AXA commits to organic growth

AXAis looking for organic growth in its operations and will only use acquisitions if there is perceived value, says chief executive officer Henri de Castries.

“We don’t need to make acquisitions to grow earnings, I am optimistic we can enhance our long-term organic growth,” he says.

“Australia remains a clear strategic priority for us.”

De Castries, in Melbourne this week, says AXA perceives Australia as an important market that is sophisticated compared to some European countries.

“Many markets are not changing to meet the demands of their aging population,” he says.

“If the clients want the same level of income they will come to value advice and AXA can meet that need for advice.”

De Castries believes AXA can add value to the advice chain and the company is well placed to deliver products such as risk.

“In the short-term it is prudent for the (financial services) industry to remain the same, but in the future there will be strong demand for major players,” he says.

Both de Castries and AXA Asia Pacific group chief executive Les Owen believe the banks will not be able to deliver customer satisfaction in the long term.

“The banks are churning their customers’ savings into financial services products,” Owen says.

“In Europe and the US the banks’ savings business is slowing down.”

He did note that in Australia,CommonwealthandNationallead the inflow charts for most products.

Owen also claimed that the banks were only copying the AXA model and poured scorn on the banks’ distribution model.

“People believe the bank’s distribution model is superior, but what is going to determine that is the quality of products and the relationship they have with their customers,” he says.

“What would be interesting to see is the banks’ productivity per adviser and whether they were just churning savings into retail products.”

AXA has its own banking operation in a joint venture withIndustry Fund Services.

The joint venture has incurred huge losses for AXA.Money Managementunderstands the company has invested $100 million into the venture and has lost on average $10 million a year during its five years of operations.

De Castries was not forthcoming on the future of the Australian operations. He said the French group was not interested in taking out the minority shareholders in AXA Asia Pacific.

Also not covered was how the Australian operations next year hoped to recover the 32 per cent of profits that the recently sold health business added to the group’s bottom line. This business also provided 22 per cent of AXA Australia’s revenue streams.

It is two years since de Castries last visited Australia and AXA has shed its internal fund management and health business during that time. Only the risk, dealer groups andSummitmaster trust remain.