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AXA Brand To Disappear In NZ If Australian Deal Goes Ahead

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Nov 9 NZPA - A deal unveiled in Australia today will result in a merger of two big players in the life insurance and funds management industries in New Zealand and the loss of the AXA brand here.

Under the plan proposed by AMP and Paris-based AXA SA, AMP will buy all of the shares in AXA Asia Pacific, then sell Asian assets back to the French parent, leaving AMP with a combined Australia and New Zealand business. AXA Asia Pacific is rejecting the plan, saying it significantly undervalues the company.

New Zealand's Investment Savings and Insurance Association estimates the combined business in New Zealand will have 26.1 percent of the life insurance market, second to ASB-owned Sovereign on 29.7 percent. Asteron will become the number three company.

The combined business will manage 43.7 percent of New Zealand retail managed funds, combining the top player AMP, with 35.4 percent share, with the number five player AXA, with a 6.5 percent market share.

ISI chief executive Vance Arkinstall said the insurance and fund management industries were undergoing a period of consolidation.

"The funds management and life insurance business is very much a volume business. To achieve efficiencies that go with keeping fees low really requires critical mass.

"We wouldn't be surprised to see other mergers and acquisitions occurring, especially as the governments of Australia and New Zealand are pushing toward greater harmonisation," he said.

He said the Government may have an issue with the merger of two default providers to its Kiwisaver scheme. ING ANZ has the largest share of the Kiwisaver fund management market with $641 million under management and will just retain that position if AMP and AXA combine.

AMP Financial Services NZ managing director Jack Regan estimated the combined business would have 21 percent of the life insurance market for open, or contemporary, policies.

He said the two businesses had similar histories. The combined business will have about 700 employees in New Zealand and it was too early to talk about ramifications for the workforce in the proposed merger. There was not expected to be an issue with competition regulator the Commerce Commission.

"It is not the intention to retain the AXA name," he said.

If the deal proceeds people with AXA policies in New Zealand will be managed by AMP. The two life insurance companies will be merged and AXA Life will become AMP Life in New Zealand.

AXA has about 400 aligned financial advisers and the intention is to bring them into the AMP adviser network, which numbers just under 400. AXA also owns Spicers in New Zealand.

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