FSA/PN/107/2003
09/10/2003

The UK financial services regulator, the Financial Services Authority (FSA), has given its in principle approval to the AMP group demerger. The FSAs decision is based on the appropriate approvals also being obtained from the Australian Prudential Regulation Authority (APRA). In giving its approval, the FSA has secured a number of binding commitments from AMP in Australia and HHG PLC which will provide real benefits for UK policyholders.

In particular:

  • AMP has already committed 157mn of capital and will commit an additional 34mn to support the UK businesses. AMP will also take on 1bn of HHG PLC's existing internal and external debt. The UK life companies and other regulated firms will benefit indirectly from these measures.

  • HHG PLC will be raising from the market around 100mn, of which 50mn will benefit Pearl Assurance Plc (Pearl) directly. This capital raising is ultimately underpinned by AMP.

  • Pearl has given a commitment that future transfers of any surplus from the Pearl with profits fund to the shareholders may not be made, or may be deferred at least until 2014. Principles have been agreed between Pearl and the FSA to ensure that such shareholder surpluses will be available if necessary to support policyholders.

  • Pearl has also given a commitment not to make any transfers from its long term business fund or to make any dividend payments without the prior written consent of the FSA.

The FSA will take into account any material new information that comes to light before making a final decision prior to the completion of the demerger. AMP and HHG PLC have committed to provide the FSA with such information that comes to light between now and the completion of the demerger proposals. In the meantime, the FSA will continue to monitor the position closely.

David Strachan, Director of Insurance Firms at the FSA said:

"We have made it clear from the start that our prime interest in the demerger was to protect UK policyholders. We believe we have secured a positive outcome, including commitments from AMP that will provide real benefits for policyholders."

Notes for editors

  1. HHG PLC will be the demerged entity in the northern hemisphere. It will include the current AMP Pearl, AMP NPI and AMP London Life which are all closed funds and HHG PLC which is active.

  2. AMP announced in May that it was proposing to separate its current business into two distinct groups, one operating in Australia and the southern hemisphere and the other operating in the UK and the northern hemisphere. This demerger requires regulatory approvals in the UK and Australia. The two active companies will be AMP Limited in the southern hemisphere and HHG PLC in the northern hemisphere.

  3. The capital in HHG PLC will be approximately 49% of the combined capital of the demerged group.

  4. Pearls current interest in Henderson Global Investors, Towry Law and Virgin is part loan and part equity. This interest is owned by the Pearl shareholder fund. The demerger sees considerable injection of cash and other assets into those interests. Pearls shareholder fund will retain over 40% of the new equity and will benefit from future dividend income and any increase in the valuation of Henderson Global Investors.

  5. Policyholders can contact the AMP helpline on the following helplines with questions about their policy.

    AMP Pearl: 0870 8970028
    AMP NPI: 01892 596050
    AMP London Life: 0117 984 7264

  6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing an appropriate degree of protection for consumers and fighting financial crime.

  7. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

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