- AMP is exiting its insurance business in a sale to Resolution Life for $3.3 billion.
- It also plans an IPO of its New Zealand wealth management and advice businesses.
- AMP will now focus on its Australian wealth management, AMP Capital and AMP Bank..
AMP today announced the sale of its Australian and New Zealand insurance businesses to global wealth protection group Resolution Life for $3.3 billion.
The financial services giant says the significant capital release will strengthen AMP’s balance sheet and will mean a switch in focus =to the higher growth businesses of Australian wealth management, AMP Capital and AMP Bank.
It also has an agreement with Swiss Re Life & Health Australia Ltd to reinsure New Zealand retail wealth protection, releasing additional capital of up to A$150 million.
AMP also intends to divest its New Zealand wealth management and advice businesses via an IPO.
In July AMP launched a program to repair its reputation and “earn back trust”, by compensating customers for lost earnings, strengthening risk management systems and controls, and cutting fees on its superannuation products.
In August the company posted a 74% fall in half year profit to $115 million, driven down by provisions to compensate customers for financial advice they paid for but didn’t receive.
Mike Wilkins, AMP’s Acting CEO, says the completion of a portfolio review marks a major step forward in reshaping AMP as a simpler, more focused group.
“Delivering the right outcome for customers, shareholders and employees has been our focus throughout the portfolio review,” he says.
“For customers, there will be no change to their existing insurance policy terms or conditions. They will benefit from Resolution Life’s deep expertise in managing in-force insurance policies and its commitment to customer service.
“For shareholders, the agreement with Resolution Life and our exit from wealth protection and mature delivers important strategic benefits. It substantially simplifies our portfolio, delivers certainty and frees up capital.”
AMP had admitted knowingly charging customers for advice they didn’t get and of misleading the corporate regulator ASIC.
The scandal claimed the scalps of former CEO Craig Meller, Chairman Catherine Brenner and three other board members.
Under the terms of today’s agreement, AMP will sell AMP Life to Resolution Life for $3.3 billion, including $1.9 billion in cash, $300 million in preference shares in AMP Life and $1.1 billion in non-cash consideration.
AMP also has an economic interest in future earnings equivalent to $600 million and a $515 million interest in Resolution Life.
The company will exclude the second half =earnings from the discontinued businesses in determining the final dividend.
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