PARIS, March 5, 2018 /PRNewswire/ --
- A major leap forward in AXA's strategic journey
- Creating the leading global P&C Commercial lines
player across all lines
- Strong complementarities expected to fuel future
earnings growth and value creation
- Effective use of proceeds from the planned US IPO and
intended subsequent sell-downs1, at an attractive
return
- Ambition 2020 targets reaffirmed
AXA announced today that it has entered into an agreement to
acquire 100% of XL Group Ltd (NYSE: XL), a leading global Property
& Casualty commercial lines insurer and reinsurer with strong
presence in North America,
Europe, Lloyd's and Asia-Pacific. The merger agreement has been
unanimously approved by the boards of AXA and XL Group. Total
consideration for the acquisition would amount to USD 15.3 billion (or Euro
12.4 billion2), to be fully paid in cash. Under
the terms of the transaction, XL Group shareholders will receive
USD 57.60 per share3. This
represents a premium of 33% to XL Group closing share price on
March 2, 2018.
"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 #1 global P&C Commercial lines insurer based on
gross written premiums. 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.
"XL Group has the right geographical footprint, world-class
teams with recognized expertise and is renowned for innovative
client solutions. 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 two companies share a common culture around
people, risk management and innovation, positioning AXA uniquely
for the evolving future of the P&C industry,"
said Thomas Buberl, Chief
Executive Officer of AXA.
"Today marks an unrivalled opportunity to accelerate our
strategy with a new strength and dimension. With every confidence
in how we have positioned XL Group for the future, it is a
substantial testament to AXA's leadership and commitment to
maintaining the XL Group brand and culture that we have come to an
alignment. We are excited at the opportunity to build the scale,
geographical footprint, product portfolio, and the unmatched
commitment to innovation that relevance in the global insurance
industry requires. In AXA we have found like-minded partners
committed to the absolute necessity to innovate and move this
industry forward," said Mike McGavick, Chief Executive Officer of XL
Group.
XL Group Overview
Founded in 1986, XL Group is a
leader in P&C Commercial and specialty lines with an active
global network. XL Group generated USD 15
billion of GWP in FY17. It is a growing franchise with a
high-quality underwriting platform and a rich and diversified
product offering. XL Group is a highly agile company renowned for
innovative client solutions and has a comprehensive business model
of originating, packaging and selling risks. XL Group has ca. 7,400
colleagues worldwide and has a strong presence across specialty and
mid-market segments via insurance and reinsurance.
Strategic Rationale
This acquisition is aligned with
AXA's Ambition 2020 preferred segments favoring product lines with
high frequency customer contacts, quality service and superior
technical expertise. XL Group provides both a premier specialty
platform complementing and diversifying AXA's existing commercial
lines insurance portfolio, and reinsurance capabilities that will
allow AXA an access to enhanced diversification and alternative
capital. The combination of AXA's and XL Group's existing position
will propel the Group to the #1 global position in P&C
Commercial lines with combined 2016 revenues of ca. Euro 30 billion and total P&C revenues of ca.
Euro 48 billion.
The opportunity to acquire XL Group has led AXA to review its
exit strategy from its existing US operations4 which AXA
now expects to accelerate. Together with the planned IPO of AXA's
US 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.
The strong complementarities between AXA and XL Group provides
opportunities for significant value creation, offsetting the
planned US IPO earnings dilution as soon as 2018. It also allows
for material capital diversification benefits under the Solvency II
framework and a strong return on investment. In this context, AXA
also reaffirmed its Ambition 2020 targets.
Governance
Upon completion of the transaction, the
combined operations of XL Group, AXA Corporate Solutions (AXA's
large commercial P&C and specialty business) and AXA Art will
be led by Greg Hendrick, currently
the President and Chief Operating Officer of XL Group, who will be
appointed CEO of the combined entity and join AXA Group'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' CEO, to build an integrated
organization and leadership team for this new company. Following
the closing, Mike McGavick, XL
Group's current CEO, will become Vice-Chairman of the combined
P&C Commercial lines operations and special adviser to
Thomas Buberl, AXA Group CEO, to
advise on integration-related and other strategic matters.
Completion
Completion of the transaction is subject
to approval by XL Group shareholders and other customary closing
conditions, including the receipt of required regulatory approvals,
and is expected to take place during the second half of 2018.
Financial details of the acquisition
Transaction
terms:
- Total transaction value of USD 15.3
billion (or Euro 12.4
billion5), representing a premium of 33% to XL
Group closing share price on March 2,
2018.
