Axa SA, the French insurer that’s trying to buy out its Asian units, expects to reduce costs by at least 1.5 billion euros ($2 billion) by 2015 at the company’s life-insurance and property-and-casualty businesses.
“In a post-crisis world, we’re reviewing the balance between growth and efficiency and the way we manage our capital,” Chief Executive Officer Henri de Castries said in a statement today. Axa aims to deploy capital in emerging markets and in businesses such as protection and health, he said.
Axa plans to have more than 500 million euros of pretax “productivity gains” at its life-and-savings business and it expects at least 1 billion euros of pretax gains from reducing expenses, including “claims handling costs,” at the property- and-casualty operations, it said.
“The cost reductions are aggressive,” said Pierre Flabbee, a Paris-based analyst at Kepler Capital Markets who recommends buying the stock. Still, “this isn’t a complete plan. The market is not reacting on this.”
Axa will present its “deployment plan” in the first half of 2011, de Castries, 56, said today. The CEO and Axa’s management will hold an investors’ presentation in Paris today starting at 11 a.m. local time.
Axa fell 13 cents, or 0.9 percent, to 13.42 euros at 10:15 a.m. in Paris trading, valuing Europe’s second-largest insurer at about 30.7 billion euros.
Axa expects U.S. variable annuities, equity-linked insurance products, to cut operating profit by about 100 million euros in the second half on “assumptions for long-term surrender rates,” the company said.
The insurer also said it expects between 300 million euros and 500 million euros a year of net realized gains from investments on assets such as equities.
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Life Insurance companies are doing so well in the current climate they are beginning to think long term while the banks and other sectors from sovereign debt crisis to another, trying to keep ahead of the storm. If it wasn’t for the BRIC countries and other Far East countires insurance markets booming, they could be in the same boat as the banks in all probability.
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