Some of Axa’s UK businesses have been put up for sale by parent company Axa Group, as they have struggled to make their mark in a tough market, according to industry insiders.
According to industry insiders, Barclays has been appointed to handle the sale, which could fetch tens of millions of pounds.
The parent company is believed to have become frustrated with the conditions in which it has to operate, with the UK being a harsh regulatory market offering tight margins.
One industry expert said: “Axa Group has got lots of different companies doing different things. Axa Group bought up a number of companies in the UK, and it has turned into a complete shambles. The UK is a heavily regulated market – margins are increasingly tight.
“Axa Group would be thinking: ‘We might as well get out and put our money elsewhere.’”
Peter Eliot, an analyst at Berenberg, said: “The UK is not really a focus area for Axa Group. Its growth plans are focused on other growing regions and emerging markets. It wouldn’t be a huge surprise to me if it sold off the business. It sold its back book of policies before.”
The parent group has also made a £405m loan to Axa UK for use as ‘internal refunding’.
Axa Group operates several businesses in the UK, including Axa Wealth, which includes Architas and the platform Axa Elevate; Axa PPP Healthcare, which provides private medical insurance; the general insurance division Axa Direct and Partnerships; and Axa Commercial Lines and Personal Intermediary, which offers insurance products to SMEs.
The process is not believed to apply to the investment side of the business.
In the most recent set of results, for the six months to the end of June this year, the UK side of the life and savings division was the smallest geographic division after Central & Eastern Europe.
Of the total €1.862trn of underlying earnings for life and savings at the group, the UK contributed €27m, against €421m in France, €513m in the US and €230m in Japan.
Underlying earnings for the group in total for the six-month period were €3.1bn, on gross revenues of €54bn. The underlying earnings for the group for last year were €5bn, for the 12 months to the end of December.
Axa bought Winterthur Group and Thinc Group in 2006, but in 2010 offloaded much of its life and pensions business to Resolution, to focus on the less capital-intensive wealth management and savings business.
In the UK, Axa Wealth has published growth in its business with funds under management growing 11 per cent to £28.2bn in the year to the end of December 2014. The platform, Axa Elevate, currently has £10bn of funds under management, and it is ranked ninth by Platforum, in terms of asset size.
Dan Clayden, chartered financial planner for Devon-based Clayden Associates, said: “I would consider Axa Group a trustworthy organisation with good financial strength. Sometimes when companies sell their business to another provider that service might suffer, because they may be looking more at costs and cutting back. But the general trend with lots of providers is to do more stuff remotely.”
Last year, Axa Wealth achieved a five-star award in Financial Adviser’s Service Awards.
Right to reply
Helene Caillet of Axa Group Media Relations said: “We do not comment on any market rumour as a general policy. We have recently announced a deal concerning the UK. We are in the process of acquiring Genworth Lifestyle Protection Insurance.”
