Axa reports over £50bn in revenue amid talks to sell asset management unit for whopping fee
Axa reports £50.8bn in revenue as the firm enters talks with BNP Paribas to sell asset management unit for £4.3bn.
French insurer Axa reported underlying earnings over H1 2024 at €4.2bn (£3.6bn), as the group revealed it is leaving the asset management market.
The insurer revealed that its underlying earnings were up from €4.1bn (£3.5bn) recorded in H1 2023 to €4.2bn (£3.6bn), while gross written premiums and other revenues were €59.9bn (£50.8bn), up 7 per cent from €55.7bn (£47.2bn).
The group reports that this was driven by property and casualty, with growth in commercial lines from favourable price effects across all geographies as well as higher volumes, notably at AXA XL Insurance and at AXA XL Reinsurance.
On the financial results, CEO Thomas Buberl, said: “Axa has made a good start to its new strategic plan ‘Unlock the Future’”.
He noted 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 an
underlying earnings per share growth by year-end that will be in line with the 6 per cent to 8 per cent plan target”.
Buberl also stated that the group has taken “a strategic decision to exit asset management with the intention to sell AXA IM to BNP Paribas”.
He explained that the group “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 said it entered into an exclusive negotiation to sell its asset manager AXA Investment Managers to BNP Paribas for cash proceeds of €5.1bn (£4.3bn).
This would be for 100 per cent share capital of Axa IM, of which 98 per cent is owned by the Axa Group (67 per cent by Axa SA and 31 per cent by other Axa entities), but the deal is subject to price adjustment mechanisms.
The CEO noted 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”.
The group’s strategy is focused on insurance business: life and savings, property and casualty and health.
In addition to its results, the insurer revealed that it has entered into an agreement to acquire Gruppo Nobis, a predominantly retail P&C insurance company in Italy, for €423m (£359m).
Commenting on the deal with BNP, Johann 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 explains: “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.”
“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 added.