Embattled financial services firm AMP will offload its life insurance and wealth protection businesses as part of an overhaul, in the wake of damning revelations at the banking royal commission.
In a statement to the stock exchange this morning, AMP said it would sell its life insurance division to global giant Resolution Life for $3.3 billion and its New Zealand wealth protection business through a share market float.
AMP has also struck a deal with the reinsurer Swiss Re to cover New Zealand wealth protection, which will free up $150 million taking the total sales proceeds to $3.45 million.
The terms of the sale in both Australia and New Zealand are subject to regulatory approvals.
AMP interim chief executive Mike Wilkins said the deal was “a major step towards shaping AMP as a simpler, more focused group” that was better positioned to compete in core markets.
“For customers, there will be no change to their existing insurance policy terms or conditions.
“For shareholders, the agreement … delivers important strategic benefits. It substantially simplifies our portfolio, delivers certainty and frees up capital.”
Misconduct triggers leadership exodus
Mr Wilkins and chairman David Murray initiated the portfolio review after revelations about fees for no service and misleading the Australian Securities and Investments Commission led to the sacking of chief executive Craig Meller and the resignation of chairman Catherine Brenner.
Other casualties include legal counsel Brian Salter and three directors of the AMP board.
Mr Wilkins has described recent months as “testing”, though not surprising given the reputation damage from the royal commission.
Senior counsel assisting Rowena Orr QC has suggested that AMP’s alleged misconduct could constitute criminal breaches of the Corporations Act.
In the royal commission’s interim report released three weeks ago, commissioner Kenneth Hayne observed “a culture of greed” where banks and insurers put the interests of shareholders ahead of customers.
Incoming chief executive Francesco De Ferrari is set to replace Mike Wilkins later this year ahead of the royal commission’s final report, which is due in February.
AMP also released its third quarter cash flows, which report cash outflows of $1.5 billion citing “a difficult environment” and “continued weakness”.
On a rough day across the market, AMP’s share price has plunged almost 9 per cent to $3.02, to be down more than 40 per cent this year.