AMP, the Australian insurer, yesterday suffered a set back in its plans to offload its ailing UK businesses, revealing that it has had to delay sending documents to the Australian regulators while it struggles with new solvency rules in the UK.
Andrew Mohl, chief executive of AMP, told shareholders that its much-awaited demerger documents would not go to the Australian Securities and Investments Commission (ASIC) until early October. They had been due to go this Friday.
The delay has come from the introduction of new capital requirements for UK life insurers designed to give a more realistic picture of their solvency and end the forced selling of equity holdings when markets fall. AMP has employed the consultant actuaries Tillinghast to make sure its life businesses, which are very thin on capital, can meet the new solvency rules and to assess the rule changes on the businesses' values.
The FSA has to give its approval to the demerger plans and is scrutinising every detail to ensure that "UK policyholder interests are safeguarded". It is keeping a close eye on the solvency of AMP's life businesses and wants to ensure that the demerged company will have sufficient capital. It could demand further injections of cash before agreeing to the demerger. The FSA said it welcomed the efforts AMP was making to take on board its solvency regime changes in its demerger documents.
AMP decided in May to hive off its UK businesses - Pearl Assurance, London Life, NPI and Henderson Global Investors - after £900m of write-downs contributed to a record loss at the group. AMP was forced to admit last week that it may need to raise more capital before the UK businesses are split. AMP has already had to raise A$1.5bn (£625m) from shareholders.
"While our timetable is tight, the demerger remains achievable by the end of 2003," Mr Mohl said yesterday.
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