S&P Places AMP Ratings on CreditWatch Negative

May 1, 2003

Standard & Poor’s Ratings Services announced that it has placed the ‘AA-‘ insurer financial strength and counterparty credit ratings on AMP Life Ltd., the Australian operating subsidiary of AMP Ltd. on CreditWatch Negative. It also placed the ‘A-‘ counterparty credit ratings, and related debt ratings, on AMP Group Holdings Ltd. and AMP Bank Ltd. on CreditWatch Negative.

“The CreditWatch ratings action follows AMP Ltd.’s announcement today [April 30] that the group will sell its equity investments held in its U.K. operations, and that the group expects a substantial write-down in asset values, a capital raising of A$1.5 billion [$928 million], and the legal separation of the U.K. and Australian businesses,” said S&P.

Kate Thomson, S&P credit analyst, Financial Services Ratings, stated that the ratings agency would “assess the extent to which write-downs will weaken the financial strength of the AMP Ltd. group, and signal lower group earnings going forward.” She noted that “Positive features of the restructuring plan include the influx of fresh capital of up to A$1.5 billion [$928 million], a reduction in debt improving leverage and interest cover, and reduced equity exposures in the U.K. However, these positive factors are balanced by a reduction in capital resources under the substantial write-downs announced, and some diminution in U.K. operations in a difficult market environment.”

S&P said it “believes that should the ratings on AMP Life Ltd., AMP Group Holdings Ltd. and AMP Bank Ltd. be lowered, they would unlikely be lowered below ‘A+’ for AMP Life and ‘BBB+’ for AMP Group Holdings Ltd. and AMP Bank Ltd. The ratings for Pearl Assurance PLC (rated ‘BBB+’), NPI Ltd. (rated ‘A’), and National Provident Life Ltd. (rated ‘BBB+’) will likely be in the ‘BBB’ range.” The announcement indicated that it expected to “resolve the CreditWatch shortly as more detailed information becomes available.”

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