Given these results, the Group decided to launch a share buyback program of up to EUR 1 billion in addition to the two programs completed in the first half of the year.
Insurer Axa beat expectations with a net profit of 4.1 billion euros, up slightly in the first half despite a difficult environment, and on the back of these results the group announced a 1 billion euro share buyback program.
Analysts were expecting profits to fall compared to the nearly 4 billion earned in the first half of 2021, a record year for the group, at between 3.4 and 3.6 billion euros, according to consensus compiled by Factset and Bloomberg respectively. Over a year, earnings ended up rising 2.8%.
Meanwhile, sales grew by 2% to 55.1 billion euros, slightly exceeding analysts’ expectations.
Given these results, the group decided to launch a share buyback program of up to a maximum of one billion euros, in addition to the two programs completed in the first half of the year “for a total of 2.2 billion euros”, according to the press release issued by the insurer.
“The share buyback program should start as soon as possible and end by February 2023, depending on market conditions,” specifies Axa.
In detail, profit was driven by property-casualty insurance, which accounts for just over half of the group’s activity, with a 4% increase to almost 2.4 billion euros, “mainly due to the increase in the financial result”.
Specifically, when an insurer collects premiums, it places them and waits for a claim to occur. Axa was therefore able to benefit from distributions from certain equity funds on inflation-linked bonds, which therefore yielded more.
“And third, we’re just beginning to see the benefit of slightly higher interest rates,” Alban de Mailly Nesle, chief financial officer, told reporters.
However, in general insurance, the group noted “an increase in claims in motor insurance following the lifting of travel restrictions in France and Europe” as well as “an increase in serious claims, mainly due to the effects of the war in Ukraine “, with 300 million euros before tax and after reinsurance, i.e. after taking into account the compensation received from its reinsurers.
At the moment, these 300 million euros are only provisions because, according to Mr de Mailly Nesle, the group had reported “very few” claims and mainly concerns the aircraft that Russia has decided to register so as not to return them to foreign lessors and that in certain contracts contained risk of war.
In addition, the bad weather that hit France between late May and early July cost Axa around 200 million euros out of a total of 3.9 billion euros in damages claims, according to figures released by the association.
With global warming, natural disasters are bound to become more frequent and more intense. Axa data well integrated as the insurer has been looking to significantly reduce its exposure to natural catastrophes in recent years. In the first half of the year, this repositioning resulted in a 21% drop in sales at Axa XL Réassurance, the subsidiary of the “Large Risk” group based in the United States.
In other segments, profit rose 7% to 1.3 billion euros in life insurance, 2% to 402 million euros in health insurance and 3% to 203 million in wealth management.
Despite a “more uncertain economic environment”, according to Frédéric de Courtois, Deputy General Manager, Axa remains “very confident”.
“We remain vigilant and are taking action to offset the impact of inflationary pressures and financial market volatility. We remain very confident in our ability to achieve the key objectives of our +Driving Progress 2023+ strategic plan, in particular the ultimate goal of our earnings per share growth.
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