Axa: 1% like-for-like revenue growth in the first quarter

(AOF) – Turnover is up 1%, to 31.3 billion euros on a like-for-like basis in the first quarter. Turnover in health was up 6%, at 4.4 billion euros. Revenues in business insurance excluding AXA XL Re (-12% to 1.5 billion euros) increased by 4%, to 10.7 billion euros and those in personal protection, by 3%, to 4.3 Billions of Euro’s. The turnover of life insurance, savings, retirement fell by 3% to 8.4 billion euros.

Asset management revenue was stable at 392 million euros.

“We achieved this performance in an uncertain context linked to the geopolitical tensions caused by the war in Ukraine. (…) It is too early to indicate a precise estimate of the impact of the crisis, nevertheless on the basis at this stage based on our assessment and the scope of the crisis, we now estimate that the net underwriting loss related to the crisis should amount to a medium-sized natural disaster,” said Alban de Mailly Nesle, Chief Financial Officer of Axa .

Net inflows in asset management amounted to 9 billion euros, driven by strong inflows from third-party clients (+6 billion euros), both at “AXA IM Alts”, “AXA IM Core ” and Architas, and Asian joint ventures (+4 billion euros).

Average assets under management amounted to 790 billion euros, down 1%, with strong net inflows being more than offset by unfavorable market effects in the first quarter.

The insurer posted a solvency II ratio up 7 points over the quarter to 224%.

AOF – LEARN MORE

Key points

– World number one in insurance born in 1982;

– Turnover of €100 billion, split between France for 26%, the rest of Europe (34%), Asia (16%), international (7%) and AXA XL (damages for businesses, 20%);

– Three main activities: business damages (33% of revenue) & personal damages (17%), life, savings and retirement (33%), ahead of asset management;

– Business model: develop health and personal protection, simplify the customer experience, strengthen underwriting performance, maintain the number 1 position on climate issues, increase cash flow;

– Split capital, with an employee shareholding of 4.16% (5.69% of voting rights), behind the AXA mutuals (14.95% and 24.75%), Denis Duverne chairing the Board of administration of 16 members, Thomas Buberl being managing director;

– Very solid financial position with AA-rated debt equal to 26% of equity, a solvency II ratio of 217% and cash of €4.5 billion.

Challenges

– “Driving progress 2023” plan: cost reduction of €300m, reduction in portfolio volatility, increase of €3bn in free cash flow, increase in the payout rate to 55-65% and growth of 3 to 7% earnings per share;

– Innovation strategy: Axa Next ecosystem of 8 units aimed at tackling emerging and global risks, offering innovative solutions and simplifying the customer experience by focusing on BtoB initiatives, 2 strategic priorities for 2023: health & protection (telemedicine, care coordination, specific platforms, etc.) and damage (cybersecurity, risk management platforms, particularly climate-related) / use of artificial intelligence (member of Impact IA, French think&do tank on responsible AI), open innovation (Give data back…);

– Environmental strategy to combat climate change and protect diversity: 20% reduction in the carbon footprint linked to investments between 2021 and 2025 / green investment of €24 billion between 2020 and 2023 / launch of the 1

er

green borrowing / exit in 2022 from the shale gas, oil sands and exploitation sectors in the Arctic and new oil exploration projects excluding groups engaged in the energy transition / fight for biodiversity through subscription and investment policies / chairman of the Net Zero Insurance Underwriting alliance;

– Continued simplification of the group, by refocusing on the main markets and disposals -8 over one year.

Challenges

– Monitoring of profitability indicators or combined ratios (94.6% in property damage, 95.1% in life, savings & health);

– Russia-Ukraine war: cessation of subscriptions in assets belonging to Russians and withdrawal from the board of directors of the Russian insurer Reso-Garantia;

– Transformation of the holding company into a group reinsurer, i.e. $2 billion in additional cash by 2025;

– 2022 target of earnings per share up nearly 7%;

– New share buyback program and 2021 dividend of €1.54, i.e. a rate of 56%.

Insurers are concerned about the consequences of climate change –

2021 was the fifth consecutive year

with severe natural disasters. The frequency of these events

increases with climate change

. The French Insurance Federation considers that the cumulative amount of claims due to natural events could almost double between 2020 and 2050 if compared to the period 1989-2019. More than a third of the projected increase is due to climate change. The overall bill for disasters over the next thirty years would thus amount to 143 billion euros, an increase of 93% compared to the previous three decades. This development will boost the premiums paid by professional policyholders.

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Axa: 1% like-for-like revenue growth in the first quarter


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