AMP Limited has announced it will be divesting its Australian and New Zealand wealth protection and mature businesses and reinsure New Zealand retail wealth protection for $3.45 billion.
The company announced to the Australian Securities Exchange today that it would exit its Australian and New Zealand wealth protection and mature businesses via sale to Resolution Life and that it had entered a binding agreement with Swiss Re to reinsure New Zealand retail wealth protection, releasing additional capital of up to $150 million to AMP prior to completion of sale.
It said that it intended to seek divestment of the New Zealand wealth management and advice businesses via an initial public offering next year.
Commenting on the move, AMP acting chief executive, Mike Wilkins said the moves followed completion of a portfolio review.
He said that for shareholders, the agreement with Resolution Life and AMP’s exit from wealth protection and mature delivered important strategic benefits and substantially simplified AMP’s portfolio.
Comments
Wow, so the whole life business is being out to pasture with Resolution. 160 year legacy now gone. What a failure.
I agree, from the market leader to this in 30 short years.
It's only strategic when you have stuffed in up !
I am already moving my AMP Investment solutions and haven't used them for risk for 15 years, and we are (for our sins) licensed by these clowns.
AMP need cash. This will just be the begining of the sell off. I’m sure that any of their assets that are not absolutely fundamental are on the market.
Does this mean AMP will not distribute own life products further (given Resolution only focuses on in-force management)?
This will have a significant impact on market dynamics if that's the case!
The Treasurer should object, because there are no more Australian 100% owned life insurance companies, multinationals are not globally competitive, so the future outlook is bleak. Zurich Australia took over Macquarie Life and refused to insure Australians overseas, because not globally competitive, breaching Section 12AC of ASIC ACT.
I'll bet this will also be a way for AMP not to have to honor BOLR agreements in the future. Interested in comments.
I'll bet this will also be a way for AMP not to have to honor BOLR agreements in the future. Interested in comments.
Yes ANON. is it time to excercise BOLR agreements ASAP? Can anyone give more info on this?
The specific agreement will determine whether it works in practice or not. But my experience is, if its a staggered payment based on retention of clients over a 2-3 year period, i.e if the book declines so does the back ended payments which may be as much as 70% of the notional total, you end up with no more than what the market would pay if you sold privately. Also, the RC has handed them a gift, in that they can't charge fees to clients not serviced. So, you sell under BOLR, they control the book, they turn off the advice fees until an adviser appears to buy ( not happening), therefore they retain the FUM but nullify the back end payment. Not worth the paper they are written on in the new world and haven't been for a year or two.
Anyone think AMP will survive ? Super mandates out the door, selling the furniture, share price in the toilet ?
Their advisers have never been their priority. Look at the entrenched behaviour of their management.
If you go now at least you know what you will get.
BOLR is not real value and has only been maintained by AMP to stop the leeching of their in-force book.
Get an independent licence and enter the brave new world .
AMP will not act to help you, only themselves.
Absolutely correct there Peter!
Seriously, with the life business gone, what does AMP stand for? What is their reason for existence? Just break the thing up and sell it off. Put it out of it's misery.
I’d exercise BOLR in a heartbeat though expect kick back as AMP have weaponised their compliance team to ensure you won’t get what you expect.
Will this effect their heritage products?...whole of life plans, etc?
Unfortunately there are a lot of advisers who have been force fed books of business at AMP’s pricing funded by AMP bank loans. What happens if the RC kills the trails? Worthless books supporting huge loans.
You said it Julian. If all advisers left and took their books with them to salvage some value AMP would fail to recover $$$$ and clients and fail to recover from their management hubris.
Doesn't sound so bad.
The problem is that a great number of advisers are up to their ears in debt because the borrowed from AMP to buy books of AMP trails from AMP. They can’t just leave. What about the debt?
Many of these assets will be destroyed by the loss in value attributable to AMP's mismanagement.
So, loss now or loss later ?
Sham asset, no doubt, sold under AMP rules. Debt lent by another AMP entity, recoverable ? Who knows ?
Lots of questions.
Shouldn't be a problem though, MD says "advisers are loyal"
So who is wearing the risk here. AMP advisers with large debts to AMP bank secured by potentially worthless trail books and personal guarantees or AMP shareholders. Between a rock and a hard place?
I suspect many of those AMP Bank loans to advisers are secured by the adviser's home.
That sure is a contradiction in terms !!
AMP and Wealth protection
Interesting question isn't it ? Most advisers who signed personal guarantees would have been advised (should have been advised) not to hold personal assets in their own names, so their down-side is limited. There are what, 5 class actions on behalf of AMP shareholders, what is one more in the scheme of things ? Perhaps a class action on behalf of advisers ?
also if there are BOLR obligations or future obligations they should be on the AMP balance sheet, but I suspect they're not. So either they don't think they're material, don't think they'll ever have to pay, or they've just decided to mislead the market for past 20 years
Does AMP still utilise the old style Agency Development Loan or maybe called something else that looks like a loan, smells like a loan and quacks like a loan?
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