AMP Life sale ‘unlikely to proceed’

In a statement to the ASX this morning, AMP advised that there were challenges in meeting the condition precedent for the Reserve Bank of New Zealand’s approval.

This condition requires RBNZ approval of a change of control for AMP Life in a form consistent with the current branch structure, which currently exempts AMP Life from a number of New Zealand requirements.

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Resolution Life has notified AMP that RBNZ would not consider a change of control applications unless it agreed to have separate ringfenced assets held in New Zealand for the benefit of New Zealand policyholders.

This change would be inconsistent with the current branch structure and as a result Resolution does not expect for its application to be approved that would satisfy the condition.

Addressing the requirements is believed by AMP to adversely impact the commercial return of the sale for both AMP and Resolution Life.

The sale of AMP Life was a foundational element of AMP’s strategy in a move to simplify the operations of the group.

AMP had originally announced the sale for $3.3 billion, being made of $1.9 billion in cash, $300 million in preference shares and a $1.1 billion economic interest in Resolution Life.

The wealth giant confirmed in January that the sale was still on track to be completed by the second half of this year, but that now appears to be in doubt.

AMP said it was working with Resolution Life to determine whether there was a solution that would addresses policyholder interests, regulatory requirements and certainty of execution, but this will mean a negotiation of new terms.

The AMP Limited board will review any revised transaction to ensure it is in the best interests of policyholders, the company and shareholders.

If no revised transaction can be achieved and receive regulatory approval then AMP will retain AMP Life and manage it as a specialist life insurance and mature business with a focus on policyholder outcomes, costs and capital efficiency.