Half Year 2024 AXA SA Earnings Call (Analyst & Investors) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: James Shuck - Citigroup - Analyst : Excellent, and good morning, everyone. My question might seem a bit unfair given the disposals you've made and I think you probably earned the right to make the small acquisition in Nobis, but I'm just interested in the P/E that you're paying for that, because there's 11 times -- again, I know it's a small acquisition, but I was always under the impression that you would measure acquisitions versus the hurdle rate versus buybacks. So clearly, this seems a small departure from that, but given the amount of solvency build that you have and the stock of solvency, one might expect more acquisitions further down the road. So just to clarify that you will continue to use that as a hurdle rate when it comes to slightly larger acquisitions, please? Thank you.

Question: David Barma - Bank of America - Analyst : Good morning. Thank you for taking my question. So I wanted to ask about non-life reserving. I think it will have been a nice surprise that XL released some reserve overall in H1. But could you tell us about what you have seen specifically on casualty reserve developments? And when I look at slide 33 in your pack, it looks like the strength of reserves has softened a bit since we have moved to IFRS 17. Could you give us some color on that, please? And then secondly, on debt. So you have a target to keep your debt stack flat. Should we actually expect you to reduce the absolute amount of debt now, given your balance sheet will be smaller? So should we think about the cash and spends from the AXA IM deal to be potentially used for that, or do you have other plans for that cash? Thank you.

Question: Andrew Crean - Autonomous Research - Analyst : Three questions, if I can. Firstly, just as a long-term question, I know, Thomas, you've been de-emphasizing financial risk for some time, sale of US Life and AB, all those closed book actions. Now, the sale of the asset management business. Is that largely done in terms of the structure of the business? Are you where you want to be in terms of structure? So that's the first question. Second question, can you give us a bit more detail on the Financial Lines business within XL? How big is it and what's its combined ratio relative to the 89%, which the whole of XL is doing? And then thirdly, a technical question around the buyback. I mean, obviously, you've got the normal regular buyback to do, and then from mid-year on, you kick off with this EUR3.8 billion buyback. Do you have any sense as to how long it will take in 2025 to get through all those buybacks? Will you have completed them by till the end of the year, do you expect?

Question: Michael Huttner - Berenberg - Analyst : Fantastic. Thank you so much and well done for shaking us up last night. And I have two questions, if I may. One is a normal one and the other one is a kind of fluffy one. The normal one is EUR21 billion reiterated, even though you won't have the cash contribution from asset management for two years out of the three years. So, I work out that this is very roughly back in the envelope, 4% uplift. Can you talk a little bit about the cash profile, what gives you the confidence, where it's coming from? Kind of give us a story with as much detail as possible. That would really, really help. My feeling is it's moving ahead way, way beyond what we'd hoped, but I don't know. And then the kind of more softer question is, I really do enjoy speaking to the asset managers at AXA IM. Can you tell us what's going to happen there? Thanks.

Question: Farooq Hanif - JPMorgan - Analyst : Hi, everybody. Thank you very much. Firstly, I wanted to talk about your investment income. So I can see that there's some seasonality and there's some one-off in the inflation-linked investments. But when we look at your reinvestment yield, it still seems well above book yield. So are you -- I mean, do you have a feeling that the net financial income from both P&C and life is tracking a lot better than your initial guidance? I guess that's kind of question one. Question two as well, yeah, similar question on the combined ratio, it feels like there are not many areas where your pricing is less than lost cost inflation and there's a surprise in how quickly you've achieved the margin improvement. So there again, what is the upside risk, for example, in your 200-basis-point overall P&C margin expansion? And then finally, it's nice to see a positive operating variance in the CSM for a change. I was wondering what exactly was driving that? Thank you.

Question: Will Hardcastle - UBS - Analyst : Thanks for taking the questions. Slide 10 is really helpful, thanks, on that technical margin improvement. And as you say, it certainly seems that we're ahead of the around 50% of improvement you anticipated in '24. I guess just thinking about the trade-off from here, how should we think about the trade-off between potentially further margin expansion versus increasing competitiveness? And would that be different at the moment in your thinking across the commercial, the retail, and the short-term life & health divisions? And just perhaps going a little bit more granular on the UK, could you help us to understand how much UK volume has reduced in that? I know you're saying business mix as well. And I guess just really as we enter second half, are you operating in the UK at target margins you'd want to be operating on a written basis or is there still a bit more action to go? Thanks.

