Australian wealth manager AMP has advised that the planned $3.3 billion sale of its life insurance business to a London-based insurance firm is unlikely to proceed and that it would not pay an interim dividend for the first half of 2019.
In a statement, AMP said the sale of AMP Life to Resolution Life was “highly unlikely to proceed on the current terms” because it is unlikely that the condition precedent for the Reserve Bank of New Zealand (RBNZ) approval would be satisfied.
Resolution Life said it had been informed that RBNZ would not consider the change of control application unless the company agreed to have separate, ringfenced assets held in New Zealand for the benefit of New Zealand policyholders, which is inconsistent with the current branch structure.
“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.”
The two companies are now working “to determine whether there is a solution that addresses policyholder interests, regulatory requirements, and provides certainty of execution,” but AMP said a revised deal “will require negotiation of new terms and is not certain.”
AMP said it intends to “retain AMP Life and manage it as a specialist life insurance and mature business with a focus on policyholder outcomes, cost, and capital efficiency” if a revised transaction is not achieved.
The wealth giant also announced that it would not pay out an interim dividend for the six months to June 30, given the uncertainty surrounding the deal.
