(Source: Business Wire)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of certain life insurance subsidiaries of AXA Financial, Inc. (AXA Financial) (New York, NY) including its lead operating subsidiary, AXA Equitable Life Insurance Company (AXA Equitable) (New York, NY). Concurrently, A.M. Best has revised the outlook to negative from stable and affirmed the ICR of "a-" of AXA Financial and the group's existing debt ratings. AXA Financial is a subsidiary of AXA S.A. (Paris, France) (NYSE: AXA). (See below for a detailed listing of the companies and ratings.).
The revised outlook reflects the significant declines in assets under management within AXA Financial's variable life and annuity lines, as well as in its AllianceBernstein (AB) asset management affiliate. In addition, while AXA Equitable's risk-adjusted capital did not deteriorate materially, its absolute level of statutory adjusted capital and surplus significantly declined due primarily to unrealized investment losses related to AXA Equitable's holdings in AB and reserve increases associated with its variable annuity secondary guarantees. A.M. Best notes that the decline in statutory adjusted capital and surplus was partially offset by $1 billion in new surplus notes issued by AXA Equitable to AXA Financial. AXA Equitable also completed a significant reinsurance transaction with its AXA Bermuda affiliate. Furthermore, AXA Equitable's dependence on equity-linked products is expected to result in lower operating earnings capacity over the near term and has led to a contraction of some of its core business lines.
The ratings reflect AXA Financial's industry position as one of the leading variable annuity writers, a top-ten global asset manager and an integral part of AXA S.A., a worldwide leader in financial protection and wealth management. Its financial advisory/insurance segment has diverse distribution channels, which have allowed AXA Financial to maintain a competitive position among the industry leaders, despite recent declines in its variable annuity and individual life market shares. The segment continues to generate solid GAAP pre-tax earnings, driven primarily by asset-based fee income from separate account products. The investment management segment, through its 63% ownership of AB, is a contributor to the group's earnings and adds product diversification. A.M. Best believes AB has a well-diversified business model across product type, global asset allocation, client type and client location.
