* S&P Global lowers AMP Life rating to A+, group outlook negative
* AMP says downgrades were not material, well capitalised
* AMP shares 1.7 percent lower in a largely stable market (Adds AMP statement, shares)
By Paulina Duran
SYDNEY, Aug 30 (Reuters) - The credit worthiness of Australia’s AMP Life, a unit of AMP Ltd, was downgraded one notch to ‘A+’ due to its weakened competitive position following damaging revelations at a sector-wide misconduct inquiry, S&P Global said on Thursday.
S&P also said the ‘A’ rating of the holding company now had a negative outlook due to the risks of further remediation payments, potential penalties, fines and legal action.
AMP has been hit hard by the quasi-judicial inquiry into Australia’s finance sector, losing its CEO, half its board and nearly A$4 billion ($2.9 billion) in market value.
Among other things, the inquiry revealed AMP had charged customers fees for no service and then worked at board level to deceive a regulator about the practice.
“The lowering of the rating on AMP Life reflects a deterioration in the creditworthiness of the entire AMP group as a result of fallout from the Royal Commission revelations,” the agency said in a statement.
The company, which is due to re-appear at the year-long public inquiry next month, is also defending a record number of class actions for allegedly failing to disclose its governance problems.
In a statement to the exchange, AMP said the downgrades were not material to its operations.
“AMP Limited remains well capitalised and at 30 June 2018 held a surplus over minimum regulatory requirements of A$1.8 billion,” the company said.
AMP shares fell 1.76 percent after S&P’s announcement on Thursday, while the broader market was unchanged.
“We believe the AMP group’s competitiveness has weakened as a result of the damage to its brand and reputation,” S&P said.
Remediation costs had undermined earnings and asset management flows were also being affected, it added.
“The lower rating on AMP Life also factors in risk controls within the insurer’s enterprise risk management that are weaker than our expectations,” it said.
AMP said last week it had hired a veteran Credit Suisse Group banker as its new CEO, tasking him with using his experience of handling regulatory crises to mend a reputation battered by misconduct.
AMP offered Francesco De Ferrari A$17.7 million on top of its multi-million annual salary to join the 169-year-old firm.
“While the group has announced material investments to enhance its risk controls and compliance systems, any improvement would take some time,” S&P said.
$1 = 1.3691 Australian dollars Reporting by Paulina Duran; Editing by Stephen Coates and Sunil Nair