French insurance giant AXA has entered into a memorandum of understanding with SNS Reaal regarding the sale of its Dutch insurance operations, comprising 100% of AXA Netherlands, Winterthur Netherlands and DBV Netherlands, to the Dutch financial services company for a total consideration of E1.75 billion.

According to AXA, the Dutch insurance market offers limited opportunities to reach a leading position in the country through organic growth, due to the highly competitive market, which is dominated by large local players.

As a result, AXA’s management believes that the proposed sale to a larger market participant is the most efficient way to maximize value creation, and that the proposed transaction should also create new and exciting opportunities for employees of its Dutch operations.

AXA’s affected Dutch operations will be treated as discontinued operations in the insurer’s 2007 consolidated financial statements. As a consequence, its earnings until closing date will be accounted for in net income. The sale is expected to generate an exceptional capital gain of approximately E400 million, which will also be accounted for in 2007 net income.