S&P Global Ratings has revised its outlook for AMP to stable from negative after the financial services group reported a strong return to profitability and new reinsurance arrangements.

“The stable outlook reflects our expectation that, over the next two years, AMP will successfully leverage its very strong competitive position to generate solid earnings and maintain its robust capital position,” S&P said.

AMP’s half-year results show a “sound performance” across all business lines, and the life insurance business should experience less volatility due to reinsurance arrangements that will fully take effect from November, the ratings agency says.

Other remediation initiatives, especially on income protection, have contributed to the improved outlook.

AMP’s profit fell 14.9% to $445 million in the first half, but operating earnings increased 4.9% to $509 million. Its life insurance division reported a 10.6% jump in operating earnings to $52 million, and most other divisions reported stronger results. 

S&P has affirmed its AA- ratings on AMP’s core operating entities and the A issuer credit ratings on holding companies AMP Ltd and AMP Group Holdings.