New Zealand’s central bank rules have potentially sunk a deal to sell the life insurance arm of Australia’s AMP.
The company was set to offload AMP Life, which provides services in Australia and New Zealand, to London-based Resolution Life for A$3.3bn (£1.8bn, $2.3bn, €2bn).
But the sale was stopped when the London insurer was unable to get the green light from the Reserve Bank of New Zealand (RBNW).
“This condition requires RBNZ approval of a change of control for AMP Life in a form consistent with the current branch structure (which exempts AMP Life from a number of New Zealand legislative requirements).”
The central bank told the UK firm that, in order to successfully meet the criteria, it would need to have separate, ringfenced assets held in New Zealand for the benefit of local shareholders.
However, Resolution’s branch structure is not consistent with the RBNZ’s requirements.
As a result, AMP said that the transaction is “highly unlikely to proceed on the current terms”.
Will there be another way?
The Australian insurer added: “Addressing these requirements would adversely impact the commercial return of the sale for both AMP and Resolution Life.
“The failure to meet this condition precedent is exceptionally disappointing as the sale of AMP Life is a foundational element of AMP’s strategy.”
The two firms are now working together to see if they can find an alternative arrangement that would meet RBNZ’s requirements.
“If a revised transaction cannot be achieved on acceptable terms, AMP will retain AMP Life and manage it as a specialist life insurance and mature business with a focus on policyholder outcomes, cost and capital efficiency,” the Australian company added.