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AXA Talks More About US Life Spinoff

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Something like the old Equitable Life Assurance Society of the United States could soon be a stand-alone company.

Executives at AXA, the corporate parent of AXA Equitable, today said that they hope to spin AXA Equitable off as a separate company by June 30, if market conditions make that possible.

(Related: 5 Ways an AXA U.S. Spinoff Could Affect You)

AXA, a Paris-based financial services company, today announced that it plans to acquire XL Group Ltd., a property-casualty reinsurer, for the equivalent of about $15.3 billion in cash.

AXA would pay for part of the deal costs with $4.3 billion in cash on hand and $3.7 billion in subordinated debt.

AXA intends to raise another $7.3 billion through an initial public offering (IPO) of stock in AXA Equitable Holdings Inc.

AXA Equitable Holdings Inc. would include:

  • AXA Equitable, AXA’s New York-based life and savings business unit.
  • AXA’s interest in AllianceBernstein L.P., the operating partnership that runs the AllianceBernstein money management business.
  • AXA’s interest in AllianceBernstein Holding LP, the publicly traded partnership that shares control of the money management business with AllianceBernstein L.P.

AXA Corporate Solutions Inc., AXA’s U.S. property-casualty unit, would not be part of the IPO.

The company would continue to operate in the health insurance market outside of the United States.

AXA faces the tough new European Solvency II financial obligation accounting rules.

Thomas Buberl, AXA’s chief executive officer, said in a statement that AXA is making the XL deal, and organizing the AXA Equitable IPO, because AXA wants to move from being predominantly a life and savings company to being predominantly a property-casualty insurer.

“The future AXA will see its profile significantly rebalanced towards insurance risks and away from financial risks,” Buberl said.

AXA executives first talked publicly about the possibility of selling a minority stake in the U.S. life operations in May 2017. They gave few details about the proposed spinoff at the time.

AXA filed a preliminary registration statement for the spinoff IPO in November. A copy of an amended version of the filing is available here.

AXA notes that AXA Equitable Holdings was founded in 1859, has 12,100 employees and advisors, and has about $600 billion in assets under management.

In the amended preliminary registration filing, AXA leaves the fields describing how big of a stake in AXA Equitable it would sell blank. AXA does say that it expects to continue to own enough of AXA Equitable that AXA Equitable would be considered a “controlled company” under New York Stock Exchange rules.

A chart in the filing shows that, after the IPO took place, AXA Equitable Life Insurance Company, AXA Distribution Holding Corp., EQ AZ Life Re Company and MONY Life Insurance Company of America would be separate entities.

— Read Analyst Sees ‘Great Restructuring’ of Life Industry ThinkAdvisor.

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