New York Approves AXA Acquisition of XL Group

France’s AXA Group moved a step closer to closing on its acquisition of XL Group as Nw York insurance regulators have given their approval of the deal.

New York’s Department of Financial Services (DFS) on Friday announced it had approved an application by AXA Group, including AXA SA, to acquire XL Insurance Co. of New York and XL Reinsurance America. Each is a New York domestic stock property/casualty insurance company, which requires DFS approval for the proposed change of control.

Approval of the deal is still subject to other regulatory approvals and closing conditions. Insurer XL Group’s shareholders have already approved the deal. The transaction is expected to be completed before the end of this year.

New York Superintendent Maria T. Vullo said DFS approved the acquisition as “satisfying the requirements” of the state’s insurance law.

“This acquisition further demonstrates the strength of New York’s insurance market and the commitment that significant companies have to New York’s robust market and strong regulation,” Vullo said in prepared remarks.

DFS said AXA has given assurances regarding its plans of operation as well as ongoing DFS supervision.

AXA has secured financing for the 12.4 billion euros ($14.9 billion) acquisition of XL Group and is not dependent on the issuance of any additional debt.

At the end of 2016, the AXA Group of companies was the world’s largest insurance group, and based on its 2017 annual report, had total assets of 870 billion euros and gross revenues of 98.5 billion euros. In May, AXA Equitable Holdings, which encompasses AXA’s American operations, raised $2.75 billion in an initial public offering.

The New York XL companies that will be acquired provide significant reinsurance capacity in the U.S. insurance market. Based on their 2017 annual reports, XL Insurance Co. of New York and XL Reinsurance America combined have total assets of $6.2 billion and $981.3 million in gross revenues.

While AXA is acquiring the XL companies by means of a merger, they will be maintained within a new division within AXA. AXA has said intends to preserve the XL assets and maintain the current XL business model such that there will be no significant changes to the XL companies’ U.S. business.

Upon completion of the transaction, the combined operations of XL Group, AXA Corporate Solutions (AXA’s large commercial property/casualty and specialty business) and AXA Art will be led by Greg Hendrick, currently the president and chief operating officer of XL Group, who will be appointed CEO of the combined entity and join AXA Group’s management committee. This division twill be called AXA XL.

Hendrick will report to AXA Group Chief Executive Officer Thomas Buberl.

XL Group’s Chief Executive Officer Mike McGavick will become vice chairman of AXA XL and special adviser to Buberl to advise on integration-related and other strategic matters.