Global insurer AXA and Athora have mutually agreed to terminate the sale agreement related to the purchase of a closed life and pensions portfolio from AXA Germany, which was initially announced on July 14, 2022.
According to the announcement, AXA will retain this portfolio, which is well-capitalised and duration-matched, as well as its associated earnings.
It is important to note, that the termination is expected to have no impact on the financial targets announced by the Group as part of its new strategic plan, “Unlock the Future”
As well as this, the termination agreement is consistent with the contractual terms of the sale agreement between the parties and follows significant changes in financial market conditions since signing.
Athora remains committed to further growth in the German savings and retirement services market, and has meaningful undrawn equity capital, totalling €2.2 billion, to further grow its footprint across Europe.
In addition, AXA Group’s subsidiary AXA Life Europe has also entered into a reinsurance agreement with New Reinsurance Company that covers ca. Euro 3 billion of Variable Annuity reserves.
This transaction is expected to result in a reduction in underlying earnings of ca. Euro 20 million per annum from 2024 onwards.
From what we understand, AXA intends to offset the resulting earnings dilution related to the reinsurance agreement at AXA Life Europe with a Euro 0.2 billion share buyback to be completed by year-end.
The transaction, including the impact of the share buyback, is expected to have a ca. -1 point impact on AXA Group’s Solvency II ratio.
