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AMP slashes U.K. asset values
By Geoff Hiscock
SYDNEY, Australia (CNN) -- The slump in global equity markets has forced Australia's biggest life insurer and funds manager AMP Ltd. to slash the value of its assets by Aust. $1.2 billion ($672 million), the company said Monday. More than 70 percent of the writedown relates to AMP's assets in the United Kingdom, where problems in the company's Pearl insurance business rocked investor confidence in the third quarter. Those problems, and questions about AMP's disclosure, saw its shares plummet more than 45 percent from a March high, and led to the departure of former chief executive Paul Batchelor in late September. Batchelor's replacement as chief executive, Andrew Mohl, said in a statement to the Australian Stock Exchange on Monday morning that previous valuations were "no longer appropriate", given the fall in equity markets since June 30. Mohl said that while uncertainty remained about precise valuations, AMP anticipated a writedown of A$1.2 billion for the year ending on December 31. U.K. financial servicesAbout A$850 million of this relates to the assets of its U.K. financial services business, and about A$350 million relates mainly to former AMP International businesses. "AMP believes the carrying value of these assets is unlikely to recover for some time and it will therefore be prudent to reflect a more realistic view in the balance sheet," Mohl said. Last Thursday AMP said it would slash almost 1,200 jobs and sell parts of its banking business under a far-reaching restructuring designed to turn around the company's performance and share price. (Full story) Mohl said on Monday that the asset writedowns are part of the review of the company's activities and costs. AMP shares touched a record low of A$10.73 on September 24, down more than 45 percent from a one-year high of A$19.78 in March. By noon Monday they were down 1.04 percent from Friday's close to A$12.37. The broader market, measured by the S&P/ASX200, is just in the black, up 0.06 percent. AMP operates in 16 markets, with most of its activity in Australia, New Zealand the U.K. About a quarter of its assets under management are in Australia and New Zealand, with about 73 percent in the UK/Europe and about 2 percent in North America and Asia.
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