AXA’s $15.3 Billion Acquisition of XL Group

Skadden is advising XL Group Ltd on the deal

AXA announced today that it has entered into an agreement to acquire 100% of XL Group Ltd (NYSE: XL), a leading global Property & Casualty commercial lines insurer and reinsurer with strong presence in North America, Europe, Lloyd’s and Asia-Pacific. The merger agreement has been unanimously approved by the boards of AXA and XL Group. Total consideration for the acquisition would amount to USD 15.3 billion (or Euro 12.4 billion), to be fully paid in cash. Under the terms of the transaction, XL Group shareholders will receive USD 57.60 per share. This represents a premium of 33% to XL Group closing share price on March 2, 2018.

Founded in 1986, XL Group is a leader in P&C Commercial and specialty lines with an active global network. XL Group generated USD 15 billion of GWP in FY17. It is a growing franchise with a high-quality underwriting platform and a rich and diversified product offering. XL Group is a highly agile company renowned for innovative client solutions and has a comprehensive business model of originating, packaging and selling risks. XL Group has ca. 7,400 colleagues worldwide and has a strong presence across specialty and mid-market segments via insurance and reinsurance.

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. 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. Euro 30 billion and total P&C revenues of ca. Euro 48 billion.

The opportunity to acquire XL Group has led AXA to review its exit strategy from its existing US operations4 which AXA now expects to accelerate. Together with the planned IPO of AXA’s US operations (expected in 1H 2018 subject to market conditions) and intended subsequent sell-downs, this transaction would gear AXA further towards technical margins less sensitive to financial markets.

The strong complementarities between AXA and XL Group provides opportunities for significant value creation, offsetting the planned US IPO earnings dilution as soon as 2018. It also allows for material capital diversification benefits under the Solvency II framework and a strong return on investment. In this context, AXA also reaffirmed its Ambition 2020 targets.

Upon completion of the transaction, 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 CEO of the combined entity and join AXA Group’s management committee, reporting to Thomas Buberl. 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. Following the closing, Mike McGavick, XL Group’s current CEO, will become Vice- Chairman of the combined P&C Commercial lines operations and special adviser to Thomas Buberl, AXA Group CEO, to advise on integration-related and other strategic matters.

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.

The Skadden team includes: Financial Institutions M&A partners Todd Freed (Picture) and Jon Hlafter, and associates Patrick Lewis, John Stewart and Liana-Marie Lien; Tax partner Sally Thurston; Executive Compensation and Benefits partner Neil Leff and associate Young Park (Boston); and Antitrust and Competition partner Kenneth Schwartz.


Involved fees earner: Todd Freed – Skadden Arps Slate Meager & Flom; Jon Hlafter – Skadden Arps Slate Meager & Flom; John Stewart – Skadden Arps Slate Meager & Flom; Patrick Lewis – Skadden Arps Slate Meager & Flom; Liana-Marie Lien – Skadden Arps Slate Meager & Flom; Sally Thurston – Skadden Arps Slate Meager & Flom; Neil Leff – Skadden Arps Slate Meager & Flom; Young Park – Skadden Arps Slate Meager & Flom; Kenneth Schwartz – Skadden Arps Slate Meager & Flom;

Law Firms: Skadden Arps Slate Meager & Flom;

Clients: XL Group ltd;


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Author: Ambrogio Visconti