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AMP closes Pearl and London Life to WP bond sales

AMP is closing its Pearl and London Life subsidiaries to with-profits bond and annuities business as part of a review of the capital management of its UK business.

AMP group chief financial officer Marc de Cure says heavy declines in the markets since June had accelerated a number of capital management initiatives.

The company admits it has been selling equities from the Pearl fund since the start of the year, leading to a current equity backing of 35 per cent.

Pearl will continue to write with-profits pensions but not the more capital-intensive bond business.

Pearl policies do not allow for a market value reduction, which the company says made business expensive to write.

The range will be plugged by ringfenced with-profits from NPI. London Life will continue writing conventional annuities.

The news follows research commissioned by Money Marketing from KPMG which showed that if future profits are excluded, Pearl had the lowest free-asset ratio in the industry at -0.9 per cent at the end of 2001.

In June, the company ann-ounced 1,500 redundancies phased over the next two years.

AMP UK director IFA sales David Tildesley says: “We will carry on with with-profits bonds written through NPI which are more Sandler-friendly.

“Writing through Pearl was more capital-intensive because of it having no MVR. Like the rest of the industry, we have had to look carefully at capital management.”

Syndaxi principal Robert Reid says: “This is the first step towards goodnight for Pearl – I do not think it will survive this.

“If the industry does not sort itself out quickly, then it will not have the chance to do so at its leisure. Other companies will be considering similar moves.”

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