbottLimited,TheGenevaAssociationandtheAustralianBusinessandCommunityNetwork.HewasontheBusinessCouncilofAustraliaforeightyearsandamemberoftheB20HumanCapitalTaskforcein2014.MikeisaFellowofCharteredAccountantsAustraliaandNewZealand.

Listed directorships– DirectorofQBEInsuranceGroupLimited(appointed

November2016)

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Our management team

ThenewgroupstructuredeliversasharperfocusonperformanceinthecoreAustralianbusinesses,drivesefficiencyacrossthegroupandprovidesincreasedemphasisonthegrowthdriversintheportfolio.

PaulSainsbury,formerlyChiefCustomerOfficer,nowleadsanewWealthSolutionsandCustomerdivision,whileJackReganassumedmanagementofAMP’sadvicebusinessesinhisexpandedroleasGroupExecutive,AdviceandNewZealand.SallyBrucejoinedtheleadershipteamasGroupExecutive,AMPBank,whileMeganBeerwasappointedGroupExecutive,Insurance.CraigRyman,formerlyChiefInformationOfficer,wasappointedGroupExecutive,TechnologyandOperations,andSaskiaGoedhart,ChiefRiskOfficer,joinedtheleadershipteam.Thenewstructurewaseffective1January2017.

Thechangesresultedinthreeexecutivesleavingattheendof2016:PaulineBlight-Johnston,GroupExecutive,Insurance,SuperandRiskManagement;RobCaprioli,GroupExecutive,AdviceandBanking;andWendyThorpe,GroupExecutiveOperations.

Craig Meller1

Chief Executive Officer BSc(Hons)Seepage10fordetailsofCraig’sroles,responsibilitiesandexperience.

Business Group Executives

Megan Beer2 Group Executive, Insurance EMBA,MEc,FIAA,MAICD,ANZIIF(CIP)MeganjoinedAMPinFebruary2014asDirector,InsuranceandwasappointedGroupExecutive,Insuranceon1January2017.MeganisresponsibleforAMP’sinsurancebusiness,includingmaturelines.

ExperienceMeganhasmorethan20years’experienceinthefinancialservicesindustryinarangeofexecutive,finance,actuarialandconsultingroles.PriortoMegan’sappointmentasGroupExecutive,Insurance,MeganwasDirectorofInsuranceatAMPsince2014.PriortoAMP,MeganledNAB’swealthmanagementandinsuranceofferthroughthebankchannelasGeneralManager,BancassuranceandDirect.MeganwasalsoGeneralManagerofGroupInsuranceandHeadofFinanceforInsurance,

bothatMLC.SheworkedforTower(nowTAL)forsixyearsasChiefActuary,ChiefRiskOfficerandHeadofClaims,andhasbeenaDirectorwithTillinghast(ConsultingActuaries).

Other appointments– ManagingDirectorofAMPLifeandtheNationalMutual

LifeAssociationofAustralasiaLimited– DirectorofNationalMutualFundsManagementLimited– DirectorofAustralianandNewZealandInstituteof

InsuranceandFinance

Sally Bruce3 Group Executive, AMP BankBCom,MAppFinSallyjoinedAMPinAugust2015asManagingDirector,AMPBankandwasappointedGroupExecutive,AMPBankon1January2017.SallyisresponsibleforAMP’sbankingbusiness.

ExperienceSallyhasmorethan25years’experienceinbankingandfinancialservices.DuringherfiveyearsatNAB,SallyheldanumberofseniorexecutivepositionsincludingChiefFinancialOfficer,BusinessandPersonalBanking.Priortothis,sheheldanumberofseniorleadershiprolesina20-yearcareeratMacquarieGroup.

Other appointments– DirectorofAMPBankLimited– DirectorofMelbourneInternationalArtsFestival

Jack Regan4

Group Executive, Advice and New ZealandBEd,GradDipMktJackhasbeenwithAMPinAustraliaandNewZealandfor18yearsandwasappointedGroupExecutive,AdviceandNewZealand,on1January2017.HeisresponsibleforAMP’sAdviceandDirectbusinessesinAustraliaandAMP’soperationsinNewZealand.JackwasManagingDirectorofAMPinNewZealandfor10years.

ExperienceJackbeganhisworkinglifeasateacherandhassincespentmorethan30yearsinfinancialservices.Heworkedindistribution,marketingandoperationalrolesatSt.GeorgeBank,IOOFandGIObeforejoiningAMP’sHillross.

Other appointments– DirectorofAMPAdviceHoldingsPtyLimited– BoardmemberofipacSecuritiesLimitedandipacGroup

ServicesPtyLimited

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In 2016, organisational changes were made to create clearer accountability for short-term performance and for delivering long-term growth.

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AMP Limited Board and management team as at 9 February 2017

Paul Sainsbury5

Group Executive, Wealth Solutions and CustomerPaulwasappointedChiefCustomerOfficerinApril2013andwasappointedGroupExecutive,WealthSolutionsandCustomeron1January2017.InthisroleheisresponsibleforAMP’swealthmanagementbusinessandAMP’sstrategicfocusoncustomers.Paul’sportfolioofresponsibilityincludesdesigningandorchestratingAMP’scustomerexperiencestrategy,managementofAMP’ssuperannuation,retirementandinvestmentplatforms,businessdevelopment,digitalanddesign,aswellasAMP’sSMSFbusiness,SuperConcepts,andadedicatedbusinesstransformationteam.

ExperiencePaulhasworkedinthefinanceindustryforover30yearsandhasheldanumberofleadershippositionssincejoiningAMPin2000.TheseincludeDirector,ProductManufacturing;ChiefOperatingOfficer,AMPFinancialPlanning,Advice&Services;ChiefOperatingOfficer,ProductManufacturing;DirectorMatureProductsandCustomerService;andOperationsManager.From2010to2013,PaulwasresponsibleforAMP’smergerwiththeAustralianandNewZealandbusinessesofAXAAsiaPacificHoldingsLimited.

Adam Tindall6 CEO, AMP Capital BE(Hons),GDipMan,GCertAppFinInv,FAICDAdamwasappointedtotheroleofChiefExecutiveOfficer,AMPCapitalinOctober2015.AsCEO,Adamleadsamarketleadingspecialistinvestmentmanager,whichmanagesfundsonbehalfofretailandinstitutionalclientsacrossarangeofassetclassesincludingequities,fixedincome,realestateandinfrastructure.AMPCapitalhasofficesinAustralia,China,HongKong,India,Japan,Luxembourg,NewZealand,theUnitedArabEmirates,theUnitedKingdomandtheUnitedStates.

ExperienceBeforebeingappointedCEO,AdamheldtheroleofDirectorandChiefInvestmentOfficer,PropertyatAMPCapital.Adamhas30yearsofextensiveexperienceinthepropertyindustry.HejoinedAMPCapitalPropertyin2009fromMacquarieCapitalwherehewasExecutiveDirector,PropertyandInfrastructure,responsibleforcreatingorenhancinganumberofmajorpropertyinvestmentfunds.Priortothis,Adamspent17yearswithLendLease,ultimatelyworkinginvariousbusinessleadershiprolesincludingCEO,AsiaPacificforBovisLendLease.

Other appointments– ExecutiveMemberoftheAustraliaJapanBusiness

Co-operationExecutiveCommittee– MaleChampionofChange

Function Group Executives

Saskia Goedhart7 Chief Risk OfficerSaskiajoinedAMPinJuly2015asChiefRiskOfficerandwasappointedtothegroupleadershipteamon1January2017.SaskiaisresponsibleforAMP’sriskmanagement.

ExperienceSaskiajoinedAMPfromEYwhereshewasthepartnerresponsibleforriskmanagementinthefinancialsectorinCanada,andforriskmanagementininsuranceintheUS.Saskiahasmorethan20yearsofexperienceasariskmanagementprofessionalandhasworkedinNorthAmerica,EuropeandAsia.

PriorrolesincludeChiefRiskOfficer(CRO)fortheNorthAmericanregionatAvivaplcandCROforMunichReLife,alsoinNorthAmerica.Saskiaworkedfor10yearsatINGasHeadofEconomicCapitalandAssetLiabilityManagementintheUS,CROoftheannuitybusinessintheUS,ChiefFinancialOfficer,INGLifeinJapan,andotherseniorriskandfinancialmanagementrolesthroughoutINGinEurope.Saskiaalsohasmorethan10yearsofexperienceasacorporatefinanceandriskmanagementconsultant,havingworkedatEY,PwCandVanDenBoomGroep.

Gordon Lefevre8

Chief Financial OfficerFCAGordonjoinedAMPinJanuary2014andassumedtheChiefFinancialOfficerrolefrom1March2014.

ExperienceGordonhasconsiderablefinancialservicesindustryexperienceincluding13yearswiththeNationalAustraliaBankGroup.Hiscareeratthebankincludedarangeofbothcustomerfacingandgroupsupportfunctionrolesdomesticallyandoverseas.ImmediatelypriortoleavinghewastheDeputyGroupChiefFinancialOfficer.BeforejoiningAMPhewasChiefFinancialOfficeroftheGroconConstructionGroupinAustralia.

Other appointment – DirectorofAMPBankLimited

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Helen Livesey9 Group Executive, Public Affairs and Chief of Staff Bsc(Hons)HelenjoinedAMPin1999andwasappointedGroupExecutive,PublicAffairsandChiefofStaffon1January2017.Helenhasgroup-wideresponsibilityforbrand,reputationandcommunicationsmanagement,managingAMP’srelationshipwithkeystakeholders.

ExperienceHelenhasheldanumberofseniorrolesatAMP,includingDirectorBrandandMarketing,DirectorCorporateCommunicationsandDirectorPublicAffairsUK.Helenhasover20years’experienceincorporateaffairs,marketingandbrandmanagementacrossarangeofindustriesinAustraliaandtheUKinbothconsultancyandin-houseroles.

Craig Ryman10 Group Executive, Technology and OperationsBComCraigjoinedAMPin1997andwasappointedtotheroleofGroupExecutive,TechnologyandOperations,effective1January2017.CraigisresponsibleforAMP’sgroup-wideinformationtechnologyandoperations.

ExperiencePriortohiscurrentrole,CraigwasAMP’sChiefInformationOfficerandbeforethatITDirectorforAMP’sAdviceandBankingandInsuranceandSuperannuationbusinessareas.DuringhistimeatAMP,CraighasledtheITfunctionforavarietyofdifferentareasofthebusinessandhasalsocompletedarangeoftransformationprogramsincludingtheintegrationoftheAustraliaandNewZealandbusinessesofAXAAsiaPacificHoldings,platformconsolidationprojectsandtransformationinitiativesinAustraliaandtheUK.

BeforejoiningAMP,CraigworkedasasuperannuationconsultantforWilliamMMercerinAustralia.

Brian Salter11 Group General Counsel BA,LLB(Hons),LLM(Hons)BrianjoinedAMPinJuly2008asGroupGeneralCounsel.Brianhasgroup-wideresponsibilityforAMP’slegalandgovernancefunctions.

ExperienceBrianhasover35years’experienceinthelegalprofession,advisingmanyofAustralia’sleadingfinancialandwealthmanagementcompanies.BeforejoiningAMP,BrianwasapartnerwithamajorAustralianlawfirmfor19yearsandamemberofitsexecutiveteamforanumberofyears.

BrianisaformermemberoftheAustralianGovernment’sCorporationsandMarketsAdvisoryCommittee(CAMAC),whichwasestablishedtoprovideindependentadvicetotheAustralianGovernmentonissuesthatariseincorporationsandfinancialmarketslawandpractice.BrianisalsoamemberoftheLegalCommitteeoftheAustralianInstituteofCompanyDirectorsandtheCorporationsCommitteeoftheBusinessLawSectionoftheLawCouncilofAustraliaandistheDeputyChairoftheGeneralCounsel100.HeisaformerChairmanandNationalCommitteememberoftheAustralianSecuritisationForum.

Other appointments– ExecutiveDirectorofAMPSuperannuationLimited– ExecutiveDirectorofN.M.SuperannuationProprietaryLimited– ChairmanofSCECGSRedlandsLimited

Fiona Wardlaw12 Group Executive, People and CultureBA(Psych)(Hons)FionajoinedAMPinAugust2008andhasresponsibilityforAMP’speopleandculturefunction.

ExperienceFionajoinedAMPfromANZBankwhere,asheadofLeadershipandTalent,shewasresponsibleforrecruitmentstrategy,talentmanagement,successionplanningandseniorexecutivedevelopment.PriortojoiningANZ,FionaworkedintheAustralianbankingoperationsatNationalAustraliaBank,whereherrolesincludedheadingupthebank’sunsecuredlendingbusinessandleadingtheAustralianhumanresourcesfunction.

Herbackgroundalsoincludesexecutivehumanresourcesexperienceintheresourcesandtelecommunicationssectors,includingCableandWireless’cableTVstart-upOptusVisionandBHP.

Other appointment– DirectorofAMPFoundationLimited

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Corporate governance

Corporate governance at AMPThis section explains how AMP’s business is structured and managed to deliver on our strategy and protect the interests of our shareholders, customers, employees, business partners and communities.

Ourpromiseistohelppeopleowntomorrow.Thisisaresponsibilitywetakeseriously,andourgovernanceframeworkisdesignedtoprovidetherightstructureandreviewprocessestodeliveronourpromiseformanyyearstocome.

Key information During2016,AMPcontinuedtostrengthenandenhanceitscorporategovernancepractices,includinginthefollowingkeyareas:

Succession planning–atAMP,ensuringthattheAMPLimitedBoardasawholemaintainstherightcombinationofskillsandexperiencetodriveourbusinessforwardiskeytooursuccess.In2016,theboard’sskillsandexperiencewereenhancedwiththeappointmentsofVanessaWallace,GeoffRoberts,MikeWilkinsandPeterVarghese.Theseappointmentsunderlinetheintegrityandstrengthoftheboard’snominationandsuccessionplanningprocesses.Youcanfindthedirectors’biographies,includingdetailsoftheirqualifications,tenureandexperience,inthisreportandonourwebsite.

Inclusion and diversity–AMPiscommittedtofosteringaninclusiveanddiverseworkplace.Genderequalityisaclearpriority,andat31December2016,womenheld40%ofAMPLimitedBoardandseniorexecutivepositions.Womenalsoheld41%ofourmiddlemanagerroles,slightlybehindtarget(42%).Weremaincommittedtoincreasinggenderrepresentationatthislevelandtoarangeofbroaderinclusionanddiversitygoalsandinitiatives,includinganincreasedfocusonflexiblework.

Risk culture–AMPvalueseffectiveriskmanagementasfundamentaltoitslong-termsustainabilityandreputation.Theboardandmanagementbelievethateffectiveriskmanagementrequiresarisk-awarecultureamongstallemployees.In2016,AMPcontinuedtofocusoninitiativestofurtherembedriskawarenessintoAMP’sbroaderculturetoensurethatriskiseffectivelyintegratedintodecisionmaking.

Corporate sustainability–atAMP,corporatesustainabilityencompassesabroadrangeofmattersincludingenvironmentalmanagement,peopleandworkplace,corporateresponsibilityandcommunityinvestment.In2016,AMPcontinuedtoreduceitsgreenhousegasemissions,by25%fromour2013baseyear,andtheAMPFoundationdistributed$5.2milliontothecommunity.

Board governance–during2016,wecomprehensivelyreviewedtheboard’sgovernancemodeltoprovideenhancedclarityovertherolesandresponsibilitiesoftheboardanditscommittees,forgreatergovernanceefficiencyandeffectiveness.

Engaging with our shareholdersAMP encourages our individual and institutional shareholders to actively engage with our business.

Ourshareholdersaretheownersofourcompanyandwevaluetheirinput.During2016,wehadthesecond-largestshareholderbaseofanycompanyinAustraliawithover795,000shareholders,manyofwhomarealsoourcustomers.

Keeping our shareholders informedAMPvaluesdirect,two-waycommunicationwithourshareholdersandweensurethattheyreceiveclear,transparentandtimelyinformationaboutourbusiness.Wecommunicatewithourshareholdersonchangestoourbusinessandissuesthatimpactourindustry.

Wetakeourcontinuousdisclosureobligationsseriously.AllmaterialpricesensitiveinformationthatrequiresdisclosureismadeavailablethroughtheAustralianSecuritiesExchange(ASX)andNewZealandStockExchange(NZX).ShareholderscanalsoelecttoreceiveemailsdirectlyfromAMPonkeyannouncements,andwecontinuetoencourageshareholderstoprovidetheiremailaddresssowecandelivertimelyupdatesdirecttotheirinbox.

Shareholderscanelecttoreceivetheirannualreports,noticesofmeetinganddividendstatementsinprintoronline.Shouldtheychoosetoreceivetheirreportinginformationonline,theycanstillopttoreceiveacopyoftheirdividendstatementbypost.Inaddition,shareholdersareabletocommunicateelectronicallywithourshareregistry,Computershare.Shareholdersarealsoabletolodgetheirproxyformsonlineusingtheircomputerormobiledevice.

OurInvestorRelationsteamcoordinatesaninvestorrelationsprogramandconductsgroupandone-on-onebriefingswithourinstitutionalinvestorsandanalysts.Wherepossible,ourgroupbriefingsarewebcast.Ourdedicatedshareholderwebsiteincludesacalendarofupcomingannouncementsandpresentationsandallowsuserstosetupautomaticdiaryremindersofthesedates.Youcanfindthiswebsiteatamp.com.au/shares.

Annual shareholder meetingOurboardwelcomestheopportunitytomeetwithourshareholdersandencouragesthemtojoinusforourannualgeneralmeeting(AGM)eachyeareitherinpersonorviaourwebcast.WeencourageshareholderstoprovideuswithanyquestionsaboutourbusinessorthebusinessoftheAGMaheadofeachmeeting,sothatthesecanbeaddressedbeforeoratthemeeting.ForshareholderswhoareunabletoattendtheAGM,weenablequestionstobeaskedonlineduringthemeeting.

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Weareagainofferinganinformationsessionforshareholderstohearfromourfinancialexpertsandbenefitfromtheirinsightsandexpertise.Thissessionwillbeheldbeforethe2017AGM,at9.30amonThursday11May2017atSydneyTownHall,andallshareholdersareinvitedtojointhesessioninpersonoronline.

2017 annual general meetingAMP’s2017AGMwillbeheldat11amonThursday11May2017atSydneyTownHall.Shareholderswhoareunabletoattendcanappointaproxytovoteontheirbehalf,eitheronlineorbypostorfax,andcanobserveandcontributetothemeetingthroughourwebcast.Youcanfindfulldetailsinthe2017noticeofmeeting.

Our board of directorsThe AMP Limited Board oversees the management of our company on behalf of shareholders.

TheboardisresponsibleforoverseeingthemanagementofAMPonbehalfofshareholders.Inadditiontothematterstheboardisrequiredtoapprovebylaw,itskeyresponsibilitiesinclude:– approvingthestrategicdirectionofthecompanyand

overseeingitsimplementation– approvingmaterialtransactionsandcapitalinitiatives– overseeingandapprovingthecompany’sgovernancemodel– approvingtheriskmanagementframework(including

riskappetite,riskmanagementstrategy,andcontrolandcompliancesystems)andmonitoringitseffectiveness(includingriskculture)

– approvingtheappointmentofthechiefexecutiveofficer(CEO)andchieffinancialofficer(CFO)andtheremunerationarrangementsforcertainkeyexecutives

– overseeingsuccessionplanningforkeyexecutiveroles– approvingdiversitytargetsandoverseeingprogress

againstthem– monitoringtheperformanceofmanagementand

thebusiness.

Theresponsibilitiesoftheboardareoutlinedinourcorporategovernancecharter,whichyoucanfindatamp.com.au/corporategovernance.

Board compositionAMP’s non-executive directors have diverse backgrounds. Each brings valuable skills and experience to help oversee the delivery of our strategy and manage the opportunities and risks we face.

Underourcorporategovernancecharter,theboardmustbemadeupofamajorityofindependentnon-executivedirectorsandwillhavenomorethantwoexecutivedirectors.Thechairmanoftheboardwillbenon-executiveandindependent.Themaximumtenureofanon-executivedirectorwillnormallybeuntiltheAGMoccurringintheninthyearaftertheirfirstelectionbyshareholdersatanAGM.

Ourboardismadeupofnineindependentnon-executivedirectorsandtheCEO.OurChairman,CatherineBrenner,joinedtheboardin2010andwaselectedChairmaninJune2016.SheisresponsibleforprovidingleadershiptotheboardandtheAMPgroupasawhole.

Youcanfindbiographiesoftheboardofdirectors,includingdetailsoftheirqualifications,tenureandexperience,onpages10to12andonourwebsite.

Our shareholders

AMP Limited Board OverseesmanagementofAMPonbehalfofshareholders

Audit Committee Overseesfinancialreporting

Nomination and Governance Committee

Overseesboardandcommitteemembershipand

successionplanning

Chief Executive Officer Responsiblefortheday-to-daymanagementofourcompanyandtheimplementationofourstrategicobjectives

Group Leadership Team Responsibleforrunningourbusinessanddeliveringonourstrategicobjectives

Our people

People and Remuneration Committee

Overseeskeyremunerationandpeoplepoliciesandpractices

Risk Committee Overseescurrentandfuture

riskmanagement

Our governance structure

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Corporate governance

Board committeesThe AMP Limited Board is supported by four committees, which focus in detail on different areas of the board’s responsibilities and provide a strong governance framework.

Theboardhasthefollowingfourcommitteestoassistintheexecutionofitsresponsibilities:

Audit Committee–responsibleforoverseeingtheintegrityofthefinancialstatements,reviewingtheeffectivenessofAMP’sriskmanagementframeworkandmonitoringtheperformance,adequacyandindependenceoftheinternalandexternalauditfunctions

Nomination and Governance Committee–responsibleforreviewingthecompositionofAMP’sboardsandsuccessionplanningandplanningforboard,committeeanddirectorperformancereviews

People and Remuneration Committee–responsibleforreviewingandendorsingtheremunerationarrangementsforcertainexecutivesandnon-executivedirectors,monitoringtheeffectivenessofAMP’sstrategiesforexecutivesuccession,talentmanagementanddiversityandapprovingmattersrelatingtoAMP’skeyincentiveplans

Risk Committee–responsibleforoverseeingtheimplementationandoperationofAMP’senterpriseriskmanagementframework,monitoringAMP’sriskcultureandendorsingAMP’sriskmanagementstrategy,riskappetitestatementandtheappointmentofthechiefriskofficer.

Eachcommitteehasitsownannualprogramandmeetsatleastfourtimesperyear.Eachprogramprovidesahigh-leveloverviewofitemstobeconsideredbytherelevantcommitteeduringtheyear.Throughout2016,allcommitteememberswereindependentdirectors.

Youcanfindthetermsofreferenceforeachcommitteeatamp.com.au/corporategovernance.

Managing risksEvery day AMP monitors and manages risks to deliver sustainable growth, protect our business and our stakeholders’ interests, and meet our legal and regulatory obligations.

Riskisinherentinourbusinessandindustry.Assuch,wetakemeasuredriskstoachieveAMP’svisionofhelpingpeopleowntomorrowanddeliversustainablevaluetoourshareholders.Effectiveriskmanagementsupportsinformeddecisionmakingandaidsincapitalisingonbusinessopportunitiestoensurethat

strategicobjectivesareachieved.TheboardandmanagementvalueeffectiveriskmanagementasfundamentaltoAMP’slong-termsustainabilityandreputation.Inaddition,theboardandmanagementbelievethateffectiveriskmanagementrequiresarisk-awarecultureamongstallemployees,whichinturnpromotesrisk-informeddecisionmaking.

GovernanceTheboardisultimatelyresponsiblefortheEnterpriseRiskManagement(ERM)frameworkandoversightofitsoperationbyAMP’smanagement.Inparticular,theboardisresponsibleforsettingAMP’sriskappetite,thestrategicplanandriskmanagementstrategy.ItalsomonitorspoliciesandbusinesspracticestoensurethatstrategicobjectivesareachievedwithinAMP’sriskappetiteandtocomplywithapplicablelawsandregulations.TheRiskCommitteeandboardreviewtheERMframeworkatleastannually,includingfor2016,tosatisfythemselvesthatitcontinuestobesound.

TheboardandRiskCommitteehavebeenprovidedwithassurancethatallofAMP’smaterialbusinessriskshavebeeneffectivelymanagedfortheyearended31December2016.

Wehaveathreelinesofdefenceapproachtoriskmanagementaccountability:

Line 1–managementisresponsibleforidentifying,assessing,monitoringandmanagingmaterialrisksinthebusiness.Theseteamsareresponsiblefordecisionmakingandtheexecutionoftheday-to-daybusiness,whilstmanagingriskandtheresultingprofitandlosstoensureitisinlinewiththeboard’sriskappetiteandstrategy.

Line 2–theERMteamisresponsiblefordesigning,implementingandmonitoringthepracticesandprocessestoidentify,assess,monitorandmanagematerialrisksandprovideadviceandoversightonmaterialbusinessdecisions.Theteamalsoprovidesobjectiveadviceandchallengetothefirstline’sdecisionsandprovidesassurancetotheboardthattheriskprofileisalignedwiththeboard’sexpectations.

Line 3–theInternalAuditteamprovidesindependentandobjectiveassurancetotheboardontheoperationaleffectivenessofriskmanagementacrossthebusinessandtheeffectivenessofourcontrolprocesses.

ManagementprocessesarecomplementedbytheInternalAuditteam,whichregularlyreportstotheleadershipteamandtheboardonthemanagementofriskswithintheorganisation.Thisteamcallsonsupportandadvicefromexternalexpertsasrequired.

AnoutlineofAMP’skeyriskscanbefoundinthedirectors’report.

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Our approach to taxAMP is proud of the contribution we make to the public finances of the countries in which we operate.

Wetakeourtaxobligationsveryseriouslyandarefocusedonintegrityinbothcomplianceandreporting.TheAMPLimitedBoarddoesnotsanctionorsupportanyactivitieswhichseektoaggressivelystructureAMP’staxaffairs.

WepublishdetailsofthetaxeswepayintheAMPtaxreportonourshareholdercentrewebsiteatamp.com.au/shares.ThereportisconsistentwiththeBoardofTaxation’svoluntarytaxtransparencycode.

ThemajorityofourtaxispaidinAustraliaanddeterminedbythenatureofourbusiness.Forexample,superannuationissubjecttodifferent(lower)taxratesandwepayourtaxesaccordingly.

WehaveanannualcompliancearrangementinrelationtobothincometaxandGSTwiththeAustralianTaxationOffice,andweworkcloselywithittoensurethatwemeetallourtaxrequirements.

Comparison of NZX and ASX corporate governance rulesAsanNZXoverseaslistedissuer,AMPLimitedisdeemedtosatisfyandcomplywithalltheNZXListingRulessolongasitremainslistedontheASX.TheonlyNZXrequirementsapplicabletoAMParetogivetheNZXthesameinformationandnoticesitis

requiredtogivetotheASXandtoincludeastatementtothiseffectinitsannualreport.

TheASXListingRulesandtheASXRecommendationsmaydiffermateriallyfromNZX’scorporategovernancerulesandtheprinciplesoftheNZXCorporateGovernanceBestPracticeCode.YoucanfindfurtherinformationabouttheASXRecommendationsontheASXwebsite:asx.com.au/regulation/corporate-governance-council.htm.

Acting ethically and responsiblyAMP wants to create a better tomorrow for our customers, employees, business partners, communities and shareholders.

Everythingwedo,everydecisionwemake,hasanimpact,notonlyonthelong-termsuccessofourbusinessbutalsoonthelivesofourcustomers.Wearecommittedtoactingwithprofessionalism,honestyandintegritysoallourstakeholdersknowtheycantrustustodotherightthing.Youcanfindinformationonthestructureofourbusiness,ourboardandmanagementteamsandourpoliciesandpracticesatamp.com.au/aboutamp.

Throughout2016,wecompliedwiththethirdeditionoftheASXCorporateGovernancePrinciplesandRecommendations,andwecontinuallyreviewourgovernancepracticestoensurethatwenotonlymeetbutexceedtheexpectationsoftheregulatorsandallourstakeholders.Ourboard-approvedcorporategovernancestatement,dated8February2017,isavailableonourwebsiteatamp.com.au/corporategovernance.

Our risk management framework

Risk strategy and appetite

Systems and data

People and culture

Risk taxonomy

Strategic Credit Market Insurance Liquidity Concentration Operational

Identify and measure Monitor and optimise

Riskidentification MonitorandreportRiskmeasurementandanalysis Optimiseandmitigate

Risk strategy–describeshowmaterialrisksaremanagedRisk appetite statement–describestheamountandnatureofriskacceptableinthepursuitofthecorporatestrategy

Governance

BoardandRiskCommitteeManagementRiskCommittee

Mandates/riskpolicy/procedures

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Directors’ report for the year ended 31 December 2016

Operating and financial reviewPrincipal activitiesAMPisAustraliaandNewZealand’sleadingindependentwealthmanagementcompany,withanexpandinginternationalinvestmentmanagementbusinessandagrowingretailbankingbusiness.

WeprovideretailcustomersinAustraliaandNewZealandwithfinancialadviceandsuperannuation,retirementincomeandinvestmentproducts.Wealsoprovidesuperannuationservicesforbusinesses,administration,bankingandinvestmentservicesforself-managedsuperannuationfunds(SMSF),incomeprotection,disabilityandlifeinsurance,andselectedbankingproducts.TheseproductsandservicesaredelivereddirectlyfromAMPandthroughanetworkofover3,500alignedandemployedfinancialadvisersinAustraliaandNewZealandandextensiverelationshipswithindependentfinancialadvisers.

ThroughAMPCapital,wemanageinvestmentsacrossmajorassetclassesincludingequities,fixedincome,infrastructure,realestate,diversifiedfunds,multi-managerandmulti-assetfunds,fordomesticandinternationalcustomers.AMPCapitalalsoprovidescommercial,industrialandretailrealestatemanagementservices.

Wehaveover5,400employees,around795,000shareholdersandmanageandadminister$240billioninassets.

AMPCapitalhasastrategicalliancewithleadingJapanesebank,MitsubishiUFJTrustandBankingCorporation(MUTB)throughwhichMUTBholdsa15%minorityinterestinAMPCapitalHoldingsLimited.AMPCapitalholdsa15%stakeinChinaLifeAMPAssetManagementCompanyLimited,afundsmanagementcompanywhichoffersretailandinstitutionalinvestorsinChinaaccesstoleadinginvestmentsolutions.AMPalsoownsa19.99%stakeinChinaLifePensionCompany.

In this report, our business is divided into six areas: Australian wealth management, AMP Capital, Australian wealth protection, AMP Bank, New Zealand financial services and Australian mature.

TheAustralian wealth managementbusinessprovidescustomerswithsuperannuation,retirementincome,investment,SMSFadministrationandfinancialadviceservices(throughalignedandownedadvicebusinesses).

AMP Capitalisadiversifiedinvestmentmanager,managinginvestmentsacrossmajorassetclassesincludingequities,fixedinterest,infrastructure,realestate,diversifiedfunds,multi-managerandmulti-assetfunds.

Directors’ reportThis directors’ report provides information on the structure and progress of our business, our 2016 financial performance, our strategies and prospects for the future and the key risks we face. It covers AMP Limited and the entities it controlled during the year ended 31 December 2016.

Australian wealth protectioncomprisesindividualandgrouptermlife,trauma,disabilityandincomeprotectioninsuranceproducts.Productscanbebundledwithasuperannuationproductorheldindependently.

AMP BankisanAustralianretailbankofferingresidentialmortgages,deposits,transactionalbanking,andSMSFproductswitharound100,000customers.ItalsohasasmallportfolioofpracticefinanceloanssupportingAMP’sAdvisernetwork.AMPBankdistributesthroughbrokers,AMPadvisersanddirecttoretailcustomersviaphoneandinternetbanking.

New Zealand financial servicesprovidestailoredfinancialproductsandsolutionstoNewZealandersbothdirectlyandthroughanetworkoffinancialadvisers.NewZealandfinancialserviceshasaleadingmarketpositioninbothwealthprotectionandwealthmanagement,inadditiontobeingthemarketleaderinadviceandinprovidingsupporttoadvisers.

The Australian mature businessisthelargestclosedlifeinsurancebusinessinAustralia.Australianmatureassetsundermanagement(AUM)comprisescapitalguaranteedproducts(77%)andmarketlinkedproducts(23%).Australianmatureproductsincludewholeoflife,endowment,investmentlinked,investmentaccount,retirementsavingsaccount,eligiblerolloverfund,annuities,insurancebonds,personalsuperannuationandguaranteedsavingsaccounts.

2016 performanceThelossattributabletoshareholdersofAMPLimitedfortheyearended31December2016was$344million(2015:profitof$972million).

Basiclossespersharefortheyearended31December2016onastatutorybasiswere11.7centspershare(2015:earningsof33.3centspershare).Onanunderlyingbasis,theearningspersharewere16.4centspershare(2015:37.9centspershare).

Keyperformancemeasureswereasfollows:

– 2016underlyingprofit1of$486millionfellfrom$1,120millionin2015largelyduetoAustralianwealthprotectionlossesof$415million.2016underlyingprofitwasalsoimpactedbychallenginginvestmentmarketconditionsthatresultedinloweroperatingearningsinAustralianwealthmanagement(-2%)andexpectedportfoliorun-offwhichreducedtheearningsofAustralianmature(-4%).

– 2016Australianwealthprotectionoperatinglossesweredrivenbyexperiencelossesof$105millionandcapitalisedlossesandotherone-offexperienceitemsof$485million.

1 Underlyingprofitisourkeymeasureofbusinessprofitability,asitnormalisesinvestmentmarketvolatilitythatstemsfromshareholderassetsinvestedininvestmentmarketsandaimstoreflectthetrendsintheunderlyingbusinessperformanceoftheAMPgroup.

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– Partialoffsetstothesefallsin2016camefromstrongoperatingearningsgrowthfromAMPBank(+15%),NewZealandfinancialservices(+5%)andAMPCapital(+4%).

– 2016underlyinginvestmentincomefell$3millionto$122millionfrom2015.

– AMPgrouptotalcontrollablecostsincreased$64million(5%)on2015to$1,393million.Underlyingcostgrowth,increasedinvestmentingrowthinitiativesandbusinessrestructuringcostswereonlypartlyoffsetbybusinessefficiencyprogrambenefits.

– Australianwealthmanagementnetcashflowswere$336millionin2016,downfrom$2,213millionin2015.Netcashflowswereimpactedbyongoingmarketvolatility,superannuationlegislativeuncertaintyandadvisersadjustingtoanenhancedregulatoryenvironment.

– AMPCapitalexternalnetcashflowswere$967millionin2016,downfrom$4,434millionin2015.StrongflowsintoinfrastructureandrealestateassetclasseswereoffsetbychallengingdomesticandJapaneseretailmarketconditions.

– Underlyingreturnonequitydecreased7.6percentagepointsto5.6%in2016from2015,largelyreflectingtheimpactofAustralianwealthprotectionexperienceandcapitalisedlosses.

AMP’stotalassetsundermanagement(AUM)andadministrationwere$240billionat31December2016(2015:$226billion).

Differences between underlying profit and statutory profitThe31December2016underlyingprofitof$486millionexcludestheimpact(netofanytaxeffect)of:– goodwillimpairmentof$668million– netlossfromone-offandnon-recurringitemsof$9million– businessefficiencyprogramcostsof$19million– amortisationofAXAacquiredintangibleassetsof$77million– marketadjustmentlossesof$43million– accountingmismatchlossesof$14million.

AreconciliationbetweenunderlyingprofitandstatutoryprofitisprovidedinNote1.1ofthefinancialreport.

UnderAustralianAccountingStandards,someassetsheldonbehalfofpolicyholders(andrelatedtaxbalances)areincludedinthefinancialstatementsatdifferentvaluestothoseusedinthecalculationoftheliabilitytopolicyholdersinrespectofthesameassets.Theseaccountingvaluationdifferencesbetweenpolicyholderassetsandliabilitiesflowthroughtoshareholderprofit,buthavenoimpactonthetrueeconomicprofitsandlossesoftheAMPgroup.

Operating results by business areaTheoperatingresultsofeachbusinessareafor2016wereasfollows:

Australian wealth management–operatingearningsfellby$9million(2%)to$401millionin2016from$410millionin2015,largelyduetothechallenginginvestmentmarketconditionswhichimpactedinvestorsentimentandearnings,primarilyinthefirsthalfof2016.Operatingearningsbenefitedfromstrongcostcontrol,includinglowervariableremunerationinthesecondhalfof2016.

AMP Capital–AMPgroup’s85%shareofAMPCapital’s2016operatingearningswas$144million,up4%from$138millionin2015.Despitevolatileequitymarketsin2016,AMPCapital’s

operatingearningsbenefitedfrompositivefeeincomegrowthof5%,assistedbystrongperformancefeesinthefirsthalfof2016.Feeincomegrowthwaspartiallyoffsetbyan8%increaseincontrollablecosts.

Australian wealth protection–2016operatinglossesof$415million(2015:operatingearningsof$185million)wereimpactedbyexperiencelossesof$105millionandcapitalisedlossesandotheroneoffexperienceitemsof$485million.Profitmarginsfellby$21million(11%)to$175millionin2016,largelyduetotheimpactofstrengthenedassumptionsadoptedforlumpsumproductsinthesecondhalfof2015andtheimplementationofa50%quotasharereinsurancearrangementof$750millionofannualpremiumincomeoftheAMPLiferetailportfolio,withMunichReinsuranceCompanyofAustralasiaLimited,effectivefrom1November.

AMP Bank–operatingearningsincreased$16million(15%)to$120millionin2016from$104millionin2015.Totalrevenueincreased11%in2016on2015,drivenbyimprovednetinterestmarginandgrowthintheloanportfolio.

New Zealand financial services–operatingearningsincreasedby$6million(5%)to$126millionin2016from2015largelyasaresultofhigherprofitmargins,partiallyoffsetbythereductionintransitionaltaxrelief.

Australian mature–operatingearningsfell$7millionto$151millionin2016from$158millionin2015.Operatingearningswereimpactedbytheexpectedportfoliorun-off($9milliondecrease),investmentmarkets($1million)andotheritems($1million).Thesewerepartiallyoffsetbylowercontrollablecosts($3million)andexperienceprofits($1million).

Capital management and dividendEquityandreservesoftheAMPgroupattributabletoshareholdersofAMPLimiteddecreasedto$7.5billionat31December2016from$8.5billionat31December2015.

AMPremainswellcapitalised,with$2.2billioninshareholderregulatorycapitalresources,aboveminimumregulatoryrequirements(MRR)at31December2016($2.5billionat31December2015).

AMP’sfinal2016dividendis14.0centspershare,frankedto90%.Thisrepresentsafullyear2016dividendpayoutratioof85%ofunderlyingprofit2.AMPwillcontinuetoofferthedividendreinvestmentplan(DRP)toeligibleshareholders.Forthe2016finaldividend,nodiscountwillapplytotheDRPallocationprice.AMPintendstoneutralisetheimpactoftheDRPbyacquiringshareson-markettosatisfyanyentitlementsundertheDRP.

ThestrengthofAMP’scapitalposition,followingtheexecutionofthereinsurancedealandthelifecompanymerger,hasfacilitatedtheannouncementofanon-marketbuy-backofupto$500milliontobegininthefirstquarterof2017.

Strategy and prospectsOur vision is to be Australia and New Zealand’s favourite financial services company.

AMPiswellpositionedtotakeadvantageofpositivelong-termdemographicandmarkettrendsandmitigatepotentialthreatswithagrowthstrategythatleveragesitscompetitiveadvantagesinitschosenmarkets.Thecompanyispursuingaclearstrategyforlong-termgrowthwithfourkeyobjectives:

2 Theunderlyingpayoutratiofor2016iscalculatedbasedonunderlyingprofitexcludingcapitalisedlossesandotherone-offexperienceitems.

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Directors’ report for the year ended 31 December 2016

– tiltinginvestmenttohighergrowth,lesscapitalintensivebusinesseswithstrongpositionsingrowingmarkets

– transformingthecoreAustralianbusinesstocentreonthecustomer

– reducingcoststocontinuegrowingprofitablyinamargincompressedworld,and

– expandingselectivelyinAsiaandinternationallytocapturenewgrowthopportunities.

Inthesecondhalfof2016,AMPrealignedthebusinesswithanewmanagementstructuretostrengthenaccountabilityfordrivingshort-termbusinessperformancewhiledeliveringlonger-termgrowth.Thisalignmentacrossbusinessunitsissupportiveofthefourkeyobjectives,withasharpenedfocusoneffectivecostandcapitalmanagementtounderpinshort-termperformance.

1. Tilt investment to higher growth businessesAMPisfocusedondeliveringgrowthacrosstheportfoliobyfocusinginvestmentonhighergrowth,lesscapitalintensivebusinessestobuildontheirmarket-leadingpositions.

ThegrowthinvestmentisbeingdeliberatelytiltedtowardsAustralianwealthmanagement,AMPBankandAMPCapital,thebusinesslineswiththegreatestopportunities.Australianwealthprotection,NewZealandfinancialservicesandMaturearebeingmanagedforvalueandefficiency.

Akeypriorityistogrowintheexpanding$2.8trillion3Australianwealthmanagementmarket,whereitholdsthenumberone4marketsharepositioninsuperannuation.

AMPisinvestinginAustralianwealthmanagementtomaintainandenhanceasustainableandcompetitiveadvantageindistributionandincreaseitschannelcapacitybyactivatingnewdigitalanddirectchannelstocomplementourface-to-faceadvicecapabilities.AMP’sleadingcorporatesuperannuationbusinessisexpectedtoassistindrivingAustralianwealthmanagementcashflowsintheshortandlongterm.

AMPBankcontinuestogrowstronglyandrepresentsasignificantopportunityforAMP,particularlyacrossitsalignedadvicenetworkwheredebtandcashflowmanagementstrategiescanbeembeddedasacorepartofAMP’sadvicevalueproposition.

AMPCapitalhasdemonstratedconsistentandsustainableearningsgrowthandisfocusedongrowingdomesticallywhilealsoextendingitsgeographicreachanddistributioncapabilitiesacrossselectedmarkets.Utilisingitsstrengthsinthemanagementofrealassets,AMPCapitalhasfurtheropportunitytocaptureattractiverevenues.

2. Transform AMPistransformingitscoreAustralianbusinessestohelpourcustomersowntomorrow.WhilethistransformationisbeingdrivenfromAustralianwealthmanagement,italsoencompassesAMPBank,AMPCapitalandAustralianwealthprotection,asAMPpackagestherightsolutionsforitscustomerstohelpthemmeettheirgoals.

Differentiate via integrated goals-based modelAMPhaslaunchedanexperientialgoals-basedapproachdesignedtoengageexistingcustomersandactivateAMP’scustomerbaseofmorethan3.7million,particularlyunadvisedcustomers.

Deliver goals-based advice model of the futureAMPisaimingtomakefinancialadvicemorerelevant,accessibleandaffordableforconsumers,andatthesametime,moreefficientandprofitableforAMPanditsstrongnetworkofalignedadvisers.Thecompanyisrollingoutitstechnology-enabled,goals-basedadviceplatformtobothAMPAdviceanditsbroaderadvisernetwork.Bytheendof2016,24practiceswereoperatingunderthenewAMPAdvicemodelandareexpectedtodelivergreateradviserproductivity,increasedshareofcustomerwalletandimprovedadvicepracticeprofitability.

Increase channel choiceAMPisgivingconsumersmorewaystointeractwiththecompany.Itiscreatinganomni-channelexperiencewithnewdigitalanddirectchannelsthatcomplementitsexistingmulti-brandedface-to-faceadviceexperience.Newdataandanalyticsinfrastructureisdrivingcustomerengagementandnewbusinessacrossallchannels.

Deliver a superior customer experienceNetpromoterscore(NPS)isnowusedacrossthecompanytoobjectivelymeasureanddriveongoingimprovementofcustomerexperiences.25%ofvariableemployeeremunerationisnowbasedonNPS.

3. Reduce costsAMPcompleteditsthree-yearbusinessefficiencyprogramattheendof2016(delivering$200millioninpre-taxrecurringrunratecostsavings).Thecompanyissustainingitsbusinessefficiencybenefitsbyembeddingmoreeffectiveprocessesandprojectmanagement,processautomationandactivity-basedworking.Operatingmodelandorganisationaldesignchangeswilldeliverafurtherroundofbusinessefficiencygainsin2017,withtheaimofreducingcontrollablecosts.

4. Expand internationallyAMPisexpandinginternationally,primarilythroughAMPCapital,inhigh-growthpotentialregionswhereitsexpertiseandcapabilitiesareindemand.ItisdoingthisbybuildingstrongpartnershipswithnationalchampioncompaniesinChinaandJapanandiscapitalisingondemandforitsinfrastructure,realestateandfixedincomecapabilitiesacrossAsia,EuropeandNorthAmerica.AMP’srelationshipswithChinaLifearegoingfromstrengthtostrength.ChinaLifeAssetManagementCompanyLimitedisthefastestgrowingnewassetmanagementcompanyinChinawhileChinaLifePensionCompany(CLPC)ranksfirstintrusteeserviceswith29%marketshareandthirdininvestmentmanagementwith12%marketshare.

In2017,CLPCissettobenefitfromtheimplementationofnewregulationsforOccupationalPensions(OP)inChina.OPrepresentsasignificantgrowthopportunityforCLPC,coveringaround40millioncivilservantemployeeswith12%salarycontributionandannualcontributionsexpectedtoreachuptoRMB200billion.CLPCiscurrentlycompetingtowinthisOPbusinessacrosseachregionofChina.

AMP’srelationshipwithitsJapanesepartnerMUTBisalsobeingstrengthened.

Strategies and prospects by business area5

Australian wealth managementAustralianwealthmanagement’skeyprioritiesareto:

3 ABSManagedFundsReport,ManagedFundsIndustry,September2016.4 FundMarketOverviewRetail–Marketer,StrategicInsight(PlanForLife),September2016.5 Forwardlookingstatementsinthedirectors’reportarebasedonmanagement’scurrentviewsandassumptionsandinvolveknownandunknown

risksanduncertainties,manyofwhicharebeyondAMP’scontrolandcouldcauseactualresults,performanceoreventstodiffermateriallyfromthoseexpressed.Theseforwardlookingstatementsarenotguaranteesorrepresentationsoffutureperformance,andshouldnotbereliedupon.

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– buildcustomergoals-orientedbusinesswhilstremainingvigilantoncostcontrol

– buildthegoals-basedadvicemodelofthefutureandimprovethequalityoftheadviceexperience

– increasechannelchoice– usenewcapabilitiestodesigncustomercentricoffers

coveringadvice,productandservice– developastrongSMSFcapabilitywithafocusonbuilding

scaleandefficiency.

AMP CapitalWorkingasaunifiedinvestmenthouse,AMPCapital’skeyprioritiesaretogeneraterevenuegrowththrough:– deliveringoutstandinginvestmentoutcomestoclients– buildingadifferentiatedclientexperiencedrivingstrong

clientengagement– partneringeffectivelyacrosstheAMPgrouptodeliverinvestment

solutionsforretail,SMSFandcorporatesupercustomers– expandingtheglobalpensionfundclientbase– buildingpreferentialdistributionpartnershipsinselect

Asianmarkets,particularlyJapanandChina.

Australian wealth protectionThekeyprioritiesformanagementareto:– stabiliseearningsandreleasecapitalviareinsurance– sustainbusinessefficiencies– promotethenewinsuranceoffer.

AMP BankAsthebankingarmofawealthmanager,AMPBank’sroleistoleverageandgrowthegroup’scustomerbasetoprovidecorebankingsolutionstohelpmeetthegoalsofcustomers.Inaligningwiththisstrategicimperative,AMPBank’sprioritiesareto:– delivercompellingcustomer-centricbankingpropositions

toAMPgrouptargetcustomersegments– makebankingeasierforcustomersbyinvestingintechnology

andserviceexcellence– maintainfocusandgrowthinboththealignedadviserand

mortgagebrokerchannels– leverageAMPgroupinvestmentstobuildoutcapabilitiesin

directanddigital– continuetooptimiseAMPBank’sfundingsourcesandinvest

inoperatingcapacity.

New Zealand financial servicesNewZealandfinancialserviceshasthefollowingkeyprioritiestogrowshareholdervalue:– deepenitscustomerrelationships– re-engineerwealthprotectiontoincreaseproductattractiveness– maximisewealthmanagementmarketopportunitiescreated

byregulatorychange– evolveadviceanddistributioncapability– leveragetheKiwiSaveropportunity– buildonourgeneralinsurancepartnership– continueitsfocusoncostcontrol.

