AXA, Athora deal collapses after two years over market shifts

Global re/insurance giant AXA and Athora, an affiliate of Apollo Group Management, have cancelled a deal to transfer closed life and pensions policies nearly two years after it was first announced, citing “significant changes” in the market.

AXA Germany was to sell €16 billion in reserves or €19 billion in assets under management on a closed book of guaranteed pension and life policies to  Athora Germany for €660 million, according to the deal announced in July 2022.

However, the two parties have now “mutually agreed” to terminate the transaction, with Athora citing "significant changes in financial market conditions since signing."

Despite this, Athora says it remains committed to further growth in the German savings and retirement services market, and has meaningful undrawn equity capital, totalling €2.2 billion, to further grow its footprint in Europe.

AXA will retain the portfolio, which it describes as “well capitalised and duration matched”, along with its associated earnings. The company expects the termination to have no impact on the financial targets announced by the Group as part of its new strategic plan.

Separately, AXA Group’s subsidiary AXA Life Europe has entered into a reinsurance agreement with New Reinsurance Company, covering approximately €3 billion of variable annuity reserves.

This transaction is expected to result in a reduction in underlying earnings of approximately €20 million per annum from 2024 onwards, the company warned. AXA plans to offset the earnings dilution related to the reinsurance agreement at AXA Life Europe with a €0.2 billion share buyback to be completed by year-end.

The transaction, including the impact of the share buyback, is expected to have a ca. -1 point impact on AXA Group’s Solvency II ratio.

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