trending Market Intelligence /marketintelligence/en/news-insights/trending/4JrohrQ_mw_JaFu7bUDjdg2 content esgSubNav
In This List

AXA's UK exit plan shows up weakness of British insurance market


Perspectives from China: The Shifting Regulatory Landscape


Anticipate the Unknown: Does Supply Chain Disruption Lead to Increased Credit Risk?


Data Stories: Data insights to help alleviate business complexity amid geopolitical risks


Expand Your Perspective: Data & Distribution Q&A

AXA's UK exit plan shows up weakness of British insurance market

's attempt to exit part ofits struggling U.K. business should be welcomed by investors, experts say.

TheFrench insurer is said to be considering selling most of its U.K. life insuranceand wealth-investment units to separate bidders in deals potentially raisingbetween £500 million and £700 million.

Elevate,AXA's platform for assisting independent U.K. financial advisers manageclients' investments, has reportedly received a bid from .

Meanwhile,AXA is said to be in talks with other parties to sell SunLife, another one ofits U.K. assets. The SunLife business provides life insurance and funeral-costscoverage for people 50 years of age or older, and some investment-fundactivities.

CM-CICSecurities' Pierre Chedeville said in an interview that AXA is right toconsider selling the U.K. businesses given their low profitability.

Onrevenues of €706 million, AXA's U.K. life and savings operations profits of €72 millionin 2015, compared with €28 million a year ago, a small amount for a groupwhose full-year netincome was €5.62 billion on revenues of €98.53 billion.

TheU.K. insurance market is a "terrible market" for foreign insurers, aFrench analyst who spoke in an interview on condition of anonymity, observed."It is verydifficult to make a profit in," he said. "It's a market of brokers,meaning one that is structurally more competitive. The [foreign] players thathave left the U.K. are relatively happy to have done so."

Chedevillealso underscored the U.K. intensely competitive environment, leading AXA tostruggle to generate sufficient margins. "[AXA's U.K. business] will be ofinterest to me as a financial analyst if it registers a capital gain [on sale].Asia is where the future is for AXA," he said.

AXA'sincoming CEO, ThomasBuberl, is widely expected to maintain the focus of his predecessor, Henri deCastries, particularly in terms of expanding the firm's business in Asia, wherea rapidly expanding and aging middle class is creating strong demand forinvestment products. Even the recent turmoil in China's financial markets hasnot had much of a negative impact on investment products offered byEurope-based firms.

AXA'snew business plan, to be presented on June 21, will likely confirm the firm'sinterest in expanding in emerging markets, while also laying out plans to cutcosts and rely more on digital offerings.

Thisis not the first time that AXA has beaten a strategic retreat from the In 2010, it sold most of its U.K. life business to Resolution Group for£2.75 billion.

Otherinsurers have also opted to step away from the U.K. Earlier in April,AEGON NV two-thirds of itsU.K. annuities book to RothesayLife Plc; the rest of the portfolio remains up for sale.

Proceedsfrom the sale of AXA's U.K. assets, however, seem unlikely to be used for bigacquisitions, even in Asia. Under de Castries, AXA came under fire foroverpaying for assets in high-growth markets, snapping up HSBC Holdings Plc'sAsian operations in 2012 and a slew of business from other sellers in Nigeria,China, Poland and Turkey. One analyst speaking anonymously described thecompany's previous deal-making as "empire-building."