Question: William Hawkins - Keefe, Bruyette & Woods, Inc - Analyst : Hello. Thank you for taking my call. On AXA Investment Managers sale. Thomas, why did you decide to sell the business outright? I mean, the alternative could have been that you could share in the benefits of this great opportunity through a joint venture or a merger. So I'm interested in your thinking on that, please. And then secondly, sorry, FrTdTric, because you've kind of already answered this, but I did want to come back on the issue about reserve movements in AXA XL and across the group. Did you say specifically that you have not changed casualty loss picks, so your reserving for casualty is unchanged, or did your answers allow for the fact that maybe you have changed your casualty, but it's been offset by other stuff? I wasn't quite clear about whether you were just talking about the net figure or the moving parts. And if I could append to that, has the ADC attached yet, please? Thank you.

Question: Dominic O'Mahony - Exane - Analyst : Three for me, if that's okay. Just on the tax rate, I understand the point about the OECD rate. And I just -- I think the tax rate in France and Europe is also a bit higher than it was in 2023. Is that the same thing or is there something else going on? And do you expect those geographies to have a higher tax rate than last year going forwards? And the second question was, I wonder if you might just reflect a bit on protection and health claims experience. You mentioned that the UK Health situation is stabilized, which is great. And I observed some other players globally, so for instance in Asia, having some challenges in claims experience. I wonder if you could just share your reflections on what you're seeing on the claims in protection and health more globally. Then final question, Alban, you mentioned you're on track for the 6% to 8% EPS in 2024, which, of course is better than the 4% in the half. I just wanted to understand, are you suggesting that -- is the point you're making that we shouldn't limit ourselves to the 4% or that it won't be better than the 8%, because clearly the print here is above current expectations. I'm just reflecting on what that might mean. Thank you.

Question: Andrew Sinclair - Bank of America - Analyst : Thank you very much, everyone. And first was actually an XL Re and how much do you actually have in the numbers in the attritional, I guess, for Baltimore bridge losses? I think you'd mentioned it could be up to EUR100 million. If I stripped out EUR100 million from your attritional, you'd be under 60% attritional. So just trying to get a handle on that. That's my first question. Second, is this on AXA IM and the solvency impact of the disposal? I suppose maybe a little bit surprised it was only neutral for what seems a pretty good deal. Just wondering if you could tell us a little bit. I guess you lose maybe a bit of diversification, but why is it only neutral given the amount of extra cash you'll have lying around? And then finally, I was just interested to know what the disposal of AXA IM means for your thoughts on Life books in general, both back books and open books, and does that change your thoughts if you're not capturing asset management revenues as well? Just thoughts on that. Thank you very much.

Question: Henry Heathfield - Morningstar - Analyst : Good morning, all. Thank you for taking my questions. So just on AXA IM, I'm really -- I'm just trying to get my head around the strategic decision here. You mentioned there that BNP Paribas was better in retail and equities. It just seems to me like for a long-term savings business, asset management is really important. So I was wondering why you didn't consider then building out those kind of retail and equities expertise internally or buying someone else like you sort of did with AXA Framlington and preserving that kind of part of the business. And then second question is, have you had discussions with shareholders so far on this and how has the reception been in those discussions? And then third question, if I could, just on the buyback, that EUR3.8 billion, I assume that's going to be on top of the 15% that you have outlined in your capital kind of allocation framework. So is that kind of coming in at around EUR4.9 billion under your estimates? Thank you.

Question: Kailesh Mistry - HSBC - Analyst : Thank you for taking my question. I've just got a very quick one on investments. I think Thomas mentioned EUR1.6 billion of investment spend over three years in his video. Could you just help us understand how much will be expensed versus capitalized through the P&L and will this go through the P&L equally in the next three years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 9:00AM, AXAF.PA - Half Year 2024 AXA SA Earnings Call (Analyst & Investors) And just lastly, related to that, are there -- on the innovation element of that investment spend, are there sort of any particular markets we should be looking at for evidence of progress already made that you intend to, if you like, export to the rest of the group? Thank you.