Axa (CS:EPA) FY 2026 earnings call transcript

Good morning, and thank you very much for joining AXA's nine-month 2026 activity indicators call. Our group CFO, Alvandine Meynell, will walk you through the highlights of the press release that we issued last night, after which we'll be ready to take your questions.

With that, I hand over to Alvandine.

Thank you, Anu, and good morning to all of you. Thank you for joining the call. So let me begin with the key messages for the first nine months of 2026. AXA delivered a strong performance over these first nine months, sustaining the momentum from a half-year, supported by the diversity of our business model, the quality of our franchise, and continued good performance across key markets.

And total revenues increased by 5% to €93 billion, with growth well-balanced across our businesses. Our sorensitu ratio stood at 213%, demonstrating the resilience of our balance sheet in a more volatile market environment.

Let me now turn to our business performance, starting with PNC. PNC revenues were up by 3% to €48.1 billion, with a balanced contribution from price and volume. In personal lines, revenues were up 7% to €17.2 billion, and momentum remained strong and broadly in line with the first half, supported by continued price increases across geographies. We added 2.4 million net new contracts over the period, reflecting an acceleration in customer growth.

The growth rate in personal lines is calculated with Prima's contribution to nine months 25, as it had already been considered, and the proportion of the business recaptured was the same as in nine months 26. So Prima contributed $1 billion of gross written premiums in the first nine months. This reflects both commissions paid to the MGA and the initial recapture of approximately 0.5 billion of the premiums. So 0.5 billion commissions, 0.5 billion premiums. On a standalone basis, Prima's revenues increased by 32% to 1.7 billion.

Moving to commercial lines, revenues increased by 1% to 28.7 billion euros, with trends across our two sublines broadly consistent with those reported in the first half. In commercial insurance, excluding XIXL, revenues were up by 4%. This was driven by a favorable pricing environment in France and across Europe, with overall pricing up 2%. We also delivered positive volume growth, particularly in France and international markets, reflecting the strength of our franchise and distribution capabilities.

And looking ahead, we remain confident in our ability to continue growing this business profitably. At AXAXL Insurance, our approach remains consistent. In a softening market, we will grow where market conditions support adequate returns, while maintaining discipline underwriting and exposure management where pricing is less attractive.

Against this backdrop, AXAXL insurance revenues declined by 1%, with pricing also down 1%, broadly in line with the trends reported in the first half. In property, while pricing is softening, minus 7%, margins remain attractive and above are return hurdles. In casualty, rate increases are in line with first half, plus 4.5%. We remain highly disciplined and prioritize margin over volume. In professional lines, pricing is negative, minus 2%, but appears to be bottoming out after several years of declines, and there as well, we remain disciplined. Specialty comprises a number of distinct lines with different market dynamics.

Overall, pricing remains broadly stable, and we continue to see attractive opportunities for profitable growth in areas where XAXL has deep expertise.

Our strategy is unchanged, discipline underwriting, expense management, and growth only where returns meet our hurdles. And finally, in reinsurance, revenues were down by 9%. Renewal pricing declined by 4% versus nine months, 25, with pricing down 8% in property lines and stable in the rest of the business, which reflects a relatively resilient outcome in the current market environment.

Consistent with our underwriting discipline, we reduced volumes where expected returns did not meet our target. Turning briefly to natural catastrophes, group experience in the first nine months was above budget. The third quarter was active in Europe with drought and several hailstorms affecting France and Switzerland, where AXA has high market shares. And as a reminder, we manage NADCATs, BYDs, and discount benefits together with a focus on maintaining a stable overall contribution to profitability.

And now we turn to life and health. So in life and health, premiums were up 7% to €44.8 billion. Both our short-term and long-term businesses delivered strong performance. In the long-term business, premium increased by 7%, reflecting strong sales momentum across GA savings, unit-linked, and protection. And in the short-term business, revenues also increased by 7%, primarily driven by positive price effects in health across all geographies.

Net flows were strong at $6 billion in the first nine months, compared with $5.6 billion in the prior year period.

Overall, the performance demonstrates the relevance of our product offering and the strength of our distribution capabilities across key markets. Let me now turn to new business metrics. New business CSM grew by 1%, supported by strong volumes in savings and good margins. This was partly offset by lower health sales in Japan amid heightened competition. In Japan, we are shifting our commercial focus from health to protection, where margins are attractive and stable.

