H1 2019 earnings call transcript
Our analyst
Read of this earnings call — headline is the investment verdict. Research synthesis, not investment advice.
Hold: AXA delivered a solid H1 2019, with revenue up 4% to €58bn and underlying earnings up 7% to €3.6bn, led by Commercial P&C (+6%), Health (+5%), Protection (+3%), and AXA XL earnings of €502m.
The strategic mix is improving—82% of underlying earnings now come from Health, Protection and P&C versus 66% two years ago—but the script provides no valuation, capital, cash-generation, or forward-guidance detail to justify adding risk after the call.
- H1 2019 Earnings
- Organic Growth
- Axa Xl Integration
- Commercial P And C
- Health Insurance
- Protection
- Deleveraging
- Business Mix
Near term
- Sustained growth in Commercial P&C, Health, and Protection is the key earnings support over the next two quarters.
- AXA XL’s €502m contribution and the pace of integration remain important indicators for profitability and execution.
- Progress on reducing U.S. life and asset-management exposure and deleveraging could affect capital sentiment.
Longer term
- The shift toward Health, Protection, and P&C should reduce financial-market sensitivity and improve the quality of earnings.
- The AXA XL integration could create distribution and commercial-risk synergies, but these were described qualitatively rather than quantified.
- The strategic concentration in commercial insurance and health supports growth, though the call did not establish a durable competitive advantage versus other global insurers.
Red flags
- Management called AXA XL integration and the broader transformation successful without providing quantified synergy, cost, retention, or return targets.
- No forward earnings, revenue, margin, capital, solvency, or dividend guidance was provided in the script.
- Claims around creating the world's leading P&C Commercial insurance platform were not supported with market-share or underwriting-performance data.
- The U.S. life and asset-management reduction and group deleveraging were mentioned without amounts, timing, or remaining execution risk.
HY19 Script
English version
1. Hello Thomas Buberl.
Hello David.
2. AXA publishes today its Half Year 2019 Earnings, what are the highlights?
We have strengthened last year’s positive trend, and we achieved a very good operating performance in the first half of the year.
- The momentum of organic growth has continued. Our revenues increased by 4% to 58 billion euros. This was driven by our priority segments: P&C Commercial lines +6%, Health +5% and
Protection +3%.
- This growth has been very profitable. Our underlying earnings are up by 7% to 3.6 billion euros. This strong figure was driven by our key markets, notably Europe and Asia. It also reflects the very good quarter of our new entity, AXA XL, which generated 502 million euros in earnings.
These results are the fruits of our strategy, which is to focus on segments with future growth and promising geographies.
3. Where are you on reaching the objectives that you set during your Full Year Earnings presentation last February?
We have made very good progress on this year’s priorities.
- We continued to reduce the ownership of our life and asset management activities in the US and deleverage the Group, while accelerating our Payer-to-Partner strategy in emerging countries by creating an innovative health ecosystem.
- In addition, the integration of AXA XL is progressing well. The new entity had a very good first half of the year in terms of financial performance. We are also beginning to see the full potential of combining AXA XL’s expertise in commercial risks with the power of AXA’s distribution.
4. How is the long-term transformation process of AXA going?
We are well on track to deliver on AXA’s transformation.
- The Group has reduced its sensitivity to the financial markets, created the world’s leading platform for P&C Commercial insurance, and strengthened its position as a world leader in health insurance.
- The new AXA derives 82% of its underlying earnings from Health, Protection and P&C. This figure was 66% only two years ago.
I would like to thank all our employees and partners for their essential role in the delivery and implementation of our transformation. It is a crucial evolution to meet future challenges.