(AOF) – AXA announces the successful placement with institutional investors of 750 million euros of Reg S senior unsecured bonds due 2033. These bonds will be used for general corporate purposes, in particular for the refinancing of part of the Group’s debt. The bonds will have a fixed annual coupon of 3.625%. Investor demand was strong as the order book was oversubscribed almost three times. The bond settlement date is scheduled for January 10, 2023.
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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 (damage 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: developing health and provident insurance, simplifying the customer experience, strengthening underwriting performance, maintaining the No. 1 position on climate issues, increasing 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 situation with, at the end of June, debt rated AA equal to 26.9% of shareholders’ equity, a solvency II ratio of 227% 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 ratio to 55-65% and growth of nearly 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, etc.);
– Environmental strategy to combat climate change and protect biodiversity:
– 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 1st green loan,
– exit in 2022 from the shale gas, oil sands and exploitation sectors in the Arctic and from 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;
– 4 businesses showing strong resilience: France, Europe, Asia and AXA XL;
– Simplification of the group, by refocusing on the main markets and disposals (€28 billion received on the target of €30 to 50 billion);
– Resistance to economic cycles by increasing health and proactive management of inflationary risks.
Challenges
– Monitoring of profitability indicators or combined ratios (93.7%);
– Transformation of the holding company into a group reinsurer, i.e. $2 billion in additional cash by 2025;
– After a 1% increase in revenue and a 4% increase in operating profit in the 1st half, the 2022 target of earnings per share up nearly 7%;
– New share buyback program of up to €1bn in order to avoid the dilution caused by the sale of the German portfolio.
A strong development momentum for French life insurance
The growth of life insurance continues over the months. Over the first four months of the year, contributions reached 53.7 billion euros, a level not seen for more than ten years. At 10.5 billion euros, net inflows also returned to their highest level since 2011 over a similar period. In the end, at the end of April 2022, outstanding life insurance contracts reached 1.847 billion euros, up 1.1% over one year. These good performances are partly linked to the growing success of the PER (Retirement Savings Plan). Since the start of 2022, PERs marketed by an insurer have posted 592,000 additional policyholders and 9.3 billion euros in payments. At the end of April 2022, 3.2 million policyholders held a PER, which represented an outstanding amount of 39 billion euros. Without taking transfers into account, 87% of new holders of a PER (at the end of December 2021) had taken it out with an insurer.