As in the first half, high interest rates, notably in Japan, weighed on our new business CSM. Excluding this impact, new business CSM would have grown by 4% on a comparable basis. As a reminder, our new business metrics at nine months are not updated for changes in financial or actuarial assumptions. Those are refreshed at half-year and full-year. Given the evolution of interest rates since June, particularly in Japan, we expect the full-year assumption update to create further pressure on reported new business metrics. I now move to Solvency 2. So we continue to operate at a high Solvency 2 ratio that stands at 213% at the end of September. Our ratio was down five points from the first half, mainly explained by the following.

So first, one point of net capital generation, made of seven points from normalized capital generation, and minus six points of accrued foreseeable dividends and annual share buybacks. And minus five points, unfavorable impacts from financial markets, reflecting increased volatility, notably on interest rates, high inflation expectations in the eurozone, the widening of government spreads, including also minus two points impact from cross effects. And as a reminder, the sensitivity of our solvency to OIT's friend, widening, is minimal.

To conclude, so AXA delivered a strong performance over the first nine months, combining strong growth, discipline underwriting, and continued capital strength. We continue to leverage the strength of our franchise to drive growth in retail P&C and commercial insurance excluding AXA Excel Together they grew plus 6 At At AXAXL we are actively managing the cycle and remain selective prioritizing returns over volume AXAXL is well positioned to capitalize on structural growth opportunities and maintain attractive margins. In life and health, strong sales momentum and net flows support the continued growth of our future earnings base. and our 213% sovereignty to ratio, prudent reserving and high-quality investment portfolio provide resilience in a more volatile environment.

So taken together, these elements give us confidence in our ability to deliver the 2026 underlying earnings per share growth at the top end of our 6% to 8% target range. I'm now happy to answer your questions.

Thank you.

Thank you, Andrew. Good morning. So on Excel insurance, I would say overall trends are very much in line with what we saw in the first half. You heard the details I gave by line of business. I think there are probably two things. The first one is we do see an improvement in financial lines in 3Q versus the first half. and there's probably a mixed effect between the various lines of business. But otherwise, for instance, if I take property, it was minus 7% in half year and the same in Q3.

On your second question, yes, it's true that in the UK in particular, we see significant price increases in motor over the third quarter. Yes.

Thank you.

So thank you, Michael. On health, so the 7% is there again very much in line with what we said I have here. And you can say that it's only pricing on this.

We plan very clearly to grow volumes in health in the next plan. But for the time being, in this quarter, we have kept on focusing on margin. You know that we are, for this plan, a target of reducing our combined ratio in short-term life and health by 300 bps. And that's the focus of this plan. By the way, it's also the focus of next plan because we want to improve it by one more point. so 7% rising in Q3 and in 9 months on riots look at this point we don't have the final number because we've given our customers more time to report on their losses you should see that as a mining ad cap it will not be material for the group.

I don't know what it would take for that to be material. I count on the French beliefs to make sure that it's not material and that should be okay.

Thank you for working. Good morning. So on Prima, up to now, we have recaptured 500 million of premiums out of a total written by Prima of 1.7 billion. So we have recaptured roughly 30% of the premiums written. That's exactly according to our plan. And that should grow to approximately 40%, 45% at the end of the year. And in 2017, we will recapture close to 100% of Prima's premiums.

And you saw that Prima grew by more than 30% its premiums over the first nine months compared to 2025.

On volume growth, so I'd say we have very strong volume growth in personal lines, even when you exclude Prima. and that's true in France and in Europe and we're happy with that level. Obviously, we have a plan to improve retention and cross-sale. As you know, that's the one that we disclosed a bit more than a month ago but we're already very happy with that.

On commercial lines XXL, we have a good balance. I think the 4% growth that we have is really slightly more than 2% in price, slightly less than 2% in volumes, but the two round up to 2%. Is it good enough? Well, I think we have a plan again where we want to grow TNC revenues in the next plan by more than five, bearing in mind that Excel should be positive in the next plan. It was slightly negative in the current nine months. So we do see or we do plan for improvement in commercial lines in our plan.

And then NBV margin. in. So the new business CSM overall is up by 1%, 4% if you adjust for the interest rate impact. The reason why you move to a more mutual growth of MBV, it's very much in fact the impact of our Chinese joint venture which weighed a little bit on the NBV number because you know that we report ICBC with NBV and not with new business CSM That's the reason.

Okay, thank you.

So on the net flows, I think the first, they are still strong at 6 billion. What you see is the following. Clearly, we had a slowdown in inflows at AXA MPS. that we attribute to what's happening around BMPS itself.

And we also saw a slight slowdown in AXA France in terms of premium inflows. And you may have seen that it's something that is impacting the whole market. It's not specific to our own business. There's a slight slowdown here. I think those are the two reasons why you see a lower growth in our net flows in Q3 compared to a half year. In a health new business margin, that's really the fact that we grew our Japanese business less.

