Italy throws AMP plans for Europe into disarray

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The Independent Online

AMP, the Australian financial services group, yesterday admitted its European expansion plans had been thrown into disarray due to the weakened state of its UK life insurance business, Pearl.

AMP, the Australian financial services group, yesterday admitted its European expansion plans had been thrown into disarray due to the weakened state of its UK life insurance business, Pearl.

Italian regulators have told AMP that it is not allowed to buy the Italian asset management business of Commerzbank because the authorities were unhappy with the capital strength of Pearl. AMP wanted to use Pearl to finance the acquisition of CAMI, the Italian business.

The Australian financial services giant then ran into difficulties in the UK because Pearl has this year breached the minimum funding levels necessary to comply with UK solvency regulations.

AMP last month responded by unveiling a radical restructuring of its UK business and undertook to strengthen Pearl's reserves by the end of the year.

But Italian regulators ruled that AMP had not done enough to bolster the reserves by the cut off point of yesterday. This was 60 days after it said it wanted to buy CAMI – the period under Italian company law in which a business must prove it is in a position to finance its acquisition.

Andrew Mohl, the chief executive of AMP, tried to allay investors' concerns that the block by Italian regulators indicated Pearl's capital position had deteriorated further. He said: "The decision is not indicative of any further deterioration in the minimum regulatory capital position of the Pearl fund."

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