The transaction took effect on June 30.
At the same time, S&P assigned an A- insurer financial strength and issuer credit rating to Resolution Life New Zealand Ltd as a core captive insurer and reinsurer to the local subgroup. It withdrew the A- financial enhancement rating on AMP Life at the issuer's request. The outlook on the ratings is negative.
“The ratings on AMP Life continue to be driven by its strong stand-alone profile, supported by its solid competitive position in the Australian and New Zealand life insurance markets and robust capital resources in excess of A$2 billion,” S&P said.
“We expect it to maintain capital and earnings at the upper end of our satisfactory assessment, revised down from our previous assessment as it moves to closed-fund consolidator status under new ownership. Our higher anchor selection of 'A-' reflects a financial profile at the upper end of the satisfactory category, solid regulatory capital metrics, and inherent flexibility ahead of dividend payments. The outlook on AMP Life remains negative, reflecting the potential for downward ratings pressure if worsened economic conditions lead to weakened profitability and capital buffers.
“The ratings on AMP Life drive the credit profile of the Resolution Life Australia subgroup, as the principal operating entity and contributor of over 95% of earnings. We would anticipate that further blocks of life business are consolidated into this structure over time, rather than operating as a pure run-off business.”
AMP Life and the Resolution Life Australia subgroup were insulated from the wider Resolution Life Group, S&P said, because of their separate legal structure and regulation under the Australian Prudential Regulation Authority and Reserve Bank of New Zealand.
“The ratings on RLNZ reflect our assessment of the entity as a core subsidiary of Resolution Life Australia and captive insurer and reinsurer to AMP Life, including the New Zealand branch. The role of RLNZ is largely to enable regulatory oversight by RBNZ and act as trustee to the asset trust.”
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