A week after Axa SA ousted Peter Kraus from its AllianceBernstein Holding LP unit, the French insurer is taking steps to reduce its financial investment in the money manager to raise cash for deals.

Axa, Europe’s second-largest insurer, on Wednesday announced a plan to list a minority stake in its U.S. businesses, including its U.S. Life & Savings unit and its 64 percent stake in AllianceBernstein. Proceeds from the initial public offering, scheduled for the first half of next year, will be used to fund acquisitions worldwide in areas Axa has earmarked for growth, such as health, protection and commercial property and casualty lines.

The U.S. listing “is a big surprise,” said Daniel Bischof, a Zurich-based analyst at Baader Helvea AG. “With the recent personnel changes, some change was expected at AllianceBernstein.”

The investment in the U.S. money manager, which dates back to 1991, was a cornerstone in Axa founder Claude Bebear’s growth strategy, but underperformance of active managers and a flight to low-cost index funds changed the business after the financial crisis. Assets managed by AllianceBernstein have dropped to $498 billion from more than $800 billion in 2007. Kraus, who was removed as the firm’s chief executive officer last week along with nine directors, said last year that active investment managers may need to shrink by as much as a third if they want to beat industry benchmarks again.

Axa CEO Thomas Buberl, who took over last year, told analysts on a conference call that the IPO was separate from the management shakeup at AllianceBernstein, and was intended to accelerate the firm’s growth strategy in insurance.

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Axa is not planning to buy out minority shareholders in AllianceBernstein, Buberl said on a conference call on Wednesday. The new U.S. unit should help realize “synergies” between the life insurance business, the asset manager and the distribution network, he said. Chief Financial Officer Gerald Harlin said the U.S. insurance unit could provide “seed money” to AllianceBernstein to develop “sophisticated, attractive” products in a low-rate environment.

Axa rose as much as 2.6 percent before reversing gains to trade 0.4 percent lower at 4:41 p.m. in Paris trading. The stock is up 1.8 percent this year. AllianceBernstein fell 0.6 percent at 10:41 a.m. in New York, bringing declines this year to 11 percent.

Shifting Approach

While Buberl called the U.S. an important market for Axa, he didn’t rule out reducing the insurer’s stake in the U.S.-listed business in the future, saying the company will be “opportunistic.”

Germany’s Allianz SE, the biggest European insurer, has shifted its approach in the U.S. over the years. The company struck a deal in 2014 to sell the Fireman’s Fund business, which caters to wealthy individuals. Allianz remains a major provider of commercial insurance in the world’s largest economy and owns Newport Beach, California-based Pacific Investment Management Co.

Dutch lender ING Groep NV exited its U.S. insurance operation in a series of share sales beginning with a 2013 initial public offering. The New York-based company, now called Voya Financial Inc., closed at $36.63 Tuesday, a gain of almost 90 percent from its IPO price. ING had been narrowing its focus to comply with terms of a 2008 bailout.

Billion-Dollar Deals

Buberl aims to preserve his company’s profitability through cost cuts, new-technology investments and tapping growing demand for health insurance. The company on Wednesday confirmed key 2020 profit targets, including an adjusted return on equity of 12 percent to 14 percent, and average underlying earnings per share growth of 3 percent to 7 percent a year.

To help meet those goals, Axa has a budget of about 1 billion euros ($1.1 billion) a year for acquisitions. Buberl said the company will be “very active” in pursuing any potential targets or invest to accelerate growth in markets including Thailand, Indonesia, China. The IPO will increase Axa’s financial flexibility to fund larger investments as well, he said. Should the company find no suitable targets, Axa could return cash to shareholders instead.

“We would like to focus on deals of the magnitude” between 1 billion euros and 3 billion euros, Buberl said. “We are not ruling out for now to return part of these funds to our shareholders if we don’t find the targets” fitting Axa’s strategy.

‘Regulatory Divergence’

Axa last year generated about 14 percent of group revenues from the U.S. The insurer made 905 million euros in operating profit from life and savings in the country last year, an 8.5 percent increase from a year earlier. About a quarter of its life and savings new business is generated in the U.S., where it is the third-largest provider of variable annuities.

Citigroup Inc. said in a note that a back-of-the-envelope calculation suggests an IPO of Axa’s U.S. life business could potentially raise between 3 billion euros and 4 billion euros, assuming that half is sold at a 20 percent discount.

“We have seen over the last month some regulatory divergence between Europe and the U.S.,” Buberl said on a call with journalists. The IPO will allow Axa’s U.S. activities to better compete with its U.S. rivals as economic recovery and the new administration may favor “stronger and more profitable growth” conditions.

The insurer plans to convert about $1 billion of outstanding debt owed by the U.S. unit to the group into equity ahead of the IPO. The U.S. unit of Axa Investment Managers is not affected by the plans, a spokeswoman for the firm said in an emailed statement.