AMP faces new blow with $3.3 billion life insurance sale ‘highly unlikely’
AMP says it is unlikely to pay shareholders this year in anticipation the $3.3 billion sale of its wealth protection business will fall through.
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AMP shareholders aren’t likely to receive a payment during the full-year results after reports the $3.3 billion sale of its wealth protection business will fail to go through, the company admitted.
The beleaguered wealth manager said its proposed deal with London-based Resolution Life was on the rocks after the Reserve Bank of New Zealand informed the latter it would not consider the required change of control application.
The RBNZ asked Resolution to alter its current branch structure to include separate, ring-fenced assets held in New Zealand for the benefit of New Zealand policyholders.
AMP said on Monday addressing these requirements would adversely impact the commercial return of the sale for both parties.
“The failure to meet this condition precedent is exceptionally disappointing, as the sale of AMP Life is a foundational element of AMP’s strategy,” the company said.
AMP said it was now working with Resolution Life to find a new solution.
“This will require negotiation of new terms and is not certain,” AMP said.
The company said it would retain AMP Life and manage it as a specialist life insurance and mature business if a revised transaction couldn’t be achieved.
$AMP hits a fresh all time record low this morning. Shares down 8.6% after sale Life Insurance business doesn't look like it will proceed. Here's the 2 year chart: #tanking pic.twitter.com/lqyk8pCipW
— Julia Lee (@JuliaLeeAU) July 15, 2019
Shares in the 170-year-old company took a dive when it announced the sale of Life in October last year for $3.3 billion, including $1.9 billion cash.
The sale was met with scepticism by several key shareholders who questioned the value of the deal.
The transaction came in the wake of the company’s mauling at the financial services royal commission, where the fees-for-no-service scandal prompted a clear-out of AMP’s top brass and millions of dollars in remediation to customers.
AMP has since been hit with a number of shareholder class action suits and compliance orders from regulators amid ongoing concerns over the company’s management.
More than $10 billion has been wiped from the company’s value since March 2018 with shares in the company falling from $5.43 to an all-time low of $1.97 last month.
AMP shares were worth $2.15 before trade on Monday.
AMP said it expected to report a Level 3 eligible capital surplus above minimum regulatory requirements and in line with board limits for target capital surplus in its first-half results on August 8.
But it said an interim dividend for the six months to June 30 was “unlikely” due to the uncertainty around the Life deal.
The company paid an interim dividend of 10 cents per share in August 2018.
AMP cut its full-year dividend from 14.5 cents to 4.0 cents per share in February after full-year profit plummeted 97 per cent to a worse-than-expected $28 million.
Originally published as AMP faces new blow with $3.3 billion life insurance sale ‘highly unlikely’