AXA steers clear of big
deals, manages risks stemming from French politics
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[February 23, 2017]
By Maya Nikolaeva and Matthieu Protard
PARIS
(Reuters) - AXA has reached a "critical size" and is ruling out
major acquisitions such as Italy's Generali, the French insurer's chief
executive Thomas Buberl said on Thursday.
It is managing risks relating to May's presidential election in France
and raising its profitability through higher prices and cost cutting,
after increasing underlying earnings per share by 4 percent in 2016.
Although AXA's earnings were helped by tariff hikes in property
insurance coverage and a recovery in its life and savings business,
Buberl's first set of annual results as CEO were at the lower range of
its targets.
Concerns that far-right National Front leader Marine Le Pen might win
and lead France out of the euro zone - an event dubbed 'Frexit' - have
rattled financial markets.
"Frexit is a probability, it is clear, we need to look at it. Our job is
to manage risks and volatility. A potential Frexit is not the first
surprise and not the first crisis that AXA has seen over its history,"
Buberl said.
However, AXA saw the probability of 'Frexit' as not very high, Buberl
added, with opinion polls currently showing Le Pen as eventually losing
to either centrist Emmanuel Macron or right-wing candidate Francois
Fillon in the vote.
Shares in the insurer were 0.6 percent lower at 22.68 euros at 1147 GMT.
AXA's stock is down around 5 percent in 2017.
"We expect AXA's share price performance to remain largely macro
driven...with the key drivers remaining concerns on the French
elections, U.S. interest rates and European equities," analysts at
Barclays said.
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Thomas Buberl (L), CEO of AXA, speaks with AXA France Chairman and
CEO Jacques de Peretti (R) during the company's 2016 annual results
presentation in Paris, France, February 23, 2017. REUTERS/Charles
Platiau
GENERALI NOT ON CARDS
In the face of falling yields on its investments, AXA aims to increase
earnings per share by 3 to 7 percent a year over the 2016-2020 period,
seeking to lift profitability through tariff hikes and higher-margin
products while reducing its costs.
"We are on track on the headline targets of our Ambition 2020 plan," the
insurer said in a statement.
AXA aims to grow in areas such as property and casualty insurance for
businesses, as well as savings products that do not tie up too much
capital, and in Asia.
The French insurer was rumoured to be among potential suitors for
Italy's largest insurer Generali <GASI.MI>, but reiterated on Thursday
that a tie-up was not on the table and that it "would bring nothing" for
AXA.
"AXA has done many large acquisitions and the aim has been to reach a
critical size globally. We reached it now and for our acquisitions'
strategy, this excludes small and really large acquisitions," Buberl
said.
(Editing by Sudip Kar-Gupta and Alexander Smith)
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