Australian matureKeyprioritiesformanagementareto:– maintainhighpersistency– prudentlymanageassetandliabilityrisk– achievegreatercostefficiency– maintaincapitalefficiency.

TheAustralianmaturebusinessremainsinslowdeclinebutisexpectedtoremainprofitableformanyyears.Itisexpectedtorunoffataround6%perannum.However,involatileinvestmentmarkets,thisrun-offratecanvarysubstantially.Therun-offofAUMmirrorspolicyliabilities,althoughthereispotentialforprofitmarginstobeimpacteddifferently.Therun-offofAustralianmatureAUMisanticipatedtohaveanaveragedurationofapproximately12years,butwillbeimpactedbyinvestmentmarketsandregulatorychanges.

Key risksRisk is inherent to our business and AMP takes measured risks to achieve our strategic objectives. We have a clear strategic plan to drive our business forward and an Enterprise Risk Management framework to identify, understand and manage risks.

TheEnterpriseRiskManagement(ERM)frameworkisdesignedtoenableAMPtoidentify,assess,respond,monitorandreviewcurrentandemergingrisksthatcanaffectourbusiness.Werecognisethateffectiveriskmanagementissupportedbyappropriatebehaviourbyouremployeesandwearecommittedtodrivingariskawareculture.AMP’sERMframeworkincludesariskmanagementstrategywhichestablishestheprinciples,requirements,rolesandresponsibilitiesforthemanagementofriskacrossAMPandtheriskappetitestatementwhicharticulatesthenatureandlevelofrisktheboardiswillingtoacceptinthepursuitofstrategicobjectives.

AMP’scorporatestrategyreflectsthetypesofriskstheboardiswillingtoaccept.Thestrategicrisksandtheirimpactsareidentifiedaspartofthestrategicplanningprocess.

KeyriskswhichmayimpactAMP’sabilitytoachieveitsstrategicobjectivesinclude:

Strategic risk– Changes to the business environment:Ourstrategyissetbased

onexistingandexpectedbusinessenvironmentalfactorsincludingbusinesscycle,technology,customerpreferencesandcompetitivelandscape.SignificantchangesintheseenvironmentalfactorsmaydisruptAMP’sbusinessoperations.Forexample,asignificantchangeincustomerpreferencesmayimpactsalesvolumes,revenueandcustomersatisfaction.AMPfocusesonimplementingprogramstobetteranticipateandrespondtothreatsandopportunitiesthatarisefromchangingcustomerpreferencesandcompetitorstrategiesandcapabilities.

– Changes in the regulatory environment:Thefinancialservicesindustryisgoingthroughaperiodofsignificantchange.Thesechanges,combinedwithincreasedattentionfromthemediaandpublic,haveplacedadditionalpressuresongovernmentstomakechangestoexistingregulations.WerecognisethatfailuretoeffectivelyanticipateandrespondtoregulatorychangescouldadverselyimpactAMP’sreputationandabilitytoachieveitsstrategicobjectives.Wemanagethisriskbyhavingdedicatedresourcestoimplementrequiredchangeprogramsandactivelyengagewithgovernment,regulatorsandindustrybodiestoeffectivelymonitorandanticipateregulatorychanges.Wealsoplacesignificantfocusonourriskculturetoensurewearekeepingourlegal,regulatoryandsocialresponsibilitiesfrontofmindinourdailyactivities.

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– Sufficient investment in operating environment:AMP’spromisetohelppeopleowntomorrowrequireschangestoproducts,servicesandcustomerexperiences.Thepromisehasdrivennewapproaches,modelsandwaysofworkingwithinourbusinesswhichrequiremodificationandcapabilityuplifttoexistingsysteminfrastructure,processesandpeopleskillsandcapabilities.Inadequateinvestmentintocorefunctionscanlimitourabilitytoachieveourstrategicobjectivestomeetcustomerexpectations.Tomanagethis,wecontinuallyreview,investinandmonitortheadequacyofcorefunctionsofsystems,processesandpeopletoensurethatthesearesufficienttosupportthestrategicobjectives.

Market risk– Inadequate monitoring and management of exposure to

market volatility:Volatilityinmarketfactorssuchasinterestrates,equitymarketsorforeignexchangeratescouldhaveanegativeimpactontheprofitabilityofAMP.Uncertaintyininvestmentreturnscanimpactoncustomersentimentandmayresultinareductionincapitalinvestedandincreasedproductswitchingbyinvestors.Cashinflowstowealthmanagementproductssuchassuperannuationandinvestmentproductsmaybeimpactedifcustomerappetitefordiscretionarysavingsandinvestmentproductsreduces.Wemonitormarketconditionsandcontinuallyreviewourproductofferingstoensuretheyareappropriatelybalancedtoaccountformarketvolatilityandchangingcustomerneeds.

Insurance risk– Greater than expected insurance claims and lapse rates:

ConditionsintheAustralianlifeinsurancemarkethaveprovenchallengingoverthepastfewyears.AMPhasexperiencedunfavourableinsuranceclaimsandlapserateswhichimpactonearnings.Thisisdrivenbypoorterminations,increasingincomeprotectionclaims,ahighervolumeoflumpsumclaimsandunfavourablegroupsalarycontinuanceclaims.Wearemanagingthevolatilityininsuranceclaimsandlapseratesbyredesigninginsuranceproductsandtheclaimsprocesses,reducingexposurethroughreinsuringpartofthelifeinsurancebusinessandstrengtheningourbestestimateassumptions.Wearealsolookingtomanagevolatilityacrossthegroupbyfocusingongrowingourbusinessinareaswheretheindustryhasinvestedheavilyindevelopingmethodstomeasureandmanagevolatilitysuchaswealthmanagement,assetmanagementandthebankingindustry.

Operational risk– Effective management and implementation of change:

AMPhasinvestedheavilyintodevelopingnewapproaches,modelsandwaysofworkingwithinthebusinesstodriveefficiency.Thishasresultedinsignificantmodificationoruplifttoexistingsysteminfrastructure,processesandpeoplerolerequirements.WerecognisethatfailuretoappropriatelymanagetheimplementationofthesechangescancausedisruptiontoAMP’sbusinessoperations.Tomanagethis,AMPhasdedicatedresourceswithappropriateskillsandexpertisewhoworkwiththebusinesstoestablishchangeprogramsandmanagethetransition.

– Cyber risk:Cyberriskcontinuestobeafocusareaacrossallfinancialindustries.Werecognisethatcyberriskwillcontinuetoincreasesignificantlyinarapidlychangingtechnologicalenvironmentandthatthemagnitudeandcostsofacyber-crimevarydependingonthenatureoftheattack.Wearecommittedtoinvestinginenhancingourcybersecuritynetworkandwehaveanumberofdetective,preventative

andresponsivecontrolstoprotectourassetsandnetworks.Whilstwearecommittedtoenhancingourcybersecuritynetwork,werecogniseitisinevitablethatcyberattackswilloccur.Inassessingandmitigatingcybercrime,weregularlyconsidervulnerabilitiesandpotentialcontrolsforfailuresacrosspeople,processesandtechnology.

– Outsourcing risk:AMPhasoutsourcingarrangementswithexternalserviceproviderstosupportbusinessfunctions.WerecognisethatpoormanagementofoutsourcedserviceswilldirectlyimpactAMP’sabilitytoservicecustomersandachievestrategicobjectives.Wearecommittedtoensuringthatoutsourcedarrangementsareappropriatelymanagedandpoliciesandprocessesareinplacetoensureappropriategovernance,managementandoversightofexternalserviceproviders.AMPhasdedicatedresourcestomonitorcontracts,servicelevelagreementsandperformancetargetstoensureservicedeliverablesaremet.

– Conduct risk:AMPiscommittedtoestablishingacultureofhelpthatreflectsourvaluesofprofessionalism,honestyandintegrity.Weseeconductriskastheriskofinappropriate,unethicalorunlawfulbehaviouronthepartofouremployees.Ourcodeofconductoutlinestheminimumstandardsforbehaviours,decisionmakingandourexpectationsforhowwetreatouremployees,customers,businesspartnersandshareholders.Wearecommittedtodoingtherightthingandourcodeofconductsupportsdrivingastrongrisk-awareculture.WerecognisethatculturedrivestherightbehaviourandconductwithinAMPandinfluencesoutcomesandtheachievementofstrategicobjectives.AMP’sapproachtomanagingconductriskistoeducateandsupportstafftorecognisetheriskimplicationsoftheirdecisions,andempowerouremployeestospeakoutagainstinstancesofbadconduct.

Theserisksareconstantlymonitored,assessedandreportedtotherelevantcommitteesandtheboardtoensurethatanymitigatingactionsaretakenappropriately.

The environmentInthenormalcourseofitsbusinessoperations,AMPissubjecttoarangeofenvironmentalregulationsofwhichtherehavebeennomaterialbreachesduringtheyear.YoucanfindfurtherinformationaboutAMP’senvironmentpolicyandactivitiesatamp.com.au/corporatesustainability.

Significant changes to the state of affairsDetailsofchangesinAMP’sstrategicprioritiesaresetoutearlierinthisreport.

Events occurring after the reporting dateAsatthedateofthisreport,thedirectorsarenotawareofanymatterorcircumstancethathasarisensincethereportingdatethathassignificantlyaffectedormaysignificantlyaffecttheentity’soperationsinfutureyears;theresultsofthoseoperationsinfutureyears;ortheentity’sstateofaffairsinfutureyearswhichisnotalreadyreflectedinthisreport,otherthanthefollowingannouncementsmadeon9February2017of:– Afinaldividendonordinarysharesof14.0centspershare.

DetailsoftheannounceddividendanddividendspaidanddeclaredduringtheyeararedisclosedinNote1.4ofthefinancialreport;and

– Anon-marketsharebuy-backofupto$500milliontobegininthefirstquarterof2017.

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The AMP Limited board of directorsThe management of AMP is overseen by a board of directors who are elected by shareholders.

ThedirectorsofAMPLimitedduringtheyearended31December2016anduptothedateofthisreportarelistedbelow.Directorswereinofficeforthisentireperiod(exceptwherestatedotherwise):– CatherineBrenner(Chairman)– CraigMeller(ChiefExecutiveOfficerandManagingDirector)– PatriciaAkopiantz– BrianClark(retired12May2016)– HollyKramer– TrevorMatthews– SimonMcKeon(retired12May2016)– JohnPalmer(retired23June2016)

– GeoffRoberts(appointed1July2016)– PeterShergold– PeterVarghese(appointed1October2016)– VanessaWallace(appointed1March2016)– MikeWilkins(appointed12September2016).

Detailsofeachofthecurrentdirector’squalifications,experience,specialresponsibilities,anddirectorshipsofotherlistedcompaniesaregivenintheOurboardsectionofthisannualreport.

Attendance at board and committee meetings ThetablebelowshowsdetailsofattendancebydirectorsofAMPLimitedatmeetingsofboardsandthecommitteesofwhichtheyweremembersduringtheyearended31December2016.Thedirectorsalsoattendedothermeetings,includingmanagementmeetingsandmeetingsofsubsidiaryboardsorcommitteesofwhichtheywerenotamemberduringtheyear.

Board/CommitteeAMP Limited

Board meetingsAudit

CommitteeRisk

Committee

Nomination and Governance

Committee

People and Remuneration

Committee

Ad hoc committees/ workshops1

Subsidiary and committee

meetings2

Held/attended A B A B A B A B A B A B A B

CatherineBrenner 15 15 – – – – 4 4 4 4 2 2 11 11

CraigMeller 15 15 – – – – – – – – 2 2 19 18

PatriciaAkopiantz 15 15 – – 1 1 4 4 6 6 1 1 17 17

BrianClark(retired12/05/16)3

5 5 – – – – – – 1 1 1 1 7 7

HollyKramer 15 15 4 3 – – – – – – 1 0 13 12

TrevorMatthews 15 15 4 4 4 4 – – – – 3 3 24 24

SimonMcKeon(retired12/05/16)4

5 5 – – – – 2 2 2 2 3 3 – –

JohnPalmer(retired23/06/16)5

8 8 – – – – – – – – 1 1 4 4

GeoffRoberts(appointed01/07/16)6

7 7 2 2 – – – – – – 1 1 – –

PeterShergold 15 14 3 3 4 4 1 1 – – 1 1 21 20

PeterVarghese(appointed01/10/16)7

4 4 – – 1 1 – – – – – – 3 3

VanessaWallace(appointed01/03/16)8

13 12 – – 3 3 – – 5 5 1 1 6 6

MikeWilkins(appointed12/09/16)9

5 5 1 1 1 1 – – – – – – 4 4

ColumnA–indicatesthenumberofmeetingsheldwhilethedirectorwasamemberoftheboard/committee.ColumnB–indicatesthenumberofthosemeetingsattended.1 Adhoccommittees/workshopsoftheboardwereorganisedduringtheyearinrelationtofinancialresults,AMPgroupcapitalinitiativesand

APRACPS220.2 SubsidiaryboardandcommitteemeetingsincludeAMPLife/TheNationalMutualLifeAssociationofAustralasia(NMLA),AMPBankand

AMPCapitalHoldings.WheremeetingsofAMPLife/NMLAwereheldconcurrently,onlyonemeetinghasbeenrecordedintheabovetable.3 BrianClarkretiredasaDirectoron12May2016.4 SimonMcKeonretiredasaDirectoron12May2016.5 JohnPalmerretiredasaDirectoron23June2016.6 GeoffRobertswasappointedasaDirectoron1July2016andChairmanoftheAuditCommitteeinJuly2016.7 PeterVarghesewasappointedasaDirectoron1October2016andamemberoftheRiskCommitteeinOctober2016.8 VanessaWallacewasappointedasaDirectoron1March2016andamemberoftheRiskandPeopleandRemunerationCommitteesinMarch2016.9 MikeWilkinswasappointedasaDirectoron12September2016andamemberoftheAuditandRiskCommitteesinSeptember2016.

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Directors’ report for the year ended 31 December 2016

Company secretaries’ detailsDetailsofeachcompanysecretaryofAMPLimited,includingtheirqualificationsandexperience,aresetoutbelow.

Brian SalterGroup General Counsel BA,LLB(Hons),LLM(Hons)BrianjoinedAMPinJuly2008asGroupGeneralCounsel.Brianhasover35years’experienceinthelegalprofession,advisingmanyofAustralia’sleadingfinancialandwealthmanagementcompanies.BeforejoiningAMP,BrianwasapartnerwithamajorAustralianlawfirmfor19yearsandamemberofitsexecutiveteamforanumberofyears.

BrianisaformermemberoftheAustralianGovernment’sCorporationsandMarketsAdvisoryCommittee,whichwasestablishedtoprovideindependentadvicetotheAustralianGovernmentonissuesthatariseincorporationsandfinancialmarketslawandpractice.BrianisalsoamemberoftheLegalCommitteeoftheAustralianInstituteofCompanyDirectorsandtheCorporationsCommitteeoftheBusinessLawSectionoftheLawCouncilofAustraliaandistheDeputyChairoftheGeneralCounsel100.HeisaformerChairmanandNationalCommitteememberoftheAustralianSecuritisationForum.HeisalsoanExecutiveDirectorofAMPSuperannuationLimitedandN.M.SuperannuationProprietaryLimitedandtheChairmanofSCECGSRedlandsLimited.

David Cullen Group Company Secretary and General Counsel, GovernanceBCom,LLB,LLM,GradDipAppFin,PGCertMgmtDavidjoinedAMPinSeptember2004andhasheldvariouslegalandgovernancerolesacrossAMPCapitalandtheAMPgroup,withaparticularfocusonmergers,acquisitionsandjointventures.HewasappointedGroupCompanySecretaryandGeneralCounsel,GovernanceinJuly2013andisCompanySecretaryforAMPLimited.PriortojoiningAMP,DavidspenteightyearsinprivatelegalpracticefocusingonmergersandacquisitionsandequitycapitalmarketsinPerthandSydneyandtwoyearswiththeASX.DavidisadirectorofvariousAMPsubsidiariesandaFellowoftheGovernanceInstituteofAustralia.

Vicki VordisCompany SecretaryBEc,LLB(Hons),FGIAVickijoinedAMPinDecember2000andheldvariouslegalrolesbeforemovingintoGroupSecretariat.SheisaCompanySecretaryofAMPBankLimited.Priorto2000,VickiworkedasalawyerinseveralSydneylawpractices.SheholdsagraduatediplomainAppliedCorporateGovernanceandisaFellowoftheGovernanceInstituteofAustralia.

Indemnification and insurance of directors and officersUnderourconstitution,thecompanyindemnifies,totheextentpermittedbylaw,allcurrentandformerofficersofthecompany(includingthenon-executivedirectors)againstanyliability(includingthecostsandexpensesofdefendingactionsforanactualorallegedliability)incurredintheircapacityasanofficerofthecompany.

ThisindemnityisnotextendedtocurrentorformeremployeesoftheAMPgroupagainstliabilityincurredintheircapacityasanemployee,unlessapprovedbytheAMPLimitedBoard.Nosuchindemnitieshavebeenprovidedduringorsincetheendofthefinancialyear.

Duringthefinancialyear,thecompanyagreedtoinsurealloftheofficers(includingalldirectors)oftheAMPgroupagainstcertainliabilitiesaspermittedbytheCorporationsAct2001.Theinsurancepolicyprohibitsdisclosureofthenatureofthecover,theamountofthepremium,thelimitofliabilityandotherterms.

Inaddition,thecompanyandeachofthedirectorsarepartiestodeedsofindemnityandaccess,asapprovedbytheboard.Thosedeedsofindemnityandaccessprovidethat:– thedirectorswillhaveaccesstothebooksofthecompany

fortheirperiodofofficeandfor10(orincertaincases,seven)yearsaftertheyceasetoholdoffice(subjecttocertainconditions)

– thecompanyindemnifiesthedirectorstotheextentpermittedbylaw

– theindemnitycoversliabilitiesincurredbythedirectorsintheircapacityasofficersofthecompanyandofotherAMPgroupcompanies,and

– thecompanywillmaintaindirectors’andofficers’insurancecoverforthedirectorstotheextentpermittedbylawfortheperiodoftheirofficeandfor10yearsaftertheyceasetoholdoffice.

Rounding InaccordancewiththeAustralianSecuritiesandInvestmentsCommissionCorporationsInstrument2016/191,amountsinthisdirectors’reportandtheaccompanyingfinancialreporthavebeenroundedofftothenearestmillionAustraliandollars,unlessstatedotherwise.

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Tel: +61 2 9248 5555Fax: +61 2 9248 5959ey.com/au

Ernst & Young200 George StreetSydney NSW 2000 AustraliaGPO Box 2646 Sydney NSW 2001

A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation

Ernst & Young Tony JohnsonPartnerSydney, 9 February 2017

Auditor’s Independence Declaration to the Directors of AMP LimitedAsleadauditorfortheauditofAMPLimitedforthefinancialyearended31December2016,Ideclaretothebestofmyknowledgeandbelief,therehavebeen:a) nocontraventionsoftheauditorindependencerequirementsoftheCorporations Act 2001inrelationtotheaudit;andb) nocontraventionsofanyapplicablecodeofprofessionalconductinrelationtotheaudit.

ThisdeclarationisinrespectofAMPLimitedandtheentitiesitcontrolledduringthefinancialyear.

Auditor’s independence declaration to the directors of AMP LimitedThedirectorshaveobtainedanindependencedeclarationfromthecompany’sauditor,Ernst&Young,forthefullyearended31December2016.

Non-audit servicesTheAuditCommitteehasrevieweddetailsoftheamountspaidorpayablefornon-auditservicesprovidedtotheAMPgroupduringtheyearended31December2016,bythecompany’sauditor,EY.

Thedirectorsaresatisfiedthattheprovisionofthosenon-auditservicesbytheauditoriscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporations Act 2001anddidnotcompromisetheauditorindependencerequirementsoftheCorporations Act 2001forthefollowingreasons:– allnon-auditassignmentswereapprovedbythenominated

delegatetothechieffinancialofficerorthechairmanoftheAuditCommittee

– nonon-auditassignmentswerecarriedoutwhichwerespecificallyexcludedbytheAMPcharterofauditindependence,and

– theleveloffeesfornon-auditservicesamountedto$2,089,000or13%ofthetotalfeespaidtotheauditors(refertoNote7.5ofthefinancialreportforfurtherdetails).

Remuneration disclosuresTheremunerationarrangementsforAMPdirectorsandseniorexecutivesareoutlinedintheremunerationreportwhichformspartofthedirectors’reportfortheyearended31December2016.

Directors’andseniorexecutives’interestsinAMPLimitedshares,performancerightsandoptionsarealsosetoutintheremunerationreportonthefollowingpages.

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Directors’ report for the year ended 31 December 2016

Remuneration report

Dear shareholders,OnbehalfoftheboardIampleasedtopresentour2016remunerationreportforwhichweseekyourapprovalattheannualgeneralmeetingonThursday11May2017.

Theboardunderstandsthatthereisincreasingshareholderinterestinthescaleandstructureofexecutiveremuneration.Thatisentirelyappropriate.We,too,believethatremunerationshouldbeclearlyalignedtothesustainablegrowthofourcompanyandlong-termreturnstoshareholders.Thisisimportantinagoodyear.Itisevenmorecriticalinachallengingyear.

2016 remuneration outcomesTheyearsawstrongresultsfromAMPCapital,AMPBankandNewZealand,andaresilientperformancefromwealthmanagementdespitechallengingmarketconditions.However,theseresultswereovershadowedbyapoorperformanceinwealthprotection.Nonetheless,ourcapitalpositionandunderlyingbusinessremainedstrongandasaresultshareholderswillreceiveafinaldividendof14centspershare,bringingthe2016totaldividendto28centspershare,thesametotaldividendpaymentaswasdeliveredin2015.

ToensurethatremunerationoutcomesarealignedwithAMP’sperformancein2016,thefollowingdecisionswereapprovedbyyourboard:

– No short-term incentive (STI) was paid to our CEO or KMP executives for 2016 under the AMP Group STI plan.AdamTindall,AMPCapital’sCEO,isanexceptionasheparticipatesinaseparateincentiveplanthat’salignedwiththeprofitandperformanceofAMPCapital.AMPGroup’sperformanceagainstfinancialSTIgoalswasbelowthresholdin2016(exceptfornetrevenueofAMPCapital).Progressagainstourstrategictransformationprogramtobuildacustomercentredculturecontinuedatpacein2016,andtherelatedperformanceagainstthestrategicgoalswasabovetarget.Giventhefinancialperformance,theCEOandboardagreedthatnoneoftheSTIpoolbepaidtotheCEOorKMPexecutives.

– No salary increase will be made for our CEO in 2017.TheonlyKMPexecutiveswhowillreceiveanincreasein2017arethoseexecutiveswhoserolessignificantlyincreasedintherestructurethatwasannouncedinNovember2016.Theseincreaseswereeffectivefrom1January2017.Asaresultoftherestructure,threeKMProlesweremaderedundantandtheirredundancypaymentsaredisclosedinthisreport.TheseamountswerecalculatedusingtheAMPpolicywhichappliestoallemployees.

Inaddition:– No portion of the long-term incentive (LTI) granted in 2014

is expected to vest.Thereturnonequity(RoE)targetwasnotachievedandthecurrentrelativetotalshareholderreturn(TSR)performanceindicatesthatAMPwillnotoutperformatleast50%ofthepeergroupwhenthishurdleistestedin2017(notconfirmedatthetimeofpublication).ThereforeweexpecttheentireLTIgrantmadein2014tolapseatthevestingdatein2017.

2015 remuneration outcomes Asshareholderswillrecall,AMP’s2015performancewasstrongwitha7%increaseinunderlyingprofit.Itwasinthecontextofthis2015performancethattheboardreviewedtheCEO’ssalaryfor2016.

InFebruary2016,thePeopleandRemunerationCommittee(PRC)benchmarkedtheCEO’sremunerationagainstcompaniesofsimilarsizeandotherfinancialinstitutions.ThisdatashowedthattheCEO’sfixedremunerationwasatthe25thpercentileofthispeergroup.Ascontext,whentheCEOwasappointedtotherole,hissalarywassetatalowerlevelcomparedtohispeersandpredecessor.Itwastoprogressivelyincreaseashegainedexperienceanddeliveredresults.Inkeepingwiththisapproach,andconsidering2015performance,theboardincreasedhissalaryby9%to$1.9millioninFebruary2016.

InFebruary2016,theboardalsoreviewedthevestingofthe2013LTI.The2013TSRhurdlewasnotmetandthistranchedidnotvest.TheRoEperformancehurdlewaspartiallymetanda

We believe that remuneration should be clearly aligned to the sustainable growth of our company and long-term returns to shareholders.

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portionofthistranchedidvest.TheminimumRoEhurdleforthe2013LTIgrantwas13.4%.Whenthehurdleswereset,theboardagreedthatitwouldexercisediscretion,inparticularforstrategicdecisionsthatwerenotforeseenatthetimetheperformancetargetswereset.TheactualRoEresultfor2015was13.2%buttheboardexerciseditsdiscretionandadjustedtheRoEoutcomeupto13.5%totakeintoaccounttheimpactoftheinvestmentintheChinaLifePensionCompany(CLPC)(0.3%)onthe2015RoEresult.Theboardwascognisantthatthisdiscretionwasthedifferencebetweenvestingandnotvestingandappliedduerigour.Thisdecisionwasmadetoensurethattheboardcontinuestoencouragemanagementtopursuesuchgrowthopportunitiesandnotbedisadvantagedformakingdecisionsthatbenefitthelong-termvalueforshareholders.ThisdecisionwaspreviouslydisclosedtoshareholdersinMay2016.

Improving transparencyTheboardisawareoftheneedtoimprovetransparencyonthelinkbetweenremunerationandperformance,withoutundermininganycompetitiveadvantagewithinappropriatedisclosure.Inthisreportwehavesoughttoimprovethatby:– providingasummaryofkeydecisionstointroducethe

remunerationreport(thisletter)– movingtodiscloseRoEtargetsforvestedandunvested

LTIgrants– expandingtheexplanationonstrategicSTItargetsandtheir

linktolong-termvaluecreation– improvingtheuser-friendlinessofthisdocument.

Wetrustthatshareholdersfindthisreporteasiertounderstand.

Changes in 2017Finally,yourboardisengagedinaveryactivediscussionabouthowremunerationcansupportacceleratedstrategicdeliveryandimprovereturnsforshareholders.For2017,threekeychangeshavebeenmadetoimprovealignment.

1. Extend the LTI vesting period from three to four years.Startingwiththe2017grant,LTIwillvestoverfouryearsandthevestingperiodwillcommencefrom1January2017toalignwithAMP’s

financialyear.PreviouslythevestingperiodcommencedinMarcheachyear.ThischangewillaligntheperformanceperiodthatdeterminesvestingwiththeperformanceperiodofAMP,andwilldirectmanagement’sfocusonvaluecreationoveralongerterm.ThiswillnotresultinanincreaseintheLTIvalueawarded.

2. Remove the RoE performance hurdle so that 100% of LTI vests subject to relative TSR.RoEwasintroducedasaperformancehurdlearoundthetimeoftheAXAtransactiontodriveanimprovementinRoE.WithanimprovedRoEachievedoverthelastfewyearsthroughcapitalefficiencyactivitiesacrossthebusiness,theuseofaRoEmeasureisnolongerconsideredappropriateforLTIpurposes.Capitalmanagementwillcontinuetobeakeyfocusareaformanagement.Ourfocusonunderlyingprofitaftertax(UPAT)lesscostofcapitalensuresacontinuedfocusoneffectivecapitalmanagementandisakeyconsiderationwhendeterminingindividualperformance.

3. Increase focus on financial goals.In2017wewillincreasetheweightingoffinancialmeasuresto70%oftheSTIscorecard(from65%).Theremaining30%willfocusonembeddingourcustomercentredculturesupportedbyastrongriskmanagementenvironmentthroughouttheorganisation,whichwebelieveiscriticaltodeliveringourstrategy.

In2017,wewillcontinuetoreviewhowwecanbetteralignourremunerationstrategytodriveperformanceandreturnsforshareholders.Fundamentally,yourboardbelievesthatremunerationshoulddrivethedeliveryofAMP’sbusinessstrategybyachievingtherightbalanceofmotivationandchallengeforourKMP;encouragingthemtobothgrowthebusinessanddeliversustainableshareholderreturns.

Patricia AkopiantzChairman,PeopleandRemunerationCommittee

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Directors’ report for the year ended 31 December 2016

Remuneration report (audited)This remuneration report explains how we structure remuneration to incentivise and reward executives for delivering sustained business performance that leads to positive value for shareholders. It also provides details of the remuneration arrangements for our key management personnel (KMP) in 2016.

Contents1. Whoiscoveredbythisreport2. Ourexecutiveremunerationstructure3. 2016remunerationoutcomes4. Executiveshareholding5. HowexecutivearrangementsoperateatAMP6. Non-executivedirectorremuneration7. Otherexecutiveremunerationdisclosures

1. Who is covered by this reportThe following executives and non-executive directors were KMP between 1 January 2016 and 31 December 2016.

KMParethosepeoplewhohaveauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesofAMP.Thisincludesthechiefexecutiveofficer(CEO),nominateddirectreportsoftheCEOandAMP’snon-executivedirectors(NEDs).InthisreportthetermexecutivemeanstheCEOandtheotherexecutiveswhoareKMP.2016KMParedetailedbelow.

Term as KMP in 2016

Current executives CraigMeller ChiefExecutiveOfficerandManagingDirector FullYearPaulineBlight-Johnston GroupExecutive,InsuranceandSuperannuation FullYearRobertCaprioli GroupExecutive,AdviceandBanking FullYearGordonLefevre ChiefFinancialOfficer FullYearMatthewPercival GroupExecutive,PublicAffairsandChiefofStaff FullYearCraigRyman ChiefInformationOfficer FullYearPaulSainsbury ChiefCustomerOfficer FullYearBrianSalter GroupGeneralCounsel FullYearWendyThorpe GroupExecutive,Operations FullYearAdamTindall1 ChiefExecutiveOfficer,AMPCapital FullYearFionaWardlaw GroupExecutive,PeopleandCulture FullYear

Former executives StephenDunne2 FormerManagingDirector,AMPCapital–retired9October2015

Current non-executive directors CatherineBrenner Chairman–appointedChairman24June2016 FullYearPatriciaAkopiantz Non-executiveDirector FullYearHollyKramer Non-executiveDirector FullYearTrevorMatthews Non-executiveDirector FullYearGeoffRoberts Non-executiveDirector–appointed1July2016 SixmonthsPeterShergold Non-executiveDirector FullYearPeterVarghese Non-executiveDirector–appointed1October2016 ThreemonthsVanessaWallace Non-executiveDirector–appointed1March2016 TenmonthsMikeWilkins Non-executiveDirector–appointed12September2016 Fourmonths

Former non-executive directors SimonMcKeon Chairman–retired12May2016 FivemonthsBrianClark Non-executiveDirector–retired12May2016 FivemonthsPaulFegan Non-executiveDirector–retired30November2015 –JohnPalmer3 Non-executiveDirector–retired23June2016 Sixmonths

1 AdamTindallwasappointedChiefExecutiveOfficer,AMPCapital(CEO,AMPCapital)on12October2015followingtheretirementofStephenDunne.AtthisdateAdamcommencedasaKMP.

2 StephenDunnechangedrolefromMDAMPCapitaltoConsultanton9October2015.AtthisdateStephenceasedasaKMP.HeremainedasaconsultantwithAMPuntil29February2016.

3 JohnPalmerheldthepositionofAMPLimitedChairmanfortheperiod12Mayto23June2016followingtheretirementofSimonMcKeonuntiltheappointmentofCatherineBrenner.HewaspaidtheAMPLimitedChairmanfeeforthisperiod.

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2. Our executive remuneration structure Our executive remuneration is structured so that each individual’s remuneration is linked to the performance of the company as a whole and their individual performance, as long as company performance meets threshold performance levels.

YourboardbelievesthatremunerationshoulddrivethedeliveryofAMP’sbusinessstrategybyachievingtherightbalanceofmotivationandchallengeforourexecutives;encouragingthemtobothgrowthebusinessanddeliversustainableshareholderreturns.Inaddition,theremunerationarrangementssupporttheattractionandretentionoftalentwithinAMP.In2016theremunerationstructureincludesfixed,STIandLTIcomponents.PerformancetargetsaresettosupportthedeliveryofAMP’sstrategy,whichinturnisdesignedtodelivervaluetocustomersandshareholders.

2016 executive remuneration structure

Fixed At risk

Fixed remuneration

Basesalary,superannuationandanysalarysacrificedbenefits

AMPgenerallypositionsfixedremunerationatthemedianofthe

market,comparedtolikerolesinAustralianlistedcompaniesofcomparablesizeboth

withinthefinancialservicessectorandacrossthegeneralmarket

Short-term incentive (STI)1

Rewardforstrongindividualandcompanyperformanceduringtheyear

throughannualgoalsthatarealignedtodeliveryofourstrategyandcreationof

shareholdervalue

Long-term incentive (LTI)

Rewardforlong-termcompanyperformance,measuredagainstAMP’sreturnonequityandtotalshareholder

returntargets

Value determined by

Delivered as

Why it is paid

60%–relativetotalshareholderreturnhurdleoverthreeyears

40%–returnonequityhurdleinthreeyears

RightstoAMPLimitedsharessubjecttothreeyearperformancetargets

Tofocusexecutives’effortstocreatelong-termvalueforshareholders

Toincreaseshareholdingtosupportalignmentwithshareholderinterests

Performanceoftheindividualandthecompanyduringtheyearmeasured

65%againstfinancialand35%againststrategicgoals

60%cash

40%rightstoAMPLimitedshares–deferredfortwoyears2

Tofocusexecutives’effortstodeliveronAMP’sstrategicprioritiesduringtheyear

Deferralof40%ofpaymentencouragesexecutivestofocusonsustainableoutcomesbeyondthe

performanceperiod

Marketvalueandcriticalityofrole,qualificationsandexperience

Cashandsuperannuation

Toattractandretaintalent

1 ExecutivesparticipateintheAMPSTIplanwiththeexceptionofAMPCapital’sCEOwhoparticipatesintheAMPCapitalenterpriseprofitshareplan.2 FortheAMPCapitalenterpriseprofitshareplan,50%vestsaftertwoyearsandremainingportionvestsafterthreeyears.

AMPCapitaloperatesunderseparateremunerationarrangements,whichincludetheAMPCapitalenterpriseprofitshareplan,whichisinlinewithmarketpracticeintheinvestmentmanagementindustryandsupportsAMPCapital’stalentmanagementgoalofattracting,motivatingandretaininginvestmentmanagementtalentinallmarketsinwhichAMPCapitaloperates.

AdamTindall(CEO,AMPCapital)participatesintheAMPCapitalenterpriseprofitshareplan,whichdeliversapoolasasetproportionofprofit(adjustedforcostofcapital).TheAMPLimitedBoardapprovestheallocationoftheprofitsharepoolforaperformanceperiodforAMPCapital’sCEO,basedonarecommendationfromtheAMPLimitedCEO.

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Directors’ report for the year ended 31 December 2016

2.1. Remuneration mix Thefollowingillustrationshowstheremunerationmixfortheexecutivesin2016(excludingAMPCapital’sCEOasheparticipatesintheAMPCapitalenterpriseprofitshareplan).Ithasbeenmodelledbasedontheaverageoftheexecutives’maximumopportunity.

Havingamajorityoftheexecutives’remunerationpackagelinkedtotheperformanceofthecompanyisimportantforensuringthattheinterestsofexecutivesarecloselytiedtotheinterestsofshareholders.

Remunerationthatisperformance-relatedandthereforeconsideredtobe‘at-risk’comprises81%oftheCEO’stotalremunerationand77%ofotherexecutives’totalremuneration.

Fixed19%

Fixed23%

STI cash 23%

STI cash 25%

STI deferral17%

LTI35%

STI deferral 15%

LTI 43%

At risk81%

At risk77%

Deferred equity58%

CEO Executives

Deferred equity52%

Cash42%

Cash48%

Fixed19%

Fixed23%

2.2. Changes in 2017For2017,threekeychangeshavebeenmadetoourexecutiveremunerationstructuretobetteralignwithshareholderexperience.

– Extend the LTI vesting period from three to four years. Startingwiththe2017grant,LTIwillvestoverfouryearsandthevestingperiodwillcommencefrom1January2017toalignwithAMP’sfinancialyear.ThischangewillaligntheperformanceperiodthatdeterminesvestingwiththeperformanceperiodofAMP,andwilldirectmanagement’sfocusonvaluecreationoveralongerterm.Previously,thevestingperiodcommencedinMarcheachyear.ThiswillnotresultinanincreaseintheLTIvalueawarded.

– Remove the RoE performance hurdle so that 100% of LTI vests subject to relative TSR.RoEwasintroducedasaperformancehurdlearoundthetimeoftheAXAtransactiontodriveanimprovementinRoE.WithanimprovedRoEachievedoverthelastfewyearsthroughcapitalefficiencyactivitiesacrossthebusiness,theuseoftheRoEmeasureisnolongerconsideredappropriateforLTIpurposes.Capitalmanagementwillcontinuetobeakeyfocusareaformanagementandwillcontinuetobeaconsiderationwhendeterminingindividualperformance.

– Increase focus on financial goals for STI. In2017wewillincreasetheweightingoffinancialmeasuresto70%oftheSTIscorecard(from65%).Theremaining30%willcontinuetofocusonembeddingourcustomercentredculturesupportedbyastrongriskmanagementenvironmentwhichwebelieveiscriticaltodeliveringourstrategy.

3. 2016 remuneration outcomesThe remuneration each executive receives is based on the performance of AMP and their individual performance during the year.

In2016,AMPdeliveredalossattributabletoshareholdersof$344million(comparedtoaprofitof$972millionin2015)andanunderlyingprofitof$486million(from$1,120millionin2015).The2016resultswerelargelydrivenbyactionsthatweretakentostabiliseourwealthprotectionbusinessandreducetheearningsimpactonthegroup.Thelossincludessomelargelyone-off,mainlynon-cashitems.ThisovershadowedgrowthinAMPBank,AMPCapitalandtheNewZealandoperations,aswellaslowgrowthinwealthmanagement.Wealsomadeprogressonourtransformationtobecomeatrulycustomercentredcompany.

Despitethisresult,ourcapitalpositionremainsstrongandasaresultshareholderswillreceiveafinaldividendof14centspershare,bringingthe2016totaldividendto28centspershare,thesametotaldividendpaymentaswasdeliveredin2015.

3.1. Summary of 2016 CEO remuneration outcomesTheCEOwillnotreceiveanyincentiveoutcomesbasedonAMP’sperformancein2016.HisSTIawardiszeroandnoneoftheperformancerightsthatweregrantedinhis2014LTIawardwillvestsubjecttoAMP’s2016RoEperformance(40%ofthegrant).Wedonotanticipateanyvestingofthe60%ofthe2014LTIgrantthatissubjecttorelativeTSRperformance,althoughthiswillnotbetesteduntilMarch2017.

InFebruary2016,thePRCbenchmarkedtheCEO’sremunerationagainstcompaniesofsimilarsizeandotherfinancialinstitutions.ThisdatashowedthattheCEO’sfixedremunerationwasatthe25thpercentileofthispeergroup.Ascontext,whentheCEOwasappointedtotherole,hissalarywassetatalowerlevelcomparedtohispeersandpredecessor.Itwastoprogressivelyincreaseashegainedexperienceanddeliveredresults.Inkeepingwiththisapproach,andconsidering2015performance,theboardincreasedhissalaryby9%to$1.9millioninFebruary2016.TheCEOwillnotreceiveasalaryincreasein2017.

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Asaresultoftheabove,theCEOwillonlyreceivehisfixedremunerationandhewillnotreceiveanyvariableremunerationbasedon2016performance.Thisrepresentsa100%dropinvariableremunerationanda56%dropintotalremunerationcomparedtoremunerationreceivedbasedon2015performance,asshownbelow.Allexecutiveswillhavea100%dropinvariableremunerationreflectingAMP’sperformancein2016.

Cash Rights

Performance year on which remuneration received is based

Fixed remuneration1

$’000

Cash short-term

incentive awarded

$’000

Deferred short-term

incentive awarded

$’000

Long-term incentive

vested2

$’000Total

$’000

2016 1,900 – – – 1,9002015 1,750 1,260 840 455 4,305

1 FixedremunerationasdeterminedbytheboardinFebruary,effectiveAprileachyear.2 Forthe2014LTIaward,novestingwilloccurfor2016performanceagainsttheRoEhurdleandcurrentperformanceindicatesthatnovestingwill

occuragainsttheTSRperformancehurdle.TheTSRhurdlewillbetestedinMarch2017.Forthe2015performanceyearaportionoftheRoEtranchevestedandthevalueisdeterminedusingthefive-dayVWAPontheexercisedate.

Thisinformationdiffersfromthestatutorytableinsection7.1.2whichispreparedaccordingtoAustralianAccountingStandards.

ThefollowingsectionsdetailhowtheseoutcomesweredeterminedfortheCEOandotherexecutivesfor2016.Asummaryofremunerationawardedbetween1Januaryand31December2016forallexecutivesisinsection7.1.1.

3.2. Fixed remunerationFixedremunerationincreasesforexecutives(includingAMPCapital’sCEO)wereconsideredaspartofthegroup-wideremunerationreviewprocessinFebruary2016andwereeffectiveApril2016.Fixedremunerationlevelswereheldflatforthemajorityoftheexecutives,withincreasesonlyprovidedtothoseexecutiveswhowerebelowourdesiredmarketpositionorfornewexecutives.Thesedecisionsweremadeinthecontextof2015performance.FixedincreaseswereawardedtotheCEO(9%),ChiefInformationOfficer(8%)andChiefFinancialOfficer(4%)sothattheirfixedremunerationwascomparabletotheirpeersintheAustralianmarket.Nosalaryincreaseswillbemadein2017exceptforthoseexecutiveswhoserolessignificantlyincreasedintherestructurethatwasannouncedinNovember2016.

3.3. Short-term performance and incentive outcomesBasedonAMP’sperformancein2016,neithertheCEOnorexecutives(excludingAdamTindallwhooperatesunderadifferentremunerationstructure)willreceiveanSTIpaymentfor2016.Thissectiondescribestheboard’sphilosophyaroundSTImeasuresaswellasthedetailedoutcomesfor2016.

3.3.1. Approach to STITheSTIscorecardisapowerfulmechanismfortheboardtosignaltoemployeeswhatthekeyprioritiesfordeliveryareinanygivenyear.Theboardbelievesthatbothfinancialandstrategicgoals,whicharemeasuredagainststretchtargets,arekeytodeliveringourstrategyandthroughthis,shareholdervalue.

In2016,65%oftheSTIscorecardwasweightedtofinancialgoals,and35%tostrategicgoals.Ourfinancialgoalsarefocusedondrivingprofitabilityandgrowth.ThestrategicgoalsfocusourpeopleonbuildingandstrengtheningcriticalcapabilitiestodeliveronAMP’sstrategy.Ofthethreestrategicmeasures,twoarecustomeradvocacymeasures;NetPromoterSystem(NPS)scoreandstrengtheningourcustomercentredculture.Thethirdstrategicmeasureisstrengtheningourriskculture.Duetotheincreasedinterestinunderstandinghowstrategicmeasuresdrivecompanyvalue,furtherinformationonthesestrategicmeasuresisdetailedbelow.

Customer advocacy measuresAtAMP,webelievethatimprovedcustomerexperienceswilldeliverasustainedcompetitiveadvantagenowandinthefuture,andwilldrivesuperioroutcomesforcustomersandshareholders.ItisAMP’sgoaltobecomeAustraliaandNewZealand’sfavouritefinancialservicesprovider,andourfocusonthecustomerexperienceisparamounttodeliveringthisstrategy.

Wemonitorourprogressagainstourstrategythroughvariousmeasures.WeuseNPStoevaluateourprogressagainstourcustomergoals.NPSisabusinesscapabilitythatiscentredaroundfrequentlysurveyingcustomerswithasimplesetofquestions(‘Listen’),workingtounderstandthatfeedback(‘Learn’)andthenmakingimprovementsbasedonthatfeedback(‘Act’).Basedonthisfeedback,weputtools,trainingandinfrastructureinplacetocontinuouslyimprovethecustomerexperience.BothexternalresearchandouranalysisshowacorrelationbetweenhighNPSscoresandimprovedeconomicvalue.

WhentheboardfirstintroducedacustomergoalintotheSTIscorecard,arangeofmeasureswereusedtodeterminehowwellourpeoplewerebuildingacustomercentredcultureandimprovedcustomerexperiences.By2016ourunderstandingofNPShadevolvedtoapointwherewewereabletomoreconfidentlyintroducethequantitativeNPSmetric(NPSscore)alongsideaspecificsetofambitiousinitiativestostrengthenourcustomercentredculturethroughouttheorganisation(strengtheningourcustomercentredculture).ThesemeasuresaccountedforaquarteroftheSTIscorecardin2016.

Strengthening our risk cultureAMPbelievesthatcultureisanenablerofstrategicexecutionwhichcanbedeliberatelyanddirectionallydeveloped,primarilythroughleaders.AMPhasdeterminedthebehavioursthatwillsupportourstrategyandwearecommittedtoaculturethatvaluesintegrity,helpandperformance.Employeebeliefsabouttherisk-takingorrisk-reducingbehavioursthatarevaluedandexpectedatAMP(ieourriskculture)areimportantaspectsofAMP’soverallculture.

OurinclusionofstrategicgoalsintheSTIscorecardhasbeenakeymeansthroughwhichwehaveseenachangeinthewayourpeopleserveourcustomers.Ouremployeeengagementsurveyresultsshowasteadyincreaseoverrecentyearsinouremployees’perceptionofAMP’scustomer-centricityandthatwespeakup,challengeandactwhenthingsaren’tright.

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3.3.2. STI outcomesTheboardassessedAMP’sperformanceagainstthescorecardbelowandusedthistodeterminethefundingoftheSTIpoolfor2016.AMP’sfinancialperformancewasbelowthresholdexceptfornetrevenueofAMPCapital.Performanceagainstthestrategiccustomerandriskgoalswasdeterminedbytheboardtobeabovetarget.Overallperformanceonfinancialandstrategicmeasuresgenerateda25%ofmaximumopportunitySTIpoolfor2016.ThiscomparestoanSTIpoolof51%ofmaximumopportunityin2015.TheSTIpoolin2016excludesAMPCapitalasthispartofthebusinesshasseparateremunerationarrangements.

Description (scorecard weighting) Link to strategy Outcome Performance commentary

Fina

ncia

l mea

sure

s (6

5%)

Underlying profit less capital charge (45%)

ProfitabilityofAMPdeliversshareholders’annualdividendsandgeneratesfundsforinvestinginourfuture.

Belowthreshold

The2016resultswerelargelydrivenbyactionsthatweretakentostabiliseourwealthprotectionbusinessandreducetheearningsimpactonthegroup.Thelossincludessomelargelyone-off,mainlynon-cashitems.ThisovershadowedgrowthinAMPBank,AMPCapitalandtheNewZealandoperations,aswellaslowgrowthinwealthmanagement.

Cost to income ratio (5%) Wefocusonreducingcostsbyspendingdollarssmartly,whereitmattersmosttoourcustomers,andredirectingsavingstoenableustoinvestinbettercustomersolutions.

Belowthreshold

ThecosttoincomeratiowasimpactedbythechallengesintheAustralianwealthprotectionbusiness.

Therehasbeenasignificantfocusondrivingbusinessefficienciesduringtheyear.Athree-yearbusinessefficiencyprogramisnowcomplete,with$200millioninpre-taxrecurringrunratecostbenefits.

Maintainingasharperfocusonmanagingourcostsisastrategicpriorityforustodriveshort-termperformance.Retainingarigorousfocusoncostcontrolensuresweremaincompetitiveandenablesustocontinuetoinvestinlong-termgrowth.

Value creation (15%)

– Valueofnetcashflow(5%)

WeorientcapitalandresourcestogrowourcoreAustralianbusinesses.

Belowthreshold

Weexperiencedlowerthanexpectedexternalcashflowsin2016.InvestmentmarketvolatilityanduncertaintyforretailcustomersfollowingchangestosuperannuationlegislationnegativelyimpactedourperformanceandhencetheoutcomewasbelowthresholdlevelsfortheSTIscorecard.

– Valueofrisknewbusiness(5%) Below

threshold

NewbusinessvolumeacrossAMPbusinesseswasbelowthresholdperformancelevelsin2016.Thebestestimateassumptionshadanegativeimpactontheprofitabilityofbusinesswrittenin2016.

– NetrevenueofAMPCapital(5%)

Threshold

ExternalnetcashflowswereimpactedbychallengingmarketconditionsinAustraliaandJapan,partlyoffsetbygoodinstitutionalflowsintorealestateandinfrastructureassetclasses.

