AXA Group Presenting to Thomas Buberl, CEO, January 2020
"The presentation by Nanyang Consulting to AXA Group's CEO, Thomas Buberl, in January 2020 showcased strategies for insuring the future. The insights shared during the session aimed to drive innovation and excel in the insurance industry. With a focus on sustainability and growth, the collaboration highlighted key factors influencing the future of insurance. Both parties aimed to explore opportunities and challenges in the evolving landscape of insurance, emphasizing the importance of adaptation and foresight."
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Presentation Transcript
AXA Group --- Insuring the future Presenting to: Thomas Buberl, CEO, AXA Group January 2020 Presented by: Nanyang consulting
Agenda Agenda 1 2 3 4 5 6 7 8 Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion AXA Group 2
Problem Statement: AXA faces obstacles to transformation amidst disruption and dynamic consumer trends Technological advancements Insurtechs Transformation of Payer-to-Partner Disruption and Competition Internal adaptation issues Need to speed up innovations new products Adapt to digital realities AXA Group Failure to capture Asia growth engine Dynamic customer trends Geographical expansion AXA needs to overcome challenges in its path to achieving transformation objectives of Ambition 2020 Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 3
Recommendations : AXA will pave the way towards becoming the world s preferred insurer Reduce risk with Analytics Smart contracts with Blockchain Customer centricity Digital Transformation Global Digital Services Startup Partnerships Nurture innovative culture Innovative AXA Group Transformation Strategy Effective partnerships New product offering Expansion into Asia AXA will establish itself as a trusted, go-to insurer with exceptional customer centric and digitally driven services Alternatives Implementation Financials Contingency Conclusion Problems Recommendations Analysis 4
External analysis: AXA operates in a highly competitive industry with threat of disruption Opportunity Threat Technological advancements leading to increased consumer protection Rising expectations of digital first customers Potential in emerging markets Commercial partnerships via acquisition (XL) Dynamic social and economic trends China premium growth 20% by 2029 Usage based insurance Disruption by emerging technology Displacement by insurtechs Competitive industry Impact of socio-political turmoil Economic slowdown and recession AXA Group Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 5
Internal analysis: AXA exhibits a robust business model that requires transformation based on innovative solutions Strengths Weaknesses 1/3 large global insurance companies 103 million customer 64 countries Diverse portfolio people, property and assets Shift to insurance risk reducing sensitivity Financially viable for strategic acquisition Geographical diversification - Asia ESG strategy; impact funds Slowing growth rates and tight margins Decreasing stockholder confidence Underperformance in Asia (lower sales of traditional product offering) Double premium rates relative to competitors in China AXA Group Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 6
Product Offering Analysis: AXA provides insurance solutions across a variety of segments, which require focused solutions Life & Savings Property and casualty Healthcare AXA Group Asset Banking management AXA has the potential to grow across sector by developing digitally-driven solutions that satisfy customer needs Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 7
Value Proposition Analysis : AXA remains competitive amongst various players in the industry High Banks InsureTech Regional players Relativity AXA Group Global Insurers (AXA) Low Geographical presence Technology Customer Understanding Product Offering AXA has potential to exploit customer centricity, technological capabilities and product offerings, to remain competitive Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 8
Customer Persona analysis : AXA can focus product offerings and solutions on the basis of customer profiling 24 years old Hobbies: volleyball, concerts, high usage of phone Priority : easy, mobile phone solutions, cheap insurance one fits all insurance Wei Hue (Student of biology) 37 years old, Father of 2 Hobbies : soccer, drone pilot, travel Jonathan AXA Group Priority: comprehensive international insurance coverage, transparency in use (Product Manager at P&G) 63 years old Hobbies : golf, sports betting Priority: trustworthy point of contact, easy filing & processing of claims Francois (Financial trader at UBS) AXAs solutions can be tailored to address concerns of its target audience, and become the #1 preferred insurer Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 9
Strategic alternatives have been considered in our analysis Profitability Strategic Fit Feasibility Decision Digital transformation Technological improvement Innovative AXA Group transformation Ambition 2020 Asia expansion X X X Extension of offerings Crowd sourcing X X X Related diversification Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 10
Implementation (1/3): Digital Transformation What Integration of upcoming innovation to provide tailored solutions Create transparency, ease and trust AXA Group Why Prevent disruption and disintermediation in the industry Customers demand transparency and convenience AXA will enhance customer centricity whilst also staying abreast with developments in technology Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 11
