AXA

Analysis of AXA share price

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Among the companies whose share prices are quoted on the stock markets, particularly those on the French markets, we notice many large financial groups whose activities touch the banking or insurance sectors. Thus, one of the most popular actions with traders and retail investors is that of the AXA group, which is known for its high liquidity and its ability to innovate. Here therefore is some basic information about this company and advice for the analysis of its share price.

Elements that can influence the price of this asset:

Analysis N°1

As part of this analysis, the insurance industry, and more specifically the life insurance segment that generates a large portion of this group's revenues, will need to be closely monitored.

Analysis N°2

Similarly, AXA's positioning in emerging markets and all operations carried out by the group to increase its presence in these markets will be closely monitored.

Analysis N°3

The digital sector and online sales are also an important means for AXA to increase its sales. Indeed, it will be necessary to closely monitor the development of new online services by the group.

Analysis N°4

The economic situation in the countries in which the AXA Group operates will of course also have an undeniable influence on this value and you should therefore monitor this data.

Analysis N°5

Of course, like all insurance companies, the AXA Group could see its profitability threatened by an increase in claims and damages. Attention will therefore be paid to these statistics.

Analysis N°6

Finally, it will of course be necessary to take into account the increasingly strong competition from this sector of activity throughout the world and therefore the current events of its main adversaries.

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General presentation of AXA

Particularly well known in France, the AXA Group is in fact the European leader in the insurance sector and its turnover is generated by diverse and multiple activities that include life insurance, general insurance cover, asset management, international insurance and banking.

This group has extended its activities in different European countries but achieves the majority of its profits in France.

To understand the presence and importance of AXA around the world, here are some important figures you should know.

In 2017, AXA had no less than 107 million customers around the world and only 9 million in France. This clearly demonstrates the strong presence of the French insurer on the international market.

In the labor market, AXA is also a key player, since the group currently employs around 120,000 people in different countries and has with more than 166,000 employees worldwide.

Finally, let's take a look at the profitability of AXA. In 2016, the group generated a turnover of more than 100 billion euros with a net profit of more than 5.6 billion euros.

Of course, these few figures are given to you as an indication and represent the situation as it is in 2017. They are therefore likely to change over time.

The Axa share price is currently quoted in the A section of the Euronext Paris stock market in France. The Axa Group share price is integrated in the calculation of the major French National stock market Index, the CAC 40.

Analysis of AXA share price
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The major competitors of AXA

Knowing about the major competitors of the Axa Group will enable you to better understand the challenges of the insurance activity sector. In fact, by observing the financial results and following the news and events of these competitors you will be able to better anticipate their influence on the Axa Company and thereby adapt your stock market trading strategy accordingly to easily make significant profits.

Allianz

Competitors of the Axa Group on the international level are numerous. Among these can be noted the Allianz Group which holds second position worldwide in this sector and sixth position in France. This competitor offers overall a similar operation as the Axa Group with comparable products and services and has developed a strong international presence, even beyond Europe.

Generali

Another major competitor of the Axa Group is Assicurazioni Generali, originally from Italy, which is currently the market leader in its country and holds third position on a European level. Its shares can be found on the stock market under its more common name of Generali. Generali also offers insurance for individuals and professionals.

Groupama & MMA

In France, the Axa Group faces a serious competitor by the name of Groupama (Groupe des Assurances Mutuelles Agricoles) that also offers banking and savings services and which holds the number two position on a national level in the insurance sector. Axa also faces competition from MMA (Mutuelles du Mans Assurances) which is specialised in insurance for associations and groups as well as individuals and professionals.


The major partners of AXA

In terms of Axa's partnerships, we must turn to the start-ups that are at the heart of the insurer's alliance strategy. Thus, Axa has recently linked up with Blablacar or Deliveroo in order to offer its services to young innovative companies.

Alibaba

Axa also signed a partnership with the Alibaba group in 2016 concerning the online distribution of its products.

ING Bank

In 2018, the AXA Group also set up a partnership with ING Bank in the digital field. This is an exclusive and long-term partnership that will allow AXA to offer online insurance products and related services in more than 6 countries. Thanks to this contract, ING will be able to diversify its sources of income by offering property and casualty insurance, health insurance and personal protection products in countries where it was only present in the online banking sector. This includes the French, German, Italian, Czech, Austrian and Australian markets. In total, no less than 13 million consumers are targeted by these new offers.

MACIF

More recently, in July 2019, the AXA Group did not create, but rather strengthened an existing partnership with Adie, an association working in the field of microcredit in France. The partnership, which began in 2007, has already enabled Adie to offer 3,000 micro-entrepreneurs micro-insurance policies tailored to their needs and activities.

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The factors in favour of a rise in the AXA share price:

Of course, one of the most persuasive arguments relating to a probability of a rising trend of the AXA share price concerns its position among the other European and international players in certain specific sectors of its activities. It should be remembered here that the AXA Group currently holds second position in the insurance sector in Europe and is the leader in life insurance worldwide. It is also the global leader in the wealth management sector. This position as leader has been rendered possible through the long term strategy practised by this group over the last three decades which essentially resides on the strategic acquisition of companies around the world. Nowadays this strong position offers the AXA Group a better visibility worldwide than the majority of its competitors and an almost total coverage of the different areas in this sector.

