AMP stock rises in NZ after Pearl assurance

By NZPA

Monday 23rd September 2002

AMP Ltd's shares in New Zealand temporarily jumped almost 3 percent this morning after the Australian insurance giant announced plans to inject Stg500 million ($NZ1.676 billion) into its troubled British unit.

Investors slashed $A1.5 billion ($NZ1.76 billion) off the holdings group's value towards the end of last week after it emerged AMP's Pearl unit in Britain had breached regulatory rules for holding insufficient capital.

AMP's stock was halted Friday as Australia's securities regulator examined the company's disclosure about Pearl. But the stock traded closing at a new low of $13.40 in New Zealand on Friday.

Tony Jackson, an insurance analyst for Macquarie Equities in Australia, said it was possible Pearl could need even more money if the FTSE-100 fell below critical levels.

"The stock...is inextricably linked to the FTSE and the FTSE was up quite tidily on Friday in London, having been down quite savagly on Wednesday and Thursday," he said.

"It's in one of those very difficult positions where's there not a lot they can do, they have to sit there and see how the FTSE unfolds over the next quarter," he said.

"If the FTSE falls down below 3700 then they're going to have to do some further things on the capital management side. But previously they have said the FTSE would have to fall below 3000 level before they had a real capital issue."

The FTSE closed on Friday at 3860.10.

AMP stock peaked up 40 cents at $13.80 in New Zealand this morning before edging down to $13.50 at 11.30am.

Meanwhile in Australia, credit ratings agency Standard & Poor's said AMP Ltd may soon recover its credit standing after having its group holding company rating drop to A-minus with a negative outlook in July.

S&P's head of financial services, Gavin Gunning, told the Sydney Morning Herald that the agency's view on AMP's ratings remained unchanged even after the Pearl announcement.

"The developments of the last week are not really new developments," Mr Gunning said.

"They are really the same fundamental issues which AMP has been grappling with over the last couple of months."

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