AMP has successfully completed its portfolio review of the insurance, mature and New Zealand businesses. It has announced the sale of its insurance and mature businesses, and reinsurance of its New Zealand retail insurance & mature business for A$3.45 billion.
There are a number of components to the announcement, all of which are subject to regulatory approvals:
- The sale of the Australia & New Zealand insurance and mature businesses for A$3.3 billion to Resolution Life
- A binding agreement with Swiss Re to re-insure a portion of the New Zealand insurance portfolio to release up to A$150 million of capital.
- Plans to IPO the New Zealand wealth management and advice business in 2019.
Today’s announcement marks the completion of the portfolio review, first announced in February 2018, which encompassed a range of options, from reinsurance to sale.
Delivering the right outcome for stakeholders, including advisers and their clients, was the focus throughout.
Clients will benefit from Resolution Life’s deep expertise in managing in-force insurance policies and its strong commitment to customer service.
For shareholders, the agreement with Resolution Life delivers important strategic benefits. It substantially simplifies AMP’s business, delivers certainty and frees up capital.
Agreement with Resolution Life
The sale of the insurance and mature businesses to Resolution Life for A$3.3 billion includes a number of components:
- $1.9 billion in cash.
- A$300 million in preference shares in AMP Life
- A$1.1 billion in income generating equity investments:
- An ongoing economic interest in the future earnings of the mature business
- A A$515 million interest in Resolution Life that will be focused on the acquisition and management of in-force life insurance portfolios internationally
- A new Relationship Agreement has been established with Resolution Life and AMP Capital, which will continue to manage wealth protection and mature assets under management. AMP Capital will also join Resolution Life’s global panel of preferred asset managers.
The transaction is expected to complete in the second half of 2019.
The terms of the agreement with Resolution Life will minimise change or disruption to clients.
All existing insurance and mature clients will retain the terms and conditions of their current policies.
The completion of the portfolio review will significantly simplify AMP so it is well positioned to compete in its core markets including financial advice.
AMP remains a financially strong business and as a result of the transaction, will have an even stronger balance sheet.
25 October 2018