AXA SA (AXAHF)

Comment l'entreprise gagne de l'argent

Premiums are collected upfront and claims are paid later, sometimes decades later for life and health policies, so profit comes from underwriting discipline — pricing risk correctly — plus the investment income earned on the funds held in between. Asset management adds a smaller, fee-based income stream that depends on the value of assets managed rather than on claims experience.

Chiffre d'affaires par segment

A global brand, broad distribution and a large capital base give AXA underwriting and pricing advantages over smaller insurers. The advantage is not exclusive, however: several other large composite insurers operate at similar scale in AXA's core European and Asian markets, and policyholders can and do switch insurers at renewal.

Car, home and liability insurance are largely mandatory or near-mandatory, so premium volumes hold up through economic downturns better than most consumer businesses. Growth still responds to the economy at the margin, through new business formation, asset values for savings products, and how much coverage households choose to buy.

Principaux risques

• Frequency and severity of insured losses — The company lists the frequency and severity of insured loss events, including weather-related catastrophes, as a main risk factor; it targets a normalized natural-catastrophe load of about 4.5 points of the combined ratio, and a worse year than that assumption directly hits underwriting profit.
• Interest rate and market conditions — The company identifies market performance and exchange- and interest-rate fluctuations as a key risk, since they affect both the value of the investment portfolio backing its policies and the cost of long-term savings guarantees.
• Mortality and morbidity assumptions — Life and health results depend on how actual mortality and morbidity compare with the assumptions used to price policies decades in advance; the company lists these levels among its principal risk factors.