Difficult six months for AXA
AXA suffers funds outflow in New Zealand, but says it's probably gained market share in the past six months.
Tuesday, August 26th 2003, 11:28PM
AXA says the lack of a compulsory savings regime in New Zealand and a strong reaction to falling sharemarkets has contributed to a volatile funds flow.Consequently, the company reported net funds outflows of A$142 million in the six month period. However, outflows reduced in the June quarter to A$15 million - the smallest outflow since the first quarter of 2002.
Results from AXA’s flagship advisory business, Spicers, have been particularly affected by the economic conditions due to the focus of its business model on providing post-retirement, lump sum investments in predominantly equity-backed products.
“Due to Spicers’ focus on diversified equity-backed products, redemption volumes during the six months were up 17%, and inflows down 74% compared to the corresponding period last year.
New Zealand chief executive Vaughan Underwood says Spicers’ negative flows of A$44 million was a reasonable result in the context of negative funds flow industry wide.
Whilst Spicers' performance doesn’t look too flash on the face value, Underwood says the business has, by his reckoning, at least maintained market share, if not increased it.
Underwood says AXA has been acquiring more advisory firms, besides Sterling Portfolio Management (formerly Harts and Reeves Moses).
The number of advisers in the Spicers network increased 10% to 68 in the year to June 30 due to acquisitions.
He says a number of advisory firms are interested in becoming part of a larger group for security and succession planning reasons. These new firms, which range from one-person operations with $5 million under management to nine person group with $30 million.
Underwood says AXA is still interested in acquiring more businesses, however it is past the stage of buying just to get distribution and increased funds under management.
AXA is “quite discerning” and is looking for well-run businesses which are a good fit.
AXA is going to roll out ipac’s Strategic Lifestyle financial planning model and software to advisers in Charter and AXA Financial Planning during the second half of 2003.
“It is anticipated that the use of the Strategic Lifestyle model by the aligned advisers will further increase the productivity of this network.” On the insurance side of the business AXA has seen an 8% increase in new business and in its in-force business.
This growth has come from product enhancement, new pricing and a greater push into the broker market.
Underwood says AXA is keen to get more involved in the workplace superannuation market once the Government makes some regulatory changes in this area.
He believes the company some competitive advantages in this area.
FOR MORE ON AXA'S RESULT VISIT www.sharechat.co.nz
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