PARIS, June 24, 2010 /PRNewswire/ -- AXA announced today that it has agreed
to sell to Resolution Ltd, its UK-based traditional life and pensions
businesses, its IFA protection and corporate pension businesses, and its
annuity businesses for consideration of GBP2.75 billion (or ca. EUR3.3
billion). This sale is consistent with AXA's intention to focus on growing its
wealth management business in the UK life & savings market.
This potential transaction does not call into question the AXA Group's
continuing long-term commitment to the UK market going forward. AXA UK will
continue to develop its leading AXA Wealth Management operations, comprising
the AXA wrap platform ('Elevate'), Architas Multi-Manager, AXA Wealth
International (including Isle of Man) and the AXA Winterthur Wealth specialist
pensions and investments operations, as well as its AXA Direct Protection
This capital efficient business represented 41% of total UK Life APE and
69% of total UK Life NBV in 2009.
The Group also remains fully committed to all its other UK-based businesses
including AXA Insurance, AXA PPP Healthcare, Bluefin and the UK operations of
AXA Investment Managers.
"As we have shown in the past, we are committed to focus on businesses that
benefit from the right combination of scale, competitive position, growth
prospects and profitability, as this is the best way to create sustainable
value for our clients, our distributors, our staff and our shareholders", said
Henri de Castries, Chairman and CEO of the AXA Group.
"With this transaction, we are selling to Resolution businesses, notably
protection and group pensions, which will benefit from Resolution's bigger
scale in these activities. We will focus on our UK wealth management business
where we are among the leaders and plan to continue to grow fast."
Rationale for the transaction
This transaction underlines AXA's focus in life & savings on further
optimizing capital allocation throughout the Group, towards identified business
lines (including Health, Protection and Unit-Linked) and geographies (including
high growth markets).
In recent years, AXA's strategy in the UK life & savings market has
concentrated on optimizing its traditional businesses notably by lowering their
capital requirements, and on repositioning its operations towards the more
profitable wealth management activities - as reflected in a number of key
initiatives such as the launch of Architas Multi-Manager and the 'Elevate' wrap
Through this transaction, AXA UK has the opportunity to accelerate this
repositioning and focus on its wealth management operations. These operations
have a market leading position with the scale, products and services to be well
positioned for market and regulatory changes such as the FSA's Retail
Distribution Review (RDR) scheduled for 2012, which will lead to products with
more transparent charges and limited commission-based sales.
"This is a significant step in AXA UK's strategy that sharpens our focus on
future profitable growth and builds on the market leading position that we have
developed in our wealth management business, as well as in our other
businesses: general insurance, healthcare insurance and Bluefin", said Nicolas
Moreau, CEO of AXA UK.
Impacts for the AXA Group
The consideration of GBP2.75 billion (or ca. EUR3.3 billion) consists of
GBP2.25(1) billion (or ca. EUR2.7 billion) in cash and GBP0.50 billion (or ca.
EUR0.6 billion) of Resolution Ltd senior Deferred Consideration Notes, which
bear an effective interest rate of 6.5% per annum and are repayable in
instalments over an 8 year period (4 year duration) and which are subject to
early repayment in full in certain circumstances including an IPO of any UK
insurance business of the Resolution Ltd Group. The face value of the Notes and
consequently the consideration may be reduced by up to GBP0.15 billion
depending on the amount of inherited estate which is found to be releasable
from the AXA Sun Life long term fund following testing at December 31, 2010.
Based on its current expectations with respect to the amount to be released
from the inherited estate, management does not currently anticipate a price
The purchase price to be received by AXA corresponds to:
- 0.86x(2) FY09 EV of the sold business adjusted for AXA
APH shares (GBP3.2 billion),
- 19x adjusted(3) FY09 underlying earnings of the sold
After the buy-back of EUR0.9 billion of AXA APH shares currently held by
AXA Life UK, net cash proceeds would be EUR1.7 billion for the AXA Group. These
proceeds will be dedicated to funding the further development of the UK wealth
management business and to redeploying capital more efficiently throughout the
AXA Group, while maintaining a strong balance sheet.
The transaction would have the following impacts on AXA:
- Ca. EUR-1.4 billion exceptional capital loss accounted for
in net income in 2010,
- Ca. EUR+0.8 billion on shareholders' equity net of
- +4 pts on Solvency I, which was estimated above 180% at
March 31, 2010,
- -1 pt on debt gearing, which was 26% at December 31, 2009,
- Ca. EUR-0.5 billion on Group EV, which was EUR30.4 billion
at December 31, 2009.
Approximately 2,200 AXA employees will be transferred to the Resolution Ltd
Group on completion of the transaction.
This transaction is subject to certain covenants and conditions customary
for a transaction of this nature, including the approval of the shareholders of
Resolution Ltd and the receipt of regulatory approvals. The closing is expected
to take place in 3Q 2010.
FY09 AXA Life UK key figures
APE NBV NBV Margin NB IRR Net inflows
Retained 344 60 18% 13% 920
Sold 496 27 5% 8% -1,820
Total UK Life 840* 87 10% 9% -900
* including GBP14m APE of non modelled businesses
AXA Group is a worldwide leader in Financial Protection. AXA's operations
are diverse geographically, with major operations in Europe, North America and
the Asia/Pacific area. For full year 2009, IFRS revenues amounted to Euro 90.1
billion and IFRS underlying earnings to Euro 3.9 billion. AXA had Euro 1,015
billion in assets under management as of December 31, 2009.
The AXA ordinary share is listed on compartment A of Euronext Paris under
the ticker symbol CS (ISIN FR0000120628 - Bloomberg: CS FP - Reuters: AXAF.PA).
AXA's American Depository Shares are also quoted on the OTC QX platform under
the ticker symbol AXAHY.
This press release is available on the AXA Group website: http://www.axa.com
IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS CONCERNING
Certain statements contained herein are forward-looking statements
including, but not limited to, statements that are predictions of or indicate
future events, trends, plans or objectives. Undue reliance should not be placed
on such statements because, by their nature, they are subject to known and
unknown risks and uncertainties. Please refer to the section "Cautionary
statements" in page 2 of AXA's Document de Référence for the year ended
December 31, 2009, for a description of certain important factors, risks and
uncertainties that may affect AXA's business. AXA undertakes no obligation to
publicly update or revise any of these forward-looking statements, whether to
reflect new information, future events or circumstances or otherwise.
 Including £26m (plus interest) to be paid on completion of certain
steps in the agreed post-completion reorganisation
 Or 0.80x a pro-forma EV of £3,446m reflecting adjustments mainly on
liquidity premium and cost of capital to align with Resolution Ltd methodology
 FY09 underlying earnings adjusted for £-106m one-off gain related to
internal restructuring of an annuity portfolio, £+16m dividend on AAPH shares
and on the business retained
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