Amp May Sell Its General Insurance

Illawarra Mercury

Wednesday January 31, 2001

AMP Ltd may try to off-load its general insurance business - which the financial services giant values at $1.65 billion - this year, according to a Merrill Lynch report.

Merrill Lynch reaffirmed its profit forecast for AMP despite anticipated weaker investment earnings, and upgraded its share-price valuation.

AMP said it did not wish to add to comments about its general insurance operations by chief financial officer Marc de Cure.

``What we've said we're looking to do is to do alliances, joint ventures, (and) improve our manufacturing margin," Mr de Cure said in December. ``We haven't got the For Sale sign up on GIO ... but you never say it's not for sale."

In a note to investors yesterday, Merrill Lynch suggested AMP may seek to put a sale of the general insurance book ``back into the limelight in 2001", with NRMA Insurance Group Ltd and Suncorp-Metway Ltd as potential buyers.

AMP is keeping a net asset value of $1.65billion in its books, inclusive of the excess of market value over tangible assets.

Merrill Lynch however values the business at $1.35billion, including all attributable cost savings.

AMP sought to strengthen its own general insurance book when it acquired former NSW government-owned insurer GIO after an acrimonious and ultimately costly bid in 1999.

Merrill Lynch said its headline profit forecasts for AMP remained largely unchanged. AMP was expected to enjoy at least $320million in future one-off benefits, insulating it from an anticipated fall in investment earnings, it said.

The investment bank lifted valuation for AMP to $17.70 a share, from $16.85, to reflect the inclusion of partial value from UK restructuring and/or attribution of its 2.6billion ($7.1billion) UK orphan estate.

Late last year, a UK court ruled French funds management giant Axa could add almost $4billion of surplus so-called ``orphan" assets to its shareholders' funds.

© 2001 Illawarra Mercury

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