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Rating Action:

Moody's downgrades AXA Financial following AXA's announcement of planned partial IPO

10 May 2017

New York, May 10, 2017 -- Moody's Investors Service today has downgraded the insurance financial strength (IFS) rating of AXA Equitable Life Insurance Company (AXA Equitable) to A1 from Aa3, affirmed the IFS rating of MONY Life Insurance Company of America (MLOA) at A1, and downgraded the senior unsecured debt rating of AXA Financial Inc. (AXA Financial) to Baa1 from A2. This rating action follows today's announcement by AXA SA (AXA; A2 senior unsecured debt) that it intends to pursue a partial IPO of its US life business. The outlook of AXA Equitable, MLOA, and AXA Financial are changed to negative from stable. Please refer to the complete list of rating actions below.

RATINGS RATIONALE

The downgrade of AXA Equitable and AXA Financial reflects the diminished implicit support from AXA. Since AXA has so far only announced its intentions and because it still intends to hold a majority of the AXA US business after the partial IPO, at least initially, Moody's has retained one notch of parental support from AXA Equitable's A2 standalone credit profile. The affirmation of MLOA reflects its A2 standalone credit profile as well as the same one notch of implicit support. Moody's has also affirmed the backed commercial paper at P-1 since this debt is guaranteed by AXA.

The Baa1 rating on AXA Financial's senior unsecured debt reflects Moody's typical notching relative to its insurance operating subsidiaries. The debt rating for AXA Financial had been aligned with that of AXA's debt but, with the diminished implicit support, has now been aligned with the rating suggested by its operating subsidiaries.

As indicated by the negative outlook, there is pressure on the one-notch ratings uplift to AXA Equitable and MLOA's standalone credit profile. The change in outlook largely reflects the uncertainty regarding the degree of support of AXA Equitable and its subsidiaries by the parent, as well as challenges the company may face during the transition period to its increased independence.

The ratings of AXA Financial and AXA Equitable are based on well-established positions in the individual annuity and life insurance markets and on the ownership and expected continued support of parent. MLOA's rating reflects its standalone credit profile as well as its importance to the AXA US family as virtually all new life insurance products outside of New York are sold through it.

RATING DRIVERS

The negative outlook on AXA Financial and its insurance subsidiaries signals the higher likelihood of a downgrade over the next 12 to 18 months as a result of today's announcement. Over the outlook period, Moody's will consider the performance of the business, any actual or contemplated changes in parental ownership levels as well as other forms of implicit and explicit support. A downgrade of the insurance subsidiaries to their standalone ratings would likely lead to a downgrade of the ratings at AXA Financial.

Given the negative outlook and the one-notch ratings uplift to AXA Equitable and MLOA's stand-alone credit profile due to the parent's ownership and support, it is not likely the ratings will be upgraded in the near term. However, the following could lead to upward pressure on the ratings of AXA Equitable and MLOA over the long term, which would be analyzed on a combined basis should MLOA successfully execute on its strategy to maintain its status as the primary provider of non-New York life insurance products: (1) Increased capitalization and ability to withstand a stress scenario; (2) Successful runoff of legacy business.

The following could lead to a downgrade of AXA Equitable's rating: (1) A downgrade of the rating of the parent, AXA SA, or further reduction in the implicit support of the US company; (2) The AXA Group fails to continue to address regulatory capital stress and economic risks associated with the variable annuity business and the NAIC RBC ratio falls below 300% (company action level) at AXA Equitable.

The following could lead to a downgrade of MLOA's rating: (1) greater than 15% decline in new life sales outside NY on an annual basis, (2) RBC ratio (company action level) below 300%, or (3) if MLOA does not maintain its status as the primary provider of non-New York life insurance products.

The following ratings were affirmed:

MONY Life Insurance Company of America -- insurance financial strength rating at A1

AXA Financial, Inc. -- backed commercial paper at P-1

The following ratings have been downgraded:

AXA Equitable Life Insurance Company -- insurance financial strength rating to A1 from Aa3

AXA Financial, Inc. -- senior unsecured debt rating to Baa1 from A2

AXA Financial, Inc. -- provisional senior unsecured shelf rating to (P)Baa1 from (P)A2

AXA Financial, Inc. -- provisional subordinated shelf rating to (P)Baa2 from (P)A3

AXA Financial, Inc. -- provisional junior subordinated shelf rating to (P)Baa2 from (P)A3

AXA Financial Capital Trust I -- backed preference shares shelf rating to (P)Baa2 from (P)A3

AXA Financial Capital Trust II -- backed preference shares shelf rating to (P)Baa2 from (P)A3

AXA Financial Capital Trust III -- backed preference shares shelf rating to (P)Baa2 from (P)A3

AXA Financial Capital Trust IV -- backed preference shares shelf rating to (P)Baa2 from (P)A3

The outlook on all issuers has been changed to negative from stable.

The principal methodology used in these ratings was Global Life Insurers published in April 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Michael Fruchter
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Marc R. Pinto, CFA
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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