PREM14A 1 tv490553-prem14a.htm PRELIMINARY PROXY STATEMENT tv490553-prem14a - none - 9.263079s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12
XL GROUP LTD
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
Common shares, $0.01 par value per share
(2)
Aggregate number of securities to which transaction applies:
As of March 28, 2018, there were issued and outstanding: 258,171,836 common shares (including 16,000 restricted common shares issued and outstanding under XL Group Ltd’s Amended and Restated 1991 Performance Incentive Program (excluding treasury shares held by XL Group Ltd) and the Directors Stock & Option Plan; 2,327,946 common shares issuable under restricted share units granted under XL Group Ltd’s Amended and Restated 1991 Performance Incentive Program and the Directors Stock & Option Plan; 1,564,212 common shares issuable under performance unit awards granted under XL Group Ltd’s Amended and Restated 1991 Performance Incentive Program and the Directors Stock & Option Plan; and 9,511,372 common shares subject to outstanding options to purchase XL common shares under XL Group Ltd’s Amended and Restated 1991 Performance Incentive Program and the Directors Stock & Option Plan.
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
The maximum aggregate value was determined based upon the sum of: (1) 258,171,836 common shares multiplied by $57.60 per share; (2) 2,327,946 common shares issuable under restricted share units multiplied by $57.60 per share; (3) 1,564,212 common shares issuable under performance unit awards multiplied by $57.60 per share; and (4) the sum of each of the 9,511,372 common shares subject to outstanding options to purchase XL common shares multiplied by the excess, if any, of  (a) $57.60 per share, over (b) the applicable per share exercise price. In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying the sum calculated in the preceding sentence by 0.0001245.
(4)
Proposed maximum aggregate value of transaction:
$15,345,891,531.61
(5)
Total fee paid:
$1,910,563.50

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:

PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION — DATED APRIL 16, 2018
[MISSING IMAGE: lg_xlgroup.jpg]
[•] [•], 2018​
Dear XL Group Ltd Shareholder:
We cordially invite you to the special general meeting of the shareholders of XL Group Ltd (“XL”), to be held at One Bermudiana Road, Hamilton, HM 08, Bermuda, on [•] [•], 2018 at 9:00 a.m., Atlantic time or any adjournment thereof. We refer to such meeting as the “special general meeting.”
On March 5, 2018, XL entered into an Agreement and Plan of Merger with AXA SA (“AXA”) and Camelot Holdings Ltd., a wholly-owned subsidiary of AXA (“Merger Sub”) (we refer to the Agreement and Plan of Merger as the “merger agreement”). Pursuant to the merger agreement and a statutory merger agreement that is an exhibit to the merger agreement, Merger Sub will be merged with and into XL, with XL surviving the merger as a wholly-owned subsidiary of AXA (which we refer to as the “merger”).
Pursuant to the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger (which we refer to as the “effective time”), each holder of common shares of XL, $0.01 par value per common share (which we refer to as the “common shares”, and each as a “common share”), issued and outstanding immediately prior to such time (other than any common share that is owned by XL as treasury shares, by wholly-owned subsidiaries of XL or by AXA, Merger Sub or wholly-owned subsidiaries of AXA (with certain exceptions)) will be entitled to receive, with respect to each such common share, $57.60 in cash, without interest and less any required withholding taxes (which we refer to as the “merger consideration”). Common shares are currently quoted on the New York Stock Exchange under the symbol “XL” and on the Bermuda Stock Exchange under the symbol “XL.BH.”
We are soliciting proxies for use at the special general meeting or any adjournment thereof to consider and vote upon proposals to approve: (1) the merger agreement, the statutory merger agreement required in accordance with Section 105 of the Bermuda Companies Act 1981, as amended, and the merger (which we refer to as the “merger proposal”), (2) on an advisory (non-binding) basis, the compensation that may be paid or become payable to XL’s named executive officers in connection with the merger, as described in the proxy statement (which we refer to as the “compensation advisory proposal”) and (3) an adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes to approve the merger proposal at the special general meeting (which we refer to as the “adjournment proposal”). Holders of common shares will be entitled to vote on all three proposals. We urge all shareholders to read this proxy statement and the documents included with this proxy statement carefully and in their entirety.
The XL board of directors has unanimously (1) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, XL, (2) approved the merger, the merger agreement and the statutory merger agreement and (3) resolved that the merger proposal and the compensation advisory proposal be submitted to XL’s shareholders for their consideration at the special general meeting. Accordingly, the XL board of directors recommends that XL shareholders vote “FOR” the merger proposal, “FOR” the compensation advisory proposal and “FOR” the other proposal described in this proxy statement in respect of which they are entitled to vote.
Pursuant to XL’s bye-laws, as the XL board of directors has unanimously approved the merger proposal, the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting or any adjournment thereof at which a quorum under XL’s bye-laws is present will be required to approve the merger proposal. Approval of the merger proposal by holders of common shares is necessary to complete the merger.

Your vote is very important. Whether or not you plan to attend the special general meeting, please take the time to complete, date, sign and return the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy by telephone or through the Internet. We ask that you do so as promptly as possible to ensure that your shares may be represented and voted at the special general meeting or any adjournment thereof. You may revoke a submitted proxy prior to its exercise at the special general meeting, or any adjournment thereof, in any of the following ways: (1) submitting a later-dated proxy by telephone or through the Internet prior to the telephone or Internet voting deadline indicated on your proxy card; (2) submitting a later-dated proxy card; (3) giving notice of revocation or executing a subsequent proxy, in either case to the Secretary of XL in writing at XL Group Ltd, One Bermudiana Road, Hamilton, HM 08, Bermuda such that it is received by the Secretary of XL at least one hour before the commencement of the special general meeting, or any adjournment thereof, as required under XL’s bye-laws to permit the necessary examination and tabulation of the subsequent proxy or revocation before the votes are taken; or (4) attending and voting in person at the special general meeting, or any adjournment thereof.
If your common shares are held in street name by your bank, broker, trustee, custodian or other nominee (which we generally refer to as “banks”, “brokers” or “nominees”), your bank, broker or other nominee, as applicable, will not be permitted to vote your shares without instructions from you. If you are a holder of depositary interests representing common shares (which we refer to as “DIs”) through CREST or the Corporate Sponsored Nominee Service held through Computershare Investor Services PLC (which we refer to as “Computershare UK”), the relevant voting instructions have been provided by Computershare UK (if you hold DIs directly) or your bank, broker or other nominee. You should instruct your bank, broker or other nominee as to how to vote your shares by following the procedures provided by your bank, broker or other nominee. You also will not be able to vote your shares in person at the special general meeting or any adjournment thereof unless you present a form of personal photo identification and obtain a legal proxy form from Computershare UK or your bank, broker or other nominee. You will need to follow the instructions of Computershare UK or your bank, broker or other nominee in order to obtain such a legal proxy form.
Please note that holders of common shares through banks, brokers or other nominees and holders of DIs may be required to submit voting instructions to Computershare UK (for direct holders of DIs) or bank, broker or other nominee, as applicable, at or prior to the deadline applicable to registered holders of common shares. Therefore, holders of common shares through banks, brokers or other nominees and holders of DIs should follow the separate instructions that will be provided by Computershare UK (for direct holders of DIs) or bank, broker or other nominee, as applicable. Computershare UK or your bank, broker or other nominee, as applicable, will not be able to vote your common shares unless it receives appropriate and timely instructions from you.
The accompanying proxy statement provides you with detailed information about the special general meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to the proxy statement. A copy of the statutory merger agreement is attached as Annex A-1 to this proxy statement. We encourage you to read the entire proxy statement and its annexes, including the merger agreement, carefully.
If you have any questions or need assistance voting your shares, please call D.F. King & Co., XL’s proxy solicitor, at (877) 732-3613 (toll-free within the United States) or at (212) 269-5550 (outside the United States).
Thank you in advance for your cooperation and continued support.
Sincerely,
[•] [•]
Michael McGavick Eugene M. McQuade
Chief Executive Officer Chairman of the Board of Directors
The proxy statement is dated [•] [•], 2018, and is first being mailed to XL’s shareholders on or about [•] [•], 2018.

NONE OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION, THE REGISTRAR OF COMPANIES IN BERMUDA OR THE BERMUDA MONETARY AUTHORITY HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[MISSING IMAGE: lg_xlgroup.jpg]
XL GROUP LTD
One Bermudiana Road, Hamilton HM 08, Bermuda
NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS
To be Held on [•] [•], 2018
[•] [•], 2018​
To XL Group Ltd Shareholders:
On March 5, 2018, XL Group Ltd (which we refer to as “XL”) entered into an Agreement and Plan of Merger with AXA SA (“AXA”) and Camelot Holdings Ltd., a wholly-owned subsidiary of AXA (“Merger Sub”) (we refer to the Agreement and Plan of Merger as the “merger agreement”). Pursuant to the merger agreement and a statutory merger agreement that is an exhibit to the merger agreement, Merger Sub will be merged with and into XL, with XL surviving as a wholly-owned subsidiary of AXA (which we refer to as the “merger”).
Notice is hereby given that a special general meeting of shareholders (which we refer to as the “special general meeting”) of XL will be held at XL’s offices at One Bermudiana Road, Hamilton, HM 08, Bermuda, on [•] [•], 2018 at 9:00 a.m., Atlantic time, for the following purposes:

Proposal 1:   to approve the merger agreement, the statutory merger agreement required in accordance with Section 105 of the Bermuda Companies Act 1981, as amended (which we refer to as the “Companies Act”), and the merger;

Proposal 2:   on an advisory (non-binding) basis, to approve the compensation that may be paid or become payable to XL’s named executive officers in connection with the merger, as described in this proxy statement; and

Proposal 3:   to approve an adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes to approve Proposal 1 at the special general meeting.
Consummation of the merger is conditioned on, among other things, the approval of Proposal 1 (which we refer to as the “merger proposal”), but is not conditioned on the approval of Proposal 2 (which we refer to as the “compensation advisory proposal”) or Proposal 3 (which we refer to as the “adjournment proposal”).
Only XL shareholders of record, as shown in XL’s register of members at the close of business on [•] [•], 2018, will be entitled to notice of, and to vote at, the special general meeting and any postponement or adjournment thereof. Holders of common shares, par value $0.01 per common share, of XL (which we refer to as “common shares”, and each as a “common share”), will be entitled to vote on all of the above proposals.
If you hold your common shares in the name of a bank, broker, trustee, custodian or other nominee (which we generally refer to as “banks”, “brokers” or “nominees”), or if you are a holder of depositary interests representing common shares (which we refer to as “DIs”) through CREST or the Corporate Sponsored Nominee Service held through Computershare Investor Services PLC (which we refer to as “Computershare UK”), and you plan to attend the special general meetings, you must present a form of personal photo

identification and a legal proxy form from Computershare UK or your bank, broker or other nominee, as applicable, to be admitted to the special general meeting. You will need to follow the instructions of Computershare UK or your bank, broker or other nominee in order to obtain such a legal proxy form.
Your vote is very important. Whether or not you plan to attend the special general meeting, please take the time to complete, date, sign and return the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy by telephone or through the Internet. We ask that you do so as promptly as possible to ensure that your shares may be represented and voted at the special general meeting.
You may revoke a submitted proxy prior to its exercise at the special general meeting, or any adjournment thereof, in any of the following ways: (1) submitting a later-dated proxy by telephone or through the Internet prior to the telephone or Internet voting deadline indicated on your proxy card; (2) submitting a later-dated proxy card; (3) giving notice of revocation or executing a subsequent proxy, in either case to the Secretary of XL in writing at XL Group Ltd, One Bermudiana Road, Hamilton, HM 08, Bermuda such that it is received by the Secretary of XL at least one hour before the commencement of the special general meeting, or any adjournment thereof, as required under XL’s bye-laws to permit the necessary examination and tabulation of the subsequent proxy or revocation before the votes are taken; or (4) attending and voting in person at the special general meeting, or any adjournment thereof.
THE XL BOARD OF DIRECTORS HAS UNANIMOUSLY (1) DETERMINED THAT THE MERGER, ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE MERGER AGREEMENT, IS FAIR TO, AND IN THE BEST INTERESTS OF, XL, (2) APPROVED THE MERGER, THE MERGER AGREEMENT AND THE STATUTORY MERGER AGREEMENT AND (3) RESOLVED THAT THE MERGER PROPOSAL AND THE COMPENSATION ADVISORY PROPOSAL BE SUBMITTED TO THE XL SHAREHOLDERS FOR THEIR CONSIDERATION AT THE SPECIAL GENERAL MEETING. ACCORDINGLY, THE XL BOARD OF DIRECTORS RECOMMENDS THAT XL SHAREHOLDERS VOTE “FOR” THE MERGER PROPOSAL, “FOR” THE COMPENSATION ADVISORY PROPOSAL AND “FOR” THE OTHER PROPOSAL DESCRIBED IN THIS PROXY STATEMENT IN RESPECT OF WHICH THEY ARE ENTITLED TO VOTE.
For purposes of Section 106(2)(b)(i) of the Companies Act, the XL board of directors considers $57.60, without interest and less any applicable withholding taxes, to be fair value for each common share. XL shareholders who are not satisfied that they have been offered fair value for their shares and whose shares are not voted in favor of the merger proposal may exercise their appraisal rights under the Companies Act to have the fair value of their shares appraised by the Supreme Court of Bermuda (which we refer to as the “Bermuda Court”). XL shareholders intending to exercise appraisal rights MUST file their application for appraisal of the fair value of their shares with the Bermuda Court within ONE MONTH of the giving of the notice convening the special general meeting.
By Order of The Board of Directors,
[•]
Kirstin Gould
Secretary
Hamilton, Bermuda
[•] [•], 2018

TABLE OF CONTENTS
1
1
1
1
2
2
3
4
4
4
4
5
5
5
9
9
9
10
11
19
20
20
20
20
21
21
21
27
31
39
42
42
42
49
49
51
52
52
i

53
53
53
54
54
57
58
61
62
62
65
66
67
71
71
72
73
74
74
74
76
76
76
77
78
79
79
80
82
84
85
86
87
87
87
87
87
87
88
ii

88
89
89
90
91
92
93
94
94
95
96
97
98
A-1
A-1-1
B-1
iii

SUMMARY
This summary highlights the material information in this proxy statement. To fully understand XL’s proposals and for a more complete description of the legal terms of the merger, you should carefully read this entire proxy statement, including the annexes and documents incorporated by reference herein, and the other documents to which XL has referred you. For information on how to obtain the documents that are on file with the United States Securities and Exchange Commission (which we refer to as the “SEC”), please see the section of this proxy statement titled “Where You Can Find More Information.”
The proxy statement is dated [•] [•], 2018, and is first being mailed to shareholders of XL Group Ltd on or about [•] [•], 2018.
Parties to the Merger (Page 20)
XL Group Ltd (which we refer to as “XL” and, following the merger, as the “surviving company”), a Bermuda exempted company, through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and special products to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis.
For additional information on XL and its business, including how to obtain the documents that XL has filed with the SEC, see the section of this proxy statement titled “Where You Can Find More Information.”
AXA SA (which we refer to as “AXA”), a French société anonyme, is the holding company of the AXA Group, a worldwide leader in insurance and asset management, with 116,000 employees (open-ended and fixed term contracts) serving more than 100 million clients. In 2017, IFRS revenues amounted to Euro 98.5 billion and IFRS underlying earnings to Euro 6.0 billion. AXA had Euro 1,439 billion in assets under management as of December 31, 2017. The AXA ordinary share is listed on compartment A of Euronext Paris under the ticker symbol CS (ISN FR 0000120628 — Bloomberg: CS FP — Reuters: AXAF.PA). AXA’s American Depository Share is also quoted on the OTC QX platform under the ticker symbol AXAHY. AXA is included in the main international SRI indexes, such as Dow Jones Sustainability Index (DJSI) and FTSE4GOOD. It is a founding member of the UN Environment Programme’s Finance Initiative (UNEP FI) Principles for Sustainable Insurance and a signatory of the UN Principles for Responsible Investment.
Camelot Holdings Ltd. (which we refer to as “Merger Sub”), a Bermuda exempted company, is a wholly owned subsidiary of AXA that was formed by AXA solely for purposes of entering into the merger agreement and the statutory merger agreement and completing the transactions contemplated thereby. Upon completion of the merger, Merger Sub will be merged with and into XL and will cease to exist.
The Merger (Page 21)
Pursuant to an Agreement and Plan of Merger, entered into on March 5, 2018, among XL, AXA and Merger Sub (which we refer to as the “merger agreement”) and the statutory merger agreement required in accordance with Section 105 of the Bermuda Companies Act 1981, as amended (which we refer to as the “Companies Act”), Merger Sub will merge with and into XL, with XL continuing as the surviving company (which we refer to as the “merger”). XL, as the surviving company, will continue in existence as a Bermuda exempted company and as a wholly owned subsidiary of AXA. As a result of the merger, under Bermuda law, XL’s and Merger Sub’s respective undertakings, property and liabilities will become vested in XL as the surviving company in the merger. The closing of the merger (which we refer to as the “closing”) will occur as soon as reasonably practicable (but in any event no later than the fifth business day) following the satisfaction or waiver of the closing conditions set forth in the merger agreement (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of those conditions) or at such other date and time as XL and AXA may agree in writing. The merger will be effective upon the issuance of a certificate of merger by the Bermuda Registrar of Companies and at the time and date shown on such certificate of merger (which we refer to as the “effective time”).
Merger Consideration (Page 53)
At the effective time, each common share of XL, $0.01 par value per common share (which we refer to as a “common share”), issued and outstanding immediately prior to the effective time (other than any
1

common share that is owned by XL as treasury shares, by wholly owned subsidiaries of XL or by AXA, Merger Sub or wholly owned subsidiaries of AXA (with certain exceptions)) will be canceled and converted into the right to receive $57.60 in cash, without interest and less any required withholding taxes (which we refer to as the “merger consideration”).
The Statutory Merger Agreement (Page 53)
The statutory merger agreement, together with the merger agreement, governs the legal effects of the merger under Bermuda law. A copy of the statutory merger agreement is attached as Annex A-1 to this proxy statement.
The Special General Meeting (Page 87)
Time, Place and Purpose of the Special General Meeting (Page 87)
The special general meeting (which we refer to as the “special general meeting”) will be held on [•] [•], 2018, starting at 9:00 a.m., Atlantic time, at XL’s offices at One Bermudiana Road, Hamilton HM 08, Bermuda. At the special general meeting, XL shareholders will be asked to consider and vote on each of the following proposals:

Proposal 1 (the “merger proposal”):   to approve the merger agreement, the statutory merger agreement and the merger;

Proposal 2 (the “compensation advisory proposal”):   on an advisory (non-binding) basis, to approve the compensation that may be paid or become payable to XL’s named executive officers in connection with the merger, as described in this proxy statement; and

Proposal 3 (the “adjournment proposal”):   to approve an adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes to approve the merger proposal at the special general meeting.
Holders of common shares issued and outstanding as of the record date (as defined below) will be entitled to vote on each of the above proposals.
Consummation of the merger is conditioned on, among other things, the approval of Proposal 1 above, but is not conditioned on the approval of Proposals 2 or 3.
Record Date (Page 87)
Only shareholders of record, as shown on XL’s register of members, at the close of business on [•] [•], 2018, the record date for the special general meeting (which we refer to as the “record date”), will be entitled to notice of, and to vote at, the special general meeting or any adjournment or postponement thereof. As of [•] [•], 2018, the record date for the special general meeting, there were [•] common shares issued and outstanding.
Quorum (Page 87)
At the special general meeting, two or more persons present in person and representing in person or by proxy more than 50% of the aggregate voting power of XL common shares as of the record date will form a quorum for the transaction of business.
Required Vote (Page 87)
Pursuant to XL’s bye-laws, as the XL board of directors has unanimously approved the merger proposal, the approval of the merger proposal requires the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting or any adjournment thereof in accordance with XL’s bye-laws.
2

The approval of the compensation advisory proposal requires the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with XL’s bye-laws.
The approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with XL’s bye-laws.
Voting Securities (Page 88)
Except as provided below, holders of common shares have one vote for each common share held by them as of the record date and are entitled to vote all common shares held by them as of the record date on all the proposals voted on at the special general meeting or any adjournment thereof.
In accordance with XL’s bye-laws, if any shareholder is deemed to control 10% or more of the votes conferred by all of the issued shares of XL, each issued share comprised in such controlled shares will confer only a fraction of a vote that would otherwise be applicable, according to the formula set forth in XL’s bye-laws and as further described in the section of this proxy statement titled “The Special General Meeting — Voting Securities.” If, as a result of applying such formula, the votes conferred by the controlled shares of any person would otherwise represent more than 10% of the votes conferred by all of the issued shares of XL, the votes conferred by the controlled shares of such person shall be reduced by application of such formula set forth in XL’s bye-laws and such process shall be repeated until the votes conferred by the controlled shares of each person represent no more than 10% of the votes conferred by all of the issued shares of XL. Notwithstanding the foregoing, after having applied such formula as best as reasonably practicable, the XL board of directors may make such final adjustments to the aggregate number of votes conferred by the controlled shares of any person that it considers fair and reasonable in all the circumstances to ensure that such votes represent less than 10% of the aggregate voting power of the votes conferred by all of the issued shares of XL.
If your common shares are held in “street name” by your bank, broker, trustee, custodian or other nominee (which we generally refer to as “banks”, “brokers” or “nominees”), you should instruct your bank, broker or other nominee how to vote your shares using the instructions provided by your bank, broker or other nominee, as appropriate.
If you directly hold depositary interests (which we refer to as “DIs”) representing common shares through CREST or the Corporate Sponsored Nominee Service held through Computershare Investor Services PLC (which we refer to as “Computershare UK”), you should instruct Computershare UK how to vote your shares using the instructions provided by Computershare UK.
If you fail to submit a proxy or to vote in person at the special general meeting and you are a record holder, your shares will not be counted for purposes of quorum or as votes cast at the special general meeting. If your common shares are held in “street name” and you do not provide your bank, broker or other nominee or Computershare UK (if you hold DIs directly) with any voting instructions, your shares will be treated as “broker non-votes” (we refer to such uninstructed common shares or common shares underlying DIs as “broker non-votes”) and will not be voted at the special general meeting. If you choose to vote in person at the special general meeting and your common shares are held in “street name”, or if you are a holder of DIs, you must first obtain a legal proxy form from your bank, broker or other nominee or Computershare UK and bring such executed form with you (along with a form of personal photo identification) to the special general meeting.
Abstentions and “Broker Non-Votes” (Page 88)
Abstentions will be counted toward the presence of a quorum at the special general meeting. “Broker non-votes” will not be counted toward the presence of a quorum at the special general meeting (unless instructions have been provided by the applicable beneficial owner to the bank, broker or other nominee or Computershare UK, as applicable, with respect to at least one proposal to be voted upon at the special general meeting). Abstentions and “broker non-votes” will not be considered votes cast on any proposal brought before the special general meeting. Because the vote required to approve the proposals to be voted
3

upon at the special general meeting is the affirmative vote of the majority of the votes cast assuming a quorum is present, an abstention or a “broker non-vote” with respect to any proposal to be voted on at the special general meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting.
Revocation of Proxies (Page 89)
You may revoke a submitted proxy prior to its exercise at the special general meeting, or any adjournment thereof, in any of the following ways: (1) submitting a later-dated proxy by telephone or through the Internet prior to the telephone or Internet voting deadline indicated on your proxy card; (2) submitting a later-dated proxy card; (3) giving notice of revocation or executing a subsequent proxy, in either case to the Secretary of XL in writing at XL Group Ltd, One Bermudiana Road, Hamilton, HM 08, Bermuda such that it is received by the Secretary of XL at least one hour before the commencement of the special general meeting, or any adjournment thereof, as required under XL’s bye-laws to permit the necessary examination and tabulation of the subsequent proxy or revocation before the votes are taken; or (4) attending and voting in person at the special general meeting, or any adjournment thereof.
If your common shares are held in “street name” by your bank, broker or other nominee, please follow the instructions provided by your bank, broker or other nominee as to how to revoke your previously provided voting instructions.
Background of the Merger (Page 21)
A description of the actions that led to the execution of the merger agreement is included under the section of this proxy statement titled “The Merger — Background of the Merger.
Recommendation of the XL Board of Directors (Page 27)
The XL board of directors has unanimously (1) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, XL, (2) approved the merger, the merger agreement and the statutory merger agreement and (3) resolved that the merger proposal and the compensation advisory proposal be submitted to XL’s shareholders for their consideration at the special general meeting. Accordingly, the XL board of directors recommends that XL shareholders vote “FOR” the merger proposal, “FOR” the compensation advisory proposal and “FOR” the other proposal described in this proxy statement in respect of which they are entitled to vote. See the section of this proxy statement titled “The Merger — XL’s Reasons for the Merger and Recommendation of the XL Board of Directors” beginning on page 27 for the factors considered by the XL board of directors in reaching its determination that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, XL.
Opinion of XL’s Financial Advisor (Page 31)
The XL board of directors retained Morgan Stanley & Co. LLC (which we refer to as “Morgan Stanley”) to provide it with financial advisory services in connection with the merger. The XL board of directors selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation, and its knowledge of XL’s business and affairs. On March 4, 2018, Morgan Stanley rendered its oral opinion, which was subsequently confirmed in writing on March 4, 2018, to the XL board of directors to the effect that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement was fair from a financial point of view to such holders of XL common shares.
The full text of the written opinion of Morgan Stanley, dated March 4, 2018, is attached as Annex B to this proxy statement, and is incorporated by reference herein in its entirety. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. The summary of the opinion of Morgan Stanley in this proxy statement is qualified in its entirety by reference to the full text of the opinion.
4

