Axa Sa Ord

Good morning and welcome to ACCESS 9-month-24 Activity Indicators conference call.

A group CO4 out on the mind now will walk through the highlights of the 9-month release, after which we'll be ready to take your questions, but then I turn it over to Al. Thank you, Anu. Good morning to all of you and thank you for joining the call today. So I will start with the key highlights of 9-month-24. So we delivered another excellent performance with total revenues increasing by 7%. We continue to see strong organic growth across all our lines of business, with P&C up 7% and life and health also up 7%. And this is very much in line with what we delivered in 1H. by a combination of discipline, pricing, and accessories, notably, as you know, in PNC retail and in UK Health. It's also improved customer retention and market share gains. So the environment remains supportive with prices up, which will be earned through next year while inflation is lower. And this is exactly what we had in our plan that we presented to you in February. So we are focused on executing our growth agenda across our organization. And growth is a key leader of our new plan. On one side, our focus on technical and operations excellence. And lastly, we continue to operate at a high level of capital with a sovereignty ratio of 20 and 21%. In the quarter, the group's financial strength was further affirmed by the decision from Moody's to raise the waiting outlook of the group to a positive. Let me now go through the key numbers of the increase, starting with P&C. P&C revenues were up 7%, well-balanced between commercial and personal lines. Commercial lines grew by 7%, and if you're both driven by favorable price effects, and higher volumes from improved retention, notably at AXAXL, and higher in the business with sustained demand from corporates. If I focus on pricing, at AXAXL insurance, prices were up 2% on the euros, or 3% if we exclude North America professional lines. Overall, for 2024, we expect pricing, including exposure, to be broadly aligned with loss trends. And this is consistent with our plan assumptions, which assume margin being stable at the current attractive levels, driven by selective growth, disciplined cycle management, and efficiency initiatives. Similar to 1H24, pricing trends varied line by line, and we are managing the cycle proactively. We see, for instance, continued favorable pricing in shorter lines, plus 8% in North America property, plus 5% in international property. Casualty pricing is forming in line with last year's. with plus 9% in U.S. casualty and plus 5% in international casualty. And in North America professional loans, pricing remains soft, and we therefore remain focused on profitability. In firms in Europe selling commercial loans, we continue to see favorable pricing at plus 4% in both geographies, which is at a good level in the context of lower inflation. And as I said, we also continue to see good demand from corporates across SMEs and mid-market business. Moving to P&C personal lines, revenues were up 6%, with growth in both motor and non-motor up 5% and 8% respectively. Pricing remains strong at plus 11%. It's up across all countries, but as you know, in particular in the UK and in Germany, where we are prioritizing pricing over volumes to restore profitability. The volume is down, therefore, in those two countries, and that reflects our underwriting and pricing measures. But a large part of the pooling, and the size is not behind us, And in other countries, such as France, Switzerland, or Italy, where we do not need such repatriation, we see strong net new contracts. So we are confident in achieving our margin improvement plan. And if you remember, we already saw 1.7 points margin recovery in 1H24 in personal lines versus 1H23. Finally, in reinsurance, revenues were up 10%. driven by both favorable price effects in property and casualty, and higher volumes in specialty and property. One last point in PNC on NADCAT, so you probably have seen in our press release that the combined impact of Hurricane Helen in September and Hurricane Milton in October was below 200 million euros, free tax, and net of insurance. Based on the current industry loss estimates, it represents a market share of approximately 0.5%, and that reflects the actions that we took to reduce cat exposure and volatility over the past years. And therefore, we are maintaining our annual net cat budget of 4.5 points of combined ratio for the year. I now move to life and health. In life, premiums were up 7%. Capital my GA savings, it was up 12%, notably in Japan from strong sales of single premium whole life products, which was supported by favorable market conditions, and in Italy and Belgium from the successful launch of new products. Strong performance in Munich, England, up 14%, driven by the successful commercial campaigns across our distribution network in both Italy and France. Protection was also up plus 2%, notably from higher sales in protection with Uniclinked in Japan and S4Cent. And lastly, premiums in traditional GA savings were up 1%. In health, premiums increased by 7%, reflecting higher pricing on both group and individual businesses across all geographies, as well as higher volumes in group business in France and in Europe. In the UK, we continue to take pricing actions, which will be earned over time, and we have been rigorously implementing claims pathways to triage claims to manage claims costs. Overall, our EB business, which is one of our key growth initiatives, was up 8% over the first nine months. And then net flows. There were 0.9 billion euros year-to-date compared to minus 2.9 billion euros last year. And those net flows also reflect our quality mix and the focus we have on protection, health, and capital by GF. Moving on to new business, so Life & Health, PV&P, and MBV were up 16.6% respectively, and that was not attributable to good volume growth that I just mentioned. MBV margin was slightly down at 4.6 points, which was last year, And that mostly mangled 1H level. And fundamentally, that reflects the change in business mix and financial assumptions that we had over the first nine months. So overall, our business mix in life and health remains of high quality. Asset management now. Average AUM was up 3%, reflecting favorable market effects. Net flows were at 3 billion euros, positive, driven by accident insurance companies and our Asian JVs. Revenues were up 6% from higher management fees due to an increased asset base and higher performance fees, partly offset by lower transaction fees. Moving on to our balance sheet and Solvency II in particular. So our Solvency ratio was at 221% at the end of September, down six points from the first half, and that comes mainly from unfavorable market effects. So if we look at the details, as the previous quotas, we had seven points from normalized capital generation, minus 5 points of accrued foreseeable dividends and annual share buybacks. We had minus 6 points from financial markets. That reflects lower interest rates and widening of government spreads, notably the OIT, and corporate spreads in Europe. And even if equity markets were up this quarter, the equity market impact was neutral, given our skew towards infra and private equity, where valuations have been fairly stable. And we had minus one point from the effect of an anti-dilutive share buyback related to employee share-based compensation, and that's a runoff. So to conclude, we believe those are very good numbers overall with continued good growth momentum. In particular, pricing remains favorable, and that will be earned through next year, while inflation will be lower. And this is in language data. This is driven by high-quality and diversified businesses, which are well-positioned to capture attractive growth opportunities and to deliver a predictable earnings trajectory. So we are executing on that plan with a clear roadmap across top-line growth and technical and operational excellence. So as indicated in 1H, with all those pieces of good news, we remain confident to achieve for 2024 an underlying earnings per share growth in line with our three-year plan target, which is a range of 6% to 8%. And now we are available for your questions.

Thank you, sir. This is the conference operator. Operator, excuse me. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. The first question comes from David Barma of BOA.