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Fitch Downgrades AXA Financial, Inc.; Places Ratings on Negative Watch
May 10, 2017 / 1:50 PM / 8 months ago

Fitch Downgrades AXA Financial, Inc.; Places Ratings on Negative Watch

(The following statement was released by the rating agency) NEW YORK, May 10 (Fitch) Fitch Ratings has downgraded AXA Financial, Inc.'s (AXF) Long-term Issuer Default Rating (IDR) to 'A-' from 'A' and the Insurer Financial Strength (IFS) ratings of AXF's insurance operating subsidiaries to 'A+' (Strong) from 'AA-' (Very Strong). Fitch has also placed AXF's IDR and IFS ratings on Rating Watch Negative. At the same time, Fitch has affirmed AXF's short-term commercial paper rating at 'F1'. A full list of rating actions follows at the end of this release. Today's rating action follows AXA S.A.'s announcement that the company plans to pursue a partial IPO of its ownership in AXA Financial, Inc. (AXF) and its subsidiaries. The AXF IPO is expected to occur in 2018. KEY RATING DRIVERS As a result of the announcement, Fitch revised its view of AXF's strategic importance relative to AXA group to no longer being Core and, as a result, downgraded the ratings by one notch based on Fitch's group ratings methodology. The ratings assigned to AXF and its insurance subsidiaries continue to reflect an ongoing but decreased degree of support from AXA. AXF's ratings were also placed on Rating Watch Negative as Fitch will be reviewing the financial profile and further developments of AXF as the timeline for the expected IPO approaches. This will include further clarification of AXF's strategic category under Fitch's group rating methodology, and fine-tuning Fitch's view on AXF's post-IPO standalone financial profile. The affirmation of AXF's short-term commercial paper rating reflects an explicit guarantee of the commercial paper program by AXA S.A. AXF's ratings reflect the company's strong business profile, strong balance sheet profile, and moderate operating performance. AXF maintains a strong competitive position in the individual life and annuity market, as well as asset management. The ratings also consider the company's above-average equity market exposure as well as the regulatory uncertainty around the Department of Labor's fiduciary rule, which could negatively impact the sale of variable annuities in qualified accounts. RATING SENSITIVITIES Factors that could result in a rating downgrade include: --Fitch classifying AXF as being of 'Limited Importance' under its group rating methodology, and moving the rating to the standalone level. This assessment could be influenced by Fitch's ultimate judgment with respect to AXA's plans to further divest AXF. Additionally, Fitch's final standalone assessment of AXF may be a notch lower than the current rating level. --A significant adverse development related to the IPO, or related to the credit profile of AXF or AXA S.A. Factors that could result in a rating upgrade include: --AXA S.A. announces it will no longer pursue an IPO; or that it will maintain AXF as a substantively majority owned subsidiary, share common branding and would provide support consistent with that of a Core subsidiary. FULL LIST OF RATING ACTIONS Fitch has downgraded and placed on Rating Watch Negative the following ratings: AXA Financial, Inc. --Long-term IDR to 'A-' from 'A'; --Senior unsecured debt to 'BBB+' from 'A-'. AXA Equitable Life Insurance Company AXA Equitable Life and Annuity Company MONY Life Insurance Company of America U.S. Financial Life Insurance Company --IFS to 'A+' from 'AA-'. Fitch also affirmed the following ratings due to an explicit guarantee from AXA S.A.: AXA Financial, Inc. --Commercial paper at 'F1'. Contact: Primary Analyst Nelson Ma, CFA Director +1-212-908-0273 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Douglas Meyer, CFA Managing Director +1-312-368-2061 Committee Chairperson Julie A. Burke, CPA, CFA Managing Director +1-312-368-3158 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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