Title : AMP $3.3b life insurance sale unlikely to go ahead, dividend scrapped
link : AMP $3.3b life insurance sale unlikely to go ahead, dividend scrapped
AMP $3.3b life insurance sale unlikely to go ahead, dividend scrapped
AMP has said the $3.3 billion sale of its life insurance arm to a foreign buyer was unlikely to proceed as planned and that it had scrapped its interim dividend.
AMP said in a statement on Monday morning that the sale of its wealth protection business to London-based Resolution Life is "unlikely to proceed in its current form" because it is unlikely to get approval from New Zealand's central bank.
Resolution Life said it had been told the Reserve Bank of New Zealand would not consider the required change of control application unless the company altered its current branch structure to include separate, ringfenced assets "for the benefit of New Zealand policyholders".
"AMP believes that this reflects RBNZ's position and that addressing these requirements would adversely impact the commercial return of the sale for both AMP and Resolution Life," AMP said.
"The failure to meet this condition precedent is exceptionally disappointing as the sale of AMP Life is a foundational element of AMP's strategy."
It said since the transaction was "unlikely to proceed in its current form", AMP was now working with Resolution Life to "determine whether there is a solution that addresses policyholder interests, regulatory requirements and provides certainty of execution".
"This will require negotiation of new terms and is not certain," AMP said.
Shareholders miss out on dividend
In more bad news for shareholders, still reeling from potential criminal misconduct revealed in last year's banking royal commission, AMP said its dividend for the first half of 2019 would not be paid given the uncertainty surrounding the AMP Life sale.
AMP said its board would review any revised transaction proposed for the sale of AMP Life to determine if it was in the best interests of policyholders, the company and shareholders.
However, AMP indicated it would have no choice but to hold on to its life business if the right offer failed to emerge.
"If a revised transaction cannot be achieved on acceptable terms, and receive regulatory approval, AMP will retain AMP Life and manage it as a specialist life insurance and mature business with a focus on policyholder outcomes, cost and capital efficiency," AMP said.
AMP announced the proposed sale to Resolution Life last October along with its New Zealand wealth management and advice business to simplify the troubled wealth giant's operations.
The wealth manager's share were badly damaged during the financial services royal commission after allegations of "fees for no service" and cases where even dead people had been charged advice fees.
AMP chairman David Murray had defended the $3.3 billion sale of the firm's life insurance business, despite critics slamming it as a "blatant destruction of shareholder value".
Some institutional shareholders of AMP have slammed the transaction, including fund manager Merlon Capital Partners, which owns 25 million shares.
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