Earnings call: AXA reports steady growth with 7% revenue increase

In the latest earnings call, AXA Group CEO Thomas Buberl presented a robust financial report for the first nine months of 2024, showcasing a 7% increase in total revenues across its various business lines. The company’s Property & Casualty (P&C), as well as Life & Health sectors, both experienced a 7% rise in revenue, with disciplined pricing and improved customer retention contributing to this growth. AXA also maintained a strong capital position with a Solvency II ratio of 221% and expects an underlying earnings per share (EPS) growth of 6% to 8% for the year, aligning with its three-year plan.

Key Takeaways

• AXA’s total revenues increased by 7%, with equal growth in both P&C and Life & Health sectors.
• The company’s Solvency II ratio stands strong at 221%.
• An anticipated underlying EPS growth of 6% to 8% is in line with AXA’s three-year plan.
• AXA observed disciplined pricing and improved customer retention, especially in commercial lines.
• Life premiums rose by 7%, bolstered by strong sales in Japan and Italy.
• Net flows year-to-date reached €0.9 billion, a significant rebound from the previous year’s negative flows.
• AXA expects to achieve a 200 basis point improvement in the P&C combined ratio.
• Growth in Health premiums was notable outside Europe, with significant increases in Mexico and Turkey.

Company Outlook

• AXA anticipates continued underlying EPS growth within the 6% to 8% target range for 2024.
• The company expects to hit the upper end of its capital generation guidance of 25 to 30 points.
• A return to profitability for the UK Health segment is projected by 2025.

Bearish Highlights

• A 50 basis point decrease in NBV margin was reported, mainly due to business mix and financial assumptions.
• Net outflows of €600 million in Unit-Linked products are a concern.
• In France, sales increased significantly but with slightly lower margins.

Bullish Highlights

• Strong Health premium growth was seen in Mexico and Turkey, with a 15% increase in Mexico and a near doubling in Turkey.
• The company is confident in achieving its growth target for P&C, estimating 4-5% growth in 2025.
• Pricing in casualty is accelerating in the U.S., with property prices increasing by 7-8%.

Misses

• Despite overall growth, higher-margin sales in Switzerland and Japan declined.
• The second half of the year typically sees lower performance in capital generation.

Q&A Highlights

• AXA expects a €100 million impact from a 25 basis point decrease in discount rates if interest rates remain stable.
• The company is increasing internal reinsurance in its P&C business to optimize capital.
• Biannual valuation exercises for casualty reserves have not revealed any issues.
• Claims from hurricanes Helene and Milton are estimated at €200 million.
• AXA does not engage in life and health reinsurance, focusing solely on P&C.
• Discussions about potential integration with Monte dei Paschi could occur after the joint venture agreement expires in 2027.
• AXA IM experienced lower third-party net inflows but retained all clients despite the upcoming sale of the asset management unit.

AXA (ticker: AXA), under the leadership of Group CEO Thomas Buberl, has demonstrated a consistent and disciplined approach to growth, as reflected in the latest earnings call. The company’s strategic focus on pricing, customer retention, and diversified business lines has contributed to a positive financial outlook, with prospects for continued EPS growth and strong capital generation. Despite some challenges, such as lower margins in certain regions and concerns over Unit-Linked product outflows, AXA remains confident in its ability to meet its long-term targets and maintain its position as a leading global insurer.

InvestingPro Insights

AXA’s strong financial performance, as reported in the recent earnings call, is further supported by data from InvestingPro. The company’s market capitalization stands at an impressive $78.7 billion, reflecting its significant presence in the insurance industry.

One of the key InvestingPro Tips highlights that AXA has maintained dividend payments for 45 consecutive years, underscoring its commitment to shareholder returns and financial stability. This aligns well with the company’s reported strong Solvency II ratio of 221% and its anticipated underlying EPS growth of 6% to 8%.

The company’s P/E ratio of 10.6 suggests that AXA’s stock may be undervalued relative to its earnings potential. This is particularly interesting given another InvestingPro Tip indicating that AXA is trading at a low P/E ratio relative to its near-term earnings growth. This could be an attractive point for investors, especially considering the company’s projected growth and strong market position.

AXA’s revenue for the last twelve months as of Q2 2024 reached $97 billion, with a growth rate of 6.25%. This aligns with the 7% increase in total revenues reported in the earnings call, demonstrating consistent growth across different reporting periods.

