AXA is set to transform its holding company AXA S.A. into the group’s internal reinsurer following a merger with its current captive internal reinsurer, AXA Global Re.
As a licensed reinsurer, AXA S.A. will reinsure part of its European property and casualty carriers through annually renewable quota share reinsurance treaties.
AXA highlights that this is designed to “enhance capital fungibility across the group, in line with our capital management policy”.
Although subject to regulatory and AXA S.A. shareholders approval, the reorganisation is expected to close by 30 June 2022, with retroactive effect for the new reinsurance treaties to 1 January 2022.
AXA Group anticipates €2 billion in additional cash for AXA S.A. by 2026 as a result of the transformation. Of this, €1 billion in additional cash is expected by 2023, comprising a one-time cash impact resulting from the merger with AXA Global Re, and accelerated cash remittance.
The transformation was announced in AXA’s FY21 earnings report, which notes gross revenues of €100 billion for 2021.
In the report, Thomas Buberl, CEO of AXA, comments: “AXA delivered an excellent performance in 2021 on all fronts. Our underlying earnings increased by 61 per cent from last year to €6.8 billion. This reflects very strong technical performance across the group, and in particular at AXA XL, which delivered €1.2 billion underlying earnings following successful re-underwriting measures.
“AXA is delivering on all five strategic actions of its “Driving progress 2023” plan. We expect to deliver at the high end of our earnings growth target range and exceed our cumulative cash upstream target under our plan.”
