Analysis of AXA's Position in the Evolving Insurance Industry

In January 2020, HHU Consulting presented a detailed analysis focusing on AXA as the orchestrator in the new insurance world. The presentation discussed disruptive environments, global risks, the need for innovation, and strategies to tackle challenges. Recommendations included avoiding a singular focus on the Chinese market, creating new products, targeting modern customers, and preparing for future trends. The analysis also highlighted AXA's strong financial performance, discussing revenue, net income, and profit per employee. Additionally, the presentation emphasized the importance of being prepared for current and future trends such as political turbulences, ecological changes, social shifts, and technological advancements.

• AXA
• Insurance industry
• Innovation
• Strategic analysis
• Financial performance

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1. hhu. AXA The orchestrator in the new insurance world Presented to: Thomas Buberl and management board of AXA Presented by HHU Consulting: Laura Schaefer Johannes Klein-Peters Dario Foese Sven Wauschkuhn January 2020

2. hhu. Problem Statement Disruptive environment Global risks especially in China Fast moving industry Need for innovation and technology What to tackle? January 2020 HHU Consulting 2

3. hhu. Recommendation Disruptive environment Global risks especially in China Fast moving industry Need for innovation and technology What to tackle? Do not focus your resources in the Chinese market Focus creation of new products Target the modern customer Prepare for future trends How to solve? January 2020 HHU Consulting 3

4. hhu. Agenda 01 Situation Analysis Challenges in a disruptive market 02 Strategic Alternatives Focus on resources and talents 03 Implementation Measures to thrive in the future 04 Financials January 2020 HHU Consulting 4

5. hhu. Situation Analysis January 2020 HHU Consulting 5

6. hhu. Strong financial performance in the past Revenue in $bn Net income 140 9 8 120 7 100 6 80 5 60 4 3 40 2 20 1 0 0 AXA Allianz ChinaLife AIG AXA Allianz ChinaLife AIG January 2020 HHU Consulting 6

7. hhu. Strong financial performance in the past Revenue in bn Euro Net income in bn Euro 140 9 8 120 7 100 Profit per employee 6 80 5 16,997 Euro 60 4 3 40 2 20 1 0 0 AXA Allianz ChinaLife AIG AXA Allianz ChinaLife AIG January 2020 HHU Consulting 7

8. hhu. Be prepared for current and future trends Political turbulences Ecological Social Technological P E S T Trump re-election in 2020 Trade war between China and USA Brexit Higher expectations of customers People increasingly more connected Climate change Raise of sustainability awareness Fast moving business AI IoT Blockchain January 2020 HHU Consulting 8

9. hhu. What are we here for? Strengths Weaknesses Highly profitable Globally successful Large product portfolio Lack of innovation compared to Insuretechs Complexity when comes to change Not operating as much in the Asian market January 2020 HHU Consulting 9

10. hhu. Get to know your target group Conservative No need for more innovation Trust and caution Stability, security Accuracy Reliable claims payment Policy renewal The traditional John Family father 49 years old Looking for choice Flexibility Simplicity Personalization in services, channels and communication Wearables Reward system The modern Sarah Executive, healthy life style 28 years old January 2020 HHU Consulting 10

11. hhu. Employees are a vital factor for technological change Why? Baseline of every large cooperation Direct contact to customers Need to be well trained to increase customer satisfaction Need to be convinced for AXA future vision January 2020 HHU Consulting 11

12. hhu. Leverage on the strategic pillars of Ambition 2020 Transform Focus New customer experience Selective growth From payer to partner Efficiency and margins Capital and cash Adapt capabilities January 2020 HHU Consulting 12

13. hhu. Leverage on the strategic pillars of Ambition 2020 Transform Focus New customer experience Selective growth From payer to partner Efficiency and margins Innovation People Capital and cash Adapt capabilities January 2020 HHU Consulting 13

14. hhu. Key issues Innovation People Sustainability January 2020 HHU Consulting 14

