AXA to sell €16bn in German life & pensions to Athora
AXA will sell €16 billion in reserves or €19 billion in assets under management on a closed book of guaranteed pension and life policies to Athora Germany for €660 million as a “significant milestone” towards AXA's goal of cutting €30-50 billion in IFRS general account reserves.
The portfolio, originally a DBV-Winthurtur Life book closed to new business since 2013, is mainly composed of traditional savings policies, with an average guaranteed rate of 3.2%. AXA hails the move as a reduction to the group's financial market risk.
The sale, valued at 18x 2022 expected earnings, will render €400 million in net cash proceeds for AXA at sale and reduce core earnings to the tune of €36 million annually. AXA will put proceeds to a share buyback to mitigate the expected hit to per share earnings. Pricing, at €610 million plus an expected €50 million in estimated earnings for 2022, remains subject to potential contractual adjustments.
“Upon completion of this transaction, we will have secured Euro 24 billion out of the Euro 30-50 billion target reduction in traditional G/A reserves that we set for the Group,” deputy CEO Frederic de Courtois (pictured) said of the deal. “We are pleased with this transaction that will further improve the Group’s risk profile and enhance our cash position.”
As part of the transaction, AXA will provide asset management services and policy administrative services to Athora until 2028 while Athora will take on terms, conditions and guarantees of the policies in full.
The deal should leave Athora Germany with €24 billion of AuA and 1.1 million customers, “helping it to achieve economies of scale in Europe’s second largest life insurance market,” the firm said in its statement. For the larger European market, Athora will brag of over €100 billion of consolidated AuA (including the proposed acquisition of Amissima Vita and portfolio transfer with NN Belgium).
“We have been strategically building Athora's presence across Europe and are excited about the opportunity this deal provides for our growth in Germany,” Athora group CEO Michele Bareggi said. “We intend to play a long-term role in meeting customer demand for these products in this important European market.”
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