The OIO has approved Resolution Life NOHC Pty Ltd (Australia 24%,Japan 22%, United States of America 15%, United Kingdom 11%, United Arab Emirates 11%, Singapore 8%, Various 9%) to buy up to 100% of the shares in Asteron Life Limited (Australia 68%, United States of America 7%, Various 25%). The price paid was $410 million.
To quote the OIO: “The Applicant is a subsidiary of the Resolution Life Group, a global insurance, reinsurance and risk transfer business. The Applicant is acquiring the shares of Asteron Life Limited, a licensed insurer providing life and disability insurance products to customers in New Zealand. Consent was granted as the Applicant has met the investor test criterion”.
Just another mega takeover in the transnational insurance industry (Asteron is Suncorp’s NZ life insurance company)? Turns out that Resolution Life has a very particular modus operandi. Newsroom has a fascinating article about another recent Resolution takeover in NZ (“Over 200,000 Policies Caught Up In AMP ‘Zombie Deal’”, Nikki Mandow, 23/2/20) https://newsroom.co.nz/2020/02/23/amp-lifes-secret-zombie-deal-200000-policyholders/ Here are some extracts.
“It’s the biggest financial deal in New Zealand in almost two decades. AMP’s proposed A$3 billion sale of its life insurance business here and in Australia to Bermuda-based Resolution Life affects about 200,000 NZ policyholders. Another 600,000 or so dependants would be reliant on a payout if their loved one died or got sick”.
“Yet these policyholders know very few details about the AMP-Resolution deal, due to be completed in the first half of this year (2020), according to the company. Policyholders say they have been given little information about Resolution Life or Clive Cowdery, the British financier behind it – although a search reveals he has in the past been called a ‘ruthless money grabber’ and a ‘zombie fund guru’.
“… It all started back in late 2018, when the Australasian financial services company AMP announced its intention to exit the life insurance business. As its financial performance plummeted in the wake of the misconduct scandals, AMP decided to stop selling new life policies and announced a deal to sell its life insurance business to Bermuda-based Resolution Life. Enter the zombies”.
“‘Zombie’ is the name given to a closed, with-profits (pooled) fund which no longer accepts new business. You know, the ‘living dead’ of funds. When AMP Life stopped accepting new customers it became a zombie. Resolution Life specialises in buying zombie funds. Its boss, UK-based Clive Cowdery has made millions over the past 15 years via three different zombie-buying companies all called (rather confusingly) Resolution Life. No problem with that. In fact, Cowdery was knighted back in 2015 for philanthropically giving some of his millions away”.
“But third parties making money from owning zombie funds comes with risks for existing policyholders in those funds – in theory at least. Any extra dollar Resolution Life gets in premiums from AMP customers, or avoids paying out in future claims to those same customers, could end up in the pockets of Resolution’s shareholders”.
“As outspoken Australian journalist and academic Michael West wrote after the deal was announced: ‘There will be every incentive for Resolution to run the business down and get the loyal existing AMP policyholders off the books as quickly and as cheaply as possible. Who is going to police the conduct of Resolution to make sure it treats AMP policyholders fairly?’ West asked. Who is going to make sure the company pays claims on time, doesn’t use a ‘wait on the phone forever’ overseas call centre strategy designed to frustrate legitimate complaints, and doesn’t hike premiums and cut bonuses?”
Many Of Normal Checks & Balances Don’t Apply
“…The trouble is many of the normal market-based checks and balances don’t apply with a zombie fund. Because Resolution Life is based overseas and the insurance book is closed, the company doesn’t necessarily need to worry about branding or reputational damage if customers get grumpy or vociferous about any perceived poor treatment. And because of the long-term nature of life insurance policies, many customers can’t just up sticks and change providers if they don’t like what’s happening at AMP/Resolution. They are stuck. Captured is the common phrase”.
“… Resolution Life Group Holdings LP is a Bermuda-based company specialising in buying zombie insurance businesses and making money out of them. The head of Resolution Life, Cowdery – now Sir Clive – has 15 years in the business through the three separate Resolution Life companies. The first was based in London, the second in Guernsey, the third in Bermuda”.
“Guernsey is ranked 15th in a 2019 list of the world’s worst corporate tax havens. ‘Worst’ unless you are wanting to avoid paying tax, that is. Bermuda, an isolated, seahorse-shaped island almost 3,000km off the east coast of the US, gets the number two slot. Not that being based in a notorious tax haven seems to have done him any harm. Cowdery recently raised $US3 billion for his latest Resolution vehicle from investors including JPMorgan Chase and Nippon Life Insurance”.
The full June 2024 Decisions are at
https://www.linz.govt.nz/our-work/overseas-investment-regulation/decisions
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