Massive loss rocks AMP
Overhaul looms thanks to shocking $2.3b deficit
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.
AMP’s loss came after it copped a $2.35 billion writedown that chief executive Francesco de Ferrari described as a line in the sand ahead of a major overhaul. “We’ve always said (2019) would be a transitional year,” Mr de Ferrari (pictured) said yesterday.
“The transformation will not happen overnight ... (but) it is a very historic day in building the future of this great Australian company.”
AMP, which was hammered at last year’s royal commission over its treatment of customers, will hold an institutional placement and share purchase plan to pay for a $1.3 billion, three-year transformation program.
That program will not include its life insurance business, which it has agreed to sell to the UK’s Resolution Life in a revised deal worth a reduced $3 billion.
The Reserve Bank of New Zealand last month scuppered a $3.3 billion deal due to concerns over benefits to the company’s NZ policy holders.
Under the revived deal, AMP will receive $2.5 billion in cash and a $500 million stake in the holding company that will own AMP Life.
The stuttering sale had already delayed the arrival of John Patrick Moorhead as chief financial officer by four months, and AMP yesterday said Mr Moorhead has decided against taking up his role.
Deputy CFO James Georgeson will instead formally take over from the retiring Gordon Lefevre by October.
The personnel shift is just the latest in a tumultuous twoyear period in which AMP lost its chief executive, head of wealth management, advice executive, chairman, and several directors.
Shares in the company hit an all-time low $1.715 on Wednesday and were worth $1.73 yesterday when they went into a trading halt for the capital raising. CMC Markets’ chief strategist Michael McCarthy said the likelihood of a further decline had increased with the first-half result.
AMP’s stock has lost more than 70 per cent of its value in the past three years following a series of scandals, including charging life insurance premiums to dead clients.
The one-off items announced yesterday include a $1.51 billion impairment against the goodwill of Australian wealth management business and $459 million against AMP Life.