Shares of XL Group (XL) skyrocketed at the opening of Monday trading, after France’s biggest insurance company, AXA, announced it was merging with the insurer a $15.3 billion deal. Following the announcement, shares of the casualty and property insurance group rose to $56.24, an increase of 29.7%.

The merger will be funded by AXA, using $7.5 billion from the planned initial public offer of its American annuity and life business, $4.5 billion cash at hand, and $3.5 billion of subordinated debt.

The $15 billion agreement was unanimously accepted by the boards of both companies. However, transaction completion is subject to approval by the shareholders of XL Group and other customary conditions, including regulatory approvals receipt, which is expected to take place during this year’s second half.

The merger will see XL shareholders receive $57.6 a share, representing a premium of 33% to its closing price.

XL Outlook & Earnings

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XL Group released its fourth-quarter earnings report last month and reported its net investment income as $217.7 million up from $196.2 million in the previous period.

This increase was largely aided by higher rates of reinvestment from portfolio management activities and active sector rotation. Income derived from affiliates stood at $14.8 million, compared to $47.8 million in the previous year quarter, mainly due to low hedge-fund performance.

During the quarter, operating expenses were 21.2% or $110 million favorable as compared to the previous quarter. The figure was primarily driven by integration costs absence, which was $58.7 million in the previous quarter and a reduction in compensation costs.

XL Group’s Executive Comments

XL Group chief executive officer Mike McGavick had this to say during the announcement of the company’s deal with AXA: 

“Unrivalled opportunity that will help propel our strategy with new dimension and strength has been marked today. We are proud of how we have positioned our company for the future. It’s a substantial testament to the leadership of AXA and commitment to accelerating the XL Group culture and brand that we have reached a consensus.”

“We are happy at the chance to build the geographical footprint, unmatched innovation commitment, scale, and product portfolio. Our like-minded partners that we have found at AXA are dedicated to the absolute need to move and innovate this industry.”