AXA Earnings: Robust Top-Line Indicators; Fair Value Estimate Maintained, Shares Fairly Valued

AXA CS has reported robust key indicators for the first nine months of 2023 with a continuation of the group’s strategy to orient away from some savings lines such as unit-linked and focus on commercial and personal property and casualty insurance. AXA has decided to not refinance EUR 1 billion of debt that fell due, improving the company’s best-in-class leverage.

AXA has posted the strongest top-line performance in property and casualty insurance from a combination of price rises and volume growth that have driven good mid-single-digit premium increases. Volume growth is more noticeable in commercial insurance where AXA continues to build out its property and specialty business. AXA is taking a cautious approach to writing new international casualty business. In personal lines, pricing has been the dominant driver of the premium increase. High price rises in Germany have been surpassed by double-digit price rises in the United Kingdom and Ireland as AXA is looking to make its U.K. motor insurance business more competitive. While some of the rate rises are to catch up with inflation, another part is to bring the underwriting standards more in line with the market and competition. Historically, this has been a weak part of AXA’s business.

Life and health have reported higher sales in Hong Kong to Mainland China visitors. While net flows are negative EUR 2.9 billion, the mix is encouraging. Large outflows in guaranteed business, a small outflow in unit-linked mainly in Italy, strong protection inflows in Hong Kong and Japan, and good inflows in health in the same two countries plus Germany will no doubt be good for margins. We maintain our EUR 29.8 fair value estimate and our no-moat rating.