AXA CEO Thomas Buberl commented, "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".
Axa will fund the deal through 3.5bn euros (£3.1bn) in cash, 6bn euros (£5.3bn) from a planned USA stock market listing of its life and annuity business and 3bn euros (£2.7bn) of debt.
Once the takeover goes through XL Group, Axa Corporate Solutions and Axa Art will be led by Greg Hendrick, now the president and COO of XL Group. It said the deal will make AXA more focused on insurance risks instead of financial risks, a key issue amid tighter regulation of financial markets. In reaction, XL shares are up almost 30% to $56.50 in pre-market trading.
The opportunity to acquire XL Group has led AXA to review its exit strategy from its existing U.S. operations4 which AXA now expects to accelerate.
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.
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. AXA's shares sank on announcement of the deal.
XL has already agreed to AXA's offer, and AXA, which ranks as Europe's second-biggest insurer in terms of market capitalisation behind Germany's Allianz, will look to delist XL's shares.
Mike McGavick, XL Group CEO, will become vice-chairman of the combined P&C commercial lines operation.
However, AXA shares fell 5 percent in early trading, as some analysts said the XL deal looked pricey.