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AMP denies sale rumour

By Phil Boeyen, ShareChat Business News Editor

Thursday 16th November 2000

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Insurer AMP is not buying into media speculation that it is considering selling all or part of its general insurance business.

Yesterday the Australian Stock Exchange asked the company to explain why its share had gained around 5% in the past few days, and in particular to address media reports that about the proposed joint venture or sale of the GIO general insurance business.

In a response to the query the company says that it does not comment on media speculation and does not have any announcement to make.

"AMP Limited does not have any knowledge as to the reason for the movement in price you have queried," the company said in a statement.

"However, it is AMP Limited's view that the recent upwards movement in its share price may be the result of a market rotation into more defensive sectors, including the insurance sector, as displayed by the strong recent price performance of listed insurers and purchasing by overseas investors."

The company went on to say that it is unsure why the ASX has queried the price movement since both it and the volumes of AMP Limited shares traded during the past week are not inconsistent with the stock's trading history.

Speculation centres on the claim that the insurer may want to get rid of its underperforming general insurance business to concentrate on its more profitable life insurance and funds management.

Ratings agency Standard & Poor's today lowered the ratings on the insurer's GIO business from A+ to A, in line with the rating on AMP General.

Standard and Poor's says it questions the capacity of AMP's general insurance operations to meet the group's stated return on capital targets on an ongoing basis, despite an improved earnings profile.

"Accordingly, any strategic developments by AMP relating to the general insurance business, or the level of implicit and explicit support provided, may impact the ratings. Should forecast improvements in earnings not be achieved, the ratings could come under further pressure."

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