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Jun
14
AXA UK Life Business may be Acquired by Resolution
Posted on Jun 14, 2010 by Sergio Ulloa (G+)
Resolution Plc, the company headed by insurance tycoon Clive Cowdery, has been in talks with the French group AXA for over one month, to buy most of their AXA UK business for GBP 2.8 billion (EUR 3.36 billion; USD 4.1 billion). This deal would create one of the biggest life groups in Britain. The cash needed for this deal would be raised by a GBP 2.5 billion (EUR 3 billion; USD 3.66 billion) rights issue by Resolution, which lists already in the stock market. The embedded value of AXA UK business is estimated at GBP 3.5 billion (EUR 4.2 billion; USD 5.1 billion), a valuation of the worth of insurance companies based on the market value of net assets plus future profits from existing policies, therefore the deal would be widely considered by analysts as discounted. Resolution intends to combine AXA UK business with Friends Provident, which was acquired last year for almost GBP 2 billion (EUR 2.4 billion; USD 2.9 billion). Even though this merger will result in one of the largest providers of protection products and group pensions services in Britain, it will bring huge cost savings, but also job losses in the form of operational redundancies. The British operations of AXA employ 11,000 people disseminated across AXA Life, AXA Insurance, AXA PPP Healthcare and AXA Ireland. Offloading of these operations would allow AXA France to focus in fast business-growth areas such as Asia. It is understood in financial circles that Resolution intends to create a group with GBP 10 billion (EUR 12 billion; USD 14.6 billion) of embedded value by Q1 2011, which still gives room for Resolution to close on a bigger deal than this one with AXA. Companies mentioned: Resolution
Resolution Operations LLP is a privately owned advisory and operating firm which provides services to Resolution Ltd. Resolution Operations LLP is part of the Resolution Group that also includes Resolution Capital Limited and Resolution Financial Markets LLP. Resolution Capital Limited facilitated the creation and initial public offering of Resolution Limited. Resolution Financial Markets LLP undertakes for Resolution Operations LLP a range of activities that include working with investors to facilitate the direct placing of equity and debt with institutions.
AXA
AXA Group is a worldwide leader in Financial Services. Headquartered in Paris, the AXA Group companies are engaged in life insurance, health insurance and asset management services among others. AXA's operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area.