AXA's 2026E Thesis: Navigating Divergence with a Stable Capital Framework

The article analyzes AXA's "Unlock the Future" strategic plan for 2024-2026, which serves as the foundation for its investment thesis. The plan targets a 6-8% compounded annual growth rate in underlying earnings per share and an underlying return on equity of 14-16%. A key component of the strategy is a new capital return policy with a 75% total payout ratio, consisting of a 60% dividend payout and 15% in annual share buybacks, aiming to return over €21 billion to shareholders. The author notes that this plan is set against a backdrop of a resilient but diverging global economy. The success of the thesis hinges on AXA's disciplined execution of its strategy, particularly in its core businesses of P&C Commercial lines, Employee Benefits, and Individual Health. The main risks identified are a potential global economic slowdown, deterioration in credit markets, and uncertainty surrounding global trade. The author concludes that the valuation must reflect both the growth targets and the significant capital return policy.