Stra

tegi

c m

easu

res

(35%

)

Customer advocacy (25%)

– NetPromoterSystem(NPS)score(10%)

Improvedcustomerexperienceswilldriveasustainablecompetitiveadvantage.

Abovetarget

ThecombinedNPSresultacrossourbusinesswasabovetargetandwesawimprovementacrossallcategoriessurveyed.Thesearedigitalinteractions,contactcentreinteractionsandend-to-endcustomerexperiences.

– Strengtheningourcustomercentredculture(15%) Above

target

Overallweachievedstrongmomentumagainstourplantowardsembeddingacustomercentredculture.NPSisnowpartofoperatingroutinesinkeyareasofthebusiness,drivingcustomercentredbehaviourchangeandimprovedcustomersolutions.

Strengthening our risk culture (10%)

Conductofourpeopleisparamounttooursuccess.Strongriskmanagementbehaviourssupportustodotherightthingbyourcustomersineveryinteraction.Thisinturnwillcreatecustomerloyaltyandadvocacytogenerateimprovedfinancialresultsandvalueforshareholders.

Ontarget

Embeddingtheenhancedriskmanagementframeworkislargelyontrackagainstourambitiousplanwiththemajorityofactivitytrackingattarget.ThishasresultedinimprovementsinourapproachtoriskmanagementandriskbehaviourstosupportcustomeroutcomesacrossAMP.

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ReflectiveofAMP’sperformancein2016,noexecutivereceivedanawardundertheGroupSTIplanfor2016.TheSTIawardswerebasedontheoverallcompanyfinancialresultsandindividualexecutiveperformancewasnottakenintoconsiderationasthresholdfinancialperformancewasnotmet.Reflectingperformanceagainstthestrategiccustomerandriskgoals,areducedSTIpool($34.3million)wasgenerated.ThispoolissignificantlylessthantheSTIpoolsthatwereavailableinpreviousyearsanditwasusedtorewardoutstandingemployeesbelowtheexecutivestorecognisetheircontributionstoour2016strategicgoalsandtosupportretention.

Maximum STI opportunity

(% of total fixed pay)

% of maximum STI opportunity

awarded

% of maximum STI opportunity

not awarded

Maximum STI opportunity

value forgone $

Current executivesCraigMeller 200 0 100 3,800,000PaulineBlight-Johnston 175 0 100 1,400,000RobCaprioli 175 0 100 1,356,250GordonLefevre 200 0 100 1,930,000MatthewPercival 175 0 100 1,050,000CraigRyman 175 0 100 1,137,500PaulSainsbury 200 0 100 1,740,000BrianSalter 175 0 100 1,373,750WendyThorpe1 204 0 100 1,162,800AdamTindall2 – – – –FionaWardlaw 175 0 100 1,225,000

Average 0 100 1,617,530

1 WendyThorpe’sfixedremunerationexcludesthevalueofherparticipationinadefinedbenefitsuperannuationarrangementwhichdeliversahighersuperannuationbenefitovertime.In2016AMPreviewedWendy’sremunerationanddeterminedthattheresultinglowerfixedremunerationpositionresultedinunderstatedSTIandLTIopportunitiesgiventhesearepercentagesoffixedremuneration.TheboardthereforeapprovedincreasedSTIandLTIopportunitiesforWendyfor2016andmadeadjustmentstoher2014and2015STIandLTIawardstocorrectpastdiscrepancies.

2 AdamTindallreceived$2,119,000undertheAMPCapitalenterpriseprofitshareplan.Hisopportunityisuncapped.

3.4. Long-term incentive outcomesAMPoperatesaLTIplantomotivateexecutivestocreatelong-termvalueforshareholdersandtoincreaseshareholdingamongstexecutivestosupportthealignmentofinterests.TheboardselectedTSRandRoEastwomeasuresthatarelinkedtodeliveringshareholdervalue.TSRdirectlyalignswithbenefitsthataredeliveredtoshareholdersandRoEwaschosenasitdrivesstrongcapitaldisciplineanditwasintroducedatatimewhenRoEwasnotatthedesiredlevel.TheLTIgrantsmayvestafterthethree-yearvestingperiod,subjecttoperformanceagainstRoEtargetsandourrelativeTSRperformance.FulldetailsoftheLTIplanaredescribedinsection5.2.

Thevestingoutcomesthatreflect2015and2016performancearedetailedbelow,alongwiththeapprovedperformancemeasuresandtargetsforallunvestedLTIgrants.

Grant date

Performance period

start date

Performance period

end date Measure

Threshold target

(50% vests)

Maximum target

(100% vests)

Board approved

performance outcome

Vesting outcome

(portion of tranche vested)

Grants that were tested for vesting since 1 January 2016

6Jun2013 1Jan2015 31Dec2015 RoE 13.4% 14.5% 13.5% 55%

6Jun2013 7Mar2013 6Mar2016 TSR 50thpercentile 75thpercentile 31stpercentile 0%

5Jun2014 1Jan2016 31Dec2016 RoE 13.7% 15.0% 5.8% 0%

Grants to be tested for vesting in the future

5Jun2014 6Mar2014 5Mar2017 TSR 50thpercentile 75thpercentile tba tba

4Jun2015 1Jan2017 31Dec2017 RoE 15.3% 17.2% tba tba

4Jun2015 5Mar2015 4Mar2018 TSR 50thpercentile 75thpercentile tba tba

2Jun2016 1Jan2018 31Dec2018 RoE 15.9% 18.0% tba tba

2Jun2016 3Mar2016 3Mar2019 TSR 50thpercentile 75thpercentile tba tba

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UndertheLTIplanrulestheboardmayexercisediscretionwhenassessingperformancetodeterminevestingofLTIawards.AdjustmentsareconsideredatthesolediscretionoftheboardwhenRoEoutcomesareimpactedbymaterialitemsandstrategicmattersthatwerenotknownorplannedforwhentheperformancetargetswereset,werenotcontrollablebymanagementand/orarenotintheordinarycourseofbusiness.Thereareitemsthatarecontrolledbymanagementthattheboardwillnotadjustforastheyareactivitiesthatoccurintheordinarycourseofbusiness.Thecalculationsforanyadjustmentsmadebytheboardareexternallyvalidated.

2013 LTI awardTheRoEhurdlewaspartiallymet.TheminimumRoEhurdleforthe2013awardwas13.4%.TheactualRoEresultfor2015was13.2%.TheboardexerciseditsdiscretionandadjustedtheRoEoutcomeupto13.5%totakeintoaccounttheimpactoftheinvestmentintheChinaLifePensionCompany(CLPC)of0.3%ontheactual2015RoEresult.Theboardwascognisantthatthisdiscretionwasthedifferencebetweenvestingandnotvestingandappliedduerigour.ParamounttothedecisionwastoensurethattheboardcontinuestoencouragemanagementtopursuegrowthopportunitiesliketheinvestmentinCLPCandnotbedisadvantagedformakingdecisionsthatbenefitthelong-termvalueforshareholders.ConsiderationwasalsogiventothebroaderseniorexecutivepopulationwhoareeligibleforLTIandtoensuretheoutcomewasfairtoall.ThisresultwaspreviouslydisclosedtoshareholdersinMay2016.

TheTSRhurdlewasnotmetand100%ofthistranchelapsed.

2014 LTI awardThe2016RoEoutcomewasnotsufficienttomeettherequiredperformancethresholdand100%ofthistranchewilllapseatthevestingdate.WhentheboarddeliberatedonRoEperformancetodetermineLTIvesting,considerationwasgiventoexercisingdiscretionandadjustingfortheimpactofinvestmentinCLPC,thereinsurancearrangement,wealthprotectioncapitalisedlossesandthewrite-downingoodwillontheRoEresult.TheboarddecidedtoaltertheRoEoutcometoaccountfortheimpactofourinvestmentinCLPCandthereinsurancearrangementonly.NofurtheradjustmentsweremadetotheRoEresultfor2016.WhenassessingRoEperformanceforLTIvestinginfutureyears,theboardwillensurethatthevestingoutcomeisnotinappropriatelyimpactedbytheseitems.

ThecurrentrelativeTSRperformanceindicatesthatAMPisnotlikelytooutperformatleast50%ofthepeergroup.IfthisisthecasewhenthishurdleistestedinMarch2017,100%ofthistranchewilllapse.

Detailsonthe2014LTIawardareincludedtoprovidetransparentdisclosureonoutcomesrelatingto2016performance,despitethefinalTSRoutcomenotbeingconfirmedattimeofpublication.Thefinaloutcomeofthe2014LTIawardwillbeincludedinthe2017report.

3.5. AMP’s five-year performanceThetablebelowillustratesAMP’sperformanceoverthelastfiveyearsandtheimpactthishashadonSTIawardsandLTIvestingoutcomes,whichshowsthatincentiveawardsvarywithAMP’sperformance.

Financial results 2012 2013 2014 2015 2016

Profit (loss) attributable to shareholders ($m) 689 672 884 972 (344)

Underlying profit ($m) 950 849 1,045 1,120 486

Cost to income ratio (%) 47.3 49.4 44.8 43.8 63.7

Shareholder outcomesTotaldividend(centspershare) 25 23 26 28 28Sharepriceat31December($) 4.81 4.39 5.50 5.83 5.04

STI pool STIpool($m)1 96 83 118 105 34STIpoolas%ofunderlyingprofit(%) 10.1 9.8 11.3 9.4 7.1AverageSTIreceivedas%ofmaximumopportunityforexecutives(%) 63 43 70 54 0

LTI performanceRelativeTSRpercentile2 20th 21st 26th 50th 31st Returnonequity(unadjusted%) 12.8 10.7 12.7 13.2 5.6LTIvestingoutcome(%ofgrantvestedduringtheyear)3 0 0 0 0 22

1 The2016STIpoolexcludesAMPCapitalasthispartofthebusinesshasseparateremunerationarrangementswhichwereintroducedin2016.2 TSRpercentilerankingasat31July2012,2013and2014,28February2015and6March2016respectively.3 LTIvestingreflectsperformancefromthepreviousyear.22%ofthe2013LTIgrantvesteddueto2015RoEperformancebeingabovethreshold.

3.6. Termination paymentsAsaresultoftherestructurethatwasannouncedinNovember2016,threeKMProlesweremaderedundant,effective31December2016.AlthoughtheredundancypaymentsforPaulineBlight-Johnston,RobCaprioliandWendyThorpearenotpayableuntiltheyceaseemploymentwithAMPin2017,thepaymentshavebeendisclosedinthetablesinsection7.1astheyrelatetotheterminationoftheirKMProles.

MatthewPercivalalsolefthisroleasKMPeffective31December2016.HisretirementfromAMPhasnotresultedinanyterminationbenefitandthereforethereisnoterminationpaymenttobedisclosed.

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4. Executive shareholding Executives are required to hold a significant number of AMP shares to ensure that their long-term interests are closely aligned with the interests of shareholders.

4.1. Minimum shareholdingAspartofAMP’scommitmenttoensuringthelong-terminterestsofexecutivesarecloselyalignedwiththelong-terminterestsofshareholders,allexecutivesarerequiredtoholdaminimumnumberofAMPLimitedsharesand/orSTIsharerightswithinfiveyearsoftheirappointment.Theminimumnumbersare:– CEO:300,000– otherexecutives:60,000.

Usingthe31Decemberclosingsharepriceof$5.04theminimumrequirementasapercentageoffixedremunerationfortheCEOis80%andanaverageof41%forotherexecutives.

AMPincludesthefollowingequityholdingstodeterminewhetheranexecutivemeetsthisrequirement:– AMPLimitedshares:ordinaryAMPLimitedsharesregisteredintheexecutive’snameorarelatedparty– AMPsharerights:grantedtoexecutivesthroughAMP’semployeeshareplanse.g.throughtheSTIdeferralprogram.

SharerightsthatareallocatedtoexecutivesthroughtheSTIdeferralplanareincludedtomeettheirminimumholdingrequirementonthebasisthatfuturevestingisnotsubjecttoanyperformancecondition.AMPLimitedsharesand/orsharerightscannotbehedged.

Allexecutivescurrentlymeettheirminimumshareholdingrequirements.

4.2. Executive shares and share rights holding Thefollowingtableshowsthenumberofshares,andsharerightsheldbyexecutivesortheirrelatedpartiesduring2016.Arelatedpartyistypicallyafamilymemberoftheexecutiveand/orisanentityinwhichtheexecutivehasdirectorindirectcontrol.ThedefinitionofunitsincludesAMPLimitedsharesandsharerightswhicharenotsubjecttoanyfutureperformanceconditions.

Holding at 1 Jan 2016 Holding at 31 Dec 2016

SharesShare rights

Total number of

units at 1 Jan 2016

Share rights

granted during 20161

Share rights

converted to shares2

Other market

transactions3 SharesShare rights

Total number of

units at 31 Dec 2016

Total value of units held at 31 Dec 2016

as percentage of fixed

remuneration (%)4

CraigMeller 362,246 243,831 606,077 170,040 76,887 82,042 521,175 336,984 858,159 228%

PaulineBlight-Johnston 37,282 86,148 123,430 57,813 24,713 12,678 74,673 119,248 193,921 122%

RobCaprioli 62,918 80,547 143,465 56,007 27,459 19,257 109,634 109,095 218,729 142%

GordonLefevre – 69,449 69,449 83,886 – – – 153,335 153,335 80%

MatthewPercival 30,000 83,766 113,766 43,360 39,359 (2,362) 66,997 87,767 154,764 130%

CraigRyman5 – 28,053 28,053 45,485 12,987 4,621 17,608 60,551 78,159 61%

PaulSainsbury – 152,417 152,417 78,898 67,276 (1,801) 65,475 164,039 229,514 133%

BrianSalter 132,255 112,434 244,689 59,510 54,004 (30,052) 156,207 117,940 274,147 176%

WendyThorpe6 41,928 73,337 115,265 56,951 24,256 (4,614) 61,570 106,032 167,602 148%

AdamTindall 32,379 146,984 179,363 153,846 77,803 – 110,182 223,027 333,209 210%

FionaWardlaw 81,730 96,813 178,543 53,066 44,393 41,908 168,031 105,486 273,517 197%

1 Thenumberofsharerightsgrantedon28AprilundertheSTIdeferralplanwasdeterminedusingthefairvaluepriceof$4.94pershareright.2 Unlessotherwisestated,thesharerightsconvertedtosharesduring2016relatetothevestingofthe2013STIdeferralgrants.3 OthermarkettransactionsarearesultoftheexecutivesortheirrelatedpartiestradingAMPLimitedsharesontheopenmarket.4 Valueasat31Decemberusingclosingsharepriceof$5.04.5 CraigRyman’s12,987sharerightsthatconvertedtosharesduring2016weregrantedinJune2013aspartofthe2013LTIaward.Craig’sholdingof

sharerightsasat31December2016ismadeupof15,066sharerightsgrantedinJune2014undertheLTIplanand45,485sharerightsgrantedin2016undertheSTIdeferralplan.

6 ThesharerightsawardedtoWendyThorpeon15April2016weregrantedunderthe2014STIdeferralplan.ThesewereawardedasaresultofthereviewofWendy’sremunerationarrangementwhichresultedinatop-upofthe2014STIaward.Seefootnote1inthetableinsection3.3.2forfurtherinformation.

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5. How executive arrangements operate at AMP Our executive arrangements are structured to ensure that each individual’s remuneration is linked to both their performance and the performance of the company as a whole.

5.1. Short-term incentivesAMP’sSTIplansaredesignedtorewardexecutivesforachievingfinancialandstrategicperformanceatbothabusinessandindividuallevel.AllexecutivesparticipateintheSTIplan,withtheexceptionofAMPCapital’sCEO.AMPCapital’sCEOparticipatesintheAMPCapitalenterpriseprofitshareplan,whichisamoreappropriateincentiveplanfortheexecutivesofAMP’sinvestmentmanagementbusiness.

AMP short-term incentive plan AMP Capital enterprise profit share plan

Who Allexecutives,excludingtheCEO,AMPCapital CEO,AMPCapital

Format of reward 60%cash,40%rightstoAMPLimitedshares:deferred

How individual performance is measured

Individualperformanceismeasuredagainsttheperformanceofeachexecutive’sbusinessareaandtheirperformanceagainsttheirpersonalobjectives.Executiveperformancescorecardsandobjectivesareagreedwiththeboardatthestartofeachyear.

How the STI pool is calculated

TheboarddeterminesthesizeoftheSTIpool,basedonperformanceagainsttheSTIscorecard(seesection3.3.2),takingintoaccountAMP’sfinancialresults,businessleadershipandprogressofAMP’sstrategicobjectives.

TheChiefRiskOfficerreportstothePRCannuallyonriskoutcomesacrossAMP.TheboardconsidersthisreportandasaresultmayadjusttheSTIpoolupordowniftheybelievethemanagementteamhasoperatedoutsideboard-approvedriskappetitelevels,oriftherehavebeenotherextraordinaryeventswhichhaveabroaderimpactonshareholdervalue.

AsetpercentageofAMPCapitalpre-taxprofitismadeavailablefortheenterpriseprofitshareplan.Thepercentageisdeterminedbytheboardatthestartoftheperformanceyear.Itisnotdisclosedbecauseitiscommerciallysensitive.

Theboardmayadjustthepoolupordownatitsdiscretiontorecognisenon-profit-relatedperformance,includingchangesinmarketconditionsandbroaderfinancialfactorsorifAMPCapitalmanagementoperatesoutsideboard-approvedriskappetitelevels.

How the awards are allocated

TheCEOdistributestheSTIpoolbetweenbusinessareasbasedontheircontributiontoAMP’sperformance.TheCEOrecommendstotheboardforitsapprovalSTIpaymentsforhisdirectreportsbasedontheirperformanceandtheperformanceofthecompanyagainsttheSTIscorecard.SeparatelytheboardassessestheCEO’sperformancetakingintoconsiderationthegroupscorecardandobjectivesanddeterminesanappropriateSTIpayment.

BasedonarecommendationfromtheCEO,theboardapprovesanyallocationtotheAMPCapitalCEObasedonperformanceagainsttheAMPCapitalscorecard.Followingthisallocation,AMPCapital’sCEOallocatestheremainingenterpriseprofitsharepooltoparticipantsonadiscretionarybasissubjecttofinalapprovalbytheCEO,AMPLimited.

STI deferral Toensureafocusonriskmanagementandlong-termsustainableperformance,40%ofanySTIpaymentorprofitsharerewardispaidintheformofrightstoAMPLimitedshares(sharerights).ThesharerightshavenoexercisepriceandnoexerciseperiodandconverttoAMPLimitedshares(vest),subjecttotheavailabletradingwindow:– FortheAMPSTIPlan:100%vestsaftertwoyears– FortheAMPCapitalenterpriseprofitshareplan:50%vestsaftertwoyearsandtheremainingportion

vestsafterthreeyears.

VestingissubjecttoongoingemploymentandcompliancewithAMPpolicies,andisattheboard’sdiscretion.

Itistheboard’spreferencetobuythesharesonmarketsothevalueofexistingAMPsharesisnotaffected.

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5.2. Long-term incentivesAMP’sLTIplanisdesignedtolinktheremunerationofexecutiveswiththecreationoflong-termvalueforshareholders.Italsoprovidesanavenuetoincreaseshareholdingamongstexecutivestosupportthealignmentofexecutiveinterestswiththoseofshareholders.

2016 AMP long-term incentive plan

Who Allexecutives,includingAMPCapital’sCEO.

Format of reward RightstoAMPLimitedshares:theperformancerightsvestthreeyearsaftertheyhavebeenawardedifthevestingconditionshavebeenmet.Theperformancerightshavenoexercisepriceandnoexerciseperiod.UponvestingtheexecutivereceivesonefullypaidordinaryAMPLimitedshareinexchangeforeachrightheld.Theexecutivedoesnotreceivedividendsandvotingrightsuntiltherightsvestandhavebeenconvertedtoshares.

How the awards are allocated

Annually,thePRCrecommendstotheboardatotalgrantvalue,whichisapercentageoftheexecutive’sfixedremuneration.Thisallocationofperformancerightsisprovidedtoeachexecutiveannuallybasedontheexecutive’scontractualentitlements.ShareholdersareaskedtoapprovetheCEO’sallocationeachyearattheannualgeneralmeeting(AGM).

Oncethetotalgrantvalueisdeterminedandapproved,thistotalvalueisconvertedintoanumberofperformancerights.

Thetotalgrantvalueiscalculatedasfollows:

Totalgrantvalue=Totalnumberofrightstobeallocated

FacevalueofanAMPshare

ThefacevalueofanAMPshareisthevolumeweightedaveragepriceofAMPsharesontheAustralianSecuritiesExchange(ASX)duringthe10-daytradingperioduptoandincludingthevaluationdateoftheaward(6May2016forthe2016awards).

Thetotalnumberofrightsisthenallocatedtoeachperformancehurdlebasedontheweightingsbelow.Definitionsareprovidedinthefollowingperformancehurdlessection:– 60%oftherightsaresubjecttoarelativetotalshareholderreturn(TSR)hurdle– 40%oftherightsaresubjecttoareturnonequity(RoE)hurdle.

The performance hurdles

Total shareholder return hurdle

TSRmeasuresthebenefitdeliveredtoshareholdersoverthreeyearsincludingdividendpayments,capitalreturns,andmovementintheshareprice.

ThishurdlewaschosenbecauseitrequiresAMPtooutperformmajorASX-listedcompaniesbeforetheplangeneratesanyvalue.

Tomeetthishurdle,AMPneedstogenerateaTSRgreaterthanthatachievedby50%ofacomparatorgroupofcompaniesoverthreeyears.ThemorecompaniesAMPoutperformsonthismeasurethegreaterthepercentageofrightsthatvest.Thecomparatorgroupismadeupofthetop50industrialcompaniesintheS&P/ASX100Index(basedonmarketcapitalisation).

Return on equity hurdle

RoEmeasurestheprofitgeneratedbythemoneyinvestedbyshareholdersattheendofthethirdyear.

RoEwasintroducedasaperformancehurdlearoundthetimeoftheAXAtransactiontodriveanimprovementinRoE.TomeetthishurdleAMPmustoutperformaRoEmeasurepre-determinedbytheboard.

RoEforthe2016LTIwascalculatedasfollowsandthenexpressedasapercentage:

Underlyingprofitlessdividendspaidonanypreferenceshares

AMPshareholderequity

Where:

Underlying profit=underlyingprofitforthefinancialyearending31December2018.

AMP shareholder equityiscalculatedbyaddingAMPshareholderequityasat31December2017andAMPshareholderequityattheendofeachmonththroughout2018,butexcludinganyequityattributabletoanypreferenceshareholders,anddividingtheresultby13months.F

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2016 AMP long-term incentive plan

How performance is measured

AttheendoftheperformanceperiodtheTSRandRoEallocationsaretestedagainstperformancehurdlesthataresetatthegrantdate(startofthevestingperiod).IfeitheroftheallocationspasstheperformancehurdletherightsallocatedtothathurdlewillbeconvertedintoAMPordinarysharesaccordingtothefollowingdiagram.Performancerightswhichdonotpasstheperformancetestwilllapseandwillnotberetested.

TSR RoE% of TSR performance rights that vest

AMP’s TSR ranking against the comparator group

50th percentile

50%

100%

75th percentile

% of RoE performance rights that vest

RoE performance level

Threshold

50%

100%

Maximum

Seesection3.4forRoEtargets.

How the rights are converted to shares

Attheendofthethree-yearperiod,anyrightsthathavevestedareconvertedintoAMPLimitedordinarysharesonbehalfofparticipants.Participantsthenbecomeentitledtoshareholderbenefits,includingdividendsandvotingrights.

Source of the shares Itistheboard’spreferencetobuythesharesonmarketsothevalueofexistingAMPsharesisnotaffected.

5.3. Treatment on exit for deferred STI and LTI awardsIftherightshavenotyetvestedandanexecutiveresignsfromAMP,theirrightswilllapse.

IfanexecutiveleavesAMPduetoretirementorredundancy,anyunvestedrightsmayberetainedandvestingwillcontinuesubjecttothesamevestingconditionsasifthepersonhadremainedinAMPemployment.

IntheeventAMPissubjecttoatakeoverorchangeofcontrol,theboardwilldeterminethetreatmentofanyunvestedrights.Itisnottheboard’sintentionthatawardswillautomaticallyvestuponchangeofcontrol.

5.4. Executive employment contractsTerminationpaymentsarecappedatoneyear’sbasesalaryanddonotrequireshareholderapproval.

Contract term CEO Executives

Length of contract Open-ended Open-ended

Notice period 12monthsbyAMP6monthsbyCraigMeller

12monthsbyAMP6monthsbytheexecutive

Entitlements on termination

– Accruedfixedpay,superannuationandotherstatutoryrequirements

– Pro-rataSTImaybepaidforthecurrentperiodexceptincasesofmisconductorbreachofcontract.TheSTIiscalculatedbasedonperformancetothedateoftermination

– UnvestedLTIrightsmaycontinueinthecaseofdeath,disablement,redundancy,retirementornoticewithoutcause,subjecttotheoriginalperformanceperiodsandhurdles

– VestedLTIrightswillberetainedexceptinthecaseofseriousmisconductorbreachofcontract

– Inthecaseofredundancy,theAMPRedundancy,RedeploymentandRetrenchmentPolicyinplaceatthetimewillbeapplied.ThisisthesamepolicythatappliestoallemployeesatAMP.

Post-employment restraint

Six-monthrestraintonenteringemploymentwithacompetitorandsolicitationofAMPclientsandemployeesandforsomeexecutives(specificallytheCEO)12-monthrestraint.

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5.5. Remuneration governanceRole of the People and Remuneration CommitteeThePeopleandRemunerationCommittee(PRC)supportstheboardtofulfilitsremunerationobligationsbyoverseeingAMP’sremunerationstrategyandpolicy.ThePRCismadeupofnon-executivedirectors(NEDs)andrecommendstotheboardthenatureandamountofremunerationforexecutivesandNEDs.

Whereanexternalperspectiveisneeded,thePRCseeksguidancefromindependentremunerationadvisers.DuringtheyearthePRCengagedPricewaterhouseCoopersandreceivedupdatesonmarkettrends,regulatorychanges,shareholderconcernsregardingremunerationandadviceonremunerationgivenAMP’sstrategyandgoals.ThePRCalsoreceivedbenchmarkingdataforCEOremuneration.NospecificremunerationrecommendationsweremadetothePRCbyindependentremunerationadvisersin2016.

RemunerationatAMPisdesignedtoclearlyaligntheinterestsofemployeeswiththecreationofvalueforshareholders.

UnderAMP’sguidingprinciples,remunerationarrangementsshould:– alignandcontributetoAMP’skeystrategicobjectives,businessoutcomesanddesiredperformanceculture– besimpleandpracticalandsupporttheattractionandretentionoftalentwithinAMP– supportAMP’sriskmanagementframeworkandprotectthelong-termfinancialsoundnessofAMP– alignwiththeinterestsofshareholders,customersandemployees– supporttheengagementofemployeestoachieveoutstandingperformanceandbringvaluetoAMPanditsshareholders– besupportedbyagovernanceframeworkthatmanagesconflictsofinterest,definesclearaccountabilitiesandensuresthat

properchecksandbalancesareinplace.

Exercising discretionTheboardretainsdiscretiontoadjustremunerationoutcomesupordowntoensurethatawardsarenotprovidedwhereitwouldbeinappropriateorwouldprovideunintendedoutcomes.Theexerciseofappropriatediscretionmaybeusedwhereaformulaicoutcomedoesnotalignwiththeoverallshareholderexperience.Theboardbalancesjudgementonremunerationoutcomeswithconsiderationtoallstakeholders.

Considering risk and remunerationAMPaimstointegrateeffectiveriskmanagementintotheremunerationframeworkthroughouttheorganisation.Riskmanagementisakeyfeatureofourrewardelementssuchas:– ariskculturemeasuremakesup10%ofthe2016STIscorecard.TheinclusionofriskculturesignalstoallAMPemployeesthat

integrity,helpingcustomersovertimeandachievingshareholderoutcomesareallprioritiesandrequirevigilance,managementandtracking

– theChiefRiskOfficerreportstothePRCannuallyonriskoutcomesacrossAMP– theboardmayadjusttheSTIpooldownifitbelievesthemanagementteamhasoperatedoutsideboard-approvedriskappetite

levels,oriftherehavebeenotherextraordinaryeventswhichhaveabroaderimpactonshareholdervalue– inthecaseofdeferredSTIandLTIawards,vestingisattheboard’sdiscretionwithmalusandclawbackprovisions.Theprovisions

allowtheboardtoreduceorclawbackawardsincertaincircumstances,suchas: – theparticipant’semploymentisterminatedformisconduct – theparticipantactingfraudulently,dishonestlyorinamannerwhichbringstheAMPgroupintodisreputeorbeinginmaterial

breachoftheirobligationstothegroup – toprotectthefinancialsoundnessorpositionofAMP – torespondtoamaterialchangeinthecircumstancesof,orasignificantunexpectedorunintendedconsequenceaffecting

AMPthatwasnotforeseenbythePRC(includinganymisstatementoffinancialresults) – toensurenounfairbenefittotheparticipant.

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6. Non-executive director remuneration AMP’s NED remuneration is designed to attract and retain high-calibre board members who are appropriately paid for their time and effort.

AMP’sremunerationisstructuredtoensurethatAMPisabletoattractandretainNEDswiththeskills,experienceandqualificationsnecessarytooverseeagroupascomplexandhighlyregulatedasAMPandtoremuneratethemappropriatelyfortheirtime,effortandexpertise.

NEDremunerationconsistsoffourcomponents:– AMPLimitedBoardbasefee– AMPLimitedcommitteefees– AMPsubsidiaryboardandcommitteefees– superannuation.

NEDsreceivefixedremunerationforcompletingtheirdutiesanddonotreceiveanyremunerationlinkedtotheirorAMP’sperformance.Thissupportstheindependenceandimpartialityoftheirrolesinmakingdecisionsaboutthefuturedirectionofthecompany.

Asdetailedinsection6.1.2below,akeyfeatureofAMP’sconglomerate-basedgovernancemodelistheappointmentoftwoormoreAMPLimitedNEDstotheboardofeachofAMP’skeysubsidiaries.Theboardconsidersthisenhancesitsoperationandtheoperationoftheboardsofthosesubsidiaries.ThesubsidiaryboardsareAMPLifeLimited,TheNationalMutualLifeAssociationofAustralasiaLimited,AMPBankLimitedandAMPCapitalHoldingsLimited(AMPCHL).ThefirstthreeboardsareAPRAregulated.TheAMPCHLboardalsohasasanon-executivedirectorarepresentativeofTheMitsubishiTrustandBankingCorporation.Theboardsofthosesubsidiariesoperateasfullyfunctioningindependentboards–withsignificantregulatoryandoversightresponsibilitiesforthebusinessesofthosesubsidiaries–and,accordingly,theAMPLimitedNEDsappointedtothoseboardsandtheircommitteesreceivethesamefeesasotherNEDsappointedtothem.

ToaligntheinterestsofNEDswiththelong-terminterestsofshareholders,allNEDsarerequiredtoholdaminimumnumberofAMPshares,asoutlinedinsection6.3.

NEDfeelevelsforAMPLimitedanditskeysubsidiariesdidnotincreasein2016.However,aspartofaprogramtosimplifyNEDfeestructuresandincreasetransparency,somechangeshavebeenapproved:– from1April2016,the$6,000annualexpenseallowancepaidtoAMPLimitedNEDs(otherthanthechairman)wasconsolidated

intotheAMPLimitedNEDbasefee– from1January2017,thesuperannuationentitlementsofAMPLimitedandkeysubsidiaryNEDswillbeconsolidatedintotheir

boardandcommitteefees.

ThesechangeswillnotresultinanychangetothetotalremunerationreceivedbytheNEDs.

6.1. Non-executive director fees ThePRCisresponsibleforreviewingNEDfeesforAMPLimitedanditskeysubsidiaries.

Inreviewingthesefeesthecommitteehasregardtoarangeoffactors,including:– feespaidtoboardmembersofotherAustraliancorporationsofasimilarsizeandcomplexity– thecomplexityofAMP’soperationsandthoseofitskeysubsidiaries– theneeds,responsibilitiesandworkloadrequirementsofeachboardandcommittee.

ThePRCcommissionsmarketdataanalysisandmatchingservicesfromexternalremunerationadviserswhereitconsidersnecessary.

Non-executivedirectorfeesarerecommendedbythePRCtotheAMPLimitedBoardforapproval.

TheaggregateannualremunerationreceivedbyAMPLimitedNEDsmustnotexceedthemaximumaggregatefeepoolapprovedbyshareholdersfromtimetotime.Themaximumaggregatefeepooliscurrently$4,620,000,whichwasapprovedbyshareholdersatthe2015AGM.TheaggregateannualremunerationpaidtoAMPLimitedNEDsforallservicesperformedasdirectorsandmembersofboardcommitteesofAMPanditssubsidiariesmustnotexceedthisamount.

During2016,thetotalremunerationpaidtoAMPLimitedNEDswas$3,206,217being69%oftheshareholder-approvedfeepool.

NEDsdonotreceiveperformancerightsorsharerightsaspartoftheirremuneration.NoretirementbenefitsarepaidtoNEDs.

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6.1.1. Base feesAllNEDsreceiveabasefeefortheirparticipationontheAMPLimitedBoard.FortheAMPLimitedChairman,thisfeecoversallresponsibilities,includinganyappointmentasthechairmanoramemberofaboardcommittee,attendanceasanobserveratboardandcommitteemeetingsofkeysubsidiaries,andliaisonwiththechairmenandNEDsofthosekeysubsidiaries.WhilethechairmanisnotamemberofallthecommitteesorcurrentlyadirectorofanyAMPsubsidiaries,sheregularlyattendsmeetingsofthoseAMPLimitedcommitteesofwhichsheisnotamemberandmeetingsoftheboardandcommitteesofAMP’skeysubsidiaries.

AlthoughtheCEOisadirectorofAMPLimitedandcertainkeysubsidiaries,heisnotpaidboardfeesinadditiontohisexecutiveremuneration,ashisboardresponsibilitiesarepartofhisnormalemploymentconditions.

6.1.2. Committee and subsidiary board and committee fees NEDs,excludingtheAMPLimitedChairman,receiveadditionalfeesfortheirtimeandeffortinservingasmembersofAMPLimitedBoardcommittees,directorsofAMP’skeysubsidiariesandmembersofcommitteesoftheboardsofthosesubsidiaries,andmembersofotherspecialpurposecommitteesformedfromtimetotime.Asalarge,diversifiedfinancialservicesgroup,withsignificant,highlyregulatedoperatingsubsidiaries,AMPbelievesitisimportantfor:– theAMPLimitedNEDstohaveknowledge,understandingandoversightofthestrategicandoperationalissuesandrisksthatare

specifictoitskeysubsidiaries,and– anyotherdirectorsofthosesubsidiariestohavethebenefitofthegroup-levelinsightsfromAMPLimitedNEDs.

Forthisreason,AMPLimitedNEDsgenerallyalsoserveontheboardsandcommitteesofoneormoreofAMP’skeysubsidiaries.

6.2. 2016 non-executive director remunerationThefollowingtableshowstheNEDfeesforAMPLimitedanditskeysubsidiariesfor2016.

Chairman base fee $

Member base fee $

AMP Limited Board 602,600 181,1001

AuditCommittee 46,400 23,200RiskCommittee 46,400 23,200NominationandGovernanceCommittee2 24,000 12,000PeopleandRemunerationCommittee3 43,300 21,700

AMP Bank Board 82,500 51,500AuditCommittee 25,300 14,000RiskCommittee 25,300 14,000

AMP Capital Holdings Board 113,300 72,100AuditandRiskCommittee 25,800 15,500

AMP Life Limited and NMLA4 Board 162,800 101,000AuditCommittee 28,900 16,000RiskCommittee 28,900 16,000

1 Feeeffective1April2016,incorporatingthepreviousannualexpenseallowanceof$6,000.Refertosection6above.2 NofeeiscurrentlypayablewhenthechairmanofthecommitteeistheChairmanoftheAMPLimitedBoard.3 NofeeiscurrentlypayabletoamemberofthecommitteewhoisalsoChairmanoftheAMPLimitedBoard.4 Asinglefeeispaidforserviceonbothboardsorbothcommitteesofeachboard.

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ThefollowingtableshowstheremunerationearnedbyAMPLimitedNEDsfor2016.

Short-term benefits

Post-employment

benefits

AMP Limited Board and

committee fees$’000

Fees for other group boards

$’000

Other short-term

benefits2

$’000

Additional board duties3

$’000

Non-monetary benefits4

$’000

Super- annuation

$’000Total

$’000

Current NEDs CatherineBrenner 2016 410 71 2 – – 46 529Chairman1 2015 196 193 6 – – 38 433

PatriciaAkopiantz 2016 239 111 2 – – 33 385Non-executiveDirector 2015 266 92 6 – – 35 399

HollyKramer 2016 203 85 2 – – 27 317 Non-executiveDirector 2015 40 – 1 – – 4 45

TrevorMatthews 2016 238 177 2 – – 40 457 Non-executiveDirector 2015 222 145 6 25 – 38 436

GeoffRoberts 2016 114 – – – – 11 125 Non-executiveDirector 2015 – – – – – – –

PeterShergold 2016 246 144 2 – 1 37 430 Non-executiveDirector 2015 243 100 6 – 1 33 383

PeterVarghese 2016 51 18 – – 1 7 77 Non-executiveDirector 2015 – – – – – – –

VanessaWallace 2016 188 71 1 – – 25 285 Non-executiveDirector 2015 – – – – – – –

MikeWilkins 2016 69 23 – – – 9 101 Non-executiveDirector 2015 – – – – – – –

Former NEDs SimonMcKeon 2016 220 – – – 4 8 232 FormerChairman 2015 598 – – – 5 19 622

BrianClark 2016 68 54 2 – 6 12 142 FormerNon-executiveDirector 2015 201 128 6 – – 32 367

PaulFegan 2016 – – – – – – – FormerNon-executiveDirector 2015 221 74 5 25 – 31 356

JohnPalmer 2016 135 32 2 – 6 16 191 FormerNon-executiveDirector 2015 174 87 6 – – 25 292

Total for 2016 2,181 786 15 – 18 271 3,271

Totalfor2015 2,161 819 42 50 6 255 3,333

1 CatherineBrennerwasappointedChairman24June2016.2 AnnualexpenseallowancethatwasconsolidatedintotheAMPLimitedNEDbasefeefrom1April2016.3 AdditionalworkperformedfortheAMPLimited2015NotesOffer.4 Non-monetarybenefitsandtherelatedFBToneachitem.

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6.3. Non-executive director minimum shareholdingPursuanttoaminimumshareholdingpolicyadoptedbytheboard,AMPLimitedNEDsarerequiredtoholdaminimumvalueofAMPLimitedsharestoensurethattheirinterestsarecloselyalignedwiththelong-terminterestsofAMPshareholders.Theseminimumvaluesare:– AMPLimitedChairman:$602,600–theequivalentoftheAMPLimitedChairmanbasefee– otherAMPLimitedNEDs:$181,100–theequivalentoftheAMPLimitedNEDbasefee.

NEDsareexpectedtoachievetheselevelswithinfouryearsofappointmentandthenmaintainthemasaminimumshareholdingthroughouttheirtenure.

Basedontheclosingsharepriceof$5.04on31December2016,allNEDscomplywiththeminimumshareholdingpolicyhavingregardtotheirtenureontheboard.

6.4. Non-executive director shareholdingThefollowingtableshowstheholdingsofAMPLimitedsharesbyAMPLimitedNEDsandtheirrelatedpartiesasat31December2016andmovementsintheirholdingsduringtheyear.

Holding at 1 Jan 2016

Other market transactions1

Holding at 31 Dec 20162

Value of holding at

31 Dec 20163

$

Current NEDs CatherineBrenner 84,463 55,000 139,463 702,894PatriciaAkopiantz 56,239 8,770 65,009 327,645HollyKramer 4,400 41,831 46,231 233,004TrevorMatthews 63,763 – 63,763 321,366GeoffRoberts – 42,540 42,540 214,402PeterShergold 63,348 – 63,348 319,274PeterVarghese – 7,500 7,500 37,800VanessaWallace 20,000 50,000 70,000 352,800MikeWilkins – 31,500 31,500 158,760

Former NEDs SimonMcKeon 175,000 – 175,000 882,000BrianClark 75,813 – 75,813 382,098JohnPalmer 96,252 – 96,252 485,110

1 OthermarkettransactionsarearesultoftheNEDsortheirrelatedpartiestradingAMPLimitedsharesontheopenmarket.2 TheclosingbalanceforSimonMcKeonandBrianClarkisat12May2016andforJohnPalmerisat23June2016,thedatestheyretiredfromthe

AMPLimitedBoard.3 Valueasat31Decemberusingclosingsharepriceof$5.04.

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7. Other executive remuneration disclosuresThe following disclosures provide additional information or are required under the Corporations Act, including 2016 executive remuneration that is prepared according to Australian Accounting Standards.

7.1. Executive remuneration7.1.1. Awarded remuneration for 2016Thefollowingtableshowstheremunerationawardedtoexecutivesbasedonthe2016performanceyear,orinthecaseofLTI,thefacevalueoftheLTIawardedfor2016.ThetotalSTIawardedincludesthe60%cashcomponentandthe40%deferredintosharerights.Thetableinsection7.1.2hasbeenpreparedaccordingtoAustralianAccountingStandardsandsodiffersfromthetableprovidedbelow.

Fixed remuneration

$’000

2016 total STI awarded

$’000

2016 LTI face value grant

$’000

Termination payments1

$’000

Total remuneration

earned from 2016

$’000

CraigMeller 1,900 – 4,275 – 6,175PaulineBlight-Johnston 800 – 1,200 291 2,291RobCaprioli 775 – 1,162 436 2,373GordonLefevre 965 – 1,447 – 2,412MatthewPercival 600 – 900 – 1,500CraigRyman 650 – 975 – 1,625PaulSainsbury 870 – 1,305 – 2,175BrianSalter 785 – 1,177 – 1,962WendyThorpe2 570 – 1,292 1,000 2,862AdamTindall 800 2,119 1,200 – 4,119FionaWardlaw 700 – 1,050 – 1,750

Total 9,415 2,119 15,983 1,727 29,244

1 TerminationpaymentsaretheseverancepaymentsthatwillbemadetoPaulineBlight-Johnston,RobCaprioliandWendyThorpeattheendoftheirnoticeperiodsin2017.TheyhavebeendisclosedastheyrelatetotheterminationoftheirKMProles.

2 WendyThorpe’sfixedremunerationexcludesthevalueofherparticipationinadefinedbenefitsuperannuationarrangementwhichdeliversahighersuperannuationbenefitovertime.AreviewofWendy’sremunerationarrangementduring2016resultedinatop-upofher2014and2015LTIawards,includedinthe2016LTIgrantamountabove.Seefootnote1inthetableinsection3.3.2forfurtherinformation.

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7.1.2. Statutory disclosureThetablebelowshowstheremunerationthatwasreceivedbyexecutivesin2016aswellasSTIandLTIrewardsthathavebeenawardedbutnotyetreceived.Thisincludesfixedremunerationaswellasthecashportionofthe2016STIrewardandthevalueofcurrentandpreviousSTIandLTIpaymentswhichhavenotyetvested.

Short-term employee benefits

Post-employment

benefits

Share- based

payments

Long-term

benefitsTermination payments5

Cash salary$’000

Cash short-term

incentive$’000

Other short-term

benefits1

$’000

Super- annuation

benefits2

$’000Rights3

$’000Other4

$’000

Cash payments

$’000

Share-based

payment$’000

Grand total

$’000

Current executives CraigMeller 2016 1,828 – 34 25 2,838 71 – – 4,796 ChiefExecutiveOfficer 2015 1,678 1,260 16 25 2,164 136 – – 5,279andManagingDirector

PaulineBlight-Johnston 2016 769 – 26 21 892 4 291 – 2,003 GroupExecutive,Insurance 2015 751 428 33 21 674 5 – – 1,912andSuperannuation

RobCaprioli 2016 752 – 11 23 848 13 436 – 2,083 GroupExecutive, 2015 734 415 – 23 631 15 – – 1,818AdviceandBanking

GordonLefevre6 2016 931 – 67 21 1,035 2 – – 2,056 ChiefFinancialOfficer 2015 885 622 366 21 555 4 – – 2,453

MatthewPercival 2016 525 – 7 40 710 39 – – 1,321 GroupExecutive,Public 2015 489 321 12 43 678 64 – – 1,607AffairsandChiefofStaff

CraigRyman 2016 599 – 11 29 405 11 – – 1,055 ChiefInformationOfficer 2015 565 337 10 25 192 22 – – 1,151

PaulSainsbury 2016 745 – 73 34 1,139 44 – – 2,035 ChiefCustomerOfficer 2015 736 585 59 36 1,096 89 – – 2,601

BrianSalter7 2016 741 – 46 31 940 30 – – 1,788 GeneralCounsel 2015 748 441 19 34 907 26 – – 2,175

WendyThorpe8 2016 648 – 8 56 871 12 1,000 – 2,595 GroupExecutive,Operations 2015 515 305 8 56 545 53 – – 1,482andDirector,Melbourne

AdamTindall9 2016 740 1,271 41 22 643 21 – – 2,738 ManagingDirector, 2015 171 285 6 7 98 16 – – 583AMPCapital

FionaWardlaw 2016 615 – 60 25 820 27 – – 1,547 GroupExecutive, 2015 624 393 50 25 769 26 – – 1,887PeopleandCulture

Former disclosed executives StephenDunne 2016 – – – – – – – – – FormerManaging 2015 1,044 1,458 256 21 1,787 108 – – 4,674Director,AMPCapital

2016 total 8,893 1,271 384 327 11,141 274 1,728 – 24,018

2015total 8,940 6,850 835 337 10,096 564 – – 27,622

1 Othershort-termbenefitsincludenon-monetarybenefits,forexample,purchasedannualleave,carbenefitsandanyrelatedFBToneachitem.2 WendyThorpeisinadefinedbenefitplanandthevaluerepresentsthenotionaltaxablecontributions.3 Includesperformancerightsandsharerights.TheminimumfuturevaluefortheseawardsisnilandthemaximumamountexpensedbyAMP

isthefairvalueatgrantdate.Thefairvaluehasbeencalculatedasatthegrantdatebyexternalconsultants,usingaMonteCarlosimulationfortheTSRperformancerightsandadiscountedcashflowmethodologyfortheRoEperformancerights.ThefairvalueshavebeendiscountedforforgonedividendsandfortheTSRperformancerights,theriskofperformanceconditionsnotbeingmet.Thevalueoftheawardmadeinanyyearisamortisedoverthevestingperiod.

4 Otherlong-termbenefitsrepresentlongserviceleaveaccrued,takenorpaidduringtheyear.5 TerminationpaymentsaretheseverancepaymentsthatwillbemadetoPaulineBlight-Johnston,RobCaprioliandWendyThorpeattheendoftheir

noticeperiodsin2017.TheyhavebeendisclosedastheyrelatetotheterminationoftheirKMProles.6 GordonLefevrereceivedadditionalremunerationascommutingandrelocationsupport.7 BrianSalterreceivedacashpaymenttofundhislifeinsurancecover.8 WendyThorpereceivedanadditionalcashpaymentof$130,845andadditionalSTIdeferralgrantsvaluedat$87,230andLTIgrantsvaluedat

$294,496.Thesewereduetoareviewofherremunerationarrangementwhichresultedinatop-upofher2014and2015awards.Seefootnote1inthetableinsection3.3.2forfurtherinformation.

9 AdamTindallreceivedadditionalremunerationrelatingtotherefundofhisunusedpurchasedannualleave.

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Directors’ report for the year ended 31 December 2016

7.2. Executive performance rights holdingsThefollowingtableshowstheLTIperformancerightswhichweregranted,lapsedorexercisedduring2016.TherewerenochangesduringthevestingperiodforeachLTIgrant.

