Resolution Life will take on the risk for all claims experience and insurance lapse losses from last month until the acquisition of AMP Life is completed, under a salvaged deal with the financial services giant.

Resolution, which has bases in London and Bermuda, will also be entitled to all AMP Life net earnings during that period, AMP says. Resolution will pay AMP $2.5 billion in cash, and a $500 million equity interest in its new Australian business, which will own AMP Life.

The $500 million is expected to provide AMP a 20% share in the business. The original sale would have netted AMP about $3.3 billion in cash.

The sale is now expected to be completed in the first half of next year.

AMP and Resolution are still working with the Reserve Bank of New Zealand to address its concerns over the sale.

The central bank did not approve the sale last month, after it warned Resolution it would have to separate and “ringfence” AMP’s New Zealand assets for the benefit of New Zealand policyholders.

The condition was inconsistent with AMP’s branch structure for New Zealand, which exempts AMP Life from several regulatory requirements.

AMP is seeking to transfer its China Life holdings to the bank, given its strategic importance.

The Protecting Your Super legislation and higher reinsurance costs in New Zealand have reduced AMP Life’s profit to $116 million in the first half of the year, compared to $143 million at the corresponding time last year.

AMP will implement a $1.3 billion investment program to reduce costs, drive growth and de-risk the business, with cost reduction initiatives to deliver $300 million in annual savings by 2022. Estimated costs for its compensation program for bad advice remains stable at $778 million. It is also exploring options to sell the New Zealand wealth business.

S&P is maintaining its CreditWatch negative rating for AMP following news of the renegotiated sale. The current ratings for different parts of the group face pressure as the likelihood and timing of divestments, future earning potential and structure of the AMP Group are still uncertain, the agency says.