The AMP Limited (ASX: AMP) share price has closed today at its lowest level since demutualisation in 1998. The embattled wealth manager released a statement to the ASX early this morning outlining how the planned sale of AMP's life insurance arm was "highly unlikely" to proceed and that the company would not be paying a dividend for 1H19.
Although AMP stock closed Friday at $2.14, shares opened this morning at $2.00 and have trended lower since, hitting the $1.77 level just after open and closing the day at $1.82, a fall of more than 15% for the day.
AMP has stated that the sale of its life insurance business AMP Life to London-based Resolution Life is unlikely to proceed due to "challenges in meeting the condition precedent for Reserve Bank of New Zealand (RBNZ) approval".
According to AMP, the RBNZ "would not consider Resolution Life's change of control application unless it agreed to have separate, ringfenced assets held in New Zealand for the benefit of New Zealand policyholders, which is inconsistent with the current branch structure… AMP believes that this reflects RBNZ's position and that addressing these requirements would adversely impact the commercial return of the sale for both AMP and Resolution Life. The failure to meet this condition precedent is exceptionally disappointing as the sale of AMP Life is a foundational element of AMP's strategy"
This development has obviously thrown a large spanner in the works of AMP's recovery and refocusing strategy, of which the sale of AMP Life was a centrepiece. As the outlook for the company's available cash flow and capital is now uncertain (at least for the near-term), the AMP board prudentially "anticipates that an interim dividend will not be paid for 1H 19".
This is the latest blow for weary AMP shareholders, who have watched the company's share price halve in value over the last year and now must watch the dividends disappear (for the time being).
