October has a special place in finance as a month that has traditionally seen volatility in share markets, known as the “October effect”. However, many of our members may now remember it as the month a 169-year-old insurance company died, with the news on 25 October that AMP Life will sell its NZ legacy book and off-load its Wealth Management division via an NZX IPO.
As another New Zealand insurance company name vanishes, our client’s are left wondering what/whose name is on the next letterhead/email signature. Thank goodness they have an adviser who looks after them.
Arguably, AMP has done many good things over the various years it has been around. Its recent acquisition of AXA in 2010 saw its adviser numbers double, and its life insurance market share double to 20%.
However, a recent article in Good Returns highlighted that the number of advisers regularly writing life business for AMP is well down on the 2010 figures, which is evidenced in their market share now sitting around the 14% mark.
Since the sale announcement, the New Zealand and Australian media are making various comments about the pros and cons, and some Australian shareholders are proposing to hold a special meeting for shareholders to consider changing its constitution or removing the board to ensure the deal with Resolution is dropped.
What impacts will the AMP sale have on both our clients and our members?
First, our clients have been told that nothing changes with their AMP policy contracts. Secondly, with AMP selling their life book as opposed to a merger, we should wait for the NZ AMP management to advise us if there will be changes to our agency relationships with them.
So far this year, we have all experienced the effects of life insurance businesses being bought and sold, (for example Sovereign to AIA and OnePath to Cigna) and the sky has not fallen on our industry relationships or for that matter our agency agreements. AMP New Zealand’s management team needs time to get its head around the finer details of this sale. Many of them may not have thought this would have unfolded as it has.
In the last week of October, I attended a brief meeting with representatives of The Association for AMP adviser businesses. In the first week of November, I attend one of AMP’s ‘Road Show’ meetings to find out more information. We are also talking to our counterparts in Australia.
Our CEO and other board members have been working on the concerns our members have begun to raise, and we are in the process of arranging meeting dates with AMP management. The Trustees of the AMP (NMLA) NZ Superannuation Plan are also meeting this week to address many issues being forwarded to them from our members and the management of this scheme.
We will keep members posted as more information comes to light.
Malcolm Papworth
Chair, TripleA Advisers Association