The Wall Street Journal recently reported on AXA Financial’s acquisition of HSBC Holdings,which the article says demonstrates the French insurer’s faith in “Mexico’s long-term potential.” AXA has been very careful in its spending choices due to the current European credit crisis,which is why the company chose to buy general insurance corporation HSBC’s businesses in Mexico in a $494 million deal.
“From the beginning of the discussions [with HSBC],Mexico was a top target,” stated Xavier de Bellefon,who is a chief executive for AXA Mexico,in a recent interview with Dow Jones Newswires. “Mexico is a success story for AXA; that’s why the company is willing to invest more.”
AXA has maintained a strong presence in Mexico since 2008 when it purchased ING’s Mexican insurance business. The insurance giant has invested more than $150 million in Mexico since that time in addition to the money it will now spend to purchase HSBC.
As the market leader in non-life insurance policies,AXA already holds around16% of the Mexican market,which will increase by at least 1% after the purchase of HSBC is finalized. The acquisition is also expected to increase distribution of AXA products in Mexico real estate,thanks to exclusive marketing of auto and property insurance policies throughout the country.
According to de Bellefon,since 2011 AXA has more than doubled its net profit in Mexico and has also increased the total number of premiums by around 15%. Last year the French company realized a net profit of $32.5 million and issued more than 28 billion (pesos) in premiums,according to Mexican insurance regulators.
As the world’s 13th-largest economy,and as Mexicans continue to accumulate more wealth,AXA has seen a steady increase in the historically low number of people who purchase insurance,giving the insurance giant good reason to project substantial growth over the coming years.
“Over the next 30-40 years,with our market share and potential for growth,Mexico will be one of the company’s most important units,” stated de Bellefon.