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Axa's US IPO misses target; Florida's Citizens buying $1.42B reinsurance in 2018


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Axa's US IPO misses target; Florida's Citizens buying $1.42B reinsurance in 2018

AXA Equitable Holdings Inc.'s initial public offering of 137,250,000 common shares was priced at $20 apiece, below its targeted range of $24 per share to $27 per share. Based on the per-share price and assuming full exercise of the underwriters option, S&P Global Market Intelligence calculates a gross offering size of about $3.16 billion. Earlier reports had said that Axa's U.S. IPO could raise up to $4.26 billion.

Despite the lower valuation, it is still the biggest U.S. IPO this year on the basis of proceeds raised, according to Reuters. The drop in pricing reflects investor concerns about the prospects for the life and pensions industry as low interest rates have dampened profits, the Financial Times said. The IPO is also part of an ongoing restructuring in the industry, the report said, citing UBS analyst John Nadel.

Citizens Property Insurance Corp.'s board of governors has approved the purchase of a $1.42 billion reinsurance program for 2018, Artemis reported. The program size represents a 7% increase from the $1.33 billion approved for 2017, according to the report.

Transatlantic Holdings Inc.'s catastrophe bond Bowline Re Ltd. series 2018-1 may upsize to $250 million from $200 million due to investor demand, Artemis reported. Transatlantic Holdings is the parent of Transatlantic Reinsurance Co.

At-Bay, Inc., a Mountain View, Calif.-based cyber insurance startup, raised $13 million in a series A funding round, bringing the company’s total funding to $19 million. Keith Rabois of Khosla Ventures; Yoni Cheifetz of Lightspeed; and Shlomo Kramer, former founder of Check Point and Imperva, co-led the latest fundraising round. At-Bay's policies are backed by the Hartford Steam Boiler Inspection & Insurance Co., a part of Munich Re.

Public and private insurers were poised to pay at least $1.5 billion in claims from severe thunderstorms that hit the U.S. in April, according to the latest Global Catastrophe Recap from Aon Benfield's Impact Forecasting.

Former Zenefits CEO Parker Conrad has surrendered his insurance license and agreed to pay $66,000 in reimbursement costs to the California Department of Insurance after it took action against him for his alleged role in violation of licensing compliance. California Commissioner said, "Unlicensed insurance transactions occurred under Conrad's management and employees were provided with a computer program that enabled them to skirt the pre-licensing education requirements."

Texas Windstorm Insurance Association's board has authorized staff to get regulatory approval for a $175 million assessment to its insurance company members for losses related to Hurricane Harvey, the Insurance Journal reported. The assessment needs to be approved by the Texas Department of Insurance.

Atlas Financial Holdings Inc. will apply to the securities regulatory authorities in Ontario, Alberta and British Columbia for an order deeming it to have ceased to be a reporting issuer in all jurisdictions of Canada.

CNA Financial Corp. is facing a lawsuit for allegedly raising premiums of certain long-term care insurance policyholders despite promising that premiums will not increase unless the hike is imposed on all clients of the same age and coverage plan.

Insurance brokers may be looking to sell more policies that provide coverage for executives' actions and decisions amid a slew of sexual misconduct scandals in corporate America and a proliferation of M&A-related lawsuits. The business line, called directors and officers, or D&O, has seen flat revenue growth in the last four years. But in recent months, prices have picked up as underwriters deal with more frequent, and sometimes bigger, payouts.

U.S. insurance companies expanded their holdings of assets classified as other loan-backed securities in 2017, and if recent disclosures from Athene Holding Ltd. are indicative of a broader trend, further growth may be ahead in 2018. "Structured securities ... provide us with attractive yields, downside protection, [and] are highly rated and very capital efficient," Athene Chairman, CEO and Chief Investment Officer James Belardi said during a May 4 conference call.

Click here to read a summary of earnings reported May 9 by select insurance companies covered by S&P Global Market Intelligence.

Featured news

Roche's Tecentriq fails key cancer trial; US Congress pushes opioid bills: The House Energy and Commerce Committee advanced more than two dozen bills aimed at tackling the U.S. opioid epidemic — sending the measures to the chamber floor for consideration. Among the measures that passed the committee was a bipartisan bill from Rep. Debbie Dingell, D-Mich., and Rep. Fred Upton, R-Mich., that was dubbed the ACE Research Act, which aims to speed the development of non-addictive painkillers by giving the National Institutes of Health additional flexibility to approve projects more quickly under the so-called "other transaction authority."

Financial news in other parts of the world

Asia-Pacific: AMP posts Q1 results; New Zealand holds rate; India mulls new insurance rules

Europe: RBS to pay $4.9B to settle US probe; UniCredit Q1 profit up 22.6% YOY

Middle East & Africa: Samba Q1 profit rises 6% YOY; Bahrain says reserves enough to keep dollar peg

The day ahead

Early morning futures indicators pointed to a mixed opening for the U.S. market.

In Asia, the Hang Seng rose 0.89% to 30,809.22, while the Nikkei 225 was up 0.39% to 22,497.18.

In Europe, around midday, the FTSE 100 fell 0.35% to 7,635.86, and the Euronext 100 was down 0.16% to 1,068.16.

On the macro front

The consumer price index, the jobless claims report, the EIA natural gas report, the treasury budget report, the fed balance sheet and the money supply report are due out today.

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