Axa plans 1.1 billion euro buyback as underlying earnings rise
AXA unveiled plans to repurchase as much as 1.1 billion euros (S$1.7 billion) of its shares as it announced that its underlying earnings for 2022 rose, and that it expects to surpass one of its key financial targets by the end of the year.
The Paris-based insurer intends to carry out this new buyback programme “as soon as reasonably practicable”, with plans to complete the purchases by the end of the year, it said on Thursday (Feb 23). It will also pay a dividend of 1.70 euros a share, up 10 per cent from a year earlier.
The capital-return update “is the consequence of the pertinence of the transformation of Axa, which was able to deeply change in the past years to refocus on profitable markets and products”, said deputy chief executive officer (CEO) Frederic de Courtois.
Shares of Axa were up 3.8 per cent as at 10.28 am in Paris.
Since taking over as Axa’s CEO in 2016, Thomas Buberl has shifted the insurer’s focus to its underwriting business, while reducing the exposure of its reinsurance unit to natural disasters. These moves have allowed the company to carry out several buyback programmes totalling 3.2 billion euros over the past two years, and to update its profitability outlook.
The insurer, which previously said it could deliver underlying earnings-per-share growth at the top of the 3-7 per cent range it set for itself for the years 2020 to 2023, now believes it can exceed that target.
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Last year, Axa’s underlying earnings rose 12 per cent to 3.08 euros a share. At 7.26 billion euros, the firm’s total underlying earnings rose 7 per cent, just above analysts’ average estimate of 7.23 billion euros.
Still, Axa’s net income fell 8 per cent to 6.68 billion euros, below analysts’ average estimate, as rising interest rates weighed on the mark-to-market valuation of the company’s invested assets.
Its revenue rose 2 per cent to 102.3 billion euros, just below the 103 billion euro average estimate in a Bloomberg survey. Sales of the company’s property-and-casualty unit, the biggest contributor to its revenue, rose 2 per cent to 51.6 billion euros, also close to estimates.
The health unit, for which the firm targets a 5 per cent annual growth rate, gained 16 per cent in sales to 17.4 billion euros. It fared better than anticipated.
As at end-December, Axa’s solvency ratio stood at 215 per cent, down one percentage point from a year ago and below the average estimate of 228.1 per cent.
Asset-management revenue declined 3 per cent to 1.6 billion euros, driven by lower management and performance fees. The unit posted inflows of 18 billion euros.
The insurer intends to announce a new strategic plan along with its 2023 earnings in late February 2024. BLOOMBERG
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