It’s worth noting that InvestingPro offers 8 additional tips for AXA, providing even more comprehensive insights for investors looking to deepen their understanding of the company’s financial health and market position.

While the earnings call highlighted strong performance in various sectors, an InvestingPro Tip cautions that AXA suffers from weak gross profit margins. This is reflected in the gross profit margin of 15.1% for the last twelve months as of Q2 2024. However, this should be considered in the context of the insurance industry’s typical margin structures.

Overall, the InvestingPro data and tips complement the earnings call information, providing a more rounded view of AXA’s financial position and market performance. These insights reinforce the company’s strong market presence and potential for continued growth, while also highlighting areas that investors may want to monitor closely.

Full transcript – AXA SA (EPA:) (AXAHF) Q3 2024:

Anu Venkataraman: Good morning, and welcome to AXA’s 9 month ‘24 Activity Indicators Conference Call. Our Group CFO, Alban de Mailly Nesle, will walk through the highlights of the 9-month release, after which we’ll be ready to take your questions. With that, I turn it over to Tom.

Thomas Buberl: Thank you, Anu. Good morning to all of you, and thank you for joining the call today. So I will start with the key highlights of 9 months ‘24. So we delivered another excellent performance with total revenues increasing by 7%. We continue to see strong organic growth across all our lines of business with P&C up 7%; and Life & Health also up 7%. And this is very much in line with what we delivered in 1H. It’s driven by a combination of disciplined pricing where necessary, notably, as you know, in P&C Retail and in UK Health. It’s also improved customer retention and market share gains. So the environment remains supportive with prices up which will be earned through next year, while inflation is lower, and it is exactly what we had in our plan that we presented to you in February. So we are focused on executing our growth agenda across our organization. And growth is a key lever of our new plan alongside our focus on technical and operational excellence. And lastly, we continue to operate at a high level of capital with a Solvency II ratio of 221%. In the quarter, the group’s financial strength was further affirmed by the decision from Moody’s to raise the rating outlook of group to positive. Let me now go through the key numbers of the release, starting with P&C. P&C revenues were up 7%, well balanced between Commercial and Personal lines. Commercial lines grew by 7%, and this is both driven by favorable price effect and higher volumes from improved retention, notably at AXA XL and higher new business with sustained demand from corporates. If I focus on pricing, at AXA XL Insurance prices were up 2% on renewals or 3% if we exclude North America Professional lines. Overall, for 2024, we expect pricing, including exposure to be broadly in line with loss trends. And this is consistent with our planned assumptions, which assume margin being stable at the current attractive levels, driven by selective growth, disciplined cycle management and efficiency initiatives. Similar to 1H ‘24, pricing trends varied line by line, and we are managing the cycle proactively. We see, for instance, continued favorable pricing in short-tail lines, plus 8% in North America property, plus 5% in international property. Casualty pricing – is firming sorry, in line with loss trend with plus 9% in U.S. Casualty and plus 5% in International Casualty. And in North America Professional lines, pricing remains soft, and we therefore remain focused on profitability. In France and Europe, still in Commercial Lines, we continue to see favorable pricing at plus 4% in both geographies, which is at a good level in the context of lower inflation. And as I said, we also continue to see good demand from corporates across SMEs and mid-market business. Moving to P&C Personal Lines. Revenues were up 6%, with growth in both motor and non-motor up 5% and 8%, respectively. Pricing remained strong at plus 11%, it’s up across all countries but as you know, in particular, in the UK and in Germany where we are prioritizing pricing over volumes to restore profitability. The volume is down therefore, in those two countries, and that reflects our underwriting and pricing measures. But a large part of the pruning exercise is now behind us. And in other countries, such as France, Switzerland or Italy where we do not need such repricing, we see strong net new contracts. So we are confident