New AMP CEO Makes Changes, May Reduce U.K. Operations

October 16, 2002

Andrew Mohl, who took over as CEO of Australia’s AMP in September, has announced a number of changes, aimed at restoring the company’s image and profitability, following a steep fall in its share price, due mainly to troubles with its Pearl, NPI and London Life operations in the U.K.

A statement by the Financial Services Authority (FSA), the U.K.’s banking and insurance regulator, that the companies’ reserves may have fallen below mandatory solvency levels, requiring additional cash, was the immediate cause of AMP’s troubles.

Mohl indicated earlier this week that he felt AMP had been unfairly singled out by the FSA for breaching the solvency margins. He charged that at least a dozen other U.K. financial services and life companies were also in the same position, but had not been cited. The FSA has denied the accusation, but by some calculations the recent drop in global stock markets has reduced insurance company funds by £130 billion ($201 billion), and inevitably reduced the value of many life policies.

Mohl also announced a complete restructuring of the U.K. business, splitting it into two divisions, “mature” and “contemporary,” and replacing five senior executives, including Tom Fraser, the head of AMP’s U.K. financial services business.

At the same time Mohl also indicated that there would be at least a partial exit from the depressed and highly competitive U.K. market, as more funds would go to the company’s Australian operations, although he ruled out a complete withdrawal from the U.K.

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