Cinven agrees to acquire ALE from Axa for €925m

Kenny Wastell
02 August 2018

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Cinven has agreed to acquire Ireland-headquartered life insurance business Axa Life Europe (ALE) from Axa Group in a deal that would value the company at тЌ925m.

While Axa said in a statement that it will generate €1.165bn from the divestment of ALE, €240m of this amount is accounted for by a pre-sale dividend.

The deal would be the 12th investment made with capital drawn from Sixth Cinven Fund, which closed on its €7bn hard-cap in June 2016.

The announcement comes weeks after the GP transferred life insurance business Viridium Group into its latest fund and provided additional equity funding for the bolt-on of competitor Generali Lebensversicherung.

Though both businesses operate in the life insurance space, Unquote understands that ALE and Viridium will remain entirely separate businesses, with independent M&A strategies operating in different areas of the sector.

According to a recent report by Unquote sister publication Debtwire, other bidders involved in the auction included Blackstone, Cerberus and Onex. The publication also cited one source that said debt was expected to amount to 30-40% of the embedded value of the book, with the quantum likely to total around €400-500m.

A spokesperson for Cinven declined to comment on debt related to the deal.

Cinven said in a statement that ALE provides an opportunity for consolidation of the European variable annuity market, with a particular focus on Ireland and the Isle of Man. The GP said a number of European insurers are currently looking to divest their guaranteed back-book portfolios.

Cinven also said it has identified operational improvements, owing to the carve-out nature of the transaction, and it will look to optimise ALE's asset management and hedging strategies.

ALE's existing management team will remain in place following the deal.

The transaction is subject to regulatory and anti-trust approval, and is expected to be completed by the end of 2018, or early in 2019.

Company
Headquartered in Dublin, ALE is a provider of life insurance to customers in Germany, the UK, France, Spain, Italy and Portugal. The company manages 248,000 policies and €8bn in assets. It has €5bn in reserves, and German insurance contracts account for around 70% of its portfolio.

ALE is also a reinsurer of Axa's Japanese variable annuity portfolio. It has a headcount of 60. According to a statement issued by the vendor, underlying earnings attributable to ALE in its most recent financial year amount to €19m.

People
Cinven – Caspar Berendsen (partner); Andrea Bertolini (principal).
Axa Life Insurance – Eoin Lynam (CEO).

Advisers
Equity – JP Morgan (corporate finance); Milliman (insurance due diligence); Deloitte (financial due diligence, operational due diligence, IT due diligence, tax); Clifford Chance (legal); A&L Goodbody (legal); Marsh (insurance due diligence).