15. hhu. Strategic Alternatives January 2020 HHU Consulting 15

16. hhu. Expand to China? Accelerated growth in China Large underinsured middle class Rising standard of living January 2020 HHU Consulting 16

17. hhu. Expand to China? Accelerated growth in China Large underinsured middle class Rising standard of living Trade war China underperformed Contra Pro January 2020 HHU Consulting 17

18. hhu. Looking back at the global risk monitor Likelihood Sharp global growth slowdown Trade war China hard landing Impact on global economic growth January 2020 HHU Consulting 18

19. hhu. Expanding in China is right now not the best strategy Accelerated growth in China Large underinsured middle class Rising standard of living Trade war China underperformed Different local cultural understanding of risk Hong Kong conflict January 2020 HHU Consulting 19

20. hhu. Where to focus resources to develop customer experience? Innovation and technological development is key! How to accelerate Innovation? 1. The Organic Approach 2. The Total Acquisition 3. The Cooperative Insurtech Approach January 2020 HHU Consulting 20

21. hhu. 1. The Organic Approach Build up strong innovative position by.. Pros Cons Focus: - Acquisition of talents - Build up own innovation hubs - Start up incubators January 2020 HHU Consulting 21

22. hhu. 2. The Total Acquisition Build up strong innovative position by.. Pros Cons - Merging with another global insurance player January 2020 HHU Consulting 22

23. hhu. 3. The Cooperative Insurtech Approach Build up strong innovative position by.. Pros Cons - - Opening up innovation funnel to Insurtechs Increase technological network January 2020 HHU Consulting 23

24. hhu. 5 decision criteria to evaluate the option 15% 25% 15% 20% 25% Tech Knowhow Time to market Strategic fit Cost Feasibility The Organic Approach The Total Acquisition The Cooperative Insurtech Approach January 2020 HHU Consulting 24

25. hhu. 5 decision criteria to evaluate the option 15% 25% 15% 20% 25% Tech Knowhow Time to market Strategic fit Cost Feasibility The Organic Approach The Total Acquisition The Cooperative Insurtech Approach January 2020 HHU Consulting 25

26. hhu. The cooperative insuretech approach is the preferred option 15% 25% 15% 20% 25% Tech Knowhow Time to market Strategic fit Cost Feasibility The Organic Approach The Total Acquisition The Cooperative Insurtech Approach January 2020 HHU Consulting 26

27. hhu. The Cooperative Insuretech Approach to boost innovation Opening up innovation funnel to Insurtechs Increase technological network January 2020 HHU Consulting 27

28. hhu. Implementation January 2020 HHU Consulting 28

29. hhu. Key issues Innovation People Sustainability January 2020 HHU Consulting 29

30. hhu. Key issues Innovation People Sustainability January 2020 HHU Consulting 30

31. hhu. Leverage on the capabilities of technolgy Artificial Intelligence Internet of Things Blockchain Will help to improve predictions about individual risks January 2020 HHU Consulting 31

32. hhu. Set up partnerships with AI companies Technology for customized product development Element AI, LogiBall, etc. AXA Capital, Network & Support January 2020 HHU Consulting 32

33. hhu. Use IoT to create tailored products for your customers Behavioral based insurance products Insurance Issues Moral hazard Customer privacy issues Hidden behavior Wearables and sensors Data security January 2020 HHU Consulting 33

34. hhu. Blockchain will enables AXA to ensure the customer s data Health: Long-distance conference with doctors Mobility: Safe data for autonomous driving January 2020 HHU Consulting 34

35. hhu. Key issues Innovation People Sustainability January 2020 HHU Consulting 35

36. hhu. Remember your customers Conservative No need for more innovation Trust and caution Stability, security Accuracy Reliable claims payment Policy renewal The traditional John Family father 49 years old Looking for choice Flexibility Simplicity Personalization in services, channels and communication Wearables Reward system The modern Sarah Executive, healthy life style 28 years old January 2020 HHU Consulting 36

