Axa shares are going cheap – should you buy?

Back in 2016, French insurance giant Axa (Paris: CS) was known for its complexity. The majority of the company’s earnings came from its life insurance and long-term savings business, the health of which was tied directly to interest rates. That began to change under CEO Thomas Buberl, who took over the group in 2016. Buberl’s vision for the company was simple. The new boss wanted to turn Axa into a leading global insurer in the “short-tail”, relatively capital-light business of property and casualty insurance (P&C).

One of the main issues with life insurance is its “long tail” business – once the insurer has written the life insurance or annuity policy, it’s stuck with the contract for decades, even if it becomes unprofitable. As a result, regulators tend to demand that these firms hold high levels of capital reserves to meet upcoming liabilities and unforeseen developments.

One of Buberl’s first moves was to carve off its US life-insurance arm, Axa Equitable, which freed up billions of dollars in capital for the group to go shopping. Almost as soon as the company announced the transaction, it launched an offer for XL Group, a leading global P&C insurer. Axa paid $15.3 billion for its peer and was instantly catapulted into the ranks of the world’s largest P&C insurers. As part of its Vision 2020 growth plan, management continued to exit non-core businesses, de-risking the group’s exposure to highly volatile and loss-making segments of the global insurance and reinsurance market and cutting costs.

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At the same time, higher interest rates have boosted the returns insurers can earn on the investment portfolios they hold to back up underwriting. Thanks to this double tailwind, insurers have reaped the benefits. Axa’s combined ratio, a measure of underwriting profit, fell to just 90.6% in its 2025 financial year, from 99.5% in 2020. Anything below 100% signifies an underwriting profit while anything above signifies a loss. Thanks to this tailwind, Axa’s net income rose to €9.8 billion in 2025, on a total revenue of €75 billion. Of that total, €58 billion comprised revenue from P&C underwriting.

The company’s next move was to sell its asset-management business. Axa sold this division, Axa Investment Managers (Axa IM), to BNP Paribas for €5.4 billion – 15 times earnings at the time of the deal. The combination of Axa IM and BNP Paribas created an asset manager with total assets under management of €1.5 trillion, giving it the scale to compete in the increasingly competitive asset-management market. Axa immediately gave the bulk of the proceeds from this deal back to shareholders via a share buyback.

Axa has changed completely since 2016 and, on 15 September, the group published its new plan for 2027-2029. The new plan builds on the work management has done over the past decade to get the business to where it is today, and the focus is earnings growth. Management wants Axa to reach earnings growth of 7% to 9% on a compound annual basis over the next three years, above the top end of the 6% to 8% target in the previous plan.