AXA announces its intention to IPO its US operations
- Strategic decision to create significant additional financial flexibility to accelerate AXA’s transformation, in line with Ambition 2020 objectives
- Intention to list a minority stake of AXA’s US operations* (expected to consist of its US Life & Savings business and AXA Group’s interest in AB) in 1H18, subject to market conditions
- Creating a leading US-based diversified financial institution benefiting from enhanced strategic flexibility, visibility and stronger growth prospects as a listed company
- Proceeds to be reinvested by AXA in priority segments and/or potentially returned to shareholders, depending on opportunities and market conditions
- AXA’s 3%-7% UEPS CAGR target over 2015-2020 reaffirmed
In the US, AXA is a leading life insurance and annuity company serving more than 2.5 million customers, and owns an interest of approximately 64% in AB, a leading global asset manager with USD 498 billion in Assets under Management as at 31 March 2017.
We are very proud of our strong financial performance track-record over the past years, which resulted from a dramatic shift in new business towards a more balanced and capital effective product suite, supported by strict discipline in terms of product development, pricing, hedging and reserving.
With Seth Bernstein, the new AB CEO, we have the unique opportunity together to create a leading US life insurance, annuity and asset management company. Together we will be focused on delivering superior wealth accumulation, protection and retirement-focused products for our customers and creating sustainable value for our stakeholders.
“At AB, we’re excited to be taking this next step in our journey with AXA US and the AXA Group” said Seth Bernstein, President and CEO of AB. “We’ll continue to manage assets for both entities, and look forward to further aligning our businesses from here with new services and opportunities.”
The listing of the US operations would bring significant additional financial flexibility for AXA, benefiting from supportive macroeconomic conditions in the US, and create an option to further reduce AXA’s exposure to financial risks while further strengthening its economic capital position.
To enhance the capitalization of the US operations ahead of the IPO, about USD 1.0 billion of outstanding debt owed by AXA US to AXA Group will be converted into equity.
The proceeds of the transaction would be reinvested in the Group’s priority lines of business, including Health, Capital-light Savings, Protection and P&C commercial lines, in line with the Ambition 2020 strategy, and/or potentially returned to shareholders depending on acquisition opportunities and market conditions.
The AXA Group reaffirms the following key financial objectives for 2015-2020: Underlying earnings per share CAGR of 3%-7%, Solvency II ratio target range of 170%-230%, cumulative cash remitted to Group holding company of Euro 24-27 billion, and adjusted Return on Equity of 12%-14%.
The decision to prepare for a listing of our US operations is a key step towards our 2020 objectives: 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 around Health, Capital-light Savings, Protection and P&C commercial lines, our priority lines of business.
At the same time, we are convinced our US operations would be better positioned as a listed company in the US, operating on a level-playing field under local regulatory rules, and would benefit from greater strategic flexibility to deliver sustainable and profitable growth.
“We very much appreciate the continued guidance and responsiveness of AXA Equitable’s US regulator, the New York Department of Financial Services. DFS has been a strong and fair supervisor of AXA Equitable, which will remain a New York domiciled insurer, and we look forward to the Department’s ongoing leadership and oversight”, said Mark Pearson, CEO of AXA US.