in achieving our margin improvement plan. And if you remember, we already saw 1.7 points margin recovery in 1H ‘24 in Personal Lines versus full year ‘23. Finally, in Reinsurance, revenues were up 10%, driven by both favorable price effects in Property and Casualty and higher volumes in Specialty and Property. One last point in P&C on nat cat. So you probably have seen in our press release that the combined impact of Hurricane Helene in September and Hurricane Milton in October was below €200 million pre-tax and net of reinsurance. Based on the current industry loss estimates, it represents a market share of approximately 0.5%. And that reflects the actions that we took to reduce cat exposure and volatility over the past years. And therefore, we are maintaining our annual nat cat budget of 4.5 points of combined ratio for the year. I now move to Life & Health. In Life, premiums were up 7%. Capital-light G/A savings, that was up 12%, notably in Japan from strong sales of single premium whole life products, which was reported by a favorable market conditions. And in Italy and Belgium from the successful launch of new products; strong performance in Unit-Linked, up 14%, driven by the successful commercial campaigns across our distribution network in both Italy and France. Protection was also up plus 2%, notably from higher sales in protection with Unit-Linked in Japan and in Switzerland. And lastly, premiums in traditional G/A savings were up 1%. In Health, premiums increased by 7%, reflecting higher pricing on both group and individual businesses across all geographies as well as higher volumes in group business in France and in Europe. In the UK, we continue to take pricing actions, which will be earned over time. And we have been rigorously implementing claims pathways to triage claims, to manage claims cost. Overall, our EB business, which is one of our key growth initiatives, was up 8% over the first 9 months. On the net flows, there were €0.9 billion year-to-date compared to minus €2.9 billion last year. That – and those net flows also reflect our quality mix and the focus we have on protection, health and capital-light G/A. Moving on to new business. The Life & Health PVEP and NBV were up 16% and 6%, respectively. And that was largely attributable to good volume growth that I just mentioned. NBV margin was slightly down at 4.6 points versus last year, and that’s broadly in line with 1H level. And fundamentally, that reflects the change in business mix in financial assumptions that we had over the first 9 months. So overall, our business mix in Life & Health remains of high quality. Asset Management now, average AUM was up 3%, reflecting favorable market effects. Net flows were at €3 billion positive, driven by AXA Insurance companies and our Asian JVs. Revenues were up 6% from higher management fees due to an increased asset base and higher performance fees, partly offset by lower transaction fees. Moving on to our balance sheet and Solvency II in particular. So our Solvency ratio was at 229% – 221%, sorry, at the end of September, down 6 points from the first half. And that comes mainly from unfavorable market effects. So if we look at the details, as the previous quarters, we had 7 points from normalized capital generation, minus 5 points of accrued foreseeable dividends and annual share buybacks. We had minus 6 points from financial markets. That reflects lower interest rates and widening of government spreads, notably the OAT and corporate spreads in Europe. And even if equity markets were up this quarter, the equity market impact was neutral, given our skew towards infra and private equity, where valuations have been fairly stable. And we had minus 1 point from the effect of an anti-dilutive share buyback related to employee share-based compensation. And that’s a one-off. So to conclude, we believe those are very good numbers overall, with continued good growth momentum. In particular, pricing remains favorable, and that will be earned through next year, while inflation will be lower, and this is in line with our plan. This is driven by our high-quality and diversified businesses which are well positioned to capture attractive growth opportunities and to deliver a predictable earnings trajectory. So we are executing on our plan with a clear road map across top line growth and technical and operational excellence. So as indicated in 1H, with all pieces of good news, we remain confident to achieve for 2024 an underlying earnings per share growth in line with our 3-year plan target, which is a range of 6% to 8%. And now we are available for your questions.

