Axa announced an immediate share buyback of up to €1.7bn alongside its third-quarter results on Thursday, in the latest example of a big European insurer returning funds to shareholders.
The Paris-based insurer’s solvency ratio — its capital as a percentage of the regulatory minimum — rose two percentage points in three months to 214 per cent at the end of September, fractionally ahead of analysts’ expectations and clearing the way for the buyback.
The ratio improved because of factors including slightly higher interest rates and the effects of a reinsurance transaction announced in July for its Hong Kong-based business.
Frédéric de Courtois, deputy chief executive of AXA, said the insurer’s strategy, which had been “implemented with discipline”, was “bearing fruit and the group is in a very solid position”.
A further buyback of up to €500m is planned for next year.
“All these elements illustrate how Axa has generated value for all stakeholders,” de Courtois said. “We are very confident about the future.”
He said the €1.7bn buyback would begin in the next few days and would probably last for five months.
Analysts had been expecting some form of buyback partly in light of the sale of its Singapore business to HSBC.
But broker Jefferies said it was 70 per cent bigger and 15 months earlier than expected.
The move fits a trend of multinational insurance groups selling out of non-core territories and boosting returns after last year’s dividend pauses caused by the pandemic.
The UK’s Aviva pledged in August to return at least £4bn to shareholders after announcing a series of disposals in the preceding months.
Axa’s revenues for the first nine months of the year increased 7 per cent on the same period last year. The major division of property and casualty insurance benefited from the global rise in insurance prices, while the life and savings division increased turnover 12 per cent.
The company estimates its Axa XL division will pay out €400m, before tax and after reinsurance recoveries, as a result of Hurricane Ida, which hit Louisiana at the end of August and also caused destruction in the US north-east.
Citi had expected Ida-linked losses of about €300m, but Jefferies had expected almost double that.
“With growth ahead of expectations, capital in line and catastrophe claims less costly than feared, Axa’s update reads highly positively,” wrote Jefferies analysts in a note.
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