NameGrant date

Performance condition

Fair value per

performance right

$Holding at 1 Jan 2016

Rights granted in

2016

Rights exercised

in 2016

Rights lapsed in

2016Holding at

31 Dec 2016

Vested and exercisable

at 31 Dec 2016

CraigMeller 06/06/13 TSR 2.00 219,149 – – 219,149 – – RoE 4.21 149,168 – 82,042 67,126 – – 05/06/14 TSR 2.89 355,871 – – – 355,871 – RoE 4.57 297,619 – – – 297,619 – 04/06/15 TSR 2.82 363,461 – – – 363,461 – RoE 5.39 242,308 – – – 242,308 – 02/06/16 TSR 2.37 – 438,462 – – 438,462 – RoE 4.81 – 292,307 – – 292,307 –

Total 1,627,576 730,769 82,042 286,275 1,990,028 –

PaulineBlight-Johnston 06/06/13 TSR 2.00 66,872 – – 66,872 – – RoE 4.21 45,518 – 25,034 20,484 – – 05/06/14 TSR 2.89 105,871 – – – 105,871 – RoE 4.57 88,541 – – – 88,541 – 04/06/15 TSR 2.82 110,769 – – – 110,769 – RoE 5.39 73,846 – – – 73,846 – 02/06/16 TSR 2.37 – 123,076 – – 123,076 – RoE 4.81 – 82,051 – – 82,051 –

Total 491,417 205,127 25,034 87,356 584,154 –

RobCaprioli 06/06/13 TSR 2.00 51,440 – – 51,440 – – RoE 4.21 35,014 – 19,257 15,757 – – 05/06/14 TSR 2.89 105,871 – – – 105,871 – RoE 4.57 88,541 – – – 88,541 – 04/06/15 TSR 2.82 107,308 – – – 107,308 – RoE 5.39 71,538 – – – 71,538 – 02/06/16 TSR 2.37 – 119,230 – – 119,230 – RoE 4.81 – 79,487 – – 79,487 –

Total 459,712 198,717 19,257 67,197 571,975 –

GordonLefevre 05/06/14 TSR 2.89 128,558 – – – 128,558 – RoE 4.57 107,514 – – – 107,514 – 04/06/15 TSR 2.82 128,077 – – – 128,077 – RoE 5.39 85,384 – – – 85,384 – 02/06/16 TSR 2.37 – 148,461 – – 148,461 – RoE 4.81 – 98,974 – – 98,974 –

Total 449,533 247,435 – – 696,968 –

MatthewPercival 06/06/13 TSR 2.00 98,828 – – 98,828 – – RoE 4.21 67,269 – 36,997 30,272 – – 05/06/14 TSR 2.89 88,478 – – – 88,478 – RoE 4.57 73,995 – – – 73,995 – 04/06/15 TSR 2.82 83,077 – – – 83,077 – RoE 5.39 55,384 – – – 55,384 – 02/06/16 TSR 2.37 – 92,307 – – 92,307 – RoE 4.81 – 61,538 – – 61,538 –

Total 467,031 153,845 36,997 129,100 454,779 –For

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NameGrant date

Performance condition

Fair value per

performance right

$Holding at 1 Jan 2016

Rights granted in

2016

Rights exercised

in 2016

Rights lapsed in

2016Holding at

31 Dec 2016

Vested and exercisable

at 31 Dec 2016

CraigRyman 06/06/13 TSR 2.00 12,345 – – 12,345 – – RoE 4.21 8,403 – 4,621 3,782 – – 05/06/14 TSR 2.89 12,010 – – – 12,010 – RoE 4.57 10,044 – – – 10,044 – 04/06/15 TSR 2.82 83,077 – – – 83,077 – RoE 5.39 55,384 – – – 55,384 – 02/06/16 TSR 2.37 – 100,000 – – 100,000 – RoE 4.81 – 66,666 – – 66,666 –

Total 181,263 166,666 4,621 16,127 327,181 –

PaulSainsbury 06/06/13 TSR 2.00 174,897 – – 174,897 – – RoE 4.21 119,047 – 65,475 53,572 – – 05/06/14 TSR 2.89 128,558 – – – 128,558 – RoE 4.57 107,514 – – – 107,514 – 04/06/15 TSR 2.82 120,461 – – – 120,461 – RoE 5.39 80,308 – – – 80,308 – 02/06/16 TSR 2.37 – 133,846 – – 133,846 – RoE 4.81 – 89,230 – – 89,230 –

Total 730,785 223,076 65,475 228,469 659,917 –

BrianSalter 06/06/13 TSR 2.00 134,682 – – 134,682 – – RoE 4.21 91,674 – 50,420 41,254 – – 05/06/14 TSR 2.89 116,469 – – – 116,469 – RoE 4.57 97,404 – – – 97,404 – 04/06/15 TSR 2.82 108,692 – – – 108,692 – RoE 5.39 72,461 – – – 72,461 – 02/06/16 TSR 2.37 – 120,769 – – 120,769 – RoE 4.81 – 80,512 – – 80,512 –

Total 621,382 201,281 50,420 175,936 596,307 –

WendyThorpe1 06/06/13 TSR 2.00 52,469 – – 52,469 – – RoE 4.21 35,714 – 19,642 16,072 – – 05/06/14 TSR 2.89 84,519 – – – 84,519 – RoE 4.57 70,684 – – – 70,684 – 04/06/15 TSR 2.82 78,923 – – – 78,923 – RoE 5.39 52,615 – – – 52,615 – 02/06/16 TSR 2.37 – 102,307 – – 102,307 – RoE 4.81 – 68,205 – – 68,205 – 15/04/16 TSR 3.68 – 27,201 – – 27,201 – RoE 5.49 – 17,062 – – 17,062 – 15/04/16 TSR 1.80 – 13,073 – – 13,073 – RoE 5.24 – 8,715 – – 8,715 –

Total 374,924 236,563 19,642 68,541 523,304 –

AdamTindall 02/06/16 TSR 2.37 – 123,076 – – 123,076 – RoE 4.81 – 82,051 – – 82,051 –

Total – 205,127 – – 205,127 –

FionaWardlaw 06/06/13 TSR 2.00 111,945 – – 111,945 – – RoE 4.21 76,198 – 41,908 34,290 – – 05/06/14 TSR 2.89 96,807 – – – 96,807 – RoE 4.57 80,960 – – – 80,960 – 04/06/15 TSR 2.82 96,923 – – – 96,923 – RoE 5.39 64,615 – – – 64,615 – 02/06/16 TSR 2.37 – 107,692 – – 107,692 – RoE 4.81 – 71,794 – – 71,794 –

Total 527,448 179,486 41,908 146,235 518,791 –

1 TheperformancerightsawardedtoWendyThorpeon15April2016weregrantedunderthe2014and2015LTIawardrespectively.ThesewereawardedasaresultofthereviewofWendy’sremunerationarrangementwhichresultedinatop-upofher2014and2015LTIawards.

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Directors’ report for the year ended 31 December 2016

7.3. Loans and other transactionsAMPprovideshomeloanstoAustralianstohelpthembuy,buildorrenovateproperties.Thisincludesexecutiveswhoareofferedloansintheordinarycourseofbusinessthatareequivalenttothosethatprevailinarm’slengthtransactionsontermsandconditionsthatarethesameasthosegiventootheremployees,includingthetermoftheloan,securityrequiredandtheinterestrate.

Balance at 1 Jan 2016

$’000Written off

$’000

Net advances

(repayments)$’000

Balance at 31 Dec 2016

$’000

Interest charged

$’000

Interest not charged

$’000

Highest indebtedness

during year$’000

Number in group

Total loans to KMP KMPandtheirrelatedparties 13,592 – 3,756 17,348 495 – 18,979 10

Loans to KMP exceeding $100,000 CraigMeller 2,044 – (11) 2,033 82 – 2,185PaulineBlight-Johnston 4,109 – (31) 4,077 134 – 4,109RobertCaprioli 1,958 – (188) 1,771 70 – 1,981GordonLefevre – – 1,397 1,397 42 – 1,440CraigRyman 2,017 – (8) 2,009 77 – 2,045PaulSainsbury 636 – (623) 13 1 – 636AdamTindall 2,746 – (500) 2,246 64 – 2,751FionaWardlaw – – 2,384 2,384 15 – 2,400PeterShergold – – 1,350 1,350 7 – 1,350

Other transactions During2016,theexecutivesandtheirrelatedpartiesmayhaveaccesstootherAMPproducts.Theyareprovidedtoexecutiveswithinnormalemployeetermsandconditions.Theproductsinclude:– personalbankingwithAMPBank– thepurchaseofAMPinsuranceandinvestmentproducts– financialinvestmentservices.

Signedinaccordancewitharesolutionofthedirectors.

Catherine Brenner Craig MellerChairman ChiefExecutiveOfficerandManagingDirector

Sydney,9February2017

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Analysis of shareholder profit for the year ended 31 December 2016

Analysis of shareholder profit

All amounts are after income tax2016

$m2015

$m

Australianwealthmanagement 401 410AMPCapital 144 138Australianwealthprotection (415) 185AMPBank 120 104NewZealandfinancialservices 126 120Australianmature 151 158

Business unit operating earnings 527 1,115

GroupOfficecosts (104) (61)

Total operating earnings 423 1,054

Underlyinginvestmentincome 122 125Interestexpenseoncorporatedebt (59) (59)

Underlying profit 486 1,120

Otheritems (9) (3)Businessefficiencyprogramcosts (19) (66)AmortisationofAMPAAPHacquiredintangibles (77) (80)Goodwillimpairment (668) –

Profit before market adjustments and accounting mismatches (287) 971

Marketadjustment–investmentincome (46) 9Marketadjustment–annuityfairvalue (8) 34Marketadjustment–riskproducts 11 2Accountingmismatches (14) (44)

Profit attributable to shareholders of AMP Limited (344) 972

This table shows an analysis of the source of profit after income tax attributable to shareholders of AMP Limited.

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Financial report for the year ended 31 December 2016

Financial report

Contents Mainstatements53 Consolidatedincomestatement54 Consolidatedstatementofcomprehensiveincome55 Consolidatedstatementoffinancialposition56 Consolidatedstatementofchangesinequity57 Consolidatedstatementofcashflows Notestothefinancialstatements Aboutthisreport58 (a) What’snewinthisreport?58 (b) UnderstandingtheAMPfinancialreport59 (c) Basisofconsolidation59 (d) Significantaccountingpolicies60 (e) Criticaljudgementsandestimates Section1:Resultsfortheyear61 1.1Segmentperformance64 1.2Earnings(loss)pershare64 1.3Taxes67 1.4Dividends Section2:Investments,intangiblesandworkingcapital68 2.1Investmentsinfinancialinstruments70 2.2Intangibles72 2.3Receivables72 2.4Payables73 2.5Fairvalueinformation Section3:Capitalstructureandfinancialriskmanagement77 3.1Contributedequity78 3.2Interest-bearingliabilities79 3.3Financialriskmanagement85 3.4Otherderivativeinformation86 3.5Capitalmanagement Section4:Lifeinsuranceandinvestmentcontracts87 4.1Accountingforlifeinsurancecontractsandinvestmentcontracts89 4.2Lifeinsurancecontracts–premiums,claims,expensesandliabilities90 4.3Lifeinsurancecontracts–assumptionsandvaluationmethodology96 4.4Lifeinsurancecontracts–risk99 4.5Otherdisclosure–lifeinsurancecontractsandinvestmentcontracts Section5:Employeedisclosures102 5.1Keymanagementpersonnel103 5.2Definedbenefitplans106 5.3Share-basedpayments Section6:Groupentities110 6.1Controlledentities111 6.2Acquisitionsanddisposalsofcontrolledentities112 6.3Investmentsinassociates113 6.4Parententityinformation Section7:Otherdisclosures114 7.1NotestoConsolidatedstatementofcashflows114 7.2Leases115 7.3Provisions115 7.4Contingentliabilities116 7.5Auditors’remuneration116 7.6Newaccountingstandards116 7.7Eventsoccurringafterreportingdate117 Directors’declaration118 Independentauditor’sreport

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Consolidated income statement fortheyearended31December2016

Note2016

$m2015

$m

Incomeandexpensesofshareholders,policyholders,externalunitholdersandnon-controllinginterests1 Lifeinsurancecontractrelatedrevenue 4.2 2,883 2,337Lifeinsuranceclaimsrecoveredfromreinsurers 4.2 150 128Feerevenue 3,031 2,941Otherrevenue 140 133Interestincome,dividendsanddistributionsandnetgainsonfinancialassets andliabilitiesatfairvaluethroughprofitorloss 7,817 7,725Interestincomeonassetsnotatfairvaluethroughprofitorloss 750 758Shareofprofitorlossofassociatesaccountedforusingtheequitymethod 6.3 28 27Lifeinsurancecontractclaimsexpense 4.2 (2,038) (1,988)Lifeinsurancecontractpremiumcededtoreinsurers 4.2 (243) (176)Feesandcommissionexpenses (1,671) (1,563)Staffandrelatedexpenses (1,047) (1,018)Goodwillimpairment 2.2 (668) –Otheroperatingexpenses (1,165) (1,110)Financecosts (551) (732)Movementinexternalunitholderliabilities (979) (855)Changeinpolicyholderliabilities – lifeinsurancecontracts 4.2 (1,471) (240)– investmentcontracts (4,608) (4,374)Incometaxexpense 1.3 (166) (280)

Profitfortheyear 192 1,713

Profit(loss)attributabletoshareholdersofAMPLimited (344) 972Profitattributabletonon-controllinginterests 536 741

Profitfortheyear 192 1,713

Note2016cents

2015cents

Earnings(loss)pershare Basic 1.2 (11.7) 33.3Diluted 1.2 (11.7) 33.1

1 Incomeandexpensesincludeamountsattributabletoshareholders’interests,policyholders’interestsintheAMPlifeinsuranceentities’statutoryfunds,externalunitholders’interestsandnon-controllinginterests.AmountsincludedinrespectoftheAMPlifeinsuranceentities’statutoryfundshaveasubstantialimpactonmostoftheConsolidatedincomestatementlines,especiallyInterestincome,dividendsanddistributionsandnetgainsonfinancialassetsandliabilitiesatfairvaluethroughprofitorloss,Interestincomeonassetsnotatfairvaluethroughprofitorloss,andIncometaxexpense.Ingeneral,policyholders’interestsinthetransactionsfortheperiodareincludedinthelinesChangeinpolicyholderliabilities.

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Financial report for the year ended 31 December 2016

Consolidated statement of comprehensive incomefortheyearended31December2016

Note2016

$m2015

$m

Profitfortheyear 192 1,713

Othercomprehensiveincome

Itemsthatmaybereclassifiedsubsequentlytoprofitorloss Cashflowhedges – lossesinfairvalueofcashflowhedges (13) (10)– incometaxcredit 4 3– lossesrecognisedinpreviousyearstransferredtoprofitfortheyear 19 18– transferredtoprofitfortheyear–incometaxexpense (6) (5)

4 6

Exchangegainsontranslationofforeignoperationsandrevaluationofhedgeofnetinvestments 12 7

12 7

Itemsthatwillnotbereclassifiedsubsequentlytoprofitorloss Definedbenefitplans – actuarialgains 5.2 48 94– incometaxexpense (14) (29)

34 65

Owner-occupiedpropertyrevaluation – gainsinvaluationofowner-occupiedproperty – 22– incometaxexpense – (2)

– 20

Othercomprehensiveincomefortheyear 50 98

Totalcomprehensiveincomefortheyear 242 1,811

Totalcomprehensiveincome(loss)attributabletoshareholdersofAMPLimited (294) 1,063Totalcomprehensiveincomeattributabletonon-controllinginterests 536 748

Totalcomprehensiveincomefortheyear 242 1,811

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Consolidated statement of financial positionasat31December2016

Note2016

$m2015

$m

Assets Cashandcashequivalents 7.1 3,476 3,955Receivables 2.3 1,975 2,067Currenttaxassets 24 11Plannerregistersheldforsaleandprepayments 123 147Investmentsinfinancialassets 2.1 129,419 127,221Investmentproperties 127 386Investmentsinassociatesaccountedforusingtheequitymethod 6.3 449 467Property,plantandequipment 66 423Deferredtaxassets 1.3 656 557Reinsuranceasset–cededlifeinsurancecontracts 4.2 546 491Intangibles 2.2 3,199 3,983

TotalassetsofshareholdersofAMPLimited,policyholders,externalunitholdersandnon-controllinginterests 140,060 139,708

Liabilities Payables 2.4 1,952 2,031Currenttaxliabilities 55 271Provisions 7.3 205 197Employeebenefits 271 290Otherfinancialliabilities 2.1 1,242 1,108Interest-bearingliabilities 3.2 17,218 17,452Deferredtaxliabilities 1.3 1,946 2,076Externalunitholderliabilities 13,252 13,571Lifeinsurancecontractliabilities 4.2 24,225 23,871Investmentcontractliabilities 4.5 71,579 69,848Reinsuranceliability–cededlifeinsurancecontracts 4.2 530 –Definedbenefitplanliabilities 5.2 44 98

TotalliabilitiesofshareholdersofAMPLimited,policyholders,externalunitholdersandnon-controllinginterests 132,519 130,813

NetassetsofshareholdersofAMPLimitedandnon-controllinginterests 7,541 8,895

Equity Contributedequity 3.1 9,619 9,566Reserves (1,972) (1,866)Retainedearnings (185) 819

TotalequityofshareholdersofAMPLimited 7,462 8,519Non-controllinginterests 79 376

TotalequityofshareholdersofAMPLimitedandnon-controllinginterests 7,541 8,895

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Financial report for the year ended 31 December 2016

Consolidated statement of changes in equityfortheyearended31December2016

EquityattributabletoshareholdersofAMPLimited

Contributedequity

$m

Demergerreserve1

$m

Share-based

paymentreserve2

$m

Capitalprofits

reserve3

$m

Available-for-sale

financialassets

reserve$m

Cashflow

hedgereserve

$m

Foreigncurrency

translationandhedge

ofnetinvestment

reserves$m

Owner-occupiedproperty

revaluationreserve

$m

Totalreserves

$m

Retainedearnings

$m

Totalshareholder

equity$m

Non-controlling

interest$m

Totalequity

$m

2016 Balanceatthebeginningoftheyear 9,566 (2,566) 93 329 8 12 136 122 (1,866) 819 8,519 376 8,895

Profit(loss) – – – – – – – – – (344) (344) 536 192

Othercomprehensiveincome – – – – – 4 12 – 16 34 50 – 50

Totalcomprehensiveincome – – – – – 4 12 – 16 (310) (294) 536 242

Share-basedpaymentexpense – – 23 – – – – – 23 – 23 2 25

Sharepurchases – – (23) – – – – – (23) – (23) (2) (25)

Netsaleoftreasuryshares 53 – – – – – – – – 4 57 – 57

Dividendspaid4 – – – – – – – – – (828) (828) (514) (1,342)

Dividendspaidontreasuryshares4 – – – – – – – – – 8 8 – 8

Saleofowner-occupiedproperty – – – – – – – (122) (122) 122 – – –

Salesandacquisitionsofnon-controllinginterests – – – – – – – – – – – (319) (319)

Balanceattheendoftheyear 9,619 (2,566) 93 329 8 16 148 – (1,972) (185) 7,462 79 7,541

2015 Balanceatthebeginningoftheyear 9,508 (2,566) 97 329 8 6 136 102 (1,888) 566 8,186 199 8,385

Profit(loss) – – – – – – – – – 972 972 741 1,713

Othercomprehensiveincome – – – – – 6 – 20 26 65 91 7 98

Totalcomprehensiveincome – – – – – 6 – 20 26 1,037 1,063 748 1,811

Share-basedpaymentexpense – – 32 – – – – – 32 – 32 2 34

Sharepurchases – – (36) – – – – – (36) – (36) (2) (38)

Netsaleoftreasuryshares 58 – – – – – – – – 16 74 – 74

Dividendspaid4 – – – – – – – – – (813) (813) (582) (1,395)

Dividendspaidontreasuryshares4 – – – – – – – – – 13 13 – 13

Salesandacquisitionsofnon-controllinginterests – – – – – – – – – – – 11 11

Balanceattheendoftheyear 9,566 (2,566) 93 329 8 12 136 122 (1,866) 819 8,519 376 8,895

1 Reservetorecognisetheadditionallossandsubsequenttransferfromshareholders’retainedearningsonthedemergerofAMP’sUKoperationsinDecember2003.Thelosswasthedifferencebetweenthepro-formalossondemergerandthemarket-basedfairvalueoftheUKoperations.

2 TheShare-basedpaymentreserverepresentsthecumulativeexpenserecognisedinrelationtoequity-settledshare-basedpaymentslessthecostofsharespurchasedonmarketinrespectofentitlements.

3 TheCapitalprofitsreserverepresentsgainsattributabletoshareholdersofAMPonthesaleofminorityinterestsincontrolledentitiestoentitiesoutsidetheAMPgroup.

4 Dividendspaidincludedividendspaidontreasuryshares.Dividendspaidontreasurysharesarerequiredtobeexcludedfromtheconsolidatedfinancialstatementsbyadjustingretainedearnings.

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Consolidated statement of cash flowsfortheyearended31December2016

Note2016

$m2015

$m

Cashflowsfromoperatingactivities1 Cashreceiptsinthecourseofoperations 19,072 19,773Interestandotheritemsofasimilarnaturereceived 2,123 2,287Dividendsanddistributionsreceived2 2,319 2,130Cashpaymentsinthecourseofoperations (22,166) (21,663)Financecosts (534) (806)Incometaxpaid (639) (379)

Cashflowsfrom(usedin)operatingactivities 7.1 175 1,342

Cashflowsfrominvestingactivities1 Netproceedsfromsaleof(paymentstoacquire): – investmentproperty 279 26– investmentsinfinancialassets3 1,174 (5,622)– operatingandintangibleassets (11) (198)(Paymentstoacquire)proceedsfromdisposalofoperatingcontrolledentities andinvestmentsinassociatesaccountedforusingtheequitymethod 10 (348)

Cashflowsfrom(usedin)investingactivities 1,452 (6,142)

Cashflowsfromfinancingactivities Netmovementindepositsfromcustomers 1,972 567Proceedsfromborrowings–non-bankingoperations1 361 1,212Repaymentofborrowings–non-bankingoperations1 (653) (250)Netmovementinborrowings–bankingoperations (282) (562)Dividendspaid4 (821) (800)

Cashflowsfrom(usedin)financingactivities 577 167

Netincrease(decrease)incashandcashequivalents 2,204 (4,633)Cashandcashequivalentsatthebeginningoftheyear 6,601 11,232Effectofexchangeratechangesoncashandcashequivalents 5 2

Cashandcashequivalentsattheendoftheyear1 7.1 8,810 6,601

1 Cashflowsandcashandcashequivalentsincludeamountsattributabletoshareholders’interests,policyholders’interestsinAMPlifeinsuranceentities’statutoryfundsandcontrolledentitiesofthosestatutoryfunds,externalunitholders’interestsandnon-controllinginterests.AmountsincludedinrespectofAMPlifeinsuranceentities’statutoryfundsandcontrolledentitiesofthosestatutoryfundshaveasubstantialimpactoncashflowsfromoperatingactivitiesandinvestingactivitiesandproceedsfromandrepaymentsofborrowings–non-bankingoperations.

2 DividendsanddistributionsreceivedareamountsofcashreceivedmainlyfrominvestmentsheldbyAMPlifeinsuranceentities’statutoryfundsandcontrolledentitiesofthestatutoryfunds.Dividendsanddistributionsreinvestedhavebeentreatedasnon-cashitems.

3 Netproceedsfromsaleof(paymentstoacquire)investmentsinfinancialassetsalsoincludesloansandadvancesmade(netofpayments)andpurchasesoffinancialassets(netofmaturities)duringtheperiodbyAMPBank.

4 TheDividendspaidamountispresentednetofdividendsontreasuryshares.

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Notes to the financial statements for the year ended 31 December 2016

About this reportThissectionoutlinesthestructureoftheAMPgroup,informationusefultounderstandingtheAMPgroup’sfinancialreportandthebasisonwhichthefinancialreporthasbeenprepared.

(a) What’s new in this report?Wehavereviewedthecontentandstructureofthefinancialreportandidentifiedopportunitiestoreduceitscomplexityandtomakeitmorerelevanttoourshareholdersandotherstakeholders.

Aspartofthisreviewwehavemadeanumberofchangestothefinancialreportincluding:– Removingimmaterialdisclosuresthatmaydetractfromtheusefulnessofthefinancialreportbydistractingfromimportant

information;– Disaggregatingbalances(includingprioryearcomparatives)toshowamountsseparatelyontheIncomestatementandStatement

offinancialposition;– Disclosingparententityinformationinaseparatenote;and– Groupingthenotestothefinancialstatementsintosevensections: 1. Resultsfortheyear 2. Investments,intangiblesandworkingcapital 3. Capitalstructureandfinancialriskmanagement 4. Lifeinsuranceandinvestmentcontracts 5. Employeedisclosures 6. Groupentities 7. Otherdisclosures.

Thesechangesdonotinvolveanychangestothemeasurementandrecognitionofamountsinthefinancialstatements.

ThepurposeofthesechangesistoprovideourshareholdersandotherstakeholderswithaclearerunderstandingofhowtheAMPgroupstrategy,asoutlinedintheDirectors’report,isreflectedinthefinancialperformanceandpositionoftheAMPgroup.

MaterialityInformationhasonlybeenincludedinthefinancialreporttotheextentthatithasbeenconsideredmaterialandrelevanttotheunderstandingofthefinancialstatements.Adisclosureisconsideredmaterialandrelevantif,forexample:– theamountinquestionissignificantbecauseofitssizeornature;– itisimportantforunderstandingtheresultsoftheAMPgroup;– ithelpsexplaintheimpactofsignificantchangesintheAMPgroup;and/or– itrelatestoanaspectoftheAMPgroup’soperationsthatisimportanttoitsfutureperformance.

(b) Understanding the AMP financial reportTheAMPgroupiscomprisedofAMPLimited(theparent),aholdingcompanyincorporatedanddomiciledinAustralia,andtheentitiesitcontrols(subsidiaries).TheconsolidatedfinancialstatementsofAMPLimitedincludethefinancialinformationofitscontrolledentities.

AMPbusinessoperationsarecarriedoutbyanumberofthesecontrolledentitiesincluding,during2016and2015,tworegisteredlifeinsuranceentities–AMPLifeLimited(AMPLife)andTheNationalMutualLifeAssociationofAustralasiaLimited(NMLA),AMPBankandAMPCapitalinvestmentmanagementcompanies.

ThebusinessofAMP’slifeinsuranceentitiesisconductedthroughstatutoryfundsandrelatestotheprovisionofwealthmanagementandlifeinsuranceproductstoinvestors,referredtoaspolicyholders.TheinvestmentassetsofthestatutoryfundsrepresentthemajorityoftheassetsoftheAMPgroup,alargeproportionofwhichisheldonbehalfofpolicyholders.Thecorrespondingliabilitiestopolicyholdersareclassifiedaseitherlifeinvestmentorlifeinsurancecontractliabilities.UnderAustralianAccountingStandards,someassetsheldonbehalfofpolicyholders(andtherelatedtaxbalances)areincludedinthefinancialstatementsatdifferentvaluestothoseusedinthecalculationoftheliabilitytopolicyholdersinrespectofthesameassets.Theimpactofthesedifferencesflowsthroughtoshareholderprofitandtheyarereferredtoasaccountingmismatchesinthesegmentdisclosuresinnote1.1(b).

AMPCapitaloperatesalargenumberofregisteredmanagedinvestmentschemesandotherpooledinvestmentvehicles.AMP’slifeinsuranceentitiesmakesignificantpolicyholderinvestmentsintothesevehicles.Inmanycases,thisresultsinthevehiclebeingcontrolledandthereforeconsolidatedinitsentiretyintotheAMPgroupfinancialstatements,includingtheportionthatrepresentstheshareholdingsofexternalparties,knownasnon-controllinginterests.

Asaconsequence,theseconsolidatedfinancialstatementsincludenotonlytheassetsandliabilitiesattributabletoAMPLimited’sshareholdersbutalsotheassetsandliabilitiesofthestatutoryfundsattributabletopolicyholdersandtheassetsandliabilitiesattributabletonon-controllinginterests.F

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(b) Understanding the AMP financial report (continued)Thefinancialreport:– isageneralpurposefinancialreport;– hasbeenpreparedinaccordancewiththerequirementsoftheCorporationsAct2001,AustralianAccountingStandards(AASBs)

includingAustralianAccountingInterpretationsadoptedbytheAustralianAccountingStandardsBoard(AASB)andInternationalFinancialReportingStandards(IFRSs)asissuedbytheInternationalAccountingStandardsBoard;

– ispresentedinAustralianDollarswithallvaluesroundedtothenearestmilliondollars($m),unlessotherwisestated;– hasbeenpreparedonagoingconcernbasisgenerallyusinganhistoricalcostbasis;howeverwherepermittedunderaccounting

standardsadifferentbasismaybeused,includingthefairvaluebasisfor: − assetsandliabilitiesassociatedwithlifeinsurancecontracts − assetsandliabilitiesassociatedwithinvestmentcontracts– presentsassetsandliabilitiesonthefaceoftheStatementoffinancialpositionindecreasingorderofliquidityanddoesnot

distinguishbetweencurrentandnon-currentitems;– presentsreclassifiedcomparativeinformationwhererequiredforconsistencywiththecurrentyear’spresentation.

AMPLimitedisafor-profitentityandislimitedbyshares.

Thefinancialstatementsfortheyearended31December2016wereauthorisedforissueon9February2017inaccordancewitharesolutionofthedirectors.

(c) Basis of consolidation Entitiesarefullyconsolidatedfromthedateofacquisition,beingthedateonwhichtheAMPgroupobtainscontrol,andcontinuetobeconsolidateduntilthedatethatcontrolceases.ControlexistswheretheAMPgroupisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthosereturnsthroughitspowerovertheentity.

Income,expenses,assets,liabilitiesandcashflowsofcontrolledentitiesareconsolidatedintotheAMPgroupfinancialstatements,alongwiththoseattributabletotheshareholdersoftheparententity.Allinter-companytransactionsareeliminatedinfull,includingunrealisedprofitsarisingfromintra-grouptransactions.

Whenacontrolledmanagedinvestmentschemeisconsolidated,theshareoftheunitholderliabilityattributabletotheAMPgroupiseliminatedbutamountsduetoexternalunitholdersremainasliabilitiesintheConsolidatedstatementoffinancialposition.Theshareofthenetassetsofcontrolledentitiesattributabletonon-controllinginterestsisdisclosedasaseparatelineitemontheConsolidatedstatementoffinancialposition.

(d) Significant accounting policiesThesignificantaccountingpoliciesadoptedinthepreparationofthefinancialreportarecontainedinthenotestothefinancialstatementstowhichtheyrelate.Allaccountingpolicieshavebeenconsistentlyappliedtothecurrentyearandcomparativeperiod,unlessotherwisestated.Whereanaccountingpolicyrelatestomorethanonenoteorwherenonoteisprovided,theaccountingpoliciesaresetoutbelow.

FeerevenueFeesarechargedtocustomersinconnectionwithinvestmentcontractsandotherfinancialservicescontracts.Feerevenueisrecognisedasservicesareprovidedeitheratinceptionofthecontractorastheyareperformedoverthelifeofthecontract.Forexample,feesforongoinginvestmentmanagementservicesandotherservicesprovidedarechargedonaregularbasis,usuallydaily,andarerecognisedastheserviceisprovided.

Interest,dividendsanddistributionsincomeInterestincomeisrecognisedwhentheAMPgroupobtainscontroloftherighttoreceivetheinterest.RevenuefromdividendsisrecognisedwhentheAMPgroup’srighttoreceivepaymentisestablished.

ForeigncurrencytransactionsTransactions,assetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintoAustraliandollars(thefunctionalcurrency)atreportingdateusingthefollowingapplicableexchangerates:

Foreigncurrencyamount Applicableexchangerate

Transactions DateoftransactionMonetaryassetsandliabilities ReportingdateNon-monetaryassetsandliabilitiescarriedatfairvalue Datefairvalueisdetermined

ForeignexchangegainsandlossesresultingfromtranslationofforeignexchangetransactionsarerecognisedintheIncomestatement,exceptforqualifyingcashflowhedgeswhicharedeferredtoequity.

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Notes to the financial statements for the year ended 31 December 2016

(d) Significant accounting policies (continued)Onconsolidationtheassets,liabilities,incomeandexpensesofforeignoperationsaretranslatedintoAustraliandollarsusingthefollowingapplicableexchangerates:

Foreigncurrencyamount Applicableexchangerate

Incomeandexpenses AverageexchangerateAssetsandliabilities ReportingdateEquity HistoricaldateReserves Reportingdate

ForeignexchangedifferencesresultingfromtranslationofforeignoperationsareinitiallyrecognisedintheforeigncurrencytranslationreserveandsubsequentlytransferredtotheIncomestatementondisposaloftheforeignoperation.

(e) Critical judgements and estimatesPreparationofthefinancialstatementsrequiresmanagementtomakejudgements,estimatesandassumptionsaboutfutureevents.Informationoncriticaljudgementsandestimatesconsideredwhenapplyingtheaccountingpoliciescanbefoundinthefollowingnotes:

Accountingjudgementsandestimates Note Page

Consolidation Aboutthisreport(c) Basisofconsolidation 59Tax 1.3 Taxes 66Fairvalueoffinancialassets 2.1 Financialassetsandotherfinancialliabilities 69Goodwillandacquiredintangibleassets 2.2 Intangibles 72Lifeinsuranceandinvestmentcontractliabilities 4.1 Accountingforlifeinsurancecontracts andinvestmentcontracts 88Consolidation 6.1 Controlledentities 110Provisions 7.3 Provisions 115

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Section 1: Results for the yearThissectionprovidesinsightsintohowtheAMPgrouphasperformedinthecurrentyearandprovidesadditionalinformationaboutthoseindividuallineitemsinthefinancialstatementsthatthedirectorsconsidermostrelevantinthecontextoftheoperationsoftheAMPgroup.

Statutorymeasuresofperformancedisclosedinthisreportare:– Statutoryearningspershare(EPS)–basicanddiluted– Annualdividend– ProfitaftertaxattributabletotheshareholdersofAMP

UnderlyingprofitisAMP’skeymeasureofbusinessperformance.ThisperformancemeasureisdisclosedbytheAMPoperatingsegmentwithinSegmentperformance.

1.1 Segmentperformance1.2 Earnings(loss)pershare1.3 Taxes1.4 Dividends

1.1 Segment performance TheAMPgroupidentifiesitsoperatingsegmentsbasedonseparatefinancialinformationthatisregularlyreviewedbythechiefexecutiveofficerandhisimmediateteaminassessingperformanceanddeterminingtheallocationofresources.Theoperatingsegmentsareidentifiedaccordingtothenatureofprofitgeneratedandservicesprovided,andtheirperformanceisevaluatedbasedonapost-taxoperatingearningsbasis.

Reportablesegment Segmentdescription

Australianwealthmanagement(WM)

Financialadviceservices(throughalignedandownedadvicebusinesses),platformadministration(includingSMSF),unit-linkedsuperannuation,retirementincomeandmanagedinvestmentproductsbusiness.Superannuationproductsincludepersonalandemployersponsoredplans.

AMPCapital Adiversifiedinvestmentmanagerwithagrowinginternationalpresence,providinginvestmentservicesfordomesticandinternationalcustomers.AMPCapitalmanagesinvestmentsacrossmajorassetclassesincludingequities,fixedinterest,realestate,infrastructureandmulti-managerandmulti-assetfunds.AMPCapitalalsoprovidescommercial,industrialandretailrealestatemanagementservices.

AMPCapitalandMitsubishiUFJTrustandBankingCorporation(MUTB)haveastrategicbusinessandcapitalalliance,withMUTBholdinga15%ownershipinterestinAMPCapital.

InNovember2013,AMPCapitalestablishedafundsmanagementcompanyinChinawithChinaLifecalledChinaLifeAMPAssetManagementCompanyLimited(CLAMP).AMPCapitalisafoundingshareholder,holdinga15%stake,withthebalanceheldbyChinaLifeAssetManagementCompany,asubsidiaryofChinaLife.

Australianwealthprotection(WP)

Includesindividualandgroupterm,disabilityandincomeprotectioninsuranceproducts.Productscanbebundledwithasuperannuationproductorheldindependentlyofsuperannuation.

AMPBank Australianretailbankofferingresidentialmortgages,deposits,transactionbankingandSMSFproducts.Italsohasaportfolioofpracticefinanceloans.AMPBankdistributesthroughAMP’saligneddistributionnetworkaswellasthirdpartybrokers,anddirecttoretailcustomersviaphoneandonline.

NewZealandfinancialservices(NZFS)

Riskinsurance,wealthmanagementandmaturebook(traditionalparticipatingbusiness),withgrowthinwealthmanagementdrivenbyKiwiSaver.

Australianmature(Mature)

Abusinesscomprisingproductswhicharelargelyclosedtonewbusinessandareinrun-off.ProductswithinAustralianmatureincludewholeoflife,endowment,investment-linked,investmentaccount,RetirementSavingsAccount,EligibleRolloverFund,annuities,insurancebonds,personalsuperannuationandguaranteedsavingsaccounts.

SegmentinformationisnotreportedforactivitiesoftheAMPgroupofficecompaniesasitisnotthefunctionofthesedepartmentstoearnrevenueandanyrevenuesearnedareonlyincidentaltotheactivitiesoftheAMPgroup.

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Notes to the financial statements for the year ended 31 December 2016

1.1 Segment performance (continued) (a) Segmentprofit

WM$m

AMPCapital1

$mWP2

$m

AMPBank

$mNZFS2

$mMature2

$m

Totaloperatingsegments

$m

2016Segmentprofit(loss)afterincometax 401 144 (415) 120 126 151 527

Externalcustomerrevenue 1,499 387 (415) 311 126 151 2,059Intersegmentrevenue4 109 226 – – – – 335

Segmentrevenue3 1,608 613 (415) 311 126 151 2,394

Othersegmentinformation3 Incometaxexpense 168 59 (178) 52 49 65 215Depreciationandamortisation 78 11 26 – 6 9 130

2015 Segmentprofitafterincometax 410 138 185 104 120 158 1,115

Externalcustomerrevenue 1,396 322 185 281 120 158 2,462Intersegmentrevenue4 120 254 – – – – 374

Segmentrevenue3 1,516 576 185 281 120 158 2,836

Othersegmentinformation3 Incometaxexpense 173 61 79 44 47 68 472Depreciationandamortisation 68 11 20 – 7 6 112

1 AMPCapitalsegmentrevenueisreportednetofexternalinvestmentmanagerfeespaidinrespectofcertainassetsundermanagement.Segmentprofitisreportednetof15%attributabletoMUTB.OtherAMPCapitalsegmentinformationisreportedbeforedeductionsofminorityinterests.

2 Forsegmentreporting,revenueforWP,NZFSandMatureispresentedastheamountofoperatingearningsofthosesegments,whichisalsothesegmentprofitaftertax.Thedifferencesbetweenthoseamountsandtotalrevenueforstatutoryreportingareincludedinthereconciliationofsegmentrevenueinnote1.1(b).

3 Segmentrevenueandothersegmentinformationexcludesrevenue,expensesandtaxrelatingtoassetsbackingpolicyholderliabilities.4 Intersegmentrevenuerepresentsoperatingrevenuebetweensegmentspricedonanarm’s-lengthbasisandiseliminatedonconsolidation.

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1.1 Segment performance (continued) (b) ReconciliationsSegmentprofitafterincometaxdiffersfromProfitattributabletoshareholdersofAMPLimitedduetotheexclusionofthefollowingitems:

2016$m

2015$m

Segmentprofitafterincometax 527 1,115Groupofficecosts (104) (61)

Totaloperatingearnings 423 1,054Underlyinginvestmentincome1 122 125Interestexpenseoncorporatedebt (59) (59)

Underlyingprofit 486 1,120Otheritems (9) (3)Businessefficiencyprogramcosts (19) (66)AmortisationofAMPAAPHacquiredintangibleassets (77) (80)Goodwillimpairment (668) –

Profit(loss)beforemarketadjustmentsandaccountingmismatches (287) 971Marketadjustment–investmentincome1 (46) 9Marketadjustment–annuityfairvalue (8) 34Marketadjustment–riskproducts 11 2Accountingmismatches (14) (44)

Profit(loss)attributabletoshareholdersofAMPLimited (344) 972Profitattributabletonon-controllinginterests 536 741

Profitfortheyear 192 1,713

1 Underlyinginvestmentincomeconsistsofinvestmentincomeonshareholderassetsinvestedinincomeproducinginvestmentassetsnormalisedinordertobringgreaterclaritytotheresultsbyeliminatingtheimpactofshort-termmarketvolatilityonunderlyingperformance.Underlyingreturnsaresetbasedonlong-termexpectedreturnsforeachassetclass,exceptforashort-termreturn,equivalenttoaone-yeargovernmentbond,setannuallyfortheimplicitdeferredacquisitioncosts(DAC)componentofshareholderassets.Marketadjustment–investmentincomeistheexcess(shortfall)betweentheunderlyinginvestmentincomeandtheactualreturnonshareholderassetsinvestedinincomeproducinginvestmentassets.

TotalsegmentrevenuediffersfromTotalrevenueasfollows:

2016$m

2015$m

Totalsegmentrevenue 2,394 2,836Addrevenueexcludedfromsegmentrevenue – Investmentgainsandlosses–shareholdersandpolicyholders

(excludingAMPBankinterestrevenue) 7,775 7,733– Revenueofinvestmententitiescontrolledbythelifeentities’

statutoryfundswhichcarryoutbusinessoperationsunrelatedtothecorewealthmanagementoperationsoftheAMPgroup 19 35

– Otherrevenue 121 52

Addbackexpensesnettedagainstsegmentrevenue – Claims,expenses,movementininsurancecontractliabilitiesand

taxrelatingtoAustralianwealthprotection,AustralianmatureandNewZealandfinancialservices 3,171 2,002

– InterestexpenserelatedtoAMPBank 490 525– Externalinvestmentmanagerandadviserfeespaidinrespect

ofcertainassetsundermanagement 1,164 1,240

Removeintersegmentrevenue (335) (374)

Totalrevenue 14,799 14,049

(c) SegmentassetsAssetsegmentinformationhasnotbeendisclosedbecausethebalancesarenotprovidedtothechiefexecutiveofficerorhisimmediateteamforthepurposeofevaluatingsegmentperformance,orinallocatingresourcestosegments.

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Notes to the financial statements for the year ended 31 December 2016

1.2 Earnings (loss) per shareBasicearnings(loss)pershareBasicearnings(loss)pershareiscalculatedbasedonprofit(loss)attributabletoshareholdersofAMPLimited(AMP)andtheweightedaveragenumberofordinarysharesoutstanding.

2016 2015

Profit(loss)attributabletoshareholdersofAMP($m) (344) 972Weightedaveragenumberofordinaryshares(millions)1 2,929 2,918Basicearnings(loss)pershare(centspershare) (11.7) 33.3

Dilutedearnings(loss)pershareDilutedearnings(loss)pershareisbasedonprofit(loss)attributabletoshareholdersofAMPLimited(AMP)andtheweighted-averagenumberofordinarysharesoutstandingafteradjustmentsfortheeffectsofalldilutivepotentialordinaryshares,suchasoptionsandperformancerights.

2016 2015

Profit(loss)attributabletoshareholdersofAMP($m) (344) 972Weightedaveragenumberofordinaryshares(millions)–diluted: – Weightedaveragenumberofordinaryshares1 2,929 2,918– Add:potentialordinarysharesconsidereddilutive2 19 20Weightedaveragenumberofordinarysharesusedinthecalculationofdilutiveearnings(loss)pershare 2,948 2,938Dilutedearnings(loss)pershare(centspershare) (11.7) 33.1

1 Theweightedaveragenumberofordinarysharesoutstandingiscalculatedafterdeductingtheweightedaveragenumberoftreasurysharesheldduringtheperiod.

2 Performancerightshavebeendeterminedtobedilutive;however,iftheseinstrumentsvestandareexercised,itisAMP’spolicytobuyAMPsharesonmarketsotherewillbenodilutiveeffectonthevalueofAMPshares.

1.3 TaxesThissub-sectionoutlinestheimpactofincometaxesontheresultsandfinancialpositionofAMP.Inparticular:– theimpactoftaxonthereportedresult;– amountsowedto/receivablefromthetaxauthorities;– deferredtaxbalancesthatariseduetodifferencesinthetaxandaccountingtreatmentofbalancesrecordedinthefinancial

report;and– discussionoftheimpactsoflifeinsurancepolicyholdertax.

Thesefinancialstatementsincludethedisclosuresrelatingtotaxrequiredunderaccountingstandards.FurtherinformationonAMP’staxmatterscanbefoundintheAMPTaxReportatwww.amp.com.au.

(a) IncometaxexpenseTheincometaxexpenseamountreflectstheimpactofbothincometaxattributabletoshareholdersaswellasincometaxattributabletopolicyholders.Inrespectofincometaxexpenseattributabletoshareholders,thetaxratewhichappliesis30%inAustraliaand28%inNewZealand.

Incometaxattributabletopolicyholdersisbasedoninvestmentincomeallocatedtopolicyholderslessexpensesdeductibleagainstthatinvestmentincome.Theimpactofthetaxischargedagainstpolicyholderliabilities.Anumberofdifferenttaxrateregimesapplytopolicyholders.InAustralia,certainclassesofpolicyholderlifeinsuranceincomeandsuperannuationearningsaretaxedat15%,andcertainclassesofincomeonsomeannuitybusinessaretax-exempt.TherateapplicabletoNewZealandlifeinsurancebusinessis28%.

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1.3 Taxes (continued)Thefollowingtableprovidesareconciliationofdifferencesbetweenprimafacietaxcalculatedas30%oftheprofitbeforeincometaxfortheyearandtheincometaxexpenserecognisedintheIncomestatementfortheyear.

2016$m

2015$m

Profitbeforeincometax 358 1,993Policyholdertax(expense)creditrecognisedaspartofthechangeinpolicyholderliabilitiesindeterminingprofitbeforetax (121) 48

Profitbeforeincometaxexcludingtaxchargedtopolicyholders 237 2,041

TaxattheAustraliantaxrateof30%(2015:30%) (71) (612)

Shareholderimpactoflifeinsurancetaxtreatment (16) (11)Taxconcessionsincludingresearchanddevelopmentandoffshorebankingunit 5 11Non-deductibleexpenses (19) (10)Non-taxableincome 5 14Otheritems 5 (12)Non-controllinginterests1 154 217Goodwillimpairment (200) –Overprovidedinpreviousyearsafterexcludingamountsattributabletopolicyholders 14 25Utilisationofpreviouslyunrecognisedtaxlosses 69 43Differencesinoverseastaxrates 9 7

Incometaxexpenseattributabletoshareholdersandnon-controllinginterest (45) (328)Incometax(expense)creditattributabletopolicyholders (121) 48

IncometaxexpenseperIncomestatement (166) (280)

1 $513m(2015:$723m)profitattributabletonon-controllinginterestsininvestmententitiescontrolledbytheAMPlifeinsuranceentities’statutoryfundsisnotsubjecttotax.

(b) AnalysisofincometaxexpenseCurrenttaxexpense (486) (523)Increase(decrease)indeferredtaxassets 163 (78)Decreaseindeferredtaxliabilities 142 280Overprovidedinpreviousyearsincludingamountsattributabletopolicyholders 15 41

Incometaxexpense (166) (280)

(c) AnalysisofdeferredtaxbalancesAnalysisofdeferredtaxassets Expensesdeductibleandincomerecognisableinfutureyears 491 234Unrealisedmovementsonborrowingsandderivatives 40 24Unrealisedinvestmentlosses 27 29Lossesavailableforoffsetagainstfuturetaxableincome 49 175Other 49 95

Totaldeferredtaxassets 656 557

Analysisofdeferredtaxliabilities Unrealisedinvestmentgains 1,498 1,596Unrealisedmovementsonborrowingsandderivatives 1 17Other 447 463

Totaldeferredtaxliabilities 1,946 2,076For

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1.3 Taxes (continued)

2016$m

2015$m

(d) AmountsrecogniseddirectlyinequityDeferredincometaxexpenserelatedtoitemstakendirectlytoequityduringthecurrentyear (16) (28)

(e) UnusedtaxlossesanddeductibletemporarydifferencesnotrecognisedRevenuelosses 110 109Capitallosses 170 239

Accountingpolicy–recognitionandmeasurementIncometaxexpenseIncometaxexpenseisthetaxpayableontaxableincomeforthecurrentperiodbasedontheincometaxrateforeachjurisdictionandadjustedforchangesindeferredtaxassetsandliabilities.Thesechangesareattributableto:– temporarydifferencesbetweenthetaxbasesofassetsandliabilitiesandtheirStatementoffinancialpositioncarryingamounts;– unusedtaxlosses;– theimpactofchangesintheamountsofdeferredtaxassetsandliabilitiesarisingfromchangesintaxratesorinthemannerin

whichthesebalancesareexpectedtoberealised.

Adjustmentstoincometaxexpensearealsomadeforanydifferencesbetweentheamountspaid,orexpectedtobepaid,inrelationtopriorperiodsandtheamountsprovidedfortheseperiodsatthestartofthecurrentperiod.

