Thursday 2nd May 2019
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AMP’s New Zealand wealth management business suffered a net cash outflow of A$52 million in the March quarter, a big turn-around from a net inflow of A$53 million in the same quarter of last year.
That suggests the kiwi branch may be suffering a contagion effect after its Australian parent was excoriated in Australia’s royal commission into financial services and which is in the process of a radical reshaping of the business.
AMP is ditching nearly 170 years as a trans-Tasman life insurance company by selling both its Australian and New Zealand life insurance and wealth protection businesses.
The life insurance business is to be sold to British-based Resolution Life for A$3.3 billion.
The net outflow in New Zealand was despite A$162 million of new money flowing into AMP’s KiwiSaver scheme, up from A$150 million in the same three months last year.
However, the New Zealand results pale into insignificance compared with the A$1.8 billion net cash outflow the Australian wealth management business suffered in the wake of the royal commission.
The Australian outflow included A$538 million of regular pension payments.
The figures were released ahead of AMP’s annual shareholders’ meeting at which the board comfortably avoided a “second strike” vote, largely because the board has effectively already suffered a “spill.”
Under Australia’s Corporations Act, shareholders get to vote on each listed company’s remuneration report and if more than 25 percent vote against it one year – as AMP’s shareholders did last year – and then again the following year, shareholders get to vote on whether all directors have to stand for re-election.
While a number of fund managers had protested the sale of the life business and had planned to show their displeasure by voting against AMP’s remuneration report this year, they mustered only 10.59 percent of the votes cast and the resolution was carried with 89.4 percent voting in favour.
But four of the company’s 10 directors had all been appointed since the last AGM – former chair Catherine Brenner had actually resigned ahead of last year’s AGM – and a fifth is the new chief executive, Francesco De Ferrari, who also sits on the board.
Those four new non-executive directors were duly elected ahead of the vote on the remuneration report.
Chair David Murray, former chief executive of the Commonwealth Bank of Australia who conducted his own financial system inquiry in 2014 and recommended banks should hold more capital, took the helm in June last year from Mike Wilkins.
Wilkins, who remains on the board, had stepped into the breach left by Brenner’s departure and had also filled in as acting chief executive until De Ferrari took up the reins.
“I joined AMP because I believe this is an important Australian institution for our customers, the community and the wider financial system, which, in the context of the Royal Commission, must make earning back trust a priority,” Murray told shareholders.
“Last year, AMP was shown to have faltered from its purpose” and “as your new chairman, I am focused on driving change, improving governance, facing squarely into the issues and being accountable,” he said.
Murray championed the sale of the life business, saying it’s the right outcome for shareholders and that the majority of the proceeds will be returned to shareholders.
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