EXCLUSIVE-Protective Life in lead for AXA US insurance assets -sources

Tue Mar 26, 2013 3:55pm EDT

(Adds Morgan Stanley declining to comment, stock price, background)

NEW YORK, March 26 (Reuters) - U.S. insurer Protective Life Insurance is the leading candidate to buy some of AXA SA's U.S. life insurance assets in a deal that could be valued at around $1 billion, according to two people familiar with the situation.

French insurer AXA hired Morgan Stanley last year to help find a buyer for the assets, including remnants of the Mony Group Inc business that it acquired in 2004, according to the sources who spoke with Reuters this week. Both sources asked not to be named because the matter is not public.

AXA, which bought New York-based life insurer Mony Group for $1.5 billion, has been expanding into emerging markets while scaling back its presence in North America after years of underperformance.

Spokeswoman for AXA and Morgan Stanley declined to comment. Birmingham, Alabama-based Protective Life did not immediately respond to requests for comment.

AXA, Europe's second-largest insurer behind Germany's Allianz, like its peers has grappled with the uncertain euro zone investment market as well as low interest rates, which have hurt its asset management and savings products.

In 2011, the insurer announced a strategic plan targeting 1.5 billion euros in cost savings in "mature markets" by 2015, by which time it hoped to lift its adjusted return on equity to 15 percent.

The current sale comes after years of underperformance in AXA's U.S. business, most of it centered in the sale of variable annuities. Although AXA has lately narrowed those losses, the insurer has made it clear that its acquisition priorities lie in emerging markets such as Asia rather than mature ones.

AXA, whose other units include AllianceBernstein Holding, has already taken steps to cut back on its North American presence, selling its Canadian business in 2011 while it has expanded in Asia by acquiring HSBC's general insurance businesses there among other assets.

Protective Life, which has a market capitalization of $2.72 billion, was trading at $35.81 in late afternoon trading, up 3 percent on the day. (Reporting By Jessica Toonkel; Editing by Gerald E. McCormick, Bernard Orr)