AXA Group boosts solvency with €12bn reinsurance agreement via AXA Réassurance Vie France
AXA Group, a global leader in the insurance industry, has announced a significant reinsurance agreement through its subsidiary AXA France Vie with AXA Réassurance Vie France (‘ARVF’). This strategic move involves a total reinsurance of €12 billion in savings reserves, including €10 billion in traditional General Account (G/A) savings, marking a pivotal step in bolstering the company’s financial health.
Impact on AXA Group’s Solvency and Earnings
The transaction is projected to have a favorable impact of approximately 2 points on AXA Group’s Solvency II ratio as of December 31, 2023, and to result in a cash upstream to AXA S.A. of €0.6 billion. However, it is expected to lead to a reduction in underlying earnings of about €50 million per annum from 2024. To counteract this earnings dilution, AXA plans to initiate a share buyback of approximately €0.5 billion, scheduled to launch following the release of the Group’s full-year 2023 results and new strategic plan.
AXA Group Strengthens Financial Position with Substantial Reinsurance Deal
One-Off Net Income Impact and Contractual Service Margin Reduction
The transaction is anticipated to have an immaterial one-off impact on AXA Group’s net income. It will also result in a reduction of approximately €0.4 billion in AXA Group’s net Contractual Service Margin from 2024.
Details of the Reinsurance Agreement
The quota-share treaty, covering both in-force and associated new business, is expected to be renewed annually until the expiration of the last policies in scope. The reinsurance agreement involves AXA Assurances Vie Mutuelle and AXA Assurances IARD Mutuelle, which are part of the Mutuelles AXA but are not within the accounting consolidation scope of AXA Group nor its Solvency II prudential scope.
Leadership’s Strategic Vision
This reinsurance agreement reflects AXA Group’s commitment to reinforcing its financial stability and long-term growth. The initiative aligns with AXA’s broader strategy to optimize its financial structure and maintain a robust balance sheet.
Conclusion:
The reinsurance agreement between AXA France Vie and ARVF signifies a major strategic move for AXA Group. It underscores the company’s proactive approach to enhancing its solvency ratio and financial flexibility, while positioning itself for sustained success in the dynamic insurance market.