AXA to Sell Dutch Operations to SNS REAAL for $2.35 Billion

France’s AXA Group announced today that it has entered into a memorandum of understanding with SNS Reaal, a Dutch financial-services company, leading to final discussions on the sale of its principal Dutch insurance operations for €1.75 billion ($2.35 billion). These include AXA Netherlands, Winterthur Netherlands and DBV Netherlands.

AXA explained its decision in a press release, which noted that “given the limited possibilities to reach a leading position through organic growth in the foreseeable future” in the Netherlands’ insurance market, its management had reached the conclusion “that the proposed sale to a larger market participant is the most efficient way to maximize value creation.”

Although AXA has a place in the highly competitive Dutch market – it ranks as the 7th largest life and savings provider and the 11th largest P/C carrier – the market is largely dominated by locally based companies, including ING and Aegon.

AXA described the move as part of its “active capital management discipline and its Ambition 2012 program.” It also said the transfer should “create new and exciting opportunities for employees of its Dutch operations,” although it didn’t go into details.
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AXA’s Dutch operations provided €143 million ($192.3 million) in “normalized earnings” in 2006. Their contribution to AXA’s Group EV was €1.529 billion ($2.05 billion), of which €1.349 billion ($1.81 billion) for Life & Savings EEV.

AXA said its “Dutch operations concerned by this proposed transaction will be treated as discontinued operations (held for sale) in AXA’s 2007 consolidated financial statements. As a consequence, their earnings until closing date will be accounted for in net income. Their sale should generate an exceptional capital gain of approximately €400 million [$538 million], which will also be accounted for in 2007 net income.”