AMP's life insurance sale blocked
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AMP's planned sale of its life insurance businesses has been blocked by the New Zealand regulator as there is insufficient protection for policyholders in that country. The deal with Resolution Life may still occur if regulatory concerns are addressed but that will be a costly and cumbersome process, and Resolution Life may prefer to walk given the additional impediments.
In any case, it's another headache for AMP's new management team that is formulating a difficult turnaround.
The company's core businesses of wealth management, banking, and AMP Capital are weakening. And there are angry shareholders and customers demanding compensation.
The proceeds from the life insurance sale were meant to help return capital to shareholders and fund a turnaround. We previously estimated that AMP would have around $1.1bn of capital above regulatory needs from a combination of net cash and proceeds from the life insurance sales.
Revised terms for the sale will likely mean less money for AMP as the life insurance businesses continues to deteriorate.
We'll update our capital expectations as AMP provides more detail. There is to be no interim dividend paid.
We've previously stated that the risk/rewards equation simply doesn't stack up for AMP. The latest development only reinforces that view. AVOID.
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