- P/E of 11x post synergies
- 10% return on investment
Financing and capital impacts:
- Financed by ca. Euro 3.5 billion
of cash at hand, ca. Euro 6.0 billion
from the planned US IPO and related transactions, ca. Euro 3.0 billion of subordinated debt
- Euro 9 billion of backup bridge
financing already in place
- Estimated debt gearing at ca. 32%, of which +3 points from the
US IPO related debt issuance, at year end 2018 with a target to be
reduced below 28% within two years
- Solvency II ratio estimated to be in the range of 190% - 200%
year end 2018, acquisition impact to be mitigated by operating
return and the planned US IPO
- Capital synergies of ca. 30% reduction of XL Group's SCR or +5
to +10 points benefit in the AXA Group Solvency II ratio expected
by 2020 from capital diversification following the approval and
integration of XL Group internal model
Earnings, synergies and cash:
- Compensating the US IPO earnings impact as soon as 2018
- Substantial synergies of ca. USD 0.4
billion pre-tax earnings per annum (ca. USD 0.2 billion from cost synergies, ca.
USD 0.1 billion from revenues
synergies and ca. USD 0.1 billion to
be saved through reinsurance net of additional reinsurance bought
to align with AXA Group's risk appetite)
- Cash accretive with more than 80% remittance ratio from XL
Group
Medium and long-term outlook following the
transactions
- Reduces sensitivities to financial markets
- Lower beta and cost of equity
- Increases cash remittance potential
- Reinforces Group's growth potential
About XL Group
- A leader in P&C Commercial and Tier 1 specialty lines
player
- USD 15 billion of GWP in 2017, of
which ca. USD 5 billion GWP from
reinsurance
- Long-term average loss ratio of 63%6
- Premier specialty platform with top-level capabilities
- Reinsurance business providing access to diversification and
alternative capital
- Strong access to large and mid-market segment
An investor presentation pack will be available
at 7:00 am Paris time on the AXA website:
https://www.axa.com/en/newsroom/press-releases
A press conference will be held at 9.15 am Paris
time in our Paris Headquarters.
An investor and analyst presentation/call will be
held at 3:30 pm London time / 4.30
pm Paris time in our UK
offices.
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FOR MORE
INFORMATION:
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ABOUT THE AXA
GROUP
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Investor
Relations:
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+33.1.40.75.48.42
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The AXA Group is a
worldwide leader in insurance and asset management, with 165,000
employees serving 105 million clients in 64 countries. In 2017,
IFRS revenues amounted to Euro 98.5 billion and IFRS underlying
earnings to Euro 6.0 billion. AXA had Euro 1,439 billion in assets
under management as of December 31, 2017.
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Wallace-Barnett:
François
Boissin:
Aayush
Poddar:
Shantanu
Priya:
Mathias
Schvallinger:
Alix
Sicaud:
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+33.1.40.75.46.85
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+33.1.40.75.56.66
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The AXA ordinary
share is listed on compartment A of Euronext Paris under the ticker
symbol CS (ISN FR 0000120628 – Bloomberg: CS FP – Reuters:
AXAF.PA). AXA's American Depository Share is also quoted on the OTC
QX platform under the ticker symbol AXAHY.
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The AXA Group is
included in the main international SRI indexes, such as Dow Jones
Sustainability Index (DJSI) and FTSE4GOOD.
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Individual
Shareholder Relations:
+33.1.40.75.48.43
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It is a founding
member of the UN Environment Programme's Finance Initiative (UNEP
FI) Principles for Sustainable Insurance and a signatory of the UN
Principles for Responsible Investment.
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Media
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This press release
and the regulated information made public by AXA pursuant to
article L. 451-1-2 of the French Monetary and Financial Code and
articles 222-1 et seq. of the Autorité des marchés financiers'
General Regulation are available on the AXA Group website
(axa.com).
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Corporate
Responsibility strategy:
axa.com/en/about-us/strategy-commitments
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THIS PRESS RELEASE
IS AVAILABLE ON THE AXA GROUP WEBSITE axa.com
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SRI
ratings:
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axa.com/en/investor/sri-ratings-ethical-indexes
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ABOUT XL Group
Ltd
XL Group Ltd
(NYSE:XL), through its subsidiaries and under the XL Catlin brand,
is a global insurance and reinsurance company providing property,
casualty and specialty products to industrial, commercial and
professional firms, insurance companies and other enterprises
throughout the world. Clients look to XL Catlin for answers to
their most complex risks and to help move their world forward. To
learn more, visit xlgroup.com
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Goldstein:
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203-964-3573
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Relations:
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IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS
CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 ("PSLRA")
provides a "safe harbor" for forward-looking statements. Any
prospectus, prospectus supplement, Annual Report to common
shareholders, proxy statement, Form 10-K, Form 10-Q or Form 8-K or
any other written or oral statements made by AXA, XL Group or on
AXA's or XL Group's behalf may include forward-looking statements
that reflect their respective current views with respect to future
events and financial or operational performance. Such statements
include forward-looking statements both with respect to AXA or XL
Group in general, and to the insurance and reinsurance sectors in
particular (both as to underwriting and investment matters).
