The merger and acquisition rumours continue, with the latest being that Bermudian insurance and reinsurance firm XL Group is targeted as a potential purchase by French insurance and investment giant AXA.
The news was first reported by Bloomberg on Saturday, who said that talks between AXA and XL Group are at an advanced stage.
This follows other market rumours that included Allianz being a potential suitor for XL Group, as well as Swiss Re perhaps also being in the running.
According to the reports, which cite people familiar with the transaction discussions, AXA which is valued at around $75 billion is looking to acquire XL Group which is valued at around $11 billion.
AXA had previously said that its focus for acquisitions would be narrowed to complementary areas of business and in developed markets including the U.S. or key European economies, as well as high-growth emerging regions such as China and Brazil.
XL has a strong business through the XL Catlin brand in the U.S. and Europe, as well as an expanding global footprint, with specialisms in non-life property and casualty insurance and reinsurance, commercial insurance, catastrophe and specialty reinsurance, as well as other lines.
XL Group’s share price has risen by roughly 23% this year, boosting its valuation, but the firm clearly remains an attractive target for larger players in the market, as evidenced by recent acquisition rumours.
XL purchased Catlin Group Limited in 2015, giving the firm an enlarged specialty and London operation, including larger Lloyd’s syndicate facilities, as it sought to position itself as a leading global specialty insurance and reinsurance player.
In its insurance business, XL leads more than 70% of the almost 3,500 programs it participates in, while its reinsurance business is a global player and a preferred partner for many.
XL being much smaller than AXA means the firm could likely acquire it relatively easily, perhaps allowing it to remain its own entity and brand, to segment off a new focus on the specialty arena XL concentrates on.
AXA’s CEO Thomas Buberl has previously said that one of its areas of strategic focus would be on commercial property and casualty lines of underwriting, making XL potentially a good fit.
AXA has also been promising to rationalise its business, with a listing of some U.S. businesses planned and disposal of some of its stake in AllianceBernstein, the proceeds of which it said would be put towards acquisitions and shareholder returns of capital.
Neither company has responded to any requests for comment and no statement on the rumour has been forthcoming, so we’ll have to wait and see how accurate this latest major re/insurance M&A rumour is.