Anytaximpactonincomeandexpenseitemsthatarerecogniseddirectlyinequityisalsorecogniseddirectlyinequity.

IncometaxforinvestmentcontractsbusinessandlifeinsurancecontractsbusinessTheincometaxexpenserecognisedintheIncomestatementoftheAMPgroup,whicharisesinrespectoftheAMPlifeinsuranceentities,reflectstaximposedonshareholdersaswellaspolicyholders.InvestmentcontractsliabilitiesandlifeinsurancecontractsliabilitiesareestablishedinAustralianet,andinNewZealandgross,ofthepolicyholders’shareofanycurrenttaxpayableanddeferredtaxbalancesoftheAMPgroup.ArrangementsmadewithsomesuperannuationfundsresultintheAMPlifeinsuranceentitiesmakingpaymentstotheAustralianTaxationOfficeinrelationtocontributionstaxarisinginthosefunds.Theamountspaidarerecognisedasadecreaseininvestmentcontractliabilitiesandnotincludedinincometaxexpense.

DeferredtaxDeferredtaxassetsandliabilitiesarerecognisedfortemporarydifferencesandaremeasuredatthetaxrateswhichareexpectedtoapplywhentheassetsarerecoveredorliabilitiesaresettled,basedontaxratesthathavebeenenactedorsubstantivelyenactedforeachjurisdictionatthereportingdate.Deferredtaxassetsandliabilities,includingamountsinrespectofinvestmentcontractsandlifeinsurancecontracts,arenotdiscountedtopresentvalue.

Deferredtaxassetsarerecognisedfordeductibletemporarydifferencesandunusedtaxlossesonlyifitisprobablethatfuturetaxableamountswillbeavailabletoutilisethosetemporarydifferencesandlosses.

TaxconsolidationAMPLimitedanditswholly-ownedAustraliancontrolledentitiesarepartofatax-consolidatedgroup,withAMPLimitedbeingtheheadentity.Ataxfundingagreementhasbeenenteredintobytheheadentityandthecontrolledentitiesinthetax-consolidatedgroupandrequiresentitiestofullycompensatethecompanyforcurrenttaxliabilitiesandtobefullycompensatedbythecompanyforanycurrentordeferredtaxassetsinrespectoftaxlossesarisingfromexternaltransactionsoccurringafter30June2003,theimplementationdateofthetax-consolidatedgroup.

Criticalaccountingestimatesandjudgements:The AMP group is subject to taxes in Australia and other jurisdictions where it has operations. The application of tax law to the specific circumstances and transactions of the AMP group requires the exercise of judgement by management. The tax treatments adopted by management in preparing the financial statements may be impacted by changes in legislation and interpretations or be subject to challenge by tax authorities.

Judgement is also applied by management in determining the extent to which the recovery of carried forward tax losses is probable for the purpose of meeting the criteria for recognition as deferred tax assets.

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1.4 DividendsDividendspaidandproposedduringtheyearareshowninthetablebelow:

2016Final

2016Interim

2015Final

2015Interim

Dividendpershare(cents) 14.0 14.0 14.0 14.0Frankingpercentage 90% 90% 90% 85%Cost(in$m) 414 414 414 414

Paymentdate 31March 7October 8April 9October 2017 2016 2016 2015

2016$m

2015$m

Dividendspaid Previousyearfinaldividendonordinaryshares 414 399Interimdividendonordinaryshares 414 414

Totaldividendspaid1 828 813

1 Totaldividendspaidincludesdividendspaidontreasuryshares$8m(2015:$13m).

DividendfrankingcreditsFrankingcreditsavailabletoshareholdersare$342m(2015:$396m),basedonataxrateof30%.Thisamountiscalculatedfromthebalanceofthefrankingaccountasattheendofthereportingperiod,adjustedforfrankingcreditsthatwillarisefromthesettlement,aftertheendofthereportingdate,ofliabilitiesforincometaxandreceivablesfordividends.

Thecompany’sabilitytoutilisethefrankingaccountcreditsdependsonmeetingCorporationsAct2001requirementstodeclaredividends.Theimpactoftheproposeddividendwillbetoreducethebalanceofthefrankingcreditaccountby$160m.

Alldividendsarefrankedatataxrateof30%.

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Notes to the financial statements for the year ended 31 December 2016

Section 2: Investments, intangibles and working capitalThissectionhighlightstheAMPgroup’sassetsandworkingcapitalusedtosupporttheAMPgroup’sactivities.

2.1 Investmentsinfinancialinstruments2.2 Intangibles 2.3 Receivables2.4 Payables2.5 Fairvalueinformation

2.1 Investments in financial instruments

2016$m

2015$m

Financialassetsmeasuredatfairvaluethroughprofitorloss1 Equitysecuritiesandlistedmanagedinvestmentschemes 53,520 53,173Debtsecurities2 34,512 35,743Investmentsinunlistedmanagedinvestmentschemes 21,359 19,421Derivativefinancialassets 1,195 1,790Otherfinancialassets 5 8

Totalfinancialassetsmeasuredatfairvaluethroughprofitorloss 110,591 110,135

Available-for-salefinancialassets Equitysecuritiesandmanagedinvestmentschemes 67 66

Totalavailable-for-salefinancialassets 67 66

Financialassetsmeasuredatamortisedcost3 Loansandadvances 17,204 15,281Debtsecurities–heldtomaturity 1,557 1,739

Totalfinancialassetsmeasuredatamortisedcost 18,761 17,020

Totalfinancialassets 129,419 127,221

Otherfinancialliabilities Derivativefinancialliabilities 1,150 883Collateraldepositsheld2 92 225

Totalotherfinancialliabilities 1,242 1,108

1 FinancialassetsmeasuredatfairvaluethroughprofitorlossaremainlyassetsoftheAMPlifeinsuranceentities’statutoryfundsandtheircontrolledentities.

2 IncludedwithindebtsecuritiesareassetsheldtobacktheliabilityforcollateraldepositsfordebtsecurityrepurchasearrangementsenteredintobytheAMPlifeinsuranceentities’statutoryfundsandtheircontrolledentities.Collateraldepositsheldaremostlyinrespectoftheobligationtorepaycollateralforthedebtsecurityrepurchasearrangements.

3 FinancialassetsmeasuredatamortisedcostaremainlyassetsofAMPBank.

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2.1 Investments in financial instruments (continued)Accountingpolicy–recognitionandmeasurementFinancialassetsmeasuredatfairvaluethroughprofitorlossFinancialassetsdesignatedoninitialrecognitionas financial assets measured at fair value through profit or lossareinitiallyrecognisedatfairvaluedeterminedasthepurchasecostoftheasset,exclusiveofanytransactioncosts.Transactioncostsareexpensedasincurredinprofitorloss.AnyrealisedandunrealisedgainsorlossesarisingfromsubsequentmeasurementatfairvaluearerecognisedintheIncomestatementintheperiodinwhichtheyarise.

Available-for-salefinancialassetsFinancialassetswhichareneitherdesignatedasfairvaluethroughprofitorlossnormeasuredatamortisedcostareclassifiedasavailable-for-sale.Measurementisinaccordancewithfinancialassetsmeasuredatfairvaluethroughprofitorlossbutanyunrealisedgainsorlossesarisingfromsubsequentmeasurementatfairvaluearetakentoothercomprehensiveincomeandonlytransferredtoprofitandlosswhentheyarerealised.

Detailsonhowthefairvaluesforfinancialassetsaredeterminedfollowinginitialrecognitionaredisclosedinnote2.5.

FinancialassetsmeasuredatamortisedcostLoans,advancesandotherreceivableswhicharisewhenAMPBankprovidesmoneydirectlytoacustomer,includingloansandadvancestoadvisers,withnointentionoftradingthefinancialassets,aremeasuredatamortisedcost.AllotherdebtsecuritiesheldbyAMPBankareclassifiedasheldtomaturityinvestments.Heldtomaturityinvestmentsarenon-derivativeassetswithfixedordeterminablepaymentsandfixedmaturitiesthatmanagementhasthepositiveintentionandabilitytoholdtomaturity.

Financialassetsmeasuredatamortisedcostareinitiallyrecognisedatfairvalueplustransactioncoststhataredirectlyattributabletotheacquisitionorissueofthefinancialasset.Theseassetsaresubsequentlyrecognisedatamortisedcostusingtheeffectiveinterestratemethod.

Recognitionandde-recognitionoffinancialassetsandliabilitiesFinancialassetsandfinancialliabilitiesarerecognisedatthedatetheAMPgroupbecomesapartytothecontractualprovisionsoftheinstrument.Financialassetsarede-recognisedwhenthecontractualrightstothecashflowsfromthefinancialassetsexpire,oraretransferred.Atransferoccurswhensubstantiallyalltherisksandrewardsofownershipofthefinancialassetarepassedtoanunrelatedthirdparty.Financialliabilitiesarede-recognisedwhentheobligationspecifiedinthecontractisdischarged,cancelledorexpires.

ImpairmentoffinancialassetsAssetsmeasuredatfairvalue,wherechangesinfairvaluearereflectedintheIncomestatement,arenotsubjecttoimpairmenttesting.

Forfinancialassetsmeasuredatamortisedcost,includingloans,advances,heldtomaturityinvestmentsandotherreceivables,impairmentisrecognisedintheIncomestatementwhenthereisobjectiveevidencealosshasbeenincurred.Itismeasuredasthedifferencebetweenthecarryingamountandthepresentvalueofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.

Criticalaccountingestimatesandjudgements:Financial assets measured at fair valueWhere available, quoted market prices for the same or similar instruments are used to determine fair value. Where there is no market price available for an instrument, a valuation technique is used. Management applies judgement in selecting valuation techniques and setting valuation assumptions and inputs.

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Notes to the financial statements for the year ended 31 December 2016

2.2 Intangibles

Goodwill1

$m

Capitalisedcosts

$m

Valueofin-force

business$m

Distributionnetworks

$m

Otherintangibles

$mTotal

$m

2016Balanceatthebeginningoftheyear 2,782 374 703 123 1 3,983Additionsthroughacquisitionsofcontrolledentities 3 4 – 4 – 11Additionsthroughinternaldevelopment – 133 – – – 133Transferredfrominventories – – – 9 – 9Amortisationexpense – (129) (103) (37) – (269)Impairmentloss (668) – – – – (668)

Balanceattheendoftheyear 2,117 382 600 99 1 3,199

Cost 2,893 1,266 1,191 264 95 5,709 Accumulated amortisation and impairment (776) (884) (591) (165) (94) (2,510)

2015 Balanceatthebeginningoftheyear 2,717 378 806 136 5 4,042Additionsthroughacquisitionsofcontrolledentities 59 7 – 16 – 82Additionsthroughseparateacquisitions – – – 2 – 2Additionsthroughinternaldevelopment – 114 – – – 114Transferredfrominventories – – – 17 – 17Amortisationexpense – (117) (103) (37) (4) (261)Impairmentloss – (8) – (10) – (18)Othermovements 6 – – (1) – 5

Balanceattheendoftheyear 2,782 374 703 123 1 3,983

Cost 2,890 1,129 1,191 251 95 5,556 Accumulated amortisation and impairment (108) (755) (488) (128) (94) (1,573)

1 Totalgoodwillcomprisesamountsattributabletoshareholdersof$2,102m(2015:$2,767m)andamountsattributabletopolicyholdersof$15m(2015:$15m).

Accountingpolicy–recognitionandmeasurementGoodwillGoodwillacquiredinabusinesscombinationisrecognisedatcostandsubsequentlymeasuredatcostlessanyaccumulatedimpairmentlosses.Thecostrepresentstheexcessofthecostofabusinesscombinationoverthefairvalueoftheidentifiableassetsacquiredandliabilitiesassumed.GoodwillincludesbalancesattributabletoshareholdersandbalancesattributabletopolicyholdersininvestmententitiescontrolledbytheAMPlifeinsuranceentities’statutoryfunds.

CapitalisedcostsCostsarecapitalisedwhenthecostsrelatetothecreationofanassetwithexpectedfutureeconomicbenefitswhicharecapableofreliablemeasurement.Capitalisedcostsareamortisedonastraight-linebasisovertheestimatedusefullifeoftheasset,commencingatthetimetheassetisfirstputintouseorheldreadyforuse,whicheveristheearlier.

Valueofin-forcebusinessThevalueofin-forcebusinessrepresentsthefairvalueoffuturebusinessarisingfromexistingcontractualarrangementsofabusinessacquiredaspartofabusinesscombination.Thevalueofin-forcebusinessisinitiallymeasuredatfairvalueandissubsequentlymeasuredatfairvaluelessamortisationandanyaccumulatedimpairmentlosses.

DistributionnetworksDistributionnetworkssuchascustomerlists,financialplannerclientservicingrightsorotherdistribution-relatedrights,eitheracquiredseparatelyorthroughabusinesscombination,areinitiallymeasuredatfairvalueandsubsequentlymeasuredatcostlessamortisationandanyaccumulatedimpairmentlosses.F

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2.2 Intangibles (continued)AmortisationIntangibleassetswithfiniteusefullivesareamortisedonastraight-linebasisovertheusefullifeoftheintangibleasset.Theestimatedusefullivesaregenerally:

Item Usefullife

Capitalisedcosts Upto10yearsValuein-forcebusiness–wealthmanagementanddistributionbusinesses 10yearsValuein-forcebusiness–wealthprotectionandmaturebusinesses 20yearsDistributionnetworks 3to15years

Theusefullifeofeachintangibleassetisreviewedattheendoftheperiodand,wherenecessary,adjustedtoreflectcurrentassessments.

ImpairmenttestingGoodwillandintangibleassetsthathaveindefiniteusefullivesaretestedatleastannuallyforimpairment.Otherintangibleassetsarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunitsorCGUs).AnimpairmentlossisrecognisedwhenthegoodwillcarryingamountexceedstheCGU’srecoverableamount.

GoodwillattributabletoshareholdersThegoodwillattributabletoshareholdersof$2,102m(2015:$2,767m)primarilyarosefromtheacquisitionofAMPAAPHLimitedgroupin2011,apreviousLifeActPart9transferoflifeinsurancebusinessintothestatutoryfundsofAMPLifeaswellasotherbusinesscombinationswheretheAMPgroupwastheacquirer.

Basedontheiractivities,eachoftheacquiredbusinesseshasbeenallocatedtoaCGUforthepurposeofassessinggoodwillasfollows:

2016$m

2015$m

Australianwealthmanagement 1,488 1,485Australianwealthprotection – 668Australianmature 350 350AMPFinancialServicesNewZealand 177 177AMPCapital 87 87

2,102 2,767

TherecoverableamountforeachCGU(excludingAMPCapital)hasbeendeterminedbythefairvaluelesscostsofdisposalbasedontheestimatedembeddedvalueplusthevalueofoneyear’snewbusinesstimesamultiplierof10to15.

Theestimatedembeddedvalueisacalculationthatrepresentstheeconomicvalueoftheshareholdercapitalinthebusinessandthefutureprofitsexpectedtoemergefromthebusinesscurrentlyin-forceexpressedintoday’sdollars.

Theestimatedembeddedvalueandvalueofoneyear’snewbusinesshasbeencalculatedbasedonthefollowingkeyassumptionsandestimates:– mortality,morbidity,discontinuancerates,maintenanceunitcosts,futureratesofsupportablebonusforparticipatingbusiness,

frankingcredits,riskdiscountrates,investmentreturnsandinflationrates;– premiumandclaimamounts,estimatedovertheexpectedlifeofthein-forcepolicieswhichvariesdependingonthenature

oftheproduct;– futuremaintenanceandinvestmentexpensesbasedonunitcostsderivedfrombudgetedamountsforthefollowingyearand

increasedinfutureyearsforexpectedratesofinflation;– riskdiscountratebasedonanannualised10yeargovernmentbondyieldplusadiscountmarginof5%to7%forAustraliaand

5%forNewZealand(2015:4%):Australia7.8%to9.8%(2015:6.9%),NewZealand8.4%(2015:7.6%),forcalculatingthevalueofin-forceandnewbusiness.

AssumptionsappliedinthisvaluationareconsistentwiththebestestimateassumptionsusedincalculatingthepolicyliabilitiesofAMP’slifeinsuranceentities(excludingtheriskdiscountrate).

Note4.3providesfurtherdetailsoftheassumptions,management’sapproachtodeterminingthevaluesassignedtoeachkeyassumptionandtheirconsistencywithpastexperienceandexternalsourcesofinformation.

TherecoverableamountfortheAMPCapitalCGUhasbeendeterminedbyusingthefairvaluelesscostsofdisposalbasedonamultipleof19timescurrentperiodearnings(2015:19times),whichapproximatesthefairvalueofthisbusiness,lessanallowancefordisposalcosts.

WiththeexceptionoftheAustralianWealthProtectionCGU,therearenoreasonablypossiblealternativeassumptionswhichwouldresultinanimpairmentofanygoodwillamounts.

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Notes to the financial statements for the year ended 31 December 2016

2.2 Intangibles (continued)GoodwillattributabletopolicyholdersPolicyholdercash-generatingunitswereallocated$15mgoodwillat31December2016(31December2015:$15m).

ImpairmentlossTheconclusionfromthegoodwillimpairmenttestingisthattherehasbeennoimpairmenttotheamountofthegoodwillrecognisedforallCGUs,exceptfortheAustralianWealthProtectionCGU,whichisfullyimpairedresultinginanexpenseof$668mintheperiod.TheimpairmentwascausedbythestrengtheningofthebestestimateassumptionsforAMPLifeandNMLA(includingretailandgroupincomeprotection,claimsandlapses).

Criticalaccountingestimatesandjudgements:Management applies judgement in selecting valuation techniques and setting valuation assumptions to determine the:– acquisition date fair value and estimated useful life of acquired intangible assets;– allocation of goodwill to CGUs and determining the recoverable amount of goodwill;– assessment of whether there are any impairment indicators for acquired intangibles and, where required, in determining

the recoverable amount.

2.3 Receivables

2016$m

2015$m

Investmentrelatedreceivables 1,163 1,290Lifeinsurancecontractpremiumsreceivable 345 363Reinsurancereceivables 70 37Tradedebtorsandotherreceivables 397 377

Totalreceivables 1,975 2,067

Current 1,857 2,061 Non-current 118 6

Accountingpolicy–recognitionandmeasurementReceivablesReceivablesthatbackinvestmentcontractliabilitiesandlifeinsurancecontractliabilitiesaredesignatedasfinancialassetsmeasuredatfairvaluethroughprofitorloss.Reinsuranceandotherrecoveriesarediscountedtopresentvalue.Receivablesthatdonotbackinvestmentcontractandlifeinsurancecontractliabilitiesaremeasuredatnominalamountsdue,lessanyallowancefordoubtfuldebts.Anallowancefordoubtfuldebtsisrecognisedwhencollectionofthefullamountisnolongerprobable.Baddebtsarewrittenoffasincurred.Giventheshort-termnatureofmostreceivables,therecoverableamountapproximatesfairvalue.

2.4 Payables

2016$m

2015$m

Investmentrelatedpayables 801 694Lifeinsuranceandinvestmentcontractsinprocessofsettlement 350 394Accruedexpenses,tradecreditorsandotherpayables 729 941Reinsurancepayables 72 2

Totalpayables 1,952 2,031

Current 1,840 1,940 Non-current 112 91

Accountingpolicy–recognitionandmeasurementPayablesPayablesaremeasuredatthenominalamountpayable.Giventheshort-termnatureofmostpayables,thenominalamountpayableapproximatesfairvalue.

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2.5 Fair value informationThefollowingtableshowsthecarryingamountandestimatedfairvaluesoffinancialinstrumentsandinvestmentproperties,includingtheirlevelsinthefairvaluehierarchy.Itdoesnotincludefairvalueinformationforfinancialinstrumentsnotmeasuredatfairvalueifthecarryingamountisareasonableapproximationoffairvalue.

Carryingamount

$mLevel1

$mLevel2

$mLevel3

$m

Totalfairvalue

$m

2016Financialassetsmeasuredatfairvalue Equitysecuritiesandlistedmanagedinvestmentschemes 53,587 51,066 22 2,499 53,587Debtsecurities 34,512 68 34,425 19 34,512Investmentsinunlistedmanagedinvestmentschemes 21,359 – 20,417 942 21,359Derivativefinancialassets 1,195 219 976 – 1,195Investmentproperties 127 – – 127 127Otherfinancialassets 5 – – 5 5

Totalfinancialassetsmeasuredatfairvalue 110,785 51,353 55,840 3,592 110,785

Financialassetsnotmeasuredatfairvalue Loansandadvances 17,204 – 17,104 – 17,104Debtsecurities–heldtomaturity 1,557 – 1,560 – 1,560

Totalfinancialassetsnotmeasuredatfairvalue 18,761 – 18,664 – 18,664

FinancialliabilitiesmeasuredatfairvalueDerivativefinancialliabilities 1,150 97 1,053 – 1,150Collateraldepositsheld 92 – 92 – 92Investmentcontractliabilities 71,579 – 2,252 69,327 71,579

Totalfinancialliabilitiesmeasuredatfairvalue 72,821 97 3,397 69,327 72,821

Financialliabilitiesnotmeasuredatfairvalue AMPBank– Deposits 8,652 – 8,639 – 8,639– Other 6,661 – 6,676 – 6,676AMPCorporateentities 1,552 618 977 – 1,595AMP’slifeinsuranceentitiesandinvestmententitiescontrolled byAMPlifeinsuranceentities’statutoryfunds 353 – 353 – 353

Totalfinancialliabilitiesnotmeasuredatfairvalue 17,218 618 16,645 – 17,263

2015 Financialassetsmeasuredatfairvalue Equitysecuritiesandlistedmanagedinvestmentschemes 53,239 49,811 18 3,410 53,239Debtsecurities 35,743 – 34,209 1,534 35,743Investmentsinunlistedmanagedinvestmentschemes 19,421 – 18,291 1,130 19,421Derivativefinancialassets 1,790 161 1,629 – 1,790Investmentproperties 386 – – 386 386Otherfinancialassets 8 – – 8 8

Totalfinancialassetsmeasuredatfairvalue 110,587 49,972 54,147 6,468 110,587

Financialassetsnotmeasuredatfairvalue Loansandadvances 15,281 – 15,281 – 15,281Debtsecurities–heldtomaturity 1,739 – 1,745 – 1,745

Totalfinancialassetsnotmeasuredatfairvalue 17,020 – 17,026 – 17,026

Financialliabilitiesmeasuredatfairvalue Derivativefinancialliabilities 883 117 766 – 883Collateraldepositsheld 225 136 89 – 225Investmentcontractliabilities 69,848 – 2,364 67,484 69,848

Totalfinancialliabilitiesmeasuredatfairvalue 70,956 253 3,219 67,484 70,956

Financialliabilitiesnotmeasuredatfairvalue AMPBank – Deposits 6,678 – 6,798 – 6,798– Other 6,924 – 6,824 – 6,824AMPCorporateentities 1,813 609 1,226 – 1,835AMP’slifeinsuranceentitiesandinvestmententitiescontrolled byAMPlifeinsuranceentities’statutoryfunds 2,037 – 2,037 – 2,037

Totalfinancialliabilitiesnotmeasuredatfairvalue 17,452 609 16,885 – 17,494

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Notes to the financial statements for the year ended 31 December 2016

2.5 Fair value information (continued)AMP’smethodologyandassumptionsusedtoestimatethefairvalueoffinancialinstrumentsaredescribedbelow:

Listed equity securities and listed managed investment schemes

Thefairvalueoflistedequitysecuritiestradedinanactivemarketandlistedmanagedinvestmentschemesreflectsthequotedbidpriceatthereportingdate.Inthecaseofequitysecuritiesandlistedmanagedinvestmentschemeswherethereisnoactivemarket,fairvalueisestablishedusingvaluationtechniquesincludingtheuseofrecentarm’slengthtransactions,referencestootherinstrumentsthataresubstantiallythesame,discountedcashflowanalysisandoptionpricingmodels.

Debt securities Thefairvalueoflisteddebtsecuritiesreflectsthebidpriceatthereportingdate.Listeddebtsecuritiesthatarenotfrequentlytradedarevaluedbydiscountingestimatedrecoverableamounts.

Thefairvalueofunlisteddebtsecuritiesisestimatedusinginterestrateyieldsobtainableoncomparablelistedinvestments.Thefairvalueofloansisdeterminedbydiscountingtheestimatedrecoverableamountusingprevailinginterestrates.

Loans Theestimatedfairvalueofloansrepresentsthediscountedamountofestimatedfuturecashflowsexpectedtobereceived,basedonthematurityprofileoftheloans.Astheloansareunlisted,thediscountratesappliedarebasedontheyieldcurvesappropriatetotheremainingtermoftheloans.Theloansmaybemeasuredatanamountinexcessoffairvalueduetofluctuationsonfixedrateloans.Asthefluctuationsinfairvaluedonotrepresentapermanentdiminutionandthecarryingamountsoftheloansarerecordedatrecoverableamountsafterassessingimpairment,itisnotappropriatetorestatetheircarryingamount.

Unlisted managed investment schemes

Thefairvalueofinvestmentsinunlistedmanagedinvestmentschemesisdeterminedonthebasisofpublishedredemptionpricesofthosemanagedinvestmentschemesatthereportingdate.

Derivative financial assets and liabilities

Thefairvalueoffinancialinstrumentstradedinactivemarkets(suchaspubliclytradedderivatives)isbasedonquotedmarketprices(currentbidpriceorcurrentofferprice)atthereportingdate.Thefairvalueoffinancialinstrumentsnottradedinanactivemarket(egover-the-counterderivatives)isdeterminedusingvaluationtechniques.Valuationtechniquesincludenetpresentvaluetechniques,optionpricingmodels,discountedcashflowmethodsandcomparisontoquotedmarketpricesordealerquotesforsimilarinstruments.

Subordinated debt Thefairvalueofsubordinateddebtisdeterminedwithreferencetoquotedmarketpricesatthereportingdate.

Thefinancialassetsandliabilitiesmeasuredatfairvaluearecategorisedusingthefairvaluehierarchywhichreflectsthesignificanceofinputsintothedeterminationoffairvalueasfollows:– Level1:thefairvalueisvaluedbyreferencetoquotedpricesandactivemarketsforidenticalassets– Level2:thefairvalueisestimatedusinginputsotherthanquotedpricesincludedwithinLevel1thatareobservableforthe

assetorliability,eitherdirectly(asprices)orindirectly(derivedfromprices)– Level3:thefairvalueisestimatedusinginputsfortheassetorliabilitythatarenotbasedonobservablemarketdata.

TherehavebeennosignificanttransfersbetweenLevel1andLevel2duringthe2016and2015financialyears.Transfersto/fromLevel3areshownintheReconciliationofLevel3valuestablelaterinthisnote.

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2.5 Fair value information (continued)Level3fairvaluesThefollowingtableshowsthevaluationtechniquesusedinmeasuringLevel3fairvalues,aswellasthesignificantunobservableinputsused.

Type Valuationtechnique Significantunobservableinputs

Equitysecuritiesandlistedmanagedinvestmentschemes

Discountedcashflowapproachutilisingcostofequityasthediscountrate.

Discountrate.Terminalvaluegrowthrate.Cashflowforecasts.

Debtsecurities Discountedcashflowapproach. Discountrate.Cashflowforecasts.

Investmentsinunlistedmanagedinvestmentschemes

Publishedredemptionprices. Judgementmadeindeterminingunitprices.

Investmentcontractliabilities Valuationmodelbasedonpublishedunitpricesandthefairvalueofbackingassets.

Fixedretirementincomepolicies–discountedcashflow.

Fairvalueoffinancialinstruments.Cashflowforecasts.Creditrisk.

SensitivityanalysisReasonablypossiblealternativeassumptionscouldhavebeenusedindeterminingthefairvaluesoffinancialinstrumentscategorisedasLevel3.Thefollowingtableshowsthesensitivitytochangesinkeyassumptions,calculatedbychangingoneormoreofthesignificantunobservableinputsforindividualassets.Thisincludedassumptionssuchascreditriskanddiscountratesfordeterminingthevaluationrangeonanindividualestimate.

2016 2015

(+)$m

(–)$m

(+)$m

(–)$m

Financialassets Equitysecuritiesandlistedmanagedinvestmentschemes 146 (153) 206 (206)

FinancialliabilitiesInvestmentcontractliabilities 6 (5) 8 (7)

FinancialassetsvaluationprocessForfinancialassetscategorisedwithinLevel3ofthefairvaluehierarchy,thevaluationprocessesappliedinvaluingsuchassetsisgovernedbytheAMPCapitalassetvaluationpolicy.Thispolicyoutlinestheassetvaluationmethodologiesandprocessesappliedtomeasurenon-exchangetradedassetswhichhavenoregularmarketprice,includinginvestmentproperty,infrastructure,privateequity,alternativeassetsandilliquiddebtsecurities.AllsignificantLevel3assetsarereferredtotheappropriatevaluationcommitteewhomeetatleasteverysixmonths,ormorefrequentlyifrequired.

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Notes to the financial statements for the year ended 31 December 2016

2.5 Fair value information (continued)ReconciliationofLevel3valuesThefollowingtableshowsmovementsinthefairvaluesoffinancialinstrumentscategorisedasLevel3inthefairvaluehierarchy:

Balanceatthe

beginningoftheperiod

$m

FXgainsorlosses1

$m

Totalgains/losses1

$m

Purchases/deposits

$m

Sales/withdrawals

$m

Nettransfersin/(out)2

$m

Balanceattheendoftheperiod

$m

Totalgainsandlosseson

assetsandliabilities

heldatreporting

date$m

2016 AssetsclassifiedasLevel3

Equitysecuritiesandlisted managedinvestmentschemes 3,410 – 191 271 (1,580) 207 2,499 190Debtsecurities 1,534 – (3) 2 (1,329) (185) 19 (2)Investmentsinunlistedmanaged investmentschemes 1,130 3 10 96 (25) (272) 942 8Investmentproperties 386 – 105 6 (370) – 127 105Otherfinancialassets 8 – (1) – (2) – 5 (1)

LiabilitiesclassifiedasLevel3 Investmentcontractliabilities 67,484 7 3,413 10,785 (12,362) – 69,327 3,333

2015 AssetsclassifiedasLevel3

Equitysecuritiesandlisted managedinvestmentschemes 2,354 48 378 942 (435) 123 3,410 379Debtsecurities 599 55 210 764 (93) (1) 1,534 209Investmentsinunlistedmanaged investmentschemes 850 – 44 383 (21) (127) 1,130 52Investmentproperties 340 – 71 1 (26) – 386 71Otherfinancialassets 9 – – – (1) – 8 –

LiabilitiesclassifiedasLevel3 Investmentcontractliabilities 64,448 (5) 3,100 11,743 (11,802) – 67,484 2,755

1 GainsandlossesareclassifiedininvestmentgainsandlossesorchangeinpolicyholderliabilitiesintheIncomestatement.2 TheAMPgrouprecognisestransfersasattheendofthereportingperiodduringwhichthetransferhasoccurred.Transfersarerecognisedwhen

therearechangesintheobservabilityofthepricingoftherelevantsecuritiesorwheretheAMPgroupceasestoconsolidateacontrolledentity.

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Section 3: Capital structure and financial risk managementThissectionprovidesinformationrelatingto:– AMPgroup’scapitalmanagementandequityanddebtstructure;and– exposuretofinancialrisks–howtherisksaffectfinancialpositionandperformanceandhowtherisksaremanaged,

includingtheuseofderivativefinancialinstruments.

ThecapitalstructureoftheAMPgroupconsistsofequityanddebt.AMPdeterminestheappropriatecapitalstructureinordertofinancethecurrentandfutureactivitiesoftheAMPgroupandsatisfytherequirementsoftheregulator.Thedirectorsreviewthegroup’scapitalstructureanddividendpolicyregularlyanddosointhecontextofthegroup’sabilitytosatisfyminimumandtargetcapitalrequirements,andtoprotectandmeettheneedsofthepolicyholders.

3.1 Contributedequity3.2 Interest-bearingliabilities3.3 Financialriskmanagement3.4 Otherderivativeinformation3.5 Capitalmanagement

3.1 Contributed equity

2016$m

2015$m

Issuedcapital1 2,957,737,964(2015:2,957,737,964)ordinarysharesfullypaid 9,747 9,747Treasuryshares2 23,539,463(2015:33,390,553)treasuryshares (128) (181)

Totalcontributedequity2,934,198,501(2015:2,924,347,411)ordinarysharesfullypaid 9,619 9,566

Issuedcapital Balanceatthebeginningoftheyear 9,747 9,747

Balanceattheendoftheyear 9,747 9,747

Treasuryshares Balanceatthebeginningoftheyear (181) (239)Decreaseduetopurchaseslesssalesduringtheyear 53 58

Balanceattheendoftheyear (128) (181)

Holdersofordinaryshareshavetherighttoreceivedividendsasdeclaredand,intheeventofthewindingupofthecompany,toparticipateintheproceedsfromthesaleofallsurplusassetsinproportiontothenumberofandamountspaiduponsharesheld.Fullypaidordinarysharescarrytherighttoonevotepershare.Ordinaryshareshavenoparvalue.

1 Underthetermsofthedividendreinvestmentplan(DRP),shareholdersmayelecttohaveallorpartoftheirdividendentitlementssatisfiedinsharesratherthanbeingpaidcash.TheDRPappliedforthe2015finaldividend(paidinApril2016)at14.0centspershareand2016interimdividend(paidinOctober2016)at14.0centspershare.AMPsettledtheDRPforthe2015finaldividendand2016interimdividendbyacquiringsharesonmarketand,accordingly,nonewshareswereissued.

2 OftheAMPLimitedordinarysharesonissue21,413,076(2015:31,264,166)areheldbyAMP’slifeinsuranceentitiesonbehalfofpolicyholders.ASIChasgrantedrelieffromrestrictionsintheCorporations Act 2001toallowAMP’slifeinsuranceentitiestoholdandtradesharesinAMPLimitedaspartofthepolicyholderfunds’investmentactivities.Thecostoftheinvestmentinthesetreasurysharesisreflectedasadeductionfromtotalcontributedequity.TheremainingbalanceisheldbyAMPFoundationLimitedastrusteefortheAMPFoundation.

3 MitsubishiUFJTrustandBankingCorporation(MUTB)hasanoptiontorequireAMPLimitedtopurchaseMUTB’sinterestinAMPCapitalHoldingsLimited(AMPCH)incertaincircumstances.AsconsiderationfortheacquisitionofAMPCHshares,AMPwouldberequiredtoissueordinarysharesinAMPLimitedtoMUTB(oritsnominee).

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Notes to the financial statements for the year ended 31 December 2016

3.1 Contributed equity (continued)Accountingpolicy–recognitionandmeasurementIssuedcapitalIssuedcapitalinrespectofordinarysharesisrecognisedasthefairvalueofconsiderationreceivedbytheAMPLimitedentity.Incrementalcostsdirectlyattributabletotheissueofcertainnewsharesarerecognisedinequityasadeduction,netoftax,fromtheproceeds.

TreasurysharesTheAMPgroupisnotpermittedtorecognisetreasurysharesintheConsolidatedstatementoffinancialposition.Theseassets,plusanycorrespondingIncomestatementfairvaluemovementontheassetsanddividendincome,areeliminatedonconsolidation.However,thecorrespondinginvestmentcontractandlifeinsurancecontractliabilities,andrelatedIncomestatementchangeintheliabilities,remainonconsolidation.AttheAMPgroupconsolidatedlevel,themismatchresultsinpolicyholderassetmovementsimpactingtheprofitattributabletoshareholdersofAMPLimited.

TheAMPFoundationalsoholdsAMPLimitedshares.Theseassets,plusanycorrespondingIncomestatementfairvalueamountontheassetsandanydividendincome,arealsoeliminatedonconsolidation.AsthenetassetsandprofitoftheAMPFoundationTrustarefullyattributabletonon-controllinginterests,thishasnoimpactonthenetassetsorprofitattributabletotheshareholdersofAMPLimited.

3.2 Interest-bearing liabilities (a) Interest-bearingliabilities

2016 2015

Current$m

Non-current$m

Total$m

Current$m

Non-current$m

Total$m

Interest-bearingliabilitiesAMPBank– Deposits1 8,614 38 8,652 6,499 179 6,678– Other2 3,145 3,516 6,661 3,123 3,801 6,924

AMPCorporateentities – 6.875%GBPSubordinatedGuaranteedBonds

(maturity2022) – 71 71 – 82 82– FloatingRateSubordinatedUnsecuredNotes

(firstcalldate2016,maturity2021) – – – 601 – 601– AMPSubordinatedNotes2

(firstcall2018,maturity2023)3 – 322 322 – 321 321– AMPWholesaleCapitalNotes4 – 276 276 – 276 276– AMPCapitalNotes4 – 263 263 – 262 262– Other 120 500 620 – 271 271

AMP’slifeinsuranceentitiesandinvestmententitiescontrolledbyAMPlifeinsuranceentities’statutoryfunds 98 255 353 565 1,472 2,037

Totalinterest-bearingliabilities 11,977 5,241 17,218 10,788 6,664 17,452

1 DepositscompriseatcallretailcashondepositandretailtermdepositsatvariableinterestrateswithintheAMPBank.2 Includes$150m(2015:$150m)FloatingRateSubordinatedUnsecuredNotestofundAMPBank’scapitalrequirements(firstcalldate2017,

maturity2022).3 Issuedon18December2013andarelistedontheASX.Incertaincircumstances,AMPmayberequiredtoconvertsomeorallofAMPSubordinated

Notes2intoAMPordinaryshares.4 AMPWholesaleCapitalNotesandAMPCapitalNoteswereissuedon27Marchand30November2015,respectively.Theyareperpetualnotes

withnomaturitydate.Incertaincircumstances,AMPmayberequiredtoconvertsomeoralloftheNotesintoAMPSubordinatedordinaryshares.

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3.2 Interest-bearing liabilities (continued)(b) FinancingarrangementsLoanfacilitiesandnoteprogramsInadditiontothefacilitiesarrangedthroughbondandnoteissues,financingfacilitiesareprovidedthroughbankloansundernormalcommercialtermsandconditions.

2016$m

2015$m

Available 13,529 15,256Used (2,579) (4,316)

Unusedfacilitiesattheendoftheyear 10,950 10,940

OverdraftfacilityTheAMPgrouphasaccesstoabankoverdraftfacilitytohelpmanageshort-termcashflowneeds.Atyear-endtheavailablefacilitywas$838m(2015:$779m).

Accountingpolicy–recognitionandmeasurementInterest-bearingliabilities,otherthanthoseheldbycontrolledentitiesoftheAMPlifeinsuranceentities’statutoryfunds,areinitiallyrecognisedatfairvalue,netoftransactioncosts.Theyaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.

BorrowingsofcertaincontrolledmanagedinvestmentschemesoftheAMPlifeinsuranceentities’statutoryfundsaremeasuredatamortisedcostforthepurposeofdeterminingtheunitpriceofthoseschemes.AllotherborrowingsofthecontrolledentitiesoftheAMPlifeentities’statutoryfundsaresubsequentlymeasuredatfairvaluewithmovementsrecognisedintheIncomestatement.

ItisAMP’spolicytohedgecurrencyandinterestrateriskarisingonissuedbondsandsubordinateddebt.Whenhedgeaccountingisapplied,thecarryingamountsofborrowingsandsubordinateddebtareadjustedforchangesinfairvaluefortheperiodthatthehedgerelationshipremainseffective.AnychangesinfairvaluefortheperiodarerecognisedintheIncomestatement.

Financecostsinclude:(i) borrowingcosts: – interestonbankoverdrafts,borrowingsandsubordinateddebt; – amortisationofdiscountsorpremiumsrelatedtoborrowings;(ii) exchangedifferencesarisingfromforeigncurrencyborrowingstotheextentthattheyareregardedasanadjustmentto

interestcosts;(iii) changesinthefairvalueofderivativehedgestogetherwithanychangeinthefairvalueofthehedgedassetsorliabilities

thataredesignatedandqualifyasfairvaluehedges,foreignexchangegainsandlossesandotherfinancingrelatedamounts.Theaccountingpolicyforderivativesissetoutinnote3.4.

Borrowingcostsarerecognisedasexpenseswhenincurred.

3.3 Financial risk management TheAMPLimitedBoardhasoverallresponsibilityfortheriskmanagementframeworkincludingtheapprovalofAMP’sstrategicplan,riskmanagementstrategyandriskappetite.Specifically,financialriskarisesfromtheholdingoffinancialinstrumentsandfinancialriskmanagement(FRM)isanintegralpartoftheAMPgroup’senterpriseriskmanagementframework.

ThisnotedisclosesfinancialriskinaccordancewiththecategoriesinAASB7Financial Instruments: Disclosures:– marketrisk;– liquidityandrefinancingrisk;– creditrisk.

Theserisksaremanagedinaccordancewiththeboardapprovedriskappetitestatementandtheindividualpoliciesforeachriskcategoryandbusinessapprovedbythechieffinancialofficer(CFO)underdelegationfromtheAMPGroupAssetandLiabilityCommittee(GroupALCO).

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Notes to the financial statements for the year ended 31 December 2016

3.3 Financial risk management (continued)(a) MarketriskMarketriskistheriskthatthefairvalueofassetsandliabilities,orfuturecashflowsofafinancialinstrumentwillfluctuateduetomovementsinthefinancialmarketsincludinginterestrates,foreignexchangerates,equityprices,propertyprices,creditspreads,commodityprices,marketvolatilitiesandotherfinancialmarketvariables.

ThefollowingtableprovidesinformationonsignificantmarketriskexposuresfortheAMPgroup,whichcouldleadtoanimpactontheAMPgroup’sprofitaftertaxandequity,andthemanagementofthoseexposures.

Marketrisk Exposures Managementofexposuresanduseofderivatives

InterestrateriskTheriskofanimpactontheAMPgroup’sprofitaftertaxandequityarisingfromfluctuationsofthefairvalueorfuturecashflowsoffinancialinstrumentsduetochangesinmarketinterestrates.

Interestratemovementscouldresultfromchangesintheabsolutelevelsofinterestrates,theshapeoftheyieldcurve,themarginbetweenyieldcurvesandthevolatilityofinterestrates.

AMPgroup’slong-termborrowingsandsubordinateddebt.

Interestrateriskismanagedbyenteringintofloating-to-fixedinterestrateswaps,whichhavetheeffectofconvertingborrowingsfromfloatingratetofixedrate.

InterestbearinginvestmentassetsoftheshareholderandstatutoryfundsofAMPLifeandNMLA.

AMPLifeandNMLAmanageinterestrateandothermarketriskspursuanttoanassetandliabilitymanagementpolicyandarealsosubjecttotherelevantregulatoryrequirementsgovernedbytheLifeAct.

AMPBankinterestrateriskfrommismatchesintherepricingtermsofassetsandliabilities(termrisk)andvariablerateshort-termrepricingbases(basisrisk).

AMPBankusesnaturaloffsets,interestrateswapsandbasisswapstohedgethemismatcheswithinexposurelimits.GroupTreasurymanagestheexposureinAMPBankbymaintaininganetinterestrateriskpositionwithinthelimitsdelegatedandapprovedbytheAMPBankBoard.

CurrencyriskTheriskofanimpactontheAMPgroup’sprofitaftertaxandequityarisingfromfluctuationsofthefairvalueofafinancialasset,liabilityorcommitmentduetochangesinforeignexchangerates.

Foreigncurrencydenominatedassetsandliabilities.

Capitalinvestedinoverseasoperations.

Foreignexchangeratemovementsonspecificcashflowtransactions.

TheAMPgroupusesswapstohedgetheinterestrateriskandforeigncurrencyriskonforeigncurrencydenominatedborrowingsbutdoesnothedgethecapitalinvestedinoverseasoperations.

TheAMPgrouphedgesmaterialforeigncurrencyriskoriginatedbyreceiptsandpaymentsoncethevalueandtimingoftheexpectedcashflowisknownexcludingtheinternationalequitiesportfolioattributabletoshareholderswithintheAMPLifeStatutoryNo.1Fund.

GroupTreasuryexecutesforeigncurrencyforwardsonbehalfofAMPCapitaltohedgeexpectedmanagementfeesincomeandoperationcostsoutflowsoriginatedoutsideofAustralia.

EquitypriceriskTheriskofanimpactontheAMPgroup’sprofitaftertaxandequityarisingfromfluctuationsofthefairvalueorfuturecashflowsofafinancialinstrumentduetochangesinequityprices.

Exposureforshareholdersincludeslistedandunlistedsharesandparticipationinequityunittrusts.

GroupTreasurymay,withGroupALCOapproval,useequityexposuresorequityfuturesoroptionstohedgeotherenterprise-wideequityexposures.F

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3.3 Financial risk management (continued)SensitivityanalysisThetablebelowincludessensitivityanalysisshowinghowtheprofitaftertaxandequitywouldhavebeenimpactedbychangesinmarketriskvariables.Theanalysis:– showsthedirectimpactofareasonablypossiblechangeinmarketrateandisnotintendedtoillustratearemote,worstcasestress

testscenario;– assumesthatallunderlyingexposuresandrelatedhedgesareincludedandthechangeinvariableoccursatthereportingdate;– doesnotincludetheimpactofanymitigatingmanagementactionsovertheperiodtothesubsequentreportingdate.

Thecategoriesofrisksfacedandmethodsusedforderivingsensitivityinformationdidnotchangefrompreviousperiods.

2016 2015

Sensitivityanalysis Changeinvariables

Impactonprofitaftertax

increase(decrease)$m

Impactonequity1

increase(decrease)$m

Impactonprofitaftertax

increase(decrease)$m

Impactonequity1

increase(decrease)$m

InterestrateriskImpactofa100basispoint(bp)changeinAustralianandinternationalinterestrates

–100bp+100bp

82(65)

83(66)

47(49)

32(34)

CurrencyriskImpactofa10%movementofexchangeratesagainsttheAustraliandollaroncurrencysensitivemonetaryassetsandliabilities

10%depreciationofAUD10%appreciationofAUD

5(6)

37(32)

6(7)

38(33)

EquitypriceriskImpactofa10%movementinAustralianandinternationalequities.AnypotentialimpactonfeesfromtheAMPgroup’sinvestmentlinkedbusinessisnotincluded

10%increasein:AustralianequitiesInternationalequities

124

124

1010

1010

10%decreasein:AustralianequitiesInternationalequities

(11)(6)

(11)(6)

(11)(11)

(11)(11)

1 Includedintheimpactonequityareboththeimpactonprofitaftertaxaswellastheimpactofamountsthatwouldbetakendirectlytoequityinrespectoftheportionofchangesinthefairvalueofderivativesthatqualifyascashflowhedgesforhedgeaccounting.

(b) Liquidityandrefinancingrisk

Risk Exposures Managementofexposures

LiquidityriskTheriskthattheAMPgroupisnotabletomeetitsobligationsastheyfallduebecauseofaninabilitytoliquidateassetsorobtainadequatefundingwhenrequired.

AMPgroupcorporatedebtportfolio,AMPBankandAMPCapitalthroughvariousinvestmentfunds,entitiesormandatesthatAMPmanagesorcontrolswithintheAMPgroup.

GroupTreasurymaintainsadefinedsurplusofcashtomitigaterefinancingrisk,satisfyregulatoryrequirementsandprotectagainstliquidityshocksinaccordancewiththeliquidityriskmanagementpolicyapprovedbytheGroupALCO.

FinanciersofloanslendingtocontrolledentitiesofthelifestatutoryfundsdonothavelegalrecoursebeyondtheoperatingsubsidiaryborrowerandthereisnodirecteffectonanyotherAMPgroupdebt.

RefinancingriskTheriskthattheAMPgroupisnotabletorefinancethefullquantumofitsongoingdebtrequirementsonappropriatetermsandpricing.F

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3.3 Financial risk management (continued)MaturityanalysisBelowisasummaryofthematurityprofilesoftheAMPgroup’sundiscountedfinancialliabilitiesandoff-balancesheetitemsatthereportingdate,basedoncontractualundiscountedrepaymentobligations.Repaymentsthataresubjecttonoticearetreatedasifnoticeweretobegivenimmediately.

