AMP 0.00% $1.98 amp limited

A view from McQ..

  1. Yak
    13,672 Posts.
    Stock analysis AMP

    AMP yesterday provided long overdue clarification of its UK regulatory capital position by
    advising that the FTSE (the benchmark index for the UK) would have to fall to around 3,000
    before the group would be forced to raise additional equity capital.
    The statement also sought to soothe concerns about the source of any regulatory capital
    initiatives, stipulating that AMP’s “contingency plan does not require the transfer of
    shareholder capital from Australia”.
    In this context, it is important to recognise that none of AMP’s proposed regulatory capital
    initiatives will result in an injection of additional capital into its UK subsidiary, Pearl.
    The initiatives instead focus on product initiatives (these include a review of bonus rates,
    surrender values and asset allocation,) and by improving regulatory capital efficiency (by the
    inclusion of £1.3bn of assets previously deemed inadmissible for solvency purposes).
    We suggested in our article yesterday that one obvious circuit breaker for spiraling UK capital
    concerns was a clear and unambiguous statement as to what level of the FTSE would
    necessitate an equity raising.
    AMP’s statement delivered in this regard and the share price responded accordingly
    notwithstanding further UK FTSE weakness.
    Furthermore, clarification of the group’s UK regulatory capital position and resulting share
    price stability will greatly assist the completion of the $750m hybrid issue, which in itself will
    build further confidence.
    While the announcement will alleviate near term regulatory capital concerns, AMP’s share
    price will nevertheless remain linked to the performance of the UK equity markets.
    AMP must now clarify the impact of equity market movements after 30 June on the group’s
    value. Assuming the above is in line with our expectations analysis (and appreciating the
    perils of investing in a yet to be finalised and therefore unknown management team), we are
    warming to AMP at current levels.
    ASX Code:
    AMP
    Share Price:
    $11.41
    Short term:
    Hold
    Long term:
    Buy
    Risk factor:
    High
 
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