French insurance group AXA is looking for more acquisitions in emerging markets, the company said after posting a 14 percent rise in full-year net income and lifting its dividend by 13 percent.
Faced with low interest rates in the United States and euro zone, AXA has sold some of its businesses in developed markets and spent 5 billion euros ($6.86 billion) since 2010 on acquiring companies in the likes of China and Colombia.
Many investors have fled high-growth emerging markets since the United States began tapering its bond-buying monetary stimulus towards the end of last year, sending emerging market currencies plummeting. AXA, however, views the currency turmoil as a buying opportunity.
“One aspect of the depreciation in emerging market currencies is that it gives us new opportunities to invest in acquisitions on lower prices, and that is surely what we are looking at,” Deputy CEO Denis Duverne said.
One Paris-based analyst said that possible acquisitions could be aimed at increasing market share in the countries where AXA is already present rather than tapping new markets.
“AXA said that they could eventually make some other acquisitions in Southeast Asia, like Thailand, but they are almost where they want to be,” the analyst said, adding that it is already present in Brazil and Colombia.
AXA, Europe’s second-biggest insurer behind Germany’s Allianz, declined to give an indication of how much money it has earmarked for deals but said it has pencilled in 1.2 billion euros for other investments, most of which will be spent on IT, marketing and expansion of its retail network.
The group’s 2013 results reflected an improving economic environment in the United States, helping to lift net income to 4.48 billion euros, against 4.06 billion in 2012 and a consensus estimate of 4.96 billion euros in a Thomson Reuters I/B/E/S poll of analysts.
Net revenue was up 2 percent at 91 billion euros, helped by stronger growth in AXA’s life, property and casualty businesses, as well as a recovery in asset management.
Concerns about insurers’ ability to meet life insurance guarantees have also eased as European interest rates have climbed from the lows seen early last year.
“It is favourable for insurers when interest rates rise; it helps us reinvest in higher yields,” Duverne said.
AXA was also able to trim its debt target, forecasting gearing of 23-25 percent through to 2015, compared with 25 percent previously.
Such prudence means that major acquisitions are not expected, Chief Executive Henri de Castries said, though his deputy pointed out that emerging markets are a different proposition.
“We are disciplined in the way we look at our acquisitions. We pay the right price,” Duverne said.
Shares in AXA were up by 0.2 percent at 1628 GMT. ($1 = 0.7293 euros)
(Editing by David Goodman)