Outlook On AMP Ltd. And Its Subsidiaries Revised To Stable From Ratings Affirmed

Stocks and Financial Services Press Releases Monday August 21, 2017 15:40
MELBOURNE--21 Aug--S&P Global Ratings

MELBOURNE (S&P Global Ratings) Aug. 21, 2017--S&P Global Ratings today said it had revised to stable from negative its outlook on AMP Ltd., the group's core operating entities, and the group's other subsidiaries (see ratings list). At the same time, we affirmed our 'AA-' ratings on AMP's core operating entities, 'A' issuer credit ratings on holding companies AMP Ltd. and AMP Group Holdings Ltd. (AGHL), and 'A' rating on AMP Bank Ltd. AGHL provides a guarantee for all of the bank's liabilities, except for the bank's A$150 million subordinated debt.

We also withdrew our ratings on The National Mutual Life Association of Australasia Ltd. and The National Mutual Life Assoc. of Australasia Ltd. (NZ) at the request of the company.

The revision of the outlook to stable from negative reflects our view that the resilience of AMP's capital and earnings has improved following the recent rebound in profitability and the likely benefit stemming from announced reinsurance arrangements for its life insurance business.

AMP's half year 2017 results were in line with our base case expectations and showed a strong return to profitability, with sound performance across all business lines.

We are anticipating less volatile performance in AMP's life insurance business following comprehensive reinsurance arrangements recently announced, which will fully take effect on Nov. 1, 2017, and the benefits of other remediation initiatives, especially related to the income protection line of business. We believe capital will remain robust over the coming years given the strong cash generation ability of the group.

The stable outlook reflects our expectation that over the next two years AMP will successfully leverage its very strong competitive position to generate solid earnings and maintain its robust capital position.
We could lower the ratings if, contrary to our base-case expectations, we see:
A deterioration in operating performance such that the group is underperforming peers; and A material fall in capital adequacy.
While unlikely, we could raise the ratings if: AMP group demonstrates an operating performance that is clearly and consistently superior to peers.

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