Operator: [Operator Instructions] The first question comes from David Barma of BOA.

David Barma: Good morning. Thanks for taking my questions. Firstly, on the nat cat, so it’s reassuring to see that your exposure to the hurricane is contained. But we’ve had a lot of weather events in Europe recently, in particular, in France, in Spain and in Italy. Are you saying you’re on track for 4.5%, including those events? Or is that assuming a normal quarter for Q4? Secondly, on Life & Health and the new business margin, which was quite a bit lower both in Life and in Health, especially in the Europe segment. Could you explain what the drivers were for this? And also the third quarter new business margin in Health was seasonally strong in Q3 and previous years. So maybe there’s an element there. And then on the U.S. Commercial lines, one of your peers was reporting an acceleration in Commercial lines pricing in Q3, excluding Professional lines with prices now ahead of loss trends. So could you give us a bit more color on where you’re seeing conditions improve and where you’re not?

Thomas Buberl: Thank you, David, for your questions. So on nat cat, the short answer is yes. When we say that we believe we are in line with our 4.5 points of combined ratio budget that includes the recent events that we had in Europe that we had in France, Italy and what – and most probably what we had over the last days in Spain. Two comments about this, one is, as you may remember, we increased our cat budget from 4% to 4.5%, and that’s precisely because we wanted to take into account so-called secondary perils which maybe secondary in terms of amounts and are clearly not secondary for the people affected. And second comment those events are extremely local. They are intense, but extremely local. And so when you compare that to hurricanes in Florida, for instance, the cost for us is a fraction of what the hurricanes could be. So yes, that’s taken into account in both our budget and the fact that we say that we should be in line with our 4.5% budget. On the new business margin, so you’re right, it’s down roughly 50 bps. It’s mainly due to two impacts. The first one is business mix, and that’s roughly 20 basis points of the 50 basis points. And the business mix, it’s a number of things. It’s the fact that you saw that sales in France were up quite significantly, but the overall NBV margin in France is slightly lower. So that’s the – that puts pressure on NBV margin. Conversely, in Switzerland, we sold a bit less and that’s higher margin and same in Japan and notably on the Health side. Sales in Japan were down. And the business mix in Japan was not good. By the way, we believe it will be better in Q4, and therefore, we should see an improvement in our margin in Q4. So that’s the first part of definition. The other part of the explanation for another 20 bps roughly is the financial assumptions with interest rates, in particular. On – and so that explains also the Health impact that you mentioned. On Commercial lines in the U.S., so our view is that if you leave aside North America professional, we are in line with loss trend, which means that we do see an acceleration in pricing in some lines, such as casualty, exactly as we’ve said for 1H where we saw that the slight pickup in casualty loss trend and prices are adjusting accordingly. Property prices are still up and more than in Europe, we’re talking about 7% or 8% price increases in property in the U.S. But I wouldn’t go as far as saying that we see an increase in our margins and that prices are above loss trends for those lines. I believe it’s in line.

David Barma: Thank you.

Operator: The next question is from Farooq Hanif of JPMorgan.

Farooq Hanif: Hi. Thank you very much everybody. Just given what – the answer to the question you’ve just given, can you talk about your visibility around your 200 basis points combined ratio of P&C improvement target, given that you’ve got there very, very quickly already compared to full year ‘23. What scope do you see of exceeding that target? That’s question one. Question two is, what signs are you seeing of any personalized pricing tailing off in 3Q not just the UK, which we know is coming down, but in other markets? And last question for me, is the growth rate in Health outside of Europe has been very, very strong. Can you kind of highlight some markets there? And what you see is kind of potential momentum next year in those markets?

Thomas Buberl: Thank you, Farooq. So I would say on the – on margin improvement in P&C, we are in line, in the sense that to some extent, I’m not saying it was easy. But in 2024, the plan was to have a recovery in margin in the UK and Germany, and we are well on track for that. But then getting further improvements that’s working on our expenses and working on a day-to-day incremental improvement in our pricing, in our underwriting, claims management and so on. So I would say we are in line. We believe we can deliver those 200 bps, but you saw that at XL, exactly as we thought the margin will be – will remain flattish. We don’t see an improvement in margin in the coming year. We will see that in both Personal lines and Commercial lines in Europe, but that will come – that will lead most probably to the 200 bps that we had planned for. On Personal line pricing, look, I would say, as you pointed out, in the UK, it’s softening. It’s not softening anywhere else. And I would even say that in some geographies, prices could go up slightly next year notably for two reasons. One is you saw an increase in frequency at the beginning of the year, then it improved. But frequency was not that good at the beginning of the year for anyone, and that was due mainly to rain. And the second thing is in a number of countries, I’m thinking of Spain, for instance, you still have players that need to increase prices to recover profitability. So I guess outside the UK, the market is still supportive. Your third question was on growth in Health. So what do we see in France and in Europe, because I guess that was your question? In France, it’s driven by price increases, there is also volume and notably on the employee benefit side. But there are price increases, because we want to improve the profitability of our book in France. You remember that on our plan, we said we would grow our EB and Health business by 6%, but that we would improve margins by 300 bps. Part of those 300 bps is the recovery that we are on track with in the UK, but the rest is, as I said, better pricing, better underwriting. And that’s what we see in France and in Europe.

Farooq Hanif: And my question actually was more on outside of Europe, the growth there. But we – I mean, we can come back to that.

Thomas Buberl: Sorry. So when you look at the table where you have 13% growth outside of Europe, I guess that’s what you’re referring to.

