AMP sale to be followed by string of similar deals

The AMP building in Sydney. Hollie Adams/The Australian

The $3.3 billion sale of AMP’s wealth protection and mature business to British-based Resolution Life is expected to be followed by a string of deals in the financial services sector as the royal commission into banking forces groups to sell off additional assets.

Resolution is said to have been in exclusive negotiations with AMP (AMP) for some time after talks broke down with suitor AIG earlier this year.

AMP was advised by UBS while Resolution was advised by Deutsche Bank

London-based Resolution, which is considered an expert in run-off portfolios, has committed $US13.6bn worth of equity into the acquisition, reinsurance, consolidation and management of 27 life insurance companies that manage over $US300bn worth of assets.

Shareholders this morning praised AMP for the price achieved on the transaction.

However, market analysts said the situation was a highly unusual one where a major part of a company was sold without a current chief executive.

AMP appointed Francesco De Ferrari as its chief executive in August and he will begin in the job in December.

The company is currently run by acting chief executive Mike Wilkins and chaired by David Murray and some say that the situation is typical of Mr Murray’s hands on and decisive approach.

Mr Murray stepped in to take the top boardroom job following the departure of CEO Craig Meller, who left following revelations in the royal commission into banking that AMP had been charging fees for no service and chairwoman Catherine Brenner.

The deal has been a long time coming and now sees 40 per cent of the market change hands with Suncorp, CBA, NAB and ANZ all divesting their life insurance operations in the past two years.

The next transactions tipped to come in the financial services space are the demergers of NAB and CBA’s wealth management operations, while Westpac’s BT Financial Group is also expected to sell in due course.