Moody's downgraded AMP Life Ltd.'s insurance financial strength rating to Aa3 from Aa2.
The downgrade reflects more challenging operating environment for life insurers and wealth managers in Australia, Moody's said.
The ratings downgrade came after a third class-action lawsuit was filed against AMP Ltd. over alleged incidents of misconduct. Moody's said the potential weakening of AMP group's business profile due to allegations raised at Australia's Royal Commission into misconduct in the banking, superannuation and financial services industry could bring AMP Life's competitive position under increasing pressure. This may result in lower net cash inflows into the group's wealth management products and platforms, providing further pressure on earnings and profitability, the rating agency added.
Moody's said that despite the potential weakening of the group's business profile, AMP Life still maintains a "leading" position in the life insurance and wealth management markets of Australia and New Zealand.
At the same time, Moody's affirmed debt ratings of AMP Group Holdings Ltd., AMP Group Finance Services Ltd. and AMP Bank Ltd. following the publication of a new cross sector methodology for assigning instrument ratings for insurers.
The outlook on all ratings is negative.