You are encouraged to, and should, read Morgan Stanley’s opinion and the section summarizing Morgan Stanley’s opinion carefully and in their entirety. Morgan Stanley’s opinion was directed to the XL board of directors, in its capacity as such, and addresses only the fairness from a financial point of view of the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement, as of the date of the opinion, and does not address any other aspects or implications of the merger. Morgan Stanley expresses no opinion and Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation to any shareholder of XL as to how to vote at any general meeting of the shareholders of XL to be held in connection with the merger or whether to take any other action with respect to the merger.
Financing (Page 42)
The merger is not conditioned upon receipt of financing by AXA. AXA has informed us that it has sufficient cash on hand and back-up bridge financing in place to fund the entirety of the merger consideration, but that it currently expects to use subordinated debt, cash on hand and, subject to market conditions, proceeds from the planned initial public offering of its U.S. business, AXA Equitable Holdings, Inc., to fund the aggregate merger consideration. The initial public offering is expected to occur during the first half of 2018, subject to market conditions. In addition to cash on hand, AXA obtained an $11.0 billion bridge term loan facility to provide back-up financing in conjunction with the merger, which was reduced to $8.54 billion following AXA’s recent issuance of €2 billion (or $2.46 billion) of subordinated debt on March 26, 2018.
Interests of Certain Persons in the Merger (Page 42)
XL’s directors and executive officers may have interests in the merger that may be different from or in addition to those of XL shareholders generally. The XL board of directors was aware of and considered these interests to the extent such interests existed at the time, among other matters, in evaluating the merger agreement, in approving the merger agreement and the merger and in recommending that the merger agreement be approved by the shareholders of XL. As described in more detail below, these interests potentially include:

except as otherwise agreed by AXA and the holder of an award in writing, the accelerated vesting (upon the closing of the merger, assuming for this purpose that the merger is completed on March 15, 2018) of 16,000 XL restricted shares with an aggregate estimated value equal to $921,600; 853,861 XL performance unit awards with an aggregate estimated value equal to $49,182,422 (determined at payout levels as described in this proxy statement); 216,465 XL restricted share unit awards with an aggregate estimated value equal to $12,468,450; 7,856,873 XL stock option awards with an aggregate estimated value equal to $202,526,066 and 22,265 XL restricted cash unit awards with an aggregate estimated value equal to $1,282,464, in each case based on the per share merger consideration equal to $57.60;

the payment of certain severance payments and benefits that the executive officers of XL may become entitled to receive under their respective employment agreements with XL or the Executive Severance Benefit Plan if they experience a qualifying termination of employment following the closing the merger (assuming for this purpose that the merger is completed on March 15, 2018), with an aggregate estimated value of  $41,686,665;

potential new retention arrangements between certain executive officers of XL and AXA; and

certain indemnification arrangements for XL’s current officers and directors and the continuation of certain insurance arrangements for XL’s current officers and directors for six years after the completion of the transactions.
See the section of this proxy statement titled “The Merger — Interests of XL’s Directors and Executive Officers in the Merger” for a more detailed discussion.
The Merger Agreement (Page 53)
Treatment of Common Shares (Page 53)
At the effective time, each common share issued and outstanding immediately prior to the effective time (other than any common share that is owned by XL as treasury shares, by wholly-owned subsidiaries
5

of XL or by AXA, Merger Sub or wholly-owned subsidiaries of AXA (with certain exceptions)) will be canceled and converted into the right to receive the merger consideration of  $57.60 per common share in cash, without interest and less any required withholding taxes.
Treatment of XL Equity Awards (Page 62)
At the effective time, except as otherwise agreed by AXA and the holder of an award in writing:

each XL restricted share will vest and be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to $57.60;

each XL performance unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) $57.60 and (ii) the number of XL common shares subject to such XL performance unit award. For the purposes of determining the number of XL common shares subject to outstanding XL performance unit awards, the merger agreement provides that with respect to any XL performance unit award with a performance period that has been completed as of the effective time, the number of XL common shares subject to such XL performance unit awards will be determined based on the actual level of performance achieved, and with respect to any XL performance unit award with a performance period that has not been completed as of the effective time, any applicable performance-based vesting requirements will be deemed to be achieved at target payout levels immediately prior to the effective time;

each XL restricted share unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) $57.60 and (ii) the number of XL common shares subject to such XL restricted share unit award;

each XL stock option, whether vested or unvested, will be deemed fully vested and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) the excess, if any, of  (A) $57.60, over (B) the per share exercise price of such XL stock option, multiplied by (ii) the number of XL common shares subject to such XL stock option. Any XL stock option with an exercise price that is equal to or greater than $57.60 will be canceled for no consideration; and

each XL restricted cash unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) $57.60 and (ii) the number of XL common shares in respect of the XL restricted cash unit award.
Regulatory Clearances Required for the Merger (Page 49)
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which we refer to as the “HSR Act”), XL and AXA cannot consummate the merger until XL and AXA have notified the Department of Justice’s Antitrust Division and the Federal Trade Commission of the merger and furnished them with certain information and materials relating to the merger and the applicable waiting period has terminated or expired. Under the EU Merger Regulation, the merger cannot be consummated until after the European Commission has issued its clearance decision or the relevant waiting periods have expired without the issuance of a decision.
The merger is also conditioned on the receipt of required regulatory approvals from regulatory authorities including, but not limited to, the Administrative Council of Economic Defense of Brazil, the Superintendence of Industry and Commerce of Colombia, the Federal Economic Competition Commission of Mexico, the Competition Commission of Switzerland, the New York State Department of Financial Services, the Delaware Department of Insurance, the Texas Department of Insurance, the Louisiana Department of Insurance, the Bermuda Monetary Authority, the UK Prudential Regulation Authority, the UK Financial Conduct Authority, Lloyd’s of London, the Swiss Financial Market Supervisory Authority and the Central Bank of Ireland.
No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements (Page 58)
XL has agreed in the merger agreement that it will not, and will cause each of its subsidiaries, and its and their respective directors, officers and employees not to, and will use its reasonable best efforts to cause
6

its other representatives not to, among other things, solicit, encourage, initiate or take any action to facilitate the submission of any inquiry or the making of any proposal, in each case that constitutes, or would reasonably be expected to lead to, a “takeover proposal” (as described and summarized on page 58 of this proxy statement).
If XL receives a bona fide written takeover proposal during the period between March 5, 2018 and the date XL shareholders approve the merger proposal where such takeover proposal did not result from a material breach by XL of such non-solicitation provisions, and the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that such takeover proposal constitutes or would reasonably be expected to lead to a “superior proposal” (as described and summarized on page 60 of this proxy statement), then XL may, subject to certain conditions, enter into a confidentiality agreement with and furnish information (including non-public information) about XL and its subsidiaries to the person or group of persons making the takeover proposal and engage in or otherwise participate in discussions or negotiations with the person or group of persons making such takeover proposal.
The XL board of directors has agreed to recommend approval of the merger proposal at the special general meeting and that it will not change such recommendation, except in certain circumstances described below.
However, the XL board of directors may make an “adverse recommendation change” (as described and summarized on page 59 of this proxy statement) in compliance with the terms of the merger agreement if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law in response to either (i) a superior proposal received by XL or (ii) an “intervening event” (as described and summarized on page 61 of this proxy statement). If XL makes an adverse recommendation change, AXA may terminate the agreement and XL will be required to pay a $499 million termination fee to AXA.
Subject to the procedures set forth in the merger agreement, if XL receives a superior proposal, XL may terminate the merger agreement to enter into an alternative acquisition agreement in respect of such superior proposal if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law. In such case XL will be required to pay AXA a $499 million termination fee.
XL is also permitted to waive any standstill provision to allow a third party to make a takeover proposal to the XL board of directors on a non-public basis if the XL board of directors determines in good faith, after consultation with XL’s outside legal counsel, that failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law.
See the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreement” beginning on page 58.
Conditions to the Merger (Page 54)
The obligations of XL, AXA and Merger Sub to consummate the merger under the merger agreement are subject to the satisfaction (or waiver by the applicable parties, if permissible under applicable law) of the following conditions:

the merger proposal having been approved by XL’s shareholders;

the required regulatory approvals having been obtained and being in full force and effect and, with respect to AXA’s and Merger Sub’s obligations, such required regulatory approvals having been obtained without the imposition of a “burdensome condition” (as described and summarized on page 63 of this proxy statement);

there being no injunction, judgment or ruling, enacted, promulgated, issued, entered, amended or enforced by any governmental authority enjoining, restraining or otherwise making illegal or prohibiting the consummation of the merger;
7


with respect to XL’s obligations, on the one hand, and AXA’s and Merger Sub’s obligations, on the other hand, subject to the applicable materiality standards provided in the merger agreement, the representations and warranties of the other party in the merger agreement being true and correct as of the closing date (except to the extent expressly made as of an earlier date, in which case, as of such date) and such other party having furnished a certificate signed on behalf of such other party by an executive officer of such other party, to that effect; and

the parties having performed or complied in all material respects with all obligations and covenants required to be performed by them under the merger agreement at or prior to the effective time and such other party having furnished a certificate signed on behalf of such other party by an executive officer of such other party, to that effect.
See the section of this proxy statement titled “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 54 for more information on the conditions to the parties’ respective obligations to consummate the merger.
Termination of the Merger Agreement (Page 65)
The merger agreement may be terminated at any time before the effective time by mutual written consent of XL and AXA and, subject to certain limitations described in the merger agreement, by either XL or AXA if any of the following occurs:

the merger has not been consummated by December 5, 2018 (we refer to such date, as may be automatically extended to March 5, 2019 under certain circumstances, as the “walk-away date”), except that this right of termination is not available to any party whose breach of a representation or warranty or failure to perform any of its obligations under the merger agreement has been a principal cause of or resulted in the failure of the merger to occur on or before the walk-away date;

there is in effect any injunction, judgment or ruling, enacted, promulgated, issued, entered, amended or enforced by any governmental authority enjoining, restraining or otherwise making illegal or prohibiting the consummation of the merger that is final and nonappealable, except that this right of termination is only available if the applicable party has performed, in all material respects, its obligations under the merger agreement;

if XL’s shareholders do not approve the merger proposal at the special general meeting (including any adjournment or postponement thereof) at which a vote on the matter has been taken; or

there has been a breach by the other party of its representations, warranties, covenants or agreements contained in the merger agreement, which breach would result in the failure of certain closing conditions relating to compliance with such representations, warranties, covenants and agreements to be satisfied on or prior to the walk-away date, and such breach is not capable of being cured or has not been cured within 30 days after written notice of such breach has been received by the party alleged to be in breach.
The merger agreement may be terminated by AXA at any time prior to the approval by XL’s shareholders of the merger proposal if any of the following occurs:

the XL board of directors makes an adverse recommendation change; or

XL has willfully breached the covenants regarding the non-solicitation of an alternative transaction, prompt filing of this proxy statement, or the convening of a shareholder meeting to approve the merger proposal.
In such cases, XL will be required to pay AXA a $499 million termination fee.
8

Subject to the procedures set forth in the merger agreement, if XL receives a superior proposal and XL’s shareholders have not yet approved the merger proposal, XL may terminate the merger agreement to enter into an alternative acquisition agreement in respect of such superior proposal if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law. In such case XL will be required to pay AXA a $499 million termination fee.
Payment of the termination fee following termination of the merger agreement will not relieve XL or AXA from liability for actual fraud or any willful and material breach of the merger agreement.
See the section of this proxy statement titled “The Merger Agreement — Termination of the Merger Agreement” for more information on the respective termination rights of the parties under the merger agreement.
Expenses and Termination Fee (Page 66)
Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement will be paid by the party incurring or required to incur such fees and expenses, whether or not the merger is consummated.
Upon termination of the merger agreement, XL may be required, under certain circumstances, to pay a termination fee of  $499 million or $249.5 million to AXA. See the section of this proxy statement titled “The Merger Agreement — Expenses and Termination Fee” for more information on the expenses and termination fee under the merger agreement.
Market Price of XL Common Shares (Page 78)
The closing price of the common shares on the New York Stock Exchange (which we refer to as the “NYSE”) on February 6, 2018, the last full trading day prior to the release of reports that XL was a potential acquisition target, was $37.34 per common share. On March 2, 2018, the last full trading day prior to the announcement of the transaction, was $43.30 per common share. On [•] [•], 2018 the most recent practicable date before this proxy statement was mailed to our shareholders, the closing price of common shares on the NYSE was $[•] per common share. You are encouraged to obtain current market quotations for common shares prior to voting your common shares.
Dissenting Shares (Page 61)
Under Bermuda law, XL shareholders of record have rights of appraisal, pursuant to which those XL shareholders who do not vote in favor of the merger proposal and who are not satisfied that they have been offered fair value for their shares will be permitted to apply to the Supreme Court of Bermuda (which we refer to as the “Bermuda Court”) for an appraisal of the fair value of their shares within one month from the giving of the notice convening the special general meeting. See the sections of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for XL Shareholders” beginning on page 52, “The Merger Agreement — Dissenting Shares” beginning on page 61 and “Appraisal Rights” beginning on page 82 for a more detailed description of the appraisal rights available to XL shareholders.
Delisting and Deregistration of XL Shares (Page 52)
If the merger is completed, the common shares will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”). The common shares will also be delisted from the Bermuda Stock Exchange (which we refer to as the “BSX”).
9

Material U.S. Federal Income Tax Consequences (Page 93)
The exchange of common shares for the merger consideration pursuant to the merger agreement generally will be a taxable transaction to U.S. holders of common shares for U.S. federal income tax purposes. On an exchange of common shares for the merger consideration in the merger, U.S. holders will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by them in the merger and their adjusted tax basis in their common shares.
TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO HOLDERS WILL DEPEND UPON THE FACTS OF THEIR RESPECTIVE SITUATIONS. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, XL STRONGLY URGES HOLDERS TO CONSULT WITH THEIR RESPECTIVE TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.
10

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL GENERAL MEETING
The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special general meeting. These questions and answers may not address all questions that may be important to you as a shareholder of XL. For more information, please see the section of this proxy statement titled “Summary” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement.
Q:
Why am I receiving this proxy statement?
A:
XL, AXA, and Merger Sub, a wholly-owned subsidiary of AXA, have entered into the merger agreement, pursuant to which Merger Sub will be merged with and into XL, with XL surviving the merger as a wholly-owned subsidiary of AXA.
In order to consummate the merger, XL shareholders must approve the merger proposal. XL will hold the special general meeting to obtain approval of the merger proposal and to consider certain other related matters which are not prerequisites to the consummation of the merger. This proxy statement, which you should read carefully, contains important information about the merger and related transactions and other matters being considered at the special general meeting.
Q:
When and where is the special general meeting?
A:
The special general meeting will take place at 9:00 a.m., Atlantic time, on [•] [•], 2018, at XL’s offices at One Bermudiana Road, Hamilton, HM 08, Bermuda.
Q:
What is happening at the special general meeting?
A:
At the special general meeting, XL shareholders will be asked to consider and vote on each of the following proposals:

Proposal 1:   to approve the merger agreement, the statutory merger agreement and the merger;

Proposal 2:   on an advisory (non-binding) basis, to approve the compensation that may be paid or become payable to XL’s named executive officers in connection with the merger, as described in this proxy statement; and

Proposal 3:   to approve an adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes to approve the merger proposal at the special general meeting.
Holders of common shares issued and outstanding as of the record date will be entitled to vote on each of the above proposals.
Q:
Does the XL board of directors recommend approval of the proposals?
A:
The XL board of directors recommends that XL shareholders vote “FOR” the merger proposal, “FOR” the compensation advisory proposal and “FOR” the other proposal described in this proxy statement in respect of which they are entitled to vote.
See the section of this proxy statement titled “The Merger — XL’s Reasons for the Merger and Recommendation of the XL Board of Directors” beginning on page 27 for a more complete description of the recommendations of the XL board of directors. In considering the recommendations of the XL board of directors, you should be aware that XL’s executive officers and directors may have interests in the merger that are different from, or in addition to, those of XL’s shareholders generally. See the section of this proxy statement titled “The Merger — Interests of XL’s Directors and Executive Officers in the Merger” beginning on page 42.
Q:
What will happen in the merger?
A:
If the merger proposal is approved and all other conditions to the merger have been satisfied or waived, Merger Sub will be merged with and into XL, with XL surviving the merger as a wholly-owned subsidiary of AXA.
11

Q:
What will holders of common shares receive in the merger?
A:
Pursuant to the terms of the merger agreement and the statutory merger agreement, each common share issued and outstanding immediately prior to the effective time (other than any common share that is owned by XL as treasury shares, by wholly-owned subsidiaries of XL or by AXA, Merger Sub or wholly-owned subsidiaries of AXA (with certain exceptions)) will be canceled and converted into the right to receive the merger consideration of  $57.60 per common share in cash, without interest and less any required withholding taxes.
Q:
How does the merger consideration compare to the closing price of common shares prior to announcement of the transaction?
A:
The merger consideration represents a premium of 54.3% to the closing price of common shares on February 6, 2018, the last full trading day prior to the release of reports that XL was a potential acquisition target, and a premium of 33.0% to the closing price of common shares on March 2, 2018, the last full trading day prior to the announcement of the transaction.
Q:
Are shareholders able to exercise appraisal or dissenters’ rights?
A:
Under Bermuda law, XL shareholders of record have rights of appraisal, pursuant to which those shareholders of XL who do not vote in favor of the merger proposal and who are not satisfied that they have been offered fair value for their shares will be permitted to apply to the Bermuda Court for an appraisal of the fair value of their shares within one month from the giving of the notice convening the special general meeting. See the section of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for XL Shareholders” and “Appraisal Rights” for more information on appraisal rights.
Q:
When do the parties expect to complete the merger?
A:
The parties expect to complete the merger in the second half of 2018, although there can be no assurance that the parties will be able to do so. The closing is subject to customary closing conditions, including approval by XL shareholders and receipt of certain insurance and other regulatory approvals.
See the section of this proxy statement titled “The Merger Agreement — Conditions to Completion of the Merger” for more information.
Q:
What happens if the merger is not completed?
A:
If the merger proposal is not approved by the requisite vote of XL shareholders, or the merger is not completed for any other reason, the merger will not occur and XL shareholders will not receive the merger consideration, which is described in greater detail in the section of this proxy statement titled “Summary — The Merger Agreement.” XL shareholders will continue to own the common shares owned by them until sold or otherwise disposed by them. XL will remain an independent public company and the common shares will continue to be registered under the Exchange Act and traded on the NYSE and the BSX. In addition, if the merger agreement is terminated, XL may be required, under certain circumstances, to pay a termination fee of  $499 million or $249.5 million to AXA.
Q:
What are the U.S. federal income tax consequences of the merger to holders of common shares?
A:
The exchange of common shares for the merger consideration pursuant to the merger agreement generally will be a taxable transaction to U.S. holders of common shares for U.S. federal income tax purposes. On an exchange of common shares for the merger consideration in the merger, U.S. holders will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by them in the merger and their adjusted tax basis in their common shares.
HOLDERS SHOULD READ THE SECTION OF THIS PROXY STATEMENT TITLED “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES” FOR A MORE DETAILED DISCUSSION OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER
12

TO HOLDERS WILL DEPEND UPON THE FACTS OF THEIR RESPECTIVE SITUATIONS. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, XL STRONGLY URGES HOLDERS TO CONSULT WITH THEIR RESPECTIVE TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.
Q:
Why are holders of common shares being asked to cast an advisory (non-binding) vote to approve “golden parachute compensation” that may be paid or become payable to XL’s named executive officers in connection with the merger?
A:
The SEC, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, adopted rules that require XL to seek an advisory (non-binding) vote with respect to certain payments that will or may be made to XL’s named executive officers in connection with the merger. The compensation advisory proposal satisfies this requirement. See the section of this proxy statement titled “The Merger — Interests of XL’s Directors and Executive Officers in the Merger” for more details on such payments.
Q:
Do any of XL’s directors or officers have interests in the merger that may differ from or be in addition to the interests of XL shareholders?
A:
XL’s directors and executive officers may have interests in the merger that may be different from or in addition to those of XL shareholders generally. The XL board of directors was aware of and considered these interests to the extent such interests existed at the time, among other matters, in evaluating the merger agreement, in approving the merger agreement and the merger and in recommending that the merger agreement be approved by the shareholders of XL. As described in more detail below, these interests potentially include:

except as otherwise agreed by AXA and the holder of an award in writing, the accelerated vesting (upon the closing of the merger, assuming for this purpose that the merger is completed on March 15, 2018) of 16,000 XL restricted shares with an aggregate estimated value equal to $921,600; 853,861 XL performance unit awards with an aggregate estimated value equal to $49,182,422 (determined at payout levels as described in this proxy statement); 216,465 XL restricted share unit awards with an aggregate estimated value equal to $12,468,450; 7,856,873 XL stock option awards with an aggregate estimated value equal to $202,526,066 and 22,265 XL restricted cash unit awards with an aggregate estimated value equal to $1,282,464, in each case based on the per share merger consideration equal to $57.60;

the payment of certain severance payments and benefits that the executive officers of XL may become entitled to receive under their respective employment agreements with XL or the Executive Severance Benefit Plan if they experience a qualifying termination of employment following the closing the merger (assuming for this purpose that the merger is completed on March 15, 2018), with an aggregate estimated value of  $41,686,665;

potential new retention arrangements between certain executive officers of XL and AXA; and

certain indemnification arrangements for XL’s current officers and directors and the continuation of certain insurance arrangements for XL’s current officers and directors for six years after the completion of the transactions.
See the section of this proxy statement titled “The Merger — Interests of XL’s Directors and Executive Officers in the Merger” for a more detailed discussion.
Q:
I am an employee of XL who holds XL equity awards. How will my XL equity awards be treated in the merger?
A:
At the effective time, except as otherwise agreed by AXA and the holder of an award in writing:

each XL restricted share will vest and be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to $57.60;
13


each XL performance unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) $57.60 and (ii) the number of XL common shares subject to such XL performance unit award. For the purposes of determining the number of XL common shares subject to outstanding XL performance unit awards, the merger agreement provides that with respect to any XL performance unit award with a performance period that has been completed as of the effective time, the number of XL common shares subject to such XL performance unit awards will be determined based on the actual level of performance achieved, and with respect to any XL performance unit award with a performance period that has not been completed as of the effective time, any applicable performance-based vesting requirements will be deemed to be achieved at target payout levels immediately prior to the effective time;

each XL restricted share unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) $57.60 and (ii) the number of XL common shares subject to such XL restricted share unit award;

each XL stock option, whether vested or unvested, will be deemed fully vested and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) the excess, if any, of  (A) $57.60, over (B) the per share exercise price of such XL stock option, multiplied by (ii) the number of XL common shares subject to such XL stock option. Any XL stock option with an exercise price that is equal to or greater than $57.60 will be canceled for no consideration; and

each XL restricted cash unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) $57.60 and (ii) the number of XL common shares in respect of the restricted cash unit award.
Q:
What is the required quorum for the special general meeting?
A:
At the special general meeting, two or more persons present in person and representing in person or by proxy more than 50% of the aggregate voting power of XL common shares as of the record date will form a quorum for the transaction of business.
Q:
What shareholder vote is required to approve the items to be voted on at the special general meeting, including the merger?
A:
Pursuant to XL’s bye-laws, as the XL board of directors has unanimously approved the merger proposal, the approval of the merger proposal requires the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting or any adjournment thereof in accordance with XL’s bye-laws.
The approval of the compensation advisory proposal requires the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with XL’s bye-laws.
The approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast by holders of common shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with XL’s bye-laws.
See the section of this proxy statement titled “Questions and Answers About the Merger and the Special General Meeting — Who is entitled to vote at the special general meeting?” for a more detailed description.
Q:
What effect do abstentions and “broker non-votes” have on the proposals?
A:
Abstentions will be counted toward the presence of a quorum at the special general meeting. “Broker non-votes” will not be counted toward the presence of a quorum at the special general meeting (unless instructions have been provided by the applicable beneficial owner to the bank, broker or other nominee or Computershare UK, as applicable, with respect to at least one proposal to be voted upon at the special general meeting). Abstentions and “broker non-votes” will not be considered votes cast on any proposal brought before the special general meeting. Because the vote required to approve the
14

proposals to be voted upon at the special general meeting is the affirmative vote of the majority of the votes cast assuming a quorum is present, an abstention or a “broker non-vote” with respect to any proposal to be voted on at the special general meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting.
Q:
Does AXA have the financial resources to complete the merger?
A:
Yes. It is anticipated that the total funds needed to complete the merger will be approximately $15.3 billion, and AXA has informed us that it has sufficient cash on hand and back-up bridge financing in place to fund the entirety of the merger consideration, but that it currently expects to use subordinated debt, cash on hand and, subject to market conditions, proceeds from the planned initial public offering of its U.S. business, AXA Equitable Holdings, Inc., to fund the aggregate merger consideration. The initial public offering is expected to occur during the first half of 2018, subject to market conditions. In addition to cash on hand, AXA obtained an $11.0 billion bridge term loan facility to provide back-up financing in conjunction with the merger, which was reduced to $8.54 billion following AXA’s recent issuance of €2 billion (or $2.46 billion) of subordinated debt on March 26, 2018. The transaction is not subject to a financing condition.
Q:
Who is entitled to vote at the special general meeting and what is the record date?
A:
Only XL shareholders of record, as shown on XL’s register of members at the close of business on [•] [•], 2018, the record date for the special general meeting, will be entitled to notice of, and to vote at, the special general meeting or any adjournment or postponement thereof. Holders of common shares will be entitled to vote on the merger proposal, the compensation advisory proposal and the adjournment proposal.
If you hold your common shares in “street name” beneficially through a bank, broker or nominee, you must follow the procedures required by your bank, broker or other nominee. You should contact your bank, broker or other nominee, as applicable, for more information on these procedures.
If you are a holder of DIs, you must follow the procedures required by Computershare UK (if you hold such DIs directly) or your bank, broker or other nominee to appoint or revoke a proxy with respect to the special general meeting. You should contact Computershare UK or your bank, broker or other nominee, as applicable, for more information on these procedures.
Q:
What do I need to do now?
A:
We urge you to carefully read this proxy statement, including its annexes and the documents incorporated by reference in this proxy statement. You are also encouraged to review the documents referenced under the section of this proxy statement titled “Where You Can Find More Information” and consult with your accounting, legal and tax advisors. Once you have considered all relevant information, we encourage you to fill in and return the enclosed proxy card (if you are a shareholder of record) or voting instruction form you receive from your bank, broker or other nominee (if you are a shareholder who holds your shares through a bank, broker or other nominee) or the voting instructions that you receive from Computershare UK (if you are a holder of DIs) or to follow the instructions provided to you for voting over the Internet or by telephone.
Q:
How do I vote my shares?
A:
Shareholder of Record.   If your common shares are registered directly in your name, then you are considered a shareholder of record of XL with respect to those shares and this proxy statement and the enclosed proxy card were sent to you directly by XL. As a XL shareholder of record, you may vote by completing, dating, signing and mailing the enclosed proxy card in the return envelope provided as soon as possible or by following the instructions on the proxy card to submit your proxy by telephone or over the Internet at the website indicated. Submission of the proxy by telephone or over the Internet is available through 11:59 p.m. Eastern Time on the business day immediately before the special general meeting. XL shareholders of record may also vote by attending the special general meeting in person by bringing valid picture identification. However, whether or not you plan to attend the special general meeting in person, we encourage you to vote your common shares in advance to ensure that your vote
15

is represented at the special general meeting. Abstentions will be counted toward the presence of a quorum at the special general meeting. “Broker non-votes” will not be counted toward the presence of a quorum at the special general meeting (unless instructions have been provided by the applicable beneficial owner to the bank, broker or other nominee or Computershare UK, as applicable, with respect to at least one proposal to be voted upon at the special general meeting). Abstentions and “broker non-votes” will not be considered votes cast on any proposal brought before the special general meeting. Because the vote required to approve the proposals to be voted upon at the special general meeting is the affirmative vote of the majority of the votes cast assuming a quorum is present, an abstention or a “broker non-vote” with respect to any proposal to be voted on at the special general meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting.
Beneficial Owner of Shares Held in Street Name.   If your common shares are held in the name of a bank, broker or other similar organization or nominee, then you are considered a beneficial owner of such shares held for you in what is known as “street name.” Most shareholders of XL hold their shares in “street name.” If this is the case, this proxy statement has been forwarded to you by your bank, broker or other organization or nominee together with a voting instruction form. You may vote by completing and returning your voting instruction form to your broker. Please review the voting instruction form to see if you are able to submit your voting instructions by telephone or over the Internet. The organization or nominee holding your account is considered the shareholder of record for purposes of voting at the special general meeting. As a beneficial owner, you have the right to instruct the organization that holds your shares of record how to vote the common shares that you beneficially own.
Holder of Depositary Interests.   If you are a holder of DIs held through Computershare UK, the relevant voting instructions have been provided by Computershare UK (if you hold DIs directly) or your bank, broker or other nominee. Please note that holders of DIs may be required to submit voting instructions to Computershare UK (if you hold DIs directly) or your bank, broker or other nominee, as applicable, at or prior to the deadline applicable to registered holders of common shares and you should therefore follow the separate instructions that will be provided by Computershare UK or your bank, broker or other nominee, as applicable. Computershare UK or your bank, broker or other nominee, as applicable, will not be able to vote your common shares unless it receives appropriate and timely instructions from you. See the section of this proxy statement titled “Questions and Answers About the Merger and the Special General Meeting — How can I vote if I hold DIs?” for a more detailed description.
Q:
If my common shares are held in “street name,” how do I vote in person at the special general meeting?
A:
If you are a beneficial owner of common shares held in “street name” rather than a shareholder of record, you may only vote your common shares in person at the special general meeting by bringing valid personal photo identification and a legal proxy form from your bank, broker or other nominee that holds your common shares or DIs.
Q:
How can I vote if I hold DIs?
A:
Holders of DIs through Computershare UK must vote the common shares underlying such DIs by following the procedures established by Computershare UK (if you hold DIs directly) or those established by their bank, broker or other nominee.
If you do not instruct Computershare UK or your bank, broker, or other nominee, as applicable, on how to vote the common shares underlying your DIs prior to the special general meeting, the common shares underlying your DIs will not be voted at the special general meeting and such common shares will not be considered when determining whether any applicable proposal has received the required approval and will not be counted as present by person or by proxy for purposes of the relevant quorum requirement.
If you hold DIs, we recommend that you contact Computershare UK (if you hold DIs directly) or your bank, broker or other nominee directly for more information on the procedures by which the common shares underlying your DIs can be voted. Computershare UK or your bank, broker or other nominee, as appropriate, will not be able to vote such common shares unless it receives appropriate instructions from you.
16

In addition, you may not vote your common shares in person at the shareholder meetings unless you obtain a legal proxy from Computershare UK (if you hold DIs directly) or the bank, broker or other nominee that holds your common shares or DIs and bring valid personal photo identification. You will need to follow the instructions of Computershare UK or your bank, broker or other nominee in order to obtain such legal proxy form.
Q:
What do I do if I want to change my vote?
A:
If your common shares are registered directly in your name, then you are considered a shareholder of record of XL with respect to those shares and this proxy statement and the enclosed proxy card were sent to you directly by XL. You may revoke a submitted proxy prior to its exercise at the special general meeting, or any adjournment thereof, in any of the following ways:

submitting a later-dated proxy by telephone or through the Internet prior to the telephone or Internet voting deadline indicated on your proxy card;

submitting a later-dated proxy card;

giving notice of revocation or executing a subsequent proxy, in either case to the Secretary of XL in writing at XL Group Ltd, One Bermudiana Road, Hamilton, HM 08, Bermuda such that it is received by the Secretary of XL at least one hour before the commencement of the special general meeting, or any adjournment thereof, as required under XL’s bye-laws to permit the necessary examination and tabulation of the subsequent proxy or revocation before the votes are taken; or

attending and voting in person at the special general meeting, or any adjournment thereof.
If your common shares are held in “street name” by your bank, broker or other nominee, please follow the instructions provided by your bank, broker or other nominee as to how to revoke or change your previously provided voting instructions.
If you are a holder of DIs and want to change your vote, the relevant voting instructions have been provided by Computershare UK (if you hold DIs directly) or your bank, broker or other nominee.
Q:
If I hold my shares in certificated form, should I send in my share certificates now?
A:
No. You should NOT return your share certificates with the enclosed proxy card, and you should not forward your share certificates to the paying agent (as described on page 51 of this proxy statement) without a letter of transmittal. Promptly after the effective time, each shareholder of record of a certificate representing common shares that has been converted into the right to receive the merger consideration will be sent a letter of transmittal describing the procedure for surrendering its shares in exchange for the merger consideration. If you hold your shares in certificated form, you will receive your cash payment after the paying agent receives your share certificates and any other documents requested in the instructions.
Q:
If I hold my shares in book-entry form, how will I receive payment when the merger occurs?
A:
If you hold shares in non-certificated book-entry form that have been converted into the right to receive the merger consideration, you will receive your cash payment in respect of those shares as promptly as practicable following the effective time and the paying agent’s receipt of the documents that it requests from you, if any.
Q:
If I hold DIs representing common shares through CREST or the Corporate Sponsored Nominee Service held through Computershare UK, how will I receive payment when the merger occurs?
A:
If you hold DIs representing common shares through CREST that have been converted into the right to receive the merger consideration, you will receive your cash payment in respect of those shares as promptly as practicable following the receipt of such payment by Computershare UK from the paying agent. Payment will be made in U.S. dollars by Computershare UK creating an assured payment obligation in favor of your payment bank in accordance with the CREST assured payment arrangements.
17

