Xl Holdings Bhd · MYX:XL
Xl Holdings Bhd — Merger or Acquisition (March 2018)
34 slides from Xl Holdings Bhd's merger presentation, Mar 5, 2018
Slide 1: AXA to acquire XL Group: Creating the new AXA
AXA to acquire XL GroupCreating the new AXA March 5, 2018
Slide 2: Important legal information and cautionary statements
IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS AND THE TIMING OF THE PLANNED IPO AND INTENDED SUBSEQUENT SELL-DOWNSCertain statements contained herein may be forward-looking statements including, but not limited to, the timing of the transaction, AXA's co
Slide 3: Table of contents
Table of contents Introduction Transaction highlights XL Group overview Strategic rationale Financial aspects – Ambition 2020 Conclusion 3 AXA to acquire XL Group | March 5, 2018
Slide 4: Introduction
1 Introduction
Slide 5: Key takeaways
Key takeaways A major leap forward in AXA’s strategic journey Creating the leading global P&C Commercial Lines player across all lines Strong complementarities to fuel future earnings growth and value creation Effective use of proceeds from the planned US IPO and intended subsequent sell-downs1, at
Slide 6: Moving from a predominantly L&S company to predominantly P&C
Moving from a predominantly L&S company to predominantly P&C 50%P&C 10%Health AXA1 39%P&C New AXA1,2 Highly diversified AXA with reinforced cash remittance and growth potential 6 AXA to acquire XL Group | March 5, 2018 All notes are on pages 32 and 33 Back to agenda 20% Protection Adding XL Group Ex
Slide 7: Becoming the #1 global P&C Commercial Lines insurer
Becoming the #1 global P&C Commercial Lines insurer 13.4 7 AXA to acquire XL Group | March 5, 2018 All notes are on pages 32 and 33 Back to agenda 25.8 Peer 4 AXA + XL Group2 30.2 Peer 5 21.2 Peer 2 16.9 Peer 1 23.3 Peer 3 #1 global P&C Commercial Lines company Enhanced global footprint with access
Slide 8: Building the champion in large, mid-market and specialty risks
Building the champion in large, mid-market and specialty risks “AXA + XL Group” Very limited integration challenge, reflecting strong complementarity “Create the most innovative insurer known for solving complex risks enabled by the best talent in the industry with leading data and analytics, digita
Slide 9: A P&C dominated company to create substantial value for stakeholders
A P&C dominated company to create substantial value for stakeholders Increases the Group’s risk diversification Reduces sensitivities to financial markets Higher proportion of technical margin earnings Increases cash remittance potential Reinforces Group’s growth potential 9 AXA to acquire XL Group
Slide 10: Transaction highlights
2 Transaction highlights
Slide 11: Acquisition of XL Group: a key step in creating the new AXA (1/2)
Acquisition of XL Group: a key step in creating the new AXA (1/2) Global leading P&C Commercial Lines insurer and reinsurer Strong presence in North America, Europe, Lloyd’s and Asia-Pacific Growing franchise with high quality underwriting platform Strong teams with recognized expertise, renowned fo
Slide 12: Acquisition of XL Group: a key step in creating the new AXA (2/2)
Acquisition 1 of XL Group 100% paid in cash, for a price of USD 15.3 billion (Euro 12.4 billion) or USD 57.6 per share, i.e. a 33% premium to its closing share price on March 2nd Transaction valued at 11x P/E post synergies Financed with a combination of cash at hand, sub debt and US IPO related pro
Slide 13: Overview of XL Group
3 Overview of XL Group
Slide 14: XL Group overview: a compelling opportunity
XL Group overview: a compelling opportunity Founded in 1986, leader in P&C commercial and specialty lines Active global network, with ca. 7,400 colleagues worldwide USD 15 billion GWP in 2017, of which ca. 5 billion in reinsurance Strong access to large and mid-market segments Highly agile and innov
Slide 15: A high quality asset
A high quality asset 11.0 8.1 15.0 2014 2015 2016 2017 13.9 78% 62% 58% 2014 2015 2016 2017 57% Strong growth and excellent underwriting expertise Gross written premiums In USD billion Net loss ratio 1 Nat Cat ca. 63% 15 All notes are on pages 32 and 33 Back to agenda Historical long term average 2
Slide 16: Strong market presence and diversified reach
Speciality & Others Casualty &Professional Property Cat Property Non-Cat …supported by a strong market presence and diversified reach Professional 19% 20% Property Specialty & Other Casualty 23%24%33% 68% 20 Insurance G 17 32% P Reinsurance 22%28%31% 16 All notes are on pages 32 and 33 Back to agend
Slide 17: Strategic relevance of XL Group's key business lines
