Today is XL Group’s last day as an independent company as its new owner-to-be Axa received the final regulatory blessing to complete its $15.3bn acquisition of the NYSE-listed carrier.
The acquisition - first announced in March - remains the totemic deal in 2018, a year that will be defined for M&A. It is also one that put pressure on Axa’s youthful CEO Thomas Buberl who will be scrutinised closely by shareholders in the coming quarters to justify the handsome price he paid for the Bermudian firm.
Since the Q1 announcement, the two companies have worked closely to combine the operations, creating a large, new combined P&C unit led by XL’s former reinsurance head, Greg Hendrick, while also “de-risking” XL’s book by buying more reinsurance in the second quarter.
XL CEO Mike McGavick - the man who led XL from safety ten years ago as it looked exposed to the chill winds of the financial crisis - will become vice chairman of the unit. In ten years, he increased value in XL stock by almost 2,000 percent following its 2008 lows.
In contrast, Buberl received criticism when the transaction was first announced because of the apparent volte-face in the group’s M&A strategy, the high 2x price-to-tangible book value that the company paid and the fact the deal was not fully funded.
In the aftermath of the announcement, Axa’s share price dipped by almost 16 percent to EUR21.15 - wiping almost EUR6bn from its value - and it has only made a modest recovery since.
A later SEC proxy filing revealed that XL had talks with at least six other unsuccessful suitors in 2017-18.
Although not identified, they are thought to have included Allianz, The Hartford and Swiss Re.
Axa’s fund raising initiatives included a near $3bn IPO of its Axa Equitable Holdings unit.
While last month, Axa agreed to sell its European variable annuity group for EUR1.2bn ($1.4bn).