If you hold DIs representing common shares through the Corporate Sponsored Nominee Service that have been converted into the right to receive the merger consideration, you will receive your cash payment in respect of those shares as promptly as practicable following the receipt of such payment by Computershare UK from the paying agent. Payment will be made by check in pounds sterling by Computershare UK arranging the conversion of the merger consideration.
In either case Computershare UK will provide any necessary documentation to the paying agent and you would not need to take any additional action.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
XL has engaged D.F. King & Co. to assist in the solicitation of proxies for the special general meeting. XL estimates that it will pay D.F. King & Co. a fee of approximately $[•] and reimbursement of certain expenses.
Q:
Who should XL shareholders contact with any additional questions?
A:
If you have any additional questions about the merger or you would like additional copies of this proxy statement or assistance voting your shares, you should contact D.F. King & Co. at:
D.F. King & Co.
48 Wall Street, 22nd floor
New York, NY 10005
Shareholders within the United States may call toll free: (877) 732-3613
Shareholders outside the United States may call: (212) 269-5550
Q:
Who should holders of DIs held in CREST or through the Corporate Sponsored Nominee contact with any additional questions?
A:
If you have any additional questions about the merger or you would like additional copies of this proxy statement or assistance voting your DIs, you should contact Computershare UK at:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Corporate Sponsored Nominee Holders: Tel +44 (0)370 703 0008
Depositary Interest Holders: Tel +44 (0)906 999 0000
Q:
Where can I find more information about XL?
A:
You can find more information about XL in the documents described under the section of this proxy statement titled “Where You Can Find More Information.”
18

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides a “safe harbor” for forward-looking statements. Any prospectus, prospectus supplement, Annual Report to common shareholders, proxy statement, Form 10-K, Form 10-Q or Form 8-K or any other written or oral statements made by XL or on XL’s behalf may include forward-looking statements that reflect their respective current views with respect to future events and financial or operational performance. Such statements include forward-looking statements with respect to the transactions contemplated by the merger agreement and statutory merger agreement, including the merger, to XL in general, and to the insurance and reinsurance sectors in particular (both as to underwriting and investment matters). Forward-looking statements are based on information then currently available to XL and involve estimates, expectations, projections and extrapolations thereof. Statements that include the words “expect,” “estimate,” “intend,” “plan,” “believe,” “project,” “anticipate,” “may,” “could,” or “would” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the PSLRA or otherwise.
The proposed transaction is subject to risks and uncertainties and factors that could cause XL’s actual results to differ, possibly materially, from those in the specific projections, goals, assumptions and statements include, but are not limited to:

that XL may be unable to complete the proposed transaction because, among other reasons, conditions to the closing of the proposed transaction may not be satisfied or waived, including the failure to obtain XL shareholder approval for the merger proposal or that a governmental entity or insurance regulator may prohibit, delay or refuse to grant approval for the consummation of the transaction;

uncertainty as to the timing of completion of the proposed transaction;

the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement;

risks related to disruption of XL’s management’s attention from ongoing business operations due to the proposed transaction;

the effect of the announcement of the proposed transaction on XL’s relationships with their respective clients, operating results and business generally;

the outcome of any legal proceedings to the extent initiated against XL or others following the announcement of the proposed transaction; and

XL’s management team’s response to any of the aforementioned factors.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein or elsewhere, including the risk factors included in XL’s most recent reports on Form 10-K and other documents of XL on file with or furnished to the SEC. Any forward-looking statements made in this material are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by XL will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, XL or its business or operations. XL undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by the federal securities laws.
19

PARTIES TO THE MERGER
XL
XL Group Ltd
One Bermudiana Road
Hamilton, HM 08,
Bermuda
+1 (441) 292-8515
XL Group Ltd (which we refer to as “XL” and, following the merger, as the “surviving company”), a Bermuda exempted company, through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and special products to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis.
For additional information on XL and its business, including how to obtain the documents that XL has filed with the SEC, see the section of this proxy statement titled “Where You Can Find More Information.”
AXA
AXA SA
21 Avenue, Matignon
75008 Paris, France
+33 1 40 75 48 43
AXA SA (which we refer to as “AXA”), a French société anonyme, is the holding company of the AXA Group, a worldwide leader in insurance and asset management, with 116,000 employees (open-ended and fixed term contracts) serving more than 100 million clients. In 2017, IFRS revenues amounted to Euro 98.5 billion and IFRS underlying earnings to Euro 6.0 billion. AXA had Euro 1,439 billion in assets under management as of December 31, 2017. The AXA ordinary share is listed on compartment A of Euronext Paris under the ticker symbol CS (ISN FR 0000120628 — Bloomberg: CS FP — Reuters: AXAF.PA). AXA’s American Depository Share is also quoted on the OTC QX platform under the ticker symbol AXAHY. AXA is included in the main international SRI indexes, such as Dow Jones Sustainability Index (DJSI) and FTSE4GOOD. It is a founding member of the UN Environment Programme’s Finance Initiative (UNEP FI) Principles for Sustainable Insurance and a signatory of the UN Principles for Responsible Investment.
Merger Sub
Camelot Holdings Ltd.
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Camelot Holdings Ltd. (which we refer to as “Merger Sub”), a Bermuda exempted company, is a wholly owned subsidiary of AXA that was formed by AXA solely for purposes of entering into the merger agreement and the statutory merger agreement and completing the transactions contemplated thereby. Upon completion of the merger, Merger Sub will be merged with and into XL and will cease to exist.
20

THE MERGER
This discussion of the merger is qualified in its entirety by reference to the merger agreement, a copy of which is incorporated by reference in its entirety and included in this proxy statement as Annex A. You should read the merger agreement in its entirety because it, and not this proxy statement, is the legal document that governs the merger.
Effects of the Merger
Pursuant to the merger agreement and the statutory merger agreement, Merger Sub will merge with and into XL, with XL continuing as the surviving company. XL, as the surviving company, will continue in existence as a Bermuda exempted company and a wholly-owned subsidiary of AXA. As a result of the merger under Bermuda law, XL’s and Merger Sub’s respective undertakings, property and liabilities will become vested in XL as the surviving company in the merger.
At the effective time, each common share issued and outstanding immediately prior to the effective time (other than any common share that is owned by XL as treasury shares, by wholly-owned subsidiaries of XL or by AXA, Merger Sub or wholly-owned subsidiaries of AXA (with certain exceptions)) will be canceled and converted into the right to receive the merger consideration.
At the effective time, each preferred share of any subsidiary of XL issued and outstanding immediately prior to the effective time will continue as a preferred share of such subsidiary following the merger and the relative rights, terms and conditions of each such preferred share will remain unchanged.
Background of the Merger
Unless otherwise stated, references in this section of this proxy statement to times of day are in Eastern Time.
The XL board of directors annually reviews with senior management XL’s long-term strategic plans and objectives and this review includes a discussion of macro trends impacting XL and the (re)insurance industry, such as (re)insurance industry consolidation, changes in the (re)insurance distribution model, increasing presence of alternative capital in the (re)insurance sector, the continued impact of a “soft market” pricing environment especially in the specialty and property catastrophe lines of business and resulting margin pressure and their potential impact on XL’s strategic plan and objectives, and also senior management’s view that public trading markets do not give proper credit to XL’s performance.
During the first half of 2017, Mike McGavick, XL’s Chief Executive Officer, had discussions with executives of a global insurance and reinsurance company, referred to as “Party 1,” who introduced the idea of a potential strategic transaction between XL and Party 1. XL entered into a confidentiality agreement including a standstill with Party 1 in June 2017. Recurring discussions with Party 1 occurred through late February 2018, which the XL board of directors was kept apprised of by XL’s senior management.
Following the annual review of XL’s strategic plan in August 2017, XL’s board of directors continued to endorse XL’s stand-alone strategic plan but also authorized XL’s management team to engage in discussions at management’s discretion with other (re)insurers regarding potential strategic opportunities within the industry, including continuing discussions with Party 1.
During October 2017, representatives of another global insurance and reinsurance company, referred to as “Party 2,” requested a meeting with representatives of XL and, during such meeting, discussed a potential strategic transaction. This meeting with Party 2 did not develop into further discussions.
On November 7, 2017, following an unrelated board meeting for AXA US in New York, Thomas Buberl, AXA’s Chief Executive Officer met with a representative of XL’s financial advisor, Morgan Stanley & Co. LLC. At this meeting, Mr. Buberl requested a meeting with Mr. McGavick.
On November 15, 2017, Mr. Buberl met with Mr. McGavick. During this meeting, Mr. Buberl proposed the possibility of a strategic transaction involving XL and AXA.
21

Following this meeting, on November 16, 2017, Mr. McGavick provided an update to the Chairman of the XL board of directors. The other members of the XL board of directors were subsequently informed of the communication with Mr. Buberl.
On December 4, 2017, Mr. McGavick and Greg Hendrick, who was then the President of XL’s property and casualty division, met with Mr. Buberl. During this meeting, the participants discussed the possibility of a strategic transaction involving XL and AXA, XL’s then-current valuation and trading multiples and the possibility that these might not fully and fairly reflect XL’s value. Mr. Buberl also expressed interest in combining XL with certain components of AXA’s existing businesses and identifying potential leadership for the combined business unit.
On December 13, 2017, representatives of Morgan Stanley and Mr. Buberl participated in a telephone call during which Mr. Buberl again expressed AXA’s strategic interest in XL.
From December 13, 2017 through January 15, 2018, XL and AXA exchanged drafts of a confidentiality agreement with respect to AXA’s receipt and review of non-public information regarding XL.
During an update to the XL board of directors on December 13, 2017, the XL management team discussed with the XL board of directors the potential for a strategic transaction with AXA. On December 14, 2017 and continuing on December 15, 2017, XL’s board of directors held a regularly scheduled meeting. Members of XL’s senior management team also participated in these meetings. Representatives of XL’s financial advisors, Morgan Stanley and Ardea Partners LLC, participated in the meeting on December 14, 2017. The XL board of directors reviewed and approved XL’s annual budget and business plan for 2018 that reflected, among other matters, the impact of the market reaction to the natural catastrophe losses that occurred in the second half of 2017. As part of these meetings, the directors discussed, among other items, the market environment, perspectives on XL’s valuation, and the fact that there had been recent expressions of strategic interest in XL from AXA, Party 1 and Party 2, as well as an expression of interest in discussing a potential strategic transaction from a global insurance company, referred to as “Party 3,” which inquiry was not subsequently pursued thereafter by Party 3. Although the XL board of directors continued to endorse XL’s stand-alone strategic plan, the macro trends that the XL board of directors regularly considers as part of its strategic review, combined with the natural catastrophe losses in 2017, led to a heightened attention to XL’s potential strategic opportunities.
On January 16, 2018, XL and AXA executed a confidentiality agreement. The terms of the confidentiality agreement did not permit AXA to make a formal proposal to acquire XL unless specifically invited to do so by XL.
On January 18, 2018, Mr. Buberl telephoned Mr. McGavick and during this call the potential acquisition of XL by AXA was discussed.
On January 19, 2018, Mr. McGavick and other XL directors participated in a regularly scheduled board update call during which Mr. McGavick’s recent conversations with Mr. Buberl and other expressions of strategic interest in XL were discussed.
On January 26, 2018, Mr. McGavick, Mr. Hendrick, Stephen Robb, XL’s Chief Financial Officer and Pete Porrino, XL’s former Chief Financial Officer and advisor to Mr. McGavick, met with Mr. Buberl, Gérald Harlin, AXA’s Deputy Chief Executive Officer and Group Chief Financial Officer, George Stansfield, AXA’s Deputy Chief Executive Officer and Group General Secretary, Nicolas Leclercq, AXA’s Head of Group Corporate Finance and Treasury and Alban de Mailly Nesle, AXA’s Group Chief Risk Officer, to discuss a potential strategic transaction. During that meeting, AXA expressed an interest in studying how the existing businesses of AXA, including AXA Corporate Solutions (AXA’s large commercial P&C and specialty business) and AXA Art, could be combined with the business of XL and what the key messages would be to internal and external stakeholders in the event of a transaction. Mr. Hendrick was asked to lead this workstream.
On January 31, 2018, Mr. Porrino, Mr. Stansfield and Helen Browne, AXA’s Group General Counsel, participated in a telephone call during which potential integration planning matters were discussed, including further details of AXA’s plan to combine certain components of AXA’s existing businesses with XL.
22

On February 1, 2018, Mr. McGavick and Mr. Buberl participated in a telephone call during which discussions regarding a potential strategic transaction continued. During this call, it was agreed that representatives of AXA would be invited to participate in a series of management meetings and discussions in order for AXA to more fully develop a view as to its interest in XL.
During the week of February 5, 2018 through February 13, 2018, representatives of XL and AXA participated in meetings, videoconferences and telephone calls regarding XL’s business, operations, structure and governance and potential integration planning matters.
On February 7, 2018, Bloomberg published a news article, citing unnamed sources, that XL was attracting interest from other insurance and reinsurance companies, including Allianz SE. AXA was not named in the Bloomberg news article.
During the week of February 5, 2018, both prior and subsequent to the Bloomberg news article, XL or its representatives continued to have conversations with Party 1 and had preliminary conversations with a U.S. insurance company, referred to as “Party 4,” and a global insurance and reinsurance company, referred to as “Party 5,” through its representatives. In addition, Morgan Stanley, on behalf of and at the direction of XL, had preliminary conversations with a global insurance and reinsurance company, referred to as “Party 6.”
On February 13, 2018, Mr. McGavick met with Denis Duverne, the Chairman of AXA, and Mr. McGavick and Mr. Hendrick each met with Mr. Buberl separately. During these discussions, Mr. Buberl indicated that if a transaction were to occur, XL would be combined with certain components of AXA’s existing businesses. Mr. Buberl expressed to Mr. McGavick that members of XL’s management team, including Mr. Hendrick and potentially Mr. McGavick, would have a role running this combined business unit if a transaction were to occur (with Mr. Hendrick possibly serving as CEO of the combined business unit and with Mr. McGavick possibly being retained by AXA in some other capacity); however, no determination was made at this time regarding whether Mr. McGavick would continue to be employed by AXA following a potential transaction and no specific terms of potential employment by AXA for any member of XL’s management team were discussed.
On February 14, 2018, certain members of XL’s management team provided the XL board of directors with an update on discussions with AXA regarding a potential strategic transaction.
On February 15, 2018, Ardea Partners provided written disclosure to XL, subsequently updated shortly prior to the March 4, 2018 meeting of XL’s board of directors, regarding Ardea Partners’ material relationships with XL and AXA which were thereafter shared with XL’s board of directors.
On February 15, 2018, XL’s board of directors held a regularly scheduled meeting. Members of XL’s management team and representatives of Morgan Stanley, Ardea Partners, and Skadden, Arps, Slate, Meagher & Flom LLP, outside counsel to XL, referred to as “Skadden Arps,” also participated in portions of this meeting. As part of this meeting, the directors discussed XL management’s ongoing dialogue with AXA and reviewed details of discussions between XL and other insurance and reinsurance companies. Representatives of Skadden Arps reviewed with XL’s board of directors the general scope of duties of a public company board of directors and how those duties would be applied in the context of discussions regarding a potential sale of the company. Representatives of Morgan Stanley and Ardea Partners reviewed with the directors XL’s financial performance and certain preliminary financial analyses performed by Morgan Stanley and Ardea Partners. At this meeting, XL’s management team discussed XL’s 2018 business plan in light of January 1, 2018 renewals. While affirming XL’s 2018 business plan, XL’s board of directors authorized Mr. McGavick and XL management to continue discussions with AXA and continue discussions or engage with other potentially interested parties and discussed how to respond to indications of interest that could be received at a range of potential prices.
On February 19, 2018, Mr. McGavick reached out to Party 2, but Party 2 did not pursue conversations with XL any further.
On February 20, 2018, Mr. McGavick received an initial preliminary and non-binding oral indication of interest to acquire XL for a cash amount in the area of  $50.00 per share from Party 1. Based on previous feedback from the XL board of directors, Mr. McGavick conveyed to Party 1 that the XL board would not
23

be willing to enter into negotiations at a price of less than $50.00 per share. Mr. McGavick further stated that the XL Board of directors would be unlikely to enter into a transaction at a price per share in the low $50s. That understood, Party 1 requested that, in the event XL sought to enter into a potential strategic transaction with a third party, XL continue to consider Party 1 as a potential alternative partner to such a transaction and continue an ongoing dialogue with Party 1. Party 1 further requested to be provided with a “last look” in the event a third party to a potential strategic transaction with XL proposed a higher price. XL agreed to maintain a dialogue with Party 1 but made no further assurances to Party 1.
Also on February 20, 2018, Mr. Porrino and Mr. Stansfield discussed key principles underlying potential areas of integration planning.
Also on February 20, 2018, at the direction of XL, a representative of Morgan Stanley contacted Mr. Buberl of AXA to convey that Mr. McGavick had received a non-binding oral indication of interest to acquire XL from an unspecified third party (which was Party 1) and that in order to proceed further AXA would need to make a competitive oral offer in light of the range of offers that could be received from other parties.
On February 21, 2018, Mr. Buberl telephoned Mr. McGavick seeking permission to make a preliminary, confidential and non-binding offer to acquire XL’s outstanding common shares for cash consideration of  $57.60 per share. Mr. Buberl also requested that XL grant AXA a period of exclusivity, which request was not granted. Based on prior authorization of the XL board of directors, Mr. McGavick granted AXA permission to submit a non-binding written offer to the XL board of directors at the price indicated by Mr. Buberl.
On February 21, 2018 and February 22, 2018, additional discussions were held between representatives of XL and representatives of AXA.
During the morning of February 23, 2018, Mr. Leclercq sent to Morgan Stanley a letter containing a preliminary, confidential and non-binding offer to acquire 100% of XL’s outstanding common shares for cash consideration of  $57.60 per share. The offer included key principles that would be applied for the integration and ongoing management of XL with the AXA group, including that XL would retain significant autonomy within AXA, while being combined with certain components of AXA’s existing businesses. The offer did not mention specific management retention or the potential for current XL board members to sit on AXA’s board of directors. The offer also indicated that AXA was prepared to enter into due diligence and negotiations on an accelerated timeframe.
On February 23, 2018, a representative of Skadden Arps sent an initial draft of the merger agreement to Ms. Browne as had been previously requested by AXA.
Also on February 23, 2018, Mr. McGavick and other XL directors participated in a board update call during which the status of the potential transaction was discussed. Mr. McGavick also called Party 1, and determined, based on that call, that it was unlikely that Party 1 would continue to pursue a transaction given the price that had been offered by AXA. In addition, in light of the non-binding offer received from AXA and AXA’s proposed accelerated timeframe, the determination was made not to seek to pursue an ongoing dialogue with any of Party 2, Party 5 or Party 6 at that time.
Also on February 23, 2018, to facilitate AXA’s due diligence, XL gave representatives of AXA access to an electronic data room containing documents and information with respect to XL.
During the period from February 23, 2018 through March 4, 2018, Mr. McGavick and Mr. Buberl had frequent discussions regarding the potential transaction and other representatives of XL and representatives of AXA and J.P. Morgan Securities LLC, AXA’s financial advisor, also engaged in discussions regarding the potential transaction and confirmatory due diligence matters.
On February 25, 2018, a representative of Party 4 met with Mr. McGavick and indicated that Party 4 would be interested in pursuing a strategic transaction with XL that would value XL at between $10 billion and $15 billion. Given the current progress of discussions with AXA and Mr. McGavick’s and XL’s board of directors’ view of Party 4’s ability to effect such a transaction, discussions were not pursued with Party 4 and Party 4 did not seek to reengage with XL.
24

During the early morning of February 26, 2018, a representative of Cravath, Swaine & Moore LLP, AXA’s outside legal advisor, referred to as “Cravath,” sent a revised draft of the merger agreement to Skadden Arps.
Also on February 26, 2018, Morgan Stanley provided written disclosure to XL, subsequently updated shortly prior to the March 4, 2018 meeting of XL’s board of directors, regarding its material relationships with XL and AXA which were thereafter shared with XL’s board of directors, as more fully described below under the heading “— Opinion of XL’s Financial Advisor.”
During the afternoon of February 27, 2018, a representative of Skadden Arps sent a revised draft of the merger agreement to Cravath. The draft reflected XL’s response to certain issues that had been raised by AXA’s proposed merger agreement draft, including regarding the scope of termination events and termination fees, the scope of the “fiduciary out” exceptions to the non-solicitation covenant, the scope of AXA’s commitments to seek and obtain regulatory approvals and the conditions to closing (including exclusions from the definition of  “material adverse effect”).
On February 28, 2018, representatives of Skadden participated in a teleconference with representatives of Cravath to discuss issues in XL’s revised merger agreement draft, including the scope of termination events and termination fees, the scope of the “fiduciary out” exceptions to the non-solicitation covenant, the conditions to closing and covenants and conditions relating to the impact of natural catastrophe events on XL.
Also on February 28, 2018, Mr. Buberl inquired of Mr. McGavick whether XL executives would be willing to consider potentially rolling over their 2018 equity awards in the event they remained at XL after the closing of the transaction. Mr. McGavick indicated to Mr. Buberl his willingness to do so and that he would discuss with other executives at XL to see if they would potentially be willing to consider doing so.
During the period from February 28, 2018 to March 4, 2018, representatives of Skadden Arps and ASW Law Limited, special Bermuda counsel to XL, with the assistance of XL’s senior management team, negotiated the terms and conditions of the merger agreement with AXA and its legal and financial advisers.
On March 1, 2018, Mr. McGavick and other XL directors participated in a board update call during which the status of the potential transaction was discussed. All members of the XL board of directors were invited to attend this session. Because XL and AXA had agreed on a per share purchase price and had agreed in all material respects to the other material transaction terms (subject to finalization of definitive documentation and approval by the boards of XL and AXA), the Management Development and Compensation Committee of the XL board of directors authorized Mr. McGavick, Mr. Hendrick, Kirstin Gould, XL’s General Counsel and Secretary, and Eileen Whelley, XL’s Chief Human Resources Officer, to preliminarily discuss with AXA post-closing officer roles and responsibilities of certain members of senior management of XL, provided that such persons were not authorized to finalize specific employment agreements or terms without the approval of the committee. Following the committee’s authorization, Messrs. McGavick and Hendrick commenced such discussions with AXA.
Also on March 1, 2018, representatives of AXA contacted a representative of Morgan Stanley to discuss the intention of Mr. McGavick and Mr. Hendrick to roll over their 2018 equity awards in connection with the transaction and to continue to provide services to the surviving company following the closing of the proposed transaction.
On March 2, 2018, during a call regarding other transaction matters, Mr. Hendrick and representatives of AXA discussed the intention of Mr. Hendrick to roll over his 2018 equity awards in connection the transaction and to continue to provide services to the surviving company following the closing of the proposed transaction.
On March 3, 2018, Bloomberg published an article stating that AXA was in advanced discussions to purchase XL.
On the morning of March 4, 2018, the Management Development and Compensation Committee of the XL board of directors met. All members of the XL board of directors were invited to attend this session. The meeting was also attended by members of XL’s management and representatives of Skadden Arps. Representatives of Skadden Arps reviewed with the Management Development and Compensation
25

Committee of the XL board of directors, among other matters, the proposed treatment of XL’s outstanding equity awards as contemplated by the merger agreement and the Management Development and Compensation Committee of the XL board of directors unanimously approved such proposed treatment.
Following this meeting, the XL board of directors met. Mr. Hendrick, Mr. Porrino, Mr. Robb, Ms. Gould and Ms. Whelley also attended this meeting together with representatives of Morgan Stanley, representatives of Ardea Partners, representatives of Skadden Arps and representatives of ASW. Representatives of Skadden Arps and ASW discussed with the XL board of directors its duties under Bermuda law and other legal principles and standards applicable to the XL board of directors’ consideration of the proposed transaction. Representatives of Skadden Arps also reviewed the terms and conditions set forth in the proposed merger agreement, including, among other things, the parties’ respective termination rights (including XL’s right to terminate the agreement if XL’s board of directors, in the exercise of its fiduciary duties, changes its recommendation with respect to the proposed transaction), the termination fees payable in connection with certain termination events under the proposed merger agreement, the obligations of the parties to obtain applicable regulatory approvals, the definition of a “material adverse effect” and the applicable closing conditions. Representatives of Morgan Stanley then reviewed with the XL board of directors Morgan Stanley’s financial analysis of the merger consideration, as more fully described below under the heading “— Opinion of XL’s Financial Advisor” and representatives of Ardea Partners presented a financial analysis of XL and the proposed transaction, including analyses based upon publicly available information and internal forecasts prepared by management of XL and approved for Ardea Partners’ use by XL. Thereafter, representatives of Morgan Stanley rendered to the XL board of directors Morgan Stanley’s oral opinion that, as of March 4, 2018 and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement was fair from a financial point of view to such holders of XL common shares (such opinion was subsequently confirmed in writing by Morgan Stanley on March 4, 2018 following the meeting). After discussion, and in light of the XL board of directors’ review and consideration of the factors described under “— XL’s Reasons for the Merger and Recommendation of the XL Board of Directors,” the XL board of directors unanimously approved the merger, the merger agreement and the statutory merger agreement and resolved that the merger proposal be submitted to XL’s shareholders for their consideration at the special general meeting.
On March 4, 2018, Mr. McGavick proposed to AXA in writing to roll over the value of the equity awards (as of the closing of the merger) granted to him in 2018 into a deferred cash award scheduled to vest in equal amounts on the 15th and 30th month anniversaries of the effective time. Alternatively, Mr. McGavick proposed to AXA to roll over his 2018 award to restricted AXA shares, if permitted under applicable tax and other laws. As part of this retention arrangement, Mr. McGavick may serve as vice-chairman of the board of directors of the surviving company (such company to serve as the holding company for P&C commercial lines business of AXA) and enter into a two-year consulting agreement pursuant to which he would advise AXA on integration-related and other strategic matters. Mr. McGavick proposed to AXA an aggregate consulting fee equal to the severance that would otherwise be payable to him in the event of a qualifying termination of employment under the terms of his employment agreement. Mr. McGavick and AXA discussed Mr. McGavick waiving his right to receive such severance in connection with his entry into the consulting agreement. Mr. McGavick and AXA have not finalized such proposal or formally entered into any such arrangement.
On March 4, 2018, Mr. Hendrick proposed to AXA in writing to roll over the value of the equity awards (as of the closing of the transaction) granted to him in 2018 into a deferred cash award having an enhanced value equal to 125% of the cash amount that would have otherwise been payable to him at the effective time in respect to such equity award, with such deferred cash award scheduled to vest in substantially equal amounts on the 15th and 30th month anniversaries of the effective time. After the closing of the transaction, it is expected that Mr. Hendrick will be appointed CEO of the combined operations of XL Group, AXA Corporate Solutions (AXA’s large commercial P&C and specialty business) and AXA Art and will join AXA Group’s management committee. Mr. Hendrick and AXA have not finalized such proposal or entered into any such arrangement.
26

XL and AXA then entered into a merger agreement dated March 5, 2018. AXA and XL issued a joint press release prior to the opening of trading markets in Europe on March 5, 2018 announcing the transaction.
XL’s Reasons for the Merger and Recommendation of the XL Board of Directors
The XL board of directors has unanimously (1) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, XL, (2) approved the merger, the merger agreement and the statutory merger agreement and (3) resolved that the merger proposal and the compensation advisory proposal be submitted to XL’s shareholders for their consideration at the special general meeting. Accordingly, the XL board of directors recommends that XL shareholders vote “FOR” the merger proposal.
For purposes of Section 106(2)(b)(i) of the Companies Act, the XL board of directors considers $57.60, without interest and less any applicable withholding taxes to be fair value for each common share.
Positive Factors Relating to the Merger
As described in the section of this proxy statement titled “The Merger — Background of the Merger,” the XL board of directors, prior to and in reaching its determination at its meeting on March 4, 2018 that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, XL, consulted with XL’s management, financial advisors and outside legal counsel and considered a variety of potentially positive factors relating to the merger, including, but not limited to, the following:
Treatment of Common Shares

The value to be received by the holders of common shares in the merger, including the fact that the all cash consideration to be received represents a significant premium relative to the trading price of the common shares. The merger consideration of  $57.60 per common share represents a premium of 54.3% to the closing price of common shares on February 6, 2018, the last full trading day prior to the release of reports that XL was a potential acquisition target, and a premium of 33.0% to the closing price of common shares on March 2, 2018, the last full trading day prior to the announcement of the transaction.

The fact that the merger consideration of  $57.60 per common share is 1.51x XL’s fully diluted book value per share and 1.96x XL’s tangible book value per share, in each case as of December 31, 2017.

The belief of the XL board of directors that the merger consideration to be received by holders of common shares compared adequately to a range of values of XL as an independent company based on traditional valuation analyses such as a discounted dividend model, comparable companies’ trading analyses, analyses of historical cash transaction control premiums paid and comparable precedent transactions analyses.

The fact that between the first half of 2017 and the time of entry into the merger agreement with AXA, XL had discussions with six other parties and no other party had expressed a willingness to make an offer in excess of the $57.60 per common share AXA has agreed to pay.

The possibility that, if XL did not enter into the merger agreement, it could take a considerable amount of time and involve a substantial amount of risk before the trading price of the common shares would reach and sustain the $57.60 per share value of the merger consideration, as adjusted for present value.

The fact that the merger agreement allows XL to continue to declare and pay regular quarterly cash dividends of up to $0.22 per common share.

