A German subsidiary of savings and retirement services group Athora has signed a €660m deal to buy a closed book of life and pensions from AXA Germany.
The value of the deal includes approximately €50m of statutory earnings for this year.
The concerned portfolio, known as DBV-Winterthur Life (DWL), has around €19bn in assets under administration (AuA).
Primarily including traditional savings policies, the portfolio has been closed to new business since 2013, stated AXA.
Its purchase will boost Athora Germany’s business to €24bn of AuA and 1.1 million clients.
Before deal completion, AXA Germany plans to transfer DWL and its related balance sheet to a ‘well-capitalised’ firm. Athora Germany will then take over the company and combine it with its own brand.
As part of the deal, AXA IM will offer asset management services to Athora Germany for the next six years.
AXA Germany will also continue to offer administrative services to Athora Germany until 2028, following which the latter will assume the management of the contracts.
However, the terms, conditions, and guarantees, will continue to be the same.
“The reduction of guarantees on AXA’s balance sheet resulting from the sale will further diminish the Group’s exposure to financial market risk,” the insurer noted.
The deal, which awaits regulatory nod, is set to complete by the end of next year.
According to AXA, the transaction will have an ‘immaterial impact’ on its net income in the first half of this year, as well as on its Solvency II ratio.
In order to offset the earnings dilution from the sale, the insurer plans a share repurchase programme upon deal completion.
Commenting on the acquisition, Athora group CEO Michele Bareggi said: “This highlights our position as a preferred solutions provider because of our robust capital position, deep expertise in the retirement services industry and proven track record of executing transactions to deliver value to counter-parties.
“We have a strong reputation for managing guaranteed savings portfolios in Germany – with significant emphasis placed on prudent investment, risk and capital management – and we intend to play a long-term role in meeting customer demand for these products in this important European market.”