The AMP Ltd (ASX: AMP) share price has had a great start to this month after the company announced it’s agreed to complete the divestment of its life insurance and mature business.
AMP will receive $524 million in exchange for its 19.3% stake in Resolution Life Australia.
As of Friday’s close, the AMP share price is $1.18, 9.26% higher than it finished the final session of October.
Let’s take a closer look at the latest news to boost the financial services company’s share price.
AMP agrees to finalise life insurance divestment
The AMP share price soared 9.3% on Wednesday after it announced it has entered into an agreement to sell its stake in Resolution Life Australia to Resolution Life Group.
The sale is the final step of AMP’s divestment of AMP Life.
AMP sold AMP Life to Resolution Life Group for $3 billion in July 2020.
Of the $3 billion, $2.5 billion was provided to AMP as cash and $500 million came in the form of a stake in Resolution Life Australia, the holding company that became the owner of AMP Life.
As part of the agreement, AMP and Resolution Life Australia will also settle some post-completion adjustments and claims between the parties.
The adjustments and claims have resulted in AMP paying $141 million to Resolution Life Australia. AMP had already provisioned for some of the costs. Though, it will still record a one-off expense of around $65 million in 2021.
However, the company claims the divestment will strengthen its available capital by approximately $459 million. It will also allow it to be flexible ahead of its planned demerger of AMP Capital’s Private Markets business.
The divestment is expected to be completed in the first half of 2022.
AMP share price snapshot
This month has been good for the AMP share price so far. Sadly, it hasn’t been enough to boost it out of the red.
Right now, the AMP share price is 24% lower than it was at the start of 2021. It has also slipped 30% since this time last year.