Rating agency says the company's strategy and earnings will counterbalance capital inadequacy

AXA Group’s core operations have been downgraded by rating agency Standard & Poor’s (S&P).

AXA ratings were lowered by one notch from AA to AA-, a rating that is three notches below the highest S&P rating of AAA.

S&P says the French-based insurer is unlikely to recover its capital adequacy enough to regain rating for at least a couple of years.

S&P says the ratings outlook for AXA is stable and the fundamentals of the group’s business, earnings, and management strategy are likely to counterbalance the negative effect of its capitalisation on its rating.

However, the downgrade could raise the cost of borrowing for the group. AXA reported a return to profit last year.