Implementation (1/3): Digital Transformation 1. Blockchain integration Development of Blockchain solution Smart Contracts Integration in Contract and claims management system AXA Group Medium-term data integration with private sector/ public sector records Long-term solutions to be applied in emerging markets scope for government partnerships Smart contracts will bring about transparency and convenience in insurance Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 12
Implementation (1/3): Digital Transformation 2. Analytics Development of analytical capabilities forecasting and prediction Integration in calculation of premiums; in line with future trends AXA Group Partnerships with relevant organizations for rollout Medium term boost cross selling of products based on customer data Analytics will reduce risks associated with premiums and growth rates, and bring about convenience in operations Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 13
Implementation (1/3): Digital Transformation Data Integration Data Contract Management Forecasting AXA Group Digital Transformation Business Finance Product development Claims Management Activity Stream for implementation of digital transformation outlining capabilities and resources required Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 14
Implementation (2/3): Innovative Transformation Strategy What Build up capabilities with Global Digital Services Startup Partnerships AXA Next as a launchpad AXA Group Why Need to extend current core capabilities to remain competitive Diversify coverage areas with potential for growth AXA can cultivate an innovative mindset within the company with the proposed strategy Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 15
Implementation (2/3): Innovative Transformation Strategy 1. Global Digital Service AXA Next to lead Global Innovation AXA Group Insurance Experts forum diverse geographies Discuss customer challenges/ grievances and highlight priorities AXA team develops solutions AXA will address needs for the future, with the help of knowledge sources within the company Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 16
Implementation (2/3): Innovative Transformation Strategy 2. Startup Partnerships Startup identification to partner (e.g: MetaFinance in Germany) AXA Group Develop MVP rapidly with Agile and Lean teams Rollout to pilotregions Regional IT teams to perform local customization Partnering with the right startups will enable AXA to launch customer-centric products Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 17
Implementation (2/3): Innovative Transformation Strategy 3. Nurture Innovative Culture Create Vision - # 1 preferred digital insurer AXA Group Regional briefing to communicate vision Work-life activities (Eg: Innovation Day ) Fast track program KPIs to monitor performance Creating a common vision will strengthen efforts of AXA towards attaining Ambition 2020 Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 18
Implementation (2/3): Innovative Transformation Strategy Agile process Regional Experts Digital products AXA Group Global Digital Services AXA Partner Customer Service AXA Next Activity Stream for implementation of digital transformation outlining capabilities and resources required Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 19
Implementation (3/3): Asia expansion strategy What Accelerate the growth in Asia Leverage partnership portfolio to scale up New product offerings for Asian customers AXA Group Why Huge market potential to be exploited in Asia market Rising purchasing power and digital intimacy of Asian customers Partnerships and acquisitions provide local cultural understanding and easier market access Effective partnerships and digital products will capture the Asian market Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 20
Implementation (3/3): Asia expansion strategy Partnerships & Acquisitions Operations & HR Promote partnership with tech-giants to access to local customers, e.g. Alibaba Initiate acquisitions to offer telemedicine service, e.g. HaoYiSheng New product offering through partnerships with local clinics, e.g. routine checks Promote products through events, e.g. sponsor drone championship Hire market agency to conduct customer insights research Exploit data analytics system to improve claim management system Establish Asian mobility squad team to monitor different markets (e.g. strategy, operations, marketing) Launch global secondment program Provide AXA scholarship with universities and recruit technical expertise AXA Group Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 21
Timeline for implementation of strategies H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 H2 2023 Strategy 1. Digital transformation Develop Smart contracts Integration to internal system AXA Group Develop forecast analytics and integration Partnerships and rollout 2. Innovative Transformation Create GDS Identify challenges & requirements Identify partnerships Develop and Rollout Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 22
