AXA expands in Russia with RESO-Garantia acquisition

by Gill Montia

Story link: AXA expands in Russia with RESO-Garantia acquisition

AXA, the French insurance group, is acquiring a 36.7% share of RESO-Garantia, the Russian insurance company, for $1.16 billion.

The transaction is expected to complete during the first half of 2008 and to be earnings enhancing within three years.

RESO is Russia’s second-largest insurer, with a 7% share of the domestic market. The company employs around 6,000 staff and specialises in motor insurance, operating through 18,000 agents.

It posted revenues of €446 million and net profit of €41 million in the first half of 2007.

Under the terms of the proposed agreement, AXA will have the option to buy out the remaining stake of RESO, through calls exercisable in 2010 and 2011.

The shareholders of both companies have also agreed to form a joint venture to develop a business focused on Russia’s emerging life and savings market.

Following the acquisition, RESO’s current management team will continue to run the company and AXA will have management control of the life joint venture.

Henri de Castries, AXA chief executive, describes the Russian insurance market as offering “strong growth prospects and a favourable business environment”.