XL Group benefits from acquisition by AXA

Fitch Ratings has placed the ratings of XLIT (XL, a Cayman Islands subsidiary of XL Group) and its property/casualty re/insurance subsidiaries on Rating Watch Positive from Negative Outlook following the planned acquisition by AXA.

XL has entered into an agreement to be acquired by French insurance and asset management company AXA for $15.3 billion.

The Positive Watch reflects the fact that the ratings will likely be aligned to AXA's ratings after deal completion with XL expected to be viewed by Fitch as either a "Very Important" or "Core" subsidiary per its criteria for group rating methodology.

Favourably, XL will be part of a very strong, larger multi-line organization in combining with AXA. AXA is the largest insurer in Europe by gross written premiums and has a strong presence in major insurance markets worldwide. Its management is pursuing a consistent strategy, diversifying by geography and business lines and expanding operations in emerging markets. AXA expects to complete an IPO of its US life operations in the first half of 2018.

The combined P/C operations of XL and AXA will be led by Greg Hendrick as CEO, currently the president and chief operating officer of XL. Mike McGavick, XL's current CEO, will become vice chairman of the combined P/C commercial lines business and advise on integration-related and other strategic matters.

Fitch affirmed XL's ratings and revised the Outlook to Negative from Stable on Oct. 27, 2017, due to a meaningful deterioration in capitalization following significant net natural catastrophe losses incurred in the third quarter of 2017, primarily from Hurricanes Harvey, Irma and Maria.

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