UPDATE ON SALE OF AMP INSURANCE TO RESOLUTION LIFE
Firstly, I want to say how excited I am to regularly hear from our clients that they believe in us and what we are doing for them. We pride ourselves on doing the best we can in each interaction and are grateful to you for putting your trust in us to help you achieve your financial goals.
It has been a time of unprecedented challenge in the financial services industry recently with the fallout from the banks and AMP but at Encounter Group we know that we continue to work with our client’s best interests at heart and as such have confidence we will get through the time.
As you know we have always tried to keep you updated with what is happening in our industry and particularly with changes within AMP.
This information is to put some detail around the recent announcements by AMP on its decision to sell its insurance and mature product businesses to Resolution Life, a specialist international insurance group.
I want to make it clear that we are not AMP, are not employed by AMP and only have a relationship with AMP to allow us to practice as financial advisers. As such any actions and decisions made by AMP do not reflect our business, processes or desires to serve and advise our clients in the best possible way.
To help provide some more clarity I have attached below some information provided by AMP that may be useful for you.
AMP sells insurance and mature product business
25 October 2018
AMP has successfully completed its portfolio review of the insurance, mature and New Zealand businesses. It has announced the sale of its insurance and mature businesses, and reinsurance of its New Zealand retail insurance & mature business for A$3.45 billion.
There are a number of components to the announcement, all of which are subject to regulatory approvals:
- The sale of the Australia & New Zealand insurance and mature businesses for A$3.3 billion to Resolution Life
- A binding agreement with Swiss Re to reinsure a portion of the New Zealand insurance portfolio to release up to A$150 million of capital.
- Plans to IPO the New Zealand wealth management and advice business in 2019.
Today’s announcement marks the completion of the portfolio review, first announced in February 2018, which encompassed a range of options, from reinsurance to sale.
Delivering the right outcome for stakeholders, including advisers and their clients, was the focus throughout.
Clients will benefit from Resolution Life’s deep expertise in managing in-force insurance policies and its strong commitment to customer service.
For shareholders, the agreement with Resolution Life delivers important strategic benefits. It substantially simplifies AMP’s business, delivers certainty and frees up capital.
Agreement with Resolution Life
The sale of the insurance and mature businesses to Resolution Life for A$3.3 billion includes a number of components:
- $1.9 billion in cash.
- A$300 million in preference shares in AMP Life
- A$1.1 billion in income generating equity investments:
- An ongoing economic interest in the future earnings of the mature business
- An A$515 million interest in Resolution Life that will be focused on the acquisition and management of in-force life insurance portfolios internationally
- A new Relationship Agreement has been established with Resolution Life and AMP Capital, which will continue to manage wealth protection and mature assets under management. AMP Capital will also join Resolution Life’s global panel of preferred asset managers.
The transaction is expected to complete in the second half of 2019.
The terms of the agreement with Resolution Life will minimise change or disruption to clients.
All existing insurance and mature clients will retain the terms and conditions of their current policies.
The completion of the portfolio review will significantly simplify AMP so it is well positioned to compete in its core markets including financial advice.
AMP remains a financially strong business and as a result of the transaction, will have an even stronger balance sheet.
Please note that there will be NO change to AMP products
We have confirmed with AMP that there is no impact on you should you have an AMP insurance policy. There are no changes to the terms and conditions of your insurance policy with AMP Life or any other products you hold with them. Whether you’re applying for insurance, making a claim or receiving a benefit, you will continue to receive the support and service you need from AMP and from us.
Finally, it is important to note that we believe that the relationship we have with AMP is strong and will be further enhanced once AMP come through the Royal Commission, which is expected to warp up sometime in February 2019.
We value our relationship with you and encourage you to get in contact if you have any questions.