Amp Integration Plans In Doubt

Sydney Morning Herald

Saturday December 9, 2000

Anthony Hughes

AMP has received a ``bundle" of objections to a plan to formally transfer GIO life insurance policyholders into its statutory funds, creating another headache for AMP's plans to integrate the troublesome acquisition.

After a preliminary hearing yesterday, Justice Emmett of the Federal Court will on Monday hear an application by Minter Ellison on behalf of AMP to approve a plan to amalgamate and transfer some 300,000 GIO Life policyholders to AMP's life funds.

But at brief proceedings held over yesterday both AMP and Justice Emmett said an unspecified number of some policyholders had lodged formal objections to the proposal.

Some of the objections have been lodged via correspondence while some policyholders appeared in the court in person.

Maurice Blackburn Cashman, which is representing 33,000 former GIO shareholders, also signalled it would raise concerns about the proposal.

The legal firm is believed to be concerned that the transfer could affect the class action's ability to claim damages should it be successful.

Maurice Blackburn Cashman must still demonstrate to the court it has a right to object but plans to call on AMP actuaries to provide details about valuation the GIO Life business.

GIO was primarily a general insurer but also had a life business, which under the plan would be transferred to AMP Life.

AMP believes the transfer will reduce computer systems costs, but has claimed no policyholder will be worse off under the arrangement.

Legal counsel for several other parties, including former GIO directors, were also believed to be onlookers yesterday and may also oppose the transfer.

The case marks another in the separate class action lawsuit against GIO Australia, its former director and its advisers. AMP is not a respondent in the class action but now wholly owns GIO.

The class action claims GIO shareholders were poorly advised by GIO to reject a takeover offer by AMP, which saw AMP take 57 per cent control of GIO.

Once the offer lapsed, GIO revealed large insurance losses that saw the value of the company plummet and AMP later mopped the balance at much lower figure than the original.

The cost to shareholders who failed to accept the AMP bid has been calculated at around $600 million.

AMP also said it was pursuing alliances for its UK-based Henderson Global Investors operation as it seeks to grow funds under management in the relatively untapped European market.

AMP yesterday closed 7c weaker at $19.

Also yesterday, Henderson managing director Mr Roger Yates said AMP might be able to build a $100 billion business in Europe within 10 years via its strategy of capitalising on shift from savings to investment products such as mutual funds.

The legal firm is believed to be concerned that the transfer could affect the class action's ability to claim damages should it be successful.

© 2000 Sydney Morning Herald

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