AXA Seminar Details Growth, Capital Management Strategy

France’s AXA Group held its Autumn Investor Seminar in Paris on Monday, at which members of the insurer’s management team presented an update on its growth and capital management strategy, as well as the priorities of its Life & Savings and Property & Casualty global business lines.

Chairman and CEO Henri de Castries stated: “The short term challenges that our industry faces are well known. We believe we have shown our ability to withstand this environment, while investing and shaping AXA for the future.

“We believe our operating model is the right one, with a combination of developed and emerging markets, strong complementarities between our insurance and asset management business lines, the support of our global brand and our continuous sharp focus on client service – aiming at becoming the preferred company has never been a more relevant ambition in the insurance industry.

“However, in a post-crisis world, we are reviewing the balance between growth and efficiency and the way we manage our capital accordingly to accelerate long term value creation. We want to implement a more aggressive allocation of capital towards emerging markets and towards specific segments, such as protection and health. We want also to increase our focus on free cash flow generation.

“This together with an increased focus on improving the business efficiency of our operations should allow us to gain flexibility and contribute to fund our investments for our future growth. We will continue to innovate in order to better serve our clients – for instance through the development of our digital services and direct operations.

“Last but not least, we are convinced that sustainable success requires a superior level of engagement from our people and a clear long term horizon for all stakeholders. This is the reason why we have spent the last year redefining our company project, Ambition AXA. We will finalize it in the coming months and will present our deployment plan in the first semester of 2011. The aspirations and priorities we are sharing today are at the core of our Ambition, which aims at better preparing AXA for the opportunities created by the growing needs for insurance and protection worldwide.”

AXA set out the following goals as its “key financial objectives”:
– Net realized capital gains of €300/500 million [$405/$676 million] per year.
– €2.8 billion [$3.784 billion] in dividends currently expected to be up streamed to Parent Company in 2010

Life & Savings – Increase AA unlevered IRR by at least 200 bps on a sustainable basis through:
– Increasing the share of protection & health business APE by 5 pts by 2015
– For Continental Europe investment & savings business, increasing the share of unit linked
APE by 20 pts by 2015
– Reducing cost income ratio by 5 pts by 2015 or more than €500 million [676 million] pre-tax productivity gains
– Sustained investment margin of 70/80 bps
– 2010 operating Free Cash Flow generation of €1.2 billion [$1.622 billion]

Property & Casualty – Targeted Current Year combined ratio of 96 percent to 100 percent across the cycle through:
– Average targeted price increase of ca. 3 percent in 2011
– Targeted Current Year combined ratio at 100 percent in 2011
– Targeted 4 pts reduction of Expense Ratio by 2015 (including claims handling costs) or more than €1.0 billion [$1.351 billion] pre-tax productivity gains

Update on US Variable Annuities:
In the second half of 2010, the assumptions for long term surrender rates for variable annuities with GMDB and GMIB guarantees at certain policy durations were updated based upon emerging experience. These changes should result in a net IFRS underlying earnings impact of approximately €100 million [$135 million]

Source: AXA Group

Topics AXA XL