AXA Unveils Ambitious Three-Year Plan ‘Unlock the Future’ to Boost Earnings and Shareholder Returns

The company's revenue increased, but it faced higher costs for debt servicing and technology investments.

France’s AXA, Europe’s second-largest insurer, has unveiled its new three-year plan, dubbed “Unlock the Future,” with the aim of delivering higher earnings and returns to shareholders by 2026.

This marks CEO Thomas Buberl’s third plan since assuming the role in 2016.

The plan focuses on various strategies to achieve its goals:

  1. Client Base Growth: AXA aims to expand its client base across its business lines, particularly in property and casualty policies for small and medium-sized companies in key markets like Britain, Spain, Italy, and the U.S.
  2. Process Automation: The company plans to invest in automation to enhance productivity, streamline operations, and reduce costs.
  3. Labour Cost Reduction: AXA intends to increase the proportion of its workforce based in countries with lower labor costs such as India, Morocco, and Poland, from 10% to 12%.
  4. Financial Targets: AXA targets an average underlying annual earnings growth of 6-8% by 2026, up from 3-7% in the previous plan. It also aims for an underlying return on equity of 14-16% over the 2024-26 period, an increase from 13-15% in the previous three-year plan.
  5. Shareholder Returns: The company plans to return up to 75% of its earnings to shareholders in cash, with a dividend payout ratio of 60%. This translates to a yearly dividend for 2023 of 1.98 euros per share, marking a 16% increase from 2022. Additionally, AXA will undertake share buybacks, totaling up to 6 billion euros in returns to shareholders for 2024.

Despite posting lower-than-expected annual earnings for 2023, AXA remains optimistic about its future performance.

The company’s revenue increased, but it faced higher costs for debt servicing and technology investments.

Notably, AXA’s gross premiums and other revenue slightly missed analysts’ expectations due to the loss of two global clients in France and lower sales in its asset management arm.

Overall, analysts view AXA’s new plan positively, citing faster growth, improved remittance ratios, and higher capital generation, supporting the company’s ambitious capital return targets.