Axa Sa Ord

Good afternoon and welcome to AXA's full year 2024 results presentation. The results will be presented today by our Group CEO, Thomas Boubel, Group Deputy CEO, Frederic de Courtois, and Group CFO, Avant de Mainel. For the Q&A session, we will also have Scott Gunter, CEO of AXA Excel, Guillaume Bory, CEO of AXA France, and Patrick Cohen, CEO of AXA Europe. With this, I turn it to Thomas for the results.

Thank you, Anu, and good afternoon to all of you. Very happy to see you in London here and to present to you as my colleagues a good first year of our three-year plan, Unlock the Future. When you look at the key highlights, you see that the business is in very good shape. We have achieved an 8% growth on revenue across all lines of business, across all geographies, and this has also translated into an 8% underlying earnings per share growth, which is, as you know, at the top end of our range of this plan. Very importantly, the solvency is 216%, so a very solid balance sheet, a strong capital position, which has led the board to decide that the delivery for shareholders based on these results is very positive. The dividend per share will increase by 9%, which also is a clear indication of the confidence we have in the business and also being able to deliver for the remaining two years. And an annual share buyback, a new program of $1.2 billion, which represents a 75% payout ratio. So you see that the excellent operational performance is underpinned by an attractive return to shareholders. If we go a little bit deeper, we see that AXA today is simple, is balanced and is focused on insurance. Today, we are only an insurer and it's good that we are only an insurer because that's the business we know best. That's the business we focus on. We are simple in a way that we are serving enterprises from the small SME to the large global commercial and we are on the retail side top three multi-line insurers in Europe and we have leading positions in protection and health in Japan and Hong Kong. balanced because both of it is 50 to 50 and certainly when you think about diversification and the different dynamics of these businesses over time it's important to be balanced and to have within this balance very high quality businesses with leading positions because that gives you attractive and scaled businesses and then certainly also predictable earning scores which we have shown over the last years. If we look at the top line developments, the last years were always a little bit blurred because we had many disposals, we had business right sizings, but the underlying dynamic was always 6% organic growth. From 23 to 24, we were not, and the numbers were not disturbed by any disposals and large rightsizing, and you have seen the organic growth power that is mounting to 8%. This 8% is very consistent across all the lines of business, plus 7 in PNC, plus 9 in life, plus 8 in health, and is also very consistent across all the geographies. So the attractive positioning we have in growing markets helps us to develop these and to generate these numbers. This is very much based on a high customer satisfaction. When you look at our NPS numbers, you see that they have steadily grown over time and have reached very high standards. And what we are very proud about as well, a very high customer retention in almost every market. We are also very happy to see that the investment in growth initiatives that we have been mainly focusing on 2024 start to pay off, and we'll hear later on from Frederik more detail around it, be it in mid-markets, be it in employee benefits, but also be it in expanding our distribution footprint. So what you see here is the very disciplined execution of the plan that we have presented to you about a year ago. As I said, this top line growth also translates into very strong bottom line growth, the underlying earnings per share being plus 8%. And so when you look at the timeline there again, you see that AXA has been delivering consistently earnings year after year in very different environments that have over time become more and more volatile. And if you go even further back to 2016, when I started as a CEO, the increase in profit and underlying earnings is north of 40%. What is nice to see is that top line is translating into bottom line, that we have consistent earnings. And if you look at these numbers, 110 billion revenue and 8.1 billion of profits, these are numbers that we have never seen in the history of AXA. What is it due to? As I said, it's due to the very disciplined execution that we have on clear strategic priority. It's our focus on excellent technical profitability. And as you know, the year 2024 was very focused around getting the German operation, the German retail business, and getting the UK retail business and health business right. And you have seen that we have delivered on it. And certainly the investment in technology and AI, as I said earlier, has shown its first effects, has also been a drag on our earnings in 2024, which will not repeat in the remainder of the plan, but will enable us to continue this dynamic going forward. So we've built a business over the last years that is now in good shape, that is global, that is performing well, that is giving steady and consistent returns, and that is a reliable profit generator for the future. When I talk about the future, we need to also look what are the catalysts for near-term growth in the next two years, but also beyond that. And on the commercial insurance, you clearly see that mid-market is an area where we see significant growth. We've already delivered good growth numbers in the high single digit. The energy transition is still a growth factor for us, but also when you think about companies, they want to do more for the well-being of their employees. They want to care more about their employees in terms of talent retention. There is an area to capture growth with our digital capabilities and the global pricing assets that we have. On the retail side, and it's important as well because of our balanced model to have a strong and large retail presence, we can certainly do more and want to benefit more from a new pension and savings uh... area where people think more about retirement if you look for example in france the public debate is very much again around uh... retirements and so revamping our product offerings making sure that we are becoming even more present in this area and this has already started last year in particular in france and italy we want to benefit uh... from this and certainly when you think about the retail pnc environment We are now at a level where we have done all the necessary work to be at the technical level that is necessary and now we need to use our large franchise to also gain more market share across all the countries. We have achieved that already in those countries where we didn't have this significant restructuring to be done, so the UK and Germany, but if you look at the net new customers or net new contracts across all the other markets, you see that we have been very successful already. So we are very confident that we will sustain this momentum also for the years going forward. What does it mean in terms of shareholder return? We are, the board of directors is proposing to the shareholders a dividend of 2 euro 15, which is an increase of 9%. And when you look at the total yield, it's about 7% dividend and share buyback based on a very clear capital management policy. And what does that mean if you again look over the last four years? AXA will have returned 40% of its market cap to the shareholders. 75% is paid out to shareholders. What happens to the other 25%? The other 25% is invested in our business at attractive returns. And when you look at the book value and the compounding book value per share over time, you see that it's very attractive as well. So our strategy will continue exactly what you have seen in 2024, continue to generate sustainable and predictable earnings while making sure that this value is also being created for shareholders. and when you look at where we are along the key KPIs of our plan we see that we have had a strong start of our plan on the underlying earnings per share area at the top of the range on the return of equity in the middle of our range, and certainly when you look at the cash bang on, if you look at the three-year plan. So we have high confidence that over the next two years, we will also deliver the plan. We need to remain focused on our execution, which we have proven in 2024 and which we are dedicated to do with my whole team. And that's why I will now hand over to Frederick, who will go more into details and show us what 2024 looked like, but also what the outlook will look like. Thank you.

