Once the giant of insurance in Australia and New Zealand, AMP has exited the sector altogether with the sale of its life business to international insurer Resolution Life for $3.3 billion.

The company shed its Australian general insurance business in 2001, selling its manufacturing operations to Suncorp and then its New Zealand general insurance operation to Royal&SunAlliance. That business is now Vero NZ.

AMP then sold its distribution arm of some 700 authorised representatives to Suncorp in December 2011. insuranceNEWS.com.au reported last week that this unit, renamed Resilium, is likely to be sold.

Formed in 1849 as the Australian Mutual Provident Society – its motto is “Amicus certus in re certa” (“A certain friend in uncertain times”) - AMP became a leader in general and life insurance as well as banking and wealth management for most of its 169-year history.

But the company’s market domination – and its reputation – began to slip after it demutualised in 1998 and fought a ferocious and capital-sapping battle for GIO, and acquired the old National Mutual life and investments business from Axa in 2010.

But the hardest blows have come in the past few months, as the Hayne royal commission exposed a series of appalling internal practices that shredded its once-lofty reputation and led to the resignation of its CEO and most of the board.

It also led to a withdrawal of $1.48 billion in funds in the September quarter. Yesterday investors reacted to that figure – and the sale of the life insurance unit – by sending the value of shares down more than 24% to $2.50, the biggest one-day fall on record.

“The investment community still thinks of AMP as a life insurer – that now needs to change,” one analyst told insuranceNEWS.com.au.

“What it is left with - the bank and the wealth management side - is directly in the headlights of the royal commission.

“Those parts can’t sit together in the same entity any more, and as those businesses are pulled apart there will be costs. The value as a group was much greater than the sum of its parts.”

The sale was not unexpected, but the numbers were “nowhere near” what was anticipated, the analyst said.

S&P Global Ratings’ negative outlook on AMP remains unchanged following the announcement.

It says the impact on AMP’s credit profile will depend on what financial shape it is in after the sale. It is unclear what the former insurance giant plans to do with the proceeds, S&P says.

S&P downgraded its rating on AMP last month following the royal commission hearings.

The sale of the life insurance business will reap AMP $1.9 billion in cash, $300 million in AMP Life shares, and $1.1 billion in non-cash consideration, including future earnings from the business and $515 million interest in Resolution Life.

Swiss Re will reinsure AMPs New Zealand retail wealth protection business. AMP will divest its New Zealand wealth management and advice business in 2019 through an initial public offering next year.

Management and staff are expected to transfer across to Resolution Life. The deal should be completed in the second half of 2019.

AMP Capital will continue to manage wealth protection and mature assets under a relationship with Resolution Life.

Acting CEO Mike Wilkins says AMP’s exit from wealth protection delivers important strategic benefits, simplifies the portfolio and frees up capital.

Resolution Life Executive Chairman Sir Clive Cowdery says the acquisition is consistent with the company’s strategy of building up its life insurance business outside its traditional European and US markets.