The possibility that, if XL did not enter into the merger agreement, there would likely be few, if any, other parties that would be willing to make an offer in excess of AXA’s offer of  $57.60 per common share.
27


The fact that the merger consideration is to be paid entirely in cash, which will allow holders of common shares to realize, upon closing, a certainty of value in light of the risks and uncertainties inherent in XL’s prospects and the market, economic and other risks that arise from owning an equity interest in a public company.

The opinion of Morgan Stanley to the XL board of directors on March 4, 2018 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement was fair from a financial point of view to such holders of XL common shares.
Terms of the Merger Agreement

The fact that the terms and conditions of the merger agreement, including, but not limited to, the representations, warranties and covenants of the parties and the conditions to closing, are reasonable.

The belief of the XL board of directors that, based on consultation with XL’s outside legal counsel, the conditions to the consummation of the merger as set forth in the merger agreement are reasonable and customary, and the likelihood in the view of the XL board of directors that the merger would be completed because of the limited nature of such conditions.

The availability of appraisal rights to XL shareholders who do not vote in favor of the merger proposal, which rights provide eligible shareholders with the opportunity to have the Bermuda Court determine the fair value of their shares.

The fact that the XL board of directors is permitted to modify or withdraw its recommendation of the merger proposal in response to a material event or circumstance that was not known or was not reasonably foreseeable to the XL board of directors on March 5, 2018 if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law, subject to the payment of a $499 million termination fee if AXA terminates the merger agreement (see the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreement”).

Other specific terms of the merger agreement permitting XL to consider a “superior proposal” received after March 5, 2018 and at any time prior to approval of the merger proposal by XL’s shareholders, including:

XL’s ability, under certain circumstances, to consider and respond to a written unsolicited bona fide proposal or engage in discussions or negotiations with the third party making such a proposal, in each case if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that such “takeover proposal” either constitutes or would reasonably be expected to lead to a “superior proposal” (see the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements”);

The fact that the terms of the merger agreement provide that, under certain circumstances where a superior proposal has been received, XL is permitted to entertain takeover proposals, and the XL board of directors is permitted to:

modify or withdraw its recommendation of the merger proposal in response to a superior proposal if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law, subject to the payment of a $499 million termination fee if AXA terminates the merger agreement; or
28


terminate the merger agreement to enter into an alternative acquisition agreement in respect of a superior proposal if the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law, subject to the payment of a $499 million termination fee or terminate the merger agreement, subject, in each case, to compliance with certain procedural requirements, which may include under certain circumstances the payment of a termination fee (see the section of this proxy statement titled “The Merger Agreement —  No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements”).

The fact that the terms of the merger agreement provide that, if AXA or XL terminates the merger agreement due to the shareholder approval for the merger proposal not being obtained at the shareholder meeting and prior to the shareholder meeting, a takeover proposal is announced (and not withdrawn at least 10 business days prior to the shareholder meeting), then XL is permitted to consummate a takeover proposal with any person other than the person who announced a takeover proposal prior to the shareholder meeting, provided that within 12 months after the termination of the merger agreement, XL consummates the takeover proposal or enters into a definitive agreement to consummate such takeover proposal and thereafter consummates such takeover proposal (whether or not within such 12 month period), and subject to an “alternate fee” of  $249.5 million. In no event will XL be required to pay the $499 million termination fee or the $249.5 million alternate fee more than once or be required to pay both the termination fee and the alternate fee.

XL’s ability to waive any standstill provision to allow a third party to make an alternative acquisition proposal to the XL board of directors on a non-public basis if the XL board of directors determines in good faith, after consultation with XL’s outside legal counsel, that failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law.

The belief of XL’s board of directors, based on consultation with XL’s financial advisors and outside legal counsel, that the $499 million termination fee, which is approximately 3.25% of the estimated aggregate merger consideration payable to holders of common shares in connection with the merger, would not preclude other parties from making an acquisition proposal for XL.

The absence of any financing condition or contingency to the merger.

The fact that AXA is a strong, well-capitalized company with ample resources to consummate the transaction.

The high likelihood that AXA will proceed to consummate the merger without significant delay, given its regulatory sophistication, financial resources and high credit rating.

AXA’s commitment in the merger agreement to use its reasonable best efforts to consummate the merger (subject to the terms and conditions of the merger agreement).

The ability of the parties to consummate the merger.
Risk and Other Considerations of the Merger
In the course of its deliberations, the XL board of directors, in consultation with XL management, financial advisors and outside legal counsel, also considered a variety of risks and other potentially negative factors relating to the merger, including the following:

The possibility that the merger might not be consummated, or that the consummation might be delayed.

The risk of diverting management focus and resources from other strategic opportunities and operational matters while implementing the merger.
29


That restrictions on the conduct of XL’s business prior to consummation of the merger could delay or prevent XL from undertaking business opportunities that arise pending consummation of the merger, which opportunities might be lost to XL if the merger could not be consummated.

The potential negative effect of the pendency of the merger on XL’s business and relationships with customers, vendors, business partners and employees, including the risk that key employees might not choose to remain employed with XL prior to the consummation of the merger, regardless of whether or not the merger is consummated.

The risk that XL shareholders may not approve the merger proposal.

The risk that governmental entities may oppose or refuse to approve the merger or impose conditions on XL and AXA (or any of their respective affiliates) prior to approving the merger, which conditions may constitute a burdensome condition under the terms of the merger agreement that would permit AXA to refuse to consummate the merger.

That XL only conducted a limited pre-signing market check as to the availability of alternative proposals, even though the XL board of directors determined that forgoing a broad pre-signing market check was in the best interests of XL because (i) AXA was offering a significant premium to holders of common shares; (ii) the board believed following consultation with its financial advisors that it was unlikely that there would be other parties that would be willing to make an offer in excess of AXA’s offer; and (iii) discussions with alternative potential acquirers might jeopardize any potential transaction with AXA.

The fact that the all-cash merger consideration, while providing certainty of value upon consummation, would not allow holders of common shares to participate in any future earnings growth of XL or benefit from any future increase in its value.

The fact that some of XL’s directors and executive officers have other interests in the merger that are in addition to their interests as shareholders of XL (see the section of this proxy statement titled “The Merger — Interests of XL’s Directors and Executive Officers in the Merger”).

The specific terms of the merger agreement that either individually or in combination, could discourage potential acquirors from making a competing bid to acquire XL, including:

The terms of the merger agreement placing certain limitations on the ability of XL to initiate, solicit or take any action to knowingly facilitate or knowingly encourage any inquiries or requests for information by a third party with respect to a takeover proposal and to furnish non-public information to, or engage in discussions or negotiations with, a third party interested in pursuing an alternative business combination transaction; and

The fact that XL will be required to pay AXA a termination fee in connection with the merger if the merger agreement is terminated under certain circumstances, or which may become payable following a termination of the merger agreement in circumstances where no alternative transaction or superior proposal is ultimately consummated (which termination fee the XL board of directors determined was reasonable and customary).
The foregoing discussion of the factors considered by the XL board of directors is not intended to be exhaustive, but rather a summary of the material factors considered by the XL board of directors. In reaching its decision to approve the merger agreement, including the merger and other transactions contemplated by the merger agreement, the XL board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The XL board of directors considered the various factors as a whole, including discussions with, and questioning of, XL’s management, financial advisors and outside legal counsel, and overall considered the factors to be favorable to, and to support, its determination.
The foregoing discussion of the information and factors considered by the XL board of directors is forward-looking in nature. This information should be read in light of the factors described under the section of this proxy statement titled “Cautionary Statement Concerning Forward-Looking Information.”
30

Opinion of XL’s Financial Advisor
The XL board of directors retained Morgan Stanley & Co. LLC (which we refer to as “Morgan Stanley”) to provide it with financial advisory services in connection with the merger. The XL board of directors selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation, and its knowledge of XL’s business and affairs. On March 4, 2018, Morgan Stanley rendered its oral opinion, which was subsequently confirmed in writing on March 4, 2018, to the XL board of directors to the effect that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement was fair from a financial point of view to such holders of XL common shares.
The full text of the written opinion of Morgan Stanley, dated March 4, 2018, is attached as Annex B to this proxy statement, and is incorporated by reference herein in its entirety. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. The summary of the opinion of Morgan Stanley in this proxy statement is qualified in its entirety by reference to the full text of the opinion. You are encouraged to, and should, read Morgan Stanley’s opinion and the section summarizing Morgan Stanley’s opinion carefully and in their entirety. Morgan Stanley’s opinion was directed to the XL board of directors, in its capacity as such, and addresses only the fairness from a financial point of view of the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement, as of the date of the opinion, and does not address any other aspects or implications of the merger. Morgan Stanley expresses no opinion and Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation to any shareholder of XL as to how to vote at any general meeting of the shareholders of XL to be held in connection with the merger or whether to take any other action with respect to the merger.
In connection with rendering its opinion, Morgan Stanley, among other things:

reviewed certain publicly available financial statements and other business and financial information of XL;

reviewed certain internal financial statements and other financial and operating data concerning XL;

reviewed certain financial projections prepared by the management of XL, including extrapolations of such financial projections, as described below;

discussed the past and current operations and financial condition and the prospects of XL with senior executives of XL;

reviewed the reported prices and trading activity for the XL common shares;

compared the financial performance of XL and the prices and trading activity of the XL common shares with that of certain other publicly-traded companies comparable with XL, and their securities;

reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

participated in certain discussions and negotiations among representatives of XL and AXA and their financial and legal advisors;

reviewed the merger agreement and certain related documents; and

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by XL, and which formed a substantial basis for its opinion. With respect to the financial projections, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best
31

currently available estimates and judgments of the management of XL of the future financial performance of XL, including the potential impact of recent changes in the U.S. tax laws and regulations pursuant to H.R. 1, Tax Cuts and Jobs Act, enacted on December 22, 2017 (the “Tax Cuts and Jobs Act”) on the future financial performance of XL, as to which impact Morgan Stanley expressed no view or opinion. Morgan Stanley further noted in its opinion that (i) the actual and estimated financial and operating performance and the share price data Morgan Stanley reviewed for the companies with publicly traded equity securities that Morgan Stanley deemed to be relevant and (ii) the financial terms of certain acquisition transactions that Morgan Stanley deemed relevant might not, in whole or in part, reflect the potential impact of the Tax Cuts and Jobs Act. In addition, Morgan Stanley assumed that the merger will be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, and that the definitive merger agreement did not differ in any material respect from the draft thereof furnished to Morgan Stanley, except as would not be material to its opinion. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the merger, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed merger. Morgan Stanley noted that it is not a legal, tax, regulatory or actuarial advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of XL and its legal, tax, regulatory or actuarial advisors with respect to legal, tax, regulatory or actuarial matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of XL’s officers, directors or employees, or any class of such persons, relative to the merger consideration to be received by the holders of XL common shares in the merger.
Morgan Stanley’s opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to other business or financial strategies that might be available to XL, nor does it address the underlying business decision of XL to enter into the merger agreement or proceed with any other transaction contemplated by the merger agreement. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of XL, nor was it furnished with any such valuations or appraisals. Morgan Stanley is not an expert in the evaluation of reserves for life or property and casualty insurance losses and loss adjustment expenses and did not make an independent evaluation of the adequacy of the reserves of XL. In that regard, Morgan Stanley made no analysis of, and expressed no opinion as to, the adequacy of the losses and loss adjustment expense reserves of XL. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of, March 4, 2018. Events occurring after such date may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion. In arriving at its opinion, Morgan Stanley was not authorized to solicit, and did not solicit, interest from any party with respect to the acquisition, business combination or other extraordinary transaction, involving XL.
Summary of Financial Analyses
The following is a brief summary of the material financial analyses performed by Morgan Stanley in connection with the preparation of its opinion to the XL board of directors. The following summary is not a complete description of Morgan Stanley’s opinion or the financial analyses performed and factors considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 1, 2018 (the second-to-last trading day immediately preceding the March 4, 2018 presentation by Morgan Stanley to the XL board of directors), and is not necessarily indicative of current market conditions. Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole; considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion.
In performing the financial analysis summarized below and arriving at its opinion, Morgan Stanley used and relied upon certain financial projections provided by XL’s management and referred to in this
32

proxy statement as the “financial projections,” and extrapolations of such financial projections, as described in greater detail in the section of this proxy statement titled “The Merger — Certain XL Prospective Financial Information,” and certain financial projections based on Wall Street research. For the purposes of analysis, each of the per share values outlined below is rounded to the nearest $0.25, with the exception of the 90-trading day trading price range.
Historical Trading Range and Research Targets Analysis
Morgan Stanley reviewed the historical trading range of the XL common shares for the 90-trading day period ended March 1, 2018 and noted that, during such period, the maximum closing price per XL common share was $43.80 and the minimum closing price per XL common share was $34.02. Morgan Stanley also reviewed share price targets for the XL common shares prepared and published by equity research analysts, which reflect each analyst’s estimate of the future public market trading price of the XL common shares.
Morgan Stanley discounted such share price targets to present value (as of March 1, 2018) by applying an illustrative 12-month discount period at a discount rate of 8.2%, which was selected based on Morgan Stanley’s professional judgment and taking into consideration, among other things, XL’s assumed cost of equity calculated utilizing a capital asset pricing model, which is a financial valuation method that takes into account both returns in equity markets generally and volatility in a company’s common stock. Morgan Stanley noted a range of share price targets for the XL common shares as of March 1, 2018 discounted as described above of approximately $29.50 to $46.25 per XL common share.
The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for the XL common shares and these estimates are subject to uncertainties, including the future financial performance of XL and future financial market conditions.
Comparable Company Analysis
Morgan Stanley performed a comparable company analysis, which attempts to provide an implied value of a company by comparing it to similar companies that are publicly traded.
Morgan Stanley reviewed and compared, using publicly available information, certain current and historical financial information for XL and the financial projections with corresponding current and historical financial information, certain financial projections based on Wall Street research reports, ratios and public market multiples for selected companies that, based on Morgan Stanley’s professional judgment and experience, share similar business characteristics and have certain comparable operating characteristics including, among other things, similar lines of business, market capitalizations and/or other similar operating characteristics (we refer to these companies as the “comparable companies”). The following list sets forth the selected publicly traded comparable companies that were reviewed in connection with this analysis:
U.S. Commercial

Chubb Limited

The Travelers Companies, Inc.

The Hartford Financial Services Group, Inc.

CNA Financial Corporation
U.S. Specialty

W.R. Berkley Corporation
Bermuda

Arch Capital Group Ltd.

Everest Re Group, Ltd.
33


RenaissanceRe Holdings Ltd.

AXIS Capital Holdings Limited

Aspen Insurance Holdings Limited
For purposes of this analysis, Morgan Stanley calculated and analyzed the following statistics of each of the comparable companies, based on closing share prices on March 1, 2018 and publicly available financial data, for comparison purposes:

such company’s share price/2018 estimated earnings per share ratio by calculating such company’s price per share of common equity as of March 1, 2018 divided by its estimated 2018 earnings per share (“2018 P/E”), based on publicly available equity research estimates;

such company’s share price/2019 estimated earnings per share ratio by calculating such company’s price per share of common equity as of March 1, 2018 divided by its estimated 2019 earnings per share (“2019 P/E”), based on publicly available equity research estimates;

the ratio of such company’s price per share of common equity divided by the book value per share of such company’s common equity (“P/BV”), using market data as of March 1, 2018 and balance sheet data as of December 31, 2017; and

the ratio of such company’s price per share of common equity divided by the tangible book value per share of such company’s common equity (“P/TBV”), using market data as of March 1, 2018 and balance sheet data as of December 31, 2017.
The following table presents the results of this analysis:
Comparable Company (U.S. Commercial)
2018 P/E
Ratio
2019 P/E
Ratio
P/BV
Ratio
P/TBV
Ratio
Chubb Limited
12.9x 12.2x 1.28x 2.14x
The Travelers Companies, Inc.
12.9x 12.3x 1.61x 1.96x
The Hartford Financial Services Group, Inc.
11.9x 10.8x 1.40x 1.64x
CNA Financial Corporation
13.0x 12.1x 1.11x 1.13x
Comparable Company (U.S. Specialty)
2018 P/E
Ratio
2019 P/E
Ratio
P/BV
Ratio
P/TBV
Ratio
W.R. Berkley Corporation
18.6x 17.8x 1.55x 1.64x
Comparable Company (Bermuda)
2018 P/E
Ratio
2019 P/E
Ratio
P/BV
Ratio
P/TBV
Ratio
Arch Capital Group Ltd.
13.7x 12.5x 1.46x 1.58x
Everest Re Group, Ltd.
10.9x 10.1x 1.17x 1.18x
RenaissanceRe Holdings Ltd.
12.7x 11.8x 1.28x 1.37x
AXIS Capital Holdings Limited
10.9x 9.9x 0.89x 0.95x
Aspen Insurance Holdings Limited
9.5x 8.8x 0.88x 0.89x
For purposes of calculating the 2018 P/E of each comparable company, Morgan Stanley utilized publicly available estimates of 2018 earnings per share, prepared by equity research analysts, available as of March 1, 2018. Based on the results of this analysis and its professional judgment, Morgan Stanley applied a 2018 P/E range of 9.5x to 11.5x, which resulted in an implied per share equity value range of XL of $35.75 to $43.25, based on consensus estimated operating earnings per XL common share of  $3.75 from publicly available equity research analysts estimates, available to Morgan Stanley as of March 1, 2018 (as compared to XL’s closing common share price of  $37.34 on February 6, 2018, which was deemed to be an “unaffected price”), and AXA’s final proposed price per common share of  $57.60).
For purposes of calculating the 2019 P/E of each comparable company, Morgan Stanley utilized publicly available estimates of 2019 earnings per share, prepared by equity research analysts, available as of March 1, 2018. Based on the results of this analysis and its professional judgment, Morgan Stanley applied
34

a 2019 P/E range of 9.0x to 11.0x, which resulted in an implied per share equity value range of XL of $36.00 to $44.00, based on consensus estimated operating earnings per XL common share of  $4.00 from publicly available equity research analyst estimates, available to Morgan Stanley as of March 1, 2018 (as compared to XL’s “unaffected price”, and AXA’s final proposed price per common share of  $57.60).
Based on the results of this analysis and its professional judgment, Morgan Stanley applied (i) a P/BV range of 0.90x to 1.20x to XL’s diluted book value per XL common share of  $38.04 as of December 31, 2017, which resulted in an implied per share equity value range of XL of  $34.25 to $45.75 and (ii) a P/TBV range of 1.20x to 1.50x to XL’s diluted tangible book value per XL common share of  $29.44 as of December 31, 2017, which resulted in an implied per share equity value range of XL of  $35.25 to $44.25 (in each case as compared to XL’s closing common share price of  $37.34 on February 6, 2018, and AXA’s final proposed price per common share of  $57.60).
No company included in the comparable company analysis is identical to XL. In evaluating and selecting comparable companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of XL. These include, among other things, the impact of competition on the business of XL and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of XL and the industry, and in the financial markets in general. Mathematical analysis (such as determining the median) is not, in itself, a meaningful method of using comparable company data.
Dividend Discount Analysis
Morgan Stanley performed a dividend discount analysis to calculate a range of implied present values of the distributable cash flows that XL is forecasted to generate. The range was determined by adding:

the present value of estimated future distributable cash flows for XL over a period of sixty months from January 1, 2018 to December 31, 2022 based on the financial projections for fiscal years 2018 to 2020, which were prepared by the management of XL, and extrapolations of such financial projections for fiscal years 2021 and 2022 prepared based upon assumptions discussed and authorized by management of XL, which management of XL directed Morgan Stanley to use in its financial analysis, including extrapolations of analysts’ estimates of prior year development; and

the present value of an estimated “terminal value” of the XL common shares at the end of the year 2022 determined as a multiple of XL’s tangible book value.
In performing its analysis, Morgan Stanley assumed a cost of equity of 7.7% to 8.7%, which it used as the discount rate. The low end of the range implied by the dividend discount analysis reflected a terminal P/TBV multiple of 1.27x and a discount rate of 8.7%. The high end of such range reflected a terminal P/TBV multiple of 1.49x and a discount rate of 7.7%. This resulted in an implied per share equity value range of the XL common shares of  $48.00 to $57.25 (as compared to XL’s closing common share price of $37.34 on February 6, 2018, and AXA’s final proposed price per common share of  $57.60).
Present Value of Future Share Price Analysis
Morgan Stanley calculated an illustrative future share price for XL common shares in 2019 using estimates contained in the financial projections. Morgan Stanley applied the estimated fiscal year 2019 unaffected earnings per share in the financial projections to the estimated, unaffected P/2018E EPS multiple in the financial projections of 10.0x. The illustrative future market equity value for XL in 2019 was then discounted back to March 1, 2018, using a discount rate of 8.2%. Morgan Stanley selected this discount rate based on the application of its professional judgment and experience and taking into consideration, among other things, XL’s cost of equity calculated utilizing a capital asset pricing model.
Based on the results of this analysis and its professional judgment, Morgan Stanley derived an implied per share equity value of XL of  $46.75 (as compared to XL’s closing common share price of  $37.34 on February 6, 2018, and AXA’s final proposed price per common share of  $57.60).
35

Premiums Paid Analysis
Using publicly available information, Morgan Stanley reviewed transactions and announced bids for control of both (i) certain select public targets in the reinsurance and insurance sectors and (ii) worldwide public targets with an aggregate transaction value of at least $1.0 billion announced since January 1, 2008 to and including December 31, 2017, regardless of sector. Morgan Stanley calculated the premiums paid in these transactions over the applicable unaffected stock price of the acquired company (i.e., the amount by which the price that the purchaser paid for the shares of the target exceeded the market price of such shares) prior to the earliest of the deal announcement, announcement of a competing bid and market rumors. The median of the premium paid in respect of the precedent (Re)Insurance sector transactions, was 23%. Morgan Stanley noted that the ten-year average of the premium paid in transactions with an aggregate transaction value of at least $1.0 billion announced since January 1, 2008 to and including December 31, 2017 (x) in the U.S., was 39%, and (y) worldwide, was 38%.
Based on the results of this analysis, the premiums paid in precedent transactions as outlined above, and its professional judgment, Morgan Stanley applied a premium range of 20% to 35% to the closing price per XL common share of  $37.34 on February 6, 2018, which resulted in an implied per share equity value range of XL of  $44.75 to $50.50 (as compared to XL’s closing common share price of  $37.34 on February 6, 2018, and AXA’s final proposed price per common share of  $57.60).
No company or transaction utilized in the premiums paid analysis is identical to XL or the merger. The fact that points in the range of implied present value per share of XL derived from the valuation of premiums paid in precedent transactions were less than or greater than the consideration is not necessarily dispositive in connection with Morgan Stanley’s analysis of the consideration for the merger, but is one of many factors Morgan Stanley considered.
Precedent Transactions
Morgan Stanley performed a precedent transactions analysis, which is designed to imply a value of a company based on publicly available financial terms and premiums of selected transactions as of, or in close proximity to, the date such transactions were announced. Morgan Stanley compared publicly available statistics for 15 select reinsurance and insurance transactions that were announced since 2014. The following is a list of the insurance transactions reviewed:
Announcement Date
Acquiror
Target
Deal Value
($ in billions)
Deal Value as a multiple of
Book
Value
Tangible
Book
Value
Next 12 Months
(“NTM”) Estimated
Earnings per
Share
January 22, 2018
AIG Validus $ 5.6 1.58x 1.78x 16.6x(1)
September 1, 2017
Centerbridge led
consortium
Sompo Canopius
$ 1.0 1.17x(2) N/A N/A
July 5, 2017
AXIS Novae $ 0.6 1.45x 1.47x N/M
May 2, 2017
Intact One Beacon $ 1.7 1.65x 1.65x 25.5x
December 18, 2016
Fairfax Allied World $ 4.9 1.35x 1.57x 21.7x
October 5, 2016
Sompo Endurance $ 6.3 1.36x 1.53x 14.5x
September 8, 2015
MS&AD Amlin $ 5.3 2.06x 2.43x 16.6x
August 3, 2015
EXOR PartnerRe $ 6.9 1.18x(3) 1.30x(3) 15.4x
July 27, 2015
CMI Sirus $ 2.2 1.26x 1.28x N/A
July 1, 2015
ACE Chubb $ 28.3 1.75x 1.80x 16.1x
June 10, 2015
Tokio Marine HCC $ 7.5 1.90x 2.55x 19.5x
March 31, 2015
Endurance Montpelier $ 1.8 1.21x 1.21x 13.9x
February 16, 2015
Fairfax Brit $ 1.9 1.47x 1.57x 10.3x
January 9, 2015
XL Group Catlin $ 4.1 1.25x 1.54x 12.0x
November 24, 2014
RenaissanceRe Platinum $ 1.9 1.13x 1.13x 18.3x
36

(1)
Utilizes calendar year 2018 estimated earnings per share (instead of NTM estimated earnings per share) as NTM appeared artificially low due to losses in the fourth quarter of 2017.
(2)
Based on consolidated net assets as of December 2016.
(3)
PartnerRe June 30, 2015 book value adjusted for $315 million breakup fee payable to Axis.
Based on the results of this analysis and its professional judgment, Morgan Stanley applied a P/TBV range of 1.40x to 1.80x to XL’s diluted tangible book value per XL common share of  $29.44 as of December 31, 2017, which resulted in an implied per XL common share equity value range of  $41.25 to $53.00 (as compared to XL’s closing common share price of  $37.34 on February 6, 2018, and AXA’s final proposed price per common share of  $57.60). Based on the results of this analysis and its professional judgment, Morgan Stanley applied an NTM P/EPS range of 14.0x to 18.0x, which resulted in an implied per XL common share equity value range of  $52.50 to $67.50, based on consensus estimated operating earnings per XL common share of  $3.75 based on publicly available equity research analysts estimates available to Morgan Stanley (as compared to XL’s closing common share price of  $37.34 on February 6, 2018, and AXA’s final proposed price per common share of  $57.60).
No company or transaction utilized in the precedent transactions analysis is identical to XL or the merger. In evaluating the precedent transactions, Morgan Stanley made assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond XL’s control. These include, among other things, the impact of competition on XL’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of XL and the industry, and in the financial markets in general, which could affect the public trading value of the companies and the aggregate value and equity value of the transactions to which they are being compared. The fact that points in the range of XL’s implied value per share derived from the valuation of precedent transactions were less than or greater than the consideration is not necessarily dispositive in connection with Morgan Stanley’s analysis of the consideration for the merger, but is one of many factors Morgan Stanley considered.
Synergy Valuation Analysis
Morgan Stanley also performed an illustrative synergy valuation analysis based on the publicly disclosed expenses of XL. For purposes of this analysis, Morgan Stanley applied a range of potential cost synergies and an assumption as to the willingness of an acquiror to pay the value of such synergies to XL, in each case selected by Morgan Stanley in its professional judgment.
Based on the foregoing, and Morgan Stanley’s professional judgement, Morgan Stanley calculated the net capitalized value of the cost savings by applying a multiple of 10.0x to annual run-rate cost savings and then subtracting 1.0x in one-time integration costs, and then added the net capitalized value on a per share basis of such potential synergies to the closing share price of XL on February 6, 2018 of  $37.34, resulting in an implied per XL common share equity value range of  $45.00 to $50.50.
General
In connection with the review of the merger by the XL board of directors, Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of XL. In performing its analyses, Morgan Stanley made assumptions with respect to industry performance, general business, regulatory, economic, market and financial
37

conditions and other matters, many of which are beyond XL’s control. These include, among other things, the impact of competition on XL’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of XL and the industry, and in the financial markets in general. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness from a financial point of view to the holders of XL common shares of the merger consideration to be received by the holders of XL common shares pursuant to the merger agreement, and in connection with the delivery of its oral opinion, and its subsequent written opinion, to the XL board of directors. These analyses do not purport to be appraisals or to reflect the prices at which the common shares might actually trade.
The merger consideration was determined through arm’s-length negotiations between XL and AXA and was approved by the XL board of directors. Morgan Stanley provided advice to XL during these negotiations but did not, however, recommend any specific merger consideration to XL, or that any specific merger consideration constituted the only appropriate consideration for the merger.
Morgan Stanley’s opinion and its presentation to the XL board of directors was one of many factors taken into consideration by the XL board of directors in deciding to approve the merger agreement and the transactions contemplated thereby. Consequently, the analyses as described above should not be viewed as determinative of the recommendation of the XL board of directors with respect to the consideration to be received by shareholders pursuant to the merger agreement or of whether the XL board of directors would have been willing to agree to a different form or amount of consideration. Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with Morgan Stanley’s customary practice.
Morgan Stanley express no opinion and Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation to any shareholder of XL as to how to vote at the special general meeting of the XL shareholders to be held in connection with the merger or whether to take any other action with respect to the merger. Morgan Stanley’s opinion did not address the relative merits of the merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available.
The XL board of directors retained Morgan Stanley based upon Morgan Stanley’s qualifications, experience and expertise. Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading and prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley and its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions and finance positions and may trade or otherwise structure and effect transactions, for their own account or the accounts of its customers, in debt or equity securities or loans of XL, AXA, or any other company, or any currency or commodity, that may be involved in the merger, or any related derivative instrument.
Under the terms of its engagement letter, Morgan Stanley provided the XL board of directors with financial advisory services and a fairness opinion, described in this section and attached as Annex B to this proxy statement, in connection with the merger, and XL has agreed to pay Morgan Stanley a fee of approximately $42 million for its services, approximately $4 million of which was paid in connection with the delivery of the fairness opinion and approximately $38 million of which is contingent upon the closing. XL may also pay Morgan Stanley an additional discretionary fee based on XL’s good faith evaluation of the services provided by Morgan Stanley, determined in XL’s sole discretion. XL has also agreed to reimburse Morgan Stanley for its expenses, including fees of outside counsel and other professional advisors, incurred in connection with its engagement. In addition, XL has agreed to indemnify Morgan Stanley and its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the U.S. federal securities laws, relating to or arising out of Morgan Stanley’s engagement.
38

