This condition requires RBNZ approval of a change of control for AMP Life in a form consistent with the current branch structure (which exempts AMP Life from a number of New Zealand legislative requirements).

On 13 July 2019, Resolution Life notified AMP that:

• RBNZ would not consider Resolution Life’s change of control application unless it agreed to have separate, ring-fenced assets held in New Zealand for the benefit of New Zealand policyholders, which is inconsistent with the current branch structure; and
• as a result, Resolution Life does not expect RBNZ to approve an application that would satisfy the condition precedent.

AMP believes that this reflects RBNZ’s position and that addressing these requirements would adversely impact the commercial return of the sale for both AMP and Resolution Life.

The failure to meet this condition precedent is exceptionally disappointing as the sale of AMP Life is a foundational element of AMP’s strategy.

Recognising that the transaction is unlikely to proceed in its current form, AMP is now working with Resolution Life to determine whether there is a solution that addresses policyholder interests, regulatory requirements and provides certainty of execution. This will require negotiation of new terms and is not certain.

The interests of policyholders, both in New Zealand and Australia, have been and will continue to be paramount.

While the earnings impacts since 30 June 2018 from unwinding the risk sharing agreement in the current transaction are not substantial, the long-term valuation effect would have a more significant influence on any future price negotiation because of best estimate assumption changes since 30 June 2018 (reduction of approximately A$400m) and the impact of Protecting Your Super legislation (reduction of approximately A$300m).

There is a range of other factors, both positive and negative, that would be taken into consideration in any future sale price including the effects of the Putting Members’ Interests First Bill.

The AMP Limited Board will review any revised transaction to determine if it is in the best interests of policyholders, the company and its shareholders. If a revised transaction cannot be achieved on acceptable terms, and receive regulatory approval, AMP will retain AMP Life and manage it as a specialist life insurance and mature business with a focus on policyholder outcomes, cost and capital efficiency.

Capital position and interim dividend expectations

While the 1H 19 accounts are yet to be finalised, AMP expects to report a Level 3 eligible capital surplus above minimum regulatory requirements and in line with Board limits for target capital surplus.

Given the uncertainty around the AMP Life transaction, the AMP Board expects to continue its prudent approach to capital management and anticipates that an interim dividend will not be paid for 1H 19.

A further update will be provided at our 1H 19 Results on 8 August 2019.

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Megan Beer

AMP’s mental health training, which helps employees and advisers engage with people experiencing mental health issues, has been honoured with the Innovation in Retail Life Insurance award from the Financial Services Council of Australia.

Developed in conjunction with mental health research organisation the Black Dog Institute, the training is well above the FSC standard for mental health in terms of the breadth of people who can access it and the depth of content covered.

Since a training refresh in October 2017, AMP has seen around 600 financial advisers voluntarily undertake the training.

“To have so many of our advisers proactively opt-in to take the training in just six months has exceeded all expectations,” said AMP Group Executive Insurance, Megan Beer.

“It reflects the growing understanding of the impact of mental health on clients and the growing willingness for our broader community to respond to these challenges.

“We’re now planning to make the training available to our external and non-aligned financial advisers.”

Research shows that one in five people suffer from mental illness at any given time, and advisers are well positioned to make a difference.

“This training helps equip advisers if they’re seeing concerning signs in a customer they’ve known and developed a relationship with over time,” said Ms Beer.

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Craig Meller

AMP has announced reforms to payment structures which will reduce upfront commissions for AMP licensed advisers on all life insurance policies. The changes will take effect from 1 July 2015.

“It is clear the Australian life insurance industry needs to reform in order to help restore customer confidence,” said AMP Chief Executive Craig Meller.

“This confidence is essential for AMP to achieve its most important objective – offer financial advice to help people improve their lives. These changes, which are initial steps towards a fee for service model, support this objective.”

The reforms are:

• AMP is reducing upfront commissions paid to advisers on new life insurance products through a new payment structure. The model caps year one commissions paid on life insurance policies to 80 per cent and a 20 per cent annual commission payment during the life of the policy.
• AMP advisers will have access to this year one commission only once every five years per policy. This will be irrespective of the life insurance provider and applies to all insurance policies written since 1 July 2010.
• Our licensees’ approved product lists will move to a similar remuneration structure with all life insurance products (including non-AMP products) complying with the new model and five year rule.
  “We have consulted with adviser associations to develop these reforms – they also recognise that change is required to build trust and secure long-term benefits for our customers,”Mr Meller said.

