AMP is offloading its life insurance business and embarking on a $650 million capital raising to help fund a turnaround strategy after the group sank to a $2.3 billion first-half loss.
AMP’s loss came after it copped a $2.35 billion writedown that chief executive Francesco de Ferrari described as a line in the sand ahead of a major overhaul.
“We’ve always said (2019) would be a transitional year,” Mr de Ferrari said on Thursday.
“The transformation will not happen overnight … (but) it is a very historic day in building the future of this great Australian company.”
AMP, which was hammered at last year’s royal commission over its treatment of customers, will hold an institutional placement and share purchase plan to pay for a $1.3 billion, three-year transformation program.
That program will not include its life insurance business, which it has agreed to sell to the UK’s Resolution Life in a revised deal worth a reduced $3 billion.
The Reserve Bank of New Zealand last month scuppered a $3.3 billion deal due to concerns over benefits to the company’s NZ policy holders.
Under the revived deal, AMP will receive $2.5 billion in cash and a $500 million stake in the holding company that will own AMP Life.
AMP had already said it wouldn’t pay an interim dividend as a result of the delay and on Thursday confirmed shareholders will have to wait for the deal to complete before it resumes payouts.
The stuttering sale had already delayed the arrival of John Patrick Moorhead as chief financial officer by four months, and AMP on Thursday said Mr Moorhead has decided against taking up his role.
Deputy CFO James Georgeson will instead formally take over from the retiring Gordon Lefevre by October.
The personnel shift is just the latest in a tumultuous two-year period in which AMP lost its chief executive, head of wealth management, advice executive, chairman, and several directors as its mistreatment of customers was gradually exposed.
Shares in the company hit an all-time low $1.715 on Wednesday and were worth $1.73 on Thursday when they went into a trading halt for the capital raising.
CMC Markets’ chief strategist Michael McCarthy said the likelihood of a further decline had increased with the first-half result.
AMP’s stock has lost more than 70 per cent of its value in the past three years following a series of scandals, including charging life insurance premiums to dead clients and other ongoing compliance concerns.
The one-off items announced Thursday – which follow a $668 million writedown in 2017 – include a $1.51 billion impairment against the goodwill of Australian wealth management business and $459 million against AMP Life.
AMP confirmed it was on track to complete its $778 million customer remediation program in 2021, and said it had paid out $60 million so far over the fees-for-no-service scandal.
Earnings grew at AMP Capital and the group said AMP Bank had remained resilient, but an underlying first-half net profit of $309 million was still 37.6 per cent lower than a year ago.
After consulting with shareholders, Mr De Ferrari’s potential bonuses have been cut by as much as $4.6 million to reflect the company’s diminished value since his appointment was announced.