S&P Comments on AMP De-merger; Sees No Rating Change

October 10, 2003

Standard & Poor’s Ratings Services noted that regulatory authorities have agreed in principle to AMP’s proposed capital structure for its Australian and U.K.-based entities to be created under a de-merger plan. It also indicated that it has no present intentions of changing the company’s ratings.

“Regulatory approval of the demerger is an important milestone in the demerger process, and the likely issue of common equity to repay the reset preferred securities (RPS) should result in a stronger capital position for the Australian entities than initially contemplated by AMP in May 2003,” said S&P credit analyst, Kate Thomson, Financial Services Ratings.

The rating agency noted, however, that AMP would continue to face challenges not only in successfully completing the planned demerger, but also due to the volatility and competition in the global life insurance and funds management markets. “Although the repayment of the RPS will fundamentally reduce the level of leverage and improve quality of capital, credit will not be ascribed in advance of the execution risks being resolved,” Thomson added.

“The outlook on the long-term ratings for AMP Life Ltd. (A+/Negative/-), AMP Group Holdings Ltd. (BBB+/Negative/A-2), AMP Bank Ltd. (BBB+/Negative/A-2), and the U.K. life entities remains negative, reflecting the challenging period AMP faces,” S&P’s announcement continued. “Risks inherent in completing the demerger process, the difficult operating environment, and the potential impact on AMP’s business and financial profile are key rating factors.”

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