AXA is to acquire 1005 of XL Group Ltd, according to Actuarial Post. The purchase price is said to be $15.3bn, to be paid in cash.
Under the terms of the agreement, which has been approved by the boards of both AXA and XL Group, the shareholders of XL Group will be given $57.60 per share, representing a 33% premium on the XL Group closing share price of 2 March 2018.
The chief executive of AXA, Thomas Buberi, said: “This transaction is a unique strategic opportunity for AXA to shift its business profile from predominantly L&S 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.”
The purchase of the Bermuda-based specialist XL Group indicates the pressure on niche insurers. Low interest rates, tax reforms in the US and falling prices are creating a challenging environment for specialist insurers.