Axa, Europe's second-biggest insurer, said it is in talks to sell part of its UK life insurance unit to Resolution Ltd. for £2.75 billion.
Under the proposed transaction, Axa would receive £2.25 billion in cash and the remainder in senior deferred consideration notes, the Paris-based company said in a statement today.
Resolution, the investment firm Cowdery started two years ago, plans to fund the purchase through a £2 billion rights offer, the company said in a separate statement.
European insurers including Axa and Prudential Plc are seeking to free up capital reserves used to back policies in slower-growing markets like the UK to fund growth in Asia, where margins are wider.
Resolution paid £1.9 billion for Britain's Friends Provident Plc last year, the first of as many as
four purchases it's planning as it aims to merge U.K. life insurers and sell the enlarged group back to investors by 2013.
Axa's life insurance division is the eighth-biggest in the UK according to data compiled by the Association of British Insurers. Axa plans to keep its wealth management and non-life insurance operations in the U.K.
Axa's UK life and savings operations posted a €33 million net loss in 2009, compared with a €257 million profit a year earlier. Axa's gross annual life and savings sales in the UK fell 22 per cent to €2.78 billion as investment fees and premiums dropped.