AXA's Thomas Buberl wants to 'scale up' corporate business

(Bloomberg) — AXA SA’s CEO Thomas Buberl says he intends to “scale up” the firm’s business insuring corporate risks in the next phase of the firm’s growth.

“In a highly volatile and highly unpredictable environment it is important to take a strategy of low risk,” Buberl said in an interview with David Rubenstein for Bloomberg TV. “We are the biggest insurer now of enterprises across the world. We are one of the biggest in Europe. We want to make sure that we scale up this business more in the next phase.”

AXA is expected to unveil a new strategic plan later this month, alongside the release of its full-year earnings. Buberl, who’s been leading the Paris-based insurance firm since 2016, has shifted its focus from life insurance to property & casualty and health insurance, in a bid to make AXA less sensitive to financial markets.

The CEO also said he is bracing for more claims ranging from the marine to the aviation industry as geopolitical crises multiply.

In his interview with Bloomberg, the German-born executive discusses how he got into the world of insurance and his views on the U.S. economy. He also says he doesn’t plan to leave the world of insurance for the time being, and isn’t interested in a career in politics.

The following interview was recorded on January 30, 2024, in New York. Questions and answers have been condensed and edited for clarity.

Rubenstein: Recently, we’ve had high-interest rates and high inflation. Now we seem to be going into an era of falling interest rates and inflation. How do you reposition your company to deal with that/?

Buberl: Obviously these changes produce a high volatility of the economic environment, and certainly we spoke earlier about the geopolitical environment. So in a highly volatile and highly unpredictable environment it is important to take a strategy of low risk.

We have built now a platform that is working very well. We are the biggest insurer now of enterprises across the world. We are one of the biggest in Europe. We want to make sure that we scale up this business more in the next phase.

Rubenstein: In an era when we have high inflation, high interest rates, what kind of rate of return do you need to get to be comfortable? 

Buberl: It depends on the liability profile. We always look, “What is the duration of the liability relative to how we need to invest?” But it’s obviously clear now that in an environment like this, we need to get much higher return than we used to in a zero-interest rate environment. And therefore the insurer is a very slow-moving investor. We reinvest around 10% of our balance sheet every year. So it is not that when market changes we immediately change everything to change the return pattern.

Rubenstein: If I wanted to go into the insurance business myself, would you recommend that I go into life insurance, automobile insurance, health insurance, property and casualty?

Buberl: I would say, the property and casualty insurance for commercial business and health insurance. Why? Because those are two businesses that are growing the most. On the property and casualty for companies, you’ve got all the new risks — supply chain risk, cyber risk, climate transition risk. And on the health side, you obviously have the question around more longevity but higher health costs, and how can you help people live a better life? Those are two areas I would recommend to you.

Rubenstein: Do you worry about Russia-Ukraine as a potential insurance risk?

Buberl: I mean, we worry a lot about these risks, because these risks do create claims, and so the Russia-Ukraine did create a lot of claims on the political risk side, on the marine side, on the aviation side. So for us, it’s important to look out for them.

Look what is happening in the Red Sea now, which again has massive implications around maritime transport, war cover for maritime transport, supply chain risk and so on. I project myself in a world now in which we see many, many more of these crises happening, and we need to deal with it.

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