AXA S.A. hopes to sell a minority stake in its U.S. life insurance and asset management operations to the public by June 30, 2018.
Securities analysts are estimating an initial public offering of the Paris-based company’s U.S. operations could raise more than $3 billion for the parent company.
Thomas Buberl, AXA’s chief executive officer, said AXA is organizing the IPO partly because it wants to use the cash it raises to expand health insurance, property-casualty insurance and elder care operations in countries like Thailand and Indonesia, and partly because AXA believes an IPO could be good for the U.S. operations.
The U.S. IPO would give investors a chance to buy a stake in a business that includes a major life and annuity business; the AXA Advisors financial services distribution operation; and control over the AllianceBernstein Holding LP asset management operation.
Getting the U.S. business its own stock listing could help raise the company’s profile in the United States, Buberl said.
Keeping the U.S. business in the U.S. Generally Accepted Accounting Principles framework and under U.S. insurance accounting rules could also be good for the U.S. insurance product mix, Buberl said.
A few years ago, he said, insurance regulators around the world seemed to be interested in harmonizing their insurance solvency standards.
Today, “there’s a clear debate,” Buberl said.
The gap between U.S. standards and Europe’s Solvency II standards creates an interesting regulatory opportunity, Buberl said.
The Equitable built the Equitable Building in New York in 1915. (Photo: Allison Bell/TA)
Meanwhile, “the macroeconomic environment is a very positive one,” Buberl said.
The new Trump administration is doing what it can to ease the regulatory burden, and it also wants to promote retirement savings, he said.
Executives at several U.S.-based annuity issuers said last week, during conference calls with securities analysts, that the effects of low interest rates and uncertainty about financial services sales and marketing rules are pushing them away from interest-sensitive products, and toward products with results tied mainly to health and mortality risk.
The Equitable Life Insurance Co. of New York, a New York-based life insurer founded in 1875, was one of the biggest, most visible life insurers in the world for decades. A national scandal erupted in 1905, after the company president was falsely accused of spending $200,000 of company money on a lavish costume ball.
Equitable acquired Alliance Capital, a large money manager, in 1985.
AXA became a major player in the U.S. financial services market by acquiring control over Equitable in 1991. Alliance Capital then combined with Sanford C. Bernstein in 2000.
AXA changed the name of Equitable Life to AXA Equitable Life Insurance Co. in 2004, and it rebranded its Alliance Capital unit as Alliance Bernstein in 2006.
AXA ranks 10th on the National Association of Insurance Commissioners’ latest list of the top 25 annuity issuers, with $11 billion in 2016 U.S. annuity premiums and a 4.2% share of the 2016 U.S. annuity market.
AXA ranks 14th on the NAIC’s latest list of the top 25 life insurance issuers, with $3.1 billion in 2016 U.S. life premiums and a 1.9% share of the 2016 U.S. life market.
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