AXA Asia Pacific Holdings Grows Business In 2010

Posted on Feb 16, 2011 by Sergio Ulloa (G+)

Despite a growth in business volumes, AXA Asia Pacific Holdings (AXA APH) announced a fall in profits for the year ending 31st December 2010. While the company generated a profit of AU$601.6 million (US$601.2 million), this was an 11 percent decline compared with results achieved in 2009 when a profit of AU$679.2 million (US$677.7 million) was delivered; results in 2010 being adversely influenced by the strength of the Australia dollar against other major currencies. AXA Asia Pacific's Chief Executive Officer, Andrew Penn said: "This is a strong result with Group Operating Earnings up 13 percent, after taking into account the impact of the strengthening Australian Dollar. We saw particularly strong performance in the second half of the year. After more than a year of ownership uncertainty, I am very pleased with the professionalism and focus of our teams and the exceptional performance of our businesses. The AXA APH operations are well positioned to continue to grow, and we will be handing the businesses over in good shape if the merger with AMP and the sale of the Asian business to AXA SA are approved." Although there was a sharp decline in profits over 2010, the life insurance and wealth management specialist in the Asia-Pacific region enjoyed positive results from South East Asian operations. Revenue from new business in 2010 climbed by 46 percent to AU$659.2 million (US$657.7 million) up from AU$451.7 million (US$450.8 million) generated in 2009. Notable contributions were delivered by AXA Asia Pacific's operations in Indonesia, Thailand and the Philippines, reflecting strong performances from bancassurance channels. In a break-down of the new business generated in Southeast Asia during 2010, increases were achieved in Indonesia - up 81 percent to total AU$324.9 million (US$324.4 million), in Thailand - up 37 percent to AU$222.8 million (US$222.3 million), the Philippines improved by 77 percent to AU$44.3 million (US$44.2 million), while activity in the Singapore market declined by 9 percent to AU$41.1 million (US$41 million) and in Malaysia 95 percent to reach A$26.1 million (US$26 million). Speaking on Southeast Asian operations, Mr Penn said "Operating Earnings in South East Asia continued to grow strongly, up 44 percent as our growth momentum continued and the region now contributes more than half of Asian new business." AXA APH's business in Asia's two largest and fastest growing economies of China and India also showed signs of growth. New business in India increased 8 percent in 2010 compared to 2009, reaching AU$96.7 million (US$96.5 million), while in the rival powerhouse in the Asian region, China, AXA APH saw new business increase by 79 percent to AU$85.9 million (US$85.7 million). Within China, AXA APH opened two new operations last year expanding their presence into14 Chinese cities. Despite the generation of new business in China and India, operating earnings were still negative at AU$15.2 million (US$15.1 million), although this was an improvement compared to 2009 when operating earnings showed a deficit of AU$24.5 million (US$24.4 million) - an AU$9.3 million (US$9.2 million) improvement in trading results. The life insurer highlighted particularly tough conditions in India, with AXA APH carrying out a reduction in ownership coupled with the adverse impact of the introduction of changes to regulatory conditions. One of the world's largest insurers AXA and the Australian wealth management group AMP are in the process of acquiring the AXA APH business with an AU$13.3 billion (US$13.1 billion) bid made in November 2010. The joint bid launched between AXA and AMP envisages the French insurer taking 100 percent control of the AXA APH Asian business, with AMP acquiring 100 percent of the life insurer's Australian and New Zealand operations in order to merge with their existing business in these countries. The deal is subject to approval from regulatory bodies, which is expected to be concluded during the first quarter of 2011. If the takeover of AXA Asia Pacific is successful, AXA will end up owning the life insurer's Asian assets in a move which will cement the French insurer's presence in rapidly growing Asian markets. Asia has become an essential region for multi-national financial institutions to maintain a presence in, especially insurance companies seeking new opportunities to generate business and premium growth; Asia's strengthening economy providing insurer's with a massive opportunity to increase their profitability. AXA Asia Pacific's existing activities in Australia and New Zealand would be acquired by AMP - one of the region's leading wealth management companies - enhancing their market position in these two major trading nations. Australia and New Zealand both being mature markets, with minimum exposure to the global recession being experienced by the USA and European countries, and are well positioned for further growth. Although there was a fall in AXA Asia Pacific's earnings in 2010 - predominantly due to unfavorable movements in currencies - the life insurer and wealth manager is well positioned in the mature markets of Australia and New Zealand, and the emerging markets of Southeast Asia as well as the powerhouse economies of China and India - justifying the substantial bid by AXA and AMP for acquisition of the company. The latest bid for AXA APH supersedes a previous bid by the National Australia Bank (NAB) which was blocked by Australian Securities & Investments Commission (ASIC) due to concerns over marketplace competition. Companies Mentioned: AXA 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. AAP AXA Asia Pacific Holdings Ltd. (AAP) is responsible for the Global AXA Group's life insurance and wealth management businesses in the Asia-Pacific region. We have operations in Hong Kong SAR, China, Singapore, Indonesia, Philippines, Thailand, India, Malaysia, Australia and New Zealand. Established as National Mutual in Australia in 1869, AXA Asia Pacific has grown significantly over time. In 1995, the company demutualised and AXA SA acquired 51% of the company. National Mutual listed on the Australian and New Zealand stock exchanges in October 1996 and adopted the AXA brand in 1999. AMP AMP Group (AMP) is one of Australia's largest retail and corporate superannuation providers, and one of the region's most significant investment managers with more than A$104 billion in assets under management (as at 30 June 2009), with a market-leading network of more than 2,000 qualified financial planners. AMP Limited has one of Australia's largest shareholder registers, with more than 820,000 shareholders. Individual investors comprise around 46 per cent of AMP's shareholder base and live in more than 100 countries around the world. Institutional investors constitute around 54 per cent. AMP traces its heritage back to 1849 as a mutual company, AMP Limited listed on the Australian and New Zealand Stock Exchanges in mid-1998.