After announcing it will be listing its operations in the US, Moody’s has downgraded the insurance financial strength (IFS) rating of AXA Equitable Life Insurance Company (AXA Equitable) to A1 from Aa3.
The rating agency also 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.
Moody’s also changed its outlook position for AXA Equitable, MLOA, and AXA Financial are changed to negative from stable.
Specifically stating its rationale for downgrade, Moody’s said it took the decision following AXA SA’s announcement that it intends to pursue a partial IPO of its US life business.
See below Moody’s 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.