H1 2017 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 but not decisive H1 2017, with underlying EPS up 5% and solvency around 200%, while overall revenue remained stable.
Growth in P&C commercial and Health, plus the planned US Life & Asset Management minority listing, support the bull case; however, the transformation agenda is largely qualitative and its earnings impact remains unproven.
- H1 2017 Results
- Ambition 2020
- Us Life Asset Management
- Private Cloud
- P And C Commercial
- Health
- Uber Partnership
- Coursera
Near term
- Execution of the planned minority listing of the US Life & Asset Management operations could improve capital flexibility and fund growth investments.
- Growth in P&C commercial and Health must continue to offset broadly stable group revenue.
- The newly operational €250 million private cloud should demonstrate measurable efficiency, execution-speed, or data-protection benefits.
Longer term
- The US Life & Asset Management separation could sharpen strategic focus and provide capital to higher-growth businesses.
- Private-cloud investment and workforce-skills initiatives may improve AXA’s technology execution, but returns were not quantified.
- Partnerships such as Uber could expand AXA’s access to emerging insurance channels and new customer segments.
- The core thesis still depends on converting transformation initiatives into sustained revenue and earnings growth rather than relying mainly on capital strength.
Red flags
- Overall revenue was stable despite reported growth in target segments, leaving limited evidence of broad-based acceleration.
- Management gave no quantified financial targets or expected return metrics for the €250 million private-cloud investment, strategic partnerships, or US listing.
- The interview contained no analyst pushback or competitive questioning, so claims around transformation progress and future growth were not stress-tested.
H1 2017 Interview with Thomas Buberl
Transcript (English)
EuroBusiness Media (EBM): Thomas Buberl, hello.
Thomas Buberl
Hello.
EBM
You have reported today the results of AXA for the first half of 2017, what are your comments on these results?
Thomas Buberl
AXA has realised a strong performance in the first half of 2017. Revenues overall have been stable, but we have clearly realised growth in our target segments, particularly on the P&C commercial side, but also on Health.
If we look at the operating performance, we can see that it was also very strong. We have an increase in the operating performance in all lines of business and that results in an increase of the underlying earnings per share of 5%. All of this has been realised based on a very strong balance sheet, with a strong solvency ratio around 200%.
So, overall, you can see all the fundamentals are in good shape and we are well in line with our
Ambition 2020.
EBM
Your strategic plan also includes a transformation of the Group. Have you made progress on this?
Thomas Buberl
Yes, definitely. All the employees have been extremely involved and dedicated to transforming the Group and I would really use this opportunity to thank them for all their efforts.
As you have seen, quite a few very profound strategic decisions have been taken. The first one I would like to mention is the announcement of our intention to quote a minority stake of our US Life
& Asset Management operations. This will enable us to better take advantage of the growth prospects that we have in the US, but also to give us the flexibility, from a capital and financial perspective, to strengthen the investment in the areas where we want to grow more. And, it will help clearly the US operation to transform even more.
A second important piece for me is the Private Cloud. We were the first insurance company to invest into a private cloud. As of July 1, the private cloud is live at AXA. We have invested €250 million and this will enable us to be even faster in execution and have a stronger protection of our customer data.
The third area I would like to mention is our strategic partnerships. These are in the area of the future of the work of tomorrow. We have signed a partnership with Uber where we provide insurance solutions for the Uber partner and drivers in a very different way than we used to have.
The second area I would like to mention is our partnership with Coursera where we provide different and new ways of learning to really equip our colleagues with the necessary skills of tomorrow.
All of this shows you that we are very dedicated and in the middle of our transformation with the sole focus of serving our customers better tomorrow.
EBM
So, on the whole, a lot of initiatives in this first semester?
Thomas Buberl
Yes, definitely. And you see that our employees and our distributors have been extremely engaged and extremely active in making this transformation happen. And I would really like to thank all of them for all their efforts and for their courageous decisions that they have taken in the interests of our customers. I really hope that we can continue this dynamic in the second half of
2017.
EBM
Thomas Buberl, thank you very much.
Thomas Buberl
Thank you.