Policyholders set for average pounds 3,000 windfall

London Life or Australian Mutual Provident policyholders will receive average windfalls worth around pounds 3,000 each in early January if AMP's 1.8m policyholders approve the change to a public company in a vote next month. Clifford German reports.

Australian Mutual Provident the largest insurance company and fund manager in the Antipodes will become a quoted company with a market value in excess of pounds 5bn next year if 75 per cent of the policyholders who cast a vote in next month's ballot vote in favour.

Just over 1 billion shares will be created, with an estimated value of A$10.37 or 470p each if they had been traded last month, the company said yesterday.

The shares will be listed on the Australian and New Zealand stock exchange by the middle of next year, and it is widely expected the company will look for a listing in London as well in order to increase the marketability of the shares.

The 171,000 policyholders in the UK alone will benefit from windfalls worth at least pounds 500m if the demutualisation goes ahead. They will receive information packs and voting forms through the post in the next few days with a deadline for postal votes of 18 November.

The bulk of the policyholders live in Australia where the bonanza of demutualsiation windfalls is not a pehenomenon, but the voting system ignores abstentions and the company is hoping for a strong vote in favour, especially in the UK.

The shares on offer are free, and the benefits due to policyholders including future bonus expectations will not be adversely affected by the change, AMP chairman Ian Burgess told a public meeting in Sydney yesterday.

Every policyholder who had a valid policy on the two qualifying dates, 11 December last year and 10 September this year will be eligible to vote.

Each member will qualify for a minimum of 100 shares per policy, but unlike some UK demutualisations which gave all members an identical allocation AMP will allocate extra shares based on the size and age of the policies.

Joint policyholders will be awarded joint share holdings and some policy- holders could get as much as pounds 8,000 worth of shares.

The company has yet to announce any firm plans to list the shares in London, or to provide a cheap dealing service to allow policyholders to cash their windfalls.

AMP is anxious to retain as many shareholders as possible in order to protect itself from possible bids, but experience with building society conversions suggests anything from 25 per cent to 40 per cent of UK holders wanted cash rather than shares. The proportion could be higher if the shares are not listed in London, and a cheap dealing service will be in great demand.

No new money is being raised but AMP, which tried unsuccessfully to take over Scottish Amicable this year, is expected to use its new financial muscle to push ahead with plans to expand its presence in the UK. A London listing for the shares is a logical step to retaining a substantial number of UK shareholders and to making a big acquisition in the UK.