AMP (ASX:AMP) to exit insurance business on $524m divestment

Financial services provider AMP (ASX:AMP) has agreed to divest its 19.13 per cent equity interest in Resolution Life Australasia (RLA) for $524 million to Resolution Life Group.

The sale of the RLA will complete the company’s exit from its former life insurance and mature business AMP Life, which it sold to Resolution Life in 2020 for $3 billion, including the equity interest in RLA.

As part of the deal, AMP and RLA have agreed to settle a number of post-completion adjustments and certain claims between the parties, which has resulted in a net payment of $141 million to RLA from AMP.

AMP said they had partly provisioned for these items but following the acceleration of this settlement will record an additional one-off expense of approximately $65 million in FY21.

AMP also said the divestment will strengthen its available capital by around $459 million and provide further flexibility ahead of its planned demerger of AMP Capital’s private markets business. The divestment has been agreed ahead of the expiry of the 18-month standstill period agreed as part of the 2020 sale.

“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,” said chief executive Alexis George.

The divestment, which is expected to complete in 1H22, remains subject to regulatory approvals in Australia and New Zealand.

“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.”

Shares in AMP (ASX:AMP) are trading 5.1 per cent higher at $1.13.