French insurance major AXA has put up 40 million shares of AXA Equitable (EQH) on sale via a secondary offering in a move to gradually exit from its US life insurance business.
AXA has given underwriters a 30-day option to buy up to an additional 6,000,000 shares of common stock of EQH, which is a New York-based life insurance company.
The insurance major revealed its intentions to divest 30 million additional shares to EQH in a share buyback transaction, subject to certain terms and also if the secondary offering turns out to be successful.
The French company, in a statement, said: “Following the completion of the Offering and the Share Buyback, (i) AXA’s ownership of EQH’s common stock will fall below 50%, (ii) the retained non-controlling minority stake in EQH will be deconsolidated and subsequently accounted for using the equity method, and (iii) AXA will move to a minority position on the EQH Board of Directors with a right to designate three of nine directors.”
US banks JPMorgan, Morgan Stanley and Citigroup have been hired as underwriters for the secondary offering by the company.
EQH, which was originally founded in 1859, provides life insurance, retirement products and investment products. AXA acquired a majority stake in the life insurance company in 1991.
Last month, the French insurance major reported a profit of €2.14bn for the full year 2018, which was a decline by 66% compared to its full year 2017 revenue of €6.2bn.
The company said that the increase in adjusted earnings was more than offset by various factors that included the impairments of the goodwill from EQH in group share, at €3.0bn, and other intangible assets pertaining to the transformation of its Swiss Group Life business.
The insurance major also blamed higher restructuring costs at €332m and exceptional charges, related to the IPO of EQH and the $15.3bn acquisition of XL Group among others for the decline in its FY 2018 profit.
In the US, the company’s revenue for FY 2018 grew 2% to €16.48bn compared to FY 2017.