Navigating Global Market Changes: AXA Group Strategy Analysis

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In this comprehensive strategic analysis, AXA Group is tasked with addressing changing consumer expectations in a rapidly evolving global market. Key challenges, such as shifting consumer preferences and emerging technologies, are identified. The analysis delves into AXA's internal capabilities, external forces, industry trends, and market dynamics. The recommendation suggests acquiring global Insurtech and Chinese insurance companies for future positioning. The focus is on achieving long-term sustainability, digital transformation, risk reduction, and new product development.

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AXA AXAlerating Change ALTUM CONSULTING MEMORIAL UNIVERSITY

Agenda 1. Challenge Kim Sheppard 2. Analysis Curtis Whelan 3. Alternatives & Recommendation Kim Sheppard 4. Implementation Christina Fong 5. Financials & Risks Evan Foote 6. What Success Looks Like Christina Fong

Challenge How should AXA Group navigate the changing global market in an era of rapidly changing consumer expectations

Key Issues Changing consumer preferences Competition Emerging technology Potential economic downturn

Objectives Long-term sustainability Digital transformation Reduce risk exposure Develop new products

Recommendation AXA Group should acquire a global Insurtech company and an established Chinese insurance company to reposition themselves in the market and plan for the future

ANALYSIS CURTIS WHELAN

Analysis Focus Areas AXA Group Internal Capabilities External Forces Industry & Market Global Trends

AXA Internal Capabilities 1. 2. 3. 4. Socially Responsible Influence Sphere Successful Acquisition History XL Group Proactive Commitment Desire to Act Climate Change Largest Commercial Insurer Globally Commitment to Trends Tobacco 64 Countries Maestro Health Loss of Biodiversity 103 MM Customers Sustainability

AXA Internal Capabilities 1. 2. 3. 4. Socially Responsible Influence Sphere Successful Acquisition History XL Group Proactive Commitment Desire to Act Climate Change Largest Commercial Insurer Globally Commitment to Trends Tobacco 64 Countries Maestro Health Loss of Biodiversity 103 MM Customers Sustainability Leverage Position & Assets to Ensure Future Success.

AXA Business Operations Life & Savings Asset Health Management Property & Casualty Banking

AXA Growth Targets 1. 2. 3. Health Protection Commercial Property & Casualty Disability Invalidity Long-Term Care Life Insurance

AXA Growth Targets 1. 2. 3. Health Protection Commercial Property & Casualty Disability Invalidity Long-Term Care Life Insurance Major Potential Here as You ll See.

External Forces Force Competition New Players Market Size Technology Insurtechs Innovation Industry Shift New Services Same Field Global Trends Major Change Global Attention

External Forces Force Competition New Players Market Size Technology Insurtechs Innovation Industry Shift New Services Same Field Global Trends Major Change Global Attention There is a Need to Do Something Big.

Industry Overview $ 5 Trillion Market Value in 2018 (6% World GDP) Industry of Mergers & Acquisitions Increasing Disruption as a Result of Technology Innovation

Industry Overview $ 5 Trillion Market Value in 2018 (6% World GDP) Industry of Mergers & Acquisitions Increasing Disruption as a Result of Technology Innovation A Large Pie, Grow With It and Have a Slice.

Industry Overview Market Size 6000 5000 4000 3000 2000 1000 0 2015 2016 2017 2018 Premiums Life Non-Life

Industry Overview Market Size 6000 5000 4000 3000 2000 1000 0 2015 2016 2017 2018 Premiums Life Non-Life Approximately 5% Growth to Capture.

Competitive Landscape Global Multiline Regional Carriers Asset Managers Insurtechs Banks Aegon Zurich Allianz Generali Aviva AIG Hippo Rhoot Insurance Lemonade Oscar PolicyBazaar LIC HSBC Life Bradesco Vanguard Fidelity China Life LIC India Ping An Great Eastern

Competitive Landscape Global Multiline Regional Carriers Asset Managers Insurtechs Banks Aegon Zurich Allianz Generali Aviva AIG Hippo Rhoot Insurance Lemonade Oscar PolicyBazaar LIC HSBC Life Bradesco Vanguard Fidelity China Life LIC India Ping An Great Eastern Highly Segmented Stay Ahead of the Game

The Customer 1. 2. 3. Price Speed Convenience Choice. Flexibility. Simplicity. Personalization. What. Where. How.

The Customer 1. 2. 3. Price Speed Convenience Choice. Flexibility. Simplicity. Personalization. What. Where. How. Focus on the Key Differentiators.

