One of the biggest names in insurance has decided to cut back on its financial commitments in one of the world’s largest markets – a move that hints at acquisitions in the near future.
AXA revealed late yesterday that it would hive off its majority stake in AllianceBernstein, the New York-based asset manager, as well as its US life insurance business – a move that comes days after Peter Kraus was removed as AB’s chief executive.
Speaking on Wednesday, AXA chief executive Thomas Buberl outlined that the changes at AllianceBernstein, which manages assets in the region of $500 billion, were unrelated to its decision to make an initial public offering (IPO).
According to the Financial Times, AXA owns around 64% of AllianceBernstein with the US business thought to be worth around €11 billion. It is believed AXA is looking to float from around 10-25% of the business and that this extra finance may be used to
make additional acquisitions.
“We are not looking at tiny deals or very large deals,” said Buberl, as quoted by the Financial Times. “We are looking for deals worth €1bn-€3bn and for that we need financial flexibility. We want to accelerate our portfolio shift — we want less exposure to financial risk, and more exposure to health and protection products.”
In addition, Buberl outlined that the US life insurance business finds it difficult to compete in some product lines – with the Insurance Information Institute placing it tenth in the country with a 3% market share.
The businesses in the IPO were thought to be worth around €1.1 billion in underlying earnings last year – approximately a fifth of AXA’s earnings.
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