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AXA Completes IPO of US Life Unit

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AXA in May 2018 completed the initial public offering (IPO) of its U.S. individual life insurance unit, formerly known as The Equitable Life Assurance Society of America and based in New York, NY.

Total proceeds are estimated at $4 billion. AXA had demutualized and recapitalized the failed U.S. mutual life insurance company, The Equitable, to the tune of $1 billion in July 1991. Back then, the company had $5.9 billion in premiums and $372 million in net losses (1990; around $900 million in 1991).

Computing the internal rate of return (IRR) of AXA’s investment is an interesting exercise in financial analysis that may evidence that the main difficulty lies in retracing all cash in- and out-flows over a period of 27 years.

Disposal In Line With Strategic Realignment

The disposal of AXA’s U.S. unit is of little if any significance for its global employee benefits businesses. Nevertheless, it underscores in a striking way the change in strategy that AXA is undergoing under the leadership of new CEO Thomas Buberl: away from savings and back to the fundamentals of insurance, that is, risk.

And especially business insurance as shown by the XL Catlin deal. By the way, the U.S. IPO comes in handy in the financing of the latter’s acquisition cost of EUR 12.4 billion.

In our opinion, global employee benefits and global mobility offerings should be part and parcel of the future AXA as they complement its powerful P/C business insurance product range at a time when risk managers show an increased interest in employee benefits.

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