AMP has cut its final links to the life insurance business in a deal to offload an almost 20 per cent stake in Resolution Life Australasia (RLA).
The sale will, in fact, see AMP pay Resolution over A$140 million after contractual agreements bite into the “total consideration” of A$524 million.
Resolution completed the purchase of the life business last year for about A$3 billion with AMP retaining a 19.13 per cent holding in the business.
In a statement this morning, AMP says: “As part of the divestment agreement, AMP and RLA have also agreed to settle a number of post-completion adjustments and certain claims between the parties, subject to various limitations and exclusions, which has resulted in a net payment of A$141 million to RLA from AMP. AMP had partly provisioned for these items but following the acceleration of this settlement will record an additional one-off expense of approximately A$65 million in FY 21.”
According to the release, the sale – awaiting approval from Australian and NZ regulators – will boost AMP’s “available capital” by A$459 million.
Alexis George, AMP chief, said in the release: “This divestment brings to a close our long and proud involvement in life insurance in Australia and New Zealand. It enables us to realise capital to further strengthen our balance sheet ahead of our demerger and continue supporting our businesses.
“The separation of our businesses is progressing well and will continue until mid-next year as planned. We will continue to provide transitional services to RLA, as agreed, and will have a shared customer and adviser connection into the future.”
AMP is engaged in a major reform process that will see the private markets unit of funds management arm, AMP Capital, spun-out into an ASX listing while Macquarie takes controls of most of the listed assets business.
AMP Capital currently manages the investment book for Resolution.
The sale is due to complete in the first half of next year.