AMP revises Resolution Life deal, further plans to spin off NZ wealth business

AMP says it will “further localise” its New Zealand wealth management business, including AdviceFirst, and explore divestment to realise its value.

Thursday, August 8th 2019, 10:07AM 4 Comments

It has also laid out the terms of a revised, less generous agreement to sell its AMP Life insurance business to Resolution Life.

The group reported its results for the first half of 2019 today.

The New Zealand wealth management business made profit of A$22 million, down from A$28 million in the first half of last year.

There were net outflows of A$250 million in the half and cost-to-income ratio increased while operating earnings compared to assets under management dropped.

The revised deal with Resolution Life is worth A$3 billion, from A$3.3 billion previously.

That is made up of A$2.5 billion in cash and a A$500 million equity interest expected to be about 20% of Resolution Life in Australia.

The transaction is now expected to complete in the first half of 2020, although it is still subject to approval, including from the Reserve Bank.

The RBNZ scuppered the first iteration of the deal when it said Resolution Life would need to agree to have separate, ring-fenced assets in this country.

AMP said it was working with regulators to address concerns.

“AMP and Resolution Life are engaging constructively with regulators in New Zealand and Australia and are continuing to work proactively with the Reserve Bank of New Zealand to address their requirements for change in control.”

Blair Vernon, chief executive of AMP Wealth Management New Zealand, said: “We delivered a solid performance in a challenging period, primarily driven by the strength of our AMP KiwiSaver Scheme and significant investment in creating our standalone wealth management and advice business.

“The separation of the life insurance and mature business in New Zealand was largely complete by the end of June 2019, and AMP Wealth Management New Zealand is focused on the renovation and simplification of our distribution channels and continuing to improve our product and service offering for our clients locally.

“AMP Wealth Management New Zealand is now largely standalone, which positions our business to explore the logical next step of divestment. There’s no immediate impact on our day-to-day business, products or services, and continuing to serve our clients remains our number one priority.”

Vernon said a priority for 2019 was to complete the "renovation of distribution channels", “which includes the re-contracting of independent financial advisers while continuing to grow and strengthen our advice proposition through our employed advisers, both under our AMP brand and through AdviceFirst.

“The completion of the repatriation of information technology services to New Zealand provides a state-of-the-art technology platform, which will enable us to respond locally to further enhance the digital experience for our clients, including the ongoing release of additional improvements to our online portal and My AMP app.”

The AMP group is planning a A$650 million capital raising via fully underwritten placement to institutional investors and an additional share purchase plan for eligible retail investors.

Tags: Advice First AMP Resolution Life

« Kloogh's clients' missing $8 millionAdvisers' ESG consideration blew our minds: Morningstar »

Special Offers

Comments from our readers

On 8 August 2019 at 11:10 am Pragmatic said:
Looking through the lens of the consumer: how do you feel when you hear that your trusted-advisor is now looking to “divest” themselves of the business that you’ve associated your risk & investments with?

I suspect that the good advisers have/will continue to run a mile from this association
On 8 August 2019 at 2:30 pm Do what is right said:
How do you relay confidence to the general public that AMP is a viable option for them? AMP cannot even organise an orderly sale. One would have thought that AMP would have approval to sell before they change the business structure. It will appear to most that the AMP managers and the board are so incompetent that you would have more success in putting your money into a pokie machine.

They really are an embarrassment to the financial services profession.
On 9 August 2019 at 8:54 am BayBroker said:
IN regards to the life business one would have to wonder how its in their customers' best interests to sell the business of to an outfit who just run the covers off and reap the profits in an aging business when premiums increase.
On 11 August 2019 at 3:28 pm p barlow said:
Well said BayBroker especially given many fit and healthy customers will run for the hills. Hope Advice First top dogs thought about how best to look after these customers.

Sign In to add your comment

© Copyright 1997-2020 Tarawera Publishing Ltd. All Rights Reserved