Shares dive in Australia's AMP after huge funds outflow, insurance sale
Australia's AMP share price plunged by almost 25 percent Thursday after the financial services giant revealed a huge outflow of funds following a string of scandals, and amid plans to sell its insurance businesses.
The firm was a key target of a royal commission of inquiry earlier this year into abuses in the financial services sector, accused of a raft of misconduct including charging clients for advice they never received.
Its wealth management arm recorded a Aus$1.5 billion (US$1.06 billion) net outflow of funds for the three months to September, as customers ditched the business.
AMP said the figures reflected weakness in both new funds coming in and elevated outflows.
"It was a testing quarter, particularly in Australian wealth management and Australian wealth protection, although AMP Capital and AMP Bank again demonstrated ongoing resilience," acting chief executive Mike Wilkins said in a statement.
The news sent the share price tumbling, amid a broader sell-off in the sharemarket Thursday, by 24.47 percent to close at Aus$2.50 in Sydney.
The sharp fall meant that AMP's share price, which started the year just above Aus$5.20, has halved since January.
AMP said Thursday it was exiting its insurance business by selling its Australian and New Zealand arms to Resolution Life for Aus$3.3 billion and planning to divest its New Zealand wealth management businesses via an IPO.
The moves aim to reshape the company "as a simpler, more focused group" and also "strengthen AMP's balance sheet and provide strategic flexibility", it added.
The sale to Resolution Life, a global wealth protection company, is subject to regulatory approval and expected to complete in 2019.
The royal commission heard earlier this year that AMP's senior executives intervened in the drafting of a supposedly independent report drawn up for the inquiry.
The firm also admitted misleading the national stock market watchdog about the client fee scandal, which affected some 15,700 clients between 2009 and 2016.
The company's CEO and chairman both resigned in the wake of the scandal, and AMP reported in August a 74 percent plunge in half-year profits, due in part to an after-tax provision of Aus$290 million to compensate affected clients.
AMP in July announced a programme to repair its reputation via a complete review of its operating procedures and portfolios.
Wilkins said Thursday's moves were a key part of that review.
"Delivering the right outcome for customers, shareholders and employees has been our focus throughout the portfolio review," he said.