Farooq Hanif: Yes. And which market and momentum.

Thomas Buberl: Yes, exactly. Sorry, I had misunderstood. So that is very much driven by our international markets. So not Asia, but more Mexico, where you know that Health in Mexico is a very important line, is our largest line, and we are a leader there, and growth in Mexico in Health was around 15%, but we also had growth in Turkey. So obviously, there is a high inflation in Turkey. So that supports growth, but we almost doubled our Health premiums in Turkey over the first 9 months. So those were the drivers of – of that growth.

Farooq Hanif: Thank you.

Operator: The next question is from Andrew Baker of Goldman Sachs.

Andrew Baker: Hi, thank you for taking my questions. First one is just on P&C top line growth expectations. I know you’ve sort of given the 5% expectations across the planning period. You’re clearly tracking ahead of that so far. So as we think about the growth – top line growth in ‘25 and ‘26, should we expect some normalization below the 5% level or is that 5% growth still a good working assumption for those years? Secondly, on Personal lines, are you able to just to give some – what you’re thinking in terms of the German motor renewals that are coming up? And then finally, just on tax. Again, I know you’ve previously said that the tax changes in France are very manageable. Now you’ve got a bit more color there. Are you able to give any guidance on the impact on the group tax rate? Thank you.

Thomas Buberl: Thank you, Andrew. So on the top line of P&C, clearly, in 2024, we had a very good year, notably because there was still inflation, and that allowed us to have the 7% growth, I described earlier. That being said, our plan is to grow our business in P&C. Nominal GDP plus 1%. So we believe that 4% or 5%, depending whether it’s Retail or Commercial lines, it is achievable. And that’s a mix of still some price increases, not everywhere, but still, in most places because you do have still inflation, notably in the U.S. and good volume growth because we believe we are well positioned. We believe there is more demand and we are increasing retention. And that’s very important. On XL, for instance, we have increased retention by 4 points. And that’s the easiest and best growth that you can think of, because that’s with customers that you know and that are profitable. So we believe we can still deliver be 4% to 5% top line growth that we are planning for in ‘25. On Personal lines, look, I think – I mean, as far as we are concerned, we’ve done the job. We have increased prices by 17% or 18%. The book is profitable. So we’ll be back to normal price increases in ‘25. For the whole market, I mean, I noticed that some players are still not very profitable. And it might well be that they will increase prices further which would allow us to gain market share. But, we need to see that. And on tax in France, so it’s very difficult to comment precisely what will happen, not because of us, but because of the current legislative process. The way it works, and if you give me two minutes to describe it, it is when you don’t have – when government doesn’t have majority – absolute majority in parliament, at the end of the day, it’s very unlikely that everything which is voted by the parliament will go through. What happens is that the government at the end of the process brings what it believes to be the best compromise and submit it to the parliament with an Article of the Constitution called 49.3 and that budget is deemed accepted unless there is a motion of non-confidence voted by the parliament in which case the government needs to resign. And therefore, everything which you’ve voted now has a little impact until we know what will be submitted with that 49.3 article in a few weeks. Nevertheless, what we believe is that the impact for us will be limited for the following reasons. One, France is roughly 25% of our business and our profits. Two, in France, we have both the AXA France profits, but we also have the debt at holding level and the interest we pay on that debt compensate a very, very significant part of the taxable income of AXA France. So overall, I don’t believe that the taxes that might be implemented in France will affect our earnings target that we have for our plan.

Andrew Baker: Right. Great. Thank you.

Operator: The next question comes from Michael Huttner of Berenberg.

Michael Huttner: Thank you so much and congratulations on the loan Nat cats. I was going to ask the other way, but obviously, you’ve answered all that. I had just – just to – the first one is on the capital generation, so 16 points at the half year, 7 points in Q3. So if I had another 7 points, I get to 30 points, which is the top end of your guidance range. And I was just wondering whether you can say whether that’s a new number we can use going forward, given that you’re really delivering on track. There’s very little volatility. And then, the other question is, I think, you kind of answered it, but I don’t know maybe I’d be lucky. So 7% seems to be the magic top line number. I know you’re saying 5% going forward. Momentum is in Insurance, makes me believe maybe 7% can continue. And you have – in terms of underlying EPS, the figure is 6% to 8%. But given that buybacks would kind of add another 1% and there’s lots of operating leverage things going on. My guess is, the 7% would normally translate in at least 9%. And I just wonder whether you can maybe comment on that, you’ll probably say no, next year or something, I don’t know. And then the last one is on UK Health, I detect a slowdown in – or slight reticence here relative to what I had hoped, not what you’ve said, but what I’d hoped all the actions which you’ve already taken. It seems it’s a much slower process. Maybe you could comment on that. Thank you.

