Last week, the Reserve Bank approved the sale in a revised arrangement. It followed an 18-month review process.

Once sold, AMP Life will be in “run-off” and no new policies will be written.

“A bespoke trust model has been established that ensures supervisory objectives are better met, future industry dynamics are generally more positive, and there is additional protection in the event of insolvency – one of the key risk considerations that we have been seeking to mitigate,”  Reserve Bank deputy governor and general manager for financial stability Geoff Bascand said.

The trust is required to hold capital and assets in New Zealand that help provide long-term security for policyholder benefits or investments, where relevant.

The trust will be under the management and scrutiny of relevant officers in New Zealand, who have appropriate influence and authority in respect of the New Zealand operations, for the purpose of securing equity across all policyholders.

In addition, the model will see the establishment of a new, locally incorporated insurer Resolution Life New Zealand (RLNZ). The RLNZ board will have a majority of New Zealand resident, independent directors. RLNZ will act as trustee to the trust and will effectively manage the assets held in the trust.

But policyholder Andrew Body said the deal was a concern.

He told media there was very little information available to policyholders about the purchase, which they had no choice to participate in. 

While Resolution Life would have to honour existing AMP Life policies, it had no reason to maintain goodwill because it did not want to attract new customers – and those who had policies could be unlikely to want to risk losing cover by moving to another insurer.

The Reserve Bank was worried about solvency and not anything else, he said, and the Financial Markets Authority had not had a chance to apply a conduct lens.

He told Good Returns he wanted an urgent review of the Insurance (Prudential Supervision) Act. “If we can’t get a better regulatory environment then I think it needs to be stopped. If we can get better regulation then I’m ambivalent.”

He will address the Finance and Expenditure Select Committee on Wednesday.

The Reserve Bank is reviewing the act but this will not resume until next year and is expected to take two or three years.