And therefore, it's a mixed effect. our new business in terms of health is really Japan and Germany. And here, that's the mixed impact of Japan that has a slight impact on the new business value margin.

And so why did we do this? It's also the fact that in Japan, as I mentioned in my opening comments, we are focusing more and more on the protection business as opposed to the health business which is a bit saturated and where competition is extremely high Okay, so just going forward the new business margin in Q3 given the mix might look more similar to Q3 going forward should be a good sort of run rate?

Thank you for your two questions. So on the retail PNC, price versus inflation, at this stage, we see extremely little impact, if any, of the higher general inflation. And so the price increases that we see do more than offset the claims inflation on the retail side very, very clearly. On the solvency to ratio, yes, we have 17 billion of OATs in our balance sheet, and that's the amount such that our solvency ratio is insensitive to the OAT spread widening.

As you wish.

Okay.

Thank you, Michael, for your additional questions. Yes, thank you. So, on NADCAT, so first, you know our NADCAT load, which is 4.5% of premiums. And there is obviously volatility around that number. Over the last two years, we were below that number. what we're saying is that over the first nine months we are above that number on the pro-rata basis.

So as such, it doesn't mean that we should buy more insurance but more importantly, when you look at what sort of net cap we had so some hail, some convective storm and the impact of drought in France taken individually those losses coming from secondary perils are not significant, not material. So you would need to lower your attachment point very significantly for reinsurance to have any impact. And clearly, reinsurers today are not willing to lower their attachment point. They are more prepared to accept price decreases, but remain on primary perils and significant losses. I don't think there would be a market for protection for those secondary perils today.

On your second question on Excel, it's very much in line with what we said at half year, and obviously the dynamics line by line are slightly different on both sides of the ocean. But overall, precisely what Scott and his team are doing is to navigate from one line of business to another to make sure that we take advantage of the lines where profitability is good growth is good and so on So the mix can change from one period to another But at the end of the day we want to make sure that we have the right profitability and minimize the price impacts On your third question on M&A, nothing new under the sun.

We always said that we could do some more M&A, as we did over the last years with Prima, Laia, and the others. certainly we will have 17 points of certainty more but that doesn't mean that we would relax our standards. And on NPS production?

And so what exactly is your question? How much will you get? I wish I knew so it's not a fixed price as you can imagine so I think the important point to have in mind and on which I that I already mentioned in past calls is that it's going to be fair value what I mean by fair value it's as opposed to embedded value because very often in those joint ventures you the price at which you sell your stake is the embedded value and therefore the reflection of the enforced contracts in ours it's the fair value which means that it also embeds the value of future new business.

And then there will be a discussion either with BMPS or with the acquirer of BMPS, depending on how the offer from Intesa goes.

Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone.

So thank you for your two questions. On Germany, first, to put things in perspective, our strengths in Germany are first and foremost PNC and health, where we have strong market shares. We are less strong on the live side and therefore we would probably participate to the pension reform to a lesser extent compared to some of our competitors.

Nevertheless, we believe that's also an opportunity for us and we do plan to participate. More generally, but specifically in Germany, the life insurance we sell is long-term life insurance to help our customers build savings for their pensions. So that is very much in line with what we do in Germany as what we do in Switzerland, Belgium, and France. So we will certainly participate in that.

On the JV in China, so it's a JV where we are minority shareholders. We have 28%. And it so happens that over the last quarter, the NBV went down. it's mainly general account savings, traditional ones, and a bit capital heavy.

We are a minority shareholder and we see that it has a negative impact on our NBV margin overall.

Thanks. Once again, if you wish to register for a question, please press star and one on your telephone.

Sorry, Michael, on your last question, I'm not exactly sure to understand. What is your question? It's on private debt, but what is it exactly?

Okay. So on Prima, what we disclosed in the half-year earnings is that the Prima's combined ratio was 87.5%. and there's no reason to believe at this stage that it would be materially different and on private debt, no, nothing new we have 10 billion of private credit below investment grade overall we have 48 billion of private credit overall with 36 billion of investment grade private credit and that's mostly mortgages, infrastructure debt, commercial real estate debt.

But on the below investment grade part, which is mid-market lending, nothing new, we have a 10 million average line and therefore a high diversification plus a high level of selectivity in the businesses we lend to. So nothing new on that part.

Thank you very much for joining our call. If you have any further questions, please don't hesitate to reach out to Investor Relations. Thanks and have a nice day.