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AMP (ASX: APM) will exit the life insurance business after 170 years after completing the sale of AMP Life to New Zealand-based Resolution Life.
The total proceeds of the sale come to $3 billion including $2.5 billion in cash and a $500 million equity interest in holding company Resolution Life Australia.
The company expects the net proceeds of the sale will increase AMP's capital in excess of target surplus by approximately $1.1 billion.
Any capital in excess of target surplus post completion will be used to fund AMP's new strategy. Beyond this, the company says it will assess all capital management options with the intent of returning the excess above target surplus to shareholders.
AMP will continue to provide technology and administrative services to AMP Life for a two-year period under a transitional services agreement.
"The sale is a major milestone for AMP demonstrating our ability to execute complex projects including through the difficulties of COVID-19," says AMP chief executive Franceso De Ferrari (pictured).
"It is also a historic milestone as AMP ceases to be a life insurer after 170 years. Our Life teams will move to Resolution Life and will continue to support clients who will see no changes in their policy terms or conditions.
"We are pleased to partner with an experienced operator in Resolution Life and deliver an outcome that is in the best interests of our clients, policy holders and shareholders."
Read more: AMP reset not enough to stem losses
The sale of AMP Life was a long time coming for AMP after it was effectively shot down in July 2019 when AMP failed to secure approval for the transaction from the Reserve Bank of New Zealand (RBNZ).
Resolution Life notified AMP the RBNZ would only approve a change of control application if Resolution Life agreed to have "separate, ringfenced assets held in New Zealand for the benefit of New Zealand policy holders".
Resolution Life managed to get around this restriction by forming a new, Australian-domiciled holding company called Resolution Life Australia that is now the new owner of AMP Life.
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