London-based Resolution Life has said it will look to force through a deal to acquire AMP Life in a bid to bolster its Australasia operation.
These comments come after its proposed A$3.3bn (£1.8bn, $2.3bn, €2bn) deal potentially hit the rocks after the Reserve Bank of New Zealand (RBNW) failed to give it the green light.
The UK life insurer said in a statement: “Resolution Life notes [the 15 July] update provided by AMP Limited on the sale of AMP’s life insurance businesses to Resolution Life and the regulatory challenges to achieving the conditions precedent for the transaction within the agreed terms of the transaction.
“Resolution Life reaffirms its strategic interest in expanding its in-force specialist life insurance business to Australia and New Zealand.”
The company said its business is “focused on the careful, long term management of existing policyholders”, adding that it “views the acquisition of AMP Life as an excellent opportunity”.
“As such, the two parties are now engaged in discussions regarding a restructuring of the transaction (including updated terms) to accommodate the regulatory requirements whilst delivering a de-risked transaction with execution certainty, which meets the needs of all stakeholders.”
Scuppered deal
On Monday, International Adviser reported on AMP’s acquisition hitting a roadblock after it was denied regulatory approval.
Australian-based AMP Group said: “This condition requires RBNZ approval of a change of control for AMP Life in a form consistent with the current branch structure (which exempts AMP Life from a number of New Zealand legislative requirements).”
The central bank told Resolution that, in order to successfully meet the criteria, it would need to have separate, ring-fenced assets held in New Zealand for the benefit of local shareholders.
However, Resolution’s branch structure is not consistent with the RBNZ’s requirements.
As a result, AMP said on Monday that the transaction is “highly unlikely to proceed on the current terms”.
Price drop
Simon Mawhinney, chief investment officer at investment manager Allan Gray, which holds a 3% stake in AMP Group, said he was opposed to the firm slashing the price of the life business to seal a deal with Resolution.
He told newswire Reuters:”I don’t think the announcement is outrageously bad. It would be bad if they decided to reduce their asking price by A$700m.
“We want the outcome that maximises value for us.”
