AXA SWOT and PESTLE Analysis

 

Strength

1. Well-established brand: The legacy of this group goes back to 1817 when Mutuelle de L'assurance contre L'incendiewas established, however, the name “AXA” came into force in the year 1988. Over the years AXA Group had maintained its performance and its current S&P ratings are AA-, Moody’s rating Aa3 and Fitch rating AA-. In 2016, for the eighth consecutive year, AXA Group was named the leading global insurance brand by ‘Interbrand’. The brand power of AXA lay in its investment in building a strong brand portfolio. It is the only international brand which operates in both life & savings and property & casualty insurance.

2. Joint Ventures and Subsidiaries in many countries reduce business risk: AXA has joint ventures in many developed economies like the UK, Canada, United States, Middle East, etc. In the UK AXA have subsidiaries like AXA Sun Life, AXA PPP Healthcare, etc. In Canada, AXA Canada provides insurance services. In US AXA Advisors, AXA Equitable Life Insurance, AXA Network, etc. are AXA subsidiaries. Apart from these subsidiaries, AXA has many joint ventures such as Philippine Life Insurance, Krungthai Life Insurance, PT AXA Mandiri Financial Services, Bharati AXA Life, Reso Garantia and much more. Hence we see the AXA has reduced its risk by diversifying.

3. Continued growth for consecutive years: AXA Group has shown increase in revenue in every year since 2011 with revenue of 100,193 Million Euros in 2016. Also, regarding Net Income and Earnings AXA Group has shown growth in consecutive years since 2010 and in the year 2016 it had recorded Net Income and Earnings of 5,829 Million Euros and 5,688 Million Euros respectively. Such strong growth over the years gives positive signs about the future course of the company. AXA has shown good track record of successful implementation of new projects. It has built a strong and reliable distribution network and boasts of a great market reach in the target economies.

Weakness

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Opportunity

1. Aging population in China to increase demand for insurance: During the years when one-child policy was in effect, life expectancy in China rose from 67 to 75. It can be forecasted that China will have the highest number of retirees in the coming years. As per Forbes report, China’s dependency ratio of retirees could rise as high as 44% by 2050. This is expected to give boost to sales of health and retirement products in China. Hence AXA need to expand its operations in China.

2. New acquisitions and expansion: Around 40% of world’s GDP is held by emerging countries, however, emerging countries account for only 17% of the insurance market. AXA has very little presence in Africa and China. This can be best done by forming joint ventures or powerful partnerships in these regions which contribute genuine business growth drivers. There is a huge growth scope in Asia too, where AXA is trying to ramp up cross-selling through local partners in various markets. They can also leverage their micro-insurance solutions to rope in low income earners who are by and large omitted from mainstream insurance. Besides AXA can also use focused organic growth to support Asia's rapidly growing economy.

3. Assets management sector: The contribution of Asset management activities at AXA Group to consolidated gross revenues have dropped from 3,822 Million Euros to 3,710 Million Euros in the year 2016. The Banking segment has accounted for less than 1% of total group revenues. AXA has ranked 9th based on the volume of assets under management. Hence there is great opportunity for AXA Group to improve in this segment to beat the competitors.

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Threat

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Political

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Economic

1. Effect of Brexit: Skilled labour from EU forms a large portion of UK insurance sector. If UK places restrictions on recruitment of workforce, then new workforce strategy needs to be devised to bridge the skill gap. Likewise, if some other nations decide to leave the EU, then similar issues would be faced by AXA Group. The investments made by AXA Group would also be affected by the volatile conditions of European market.

2. Emerging economies need insurance to cover basic risks: In countries undergoing economic transitions, there is a growing need to safeguard against basic risks like health, property, belongings etc. which will grant a sense of security and peace of mind indispensable for enabling the people to take economic decisions that will foster the nation's growth like a business opportunity, investment or education. In India, for instance 40 million people suffer a financial crisis after contracting health issues as they are not insured. AXA can create new offerings by offering combination packs of insurance with value added services like financial education and health solutions.

Social

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Technological

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1. Internet penetration has made consumer more critical in decision making: The number of consumers using internet is increasing every year as accordingly its effect on the insurance business is changing. There are many websites on the internet which help potential buyers compare the various options available to them. The number of mobile apps which provide information on insurance products has also risen over the years. Advertising is another aspect which internet has changed drastically. As more consumers use internet, advertising through internet medium makes more sense.

2. Emergence of Internet of Things: There are already about 6.4 billion devices connected and 5.5 million devices getting added every day to the network. Internet of things is expected to have profound impact on the way insurance industry works. Geospatial applications, environmental sensors, biometric sensors, etc. will change the way how companies charge the customers and it will become possible to change customer on usage basis. For example, responsible drivers would be charged less. Also, the way data will be collected from these connected devices will need to be planned accordingly.

3. Digital disruptions are revolutionizing consumer practices and expectations: Consumers are now looking for on-click banking and insurance solutions and want to connect with their insurers through seamless and hassle free means. The digital ecosystem has transformed the relationship between consumers and information and to bridge them AXA has introduced MY AXA app and a host of online services to provide customers real time information related to health, security, property etc. to scale up their role from being just a claims payer to a reliable partner. Consumers can get claim status, instant customer feedback, quick solutions and next steps at just a click of their fingers.

Legal

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Environmental

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