The CreditWatch ratings action follows AMP Ltd.'s announcement today 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, and the legal separation of the U.K. and Australian businesses.
"Standard & Poor's will assess the extent to which write-downs will weaken the financial strength of the AMP Ltd. group, and signal lower group earnings going forward," said Kate Thomson, credit analyst, Financial Services Ratings.
"Positive features of the restructuring plan include the influx of fresh capital of up to A$1.5 billion, 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," said Ms. Thomson.
Standard & Poor's 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. Standard & Poor's expects to resolve the CreditWatch shortly as more detailed information becomes available.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's Web site at www.standardandpoors.com under Fixed Income in the left navigation bar, select Credit Ratings Actions.