AXA to buy XL Group for EUR12.4bn

Under the terms of the deal, XL shareholders will receive $57.60 per share, which is a premium of 33% to XL's closing share price on 2 March.

The transaction, which is expected to complete during the second half of the year, will be funded by around €3.5bn of cash at hand, €6bn from the planned US IPO and related transactions and €3bn of subordinated debt.

AXA chief executive Thomas Buberl said: "This transaction is a unique strategic opportunity for AXA to shift its business profile from predominantly life and savings business to predominantly property and casualty business, and will enable the group to become the number 1 global P&C commercial lines insurer based on gross written premiums.

"The transaction offers significant long-term value creation for our stakeholders with increased risk diversification, higher cash remittance potential and reinforced growth prospects. The future AXA will see its profile significantly rebalanced towards insurance risks and away from financial risks. XL Group has the right geographical footprint, world-class teams with recognized expertise and is renowned for innovative client solutions."

AXA said the combined group will have 2016 revenues of around €30bn and total P&C revenues of approximately €48bn.

In FY17, XL generated $15bn of gross written premiums, $5bn of which was from reinsurance.

Bryan Garnier said the deal, combined with the IPO of the US Life/AM business, "will significantly rebalance AXA’s sensitivity to P&C (including reinsurance), and thereby reduce its sensitivity to financial markets, which is good news in itself".

"At this stage, we see the deal as positive. However, note that half of the funding relies on the proper process of the US IPO, which could make some investors nervous as AXA has put itself in some kind of forced seller position."

At 0915 GMT, AXA shares were down 7.5% to 23.16.