TEXT-S&P assigns AXA's subordinated notes 'BBB' rating

Fri Jan 18, 2013 11:39am EST

Jan 18 - Standard & Poor's Ratings Services said today that it has assigned
its 'BBB' long-term issue rating to dated 30-year subordinated notes issued by
France-based AXA (A-/Stable/A-2), the holding company of AXA Group
(core operating entities A+/Stable). The rating of the notes is subject to our
review of the final terms and conditions.

We rated the notes two notches below the long-term counterparty credit rating 
on the issuer, AXA, reflecting our hybrid debt criteria. We understand that 
the noteholders will be subordinated to AXA's senior creditors, and that the 
insurer has the option of deferring interest on the debt issue. Furthermore, 
we note that interest deferral is mandatory if a solvency event has occurred.

AXA can exercise a call of the notes in July 2023 and subsequently at each 
interest payment date thereafter. The coupon is fixed until the call date, 
when it will convert to floating rate. We understand that the notes include a 
step-up of a maximum 100 basis points to the fixed-rate spread if the call is 
not exercised.

We expect to classify the bonds as having "intermediate equity content" under 
our hybrid capital criteria. We include securities of this category, up to a 
maximum of 25%, in our calculation of total adjusted capital (TAC), which 
forms the basis of our consolidated risk-based capital analysis of insurance 
companies. Our inclusion in TAC nevertheless depends on their eligibility for 
regulatory solvency treatment. The amount of hybrid capital we include cannot 
exceed the total eligible for regulatory capital. 

We understand that AXA is expecting to use the bond's proceeds to refinance 
its existing convertible bond that matures in 2014. We expect financial 
leverage to increase temporarily but to remain lower than 28% following this 
issue, and trend back down during 2014. We expect fixed-charge coverage to 
remain above 7x, a level consistent with the rating.

RELATED RESEARCH AND CRITERIA
     -- General: Interactive Ratings Methodology, April 22, 2009
     --  Hybrid Capital Handbook: September 2008 Edition, Sept. 15, 2008
     -- General: Refined Methodology And Assumptions For Analyzing Insurer 
Capital Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.
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