Upto1yearor

noterm$m

1-5years$m

Over5years$m

Other2

$mTotal

$m

2016Non-derivativefinancialliabilitiesPayables 1,840 112 – – 1,952Borrowings 12,124 4,413 21 – 16,558Subordinateddebt 210 1,006 63 – 1,279Investmentcontractliabilities1 880 802 1,434 68,858 71,974Externalunitholders’liabilities – – – 13,252 13,252

DerivativefinancialinstrumentsInterestrateswaps 16 12 – – 28

Off-balancesheetitems Credit-relatedcommitments–AMPBank3 3,653 – – – 3,653

Totalundiscountedfinancialliabilitiesandoff-balancesheetitems2 18,723 6,345 1,518 82,110 108,696

2015Non-derivativefinancialliabilities Payables 1,940 91 – – 2,031Borrowings 10,454 4,470 1,689 – 16,613Subordinateddebt 675 953 370 – 1,998Investmentcontractliabilities1 927 905 1,473 66,952 70,257Externalunitholders’liabilities – – – 13,571 13,571

Derivativefinancialinstruments Interestrateswaps 27 89 – – 116

Off-balancesheetitems Credit-relatedcommitments–AMPBank3 2,897 – – – 2,897

Totalundiscountedfinancialliabilitiesandoff-balancesheetitems2 16,920 6,508 3,532 80,523 107,483

1 Investmentcontractliabilitiesareliabilitiestopolicyholdersforinvestment-linkedbusinesslinkedtotheperformanceandvalueofassetsthatbackthoseliabilities.Ifallthesepolicyholdersclaimedtheirfunds,theremaybesomedelayinsettlingtheliabilityasassetsareliquidated,buttheshareholderhasnodirectexposuretoanyliquidityrisk.Externalunitholders’liabilitiesallrelatetocontrolledentitiesofthelifeentities’statutoryfundsandwouldonlybepaidwhencorrespondingassetsarerealised.

2 Estimatednetcashoutflowprofileoflifeinsurancecontractliabilities,disclosedinnote4.4(d),isexcludedfromtheabovetable.3 Loancommitmentsareoff-balancesheetastheyrelatetounexercisedcommitmentstolendtocustomersofAMPBank.

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3.3 Financial risk management (continued)(c) CreditriskCreditriskmanagementisdecentralisedinbusinessunitswithintheAMPgroup,withtheexceptionofcreditriskdirectlyandindirectlyimpactingshareholdercapital,whichismeasuredandmanagedonanaggregatebasisbyGroupTreasuryattheAMPgrouplevelandreportedtoGroupALCO.

Risk Exposures Managementofexposuresanduseofderivatives

CreditriskCreditdefaultriskistheriskoffinancialorreputationallossduetoacounterpartyfailingtomeettheircontractualcommitmentsinfullandontime.

Concentrationofcreditriskariseswhenanumberoffinancialinstrumentsorcontractsareenteredintowiththesamecounterpartyorwhereanumberofcounterpartiesareengagedinsimilarbusinessactivitiesthatwouldcausetheirabilitytomeetcontractualobligationstobesimilarlyaffectedbychangesineconomicorotherconditions.

WholesalecreditriskontheinvestedfixedincomeportfoliosintheAMPLifeandNMLAstatutoryfunds.

ManagedbytheAMPCapitalRiskandComplianceCommitteeandreportedtothefundmanagers,withinspecifiedcreditcriteriainthemandateapprovedbytheAMPLifeandNMLAboards.

Wholesalecreditrisk,includingportfolioconstruction,inthefixedincomeportfoliosmanagedbyAMPCapital.

Responsibilityoftheindividualinvestmentteams.Thereisalsoadedicatedcreditresearchteamandaspecificcreditinvestmentcommittee.TheinvestmentriskandperformanceteamprovidesreportstotheAMPCapitalInvestmentCommittee.

CreditriskarisinginAMPBankaspartoflendingactivitiesandmanagementofliquidity.

ManagedasprescribedbyAMPBank’sRiskManagementSystemsDescriptionandreportedtoAMPBankALCOmonthly.

SpecificdetailrelatingtocreditriskmanagementoftheAMPBankloanportfolioisoutlinedbelow.

TheAMPConcentrationandCreditDefaultRiskPolicysetsouttheassessmentanddeterminationofwhatconstitutescreditconcentrationrisk.Thepolicysetsexposurelimitsbasedoneachcounterparty’screditrating(unlessspecialconsiderationsaredefined).Additionallimitsaresetforthedistributionofthetotalportfoliobycreditratingbands.Compliancewiththispolicyismonitoredandexposuresandbreachesarereportedtoportfoliomanagers,seniormanagementandtheAMPLimitedBoardRiskCommitteethroughperiodicfinancialriskmanagementreports.

GroupTreasuryalsomightenterintocreditdefaultswapstohedgetheconcentrationriskexposureagainstaspecificissuer,oraggregatedattheparententity,whenmaterialexposuresareovertheauthorisedlimit.

TheexposuresoninterestbearingsecuritiesandcashequivalentswhichimpacttheAMPgroup’scapitalpositionaremanagedbyGroupTreasurywithinlimitssetbytheAMPConcentrationandCreditDefaultRiskPolicy.

CreditriskoftheloanportfolioinAMPBankAMPBankispredominantlyalenderforresidentialproperties,bothowneroccupiedandforinvestment.Ineverycase,AMPBankcompletesacreditassessment,whichincludescostoflivingallowanceandrequiresvaluationoftheproposedsecurityproperty.

AMPBank’sCreditCommitteeandBoardoverseetrendsinlendingexposuresandcompliancewithconcentrationlimits.AMPBanksecuresitsloanwithfirstregisteredmortgagesoverrelevantpropertiesandasaresultmanagescreditriskonitsloanwithconservativelendingpoliciesandparticularfocusontheloantovalueratio(LVR).TheLVRiscalculatedbydividingthetotalloanamountoutstandingbythelowerofAMPBank’sapprovedvaluationamountorthepurchaseprice.LoanswithLVRgreaterthan80%arefullymortgageinsured.MortgageinsuranceisprovidedbyGenworthMortgageInsuranceAustraliaLtdandQBELendersMortgageInsuranceLtdwhoarebothregulatedbyAPRA.Thepotentialcreditexposuretotheloanmortgageinsurershasbeenassessedtobelowduetothestablehistoricalrelationshipwiththebankandminimallevelofhistoricclaimsrejectionsandreductions.

TheaverageLVRatoriginationofAMPBank’sloanportfolioforexistingandnewbusinessissetoutinthefollowingtable:

LVR

Existingbusiness

2016%

Newbusiness

2016%

Existingbusiness

2015%

Newbusiness

2015%

0–50 17 9 16 851–60 11 9 10 761–70 17 16 15 1271–80 38 50 40 5081–90 13 8 14 1191–95 4 8 5 12>95 – – – –

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3.3 Financial risk management (continued)PastduebutnotimpairedfinancialassetsAgeingofpastduebutnotimpairedfinancialassetsisusedbytheAMPgrouptomeasureandmanageemergingcreditrisks.Thefollowingtableprovidesanageinganalysisofdebtsecuritiesthatarepastdueasatreportingdatebutnotimpaired.

Pastduebutnotimpaired

Notpastduenorimpaired

$m

Lessthan31days

$m31-60days

$m61-90days

$m

Morethan91days

$mTotal

$m

2016Debtsecurities–loansandadvances 16,668 373 66 25 72 17,204

2015 Debtsecurities–loansandadvances 14,818 341 46 18 58 15,281

AMPBankmaintainsindividualprovisionsandcollectiveloanimpairmentprovisionsagainstimpairedloans.

CollateralandmasternettingorsimilaragreementsTheAMPgroupobtainscollateralandutilisesnettingagreementstomitigatecreditriskexposuresfromcertaincounterparties.

(i) Derivative financial assets and liabilitiesThecreditriskofderivativesismanagedinthecontextoftheAMPgroup’soverallcreditriskpoliciesandincludestheuseofCreditSupportAnnexestoderivativeagreementswhichfacilitatethebi-lateralpostingofcollateral.

Certainderivativeassetsandliabilitiesaresubjecttolegallyenforceablemasternettingarrangements,suchasanInternationalSwapsandDerivativesAssociation(ISDA)masternettingagreement.Incertaincircumstances,forexample,whenacrediteventsuchasadefaultoccurs,alloutstandingtransactionsunderanISDAagreementareterminated,theterminationvalueisassessedandonlyasinglenetamountispayableinsettlementofalltransactions.

AnISDAagreementdoesnotautomaticallymeetthecriteriaforoffsettingintheStatementoffinancialposition.ThisisbecausetheAMPgroup,inmostcases,doesnothaveanycurrentlegallyenforceablerighttooffsetrecognisedamounts.

Ifthesenettingarrangementswereappliedtothederivativeportfolio,thederivativeassetsof$1,195mwouldbereducedby$86mtothenetamountof$1,109mandderivativeliabilitiesof$1,150mwouldbereducedby$86mtothenetamountof$1,064m(2015:derivativeassetsof$1,790mwouldbereducedby$285mtothenetamountof$1,505mandderivativeliabilitiesof$883mwouldbereducedby$285mtothenetamountof$598m).

(ii) Repurchase agreementsIncludedwithindebtsecuritiesareassetsheldtobacktheliabilityforcollateraldepositsheldinrespectofdebtsecurityrepurchasearrangementsenteredintobythelifeentities’statutoryfundsandcontrolledentitiesofthelifeentities’statutoryfunds.Asat31December2016,ifrepurchasearrangementswerenetted,debtsecuritiesof$34,512mwouldbereducedby$25mtothenetamountof$34,487mandcollateraldepositsheldof$92mwouldbereducedby$25mtothenetamountof$67m(2015:debtsecuritiesof$35,743mwouldbereducedby$162mtothenetamountof$35,581mandcollateraldepositsheldof$225mwouldbereducedby$162mtothenetamountof$63m).

(iii) Other collateralTheAMPgrouphascollateralarrangementsinplacewithsomecounterpartiesinadditiontocollateraldepositsheldwithrespecttorepurchaseagreements.TheamountandtypeofcollateralrequiredbyAMPBankonhousingloansdependsonanassessmentofthecreditriskofthecounterparty.Guidelinesareinplacecoveringtheacceptabilityandvaluationofeachtypeofcollateral.

AMPBankholdscollateralagainstitsloansandadvancesprimarilyintheformofmortgageinterestsoverproperty,otherregisteredsecuritiesoverassetsandguarantees.

Managementmonitorsthemarketvalueofcollateralandwillrequestadditionalcollateralinaccordancewiththeunderlyingagreement.Intheeventofcustomerdefault,AMPBankcanenforceanysecurityheldascollateralagainsttheoutstandingclaim.AnyloansecurityisusuallyheldasmortgageeinpossessionwhileAMPBankseekstorealiseitsvaluethroughthesaleofproperty.Therefore,AMPBankdoesnotholdanyrealestateorotherassetsacquiredthroughtherepossessionofcollateral.

Collateralgenerallyconsistsof11amloansanddepositsandisexchangedbetweenthecounterpartiestoreducetheexposurefromthenetfairvalueofderivativeassetsandliabilitiesbetweenthecounterparties.Asat31December2016therewas$2mofcollateraldepositsduetootherfinancialinstitutions(2015:$63m).F

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3.4 Other derivative informationDerivativeswhicharehedgeaccountedDerivativeinstrumentsaccountedforasfairvaluehedgesFairvaluehedgesareusedtoprotectagainstchangesinthefairvalueoffinancialassetsandfinancialliabilitiesduetomovementsinexchangeratesandinterestrates.DuringtheyeartheAMPgrouprecognisedanetlossof$1m(2015:$4mgain)onderivativeinstrumentsdesignatedasfairvaluehedges.Thenetgainonthehedgedinterest-bearingliabilitiesamountedto$1m(2015:$4mloss).

DerivativeinstrumentsaccountedforascashflowhedgesTheAMPgroupisexposedtovariabilityinfuturecashflowsoninterest-bearingliabilitieswhichcanbeatfixedandvariableinterestrates.TheAMPgroupusesinterestrateswapsdesignatedasacashflowhedgetomanagetheserisks.

Thefollowingscheduleshows,asatreportingdate,theperiodswhenthehedgedcashflowsareexpectedtooccurandwhentheyareexpectedtoaffectprofitandloss.Duringtheyearnil(2015:nil)wasrecognisedintheIncomestatementduetohedgeineffectivenessfromcashflowhedges.

0-1year$m

1-2years$m

2-3years$m

3-4years$m

4-5years$m

2016 Cashinflows 98 40 15 6 3Cashoutflows (104) (38) (14) (8) (4)

Netcashinflow(outflow) (6) 2 1 (2) (1)

2015 Cashinflows 155 58 27 13 4Cashoutflows (179) (43) (16) (5) (1)

Netcashinflow(outflow) (24) 15 11 8 3

HedgesofnetinvestmentsinforeignoperationsTheAMPgrouphedgesitsexposuretochangesinexchangeratesonthevalueofitsforeigncurrencydenominatedseedpoolinvestments.Gainsorlossesoneffectiveseedpoolhedgesaretransferredtoequitytooffsetanygainsorlossesontranslationofthenetinvestmentinforeignoperations.

TheAMPgrouprecognisedaprofitofnil(2015:nil)duetotheineffectiveportionofhedgesrelatingtoinvestmentsinseedpoolforeignoperations.

Accountingpolicy–recognitionandmeasurementDerivativefinancialinstrumentsDerivativefinancialinstrumentsareinitiallyrecognisedatfairvalueexclusiveofanytransactioncostsonthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalueateachreportingdate.Allderivativesarerecognisedasassetswhentheirfairvalueispositiveandasliabilitieswhentheirfairvalueisnegative.Anygainsorlossesarisingfromthechangeinfairvalueofderivatives,exceptthosethatqualifyaseffectivecashflowhedges,areimmediatelyrecognisedintheIncomestatement.

HedgeaccountingWhentheAMPgroupdesignatescertainderivativestobepartofahedgingrelationship,andtheymeetthecriteriaforhedgeaccounting,thehedgesareclassifiedas:

Fair value hedgesChangesinthefairvalueoffairvaluehedgesarerecognisedintheIncomestatement,togetherwithanychangesinthefairvalueofthehedgedassetorliabilitythatareattributabletothehedgedrisk.Ifahedgenolongermeetsthecriteriaforhedgeaccounting,thecumulativegainsandlossesrecognisedonthehedgeditemwillbeamortisedovertheremaininglifeofthehedgeditem.

Cash flow hedgesTheeffectiveportionofchangesinthefairvalueofcashflowhedgesisrecognised(includingrelatedtaximpacts)throughOthercomprehensiveincomeintheCashflowhedgereserveinequity.TheineffectiveportionisrecognisedimmediatelyintheIncomestatement.ThebalanceoftheCashflowhedgereserveinrelationtoeachparticularhedgeistransferredtotheIncomestatementintheperiodwhenthehedgeditemaffectsprofitorloss.Hedgeaccountingisdiscontinuedwhenahedginginstrumentexpiresorissoldorterminated,orwhenahedgenolongermeetsthecriteriaforhedgeaccounting.ThecumulativegainorlossexistinginequityatthattimeremainsinequityandisrecognisedwhentheforecasttransactionisultimatelyrecognisedintheIncomestatement.Whenaforecasttransactionisnolongerexpectedtooccur,thecumulativegainorlossthatwasreportedinequityisimmediatelytransferredtotheIncomestatement.

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3.5 Capital management AMPholdscapitaltoprotectcustomers,creditorsandshareholdersagainstunexpectedlosses.ThereareanumberofwaysAMPassessestheadequacyofitscapitalposition.Primarily,AMPaimsto:– maintainasufficientsurplusaboveminimumregulatorycapitalrequirements(MRR)toreducetheriskofbreachingMRR;– holdsufficientliquiditytoensurethatAMPhassufficientaccesstoliquidfunds,evenunderstresssituations;– maintaintheAMPgroup’screditrating.

CalculationofcapitalresourcesTheAMPgroup’scapitalresourcesincludeordinaryequityandinterest-bearingliabilities.TheAMPgroupexcludestheinterest-bearingliabilitiesofitsbankingsubsidiary,AMPBankLimited,andcontrolledinvestmentsubsidiariesandtrusts,fromtheAMPgroupcapitalresources.

IndeterminingthecapitalresourcestheAMPgroupneedstomakeadjustmentstothestatutoryshareholderequity.UnderAustralianAccountingStandards,someassetsheldonbehalfofthepolicyholders(andrelatedtaxbalances)arerecognisedinthefinancialreportatdifferentvaluestothevaluesusedinthecalculationoftheliabilitytopolicyholdersinrespectofthesameassets.Therefore,movementsinthesepolicyholderassetsresultinaccountingmismatcheswhichimpactthestatutoryequityattributabletoshareholdersofAMPLimited.Mismatchesariseonthefollowingitems:– treasuryshares(AMPLimitedsharesheldbythestatutoryfundsonbehalfofpolicyholders);– AMPLifeLimitedstatutoryfunds’investmentsincontrolledentities;– AMPLifeLimitedstatutoryfunds’superannuationproductsinvestedinAMPBankLimitedassets.

AdjustmentsarealsomaderelatingtocashflowhedgereservesandtoexcludethenetassetsoftheAMPFoundation.

ThetablebelowshowstheAMPgroup’scapitalresourcesatreportingdate:

2016$m

2015$m

AMPstatutoryequityattributabletoshareholdersofAMPLimited 7,462 8,519Accountingmismatch,cashflowhedgeresourcesandotheradjustments 27 104

AMPshareholderequity 7,489 8,623Subordinateddebt1 951 1,551Seniordebt1 611 250

TotalAMPcapitalresources 9,051 10,424

1 Amountsshownforsubordinateddebtandseniordebtaretheamountstoberepaidonmaturity.

CapitalrequirementsAnumberoftheoperatingentitieswithintheAMPgroupofcompaniesareregulatedandarerequiredtomeetminimumregulatorycapitalrequirements(MRR).ThemainminimumregulatorycapitalrequirementsforAMP’sbusinessesare:

Operatingentity Minimumregulatorycapitalrequirement

AMPLifeLimited(AMPLife)andTheNationalMutualLifeAssociationofAustralasiaLimited(NMLA)

CapitaladequacyrequirementsasspecifiedundertheAPRALifeInsurancePrudentialStandards

AMPBankLimited(AMPBank) CapitalrequirementsasspecifiedundertheAPRAADIPrudentialStandards

AMPSuperannuationLimitedandNationalMutualSuperannuationPtyLimited

OperationalRiskFinancialRequirementsasspecifiedundertheAPRASuperannuationPrudentialStandards

AMPCapitalInvestorsLimitedandotherASICregulatedbusinesses

CapitalrequirementsunderAFSLrequirementsandforrisksrelatingtoNorth

AMP’sbusinessesandtheAMPgroupmaintaincapitaltargetsreflectingtheirmaterialrisks(includingfinancialrisk,productandinsuranceriskandoperationalrisk)andAMP’sriskappetite.ThetargetsurplusisamanagementguidetothelevelofexcesscapitalthattheAMPgroupseekstocarrytoreducetheriskofbreachingMRR.

AMPLimited,AMPLife,NMLAandAMPBankhaveboardapprovedminimumcapitallevelsaboveAPRArequirements,withadditionalcapitaltargetsheldabovetheseamounts.Withinthelifeinsurancebusinesses,thecapitaltargetsaboveboardminimumshavebeensettoalessthan10%probabilityofcapitalresourcesfallingbelowtheboardminimumovera12-monthperiod.CapitaltargetsarealsosetforAMPCapitaltocoverriskassociatedwithseedandsponsorcapitalinvestmentsandoperationalrisk.OthercomponentsofAMPgroup’scapitaltargetsincludeamountsrelatingtoGroupOfficeinvestments,definedbenefitfundsandotheroperationalrisks.

AlloftheAMPgroupregulatedentitieshaveatalltimesduringthecurrentandpriorfinancialyearcompliedwiththeexternallyimposedcapitalrequirementstowhichtheyaresubject.

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Section 4: Life insurance and investment contractsThissectionexplainshowAMP’sliabilitiesinrespectoflifeinsurancecontractsandinvestmentcontractsaremeasured,includingthemethodologiesandkeyassumptionsthatareapplied.Italsodetailsthekeycomponentsoftheprofitsthatarerecognisedinrespectoflifeinsurancecontractsandthesensitivityofthoseprofitstovariationsinassumptions.

4.1 Accountingforlifeinsurancecontractsandinvestmentcontracts4.2 Lifeinsurancecontracts–premiums,claims,expensesandliabilities4.3 Lifeinsurancecontracts–assumptionsandvaluationmethodology4.4 Lifeinsurancecontracts–risk4.5 Otherdisclosure–lifeinsurancecontractsandinvestmentcontracts

4.1 Accounting for life insurance contracts and investment contractsTheAMPgroup’slifeinsurancerelatedactivitieswereconductedthroughtworegisteredlifeinsurancecompanies,AMPLifeLimited(AMPLife)andTheNationalMutualLifeAssociationofAustralasiaLimited(NMLA),collectively‘theAMPlifeinsuranceentities’.

Thetwomajorcontractclassificationsareinvestmentcontractsandlifeinsurancecontracts.

Forthepurposesofthisfinancialreport,holdersofinvestmentcontractsorlifeinsurancecontractsarecollectivelyandindividuallyreferredtoaspolicyholders.

InvestmentcontractsTheinvestmentcontractsoftheAMPlifeinsuranceentitiesrelatetowealthmanagementproductssuchassavings,investment-linkedandretirementincomepolicies.ThenatureofthisbusinessisthattheAMPlifeinsuranceentitiesreceivedepositsfrompolicyholdersandthosefundsareinvestedonbehalfofthepolicyholders.Feesandotherchargesarepassedtotheshareholderandreportedasrevenue.

Theliabilitytopolicyholders,otherthanforfixedretirementincomepolicies,islinkedtotheperformanceandvalueoftheassetsthatbackthoseliabilities.Thefairvalueofsuchliabilitiesisthereforethesameasthefairvalueofthoseassets.Forfixedretirementincomepolicies,theliabilityislinkedtothefairvalueofthefixedretirementincomepaymentsandassociatedmanagementservices.

Thefairvalueofthefixedretirementincomepaymentsiscalculatedastheirnetpresentvalueusingafairvaluediscountrate.Thefairvalueoftheassociatedmanagementserviceselementisthenetpresentvalue,usingafairvaluediscountrate,ofallexpensesassociatedwiththeprovisionofservicesandanyprofitmarginsthereon.

LifeinsurancecontractsTheAMPlifeinsuranceentitiesissuecontractsthattransfersignificantinsuranceriskfromthepolicyholder,coveringdeath,disabilityorlongevityoftheinsured.Inaddition,therearesomepoliciesknownasdiscretionaryparticipatingcontractsthataresimilartoinvestmentcontracts,butthetimingofthevestingoftheprofitattributabletothepolicyholdersisatthediscretionoftheAMPlifeinsuranceentities.Suchcontractsaredefinedaslife insurance contractsandaccountedforusing Margin on Services(MoS).

UnderMoS,theexcessofpremiumreceivedoverclaimsandexpenses(themargin)isrecognisedoverthelifeofthecontractinamannerthatreflectsthepatternofriskacceptedfromthepolicyholder(theservice).TheplannedreleaseofthismarginisincludedinthemovementinlifeinsurancecontractliabilitiesrecognisedintheIncomestatement.

Lifeinsurancecontractliabilitiesareusuallydeterminedusingaprojectionmethod,wherebyestimatesofpolicycashflows(premiums,benefits,expensesandprofitmarginstobereleasedinfutureperiods)areprojectedusingbest-estimateassumptionsaboutthefuture.Theliabilityiscalculatedasthenetpresentvalueoftheseprojectedcashflows.Whenthebenefitsunderalifeinsurancecontractarelinkedtotheassetsbackingit,thediscountrateappliedisbasedontheexpectedfutureinvestmentearningsrateofthoseassets.Wherethebenefitsarenotlinkedtotheperformanceofthebackingassets,arisk-freediscountrateisused.Therisk-freediscountrateisbasedonthezerocoupongovernmentbondrateandaliquiditymargin,whichdependonthenature,structureandtermsofthecontractliabilities.

Anaccumulationmethodmaybeusedifitproducesresultsthatarenotmateriallydifferentfromthoseproducedbyaprojectionmethod.Amodifiedaccumulationmethodisusedforsomediscretionaryparticipatingbusiness,wherethelifeinsuranceliabilityistheaccumulationofamountsinvestedbypolicyholders,lessfeesspecifiedinthepolicy,plusinvestmentearningsandvestedbenefits,adjustedtoallowforthefactthatcreditingratesaredeterminedbyreferencetoinvestmentincomeoveraperiodofgreaterthanoneyear.Theaccumulationmethodmaybeadjustedtotheextentthatacquisitionexpensesaretoberecoveredfromfuturemarginsbetweenfeesandexpenses.

AllocationofoperatingprofitandunvestedpolicyholderbenefitsTheoperatingprofitarisingfromdiscretionaryparticipatingcontractsisallocatedbetweenshareholdersandparticipatingpolicyholdersbyapplyingtheMoSprinciplesinaccordancewiththeLife Insurance Act 1995(Cth)(LifeAct)andtheParticipatingBusinessManagementFrameworkapplyingtoNMLA.

Onceprofitisallocatedtoparticipatingpolicyholdersitcanonlybedistributedtothesepolicyholders.

ProfitallocatedtoparticipatingpolicyholdersisrecognisedintheIncomestatementasanincreaseinpolicyliabilities.Thepolicyliabilitiesincludeprofitthathasnotyetbeenallocatedtospecificpolicyholders(ieunvested)andthatwhichhasbeenallocatedtospecificpolicyholdersbywayofbonusdistributions(ievested).

Bonusdistributionstoparticipatingpolicyholdersdonotaltertheamountofprofitattributabletoshareholders.Therearemerelychangestothenatureoftheliabilityfromunvestedtovested.

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Notes to the financial statements for the year ended 31 December 2016

4.1 Accounting for life insurance contracts and investment contracts (continued)Theprinciplesofallocationoftheprofitarisingfromdiscretionaryparticipatingbusinessareasfollows:(i) investmentincome(netoftaxandinvestmentexpenses)onretainedearningsinrespectofdiscretionaryparticipatingbusiness

isallocatedbetweenpolicyholdersandshareholdersinproportiontothebalancesofpolicyholders’andshareholders’retainedearnings.Thisproportionis,mostly,80%topolicyholdersand20%toshareholders;

(ii) otherMoSprofitsarisingfromdiscretionaryparticipatingbusinessareallocated80%topolicyholdersand20%toshareholders,withthefollowingexceptions:

– theprofitarisingfromNewZealandcorporatesuperannuationbusinessisapportionedsuchthatshareholdersareallocated15%oftheprofitallocatedtopolicyholders;

– theprofitarisinginrespectofpreservationsuperannuationaccountbusinessisallocated92.5%topolicyholdersand7.5%toshareholders;

– theprofitsarisingfromNMLA’sdiscretionaryparticipatinginvestmentaccountbusinesswhere100%ofinvestmentprofitisallocatedtopolicyholdersand100%ofanyotherprofitorlossisallocatedtoshareholders,withtheover-ridingprovisionbeingthatatleast80%ofanyprofitandnotmorethan80%ofanylossbeallocatedtopolicyholders’retainedprofitsoftherelevantstatutoryfund;

– theunderwritingprofitarisinginrespectofNMLA’sparticipatingsuperriskbusinessisallocated90%topolicyholdersand10%toshareholders.

Allocationofexpenseswithinthelifeinsuranceentities’statutoryfundsAlloperatingexpensesrelatingtothelifeinsurancecontractandinvestmentcontractactivitiesareapportionedbetweenacquisition,maintenanceandinvestmentmanagementexpenses.Expenseswhicharedirectlyattributabletoanindividuallifeinsurancecontractorinvestmentcontractorproductareallocateddirectlytoaparticularexpensecategory,fund,classofbusinessandproductlineasappropriate.

Whereexpensesarenotdirectlyattributable,theyareappropriatelyapportioned,accordingtodetailedexpenseanalysis,withdueregardtotheactivitiestowhichthatexpenserelates.TheapportionmentbasishasbeenmadeinaccordancewithActuarialStandardsandonanequitablebasistothedifferentclassesofbusinessinaccordancewiththeLifeAct.

Thecostsapportionedtolifeinsurancecontractsareincludedinthedeterminationofthemargindescribedinnote4.1.

Investmentmanagementexpensesofthelifestatutoryfundsareclassifiedasoperatingexpenses.

ReinsuranceLifeinsurancecontractpremiumcededtoreinsurersisrecognisedasanexpenseandLifeinsurancecontractclaimsrecoveredfromreinsurersisrecognisedasincome.

Upfrontcommissionreceivedonquotasharereinsurancecontractsisrecognisedascommissionrevenueandacorrespondingreinsuranceliabilityisrecognisedrepresentingtheobligationtopayfuturepremiumstothereinsurer.TheestablishmentofthereinsuranceliabilityisreflectedinChangeinpolicyholderliabilities.Theliabilitywillbereleasedinlinewiththereleaseoftheprofitmarginontheunderlyinginsurancecontracts.

ThepresentvalueofAMP’snetcontractualrightsandobligationsunderreinsurancecontractsispresentedasareinsuranceassetorareinsuranceliability.

ChangesinthereinsuranceassetandthereinsuranceliabilityduringtheperiodarerecognisedasChangesinpolicyholderliabilities.

On-goingcommissionfromreinsurersisrecognisedasrevenueatthetimethecommissionisreceivedorreceivable.

Criticalaccountingestimatesandjudgements:Life insurance contract liabilitiesThe measurement of insurance contract liabilities is determined using the MoS methodology. The determination of the liability amounts involves judgement in selecting the valuation methods, profit carriers and valuation assumptions for each type of business. The determination is subjective and relatively small changes in assumptions may have a significant impact on the reported profit. The board of each of the life entities is responsible for these judgements and assumptions, after taking advice from the Appointed Actuary.

Investment contract liabilitiesInvestment contract liabilities are measured at fair value. For the majority of contracts, the fair value is determined based on published unit prices and the fair value of backing assets, and does not generally require the exercise of judgement. For fixed income products and the North capital guarantee, fair value is determined using valuation models. Judgement is applied in selecting the valuation model and setting the valuation assumptions.

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4.2 Life insurance contracts – premiums, claims, expenses and liabilities

2016$m

2015$m

(a) Analysisoflifeinsurancecontractrelatedrevenue–netofreinsurance Lifeinsurancecontractpremiumrevenue1 2,333 2,337Commissionreceivedfromreinsurers 550 –

Lifeinsurancecontractrelatedrevenue 2,883 2,337Lifeinsurancecontractpremiumcededtoreinsurers (243) (176)

Lifeinsurancecontractrelatedrevenue–netofreinsurance 2,640 2,161

(b) Analysisoflifeinsurancecontractclaimsexpenses–netofreinsurance Lifeinsurancecontractclaimsexpense (2,038) (1,988)Lifeinsuranceclaimsrecoveredfromreinsurers 150 128

Lifeinsurancecontractclaimsexpenses–netofreinsurance (1,888) (1,860)

(c) Analysisoflifeinsurancecontractoperatingexpenses Lifeinsurancecontractacquisitionexpenses – commission (52) (58)– otherexpenses (141) (150)Lifeinsurancecontractmaintenanceexpenses – commission (191) (192)– otherexpenses (389) (386)Investmentmanagementexpenses (51) (53)

1 Lifeinsurancecontractpremiumrevenueconsistsentirelyofdirectinsurancepremiums;thereisnoinwardreinsurancecomponent.

(d) Lifeinsurancecontractliabilities Lifeinsurancecontractliabilitiesdeterminedusingprojectionmethod Best estimate liability – valueoffuturelifeinsurancecontractbenefits 18,120 19,333– valueoffutureexpenses 4,789 4,964– valueoffuturepremiums (16,209) (19,447)Value of future profits – lifeinsurancecontractholderbonuses 3,188 3,129– shareholders’profitmargins 2,606 3,338

Totallifeinsurancecontractliabilitiesdeterminedusingtheprojectionmethod1 12,494 11,317

Lifeinsurancecontractliabilitiesdeterminedusingaccumulationmethod Best estimate liability – valueoffuturelifeinsurancecontractbenefits 9,181 9,549– valueoffutureacquisitionexpenses (65) (87)

Totallifeinsurancecontractliabilitiesdeterminedusingtheaccumulationmethod 9,116 9,462

Valueofdeclaredbonus 351 384Unvestedpolicyholderbenefitsliabilities1 2,248 2,217

Totallifeinsurancecontractliabilitiesnetofreinsurance 24,209 23,380

Reinsuranceasset–cededlifeinsurancecontracts 546 491Reinsuranceliability–cededlifeinsurancecontracts2 (530) –

Totallifeinsurancecontractliabilitiesgrossofreinsurance 24,225 23,871

1 Forparticipatingbusinessesinthestatutoryfunds,partoftheassetsinexcessofthelifeinsurancecontractandotherliabilitiescalculatedunderMoSisattributedtopolicyholders.UndertheLifeAct,thisisreferredtoaspolicyholderretainedprofits.Forthepurposeofreportingunderaccountingstandards,thisamountisreferredtoasunvestedpolicyholderbenefitsliabilitiesandisincludedwithinlifeinsurancecontractliabilitieseventhoughitisyettobevestedasspecificpolicyholderentitlements.

2 Reinsuranceliability–cededlifeinsurancecontractsreflectsthepresentvalueofthenetobligationtotransfercashflowsunderthenew50%quotasharereinsurancearrangementeffectivefrom1November2016inreturnfortheupfrontcommissionreceived.

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4.2 Life insurance contracts – premiums, claims, expenses and liabilities (continued)

2016$m

2015$m

(e) Reconciliationofchangesinlifeinsurancecontractliabilities Totallifeinsurancecontractliabilitiesatthebeginningoftheyear 23,871 24,403ChangeinlifeinsurancecontractliabilitiesrecognisedintheIncomestatement 1,471 240Premiumsrecognisedasanincreaseinlifeinsurancecontractliabilities 415 467Claimsrecognisedasadecreaseinlifeinsurancecontractliabilities (1,140) (1,153)Changeinreinsuranceasset–cededlifeinsurancecontracts 55 (38)Changeinreinsuranceliability–cededlifeinsurancecontracts (530) –Foreignexchangeadjustment 83 (48)

Totallifeinsurancecontractliabilitiesattheendoftheyear 24,225 23,871

4.3 Life insurance contracts – assumptions and valuation methodology Lifeinsurancecontractliabilities,andhencethenetprofitsfromlifeinsurancecontracts,arecalculatedbyapplyingtheprinciplesofmarginonservices(MoS)describedinnote4.1.Thekeyassumptionsandmethodsusedinthecalculationoflifeinsurancecontractliabilitiesareoutlinedbelow.

Themethodsandprofitcarriersusedtocalculatelifeinsurancecontractliabilitiesforparticularpolicytypesareasfollows:

Businesstype MethodProfitcarriers(forbusinessvaluedusingprojectionmethod)

Conventional Projection BonusesInvestmentaccount Modifiedaccumulation n/aRetailrisk(lumpsum) Projection ExpectedpremiumsRetailrisk(incomeprotection) Projection ExpectedpremiumsGrouprisk(lumpsum) Accumulation n/aGrouprisk(incomebenefits) Accumulation n/aParticipatingallocatedannuities(AMPLifeonly) Modifiedaccumulation n/aLifeannuities Projection Annuitypayments

(a) Risk-freediscountratesExceptwherebenefitsarecontractuallylinkedtotheperformanceoftheassetsheld,arisk-freediscountratebasedoncurrentobservable,objectiveratesthatrelatetothenature,structureandtermofthefutureobligationsisused.Theratesaredeterminedasshowninthefollowingtable:

31December2016 31December2015

Businesstype Basis1Australia

%NewZealand

%Australia

%NewZealand

%

Retailrisk(otherthanincomebenefitopenclaims)1

Zerocoupongovernmentbondyieldcurve

1.7–4.1 1.9–4.8 2.0–3.7 2.7–4.5

Retailriskandgrouprisk(incomebenefitopenclaims)1

Zerocoupongovernmentbondyieldcurve(includingliquiditypremium)

2.1–4.4 2.2–5.1 2.5–4.2 3.1–5.0

Lifeannuities2 Non-CPI

Zerocoupongovernmentbondyieldcurve(includingliquiditypremium)

2.2–4.5 2.3–5.2 2.6–4.3 3.3–5.1

CPI Commonwealthindexedbondyieldcurve(includingliquiditypremium)

0.7–1.6 0.9–3.4 0.8–1.8 2.0–3.5

1 Thediscountratesvarybydurationintherangeshownabove. 2 Australiannon-CPIannuitiesandallCPIannuitiesareAMPLifeonly. F

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4.3 Life insurance contracts – assumptions and valuation methodology (continued)(b) FuturemaintenanceandinvestmentexpensesUnitmaintenancecostsarebasedonbudgetedexpensesintheyearfollowingthereportingdate(includingGST,asappropriate,andexcludingone-offexpenses).Forfutureyears,theseareincreasedforinflationasdescribedin(c)below.TheseexpensesincludefeeschargedtothelifestatutoryfundsbyservicecompaniesintheAMPgroup.Unitcostsvarybyproductlineandclassofbusinessbasedonanapportionmentthatissupportedbyexpenseanalyses.

Futureinvestmentexpensesarebasedonthefeescurrentlychargedbytheassetmanagers.

(c) InflationandindexationBenefitsandpremiumsofmanyregularpremiumpoliciesareautomaticallyindexedbythepublishedconsumerpriceindex(CPI).Assumedfuturetake-upoftheseindexationoptionsisbasedonAMPLife’sandNMLA’sownexperience.TheannualfutureCPIratesarederivedfromthedifferencebetweenlong-termgovernmentbondsandindexedgovernmentbonds.

Theexpenseinflationassumptionshavebeensetbasedontheinflationrates,recentexpenseperformance,AMPLife’sandNMLA’scurrentplansandthetermsoftherelevantservicecompanyagreements,asappropriate.

TheassumedCPIandexpenseinflationratesatthevaluationdateare:

Australia%

NewZealand%

31December2016 AMPLifeandNMLA 2.0CPI,3.0expenses 1.5CPI,2.0expenses31December2015 AMPLifeandNMLA 2.2CPI,3.0expenses 2.5CPI,3.0expenses

(d) BasesoftaxationThebasesoftaxation(includingdeductibilityofexpenses)areassumedtocontinueinaccordancewithlegislationcurrentatthevaluationdate.

(e) VoluntarydiscontinuanceAssumptionsfortheincidenceofwithdrawals,paidupsandpremiumdormancyareprimarilybasedoninvestigationsofAMPLife’sandNMLA’sownhistoricalexperience.Theseratesarebasedupontheassessedglobalrateforeachoftheindividualproducts(orproductgroups)andthen,whereappropriate,furtheradjustedforduration,premiumstructure,smokerstatus,ageattainedorshort-termmarketandbusinesseffects.Giventhevarietyofinfluencesaffectingdiscontinuancefordifferentproductgroups,therangeofvoluntarydiscontinuanceratesacrossAMPLifeandNMLAisextremelydiverse.

Theassumptionsforfutureratesofdiscontinuanceforthemajorclassesoflifeinsurancecontractshavebeenreviewedandstrengthenedforsomebusinesslinesfromthoseassumedat31December2015,asshowninthefollowingtable.

31December2016 31December2015

Businesstype LifecompanyAustralia

%NewZealand

%Australia

%NewZealand

%

Conventional AMPLife 1.7–4.1 1.1–1.6 1.7–4.1 1.1–1.7 NMLA 2.0–9.4 1.9–2.5 2.1–9.4 1.9–2.5

Retailrisk(lumpsum) AMPLife 14.2–18.3 12.0 12.1–16.4 12.0–13.0 NMLA 12.7–13.5 11.6 13.3–15.1 11.6

Retailrisk(incomebenefit) AMPLife 11.2–19.1 11.4 9.1–19.1 11.4 NMLA 8.0–13.5 9.5 12.0–13.3 9.5

FlexibleLifetimeSuper(FLS)riskbusiness AMPLife 13.3–16.5 n/a 10.2–18.9 n/a

Investmentaccount AMPLife n/a n/a n/a n/a NMLA n/a n/a n/a n/a

(f) SurrendervaluesThesurrenderbasesassumedforcalculatingsurrendervaluesarethosecurrentatthereportingdate.Therehavebeennochangestothebasesduringtheyear(ortheprioryear)thatwouldmateriallyaffectthevaluationresults.

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4.3 Life insurance contracts – assumptions and valuation methodology (continued)(g) MortalityandmorbidityStandardmortalitytables,basedonnationalorindustry-widedata,areused.

Ratesofmortalityassumedat31December2016forAMPLifeandNMLAareasfollows:– RetailriskmortalityratesforAMPLifeAustraliaandNMLAAustraliahavebeenreviewedandstrengthenedforsomebusiness

linesfromthoseassumedat31December2015,asindicatedinthetablesbelow.RetailriskmortalityratesforAMPLifeandNMLANewZealandareunchangedfromthoseassumedat31December2015.TheratesarebasedontheIndustrystandardIA04-08DeathWithoutRiders;

– Conventionalbusinessmortalityratesareunchangedfromthoseassumedat31December2015;– Annuitantmortalityratesareunchangedfromthoseassumedat31December2015.

ForAustralianincomeprotectionbusiness,theassumptionshavebeenupdatedandbasedontherecentlyreleasedADI07-11standardtablemodifiedforAMPLifeandNMLAwithoverallproductspecificadjustmentfactors.ForNewZealandincomeprotectionbusiness,theassumptionsareunchangedfromthoseassumedat31December2015.TheseassumptionsarebasedontheIAD89-93standardtable.

ForAustralianTPDandTraumabusiness,theAMPLifeandNMLAretailriskproductsassumptionshavebeenstrengthenedforsomebusinesslinesfromthoseassumedat31December2015.ForNewZealandTPDandTraumabusiness,theretailriskproductsassumptionsareunchangedfromthoseassumedat31December2015.TheseassumptionsarebasedonthelatestindustrytableIA04-08.

Theassumptionsaresummarisedinthefollowingtable.

Conventional–%ofIA95-97(AMPLife)

Conventional–%ofIA95-97(NMLA)

Conventional Male Female Male Female

31December2016 Australia 67.5 67.5 67.5 67.5NewZealand 73.0 73.0 73.0 73.0

31December2015 Australia 67.5 67.5 67.5 67.5NewZealand 73.0 73.0 73.0 73.0

RetailLumpSum–%oftable(AMPLife)

RetailLumpSum–%oftable(NMLA)

Riskproducts Male Female Male Female

31December2016 Australia1 94–148 94–148 100–106 100–106NewZealand 100 82 120 98

31December2015 Australia1 86–118 86–118 88–104 88–104NewZealand 100 82 120 98

1 BaseIA04-08DeathWithoutRiderstablemodifiedbasedonaggregatedexperiencebutwithoverallproduct-specificadjustmentfactors.

AMPLife NMLA

AnnuitiesMale–

%ofIML00*Female–

%ofIFL00*Male–

%ofIML00*Female–

%ofIFL00*

31December2016 AustraliaandNewZealand1 95.0 80.0 95.0 80.0

31December2015 AustraliaandNewZealand1 95.0 80.0 95.0 80.0

1 Annuitiestablesmodifiedforfuturemortalityimprovements.For

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4.3 Life insurance contracts – assumptions and valuation methodology (continued)Typicalmorbidityassumptions,inaggregate,areasfollows:

Incomeprotection

Incidencerates2016–%ofADI07-112015–%ofIAD89-93

(AMPLife)

Incidencerates2016–%ofADI07-112015–%ofIAD89-93

(NMLA)

Terminationrates(ultimate)

2016–%ofADI07-112015–%ofIAD89-93

(AMPLife)

Terminationrates(ultimate)

2016–%ofADI07-112015–%ofIAD89-93

(NMLA)

31December2016 Australia 45–143 70–146 86–99 70–95

31December2015Australia 49–138 60–125 44–75 41–72

Incomeprotection

Incidencerates%ofIAD89-93

(AMPLife)

Incidencerates%ofIAD89-93

(NMLA)

Terminationrates(ultimate)

%ofIAD89-93(AMPLife)

Terminationrates(ultimate)

%ofIAD89-93(NMLA)

31December2016 NewZealand 45–67 53–80 57–78 41–57

31December2015 NewZealand 45–67 53–80 57–78 41–57

Retaillumpsum

Male%ofIA04-08

(AMPLife)

Male%ofIA04-08

(NMLA)

Female%ofIA04-08

(AMPLife)

Female%ofIA04-08

(NMLA)

31December2016 AustraliaTPD1 150–173 132–143 170–196 150–162AustraliaTrauma2 102–168 120–134 102–168 120–134NewZealandTPD1 150 194 190 194NewZealandTrauma2 114 101 114 101

31December2015AustraliaTPD1 140–155 125–138 177–196 158–175AustraliaTrauma2 105–110 96–116 105–121 96–111NewZealandTPD1 150 194 190 194NewZealandTrauma2 114 101 114 101

1 BaseIA04-08TPDtablemodifiedbasedonouraggregatedexperiencebutwithoverallproduct-specificadjustmentfactors.2 BaseIA04-08Traumatablemodifiedbasedonouraggregatedexperiencebutwithoverallproduct-specificadjustmentfactors.

Theactuarialtablesusedwereasfollows:

IA95-97 AmortalitytabledevelopedbytheInstituteofActuariesofAustraliabasedonAustralianinsuredlivesexperiencefrom1995–1997.Thetablehasbeenmodifiedtoallowforfuturemortalityimprovement.

IML00*/IFL00* IML00andIFL00aremortalitytablesdevelopedbytheInstituteandFacultyofActuariesbasedonUnitedKingdomannuitantlivesexperiencefrom1999–2002.Thetablesrefertomaleandfemalelivesrespectivelyandincorporatefactorsthatallowformortalityimprovementssincethedateoftheinvestigation.IML00*andIFL00*arethesepublishedtablesamendedforsomespecificAMPLifeandNMLAexperience.

IA04-08DTH ThiswaspublishedbytheInstituteofActuariesofAustraliaunderthenameA graduation of the 2004-2008 Lump Sum Investigation Data.Thetablehasbeenmodifiedbasedonaggregatedexperiencewithoverallproductspecificadjustmentfactors.

IA04-08TPD ThisistheTPDgraduationpublishedinthesamepaperasabove.

IA04-08Trauma ThisistheTraumagraduationpublishedinthesamepaperasabove.

IAD89-93 AdisabilitytabledevelopedbytheInstituteofActuariesofAustraliabasedonAustraliandisabilityincomeexperiencefortheperiod1989–1993.ThetablehasbeenadjustedtotakeaccountofAMPLife’sandNMLA’sownexperience.

ADI07-11 AdisabilitytabledevelopedbyKPMGattherequestoftheFinancialServicesCouncil(FSC)basedonAustraliandisabilityincomeexperiencefortheperiod2007–2011.ThistablehasbeenmodifiedforAMPLifeandNMLAwithoverallproduct-specificadjustmentfactors.

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4.3 Life insurance contracts – assumptions and valuation methodology (continued)(h) OtherparticipatingbusinessassumptionsWherebenefitsarecontractuallylinkedtotheperformanceoftheassetsheld,asisthecaseforparticipatingbusinesses,adiscountratebasedontheexpectedmarketreturnonbackingassetsisused.Theassumedearningratesforbackingassetsforparticipatingbusinessesarelargelydrivenbylong-term(eg10year)governmentbondyields.The10yeargovernmentbondyieldsusedattherelevantvaluationdatesareasshowninthefollowingtable.

Assumedearningratesforeachassetsectoraredeterminedbyaddingtothebondyieldvariousriskpremiumswhichreflecttherelativedifferencesinexpectedfutureearningratesfordifferentassetsectors.Forproductsbackedbymixedportfolioassets,theassumptionvarieswiththeproportionofeachassetsectorbackingtheproduct.Theriskpremiumsapplicableatthevaluationdateareshowninthetablebelow.

Riskpremiums

10yeargovernment

bonds%

Localequities

%

Internationalequities

%

PropertyandInfrastructure

%

Fixedinterest

%Cash

%

31December2016 Australia 2.8 4.5 3.5 2.5 AMPLife:0.6 (0.5) NMLA:0.7NewZealand 3.4 4.5 3.5 2.5 AMPLife:0.6 (0.5) NMLA:0.1

31December2015 Australia 2.9 4.5 3.5 2.5 AMPLife:0.7 (0.5) NMLA:0.8NewZealand 3.6 4.5 3.5 2.5 AMPLife:0.7 (0.5) NMLA:0.0

Theriskpremiumsforlocalequitiesincludeallowanceforimputationcredits.Theriskpremiumsforfixedinterestreflectcreditratingsoftheportfolioheld.

Theaveragesoftheassetmixesassumedforthepurposeofsettingfutureinvestmentassumptionsforparticipatingbusinessesatthevaluationdateareasshowninthetablebelowforeachlifecompany.Theseassetmixesarenotnecessarilythesameastheactualassetmixatthevaluationdateastheyreflectlong-termassumptions.