Thomas Buberl: Thank you, Michael. Look, capital generation, we gave a range. It was 25 to 30 points. So I agree with you. We are on track to be at the upper end of that range. And there is – and it might be – I mean, let’s wait for the last quarter. I would just like to highlight that typically, the first half is better than the second half. There is always seasonality, notably when it comes to investment income. But yes, we might well be at the upper end of our range. On the EU EPS, so you gave me the opportunity to spend 1 second on the buyback that we did in Q3, which is a pure one-off in the sense that we give performance shares to some of our employees, a significant portion of our employees. But we hadn’t hedged that systematically, automatically. So there’s a bit of a catch-up in the performance share hedging and therefore, the buyback that we did in Q3. So the one point, you shouldn’t expect it to be replicated every year that we will do buybacks, not for that, but not to that extent. Now on – will we be above the 6% to 8% range. I believe we are on track to be in the range. And I think that’s the strong message we want to give, which is that we are confident with that range, and I don’t believe it should be expected to be above.

Michael Huttner: And UK Health?

Thomas Buberl: Sorry. Sorry, Michael. I don’t know why you think that it’s a slow process. I mean, we are exactly on track with our plan. As we said, we would be back to good profitability in ‘25 and that’s where we will be. I mean, we have changed our processes, adjusted pricing, and so we’re good on that front. So I don’t believe there is any slowing down. But it’s – tell me, if you saw something that I didn’t cover.

Michael Huttner: Alright. Thank you.

Operator: The next question is from Will Hardcastle of UBS.

Will Hardcastle: H, there. Thanks for taking the questions. Just want, it’s just one, is there anything you can say on lapse experience in the quarter? Is that possible? Thank you.

Thomas Buberl: Yes. So the good thing about lower interest rates is that it’s less of a competition for our savings products. So what you see is lapses they have come down in the two countries that were most affected, as you know, were France and Italy. In France, that has come down very significantly. Same in Italy on general account, what is still a bit high is, lapses on Unit-Linked in Italy. So we need to – and that’s the reason also why the – we have net outflows by €600 million in Unit-Linked in the first 9 months, and that’s something that we need to be vigilant on.

Operator: Next question is from William Hawkins (NASDAQ:) of KBW.

William Hawkins: Hi, and thank you for taking my questions. I do have a couple of follow-ups on the Nat cats, I’m afraid, but it is amazing how your losses have improved. I was rereading the 3Q ‘19 press release and your severity experience has improved significantly. So in that context, can you just tell me the €200 million you’re referring to, what’s the gross versus the net on that number, please? Because I’m trying to get a sense of whether this small figure is because exposure is down dramatically, because you’ve been clever in the protection that you bought? And then secondly, you’ve already commented on the budget. But can I just be clear, how much of the 4.5% is left untouched at the end of the 9 months, please? And then lastly, just a different topic, on Solvency II, when we are looking to the outlook, can you just refresh my memory on what we are expecting from the benefits of the Solvency II reform, please? I can’t remember the timeline, and I am presuming it’s going to be a positive impact, but I just wonder if you could update me on how big that positive impact may be, please? Thank you.

Thomas Buberl: Thank you, William. So, on the Helene and Milton, of the €200 million, fundamentally, it’s exposure, it’s not a session, it’s not reinsurance. Simply because as you know, we have reduced our exposures at XL Re, where retro-sessions are unlimited, but also at XL Insurance, we have reduced the exposures there in Florida. And you know that for the last 2 years, the attachment points offered by insurers have increased significantly. And therefore, the reinsurance covers or the reinsurance benefits are limited. And so that’s really the exposure that has come down much more than smart reinsurance as I think you put it. On the 4.5% and what is left on that, so we don’t give the number. I would just say that we are on track to get there. We need to see how Q4 will develop. But I would also point out that you know that we want to manage as much as possible net cat, PYDs and discount. So, to put it a bit bluntly, if we have a good cat net year, you might see a bit less PYD release and therefore, you shouldn’t expect significant uplift there. And on Solvency II, so the benefits will come at the very end of 2026. Today, we know what the Level 1 is about. The Level 2 is still to be designed by the commission and to some extent, it will be a positive in terms of group solvency, difficult to say how much. What I want to highlight as well, but it will be visible – but what I want to highlight as well is that it will be a positive at group level. But at a group level, I will calculate the solvency on all our entities, including the ones that are not under Solvency II locally, XL, Switzerland, Japan, Hong Kong. So, the cash impact coming from Solvency II will be more limited as there will be a little change – no change at all on the local ability in those countries to upstream more capital. I think that’s important to have that in mind.

