AMP pushes on with sell-off

B E L E AGUERED we a l t h manager AMP is offloading its life insurance business and embarking on a $650 million capital raising to help fund a turnaround strategy after the group sank to a $2.3 billion first-half loss.

The steps were part of a new strategy to “reinvent AMP as a contemporary wealth manager”, the company said.

For the same period a year earlier, the company reported a $115 million net profit.

It has agreed to sell its life insurance business to Londonbased Resolution Life in a $3 billion deal. Resolution will pay $2.5 billion in cash and AMP will also receive a stake valued at $500 million in the group’s Australian operations.

AMP initially struck a $3.3 billion deal to sell the business to Resolution last October, but the deal was thwarted last month by the Reserve Bank of New Zealand, where AMP also operates.

AMP chief Francesco De Ferrari yesterday also outlined plans for a “transformation program” expected to cost $1 billion to $1.3 billion.

The program was focused on “growth, cost reduction and tackling legacy issues”, Mr Ferrari said.

He said AMP was taking “bold but necessary action”.

“The transformation will not happen overnight … (but) it is a very historic day in building the future of this great Australian company.”

AMP plans to raise $650 million by selling new shares to institutional and household investors, at a minimum of $1.50 a share.

That price would be a 13.3 per cent discount to the lowest closing price for AMP shares on Wednesday of $1.73. Shares have been halted since for the capital raising.

The company was pilloried last year at the financial services royal commission amid a string of damning revelations that culminated in the exit of then chief executive Craig Meller and chair Catherine Brenner. In its first-half results yesterday, the group said its “client remediation” program — an industry term for what is broadly a compensation scheme — was likely to cost $778 million and run until 2021.

Underlying profit, which excludes such one-off hits, was $309 million.