Will AMP sell its general insurance arm? Ratings agency Standard & Poor’s certainly thinks it’s a better than even chance. S & P’s has placed the “A” rating of AMP’s general insurance business under review. Insiders believe AMP may sell its general insurance arm within the next two months for an asking price of about $1.5 billion.

There are plenty of potential buyers, each with a different reason for wanting the AMP stake. They include Suncorp Metway, NRMA, CGNU, Royal & SunAlliance and Zurich.

Standard & Poor’s listed GIO General, AMP General and GIO General NZ on creditwatch with “developing implications”.

The decision reflects S & P’s belief that the AMP group has “heightened its strategic review of the ongoing manufacture of general insurance business” – in less coy language, it’s getting the place ready for sale.

The creditwatch reflects the potential for the rating to be raised, lowered, or affirmed “according to the future financial structure and ownership of the general insurance operations”.

AMP values its personal lines-dominated general insurance arm at $1.6 billion. But like many large companies, the general insurance operation is struggling to provide the sort of returns achieved by AMP’s financial services companies. AMP bought GIO more than three years ago in a hostile takeover for $3 billion. It then had to write off $1.2 billion in GIO’s disastrous reinsurance losses.

The “will they, won’t they” saga of the AMP General sale has been around for six months now. InsNet News first raised it in November, pointing out that the general operation doesn’t “fit” particularly well in the financial services and wealth creation culture that rules at AMP.

At that time S & P’s lowered the ratings of GIO General Insurance and GIO New Zealand from A+ to A to bring them into line with AMP. The agency warned