Axa Sa Ord

Good morning, and welcome to ACCESS 9 Month 2023 Activity Indicators call. This morning, our Group CFO, Albon de Mainel, will go through briefly the highlights of last night's press release, after which we'll be ready to take your questions. Albon?

Thank you, Anu. Good morning to all of you, and thank you for joining the call today. So I'll start with the key highlights of our 9 Month 2023 results. AXA continued to deliver high-quality revenue growth, very much in line with our strategy and consistent with the trends that you see in the first half. We continue to see strong momentum across our technical lines, in particular in P&C, plus 7%, and protection, plus 3%. And growth in health. remains also strong, up 7%, if you adjust for the non-renewable of two large international group contracts. This has been partly offset by actions taken to right-size businesses that have been deprioritized and that you know well, that's reinsurance property CAT and traditional general account. And this should be completed by year-end. Overall, our total revenues increased by 2%. to 79 billion euros. Our balance sheet remains very strong with a ratio of 230% driven by strong organic capital generation. And we are very pleased with this level. We also remain confident in delivering our enforced management target of 30 to 50 billion euros by year end. And apart from those results, we've also recently announced two transactions The first one is the closing of the acquisition of Laya, the leading health insurer in Ireland with 28% market share. And second is the agreement to dispose of our live joint venture with Bharti in India. So these are in line with our strategy, which is to focus our footprint on our core markets where we have leading positions while we exit non-core markets. So going back to nine months, 23, let me now go through the key numbers of the press release, starting with PNC. PNC revenues were up 7% overall with growth in both commercial and personal lines. In commercial lines insurance, which excludes AXA Excel RE, we saw very good growth of 9%. This was driven by both price increases and volume. And as AXA Excel insurance, Prices were up 4% on renewal or 7%, excluding North America professional lines, where conditions remained challenging. This was mainly driven by favorable price effects in short-tail lines, with notably North America property up 19%. Overall, price increases remained above lost trends in nine months 23. and we remain very disciplined on pricing and we have tools to manage the cycle. In France and Europe, we continue to see favorable price effects at 5% and 4% respectively. On volume, customer demand remains strong, notably at AXA XL insurance in property and specialty lines and in Europe. Moving to personal lines, revenues were up 5% with growth both in personal motor and personal non-motor up 7% and 3% respectively. In motor, price increases accelerated further in the third quarter in Europe, except in Switzerland. Overall, we believe the price increases in retail are sufficient to offset claims severity. But you know, we are also vigilant on the frequency side which is higher than expected in Germany and Ireland, which we had flagged at half year. And in those countries, we are taking further pricing actions. And finally, in reinsurance, as you know, we've reduced our net cat exposure again this year by circa 35%, and in line with our strategy. And that was offset by price increases in casualty, property, and specialty, so that overall revenues in reinsurance were down by only 3%. One last point on PNC regarding NatCat. In the first half, we had relatively benign NatCat experience with three points impact on our combined ratio. That's below our four points load. In the third quarter, we experienced several storms across Europe and the US. And despite this, At the end of September, we were still on track to be within our four-point NatCat budget for the year. We currently estimate losses from Hurricane Otis that made landfall in Mexico in October to be around $0.2 billion before tax and net of reinsurance. And obviously, we need to see how the rest of the year plays out. Let me now move to life and health. In life, we see once again a positive trend in protection, up 3%, from higher sales in protection with Unitlink in Japan and sales to mainland Chinese visitors in Hong Kong. Unitlink premiums were down 13%, reflecting volatile market conditions, albeit with some recovery observed in the third quarter. And this was largely offset by good performance of capital light general account, up 12%, which was driven by the continued success of our general account of maturity product, Euro Croissance, in France. In France still, which is our main life carrier, given this capital light proposition of Euro Croissance and our unit link performance, overall, we are up 10% on the saving side. Once again, our strategy around this complementary offer has proved successful. It's relevant, especially in these conditions. And lastly, traditional generic and premiums were down 13% in line with our strategy to reduce our exposure in this business. So overall, life revenues over the first nine months were stable. On health, premiums were down 7%, and that's largely from the renewal of two large international group contracts in France that you know well, Excluding those contracts, we had organic growth of plus 7%, and that's across all geographies. And this reflected notably favorable price effects, again, across most geographies. So next, on the net flows. So we see continued outflows in traditional general savings, general account savings, which is in line with our group strategy. And that's partly offset by strong flows in protection and health. moving to new business. So life and health, PVP and NBV were down 8% and 4% respectively. This was largely attributable to the increase in interest rates, which will reverse positively with a higher unwind over time. NBV margin, which is what matters to us, was up 0.2 point. New business CSM was up by 2%. reflecting a better portfolio mix, notably with a higher contribution from Eurocroissance. Overall, our business mix in life and health remains of high quality, and we will continue to grow from there. And finally, in asset management, so average assets under management decreased by 5%, but that reflects unfavorable market conditions. Because net flows were flat, we have, as you saw earlier, strong inflows from third-party funds, both in our core and our alts platforms, and specifically in real estate, where we've had good momentum. And this was offset by net ad flows from AXA insurance companies, which is obviously linked to negative flows in general account that I had mentioned earlier. Revenues in asset management were down 2%, driven by lower recurring fees, from the reduction in average assets under management. Moving on to Solvency II. So our Solvency II ratio was 230% at the end of September, and that's down five points from first half. And this was mainly due to a combination of different factors. First one is minus four points from the early redemption of subordinate debt. which we have decided not to refinance in line of our strong cash and capital position, minus three points from unfavorable market effects driven by lower equity markets and higher implied volatility, and plus seven points of normalized capital generation minus, obviously, four points of accrued foreseeable dividends. So at the end of the first nine months, our normalized capital generation was plus 23 points. And as you see, we are well on track to achieve the 25 to 30 point guidance we gave this year. Overall, we're happy with our strong solvency to ratio. It reflects our more capital efficient business model, and that allows us to grow without the need for more capital. So one word on our full year 23 outlook. We are on track to deliver our earnings outlook of above 7.5 billion underlying earnings in 23. A few things to also keep in mind for the second half. As you know, we always report more than 50% of our earnings in the first half because we have higher investment income in the first half and there is also a small seasonality in discount. And we expect several headwinds in the second half, which should already be known to you. So that's the higher health claims frequency in the UK. We have still elevated lapses in Italy. And as you saw, we have higher Q3 NADCAT losses. So as a conclusion, I think fundamentally the group is in good shape. We are disciplined in our execution of our strategy and that will continue to deliver strong results. We have a balance sheet which remains strong with a high level of sovereignty to ratio at 230%. And therefore, we are well placed for our next plan, which as you may have seen, will be announced on March 11th next year. I'm now happy to take your questions

Thank you. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. We will now take the first question. Coming from the line of Andrew Sinclair from Bank of America, please go ahead.