Axa in [Pounds Sterling]5.4 Billion Winterthur Swoop

Article excerpt

Byline: NICK GOODWAY

CREDIT SUISSE today sold its insurance subsidiary Winterthur to French giant Axa for e7.9 billion ([pounds sterling]5.4 billion) in a deal that transforms the European insurance industry landscape.

The Swiss investment bank with huge operations in London said the proceeds from the sale would be used for expansion, but ruled out a major deal.

The sale brings to an end a troubled nine years of ownership of Winterthur that saw Credit Suisse, which paid [pounds sterling]5.6 billion for the business in 1997, pump in e2.4 billion of extra capital after equity markets collapsed in 2002.

It is another unwinding of the bancassurance model that was popular across Europe in the 1990s.

Axa was the front runner to buy Winterthur two years ago when Credit Suisse first declared it was a non-core business. At that stage, the French were said only to have offered just over e5 billion, which the Swiss rejected.

Credit Suisse has since grown the business under its chief executive Leonhard Fischer and had been examining a flotation for it later this year.

The purchase takes Axa into the world's top five insurersmeasured by assets under management as it adds Winterthur's e100 billion to its existing e1.1 trillion of assets under management.

The deal will be partly funded by a e4.1 billion rights issue at a 19% discount to Axa's share price in Paris yesterday. Axa will also take over [pounds sterling]500 million of inter-company debt between Credit Suisse and Winterthurtaking the entire value of the deal to e8. …