AMP Life deal is done
AMP Limited says it has completed the sale of its life insurance business, AMP Life, to Resolution Life for A$3 billion (NZ$3.19 billion).
Wednesday, July 1st 2020, 10:03AM 
9 Comments
The total sale proceeds are A$3 billion, comprising A$2.5 billion cash and A$500 million equity interest in Resolution Life Australia, a new Australian-domiciled, Resolution Life-controlled holding company that is now the owner of AMP Life.
The final cash proceeds from the sale are subject to a number of post completion adjustments, however AMP expects the net proceeds to increase AMP’s capital in excess of target surplus by approximately A$1.1 billion.
AMP anticipates that any capital in excess of target surplus post completion will first be used to fund delivery of the new AMP strategy. Beyond this, AMP will assess all capital management options with the intent of returning the excess above target surplus to shareholders, subject to unforeseen circumstances and current economic and business conditions.
AMP will provide an update on its future capital framework and strategy at its interim results on August 13.
The separation of AMP Life will significantly simplify AMP’s group structure. The internal separation process included the transfer of approximately A$55 billion of client funds via several successor fund transfers.
Collectively these transfers represented one of the largest fund transfers of this kind and enables AMP to focus on its strategic simplification of its wealth management platforms and products.
In addition to its residual 20% holding in Resolution Life Australia, AMP will continue to provide technology and administrative services to AMP Life for a two-year period under a transitional services agreement. All customers’ terms and conditions will remain unchanged through the separation.
AMP chief executive Francesco De Ferrari said the sale was a “foundational step in AMP’s strategic transformation to become a simpler, client-led and growth-oriented organisation”.
“The sale is a major milestone for AMP demonstrating our ability to execute complex projects including through the difficulties of Covid-19,” he said.
“It is also a historic moment as AMP ceases to be a life insurer after 170 years. Our Life teams will move to Resolution Life and will continue to support clients who will see no changes in their policy terms or conditions.
“We are pleased to partner with an experienced operator in Resolution Life and deliver an outcome that is in the best interests of our clients, policy holders and shareholders.”
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Comments from our readers
Tower - bought by a viable and ongoing company.
So was Sov.
AMP bought AXA. At the time not a bad idea, just poorly done in the years after.
Of your list only 1 is in the situation AMP is now. The others are no comparison.
How the managers at AMP retained their jobs will be one of the mysteries of life!
Given the uncertainty in many workplaces It is really hoped that advisers leaving their risk cover with this run off business are not going to cause unnecessary angst.
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The Sov, AXA and Onepath situations are quite different as they were takeovers of successful companies.
AMP took a long time to finally hoist the flag of surrender.
Albeit the others have had some limitations on what they can do with pre-existing reinsurance treaties in the mix too.
Though they have been fully operating providers so there is some level of new business and adviser relationship driving the better management of the book that we don't have with AMP.
@Duncan solid points that the management and their intent is critical to the successful outcome of the business.
Either way I don't see the AMP experience improving and clients that have the choice of being somewhere else will be actively moved.
The reality is those that remain are going to find it harder to deal with the remaining company.
They used to get away with it by 'loving' their advisers and feeding them BS. Then the ex-banker management took over, the loving stopped and the BS stopped ringing true.
On balance, the New Zealand insurance and investment buying public will be better off when this company ceases to exist.
This will be a sad end after 160 years but as B Tucker says it was inevitable after 10 years of mismanagement both in AU and NZ.
Good on the new chair as customers, advisers locked into AMP and many good staff have suffered badly.
It has been hardest for the long suffering shareholders whilst execs have enjoyed the milk and honey.
Most of the world has moved whilst AMP has suffered gradual decline but remember some customers are still there including many Air NZ staff who have enough stress without the additional strain of being an AMP customer.
https://www.afr.com/chanticleer/amp-smart-to-put-itself-on-the-sale-block-20200902-p55rmn
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AMP BDM's were crooning only a few years ago, ok maybe it's a little more than a few years ago, about the safety and security of being insured by a large respected organisation that was old and established. What a crock.
The only thing that matters is the policy benefits a client pays premiums for. Big, old, international all means nothing in a world where all insurers are licenced by the FMA, just look at who has disappeared in the last decade! Tower, Sovereign, AMP, AXA, all supposedly 'big, respected and safe'.