AMP has announced the sale of its wealth protection and mature life business to Resolution Life, along with the divestment of its wealth management and advice businesses via an IPO, set to take place next year. It will also reinsure its retail wealth protection portfolio with Swiss Re, releasing capital of up to A$150 million prior to the completion of the sale.
The transactions are subject to regulatory approvals in Australia and New Zealand, with the majority expected to take place mid-2019.
According to AMP New Zealand managing director Blair Vernon, the changes will not affect existing policyholders and there are no changes for wealth management, general insurance or AMP KiwiSaver Scheme clients. He says AMP will also be working though the changes with its adviser network over the coming months, but does not expect that network to be reduced as a result.
“Our reinsurance deal with Swiss Re will release capital out of the existing retail book, and it’s a substantial simplification of our New Zealand retail insurance and reinsurance business,” Vernon told Insurance Business.
“The divestment of the wealth management and mature business to Resolution Life also allows a specialist insurance management group to come in and operate those arms. Resolution Life runs and specialises in managing life insurance businesses, and that means a really deep level of expertise coming to our net business.
“For our people, advisers and customers, it’s business as usual when it comes to terms and conditions on policies and entitlements they have, along with everything else.”
Vernon says that the divestment of its wealth management and advice businesses via an IPO will also be a good opportunity for New Zealand investors, as there are very few financial services companies listed in New Zealand at the present time. He says the key focus now will be working through each change with AMP’s stakeholders, current customers and adviser network.
“This is simply the next stage in the evolution of the business,” he stated. “Our adviser network is one of the most diverse in the country, and each group will experience different levels of change. For the adviser community where we’ve got extensive distribution partnerships, in some cases they’ll have arrangements with both Resolution Life/AMP Life and with the entity that will be IPO’d. For other advisers it’ll be business as usual, but don’t believe that this in itself is a trigger for any material impact on advisers.”
The reinsurance arrangement with Swiss Re will be effective 31 December this year. The transaction with Resolution Life is expected to close in the second half of 2019, and the IPO is also set to complete over the course of 2019.