Axa to return 6 billion euros to investors in new payout policy

AXA plans to return about 6 billion euros (S$8.73 billion) of last year’s earnings to investors under a new payout policy unveiled by chief executive officer Thomas Buberl.

The French insurer vowed to return 75 per cent of underlying earnings per share over the coming years, including 15 per cent via buybacks. For last year, Axa announced a dividend of 1.98 euros a share along with a 1.6 billion euro buyback, in line with the new policy.

Underlying profit of 7.6 billion euros last year came in just ahead of analysts’ estimates, while net income fell short.

Since taking over in 2016, Buberl has shifted the insurer’s focus from life insurance to property and casualty as well as health insurance, in a bid to make Axa less sensitive to financial markets. He said in an interview this month that he intends to “scale up” the firm’s business insuring corporate risks in the next phase of the firm’s growth.

The new payout target, which includes a pledge that the dividend per share will be at least equal to the one paid the year before, is part of a strategy update unveiled on Thursday (Feb 22). As part of that plan, Axa targets growth in underlying earnings per share of 6 per cent to 8 per cent on average from 2023 until 2026, and aims to reach an underlying return on equity between 14 per cent and 16 per cent over the 2024 to 2026 period. 

Axa previously targeted dividend payments equal to 55 per cent to 65 per cent of underlying earnings per share. It didn’t have a goal for buybacks as part of its annual capital return policy, though had repurchased some 4.3 billion euros in stock since 2021. The buyback announced on Thursday includes 500 million euros to avoid dilution from a reinsurance agreement announced in December.

Swiss rival Zurich Insurance on Thursday announced an 8 per cent increase in its dividend, along with a buyback of up to US$1.3 billion. German rival Allianz is scheduled to report earnings on Friday. BLOOMBERG