The Reserve Bank has finally approved the sale of AMP Life to Resolution Life New Zealand, on condition a trust is created to protect policyholders. AMP says the sale will complete on 30 June 2020.
In a media statement, the Reserve Bank’s Deputy Governor and General Manager for Financial Stability Geoff Bascand, says it has been reviewing the sale and consulting with the two companies for 18 months to ensure any transfer of business met the bank’s requirements.
AMP insurance policy holders’ relationship in New Zealand is with AMP Life and, and while that company will have a new owner, existing policy entitlements are unaffected by this transaction, says the bank.
Bermuda-based Resolution Life says the bank’s approval is the last regulatory hurdle required for the acquisition of AMP Life.
Bascand says: “Because AMP Life is a branch of an Australian business and intended to be in ‘run-off’ and not write new business, special arrangements were needed for the security of New Zealand policyholders.”
…special arrangements were needed for the security of New Zealand policyholders…
“A bespoke trust model has been established that ensures supervisory objectives are better met, future industry dynamics are generally more positive, and there is additional protection in the event of insolvency – one of the key risk considerations that we have been seeking to mitigate.”
The trust, says Bascand, is required to hold capital and assets in New Zealand that help provide long-term security for policyholder benefits or investments, where relevant.
“The trust will be under the management and scrutiny of relevant officers in New Zealand, who have appropriate influence and authority in respect of the New Zealand operations, for the purpose of securing equity across all policyholders,” says Bascand.
A bespoke trust model has been established that ensures supervisory objectives are better met…
In addition, the model will see the establishment of a new, locally incorporated insurer Resolution Life New Zealand (RLNZ). The RLNZ board will have a majority of New Zealand resident, independent directors and be chaired by Anne Blackburn. RLNZ will act as trustee to the trust and will effectively manage the assets held in the trust.
AMP Life has also established a New Zealand Policyholder Advisory Committee. The committee is a sub-committee of the AMP Life board, and will include RLNZ’s independent directors. Its purpose is to provide advice to the AMP Life Board on matters relating to the interests of New Zealand policyholders.
AMP, which is to retain its Wealth Management business, will provide an update to the market on 1 July 2020.