Axa and UAP merger creates pounds 5.3bn giant

Axa and Union des Assurances de Paris, two French insurers, stunned European stock markets yesterday by announcing plans for a Fr45.1bn (pounds 5.3bn) merger that would create the world's second-largest insurance company after Nippon Life of Japan.

In terms of assets under management, however, the combined group will be the world's largest insurer.

Axa has Fr1,550bn of assets under management while UAP has Fr743bn.

"It's an industry-shaking move with enormous ramifications for the European insurance industry," said Charles Landa, an insurance analyst at Societe Generale Strauss Turnbull. "It's got to lead to further consolidation."

In the UK the merger will make the group the country's third-largest life insurer as Axa owns Axa Equity & Law and UAP owns 60 per cent of Sun Life. Under the terms of the deal Axa, Europe's third-largest insurer, is in effect taking over its larger rival UAP, which was privatised in 1994.

Analysts predict numerous benefits for UAP, which lost money last year but returned to profit in the first half of 1996. UAP, a regular target for bid speculation after its losses last year and depressed share price, has seen its shares rise 14.3 per cent since late last month.

Its shares were suspended yesterday at Fr116.9 francs. "There have been plenty of rumours about UAP but they had all been discounted," said one analyst. Dealings in Axa's shares were also suspended yesterday with the price at Fr318.5 francs.

News of the merger sent shares in other UK insurance companies higher amid expectations that the deal would prompt further mergers among insurance companies. "There has been a general trend towards consolidation but this will quicken the process," one analyst said.

Shares in Legal & General ended 7.5 p higher at 332.5 p, while Prudential's shares rose 8p to 457p. Sun Life closed at 243.5, up 5.5p.

Axa and UAP said they would capitalise on their complementary businesses and geographical presence. The combined group will become the number one insurer in France and the insurers said they would rank among the leaders in the UK, Belgium, Germany and Spain. The deal will increase their presence in Italy and the Netherlands.

UAP shareholders will receive 10 UAP shares for four Axa shares plus four "certificates of guaranteed value".

If Axa's shares are below Fr392.50 in June 1999, the certificates entitle holders to receive the difference between that and the market price. The certificates can pay no more than Fr80 per certificate, or Fr32 per UAP share.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas