Securities analysts and credit rating analysts have been looking at plans by AXA S.A. to sell a stake in its U.S. life insurance and asset-management operations through an initial public stock offering with wary, Great Recession-scarred eyes.
Executives at many financial services companies now seem to be so alarmed by low interest rates, populism and U.S. regulatory oscillation that they like the idea of selling dental insurance in Jakarta or Dubai more than selling retirement savings products in Omaha.
It’s all enough to wreck even the hardiest financial professional’s efforts to be a nondisruptable advisor. Some life agents and financial advisors may read the headlines about the proposed AXA U.S. business initial public offering may feel like lying down and curling up with a nondisruptable stuffed animal.
Warren Buffett, on the other hand, has urged people who want to be like him to be greedy when others are fearful.
What is the case for being greedy about AXA’s proposed U.S. IPO?
Here are some ideas about how the IPO might affect financial professionals.
1. Sellers of AXA Financial products will have to put up with rating agency chatter.
Fitch Ratings, for example, has already lowered the insurer financial strength ratings it has assigned to AXA’s U.S. insurance operating subsidiaries to A plus, or strong, from AA minus, or very strong.
Moody’s Investors Service has lowered the insurance financial strength ratings it has assigned AXA Equitable Life Insurance Co. to A1, from Aa3, while affirming some other units’ ratings.
The rating analysts say they are lowering the U.S. subsidiaries’ ratings because they see the subsidiaries as no longer being core operations for the parent company.
Moody’s analysts say they have a negative outlook on the life subsidiaries.
In addition to the change in parent company support, the change in outlook reflects “challenges the company may face during the transition period to its increased independence,” the analysts say.
Obviously, those rating moves sting.
The life subsidiaries still have solid ratings, but not quite the same ratings.
2. Competitors might say mean things about AXA Financial.
In a perfect world, sales representatives and others would speak no evil when asked about competitors going through realignments.