A.M. Best Revises Outlook to Negative for AXA Financial, Inc

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of certain life insurance subsidiaries of AXA Financial, Inc. (AXA Financial) (New York, NY) including its lead operating subsidiary, AXA Equitable Life Insurance Company (AXA Equitable) (New York, NY). Concurrently, A.M. Best has revised the outlook to negative from stable and affirmed the ICR of "a-" of AXA Financial and the group's existing debt ratings. AXA Financial is a subsidiary of AXA S.A. (Paris, France) (NYSE: AXA). (See below for a detailed listing of the companies and ratings.).

The revised outlook reflects the significant declines in assets under management within AXA Financial's variable life and annuity lines, as well as in its AllianceBernstein (AB) asset management affiliate. In addition, while AXA Equitable's risk-adjusted capital did not deteriorate materially, its absolute level of statutory adjusted capital and surplus significantly declined due primarily to unrealized investment losses related to AXA Equitable's holdings in AB and reserve increases associated with its variable annuity secondary guarantees. A.M. Best notes that the decline in statutory adjusted capital and surplus was partially offset by $1 billion in new surplus notes issued by AXA Equitable to AXA Financial. AXA Equitable also completed a significant reinsurance transaction with its AXA Bermuda affiliate. Furthermore, AXA Equitable's dependence on equity-linked products is expected to result in lower operating earnings capacity over the near term and has led to a contraction of some of its core business lines.


The ratings reflect AXA Financial's industry position as one of the leading variable annuity writers, a top-ten global asset manager and an integral part of AXA S.A., a worldwide leader in financial protection and wealth management. Its financial advisory/insurance segment has diverse distribution channels, which have allowed AXA Financial to maintain a competitive position among the industry leaders, despite recent declines in its variable annuity and individual life market shares. The segment continues to generate solid GAAP pre-tax earnings, driven primarily by asset-based fee income from separate account products. The investment management segment, through its 63% ownership of AB, is a contributor to the group's earnings and adds product diversification. A.M. Best believes AB has a well-diversified business model across product type, global asset allocation, client type and client location.

Historically, AXA Financial has been a significant source of capital for its parent through regular dividends, although no dividend was paid in 2008 as a result of the group's statutory surplus decline. In addition, AXA Financial remains exposed to further declines in the equity markets on both sides of the balance sheet, through its investment in AB and variable insurance products with secondary guarantees, as well as to reduced revenues from asset fees related to separate account investments. A.M. Best also notes that the risk from variable annuity guarantees is largely mitigated by the group's reinsurance and hedging programs. Nevertheless, the current recessionary economic environment will challenge AXA Financial to regain profitability and sales momentum.

The outlook has been revised to negative from stable, and the FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for the following subsidiaries of AXA Financial, Inc.:

• AXA Equitable Life Insurance Company
• MONY Life Insurance Company
• MONY Life Insurance Company of America

The outlook has been revised to negative from stable, and the FSR has been downgraded to A (Excellent) from A+ (Superior) and the ICR to "a+" from "aa-"for AXA Equitable Life and Annuity Company. For more than two years, this company has not issued new business.

The outlook has been revised to negative from stable, and the FSR of A (Excellent) and ICR of "a+" have been affirmed for U.S. Financial Life Insurance Company.

The outlook has been revised to negative from stable, and the debt ratings have been affirmed for the following companies:

AXA Financial, Inc."”

-- "a-" on $480 million 7.75% senior unsecured notes, due 2010

-- "a-" on $350 million 7% senior unsecured debentures, due 2028


The MONY Group, Inc. (assumed by AXA Financial, Inc.)"”

-- "a-" on $300 million 8.35% senior unsecured notes, due 2010

AXA Equitable Life Insurance Company"”

-- "a" on $200 million 7.7% surplus notes, due 2015

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.

Analysts

Thomas Rosendale, 908-439-2200, ext. 5201

thomas.rosendale@ambest.com

or

Andrew Edelsberg, 908-439-2200, ext. 5182

andrew.edelsberg@ambest.com

or

Public Relations

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com



Source: A.M. Best Co.