AMP has agreed to offload AMP Life, its Australian and New Zealand wealth protection and mature businesses, to Resolution Life for A$3.3bn ($2.33bn) in a cash-cum-stock deal.
In another deal, AMP has signed a binding reinsurance agreement with Swiss Re covering the New Zealand retail wealth protection portfolio, which is expected to generate up to A$150m ($106.09m) of capital to the former.
AMP said the decision to sell the two businesses follows the completion of a portfolio review.
The Australian insurance company said that it will consider all options for use of the capital generated from the transactions, including growth investments and/or capital management activity.
AMP acting CEO Mike Wilkins said: “The completion of our portfolio review marks a major step forward in reshaping AMP as a simpler, more focused group, that is well positioned to compete in our core markets.
“Delivering the right outcome for customers, shareholders and employees has been our focus throughout the portfolio review.”
AMP believes that the exit from Australian and New Zealand wealth protection and mature businesses will simplify the company and its earnings profile to a significant extent.
The sale also enables the company to focus on AMP Capital and AMP Bank, the group’s higher growth businesses of Australian wealth management.
According to Wilkins, the transaction will not result in any changes for customers as far as their existing insurance policy terms or conditions are concerned. Further, they are expected to benefit from the deep expertise of Resolution Life in managing in-force insurance policies and its commitment to customer service, said Wilkins.
The transaction with Resolution Life is anticipated to be closed in the second half of 2019, based on receipt of regulatory approvals.
Resolution founder and Resolution Life executive chairman Clive Cowdery said: “Over 15 years and the acquisition of 27 life insurance companies, Resolution has developed an operating model which puts delivering policyholder benefits to existing customers at the centre of our business.
“The acquisition of AMP Life is consistent with our strategy to grow the business beyond our traditional markets in Europe and the United States and we see scope for further consolidation in the Australian life market.”