AXA sells Canadian arm to fuel growth
FRENCH insurance giant AXA sold its Canadian unit for C$2.6bn (£1.6bn) yesterday as it kicked off a new five-year plan to boost profits and cut debt.
AXA, Europe’s second-largest insurer, said at an investor day it is targeting high-growth emerging markets, where it aims to double in size and profitability on a comparable basis by 2015.
In a bid to redeploy capital towards growth markets it sold AXA Canada, which generates about C$2bn in annual premiums, to local rival Intact. The sale will generate a one-off €900m capital gain for the group.
AXA’s new plan will target ten per cent underlying earnings per share growth by 2015 on a compound annual growth rate basis, chief executive Henri de Castries told investors.
It has set new cash flow targets, including generating €24bn in operating free cash flow, and a 15 per cent adjusted return on equity. It also plans to scale back in the UK and cut costs in developed markets by 2015 to free up further capital to focus on Asia.
In asset management AXA is aiming for a turnaround of net asset flows in 2011 and then four to five per cent net new money flows per year between 2012 and 2015.
“The focus of the group now is to be less ‘all things to all people’ and to focus on selective and profitable growth,” said Espirito Santo analyst Joy Ferneyhough.
However, Jefferies analyst James Shuck said a life business target of generating €6bn cashflow from 2011-13 was already in line with his forecasts. He said the targets “seem respectable but not especially challenging depending on a stable macro backdrop”.