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The Sydney Morning Herald

AMP braces for UK shake-up and more sackings

Author: Anthony Hughes
Date: 04/12/2002
Words: 379
          Publication: Sydney Morning Herald
Section: Business
Page: 23
AMP chief executive Andrew Mohl looks set to completely overhaul the company's UK Financial Services strategy as he gets his chance today to convince investors that the group's prospects will improve.

British reports this week have already suggested Mr Mohl will disband Pearl's direct sales force, probably adding 1000 job cuts to the 1500 already slated across the UK operations by his predecessor Paul Batchelor.

Such a move would see AMP follow the trend of several large UK insurers who are relying on third party or independent distribution to sell their financial products, a channel that is considered more cost-effective. But this would represent a big departure from the strategy outlined last year by the now-exited UK Financial Services boss Tom Fraser who, along with Mr Batchelor, saw merit in running both forms of distribution alongside each other.

AMP shares closed steady at $13.30 ahead of this morning's much-anticipated strategy briefing, which is expected to focus on the company's ongoing strategy in the UK, including which distribution channels, products and market segments will be pursued.

AMP is also expected to update the market on its regulatory solvency position in the UK, which should have improved following measures to free up capital and an improvement in the depressed British stockmarket.

The benchmark FTSE100 is down 20 per cent in the year to date.

In a bad sign for the market though, rival Prudential reportedly has cut bonuses to policyholders for the third time as it protects its funds.

Still, Mr Mohl appears to have won the market's tentative support in his short reign.

``Following the disappointments of incumbent leaders of the AMP through the last half a dozen years, we feel a lot more comfortable with the leadership direction of the AMP under Andrew Mohl," commented Constellation Capital Management's managing director, Doug Little.

The troubled financial services company could also provide more detail on last month's planned $1.2 billion writedown, which largely related to goodwill on its National Provident Institution business and several emerging operations, including AMP Bank and Virgin Money, and the prospects of further writedowns.

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