Axa to buy XL for $15bn

Thomas Buberl CEO of French insurer Axa the company is said to be in advanced talks to buy XL Group which has a market value of $11bn. Pascal Rossignol  Reuters

France's AXA moved to buy Bermuda-based XL Group for US$15.3 billion (S$20 billion) yesterday to create what it said would be a world leader in property and casualty (P&C) insurance. That represents a premium of 33 percent to XL Group closing share price on 2 March. Together with the planned IPO of AXA's U.S. operations4 (expected in 1H 2018 subject to market conditions) and intended subsequent sell-downs, this transaction would gear AXA further towards technical margins less sensitive to financial markets.

Commenting on the deal, Buberl said, "Our combined P&C Commercial lines operations, will have a strong position in the large and upper mid-market space, including in specialty lines and reinsurance, and will complement and further enhance AXA's already strong presence in the SME segment".

The Wall Street Journal said the acquisition of XL "marks another step in AXA's plan to cut its exposure to financial markets and focus more on insurance products that aren't sensitive to swings in interest rates and stock prices".

The company expects the XL takeover to be cash accretive, and result in cost synergies of around $400 million per year, based on pre-tax earnings.

Calling the acquisition of the Bermuda-based business a "major leap forward in Axa's strategic journey", Axa promised it would now accelerate its exit from its existing USA operations.

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The deal would also hand $57.60 per share to XL Group shareholders, the terms of proposed transactions showed.

Once transaction has been completed, combined operations of XL Group, AXA Corporate Solutions and Axa Art will be directed by Greg Hendrick, current president and chief operating officer of XL Group, who will be appointed CEO of combined entity and go to Be part of AXA Management Committee.

Paris-based AXA said Monday that it has reached an agreement to buy all of XL Group Ltd in a deal approved by both boards.

AXA's shares fell 6.9 percent to 23.33 euros by 0955 GMT, as some analysts said the deal looked pricey.

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