August 9, 2018
AMP has flagged that it may consider the sale of its life insurance business in Australia as part of an ongoing wider strategic review of the group’s business.
Speaking at a media briefing following the release of its 2018 half year results, AMP Acting Chief Executive Mike Wilkins said the time was right to restart the review of its ‘manage for value’ businesses after the group had been stabilised, and its board renewal process and search for a new Chief Executive had begun.
“We are talking to some interested parties about those businesses and just to be clear those businesses are our Australian wealth protection business and our New Zealand business and we are looking at all the opportunities there,” Wilkins said.
“We want to give those businesses certainty as quickly as we can but also we want to make sure we do the right thing by all parties – not just our shareholders but our customers and the people who are in those businesses. So we’ll take the right amount of time to reach the right conclusion,” he added.
“We are talking to some interested parties about those businesses and…those businesses are our Australian wealth protection business…”
When asked whether AMP would consider a trade sale for the business areas under review, Wilkins repeated that AMP was ‘looking at all available options’ and was currently in discussions with a number of interested parties and would continue to pursue those discussions.
The group’s underlying profit for the half year was $495 million and its net profit was $115 million taking into account provisions for advice remediation announced in late July (see: AMP Accelerates Advice Remediation Program).
Profit margins for AMP’s life insurance business declined by $3 million to $46 million for the half year with AMP stating this was a result of implementing of previously-announced reinsurance agreements.
Operating earnings, however, fell by $51 million to $1 million, driven by a deterioration in claims experience and capitalised losses and reserve strengthening on a large group plan worth $29 million, which terminated on 1 July 2018.
AMP stated the negative claims experience was driven by higher than expected claims activity, mainly in the area of TPD, but its insurance business had paid out $597 million in total claims during the half year.