Timeline for implementation of strategies H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 H2 2023 Strategy 2. Innovative Transformation Set vision and communicate Monthly Innovation meeting & monitoring KPI AXA Group 3. Expansion in Asia Marketing initiatives Asia Mobility squad Partnerships and Acquisition Product development and rollout Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 23
KPIs: Following KPIs will enable AXA to track and monitor the implementation process. KPI Target Digital transformation strategy Digital transformation strategy 1. Customer engagement rate of smart contracts 1. 40% (progressively achieved) 2. Customer satisfaction rate 2. 80% AXA Group Innovative transformational strategy Innovative transformational strategy 1. Number of partnerships with start-ups 1. 50 p.a. 2. Employee turnover rate in AXA Next 2. Less than 10% Asia expansion strategy Asia expansion strategy 1. Increase in customer base 1. 10% (progressively achieved) 2. ROI on relevant acquisitions, e.g. HaoYiSheng 2. 15% Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 24
Financial analysis: AXAs revenue will increase to 1.6 times by 2025. In USD'million Digital transformation strategy Revenue of exisiting customer base Revenue increase of premium 2020 2021 2022 2023 2024 2025 Trend 10,663 3,477 11,729 3,825 12,902 4,207 13,934 4,544 15,049 4,907 16,253 5,300 Innovative transformational strategy Revenue of innovative offeings 3,477 3,998 4,798 5,758 6,909 8,291 AXA Group Asia expansion strategy Revenue of Asian customer base Revenueof new product offerings 9,272 278 9,735 292 10,222 307 11,040 331 11,923 358 13,115 393 Total incremental revenue Growth rate 27,166 29,579 32,436 35,607 39,146 43,352 1.60 Proposed strategies will enable AXA grow revenue to 1.6* by 2025, with the contribution of increase in customer base, product offerings, and new markets. Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 25
Financial analysis: The following cost is associated with three suggested strategies, while increases profitability. In USD'million Digital transformation strategy COGS and other operating cost Software development expense Analytics and integration expense Partnerships development expense Cost reduction of climate change Innovative transformational strategy COGS and other operating cost Set up expense for "Global Digital Service" Partnerships development expense 2020 2021 2022 2023 2024 2025 Trend Investment outlook: Implementation cost Investment in acquisitions (e.g. HaoYiSheng 600 million) 10,129 200 11,142 12,257 13,237 14,296 15,440 40 20 5 40 10 5 40 10 5 40 10 5 40 10 5 20 - (203) (223) (245) (265) (286) (309) 3,303 3,799 4,558 5,470 6,564 7,877 AXA Group 40 5 50 5 40 5 40 5 40 5 40 5 Asia expansion strategy COGS and other operating cost Partnerships development expense Due diligence fee for acquisions 9,072 9,526 10,002 10,803 11,667 12,834 20 5 20 5 20 5 20 5 20 5 20 5 Total incremental implementation cost 22,602 24,379 26,697 29,370 32,366 35,966 Underlying earnings 4,564 5,200 5,739 6,237 6,780 7,386 Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 26
Contingency plan: Mitigating controls will address foreseeable risks faced by implementation plans Risk Probability Mitigation 1. Digital transformation 1. Delay in integration of solution with internal systems 2. Inaccurate customer data 1. Digital transformation 1. Evaluation of current processes to increase efficiency 2. Filtering and alternate sources Medium AXA Group 2. Innovative Transformation 1. GDS collaboration 2. Rejection of new vision 2. Innovative Transformation 1. Enhance stakeholder management 2. Global ambassador and re-alignment of KPIs Low 3. Expansion to Asia 1. Low pick-up rate 2. Failure of successful partnership 3. Expansion to Asia 1. Promote customer success stories 2. Identify alternate partnerships Medium Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 27
Key Factors to Success : AXA can achieve its objective of Ambition 2020 by focusing on key elements AXA Group Geographical Diversification Product Offerings with Customer Focus Technological # 1 preferred digital insurer in the world transformation Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 28
Conclusion : AXA will pave the way towards becoming the world s preferred insurer Reduce risk with Analytics Smart contracts with Blockchain Customer centricity Digital Transformation Global Digital Services Startup Partnerships Nurture innovative culture Innovative AXA Group Transformation Strategy Effective partnerships New product offering Expansion into Asia AXA will establish itself as a trusted, go-to insurer with exceptional customer centric and digitally driven services Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 29
THANK YOU FOR YOUR ATTENTION We now welcome any questions you may have. January 2020
APPENDIX We now welcome any questions you may have. January 2020
Financial analysis: Assumptions of revenue projection Assumptions 2020 2021 2022 2023 2024 2025 Digital transformation strategy Revenue of exisiting customer base Revenue increase of premium annual growth rate annual growth rate 10% 10% 10% 10% 10% 10% 8% 8% 8% 8% 8% 8% AXA Group Innovative transformational strategy Revenue of innovative offerings annual growth rate 10% 15% 20% 20% 20% 20% Asia expansion strategy Revenue of Asian customer base Revenueof new product offerings Revenueof new product offerings over existing revenue annual growth rate annual growth rate 3% 10% 3% 5% 15% 3% 5% 20% 3% 8% 20% 3% 8% 20% 3% 10% 20% 3% Problems Recommendations Analysis Alternatives Implementation Financials Contingency Conclusion 32
