Axa: AXA promises higher profits and returns to shareholders by 2026

PARIS (Reuters) – The insurer AXA committed on Thursday to increasing its profit as well as the return for its shareholders by 2026 through the development of its clientele, the automation of its operations and the reduction of its salary costs .

The new three-year plan, called “Unlock the Future”, aims to build on the group’s efforts over the past few years, marked by the sale of non-strategic assets and the recovery of the acquired XL Group. for 15.3 billion dollars (14.1 billion euros) in 2018.

The insurance industry operates in an uncertain economic environment, marked by geopolitical upheaval, higher interest rates and the prospect of extreme weather events linked to climate change, representing both risks and opportunities for international underwriters.

AXA, which published annual results below expectations on Thursday, said it was targeting annual growth in its operating profit per share of 6% to 8% over the 2023-2026 period, compared to a range between 3% and 7% forecast during the previous plan.

The company also expects operating return on equity to be between 14% and 16% for the 2024-26 period, compared to a range of 13% to 15% for the previous three-year period ending in 2023.

Jefferies analysts welcomed these announcements, deemed “pleasantly surprising”.

“Faster growth, structurally higher returns and materially greater capital generation all support the group’s new (and ambitious) capital management target of a payout ratio of 75%.” , they write.

On the Paris Stock Exchange, Axa shares rose 2.96% at 08:35 GMT.

The insurer’s performance will be supported by the addition of new customers in all its lines of business, including in general insurance policies dedicated to small and medium-sized businesses in Great Britain, Spain, Italy and UNITED STATES.

AXA also said it plans to improve its productivity by investing in automation and increasing the proportion of its staff based in countries with lower labor costs from 10 to 12% (India, Morocco and Poland).

The group has also committed to returning up to 75% of its profits in cash to its shareholders, with a distribution rate of 60%. This new policy results in an annual dividend of 1.98 euros per share for 2023, up 16% compared to 2022.

In total, AXA will return up to 6 billion euros to its shareholders in 2024, divided between 4.4 billion euros in dividends and up to 1.6 billion euros in share buybacks.

Under AXA’s previous three-year plan, the dividend distribution policy was in the range of 55 to 65%.

For 2023, AXA reported slightly lower annual results than expected, as higher debt servicing costs and technology investments offset the increase in revenue.

Its operating profit increased by 5% compared to the previous year to reach 7.6 billion euros. This figure is in line with AXA’s forecasts, but lower than the analyst consensus of 7.69 billion euros, provided by the company.

Gross premiums and other income for the period rose 1% to €102.7 billion, also missing analysts’ average estimate of €103 billion, impacted by the withdrawal of two global clients in France and the decline in sales of its asset management arm.

(Reporting Mathieu Rosemain; French version Augustin Turpin and Stéphanie Hamel, edited by Kate Entringer)

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