AMP uses axe to staunch bleeding

Friday 6th December 2002

AMP yesterday confirmed it would write off $A1.2 billion ($1.35 billion) from the value of its British and other businesses and axe 1900 staff.

In addition to the writeoffs announced on November 18, the financial services group will also incur restructuring costs of about $A320 million ($359 million).

AMP's shares fell 1% to $14.75 on the news, making a loss this year of 35%.

In common with other insurers the company has run into trouble as equity markets worldwide have fallen. In particular its Pearl insurance unit in Britain fell below minimum regulatory capital (MRC) ratios and had to be recapitalised with an equity injection of £500 million ($1.56 billion) and other measures.

Chief executive Andrew Mohl said Pearl would now meet MRC ratios down to a level of 3000 on London's FTSE100 index. The index is currently above 4000.

Under the completed first phase of AMP's review of its British operations, the direct sales force will be disbanded with the loss of 700 jobs.

Some 300 more will go with the closure of the household adviser channel. AMP will regroup around two new distribution channels, a self-employed financial planning group of 50-100 and a mortgage advisory service group, also self-employed.

The changes resulted in AMP revising its estimate of annual cost savings in Britain from £100 million to £160 million.

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