AXA (AXA) Chief Henri de Castries: a Count to Count On - Barron's
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Under leadership of CEO Henri de Castries, a real count with aristocratic lineage dating to Louis XIV, AXA (NYSE: AXA) is poised to make le grande rebound, Barron's reported over the weekend. De Castries (say: cahst) had a promising career in government ahead of him, graduating first in his class at Ecole Nationale d'Administration in France. He then left in 1989 to join AXA to the dismay of his peers. Mentor, ECB Cheif Jean-Claude Trichet, said that he was making the mistake of a lifetime.
De Castries has been at the helm of the French insurance giant for 10 years, guiding it through tumultuous times such as 9/11, the 2001 - 2003 bear market, and the recent collapse of the financial markets. He says that they have made their share of mistakes, but they have been "less than average."
Once a mentionable name, AXA now vies for boasting rights of the largest market cap among insurance giants. Perennial European favorite Allianz posted a market value of €38 billion, while AXA claimed €35 billion (about $51 billion).
Although its a major player in life insurance and P&C insurance, their money-management unit AllianceBernstein is probably the best known.
So, what about life after a meltdown? Considering their conservative balance sheet and diversified earnings base, AXA has the wherewithal to make some strategic acquisitions of rivals who didn't fair quite as well over the past 18 to 24 months.
De Castries says that he'll pull about a £1 billion out of U.K. operations due to over-regulation of profit margins and capping fees there.
AXA recently raised €2 billion for expansion in markets such as Asia, South America, Central Europe and Russia. They recently bought the P&C insurance operations from ING (NYSE: ING) for €1 billion.
Part of the attractiveness to AXA by investors lies in its global diversification. 24% of revenues last year came from France, 26% from Northern, Central, and Eastern Europe, 18% from North America, Asia Pacific and the U.K. accounted for 10% and Southern Europe and Latin America added 13%. AXA’s penetration of emerging markets is rather light, due in part to the fact that the company is rather young at the age of 20. De Castries names some areas of growth that include Indonesia, Philippines, Thailand, Vietnam, India, Turkey, Algeria, Latin America, Russia, and many of the republics rimming Russia. AXA is also enjoying strong growth in Poland and the Czech Republic.
In terms of business diversification, 64% is in their life and savings operation. Savings operations include products like VA’s and VUL’s. Appeal to run to insurance products comes after the serious financial meltdown of 2008 and the apprehension of putting money in, or even trusting, banks. Consumers are also looking for better performance stemming from the fear of outliving their retirement savings. AXA’s other revenue, 32% in 2008, comes from their European P&C business.
AXA is also focusing more on its personal lines operations, and have developed an innovative, direct, Web-based sales platform to supplement their agents.
"The lesson is that one must stick with what one knows," de Castries says. "Banking and insurance are entirely distinct businesses with different balance sheets and risk profiles. And as for AIG (NYSE: AIG), it became a gambling casino bolted on to an insurance operation."
Much of the corporation’s €390 billion portfolio is backed by high-rated corporate bonds and various government securities. AXA avoided the mortgage-backed security risk by keeping only about €673 million in its portfolio, below 1%. Of their real-estate investments, accounting for 5% of their portfolio, most are in areas such as Germany and Switzerland, which tend to be more stable.
Considering that his maternal grandfather and father were highly decorated military heroes, it comes as no wonder that this count keeps his head in times of pressure to guide his company in a profitable direction.
AXA is trading at $23.35 in the late-morning session, up about 2% on the day.
De Castries has been at the helm of the French insurance giant for 10 years, guiding it through tumultuous times such as 9/11, the 2001 - 2003 bear market, and the recent collapse of the financial markets. He says that they have made their share of mistakes, but they have been "less than average."
Once a mentionable name, AXA now vies for boasting rights of the largest market cap among insurance giants. Perennial European favorite Allianz posted a market value of €38 billion, while AXA claimed €35 billion (about $51 billion).
Although its a major player in life insurance and P&C insurance, their money-management unit AllianceBernstein is probably the best known.
So, what about life after a meltdown? Considering their conservative balance sheet and diversified earnings base, AXA has the wherewithal to make some strategic acquisitions of rivals who didn't fair quite as well over the past 18 to 24 months.
De Castries says that he'll pull about a £1 billion out of U.K. operations due to over-regulation of profit margins and capping fees there.
AXA recently raised €2 billion for expansion in markets such as Asia, South America, Central Europe and Russia. They recently bought the P&C insurance operations from ING (NYSE: ING) for €1 billion.
Part of the attractiveness to AXA by investors lies in its global diversification. 24% of revenues last year came from France, 26% from Northern, Central, and Eastern Europe, 18% from North America, Asia Pacific and the U.K. accounted for 10% and Southern Europe and Latin America added 13%. AXA’s penetration of emerging markets is rather light, due in part to the fact that the company is rather young at the age of 20. De Castries names some areas of growth that include Indonesia, Philippines, Thailand, Vietnam, India, Turkey, Algeria, Latin America, Russia, and many of the republics rimming Russia. AXA is also enjoying strong growth in Poland and the Czech Republic.
In terms of business diversification, 64% is in their life and savings operation. Savings operations include products like VA’s and VUL’s. Appeal to run to insurance products comes after the serious financial meltdown of 2008 and the apprehension of putting money in, or even trusting, banks. Consumers are also looking for better performance stemming from the fear of outliving their retirement savings. AXA’s other revenue, 32% in 2008, comes from their European P&C business.
AXA is also focusing more on its personal lines operations, and have developed an innovative, direct, Web-based sales platform to supplement their agents.
"The lesson is that one must stick with what one knows," de Castries says. "Banking and insurance are entirely distinct businesses with different balance sheets and risk profiles. And as for AIG (NYSE: AIG), it became a gambling casino bolted on to an insurance operation."
Much of the corporation’s €390 billion portfolio is backed by high-rated corporate bonds and various government securities. AXA avoided the mortgage-backed security risk by keeping only about €673 million in its portfolio, below 1%. Of their real-estate investments, accounting for 5% of their portfolio, most are in areas such as Germany and Switzerland, which tend to be more stable.
Considering that his maternal grandfather and father were highly decorated military heroes, it comes as no wonder that this count keeps his head in times of pressure to guide his company in a profitable direction.
AXA is trading at $23.35 in the late-morning session, up about 2% on the day.
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