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 Tuesday, 28 January, 2003, 06:52 GMT
Australian insurer tumbles on FTSE fall
AMP logo
Investors will be hoping AMP has a future
Shares in AMP, Australia's biggest life insurer, have fallen by over 4% to record lows after Monday's drop by the FTSE index cause concerns about its ability to meet claims.

AMP has a high exposure to the UK market, with A$7bn (2.53bn; $4bn) invested through its Pearl Assurance, NPI, London Life and Henderson Global Investors units.

On Monday the FTSE fell for an unprecedented eleventh day to close 3.4% lower at 3,480.8, to its lowest level since October 1995, which brings its losses for January to 11.7%.

AMP stock closed 43 cents, or 4.4% lower, at A$9.37 on the Australian Stock Exchange after falling to A$9.10, the lowest level since it floated in June 1998.

Poor results

The stock market slump could force insurers around the world to sell-off parts of their share portfolios to shore up their capital reserves to meet claims on policies.

AMP has warned that its earnings in the UK would be a third lower than forecasts and that it expects a full-year loss of about A$900m when it reports results on 26 February.

The insurer's shares have fallen by about a quarter since new chief executive Andrew Mohl took over last September.

At the time the insurer injected 500m into its Pearl unit and said it would remain solvent even if the FTSE fell to 3,000.

In November AMP announced 4,700 job cuts, a third of its global workforce, and that it would write down A$1.2bn off its assets.

See also:

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