CFO Gérald Harlin said May 4that margins in the insurer's Chinese life and savings business were alreadyshowing signs of improvement after a sharp fall in new business value margin inthe first quarter.
New businessvalue margin for the life and savings business in China, Southeast Asia andIndia plunged 16 percentage points year over year to 14%, helping drive downthe new business value margin for the division as a whole by 6 percentagepoints to 29%.
"Why?First of all, in China for the first three months, so around the Chinese NewYear … there are massive marketing campaigns which are quite important forICBC [AXA's partnerin China] to increase its market base," Harlin said while presentingfirst-quarteractivity indicators. "And that's what we did and that's the reason why wehad quite attractive products for the first part of the year. But I can tellyou that in April we produced products with a [net business value] margin ofbetween 15% and 20%."
ChineseNew Year, which took place in early February, is a traditional time for makingand receiving large cash gifts, which might then be invested.
As awhole, first-quarter total revenues rose year over year to €31.75 billion from€31.47 billion. Life and savings revenues were down slightly to€17.44 billion from €17.46 billion, although new business volume, in annualpremium equivalent terms, rose on a yearly basis to €2.17 billion from €1.87billion. The value of that new business, however, declined to €625million from €645 million.
Propertyand casualty revenues totaled €11.68 billion, up from €11.43 billion a yearago, an increase driven by growth in both commercial and personal lines. Assetmanagement revenues fell to €883 million from €956 million in the first quarterof 2015.
Alsoon May 4, AXA agreed to sell AXA Portfolio Services Ltd. — known as Elevate — toStandard Life Plc,which said the deal will allow it to put together one of the largest adviserplatform businesses in the U.K. with combined assets under administration of£36.4 billion. The French insurer is also in talks to sell U.K. directprotection business SunLife and its traditional nonplatform investment andpension business in the U.K., and it expects the sale of its U.K. life andsavings businesses to generate an overall consideration of about ?£650 million.
Harlincalled the decision to leave the U.K. life business "a no-brainer."
"Wewere small, on one side, and secondly we believe we have opportunities toredeploy [the capital] corresponding to the disposals," he said inresponse to questioning. "Again it's a matter of scale. I fully agree withyou that in terms of products — unit-linked and so on — it was in line [with our objectives]. But youknow that the U.K. life market is extremely competitive and in other countrieswe can do unit-linked business at much bigger scales and at much biggerprofitability."
AXAreported a Solvency II ratio of 200% at the end of March, down from 205% atDec. 31, 2015, but at the midpoint of its target range of 170% to 230%.
Thecompany will present a newbusiness plan June 21. It is expected to confirm AXA's interest inexpanding in emerging markets, while also laying out plans to cut costs andrely more on digital offerings.