French insurer AXA goes large with XL Group purchase

PARIS: French insurer AXA snapped up Bermuda-based XL Group on Monday in a move it says will make it the leading provider of property and casualty coverage for businesses. The deal, for about $15.3 billion (12.4 billion euros) in cash, has been agreed by the boards of both companies and is expected to be completed in the second half of this year, AXA said in a statement.
It will see AXA speeding up its refocus away from the US market as it aims to shift towards more robust settings “less sensitive to financial markets”, it said.
Branding it “a major leap forwards in AXA’s strategic journey”, the French company said the acquisition offered “significant long-term value creation for our stakeholders with increased risk diversification, higher cash remittance potential and reinforced growth prospects”.
“The combination of AXA’s and XL Group’s existing position will propel the Group to the #1 global position in P&C (property and casualty) commercial lines with combined 2016 revenues of 30 billion euros and total P&C revenues of 48 billion euros,” the Paris-based insurer said.
The purchase price of $57.60 represents a premium of 33 per cent over XL Group’s closing share price on Friday.
The acquisition is AXA’s largest since it purchased Swiss insurer Winterthur in 2006 for 8.6 billion euros.
The insurer’s shares dropped seven per cent on the Paris stock exchange, however, with Bloomberg news citing an analyst as saying the price was at the upper end of expectations.
AXA described XL Group as “a highly agile company renowned for innovative client solutions and has a comprehensive business model of originating, packaging and selling risks”.
XL has some 7,400 employees around the world, whom AXA CEO Thomas Buberl described as “world-class teams with recognised expertise…”
The merger comes as AXA seeks to focus its activity on around 15 out of the 60 countries where it currently operates.
“The future AXA will see its profile significantly rebalanced towards insurance risks and away from financial risks,” Buberl said.
This planned shift comes as AXA — like many of its European rivals — struggles with low interest rates on life insurance premiums, and with strong rivalry from online competitors.— AFP