Axa has announced a robust £50.8bn revenue as it enters into negotiations with BNP Paribas for the sale of its asset management division at a hefty £4.3bn.
The French insurance giant Axa has disclosed underlying earnings for the first half of 2024 standing at €4.2bn (£3.6bn), signalling its departure from the asset management sector.
The firm’s underlying earnings have seen an uptick from €4.1bn (£3.5bn) in the first half of 2023 to €4.2bn (£3.6bn) this year, while gross written premiums and other revenues climbed by 7 per cent to €59.9bn (£50.8bn), up from €55.7bn (£47.2bn).
Axa attributes this growth to its property and casualty segment, highlighting commercial lines’ expansion due to favourable pricing across all regions coupled with increased volumes, particularly in AXA XL Insurance and AXA XL Reinsurance.
Commenting on the financial outcomes, CEO Thomas Buberl remarked: “Axa has made a good start to its new strategic plan ‘Unlock the Future'”, as reported by City AM.
He pointed out that the results “reflects the strength of our business model, which is balanced between commercial and retail lines, and diversified across geographies. This gives us confidence in achieving anunderlying earnings per share growth by year-end that will be in line with the 6 per cent to 8 per cent plan target”.
Furthermore, Buberl announced the group’s “a strategic decision to exit asset management with the intention to sell AXA IM to BNP Paribas”.
He elaborated that the company “intends to offset the resulting earnings dilution with a share buy-back, and we are affirming the key financial targets of our new strategic plan”.
“We further intend to enter into a long-term investment management agreement with BNP Paribas that would provide a wider range of investment solutions to Axa and its customers,” he added.
In an announcement made on Thursday, Axa revealed it is in exclusive talks to offload its asset manager AXA Investment Managers to BNP Paribas for a handsome cash sum of €5.1bn (£4.3bn).
The transaction involves acquiring the entire share capital of Axa IM, currently 98 percent under Axa Group’s wing (67 percent by Axa SA and 31 percent by other Axa entities), with the caveat of possible price adjustments.
Highlighting a fiercely competitive and consolidating market for asset management, the CEO expressed that “in the context of a rapidly consolidating and highly competitive asset management industry, the group has considered different options to support the future development of AXA IM and to best align with the strategic goals of Axa to further simplify its business profile and grow its insurance businesses”.
Axa remains steadfast in concentrating on its core insurance ventures: life and savings, property and casualty, and health coverage.
Marking a significant strategic leap forward, Axa also announced it’s striking a deal to purchase Gruppo Nobis, an Italian firm specializing in retail P&C insurance, for a cool €423m (£359m).
Commenting on the BNP deal, Joahnn Scholtz, senior equity analyst at Morningstar, said: “BNP Paribas has agreed to acquire AXA Investment Management for €5.1bn in cash. While this values AXA IM at 14 times its earnings over the last 12 months-a premium compared to peers like Amundi and Schroders-strategically, the deal makes sense.”
He explained: “AXA IM’s expertise in alternative assets will compliment BNP’s asset management, investment banking, and wealth management services. Although the acquisition will only boost our 2024 earnings estimate for BNP by around 5 per cent, it offers significant revenue synergies.”
Scholtz added: “BNP’s high-net-worth and institutional clients are likely to be very interested in AXA IM’s alternative assets, particularly its €218 bn in real estate and private debt assets.”
“Despite using up most of BNP’s excess capital and ruling out future share buybacks, the acquisition is a strategic move, given AXA IM’s potential for steady earnings growth,” he concluded.
