AMP returned to the headlines yesterday with news that has announced it will sell its stake in its old AMP Life (now Resolution Life) for a small profit.
AMP shares jumped on the positive news, rising 9.3% to $1.175, which while a large increase, is hardly a significant level for investors who have seen the shares trashed for the past two years or more.
AMP sold its 19.13% equity interest in Resolution Life for $524 million in ending its longstanding involvement in life insurance.
AMP sold AMP Life to Resolution Life in 2020 for $3 billion including the equity stake and this deal will mean the group has no remaining exposure to the sector as financial services firms focus on simplifying operations.
As part of the deal, AMP will pay $141 million to RLA to settle ongoing claims between the parties.
Overall, the divestment will add around $459 million to AMP’s available capital, “providing further flexibility ahead of its planned demerger of AMP Capital’s private markets business”.
“AMP is continuing to invest in the transformation and growth of its wealth management and bank businesses, as well as providing capital to support the growth of the private markets businesses and to continue actively defending its real estate business,” the company said in Wednesday’s statement.
AMP chief executive Alexis George said in the ASX statement that selling out of Resolution Life “brings a close to our long and proud involvement in life insurance in Australia and New Zealand”.
“It enables us to realise capital to further strengthen our balance sheet ahead of our demerger and continue supporting our businesses,” Ms George said.
“The separation of our businesses is progressing well and will continue until mid-next year as planned. We will continue to provide transitional services to RLA, as agreed, and will have a shared customer and adviser connection into the future.”
AMP said the sale was agreed to ahead of the expiry of the 18-month standstill period agreed as part of the 2020 sale, “and values the RLA stake at its carrying value in AMP’s accounts at 30 June 2021.”
