AXA to reduce costs to boost earnings by 3%-7%

French Insurance giant AXA released Tuesday its strategic plan for the next four years, saying it will cut costs, expand in higher-growth countries and use digital technologies to offer more services to clients.

The announcement is part of a plan to boost growth after eight years in which record-low interest rates have weighed on the earnings of AXA and other insurers. The industry relies on bond yields to generate a large chunk of its profit from reinvesting huge stockpiles of cash.

The Paris-based company set out a number of metrics for the period through 2020. It aims to boost underlying earnings per share by 3%-7% each year through 2020, generate free cash of between EUR28 billion ($31.72 billion) and EUR32 billion and cuts costs by EUR2.1 billion.

The company is also pushing to use digital technologies to evolve from a business that merely accepts premiums and pays claims. AXA wants to use digital technologies help clients avoid health and other risks, and sell more services to them after a payment is made.

“It’s still easier to buy a book from Amazon than insurance from AXA,” said Emmanuel Touzeau, AXA’s director of communication.

Source: MarketWatch