July 15, 2019
AMP has revealed that the transaction for the sale of its Australian and New Zealand life insurance businesses to Resolution Life is “highly unlikely to proceed” in its current form.
A release from AMP this week states the issue with completion of the sale (see: AMP to Sell Life Insurance Business) relates to challenges it says exist in meeting the condition precedent for approval by the Reserve Bank of New Zealand.
“This condition requires RBNZ approval of a change of control for AMP Life in a form consistent with the current branch structure (which exempts AMP Life from a number of New Zealand legislative requirements),” the company stated.
AMP stated that it was notified by Resolution Life on 13 July 2019, that:
- RBNZ would not consider Resolution Life’s change of control application unless it 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; and
- As a result, Resolution Life does not expect RBNZ to approve an application that would satisfy the condition precedent.
AMP says it 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.
It noted the failure to meet this condition precedent is “…exceptionally disappointing as the sale of AMP Life is a foundational element of AMP’s strategy.”
In response, AMP stated it is working with Resolution Life to determine whether there is a solution that addresses policyholder interests, regulatory requirements and provides certainty of execution, which will require negotiation of new terms and is not certain.
AMP noted that if a revised transaction cannot be reached and approved by RBNZ, then it 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.