AXA Europe CEO Patrick Cohen Outlines Strategy for First Insurance Joint Venture with MPS

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AXA Doubles Down on Italy with €500M Investment in First Insurance, Eyes Market Leadership

milan, Italy – AXA, the global insurance giant, is considerably strengthening its presence in the Italian market with a €500 million investment to acquire a 51% stake in First Insurance, a leading direct insurance provider. This follows a previous €423 million investment in Nobis, solidifying AXA’s ambition to become a dominant force in Italy’s competitive insurance landscape. The moves signal a strong vote of confidence in the Italian market, which AXA leadership describes as “strongly strategic” and one of the most profitable in Europe.

A Strategic Market with Notable Potential

“Italy is a strongly strategic market for AXA and one of the most interesting insurance markets in europe for size, potential and profitability,” stated AXA leadership. The company,led by CEO Chiara Soldano in Italy,sees substantial growth opportunities within the country. While the group’s overall industrial plan doesn’t typically include a dedicated acquisition budget, Italy presented a compelling exception.

The acquisition of First Insurance is notably noteworthy. In 2024, First Insurance generated €1.2 billion in premiums with a combined ratio of 90%, demonstrating strong financial performance. Combined with Nobis, which achieved €600 million in premiums and a €34 million profit in 2024, AXA will nearly double its automotive business in Italy.The combined entities will serve approximately 7 million customers.

“Now with First, which in 2024 had 1.2 billion prizes, with a 90% combined ratio, we will almost double the size of the car business in Italy,” explained an AXA spokesperson.

Direct vs. Traditional: A Complementary Approach

The move into direct insurance raises questions about the future of traditional insurance agents. However, AXA is keen to emphasize that agents remain a core component of its business model.

“The agents remain central in our model,” affirmed AXA. “First is a fantastic addition to our franchise in Italy, which complements the solidity of our traditional business of Axa Italia, which will obviously remain central, based on a network of agents strongly rooted in the territories and able to offer our customers a personalized advice both in the life field and in the damage and health.”

First Insurance’s strength lies in its proprietary technology platform and data analytics capabilities, offering a seamless user experience for both customers and multi-agent agents seeking quotes and policy acquisition.This integration of technology and a strong agent network is a key element of AXA’s strategy.

Expanding the Direct channel Across Europe

AXA’s ambition extends beyond Italy. The company is actively seeking to grow its direct insurance market share across europe. In 2024, AXA generated €3.5 billion in revenue from its direct channel, operating in eight geographical areas and holding leadership positions in France, Belgium, Spain, and Ireland. First Insurance’s existing presence in Spain and the UK will further facilitate this expansion.

“First is a unique success story in the Italian market: in a short time, it has become a leader in the direct market thanks to a unique technological platform developed internally, a slender organizational model and a culture marked by innovation,” AXA noted.

Partnership with Monte dei Paschi di Siena Remains Strong

Looking ahead, AXA also addressed its long-standing partnership with Monte dei Paschi di Siena (MPS), which is due to expire in 2027. Despite recent challenges faced by MPS, AXA expressed strong satisfaction with the collaboration.

“We are very satisfied. In the first half of the year there was a moment of sales with MPS, with a double-digit growth,” stated AXA. “Results the result of the launch of new innovative products, the Bank’s commercial force and all the initiatives put in place to satisfy our common customers.”

AXA remains confident in the value of the joint venture and the strength of its business in Italy, suggesting a willingness to re-negotiate the agreement as the 2027 expiration date approaches.

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What specific challenges, as highlighted by Patrick Cohen, are anticipated during teh implementation phase of the AXA-MPS joint venture?

The Landmark Partnership: AXA & MPS

AXA, under the leadership of CEO Patrick Cohen, has announced its inaugural insurance joint venture with Banca MPS (Monte dei Paschi di Siena), marking a significant expansion of AXA’s presence in the Italian market. This strategic alliance focuses on property and casualty (P&C) insurance, aiming to leverage the strengths of both institutions to deliver enhanced insurance solutions to MPS’s extensive customer base. The deal,finalized in late 2023,is now entering a crucial phase of implementation,with cohen detailing the core strategies driving its success.

