New York, November 14, 2017 -- Moody's Investors Service today has downgraded the insurance financial
strength (IFS) ratings of AXA Equitable Life Insurance Company (AXA Equitable)
and MONY Life Insurance Company of America (MLOA) to A2 from A1,
and downgraded the senior unsecured debt rating of AXA Financial Inc.
(AXA Financial) to Baa2 from Baa1 reflecting the removal of one notch
of uplift related to implicit support provided by AXA SA (AXA; A2
senior unsecured debt). This rating action follows yesterday's
form S-1 filing by AXA US, which indicates AXA SA's
continued pursuit of a partial IPO of its US business and plans for the
AXA US business to operate as a stand-alone entity. The
outlooks of AXA Equitable, MLOA, and AXA Financial have been
changed to stable from negative. Please refer to the complete list
of rating actions below.
RATINGS RATIONALE
The downgrade of AXA Equitable, MLOA, and AXA Financial is
driven by the removal of the one notch of uplift associated with assumed
financial support from AXA SA. This downgrade reflects uncertainty
regarding the degree of ongoing support the AXA US business will receive
from the parent. Although AXA SA still intends to hold a majority
of the AXA US business after the anticipated partial IPO, at least
initially, the partial IPO weakens the support provided by the group
to the US company. Further, the filing of the S-1
and the plans for the AXA US business to operate as a standalone entity
demonstrate that the US operations are a non-core business for
AXA SA.
The ratings of AXA Financial and its insurance operating subsidiaries
are based on well-established positions in individual annuity and
life insurance, particularly in the individual retirement,
life insurance, 403(b) savings and estate planning markets.
The ratings also reflect the company's utilization of diversified
distribution channels including a strong captive agency force, as
well as its diversified earnings that benefit from economies of scale
and solid capital.
RATING DRIVERS
The following could lead to upward pressure on the ratings of AXA Equitable
and MLOA: 1) successful execution of the operation of the US business
as a standalone entity, reflected by sustained sales; 2) return-on-capital
(ROC) consistently greater than 8%; and 3) successful runoff
of legacy business.
The following could lead to a downward pressure on the ratings:
1) consolidated RBC ratio falling below 350% (on a company action
level basis); and 2) cash flow coverage and earnings coverage consistently
below 3x and 5x, respectively.
The following rating was affirmed:
AXA Financial, Inc. -- backed commercial paper
at P-1
The following ratings have been downgraded:
MONY Life Insurance Company of America -- insurance financial
strength rating to A2 from A1;
AXA Equitable Life Insurance Company -- insurance financial
strength rating to A2 from A1;
AXA Financial, Inc. -- senior unsecured debt
rating to Baa2 from Baa1;
AXA Financial, Inc. -- provisional senior unsecured
shelf rating to (P)Baa2 from (P)Baa1;
AXA Financial, Inc. -- provisional subordinated
shelf rating to (P)Baa3 from (P)Baa2;
AXA Financial, Inc. -- provisional junior subordinated
shelf rating to (P)Baa3 from (P)Baa2;
AXA Financial Capital Trust I -- backed preference shares
shelf rating to (P)Baa3 from (P)Baa2;
AXA Financial Capital Trust II -- backed preference shares
shelf rating to (P)Baa3 from (P)Baa2;
AXA Financial Capital Trust III -- backed preference shares
shelf rating to (P)Baa3 from (P)Baa2; and
AXA Financial Capital Trust IV -- backed preference shares
shelf rating to (P)Baa3 from (P)Baa2.
The outlook on all issuers has been changed to stable from negative.
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.
AXA Equitable is headquartered in New York. As of June 30,
2017, AXA Equitable reported total assets of $214.9
billion and total equity of $17.6 billion.
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