AXA plans $1.2B buyback as underlying earnings rise

(Bloomberg) — AXA SA unveiled plans to repurchase as much as €1.1 billion ($1.2 billion) of its shares as the insurer announced 2022 underlying earnings that rose and said it expects to surpass one of its key financial targets by the end of the year.

The Paris-based firm intends to carry out this new buyback program “as soon as reasonably practicable,” with plans to complete the purchases by the end of the year, according to a statement Thursday. AXA will also pay a dividend of €1.70 a share, up 10% 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,” Deputy Chief Executive Officer Frederic de Courtois said on a conference call with reporters.

AXA shares were up 3.8% at 10:28 a.m. 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. That’s allowed the firm to carry out several buyback programs totaling about €3.2 billion over the past two years, and to update its profitability outlook.

The firm, which previously said it could deliver underlying earnings-per-share growth at the top of the 3%-to-7% range it set for itself from 2020 to 2023, now believes it can exceed that target.

Bloomberg Intelligence’s Charles Graham, insurance analyst, said: “The launch of a further share buyback program for up to €1.1 billion underpins AXA’s ability to exceed its 3-7% underlying earnings growth per share target range over 2020-23. This is in addition to the previously announced share buyback to be carried out following the closing of the sale of the closed life and pensions portfolio by AXA Germany. Underlying earnings per share increased by 12% in 2022 reflecting a 4% increase in underlying earnings, the effects of share buybacks (a 4% boost), and foreign exchange (also 4%).”

Last year, AXA’s underlying earnings rose 12% to €3.08 a share. At €7.26 billion, the firm’s total underlying earnings rose 7%, just above the analysts’ €7.23 billion average estimate.

Still, AXA’s net income fell 8% to €6.68 billion, below analysts’ average estimate, as rising interest rates weighed on the mark-to-market valuation of the firm’s invested assets.

AXA’s revenue rose 2% to €102.3 billion, just below the €103 billion average estimate in a Bloomberg survey. The firm’s property-and-casualty unit, the biggest contributor to revenue, saw sales gain 2% to €51.6 billion, also close to estimates.

The health unit, for which the firm aims a 5% annual growth rate, saw sales gain 16% to €17.4 billion, faring better than anticipated.

As of the end of December, AXA’s solvency ratio stood at 215%, down one percentage point from a year ago and below the average estimate of 228.1%.

Asset-management revenue declined 3% to €1.6 billion, driven by lower management and performance fees. The unit posted inflows of €18 billion.

The insurer intends to announce a new strategic plan along with its 2023 earnings in late February 2024, de Courtois said.

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