AXA says US$15bn (AU$19bn) deal will propel it to number one in global P&C commercial, subject to regulatory and shareholder approval
AXA has agreed to buy XL Group for $15.3bn (AUD19.76 billion) to create “the leading global P&C commercial lines player across all lines”.
XL, a property and casualty commercial lines insurer and reinsurer with a presence in North America, Europe, Asia-Pacific and Lloyd’s.
XL shareholders will receive $57.60 per share; a premium of 33% to the company’s closing share price on Friday.
“This transaction is a unique strategic opportunity for AXA to shift its business profile from predominantly L&S business to predominantly P&C business, and will enable the Group to become the number one global P&C Commercial lines insurer based on gross written premiums,” AXA chief executive Thomas Buberl said.
“The transaction offers significant long-term value creation for our stakeholders with increased risk diversification, higher cash remittance potential and reinforced growth prospects.
“The future AXA will see its profile significantly rebalanced towards insurance risks and away from financial risks.”
Buberl said the combined P&C commercial lines operations of AXA and XL “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”.
Combined, AXA’s and XL’s P&C 2016 commercial lines revenues of €30bn (£27bn) would have propelled the group to the number one position in the market segment. Total combined P&C revenues would have been €48bn.
The combined operations of XL, AXA Corporate Solutions (AXA’s large commercial P&C and specialty business) and AXA Art will be led by Greg Hendrick, currently president and chief operating officer of XL, who will be appointed chief executive of the combined entity and join AXA’s management committee, reporting to Thomas Buberl. Greg Hendrick will work closely with Doina Palici-Chehab, AXA Corporate Solutions’ executive chairwoman, and Rob Brown, AXA Corporate Solutions’ chief executive, to build an integrated organization and leadership team for this new company.
Mike McGavick, XL’s current chief executive, will become vice chairman of the combined P&C commercial lines operations and special adviser to Buberl.
The acquisition is subject to approval by XL shareholders and regulators and is expected to be completed in the second half of this year.