Thomas Buberl is trying to clean up an old mess. The boss of $66 billion AXA bought XL Group back in 2018 to beef up its position insuring against storms and other catastrophes. At the time investors complained about two flaws in the $15.3 billion deal: it was overpriced, and bulking up in exposure to unpredictable hurricanes and wildfires risked making earnings more volatile. Buberl can’t do much about the first problem, but he may now fix the second – he’s considering flogging the most volatile unit of the business, the reinsurance arm that helps insurers manage their biggest risks.
, and bulking up in exposure to unpredictable hurricanes and wildfires risked making earnings more volatile. Buberl can’t do much about the first problem, but he may now fix the second – he’s considering flogging the most volatile unit of the business, the reinsurance arm that helpsHe may get a good deal. U.S. property catastrophe rates rocketed 50% on the most recent renewal date in early July. AXA XL’s reinsurance arm, about 10% of group revenues, also drove pricing up 7% last year.
recent sale of its reinsurance arm Validus Re, which was done at 1.4 times book value, XL’s reinsurance unit might be valued at around $2.8 billion. The extra cash may help placate investors that never much liked the deal, given that the contribution to earnings from XL should now be more stable. But Buberl is still mostly solving a problem he himself created.
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