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AMP Life sale clears final hurdle

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AMP is set to exit the life insurance business at the end of this month as planned, after clearing a final regulatory hurdle with the New Zealand central bank over the $3 billion sale to Resolution Life.

AMP told shareholders at its AGM last month that it was still in talks with the Reserve Bank of New Zealand, having already secured the green light from Australian regulators and the China Banking and Insurance Regulatory Commission.

But today it confirmed it has "received all regulatory approvals".

“AMP Limited today announces that the sale of AMP Life to Resolution Life has received all regulatory approvals and confirms it expects the transaction to complete after the market closes on June 30,” the company said in a statement. “AMP will provide an update to the market on July 1.”

As part of the revised sale agreement last August, AMP will receive $2.5 billion in cash and $500 million in equity interest in a new holding company that will own AMP Life. The equity interest will give AMP about a 20% stake in Resolution Life Australia.

The Reserve Bank of New Zealand says in a statement today it has imposed a number of conditions to protect AMP policyholders before giving clearance for the sale to go ahead.

The conditions include the setting up of a trust to hold capital and assets in New Zealand that help provide long-term security for policyholder benefits or investments, where relevant.

Additionally a new, locally incorporated insurer called Resolution Life New Zealand (RLNZ) will be established and the majority of its board must comprise of New Zealand-resident, independent directors. RLNZ will act as trustee to the trust and effectively manage the assets held in the trust.

AMP Life has also set up a New Zealand Policyholder Advisory Committee to provide advice to the AMP Life Board on matters relating to the interests of New Zealand policyholders.

“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,” Deputy Governor and General Manager for Financial Stability Geoff Bascand said.

“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.”