General Insurance Article - AXA - Potential acquisition of Genworth Lifestyle Protection


AXA announced today that it has entered into exclusive negotiation with Genworth Financial for the terms of its potential acquisition of 100% of Genworth Lifestyle Protection Insurance (“Genworth LPI”), which would be for a total cash consideration of Euro 475 million.

  

     
  1.   This acquisition would be a milestone in the development of AXA credit and lifestyle protection activities, which are currently operated by AXA Creditor, and accelerate AXA’s business mix shift towards more Protection products, in line with the Ambition AXA strategy
  2.  
  3.   The combined operations would rank #3 within the creditor insurance market in Europe, with a 9% market share1, and would be a European leader in credit and lifestyle protection
  4.  
  5.   Total consideration would amount to Euro 475 million, representing an implied 0.65x book value multiple as of end of FY14
 Genworth LPI is the #7 creditor insurance player in Europe (with 4% market share1), providing credit and lifestyle protection insurance. The company benefits from a broad distribution network based on well-established relationships with a wide range of leading financial institutions. Over the past years, it has built a strong competitive advantage with its proprietary IT platform providing centralized data and strong scalability.
  
 This transaction would complement AXA’s credit and lifestyle protection activities presence in key mature markets such as France, Germany and Italy and would provide entry into new markets with strong fundamentals, notably the Nordics and Southern Europe. It would also support the Group’s acceleration in high growth markets such as China, Latin America, Turkey and Poland. Moreover, with Genworth LPI’s strong and lasting relationships with major banks, insurance companies and auto finance providers, AXA credit and lifestyle protection activities would be able to double their portfolio of strategic partners in Europe.
  
 The proposed transaction is subject to customary conditions, including completing a works council consultation process and obtaining required regulatory approvals, and should be finalized before the end of 2015. Further financial implications of this transaction, which is expected to be modestly accretive to underlying earnings, will be disclosed at a later stage.
  
 “This operation would be another milestone in AXA’s ambition to become a leading global provider of credit and lifestyle protection, a business in which we operate today through the AXA Creditor brand. It would represent a unique opportunity to obtain a scalable footprint in Europe and capture additional business potential in high growth markets. This transaction would also contribute to bringing our global expertise to the next level thanks to significant technical skills, a reinforced range of administration and digital tools as well as an enlarged products portfolio. We are particularly enthusiastic at the idea of supporting Genworth LPI in this new development phase, in the best interests of both its clients and employees”, said Denis Duverne, Deputy Chief Executive Officer of AXA.
  
 1 Source: Finaccord Creditor Insurance in Europe PartnerBASE and market model (2014). Market shares and rankings based on the weighted share of non-captive partnerships across the creditor insurance market related to consumer finance and credit cards in Europe.

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