Markets

AXA focuses on promising markets

Advertising. The insurance giant AXA is one of the industry heavyweights in Europe and is the market leader in France. In recent years, the group has undergone an extensive transformation process to shift the business focus from life insurance to the more lucrative property insurance. The biggest steps in this strategy included the acquisition of property and reinsurance company XL Group for $ 15.3 billion in 2018, as well as the IPO and partial sale of US life insurance and wealth management subsidiary AXA Equitable Holdings (EQH). In addition, the insurance group is locating the most promising future markets in Asia and, in the middle of the Corona crisis, decided to sell its Eastern European subsidiaries in Poland, the Czech Republic and Slovakia for one billion euros, which are considered too small. The buyer is the Austrian insurer Uniqa. Analysts expressed their positive surprise that the recently announced closing of the transaction was earlier than expected in view of the corona pandemic.

According to the group, the sale has a positive impact on the solvency ratio. In addition, AXA is improving its equity base by canceling the dividend payment this year. Originally, a dividend payment of 0.70 euros per share was to be made in the fourth quarter of 2020. However, due to the burden of Covid-19, the French regulatory authority has recommended insurers not to make any further distributions until 2021. AXA followed this recommendation by canceling the dividend in August. Analysts don’t expect the group to be able to return to its old dividend highs until 2022.

In the current crisis year, lower profits are initially on the agenda, with detailed earnings figures only being published every six months. During the first half of 2020, the insurance group had to accept a 39 percent profit slump to a good 1.4 billion euros compared to the previous year. The management justified the decline in particular with the high claims burden from Covid-19, which came to around 1.5 billion euros. Business interruptions and event postponements or cancellations were major negative factors. At the same time, premium income would have decreased by around ten percent to around EUR 53 billion. However, the health division Health was able to convince with a high single-digit increase in sales and earnings.

The AXA share has fallen sharply in value in the current year and has increased implied volatilities. This favors the conditions of investment alternatives such as DuoRendite reverse convertible bonds. This may offer opportunities for investors who generally share a positive assessment of AXA and who want to implement their strategy with a fixed interest rate, quick partial repayment and a bullet buffer.

2.20 percent p.a. Fixed interest and market risk only for half the nominal amount

The DekaBank 2.20% AXA DuoRendite Reverse Convertible 11/2022 (WKN DK0YFM) pays 2.20 percent interest after one year based on the nominal amount of 1,000 euros. At the same time, the investor receives half of the nominal amount (500.00 euros) back regardless of the market. The remaining nominal amount portion (500.00 euros) will continue to bear interest at 2.20 percent in the following period and will also be repaid in full if the AXA share for the final valuation on November 18, 2022 is at least the base price (85.00 percent of the starting value ) closes.

Otherwise there is a risk of losses on repayment because instead of the second half of the nominal amount, AXA shares that have fallen in value are transferred to the investor at 85 percent of the starting value. As with any bond, the issuer risk must also be considered. This means that, especially in the event of DekaBank’s insolvency, there is a risk of losses or even total loss.

The subscription runs from November 2nd, 2020 to November 20th, 2020, subject to an extension or shortening.

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Disclaimer: The information contained herein does not constitute a recommendation to buy or sell the financial instrument and cannot replace individual advice. This advertising information does not contain all relevant information about this financial instrument. Before making an investment decision in certificates, potential investors are advised to read the securities prospectus in order to fully understand the potential risks and opportunities of the investment decision. The approval of the prospectus by the competent authority is not to be understood as an endorsement of the securities offered. The securities prospectus and any supplements can be found at https://www.deka.de/deka-gruppe/wertpapierprospekte under the tab “EPIHS-I-20”, the final terms at https://mmscache.deka.de/DE000DK0YFM6_FT.pdf downloaded. All securities information and the current key information sheet are also available from your Sparkasse or DekaBank Deutsche Girozentrale (www.deka.de), 60625 Frankfurt available free of charge. You are about to acquire a product that is not easy and can be difficult to understand.

If courses / prices are mentioned, these are non-binding and do not serve as an indication of tradable courses / prices. The values ​​given here serve to explain the payout profile of this financial instrument. The values ​​are not a reliable indicator of future performance.

Sales restrictions: Reference is made to special sales restrictions and sales regulations in the various legal systems. In particular, the financial instruments described herein may not be offered for sale or purchase within the United States of America or to or for the benefit of U.S. persons.

Scope ZMR AAA

Rating from 25.09.2019, more information at www.deka.de/privatkunden/auslösungen/scope-zertifikate-management-rating

As Head of the Private Banking, Product Management and Product Sales unit of the Deka Group, Hussam Masri is responsible for product development and product management of mutual securities funds, asset management and pension products, certificates and private banking.


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