AXA shares down despite solid FY24 results, strong P&C performance

Investing.com -- AXA  (EPA:AXAF)traded lower on Thursday after reporting a set of full-year 2024 results that were broadly in line with expectations, with no major surprises either way. 

Underlying earnings came in at €8.078 billion, matching consensus estimates of €8.08 billion. While the Property & Casualty (P&C) segment posted a stronger-than-expected performance, this was offset by a miss in Life & Health (L&H) earnings.

P&C earnings rose to €5.51 billion, ahead of the €5.39 billion expected by analysts, helped by a reported combined ratio of 91%—better than the forecasted 92.1%. 

Adjusting for factors such as lower natural catastrophe losses, discounting effects, and higher prior-year developments, the underlying performance was largely in line with projections and showed sequential improvement. 

P&C revenues grew 7% year-on-year across commercial, retail (+7%, with pricing up 10% but volumes down 3%), and reinsurance.

A closer look at the P&C segment revealed mixed trends across AXA’s markets. Pricing in the Spanish retail business improved sequentially in the fourth quarter, while conditions deteriorated in the UK and Ireland, as well as in AXA XL. 

The latter may be a topic of discussion in the company’s earnings call later in the day. Nonetheless, analysts at Morgan Stanley (NYSE:MS) noted that AXA’s underlying momentum going into 2025 remains solid.

The company also flagged a pre-tax loss estimate of €100 million linked to the recent wildfires in Los Angeles, which analysts view as manageable.

On the other hand, L&H earnings came in at €3.32 billion, missing the €3.47 billion consensus forecast. This shortfall was attributed to a lower-than-expected release of the Contractual Service Margin (CSM), despite overall CSM levels being in line at €33.9 billion. 

Additionally, the new business margin of 4.4% came in below the 4.7% expectation, likely due to a different business mix. Net flows, however, were stronger (€1.5 billion vs. €0.7 billion expected), driven by a recovery in short-term business.

Asset management earnings of €914 million were 5% above consensus, supported by better-than-expected flows and average assets under management. 

Holding costs were in line at €-565 million. Cash remittances exceeded estimates by €0.4 billion, reaching €7.7 billion, with ordinary remittances at €7.1 billion and in-force actions (AXA Life Europe and AXA France) contributing €0.6 billion—€0.3 billion higher than expected.

AXA’s key capital metrics remained solid. The solvency ratio stood at 216%, in line with expectations.

The dividend per share of €2.15 and a new €1.2 billion share buyback also matched consensus.

The company reaffirmed plans for a further €3.8 billion buyback once the AXA IM disposal is completed, expected by the end of the second quarter of 2025. AXA also reiterated its 6-8% EPS growth target.

According to Jefferies, AXA’s FY 2024 results reaffirm its predictable and stable financial performance, making it an attractive investment despite broader market volatility in French equities. 

Revenue, underlying earnings, CSM, cash remittance, dividends, buybacks, and solvency were all broadly in line with expectations.

P&C was slightly weaker than consensus by 0.1%, while Life & Savings exceeded expectations by 1.8%, Health by 0.4%, Asset Management by 2.7%, and Banking by 18%.

The P&C combined ratio was 91%, outperforming expectations by 1.1 percentage points, helped by lower catastrophe claims, discounting benefits, and reserve releases.