AXA (AXAF.PA) has reached a “critical size” and is ruling out major acquisitions such as Italy’s Generali (GASI.MI), the French insurer’s chief executive Thomas Buberl said on Thursday.
It is managing risks relating to May’s presidential election in France and raising its profitability through higher prices and cost cutting, after increasing underlying earnings per share by 4 percent in 2016.
Although AXA’s earnings were helped by tariff hikes in property insurance coverage and a recovery in its life and savings business, Buberl’s first set of annual results as CEO were at the lower range of its targets.
Concerns that far-right National Front leader Marine Le Pen might win and lead France out of the euro zone – an event dubbed ‘Frexit’ – have rattled financial markets. [GVD/EUR] [FRX/]
“Frexit is a probability, it is clear, we need to look at it. Our job is to manage risks and volatility. A potential Frexit is not the first surprise and not the first crisis that AXA has seen over its history,” Buberl said.
However, AXA saw the probability of ‘Frexit’ as not very high, Buberl added, with opinion polls currently showing Le Pen as eventually losing to either centrist Emmanuel Macron or right-wing candidate Francois Fillon in the vote.
Shares in the insurer were 0.6 percent lower at 22.68 euros at 1147 GMT. AXA’s stock is down around 5 percent in 2017.
“We expect AXA’s share price performance to remain largely macro driven…with the key drivers remaining concerns on the French elections, U.S. interest rates and European equities,” analysts at Barclays said.