Investors punish AMP for bail-out of Pearl

AMP, the Australian insurer that owns Pearl, NPI and London Life, saw its shares sink to a new record low yesterday as investors in Sydney balked at having to bail out the group's UK businesses.

The stock has fallen 15 per cent since Thursday, losing A$2.2bn (£700m) in value. The descent started last week when AMP revealed in a prospectus to raise A$750m that Pearl was not meeting UK regulatory capital margins. AMP is putting £500m into the Pearl fund to help it meet the Financial Services Authority's solvency margins by the end of the year.

The Australian Securities and Investments Commission (ASIC) has forced the company to provide more detailed information on the capital position in the UK and stopped the circulation of the rights issue prospectus until it was confident AMP could fund the business.

The move prompted AMP to halt trading in its shares until the matter was resolved. Trading resumed yesterday but the shares closed down 3.6 per cent at A$11.40.

The chief executive Paul Batchelor is now under pressure from shareholders to explain the position of the UK business and improve the group's disclosure practices.