Axa to Spin Off US Life, Asset Management Operations as First-Quarter Revenue Shows Slight Rise
May 11, 2017 by David Pilla
PARIS – Axa SA said it plans to float its U.S. life savings and asset management operations in an initial public offering as the group reported a slight rise in worldwide total revenue.
The Paris-based multiline insurer said the proposed IPO will include a minority interest in its U.S. life and savings operations and its interest in AllianceBernstein, its U.S. asset management company.
According to Axa the IPO is expected to happen in the first half of 2018, subject to market conditions. Axa didn’t give an expected price for the offering, but noted “to enhance the capitalization of the U.S. operations ahead of the IPO, about US$1 billion of outstanding debt owed by Axa U.S. to Axa Group will be converted into equity.”
The group added proceeds of the transaction would be reinvested in the group’s “priority lines of business,” including health, capital-light savings, protection and property/casualty commercial lines. Axa said these investments would be in line with its “Ambition 2020” strategy and some of them “may be returned to shareholders depending on acquisition opportunities and market conditions.”
Axa spokesperson Robin Weinberg said in an email there is no targeted price or valuation for the IPO at this point. “That will depend on market conditions and other factors at the time of the IPO,” said Weinberg.
Weinberg added Axa’s stake after the IPO will depend on how much the group sells, “which in turn will be determined based on market conditions at the time of the IPO.”
As of the end of 2016, Axa Equitable had 7,422 employees and AllianceBernstein had 3,438, said Weinberg, who added “there are no changes planned at this time” regarding staff at the affected companies.
Thomas Buberl, chief executive officer of Axa SA, said in a recent conference call in 2016 Axa increased its life and savings new business annual premium equivalent while shifting its mix of business toward protection, health and the capital-light products (Best’s News Service, Feb. 23, 2017).
Axa said the expected New York Stock Exchange listing would be for a company named Axa America Holdings Inc., which is expected to consist of Axa’s U.S. life and savings businesses under the current Axa Equitable Life brand and Axa’s interest in asset manager AllianceBernstein LP and AllianceBernstein Holding LP. Axa America Corporate Solutions Inc. is not expected to be part of the IPO, the group said.
The U.S. listing “would bring significant additional financial flexibility for Axa, benefiting from supportive macroeconomic conditions in the U.S., and create an option to further reduce Axa’s exposure to financial risks while further strengthening its economic capital position,” the group said.
“The decision to prepare for a listing of our U.S. operations is a key step towards our 2020 objectives,” said Buberl in a statement. “We believe the current environment is supportive of this strategic initiative, which would create significant additional financial flexibility to accelerate the transformation of the Axa group.”
“At the same time, we are convinced our U.S. operations would be better positioned as a listed company in the U.S., operating on a level playing field under local regulatory rules, and would benefit from greater strategic flexibility to deliver sustainable and profitable growth,” Buberl added.
Axa said in the United States its life insurance and annuity business has more than 2.5 million customers, and owns a 64% interest in AllianceBernstein, a global asset manager with $498 billion in assets under management as of March 31, 2017.
In a separate statement on first-quarter revenue, Axa said worldwide total economic revenue rose 0.4% to €32.4 billion.
Life and savings revenue fell 3%, as growth in unit-linked and protection & health was more than offset mainly by lower single premiums in general account savings. Property/casualty revenue rose 2%, mainly on growth in commercial lines, in line with Axa’s strategy, the group said.
Property/casualty commercial lines revenue rose 3% to €7.1 billion and health revenue rose 7% to €3.4 billion.
“In life and savings, new business value grew strongly from increased sales and a more profitable business mix,” Buberl said of the first-quarter revenue figures. “Health operations were particularly dynamic with top-line growth of 7%.”
He added for the property/casualty segment, “growth momentum picked up in commercial lines as revenue grew by 3%, in line with our strategy. In asset management, net flows were positive for the quarter with a strong increase in revenue.”
Axa Equitable Life Insurance Co. has a current Best’s Financial Strength Rating of A+ (Superior). Axa Equitable Life and Annuity Co. is rated A (Excellent) by A.M. Best.
(By David Pilla, news editor, BestWeek: David.Pilla@ambest.com)
