Axa announces shakeup to simplify company and target preferred segments

Axa has simplified its operating model to focus on five key geographies and target preferred segments, including commercial P&C business. As the shakeup was announced, the insurer explained that growth activity, including mergers and acquisitions (M&A), will focus on 16 core countries, with potential sales in 26 countries where it lacks scale. Axa also said it will press ahead with its cost-cutting exercise, create a leaner corporate centre and dedicate €200m per year to investments in innovation. The insurer expects its new operating model to be in place during the first quarter of next year. It will see the insurer organised into five key geographies – France, Europe, the US, Asia and international. The firm said the shakeup is designed to empower its entities to deliver transformation and operate as close as possible to their customers. “My objective is to let our teams focus their energy on growing our business and deliver excellent service in their respective markets. I am convinced that local empowerment is instrumental to the long-term success of Axa, by making our transformation tangible on the ground, as close as possible to our clients. In order to achieve this, the simplification we are implementing is an absolute prerequisite, but also the starting point of a large effort to make Axa simpler for all our stakeholders,” said Axa CEO Thomas Buberl. He said Axa’s simplified footprint will allow it to focus on fewer countries and continue its shift towards preferred segments. “We will continue to shift our portfolio towards our preferred segments, favouring products with high frequency customer contacts and innovative additional services. We reaffirm our preference for health, protection and the P&C commercial lines segments, and are dedicating €200m per year to innovation, from within our existing M&A budget,” said Mr Buberl. According to Reuters, Mr Buberl said Axa will particularly focus on small and mid-sized companies within P&C insurance to help boost profitability. Reuters also reported that Mr Buberl told analysts at an investors’ day in Paris that Axa will narrow its acquisition and growth focus to 16 key countries. “We want to focus on fewer countries. We want to focus on these countries where we have scale and potential,” Mr Buberl reportedly said. Germany, France, Belgium, Italy and the US were named among ten developed and six emerging markets – Brazil, China, Indonesia, Mexico, the Philippines and Thailand – that account for nearly 90% of AXA’s profits as areas of focus. “Our M&A strategy will focus only on those ten plus six countries,” Mr Buberl said. According to Reuters, Axa also said it could sell some assets in 26 markets where it lacks scale. The firm’s chief financial officer, Gérald Harlin, said this does not mean that units in these countries – which include Algeria, Colombia, Turkey and Russia – will all be sold. “What we said is that we will rationalise it. There will be some that will be sold and there will be others that indeed will be managed for more profit,” Mr Harlin reportedly said. Axa also announced a 25% reduction in its central cost functions to deliver €300m of savings during the next two years. This forms part of its Ambition 2020 initiative to deliver €2.1bn of cost efficiencies by 2020. “Axa is well on track to achieve its Ambition 2020 targets, and is taking important steps towards making the group simpler for all our stakeholders and to foster growth. We are building the future of Axa according to a clear strategic view focusing on fewer countries, with emphasis on scale and potential,” said Mr Buberl. According to the UK’s Financial Times newspaper, Axa said at the investors day that it will cut 300 jobs from head office operations in Paris, Hong Kong and Madrid, but stressed that many of these employees will be redeployed. Axa has appointed a new executive team to lead its transformation. The reshuffle sees Gaëlle Olivier, head of Axa’s global property and casualty business, and Paul Evans, head of life, savings and health, leave the company. The new management committee consists of Mr Buberl as CEO; Benoît Claveranne as CEO of international and new markets; Gordon Watson as CEO of Asia; George Stansfield as directeur général adjoint and general secretary; Mr Harlin as directeur général adjoint and CFO; Astrid Strange as COO; Alban de Mailly Nesle as chief risk officer; Antimo Perratta as CEO of Europe; Mark Pearson as CEO of AXA US; and Jacques de Peretti as CEO of AXA France. In addition, Axa will create a single, “refocused” corporate centre. The corporate centre’s current three-layered setup of head office, global business lines and regions will fall by the wayside. Axa has also filed a registration statement with the US Securities and Exchange Commission for Axa US as the first step towards its IPO.

Axa announces shakeup to simplify company and target preferred segments

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