Axa plans US IPO to bankroll expansion
PARIS: Axa SA, Europe’s second-largest insurer, is planning an initial public offering of its US operations to fund its expansion and potentially return money to shareholders.
Axa intends to list a minority stake in its US businesses, and expects to include its US Life & Savings unit and stake in money manager AllianceBernstein Holding LP in the IPO, the company said in a statement Wednesday. The listing would take place in the first half of 2018, subject to market conditions, helping speed up Axa’s achievement of its 2020 profit goals.
“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,” chief executive Thomas Buberl said in the statement. The IPO would create “significant financial flexibility” for the group, he said.
Axa plans to reinvest the proceeds into its priority businesses which include health, protection and commercial property and casualty lines. Mr Buberl, who took over last year, aims to preserve the firm’s profitability through cost cuts, new-technology investments and tapping growing demand for health insurance.
The French firm owns about 64% in AllianceBernstein, which has US$498 billion under management and recently ousted Chief Executive Officer Peter Kraus and more than half of the board in a shake-up. Axa is not planning to buy out minority shareholders in the asset manager, Buberl said on a call with analysts.
Axa last year generated about 14% of group revenues from the US. The insurer made €905 million ($986 million) in operating profit from life and savings in the country last year, an 8.5% increase from a year earlier. About a quarter of its life and savings new business is generated in the US.
The firm plans to convert about $1 billion of outstanding debt owed by the US unit to the group ahead of the IPO. Axa US is the third-largest provider of variable annuities and the largest insurer in the retirement business segment, said Axa.
“The US listing is a big surprise. With the recent personnel changes, some change was expected at AllianceBernstein,” Daniel Bischof, a Zurich-based analyst at Baader Helvea AG, said. “It remains to be seen how they will do this in detail as AllianceBernstein already is listed in the US.”
Axa reaffirmed its key 2020 profit targets, including an adjusted return on equity of 12-14%, and average underlying earnings per share growth of 3-7% a year.
Axa said its first-quarter sales were little changed at €31.6 billion. Revenue from property & casualty insurance rose 1.2% while life and savings income fell 1.4% to €17.1 billion.