This in fact brings us to another positive argument for the future growth in this share price and relates this time to the distribution of this group’s activities into different sectors. It should be remembered here that the life and retirements savings solutions alone represent nearly 58% of this group’s activities. Then we find the damage insurance policies with 33% of the activities then international insurance and wealth management. The fact that these sectors are so separate and distinct means that AXA offers a better coverage for the market requirements and protects the company from risks related to a single type of product.

Apart from these arguments we should also mention the fact that the financial situation of this company appears particularly solid which strengthens the shareholders and investors feelings of security and encourages them to take buying positions in this company. This financial solidity is largely due to the centralised cash management system of the company which boasted a 191% solvency ratio in September 2016.

The AXA Group has for eight years concentrated its activities and investments in certain countries that have undergone strong growth and emerging countries which are now starting to bear fruit.  Since 2010 AXA has in fact invested no less than 4.2 billion Euros in Asia and has thereby become leader in this sector. This company has also invested 0.7 billion Euros in the Mediterranean, Africa and Latin America as well as 200 million Euros in Eastern Europe. The current increase in growth in these geographical sectors should therefore continue to the benefit of AXA and generate even more revenue.

Another advantageous strategy of AXA relating to its development concerns its continuing responsiveness to the digital world. By using this type of communication and distribution channels the group shows itself to be more in touch with the general modern trend and thereby improves its brand image. In this way it is connected to a larger market and can therefore be more competitive against the competition. Still from a strategic point of view, in order to further improve its profitability and financial results AXA recently decided to concentrate on its unit linked technical products such as health, accidents and retirement that offer more advantageous margins and are less sensitive to variations and drops in the interest rates.

Generally speaking, if we compare the results published by AXA to those of the market in general, we can observe that the group is one of the only companies capable of generating profits, sometimes even record profits, in a negative environment with low true rates or highly volatile markets.

And finally the last argument for a rise in the AXA share price relates to the global confidence of the analysts and ratings agencies relating to this asset. The group benefits from an AA rating from a number of these agencies and the analysts agree with this positive rating which confirms the reliability and strong position of this asset.

The factors in favour of a drop in the AXA share price:

After reading the factors presented up to now you have no doubt reached the conclusion that the AXA Company is financially solid with an attractive strategy that should enable the company to continue increasing its activities and profits in the future. However stock market investors do not simply content themselves with an analysis of the group’s strengths, they also take into consideration the company’s weak points and the factors in favour of a drop in the company’s share price and this is what we shall now examine in detail.

Firstly, with the highly specific activity sector of the AXA Company we note that the capital structure is strongly sensitive to changes in the financial markets.  This notably concerns the continuation of the weakness in current rates which are highly punishing for AXA’s guaranteed service rates as well as for the retention of life assurance margins and the shocking rise in the interest rates.

We also note a significant structural drop in the profitability of savings schemes for the majority of insurers including the AXA Company.  Concerning the new savings accounts, the profitability and the margins of the insurers are currently operating close to zero which is a real problem over the long term.

The profitability of the AXA Group can also be negatively affected by certain events that incur serious losses. This notably concerns events such as bombings or climate catastrophes including floods that have increased in number over the last few years.

The fact of having to respond to the capital requirements of the GSII regulations presents another serious setback to the development of the AXA Company which at present still manages to satisfy their requirements.

And to conclude, the last argument in favour of a drop in the AXA share price relates to the lack of interest from investors for assets in this particular sector.  In fact, since the financial crisis that severely affected Europe a few years ago, investors have displayed a certain wariness, even distrust regarding financial companies in this geographical area, including those of the insurance sector.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

In which stock market indices is the AXA share price present?

At this present time the AXA share price appears in the composition of three major stock market indices; the CAC 40, the SBF 120 and the Eurostoxx 50. But it is also to be found in a number of secondary stock market indices as follows: CAC All Shares, CAC All-Tradable, CAC Large 60, Euro Stoxx 50, Euronext 100, Euronext CDP Environment France EW, Euronext CDP Environment France Ex Oil, FTSE Eurotop 100, Low Carbon 100 Europe, PEA, Stoxx Europe 50, and the Stoxx France 50.

How well has the AXA share price performed recently?

Historically we note that the stock market share price of the AXA Group has experienced an overall drop of 15.78% over the last five years. Over the last three years this drop in performance was 19.80%, over the last two years 12.83% and the last year 14.04%. Finally we note that this performance again fell by 9.45% over the first three months of the year 2020.    

What is the risk level of AXA shares over the short and long term?

The evaluated risk level for the AXA shares over the month stood at 39.87%. Over the next three months this risk is estimated to increase to 74.01% before it lowers to 53.79% for a period of six months. It is then predicted to continue its fall to 27.06% over three years. Finally, for the following ten years this risk level is evaluated at 39.27%. This indicates that the risk level is overall fairly low over the long term.

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