AXA reinforces its emerging markets of Asia
After months of twists, Axa announced Tuesday an agreement on the ultimate fate of its subsidiary AXA Asia Pacific Holdings (APH) is listed on the Sydney Stock Exchange. The group of Henri de Castries will sell 54% stake in the company since 1999 at the National Australia Bank (NAB). The bank and the insurance company will then share the French society: the assets of New Zealand and Australia for the NAB, the life insurance companies in Asia, representing approximately 70% of the total, for Axa.
Axa has wanted for years to simplify its relationship with the subsidiary remote. A first attempt to exit the minority shareholders had failed in 2004.
Five years later, the insurer has retried chance. Initially, he hoped to finish the deal with the asset manager of Sydney AMP.
But the scenario presented well oiled by the two partners in November last year had struck again to the independent directors of APH. They found insufficient supply of AMP.
The current buyer NAB had then, to everyone's surprise, invited in the negotiations. On 17 December he announced he had convinced the board of directors of APH with a slight improvement but also provides a payment in cash.
The arrival of the NAB has been even better received in Paris that the bank was modeled on the terms negotiated between AXA and AMP. The French insurer must pay a total of 2.2 billion Australian dollars (1.4 billion euros).This amount represents the difference between the price paid by AXA to buy the Asian assets and the value of the sale of 54% of Axa Asia Pacific.
Gain of 700 million
The exclusive agreement which bound to AMP Axa fell on February 6. AMP did not wish to re-evaluate its offer, Axa was then entered into negotiations with NAB. Since then, the two groups have worked on tax, financial, human resources … prior to the split of APH. The competition authorities should then give their opinion on April 22. Their permission is not granted because the NAB has completed several acquisitions in recent months. If the green light was obtained though the sale of AXA Asia Pacific is expected to close by the end of the summer.
Axa had raised 2 billion euros in November to fund the operation without tension.She will pocket a profit of 700 million euros and will not degrade very marginally its solvency ratio. AXA strengthens its position especially in emerging countries, by acquiring 100% of its life insurance subsidiaries in Hong Kong, Singapore, Malaysia, Indonesia, Thailand … Following the operation, 24% of new business volume group (life insurance) will come from emerging countries, against 15% a year earlier.
The year 2010 promises to be an already exceptional year in terms of operations of acquisitions in the insurance industry. Prudential and MetLife signed historical transactions with the former life insurance subsidiaries of AIG paid respectively 35.5 and 15.5 billion dollars. The takeover by Axa Asia Pacific NAB for about $ 11 billion in third place.