The Reserve Bank has approved the sale of AMP Life to Resolution Life, subject to a number of conditions imposed as part of a revised arrangement.
Deputy governor and general manager for financial stability Geoff Bascand says the transaction has been under review for the past 18 months to ensure that the deal met the Reserve Bank’s requirements, and the new conditions are intended to protect AMP Life’s policyholders.
Policyholders will not be affected by the transaction, which involves a change of ownership from AMP Ltd to Resolution Life.
“Because AMP Life is a branch of an Australian business and intended to be in ‘run-off’ and not write new business, special arrangements were needed for the security of New Zealand policyholders,” Bascand said.
“A bespoke trust model has been established that ensures supervisory objectives are better met, future industry dynamics are generally more positive, and there is additional protection in the event of insolvency - one of the key risk considerations that we have been seeking to mitigate.”
The Trust will be required to hold New Zealand-based capital and assets, which will help provide long-term security for policyholder benefits and investments.
The model will also involve establishing a new, locally incorporated insurer - Resolution Life New Zealand (RLNZ). The RLNZ board will have majority New Zealand resident independent directors and will act as a Trustee to the Trust, managing its assets.
In addition, AMP Life has set up a sub-committee to the AMP Life board which will include RLNZ’s independent directors. It will advise the AMP Life board on the interests of New Zealand policyholders.
The Reserve Bank consulted the Australian Prudential Regulation Authority (APRA) before issuing its approvals to support the model.