Key Strategic Pillars Defined by Patrick Cohen

Cohen’s outlined strategy centers around three primary pillars: distribution network optimization, product innovation, and digital transformation.These aren’t isolated initiatives,but rather interconnected components designed to create a synergistic effect.

Enhanced distribution: The joint venture will utilize MPS’s robust branch network – one of the largest in Italy – to distribute AXA’s P&C insurance products.This provides immediate access to a pre-existing, loyal customer base, significantly reducing customer acquisition costs.

Targeted Product Growth: Focus will be placed on developing tailored insurance products specifically designed to meet the needs of MPS customers. This includes home insurance, car insurance, and possibly specialized offerings for small and medium-sized enterprises (SMEs) – a key segment for MPS.

Digital-First Approach: A substantial investment in digital technologies is planned. this includes a revamped online portal, similar to AXA’s MyAXA platform (allowing customers to manage policies, file claims, and access support online), and the integration of data analytics to personalize customer experiences.

Focus on Property & Casualty Insurance: Why P&C?

The decision to initially focus on P&C insurance is strategic. The Italian P&C market presents significant growth opportunities, driven by increasing awareness of risk management and a growing demand for comprehensive coverage.

Market growth: Italy’s P&C insurance market is experiencing steady growth, fueled by factors like increasing homeownership and vehicle ownership.

Cross-Selling Opportunities: P&C products complement MPS’s existing banking services, creating opportunities for cross-selling and increased customer lifetime value.

Lower Capital Requirements: compared to life insurance, P&C insurance generally requires lower capital reserves, making it an attractive entry point for the joint venture.

Leveraging Technology for Competitive Advantage

Cohen emphasized the importance of technology in differentiating the joint venture. Key technological initiatives include:

1. Data Analytics: Utilizing data analytics to understand customer behavior, personalize insurance offerings, and improve risk assessment.
2. AI-Powered claims Processing: Implementing artificial intelligence (AI) to automate claims processing, reducing turnaround times and improving customer satisfaction.
3. Digital customer Service: Developing a comprehensive digital customer service platform, including chatbots and online self-service tools.
4. Integration with MPS Systems: Seamlessly integrating the insurance platform with MPS’s existing banking systems to provide a unified customer experience.

Synergies with Existing AXA Platforms

the joint venture will benefit from leveraging existing AXA platforms and expertise. This includes:

Claims Management Systems: Utilizing AXA’s established claims management systems to ensure efficient and accurate claims handling.

Risk Modeling Capabilities: Applying AXA’s advanced risk modeling capabilities to accurately assess and price insurance risks.

Digital Infrastructure: Adapting and implementing triumphant digital solutions from other AXA operations,such as the self-service features found in MyAXA.

Potential Challenges and Mitigation strategies

While the partnership holds significant promise, potential challenges exist. These include:

Integration Complexity: Integrating the operations of two large organizations can be complex and time-consuming. Cohen has stressed the importance of clear communication and collaboration to overcome this challenge.

Regulatory Hurdles: The Italian insurance market is heavily regulated. The joint venture must navigate a complex regulatory landscape to ensure compliance.

Competition: The Italian insurance market is highly competitive. The joint venture must differentiate itself through innovative products and superior customer service.

Impact on the Italian insurance Landscape

This joint venture is poised to reshape the Italian insurance landscape. By combining AXA’s insurance expertise with MPS’s distribution network, the partnership is expected to:

Increase Market Share: Gain a significant share of the Italian P&C insurance market.

Drive Innovation: Introduce innovative insurance products and services to the market.

Enhance Customer Experience: Provide customers with a more seamless and personalized insurance experience.

Boost Competition: Increase competition in the Italian insurance market, benefiting consumers.