In the two years prior to the date of its opinion, Morgan Stanley or its affiliates have provided financing services for XL and have received fees in connection with such services in an approximate aggregate amount of less than $1 million. Morgan Stanley or an affiliate thereof is currently a lender to XL. Morgan Stanley may also seek to provide financial advisory and financing services to XL and its affiliates in the future and would expect to receive fees for the rendering of these services.
In the thirty months prior to the date of its opinion, Morgan Stanley or its affiliates have provided financial advisory and financing services for AXA and its affiliates and have received fees in connection with such services of approximately $4.9 million in the aggregate. Morgan Stanley or an affiliate thereof is currently a lender to AXA. Morgan Stanley is currently mandated on the initial public offering for AXA’s subsidiary, AXA Equitable Holdings, Inc., and one other financing engagement for AXA, for which Morgan Stanley expects to receive fees, consisting of customary underwriting fees in the case of the initial public offering, for the rendering of these services if such transactions are completed. Morgan Stanley may also seek to provide financial advisory and financing services to AXA and its affiliates unrelated to the merger (except as provided for under the terms of Morgan Stanley’s engagement letter with XL dated February 27, 2018) in the future and would expect to receive fees for the rendering of these services.
Certain XL Prospective Financial Information
XL management does not as a matter of course make public projections as to future performance or earnings and is especially wary of making projections due to the significant unpredictability inherent in its businesses. However, XL provided, among other information, certain financial projections prepared by XL’s management to Morgan Stanley, a financial advisor to the XL board of directors, in connection with its evaluation of the merger (which we refer to as the “financial projections”) and these financial projections were extrapolated upon as described below. The financial projections and extrapolations were not developed for the purposes of providing earnings guidance.
The financial projections and extrapolations each represent only one scenario in a wide range of potential outcomes. While presented with numeric specificity, the financial projections and extrapolations reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to XL’s business, all of which are inherently uncertain and difficult to predict and many of which are beyond XL’s control. The financial projections include the illustrative impact to operating earnings of analyst expectations for prior year development sourced by XL from analysts’ models. As such, the extrapolations implicity include extrapolations of analysts’ estimates of prior year development. The inclusion of prior year development is for illustrative purposes only and does not reflect an endorsement of XL of such expectations. These financial projections and extrapolations are subjective in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. These financial projections and extrapolations may also be affected by XL’s ability to achieve strategic goals, objectives and targets over the applicable periods. As such, these financial projections and extrapolations constitute forward-looking information and are subject to risks and uncertainties, including the various risks set forth in the sections of this proxy statement titled “Cautionary Statements Concerning Forward-Looking Information” and in XL’s most recent reports on Form 10-K for the fiscal year ended December 31, 2017 and other documents of XL on file with or furnished to the SEC. XL shareholders should read such sections of this proxy statement and such reports filed with the SEC for additional information regarding the risks inherent in forward-looking information such as the financial projections and extrapolations. The financial projections and extrapolations cover multiple years and such information by its nature becomes less reliable with each successive year.
The financial projections and extrapolations were not prepared with a view toward public disclosure, the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, but, in view of XL’s management, were prepared on a reasonable basis. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on the prospective financial projections and extrapolations. XL’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has not audited, reviewed, examined, compiled nor applied agreed-upon
39

procedures with respect to the financial projections and extrapolations included below and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report, incorporated by reference in Item 15 of XL’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2017, relates to XL’s previously issued financial statements and does not extend to the prospective financial information and should not be read to do so. Furthermore, the financial projections and extrapolations do not take into account any circumstances or events occurring after the date they were prepared.
Certain of the financial projections and extrapolations set forth herein may be considered non-generally accepted accounting principles (which we refer to as “non-GAAP”) financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with generally accepted accounting principles (which we refer to as “GAAP”), and non-GAAP financial measures as used in the financial projections and extrapolations may not be comparable to similarly titled amounts used by other companies or persons.
The information about the financial projections and extrapolations set forth below do not give effect to the merger and none of the financial projections and extrapolations take into account the effect of any failure of the merger to be consummated.
You are strongly cautioned not to place undue reliance on the financial projections and extrapolations set forth below. The inclusion of the financial projections and extrapolations in this proxy statement should not be regarded as an indication that any of XL, AXA or their affiliates, advisors or representatives considered or consider the financial projections and extrapolations to be predictive of actual future events, and the financial projections and extrapolations should not be relied upon as such. None of XL, AXA or their respective affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not materially differ from the financial projections and extrapolations, and none of them undertakes any obligation to update or otherwise revise or reconcile the financial projections to reflect circumstances existing after the date such financial projections and extrapolations were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the financial projections and extrapolations are shown to be in error. None of XL, AXA or their respective affiliates, advisors or representatives makes any representation to any other person regarding the financial projections and extrapolations. The financial projections and extrapolations are not being included in this proxy statement to influence a shareholder’s decision regarding how to vote on any given proposal, but because the financial projections were provided to Morgan Stanley, and the extrapolations were, at the direction of XL, used by Morgan Stanley in its financial analysis, and are accordingly required to be disclosed in this proxy statement. These financial projections and extrapolations are for illustrative purposes and should not be considered an indication of what XL may do in the future.
40

The following is a summary of the financial projections (expressed in millions of U.S. dollars):
2018E
2019E
2020E
Gross premium written
15,581 16,651 17,458
Net premium written
10,920 12,303 12,853
Net premium earned
10,162 11,639 12,212
Net losses incurred, excluding analysts’ estimates of prior year development(1)
6,372 7,053 7,272
Acquisition expenses
1,660 1,969 2,038
Operating expenses
1,522 1,607 1,672
Underwriting profit (loss), excluding analysts’ estimates of prior year
development(1)
608 1,010 1,230
Net investment income, including income from affiliates
789 785 796
Corporate operating expenses
(243) (233) (219)
Net fee income and others
(11) (12) (12)
Interest expenses
(166) (161) (161)
Income tax
(100) (146) (172)
Minority interest
(71) (64) (68)
Operating earnings, excluding analysts’ estimates of prior year development(1)
806 1,178 1,394
Operating earnings, including analysts’ estimates of prior year development(1)(2)
1,008 1,330 1,546
(1)
Estimates of prior year development reflect Wall Street analysts’ projections for prior year development and are sourced by XL from such analysts’ published models. Prior year development occurs when there is a change recorded during the year to the ultimate loss of a prior accident year.
(2)
XL has included analyst expectations of prior year development for illustrative purposes only and has sourced such estimates from analysts’ models. The inclusion of these analyst expectations does not reflect an endorsement by XL of such expectations.
The following table represents the total estimated future distributable cash flows for XL, including dividends and net share repurchases, over a period of thirty-six months from January 1, 2018 to December 31, 2020 (expressed in millions of U.S. dollars):
2018E
2019E
2020E
Cash flows
231 549 569
The projections of future distributable cash flows (as well as the extrapolations below) reflect projections of XL’s distributable cash flow to XL’s common shareholders for the periods presented based on XL’s stand-alone financial plan and capital management policy and may not be indicative of aggregate net cash flows generated by XL or the amount of cash potentially available to XL to return to XL’s common shareholders. XL in the ordinary course projects future capital return estimated to three years, as reflected above for the fiscal years ended 2018, 2019 and 2020. In connection with Morgan Stanley’s financial analysis for the delivery of its fairness opinion, Morgan Stanley required assumptions that would permit extrapolations of the XL management projections of XL’s financial performance for the fiscal years ended in 2021 and 2022.
41

The following is a summary of the extrapolations used by Morgan Stanley based upon assumptions discussed and authorized by XL, which XL directed Morgan Stanley to use in its financial analysis (expressed in millions of U.S. dollars), including extrapolations of analysts’ estimates of prior year development:
2021E
2022E
Operating earnings
1,592 1,640
The following table represents the total estimated future distributable cash flows for XL based on the foregoing extrapolations, including dividends and net share repurchases, over a period of twenty-four months from January 1, 2021 to December 31, 2022 (expressed in millions of U.S. dollars):
2021E
2022E
Cash flows
586 603
Financing
The merger is not conditioned upon receipt of financing by AXA. AXA has informed us that it has sufficient cash on hand and back-up bridge financing in place to fund the entirety of the merger consideration, but that it currently expects to use subordinated debt, cash on hand and, subject to market conditions, proceeds from the planned initial public offering of its U.S. business, AXA Equitable Holdings, Inc., to fund the aggregate merger consideration. The initial public offering is expected to occur during the first half of 2018, subject to market conditions. In addition to cash on hand, AXA obtained an $11.0 billion bridge term loan facility to provide back-up financing in conjunction with the merger, which was reduced to $8.54 billion following AXA’s recent issuance of €2 billion (or $2.46 billion) of subordinated debt on March 26, 2018.
Effective Time of Merger
The closing is expected to take place in the second half of 2018, although there can be no assurance that the parties will be able to do so. The closing will occur as soon as reasonably practicable (but in any event no later than the fifth business day) following the satisfaction or waiver of all the closing conditions set forth in the merger agreement (described in the section of this proxy statement titled “The Merger Agreement — Closing; Effective Time”) (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of those conditions) or such other date and time as XL and AXA may agree in writing.
The merger will become effective upon the issuance of the certificate of merger by the Bermuda Registrar of Companies and at the time and date shown on such certificate of merger.
Interests of XL’s Directors and Executive Officers in the Merger
XL’s directors and executive officers may have interests in the merger that are different from or in addition to those of XL shareholders generally. The XL board of directors was aware of and considered these interests to the extent such interests existed at the time, among other matters, in evaluating the merger agreement, in approving the merger agreement and the merger and in recommending that the merger agreement be approved by the shareholders of XL.
Treatment of Outstanding XL Restricted Shares
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL restricted share will vest and be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to $57.60.
Treatment of Outstanding XL Performance Unit Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL performance unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of
42

(i) $57.60 and (ii) the number of XL common shares subject to such XL performance unit award. For the purposes of determining the number of XL common shares subject to outstanding XL performance unit awards, the merger agreement provides that with respect to any XL performance unit award with a performance period that has been completed as of the effective time, the number of XL common shares subject to such XL performance unit awards will be determined based on the actual level of performance achieved, and with respect to any XL performance unit award with a performance period that has not been completed as of the effective time, any applicable performance-based vesting requirements will be deemed to be achieved at target payout levels immediately prior to the effective time.
Treatment of Outstanding XL Restricted Share Unit Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL restricted share unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of (i) $57.60 and (ii) the number of XL common shares subject to such XL restricted share unit award.
Treatment of Outstanding XL Stock Option Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL stock option, whether vested or unvested, will be deemed fully vested and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) the excess, if any, of  (A) $57.60, over (B) the per share exercise price of such XL stock option, multiplied by (ii) the number of XL common shares subject to such XL stock option. Any XL stock option with an exercise price that is equal to or greater than $57.60 will be canceled for no consideration.
Summary of Outstanding XL Equity Awards
Assuming for this purpose that the merger is completed on March 15, 2018 (the last practicable date before the filing of this proxy statement), the table below sets forth the number of XL restricted shares, XL performance unit awards, XL restricted share unit awards, vested XL stock option awards and unvested XL stock option awards held by the executive officers and directors and the value that the executive officers and directors can expect to receive for such equity or equity-based awards at the effective time (except as otherwise agreed by AXA and the holder of the award in writing) based on the per share merger consideration equal to $57.60. Depending on when the merger is completed, certain awards that are now unvested and included in the table below may vest or be forfeited pursuant to their terms, independent of the merger.
Restricted Shares
Performance Units
Restricted Share Units
Vested XL Stock Options
Unvested XL Stock Options
Name
Number
(#)
Value
($)
Number(1)
(#)
Value
($)
Number
(#)
Value
($)
Number
(#)
Value
($)
Number
(#)
Value
($)
Named Executive Officers
Michael McGavick
16,000(5) $ 921,600 303,541 $ 17,483,951 62,166 $ 3,580,744 2,730,803 $ 77,520,495 528,170 $ 10,078,451
Stephen Robb
$ 44,371 $ 2,555,755 17,555 $ 1,011,186 18,546 $ 317,322 66,106 $ 1,078,268
Gregory Hendrick
$ 127,584 $ 7,348,842 31,452 $ 1,811,645 727,909 $ 19,807,166 212,274 $ 3,849,297
Charles Cooper
$ 40,051 $ 2,306,961 15,914 $ 916,653 12,364 $ 211,548 49,874 $ 807,578
Kirstin Gould
$ 46,104 $ 2,655,588 9,830 $ 566,222 497,208 $ 14,788,955 79,085 $ 1,493,471
Peter Porrino(2)
$ 42,694 $ 2,459,201 14,975 $ 862,588 639,382 $ 17,247,461 79,760 $ 1,722,796
Stephen Catlin(2)
$ 45,301 $ 2,609,362 $ 485,528 $ 10,611,672 242,764 $ 5,305,836
6 Other Executive Officers(3)
$ 204,215 $ 11,762,762 64,573 $ 3,719,412 1,082,644 $ 28,985,744 359,456 $ 6,839,706
11 Non-Employee Directors(4)
$ $ $ 45,000 $ 1,860,300 $
(1)
The number of XL performance unit awards shown in this column is based on the assumption that the applicable performance-based vesting requirements are achieved at target payout levels.
(2)
Peter Porrino and Stephen Catlin each retired from their executive officer positions during 2017.
43

(3)
Includes Susan L. Cross, W. Myron Hendry, Paul Jardine, Andre Keller, Kelly Lyles and Eileen Whelley.
(4)
The following six non-employee directors hold vested XL stock options: Ramani Ayer, Dale R. Comey, Robert R. Glauber, Edward J. “Ned” Kelly, III, Joseph Mauriello and Anne Stevens. The following five non-employee directors do not hold XL stock options: Eugene M. McQuade, Claus-Michael Dill, James E. Nevels, John M. Vereker and Billie Ida Williamson.
(5)
This award is scheduled to vest in May 2018.
Treatment of Outstanding XL Restricted Cash Unit Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL restricted cash unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of (i) $57.60 and (ii) the number of XL common shares in respect of the XL restricted cash unit award.
Messrs. Jardine and Keller are the only executive officers who have been granted restricted cash unit awards. Assuming for this purpose that the merger is completed on March 15, 2018 (the last practicable date before the filing of this proxy statement), the value of Mr. Jardine’s XL restricted cash unit awards is $1,118,016 and the value of Mr. Keller’s XL restricted cash unit awards is $164,448. Depending on when the merger is completed, certain restricted cash unit awards that are now unvested may vest or be forfeited pursuant to their terms, independent of the merger.
Retention Arrangements with AXA
Certain executive officers of XL may become officers of AXA or its subsidiaries or otherwise be retained by AXA or its subsidiaries to provide services to AXA or its subsidiaries following the closing of the merger. Any such executive officers of XL may, prior to the closing of the merger, enter into new retention arrangements with AXA or its subsidiaries and may participate in cash or equity incentive or other benefit plans maintained by AXA or its subsidiaries following the closing of the merger.
On March 1, 2018, as the per share purchase price had been agreed and the other material transaction terms had been largely agreed between XL and AXA, the Management Development and Compensation Committee of the XL board of directors authorized Mr. McGavick, Mr. Hendrick, Ms. Gould and Ms. Whelley to preliminarily discuss with AXA post-closing officer roles and responsibilities of certain members of senior management of XL, provided that such persons were not authorized to finalize specific employment agreements or terms thereof without the approval of the Management Development and Compensation Committee of the XL board of directors. Following the Management Development and Compensation Committee’s authorization, Messrs. McGavick and Hendrick commenced such discussions with AXA.
On March 4, 2018, Mr. McGavick proposed to AXA in writing to roll over the value of the equity awards (as of the closing of the merger) granted to him in 2018 into a deferred cash award scheduled to vest in equal amounts on the 15th and 30th month anniversaries of the effective time. Alternatively, Mr. McGavick proposed to AXA to roll over his 2018 award to restricted AXA shares, if permitted under applicable tax and other laws. As part of this retention arrangement, Mr. McGavick may serve as vice-chairman of the board of directors of the surviving company (such company to serve as the holding company for P&C commercial lines business of AXA) and enter into a two-year consulting agreement pursuant to which he would advise AXA on integration-related and other strategic matters. Mr. McGavick proposed to AXA an aggregate consulting fee equal to the severance that would otherwise be payable to him in the event of a qualifying termination of employment under the terms of his employment agreement. Mr. McGavick and AXA discussed Mr. McGavick waiving his right to receive such severance in connection with his entry into the consulting agreement. Mr. McGavick and AXA have not finalized such proposal or formally entered into any such arrangement.
On March 4, 2018, Mr. Hendrick proposed to AXA in writing to roll over the value of the equity awards (as of the closing of the merger) granted to him in 2018 into a deferred cash award having an enhanced value equal to 125% of the cash amount that would have otherwise been payable to him at the
44

effective time in respect to such equity award, with such deferred cash award scheduled to vest in substantially equal amounts on the 15th and 30th month anniversaries of the effective time. After the closing of the merger, it is expected that Mr. Hendrick will be appointed CEO of the combined operations of XL Group, AXA Corporate Solutions (AXA’s large commercial P&C and specialty business) and AXA Art and will join AXA Group’s management committee. Mr. Hendrick and AXA have not finalized such proposal or entered into any such arrangement.
In Mr. McGavick’s March 4, 2018 proposal to AXA described above, Mr. McGavick also indicated that he had preliminary conversations with certain other XL executive officers regarding the rollover of each such executive’s 2018 equity awards into deferred cash awards, having an enhanced value equal to 125% of the cash amount that would have otherwise been payable to the executive at the effective time in respect of such equity award, with such deferred cash awards scheduled to vest in substantially equal amounts on the 15th and 30th month anniversaries of the effective time. Mr. McGavick indicated that such executive officers had indicated receptivity for such arrangements subject to, among other matters, each executive officer choosing to continue with AXA and its subsidiaries following the closing of the merger.
Prior to the closing of the merger, AXA may enter into retention arrangements with these and other executive officers of XL to provide for the rollover described in the preceding paragraph. However, as of the date of this proxy statement no such arrangements have been entered into between AXA or XL and any of the executive officers of XL.
Potential Severance Payments Upon a Qualifying Termination Following the Effective Time
XL previously entered into employment agreements with each of Mr. McGavick (originally entered into in 2008) and Ms. Gould (originally entered into in 2006). Each employment agreement provides that if within one year prior to, or two years following, a change in control, the executive officer’s employment is terminated by the employer without “cause” or by the executive officer for “good reason” (each as defined in the applicable employment agreement), the executive officer will be entitled to receive:

a lump-sum cash severance amount equal to two times the sum of  (i) the executive officer’s base salary and (ii) the greater of  (A) the executive officer’s target annual incentive or (B) the average of the executive officer’s annual incentive for the three years immediately preceding the year of termination, paid within 60 days after the date of termination;

a lump-sum cash severance amount equal to the greater of  (i) the executive officer’s target annual incentive for the year of termination and (ii) the executive officer’s annual incentive for the year immediately preceding the year in which a change in control occurs, prorated through the date of termination and paid within 60 days after the date of termination;

continued health, life and disability benefits for twenty-four months following the date of termination and continued housing allowances for three months following the date of termination; and

vesting of XL restricted stock units, XL stock options and XL performance units.
The closing of the merger will constitute a change in control for purposes of Mr. McGavick’s and Ms. Gould’s employment agreements. If the payments and benefits provided to Mr. McGavick constitute “parachute payments” subject to the excise tax imposed by Section 4999 of the Code, then the payments and benefits will be reduced such that no portion of such amounts will be subject to the excise tax (if, and to the extent, such reduction would result in a greater after-tax return to Mr. McGavick than receiving all of the payments and benefits and paying the resulting excise tax). With respect to Ms. Gould, if her payment and benefits are less than 3.25 times her “base amount” (as defined in Section 280G of the Code), and the excise tax would not be payable if her severance payments were reduced by no more than 20%, then her payments will be reduced such that no portion of such amounts will be subject to the excise tax. Otherwise, Ms. Gould is entitled to a gross-up payment in the event that the excise tax is imposed on her payments or benefits under Section 280G of the Code. XL has determined that an excise tax is not expected to be imposed on Ms. Gould’s payments or benefits under Section 280G of the Code and therefore, she is not expected to receive an excise tax gross-up.
45

Both Mr. McGavick and Ms. Gould are subject to post-termination restrictive covenant provisions pursuant to the terms of their employment agreements, including confidentiality, non-competition and non-solicitation covenants; however, following a change in control, the executive officer will not be subject to a post-termination non-competition covenant unless XL elects to make an additional lump-sum payment equal to the sum of  (i) six months of base salary and (ii) one-half of the executive’s average annual incentive for the three years immediately preceding the year of termination.
XL maintains the Executive Severance Benefit Plan (which we refer to as the “ESBP”). Messrs. Cooper, Hendrick, Hendry, Jardine, Robb and Porrino, and Mses. Cross, Lyles and Whelley each participate in the ESBP pursuant to participation agreements in the form of appointment or employment offer letters, which contain certain confidentiality, non-competition, and non-solicitation restrictions. The ESBP provides that if, within two years following a change in control, the participant’s employment is terminated by the employer without “cause” or by the executive officer for “good reason” (each as defined in the ESBP), the participant will be entitled to receive:

a lump-sum cash severance amount equal to two times the sum of  (i) the executive officer’s base salary and (ii) the executive officer’s target annual incentive, paid within 60 days after the date of termination;

a lump-sum cash payment of prorated annual incentive for the year of termination in an amount determined by XL’s Management Development and Compensation Committee, paid at the time annual incentives are paid to all executives; and

continued health, life and disability benefits for twelve months following the date of termination and, in the cases of Messrs. Hendrick and Cooper and Ms. Cross, continued housing allowances for three months following the date of termination.
The closing of the merger will constitute a change in control for purposes of the ESBP. The ESBP does not permit excise tax gross-ups, and permits XL to reduce severance payments and benefits that constitute “parachute payments” subject to the excise tax imposed by Section 4999 of the Code such that no portion of such amounts will be subject to the excise tax under Section 280G of the Code (if, and to the extent, such reduction would result in a greater after-tax return to the participant than receiving all of the payments and benefits and paying the resulting excise tax).
Assuming for this purpose that the merger is completed on March 15, 2018 (the last practicable date before the filing of this proxy statement) and each executive officer of XL is terminated without “cause” or resigns for “good reason” (as such terms are defined in their employment agreement or under the ESBP, as applicable) on that day, the table below sets forth the estimated value of the severance payments and benefits that the executive officers of XL would be eligible to receive under the applicable employment agreement or ESBP participation agreement. The table below does not attempt to quantify any reductions to “parachute payments” as defined by Section 280G of the Code in order to avoid any applicable excise tax.
Name
Cash
Severance
($)
Prorated Annual
Incentive
($)(2)
Health, Life,
Disability and
Housing
Continuation
Benefits
($)
Non-Compete
Payment(3)
Named Executive Officers(1)
Michael McGavick
$ 10,031,000 $ 752,060 $ 108,812 $ 1,726,500
Stephen Robb
$ 3,125,500 $ 180,043 $ 28,201 $
Gregory Hendrick
$ 5,040,000 $ 324,890 $ 88,201 $
Charles Cooper
$ 3,750,000 $ 225,618 $ 50,187 $
Kirstin Gould
$ 2,214,667 $ 110,302 $ 59,335 $ 481,053
Peter Porrino
$ 900,000 $ 45,124 $ $
6 Other Executive Officers
$ 11,659,788 $ 697,144 $ 88,240 $
46

(1)
Messrs. Porrino and Catlin each retired from their executive officer positions during 2017. Mr. Porrino remains employed at XL on a part-time basis as an advisor to Mr. McGavick. Mr. Catlin is no longer employed and is providing consulting services to XL and is not eligible for any severance benefits.
(2)
The amounts shown in this column represent a prorated annual incentive for the year of termination, calculated through March 15, 2018 and assuming achievement of the applicable performance metrics for the year of termination at target levels.
(3)
The amounts shown in this column represent for Mr. McGavick and Ms. Gould the additional amount that would be paid if XL elects for the non-competition covenant to apply.
Indemnification and Insurance
The merger agreement provides for certain indemnification arrangements for XL’s current officers and directors and the continuation of certain insurance arrangements for XL’s current officers and directors for six years after the completion of the transactions.
Merger-Related Compensation for XL Named Executive Officers
The table below sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for each named executive officer of XL that is based on or otherwise relates to the merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the merger-related compensation payable to the named executive officers of XL. The table below assumes that the merger is completed on March 15, 2018 (the last practicable date before the filing of this proxy statement) and each named executive officer is terminated without “cause” or resigns for “good reason” (as such terms are defined in the applicable employment agreement or under the ESBP, as applicable) on that day. The amounts in respect of the “golden parachute” compensation set forth in the table below are subject to a non-binding advisory vote of XL’s shareholders, as described in the section of this proxy statement titled “The Special General Meeting — Purposes of the Special General Meeting” beginning on page 87.
Golden Parachute Compensation
Name
Cash
($)(2)
Equity
($)(3)
Perquisites/​
Benefits
($)(4)
Total
($)(5)
Michael McGavick
$ 12,509,560 $ 32,064,746 $ 108,812 $ 44,683,118
Stephen Robb
$ 3,305,543 $ 4,645,209 $ 28,201 $ 7,978,953
Gregory Hendrick
$ 5,364,890 $ 13,009,784 $ 88,201 $ 18,462,875
Charles Cooper
$ 3,975,618 $ 4,031,193 $ 50,187 $ 8,056,998
Kirstin Gould
$ 2,806,022 $ 4,715,281 $ 59,335 $ 7,580,638
Peter Porrino(1)
$ 945,124 $ 5,044,585 $ $ 5,989,709
Stephen Catlin(1)
$ $ 7,915,198 $ $ 7,915,198
(1)
Messrs. Porrino and Catlin each retired from their executive positions during 2017. Mr. Porrino stepped down as Chief Financial Officer effective May 1, 2017, and currently remains employed at XL on a part-time basis as an advisor to Mr. McGavick. Mr. Catlin is no longer employed by XL and retired from XL effective December 31, 2017. Pursuant to a retirement/consulting agreement entered into effective January 1, 2018 between Mr. Catlin and XL, Mr. Catlin has agreed to serve as a consultant to XL from January 1, 2018 through September 30, 2018.
(2)
The amounts in this column represent the estimated cash payments set forth below. The amounts shown in this column are “double-trigger” and will not be payable unless the named executive officer’s employment is terminated by the employer without cause or by the named executive officer for good reason within twenty-four months following the closing of the merger (other than in the case of
47

