AXA to Take a Stake in Russia's 2nd Largest Insurer RESO Garantia
December 21 2007 - 6:36PM
PR Newswire (US)
7% P&C market share - Russia's 2nd largest agent network PARIS,
Dec. 21 /PRNewswire-FirstCall/ -- AXA announced today it has
reached an agreement with RESO Garantia's ('RESO') shareholders to
acquire a 36.7% stake in the company for a total cash consideration
of ca. Euro 810 million. This investment is expected to be
accretive within 3 years. As part of this agreement, AXA will have
the option to buy out the remaining stake through calls exercisable
in 2010 and 2011. AXA and RESO's shareholders have also agreed to
form a joint venture to develop an operation on Russia's emerging
life & savings market. Founded in 1991, RESO has built one of
the leading P&C insurance franchises in Russia (7% market
share), notably focused on retail motor, and supported by a network
of 18,000 agents, the 2nd largest in Russia. In the first half of
2007, the company posted revenues of Euro 446 million and a net
income of Euro 41 million. Shareholders' equity was Euro 195
million as of June 30, 2007. RESO's current shareholding structure
is mainly composed of the founders and management of the company
(ca. 90%) and the EBRD (10%). Both parties will sell a stake to AXA
proportionate to their holding. Under the terms of the agreement,
RESO's current management team will continue to run the company and
roll-out its successful strategy. AXA will have management control
of the life joint venture. "RESO is a high quality company, with a
strong management team and a leading competitive position based on
solid and healthy fundamentals," said Henri de Castries, Chairman
of the AXA Management Board. "This strategic investment is an
excellent opportunity for AXA to enter the Russian insurance
market, which offers strong growth prospects and a favorable
business environment. With this acquisition, AXA will further
reinforce its growth profile and increase its exposure to emerging
insurance markets." This transaction is expected to be completed
during the first half of 2008. As part of the agreement, AXA will
grant a 6-year $1 billion credit facility to RESO's main
shareholder, fully secured by its shareholding in the company.
About the Russian insurance market The size of Russian insurance
market was $21.5 billion in 2006(1), with life insurance accounting
for only 2% of this amount. It recorded an average growth rate of
19% p.a. between 2002 and 2006. Non-life insurance penetration rate
was 2.3% of GDP in 2006. Only 10% of Russia's 36 million cars have
damage insurance, and 7% of Russia's homes (143 million
inhabitants) are insured. Distribution is dominated by agent
networks, while direct and non proprietary distribution channels
begin to emerge. About RESO Garantia With a 7% market share, RESO
was the second largest insurance company in Russia in 1H 2007, with
main business lines being motor damage and motor third party
liability. It had 6,000 employees and over 3 million retail and
corporate clients as of June 2007. Over the years, RESO has
actively invested to set up the second distribution network in the
industry, with sales forces of ca. 18,000 tied agents covering
virtually all of the Russian Federation (82 regions out of 89) and
generating 74% of its revenues, as well as a broad network of 546
branches (11% of revenues). RESO Garantia - Key figures IFRS - in
million euro FY2005 FY2006 HY2007 GWP 417 470 446 Combined ratio
92.4% 94.3% 86.9% Net income 40 40 41 Shareholder's equity 86 155
195 Total assets 407 595 796 Corporate governance RESO's management
is supervised by a Board of Directors comprising 11 members and 3
committees - the Audit Committee, the Remuneration Committee and
the Investment Committee. According to its agreement with existing
shareholders, AXA will have 3 Directors and a representative on
each of the Board's committees. It will have specific minority
rights, including approval of changes in share capital and
acquisitions. This press release is available on the AXA Group web
site: http://www.axa.com/ About AXA AXA Group is a worldwide leader
in Financial Protection. AXA's operations are diverse
geographically, with major operations in Western Europe, North
America and the Asia/Pacific area. IFRS revenues amounted to Euro
79 billion for full year 2006 (Euro 51 billion for 1H07) and IFRS
adjusted earnings amounted to Euro 5,140 million (Euro 3,424
million for 1H07). The AXA ordinary share is listed on Eurolist A
of Euronext Paris under the ticker symbol CS (ISIN FR0000120628 -
Bloomberg: CS FP - Reuters: AXAF.PA). The American Depository Share
is also listed on the NYSE under the ticker symbol AXA. AXA
Investor Relations: Etienne Bouas-Laurent: +33.1.40.75.46.85
Paul-Antoine Cristofari: +33.1.40.75.73.60 Emmanuel Touzeau:
+33.1.40.75.49.05 George Guerrero: +1.212.314.28.68 Individual
shareholders: +33.1.40.75.48.4 AXA Media Relations: Christophe
Dufraux: +33.1.40.75.46.74 / + 33.6.15.04.89.66 Clara Rodrigo:
+33.1.40.75.47.22 / + 33.6.20.37.37.43 Laurent Secheret:
+33.1.40.75.48.17 / + 33.6.83.71.69.80 Mary Taylor:
+1.212.314.58.45 IMPORTANT LEGAL INFORMATION AND CAUTIONARY
STATEMENTS CONCERNING FORWARD LOOKING STATEMENTS This press release
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DATASOURCE: AXA CONTACT: Etienne Bouas-Laurent, +33-1-40-75-46-85,
Paul-Antoine Cristofari:, +33-1-40-75-73-60, Emmanuel Touzeau,
+33-1-40-75-49-05, George Guerrero, +1-212-314-28-68, all of AXA
Investor Relations; Individual shareholders, +33-1-40-75-48-4;
Christophe Dufraux, +33-1-40-75-46-74, or + 33-6-15-04-89-66, Clara
Rodrigo, +33-1-40-75-47-22, or + 33-6-20-37-37-43, Laurent
Secheret, +33-1-40-75-48-17, or + 33-6-83-71-69-80, Mary Taylor,
+1- 212-314-58-45, all of AXA Media Relations Web site:
http://www.axa-equitable.com/ http://www.axa.com/
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