Incoming Axa chief promises transformation

AXA group new Chief Executive Thomas Buberl addresses the AXA general meeting in Paris on April 27, 2016. France's biggest insurance group AXA announced on March 21, 2016 that its chief executive and chairman Henri de Castries would step down and also leave the board in September. / AFP / ERIC PIERMONT (Photo credit should read ERIC PIERMONT/AFP/Getty Images)©Getty

Axa’s incoming chief executive has promised a combination of growth and digital transformation at the French insurance group.

Laying out his plans for the next five years, Thomas Buberl said that he expected annual earnings to grow by between 3 per cent and 7 per cent — below the growth rate that the French insurance group promised in its previous plan.

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Growth has become a hot topic in the insurance industry. With stagnant developed markets, slowing progress in emerging markets and low interest rates, insurers have been struggling to find growth. 

Axa’s 3-7 per cent forecast in its Ambition 2020 plan is broadly in line with the 5 per cent pledged by German rival Allianz for the next few years but a drop on the 5-10 per cent range that Axa promised in own previous plan. 

Mr Buberl also hinted at wider changes in the way Axa deals with its customers. “We want to adapt our business model from payer to partner,” he said. “This means accelerating business innovation to meet our customers’ rapidly evolving needs in the digital world, and developing further in areas such as prevention and care.”

Axa, Europe’s second-biggest insurer by market capitalisation, said that its growth would come from a combination of commercial lines business, savings products and Asia, with emerging markets being particularly critical.

Axa said underlying earnings from the region would grow 10-12 per cent a year. The company missed the target set in its previous plan in 2011, when it said that earnings from emerging markets would reach €1bn by 2015. Last year, they came in at just over half of that.

Ambition 2020 also promised to cut €2.1bn of costs by 2020, and generate €28bn-€32bn of operating free cash flow over the next five years. However, it did not set any target for dividend growth. 

Mr Buberl highlighted the damage that low interest rates have on Axa’s business, saying that rates at current levels wipe 5 per cent off the insurer’s annual growth but that a modest rise in rates could limit that impact to 1 per cent. 

Tuesday’s strategy day will be the first chance for investors and analysts to take assess Mr Buberl, a 43-year-old German who will take up his new position in September. His appointment came as a surprise to many industry observers and he has made few appearances at other investor-focused events. He takes over from Henri de Castries, who has been Axa’s chief executive for the past 16 years.

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