(Bloomberg Gadfly) — Europe's insurers are going through something of an identity crisis. Years of squeezed investment returns and sluggish economic growth have led firms to try M&A, cost cuts and stock buy-backs to juice returns. So far this year, investors remain relatively unconvinced.
On Wednesday, France's AXA tried its own hand at a new self-portrait, announcing plans for a 2018 IPO of part of its U.S. business, which would include its life and savings unit as well as its 64% stake in money manager AllianceBernstein Holding LP.
The move could free up some 3 to 4 billion euros ($4.4 billion) of cash, according to analysts at Citigroup. Assuming it's spent on acquisitions, rather than returned to shareholders, that might pave the way for a more dramatic overhaul of AXA's geographic exposure and strategy. But the reaction in the insurer's stock price was muted.
The company is being cagey on the specifics. The announcement focuses on freeing up cash for future spending rather than giving answers to what the right model for the insurer should be.
AXA's managers were careful not to commit to any detail on how much of the U.S. business they will actually offload and whether they are open to eventually ceding majority control. Shareholders shouldn't expect that the additional financial flexibility will mean sweeteners for them — even it does bring the company closer to meeting its financial targets for 2020.
