Assessing Berenberg's Bullish Outlook on AXA's Strategic Transformation and Financial Resilience

AXA's 2024-2026 strategic plan, Unlock the Future, has positioned the insurer as a focal point for investors seeking resilience in a volatile market. Berenberg's recent “Buy” rating, with a price target of EUR 41.50, underscores confidence in AXA's ability to deliver robust financial performance despite macroeconomic headwinds. However, a closer examination of the insurer's strategic ambitions, financial targets, and external risks reveals a nuanced picture of opportunity and vulnerability.

Strategic Foundations and Financial Targets

AXA's plan hinges on disciplined execution, organic growth, and a refocused portfolio centered on technical risks. The company aims for a 6–8% compound annual growth rate (CAGR) in underlying earnings per share (EPS) from 2023 to 2026, alongside a 14–16% return on equity (ROE) over the same periodAXA announces its 2024-2026 strategy, setting ambitious new financial targets^[1]. These targets are supported by a capital management policy allocating 75% of underlying EPS to shareholders—60% via dividends and 15% through buybacksAXA Strategic Plan 2024-2026: February 22, 2024^[2]. Such a framework reflects AXA's commitment to balancing growth with value creation, leveraging its strong balance sheet and historical performance, which includes a 34% increase in underlying earnings and 75% organic cash remittance from 2016 to 2023AXA: strategic plan and objectives to 2026^[3].

Berenberg's bullish stance is partly justified by AXA's track record. The insurer reported 8% revenue growth and record operational profits in 2024, demonstrating its ability to execute under challenging conditionsAXA : Performance Solide et Perspectives Prometteuses pour 2025^[4]. Fitch Ratings has also affirmed AXA's capacity to meet its targets, citing “very strong earnings” and disciplined cost managementAXA Is on Track to Meet Financial Plan Targets Supported by Strong Revenue Growth^[5].

Risks to the Bull Case

Yet, Berenberg's optimism faces scrutiny. Political instability in France, where AXA is headquartered, introduces uncertainty. The government's recent €44 billion budget savings plan and a looming vote of no confidence have raised concerns about fiscal sustainability. A downgrade of France's credit rating from AA- to A+ by Fitch in September 2025 has already increased borrowing costs, with further downgrades by S&P and Moody's anticipatedFrance’s economy faces a key risk beyond its political turmoil^[6]. While AXA's CEO has described the political climate as “bearable,” broader economic pressures—such as higher interest rates and reduced consumer demand—could indirectly strain the insurer's operationsAXA CEO: French Political Uncertainty 'Bearable'^[7].

Global risks further complicate the outlook. AXA's Future Risks Report 2024 highlights climate change, geopolitical instability, and cybersecurity threats as top concernsA risk manager’s guide to the AXA Future Risks Report 2024^[8]. These risks are not abstract: climate-related claims could erode margins, while geopolitical tensions may disrupt supply chains or increase liability exposures. Notably, the report omits detailed analysis of AI-related risks and ethical challenges in emerging markets, potentially leaving gaps in AXA's resilience strategyPredicting the future of 2030: An in-depth dissection of AXA^[9].

Market Skepticism and Macroeconomic Headwinds

Critics argue that Berenberg's model underestimates macroeconomic volatility. AXA's stock has fallen 9% year-to-date, outpacing the European insurance sector, reflecting investor skepticism about its ability to navigate a shifting landscapeBerenberg sees AXA SA stock as a Buy amid political uncertainty^[10]. The insurer's reliance on organic growth, while prudent, may limit agility in a market where M&A or strategic partnerships could accelerate transformation. Additionally, regulatory changes—such as stricter solvency requirements—could constrain capital flexibilityAXA announces its 2024-2026 strategy, setting ambitious new financial targets^[11].

Conclusion: A Credible but Conditional Bull Case

Berenberg's bullish outlook is credible but contingent on AXA's ability to mitigate external shocks. The insurer's financial targets are ambitious yet achievable, supported by a robust balance sheet and disciplined capital allocation. However, the interplay of political instability in France, global risk trends, and potential regulatory shifts introduces material uncertainty. Investors should monitor AXA's quarterly performance, particularly its ability to maintain margins amid rising claims costs and macroeconomic volatility.