RBNZ can't say if or when it may approve AMP Life sale

The central bank also hinted that it hasn't yet received all the information it needs to make such a decision.

AMP announced the sale of its life businesses on both sides of the Tasman to Bermuda-based Resolution Life for A$3.3 billion in October 2018.

In July last year, the Reserve Bank kyboshed that deal.

AMP had expected the prudential regulator would allow Resolution to operate the New Zealand business as a branch of the Australian business, as AMP currently operates.

But the RBNZ said then that Resolution must agree to have separate, ring-fenced assets held in New Zealand for the benefit of the New Zealand policyholders.

AMP and Resolution renegotiated the deal in August 2019, reducing the value of the transaction to A$3 billion with AMP receiving A$2.5 billion in cash but keeping a 20 percent stake in Resolution Life Australia.

The two companies have been trying ever since to gain the RBNZ's approval. A decision is required a month after the regulator has all the information it requires.

In a statement today, deputy governor Geoff Bascand said the central bank is aware of media reports and public interest in the transaction and that he wanted to explain the process underway.

Various newspapers, including the Financial Times, have described Resolution's founder, Clive Cowdery, as making his fortune by buying "zombie insurance businesses."

Local news outlets, including Good Returns, have questioned whether AMP's about 200,000 policyholders in New Zealand and their 600,000 or so dependants would be left stranded by the deal without the payouts they're entitled to.

Bascand has said RBNZ won't allow this to happen.

"Before any change of control of a licensed insurer take place, the Reserve Bank must be satisfied that the change of ownership does not alter the insurer's ongoing eligibility to retain its New Zealand licence," Bascand said.

"The overriding purpose that guides the bank in any proposal before it is to promote a sound and efficient insurance sector and promote public confidence in the sector," he said.

The criteria required by the Insurance (Prudential Supervision) Act 2010 means RBNZ must determine whether the change of ownership will affect the solvency of the licensed issuer.

It must also assure itself of the new owner's ability to carry on its business in a prudent manner and of the new owner's incorporation, ownership and governance structure, and financial strength, taking into account the size and nature of its business.

"If the change in shareholding is likely to lower the standard in respect of any of those matters, the bank is able to impose conditions upon the insurer's licence or to decline approval of the change of control," Bascand said.

The Reserve Bank is restricted by law on what it can disclose about the information it has received about the deal and about its own deliberations, but it would take all these criteria into account, he said.

"There are a number of reasons why a shareholder may want to sell its holdings or why a purchaser may want to take ownership and control of an insurer."

AMP's motivation for selling its life businesses has been painfully obvious.

Australia's royal commission into financial services exposed the fact that it had lied to the Australian market conduct regulator, the Australian Securities and Investments Commission, at least 20 times, charged customers for advice they never received and doctored a report that was supposed to be independent.

Such revelations have badly tarnished the AMP brand and led to a major restructuring of the business to try to ensure the group's survival.

Resolution believes it will profit by running down all AMP Life's policies. It doesn't plan to sell new policies.

Bascand said this type of transaction isn't unique to New Zealand and that the international trend is towards consolidating ownership of life insurers.

He noted that changes of control of licensed insurers aren't unusual and that the bank considers "a number of these applications each year."

"We cannot be specific about how long the approval process may take or when approval will happen, if it does," Bascand said.

"The time taken to make these deliberations reflects the quality of the information supplied by the insurer and the final form of the proposal. The law requires that the bank provide a decision within 20 working days of receiving all of the information that it reasonably requires."

"AMP Life/Resolution have set out a preferred timetable for the transaction to complete by June 30," Bascand said. Originally, the two companies had hoped to consummate the deal by the end of 2019.