Mr. Catlin, who is no longer employed and is providing consulting services to XL and is not eligible for any severance benefits). Each named executive officer is subject to certain post-termination restrictive covenant provisions pursuant to the terms of the applicable employment agreement (or the retirement/​consulting agreement for Mr. Catlin) or ESBP participation agreement.
Name
Cash
Severance
($)(a)
Prorated
Annual
Incentive
($)(b)
Non-Compete
Payment
($)(c)
Michael McGavick
$ 10,031,000 $ 752,060 $ 1,726,500
Stephen Robb
$ 3,125,500 $ 180,043 $
Gregory Hendrick
$ 5,040,000 $ 324,890 $
Charles Cooper
$ 3,750,000 $ 225,618 $
Kirstin Gould
$ 2,214,667 $ 110,302 $ 481,053
Peter Porrino
$ 900,000 $ 45,124 $
Stephen Catlin
$ $ $
(a)
For each of Mr. McGavick and Ms. Gould, the amounts in this column represent a lump-sum cash severance amount equal to two times the sum of the named executive officer’s base salary and the greater of  (i) the named executive officer’s target annual incentive or (ii) the average of the named executive officer’s annual incentive for the three years immediately preceding the year of termination. For each of Messrs. Robb, Hendrick, Cooper and Porrino, the amounts in this column represent a lump-sum cash severance amount equal to two times the sum of  (A) the named executive officer’s base salary and (B) the named executive officer’s target annual incentive.
(b)
For each of Mr. McGavick and Ms. Gould, the amounts in this column represent a lump-sum cash severance amount equal to the greater of  (i) the named executive officer’s target annual incentive for the year of termination and (ii) the executive officer’s annual incentive for the year immediately preceding the year in which a change in control occurs, prorated through March 15, 2018. For each of Messrs. Robb, Hendrick, Cooper and Porrino, the amounts in this column represent a lump-sum cash payment equal to a prorated annual incentive for the year of termination in an amount determined by XL’s Management Development and Compensation Committee, paid at the time annual incentives are paid to all executives (assumed to be determined at target level for purposes of this table).
(c)
For each of Mr. McGavick and Ms. Gould, the amounts in this column represent a lump-sum cash amount in respect of the non-competition covenant equal to the sum of  (i) six months of the named executive officer’s base salary and (ii) one-half of the named executive officer’s average annual incentive for the three years immediately preceding the year of termination.
(3)
The amounts in this column represent the value of the accelerated vesting of XL restricted shares, performance unit awards, restricted share unit awards and unvested XL stock option awards held by the named executive officers, with total cash payments in respect of XL performance unit awards with a performance period in progress determined assuming any applicable performance-based vesting requirements were achieved at target payout levels as described in detail above. The amounts in this column are “single-trigger” and will vest and be cashed out at the closing of the merger as described in
48

detail above, except as otherwise agreed by AXA and the holder of the award in writing. Depending on when the merger is completed, certain awards that are now unvested and included in the table below may vest or be forfeited pursuant to their terms, independent of the merger. The amounts in this column consist of:
Restricted Shares
Performance Units
Restricted Share Units
Unvested XL Stock Options
Name
Number
(#)
Value
($)
Number
(#)
Value
($)
Number
(#)
Value
($)
Number
(#)
Value
($)
Michael McGavick
16,000(a) $ 921,600 303,541 $ 17,483,951 62,166 $ 3,580,744 528,170 $ 10,078,451
Stephen Robb
$ 44,371 $ 2,555,755 17,555 $ 1,011,186 66,106 $ 1,078,268
Gregory Hendrick
$ 127,584 $ 7,348,842 31,452 $ 1,811,645 212,274 $ 3,849,297
Charles Cooper
$ 40,051 $ 2,306,961 15,914 $ 916,653 49,874 $ 807,578
Kirstin Gould
$ 46,104 $ 2,655,588 9,830 $ 566,222 79,085 $ 1,493,471
Peter Porrino
$ 42,694 $ 2,459,201 14,975 $ 862,588 79,760 $ 1,722,796
Stephen Catlin
$ 45,301 $ 2,609,362 242,764 $ 5,305,836
(a)
This award is scheduled to vest in May 2018.
(4)
The amounts in this column represent an estimated amount equal to the sum of  (i) continued health, life and disability benefits for twenty-four months following the date of termination in the cases of Mr. McGavick and Ms. Gould, and for twelve months following the date of termination in the cases of Messrs. Robb, Hendrick, Cooper and Porrino, and (ii) continued housing allowances for three months following the date of termination in the cases of Messrs. McGavick, Hendrick and Cooper and Ms. Gould. The amounts shown in this column are “double-trigger” and will not be payable unless the named executive officer’s employment is terminated by the employer without “cause” or by the named executive officer for “good reason” within twenty-four months following the closing of the merger. Each named executive officer is subject to certain post-termination restrictive covenant provisions pursuant to the terms of the applicable employment agreement (or the retirement/consulting agreement for Mr. Catlin) or ESBP participation agreement.
The total amounts do not reflect any reductions to “parachute payments” as defined by Code Section 280G in order to avoid any applicable excise tax. A definitive analysis of the need, if any, for such reductions will depend on the effective time, the date of termination (if any) of the named executive officer and certain other assumptions used in the applicable calculations. XL has determined that the excise tax is not expected to be imposed on Ms. Gould’s payments or benefits under Section 280G of the Code and therefore, she is not expected to receive an excise tax gross-up.
Dividends, Distributions and Share Repurchases
XL customarily pays a quarterly cash dividend on the common shares. Under the terms of the merger agreement, prior to the effective time, XL is permitted to declare and pay regular quarterly dividends of up to $0.22 per common share.
Regulatory Clearances Required for the Merger
Each of the parties has agreed, upon the terms and subject to the conditions set forth in the merger agreement, to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and to cooperate with the other parties in doing, all things necessary, proper or advisable to fulfill all conditions to the closing applicable to such party and to consummate and make effective the merger and the transactions contemplated by the merger agreement and the statutory merger agreement in the most expeditious manner reasonably practicable.
Such obligations will not require AXA or any of its affiliates to take any action, including entering into any consent decree, hold separate order or other arrangement, or to permit or suffer to exist any material restriction, condition, limitation or requirement that (when taken together with all other such actions, restrictions, conditions, limitations and requirements) would have, or would reasonably be expected to have, a material adverse effect on the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of  (i) XL and its subsidiaries, taken as a whole or (ii) AXA and its subsidiaries,
49

taken as a whole; provided that for purposes of determining the foregoing clause (ii), the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of AXA and its subsidiaries, taken as a whole, shall be deemed to be of the same scale as those of XL and its subsidiaries, taken as a whole (as described in the section of this proxy statement titled “The Merger Agreement —  Efforts to Complete the Merger”).
Antitrust
Under the HSR Act, XL and AXA cannot consummate the merger until XL and AXA have notified the Department of Justice’s Antitrust Division (which we refer to as the “Antitrust Division”) and the Federal Trade Commission (which we refer to as the “FTC”) of the merger and furnished them with certain information and materials relating to the merger and the applicable waiting period has terminated or expired. The termination or expiration of the waiting period means the parties have satisfied the regulatory requirements under the HSR Act. XL and AXA filed the required notifications with the Antitrust Division and the FTC on March 16, 2018 and early termination of the waiting period was granted effective March 26, 2018.
Both XL and AXA operate in the European Union. The EU Merger Regulation requires notification of and approval by the European Commission of mergers or acquisitions involving parties with worldwide and European Union sales exceeding given thresholds. The European Commission has an initial period of 25 working days after receipt of the notification to issue its decision (which we refer to as “Phase I”). The European Commission may extend this Phase I period to 35 working days if, within the first 20 working days after submission of the notification, the parties propose remedies to address any competition concerns identified by the European Commission. The European Commission may open an extended investigation, which extends Phase I by up to 90 working days, and can be extended to 105 working days if remedies are offered after the 55th working day or to 125 working days by request of the parties or by the Commission with consent of the parties. The merger cannot be consummated until after the European Commission has issued its clearance decision or the relevant waiting periods have expired without the issuance of a decision.
Furthermore, XL and AXA agreed to make any other necessary, proper or advisable registrations, filings and notices under other non-U.S. antitrust laws to the extent required by applicable law, including notifications to the Administrative Council of Economic Defense of Brazil, the Superintendence of Industry and Commerce of Colombia, the Federal Economic Competition Commission of Mexico and the Competition Commission of Switzerland. The merger cannot be consummated until after each of the respective commission or council, as applicable, has issued its clearance decision or the relevant waiting periods have expired without the issuance of a decision.
Committee on Foreign Investment in the United States
XL and AXA have filed with the Committee on Foreign Investment in the United States (which we refer to as “CFIUS”) a joint voluntary notice with respect to the transactions contemplated by the merger agreement in accordance with the requirements of Section 721 of Title VII of the Defense Production Act of 1950, as amended. Upon the acceptance of such notice, CFIUS will conduct a review, during which CFIUS may request that the parties take actions to mitigate any national security concerns it has identified or, if CFIUS has unresolved national security concerns, send a report to the President of the United States, who may act to suspend or prohibit the transaction. The parties have agreed that the parties’ obligations to consummate the merger are conditioned upon CFIUS having issued its clearance decision or the relevant waiting periods having expired without the issuance of a decision.
Insurance and Other Regulatory Matters
The insurance laws and regulations of all 50 U.S. states and the District of Columbia generally require that before the acquisition of control of an insurance company, either through the acquisition of or merger with the insurance company or a holding company of that insurance company, the acquiring party must obtain approval from the insurance regulator of the insurance company’s state of domicile. In addition, under the laws of certain states, an acquirer must obtain the approval of the state’s insurance regulator to acquire control of an insurance company that is commercially domiciled in that state.
Applications or notifications in connection with the merger or the changes in control of various subsidiaries of XL and AXA that may be deemed to occur as a result of the merger have been filed,
50

pursuant to the merger agreement, with various U.S. state regulatory authorities, including the New York State Department of Financial Services, the Delaware Department of Insurance, the Texas Department of Insurance and the Louisiana Department of Insurance.
Applications for approval or notifications to certain non-U.S. regulatory authorities have been filed with the Bermuda Monetary Authority, the UK Prudential Regulation Authority, the UK Financial Conduct Authority and Lloyd’s of London, and will also be filed with certain other non-U.S. regulatory authorities, including but not limited to, the Swiss Financial Market Supervisory Authority and the Central Bank of Ireland.
Although XL and AXA do not expect these regulatory authorities to raise any significant concerns in connection with their review of the merger, there is no assurance that XL and AXA will obtain all required regulatory approvals on a timely basis, if at all, or that these approvals will not include a restriction, limitation or condition that would trigger a burdensome condition, which, in such case, would permit AXA to refuse to close the transactions contemplated by the merger agreement and consummate the merger.
Other than the approvals and notifications described above, neither XL nor AXA is aware of any material regulatory approvals required to be obtained, or waiting periods required to expire, after the making of a filing. If the parties discover that other approvals or filings and waiting periods are necessary, they will seek to obtain or comply with them, although, as is the case with the regulatory approvals described above, there can be no assurance that they will be obtained on a timely basis, if at all.
Payment of Merger Consideration and Surrender of Share Certificates
Paying Agent
Prior to the closing date, AXA will designate a paying agent reasonably acceptable to XL for the payment and delivery of the aggregate merger consideration. Prior to the effective time, AXA will deposit or cause to be deposited with the paying agent cash in an amount sufficient to pay the aggregate merger consideration.
Payment Process
As soon as practicable, but in no event later than three business days after the effective time, the surviving company or AXA will cause the paying agent to mail a letter of transmittal (in a form subject to XL’s reasonable approval) to each holder of a share certificate, as well as instructions regarding the procedures by which holders of share certificates may receive the merger consideration. Upon the completion of such applicable procedures and the surrender of such holder’s share certificates or without any action by holders of book-entry shares, the paying agent will deliver to the holder the merger consideration that the holder is entitled to receive and the share certificates or book-entry shares will be canceled immediately. No interest will be paid or accrue on the merger consideration.
Payment for DIs and the Corporate Sponsored Nominee Service
Following the receipt of the letter of transmittal referred to above, Computershare UK will take all action necessary for it to receive the merger consideration and as soon as practicable upon receipt arrange for payment to be made to the holders of DIs and holders through the Corporate Sponsored Nominee Service.
Payment for holders of DIs will be made in U.S. dollars by Computershare UK creating an assured payment obligation in favor of the DI holders’ payment bank in accordance with the CREST assured payment arrangements.
Payment for holders through the Corporate Sponsored Nominee Service will be made by check in pounds sterling. Due to the Corporate Sponsored Nominee Service being only available in certain jurisdictions, it is recognized that such holders may find it difficult and cost prohibitive to cash a U.S. dollar check. Therefore, Computershare UK will arrange to convert the U.S. dollar amount into pounds sterling based on the exchange rate obtained by Computershare UK within two (2) business days of receipt by Computershare UK of the merger consideration from the paying agent. The actual amount of currency received by any holder through the Corporate Sponsored Nominee Service will depend upon the exchange rate prevailing on the day on which Computershare UK converts the relevant amount of U.S. dollar into pounds sterling. Holders should be aware that the currency exchange rate which prevails at the date on which the merger becomes effective and on the dates of dispatch and receipt of payment may be different
51

from that prevailing on the date on which Computershare UK converts U.S. dollars into pounds sterling. In all cases, fluctuations in the exchange rates are at the risk of the holder. Any holder within the Corporate Sponsored Nominee Service who wishes to receive instead a certain, fixed cash amount in U.S. dollars should contact Computershare UK to request a withdrawal form in order to withdraw from the Corporate Sponsored Nominee Service and place their shares in certificated form on XL’s register of members.
Unregistered Transferees
If any merger consideration is to be paid to a person or entity other than the person or entity in whose name the surrendered XL certificate is registered, it will be a condition to the payment of such merger consideration to such transferee that the surrendered certificate be properly endorsed or will otherwise be in proper form for transfer and the transferee will have paid any transfer and other required taxes has been paid or is not applicable.
Withholding
AXA, the surviving company or the paying agent, as applicable, will be entitled to deduct and withhold from the amounts otherwise payable pursuant to the merger agreement such amounts as are required to be deducted and withheld with respect to the making of payments under any provision of applicable tax law. Amounts so withheld and paid over to the appropriate governmental authority will be treated for all purposes of the merger agreement as having been paid to the person in respect of which such deduction and withholding were made.
Delisting and Deregistration of XL Shares
If the merger is completed, the common shares will be delisted from the NYSE and the BSX and deregistered under the Exchange Act.
Dissenters’ Rights of Appraisal for XL Shareholders
Any dissenting shareholder who did not vote in favor of the merger proposal and who is not satisfied that it has been offered fair value for its common shares may, within one month of the giving of the notice calling the special general meeting, apply to the Bermuda Court to appraise the fair value of its common shares.
FOR THE AVOIDANCE OF DOUBT, A FAILURE OF A DISSENTING SHAREHOLDER TO AFFIRMATIVELY VOTE AGAINST THE MERGER PROPOSAL WILL NOT CONSTITUTE A WAIVER OF ITS RIGHT TO HAVE THE FAIR VALUE OF ITS COMMON SHARES APPRAISED, PROVIDED THAT SUCH DISSENTING SHAREHOLDER DID NOT VOTE IN FAVOUR OF THE MERGER PROPOSAL.
Where the Bermuda Court has appraised the fair value of any common shares and the merger has been consummated prior to the appraisal (as is anticipated) then, within one month of the Bermuda Court appraising the value of the common shares, if the value received by any dissenting shareholder for its common shares is less than the value of its common shares as appraised by the Bermuda Court, the surviving company shall pay to such dissenting shareholder the difference between the value received and the value appraised by the Bermuda Court.
There is no right of appeal from an appraisal by the Bermuda Court. The costs of any application to the Bermuda Court to appraise the fair value of the common shares shall be at the discretion of the Bermuda Court.
See the section of this proxy titled “Appraisal Rights” for more information.
52

THE MERGER AGREEMENT
The following describes the material provisions of the merger agreement, a composite conformed copy of which is included as Annex A to this proxy statement and incorporated by reference herein. The summary of the material provisions of the merger agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. XL encourages you to read carefully the merger agreement in its entirety before making any decisions regarding the merger as it is the legal document governing the merger.
The merger agreement and this summary of its terms have been included to provide you with information regarding the terms of the merger agreement and is not intended to provide any factual information about XL or AXA. Factual disclosures about XL or AXA contained in this proxy statement or XL’s public reports filed with the SEC may supplement, update or modify the factual disclosures about XL or AXA contained in the merger agreement and described in the summary. The representations, warranties and covenants made in the merger agreement by XL, AXA and Merger Sub are qualified and subject to important limitations agreed to by XL, AXA and Merger Sub in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of allocating risk between the parties to the merger agreement, rather than establishing matters as facts, and may be subject to subsequent waiver or modification. The representations and warranties may also be subject to a contractual standard of materiality that may be different from that generally relevant to shareholders or applicable to reports and documents filed with the SEC, and in some cases are qualified by confidential disclosures that were made by each party to the other, which disclosures are not reflected in the merger agreement or otherwise publicly disclosed. The representations and warranties in the merger agreement will not survive the completion of the merger. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the merger agreement and subsequent developments or new information qualifying a representation or warranty may have been included or incorporated by reference into this proxy statement. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. See the section of this proxy statement titled “Where You Can Find More Information” beginning on page 98.
The Merger
On the terms and subject to the conditions of the merger agreement and the statutory merger agreement, and in accordance with the applicable provisions of the Companies Act, at the effective time, Merger Sub will merge with and into XL, the separate corporate existence of Merger Sub will cease and XL will survive the merger as a wholly-owned subsidiary of AXA.
Effects of the Merger
The merger agreement provides that, at the effective time, each common share issued and outstanding immediately prior to the effective time (other than any common share that is owned by XL as treasury shares, by wholly-owned subsidiaries of XL or by AXA, Merger Sub or wholly-owned subsidiaries of AXA (with certain exceptions)) will be converted into the right to receive $57.60 in cash, without interest and less any required withholding tax. All such common shares will no longer be issued and outstanding and will be canceled and cease to exist and each holder of a certificate previously evidencing any common shares or uncertificated common shares represented by book-entry will cease to have any rights with respect to those shares, except the right to receive the merger consideration.
At the effective time, AXA will become the sole owner of XL’s common shares. Therefore, current XL common shareholders will cease to have direct or indirect ownership interests in XL or rights as XL common shareholders, will not participate in any future earnings or growth of XL, will not benefit from any appreciation in value of XL and will not bear the future risks of XL’s operations.
At the effective time, each preferred share of any subsidiary of XL issued and outstanding immediately prior to the effective time will continue as a preferred share of such subsidiary following the merger and the relative rights, terms and conditions of each such preferred share will remain unchanged.
53

Following completion of the merger, XL’s common shares will be delisted from the NYSE and the BSX and deregistered under the Exchange Act. As a result, there will be no public market for XL’s common shares. This will make certain provisions of the Exchange Act, such as the requirement of furnishing a proxy or information statement in connection with shareholders’ meetings, no longer applicable to XL. After the effective time, XL will also no longer be required to file periodic reports with the SEC on account of XL’s common shares.
The directors of Merger Sub immediately prior to the effective time will be the initial directors of XL as the surviving company until their earlier death, resignation or removal or until their respective successors are duly elected or appointed and qualified. The officers of XL immediately prior to the effective time will be the initial officers of XL as the surviving company until their earlier death, resignation or removal or until their respective successors are duly appointed and qualified.
At the effective time, the memorandum of association and bye-laws of XL as the surviving company will be in the form of the memorandum of association and bye-laws of Merger Sub immediately prior to the effective time until thereafter changed or amended as provided therein or pursuant to applicable law (subject to the indemnification obligations provided in the merger agreement).
At the effective time, AXA will become the sole owner of XL’s common shares. Therefore, current XL common shareholders will cease to have direct or indirect ownership interests in XL or rights as XL common shareholders, will not participate in any future earnings or growth of XL, will not benefit from any appreciation in value of XL and will not bear the future risks of XL’s operations.
Closing; Effective Time
The closing will occur as soon as reasonably practicable (but in any event no later than the fifth business day) following the satisfaction or waiver of the closing conditions set forth in the merger agreement (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of those conditions) or at such other date and time as XL and AXA may agree in writing. See the section of this proxy statement titled “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 54 for further discussion on the conditions to the closing.
Conditions to Completion of the Merger
Mutual Conditions
The obligations of XL, AXA and Merger Sub to effect the merger are subject to the satisfaction (or waiver by the parties, if permissible under applicable law) of the following conditions:

the merger proposal having been approved by XL’s shareholders;

any waiting period (or extension thereof) applicable to the transactions contemplated by the merger agreement and the statutory merger agreement under the HSR Act having been terminated or having expired and the consents of, or declarations, notifications or filings with, and the other terminations or expirations of waiting periods required from, certain governmental authorities (see the section of this proxy statement titled “The Merger — Regulatory Clearances Required for the Merger” beginning on page 49 for more information on the consents of, or declarations, notifications or filings with, and the other terminations or expirations of waiting periods required from, these governmental authorities) having occurred or been obtained and being in full force and effect; and

there being in effect no injunction, judgment or ruling, enacted, promulgated, issued, entered, amended or enforced by any governmental authority enjoining, restraining or otherwise making illegal or prohibiting the consummation of the merger.
AXA and Merger Sub Conditions
AXA’s and Merger Sub’s obligations to consummate the merger are subject to the satisfaction (or waiver by AXA and Merger Sub, if permissible under applicable law) of the following additional conditions:
54


the representation and warranty by XL that no material adverse effect occurred with respect to XL since December 31, 2017 being true and correct in all respects as of the closing date as through made as of the closing date;

the representations and warranties of XL relating to (i) the power and authority of XL to execute, deliver and perform the merger agreement and the statutory merger agreement, (ii) the due authorization by XL of the merger agreement and the statutory merger agreement, (iii) the enforceability of the merger agreement against XL, (iv) the approval of the XL board of directors of the merger, the merger agreement and the statutory merger agreement, (v) the fees and expenses payable to any brokers and advisors of XL, (vi) the capitalization of XL, (vii) the requirements under Bermuda law and XL’s bye-laws to approve the merger proposal and (viii) the applicability of any anti-takeover law to XL with respect to the merger agreement, in the case of each of clauses (i) through (viii) above, being true and correct in all material respects as of the closing date of the merger as though made as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date);

the representations and warranties of XL, other than the ones set out in the two bullet points above, being true and correct (disregarding all qualifications or limitations as to “materiality”, “material adverse effect” and words of similar import set forth therein) as of the closing date with the same effect as though made as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure to be true and correct has not had and would not, individually or in the aggregate, constitute a material adverse effect;

XL having performed or complied in all material respects with the obligations and agreements required to be performed or complied with by it under the merger agreement at or prior to the effective time;

XL having delivered to AXA a certificate of an executive officer of XL that the conditions above have been satisfied; and

all required regulatory approvals (see the section of this proxy statement titled “The Merger —  Regulatory Clearances Required for the Merger” beginning on page 49 for more information on the consents of, or declarations, notifications or filings with, and the other terminations or expirations of waiting periods required from, these governmental authorities) having occurred or been obtained without the imposition of a “burdensome condition” (as described and summarized on page 63 of this proxy statement).
XL Conditions
XL’s obligations to consummate the merger are subject to the satisfaction (or waiver by XL, if permissible under applicable law) of the following additional conditions:

the representations and warranties of AXA and Merger Sub relating to (i) the power and authority of AXA and Merger Sub to execute, deliver and perform the merger agreement and the statutory merger agreement, (ii) the due authorization by AXA and Merger Sub of the merger agreement and the statutory merger agreement and (iii) the enforceability of the merger agreement against AXA and Merger Sub, (iv) the approval by the AXA board of directors of the merger agreement and the merger, (v) the absence of a required vote of the holders of any class or series of capital stock of AXA to approve the merger agreement, the statutory merger or the merger and (vi) the fees and expenses payable to any brokers and advisors of AXA and Merger Sub being true and correct in all material respects as of the closing date of the merger as though made as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date);

the representations and warranties of AXA and Merger Sub (other than the representations and warranties described in the first bullet above), disregarding all qualification or limitations as to “materiality,” “parent material adverse effect” or similar effect, being true and correct as of the
55

closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except for such failures to be true and correct has not had and would not, individually or in the aggregate, constitute a “parent material adverse effect” (a description of which is summarized below);

AXA and Merger Sub having performed or complied in all material respects with the obligations and agreements required to be performed or complied with by them under the merger agreement at or prior to the effective time; and

AXA and Merger Sub having delivered to XL a certificate of an executive officer of AXA that the conditions above have been satisfied.
Material Adverse Effect
For the purposes of the merger agreement, a “material adverse effect” will be deemed to occur if any effect, change event, circumstance, state of facts, development or occurrence, individually or in the aggregate, has had, or is reasonably expected to have, a material adverse effect on the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of XL and its subsidiaries, taken as a whole.
However, when determining whether a material adverse effect has occurred, none of the following will be considered except as expressly noted below:

changes, events or conditions generally affecting the insurance, reinsurance or risk management industries in the geographic regions or product markets in which XL and its subsidiaries operate or underwrite insurance or reinsurance or manage risk;

general economic or regulatory, legislative or political conditions or securities, credit, financial or other capital markets conditions in any jurisdiction (including changes in the value of stocks, bonds, mortgage loans and other investments that were carried on the books and records of XL and its subsidiaries between December 31, 2017 and March 5, 2018 (such investments we refer to as “investment assets”), to the extent arising from any of the foregoing);

any failure, in and of itself, by XL to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (although the underlying causes are not excluded and may be taken into account in determining whether a material adverse effect has occurred);

geopolitical conditions, the outbreak or escalation of hostilities, any acts of war (whether or not declared), sabotage, terrorism (including cyber-terrorism) or man-made disaster, or any escalation or worsening of any such hostilities, acts of war (whether or not declared), sabotage, terrorism or man-made disaster;

the occurrence or continuation of any volcanic eruption, tsunami, pandemic, hurricane, tornado, windstorm, flood, earthquake, wildfire or other natural disaster or any conditions resulting from such natural disasters (including increases in liabilities under or in connection with insurance or reinsurance contracts to which XL or any of its subsidiaries is a party arising from such a natural disaster);

the negotiation, execution and delivery of the merger agreement or the public announcement, pendency or performance of the transactions contemplated by the merger agreement, including the impact thereof on the relationships of XL or any of its subsidiaries with employees, customers, insureds, cedants, policyholders, brokers, agents, financing sources, business partners, service providers, governmental authorities or reinsurance providers, and including any legal or administrative proceedings, suits, investigations, arbitrations or actions arising out of any of the foregoing;

any change or announcement of a potential changes, in and of itself, in XL’s or any of its subsidiaries’ credit, financial strength or claims paying ratings or the ratings of any of XL’s or its subsidiaries’ businesses (although the underlying causes are not excluded and may be taken into account in determining whether a material adverse effect has occurred);
56


any change, in and of itself, in the market price, ratings or trading volume of XL’s or any of its subsidiaries’ securities (although the underlying causes are not excluded and may be taken into account in determining whether a material adverse effect has occurred);

any change in applicable laws, GAAP (or authoritative interpretation or enforcement thereof) or in applicable statutory accounting principles, including accounting and financial reporting pronouncements by the SEC, the National Association of Insurance Commissioners, any Insurance Regulator and the Financial Accounting Standards Board (although this will not prevent or otherwise affect a determination that the actual consequences of an action taken or an omission by XL or any of its subsidiaries that resulted in a failure to comply with applicable law is, or contributed to, a material adverse effect);

any action required to be taken by XL or a subsidiary of XL’s pursuant to the terms of the merger agreement;

any failure of XL or any of its subsidiaries to take an action prohibited by the terms of the merger agreement, but only if AXA has refused, after a timely request by XL, to provide a waiver of the applicable prohibition in the merger agreement;

the effects of any breach or violation of any provision of the merger agreement by AXA or any of its affiliates;

the effect of the Tax Cuts and Jobs Act, P.L. 115-97 or any rule or regulation implementing the Tax Cuts and Jobs Act (although this will not prevent or otherwise affect a determination that the actual consequences of an action taken or an omission by XL or any of its subsidiaries that resulted in a failure to comply with applicable law is, or contributed to, a material adverse effect); or

the potential departure of the United Kingdom (or any part thereof) from the European Union, negotiations with respect to passporting rights (as defined in the UK Financial Conduct Authority handbook) and any resultant effects thereof.
Certain effects, changes, events or occurrences listed in each of the first, second, fourth and ninth bullets above may be taken into account in determining whether a material adverse effect has occurred with respect to XL if, but only to the extent, any such effect, change, event or occurrence has a disproportionate adverse effect on XL and its subsidiaries, taken as a whole, relative to other participants engaged primarily in the insurance and reinsurance industries in the geographic regions or product markets in which XL and its subsidiaries operate or underwrite insurance or reinsurance. In such case, only the disproportionate effect or effects may be taken into account when determining whether a material adverse effect has occurred with respect to XL.
Parent Material Adverse Effect
For the purposes of the merger agreement, a “parent material adverse effect” will be deemed to occur if any effect, change, event, circumstance, state of facts, development or occurrence, individually or in the aggregate, would, or would reasonably be expected to prevent or materially delay, interfere with, hinder or impair (i) the consummation by AXA or Merger Sub of any of the transactions contemplated by the merger agreement on a timely basis or (ii) the compliance by AXA or Merger Sub with its obligations under the merger agreement.
Efforts to Obtain Required Shareholder Approvals
Unless the merger agreement has been earlier terminated, including pursuant to XL’s right to terminate the merger agreement to enter into an alternative acquisition agreement (see the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements” below), XL has agreed to hold a special general meeting of its shareholders and to use its reasonable best efforts to obtain the requisite approval of XL shareholders for the merger proposal.
57

No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements
No Solicitation of Takeover Proposals
XL is prohibited from taking certain actions, summarized in detail below, relating to takeover proposals. In this proxy statement, and in the merger agreement, a “takeover proposal” means any inquiry, proposal or offer from any person other than AXA and its subsidiaries, relating to a:

acquisition reinsurance or retrocession outside the ordinary course of business in a single transaction or a series of related transactions that, if consummated, would result in any person or group owning or having the economic benefit of 20% or more of the consolidated assets, revenues or net income of XL and its subsidiaries or net exposure to insured liabilities;

acquisition of XL common shares representing 20% or more of the issued and outstanding common shares;

any transaction that, if consummated, would result in any person (or the shareholders of such person) (other than XL or any of its subsidiaries as of the date hereof) being the direct or indirect beneficial owner of 20% or more of the voting power of, or economic interest in, any “significant subsidiary” of XL within the meaning of Rule 1-02(w) of Regulation S-X of the SEC;

tender offer or exchange offer that, if consummated, would result in any person or group having beneficial ownership of common shares representing 20% or more of the issued and outstanding common shares;

merger, amalgamation, consolidation, share exchange, scheme of arrangement, business combination, reorganization, recapitalization, liquidation, dissolution or similar transaction involving XL pursuant to which such person or group (or the shareholders of any person) would acquire, directly or indirectly, 20% or more of the aggregate voting power (without taking into account the voting cutback provisions in the XL bye-laws) or economic interest in XL or in the surviving entity in such transaction or the resulting direct or indirect parent of XL or such surviving entity; or

combination of the foregoing, in each case, other than the transactions contemplated by the merger agreement and the statutory merger agreement.
Any transaction meeting the above conditions, whether effected in a single transaction or through a series of related transactions, or directly or indirectly, is a “takeover proposal.”
Specifically, XL has agreed that it will, and will cause each of its subsidiaries, and its and their respective directors, officers and employees to, and will use its reasonable best efforts to cause its other representatives to immediately cease any solicitation, encouragement, discussions or negotiations of or with any persons that may be ongoing on or prior to March 5, 2018 with respect to any takeover proposal.
XL has also agreed that, from March 5, 2018 until earlier of the closing date and the date on which the merger agreement is terminated in accordance with its terms, it will not, and will cause each of its subsidiaries, and its and their respective directors, officers and employees not to, and will use its reasonable best efforts to cause its other representatives not to, directly or indirectly:

solicit, encourage, initiate or take any action to facilitate the submission of any inquiry or the making of any proposal, in each case that constitutes, or would reasonably be expected to lead to, a takeover proposal;

engage in or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any material non-public information for the purpose of encouraging or facilitating, a takeover proposal; or

enter into any letter of intent, agreement or agreement in principle with respect to a takeover proposal.
58

