Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

AXA SA (AXAHF) reported an 8% growth in revenue across all lines of business and geographies, translating into an 8% growth in underlying earnings per share. The company's solvency ratio stands at a solid 216%, indicating a strong capital position. AXA SA (AXAHF) announced a 9% increase in dividend per share and a new share buyback program of 1.2 billion euros, reflecting confidence in the business. The company has shown consistent earnings growth, with a 40% increase in profit and underlying earnings since 2016. AXA SA (AXAHF) has a balanced and focused business model, with strong positions in insurance markets across Europe, Japan, and Hong Kong.

Negative Points

The company faces political uncertainty in the US and Europe, although it has not yet impacted the business. Inflation in Europe, while receding, remains a concern for the insurance industry. AXA SA (AXAHF) is cautious about the increasing severity and frequency of natural catastrophes, which could impact future results. The investment in technology and AI has been a drag on earnings in 2024, although it is expected to benefit future performance. The company has experienced challenges in the UK and German retail markets, although improvements have been made.

Q & A Highlights

Warning! GuruFocus has detected 6 Warning Sign with AXAHF.

Q: Given the strong performance, is there a chance AXA might revise its earnings growth plan from 6-8% to a higher range like some peers? Also, with the cash inflow, is AXA considering acquisitions? A: (Thomas Buel, CEO) We are maintaining our 6-8% growth target for now, despite the strong first-year performance. We will reassess if high numbers persist into the third year. Regarding acquisitions, while we occasionally explore opportunities, our primary focus remains on executing our current strategy, prioritizing dividends and share buybacks.

Q: Can you elaborate on the growth potential in mid-market P&C and employee benefits? Are these areas contributing positively to your margins? A: (Frederick de Courtois, Deputy CEO) Yes, mid-market P&C generally offers higher margins than large corporate accounts. We are expanding in the US, UK, and Southern Europe, and initial results are promising. In employee benefits, margins are similar to individual protection and health, despite tough negotiations with large clients.

Q: What is the outlook for AXA's CSM growth, and how does the grandfathered debt impact solvency? A: (Abon de Meinel, CFO) We aim to improve CSM growth progressively through positive net flows. The current 2% growth is below expectations, but we anticipate improvement. Regarding grandfathered debt, we have 4.5 billion left, and we will manage it strategically, considering solvency II revisions.

Story Continues

Q: With the momentum in various segments, why shouldn't we expect more than 8% earnings growth in 2025? A: (Thomas Buel, CEO) While there is strong momentum, we still have work to do in expanding margins and enhancing our life business dynamics. We prefer to see more progress in these areas before considering revising our growth targets.

Q: How are you managing the volatility in the P&C combined ratio, and what is the plan for the XIM-related buyback? A: (Abon de Meinel, CFO) We manage volatility by balancing NATCAT, discounting, and PYD. The 3.8 billion buyback for XIM will be executed post-closing, likely in summer, with half completed this year and the rest next year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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