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AXA S.A. today formally started the process of offering stock in AXA Equitable Holdings Inc., one of the biggest players in the U.S. life insurance industry, to the public, through an initial public offering.”
AXA said it will sell 137.25 millon AXA Equitable shares, or 24.5% of the total, through the IPO.
The shares of the New York-based financial services company will trade on the New York Stock Exchange, under the symbol “EQH.”
AXA expects the IPO share price to be somewhere between $24 and $27. That would give the stake AXA is selling a value of about $3.3 billion to $3.7 billion. The starting market value of AXA Equitable as a whole would be about $13 billion to $15 billion.
(Related: 3 AXA Equitable IPO Answers)
The core of AXA Equitable is the old Equitable Life Assurance Society of the United States, which was founded in 1859.
Equitable Life was one of the largest, most visible mutual insurers in the United States. False accusations about a costume ball a company vice president held in 1905 led to a national media frenzy, and a massive investigation of the insurance industry.
AXA S.A. bought a controlling stake in Equitable in 1991.
Executives at the Paris-based company began talking about the possibility of a partial AXA Equitable spin-off about a year ago. AXA S.A. executives have said they are selling the AXA Equitable stake to raise money to acquire XL Group, a reinsurer. AXA S.A. executives say the plan to shift AXA S.A.’s focus toward insurance risks and away from financial risks, partly because of changes in insurance accounting rules.
Managers of AXA Equitable are saying that they believe AXA Equitable still has an important role to play in the U.S. financial services market.
“We aim to be a trusted partner to our clients by providing advice, products and services that help them navigate complex financial decisions,” AXA Equitable says in the registration statement for its IPO. “We believe that the growing and aging U.S. population, shift of responsibility for retirement planning from employers to individuals and overall growth in total investable assets will drive significant demand for our products and services going forward.”
AXA Equitable gives investors a detailed look at its operations and finances in the registration statement.
The company reported $1.3 billion in net income for 2017 on $12.5 billion in revenue, compared with $1.7 billion in net income on $11.9 billion in revenue for 2016.
The company has a total of about 12,200 employees and advisors.
The company has large individual retirement, group retirement and insurance protections solutions units, as well as a large investment management and research arm.
The individual retirement unit has about 766,000 clients, and about 900,000 variable annuity contracts in force. The variable annuity contracts hold a total of about $103 billion in account value.
The group retirement plan operation has about $34 billion in value under management for about 26,000 403(b), 401(k) and 457(b) retirement plans sponsored by schools, municipalities and nonprofit entities. The plans provide retirement benefits for 1 million people, including 725,000 current and former teachers.
The protection solutions unit has about 900,000 term life, indexed universal life and variable universal life policies in force, with a total face value of $446 billion. The unit also offers disability insurance, dental insurance and vision insurance.
AXA Equitable provides group retirement plans through a division with about 1,000 advisors.
The company says it distributes individual retirement and protection insurance products through its own AXA Advisors arm, which has about 4,700 advisors, and through 1,000 outside distribution firms. The outside distributors have relationships with 150,000 financial professionals, AXA Equitable estimates.
“We see opportunities for continued growth by expanding our affiliated and third-party distribution channels,” the company says. “We plan to expand our third-party distribution footprint with select partners and grow our footprint in the fee-based registered investment adviser channel.”
The company says it has invested in upgrading its financial planning tool software for its advisers, and in building new distribution support capabilities, such as an outbound customer relations unit.
The company also gives some information about spending on commissions and other distribution-related payments:
Individual retirement: Distribution spending fell to $609 million, on $4.4 billion in unit revenue, in 2017, from $611 million, on $3.7 billion in revenue, the year before.
Group retirement: Distribution spending increased to $93 million, on $947 million in unit revenue, from $88 million, on $801 million in unit revenue.
Protection insurance: Spending fell to $274 million, on $3 billion in unit revenue, from $285 million, on $3.1 billion in unit revenue.
— Read Richard Jenrette, Co-Founder of DLJ Investment Bank, Dies at 89 on ThinkAdvisor.