Report AXA in Talks with Credit Suisse to Acquire Winterthur

June 12, 2006

Widely circulated reports indicate that France’s AXA Group has entered into serious negotiations with Credit Suisse aimed at acquiring the bank’s Winterthur Group of insurance companies.

The reports from Agence France Presse, the Wall Street Journal and the New York Times note that AXA, with the assistance of investment bank Goldman Sachs, has been given a two week “exclusivity” to conduct an investigation of Winterthur, and to make an offer.

So far none of the Companies involved have issued any statements concerning the reports.

Credit Suisse merged with Winterthur in 1997. Soon after, rumors began circulating that it might be interested in the selling the bujsiness in order to concentrat on its core banking and fianncial management business.

The Division has also been struggling. The bank added $1.1 billion to its reserves in 2002 (See IJ Website June 20, 2002). It has already sold off several units, including the sale of most of its international operations to XL Capital in July of 2001. It sold Churchill Insurance, its U.K. subsidiary, to the Royal Bank of Scotland for $1.82 billion in June of 2003, and later than month sold its life and P/C operations in Italy to Compagnia Assicuratri Unipol for $1.7 billion.

Nor is this the first time that AXA has been entered the picture as a potential buyer. In November 2004, the Financial Times reported AXA was in “serious discussions” with Credit Suisse to acquire Winterthur.

Those discussions went no further, and Credit Suisse had announced plans to make an initial public offering of Winterthur shares later this year, perhaps selling of as much as 20 percent of the Company.

AXA might have been better advised to stick with the earlier negotiations. Its offer in 2004, which Credit Suisse apparently rejected, was reportedly for around €5 billion ($6.5 billion at the time). Winterthur, Switzerland’s largest domestic insurer, is now valued at around €6.5 billion ($8.1 billion).

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