XL Group will become part of AXA in a $15.3 billion cash transaction that is expected to close during the second half of 2018. The deal will create one of the world’s largest property and casualty insurers, and will certainly be closely watched by insurance defense law firms that now serve on the XL Group panel counsel program.
Allianz SE and Hartford Financial Services Group also had expressed interest in XL, according to Insurance Journal, indicating that continuing industry consolidation may be in the future. AXA and XL said they expect to cut $200 million in annual costs as a result of the combination, although specifics were not disclosed.
Expected losses from 2017 hurricanes and California wildfires had caused XL’s market value to drop late in the year, prompting speculation of a takeover.
XL Group Lines of Insurance
XL Group, an international property and casualty company founded in 1986, generated $15 billion of gross written premiums in fiscal year 2017. The company offers property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. Professional liability products include: employment practices liability (EPLI), financial services, architects and engineers (A&E), pension fiduciary liability, wage and hour liability, cyber insurance, directors & officers (D&O), errors & omissions (E&O – lawyers, accountants, public entities, insurance agents, real estate agents), construction, and environmental. Property and casualty services include: construction, environmental, commercial auto, excess and surplus, life sciences, workers’ compensation, and healthcare. XL Group also offers motor cargo legal liability coverage.
XL Group maintains an active panel counsel programs across all of these insurance lines.
AXA
AXA Insurance Company, founded in 1859, specializes in international programs, including U.S. interests of corporations headquartered in Europe. AXA Group is the primary U.S. subsidiary of the Paris-headquartered AXA Group.
AXA products include property (commercial property, boiler and machinery, and inland marine coverages); casualty (commercial general liability, umbrella and excess liability policies which are part of European international casualty programs); marine (cargo policies through U.S. brokers, both for U.S. domestic corporations as well as for U.S. subsidiaries or affiliates of European based corporations); aviation (focus on products liability – manufacturers and their subcontractors, distributors, and any corporations involved in the aviation industry, including service providers); and yachting.
Implications for XL Group Panel Counsel Members
It remains to be seen whether AXA will keep the existing XL Group panel counsel program or consolidate it within AXA panel counsel. XL Group panel counsel members will want to both understand the plans for the post-acquisition integration efforts, while also accelerating the search for potential replacement panel positions.
Upon completion of the transaction, the combined operations of XL Group, AXA Corporate Solutions (AXA’s large commercial P&C and specialty business) and AXA ART will be led by the current President and COO of XL Group, who will be appointed CEO of the combined entity and join AXA Group’s management committee. Following the closing, XL Group’s current CEO, will become Vice-Chairman of the combined P&C commercial lines operations and special adviser to AXA Group’s CEO.
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