H1 2021 earnings call transcript
Our analyst
Read of this earnings call — headline is the investment verdict. Research synthesis, not investment advice.
AXA delivered a strong first half of 2021:
revenue rose 7% to €54 billion, underlying earnings increased sharply across markets, commercial P&C recovered to pre-crisis levels, and Solvency II improved 12 points to 212%. The recovery and capital strength are constructive, but the call provided no quantified forward guidance and leaves catastrophe exposure, execution of disposals, and the health-services strategy as key uncertainties; stance is hold rather than a clean buy.
- H1 2021 Results
- Commercial Pc
- Axa Xl
- Solvency Ii
- Driving Progress 2023
- Healthcare Strategy
- Climate Risk
- Portfolio Disposals
Near term
- Commercial P&C momentum and AXA XL performance should support earnings as crisis-related disruption fades.
- Catastrophe losses from floods, fires, and heat waves remain a near-term volatility risk.
- Progress on announced disposals and the Microsoft healthcare partnership may affect investor confidence in the new strategy.
Longer term
- The Driving Progress 2023 plan focuses capital on core markets with critical scale, targeted business mix, and growth potential.
- Health is a strategic growth priority, supported by new healthcare services developed with Microsoft.
- Sustained commercial P&C profitability and AXA XL execution are important to validating the recovery.
- Climate change could increase claims volatility and underwriting risk through more frequent severe weather events.
Red flags
- Management described confidence but gave no numerical earnings, revenue, or margin outlook for the coming months.
- The announced disposals and refocusing on core markets introduce execution and portfolio-transition risk.
- Climate-related floods, fires, and heat waves could pressure underwriting results despite the strong current solvency ratio.
How did AXA navigate the first half of 2021?
- The first half of the year was again marked by the health crisis.
- In this difficult environment, AXA's employees and agents have done an incredible job serving their clients.
- They were the key to success.
How does this translate into figures?
The results are excellent.
- Revenues are up 7% to 54 billion euros. They were driven by our strategic P&C commercial lines business, but also by life and savings and asset management activities.
This growth was profitable.
- Underlying earnings rose sharply in all our markets. Above all, our commercial P&C business which has been impacted by the crisis last year has returned to its pre-crisis level. This is due in particular to the good performance of our AXA XL entity.
Finally, the Group once again confirmed its great solidity.
- Our solvency 2 ratio stands at a very high level of 212%, up 12 points.
What were the highlights of this semester?
We launched our new strategic plan Driving Progress 2023.
- One of the priorities of the plan is to develop AXA in the health sector. We have partnered with Microsoft to provide new healthcare services to our customers.
- Our strategy is also to focus on our core markets. Those with critical size, a business mix focused on our target segments and strong growth potential. This is why we have announced some disposals. I would like to thank the local teams for their commitment. I am convinced that they will be very successful in the future.
The fight against climate change is also an important part of this plan!
It is urgent to act.
- We have seen it with the heat waves and fires in the United States. We have seen it with the floods in Asia and Europe. I have been there. It was impressive. I would like to pay tribute to the work of the teams in Belgium, Luxembourg and Germany to help customers.
The next few years will be decisive in the fight against climate change.
There is still a long way to go, but we are heading in the right direction. AXA's latest climate report has shown this.
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The environment remains uncertain, how will you move forward in the coming months?
We will continue to be active by relying on AXA's strengths:
- - Its great solidity ;
- - Its strategy perfectly adapted to the environment;
- - Its new management team and its highly committed teams;
We are confident.
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