AXA swoops in to buy XL Group

XL Group has been bought by French insurer AXA in a $15.3 billion deal.

The merger has been unanimously approved by the boards of AXA and XL Group, with the acquisition being fully paid for in cash.

“Today marks an unrivalled opportunity to accelerate our strategy with a new strength and dimension,” said Mike McGavick, chief executive officer of XL Group. “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.”

In a statement the companies said that 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. They added that 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 around €30 billion and total P&C revenues of around €48 billion.

The acquisition has led AXA to review its exit strategy from its existing US operations which AXA now expects to accelerate. Combined with the planned IPO of AXA’s US operations (expected in the first half of 2018 subject to market conditions) and intended subsequent sell-downs, this transaction would gear AXA further towards technical margins less sensitive to financial markets.

“XL Group has the right geographical footprint, world-class teams with recognized expertise and is renowned for innovative client solutions,” said Thomas Buberl, chief executive officer of AXA. “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 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.

After completion 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 chief executive officer of the combined entity and join AXA Group’s management committee, reporting to Thomas Buberl. McGavick will become vice-chairman of the combined P&C commercial lines operations and special adviser to Buberl to advise on integration-related and other strategic matters.