AMP Limited has announced the completion of the sale of its life insurance business, AMP Life, to Resolution Life for A$3 billion, in an historic moment as AMP ceases to be a life insurer after 170 years.
A release from the insurer to the ASX says the sale delivers a key priority in AMP’s transformation strategy. It states the total sale proceeds of A$3 billion comprise:
- A$2.5 billion cash
- A$500 million equity interest in Resolution Life Australia, a new Australian-domiciled, Resolution Life-controlled holding company that is now the owner of AMP Life.
AMP says the final cash proceeds from the sale are subject to a number of post completion adjustments, however it expects the net proceeds to increase AMP’s capital in excess of target surplus by approximately A$1.1 billion.
The statement adds that the separation of AMP Life will significantly simplify AMP’s group structure.
“The internal separation process included the transfer of approximately A$55 billion of client funds via several successor fund transfers. Collectively these transfers represented one of the largest fund transfers of this kind and enables AMP to focus on its strategic simplification of its wealth management platforms and products.”
It says that in addition to its residual 20 percent holding in Resolution Life Australia, AMP will continue to provide technology and administrative services to AMP Life for a two-year period under a transitional services agreement. All customers’ terms and conditions will remain unchanged through the separation.
AMP Chief Executive Francesco De Ferrari says that the sale of the life business “…is a foundational step in our strategic transformation to become a simpler, client-led and growth-oriented organisation”.
“It is also a historic moment as AMP ceases to be a life insurer after 170 years. Our life teams will move to Resolution Life and will continue to support clients who will see no changes in their policy terms or conditions.”
Platform for growth
Meanwhile, a media release from Resolution Life notes that the acquisition gives Resolution Life a strategic platform for further growth outside of its traditional markets in Europe and North America, and positions the company strongly for future growth in the Australian and New Zealand markets in the coming years.
In the statement Megan Beer, Chief Executive Officer, Resolution Life Australasia and AMP Life Limited, says: “We are thrilled to be part of Resolution Life. We welcome this investment, which will enable our people to focus on initiatives to enhance outcomes for AMP Life policyholders.”
She says policyholders will also benefit from both the continuity of local management and “…the experience and financial backing of a successful global manager with a key focus on meeting core promises to life insurance policyholders”.