De Castries in June set a 2015 target to reach annual operating profits of more than 6 billion euros compared with 3.88 billion euros in 2010. Meanwhile, it has scaled back in Canada and the U.K., as the firm aims for 10% annual growth in operating earnings per share through 2015.
The conference focused on the financial goals of the company. AXA is the direction of growth of earnings per share of 10% per year by 2015, 24 billion of cumulative operating cash flow available from 2011 to 2015, 15% ROE in 2015 and current a debt ratio of 25% by 2015.
The financial assumptions is 6% return on equities (including dividends) per year over the period 2011-2015 and an average yield of government bonds to 10 years from 4% in 2015.
In insurance, the Group is in line with the objective of AXA Ambition to lower the combined ratio all exercises below 96% by 2015. In Insurance & Health, the Group’s objective is to allocate 2 billion euros of additional capital by 2015.
For the activity of the General Fund, the Group expects to be able to maintain a level of financial margin of 70 to 80 basis points in a prolonged low interest rates.
“AXA’s balance sheet at the end of September 2011 remains strong. The statutory solvency ratio I is estimated at more than 190% (against 186% at June 30, 2011), near its highest historical levels.” The Group has a significant cash, transfers made in 2011 have generated significant cash inflows “indicates the direction of AXA.
AXA is currently negotiating for the sale of its subsidiary AXA Private Equity. Eurazeo is very interested in buying this business of AXA and defended his offer to the Elysee. U.S. funds Carlyle and KKR, and the Singapore sovereign wealth fund would likely bidders for the subsidiary of “private equity”. The deadline for submission of tenders recovery was set at last night.
“The AXA Group has always had a pragmatic approach in strategic transactions and will take the decision to a potential transaction at the end of this review,” said the insurer.
Established in 1996, AXA Private Equity, managing some 20 billion euros in assets at June 30. AXA Private Equity managed approximately six billion euros on behalf of insurance companies of the AXA Group, or about 1.5% of the general assets of the group total.
Analysts at Bryan, Garnier & Co. have studied this morning on the back of the French insurer AXA, as the strategic plan presented today. If the fair value (‘fair value’) by sum of its parts, is estimated at 15 euros, the board on this title quoting about 9.4 euros in Paris remains “neutral”. The reason: the pressure has increased on recent results and economic solvency, and the volatility of interest rate products such as stocks.
“Unsurprisingly,” said the research note, the CEO Henri de Castries stressed in London on the fact that the situation is “under control thanks to the strong diversification and solid business model of the group.” The plan “Ambition AXA” therefore reaffirms that the insurer intends to increase its earnings per share of 10% on average by 2015. In the meantime, the group will have reached 24 billion euros of free cash flow combined, show a return on equity of 15% and a “gearing” (ratio of net debt / equity) of 25%.
Bryan Garnier noted however that “the current market environment does not meet the assumptions of AXA” because yields are currently served by fixed income products such as stocks.
Certainly, the analysts added, the ratio of Tier 1 financial strength is estimated at the end of September, 190% against 186% at end June But the economic solvency ratio, it is passed over the same period by 184% to 150% about “due to the expansion of ‘spreads’ of credit and interest rate cuts as the stock market” .
Finally, AXA has reaffirmed its dividend policy and target payout of adjusted earnings between 40% and 50%. This target seems within reach, if at the adjusted net income increased from 4.3 billion euros in 2010 to 4.6 billion euros this year, as the consensus expects. Bryan Garnier, however, is skeptical about it.
After 1.88 euro in 2010, analysts expect earnings per share of 1.90 euro AXA this year and 1.95 euro in 2012.
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