“We will support advisers through the transition and are committed to developing technology and systems which allow advice to be delivered more efficiently.”

“AMP and its licensees will also work closely with regulators, business partners and the industry to identify further opportunities for reform, in line with the direction and intent of the Trowbridge Report. Part of this process will be assessing the impact these changes have on customers and advisers, many of whom are small business owners.”

“As a leading life insurer with Australia’s largest advice network, it’s appropriate that AMP supports industry reform – just as we did by moving early with both fee for service for investment advice in 2010 and initiatives to lift adviser professionalism last year.”

AMP will provide an update on the implementation and next phase of transition at the Company’s interim results announcement in August.

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AMP Director of Retail Risk Michael Rogers said the enhancements will benefit both new and existing customers. Using AMP’s automatic plan enhancement feature, existing customers will be upgraded to the broader protections at no additional cost and without a pre-existing condition
exclusion.

“These developments are designed to ensure AMP’s insurance offer remains contemporary and relevant, fulfilling the insurance needs of more Australians.

“We’ve also streamlined our claims concierge service to take the hassle out of making a claim and make it easier for customers and financial planners to do business with us,” Mr Rogers said.

More than 33 enhancements have been made to AMP individual insurance products, spanning Flexible Lifetime – Protection product suites (1) which include Death cover, Income Protection, Trauma and Total and Permanent Disability (TPD) insurance and AMP Flexible Super.

A significant enhancement to AMP’s Trauma cover is the addition of Type 1 and Type 2 diabetes to the AMP Optimum and Premier cover. “Diabetes is Australia’s fastest growing chronic disease. There are already 3.2 million Australians with diabetes and pre-diabetes and 275 more Australians develop the disease every day (2).  Adding this condition to our Trauma cover expands the protection we provide to Australians,” Mr Rogers said.

Other enhancements to Trauma cover include the addition of bacterial meningitis and meningococcal disease while those with TPD and death cover will benefit from accommodation benefits for immediate family members of the insured person. Another upgrade includes a payment
of $10,000 if a person with TPD cover dies without death cover.

AMP has also made four improvements to its group insurance offer (3).  One of the improvements is that when determining the automatic level of insurance offered to employees in AMP Flexible Super employer plans, employees holding personal insurance within AMP Flexible Super will now be counted towards the number of employees used to determine the automatic level of insurance for employees in the employee insurance offer.

AMP has also made improvements to its claims concierge service. A refreshed claims website provides a one-stop portal for financial planners and customers to learn about, initiate and complete the claims process.

One of the key features is the ability for customers or their financial planner to notify AMP online that they would like to begin the claims process. AMP will then call the customer to begin the process, with the same AMP assessor handling the claim from that point onwards. Claims forms can also now be completed electronically further reducing administration time.

“Our customers and financial planners have told us that they would like less paperwork, improved online accessibility and flexibility at claims time. These claims service enhancements aim to provide customers and planners with simpler processes which reduce the end-to-end service time,” Mr Rogers said.

(1) AMP Flexible Lifetime® – Protection enhancements are effective on 7 November 2011
AMP Flexible® Super – Flexible Protection; Flexible Lifetime® – Super are effective on 21 November 2011
(2) Diabetes Australia 2010
(3) AMP Flexible Super – Employee Flexible Protection

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The AMP Planner Protection Poll has found that 71 per cent of financial planners polled had seen an increase in the number of clients who disclose a personal history of mental illness.

• “Have you seen an increase in the number of clients who disclose a personal history of mental illness?”
• “Are you seeing more clients who present with a personal history of mental illness, gain access to Income Protection cover?”
• “Which of the following is most likely to make a difference in their application for insurance: client’s understanding of the impact of mental illness on an application; early access to the underwriter to discuss the client’s situation; insurer collecting personal statement directly from the client; or none of the above?”

AMP Planner Protection Poll: Results at a glance

Have you seen an increase in the number of clients who disclose a personal history of mental illness?
Yes – 134 (71%)
No – 55 (29%)
Total – 189

Are you seeing more clients who present with a personal history of mental illness, gain access to Income Protection cover?
Yes – 67 (35%)
No – 122 (65%)
Total – 189

Which of the following is most likely to make a difference in their application for insurance?
Client’s understanding of the impact of mental illness on an application – 34 (18%)
Early access to the underwriter to discuss the client’s situation – 101 (53%)
Insurer collecting personal statement directly from the client – 36 (19%)
None of the above – 18 (10%)
Total – 189

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