Posted on Nov 17, 2010 by Sergio Ulloa
Insurance giant AXA SA highlighted its 5 year strategy for growth at their autumn investor seminar held in Paris on the 16th of November 2010. The French insurer AXA gave investors a preview of plans to expand operations in emerging markets and to concentrate on high-margin protection policies to ensure future growth.
As one of Europe's largest insurers, AXA's strategic plan is to make the company more efficient by creating international growth. Part of the five year action plan proposed by AXA is to review the way the group manages its operational capital to facilitate and accelerate long term values.
"We want to implement a more aggressive allocation of capital towards emerging markets and towards specific segments, such as protection and health. We want also to increase our focus on free cash flow generation." Henri de Castries, Chairman and CEO of AXA said at the investor seminar.
AXA aims to increase the amount of premiums generated through its protection and health business in the coming years by growing new business sales. AXA stated that the protection and health business typically returns a 40 percent profit margin compared to its life insurance sector which generates around a 20 percent return. Additionally, AXA see scope for opportunities in the investment and saving segment, alongside possibilities open in the property and casualty sectors.
The increasing activities within continental Europe's investment and saving business was specifically mentioned, highlighting the opportunities present in satisfying European pension shortfalls which are estimated at US$2.6 trillion (€1.9 trillion). AXA's British-based insurance rival Aviva has recently stated that it will also be engaged within continental Europe in order to take advantage of future saving needs in this insurance sector
Emerging markets - especially in the Asian region - have become a focal point for global insurers recognizing the financial stability now being enjoyed in this part of the world, with AXA consolidating its position in China through a deal struck with ICBC to acquire a majority stake in the French insurer's joint venture AXA-Minimetals
. The strength of the Asian market has become even more apparent over the last few years as China's economy has evolved to become the second largest in the world, with other Asian countries also experiencing economical prosperity in the wake of the financial crisis. The Asian region has emerged from the 2007 world financial crisis largely unscathed - compared to Western Europe and the USA - leading international insurers to grasp opportunities for corporate growth - particularly as the more established, mature insurance markets have offered multi-national insurers less scope for new premium returns.
As part of AXA's focus on expansion in Asian markets, it has launched a joint bid with Australian financial services group AMP for AXA Asian Pacific Holdings Ltd; this amounts to approximately US$13.1 billion (€9.7 billion). If the takeover of AXA Asian Pacific Holdings Ltd is successful, AMP will acquire the Australia and New Zealand operations, with AXA SA taking control of all Asian networks.
If the French insurer's bid is completed, it will result in their increased presence in nascent Asian insurance market such as China, India, Thailand, Indonesia and the Philippines. Also, AXA will gain increased access to the mature Singapore
and Hong Kong markets, which have been generating profitable returns for insurers as the markets stabilize. The insurance markets in China and India offer insurers such as AXA fantastic opportunities to expand and increase revenue due to the vast and increasingly wealthy populations in these countries.
Along with the two economic powerhouses of China and India
, Indonesia and the Philippines have all shown growth and an appetite for insurance products in recent years. This has caused insurers such as AXA to prioritize efforts in the Asian insurance industry as established markets in the USA and Western Europe have suffered from more difficult trading conditions after the 2007-2008 financial crises.
An ambitious but failed bid by the British-based insurer Prudential for AIG's Asian arm, AIA, earlier in 2010 emphasized the potential seen in the Asian insurance industry. Prudential aimed to takeover AIA in a bid to further expand its reach across the Asian region in order to take advantage of emerging premium returns in China, Indonesia and India. Global insurers Bupa
have also entered into joint ventures / partnership agreements in 2010 to gain access to the growing Asian markets. Bupa's joint venture in India - MaxBupa - was established earlier this year, with the Bupa group enjoying significant growth as a result.
As life-styles change and personal wealth increases, demands for indemnity insurance grow - whether life, saving, motor or health insurance. As needs change, there is scope to develop products to suit demands regionally. In Asia, the products provided under the takafu
l and mircosurance
ranges are proving particularly successful.
Speaking on the future of AXA, Henri de Castries said: "We will finalize it in the coming months and will present our deployment plan in the first semester of 2011. The aspirations and priorities we are sharing today are at the core of our ambition, which aims at better preparing AXA for the opportunities created by the growing needs for insurance and protection worldwide."
As AXA enters a new phase of global operations, it is focusing on becoming a more profitable insurer by cutting costs, improving efficiency and taking a more aggressive approach with capital allocation. In order to become more competitive globally AXA - like other international insurance companies - is concentrating on expansion of its activities in Asia, with the French insurer taking serious action reflected in its US$13.1 billion (€9.7 billion) joint venture bid with AMP to acquire AXA Asian Pacific Holdings.
Insurance Companies Mentioned:
AXA Group is a worldwide leader in Financial Services. Headquartered in Paris, the AXA Group companies are engaged in life insurance, health insurance and asset management services among others. AXA's operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area.
Bupa was established more than 60 years ago in the UK and is now has ten million customers in over 190 countries, and over 52,000 employees around the world. Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, and China and across Latin America.
Headquartered in Zurich, Switzerland, Zurich Financial Services Group is an insurance-based financial services provider with a network of subsidiaries and offices in North America and Europe and also in Asia-Pacific, Latin America and other markets. Zurich is one of the world's largest insurance groups, and one of the few to operate on a truly global basis. With 60,000 employees serving customers in more than 170 countries, our business is concentrated in three business segments: General Insurance, Global Life, and Farmers.
Europe's fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide. Prudential's Asian operations include Hong Kong, India, Malaysia, Singapore, Indonesia and other Asian countries.
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.