AMP Ratings Affirmed, Off CreditWatch by S&P.MELBOURNE, Australia--(BUSINESS WIRE)--June 7, 1999-- (Standard & Poor's CreditWire) Standard & Poor's today affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its triple-'A' counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and insurer financial strength ratings on core AMP Ltd. life insurance subsidiaries AMP Life Ltd. and Pearl Assurance PLC (General Insurance Fund and Long-term Fund). Also affirmed are the double-'A'/'A-1'-plus counterparty credit ratings on AMP Bank Ltd. and AMP Group Holdings Ltd., and the double-'A'/'A-1'-plus ratings of guaranteed senior debt programs of several AMP group subsidiaries (see list below). The outlook on the long-term ratings is negative. The ratings affirmation A solemn and formal declaration of the truth of a statement, such as an Affidavit or the actual or prospective testimony of a witness or a party that takes the place of an oath. An affirmation is also used when a person cannot take an oath because of religious convictions. is based on Standard & Poor's comprehensive review of the AMP group following the group's successful bid for the U.K. mutual life insurer National Provident prov·i·dent adj. 1. Providing for future needs or events. 2. Frugal; economical. [Middle English, from Latin pr Institution (NPI NPI National Provider Identifier, see there ), and also on the group's acquisition of a 57% shareholding in Australian insurance and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. group GIO GIO Giovedì (Italian: Thursday) GIO Government Information Office GIO Geographic Information Officer GIO General Insurance Ombudservice GIO Government Information Online GIO Government Insurance Office Australia Holdings Ltd. (GIO). All ratings are removed from CreditWatch with negative implications where they were placed on Dec. 24, 1998, following the announcement of the pending takeover of NPI. The ratings reflect AMP's superior business position in its home markets of Australia and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. and the greatly enhanced position of the U.K. business following recent acquisitions, complemented by the group's very strong financial profile. AMP's financial profile is underpinned by capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. strength that remains superior even after some acquisition-related diminution Taking away; reduction; lessening; incompleteness. The term diminution is used in law to signify that a record submitted by an inferior court to a superior court for review is not complete or not fully certified. , and by a very high degree of financial flexibility. The group's good operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before performance is expected to strengthen as the group derives efficiencies and economies from its diversified diversified (di·verˑ·s and enlarged business base. Major rating factors include: -- NPI holds a significant position in the important U.K. pensions and independent financial advisor market, and will effectively complete AMP's product and distribution array in that market. Upon settlement (expected in September 1999) AMP-through its brands Pearl, London Life, Hendersons, Virgin Direct, and NPI-will be the seventh largest life insurer in the UK market. AMP already holds a commanding position in the Australasian market, with leading inforce and new business markets shares in life insurance and funds management. The GIO business will markedly improve AMP's position in the Australasian nonlife business, which formerly has been a relatively small and poorly performed concern. -- AMP's key strategy to deploy surplus reserves has seen the capitalization of key operating companies operating company A business that engages in transactions with outsiders. AMP Life and Pearl diminish, but still remains extremely strong relative both to balance-sheet risk and peer groups. Capital has been used to fund acquisitions and business growth. While AMP has indicated a desire to continue to increase capital efficiency, Standard & Poor's does not expect any further significant acquisitions within the next 12 months. -- Management of AMP has chosen to retain a conservative approach to its balance-sheet funding structure, which is enabled by its very strong financial flexibility. Debt levels are expected to increase by year-end 1999 following the acquisitions, but gearing (as measured by corporate debt-to-debt plus shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. ) is not expected to exceed 25%, compared with 19% at Dec. 31, 1998. As a result, interest coverage should decline to a satisfactory seven times (x) cover in the near term, and is expected to increase steadily thereafter. The group's balance-sheet profile is further strengthened by the very substantial unallocated equity reserves in the balance sheet, which totaled A$7.3 billion compared with A$8.7 billion in shareholders' equity at the end of 1998. OUTLOOK: Negative. The challenges associated with the assimilation Assimilation The absorption of stock by the public from a new issue. Notes: Underwriters hope to sell all of a new issue to the public. See also: Issuer, Underwriting Assimilation of both GIO and NPI are significant, and failure to achieve satisfactory improvement in operating performance, reflecting the group's enlarged scale, could lead to negative pressure on ratings. The AMP group, however, is likely to reap significant medium-term benefits from integration and alliance arrangements; and strengthened operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , combined with a lesser reliance on investment earnings, should reduce the susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. of AMP's earnings to volatility, Standard & Poor's said. -- CreditWire. -0-
RATINGS AFFIRMED, REMOVED FROM CREDITWATCH
To From
AMP Life Ltd.
Counterparty credit rating
(local currency) AAA/Negative/- AAA/Watch Neg/-
Insurer financial strength rating AAA AAA/Watch Neg
AMP Life Ltd. (New Zealand Branch)
Counterparty credit rating
(local currency) AAA/Negative/- AAA/Watch Neg/-
Insurer financial strength rating AAA AAA/Watch Neg
Pearl Assurance PLC (Long-term Fund)
Counterparty credit rating
(local currency) AAA/Negative/- AAA/Watch Neg/-
Insurer financial strength rating AAA AAA/Watch Neg
Pearl Assurance PLC (General Insurance Fund)
Counterparty credit rating
(local currency) AAA/Negative/- AAA/Watch Neg/-
Insurer financial strength rating AAA AAA/Watch Neg
AMP Bank Ltd.
Counterparty credit ratings AA/Negative/A-1+ AA/Watch Neg/A-1+
AMP Group Holdings Ltd.
Counterparty credit ratings AA/Negative/A-1+ AA/Watch Neg/A-1+
AMP Group Holdings Ltd./AMP
(UK) Finance Services PLC/AMP Group
Finance Services Ltd.
US$4 billion debt securities program
(Gtd.:AMP Group Holdings Ltd. AA/Negative/A-1+ AA/Watch Neg/A-1+
AMP (UK) Finance Services PLC/AMP
Group Finance Services Ltd.
US$2.5 billion Euro commercial paper program
(Gtd.:AMP Group Holdings Ltd.) AA/Negative/A-1+ AA/Watch Neg/A-1+
AMP Group Finance Services Ltd.
A$2 billion domestic commercial
paper/medium-term note program
(Gtd.:AMP Group Holdings Ltd.) AA/Negative/A-1+ AA/Watch Neg/A-1+
AMP (U.K.) PLC
UKu100 million unsecured bonds
due 2001 AA AA/Watch Neg
Sterling commercial paper prog. A-1+ A-1+/Watch Neg
OTHER AMP GROUP RATINGS UNCHANGED
AMP General Insurance Ltd.
Counterparty credit rating
(local currency) A/Stable/-
Insurer financial strength
rating A
AMP General Insurance Ltd.
(New Zealand Branch)
Counterparty credit rating
(local currency) A/Stable/-
Insurer financial strength
rating A
MGICA (1992) Ltd.
Counterparty credit rating
(local currency) AA-/Stable/-
Insurer financial strength rating AA-
MGICA Ltd.
Counterparty credit rating
(local currency) AA-/Stable/-
Insurer financial strength
rating AA-
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