Fitch Rates AXA's GBP750m Dated Subordinated Notes 'BBB'

Mon Jan 13, 2014 11:33am EST

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(The following statement was released by the rating agency) PARIS/LONDON, January 13 (Fitch) Fitch Ratings has assigned AXA S.A.'s GBP750m dated subordinated notes a 'BBB' rating. KEY RATING DRIVERS The notes are rated three notches below AXA's Issuer Default Rating to reflect their subordinated status, in line with Fitch standard notching methodology. The notes are issued by AXA under a EUR15bn Euro Medium Term Note (EMTN) programme. The proceeds will be used to refinance existing subordinated debt maturing in the coming 12 months. The notes have contractual maturity in 2054 and are also designed to be eligible for regulatory treatment for the required solvency margin or as Tier 2 (T2) own funds following the implementation of Solvency 2. Fitch regards this issuance as neutral to AXA's financial debt leverage and capital adequacy, as the new notes are replacing existing debt. The notes receive 100% equity credit in Fitch's internal risk-based capital calculation based on regulatory override as eligible T2 instruments. Given the optional redemption date, the notes are treated as 100% debt in Fitch's financial debt leverage calculation. The issuance will lengthen the maturity profile of the group's financial debt. Moreover, in Fitch's view, this placement further underlines AXA's financial flexibility, removing part of the 2014-2015 refinancing risk. RATING SENSITIVITIES The debt rating is subject to the same rating factors that might affect AXA's Long-Term Issuer Default Rating (IDR). Factors that could lead to a rating downgrade for AXA include a weakening of the group's capital position or deterioration in profitability. This would include a sustained drop in regulatory capital to below 170% of regulatory minimum or earnings volatility for a sustained period. In addition, the ratings could be downgraded if financial leverage increases above 30%, material investment losses develop or if there is a weakening in the group's reserve strength. Fitch currently rates AXA as follows: --Insurer Financial Strength Rating of core insurance entities: 'AA-'; Outlook Negative --Issuer Default Rating of AXA S.A.: 'A'; Outlook Negative Contact: Primary Analyst Marc-Philippe Juilliard Senior Director +33 1 4429 91 37 Fitch Ratings S.A.S. 60 Rue de Monceau 75008 Paris Secondary Analyst Stephan Kalb Senior Director +49 69 768 076 118 Committee Chairperson David Prowse Senior Director +44 20 3530 1250 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Insurance Rating Methodology', dated 13 November 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Insurance Rating Methodology -- Amended here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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