AMP’s life insurance business enjoyed a dramatic turnaround last year, with operating earnings up to $110 million following a $415 million loss in 2016.

Annual individual life premium was static at $1.5 billion, while the lapse rate increased to 14.2% from 13.9%.

Group life annual premium declined by 14.9% to $376 million due to the loss of a major client last year.

The life business’ cash inflows were static at $1.8 billion while outflows declined 7% to $902 million. Claims totalled $1.1 billion. Investment income was down 38.6% to $27 million.

Life profit margins suffered a 43.4% drop to $99 million, which AMP attributes to changes in assumptions for the business and the impact of reinsurance deals.

An agreement with Munich Re and Gen Re has reinsured 65% of the retail book.

This deal will put further pressure on profits: AMP predicts they will fall by $70 million this year.

The group says its priority this year is a focus on pricing, claims and lapse management to improve margins.

It warns it faces pressure from global players to maintain a leading market position in Australia.