Strategic relevance of XL Group’s key business lines Premier specialty platform with top level capabilities Tier 1 specialty lines player – large, profitable, growing market with low risk of commoditization Innovative solutions to complex and emerging risks and source of new dynamic products Strongl
Slide 18: Strategic rationale
4 Strategic rationale
Slide 19: Continuity in AXA's ongoing transformation
Continuity in AXA’s ongoing transformation Health Protection P&C Commercial High frequency customer contacts Attractive segments for additional services Geared towards technical margin Ripe for innovation and new business models AXA’s November 2017 Investor Day Back to agenda 19 AXA to acquire XL Gr
Slide 20: A strong complementarity
A strong complementarity Leading global insurer with ca. €100bn revenues #1 insurance brand for the 9th consecutive year Leading pan-European SME player Leader in P&C Commercial Lines and specialty Industry-wide recognition 1 for high performance and customer satisfaction across its businesses Stron
Slide 21: Leading to substantial synergies and diversification benefits
leading to substantial synergies and diversification benefits Cost synergies ca. USD 0.2 billion pre-tax p.a. Rationalization of existing operations globally Rationalization of central functions Internalization of Asset Management mandates Capital synergies ca. 30% SCR reduction for XL Group or 5-10
Slide 22: A straightforward integration as AXA's sixth major geography
A straightforward integration as AXA’s sixth major geography/market France Asia Europe US “AXA + XL Group” International 22 Back to agenda
Slide 23: Financial aspects: Ambition 2020
5 Financial aspectsAmbition 2020
Slide 24: Financial implications of the transaction
Financial implications of the transaction Substantial synergies15x P/E11x P/E synergized Strong strategic and financial benefits for shareholders High return 10% ROI Cash accretion 80%+remittance ratio from XL Group Back to agenda 24 AXA to acquire XL Group | March 5, 2018
Slide 25: Financing plan of the transaction
Financing plan of the transaction Sub debt 25 All notes are on pages 32 and 33 Back to agenda ca. 3.0 Cash at hand US IPO and related pre-IPO transactions 1 ca. 3.5 Transaction value 12.4 ca. 6.0 Transaction fully financed in cash Limited additional debt issuance Temporary increase of our debt geari
Slide 26: Limited and temporary impacts on AXA Group's 2018 financials
Limited and temporary impacts on AXA Group’s 2018 financials Temporary increase in AXA Group’s debt gearing Strong estimated Solvency II position ca. 32% 25% FY18E 190% - 200% FY17 205% +0.2 6.5 26 All notes are on pages 32 and 33 Back to agenda US IPO2 XL Group Consensus integration 3 2018 pro form
Slide 27: Expected decrease in debt gearing within two years
Expected decrease in debt gearing within two years UEPS 3% - 7% CAGR1 target reaffirmed Strong estimated Solvency II position FY20E <28% FY18E ca. 32% 190% - 200% 27 All notes are on pages 32 and 33 Back to agenda >200% FY18E FY20E Material risk diversification and capital benefits under Solvency II
Slide 28: XL Group acquisition is positive in medium and long term
XL Group acquisition is positive in medium and long term 3% - 7% UEPS CAGR12015-2020 28 – 32 Euro billion 2016 -2020 cumulative FCF 2 12% - 14%Adjusted ROE2 Ambition 2020 targets reaffirmed Medium to long term outlook Reduces sensitivities to financial markets Lower beta and cost of equity Increases
Slide 29: Conclusion
6 Conclusion
Slide 30: Key takeaways
Key takeaways A major leap forward in AXA’s strategic journey Creating the leading global P&C Commercial Lines player across all lines Strong complementarities to fuel future earnings growth and value creation Effective use of proceeds from the planned US IPO and intended subsequent sell-downs 1, at
Slide 31: Thank you
Thank you
Slide 32: Notes (1/2)
Notes (1/2) 32 Page 51. Subject to market conditions Page 62016 pre-tax underlying earnings excluding AXA SA New AXA based on 2016 pre-tax underlying earnings excluding AXA SA and AXA US (Life & Savings and AB), and including 100% of XL Group. For XL Group, earnings are based on 2016 operating net i
Slide 33: Notes (2/2)
Notes (2/2) 33 Page 201. Highest in Customer Satisfaction within Large Insurers (J.P. Power 2016 & 2017 Large Commercial Insurance Study), #1 for Industry Product Innovation (Advisen’s Pacesetter Index 2016 & 2017), Top Performer in London Market Across Nearly All Metrics (Gracehurch survey), Re/ins
Slide 34: Glossary
Glossary 34 Insurance XL Group’s insurance operations provide customized insurance policies for complex corporate risks, focusing on lines of business believed to provide the best return on capital over time: Professional liability products include a broad range of coverages to professional services