AXA(AXAHY) - 2020 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - AXA recorded a strong revenue growth of 4% at the group level in Q1 2020, with all business lines and segments contributing positively [2][10] - The Solvency II ratio was reported at 182% at the end of March, indicating resilience in the balance sheet despite volatile market conditions [4][10] - Debt gearing is now below 28% on a pro forma basis after the repayment of €1.3 billion subordinated debt [4][10] Business Line Data and Key Metrics Changes - Property & Casualty (P&C) revenues increased by 3%, driven by a 5% growth in commercial lines, with AXA XL growing by 8% [3] - Health revenues grew by 8%, with contributions from all countries [3] - Life and savings revenues increased by 4%, primarily from Unit-Linked and Protection products [3] - Asset management segment saw AXA IM revenues grow by 11%, supported by net inflows and positive market impact [3] Market Data and Key Metrics Changes - Initial trends indicated a revenue decline of around 12% in April due to COVID-19 impacts, with a more pronounced effect expected in life and savings segments [6][7] - Claims notifications related to COVID-19 were limited at the end of March, but a material impact on claims is anticipated, particularly in event cancellation and business interruption [8][9] Company Strategy and Development Direction - AXA remains confident in its strategy and execution, emphasizing the need for enhanced insurance coverage in preferred segments post-crisis [10] - The company has taken exceptional measures to support clients during COVID-19, including premium refunds for impacted SMEs in France [5] Management's Comments on Operating Environment and Future Outlook - Management expects COVID-19 to have a progressive impact on revenue growth, with a material effect on earnings anticipated for 2020 [9][10] - The company is focused on maintaining a strong balance sheet and managing expenses while navigating the challenges posed by the pandemic [10] Other Important Information - AXA is the largest private contributor to France's solidarity fund, demonstrating its commitment to social responsibility during the crisis [5] - The company has limited exposure to vulnerable sectors, with a high-quality asset portfolio primarily composed of AA-rated and A-rated corporate bonds [9] Q&A Session All Questions and Answers Question: Update on business interruption policies and claims costs - The majority of AXA's contracts are not exposed to COVID-19, with business interruption coverage typically requiring physical damage to trigger [12][13] - It is confirmed that the impact from business interruption will be an earnings event rather than a balance sheet event [13] Question: Context on travel claims and event cancellation exposure - Travel claims are expected to be mid-triple-digit millions, but not the largest hit [19][20] - For event cancellation, AXA anticipates a loss of 70% of exposure from March to September and 25% from September to March 2021 [19] Question: Update on debt redemptions and capital allocation - The two transactions related to AXA Belgium and CE disposals are progressing normally, with confidence that they will close this year [18] - There is no capital shortfall in businesses wanting to benefit from price hardening in the commercial lines [25] Question: Concerns regarding dividend payments and regulatory guidance - The Board proposed a dividend of €1.43 per share, but the decision is pending due to regulatory guidance urging companies to postpone dividends [49][50] Question: Insights on health claims and potential spikes in costs - Currently, there is no increase in health claims, but a potential spike is expected in Q3 as people return to medical services [42] Question: Clarification on business interruption claims and geographic exposure - Business interruption claims are a commercial lines issue, with discussions ongoing in various jurisdictions [59] Question: Concerns about solvency and local subsidiary performance - There are no breaches at the local subsidiary level, and liquidity remains strong at the holding level [72]