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RBNZ clarifies ‘unique operating model’ after AMP Life sale

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The Reserve Bank of New Zealand’s (RBNZ) insurance supervision team has published a detailed outline of the complicated new operating model structure it wants put in place to permit AMP’s sale of its Life business.

AMP cleared a final regulatory hurdle with the central bank in June by agreeing to the formation of a trust to hold local capital and assets to give additional protection in the event of insolvency, as well as other benefits.

The $3 billion sale to Bermuda-based Resolution Life was finalised last month.

The RBNZ imposed a new structure, exemptions and conditions for the New Zealand operations which it says will secure equity across all policyholders.

Under the operating model, the AMP Life NZ Trust provides for capital and assets in New Zealand, with AMP Life is the beneficiary. Assets are held in trust by Resolution Life New Zealand, and units are issued back to AMP Life and held as part of a statutory fund.

The trustee is Resolution Life New Zealand while AMP Life has been appointed manager of the fund.

A deed poll provides for the enforceability in Australia by the trustee and the Reserve Bank of AMP Life’s key obligations under the trust deed.

Resolution Life New Zealand is a locally incorporated insurer with two executive directors and three directors independent of both management and the shareholder.

Resolution Life New Zealand provides life insurance under a group scheme to employees of Resolution Life Services NZ, a wholly owned subsidiary of Resolution Life New Zealand, and a reinsurance treaty under which Resolution Life New Zealand will pay AMP Life a benefit in the event that AMP Life is unable to meet its obligations to a New Zealand policyholder.

“The model strengthens the governance and oversight of the interests of New Zealand policyholders and provides for appropriate “Influence of relevant officers,” the central bank says.

Licence conditions require a minimum solvency margin for Resolution Life New Zealand.