S&P Upgrades AXA’s Core Units to ‘AA’

June 12, 2007

Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on the core subsidiaries of France’s insurance and asset management group AXA to “AA” from “AA-.” The new, extremely strong rating reflects “the successful integration so far of the Winterthur group, continuous improvement of business fundamentals, and excellent enterprise risk management (ERM),” said S&P.

The rating agency has also raised its long-term counterparty credit ratings on holding companies AXA and AXA Financial Inc. to “A+” from “A” and upgraded the long-term counterparty credit and insurer financial strength ratings on Winterthur Swiss Insurance Co. to “AA” from “A+,” reflecting its new “core status to AXA group.”

The outlook is stable on all of the entities of the AXA group.

“The upgrade takes into account that the integration of Winterthur has had no significant negative impact on AXA’s financial strength and is likely to proceed smoothly,” stated S&P credit analyst Laura Santori.

In addition, S&P noted that the “group’s business fundamentals have steadily improved over the past few years, resulting in a very strong competitive position and earnings, excellent ERM, as well as very strong capitalization–despite a high level of intangibles on the balance sheet.”

“We expect AXA to maintain its competitive position by fully leveraging the Winterthur acquisition and to keep operating performance at very strong levels,” Santori added.

S&P also said it expects a sustained “operating performance” as well as further financial improvements, “particularly in P/C, where we expect the CR [combined ratio] to be maintained below 100 percent.” S&P foresees some “dilution” in the life sector following the integration of Winterthur. AXA’s “very strong capitalization” leaves it some room to continue its “its external growth strategy,” but S&P does not expect any moves to cause its “capitalization to fall below the ‘AA’ level.”

However, S&P did warn that it might “consider revising the outlook to negative if earnings or capitalization deteriorate materially.” Conversely, although it called the possibility “remote,” S&P said it might consider a revision of the outlook to positive.

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