AMP to sell off life insurance as shares plunge

AUSTRALIAN financial institutions have divested, or are in the middle of offloading, assets worth $20 billion as they reshape their businesses amid the scandals of the banking royal commission.

AMP has become the latest financial giant to simplify its business model, announcing it will sell its Australian and New Zealand life insurance operation to London-based insurance firm Resolution Life for $3.3 billion.

Shares in AMP plunged by close to 25 per cent yesterday to an all-time low of $2.50 as investors savaged the embattled wealth management giant.

Customers are abandoning AMP, with $1.5 billion in funds yanked from its wealth division in the three months to September, it reported yesterday.

That is dramatically up from $243 million in the same period a year ago.

AMP had a turbulent year in which it lost both its chief Craig Meller and chairwoman Catherine Brenner amid accusations of misleading the regu- lator over an unfolding fee for no service scandal.

In August, it booked its worst first-half profit in 15 years as it set aside cash to compensate customers it sold bad advice to and warned people were withdrawing money following the royal commission.

AMP acting chief Mike Wilkins yesterday said the completion of the portfolio review marked a step forward in reshaping the 169-year-old company as a simpler, more focused group.

“Our incoming chief executive officer Francesco De Ferrari has the mandate to transform AMP,” he said. “The outcomes from the portfolio review will create greater flexibility as he sets the new strategy for our simplified business portfolio.”

AMP’s move out of insurance follows similar sales of large units by the nation’s Big Four banks as they return to traditional lending and away from wealth management and insurance. The total amount divested, or being offloaded, by major financial institutions has hit about $20 billion.