AMP quits general insurance business

AMP chief executive Paul Batchelor, left, announces the sale to Suncorp Metway. With him is Suncorp MD Steve Jones.

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia (CNN) -- Australia's largest insurance and funds manager, AMP Limited, will sell its general insurance businesses in Australia, New Zealand and the U.K. for about $840 million (A$1.6 billion).

The company said Friday it would sell its Australian operations to Queensland-based Suncorp Metway, and its U.K. operations to Credit Suisse subsidiary Churchill Insurance.

AMP said a process to sell its New Zealand general insurance operations was "under way".

AMP's sell off of its under-performing general insurance business in Australia has been the subject of speculation for months.

Business bought from GIO

It bought the businesses less than two years ago when it took over rival insurer GIO for about $1.6 billion. It will keep the former GIO life insurance, financial planning and funds management operations.

Suncorp Metway, which is paying about $735 million (A$1.4 billion), will become Australia's second-largest general insurer, equal with QBE and behind the national leader, NRMA.

AMP said the impact of the sell off on the company's 2001 financial results would be "largely neutral".

AMP chief executive Paul Batchelor said rapidly changing market conditions in general insurance demanded increased scale and significant levels of investment.

"For these reasons, AMP has decided to exit the manufacturing of general insurance products globally," he said.

He said the company would still offer general insurance products, along with life insurance, banking, investment and superannuation services, but would be a "selective manufacturer of products".

AMP shares closed at A$21.20 on Friday, a drop of 8 cents or 0.38 percent, after hitting a one-year high of A$21.57 earlier in the day.