Stone Point makes move for Axa Re

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Axa, the French insurer, confirmed that it had received a binding offer for its reinsurance business from Paris Re, a new company backed by Stone Point Capital, the US-based private equity group.

Under the terms of the deal, Stone Point will pay ?120m above the value of Axa Re?s net assets and Axa would maintain a 5 to 10 per cent stake in the business.

The approach comes as part of a strategic review by Axa of its reinsurance activities as Axa?s chief executive Henri de Castries seeks to reposition the insurance group around its core life insurance and property and casualty insurance operations.

Mr de Castries said in a recent interview that he would not allocate ?an extra euro of shareholder funds? to Axa Re, which has been restructured heavily since being hit by the September 11 2001 attacks on New York?s World Trade Centre.

Axa Re?s gross premiums have fallen from ?3.6bn ($4.4bn) in 2001 to ?1.4bn in 2005. It has cut staff numbers, reshuffled its management, and focused on natural catastrophe risk, which accounts for about 60 per cent of revenues.

Its improved financial solidity was illustrated by the profits it made last year, in spite of the big losses inflicted on most of the reinsurance industry by a season of costly hurricanes in the US last year.

Axa said on Friday in a statement that, ?in recognition of the success of the business model implemented by Axa Re since 2003, Paris Re...plans to pursue the current strategy of Axa Re under the leadership of Han Peter Gerhardt.?

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