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 business.
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
platform.
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
adjustment.
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
business
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
intangibles,
- +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
In GBPm
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
About AXA
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
FORWARD-LOOKING STATEMENTS
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. ---------------------------------
[1] Including £26m (plus interest) to be paid on completion of
certain steps in the agreed post-completion reorganisation
[2] 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 and assumptions
[3] 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