37. hhu. Tailor specialized products to transform your customers from payers to partners Health Mobility & platform economy Living Video doctors to tackle demographics Leverage on the trend of Wearables Coop. with start-ups like BetterDoc Flexible premiums Leverage on smart- home solutions More energy efficient and can be monitored Enables flexible premiums Sensors for cars Flexible premiums due to monitored driving behavior Autonomous driving and car-sharing Align to strategic pillars of AXA Next and will satisfy your customers January 2020 HHU Consulting 37

38. hhu. Introduce change management in the entire company Create urgency Develop a vision Spread the vision Short- term wins January 2020 HHU Consulting 38

39. hhu. Intensify talent acquisition for the future University Cooperation Technical university Aachen, MIT, etc. AI programs Sponsor chair Internship & Trainee programs + Employee Value Proposition Social Media and recruitment videos Be part of the revolution in the insurance industry January 2020 HHU Consulting 39

40. hhu. This strategy will perfectly fit to the strategic pillars of Ambition 2020 FOCUS Transform Efficiency and margins New customer experience Selective Growth Capital and Cash From payer to partner Adapt capabilities January 2020 HHU Consulting 40

41. hhu. Key issues Innovation People Sustainability January 2020 HHU Consulting 41

42. hhu. Be proactive on the inevitable climate change AXA s responsible investment strategy pillars Integrating ESG into investment and decision making processes Excluding controversial companies Promoting green investments Set a strong and certain focus on sustainable investments January 2020 HHU Consulting 42

43. hhu. to fulfill your goal of being a responsible leader Use the parts of the divestment of $660mil from the AXA XL division and the $550 mil from the three impact funds to invest in sustainability Green Energy If you can not avoid the climate change, try to mitigate the effects e.g. dykes in the Netherlands or the Caribbean January 2020 HHU Consulting 43

44. hhu. Financials January 2020 HHU Consulting 44

45. hhu. Timetable and incremental costs 2020 2021 2022 2023 2024 2025 Costs Mil EUR Innovation Partnership AI Partnersip IoT Blockchain People Change Mgmt Coop. and programs EVP and marketing Video Doc Tailored premiums Sustainability Divestments Investments Search + DD Search + DD Closing Closing Develop Operate 250 190 85 Operate Implement Operate Introduce Introduce Workshops Intensify 25 20 60 30 15 Run Legal + Tec Implement Operate Develop Implement Analysis Analysis 20 145 840 SUM January 2020 HHU Consulting 45

46. hhu. Two possible revenue scenarios Revenue (bn EUR) 140.0 Assumptions: Optimistic: - Market Growth 5% - Market share increase 2% Pessimistic: - Market Growth 2% - Market share increase 0.5% 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2019 2020 2021 2022 2023 2024 2025 Optimistic (8%) 102.9 111.1 114.5 117.9 121.4 125.1 128.8 Pessimistic (3%) 102.9 106.0 109.2 112.4 115.8 119.3 122.9 Optimistic (8%) Pessimistic (3%) January 2020 HHU Consulting 46

47. hhu. KPIs you need to monitor KPIs 1. Revenue growth 2. Earning per share CAGR 3. NPS 4. Employee satisfaction 5. No of employees with tech-background 6. BBHIP customer share Target 2025 5% p.a. 4% 70% 65% 11,800 2% January 2020 HHU Consulting 47

48. hhu. Risks and contingencies Risks Impact I. Asia: Faster growth, no trade wars II. Don t comply with data regulations III. Natural disaster occur yearly III. II. Mitigation I. I. Constant monitor the market and quickly refocus resources II. Increase legal budget and create cohesive contingency plan III. Portfolio analysis, decrease portfolio, varying prices Likelihood January 2020 HHU Consulting 48

49. hhu. Key issues Innovation People Sustainability January 2020 HHU Consulting 49

50. hhu. January 2020 HHU Consulting 50