AXA Germany has reached an agreement to sell a portfolio of life and pensions insurance reserves worth €16 billion.
Under the terms of the agreement, AXA Germany will sell the portfolio to Athora Germany for a consideration of EUR660 million.
AXA noted that the portfolio has been closed to new business since 2013 and is mainly composed of traditional savings policies, with an average guaranteed rate of 3.2%.
At the same time, the reduction of guarantees on AXA’s balance sheet resulting from the sale will further diminish the Group’s exposure to financial market risk.
The transaction is expected to close at the end of next year, subject to closing conditions.
Prior to the closing of the transaction, AXA Germany will transfer the portfolio and its associated balance sheet to a well-capitalised company which will be acquired by Athora Germany and integrated under the Athora brand.
In addition, both Athora Germany and AXA Germany will also sign extensive service agreements for the five-year transition period during which the portfolio will gradually migrate to Athora. As part of the transaction, AXA will also enter into an agreement to provide asset management services to Athora Germany until 2028.
The transaction will be transformational for Athora in Germany which entered the market in 2015 and has since built a strong reputation for itself in delivering market leading results for customers.
Frederic de Courtois, AXA Group Deputy CEO, commented: “The sale of this portfolio marks an important milestone in the journey to optimize our Life & Savings in-force portfolios across the Group. Upon completion of this transaction, we will have secured Euro 24 billion out of the Euro 30-50 billion target reduction in traditional G/A reserves that we set for the Group. We are pleased with this transaction that will further improve the Group’s risk profile and enhance our cash position.”
Antimo Perretta, Chief Executive Officer Europe and Latin America, AXA, added: “This transaction was designed from its genesis with the interest of our customers and employees in mind. The agreement we signed today with Athora will ensure a smooth transition while maintaining the highest standard of service to our policyholders. Life insurance remains a strategic core business area for AXA Germany, and as such we will continue to offer our customers and insurance partners an attractive and comprehensive range of capital-light Retirement and Savings products.”
Michele Bareggi, Group CEO at Athora, said: “We have been strategically building Athora’s presence across Europe and are excited about the opportunity this deal provides for our growth in Germany. This highlights our position as a preferred solutions provider because of our robust capital position, deep expertise in the retirement services industry and proven track record of executing transactions to deliver value to counter-parties.
“We have a strong reputation for managing guaranteed savings portfolios in Germany – with significant emphasis placed on prudent investment, risk and capital management – and we intend to play a long-term role in meeting customer demand for these products in this important European market.”
Bareggi, concluded: “We look forward to welcoming the DWL customers into the Athora family and to continue to deliver great value and services to all our German customers on their long-term guaranteed savings products.”