Thank you, Thomas. Good afternoon. First, a few words on the context. It is clear that we are operating in a changing context. But we believe the context is positive. If I look on the left part of the slide, first, we have political uncertainty in the US and in Europe. We haven't seen any impact on our business. And we believe it will remain so. Second element, inflation in Europe is receding. And this is good news for insurance companies. Third, you know that we have diverging interest rates, US, Europe, and Japan. We are exposed to these three areas. But overall, interest rates remain at a good level, which is good for the insurance industry. On NatCat, you've seen that our exposure to NatCat has decreased in 24. This is a mix of good underwriting, of geographical mix, but we remain cautious. We believe that CAT will keep increasing, the severity and the frequency will keep increasing, so we will manage this in a very disciplined manner. Last element I wanted to highlight on AI, we are absolutely convinced that AI will have deep positive consequences for the insurance industry. be it on technical excellence, be it on productivity, be it on the customer experience. So we are convinced that it will have very positive impact, and this is all a matter of execution. On the right part, on the business performance, so we've delivered in line with our plan on all dimensions. First, on commercial lines, so we've seen good growth in P&C commercial lines with margins at attractive levels. On retail, we've been delivering on margin recovery in the UK, in Germany motor, and we've been growing where we wanted to grow, so in other key markets. On the short-term life business, on short-term protection and health, we are seeing higher profitability and good growth coming especially from the recovery of the UK health business, but not only. And we see improving net flows in savings. Last but not least, we continue to be extremely focused on cash with an 82% remittance ratio in 24, which is in line with our targets. So what is the overall message? First message is we are done with the fixing. All our business units are on track and in good shape. Second message, this is, we believe, a strong start, and it reflects discipline execution. Let's look at the commercial line business. So you know that we have a leading franchise on commercial lines with 35 billion premiums. with a good balance between SME and mid-market, mainly in Europe, and big corporates at Taxa XL. Margins are in a strong place with a 91% combined ratio, and we see good opportunity to grow. We see good opportunity to grow, and I will highlight especially three areas. Overall, in our commercial and business, retention is increasing. And you see the figures here at AXA Excel, which are very good. And this is especially important for commercial and business to keep your profitable clients. Second opportunity area for us, which is the mean market area. You know that we have a specific initiative on the mean market. We have a specific initiative to grow in areas where we are not strong. And be it in the US, be it in Italy, be it in the UK and Ireland, we are really happy with the results, both on the top line and on the bottom line. Third area, we believe that there is a good economic momentum in the U.S., and we are investing there to grow more on big commercial lines, on the market, and on ENS. But at the end, our focus is on sustaining our good profitability and our good margins. And as you see on the right side, this is all about cycle management. This is all about the mix and the cycle is different according to the business lines. So we are keen to grow in some business lines where the profitability is good. We are less keen to grow in some other areas. This is what we call portfolio management. And we think we are doing it well. And we do not hesitate to decrease our business where we don't like the profitability level. Last but not least, as you know, the cost of reinsurance is moderating and it is supporting margins for commercial line business. So what is next on this P&C commercial line business? We expect to see good top line growth in 25 and some improvements in margins in 25, which will drive earnings growth. If I look at retail now, so we have a good franchise on retail, especially in Europe with 19 billion premiums. You know that some of our peers are including SMEs in the retail line, which we don't. So if we included SMEs in the retail lines, it would be a 30 billion business. So we could do both. We decided not to include it, but this is important for you to know. So this business benefits from, first, a good customer satisfaction, and we are very proud of this, and you see here the figures. It also benefits from a strong proprietary distribution. We had said last year when we communicated our plan that we would grow our physical distribution channels. This is what we are doing, especially in all Europe and in France. And we also have a very good direct franchise in some markets in Europe and in Asia, which is doing well. We are also happy about our execution in 24. I've said it already, we have delivered on the turnaround in the UK retail and Germany motor, and this is good. This has led to a two points improvement of our retail technical margins. This turnaround has been based, of course, on underwriting, on pricing, on claims initiatives. But overall, I would say that we have been more courageous than the market. we've increased our prices more, we've been tougher on the underwriting, and this is good because we are now in a good position. Second area on which I would like to insist on the good execution, which is that we've grown in some markets, which we like, and we have not grown in some other markets where we believe that margins were not adequate. Overall, the balance has been zero. So if you look at our retail portfolio, overall the balance has been zero, but you see that we had good growth in France, in international markets, in Italy and Switzerland, and we've accepted to decrease our portfolio in Germany