For super funds and their advisers

Resolution keeps AMP Capital for A$29bn mandate

•6-Shawn-Johnson

AMP Capital will continue in a A$29 billion investment management gig with Resolution Life after selling down its stake in the insurer last week.

According to an AMP spokesperson, there has been “no change to the [Resolution] mandate for AMP Capital” post the agreement to offload its over 19 per cent holding in the life insurer.

Resolution completed the purchase of AMP Life last July in a deal valued at A$3 billion including the 19.13 per cent share retained by AMP.

Under the agreement last week, AMP will pay Resolution a net A$141 million to finalise the sale to “settle a number of post-completion adjustments and certain claims between the parties, subject to various limitations and exclusions”, the AMP statement says.

In total, the AMP share in Resolution was valued at A$524 million for the transaction.

If approved by Australian and NZ regulators, the sale – expected to close in the first half of 2022 – will mark AMP’s final exit from the life insurance business after more than 170 years peddling policies.

However, AMP Capital (now headed up by Shawn Johnson, pictured) will continue to run the A$30 billion Resolution investment pool that backs the life insurance policies.

The Resolution mandate represents about half of the A$60 billion AMP global equities and fixed income (GEFI) business slated to fall into Macquarie ownership next year. Macquarie agreed to buy the GEFI business in July this year for a maximum of A$185 million.

Life insurance investment books tend to be conservatively weighted to fixed income.

A Resolution spokesperson also confirmed the group would retain AMP Capital as fund manager in Australasia.

“Globally, Resolution Life uses a number of global asset managers to manage over US$357 billion of assets,” the spokesperson said.

Since taking over AMP Life last year, Resolution has been cutting off operational links with the old owner as part of a business reformation, the group says in a release.

“All transitional service arrangements with AMP are being progressively wound up and will be concluded by mid 2022,” the statement says.

Megan Beer, Resolution head of Australasia, said with AMP off the share register “we now have full ownership and control over our future” with further purchases an option.

“We are well positioned for growth in the Australian and New Zealand markets through managing our customers’ existing policies as their needs change, transforming our business and by continuing to adopt a disciplined approach to acquisitions,” she said in the release.

In May this year, Resolution raised about US$1.6 billion to “deploy for future growth transactions”, the company said in a release at the time.

Beer, along with others in the AMP Life team, shifted across to Resolution last year.

Founded in the UK by Clive Cowdrey, Resolution has spent more than US$16 billion since 2003 in mopping up 28 life insurance companies across the world under a business model aimed at client retention.

“We choose not to spend money on attracting new policyholders,” the Resolution website says. “Instead, we invest in systems and talent that are purely focused on servicing existing policies.

“… Our global scale allows us to manage our investments, policies and business more efficiently.”

In January this year, Resolution purchased the in-force individual life insurance business of US-based Voya Financial (previously known as ING) that added over US$25 billion of assets to the group.

Overall, Resolution manages about US$60 billion with about 2.5 million underlying policy-holders including A$29 billion (over US$21 billion) and 1.3 million clients in Australia and NZ.

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