MOODY'S AFFIRMS WITH A STABLE OUTLOOK AXA's Aa3 INSURANCE FINANCIAL STRENGTH RATING AND ITS A2/A3 SENIOR AND SUBORDINATED DEBT RATINGS
Paris, February 14, 2005 -- Moody's Investors Service affirmed today with a stable outlook AXA's
debt ratings (senior at A2), as well as the Aa3 insurance financial
strength ratings of AXA's main operating subsidiaries, saying that
the group's refocusing and rationalization efforts deployed in recent
years have contributed to leveraging AXA's global insurance franchise,
translating into enhanced earnings stability and financial strength.
The rating agency commented that its stable rating outlook on the insurance
financial strength ratings of the group's core operating units (AXA France,
AXA Financial in the U.S., AXA UK, AXA Germany
and AXA Belgium) reflects their leading positions in their respective
markets, sound economic solvency and reserving practices,
and their prospects for stable or improved underlying financial performance.
These ratings also remain underpinned by strong management, superior
diversification and distribution, and improved property and casualty
combined ratios. The rating agency also highlighted the recovery
seen in the profitability of business units which are no longer besetting
the group's overall profits. In life insurance, the
group is mitigating the pressure created on its financial margin by a
low interest rate environment by an improved product-mix,
advanced asset-liability management and higher cost efficiency.
On the other hand, Moody's said that the rating outlook on AXA's
Dutch operations (AXA Leven and AXA Schade) remains negative reflecting
comparatively less strong fundamentals on a stand-alone basis and
a less advantaged competitive positioning than the group's other operations.
More generally, AXA's ratings also reflect its prudent capital management,
low risk profile, and improved operating earnings. In addition,
whilst AXA's core indebtedness remains material, stronger capital
formation has enabled the group to lower its financial leverage,
whereas ample liquidity and prudent debt management provide good debt
protection measures to the group's creditors. The recent issuance
of long dated and deeply subordinated debt further demonstrate AXA's
financial flexibility. Moody's also pointed to the positive trend
seen in AXA's operating earnings power and its lower reliance on
capital gains and lower asset impairments. The group's solvency
and financial flexibility have also recovered on the back of more stable
equity markets, reallocation of capital to lower risk activities,
debt reduction and improved capital formation.
Tempering the group's strengths, Moody's said that AXA's major challenge
will be to accelerate its sales momentum by leveraging its operational
and distribution strengths despite its lack of strong bancassurance links
in Europe, and to achieve further cost efficiencies. Moody's
concluded that AXA remains well positioned to continue to expand its global
insurance franchise, and expected the group to maintain its conservative
stance in the management of its capital structure, which has benefited
from higher retained earnings and more moderate financial leverage.
Moody's also said that it had assigned a final Baa1 rating to AXA's
375 million Floating Rate Undated Deeply Subordinated Notes issued
by AXA under its 5 billion EMTN programme on October 29,
2004, reflecting the level of subordination of these securities
relative to other senior or subordinated debt obligations of AXA,
as well as the fact that they are intended to qualify as tier 1 regulatory
capital, with regard to the capital adequacy regulations which may
in the future be introduced in France. The rating agency added
that the securities appear as very junior obligations because (i) they
are perpetual (with a five year non call period), (ii) the deferral
of interest is mandatory in case of a supervisory event, in which
case deferred interest is not cumulative and the principal amount of the
notes may be reduced to absorb losses to allow AXA to meet its consolidated
solvency margin ratios, and (iii) in case of liquidation,
the securities rank junior to all other creditors except shareholders.
Finally, Moody's has withdrawn its Insurance Financial strength
ratings on AXA Direct Insurance Ltd and AXA France Collectives,
entities whose obligations have now been assumed by respectively AXA Insurance
UK plc and AXA France Vie following a legal reorganization.
The following ratings were affirmed with a stable outlook:
AXA -- senior debt at A2, subordinated and junior subordinated
debt at A3, French commercial paper at Prime-1;
AXA Financial Inc. -- senior debt at A3, subordinated
and junior subordinated debt at (P)Baa1;
AXA Financial Capital Trust I -- preferred stock at (P)Baa1;
AXA Financial Capital Trust II -- preferred stock at (P)Baa1;
AXA Financial Capital Trust III -- preferred stock at (P)Baa1;
AXA Financial Capital Trust IV -- preferred stock at (P)Baa1;
The MONY Group Inc. -- senior at A3;
Guardian Royal Exchange plc -- guaranteed senior debt at A2;
AXA France IARD -- financial strength at Aa3;
AXA France Vie -- financial strength at Aa3;
AXA Equitable Life Insurance Company. -- financial strength
at Aa3 and surplus notes at A2;
MONY Life Insurance Company -- financial strength at Aa3 and surplus
notes at A2;
MONY Life Insurance Company of America -- financial strength at Aa3;
AXA Lebensversicherung -- financial strength at Aa3;
AXA Versicherung -- financial strength at Aa3;
AXA Insurance UK Plc -- financial strength at Aa3;
AXA General Insurance Ltd -- financial strength at Aa3;
AXA Insurance Ltd -- financial strength at Aa3;
AXA Sun Life Holding plc -- financial strength at Aa3;
Sun Life Assurance Society Plc -- financial strength at Aa3;
Sun life Pensions Management Ltd -- financial strength at Aa3;
Sun Life Unit Assurance Ltd -- financial strength at Aa3;
AXA Belgium -- financial strength at Aa3.
The following ratings continue to have a negative outlook:
AXA Leven -- financial strength at Aa3;
AXA Schade -- financial strength at Aa3.
The following final rating was assigned:
AXA -- deeply subordinated debt at Baa1.
The following ratings were withdrawn:
AXA France Collectives -- financial strength at Aa3;
AXA Direct Insurance Ltd -- financial strength at Aa3.
AXA, headquartered in Paris, France, had total consolidated
assets of 472 billion and shareholders' funds of 24.4
billion at June 30, 2004.
London
Simon Harris
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Paris
Jean-Luc Lepreux
Senior Vice President
Financial Institutions Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454