Global Trends 1. 2. 3. 4. Climate Change Nature of Jobs Technology Disruption Sociopolitical Turmoil Insurtechs Economic Downturn Wildfires Gig Economy Machine Learning Inflation Floods More Time Off Blockchain Emerging Middle Class Hurricanes Safer Jobs Destabilization

Global Trends 1. 2. 3. 4. Climate Change Nature of Jobs Technology Disruption Sociopolitical Turmoil Insurtechs Economic Downturn Wildfires Gig Economy Machine Learning Inflation Floods More Time Off Blockchain Emerging Middle Class Hurricanes Safer Jobs Destabilization Stay Ahead of the Curve.

ALTERNATIVES & RECOMMENDATION KIM SHEPPARD

Alternatives 1 Franchise to Asia 2 Product diversification Acquisition of tech & insurance companies 3

Alternative 1: Franchise to Asia Pros Cons Focused growth areas Bring current model fully to a new market Current model is western-market focused Potentially unsustainable in tech- driven population

Alternative 2: Product diversification establish Asian asset management group Pros Cons New product diversity in an Asian market Large variety of high net individuals Costs Not digitally transformative Increases financial market risk

Alternative 3: Acquire Insurtech company & Chinese personal insurance company Pros Cons Value add to entire AXA Group Position for long term growth New offering in a growing market Costs Time to adjust and implement

Decision Matrix Objectives Alt. 1: Franchise Alt. 2: Manage Assets Alt. 3: Acquisition Long-term sustainability Digital transformation Reduce risk exposure Develop new products

Recommendation AXA Group should acquire a global Insurtech company and an established Chinese insurance company to reposition themselves in the market and plan for the future

IMPLEMENTATION CHRISTINA FONG

AXA Group Implementation Focus Digital Transformation Journey & AXA Next Targets New Product Development Asia Growth Strategy Improve Processes for Digital World

Digital Transformation Journey GOAL: Advance Payer to Partner Transformation Journey Through AXA Next. AXA Next Speed Up Innovation through Partnerships with Largest Digital Companies & Disruptors. Acquire Insurtech Company Leverage Insurtech Company s Established Technologies

Insurtech Acquisition Framework Insurtech s Leverage AI to Provide Increased Personalization, Greater Speed, & Improved Efficiency. Meet AXA Next Tech Objectives Value Alignment Geographical Reach (Target Demographics) Scalability & Financial Stability

Product Development TARGET: Position Company for Future of Work and Changing Global Trends. ACTIONS: 1. Offer Commercial Insurance to Gig Economy with Dynamic Premiums Based on AI Determined Risk Level. 2. Offer Property Insurance with Dynamic Premiums Based on AI Determined Natural Event Risk. Secure. Personalized. Multi-Channel. Real-Time.

Asia Growth Strategy Objectives: 1. Acquire Well-Established Chinese Insurance Company 2. Managed by Chinese National from AXA Tianping 3. Apply Technology From Insurtech to Chinese Acquisition and Existing China Joint Venture (AXA Tianping) Why China Aligns with AXA s Four Asian Levers. Leveraging Partnership Portfolio Reach New Customer Segments Delivering More Value to Existing Customers Improving Business Mix

Chinese Insurance Acquisition Framework Talent Management (Local Expertise) Value Alignment (Chinese Culture) Hungry for Growth. Well-Established & Profitable Prime Chinese Locations (Beijing)

Improving Processes for Digital World De-Risking AXA: Replacing Traditional Insurance by Modifying Strategies and Taking on a Larger Volume of Smaller Risks. AI-Enabled Operations to Truly Assess Exposures Climate Risk Exposure Providing Gig Economy with Insurance Options Leverage Maestro Health to Face Head-On AXA Two Pillars: Focus & Transform

AXAs 5 Year Strategy to 2025 Year 1 (2020) Buy Insurtech Company Year 2 (2021) Acquire Chinese Target Year 3 (2022) Service Gig Economy (Insurance Options) First Year of Service with Chinese Acquisition

AXAs 5 Year Strategy to 2025 Year 4 (2023) AI Based Innovation to Extract Consumer Insights Year 5 (2024) Make Technology Center Focus for AXA Develop New 5 Year Strategy

FINANCIALS & RISKS EVAN FOOTE

Assumptions 2019 s total FY performance will be similar to that of 2018 Stated significant writedown for 2019 assumed net income of approximately 5000MM AXA Group is not overleveraged, and has a capacity for debt AXA group has some cash and capital on hand

Implementation cost discussion Tech company acquisition financing Target acquisition cost of 200-250MM To be financed over 7 years Annual cost of 50.59 in blended payments of principal and interest

Implementation cost discussion Insurance company acquisition financing Target acquisition cost of 900-1000MM To be financed over 7 years Annual cost of 202.36 in blended payments of principal and interest

Implementation cost continued Final costs associated with tech growth and innovation No plans to cease investment into AXA Next programs Plan is to increase investment into AI expertise and development Aiming to invest 10MM a year for the first 3 years of plan, 20+M for years 4-5 as required Total implementation cost 1.31 Billion