It’s all jubilation at Resolution Life after it received the green light from both the Reserve Bank of New Zealand (RBNZ) and the Australian Prudential Regulation Authority (APRA) to successfully proceed with its quest to purchase AMP Life.
Headquartered in the UK, the life insurance group reported that RBNZ’s approval which came on June 23, was the final regulatory nod needed to seal the deal of the acquisition.
This comes after 18 long months of waiting and thorough review poised to ensure that the AMP Life’s deal duly adhered to the regulator’s requirements.
“Because AMP Life is a branch of an Australian business and intended to be in ‘run-off’ and not write new business, special arrangements were needed for the security of New Zealand policyholders,” stated Geoff Bascand, the RBNZ deputy governor and general manager for financial stability.
“Though the company might be an unfamiliar name in Australia and New Zealand, Resolution Life is well established and respected,” noted Resolution Life president and chief operating officer John Hele in an open letter to AMP Life policyholders in March. “That’s because we play an important role in the global life insurance market.
“When an insurer, like AMP, wants to sell some or all of its life business, such as AMP Life, Resolution Life is there as a prospective purchaser. For us, acquisitions are an opportunity to grow the number of customers we serve worldwide.”
To reach its decision, RBNZ worked closely with APRA alongside an independent actuary which offered professional advice regarding the transaction.
Lead To The Establishment
“A bespoke trust model has been established that ensures supervisory objectives are better met, future industry dynamics are generally more positive, and there is additional protection in the event of insolvency – one of the key risk considerations that we have been seeking to mitigate.”
The model will lead to the establishment of Resolution Life New Zealand (RLNZ), a locally incorporated insurance company that will operate as a Trustee to the Trust.
Under the new conditions issued, the Trust shall be responsible for holding capital and assets in New Zealand which will act as long-term security for policyholder investments or benefits, where necessary.
In the meantime, Resolution Life has revealed that the RLNZ board will henceforth be chaired by Ms Anne Blackburn.
While continuing with its acquisition trail and expansion initiatives, Resolution Life is likely to take over Westpac’s life insurance unit.
Apparently, the well-established life insurance group was earlier cited as one of the most potential buyer of the Westpac business, knocking out the likes of AIG and MetLife.
A new report published by The Australian has suggested that Resolution Life could have emerged as the best contender.
Since 2003, several Resolution Life entities have consolidated, acquired, managed or reinsured 28 life insurers.
Last month, Westpac Group’s Chief Exec Peter King described the company’s life insurance business as one of the businesses where Westpac does not get sufficient returns to cover the risk. These include retirement and superannuation contributions alongside general insurance.