AMP’s proposal to sell its life business to Resolution Life is the largest transaction in financial services since ANZ bought the National Bank.

AMP has the second largest in-force life insurance book in New Zealand with around 200,000 policyholders.

To date these people have had next to no information about the deal. No doubt when communications start they will have a soothing theme to them.

However there are many unanswered questions, including whether the Reserve Bank will issue Resolution Life with a licence and whether it will approve the deal. More importantly it will be interesting to see what conditions the regulator puts on the deal if it is approved.

One thing is for sure. The Reserve Bank will not make it easy for this deal to get across the line. The last time something like this was tried, the Foundation Life deal, it failed. The bank is also likely to be very cautious after its poor handling of the CBL collapse.

In this age of conduct and culture and putting clients’ interests first it’s going to be a massive challenge to convince the regulator this is a good deal.

One of the biggest risks is that the “good lives” will get moved to other life insurance companies. While some people will call this churn, there is arguably a strong case to say it is in the clients’ best interests.

A key here is what approach the former AMP advisers take now they have been unshackled from the mothership.

If the so-called “good lives” are moved, then those remaining with AMP Life are likely to see their premiums increased.

If the deal does proceed the new company may try to buy out some existing policyholders. Overseas examples have shown the difficulty of working out things like revisionary bonuses. In all likelihood the winner in any deal here will be the life company.

New owners may try and reduce trail commissions to advisers to get costs down.

Perhaps the biggest question is how they will manage and pay claims.

Then there is the question about what Resolution’s future intentions are. A number of books it has purchased previously have ended up being resold again.

One of the ironies of this whole story was that the policyholders were the owners of the company until demutualisation in 1997.

Now shareholders own AMP the policyholders interests are largely secondary to shareholders. The Royal Commission in Australia made this point strongly.

Policyholders can rightly feel a bit miffed too. Until this deal started they were part of a functioning life insurance company with a long and proud history. Now they find they are in a “legacy” or even “zombie” company.

You could well understand why, because they value life insurance, they may well want to be with a company which cares about them.