William Hawkins: Thank you.

Operator: The next question comes from Dominic O’Mahony of BNP Paribas (OTC:).

Dominic O’Mahony: Hello everyone. Thanks for taking our questions. One specific question – thank you for the color on Germany. It’s good to hear us understand that, that’s absolutely where it should be from an underwriting perspective. Can I also just ask about Switzerland? I mean it sounds from what you are saying like, actually Switzerland, you are happy with the underwriting performance. You are not in remediation mode. I just wanted to confirm that’s right and get any further color you have on the Swiss business and the trading conditions. My second question is a bit looser. Just reflecting on what you have been saying about conditions in global commercial, and I guess in particular, North America commercial. I think the message is that excluding financial lines, actually pricing is pretty good. There is no sign of things turning. I suppose my question is financial lines have been difficult. And I just wanted to get your diagnosis of why financial lines have been difficult. And I guess related to that, why do you think that the rest of the business, I guess with the property side in particular and specialty side, why you are not wide up deterioration there? I hope that wasn’t too loose, but thank you in advance for your answer.

Thomas Buberl: Thank you. Thank you, Dominic. So, on your first question on Switzerland, Switzerland is really one of our best companies, and we are a leader in that market, and it’s a very profitable business. So, we are by no means in remediation mode. We are growing. We will have – obviously we will have price increases as is normal to cover changes in frequency inflation and so on, but nothing which would be needed if we were in remediation. So, we are fine in Switzerland. On your second question, on professional lines versus direct, I would say the following. On professional line, I guess two differences. The first one is, inflation is perhaps less apparent than social inflation in casualty and basic inflation in property and short-tail lines. And therefore, there is a lot of discipline in casualty. As you noticed, I would say that, the loss trend has picked up a bit and immediately, prices have come up as well. So, we don’t see that in financial lines, but I guess that will come. But let’s remember as well, that professional lines, 2 years or 3 years ago, were extremely profitable, which has never been in the case of property and casualty, where we had a good level of profitability, but not at that kind of level. The other aspect, I think is the market was disrupted with the drop in the number of IPOs and SPACs. Those operations trigger a lot of demand for professional lines, and that keeps prices up, so that demand reduced. And at the same time, you had a few newcomers to the market that saw the very high profitability and wanted to take advantage of that and reduced – and that put pressure on prices. And that’s the dynamic that you don’t see in the other line. So, for me, that’s the reason why we have a specific momentum, specific dynamics on the professional lines. That being said, at some point, price decreases need to stop. And we as a leader in that line of business, we want to lead the effort.

Operator: The next question comes from Andrew Crean of Autonomous.

Andrew Crean: Good morning. I have three questions. One, a numerical question, if rates stay where they are at year-end, what will be the discounting impact on your underwriting versus the 3.7% last year? Secondly, you talked about Solvency II not benefiting up-streaming. But is there anything that you are doing in the next year or so to improve up-streaming? I am thinking either of increasing the level of internal reinsurance of your P&C business up from the 25% or actions in, say, Germany, where I think there is trapped capital? And then thirdly, I wanted to ask about an issue, casualty reserving for more recent years, which has been highlighted by travelers in Hartford. Is that an issue for you, or do you think the delay in settlements is just because of jamming up the court system in the U.S. as opposed to sharing signs that there is a deterioration in the underlying business?