Statements that include the words "expect," "estimate," "intend,"
"plan," "believe," "project," "anticipate," "may," "could," or
"would" and similar statements of a future or forward-looking
nature identify forward-looking statements for purposes of the
PSLRA or otherwise.
The proposed transaction is subject to risks and uncertainties
and factors that could cause AXA's or XL Group's actual results to
differ, possibly materially, from those in the specific
projections, goals, assumptions and statements include, but are not
limited to (i) that AXA and XL Group may be unable to complete the
proposed transaction because, among other reasons, conditions to
the closing of the proposed transaction may not be satisfied or
waived, including the failure to obtain XL Group shareholder
approval for the proposed transaction or that a governmental entity
may prohibit, delay or refuse to grant approval for the
consummation of the transaction; (ii) uncertainty as to the timing
of completion of the proposed transaction; (iii) the occurrence of
any event, change or other circumstances that could give rise to
the termination of the merger agreement; (iv) risks related to
disruption of AXA's or XL Group's management's attention from
ongoing business operations due to the proposed transaction; (v)
the effect of the announcement of the proposed transaction on AXA
or XL Group's relationships with their respective clients,
operating results and business generally; and (vi) the outcome of
any legal proceedings to the extent initiated against AXA, XL Group
or others following the announcement of the proposed transaction,
as well as AXA's and XL Group's management teams' response to any
of the aforementioned factors.
Undue reliance should not be placed on such statements because,
by their nature, they are subject to known and unknown risks and
uncertainties and can be affected by other factors. Please refer to
Part 4 - "Risk factors and risk management" of AXA's Registration
Document for the year ended December 31,
2016, for a description of certain important factors, risks
and uncertainties that may affect AXA's business and/or results of
operations and to XL Group's recent annual report on Form 10-K
available on XL Group's website. Neither AXA nor XL Group
undertakes any obligation to publicly update or revise any of these
forward-looking statements, whether to reflect new information,
future events or circumstances or otherwise, except as part of
applicable regulatory or legal obligations.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included herein or
elsewhere.
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION AND
WHERE TO FIND IT
This press release may be deemed to be solicitation material in
respect of the proposed transaction between XL Group and AXA. In
connection with the proposed transaction, XL Group will file with
the United States Securities and Exchange Commission ("SEC") a
proxy statement on Schedule 14A and may file or furnish other
documents with the SEC regarding the proposed transaction. This
press release is not a substitute for the proxy statement or any
other document which XL Group or AXA may file with the SEC or send
to shareholders in connection with the proposed transaction.
INVESTORS IN AND SECURITY HOLDERS OF XL Group ARE URGED TO READ THE
PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR
FURNISHED OR WILL BE FILED OR WILL BE FURNISHED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED
MATTERS.
Investors and security holders may obtain free copies of the
proxy statement (when available) and other documents filed with or
furnished to the SEC through the web site maintained by the SEC at
www.sec.gov or by contacting the investor relations departments of
XL Group or AXA. Investors and security holders may obtain free
copies of the proxy statement (when available) and other documents
filed with or furnished to the SEC by XL Group or AXA through the
web site maintained by the SEC at www.sec.gov or by contacting the
investor relations departments of XL Group or AXA.
PARTICIPANTS IN THE SOLICITATION
XL Group and its directors and executive officers, and AXA and
its directors and executive officers may be deemed to be
participants in the solicitation of proxies from XL Group's
shareholders in connection with the proposed transaction.
Information regarding XL Group's directors and executive officers,
including a description of their direct interests, by security
holdings or otherwise, is contained in XL Group's annual proxy
statement filed with the SEC on April 5,
2017, XL Group's Current Report on Form 8-K filed with the
SEC on October 26, 2017 and XL
Group's Current Report on Form 8-K filed with the SEC on
February 20, 2018. Information about
the directors and executive officers of AXA is set forth on its
website at axa.com. A more complete description will be available
in the proxy statement on Schedule 14A. You may obtain free copies
of these documents as described in the preceding paragraph filed,
with or furnished to the SEC. All such documents, when filed or
furnished, are available free of charge at the SEC's website
(www.sec.gov) or by directing a request to XL Group or AXA at the
Investor Relations contacts above.
1 Subject to market conditions
2 1 Euro = 1.2317 USD as of March 2,
2018 (Source: Bloomberg)
3 Completion of the transaction is subject to
approval by XL Group shareholders and other customary closing
conditions, including the receipt of required regulatory
approvals
4 Expected NYSE listing of AXA Equitable Holdings,
Inc., which is expected to consist of the AXA US Life & Savings
business and the AXA Group's interest in AllianceBernstein LP and
AllianceBernstein Holding LP ("AB"). AXA America Corporate
Solutions Inc. is not expected to be part of the planned IPO
5 1 Euro = 1.2317 USD as of March 2,
2018 (Source: Bloomberg)
6 Combined average over a period of 2008 to 2017 for
both XL Group and Catlin
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SOURCE XL Group Ltd