On the 25th October 2018, AMP announced that (subject to regulatory approvals), the business that had been the cornerstone of financial services in Australia and New Zealand for many years would exist no longer.
As a result of a well known ‘portfolio review’ which has been going on for many months, AMP will be broken up over the next year or so and the New Zealand business will no longer exist.
AMP is splitting the business in two parts 1. Wealth Protection and Mature Business – (which includes life, trauma, income protection insurance and the old Whole of Life and Endowment policies) and 2. Wealth Management and Advice Business (which includes corporate superannuation, investment management, KiwiSaver and advice businesses that AMP currently owns – mainly AdviceFirst in New Zealand).
While the AMP Wealth Management and Advice Business will survive in Australia, the Wealth Management and Advice Business will be spun off into an Initial Public Offering during 2019.
For Moneyworks clients, the only impact on your financial solutions is what is happening to the Wealth Protection (insurance) business.
There are two important points here:
- The NZ and Australian insurance business will be sold to Resolution Life and terms and conditions of existing policies will be retained.
- There is a binding agreement with Swiss Re to reinsure New Zealand retail insurance.
As stated by AMP:
It is important to understand that customers will retain all terms and conditions of existing life insurance policies, so there’s nothing they need to do.
AMP will not accept any new applications for their insurance products from 31 December 2018.
However for clients that already have insurance policies in place, they will be able to continue access alterations and changes of benefit types and for policy holders with mature products, you will continue to be able to make alterations and changes in line with existing policy terms.
Who are Resolution Life?
This 15 year old UK based firm was created to purchase books of ‘old’ or ‘zombie’ life insurance business (products that are closed to new business, but that have liabilities a long way in the future) from insurers.
Since 2003, various Resolution entities have committed $13.6bn of equity in the acquisition, reinsurance, consolidation and management of 27 life insurance companies. Together, these companies have managed over $300bn of assets whilst serving the needs of 10 million policyholders. Resolution Life Group has operations in London, Bermuda, and United States.
The best analysis of Resolution Life and what is happening with this AMP transaction is this article from the Sydney Morning Herald.