Australian-owned financial giant AMP has revised the sale of its life insurance business and is asking investors for more cash after slumping to a A$2.3 billion half year loss.
Australian financial services company AMP's Melbourne offices. Photo: 123rf
The company has struck a new deal to sell its local life insurance business to the British insurer Resolution Life, after the sale was blocked by the Reserve Bank of New Zealand.
AMP will be paid $AU2.5 billion in cash and $AU500m worth of shares in a new Australian business which Resolution will set up to run the life insurance business to meet the concern of regulators.
The price is $AU300m less than the original deal.
AMP fell to a half-year bottom line loss of $AU2.3bn after writing down the value of the life business, although its underlying profit was $AU309m.
AMP chief executive Francesco De Ferrari said it would raise $AU650m of capital to fund a turnaround programme.
"The capital raising and AMP Life sale will provide the funds to implement immediately our new transformational strategy.
"That strategy will put AMP on the path to sustainable, long-term value creation."
The New Zealand operations of AMP have had a sharp fall in earnings, with gross profit sliding to $22.7m from $60.4 last year, which it said was largely because of the removal of internal payments between various parts of the group.
However, it also noted that its business was seeing more money going out than coming in, because of increased competition in financial advice and retirement withdrawals.
"We delivered a solid performance in a challenging period, primarily driven by the strength of our AMP KiwiSaver Scheme and significant investment in creating our standalone wealth management and advice business," Blair Vernon, Chief Executive AMP Wealth Management New Zealand, said.
AMP also appeared to have put the divestment of its New Zealand business back on the agenda. Last year it proposed then scrapped a plan to put it into a listed company.
"AMP Wealth Management New Zealand is now largely standalone, which positions our business to explore the logical next step of divestment," Mr Vernon said.