Standard & Poor’s may not envision any downgrades for Australian P/C insurers hit by bushfire losses (See previous article), but this doesn’t apply to the country’s AMP Group.
The rating agency announced that the insurer financial strength and counterparty credit ratings on AMP Life Ltd. (rated ‘AA-‘) and NPI Ltd. (rated ‘A+’), the counterparty ratings on AMP Group Holdings Ltd. (rated ‘A’) and AMP Bank Ltd. (rated ‘A’), and related debt issue ratings “remain on CreditWatch with negative implications.”
The bulletin also added that the ‘A’ rating on AMP’s troubled U.K. life subsidiary, Pearl Assurance PLC, “remains on negative outlook,” following AMP Ltd.’s decision to reduce its current estimate of 2002 U.K. operating margins by about A$100 million [U.S.$59 million], from its previous estimates early December 2002.
“Although the current revision of estimates will depress 2002 profitability, the revision is in the context of what was already anticipated to be a significant loss year for the company,” stated Kate Thomson, associate director, Financial Services Ratings group. “The ratings on AMP were placed on CreditWatch with negative implications on Nov. 17, 2002, following the announcement of significant write-downs and restructuring costs. Today’s announcement by AMP has diminished its flexibility at current rating levels, and any further negative news of a material nature could impact ratings.”
S&P said it “expects to resolve the CreditWatch in the short term, and will assess the extent to which AMP’s medium-term earnings prospects and capitalization remain congruent with existing ratings.”
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