AMP sells general insurance arm

By Phil Boeyen, ShareChat Business News Editor

Friday 15th June 2001

AMP (NZSE: AMP) is selling its general insurance businesses in Australia and the UK for A$1.6 billion and has also put the New Zealand operation up for sale.

AMP will sell its operations in Australia to Suncorp Metway and in the UK to Churchill Insurance, a subsidiary of Credit Suisse.

The company says manufacturing and distribution agreements have been put in place with the purchasers to ensure that general insurance products will continue to be offered to AMP customers through existing distribution channels.

AMP says the impact on its 2001 financial results is expected to be largely neutral, with the sale price offset by write-offs of associated goodwill, other related expenses and tax.

CEO Paul Batchelor says the sale reflects the company's strategy of focusing on high margin, value-added wealth creation and protection solutions and services, especially with the general insurance business continuing to present significant challenges.

"In particular the rapidly changing market conditions demand increased scale and focus to achieve target returns on capital, and significant levels of investment.

"For these reasons, AMP has decided to exit the manufacturing of general insurance products globally."

Mr Batchelor says the move will also strengthen the company's balance sheet, allowing it to retire debt and reinvest in its core operations.

The sale represents less than half of the business that was acquired when the company took over GIO in 1999 and doesn't include the life insurance, financial planning or asset management operations of GIO, which have been fully integrated into AMP Financial Services and AMP Henderson Global Investors.

A process to sell the New Zealand general insurance operations and establish a distribution agreement is also underway.

The New Zealand operations comprise a fully owned general insurance and a 50% shareholding in a general insurance joint venture with the New Zealand Automobile Association.

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