XL has further agreed that it will, to the extent not previously done so prior to March 5, 2018, deliver a request to each person that executed a confidentiality agreement with XL during the 18-month period prior to March 5, 2018 in connection with considering or making a takeover proposal or that executed a confidentiality agreement with XL more than 18 months prior to March 5, 2018 and received non-public information from XL during the six months prior to March 5, 2018 in connection with considering or making a takeover proposal, in each case, to promptly return or destroy any non-public information previously furnished or made available to such person or any of its representatives on behalf of XL or representatives of XL.
XL is permitted to waive any standstill provision to allow any person to make a takeover proposal to the XL board of directors on a non-public basis if the XL board of directors determines in good faith, after consultation with XL’s outside legal counsel, that failure to take such action would be inconsistent with the director’s fiduciary duties under applicable law.
The non-solicitation obligations summarized above do not prohibit XL or its representatives from contacting a person that has made a takeover proposal delivered to XL during the period between March 5, 2018 and the date XL shareholders approve the merger proposal that did not result from a material breach by XL of such non-solicitation provisions solely to clarify the terms and conditions of such takeover proposal or to request that any takeover proposal made orally be made in writing.
If the XL board of directors determines in good faith after consultation with its financial advisors and outside legal counsel that such takeover proposal constitutes or would reasonably be expected to lead to a takeover proposal superior to AXA’s, then XL and its representatives may (i) enter into a confidentiality agreement with and furnish information (including non-public information) about XL and its subsidiaries to the person or group of persons making the takeover proposal, and (ii) subsequently engage in or otherwise participate in discussions or negotiations with the person or group of persons making such takeover proposal.
If XL enters into a confidentiality agreement and furnishes information (including non-public information) to a person or group of persons making a takeover proposal, the merger agreement requires XL to promptly provide to AXA a copy of any material non-public information about XL or its subsidiaries that is provided to any person given such access that was not previously provided to AXA or its representatives.
XL has agreed to promptly notify AXA upon receipt of any takeover proposal. XL has also agreed to promptly disclose to AXA the material terms and conditions of such takeover proposal and the identity of the person or group of persons making such takeover proposal and unredacted copies of all material correspondence or other material written documentation with respect thereto (and written summaries of any material oral communication). Finally, XL has agreed to keep AXA reasonably informed of any material developments with respect to such takeover proposal on a prompt basis.
Adverse Recommendation Change; Termination of the Merger Agreement to Enter into an Alternative Acquisition Agreement
Except as described below, XL has agreed that its board of directors will not:

withdraw or withhold its recommendation that the XL shareholders approve the merger proposal;

modify, qualify or amend, in a manner adverse to AXA such recommendation;

fail to include such recommendation in this proxy statement;

approve, publicly endorse or recommend any takeover proposal or refrain from recommending against any takeover proposal that is a tender offer or exchange offer within 10 business days following the commencement of such offer; or
59


fail to publicly reaffirm such recommendation within 10 business days of receiving a written request made by AXA to make such public reaffirmation following the receipt by XL of a takeover proposal (other than in the case of a takeover proposal in the form of a tender offer or exchange offer) that has not been withdrawn, provided that AXA may make any such request only once in any 10 day period and only once for each such public takeover proposal and once for each public material amendment to such takeover proposal.
If XL takes any of the above actions it will be deemed an “adverse recommendation change” and this proxy statement generally refers to any of such actions as an “adverse recommendation change.”
In addition, except as described below, XL has agreed that its board of directors will not authorize, cause or permit XL or any of its subsidiaries to execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, amalgamation agreement or other agreement related to any takeover proposal, other than a confidentiality agreement with the person or persons making the takeover proposal.
However, prior to the date XL shareholders approve the merger proposal, in response to a superior proposal, the XL board of directors may make an adverse recommendation change or cause XL to terminate the merger agreement and enter into an alternative acquisition agreement and terminate the merger agreement if:

the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law;

such adverse recommendation change is made or entered into after the fourth business day following the receipt by AXA of written notice from XL advising that its board of directors intends to take such action and XL discloses to AXA (1) the material terms and conditions of such superior proposal and the identity of the person or group of persons making such superior proposal and its or their financing sources, if applicable, and (2) a copy of the most current version of the acquisition agreement (if any) with respect to such superior proposal and any agreement in XL’s possession relating to the financing of such superior proposal; and

during the period following AXA’s receipt of the notice described in the immediately preceding bullet, in determining whether to make an adverse recommendation change or terminate the merger agreement and enter into an alternative acquisition agreement, (i) XL has, and has caused its representatives to, negotiate with AXA in good faith (to the extent AXA desires to negotiate) to make such commercially reasonable adjustments to the terms and conditions of the merger agreement as would enable the XL board of directors to no longer make an adverse recommendation change or a determination that a takeover proposal constitutes a superior proposal and (ii) the XL board of directors determines, after considering the results of such negotiations and any revised proposals made by AXA, if any, after consulting with its financial advisors and outside legal counsel, that such superior proposal continues to be a superior proposal.
For purposes of this proxy statement and the merger agreement, a “superior proposal” means a bona fide written takeover proposal with respect to XL:

where references to “20%” (e.g., to outstanding assets or share capital) in the definition of “takeover proposal” are replaced by references to “50%”;

that did not result from a material breach of XL’s non-solicitation obligations described above; and

which the XL board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal and the identity of the persons making the proposal (including any conditions relating to financing, regulatory approvals or other events or circumstances beyond the control of the party invoking the condition) and, if consummated, would be more favorable to the holders of common shares than the merger.
60

In addition, prior to the date XL shareholders approve the merger proposal, in response to an intervening event, the XL board of directors may make an adverse recommendation change if:

the XL board of directors of determines in good faith, after consultation with its outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law;

such adverse recommendation change is made or entered into after the fourth business day following the receipt by AXA of written notice from XL advising that its board of directors intends to take such action and XL discloses to AXA the material changes, developments, effects, circumstances, states of facts or events comprising such intervening event; and

during the period following AXA’s receipt of the notice described in the immediately preceding bullet, in determining whether to make an adverse recommendation change, (i) XL has, and has caused its representatives to, negotiate with AXA in good faith (to the extent AXA desires to negotiate) to make such commercially reasonable adjustments to the terms and conditions of the merger agreement as would enable the XL board of directors to no longer make an adverse recommendation change and (ii) the XL board of directors determines, after considering the results of such negotiations and any revised proposals made by AXA, if any, after consulting with its financial advisors and outside legal counsel, that failure to make an adverse recommendation change would be inconsistent with the directors’ fiduciary duties under applicable law.
For purposes of the merger agreement, “intervening event” means a material effect, change, event, circumstance, state of facts, development or occurrence relating to XL and its subsidiaries, taken as a whole that:

was not known to the XL board of directors on March 5, 2018;

was not reasonably foreseeable to the XL board of directors as of March 5, 2018; and

first arose or occurred or, if such effect, change, event, circumstance, state of facts, development or occurrence existed as of March 5, 2018, becomes known to the XL board of directors between March 5, 2018 and the date XL shareholders approve the merger proposal.
However, the term “intervening event” does not include any effect, change, event, circumstance, state of facts, development or occurrence specifically related to the receipt, existence of or terms of a takeover proposal or any inquiry relating thereto.
As described in further detail in the section of this proxy statement titled “The Merger Agreement —  Expenses and Termination Fee,” XL will be required to pay AXA a $499 million termination fee if:

XL’s board of directors makes an adverse recommendation change in response to a superior proposal or intervening event and AXA terminates the merger agreement; or

XL terminates the merger agreement and enters into an alternative acquisition agreement.
Dissenting Shares
XL shareholders who do not vote in favor of the merger proposal at the special general meeting will receive the merger consideration. Any dissenting shareholder will, in the event that the fair value of a dissenting share as appraised by the Bermuda Court under the Companies Act is greater than the merger consideration, be entitled to receive such difference from XL as the surviving company by payment made within one month after the final determination by the Bermuda Court of the “fair value” of such shares. If a dissenting shareholder fails to exercise, effectively withdraws or otherwise waives any right to appraisal, such dissenting shareholder’s shares will be canceled and converted as of the effective time into the right to receive the merger consideration. For a more complete description of the available appraisal rights, see the section of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal of XL Shareholders” beginning on page 52 and “Appraisal Rights” beginning on page 82.
Under the merger agreement, XL has agreed to give AXA (i) written notice of any demands for appraisal of dissenting shares (or withdrawals thereof) and, to the extent XL has knowledge thereof, any applications to the Bermuda Court for appraisal of the fair value of the dissenting shares and (ii) to the
61

extent permitted by applicable law, the opportunity to participate with XL in any settlement, negotiations and proceeds with respect to any demands for appraisal under the Companies Act. XL will not, without the prior written consent of AXA, voluntarily make any payment with respect to, offer to settle or settle any such demands or applications, or waive any failure to timely deliver a written demand for appraisal or to timely take any other action to exercise appraisal rights in accordance with the Companies Act.
Treatment of XL Equity Awards
Treatment of Outstanding XL Restricted Shares
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL restricted share will vest and be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to $57.60.
Treatment of Outstanding XL Performance Unit Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL performance unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of (i) $57.60 and (ii) the number of XL common shares subject to such XL performance unit award. For the purposes of determining the number of XL common shares subject to outstanding XL performance unit awards, the merger agreement provides that with respect to any XL performance unit award with a performance period that has been completed as of the effective time, the number of XL common shares subject to such XL performance unit awards will be determined based on the actual level of performance achieved, and with respect to any XL performance unit award with a performance period that has not been completed as of the effective time, any applicable performance-based vesting requirements will be deemed to be achieved at target payout levels immediately prior to the effective time.
Treatment of Outstanding XL Restricted Share Unit Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL restricted share unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of (i) $57.60 and (ii) the number of XL common shares subject to such XL restricted share unit award.
Treatment of Outstanding XL Stock Option Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL stock option, whether vested or unvested, will be deemed fully vested and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of  (i) the excess, if any, of  (A) $57.60, over (B) the per share exercise price of such XL stock option, multiplied by (ii) the number of XL common shares subject to such XL stock option. Any XL stock option with an exercise price that is equal to or greater than $57.60 will be canceled for no consideration.
Treatment of Outstanding XL Restricted Cash Unit Awards
Pursuant to the terms of the merger agreement, except as otherwise agreed by AXA and the holder of the award in writing, at the effective time each XL restricted cash unit award will vest and will be canceled and converted into the right to receive a lump-sum amount in cash, without interest, equal to the product of (i) $57.60 and (ii) the number of XL common shares in respect of the restricted cash unit award.
Efforts to Complete the Merger
Each of the parties has agreed, upon the terms and subject to the conditions set forth in the merger agreement, to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and to cooperate with the other parties in doing, all things necessary, proper or
62

advisable to fulfill all conditions to the closing applicable to such party and to consummate and make effective the merger and the transactions contemplated by the merger agreement and the statutory merger agreement in the most expeditious manner reasonably practicable. Specifically, such actions include:

using reasonable best efforts to obtain all necessary, proper or advisable consents from governmental authorities and making all necessary, proper or advisable registrations, filings and notices and using reasonable best efforts to take all steps as may be necessary to obtain such consents from any governmental authority (including under the insurance laws of any applicable jurisdiction and the HSR Act); and

executing and delivering any additional agreements, documents or instruments necessary, proper or advisable to consummate the transactions contemplated by the merger agreement and the statutory merger agreement, and to fully carry out the purposes of, the merger agreement.
In addition, each of the parties agreed to use its reasonable best efforts to take any and all actions necessary to avoid each and every impediment under any applicable law that may be asserted by, or judgment, decree and order that may be entered with, any governmental authority with respect to the transactions contemplated by the merger agreement and the statutory merger agreement so as to enable the closing to occur, in the most expeditious manner reasonably practicable. Specifically, such actions include using reasonable best efforts to:

obtain all consents of governmental authorities that are necessary, proper or advisable to consummate the transactions contemplated by the merger agreement and the statutory merger agreement and secure the expiration or termination of any applicable waiting period under the HSR Act;

resolve any objections that may be asserted by any governmental authority with respect to the merger or any other transaction contemplated by the merger agreement and the statutory merger agreement; and

prevent the entry of, and have vacated, lifted, reversed or overturned, any judgment, decree or order of governmental authorities that would prevent, prohibit, restrict or delay the consummation of the merger or any other transaction contemplated by the merger agreement and the statutory merger agreement.
Burdensome Condition
The obligations of the parties described in this section “— Efforts to Complete the Merger” will not require AXA or any of its affiliates to take any action, including entering into any consent decree, hold separate order or other arrangement, or to permit or suffer to exist any material restriction, condition, limitation or requirement that (when taken together with all other such actions, restrictions, conditions, limitations and requirements) that would have, or would reasonably be expected to have, a material adverse effect on the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of XL and its subsidiaries, taken as a whole, or AXA and its subsidiaries, taken as a whole (provided that for purposes of determining such material adverse effect on the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of AXA and its subsidiaries, taken as a whole, the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of AXA and its subsidiaries, taken as a whole, shall be deemed to be of the same scale as those of XL and its subsidiaries, taken as a whole) (any such action, restriction, condition, limitations or requirement, individually or together with all other such actions, restrictions, conditions, limitations or requirements, termed a “burdensome condition”).
Furthermore, the provisions of the merger agreement do not obligate any party or its affiliates to take any action required by a governmental authority which is not conditioned upon the closing.
Filings
The section of this proxy statement titled “The Merger — Regulatory Clearances Required for the Merger” beginning on page 49 includes a description of the material regulatory approvals required for the completion of the merger that are referenced above.
63

The parties have agreed that within 30 days after March 5, 2018, AXA will file and pay all necessary filing fees for the following required forms, applications, and notification filings with the governmental authorities, including: (i) a “Form A” Acquisition of Control with the Insurance Commissioner of the State of Delaware, the Insurance Commissioner of the State of Texas and the Insurance Commissioner of the State of Louisiana and a Section 1506 filing with the Superintendent of Financial Services of the State of New York; (ii) any pre-acquisition notifications on “Form E” or similar market share notifications to be filed in each jurisdiction where required by applicable insurance laws; (iii) applications with the Bermuda Monetary Authority; (iv) a notification under section 178 of the Financial Services and Markets Act 2000 to the Prudential Regulation Authority and the Financial Conduct Authority; and (v) a notification under section 43 of the Lloyd’s Underwriting Agents byelaw and section 12 of the Lloyd’s membership byelaw to Lloyd’s.
XL and AXA filed on March 16, 2018 a notification and report form pursuant to the HSR Act with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice with respect to the transactions contemplated by the merger agreement and the statutory merger agreement and requesting early termination of the waiting period under the HSR Act. XL and AXA have also agreed that each, as applicable, will make any other necessary, proper or advisable registrations, filing and notices under other non-U.S. insurance laws within 60 days after March 5, 2018. XL and AXA have also agreed that each, as applicable, will make any other necessary, proper or advisable registrations, filing and notices under non-U.S. antitrust laws within 45 days after March 5, 2018. XL and AXA have also agreed that each, as applicable, will make any other necessary, proper or advisable registrations, filings and notices with relevant governmental authorities within 60 days after March 5, 2018.
Information
In connection with the efforts described in this section “— Efforts to Complete the Merger,” each party has agreed:

to consult with one another with respect to the obtaining of all consents of governmental authorities necessary, proper or advisable to consummate the transactions contemplated under the merger agreement and the statutory merger agreement and keep the others reasonably apprised on a prompt basis of the status of matters relating to such consents;

that each other party will have the right to review in advance and, to the extent practicable, and subject to any restrictions under applicable law, to consult the other on, any filing made with, or written materials submitted to, any governmental authority in connection with the transactions contemplated under the merger agreement and the statutory merger agreement and to in good faith consider and reasonably accept comments of the other parties thereon;

to promptly furnish to each other copies of all such filings and written materials after their filing or submission, in each case subject to applicable laws;

to promptly advise each other upon receiving any communication from any governmental authority whose consent is required to consummate the transactions contemplated under the merger agreement and the statutory merger agreement, including promptly furnishing each other copies of any written or electronic communication, and to promptly advise each other when any such communication causes such party to believe that there is a reasonable likelihood that any such consent will not be obtained or that the receipt of any such consent will be materially delayed or conditioned; and

to not participate in any live or telephonic meeting with any governmental authority (other than routine or ministerial matters) in respect of any filings, investigation or other inquiry relating to the transactions contemplated by the merger agreement and the statutory merger agreement, unless it consults with the other party in advance and, to the extent permitted by applicable law and by such governmental authority, gives the other party the opportunity to attend and participate in such meeting.
XL and AXA have further agreed that each will not be obligated to provide information to a third party if a party to the merger agreement determines in its reasonable judgment that (i) doing so would violate applicable law or a contract, agreement or obligation of confidentiality owing to a third party,
64

jeopardize the protection of an attorney-client privilege or expose such party to risk of liability for disclosure of sensitive or personal information or (ii) such information is not directly related to the transactions contemplated by the merger agreement and the statutory merger agreement.
Termination of the Merger Agreement
The merger agreement may be terminated and the transactions contemplated by the merger agreement abandoned at any time prior to the effective time, whether before or after receipt of the requisite approvals of the XL shareholders (except as otherwise noted), under any of the following circumstances:

by mutual written consent of XL and AXA;

by either XL or AXA, if the merger has not been consummated by a walk-away date of December 5, 2018, except that if, on December 5, 2018, the only condition to closing that has not been satisfied or waived by that date is the condition that such required regulatory approvals have been filed or obtained, or that certain required regulatory approvals have been obtained without the imposition of a burdensome condition, then the walk-away date will be automatically extended without further action of the parties to March 5, 2019 (however, the right to terminate the merger agreement pursuant to the provision described in this bullet will not be available to any party who has breached any of such party’s representations and warranties set forth in the merger agreement, or who has failed to perform its obligations under the merger agreement has been a principal cause of or resulted in the failure of the merger to occur on or prior the walk-away date);

by either XL or AXA, if there is in effect any injunction, judgment or ruling, enacted, promulgated, issued, entered, amended or enforced by any governmental authority of competent jurisdiction enjoining, restraining or otherwise making illegal or prohibiting the consummation of the merger and that is final and nonappealable, except that the party seeking to terminate the merger agreement pursuant to the provision described in this bullet must have performed, in all material respects, its obligations under the merger agreement, including its obligations to use its reasonable best efforts to prevent the entry of and to remove any such restraint, as required by the provisions described under “— Efforts to Complete the Merger” beginning on page 62;

by either XL or AXA, if XL’s shareholders do not approve the merger proposal at the special general meeting (including any adjournment or postponement thereof) at which a vote on the matter has been taken;

by AXA, if XL has breached any of its representations or warranties, or has failed to perform any of its obligations or agreements contained in the merger agreement, which breach or failure would result in the failure of certain conditions to the obligations of AXA to consummate the merger described under “— Conditions to Completion of the Merger” beginning on page 54 to be satisfied and which is incapable of being cured prior to the walk-away date or, if capable of being cured, has not been cured within 30 days following receipt by XL of written notice from AXA stating its intention to terminate the merger agreement, provided that AXA will not have the right to terminate the merger agreement under this provision if either AXA or Merger Sub is in material breach of any of its representations, warranties, covenants or agreements under the merger agreement;

by AXA if any of the following has occurred and XL’s shareholders have not approved the merger proposal:

the XL board of directors has made an adverse recommendation change and AXA exercises its right to terminate within 10 days of the XL board of directors making such an adverse recommendation change;

XL has willfully breached the covenants regarding the non-solicitation of alternative transaction, prompt filing of this proxy statement, or the convening of a shareholder meeting to approve the merger proposal;
65


by XL, if AXA or Merger Sub has breached any of its representations or warranties, or has failed to perform any of its obligations or agreements contained in the merger agreement, which breach or failure would result in the failure of certain conditions to the obligations of XL to consummate the merger described under “— Conditions to Completion of the Merger” beginning on page 54 to be satisfied and which is not reasonably capable of being cured prior to the walk-away date or, if reasonably capable of being cured, has not been cured within 30 days after written notice thereof has been received by AXA from XL stating its intention to terminate the merger agreement, provided that XL will not have the right to terminate the merger agreement under this provision if it is in material breach of any of its representations, warranties, covenants or agreements under the merger agreement; or

by XL, if XL’s shareholders have not approved the merger proposal, the XL board of directors has authorized XL to enter into an alternative acquisition agreement with respect to a superior proposal and, concurrently with such termination, XL enters into such alternative acquisition agreement and pays to AXA an amount equal to the termination fee in accordance with the merger agreement.
Upon termination of the merger agreement in accordance with its terms by a party, written notice will be given to the other parties specifying the provision thereof pursuant to which such termination is made and the merger agreement will become null and void without liability on the part of any party or its directors, officers or affiliates, other than, with respect to any party to the merger agreement, the obligations pursuant to certain provisions that will survive the termination of the merger agreement. In addition, nothing will relieve any party to the merger agreement from liability for actual fraud or any willful breach of any provision set forth in the merger agreement.
Expenses and Termination Fees
Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement will be paid by the party incurring or required to incur such fees and expenses, whether or not the merger is consummated.
XL will be required to pay a termination fee of  $499 million (which we refer to as the “termination fee”) to AXA under the following circumstances:

AXA terminates the merger agreement as a result of a breach by XL of its representations, warranties or covenants and prior to such breach, a takeover proposal is announced (and not withdrawn at least three business days prior to such breach) and XL consummates or enters into a definitive agreement to consummate a takeover proposal within 12 months of the termination of the merger agreement with AXA, except that, for purposes of this bullet only, the reference in the definition of  “takeover proposal” to “20%” is replaced with a reference to “50%.” Such payment must be made by wire transfer of same-day funds within two business days after consummation of the takeover proposal.

AXA or XL terminates due to the shareholder approval for the merger proposal not being obtained at the shareholder meeting, and prior to the shareholder meeting, a takeover proposal is announced (and not withdrawn at least 10 business days prior to the shareholder meeting), and XL consummates or enters into a definitive agreement to consummate that takeover proposal within 12 months of the termination of the merger agreement with AXA, except that for purposes of this bullet only, each reference in the definition of  “takeover proposal” to “20%” is replaced with a reference to “50%.” Such payment must be made by wire transfer of same-day funds within two business days after consummation of the takeover proposal.

However, if XL consummates a takeover proposal with any other person other than the person who announced a takeover proposal prior to the shareholder meeting, then XL will instead be required to pay an “alternate fee” of  $249.5 million in lieu of the $499 million termination fee.

XL terminates the merger agreement to enter into an alternative acquisition agreement with respect to a superior takeover proposal. Such payment must be made by wire transfer of same-day funds simultaneously with the termination of the merger agreement with AXA.
66


AXA terminates the merger agreement due to the XL board of directors having made an adverse recommendation change or having willfully breached the covenants regarding the non-solicitation of an alternative transaction, prompt filing of this proxy statement, or the convening of a shareholder meeting to approve the merger proposal. Such payment must be made by wire transfer of same-day funds within two business days of termination of the merger agreement.
In no event will XL be required to pay the termination fee or the alternate fee more than once or be required to pay both the termination fee and the alternate fee.
Conduct of Business Pending the Completion of the Merger
XL has agreed to certain covenants in the merger agreement restricting the conduct of its business between March 5, 2018 and the earlier of the closing or the termination of the merger agreement. In general, except as required by applicable law, as required or contemplated by the terms of the merger agreement, as may have been previously disclosed in writing to AXA as provided in the merger agreement or with the prior written consent of AXA (such consent not to be unreasonably withheld, conditioned or delayed), (i) XL will, and will cause its subsidiaries to, carry on its business in all material respects in the ordinary course of business consistent with past practice, (ii) XL will, and will cause its subsidiaries to, use reasonable best efforts to preserve its and its subsidiaries’ business organizations substantially intact and preserve existing relationships with key customers, brokers, reinsurance providers, regulators, officers, employees and other persons with whom XL or any of its subsidiaries have significant business relationships, in each case, consistent with past practice and (iii) XL will not, and will not permit any of its subsidiaries to:

issue, sell or grant any of its shares or other equity or voting interests of XL, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares or other equity or voting interests of XL or any of its subsidiaries, or any options, rights, warrants or other commitments or agreements to acquire from XL or any of its subsidiaries, or that obligate XL or any of its subsidiaries to issue, any share capital of, or other equity or voting interests in, or any securities convertible into or exchangeable for shares of, or other equity or voting interests in, XL or any of its subsidiaries; except that XL may issue common shares or other securities as required pursuant to the vesting, settlement or exercise of equity awards or obligations to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any common shares, or other equity or voting interests in XL that are (i) issued and outstanding on March 5, 2018 in accordance with the terms of the applicable equity award or right in effect on March 5, 2018 or (ii) granted after March 5, 2018 in accordance with the merger agreement; and provided further that subsidiaries of XL may make any such issuances, sales or grants to XL or a direct or indirect wholly-owned subsidiary of XL;

redeem, purchase or otherwise acquire any issued and outstanding shares or other equity or voting interests of XL or any of its subsidiaries or any rights, warrants or options to acquire any shares of XL or any of its subsidiaries or other equity or voting interests of XL or any of its subsidiaries, except (i) pursuant to employee benefit plans or equity awards (including, for the avoidance of doubt, in connection with the forfeiture of any equity awards or the satisfaction of any per share exercise price related to any equity awards) or (ii) in connection with the satisfaction of tax withholding obligations with respect to any equity awards;

establish a record date for, declare, set aside for payment or pay any dividend on, or make any other distribution in respect of, any shares or other equity or voting interests of XL or any of its subsidiaries, in each case, other than (i) quarterly cash dividends paid by XL on common shares not in excess of  $0.22 per share, per quarter, with record and payment dates generally consistent with the timing of record and payment dates in the most recent comparable prior year fiscal quarter prior to March 5, 2018, (ii) periodic cash dividends paid by the applicable subsidiary of XL on preferred shares issued and outstanding on March 5, 2018 in an amount not in excess of the amounts required by the applicable bye-laws, certificate of designation or authorizing
67

resolutions for such preferred shares, with record and payment dates generally consistent with the timing of record and payment dates in the most recent comparable prior year fiscal quarter prior to March 5, 2018 and (iii) dividends paid by a subsidiary of XL to XL or any direct or indirect wholly-owned subsidiary of XL;

split, combine, subdivide or reclassify any shares or other equity or voting interests of XL or any of its subsidiaries;

incur any indebtedness for borrowed money, issue or sell any debt securities or warrants or other rights to acquire any debt securities of XL or any of its subsidiaries, guarantee any such indebtedness or any debt securities of another person or enter into any “keep well” or other agreement to maintain any financial statement condition of another person (collectively, “indebtedness”), except (i) indebtedness incurred solely between XL and any of its subsidiaries or solely between its subsidiaries, (ii) letters of credit issued in the ordinary course of business in the insurance or reinsurance business of XL or any of its subsidiaries, (iii) borrowings under XL’s existing credit facilities having an aggregate principal amount outstanding that is not in excess of $75,000,000, (iv) any other indebtedness in an aggregate principal amount not in excess of $75,000,000 and (v) indebtedness incurred in connection with the refinancing of any indebtedness existing on March 5, 2018 or permitted to be incurred, assumed or otherwise entered into hereunder, except that, in the case of this clause (v), the amount of indebtedness incurred in connection with such refinancing does not exceed the principal amount of the indebtedness so refinanced (other than with respect to increased amounts attributable to unpaid accrued interest, fees and premiums (including tender premiums), defeasance costs, and underwriting discounts, fees, commissions and expenses associated therewith);

redeem, purchase or otherwise retire any outstanding notes, debentures or other debt securities issued by XL or any of its subsidiaries that currently qualify or are intended to qualify as “Tier 2 Ancillary Capital” under the Bermuda Insurance (Group Supervision) Rules 2011, as amended, or any equivalent concept under any rules or regulations applicable to any subsidiary of XL that conducts the business of insurance or reinsurance or is licensed as a Lloyd’s corporate member or a Lloyd’s managing agent, in each case other than mandatory redemptions and repayments of any such notes, debentures or other debt securities on the maturity date thereof;

enter into any swap or hedging transaction or other derivative agreements, except in the ordinary course of business and in compliance with certain policies of XL with respect to the investment of the investment assets as of March 5, 2018 (which we refer to as the “investment guidelines”);

sell or lease to any person, in a single transaction or series of related transactions, any of its owned properties or assets whose value or purchase price exceeds $50,000,000 individually or $100,000,000 in the aggregate, except (i) dispositions of obsolete, surplus or worn out assets or assets that are no longer used or useful in the conduct of the business of XL or any of its subsidiaries, (ii) transfers among XL and its subsidiaries, (iii) leases and subleases of real property owned by XL or its subsidiaries or (iv) dispositions of investment assets permitted by the investment guidelines in the ordinary course of business (including in connection with cash management or investment portfolio activities);

make or authorize any capital expenditures outside the ordinary course of business or make loans or advances, except in compliance with the investment guidelines;

make any acquisition (including by merger or amalgamation) of the share capital or other equity or voting interests of any other person (except the acquisition of investment assets in the ordinary course of business and in compliance with the investment guidelines) or of the assets of any other person, in each case for consideration in excess of  $50,000,000 individually or $100,000,000 in the aggregate;

