AMP share price down 16% as key life insurance deal falls apart

Pressure continues to build for the troubled wealth management firm as a likely dividend cut and the stalled sale of AMP Life sends investors to the exits.

AMP Shares Source: Bloomberg

A media release from AMP Ltd this morning, outlining a likely dividend cut and difficulties concerning the sale of AMP Life, saw the company’s share price collapse as much as 16%.

Overall, this caps off a rough 12-months for the wealth management firm, with the stock now down over 40% as the full consequences of the Royal Commission weigh on the company.

AMP Life sale now ‘unlikely’

In its current form, the expected A$3.3 billion sale of AMP Life to London-based Resolution Life has been halted, following challenges to meet the relevant approval conditions from the Reserve Bank of New Zealand (RBNZ).

Due to the RBNZ not approving Resolution Life’s ‘change of control application’, the company noted that Resolution Life ‘does not expect the RBNZ to approve an application that would satisfy the condition precedent.’

In short, what this means is that in its current form, the A$3.3 billion sale of AMP Life will not go ahead.

Though disappointing, AMP remains hopeful that the sale can be salvaged in some form, maintaining that:

‘AMP is now working with Resolution Life to determine whether there is a solution that addresses policyholder interests, regulatory requirements and provides certainty of execution.’

Even still, this option looks highly uncertain, and with shares of AMP now trading at record lows, it seem investors are equally sceptical.

AMP ‘unlikely’ to maintain interim dividend

Adding to the disappointing news outlined above, the company this morning announced that it is unlikely to pay an interim dividend.

AMP pointed out that ‘given the uncertainty around the AMP Life transaction, the AMP Board expects to continue its prudent approach to capital management and anticipates that an interim dividend will not be paid for 1H 19.’

AMP’s healthy dividend would have been a drawcard for many income-oriented investors in the past, and as such, its cut is likely to have contributed to the precipitous decline of the AMP Ltd share price this morning.

Lastly, the company advised that a further update on their 1H 2019 financial results would be provided on August 8.


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