France’s AXA has agreed to buy Bermuda-based XL Group for US$15.3 billion, in a deal that would create one of the world’s biggest property and casualty insurers.
AXA, Europe’s second-biggest insurer in terms of market capitalization, offered US$57.6 for each XL share, representing a 33 percent premium to Friday’s closing price, Reuters reports.
XL has accepted the offer and will look to delist its shares after completion of the deal. AXA will finance the purchase with debt, cash and the proceeds of the IPO of its US business.
AXA CEO Thomas Buberl said the deal will enable the French financial group to dominate the global property and casualty market, and reduce its exposure to the volatility of financial markets.
“We will be number one in commercial insurance,” Reuters quoted Buberl as saying at a news conference in Paris on Monday.
AXA expects the XL takeover to be cash accretive, and result in cost synergies of around US$400 million per year, based on pre-tax earnings.
The XL acquisition would result in property and casualty insurance accounting for half of AXA’s earnings, rising from the current level of 39 percent.
The French company reaffirmed its 2020 financial targets, under which AXA aims to increase earnings per share by 3 to 7 percent a year over the 2016-2020 period, according to the report.
AXA’s deal comes just over a month after American International Group said it would buy reinsurer Validus for around US$5.6 billion.
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