except as required pursuant to the terms of any employee benefit plan in effect as of March 5, 2018 and properly disclosed to AXA or established or amended after March 5, 2018 in compliance with the merger agreement, (i) grant to any current or former director, officer or employee any increase in salary or incentive compensation opportunity, other than grants made in the ordinary
68

course of business to any employee of XL or any of its subsidiaries whose annual rate of base salary is below $400,000, (ii) grant to any current or former director, officer or employee any increase in severance, retention or termination pay, (iii) pay any incentive compensation, other than the payment for completed periods based on actual performance in the ordinary course of business, (iv) grant any new equity awards or other long-term incentive awards, amend or modify the terms of any outstanding awards or take any action to accelerate the vesting or lapse or restrictions or payment, or to fund or secure the payment of, any compensation or benefits under any employee benefit plan, (v) establish, adopt, enter into or amend in any material respect any material employee benefit plan or collective bargaining agreement or other agreement with a labor union, works council or similar organization, (vi) enter into any employment, consulting, severance or termination agreement with any current or former director, officer or employee of XL or any of its subsidiaries whose annual rate of base salary is more than $400,000, (vii) (1) hire or promote any individual (x) if immediately following such action XL and any of its subsidiaries would have more than an agreed number of employees or (y) whose annual rate of base salary following such hiring or promotion would be more than $400,000 or (2) terminate without cause the employment of any individual, other than as determined by XL in its reasonable discretion in the ordinary course of business, (viii) forgive any loans or issue any loans (other than routine travel or business expense advances issued in the ordinary course of business consistent with XL’s policy) to any current or former director, officer, employee or independent contractor (who is a natural person), or (ix) change any actuarial or other assumptions used to calculate funding obligations with respect to any employee benefit plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; provided, however, that the foregoing does not restrict XL or any of its subsidiaries from (a) entering into or making available to newly hired employees or to employees in the context of promotions based on job performance or workplace requirements (who may otherwise be hired or promoted in compliance with the merger agreement), in each case, in the ordinary course of business, plans, agreements, benefits and compensation arrangements (excluding equity-based and other long-term incentive grants, other than deferred cash awards that do not include terms providing for “single-trigger” vesting in connection with the effective time, but which may provide for accelerated vesting in the event of an involuntary termination of employment within the two-year period following the effective time), in each case, that have terms and a value that is consistent with the past practice of making compensation and benefits available to newly hired or promoted employees in similar positions, or consistent with the compensation and benefits of the then-current employee whom such newly hired or promoted employee is engaged to replace or succeed, (b) taking any of the foregoing actions to comply with, satisfy tax-qualification requirements under, or avoid the imposition of tax under, the Internal Revenue Code of 1986, as amended, and any applicable guidance thereunder or other applicable law or (c) making immaterial changes in the ordinary course of business to nondiscriminatory health and welfare plans available to all employees generally;

make any material changes in financial accounting methods, principles or practices materially affecting the consolidated assets, liabilities or results of operations of XL and its subsidiaries, except insofar as may be required by (or, in the reasonable good faith judgment of XL, advisable under) (i) GAAP (or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization or (ii) applicable statutory accounting principles (or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the National Association of Insurance Commissioners or any similar organization;

materially alter or materially amend any existing underwriting, reserving, claim handling, loss control or actuarial practice guideline or policy of XL or any subsidiary of XL that conducts the business of insurance or reinsurance or is licensed as a Lloyd’s corporate member of Lloyd’s managing agent or any material assumption underlying any reserves or actuarial practice or policy, except as may be required by (or, in the reasonable good faith judgment of XL, advisable under) (i) GAAP (or any interpretation thereof), including pursuant to standards, guidelines and
69

interpretations of the Financial Accounting Standards Board or any similar organization or (ii) applicable statutory accounting principles (or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the National Association of Insurance Commissioners or any similar organization;

reduce or strengthen any reserves, provisions for losses or other liability amounts in respect of insurance contracts and assumed reinsurance contracts, except (i) as may be required by (or, in the reasonable good faith judgment of XL, advisable under) applicable statutory accounting principles or GAAP, as applicable, (ii) as a result of loss or exposure payments to other parties in accordance with the terms of insurance contracts and assumed reinsurance contracts or (iii) in the ordinary course of business;

adopt or implement any shareholder rights plan or similar arrangement;

amend XL’s organizational documents or amend in any material respect the comparable organizational documents of any of the subsidiaries of XL in a manner that would reasonably be likely to prevent or to impede, interfere with, hinder or delay in any material respect the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger;

adopt any plan or agreement of complete or partial liquidation or dissolution, merger, amalgamation, consolidation, restructuring, recapitalization or other reorganization of XL or any of its subsidiaries, continue or agree to continue XL or any of its subsidiaries into any other jurisdiction, or convert or agree to convert XL or any of its subsidiaries into any other form of legal entity (in each case, other than the dormant subsidiaries or, with respect to any merger, amalgamation or consolidation, other than among wholly-owned subsidiaries);

grant any lien (other than certain liens permitted by the merger agreement) in any of its material properties or assets except to secure certain classes of indebtedness specified in the merger agreement;

settle or compromise any pending or threatened legal or administrative proceeding, suit, investigation, arbitration or action against XL or any of its subsidiaries, or any of their officers or directors in their capacities as such, other than the settlement of legal or administrative proceeding, suit, investigation, arbitration or action (i) solely for monetary damages for an amount not to exceed $10,000,000 for any such settlement individually or $50,000,000 in the aggregate (with such aggregate amount calculated taking into account the amount of any of certain settled tax proceedings permitted by the merger agreement) or (ii) for claims under contracts of insurance or reinsurance issued by XL or any of its subsidiaries in accordance with applicable policy or contractual limits in the ordinary course of business;

cancel any material indebtedness or waive any material claims or rights under any material contract, other than in the ordinary course of business;

amend, modify or terminate any material contract or reinsurance or retrocession treaty or agreement, slip, binder, cover note or other similar arrangement pursuant to which any subsidiary of XL that conducts the business of insurance or reinsurance or is licensed as a Lloyd’s corporate member of Lloyd’s managing agent is the cedent, and involving at least $25,000,000 in annual premium or $100,000,000 in ceded liabilities, in any of the foregoing cases in such a way as to materially reduce the expected business or economic benefits thereof or enter into any contract that would constitute a material contract if in effect as of March 5, 2018, in each case, except in the ordinary course of business;

voluntarily abandon, dispose of or permit to lapse any intellectual property right owned by XL that is material to XL and its subsidiaries, taken as a whole, except in the ordinary course of business;

voluntarily abandon, dispose of or permit to lapse any licenses, franchises, permits, certificates, approvals, authorizations and registrations from governmental authorities necessary for the lawful conduct of XL’s and its subsidiaries’ respective businesses and that is material to the business of XL or any of its subsidiaries;
70


(i) make, change or revoke any material tax election, other than in the ordinary course of business, (ii) settle or compromise any audit, claim assessment or other proceeding relating to a material amount of tax other than in an amount not to exceed $10,000,000 for any such settlement or compromise individually $50,000,000 in the aggregate (with such aggregate amount calculated taking into account the amount of any settled legal or administrative proceedings, suits, investigations, arbitrations or actions permitted by the merger agreement), (iii) file any material amended tax return, (iv) extend or waive the application of any statute of limitations regarding the assessment or collection of any material tax, other than in the ordinary course of business, (v) enter into any tax indemnification, sharing, allocation, reimbursement or similar agreement, arrangement or understanding (other than any contract entered into in the ordinary course of business the primary purpose of which does not relate to taxes), (vi) surrender any right to claim any material tax refund, (vii) make any material change to any tax accounting method, except for in the ordinary course of business or (viii) effect, or agree to effect, any material transaction, a purpose of which is to minimize the adverse tax impact of the Tax Cuts and Jobs Act;

acquire or dispose of any material investment assets in any manner inconsistent with the investment guidelines;

materially amend, materially modify or otherwise materially change the investment guidelines;

enter into any new material lines of business or withdraw from, or put into “run off”, any existing material lines of business; or

authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions.
Board of Directors and Management of XL Following Completion of the Merger
The directors of Merger Sub immediately prior to the effective time will be the initial directors of XL as the surviving company until their earlier death, resignation or removal or until their respective successors are duly elected or appointed and qualified. The officers of XL immediately prior to the effective time will be the initial officers of XL as the surviving company until their earlier death, resignation or removal or until their respective successors are duly appointed and qualified.
Indemnification; Directors’ and Officers’ Insurance
The merger agreement provides that, from and after the effective time, the surviving company will, and AXA will cause the surviving company to, indemnify and hold harmless, the present and former directors and officers of XL or any of its subsidiaries or any other person in which XL or any of its subsidiaries own any equity interests at the request of XL (and each such person’s heirs, executors and administrators) with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees and expenses of legal counsel) in connection with any action based on or arising out of, in whole or in part, (i) the fact that such person is or was a director or officer of XL or such subsidiary or (ii) the acts or omissions of such person in such person’s capacity as a director, officer, employee or agent of XL or such subsidiary or taken at the request of XL or such subsidiary, in each case, at, or at any time prior to, the effective time (including in connection with serving at the request of XL or such subsidiary as a director, officer, employee, agent, trustee or fiduciary of another person (including any employee benefit plan)) (including any action relating in whole or in part to the transactions contemplated by the merger agreement or relating to the enforcement of the indemnification provisions in the merger agreement, as described in this paragraph), to the fullest extent permitted under applicable law.
In addition, for the six-year period commencing immediately after the effective time, the surviving company will maintain in effect current directors’ and officers’ liability insurance of XL and its subsidiaries covering acts or omissions occurring at or prior to the effective time with respect to those individuals who, as of March 5, 2018, were, and any individual who, prior to the effective time, becomes, covered by XL’s directors’ and officer’s liability insurance policy. The terms, scope and amount of such insurance coverage will be no less favorable to such individuals than XL’s directors’ and officers’ liability insurance policies as in effect on March 5, 2018. However, AXA may substitute such policies for policies by reputable insurers of at least the same coverage with respect to matters existing or occurring prior to the effective time, including a
71

“tail” policy. However, if annual premium for such insurance exceeds 300% of the current annual premium, then AXA may provide or cause to be provided a policy for the applicable individuals with the best coverage as shall then be available at an annual premium not in excess of 300% of the current annual premium. In addition, XL may, prior to the effective time, purchase for an aggregate amount not in excess of such 300% threshold for six years, a six-year prepaid “tail” policy on terms and conditions providing at least substantially equivalent benefits as the current policies maintained by XL with respect to matters existing or occurring prior to the effective time including the transactions contemplated by the merger agreement. If such prepaid “tail” policy has been obtained by XL, it shall be deemed to satisfy all obligations to obtain insurance pursuant to the foregoing provisions and the surviving company will use its reasonable best efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder.
Employee Matters
From the effective time through the end of the calendar year following the year in which the effective time occurs (which we refer to as the “continuation period”), AXA has agreed to provide each individual who is employed by XL or its subsidiaries immediately prior to the effective time (whom we refer to as a “continuing employee”) with:

a base salary or wage rate that is no less than that provided to such continuing employee by XL or its subsidiaries immediately prior to the effective time;

a target annual incentive compensation plus target long-term incentive compensation opportunity that is substantially similar, in the aggregate, to the target annual incentive compensation plus target long-term incentive compensation opportunity (excluding special, one-time or transaction-based compensation opportunities) provided to such continuing employee by XL or its subsidiaries immediately prior to the effective time, with the form of such incentives to be determined in AXA’s discretion;

other compensation and employee benefits that are no less favorable, in the aggregate, than those provided to such continuing employee by XL or its subsidiaries immediately prior to the effective time (excluding annual and long-term incentives, special, one-time or transaction-based compensation and benefits); and

in the event of a termination of employment (or a continuing employee’s receipt of a notice of termination of employment) from AXA, XL or any of their respective affiliates during the continuation period, with severance benefits that are no less favorable, in the aggregate, than those that would have been provided to such continuing employee by XL or its subsidiaries had such termination occurred prior to the effective time.
The merger agreement provides that the merger will constitute a “change in control” or “change of control” (or term of similar import) with respect to all applicable XL benefit plans. AXA has agreed to honor and continue all of XL’s employment, severance, retention, termination and change-in-control plans, policies, programs, agreements and arrangements maintained by XL or its subsidiaries and properly disclosed to AXA, in each case, as in effect at the effective time, including with respect to any payments, benefits or rights arising as a result of the merger (either alone or in combination with any other event), subject, in each case, to the terms and conditions of such arrangements. AXA has further agreed to provide continuing employees with service credit with respect to prospective benefit plan participation (excluding retiree health or welfare arrangements, any frozen benefit plan, benefit accrual under any defined benefit pension plan or to the extent that such recognition would result in any duplication of benefits for the same period of service). AXA has further agreed to waive any pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods under any prospective welfare benefit plan in which continuing employees (and their eligible dependents) participate (except to the extent that such limitations, exclusions, requirements and waiting periods would not have been satisfied or waived under the comparable XL welfare benefit plan immediately prior to the effective time). With respect to such prospective welfare benefit plans, AXA has agreed to recognize the dollar amount of all co-payments, deductibles and similar expenses incurred by each continuing employee (and his or her eligible dependents) prior to the effective time during the calendar year in which the effective time occurs for purposes of satisfying such year’s
72

deductible and co-payment limitations under the relevant welfare benefit plans. With respect to continuing employees whose principal place of employment is outside of the United States, AXA’s obligations as described in this section will be modified to the extent necessary to comply with applicable law of the applicable foreign countries and political subdivisions.
AXA has agreed to honor, in accordance with its terms, each XL deferred cash award that is outstanding immediately prior to the effective time, provided that if a continuing employee’s employment is terminated by the employer without “cause” or by the executive officer for “good reason” (each as defined in the merger agreement) within the two-year period immediately following the effective time, such continuing employee will receive a lump-sum cash payment in the amount of his or her outstanding XL deferred cash awards no later than 30 days following the date of termination (or such later time as would not cause an impermissible acceleration event under Section 409A of the Internal Revenue Code of 1968, as amended.
In the event that the effective time occurs prior to XL paying annual incentives in respect of its 2018 fiscal year, AXA and XL have agreed that XL will pay to each eligible participant in an XL annual incentive plan (which we refer to as the “2018 AIP”) a cash bonus in respect of calendar year 2018 in an amount equal to the cash bonus amount payable under the applicable bonus plan based on the actual level of achievement of the applicable performance criteria, provided that at the conclusion of 2018, the 2018 AIP pool will be funded at the greater of the target level of performance or the actual level of performance (including adjustments to account for non-recurring items and any costs and expenses, in each case to the extent associated with the transactions contemplated by the merger agreement) as determined by XL. AXA and XL have agreed that the aggregate bonus payments made to all eligible participants will be no less than the amount equal to the 2018 AIP pool. If a continuing employee’s employment is terminated by the employer without “qualifying cause” or by the executive officer for “qualifying good reason” (each as defined in the continuing employee’s employment agreement or the ESBP, if the continuing employee is a participant thereof, and otherwise having the meaning set forth in the merger agreement) following the effective time and prior to the payment of the bonus, such continuing employee will receive a lump-sum cash bonus equal to his or her 2018 bonus amount prorated to the date of termination (or, if the termination occurs during the fourth calendar quarter of 2018, then not prorated). Annual bonuses will be paid, less any required withholding taxes, on or about the date on which XL would normally pay annual bonuses in the first calendar quarter of 2019 and in no event later than March 15, 2019 (or such later date in accordance with applicable law), and will not be paid to the extent payment would result in any duplication of any annual bonus otherwise payable to the continuing employee.
Amendment or Supplement and Waiver
The merger agreement may be amended or supplemented by written agreement of the parties, by action taken or authorized by the boards of directors of XL and AXA, at any time before or after the receipt of the requisite approval of the XL shareholders of the merger proposal, but after the requisite approval of the XL shareholders, no amendment may be made that by law requires further approval by the XL shareholders without such further approval.
Furthermore, without prior written consent, certain sections of the merger agreement may not be amended in a manner that is material and adverse to any person that has committed to provide or arrange or otherwise entered into definitive documents or agreements (and any joinder agreements, indentures or credit or facilities agreements entered into pursuant thereto) with AXA or any of its subsidiaries in connection with debt financing (including any permanent financing) for the purposes of financing the payment of the merger consideration and any other amounts required to be paid in connection with the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement, including the agents, arrangers, lenders and other entities that have committed to provide or arrange all or part of, or otherwise entered into agreements in connection with, such debt financing, or, with respect to any such person, its affiliates and their respective officers, directors, employees, controlling persons, agents, representatives, successors and assigns (which we refer to, collectively, as “financing sources”).
At any time prior to the effective time, AXA and XL may, subject to applicable law, (i) waive any inaccuracies in the representations and warranties of the other party, (ii) extend the time for performance of
73

any of the obligations or other acts of the other parties or (iii) waive compliance by the other party with any of the agreements contained in the merger agreement or waive any of such party’s conditions. No failure or delay by a party in exercising any of its rights under the merger agreement will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right under the merger agreement. Any agreement on the part of a party to any such extension or waiver will be valid only if set forth in an instrument in writing signed on behalf of such party.
No Third Party Beneficiaries
While the merger agreement is not intended and will not be construed to create any third-party beneficiaries or confer upon any person other than the parties to the merger agreement any rights, benefits or remedies of any nature whatsoever under or by reason of the merger agreement, it provides limited exceptions for (i) each XL shareholder at the effective time as regards its rights to receive the merger consideration, (ii) each holder of equity awards or deferred cash awards at the effective time as regards its rights to receive the merger consideration, (iii) each financing source and (iv) each present and former director and officer of XL and its subsidiaries (and each such person’s heirs, executors and administrators) to continue to have indemnification, advancement of expenses and liability insurance coverage following completion of the transactions as described under “— Indemnification; Directors’ and Officers’ Insurance” beginning on page 71.
Remedies; Specific Enforcement
XL and AXA agreed in the merger agreement that if for any reason any of the provisions of the merger agreement are not performed in accordance with their specific terms or are otherwise breached or violated, irreparable damage would be caused for which monetary relief would not be an adequate remedy under applicable law. Accordingly, each of the parties to the merger agreement agreed that, in addition to all other remedies to which it may be entitled, (i) each of the parties to the merger agreement is entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of the merger agreement and to enforce specifically the terms and provisions thereof in the courts in the State of Delaware or the federal courts of the United States of America located in the State of Delaware and (ii) the right of specific enforcement is an integral part of the transactions contemplated by the merger agreement and without that right, neither of the parties would have entered into the merger agreement. Such relief may be sought without the posting of a bond or other necessary security. The parties agreed not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law.
Representations and Warranties
The merger agreement contains certain customary representations and warranties. Each of XL and AXA has made representations and warranties regarding, among other things:

organization and standing;

corporate power and authority with respect to the execution, delivery and performance of the merger agreement and the statutory merger agreement, and the due and valid execution and delivery and enforceability of the merger agreement;

board recommendation and approval;

absence of conflicts with, or violations of, organizational documents, contracts and applicable laws;

required regulatory filings and consents and approvals of governmental authorities;

absence of certain legal proceedings; and

brokers’ fees payable in connection with the transactions contemplated by the merger agreement.
74

Additional representations and warranties made only by XL relate to:

capital structure;

ownership of subsidiaries;

requisite shareholder approval;

SEC documents, financial statements and internal controls and disclosure controls and procedures;

absence of undisclosed liabilities;

absence of any material adverse effect since December 31, 2017;

compliance with applicable laws;

possession of, and compliance with, permits;

tax matters;

benefits matters and compliance with the Employee Retirement Income Security Act of 1974;

labor matters;

investments;

intellectual property;

inapplicability of takeover statutes;

absence of any shareholder rights plan;

real property;

material contracts;

insurance and reinsurance subsidiaries;

statutory statements and examinations;

agreements with insurance regulators;

ceded reinsurance and retrocession contracts;

reserves;

insurance policies;

insurance agents;

opinions from financial advisors; and

IT systems, data security and privacy.
Additional representations and warranties made only by AXA and Merger Sub relate to:

Merger Sub’s ownership and operations;

financing;

the absence of certain agreements between AXA, Merger Sub or any of their affiliates, on the one hand, and any member of XL’s management or board of directors, on the other hand;
75


the truthfulness and veracity of information supplied by AXA to XL that XL has included in this proxy statement; and

share ownership in XL.
Financing and Other Cooperation
XL has agreed, if reasonably requested by AXA, to provide commercially reasonable cooperation to AXA and Merger Sub (including providing reasonably available financial and other information regarding XL and its subsidiaries for use in marketing and offering documents and to enable AXA to prepare customary pro forma financial statements) in the arrangement of any bank debt financing or any capital markets debt financing for the purposes of financing the payment of the merger consideration and any other amounts required to be paid in connection with the consummation of the transactions contemplated by the merger agreement; provided, however, that no obligation of XL or any of its subsidiaries under any definitive documentation relating to such debt financing will be effective prior to the closing and any such obligations shall terminate without liability to XL or any of its subsidiaries upon the termination of the merger agreement.
AXA has agreed, in the event the merger agreement is terminated other than pursuant to certain situations, to reimburse XL for all net costs (including premiums ceded and net recoveries) incurred by XL and its subsidiaries in connection with the purchase, in accordance with the merger agreement, of additional ceded reinsurance or other risk mitigation structures for XL and its subsidiaries with respect to catastrophe losses, and XL has agreed to cooperate with AXA in connection with such activities.
Existing Indebtedness
XL has agreed to, if requested by AXA, provide commercially reasonable cooperation to AXA in taking such actions as are necessary, proper or advisable under certain existing debt documents in respect of the transactions contemplated by the merger agreement and the statutory merger agreement, including delivering or causing a subsidiary to deliver any such notices, agreements, documents or instruments necessary, proper or advisable to comply with the terms thereof, including the delivery of any officer certificates and opinions of counsel required to be delivered thereunder in connection with the transactions contemplated by the merger agreement and the statutory merger agreement.
In addition, XL has agreed to, if and to the extent reasonably requested by AXA in writing, provide commercially reasonable cooperation to AXA and Merger Sub in either (i) arranging for the termination of certain existing debt documents (and the related repayment or redemption thereof, or, with respect to outstanding letters of credit, the cash collateralization thereof or the providing of  “backstop” letters of credit with respect thereto) at the closing (or such other date thereafter as agreed to by AXA and XL) which repayment, redemption, cash collateralization or providing of  “backstop” letters of credit shall be the sole responsibility of Parent, and the procurement of customary payoff letters and other customary release documentation in connection therewith or (b) obtaining any consents required under any existing debt documents to permit the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement thereunder and obtaining any amendments to or other consents under the existing debt documents as may be reasonably requested by AXA, and in each case, if reasonably requested by AXA, XL will and will cause its subsidiaries to execute and deliver such customary notices, agreements, documents or instruments necessary in connection therewith.
Other Covenants and Agreements
The merger agreement contains certain other covenants and agreements, including covenants relating to, among other things:

preparation by XL of this proxy statement;

confidentiality and access by AXA to certain information about XL;

consultation between AXA and XL in connection with public statements with respect to the transactions contemplated by the merger agreement;
76


causing the dispositions of XL equity securities pursuant to the transactions contemplated by the merger agreement by each individual who is a director or officer of XL subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3 promulgated under the Exchange Act;

each party notifying the other party of any shareholder litigation relating to the transactions contemplated by the merger agreement and the statutory merger agreement, and XL giving AXA the opportunity to participate in the defense and settlement of any shareholder litigation against XL or its directors relating to the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement;

XL and AXA discussing in good faith, from time to time, the purchase of additional ceded reinsurance or other risk mitigation structures for XL and its subsidiaries, and XL agreeing to give due consideration to any views and concerns identified by AXA and XL implementing certain catastrophe protection as agreed to by XL and AXA, assuming the availability of such catastrophe protection on commercially reasonable terms acceptable to AXA; and

in the event the merger agreement is terminated other than pursuant to the failure of shareholders to approve the merger proposal, a termination right by AXA, or prior to receipt of shareholder approval, XL’s entering into an alternative acquisition agreement, reimbursement by AXA to XL for all net costs (including premiums ceded and net recoveries) incurred by XL and its subsidiaries in connection with the purchase of additional ceded reinsurance or other risk mitigation structures for XL and its subsidiaries.
Governing Law; Jurisdiction
The merger agreement is governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule, except to the extent the provisions of the laws of Bermuda are mandatorily applicable to the merger.
All actions that arise out of or relating to the interpretation and enforcement of the merger agreement and in respect of the transactions contemplated by the merger agreement and statutory merger agreement (except to the extent any such proceeding mandatorily must be brought in Bermuda) will be held and determined in the Delaware Court of Chancery or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular action, then any federal court within the State of Delaware. If both the Delaware Court of Chancery and the federal courts within the State of Delaware decline to accept jurisdiction, then any other state court within the State of Delaware and any appellate court therefrom will have jurisdiction over any action brought by XL against AXA, or vice versa, arising out of or relating to the interpretation and enforcement of the merger agreement and in respect of the transactions contemplated by the merger agreement and statutory merger agreement.
The foregoing descriptions of governing law and jurisdiction do not apply to certain claims, actions or proceedings brought against the financing sources arising out of or related to the transactions contemplated by the merger agreement or the statutory merger agreement, including the merger, which claims, actions or proceedings are governed by and construed in accordance with the laws of France and are subject to the exclusive jurisdiction of the Tribunal de Commerce de Paris.
77

MARKET PRICE OF XL COMMON SHARES
Our common shares are quoted on the NYSE under the ticker symbol “XL.” The following table shows the intraday high and low prices for the common shares and cash dividends per share, for the periods indicated as reported by the NYSE. These prices do not necessarily represent actual transactions.
XL
High
Low
Dividend
Year ended December 31, 2018
Second quarter (through [•], 2018)
$ [•] $ [•] $ [•]
First quarter
$ 55.92 $ 34.02 $ 0.22
Year ended December 31, 2017
Fourth quarter
$ 42.99 $ 34.92 $ 0.22
Third quarter
$ 47.27 $ 36.02 $ 0.22
Second quarter
$ 44.58 $ 39.12 $ 0.22
First quarter
$ 41.39 $ 36.50 $ 0.22
Year ended December 31, 2016
Fourth quarter
$ 38.64 $ 32.81 $ 0.20
Third quarter
$ 35.50 $ 31.97 $ 0.20
Second quarter
$ 37.23 $ 30.33 $ 0.20
First quarter
$ 38.70 $ 33.06 $ 0.20
On February 6, 2018, the last full trading day prior to the release of reports that XL was a potential acquisition target, the last reported sales price of common shares, as reported by the NYSE, was $37.34. On March 2, 2018, the last full trading day prior to the announcement of the transaction, the last reported sales price of common shares, as reported by the NYSE, was $43.30. On [•] [•], 2018, the last reported sales price of common shares, as reported by the NYSE, was $[•]. XL shareholders are encouraged to obtain current market quotations for common shares before making any decision with respect to the merger. No assurance can be given concerning the market price for common shares before or after the date on which the merger will close. The market price for common shares will fluctuate between the date of this proxy statement and the date on which the merger closes and thereafter.
As of  [•] [•], 2018, there were approximately [•] holders of record of common shares. This does not represent the actual number of beneficial owners of common shares because shares are frequently held in “street names” by securities dealers and others for the benefit of beneficial owners who may vote shares.
78

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
MANAGEMENT AND DIRECTORS
Security Ownership of 5% Owners
The following table sets forth information as of March 28, 2018, with respect to the beneficial ownership of issued and outstanding common shares by each person known by us to beneficially own 5% or more of the issued and outstanding shares. As defined by the SEC, a person is deemed to “beneficially own” shares if such person directly or indirectly (i) has or shares the power to vote or dispose of such shares, regardless of whether such person has any pecuniary interest in the shares or (ii) has the right to acquire the power to vote or dispose of such shares within 60 days, including through the exercise of any option, warrant, or right. Pursuant to Rule 13d-4 under the Exchange Act, the statements concerning voting and dispositive power concerning common shares included in the footnotes to this table shall not be construed as confirmation that such persons are the beneficial owners of such common shares.
Name and address of Beneficial Owner
Common Shares
and Nature of
Beneficial Ownership(1)
Percentage
of Issued and
Outstanding
XL
Common shares
The Vanguard Group
100 Vanguard Blvd., Malvern, PA 19355(2)
25,768,889 9.98%
T. Rowe Price Associates, Inc.
100 E. Pratt Street, Baltimore, Maryland 21202(3)
23,436,803 9.08%
Wellington Management Group, LLP
280 Congress Street, Boston, MA 02210(4)
21,674,743 8.40%
Barrow, Hanley, Mewhinney & Strauss, LLC
2200 Ross Avenue, 31st Floor
Dallas, TX 75201-2761(5)
18,073,834 7.00%
Blackrock, Inc.
55 East 52nd Street, New York, NY 10055(6)
18,044,600 6.99%
Franklin Mutual Advisors, LLC
101 John F. Kennedy Parkway
Short Hills, NJ 07078(7)
17,849,059 6.91%
(1)
The percentage of beneficial ownership for all holders has been rounded to the nearest 1/100th of a percentage. Total beneficial ownership is determined in accordance with the rules of the SEC and includes common shares issuable within 60 days of March 28, 2018 upon the exercise of all options and other rights beneficially owned by the indicated person on that date. Under XL’s bye-laws, each share has one vote, except that if, and for so long as, the votes conferred by “controlled shares” constitute 10% or more of the votes conferred by the issued shares of XL, each issued share comprised in such controlled shares shall confer only a fraction of a vote that would otherwise be app