and in the UK, but also in Ireland and in Spain, because the prices were not adequate. You will see positive growth of the portfolio in 25. So what is next on the retail business? First, we believe that margins will continue to improve in 25 because pricing will be earned through and inflation is moderating. So in this context, we are focused on growing our portfolio and growing our volumes. Let's move to our life and health business. So first, this is important to understand that our life and health business is made of two different parts. The first part is what we call the short-term business. So this is pure protection business, PNC-like, annual repricing, managed like a PNC business with a combined ratio. And here we had a good growth last year. We had a 10% growth of this business with a good profitability. This is overall a $16 billion premium business and it includes our very good and very profitable employee benefit franchise. We had told you, I think, last year that the EB business was growing fast in a post-COVID environment, and this is again confirmed. Our EB business has grown by 12% last year, and we are very happy about this. This EB business is really a priority for us. We have a good franchise. We have a very good platform that we have rolled out now in 14 countries. And we continue also to invest in the individual protection business, especially for professionals and self-employed. In health, I would like to highlight the good job done in the UK, the good turnaround done in the UK, which was well executed with a 7.5 improvement of our combined ratio. You haven't seen everything yet. In other words, you will continue to see improvements in 25. And all of this has helped to deliver half of the three points margin improvement that we had announced for our plan. And this is good. So going forward, what do we expect? We expect that our margins will continue to grow in the UK, as I've just said. We will recapture the LIA premium for the first time in Ireland in 25, and the LIA premium in 25 will be around 1 billion euro. And you will see overall further margin expansion as we systematically leverage our global capabilities on healthcare pathways, data set, and pricing model. So in a nutshell, what is next on this business? First, we have a good potential to grow, to grow the top line, and we believe that we have also the capacity to grow the margins on this business, and the growth of the margins of this business will drive the earnings growth of our life and health business. Last business I would like to mention, which is our long-term life and health business. So long-term life and health business is mainly a savings business, but this is also the health business in Japan and in Germany. we have a total of 36 billion premiums. So this is a CSM-driven business. So this is why we manage this business, the short-term and the long-term in a different way. So the short-term is PNC-like. This one is, again, a long-term business driven by the CSM. And I think this is important here to look back at the history. The history for us in this business is that we've been extremely disciplined over the past years in a very low interest rate environment. And absolutely no regret on this. We believe we've done well. Now the objective is to regain momentum, to regain sales momentum. knowing that in contrast to the short-term business, here you regain sales momentum, but it takes some time to see it in the bottom line. But again, now that the context has changed, of course we remain disciplined, but the priority is to regain momentum. In addition, you know, if I look again at the history, that we had outflows over the past two years linked to high short-term interest rates, the strong competition from short-term banking products. this negative effect is now disappearing, and you will see that it will gradually disappear. So, to be more specific, where do we see the momentum? We start to see the momentum on premiums, and you see that, be it on unit linked or on capital light, general account business, we have a good sales momentum, especially in our proprietary distribution network. The good news is that we are also seeing a strong improvement of surrenders as I've seen. So we had strong surrenders in 23. We again had significant surrenders in 24, but you've seen that over the quarters, all of this has gradually improved towards a much better situation. Having said that, we are clear that we can do better on this business. Again, we have to regain momentum. For a few years, the priority was to be disciplined, to be disciplined on the mix, to be disciplined on what we sell, to be disciplined on the volume. Now that the context has changed, we can do better and we know what we have to do. We believe that we have a strong competitive advantage especially against asset management companies. We can offer lifelong whole life annuities, which is good in the moment in which pension are growing. We can offer protection riders. We can offer guarantees when it makes sense. So we believe that we have a good competitive advantage and we believe also that the partnership with BNP Paribas on asset management will bring some benefits to us. We had some underperforming asset classes at AXA and we believe that with this new partnership it will boost our live business. So in a nutshell, what is next on this business? From now on, we will invest and focus more on this long-term business and especially on pension. I had said it already when we communicated our plan. To put things in perspective, a 1% increase in life and health earnings requires a 0.3 point improvement in the short-term combined ratio. or 1.5 points of change in long-term CSM release growth, which gives order of magnitudes. So on this live business, we are very confident with the business. We are very confident with the potential, and we are very confident that we can do better than what we are doing now. It's all a question of focus. One sentence to conclude on this first year, we are fully on track with the execution of our plan. Thank you.