AXA: creation of a new business unit dedicated to innovation and new business models

(AOF) – Axa has announced the appointment of Joyce Phillips as General Manager of a new business unit dedicated to customer innovation and new business models, and as a member of the Axa Group Management Committee. This appointment takes effect on May 10. She will report directly to Thomas Buberl, CEO of the insurer. Previously, she was Managing Director of the Private Wealth Division of Australia & New Zealand Banking Group Limited (ANZ).

By federating the group’s initiatives, this new business unit will be tasked with extending the value chain of insurance services thanks to new technologies and the group’s innovation ecosystem. This structure will act on an international scale thanks to dedicated resources such as AXA Partners, Axa Next, Axa Strategic Ventures, Kamet. It will also enable the development of new offers and service proposals in line with Axa’s Ambition 2020 strategy.

With an MBA from New York University’s Stern School of Business and fluent in Japanese, Joyce Phillips has worked in all sectors of banking, financial services and insurance. During her 25-year career, she has held various regional and international positions of responsibility in the United States, Asia and Australia.


The strengths of the value

– Second European insurer and world leader in life insurance and asset management after thirty years of growth based on targeted acquisitions;

– Portfolio divided into four activities: life, savings and retirement products for 58%, property and casualty for 33%, international insurance then asset management;

– Very solid financial position thanks to centralized cash management, which provides the capital necessary to comply with Solvency II rules (solvency ratio of 191% at the end of September 2016);

– Ramp-up of “high-growth” countries on which Axa has focused its investments since 2010: €4.2 billion for Asia where the group is the leader, €0.7 billion for the Mediterranean, Africa and Latin America and €200 million for former Eastern Europe;

– Focus on digital both to increase competitiveness and to diversify distribution networks;

– In the “life” business, dominance of technical products (health, personal protection and unit-linked pensions), with better margins and less affected than pure savings products by the low level of interest rates;

– Demonstrated ability to generate record profits in an unfavorable environment – ​​very low real rates available on the markets;

– Solid governance, with Chairman Henri de Castries handing over the baton in 2016 to the German Thomas Buberl as Chief Executive Officer and Denis Duverne as Non-Executive Chairman;

– Solid financial position rated “2 A” by the rating agencies.

The weak points of the value

– High sensitivity of the capital structure to the vagaries of the financial markets: prolonged low rates, handicapping the service of guaranteed rates and the maintenance of the “life” margin; sharp rise in interest rates;

– Structural decline in the profitability of insurers’ savings products with a margin close to 0 for new contracts;

– Negative impact of attacks and floods on operating profitability;

– Cumbersome GSII regulations on capital requirements;

– Investor mistrust of European financiers.

How to follow the value

– Sensitivity, shared with other insurers, to natural disasters (hurricanes, floods, earthquakes), fires or acts of terrorism;

– Rumors of mergers in the insurance sector, facilitated by the abundance of liquidity from central banks;

– Execution of the Ambition 2020 “Focus and Transform” plan: growth in operating earnings per share of 3% to 7% per year on average, from 28 to 32 billion euros in cumulative free operating cash flow from 2016E to 2020E, profitability common equity (ROE**) between 12% and 14% from 2016 to 2020, Solvency II ratio target range between 170% and 230%, 2.1 billion euros in pre-tax savings by 2020 ;

– Benefits of the launch of Axa Partners, a structure dedicated to international partnerships, and of the global commercial partnership with the Chinese Alibaba;

– Open but non-operable capital, AXA mutuals holding 14.13% of shares (23.82% of voting rights) ahead of employees and agents (6.15%).

Finance – Certification

In an environment of low interest rates, the profitability of European damage insurers is threatened according to Moody’s. The average decline in their profits could amount to between 10% and 20% on average on average over the next three years, based on the prospect of a reduction in the return on their investments of between 10 and 35 basis points per year. one over this period. Nevertheless, damage insurers can play on their rates. Moody’s estimates that most P&C insurers would need to pass rate increases of less than 1% per year (and 0.5% on average). But in France, intense competition and weak economic growth limit the ability of insurers to raise their prices.

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