23 Jun 2020

RBNZ approves sale of AMP Life to UK business

3:04 pm on 23 June 2020

The Reserve Bank has finally agreed to the sale of AMP's life insurance business to British firm, Resolution.

AMP is an Australian financial services company. This is its office in Melbourne.

Photo: 123rf

The central bank (RBNZ) blocked the original $3.6 billion deal in mid-2019 when it insisted on the New Zealand assets and policies being ring-fenced in accordance with local industry rules.

Resolution, run by British businessman Clive Cowdery, has a track record of buying life insurance businesses that are being run down, that is administering current policies but doing no new business.

The RBNZ said it had agreed to a structure to hold and administer New Zealand policy holders policies and assets in a locally incorporated business.

"A bespoke trust model has been established that ensures supervisory objectives are better met, future industry dynamics are generally more positive, and there is additional protection in the event of insolvency - one of the key risk considerations that we have been seeking to mitigate," RBNZ deputy governor Geoff Bascand said.

A New Zealand based trust, run by locally based officers would hold assets and capital to back about 200,000 New Zealand policies.

In addition Resolution Life will set up a New Zealand branch, and AMP Life will set up a local advisory committee to look out for the interests of New Zealand policy holders.

Bascand said existing New Zealand entitlements would be unaffected by the sale.

The sale of AMP's life insurance and wealth protection division were the core of a turnaround strategy for the disgraced financial services company, which was caught charging customers for services they never received in the Australian Royal Commission into the banking and financial services sector.

Concerns had been expressed that Resolution might look to run down the business, provide poor service, and treat policyholders unfairly.

AMP said it expected the deal would be completed by 30 June and an update would be given on 1 July.

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