AXA: A French-Based Forsaken Financial Colossus



AXA is a worldwide financial services provider which is one of the leaders in the insurance market.

AXA increased year after year its paid dividend without affecting its ability to invest in new businesses.

Despite the current events (low rate environment, Brexit), AXA is oversold (25% safety margin).

Q2 2016 results will be shared very soon and could be a good opportunity to buy AXA’s shares if Mr. Market overreacts negatively.

Notes for the readers

AXA (OTCQX:AXAHF) is primarily traded on the Euronext under the ticker CS:FP. I will be referring to the French symbol for the article. Note: Amounts are in euro (€) unless mentioned otherwise. EUR-USD 1.1163. Price of 1 euro in USD as of August 1, 2016. Furthermore, most of the figures are based on the annual reports of AXA and of its main competitors.

Corporate Profile: A Globally Diversified Financial Services Provider

History of the group

The origins of AXA go back to the 19th century. AXA was created by the merger of several companies that covered agricultural risks in Normandy. The oldest of them (“The Ancienne Mutuelle”) located in Belbeuf, near Rouen, insured companies against fire. In 1955, The Ancienne Mutuelle Group opened the road to international markets by acquiring the Quebecois company Provinces-Unies. But the real revolution happened in 1975 when Claude Bébéar became Chief Executive after having developed life insurance products in the Canadian subsidiary. Claude Bébéar was a visionary leader who developed the French company and created a financial colossus.

In 1977, reinsurance became a business in its own right, with the creation of AMRé (Ancienne Mutuelle de Réassurance). That innovation rapidly thrust the company into a leading role in global financial markets. In 1978, Companie Parisienne de Garantie was acquired and the Ancienne Mutuelle Groupe became Mutuelles Unies. 4 years later, Mutuelles Unies acquired the Drouot Group. Claude Bébéar became CEO of the new Mutuelles Unies/Drouot Group, the first private insurance in France. The AXA name is adopted in 1985.

The takeover of the American insurance company The Equitable came in 1991. A public exchange offer enabled AXA to acquire UAP (Union des Assurances de Paris), which is twice its size. By acquiring UAP, AXA became the largest French company in terms of turnover, and the world’s #1 leader in insurance. In 2003, the Group strengthened its role in Asia – in the Philippines, Thailand, Indonesia and China – and consolidated its position in the American market by acquiring MONY (Mutual of New York), a well-known American insurer.

From 2003 to 2015, AXA has accelerated its growth in emerging markets via both internal and external processes (e.g. acquisition of the leading insurance company Winterthur Group from Credit Suisse in 2006, and a joint venture in China with ICBC in 2012)

AXA in 2015

With 2015 revenues of €98.5 billion, AXA is a leading global financial services provider, diversified both geographically and by business line. AXA’s presence extends across more than 60 countries, through various lines of business such as life and savings (called thereafter “L/S”), property/casualty (called thereafter “P/C”), asset management (called thereafter “AM”), assistance and banking.

AXA groups its operations into four main business segments:

L/S, which posted €59.2 billion in revenues last year. The group’s main contributor markets in this segment are France, the US, Germany, Japan, Switzerland, Belgium, and Italy.
P/C, which generated €31.3 billion in revenues in 2015. AXA is active in France, the U.K., Germany, Belgium, Switzerland, and in various other countries.
International insurance, with total 2015 revenues of €3.6 billion. This segment mainly comprises the commercial lines of AXA Corporate Solutions (€2.3 billion) and assistance (€1.4 billion)
Asset management, with €3.8 billion in revenues and €1.1 trillion assets under management of which 41.8% are third party funds. This makes AXA one of the world’s leading asset managers. AllianceBernstein Holding L.P. (NYSE:AB) 62.8% owned by AXA, and AXA Investment Managers S.A. (AXA IM) managed 60% of AUM at year-end 2015.
Banking activities, which are located in Belgium, France and German, constituted a relatively modest €621 million in revenues last year or less than 1% than AXA’s total revenue.

All the group subsidiaries, holdings, and service companies are directly or indirectly owned by the group’s holding company, Paris listed AXA. A number of entities own the holding’s capital, including France-based AXA Mutual with 14.12% and the employees with 6.15%. Individual and institutional investors spread mostly throughout France, the U.S., and the U.K. hold the remainder.

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