AMP to inject more capital in UK business
AMP to inject more capital in UK business
10/10/2003 16:00
AMP moved a step closer to spinning off its troubled UK business last night after the Financial Services Authority said it had approved the Australian insurer's demerger plans "in principle".

The UK regulator said that AMP had promised to inject an extra £34m into the UK unit, which houses Pearl, NPI, London Life and Henderson Global Investors. The company has already pledged to inject £157m into the units.

The Australian group has also agreed to take on £1bn of the UK's businesses's existing debt and will underwrite the £100m of new capital that the UK company, to be called HHG, hopes to raise during the demerger in December.

The FSA said that £50m of the new capital would benefit Pearl directly, and Pearl had also agreed that it would not make any future transfers of funds from its with-profits fund to shareholders before 2014 at the earliest. Pearl also agreed not to make any dividend payments with the FSA's written consent.

David Strachan, the 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."

Andrew Mohl, AMP's chief executive, last night said: "This is a milestone in the demerger process." AMP decided to spin off its UK operations in May after problems in the UK contributed towards a record losses.

The Australian insurer, which has been at the centre of takeover speculation recently, has already booked a £900m writedown and raised A$1.5bn from its shareholders. AMP's troubles have fuelled talk it is a takeover candidate, with National Australia Bank widely expected to make a bid once the demerger is complete.

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