Thomas Buberl: Thank you, Andrew. So, I can’t answer it directly because I don’t know the number on the last point. But on the first point, which is the discount benefit, but you know that fundamentally, a 25 bps decrease across the board, across the board and that precision matters, because obviously, interest rates movements have not been the same depending on the currency, and that will be U.S. versus Europe. But 25 bps is €100 million impact on our full year, on our discount benefit. On the Solvency II up-streaming, just to clarify by what I said. I am not saying it has zero impact, because obviously, in Europe, in European Union precisely, it will have an impact. I was more referring to the non-European entities that we have. Then on your question of, are we doing more to upstream capital, we are always striving to do more, to be clear. On internal reinsurance in P&C, we moved this year to a 35% quarter share instead of 25%. But we believe, given additional local constraints such as distributable reserves, local statutory earnings and so on, that 35% is probably an optimum and that we will not go further. But we might look at other ways to and other businesses to ensure that’s yet to be confirmed. And you are right that in Germany, there is also something to watch there in terms of capital that could be up-streamed. But it will not be massive when you compare that to the total remittance that AXA SA gets. But yes, there is a bit to add here and there. But I would say it’s our normal effort that we have every year. That contributes to making sure that the 80% remittance ratio is reached. On the reserving, in casualty, you know that we do our valuation exercise twice a year. So, we did it before, I mean at the end of 1H and you saw the result of that, which was that we didn’t see an issue, but we are obviously vigilant on that. We will do the exercise at the – at Q4 for our full year numbers. I must say, at this point in time, I think we now have accumulated a lot of experience on casualty reserves. I mean I will repeat what I say every time, which is that, I think we were among the first to detect the change in social inflation in the U.S., which led us to the re-provisioning and to the ADC. We saw the slight pickup that I mentioned earlier on the loss trend in casualty. I think we are fine and we are up-to-date in our reserving, but we will confirm that with our Q4 exercise.

Andrew Crean: Thank you.

Operator: The next question is from Henry Heathfield of Morningstar.

Henry Heathfield: Hi. Good morning. Thank you for taking my questions. Just going back to the impact from hurricanes Helene and Milton, I was wondering if you could outline the €200 million of expected claims that result from that weather or actually whether you could outline the natural capacity impact incurred in euro terms year-to-date to the end of the first nine months. And then with regard to the kind of XL Reinsurance business, I also noticed some €100 million gross premiums and other revenue within life and health. And I was wondering if you are also writing life and health reinsurance as well as property and casualty? Thank you.

Thomas Buberl: So, thank you, Henry. And on the first question, so we don’t disclose that Q3 P&L figures, and in particular, the amount – the total amount of net cat losses that we have had to-date. So, I would just repeat what I said earlier on the fact that we were at 3.6% at the end of the first half. And we are in line or we are on track to be in line with our total budget of 4.5 points for the full year. And on XL, no, we don’t write life and health, it’s P&C reinsurance.

Henry Heathfield: Okay. Thank you.

Operator: The next question is from Pierre Chedeville of CIC.

Pierre Chedeville: Yes. Good morning. Two questions, regarding Italy, I recently read a paper – an interview from the CEO of Monte dei Paschi, was seriously considering the reintegration of insurance inside the bank. And I wanted to know if you had any discussion regarding that point with that bank. And regarding asset management, we can be a little bit disappointed by the net inflows with third-parties. Could you explain that? And what are your views on that even if you are selling AXA IM? Thank you.

Thomas Buberl: Thank you, Pierre. On your first question on Italy, well, I saw the same article. And I mean I guess it’s a global trend that we see in Europe coming from the Danish compromise that a number of banks will want to be internalized their insurance JVs when they have some. You know that our JV agreement comes to term in 2027. And if BMPS wants to buy 50% in the JV, they are more than welcome to come to us to discuss it. And then we will see the terms of that discussion. Then on asset management, yes, you are right, third-party net inflows were lower and even negative. I think it’s a mix of two things. It’s the usual outflows that you would get quarter-after-quarter and lower gross inflows simply because with the announcement of the transaction, some investors are waiting to see what will happen, which is exactly normal in that case, and you would see it everywhere. So, we didn’t lose a single client at AXA IM. That’s very important. But obviously, some are waiting to see the structure of the company post acquisition.

Pierre Chedeville: Okay. Thank you.

Operator: At this time, there are no more questions. I will hand it back over to you for any closing remarks.

Anu Venkataraman: Thank you very much for your interest in our nine months activity indicators call. If you have any further questions, please don’t hesitate to reach out to AXA Investor Relations. Thank you.

Thomas Buberl: Thank you all and probably see you a bit later this afternoon.

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