Moody’s revises AXA to negative

Moody's Investors Service said it affirmed AXA's A2 senior unsecured debt rating and A3/A3 (hyb) subordinated debt ratings, as well as the Aa3 insurance financial strength ratings of AXA's main operating subsidiaries.

The outlook was changed to negative from stable.

The action follows AXA's recent announcement that it entered into an agreement to acquire 100% of XL Group Ltd. (XL) in an all-cash transaction valued at roughly $15.3 billion (or €12.4 billion).

The transaction is expected to close during the second half of 2018.

Moody’s said the negative outlook reflects the impact of the proposed financing for the acquisition of XL, which will meaningfully increase AXA's financial leverage at least in the short-term, and the significant increase in goodwill amount on AXA's balance sheet.

Furthermore, the business of XL, which has a weaker credit profile than AXA, is intrinsically volatile with moderate levels of profitability in recent years, the agency explained.

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