AXA Delivering On Its Pledges, And The Market Is Starting To Notice

It’s been a rough year for European insurance companies, though AXA (OTCQX:AXAHY) (AXAF.PA) seems to finally be getting a little interest. While other European insurers like Aviva (OTCPK:AVVIY) and Prudential (PUK), both of which I still happen to like, have done better over the past 12 months, the gap is shrinking and AXA has outperformed over the last six months (including meaningful outperformance relative to Generali (OTCPK:ARZGY) and Zurich Insurance (OTCQX:ZURVY) as well). I believe this renewed interest in coming as investors start to appreciate the long-term benefits of the XL Group deal, as well as the company’s commitment to execute on longer-range capital deployment plans.

I believe AXA is undervalued by a wide enough margin to be worth a serious look now, as I see double-digit appreciation potential on just mid-single-digit long-term earnings growth. Capital redeployment is a key unknown, particularly with respect to whether AXA will deleverage, return cash to shareholders, reinvest in organic growth initiatives, and/or engage in further M&A. While the late November investor day is an opportunity for management to lay out its plans for capital deployment in more detail, expectations do appear to be rising and management needs to deliver.

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AXA Delivering On Its Pledges, And The Market Is Starting To Notice