Averageassetmix1 Equities

%

PropertyandInfrastructure

%

Fixedinterest

%Cash

%

31December2016 Australia AMPLife 26 13 39 22 NMLA 36 18 32 14NewZealand AMPLife 34 17 41 8 NMLA 38 19 34 9

31December2015 Australia AMPLife 26 13 39 22 NMLA 36 18 32 14NewZealand AMPLife 34 17 42 7 NMLA 38 19 34 9

1 TheassetmixinthetableaboveincludesbothconventionalandinvestmentaccountbusinessforAMPLife,butonlyconventionalbusinessforNMLA.Asdescribedinnote4.1,100%ofinvestmentprofitsonNMLA’sinvestmentaccountbusinessareallocatedtopolicyholders.

Whereanassumptionusedisnetoftax,thetaxoninvestmentincomeisallowedforatratesappropriatetotheclassofbusinessandassetsector,includinganyallowanceforimputationcreditsonequityincome.Forthispurpose,thetotalreturnforeachassetsectorissplitbetweenincomeandcapitalgains.Theactualsplithasvariedateachvaluationdateasthetotalreturnhasvaried.

Forparticipatingbusiness,thetotalvalueoffuturebonuses(andtheassociatedshareholders’profitmargins)includedinlifeinsurancecontractliabilitiesistheamountsupportedbythevalueofthesupportingassets,afterallowingfortheassumedfutureexperience.Thepatternofbonusesandshareholders’profitmarginsassumedtoemergeineachfutureyeardependsontheassumedrelationshipbetweenreversionarybonuses(orinterestcredits)andterminalbonuses.Thisrelationshipissettoreflectthephilosophyunderlyingactualbonusdeclarations.

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4.3 Life insurance contracts – assumptions and valuation methodology (continued)Actualbonusdeclarationsaredeterminedtoreflect,overtime,theinvestmentreturnsoftheparticularfundandotherfactorsintheemergingexperienceandmanagementofthebusiness.Thesefactorsinclude:– allowanceforanappropriatedegreeofbenefitsmoothing;– reasonableexpectationsofpolicyholders;– equitybetweengenerationsofpolicyholdersappliedacrossdifferentclassesandtypesofbusiness;– ongoingcapitaladequacy.

Giventhemanyfactorsinvolved,therangeofbonusstructuresandratesforparticipatingbusinessisextremelydiverse.

TypicalsupportablebonusratesonmajorproductlinesareasfollowsforAMPLifeandNMLA(31December2015inparentheses).

ReversionarybonusBonusonsuminsured

%Bonusonexistingbonuses

%

Australia AMPLife 0.8–1.0(0.9–1.0) 1.0–1.5(1.0–1.6) NMLA 0.4–1.0(0.5–1.0) 0.8–1.5(0.9–1.4)NewZealand AMPLife 0.7–1.0(0.8–1.2) 0.7–1.0(0.8–1.2) NMLA 0.8(0.8) 1.1(1.1)

TerminalbonusTheterminalbonusscalesarecomplexandvarybyduration,productline,classofbusinessandcountryforAMPLifeandNMLA.

Creditingrates(investmentaccount) %

Australia AMPLife 1.3–3.7(0.3–5.5) NMLA 2.2–5.2(3.1–7.9)NewZealand AMPLife 2.0–3.3(3.1–7.1) NMLA 5.4–6.4(5.9–7.4)

(i) ImpactofchangesinassumptionsUnderMoS,forlifeinsurancecontractsvaluationsusingtheprojectionmethod,changesinassumptionsarerecognisedbyadjustingthevalueoffutureprofitmarginsinlifeinsurancecontractliabilities.Futureprofitmarginsarereleasedoverfutureperiods.

Changesinassumptionsdonotincludemarket-relatedchangesindiscountratessuchaschangesinbenchmarkmarketyieldscausedbychangesininvestmentmarketsandeconomicconditions.Thesearereflectedinbothlifeinsurancecontractliabilitiesandassetvaluesatthereportingdate.

Theimpactonfutureprofitmarginsofactualchangesinassumptionsfrom31December2015to31December2016inrespectoflifeinsurancecontracts(excludingnewbusinesscontractswhicharemeasuredusingassumptionsatreportingdate)isasshowninthetablebelowforthetwolifecompanies.

AMPLife NMLA

Assumptionchange

Changeinfutureprofit

margins$m

Changeinlifeinsurance

contractliabilities2

$m

Changeinshareholders’

profitandequity3

$m

Changeinfutureprofit

margins$m

Changeinlifeinsurance

contractliabilities2

$m

Changeinshareholders’

profitandequity3

$m

Non-market-relatedchangestodiscountrates (8) – – 11 2 (1)Mortalityandmorbidity (247) 212 (149) (66) 240 (168)Discontinuancerates (85) 23 (16) (121) 19 (13)Maintenanceexpenses 138 88 (62) (55) 157 (110)Otherassumptions1 (209) (48) 33 44 (84) 59

1 Otherassumptionchangesincludetheimpactofmodelling,reinsurance,productandpremiumchanges. 2 Changeinlifeinsurancecontractliabilitiesisnetofreinsurance,grossoftax. 3 Changeinshareholders’profitandequityisnetofreinsurance,netoftax. Inmostcases,theoverallamountoflifeinsurancecontractliabilitiesandthecurrentperiodprofitarenotaffectedbychangesinassumptions.However,whereinthecaseofaparticularrelatedproductgroup,thechangesinassumptionsattheendofaperiodeliminateanyfutureprofitmarginsfortherelatedproductgroup,andresultinnegativefutureprofitmargins,thisnegativebalanceforallforecastedfutureperiodsisrecognisedasalossinthecurrentperiod.Ifthechangesinassumptionsinaperiodarefavourableforaproductgroupcurrentlyinlossrecognition,thenthepreviouslyrecognisedlossesarereversedintheperiod.

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4.4 Life insurance contracts – risk (a) LifeinsuranceriskAMPLifeandNMLAlifeinsuranceentitiesissuecontractsthattransfersignificantinsuranceriskfromthepolicyholder,coveringdeath,disabilityorlongevityoftheinsured,ofteninconjunctionwiththeprovisionofwealthmanagementproducts.

Theproductscarryinginsuranceriskaredesignedtoensurethatpolicywordingandpromotionalmaterialsareclear,unambiguousanddonotleaveAMPLifeandNMLAopentoclaimsfromcausesthatwerenotanticipated.Thevariabilityinherentininsurancerisk,includingconcentrationrisk,ismanagedbyhavingalargegeographicallydiverseportfolioofindividualrisks,underwritingandtheuseofreinsurance.

Underwritingismanagedthroughadedicatedunderwritingdepartment,withformalunderwritinglimitsandappropriatetraininganddevelopmentofunderwritingstaff.Individualpoliciescarryinginsuranceriskaregenerallyunderwrittenindividuallyontheirmerits.Individualpolicieswhicharetransferredfromagroupschemearegenerallyissuedwithoutunderwriting.Groupriskinsurancepoliciesmeetingcertaincriteriaareunderwrittenonthemeritsoftheemployeegroupasawhole.

Claimsaremanagedthroughadedicatedclaimsmanagementteam,withformalclaimsacceptancelimitsandappropriatetraininganddevelopmentofstaffwithanobjectivetoensurepaymentofallgenuineclaims.Claimsexperienceisassessedregularlyandappropriateactuarialreservesareestablishedtoreflectup-to-dateexperienceandanyanticipatedfutureevents.Thisincludesreservesforclaimsincurredbutnotyetreported.

AMPLifeandNMLAreinsure(cede)toreinsurancecompaniesaproportionoftheirportfolioorcertaintypesofinsurancerisk,includingcatastrophe.Thisservesprimarilyto:– reducethenetliabilityonlargeindividualrisks;– obtaingreaterdiversificationofinsurancerisks;– provideprotectionagainstlargelosses;– reduceoverallexposuretorisk;– reducetheamountofcapitalrequiredtosupportthebusiness.

ThereinsurancecompaniesareregulatedbytheAustralianPrudentialRegulationAuthority(APRA),orindustryregulatorsinotherjurisdictionsandhavestrongcreditratingsfromA+toAA+.

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4.4 Life insurance contracts – risk (continued)(b) KeytermsandconditionsoflifeinsurancecontractsThenatureofthetermsofthelifeinsurancecontractswrittenbyAMPLifeandNMLAissuchthatcertainexternalvariablescanbeidentifiedonwhichrelatedcashflowsforclaimpaymentsdepend.ThefollowingtableprovidesanoverviewofthekeyvariablesuponwhichthetiminganduncertaintyoffuturecashflowsofthevariouslifeinsurancecontractsissuedbyAMPLifeandNMLAdepend.

Typeofcontract Detailofcontractworkings NatureofcompensationforclaimsKeyvariablesaffectingfuturecashflows

Non-participating life insurance contracts with fixed and guaranteed terms (term life and disability)

Thesepoliciesprovideguaranteedbenefits,whicharepaidondeathorill-health,thatarefixedandnotatthediscretionoftheLifeCompanies.PremiumratesforyearlyrenewablebusinessarenotguaranteedandmaybechangedatthediscretionoftheLifeCompaniesfortheportfolioasawhole.

Benefitsaredefinedbytheinsurancecontractandarenotdirectlyaffectedbytheinvestmentperformanceofanyunderlyingassets.

Mortality,morbidity,lapses,expensesandinvestmentmarketearningratesonassetsbackingtheliabilities.

Life annuity contracts

Thesepoliciesprovideaguaranteedregularincomeforthelifeoftheinsuredinexchangeforaninitialsinglepremium.

Theamountoftheguaranteedregularincomeissetatinceptionofthepolicyallowingforanyindexation.

Longevity,expenses,inflationandinvestmentmarketearningratesonassetsbackingtheliabilities.

Conventional life insurance contracts with discretionary participating benefits (endowment and whole of life)

Thepolicyholderpaysaregularpremiumandreceivesthespecifiedsuminsuredplusanyaccruingbonusesondeathormaturity.Thesuminsuredisspecifiedatinceptionandguaranteed.Bonusesareaddedannually,whichonceaddedareguaranteed.Afurtherbonusmaybeaddedonsurrender,deathormaturity.

Benefitsarisingfromthediscretionarybonusesarebasedontheperformanceofaspecifiedpoolofcontractsandtheassetssupportingthesecontracts.

Investmentmarketearningratesonassetsbackingtheliabilities,lapses,expensesandmortality.

Investment account contracts with discretionary participating features

Thegrossvalueofpremiumsreceivedisinvestedintheinvestmentaccountwithfeesandpremiumsforanyassociatedinsurancecoverbeingdeductedfromtheaccountbalancewhendue.Interestiscreditedregularly.

Paymentoftheaccountbalanceisgenerallyguaranteed,althoughitmaybesubjecttocertainpenaltiesonearlysurrenderorlimitedadjustmentinadverseinvestmentmarkets.Operatingprofitarisingfromthesecontractsisallocatedbetweenthepolicyholdersandshareholderswithnotlessthan80%allocatedtopolicyholders.Distributionofpolicyholderprofitisthroughaninterestratemechanism.

Fees,lapses,expensesandinvestmentmarketearningratesontheassetsbackingtheliabilities.

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4.4 Life insurance contracts – risk (continued)(c) Insurancerisksensitivityanalysis–lifeinsurancecontractsForlifeinsurancecontractsthatareaccountedforunderMoS,amountsofliabilities,incomeorexpenserecognisedintheperiodareunlikelytobesensitivetochangesinvariablesevenifthosechangesmayhaveanimpactonfutureprofitmargins,unlesstheproductisinorclosetolossrecognition.

Thistableshowsinformationaboutthesensitivityoflifeinsurancecontractliabilitiesandcurrentperiodshareholderprofitafterincometaxandequity,toanumberofpossiblechangesinassumptionsrelatingtoinsurancerisk.

Changeinlifeinsurancecontractliabilities

Changeinshareholderprofitafterincometaxandequity

Variable Changeinvariable

Grossofreinsurance

$m

Netofreinsurance

$m

Grossofreinsurance

$m

Netofreinsurance

$m

AMPLifeMortality 10%increaseinmortalityrates (1) (1) 1 1Annuitantmortality 50%increaseintherateof mortalityimprovement 1 1 (1) (1)Morbidity–lumpsumdisablement 20%increaseinlumpsumdisablementrates – – – –Morbidity–disabilityincome 10%increaseinincidencerates 80 43 (56) (30)Morbidity–disabilityincome 10%decreaseinrecoveryrates 123 73 (86) (51)Discontinuancerates 10%increaseindiscontinuancerates 19 14 (14) (10)Maintenanceexpenses 10%increaseinmaintenanceexpenses 6 6 (4) (4)

NMLA Mortality1 10%increaseinmortalityrates 11 8 (8) (6)Annuitantmortality 50%increaseintherateof mortalityimprovement – – – –Morbidity–lumpsumdisablement 20%increaseinlumpsumdisablementrates 77 63 (54) (44)Morbidity–disabilityincome 10%increaseinincidencerates 118 97 (83) (68)Morbidity–disabilityincome 10%decreaseinrecoveryrates 224 178 (157) (125)Discontinuancerates 10%increaseindiscontinuancerates 23 20 (16) (14)Maintenanceexpenses 10%increaseinmaintenanceexpenses 5 5 (3) (3)

1 Thisincludestheimpactondeathbenefitsthatarepayableonsomedisabilityincomeproducts.

(d) LiquidityriskandfuturenetcashoutflowsThefollowingtableshowstheestimatedtimingoffuturenetcashoutflowsresultingfrominsurancecontractliabilities.Thisincludesestimatedfuturesurrenders,death/disabilityclaimsandmaturitybenefits,offsetbyexpectedfuturepremiumsorcontributionsandreinsurancerecoveries.Allvaluesarediscountedtothereportingdateusingtheassumedfutureinvestmentearningrateforeachproduct.

Upto1year$m

1-5years$m

Over5years$m

Total$m

2016 1,479 3,270 8,958 13,7072015 1,116 2,769 8,342 12,227

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4.5 Other disclosure – life insurance contracts and investment contracts

2016$m

2015$m

(a) Analysisoflifeinsuranceandinvestmentcontractprofit Componentsofprofit(loss)relatedtolifeinsuranceandinvestmentcontractliabilities: – plannedmarginsofrevenuesoverexpensesreleased 580 559– profits(losses)arisingfromdifferencebetweenactualandassumedexperience (137) 71– profits(losses)arisingfromchangesinassumptions (49) 29– capitalised(losses)reversals (426) –

Profit(loss)relatedtolifeinsuranceandinvestmentcontractliabilities (32) 659

Attributableto: – lifeinsurancecontracts (250) 437– investmentcontracts 218 222

Profit(loss)relatedtolifeinsuranceandinvestmentcontractliabilities (32) 659

Investmentearningsonassetsinexcessoflifeinsuranceandinvestmentcontractliabilities 157 115

(b) RestrictionsonassetsinstatutoryfundsAMPLifeandNMLAconductinvestment-linkedandnon-investmentlinkedbusiness.Forinvestment-linkedbusiness,depositsarereceivedfrompolicyholders,thefundsareinvestedonbehalfofthepolicyholdersandtheresultingliabilitytopolicyholdersislinkedtotheperformanceandvalueoftheassetsthatbackthoseliabilities.

AMPLifehasthreestatutoryfundsassetoutbelow:

No.1fund Australia Capitalguaranteedbusiness(wholeoflife,endowment,investmentaccount,retailandgroupriskandimmediateannuities)

NewZealand Allbusiness(wholeoflife,endowment,investmentaccount,retailandgrouprisk,investment-linkedandimmediateannuities)

No.2fund Australia Investment-linkedsuperannuationbusiness(retailandgroupinvestment-linkedanddeferredannuities)

No.3fund Australia Investment-linkedordinarybusiness

NMLAhassixstatutoryfundsassetoutbelow:

No.1fund Australia Capitalguaranteedordinarybusiness(wholeoflife,endowment,investmentaccountandretailandgrouprisk)

NewZealand Allbusiness(wholeoflife,endowment,investmentaccount,retailandgrouprisk,retailinvestment-linkedandimmediateannuities)

No.2fund Australia Investment-linkedsuperannuationbusiness(retailandgroupinvestment-linkedanddeferredannuities)

No.3fund Taiwan Allbusiness(individualwholeoflife,endowmentandtermandgrouplife)

No.4fund Australia Capitalguaranteedsuperannuationbusiness(wholeoflife,endowment,investmentaccountandretail(lumpsumonly)andgrouprisk)

No.5fund Australia Investment-linkedordinarybusiness

No.6fund Australia Northlongevityguarantee

InvestmentsheldinthelifestatutoryfundscanonlybeusedinaccordancewiththerelevantregulatoryrestrictionsimposedundertheLifeActandassociatedrulesandregulations.Themainrestrictionsarethattheassetsinalifestatutoryfundcanonlybeusedtomeettheliabilitiesandexpensesofthatlifestatutoryfund,toacquireinvestmentstofurtherthebusinessofthelifestatutoryfundorasdistributionsprovidedsolvency,capitaladequacyandotherregulatoryrequirementsaremet.

Furtherdetailsaboutcapitalmanagementareprovidedinnote3.5.

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4.5 Other disclosure – life insurance contracts and investment contracts (continued)

2016AMPLifeandNMLA

2015AMPLifeandNMLA

Non-investment

linked$m

Investment-linked

$m

Totallifeentities’

statutoryfunds

$m

Non-investment

linked$m

Investment-linked

$m

Totallifeentities’

statutoryfunds

$m

Netassetsoflifeentities’statutoryfundsattributabletopolicyholdersandshareholders 29,747 68,956 98,703 30,254 67,096 97,350

Attributabletopolicyholders2 Lifeinsurancecontractliabilities 24,225 – 24,225 23,871 – 23,871Investmentcontractliabilities1 2,739 68,760 71,499 2,912 66,849 69,761

26,964 68,760 95,724 26,783 66,849 93,632

Attributabletoshareholders 2,783 196 2,979 3,471 247 3,718

1 Investmentcontractliabilitiesinthistabledonotinclude$80m(2015:$87m)beingtheinvestmentcontractliabilityfortheNorthcapitalguaranteewhichisheldoutsidethelifeinsuranceentities.

2 Basedonassumptionsastolikelywithdrawalpatternsofthevariousproductgroups,itisestimatedthatapproximately$14,268m(2015:$13,740m)ofpolicyliabilitiesmaybesettledwithin12monthsofthereportingdate.

Thenetassetsoflifestatutoryfundsattributabletoshareholdersrepresenttheinterestsofshareholdersincludingfundsrequiredtomeetregulatoryrequirementsaswellasfurtheramountsofshareholderfundsinexcessofregulatoryrequirements.

ThefollowingtableshowsasummaryoftheconsolidatedbalancesofAMPlifeinsuranceentities’statutoryfundsandtheentitiescontrolledbyAMPlifeinsuranceentities’statutoryfunds.

Lifeentities’statutoryfundsconsolidated

2016$m

2015$m

IncomestatementInsurancerelatedrevenue–netofreinsurance 3,032 2,465Feerevenue 1,485 1,592Otherrevenue 5 38Investmentgainsandlosses 8,214 8,016Insurancecontractclaimsexpenses–netofreinsurance (2,280) (2,164)Operatingexpensesincludingfinancecosts (2,339) (2,596)Movementinexternalunitholderliabilities (1,263) (1,006)Changeinlifeinsurancecontractliabilities (1,471) (240)Changeininvestmentcontractliabilities (4,614) (4,384)Incometaxexpense (154) (249)

Profitfortheyear 615 1,472

Assets Cashandcashequivalents 7,086 7,755Investmentsinfinancialassetsmeasuredatfairvaluethroughprofitorloss 100,681 107,061Investmentproperty 127 746Otherassets 11,550 4,546

Totalassetsofpolicyholders,shareholdersandnon-controllinginterests 119,444 120,108

Liabilities Lifeinsurancecontractliabilities 24,225 23,871Investmentcontractliabilities 71,499 69,761Otherliabilities 6,682 8,551Externalunitholderliabilities 14,056 13,893

Totalliabilitiesofpolicyholders,shareholdersandnon-controllinginterests 116,462 116,076

Netassets 2,982 4,032

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4.5 Other disclosure – life insurance contracts and investment contracts (continued)(c) Capitalguarantees

2016$m

2015$m

Lifeinsurancecontractswithadiscretionaryparticipatingfeature–amountoftheliabilitiesthatrelatetoguarantees 15,440 15,991

Investment-linkedcontracts–amountoftheliabilitiessubjecttoinvestmentperformanceguarantees 925 973

Otherlifeinsurancecontractswithaguaranteedterminationvalue–currentterminationvalue 169 178

(d) CapitalrequirementsRegisteredlifeinsuranceentitiesarerequiredtoholdprudentialreserves,overandabovetheirlifeinsurancecontractandinvestmentcontractliabilities,asabufferagainstadverseexperienceandpoorinvestmentreturns.ThesereservingrequirementsarespecifiedbytheAPRAprudentialcapitalstandards.Thestandardsareintendedtotakeaccountofthefullrangeofriskstowhicharegulatedinstitutionisexposedandintroducestheprescribedcapitalamount(PCA)requirement.ThePCAistheminimumlevelofcapitalthattheregulatordeemsmustbeheldtomeetpolicyholderobligations.

Inadditiontotheregulatorycapitalrequirements,theAMPlifeinsuranceentitiesmaintainatargetsurplusprovidinganadditionalcapitalbufferagainstadverseevents.TheAMPlifeinsuranceentitiesuseinternalcapitalmodelstodeterminetargetsurplus,withthemodelsreflectingtherisksofthebusiness,principallytheriskofadverseassetmovementsrelativetotheliabilitiesandofworsethanexpectedclaimscosts.

TheAppointedActuaryofAMPLifeandNMLAhasconfirmedthatthecapitalbaseofeachlifestatutoryfundandshareholders’fundhaveexceededPCAatalltimesduring2016and2015.

2016 2015

AMPLife$m

NMLA$m

AMPLife$m

NMLA$m

CommonEquityTier1Capital 2,810 1,344 3,091 1,450AdjustmentstoCommonEquityTier1Capital (854) (530) (1,424) (713)AdditionalTier1Capital 205 100 205 100AdjustmentstoAdditionalTier1Capital – – – –Tier2Capital 215 85 215 85AdjustmentstoTier2Capital – – – –

Totalcapitalbase 2,376 999 2,087 922

TotalPrescribedCapitalAmount(PCA) 825 498 860 424

Capitaladequacyamount 1,551 501 1,227 498

Capitaladequacymultiple 288% 201% 243% 217%

(e) ActuarialinformationMrAntonKapel,theAppointedActuaryofAMPLifeandNMLA,issatisfiedastotheaccuracyofthedatausedinthevaluationsinthefinancialreportandinthetablesinnote4.2andnote4.5.

Theliabilitiestopolicyholders(beingthesumofthelifeinsurancecontractandinvestmentcontractliabilities,includinganyassetorliabilityarisinginrespectofthemanagementserviceselementofaninvestmentcontract),capitalbaseandprescribedcapitalamountshavebeendeterminedatthereportingdateinaccordancewiththeLifeAct.

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Section 5: Employee disclosuresThissectionprovidesdetailsonthevariousprogramstheAMPgroupusestorewardandrecogniseemployees,includingkeymanagementpersonnel.

5.1 Keymanagementpersonnel5.2 Definedbenefitplans5.3 Share-basedpayments

5.1 Key management personnel(a) Compensationofkeymanagementpersonnel

2016$’000

2015$’000

Short-termbenefits 13,548 19,703Post-employmentbenefits 598 592Share-basedpayments 11,141 10,096Otherlong-termbenefits 274 564Terminationbenefits 1,728 –

Total 27,289 30,955

(b) LoanstokeymanagementpersonnelLoanstokeymanagementpersonnelandtheirrelatedpartiesareprovidedbyAMPBankandareonsimilartermsandconditionsgenerallyavailabletootheremployeeswithinthegroup.Noguaranteesaregivenorreceivedinrelationtotheseloans.Loanshavecurrentlybeenmadeto10keymanagementpersonnelandtheirrelatedparties.Detailsoftheseloansare:

2016$’000

Balanceasatthebeginningoftheyear 13,592Netadvances 3,756

Balanceasattheendoftheyear 17,348

Interestcharged 495

(c) KeymanagementpersonnelaccesstoAMP’sproductsDuringtheyear,keymanagementpersonnelandtheirpersonallyrelatedentitiesmayalsohavehadaccesstothefollowingAMPproducts.Theyareprovidedtokeymanagementpersonnelwithinnormalemployeetermsandconditions.Theproductsinclude,personalbankingwithAMPBankLimited,thepurchaseofAMPinsuranceandinvestmentproductsandfinancialinvestmentservices.

Informationaboutsuchtransactionsdoesnothavethepotentialtoadverselyaffectitsdecisionsabouttheallocationofscarceresourcesmadebyusersofthisfinancialreport,orthedischargeofaccountabilitybythespecifiedexecutivesorspecifieddirectors.

Accountingpolicy–recognitionandmeasurementShort-termbenefits–Liabilitiesarisinginrespectofsalariesandwagesandanyotheremployeeentitlementsexpectedtobesettledwithin12monthsofthereportingdatearemeasuredattheirnominalamounts.

Post-employmentbenefits–Definedcontributionfunds–ThecontributionspaidandpayablebyAMPgrouptodefinedcontributionsfundsarerecognisedintheIncomestatementasanoperatingexpensewhentheyfalldue.Prepaidcontributionsarerecognisedasanassettotheextentthatacashrefundorareductioninthefuturepaymentsisavailable.

Otherlong-termbenefits–Otheremployeeentitlementsaremeasuredatthepresentvalueoftheestimatedfuturecashoutflowstobemadeinrespectofservicesprovidedbyemployeesuptothereportingdate.Indeterminingthepresentvalueoffuturecashoutflows,discountratesaredeterminedwithreferencetomarketyieldsattheendofthereportingperiodonhighqualitycorporatebondsor,incountrieswherethereisnodeepmarketinsuchbonds,byusingmarketyieldsattheendoftheperiodongovernmentbonds.

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5.2 Defined benefit plans AMPcontributedtodefinedbenefitplanswhichprovidebenefitstoemployees,andtheirdependants,onresignation,retirement,disabilityordeathoftheemployee.Thebenefitsarebasedonyearsofserviceandanaveragesalarycalculation.Alldefinedbenefitplansarenowclosedtonewmembers.

Thecharacteristicsandrisksassociatedwitheachofthedefinedbenefitplansaredescribedbelow:

Plandetails Australia NewZealand

Plannames AMPAustraliaandAMPAAPHAustraliadefinedbenefitplans

AMPNewZealandandAMPAAPHNewZealanddefinedbenefitplans

Entitlementsofactivemembers

Alumpsumorpensiononretirement.Pensionsprovidedarelifetimeindexedpensionswithareversionaryspousepension.

Accumulationbenefitsandalumpsumpaymentonretirement.

Governanceoftheplans ThetrusteesoftheAMPSuperannuationSavingsTrust,ofwhichtheAustralianplansaresub-funds–thisincludesadministrationoftheplan,managementandinvestmentoftheplanassets,andcompliancewithsuperannuationlawsandotherapplicableregulations.

Theplan’strustees–thisincludesadministrationoftheplan,managementandinvestmentoftheplanassets,andlookingaftertheinterestsofallbeneficiaries.

Valuationsrequired Everyyear Everythreeyears

Keyrisks Theriskofactualoutcomesbeingdifferenttotheactuarialassumptionsusedtoestimatethedefinedbenefitobligation,investmentriskandlegislativerisk.

Dateoflastvaluation 31March2016 31December2014

Additionalcontributionsrequired

Additionalcontributionsof$7mperannumuntil31March2019.

Additionalcontributionsof$6mperannumuntil31December2017.

(a) Definedbenefitliability

2016$m

2015$m

Presentvalueofwhollyfundeddefinedbenefitobligations (804) (860)Less:Fairvalueofplanassets 760 762

DefinedbenefitliabilityrecognisedintheStatementoffinancialposition (44) (98)

Movementindefinedbenefitliability Deficitatthebeginningoftheyear (98) (190)Plus:Totalexpensesrecognisedinincome (3) (8)Plus:Employercontributions 9 6Plus:ActuarialgainsrecognisedinOthercomprehensiveincome1 48 94

Definedbenefitliabilityrecognisedattheendoftheyear (44) (98)

1 ThecumulativenetactuarialgainsandlossesrecognisedintheStatementofcomprehensiveincomeisa$152mgain(2015:$104mgain).

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5.2 Defined benefit plans (continued)(b) Reconciliationofthemovementinthedefinedbenefitliability

Definedbenefitobligation

Fairvalueofplanassets

2016$m

2015$m

2016$m

2015$m

Balanceatthebeginningoftheyear (860) (962) 762 772Currentservicecost (4) (6) – –Interest(cost)income (23) (22) 24 18Netactuarialgainsandlosses 37 82 11 12Employercontributions – – 9 6Foreigncurrencyexchangeratechanges (3) 3 3 (1)Benefitspaid 49 45 (49) (45)

Balanceattheendoftheyear (804) (860) 760 762

(c) Analysisofdefinedbenefitsurplus(deficit)byplan

Fairvalueofplanassets

Presentvalueofplanobligation

Netrecognisedsurplus(deficit)

Actuarialgains

2016$m

2015$m

2016$m

2015$m

2016$m

2015$m

2016$m

2015$m

AMPAustralian 265 274 (302) (324) (37) (50) 14 33AMPAAPHAustralian 384 380 (359) (389) 25 (9) 29 54AMPNewZealand 22 23 (26) (27) (4) (4) – –AMPAAPHNewZealand 89 85 (117) (120) (28) (35) 5 7

Total 760 762 (804) (860) (44) (98) 48 94

(d) PrincipalactuarialassumptionsThefollowingtablesetsouttheprincipalactuarialassumptionsusedasatthereportingdateinmeasuringthedefinedbenefitobligationsoftheAustralianandNewZealanddefinedbenefitfunds:

AMP AMPAAPH

Australia NewZealand Australia NewZealand

2016%

2015%

2016%

2015%

2016%

2015%

2016%

2015%

Weightedaveragediscountrate 4.5 4.5 3.3 3.5 4.6 4.6 4.1 4.1Expectedrateofsalaryincreases n/a 3.5 4.0 4.0 3.5 3.5 4.0 4.0

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5.2 Defined benefit plans (continued)(e) AllocationofassetsTheassetallocationsofthedefinedbenefitfundsareshowninthefollowingtable:

AMP AMPAAPH

Australia NewZealand Australia NewZealand

2016%

2015%

2016%

2015%

2016%

2015%

2016%

2015%

Equity 46 39 34 35 29 28 38 34Fixedinterest 32 36 36 35 45 41 36 36Property 9 9 7 10 5 4 6 6Cash 6 6 14 14 7 16 14 14Other 7 10 10 6 14 11 6 10

(f) SensitivityanalysisThedefinedbenefitobligationhasbeenrecalculatedforeachscenariobychangingonlythespecifiedassumptionasoutlinedbelow,whilstretainingallotherassumptionsasperthebasecase.Thetablebelowshowstheincrease(decrease)foreachassumptionchange.Whereanassumptionisnotmaterialtothefundithasbeenmarkedasn/a.

AMP AMPAAPH

Australia NewZealand Australia NewZealand

(+)$m

(–)$m

(+)$m

(–)$m

(+)$m

(–)$m

(+)$m

(–)$m

AssumptionDiscountrate(0.5%) (17) 18 n/a 1 (26) 29 n/a 7Expectedsalaryincreaserate(0.5%) n/a n/a n/a n/a 1 n/a n/a n/aExpecteddeferredbenefitcreditingrate(0.5%) n/a n/a n/a n/a – n/a n/a n/aPensionerindexationassumption(0.5%) 19 (17) n/a n/a 23 (21) 6 n/aPensionermortalityassumption(0.5%) n/a (10) n/a n/a n/a (4) n/a n/aLifeexpectancy(additional1year) n/a n/a 1 n/a n/a n/a 3 n/a

(g) Expectedcontributionsandmaturityprofileofthedefinedbenefitobligation

AMP AMPAAPH

AustraliaNew

Zealand AustraliaNew

Zealand

Expectedemployercontributions($m) 1 – 4 4

Weightedaveragedurationofthedefinedbenefitobligation(years) 11 8 13 13

Accountingpolicy–recognitionandmeasurementDefinedbenefitplansTheAMPgrouprecognisesthenetdeficitorsurpluspositionofeachfundintheStatementoffinancialposition.Thedeficitorsurplusismeasuredasthedifferencebetweenthefairvalueofthefunds’assetsandthediscounteddefinedbenefitobligationsofthefunds,usingdiscountratesdeterminedwithreferencetomarketyieldsonhighqualitycorporatebondsattheendofthereportingperiod.

Aftertakingintoaccountanycontributionspaidintothedefinedbenefitfundsduringtheperiod,movementsinthenetsurplusordeficitofeachfund,exceptactuarialgainsandlosses,arerecognisedintheIncomestatement.Actuarialgainsandlossesarisingfromexperienceadjustmentsandchangesinactuarialassumptionsovertheperiodarerecognised(netoftax)directlyinretainedearningsthroughOthercomprehensiveincome.

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5.3 Share-based paymentsAMPhasanumberofemployeeshare-basedpaymentplans.Share-basedpaymentsplaceemployeesparticipatinginthoseplans(participants)inthepositionoftheshareholder,andindoingso,rewardemployeesforthegenerationofvalueforshareholders.InformationonplanswhichAMPcurrentlyoffersisprovidedbelow.

ThefollowingtableshowstheexpenserecordedforAMPshare-basedpaymentplansduringtheyear:

2016$’000

2015$’000

Performancerights 12,377 11,433Sharerights 24,109 22,596Restrictedshares – 16Employeeshareacquisitionplan–matchingshares – 1

Totalshare-basedpaymentsexpense 36,486 34,046

(a) PerformancerightsTheCEOandhisdirectreports,aswellasselectedseniorexecutives,arerequiredtotaketheirlong-termincentive(LTI)awardsintheformofperformancerights.Thisistoensurethattheinterestsofthoseexecutives,whoaremostdirectlyabletoinfluencecompanyperformance,areappropriatelyalignedwiththeinterestsofshareholders.

Plan LTIawardplan

Overview PerformancerightsgivetheparticipanttherighttoacquireonefullypaidordinaryshareinAMPLimiteduponmeetingspecificperformancehurdles.Theyaregrantedatnocosttotheparticipantandcarrynodividendorvotingrightsuntiltheyvest.Performancerightsmaybesettledthroughacashpaymentinlieuofshares,atthediscretionoftheboard.

Vestingconditions Theperformancehurdlesforrightsgrantedin2014and2013are:– 50%subjecttoAMP’stotalshareholderreturn(TSR)performancerelativetothetopindustrial

companiesintheS&P/ASX100Indexoverathree-yearperformanceperiod;– 50%subjecttoareturnonequity(RoE)measure.

Theperformancehurdlesforrightsgrantedin2016and2015are:– 60%subjecttoAMP’sTSRperformancerelativetothetopindustrialcompaniesinthe

S&P/ASX100Indexoverathree-yearperformanceperiod;– 40%subjecttoaRoEmeasure.

Vestingperiod Threeyears.

Vestedawards Vestedperformancerightsareautomaticallyconvertedtosharesonbehalfofparticipants.

Unvestedawards Unvestedawardsareforfeitediftheparticipantvoluntarilyceasesemploymentorisdismissedformisconductorpoorperformance.

ValuationofperformancerightsTheallocationvaluesforperformancerightsarebasedonvaluationspreparedbyanindependentexternalconsultant.Thevaluationsarebasedonthe10-dayvolumeweightedaveragesharepriceoverthe10-daytradingperiodafterthereleaseofAMPresultsandendingpriortothestartoftheperformanceperiod.AssumptionsregardingthedividendyieldandvolatilityhavebeenestimatedbasedonAMP’sactualhistoricdividendyieldandvolatilityoveranappropriateperiod.

Indeterminingtheshare-basedpaymentsexpense,thenumberofinstrumentsexpectedtovesthasbeenadjustedtoreflectthenumberofemployeesexpectedtoremainwithAMPuntiltheendoftheperformanceperiod.

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5.3 Share-based payments (continued)Thefollowingtableshowsthefactorsconsideredindeterminingtheallocationvalueoftheperformancerightsgrantedduringtheperiod:

Grantdate SharepriceContractual

life(years)Dividend

yield Volatility1Risk-free

rate1

TSRperformance

hurdlediscount

RoEperformance

hurdlediscount2

TSRperformance

rightsfairvalue

RoEperformance

rightsfairvalue

02/06/2016 $5.54 3.0 4.7% 24% 1.6% 57% 0% $2.37 $4.8115/04/2016 $5.79 2.1 4.7% 23% 2.0% 69% 0% $1.80 $5.2415/04/2016 $5.79 1.1 4.7% 25% 2.0% 36% 0% $3.68 $5.4918/09/2015 $5.79 2.7 4.6% 23% 1.9% 58% 0% $2.43 $5.1104/06/2015 $6.20 3.0 4.7% 23% 2.1% 55% 0% $2.82 $5.3913/04/2015 $6.69 2.1 4.8% 23% 1.8% 34% 0% $4.44 $6.0505/06/2014 $5.28 3.0 4.8% 25% 2.9% 45% 0% $2.89 $4.5706/06/2013 $4.97 3.0 5.6% 23% 2.5% 60% 0% $2.00 $4.21

1 AppliestoperformancerightssubjecttoarelativeTSRperformancehurdleonly.ThesefactorsdonotapplytoperformancerightssubjecttoaRoEperformancehurdle.

2 InaccordancewiththeaccountingstandardAASB2Share-based Payment,allowancecannotbemadefortheimpactofanon-market-basedperformancehurdleindeterminingfairvalue.

Thefollowingtableshowsthemovementinperformancerightsoutstandingduringtheperiod:

GrantdateExerciseperiod1

Exerciseprice

Balanceat1Jan2016

Exercisedduringtheyear

Grantedduringtheyear

Lapsedduringtheyear

Balanceat31Dec2016

06/06/2013 n/a nil 4,646,382 1,034,932 – 3,611,450 –05/06/2014 n/a nil 3,902,891 – – 10,291 3,892,60013/04/2015 n/a nil 8,004 – – – 8,00404/06/2015 n/a nil 3,449,078 – – 7,269 3,441,80918/09/2015 n/a nil 61,038 – – – 61,03815/04/2016 n/a nil – – 44,263 – 44,26315/04/2016 n/a nil – – 21,788 – 21,78802/06/2016 n/a nil – – 3,749,418 17,251 3,732,167

Total 12,067,393 1,034,932 3,815,469 3,646,261 11,201,669

1 Performancerightshavenoexerciseperiod;theyareexercisedinthefirsttradingwindowfollowingtheapprovalofthevestingbytheboard.

Fromtheendofthefinancialyearanduptothedateofthisreport,12,820performancerightshavebeenissued,noperformancerightshavebeenexercised,andnoperformancerightshavelapsed.Oftheperformancerightsoutstandingattheendoftheperiod,nonehavevestedorbecomeexercisable.

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5.3 Share-based payments (continued)(b) SharerightsTheLTIparticipantsbelowtheCEOandhisdirectreportsmaybeawardedsharerightsaspartoftheiroverallLTIaward.

Nominatedexecutives,andselectedotherseniorleaderswhohavetheabilitytoimpactAMP’sfinancialsoundness,participateintheshort-termincentive(STI)deferralplan;thisplanrequiresthat40%oftheparticipants’STIbeawardedassharerights.AdditionallyeachyearhighpotentialemployeesataseniorleaderlevelareeligiblefornominationtoparticipateintheSTImatchplan,whichprovidesanawardofsharerightstothevalueof50%oftheindividual’sSTI.

Plan LTIawardplan STIdeferralplan STImatchplan

Overview SharerightsgivetheparticipanttherighttoacquireonefullypaidordinaryshareinAMPLimitedafteraspecifiedserviceperiod.Theyaregrantedatnocosttotheparticipantandcarrynodividendorvotingrightsuntiltheyvest.

Vestingconditions/period

Continuedserviceforthreeyears,butmayvarywherethesharerightsareawardedtoretainanemployeeforacriticalperiod.

Continuedservicefortwoyearsandsubjecttoongoingemployment,compliancewithAMPpoliciesandtheboard’sdiscretion.

Continuedservicefortwoyearsandsubjecttoongoingemployment,compliancewithAMPpoliciesandtheboard’sdiscretion.

Vestedawards Vestedsharerightsareautomaticallyconvertedtosharesonbehalfofparticipants.

Unvestedawards Unvestedawardsareforfeitediftheparticipantvoluntarilyceasesemploymentorisdismissedformisconductorpoorperformance.

PlanvaluationThefairvalueofsharerightshasbeencalculatedasatthegrantdate,byexternalconsultantsusinga‘discountedcashflow’methodology.Fairvaluehasbeendiscountedforthepresentvalueofdividendsexpectedtobepaidduringthevestingperiodtowhichtheparticipantisnotentitled.Forthepurposesofthevaluationitisassumedsharerightsareexercisedassoontheyhavevested.AssumptionsregardingthedividendyieldhavebeenestimatedbasedonAMP’sactualhistoricdividendyieldoveranappropriateperiod.

Indeterminingtheshare-basedpaymentsexpense,thenumberofinstrumentsexpectedtovesthasbeenadjustedtoreflectthenumberofemployeesexpectedtoremainwithAMPuntiltheendoftheperformanceperiod.

Thefollowingtableshowsthefactorswhichwereconsideredindeterminingtheindependentfairvalueofthesharerightsgrantedduring2016andthecomparativeperiod(2015):

Grantdate SharepriceContractual

life(years)Dividend

yieldDividenddiscount Fairvalue

02/06/2016 $5.54 3.0 4.7% 13% $4.8128/04/2016 $5.84 1.8 4.7% 8% $5.3615/04/2016 $5.79 0.9 4.7% 4% $5.5629/02/2016 $5.32 1.1 4.7% 5% $5.0622/02/2016 $5.54 1.5 4.6% 7% $5.1722/02/2016 $5.54 0.5 4.6% 2% $5.4122/02/2016 $5.54 2.6 4.6% 11% $4.9122/02/2016 $5.54 1.6 4.6% 7% $5.1522/02/2016 $5.54 0.6 4.6% 3% $5.3918/09/2015 $5.79 2.7 4.6% 12% $5.1118/09/2015 $5.79 1.8 4.6% 7% $5.4118/09/2015 $5.79 2.0 4.6% 6% $5.4204/06/2015 $6.20 3.0 4.7% 13% $5.3929/05/2015 $6.66 0.8 4.8% 4% $6.4129/05/2015 $6.66 1.8 4.8% 8% $6.1130/04/2015 $6.44 1.8 4.8% 8% $5.9013/04/2015 $6.69 2.1 4.8% 10% $6.0505/06/2014 $5.28 3.0 4.8% 13% $4.5729/04/2014 $5.07 1.8 4.8% 8% $4.6414/03/2014 $4.92 1.0 4.8% 4% $4.7014/03/2014 $4.92 2.0 4.8% 9% $4.48

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5.3 Share-based payments (continued)Thefollowingtableshowsthemovementinsharerightsoutstandingduringtheperiod:

Grantdate Exerciseperiod1 ExercisepriceBalanceat1Jan2016

Exercisedduringtheyear

Grantedduringtheyear

Lapsedduringtheyear

Balanceat31Dec2016

06/06/2013 n/a nil 1,430,780 1,374,504 – 56,276 –09/09/2013 n/a nil 35,726 35,726 – – –14/03/2014 n/a nil 37,500 37,500 – – –29/04/2014 n/a nil 654,982 644,077 – 10,905 –29/04/2014 n/a nil 2,492,491 2,492,491 – – –05/06/2014 n/a nil 1,441,351 – – 62,831 1,378,52013/04/2015 n/a nil 5,468 – – – 5,46830/04/2015 n/a nil 852,176 – – – 852,17630/04/2015 n/a nil 1,357,234 – – – 1,357,23430/04/2015 n/a nil 714,837 – – 67,518 647,31930/04/2015 n/a nil 166,944 – – – 166,94429/05/2015 n/a nil 11,848 11,848 – – –29/05/2015 n/a nil 12,437 – – – 12,43704/06/2015 n/a nil 1,587,055 – – 54,180 1,532,87518/09/2015 n/a nil 61,037 – – – 61,03718/09/2015 n/a nil 24,469 8,156 – – 16,31318/09/2015 n/a nil 83,333 41,666 – – 41,66722/02/2016 n/a nil – 16,100 16,100 – –22/02/2016 n/a nil – – 10,733 – 10,73322/02/2016 n/a nil – – 10,733 – 10,73322/02/2016 n/a nil – 27,522 27,522 – –22/02/2016 n/a nil – – 27,522 – 27,52229/02/2016 n/a nil – – 52,739 – 52,73915/04/2016 n/a nil – – 8,932 – 8,93228/04/2016 n/a nil – – 3,625,934 45,341 3,580,59302/06/2016 n/a nil – – 1,792,604 26,655 1,765,949

Total 10,969,668 4,689,590 5,572,819 323,706 11,529,191

1 Thesharerightsgrantedhavenoexerciseperiod;theyareexercisedinthefirsttradingwindowfollowingtheapprovalofthevestingbytheboard.

Fromtheendofthefinancialyearanduptothedateofthisreport,30,457sharerightshavebeenissued,nosharerightshavebeenexercised,andnosharerightshavelapsedduetoresignation.Ofthesharerightsoutstandingattheendoftheperiod,nonehavevestedorbecomeexercisable.

(c) RestrictedsharesNorestrictedsharesweregrantedduring2016or2015.

(d) EmployeeshareacquisitionplanTheemployeeshareacquisitionplanwassuspendedmid-waythrough2009inAustraliabutcontinuestooperateinNewZealand.

Accountingpolicy–recognitionandmeasurementEquity-settledshare-basedpaymentsThecostofequity-settledshare-basedpaymentsismeasuredusingtheirfairvalueatthedateatwhichtheyaregranted.Thefairvaluecalculationtakesintoconsiderationanumberoffactors,includingthelikelihoodofachievingmarket-basedvestingconditionssuchastotalshareholderreturn(marketconditions).

Thecostofequity-settledshare-basedpaymentsisrecognised,togetherwithacorrespondingincreaseintheshare-basedpaymentreserveinequity,overthevestingperiodoftheinstrument.Ateachreportingdate,theAMPgroupreviewsitsestimatesofthenumberofinstrumentsthatareexpectedtovestandanychangestothecostarerecognisedintheIncomestatementandtheshare-basedpaymentreserve,overtheremainingvestingperiod.

Wherethetermsofanequity-settledshare-basedpaymentaremodifiedandtheexpenseincreasesasaresultofthemodification,theincreaseisrecognisedovertheremainingvestingperiod.Whenamodificationreducestheexpense,thereisnoadjustmentandthepre-modificationcostcontinuestoberecognised.

Whereanequity-settledawarddoesnotultimatelyvest,expensesarenotreversed,exceptforawardswherevestingisconditionaluponanon-marketcondition,inwhichcaseallexpensesarereversedintheperiodinwhichtheinstrumentlapses.

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Section 6: Group entitiesThissectionexplainssignificantaspectsoftheAMPgroupstructure,includingsignificantinvestmentsincontrolledoperatingentitiesandentitiescontrolledbytheAMPlifeinsuranceentities’statutoryfunds,andinvestmentsinassociates.Italsoprovidesinformationonbusinessacquisitionsanddisposalsmadeduringtheyear.

6.1 Controlledentities6.2 Acquisitionsanddisposalsofcontrolledentities6.3 Investmentsinassociates6.4 Parententityinformation

6.1 Controlled entities(a) Significantinvestmentsincontrolledoperatingentitiesareasfollows:

%holdingsOperatingentitiesNameofentity

Countryofregistration Sharetype 2016 2015

AMPAAPHLimited Australia Ord 100 100AMPAdviceHoldingsPtyLtd Australia Ord 100 100AMPBankLimited Australia Ord 100 100AMPCapitalFundsManagementLimited Australia Ord 85 85AMPCapitalHoldingsLimited Australia Ord 85 85AMPCapitalInvestors(NewZealand)Limited NewZealand Ord 85 85AMPCapitalInvestorsLimited Australia Ord 85 85AMPCapitalOfficeandIndustrialPtyLimited Australia Ord 85 85AMPCapitalShoppingCentresPtyLimited Australia Ord 85 85AMPFinancialPlanningPtyLimited Australia Ord 100 100AMPGroupFinanceServicesLimited Australia Ord 100 100AMPGroupHoldingsLimited Australia OrdA 100 100AMPLifeLimited Australia Ord 100 100AMPServices(NZ)Limited NewZealand Ord 100 100AMPServicesLimited Australia OrdA 100 100AMPSuperannuationLimited Australia Ord 100 100AMPWealthManagementNewZealandLimited NewZealand Ord 100 100HillrossFinancialServicesLimited Australia Ord 100 100ipacGroupServicesPtyLtd Australia Ord 100 100NationalMutualFundsManagementLtd Australia Ord 100 100NationalMutualLifeNomineesPtyLimited Australia Ord 100 100NMMTLimited Australia Ord 100 100TheNationalMutualLifeAssociationofAustralasiaLimited Australia Ord 100 100

(b) InvestmentsininvestmententitiescontrolledbytheAMPlifeinsuranceentities’statutoryfundsThelifeinsurancestatutoryfundsholdinvestmentsinvariousinvestmentvehicles/fundsbackingpolicyholderliabilitiesaswellasshareholderattributableassetsinthelifeinsurancestatutoryfunds.ThepolicyholderattributableinvestmentsarenotpartofthecorewealthmanagementbusinessofAMPanddonothaveamaterialimpactonthefinancialperformanceornetfinancialpositionofthecompany.Theinvestmentsaremeasuredatfairvaluethroughprofitandlossreflectingthefairvaluemovementsintheseinvestmentsinthefinancialstatements.

