With AMP Ltd.'s announcement of the sale of its insurance operations, nearly all of Australia's largest life insurers will have a foreign parent by 2019.

Facing regulatory scrutiny following misconduct allegations and hit by accelerated cash outflows, AMP agreed to sell its wealth protection and mature businesses in Australia and New Zealand for A$3.3 billion to Bermuda-headquartered Resolution Life Group Holdings LP. The transaction is being carried out for 0.82x the business's embedded value, and is expected to complete in the second half of 2019.

The sale of AMP's insurance operations comes on the heels of Suncorp Group Ltd.'s August announcement of the sale of its Australian life insurance business to Japan's Dai-ichi Life Holdings Inc. Other recent sales of life insurance operations in the country include Zurich Insurance Group AG's and Hong Kong-headquartered AIA Group Ltd.'s respective deals for assets of Australia's two largest banks by assets, Australia & New Zealand Banking Group Ltd. and Commonwealth Bank of Australia.

After completion of pending deals, the life insurance operations of Westpac Banking Corp. will be only one out of the 10 largest life insurers by market share still owned by an Australian company. The 10 largest life insurers in Australia accounted for 95.5% of the market in terms of total risk premium inflows, according to data by research firm Strategic Insight.

Tommy Wu, a senior industry analyst at research company IBISWorld in Melbourne, told S&P Global Market Intelligence in May that although Australian life insurers' close to 10% return on equity generated in 2017 is not on par with returns at domestic banks, it is still better than what many insurers can expect in other parts of the world. The parent companies of Australia's largest life insurers largely hail from low-yield markets like Japan and Switzerland, including Dai-ichi Life and Zurich Insurance Group.

"As many of the new owners are operating in low yield environments, they are likely to accept lower returns than prior owners and, as a consequence, upward premium pressure may reduce somewhat," S&P Global Ratings said in an Oct. 23 report.

The Australian life insurance sector will continue to face difficulties as an ongoing parliamentary inquiry into misconduct in the financial services sector is expected to clarify final recommendations in February 2019, according to the S&P Global Ratings report. Upcoming reforms relating to the pensions business will also affect the outlook for life insurers, as will stiff competition within the segment.

"We expect pricing and terms for particular life insurance products to remain competitive irrespective of the domicile of the parent," Craig Bennett, a Melbourne-based analyst at S&P Global Ratings, said in an emailed response.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.

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