Resources
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
AMP has offloaded its life insurance arm to British firm Resolution Life in a massive $3.3 billion sale, reshaping AMP as a “simpler, more focused” business in the wake of the banking royal commission.
AMP shares nosedived at the news on Thursday, tumbling almost 25 per cent to close at a record low of $2.50.
In a statement to the ASX, AMP said it will exit its Australian and New Zealand wealth protection business, with the $3.3 billion total consideration comprising $1.9 billion in cash, $300 million in AMP Life preference shares and $1.1 billion in non-cash consideration.
The non-cash consideration includes an economic interest in future earnings from the mature business equivalent to $600 million and a $515 million interest in Resolution Life.
The embattled financial services giant has also entered into an agreement with reinsurer Swiss Re for its New Zealand retail wealth protection reinsurance, releasing additional capital of up to $150 million.
AMP’s acting chief executive Mike Wilkins said the completion of a year-long portfolio review is a “major step forward in reshaping AMP as a simpler, more focused group.”
“The agreement with Resolution Life and our exit from wealth protection and mature delivers important strategic benefits,” Wilkins said.
“It substantially simplifies our portfolio, delivers certainty and frees up capital.”
AMP acknowledged that its latest quarter has been “testing”, with net cash outflows of $1.5 billion in the September quarter.
Customers removed funds from AMP in droves after findings from the royal commission revealed AMP had billed more than 4600 dead people and routinely charged fees for no service.
The royal commission triggered leadership trouble for AMP, claiming the scalps of three board members, chief executive Craig Meller and chairman Catherine Brenner. Former Credit Suisse South East Asia head Francesco De Ferrari was named AMP’s new chief executive officer in August.
“Looking forward, our incoming CEO Francesco De Ferrari has the mandate to transform AMP,” Wilkins said.
“The outcomes from the portfolio review will create greater flexibility as he sets the new strategy for our simplified business portfolio.”
