S&P Revises AMP Outlook to ‘Stable’

April 21, 2004

Standard & Poor’s Ratings Services announced that it has revised the rating outlook on Australian insurer AMP Ltd.’s key operating subsidiaries and holding company to stable from negative.

S&P also said it has affirmed the “A+” insurer financial strength and counterparty credit ratings on AMP Life Ltd. and counterparty credit ratings on AMP Group Holdings Ltd. and AMP Bank Ltd. (both rated ‘BBB+/A-2’). “AMP Life is a core operating entity of AMP Ltd., a listed Australian life and funds management group with operations in Australia and New Zealand,” the bulletin noted.

“The outlook change to stable reflects the removal of uncertainties surrounding AMP’s financial structure and stabilization of AMP’s business profile following the demerger of its U.K. operations in 2003 and early indications of solid performance since the demerger,” said S&P.

“AMP’s competitive position in Australia and New Zealand markets held up relatively well during a tumultuous 2003 year and, since completion of the demerger, has stabilized,” stated S&P credit analyst-Financial Services Ratings Kate Thomson. “The outlook change is based on the now demonstrated resilience of AMP’s franchise throughout the very difficult 2003 year, better-than-expected underlying earnings in 2003, and promising earnings outlook.

“In addition,” Thomson added, “AMP’s balance sheet has stabilized, hybrid and debt levels have reduced, group and key operating entity capitalization remains strong, and internal cash flows that have contributed to debt reduction (along with capital releases largely from AMP Life) appear sustainable.”

S&P’s report also noted that “following the success of the recent income securities buyback, overall gearing will reduce to about 35 percent of total adjusted capital from about 45 percent, further solidifying AMP Life within the ‘A+’ rating. Standard & Poor’s expects AMP to consolidate further on early signs of improved business volumes and persistency throughout 2004, aiding the delivery of what should be an acceptable 2004 operating result.”

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