AXA shares fall over 6% as weak life metrics offset earnings beat, Prima deal

Investing.com -- AXA (EPA:AXAF)shares dropped more than 6% on Friday after the French insurer reported first-half earnings slightly ahead of expectations, while life insurance metrics fell short and its €0.5 billion acquisition of Italian motor insurer Prima drew a muted response.

Underlying earnings came in 0.5% above consensus, with total gross written premiums and other revenues up 1.4% from estimates.

Segment results were mixed. Property and casualty revenue exceeded forecasts by 0.8%, life and savings by 2.5%, and health by 0.9%. 

Asset management outperformed by 2.6%, while banking revenue lagged, coming in 10.9% below expectations. 

Property and casualty underlying earnings beat by 1.9%, while life and health earnings were 0.3% higher. 

Asset management earnings missed by 15.5%, and holdings and banks fell 1.9% short.

The property and casualty combined ratio was 90.0%, better by 0.4 percentage points. 

Catastrophe claims were 0.2 points lower than forecast, discounting impact was 0.4 points more favorable, while reserve releases underperformed by 0.2 points.

Performance in life and health weakened in key areas. Present value of expected premiums was 4.1% below consensus. 

New business value missed by 5%, although margins were in line. Net flows totaled €3.6 billion, just below the €3.7 billion expected. Closing contractual service margin was 3.2% lower than estimates.

Underlying earnings per share came in 1.5% above expectations. The group’s Solvency II ratio was 220%, in line with forecasts.

The company also announced a 51% acquisition of Prima, a digital-focused managing general agent with a 10% share in Italy’s retail motor insurance market. 

AXA said it intends to recapture ceded premiums, implying an 11x P/E multiple based on Prima’s 2024 earnings. 

Call and put options will allow AXA or minority holders to transact the remaining 49% stake in 2029 or 2030.