AXA's Strategic Resilience and Earnings Growth Amid Currency and Structural Shifts

In an era marked by volatile currency markets and structural shifts in the global insurance sector, AXA has emerged as a model of disciplined capital management and strategic reinvention. The French multinational insurer's decision to divest its asset management arm, AXA Investment Managers (AXA IM), and its aggressive share buyback program have not only unlocked value for shareholders but also reinforced its position as a leader in sustainable, high-return insurance operations. For investors, this represents a compelling case study in how a diversified business model, combined with agile capital allocation, can weather macroeconomic headwinds and generate long-term value.

A Strategic Divestiture: Refocusing on Core Strengths

AXA's sale of AXA IM to BNP Paribas for €5.4 billion in July 2025 was a calculated move to streamline its operations and redirect capital toward higher-margin insurance segments. The transaction, which includes a €5.1 billion cash payment and a €0.3 billion transfer of Select, a third-party asset management business, has provided AXA with a substantial financial tailwind. By exiting the asset management space—a sector prone to market volatility and regulatory scrutiny—AXA has simplified its business model and aligned its resources with its core competencies in life and health insurance, property and casualty (P&C) coverage, and customer-centric innovation.

The divestiture's impact on AXA's balance sheet is equally significant. With a Solvency II ratio of 216% (as of March 2025), AXA maintains a robust capital buffer, ensuring it can pursue aggressive shareholder returns without compromising financial stability. The company has committed to a 75% total payout ratio, balancing reinvestment in its business with a commitment to rewarding shareholders through dividends and buybacks. This approach contrasts with peers who have struggled to navigate interest rate cycles and inflationary pressures, often at the expense of long-term value creation.

Share Buybacks: A Catalyst for Shareholder Value

The €3.8 billion anti-dilutive share buyback program, launched alongside the AXA IM divestiture, underscores AXA's confidence in its long-term financial prospects. This initiative, combined with an existing €1.2 billion annual buyback program, has pushed total capital returns toward €5 billion or more. The buybacks are designed to offset the dilutive impact of the asset management sale, which is expected to reduce underlying earnings by approximately €0.4 billion annually. However, analysts project that the buyback program will neutralize this effect, preserving AXA's underlying earnings per share (EPS) trajectory.

AXA's disciplined approach to capital management is further highlighted by its 9% dividend increase to €2.15 per share in FY2024, a move that aligns with its payout ratio target. The company's ability to execute multiple buyback programs in Q3 2025—including a €724.6 million repurchase to address employee shareplan dilution—demonstrates its flexibility in managing capital across diverse scenarios. For investors, this flexibility is a critical differentiator in a sector where rigid capital structures often lead to suboptimal returns.

Earnings Growth and Operational Resilience

AXA's FY2024 results, which include an 8% increase in underlying EPS to €3.59 and an 8% rise in gross written premiums to €110 billion, illustrate the company's operational resilience. Strong performances in P&C Retail, UK Health, and Life Insurance segments—driven by customer retention, disciplined pricing, and margin preservation—have positioned AXA to outperform industry averages. Notably, the company's focus on high-return initiatives, such as technology-driven customer engagement and asset-liability management, has enhanced its ability to navigate macroeconomic uncertainties.

The first quarter of 2025 further reinforced this momentum, with total revenues rising 7% year-over-year to €37 billion. Growth in P&C Commercial Lines (up 6%) and Personal Lines (up 7%) reflects AXA's success in balancing top-line expansion with cost discipline. Meanwhile, a 16% increase in Unit Linked sales in France and a 10% rise in General Account savings in Italy highlight the company's ability to adapt to regional market conditions. These results, coupled with a 46-year track record of consistent dividend payments, underscore AXA's appeal as a “growth and income” investment.

Strategic Clarity in a Fragmented Sector

AXA's strategic clarity—reflected in its “Unlock the Future” plan—has become a key competitive advantage. The company's commitment to a 6%–8% compound annual growth rate (CAGR) in underlying EPS from 2023 to 2026, alongside a 14%–16% return on equity over the same period, provides a clear roadmap for investors. By retaining control over product design and asset allocation for its Life & Savings business, AXA has ensured continuity in its offerings while leveraging the expertise of BNP Paribas for investment management. This hybrid approach mitigates risks associated with asset management while preserving AXA's customer-centric focus.

Investment Implications

For long-term investors, AXA's strategic resilience and capital discipline present a compelling opportunity. The company's ability to execute large-scale transactions—such as the AXA IM divestiture—without sacrificing operational momentum is rare in the insurance sector. Its diversified business model, strong balance sheet, and alignment with high-return insurance segments position it to outperform peers in both stable and volatile markets.

However, risks remain. Currency fluctuations, particularly in emerging markets where AXA operates, could impact future earnings. Additionally, the success of its share buyback program hinges on the smooth execution of its capital return strategy. Investors should monitor AXA's Solvency II ratio and its ability to maintain a 75% payout ratio as key indicators of its financial health.

In conclusion, AXA's strategic pivot toward core insurance operations, combined with its aggressive capital returns and operational discipline, makes it a standout in an otherwise fragmented sector. For investors seeking a blend of growth and income, AXA offers a rare combination of structural resilience and proactive management—a testament to its enduring value in an evolving market.