The Australian Prudential Regulation Authority (APRA) has given AMP Limited (AMP) an in principle approval to demerge its operations in Australia and the United Kingdom.

AMP announced the proposed demerger of its operations in the United Kingdom (HHG) from the Australian and New Zealand operations (New AMP) on 1 May 2003. AMP Limited is currently the holding company for its operations in the United Kingdom, Australia and New Zealand. APRA supervises the Australian operations of AMP and the Financial Services Authority (FSA) of the United Kingdom supervises AMPs operations in that jurisdiction.

As part of APRAs review of the demerger, an enforceable undertaking was received from AMP Limited preventing any assumption of debt by the Australian entities and transfers of capital to its entities in the United Kingdom without APRAs prior approval. In accordance with this undertaking, APRA will approve the specific transactions necessary to effect the demerger. In addition, APRA has carried out considerable investigations into New AMPs capital levels and into the potential redemption of the Reset Preferred Securities and the associated AMP Rights Issue, which form an integral part of the demerger.

APRA has now advised AMP that:

1. APRAs consent to the demerger is based on the appropriate approvals being obtained from the FSA and the removal of any guarantees that are currently being provided by AMP Limited to any of its entities in the United Kingdom.

2. APRA will consent to the redemption of the Reset Preferred Securities provided that sufficient cash proceeds are raised from the AMP Rights Offer. Up until the time that AMP redeems the Reset Preferred Securities, APRA reserves the right to instruct AMP to convert them into equity.

3. APRA has consented to the capital structure proposed by AMP in respect of New AMP and therefore it intends to lift the enforceable undertaking received from AMP once the demerger is complete. This consent will be reviewed if there are changes to New AMPs potential gearing levels and/or obligations during implementation. All transactions between the entities in Australia and the United Kingdom will also need to be approved by APRA during the implementation period.

4. For some time after the demerger, New AMPs future dividends will continue to need APRA approval.

In line with its legislative mandate, APRA has examined AMPs proposals having regard to the interests of New AMPs remaining Australian policyholders and depositors. It has also worked closely with the FSA and AMP in reviewing the various options available to AMP as a result of the planned demerger.

APRA will continue to carry out active and detailed monitoring of AMPs position during the forthcoming implementation period in the interests of policyholders and depositors. Details relating to the implementation of the demerger will be released shortly to AMP shareholders in the form of an Explanatory Memorandum. APRA will take into account any material changes and make a final decision before the completion of the demerger.

In considering the demerger, the primary goal of APRA has been to ensure that the interests of depositors and policyholders in Australia have been maintained. At present, the Australian operations of AMP are meeting all of their prudential and capital requirements under the Banking Act 1959 (for AMP Bank and AMP Limited), the Life Insurance Act 1995 (for AMP Life) and the Insurance Act 1973 (for Gordian/TGI  mainly the former reinsurance business of GIO - and AMP Limited as a non-operating holding company).

APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It currently regulates $1.6 trillion in assets for 20 million Australians.

For further information:	Media and industry inquiries only:
APRA Call Centre	Susan Morey
1300 131 060	APRA - Public Affairs
	02 9210 3384
	0438 124 524