Criticalaccountingestimatesandjudgements:Judgement is applied in determining the relevant activities of each entity, whether AMP Limited has power over these activities and whether control exists. This involves assessing the purpose and design of the entity and identifying the activities which significantly affect that entity’s returns and how decisions are made about those activities. In assessing how decisions are made, management considers voting and veto rights, contractual arrangements with the entity or other parties, and any rights or ability to appoint, remove or direct key management personnel or entities that have the ability to direct the relevant activities of the entity. Management also considers the practical ability of other parties to exercise their rights.

Judgement is also applied in identifying the variable returns of each entity and assessing AMP Limited’s exposure to these returns. Variable returns include distributions, exposure to gains or losses and fees that may vary with the performance of an entity. F

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6.2 Acquisitions and disposals of controlled entities(a) AcquisitionsanddisposalsofcontrolledoperatingentitiesDuringtheyearended31December2016,AMPacquired(disposedof)itscontrolinthefollowingentities:– MoneyBrilliantPtyLtd(acquired)– HillrossAlliancesPtyLtd(disposed)

Duringtheyearended31December2015,AMPacquiredalltheissuedsharecapitalofthefollowingentities:– JustsuperPtyLtd– SupercorpPtyLtd– SuperIQPtyLtd– WealthVisionFinancialServicesPtyLtd

Thenetimpactoftheseacquisitionsanddisposalsisasfollows:

Impactin2016

$m

Impactin2015

$m

Assets Cashandcashequivalents 4 (34)Investmentsinassociatesaccountedforusingtheequitymethod (1) (16)Intangibleassets 3 82Otherassets (9) (8)

Totalassets (3) 24

Liabilities Payablesandprovisions – (11)Deferredtaxliabilities 2 (8)Otherliabilities (1) (5)

Totalliabilities 1 (24)

(b) AcquisitionanddisposalsofcontrolledentitiesofAMPlifeinsuranceentities’statutoryfundsInthecourseofnormaloperatinginvestmentactivities,theAMPlifeinsuranceentities’statutoryfundsacquireequityinterestsinentitieswhich,insomecases,resultinAMPholdingacontrollinginterestintheinvesteeentity.

Mostacquisitionsanddisposalsofcontrolledentitiesareinrelationtomanagedinvestmentschemeswithunderlyingnetassetstypicallycomprisinginvestmentassetsincludingcash.Theconsiderationforacquisitionsordisposalsreflectsthefairvalueoftheinvestmentassetsatthedateofthetransactionsaftertakingintoaccountminorityinterests.

Certaincontrolledentitiesofthelifeentities’statutoryfundsareoperatingcompanieswhichcarryoutbusinessoperationsunrelatedtothecorewealthmanagementoperationsoftheAMPgroup.

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6.3 Investments in associates (a) Investmentsinassociatesaccountedforusingtheequitymethod

Ownershipinterest Carryingamount1

Associate PrincipalactivityPlaceofbusiness

2016%

2015%

2016$m

2015$m

ChinaLifePensionCompany Pensioncompany China 19.99 19.99 283 282

AIMSAMPCapitalIndustrialREIT Industrialpropertytrust Singapore 5 5 49 49

InfrashoreGroup Communityhealth Australia – 29 – 45 serviceprovider

ChinaLifeAMPAsset Investmentmanagement China 15 15 21 20ManagementCompanyLtd

GlobalInfrastructureFund Fund CaymanIslands 5 5 38 19

AMPCapitalInfrastructure Fund CaymanIslands 8 – 11 –DebtFundIIIUSDLP

Other(individually 47 52immaterialassociates)

Totalinvestmentsinassociatesaccountedforusingtheequitymethod 449 467

1 Thecarryingamountisafterrecognising$28m(2015:$27m)shareofcurrentperiodprofitorlossofassociatesaccountedforusingtheequitymethod.

(b) Investmentsinsignificantassociatesheldbythelifeentities’statutoryfundsmeasuredatfairvaluethroughprofitorlossThelifeinsurancestatutoryfundsholdinvestmentsinvariousinvestmentvehicles/fundsonbehalfofpolicyholders.TheseinvestmentsarenotpartofthecorewealthmanagementbusinessofAMPanddonothaveamaterialimpactonthefinancialperformanceornetfinancialpositionoftheAMPgroup.

AccountingPolicy–recognitionandmeasurementInvestmentsinassociatesInvestments in associates accounted for using the equity methodInvestmentsinentities,otherthanthosebackinginvestmentcontractliabilitiesandlifeinsurancecontractliabilities,overwhichtheAMPgrouphastheabilitytoexercisesignificantinfluence,butnotcontrol,areaccountedforusingtheequitymethodofaccounting.Theinvestmentismeasuredatcostpluspost-acquisitionchangesintheAMPgroup’sshareoftheassociates’netassets,lessanyimpairmentinvalue.TheAMPgroup’sshareofprofitorlossofassociatesisincludedintheConsolidatedincomestatement.Anydividendordistributionreceivedfromassociatesisaccountedforasareductionincarryingvalueoftheassociate.

AnyimpairmentisrecognisedintheIncomestatementwhenthereisobjectiveevidencealosshasbeenincurred.Itismeasuredastheamountbywhichthecarryingamountoftheinvestmentinentitiesexceedsitsrecoverableamount.

Investments in associates measured at fair value through profit or lossInvestmentsinentitiesheldtobackinvestmentcontractliabilitiesandlifeinsurancecontractliabilitiesareexemptfromtherequirementtoapplyequityaccountingandhavebeendesignatedoninitialrecognitionasfinancialassetsmeasuredatfairvaluethroughprofitorloss.

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6.4 Parent entity information

2016 $m

2015 $m

(a) Statement of comprehensive income – AMP Limited entity Dividendsandinterestfromcontrolledentities 634 892Interestrevenue–otherentities 1 1Servicefeerevenue 11 11Operatingexpenses (8) (11)Financecosts (44) (28)Incometaxcredit1 52 48

Profit for the year 646 913

Total comprehensive income for the year 646 913

(b) Statement of financial position – AMP Limited entity Current assets Cashandcashequivalents 32 21Receivablesandprepayments2 107 293Loansandadvancestosubsidiaries 2,078 2,247

Non-current assets Investmentsincontrolledentities 11,355 11,355Deferredtaxassets3 53 54

Total assets 13,625 13,970

Current liabilities Payables2 77 44Currenttaxliabilities 29 222Provisions 3 5

Non-current liabilities Subordinateddebt4 864 864

Total liabilities 973 1,135

Net assets 12,652 12,835

Equity Contributedequity 9,747 9,747Share-basedpaymentreserve 21 22Retainedearnings5 2,884 3,066

Total equity 12,652 12,835

1 Dividendincomefromcontrolledentities$611m(2015:$876m)isnotassessablefortaxpurposes.Incometaxcreditincludes$65m(2015:$43m)utilisationofpreviouslyunrecognisedtaxlosses.

2 Receivablesandpayablesincludetax-relatedamountsreceivablefromsubsidiaries$99m(2015:$287m)andpayabletosubsidiaries$42m(2015:$42m).

3 Deferredtaxassetsincludeamountsrecognisedforlossesavailableforoffsetagainstfuturetaxableincome$49m(2015:$50m).4 AMPLimitedentityistheissuerof:AMPSubordinatedNotes$326m(2015:$326m);AMPWholesaleCapitalNotes$276m(2015:$276m)

andAMPCapitalNotes$262m(2015:$262m).Furtherinformationontheseisprovidedinnote3.2.5 Changesinretainedearningscomprise$646m(2015:$913m)profitfortheyearlessdividendspaidof$828m(2015:$813m).

(c) Contingent liabilities of AMP Limited entity AMPLimitedentityhasenteredintodeedstoprovidecapitalmaintenanceandliquiditysupporttoAMPBankLimited.Atthereportingdate,thelikelihoodofanyoutflowinsettlementoftheseobligationsisconsideredtoberemote.F

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Section 7: Other disclosuresThissectionincludesdisclosuresotherthanthosecoveredintheprevioussections,requiredfortheAMPgrouptocomplywiththeaccountingstandardsandpronouncements.

7.1 NotestoConsolidatedstatementofcashflows7.2 Leases7.3 Provisions7.4 Contingentliabilities7.5 Auditors’remuneration7.6 Newaccountingstandards7.7 Eventsoccurringafterreportingdate

7.1 Notes to Consolidated statement of cash flows

2016$m

2015$m

(a) ReconciliationofcashflowfromoperatingactivitiesNetprofitafterincometax 192 1,713Depreciationofoperatingassets 18 23Amortisationandimpairmentofintangibles 937 279Investmentgainsandlossesandmovementsinexternalunitholderliabilities 506 788Dividendanddistributionincomereinvested (3,515) (4,041)Share-basedpayments – (4)Decrease(increase)inreceivables,intangiblesandotherassets 83 36(Decrease)increaseinnetpolicyliabilities 2,615 2,336(Decrease)increaseinincometaxbalances (473) (100)(Decrease)increaseinotherpayablesandprovisions (188) 312

Cashflowsfrom(usedin)operatingactivities 175 1,342

(b) ReconciliationofcashComprises: Cashandcashequivalents 3,476 3,955Short-termbillsandnotes(includedinDebtsecurities) 5,334 2,646

CashandcashequivalentsforthepurposeoftheConsolidatedstatementofcashflows 8,810 6,601

Accountingpolicy–recognitionandmeasurementCashandcashequivalentsCashandcashequivalentscomprisecash-on-handthatisavailableondemandanddepositsthatareheldatcallwithfinancialinstitutions.Cashandcashequivalentsaremeasuredatfairvalue,beingtheprincipalamount.ForthepurposeoftheStatementofcashflows,Cashandcashequivalentsalsoincludesotherhighlyliquidinvestmentsnotsubjecttosignificantriskofchangeinvalue,withshortperiodstomaturity,netofoutstandingbankoverdrafts.BankoverdraftsareshownwithinInterest-bearingliabilitiesintheStatementoffinancialposition.

7.2 Leases

2016$m

2015$m

Duewithinoneyear 89 87Duewithinoneyeartofiveyears 222 279Duelaterthanfiveyears 16 13

Totaloperatingleasecommitments 327 379

Non-cancellableoperatingleasesareinrelationtotheAMPgroup’sofficesinvariouslocations.AMPgenerallypaysrentonaperiodbasisatratesagreedattheinceptionofthelease.

At31December2016,thetotaloffutureminimumsubleasepaymentsexpectedtobereceivedundernon-cancellablesubleaseswas$37m(2015:$37m).

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7.2 Leases (continued)Accountingpolicy–recognitionandmeasurementOperatingleasepaymentsOperatingleasepaymentsarerecognisedasanexpenseintheIncomestatementonastraight-linebasisovertheleasetermorothersystematicbasisrepresentativeofthepatternsofthebenefitsobtained.Operatingincentivesarerecognisedasaliabilitywhenreceivedandsubsequentlyreducedbyallocatingleasepaymentsbetweenrentalexpenseandreductionoftheliability.

7.3 Provisions

2016$m

2015$m

(a) Provisions Restructuring1 67 8Other2 138 189

Totalprovisions 205 197

Restructuring1

$mOther2

$mTotal

$m

(b)Movementsinprovisions Balanceatthebeginningoftheyear 8 189 197Additionalprovisionsmadeduringtheyear 69 94 163Provisionsusedduringtheyear (10) (145) (155)

Balanceattheendoftheyear 67 138 205

1 Restructuringprovisionsarerecognisedinrespectofprogramsthatmateriallychangethescopeofthebusinessorthemannerinwhichthebusinessisconducted.

2 Otherprovisionsareinrespectofprobableoutgoingsonclientremediationprojectsandvariousotheroperationalprovisions.$17m(2015:$17m)isexpectedtobesettledmorethan12monthsfromthereportingdate.

Accountingpolicy–recognitionandmeasurementProvisionsProvisionsarerecognisedwhen:– theAMPgrouphasapresentobligation(legalorconstructive)asaresultofapastevent;– itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation;and– areliableestimatecanbemadeoftheamountoftheobligation.

Provisionsaremeasuredatthepresentvalueofmanagement’sbestestimateoftheexpenditurerequiredtosettlethepresentobligationatthereportingdate.Forprovisionsotherthanemployeeentitlements,thediscountrateusedtodeterminethepresentvaluereflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.

Criticalaccountingestimatesandjudgements:The group recognises a provision where a legal or constructive obligation exists at the balance sheet date and a reliable estimate can be made of the likely outcome. Although provisions are reviewed on a regular basis and adjusted for management’s best current estimates, the judgemental nature of these items means that future amounts settled may be different from those provided.

7.4 Contingent liabilitiesFromtimetotimetheAMPgroupmayincurobligationsarisingfromlitigationorvarioustypesofcontractsenteredintointhenormalcourseofbusiness,includingguaranteesissuedbytheparentforperformanceobligationstocontrolledentitiesintheAMPgroup.WhereitisdeterminedthatthedisclosureofinformationinrelationtoacontingentliabilitycanbeexpectedtoseriouslyprejudicethepositionoftheAMPgroup(oritsinsurers)inadispute,accountingstandardsallowtheAMPgroupnottodisclosesuchinformationanditistheAMPgroup’spolicythatsuchinformationisnottobedisclosedinthisnote.

Atthereportingdatetherewerenoothermaterialcontingentliabilitieswheretheprobabilityofanyoutflowinsettlementwasgreaterthanremote.F

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7.5 Auditors’ remuneration

2016$’000

2015$’000

AuditservicesforAMPLimitedandanyotherentityintheconsolidatedgroup – Auditorreviewofthefinancialstatements 12,130 10,762– Otherauditservices1 1,527 1,422

Totalauditservicefees 13,657 12,184

Non-auditservices Inrelationtoothertaxation,complianceandprojectadvice,andothernon-auditservices 2,089 3,421

Totalnon-auditservices2 2,089 3,421

Totalauditors’remuneration 15,746 15,605

1 IncludesfeespaidtoEYaffiliatesoverseas. 2 WhentheAMPgroupgainscontrolofanentitywhoseincumbentauditorisnotEY,immaterialauditfeesarepaidtothenon-EYauditfirm

fortheauditofthecontrolledentity.Thenon-EYauditfirmisalsoindependentlycontractedtoprovideservicesunrelatedtoitsauditwork.

7.6 New accounting standards(a) NewandamendedaccountingstandardsadoptedbytheAMPgroupAnumberofnewaccountingstandardsandamendmentshavebeenadoptedeffective1January2016.ThesehavenothadamaterialeffectonthefinancialpositionorperformanceoftheAMPgroup.

(b) NewaccountingstandardsissuedbutnotyeteffectiveAnumberofnewaccountingstandardsandamendmentshavebeenissuedbutarenotyeteffective,noneofwhichhavebeenearlyadoptedbytheAMPgroupinthisfinancialreport.Thesenewstandardsandamendments,whenappliedinfutureperiods,arenotexpectedtohaveamaterialimpactonthefinancialpositionorperformanceoftheAMPgroup,otherthanassetoutbelow.

AASB15Revenue from Contracts with CustomersAASB15Revenue from Contracts with Customers(AASB15)iseffectiveforperiodsbeginningon1January2018.AASB15definesprinciplesforrecognisingrevenueandintroducesnewdisclosurerequirements.FromanAMPgroupperspective,AASB15willprimarilyapplytofeerevenueaslifeinsurancecontractrelatedrevenuewillcontinuetofalloutsidethescopeofAASB15andwillbeaccountedforunderotherapplicablestandards.

UnderAASB15,revenuewillberecognisedatanamountthatreflectstheconsiderationwhichanentityexpectstobeentitledtoinexchangefortransferringgoodsorservicestoacustomer.TheAMPgroupiscurrentlyundertakinganassessmentofthepotentialimpactofthisstandard,andisnotconsideringearlyadoptingAASB15.

AASB9Financial InstrumentsAASB9Financial Instruments(AASB9)iseffectiveforperiodsbeginningon1January2018.AASB9makeschangestotheclassificationandmeasurementoffinancialinstruments,introducesanewexpectedlossmodelwhenrecognisingexpectedcreditlossesonfinancialassets,andalsointroducesnewgeneralhedgeaccountingrequirements.

TheAMPgroupiscurrentlyundertakinganassessmentofthepotentialimpactofthisstandard.ThepotentialimpacttotheAMPgroupisunlikelytobematerialandtheAMPgroupisnotconsideringearlyadoptingAASB9.

AASB16LeasesAASB16Leases(AASB16)iseffectiveforperiodsbeginningon1January2019.AASB16requireslesseestorecognisemostleasesonbalancesheetsasleaseliabilities,withthecorrespondingright-of-useassets.Lesseesmustapplyasinglemodelforallrecognisedleases,butwillhavetheoptionnottorecognise‘short-term’leasesandleasesof‘low-value’assets.

TheAMPgroupiscurrentlyundertakinganassessmentofthepotentialimpactofthisstandard.ThepotentialimpacttotheAMPgroupisunlikelytobematerialandtheAMPgroupisnotconsideringearlyadoptingAASB16.

7.7 Events occurring after reporting dateOn9February2017,theBoardannouncedanon-marketsharebuy-backofupto$500mtobegininthefirstquarterof2017.

Otherthanthismatter,asatthedateofthisreport,thedirectorsarenotawareofanymattersorcircumstancesthathavearisensincetheendofthefinancialyearthathavesignificantlyaffected,ormaysignificantlyaffect:– theAMPgroup’soperationsinfutureyears;– theresultsofthoseoperationsinfutureyears;or– theAMPgroup’sstateofaffairsinfuturefinancialyears.

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Directors’ declarationfortheyearended31December2016

InaccordancewitharesolutionofthedirectorsofAMPLimited,forthepurposesofsection295(4)oftheCorporations Act 2001,thedirectorsdeclarethat:

(a) intheopinionofthedirectorstherearereasonablegroundstobelievethatAMPLimitedwillbeabletopayitsdebtsasandwhentheybecomedueandpayable;

(b) intheopinionofthedirectorsthefinancialstatementsandthenotesofAMPLimitedandtheconsolidatedentityforthefinancialyearended31December2016areinaccordancewiththeCorporations Act 2001,includingsection296(compliancewithaccountingstandards)andsection297(trueandfairview);

(c) thenotestothefinancialstatementsofAMPLimitedandtheconsolidatedentityforthefinancialyearended31December2016includeanexplicitandunreservedstatementofcompliancewiththeInternationalFinancialReportingStandards;

(d) thedeclarationsrequiredbysection295AoftheCorporations Act 2001havebeengiventothedirectors.

CatherineBrenner CraigMellerChairman ChiefExecutiveOfficerandManagingDirector

Sydney,9February2017

Financial report for the year ended 31 December 2016

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Tel: +61 2 9248 5555Fax: +61 2 9248 5959ey.com/au

200 George StreetSydney NSW 2000 AustraliaGPO Box 2646 Sydney NSW 2001

Independent Auditor’s ReportTotheShareholdersofAMPLimited

Report on the Audit of the Financial ReportOpinionWehaveauditedthefinancialreportofAMPLimited(theCompany),includingitssubsidiaries(theGroup),whichcomprisesthestatementsoffinancialpositionasat31December2016,theincomestatements,thestatementsofcomprehensiveincome,thestatementsofchangesinequityandthestatementsofcashflowsfortheyearthenended,notescomprisingasummaryofsignificantaccountingpoliciesandotherexplanatoryinformationandtheDirectors’DeclarationoftheCompanyandGroup.

InouropiniontheaccompanyingfinancialreportofAMPLimitedisinaccordancewiththeCorporations Act 2001,including:(i) givingatrueandfairviewoftheCompanyandGroup’sfinancialpositionasat31December2016andoftheirfinancial

performancefortheyearendedonthatdate;and(ii) complyingwithAustralianAccountingStandardsandtheCorporations Regulations 2001.

BasisforOpinionWeconductedourauditinaccordancewithAustralianAuditingStandards.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’s Responsibilities for the Audit of the Consolidated Financial Statementssectionofourreport.WeareindependentoftheGroupinaccordancewiththeCorporations Act 2001andtheethicalrequirementsoftheAccountingProfessionalandEthicalStandardsBoard’sAPES110Code of Ethics for Professional Accountants(theCode)thatarerelevanttoourauditofthefinancialreportinAustralia;andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeCode.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

KeyAuditMattersKeyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialreportofthecurrentyear.Thesematterswereaddressedinthecontextofourauditofthefinancialreportasawhole,andinformingouropinionthereon,butwedonotprovideaseparateopiniononthesematters.Foreachmatterbelow,ourdescriptionofhowourauditaddressedthematterisprovidedinthatcontext.

WehavefulfilledtheresponsibilitiesdescribedintheAuditor’s Responsibilities for the Audit of the Financial Reportsectionofourreport,includinginrelationtothesematters.Accordingly,ourauditincludedtheperformanceofproceduresdesignedtorespondtoourassessmentoftherisksofmaterialmisstatementofthefinancialstatements.Theresultsofourauditprocedures,includingtheproceduresperformedtoaddressthemattersbelow,providethebasisforourauditopinionontheaccompanyingfinancialreport.

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Keyauditmatter Howourauditaddressedthematter

Valuationoflifeinsurancepolicyliabilities31December2016Financialreportreference:Section4:Lifeinsuranceandinvestmentcontracts

Lifeinsurancepolicyliabilitiestotal$24,255millionandrepresent18%oftotalliabilities.

Thevaluationoftheprovisionsforthesettlementoffutureclaimsinvolvescomplexandsubjectivejudgementsaboutfutureevents,bothinternalandexternaltothebusiness.Smallchangesinassumptionscanhaveamaterialimpactonthevaluationoftheseliabilities.

Keyassumptionsinvolvedinthevaluationofthepolicyliabilitiesinclude:– Discountrates– Inflationandindexation– Forecastlapserates,particularlyforthewealthprotection

bookofbusiness– Futuremaintenanceandinvestmentexpenses– Taxation– Surrendervalues– Mortalityandmorbidity

Inobtainingsufficientauditevidence:– Weassessedthedesignandoperatingeffectivenessofcontrols

overthenewbusiness,maintenanceandclaimsprocesses.– Weassessedtheprocessandtestedthekeyreconciliationson

thevalidity,accuracyandcompletenessofthedatausedforthepolicyliabilityvaluation.

– AspartofourworkweusedtheworkofAMP’sAppointedActuarywhoisamanagementexpertunderauditingstandards.ThisincludedassessingthecompetenceandobjectivityoftheAppointedActuaryaswellasperformingtestsontheaccuracyoftheactuarialreports.

– WeevaluatedthekeyITsystemsandthedesignandoperatingeffectivenessofITsystemcontrols.

– Ouractuarialspecialistsassessedthereasonablenessofthevaluationmethodology,keyassumptions,includingtheimpactofthereinsurancetransactionenteredintoduringthecourseoftheyear,andtheinterpretationofaccountingandprudentialstandardsthataffectthepolicyliabilityvaluation.

– Wheremanualadjustmentsweremadetothevaluationmodeloutputsoutsidethestandardprocesses,ouractuarialspecialistsperformedtestingnecessary,onasamplebasis,tovalidatethenatureandaccuracyoftheadjustments.

– Ourspecialistsindependentlydevelopedexpectationsregardingthevaluationresultsbasedontheirunderstandingofthebusiness,externalindustrytrendsandexperienceandAMP’shistoricbusinessactivity.Theseexpectationswerecomparedtothepolicyliabilityvaluationresultsandsignificantdifferencesweresubjecttofurthertesting.

– WeassessedtheadequacyandcompletenessofpolicyliabilitydisclosuresincludedinthefinancialreportagainsttherequirementsofAustralianAccountingStandard–AASB1038Life Insurance Contract Liabilities.

Valuationofinvestmentcontractliabilities31December2016Financialreportreference:Section4:Lifeinsuranceandinvestmentcontracts

Investmentcontractliabilitiestotal$71,579millionandrepresent54%oftotalliabilities.Theyconsistofafinancialinstrumentandaninvestmentmanagementserviceselement,bothofwhicharemeasuredatfairvalue.Withtheexceptionoffixedretirementincomepolicies,theresultingliabilitytopolicyholdersiscloselylinkedtotheperformanceandvalueoftheassets(aftertax)thatsupportthoseliabilities.Forthemajorityofcontracts,thefairvalueisdeterminedbasedonexternalthirdpartypublishedunitpricesandthefairvalueofbackingassets,anddoesnotgenerallyrequiretheexerciseofjudgement.Thevaluationofinvestmentcontractliabilitiesisconsideredakeyauditmattergiventhematerialityofthisaccounttotheoverallfinancialstatements.

Inobtainingsufficientauditevidence:– Weassessedthedesignandoperatingeffectivenessofcontrols

overthenewbusiness,maintenanceandclaimsprocesses.– WeevaluatedthekeyITsystemsandthedesignandoperating

effectivenessofITsystemcontrols.– Weidentifiedandtestedkeycontrolsoverdailyinvestment,

includingwhereappropriateapplicationdrivencontrols.– Weexaminedtheunitpricingprocess,whichincludedassessing

thedesignoftheprocess,andtheroleplayedbyBNPascustodianofthepricing.

– WeevaluatedtheprocessandtestedthekeycontrolsperformedbyAMPthatsupportthevaluationofinvestmentcontractliabilities.Wereceivedandreviewedanunqualifiedassurancereportfromanauditfirmcoveringthecontrolsatthecustodian.

– Fortheinvestmentlinkedpolicies,werecalculatedthetotalinvestmentcontractliabilityviasystemextractionsofunitsheldperproduct,andthepricesasat31December2016.Weperformedtestingoverthisextractionprocessandthesystemholdingthisdata.Wereconciledtheinvestmentcontractliabilitytothefairvalueofunderlyingassets.

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Keyauditmatter Howourauditaddressedthematter

Valuationofcomplexandilliquidfinancialinvestments31December2016Financialreportreference:Section2.5Fairvalueinformation

TheGrouphastotalinvestmentsinfinancialassetsof$129,419million,representing92%oftotalassets.Asexplainedinsection2.5,theportfolioofinvestmentsiscategorisedinaccordancewiththefairvaluehierarchy,asrequiredbyaccountingstandards.ThecomplexandilliquidinvestmentsaretypicallyclassifiedasLevel3investments,wherethereisalackofobservablemarkettransactionsandavailablemarketdata.ForAMPthesetotal$3,592million,or3%oftotalassets.TheGroupisrequiredtomakejudgementstoarriveattheirbestestimatesoffairvalueoftheseassets.Thereiscomplexityinthisprocess,aswellasriskassociatedwiththevaluationandmodellingmethodologiesandtheassumptionsadopted.

Theriskisnotuniformforallinvestmenttypesandisgreatestforthefollowingwheretheinvestmentsarehardtovalue:– Infrastructureassets– Unlistedindirectpropertyholdings– Unlistedequities– Unlistedunittrusts

ForthosecomplexandilliquidfinancialinvestmentsweassessedboththemethodologyandassumptionsusedbytheGroupinthecalculationoftheyearendvalueaswellastestedtheoperatingeffectivenessofgovernancecontrolsthattheGrouphasinplacetomonitortheseinvestments.

Further,inobtainingsufficientauditevidence:– Weinvolvedourvaluationandbusinessmodellingspecialiststo

assessthevaluationandmodellingmethodologiesandthekeyassumptionsusedfortheyearendvaluations.

– Weinvolvedourpropertyspecialiststoassesstheindependenceandcompetencyoftheexternalvaluationspecialistsaswellastoassessthemodels,methodologiesandassumptions,includingdiscountrate,yearonyearchangesinvaluationmovements,andoperatingcashflowchangesemployedintheyearendvaluations.

– Forassetsrecordedwithincontrolledunittrustswheretherearenospecificlocalreportingrequirements,weassessedthevaluationsofinvestmentsasprovidedbyexternalinvestmentmanagers,includinganassessmentofthereliabilityoftheinformationprovidedbytheinvestmentmanager,suchaskeyassumptions,multiplesanddiscountsapplied.

– Foroffshoreassets,weinvolvedauditteamsinthoselocationstoperformprocedures.Thisapproachensuredthatlocalmarketconditionswereconsideredaspartofthevaluationprocedures.

Goodwillandintangibleassets31December2016Financialreportreference:Section2.2Intangibles

GoodwillhasbeenrecognisedasaresultofAMPLimited’shistoricalacquisitions,representingtheexcessofthepurchaseconsiderationoverthefairvalueofassetsacquired.OnacquisitionthisgoodwillhasbeenallocatedtotheapplicableCashGeneratingUnits(CGUs).At31December2016,AMPhasrecordedgoodwillof$2,117millionasdescribedinsection2.2.

Animpairmentassessmentisperformedateachreportingperiod,comparingthecarryingvalueoftheCGUwithitsrecoverableamount.TherecoverableamountofeachCGUisdeterminedbycalculatingtheCGU’sfairvalue.Thisiscalculatedastheembeddedvalueplusthevalueofnewbusiness.Thecalculationofembeddedvalueisdependentontheassumptionsthatdrivethevaluationoflifeinsurancepolicyliabilities.

Intangibleassetsforin-forcecontractsanddistributionnetworkswereacquiredduringhistoricalacquisitions.Theseintangibleassetsareamortisedandareassessedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

OurauditoftheimpairmentassessmentofeachCGUandintangibleassetrequiredvaluationandactuarialexpertisetoassistinthetestingoftherecoverableamountmodelsandassumptions.Accordingly,weinvolvedourEYactuarialspecialistswho:– AssessedwhetherthemethodologyusedbytheGroup

forimpairmentassessmentpurposeswasinlinewiththerequirementsofAustralianAccountingStandards–AASB136Impairment of Assets,includinganassessmentoftheadequacyoftheembeddedvaluemodelforgoodwillimpairmentassessmentpurposes.

– Assessedtheunderlyingassumptionsforconsistencywiththoseusedinthevaluationofthelifeinsurancepolicyliabilities.

– Assessedthemethodologyandassumptionsusedinthecalculationofthediscountrate,includingcomparisonoftheratetomarketbenchmarks.

– Performedsensitivityanalysisonkeyassumptions,includingcomponentsofthediscountrate.

– Assessedthevalueofoneyear’snewbusinessandthemultipleappliedtocalculatethevalueofthenewbusiness.

– AssessedtheGroup’sdeterminationoftheCGUstowhichgoodwillisallocatedandtheadequacyofthedisclosuresinthefinancialstatementsforcompliancewithapplicableaccountingstandards.

– AssessedthemathematicalaccuracyoftheimpairmentassessmentperformedbytheGroup.

– Foramortisingintangibleassets,weassessedthemethodologyusedbytheGroupforimpairmentassessmentpurposestoevaluatewhethereventsorchangesincircumstancesindicatedthatthecarryingamountmaynotberecoverable.

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Informationtechnology(IT)environment31December2016Financialreportreference:None

TheoperationsofAMPLimitedareheavilydependentoninformationtechnologysystemsandtheirassociatedITcontrols.

Afundamentalcomponentoftheseprocessesisensuringappropriateuseraccessmanagementprotocolsexist,andarebeingadheredto.

WeinvolvedourITspecialiststoassessthedesignandoperatingeffectivenessofcriticaloperationalandfinancialreportingsystems.

Wheredeficiencieswereidentified,weperformedadditionalprocedurestodeterminewhetherwecouldrelyonthedataandreportingproducedfromaffectedsystems.

Theseproceduresincluded:– Identifyingwhethertherehadbeenunauthorisedor

inappropriatechangesmadetocriticalITsystemsanddatabases.

– Assessingthedesignandoperatingeffectivenessofcompensatingcontrols.

Whererequired,weperformedsubstantiveprocedurestovalidatetheintegrityandreliabilityofassociateddataandreporting.

Information Other than the Financial Statements and Auditor’s ReportTheDirectorsoftheCompanyareresponsiblefortheotherinformation.TheotherinformationcomprisestheinformationintheCompany’sAnnualReportfortheyearended31December2016,butdoesnotincludethefinancialreportandtheauditor’sreportthereon.

Ouropiniononthefinancialreportdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.

OtherinformationconsistsoftheinformationincludedintheCompany’s2016AnnualReportotherthanthefinancialstatementsandourauditor’sreportthereon.Weobtainedthedirectors’report(includingtheremunerationreport)priortothedateofourauditor’sreport.WeexpecttoobtaintheChairman’sreport,financialsummaryinformation,informationaboutAMPincludingitsbusinessandstrategy,informationabouttheboardandmanagementteam,thecorporategovernancestatement,theanalysisofshareholderprofitandsecurityholderinformationafterthedateofourauditor’sreport.Managementisresponsiblefortheotherinformation.

Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationandwedonotandwillnotexpressanyformofassuranceconclusionthereon.

Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.

If,basedontheworkwehaveperformedontheotherinformationobtainedpriortothedateoftheauditor’sreport,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.

Directors’ ResponsibilitiesTheDirectorsoftheCompanyareresponsibleforthepreparationofthefinancialreportthatgivesatrueandfairviewinaccordancewithAustralianAccountingStandardsandtheCorporations Act 2001andforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationofthefinancialreportthatgivesatrueandfairviewandisfreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialreport,theDirectorsareresponsibleforassessingtheGroup’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlesstheDirectorseitherintendtoliquidatetheGrouporceaseoperations,orhavenorealisticalternativebuttodoso.

Auditor’s Responsibilities for the Audit of the Financial Report Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialreportasawholeisfreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithAustralianAuditingStandardswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthisfinancialreport.

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Independent Auditor’s Report (continued)AspartofanauditinaccordancewithAustralianAuditingStandards,weexerciseprofessionaljudgementandmaintainprofessionalscepticismthroughouttheaudit.Wealso:

– Identifyandassesstherisksofmaterialmisstatementofthefinancialreport,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.

– Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.

– EvaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebytheDirectors.

– ConcludeontheappropriatenessoftheDirectors’useofthegoingconcernbasisofaccountinginthepreparationofthefinancialreport.Wealsoconclude,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsandconditionsthatmaycastsignificantdoubtontheentity’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentionintheauditor’sreporttothedisclosuresinthefinancialreportaboutthematerialuncertaintyor,ifsuchdisclosuresareinadequate,tomodifytheopiniononthefinancialreport.However,futureeventsorconditionsmaycauseanentitytoceasetocontinueasagoingconcern.

– Evaluatetheoverallpresentation,structureandcontentofthefinancialreport,includingthedisclosures,andwhethertheconsolidatedfinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.

– ObtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithintheGrouptoexpressanopiniononthefinancialreport.Weareresponsibleforthedirection,supervisionandperformanceoftheGroupaudit.Weremainsolelyresponsibleforourauditopinion.

WecommunicatewiththeDirectorsregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.

WearealsorequiredtoprovidetheDirectorswithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.

FromthematterscommunicatedtotheDirectors,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialreportofthecurrentyearandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor’sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

Report on the Remuneration ReportOpinionontheRemunerationReportWehaveauditedtheRemunerationReportincludedintheDirectors’Reportfortheyearended31December2016.

Inouropinion,theRemunerationReportofAMPLimitedfortheyearended31December2016,complieswithsection300AoftheCorporations Act 2001.

ResponsibilitiesTheDirectorsoftheCompanyareresponsibleforthepreparationandpresentationoftheRemunerationReportinaccordancewithsection300Aofthe Corporations Act 2001.OurresponsibilityistoexpressanopinionontheRemunerationReport,basedonourauditconductedinaccordancewithAustralianAuditingStandards.

Ernst&Young

TonyJohnsonEngagementPartnerSydney9February2017

AmemberfirmofErnst&YoungGlobalLimitedLiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation

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Securityholder information

Securityholder information as at 9 February 2017

DistributionofAMPcapitalnotesholdings

Range Numberofholders Notesheld %ofissuedcapital

1–1,000 4,256 1,148,790 42.951,001–5,000 248 534,885 20.005,001–10,000 17 124,262 4.6510,001–100,000 22 571,822 21.37100,001andover 2 295,241 11.03

Total 4,545 2,675,000 100.00

TwentylargestAMPcapitalnotesholdings

Rank Name Notesheld %ofissuedcapital

1 HSBCCustodyNominees(Australia)Limited 189,241 7.072 CiticorpNomineesPtyLimited 106,000 3.963 NavigatorAustraliaLtd<MLCInvestmentSettA/C> 70,773 2.654 JPMorganNomineesAustraliaLimited 62,116 2.325 NetwealthInvestmentsLimited<WrapServicesA/C> 46,388 1.736 BNPParibasNomineesPtyLtdHub24CustodialServLtdDRP 43,318 1.627 IOOFInvestmentManagementLimited<IPSSuperA/C> 36,316 1.368 NationalNomineesLimited<NA/C> 31,696 1.189 BNPParibasNomsPtyLtd<DRP> 26,167 0.9810 HSBCCustodyNominees(Australia)Limited–A/C2 26,114 0.9811 FilburyP/L<PiekarskiGrandInvestA/C> 25,800 0.9612 NulisNominees(Australia)Limited<NavigatorMastPlanSettA/C> 25,327 0.9513 SandhurstTrusteesLtd<DMPAssetManagementA/C> 25,033 0.9414 NetwealthInvestmentsLimited<SuperServicesA/C> 20,598 0.7715 WincheladaPtyLimited 18,000 0.6716 IOOFInvestmentManagementLimited<IPSIDPSA/C> 15,010 0.5617 MsSihaiHou 15,000 0.5618 MutualTrustPtyLtd 14,785 0.5519 TGBHoldingsPtyLtd 14,100 0.5320 LarkinsBusinessManagementPtyLtd 12,338 0.46

Total 824,120 30.81

DistributionofAMPwholesalecapitalnotesholdings

Range Numberofholders Notesheld %ofissuedcapital

1–1,000 8 2,070 7.531,001–5,000 4 12,127 44.105,001–10,000 2 13,303 48.37

Total 14 27,500 100.00

AMPnotesvotingrightsAMPwholesalecapitalnotesandAMPcapitalnotesconfernorighttoattendorvoteatanygeneralmeetingoftheshareholdersofAMPLimited.Ifaholder’snotesconvertintoAMPsharesinaccordancewiththetermsofthenotes,thoseshareswillhavethevotingrightsdescribedonpage124.

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Securityholder information as at 9 February 2017

DistributionofAMPLimitedshareholdings

Range Numberofholders Ordinarysharesheld %ofissuedcapital

1–1,000 538,176 236,034,900 7.981,001–5,000 216,420 442,991,286 14.985,001–10,000 22,372 158,280,399 5.3510,001–100,000 11,415 236,661,099 8.00100,001andover 309 1,883,770,280 63.69

Total 788,692 2,957,737,964 100.00

Thetotalnumberofshareholdersholdinglessthanamarketableparcelof96sharesis11,541.

TwentylargestAMPLimitedshareholdings

Rank Name Ordinarysharesheld %ofissuedcapital

1 HSBCCustodyNominees(Australia)Limited 849,579,820 28.722 JPMorganNomineesAustraliaLimited 334,682,388 11.323 CiticorpNomineesPtyLimited 205,588,256 6.954 NationalNomineesLimited 140,583,697 4.755 BNPParibasNomineesPtyLtd<AgencyLendingDRPA/C> 47,108,182 1.596 CiticorpNomineesPtyLimited<ColonialFirstStateInvA/C> 36,920,991 1.257 BNPParibasNomsPtyLtd<DRP> 32,742,606 1.118 AustralianFoundationInvestmentCompanyLimited 20,100,422 0.689 RBCInvestorServicesAustraliaNomineesPtyLimited<PIPooledA/C> 16,991,550 0.5710 HSBCCustodyNominees(Australia)Limited<NT-ComnwlthSuperCorpA/C> 14,983,418 0.5111 ArgoInvestmentsLimited 12,381,674 0.4212 RBCInvestorServicesAustraliaNomineesPtyLimited<BKCustA/C> 8,283,534 0.2813 RBCInvestorServicesAustraliaNomineesPtyLtd<HavestorETF> 6,533,092 0.2214 BondStreetCustodianLimited<MacqHighConvFundA/C> 5,793,561 0.2015 NavigatorAustraliaLtd<MLCInvestmentSettA/C> 5,419,641 0.1816 RBCInvestorServicesAustraliaNomineesPtyLimited<MBAA/C> 5,172,939 0.1717 NavigatorAustraliaLtd<SMAAntaresInvDVBuildA/C> 4,777,996 0.1618 AMPLifeLimited 4,600,737 0.1619 AustralianUnitedInvestmentCompanyLimited 4,500,000 0.1520 HSBCCustodyNominees(Australia)Limited 4,323,900 0.15

Total 1,761,068,404 59.54

SubstantialshareholdersThecompanyhasreceivednosubstantialshareholdingnotices.

AMPLimitedsharesvotingrightsThevotingrightsattachedtothesharesarethateachregisteredholderofsharespresentinperson(orbyproxy,attorneyorrepresentative)atameetingofshareholdershasonevoteonavotetakenbyashowofhands,andonevoteforeachfullypaidshareheldonavotetakenatapoll.

TotalnumberofoptionsoverunissuedsharesandoptionholdersAMPLimitedhadnooptionsonissueoverunissuedordinarysharesinAMPLimited.

Onmarketacquisitionsforemployeeincentiveschemesduringthefinancialyearended31December20165,451,486AMPLimitedordinaryshareswerepurchasedonmarkettosatisfyentitlementsunderAMP’semployeeincentiveschemesatanaveragepricepershareof$5.51.

StockexchangelistingsAMPLimited’sordinarysharesarequotedontheAustralianSecuritiesExchangeandontheNewZealandStockExchange.AMPsubordinatednotes2andAMPcapitalnotesarequotedontheAustralianSecuritiesExchange.

RestrictedsecuritiesTherearenorestrictedsecuritiesonissue.

Buy-backThereiscurrentlyanon-marketbuy-back.

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Glossary

ContingentliabilitiesAsituationexistingatreportingdate,wherepasteventshaveledtoapossibleobligation,theoutcomeofwhichdependsonuncertainfutureevents,oranobligationwheretheoutcomeisnotsufficientlyprobableorreliablymeasurabletowarrantrecognisingtheliabilityatthisreportingdate.

ControllablecostsCoststhatAMPincursinrunningitsbusiness.Controllablecostsincludeoperationalandprojectcostsandexcludevariablecosts,provisionforbadanddoubtfuldebtsandinterestoncorporatedebt.

Earningspershare(EPS)Eachearningspershare(EPS)calculationrepresentstheprofitamountdividedbytheweightedaveragenumberofsharesonissueduringtheyear.

EmbeddedvalueAcalculationoftheeconomicvalueoftheshareholdercapitalinthebusinessesotherthanAMPBank,andthefutureshareholderprofitsexpectedtoemergefromthebusinesscurrentlyin-force(expressedintoday’sdollars).

ExecutivesWithinthisreport,thetermexecutivesreferstothechiefexecutiveofficerandnominateddirectreportsoftheCEOwhoarekeymanagementpersonnel(KMP).

FrankingrateTheamountoftaxAMPhasalreadypaidonadividendpayment.ThiscanbeusedasataxcreditbyAustralianresidentshareholders.ThefrankingrateisdeterminedbyAMP’staxableincome.AMP’spolicyistoalwaysfrankdividendsatthehighestpossiblerate.

InvestmentperformanceAmeasureofhowwellwemanagefundsonbehalfofourcustomers.ThepercentageofassetsmanagedbyAMPwhichmetorexceededtheirrespectiveclientgoals.

Keymanagementpersonnel(KMP)Thechiefexecutiveofficer(CEO),directreportsoftheCEOandthenon-executivedirectors,whohaveauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesofAMP.

Long-termincentive(LTI)AnexecutiverewardforhelpingAMPachievespecificlong-termperformancetargets.Itisawardedintheformofsharerightsand/orperformancerightstomotivateexecutivestocreateoutstandinglong-termvalueforshareholders.ArightisanentitlementtoreceiveoneAMPlimitedshareperrightsubjecttomeetingthevestingconditions.

Non-executivedirectors(NEDs)BoarddirectorswhoarenotemployeesofAMP(theyareindependent).

OperatingearningsTotaloperatingearningsaretheshareholderprofitsthatrelatetotheperformanceofAMP.Operatingearningsexcludeinvestmentearningsonshareholdercapitalandone-offitems.

PerformancerightAformofexecutiveremunerationdesignedtorewardlong-termperformance.Selectedexecutivesaregrantedperformancerights.EachperformancerightisarighttoacquireoneAMPshareafterathree-yearperformanceperiod,ifaspecificperformancehurdleismet.

Returnonequity(RoE)Returnonequity(RoE)isameasureusedintheAMPlong-termincentiveplan.ItisapercentagethatshowshoweffectiveAMPhasbeeningrowingthevalueofthemoneyinvestedbyourshareholders.ThepercentageisdeterminedbydividingAMP’sunderlyingprofitbyAMPshareholderequity.

SharerightAsharerightisanentitlementtoacquireoneAMPshareattheendofavestingperiodegtwoyears,aslongastheserviceconditionsaremet.

Short-termincentive(STI)AnexecutiverewardforhelpingAMPachievespecificshort-termperformancetargetsandobjectives.Itispaidintheformofcashandsharerightstomotivateexecutivestoachieveoutstandingperformanceduringtheyear.

STIpoolThemoneyusedforthepaymentofSTIrewards.ThepoolsizevarieseachyeardependingonAMP’sfinancialandnon-financialperformanceagainsttheSTIscorecard.

Totalshareholderreturn(TSR)Ameasureofthevaluereturnedtoshareholdersoveraperiodoftime.IttakesintoaccountthechangesinmarketvalueofAMPshares,plusthevalueofanydividendspaidandcapitalreturnsontheshares.

UnderlyinginvestmentincomeUnderlyinginvestmentincomeisbasedonlong-termexpectedratesofreturn.Actualinvestmentincomecanbehigherorlowerthanthelong-termratefromyeartoyear.

UnderlyingprofitAMP’skeymeasureofbusinessprofitability,asitsmoothsinvestmentmarketvolatilitythatstemsfromshareholderassetsthatareinvestedininvestmentmarketsandaimstoreflectthetrendsintheunderlyingbusinessperformanceoftheAMPgroup.Thecomponentsofunderlyingprofitarelistedonpage51.

VestingRemunerationtermdefiningthepointatwhichtherequiredperformancehurdlesand/orservicerequirementshavebeenmet,andafinancialbenefitmayberealisedbytherecipient.

AMPiscommittedtoactivelyreducingitsimpactontheenvironmentandhasprintedthisdocumentonpaperderivedfromcertifiedwellmanagedforestsandmanufacturedbyanISO14001certifiedmill.ThedocumenthasalsobeenprintedatanFSC®certifiedprinter.

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Registered office of AMP Limited 33 Alfred StreetSydney NSW 2000AustraliaT +612 9257 5000F +612 9257 7178W amp.com.auCompany Secretary: David Cullen

AMP investor relations Level 21, 33 Alfred StreetSydney NSW 2000AustraliaT +612 9257 9009F +612 8843 8255E shares@amp.com.auW amp.com.au/sharesHead of shareholder services: Marnie Reid

AMP products and policies AustraliaT 131 267E askamp@amp.com.au

New ZealandT 0800 808 267E service@amp.co.nz

InternationalT +612 8048 8162

Australia AMP share registryReply Paid 2980Melbourne VIC 8060T 1300 654 442F 1300 301 721

New ZealandAMP share registryPO Box 91543Victoria Street WestAuckland 1142T 0800 448 062F 09 488 8787

Other countries AMP share registryGPO Box 2980Melbourne VIC 3001AustraliaT +613 9415 4051F +612 8234 5002

AMP share registry

facebook.com/AMPaustralia @AMP_AU

Contact us

AMP is incorporated and domiciled in Australia

E ampservices@computershare.com.au

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