AXA SA (CS) Earnings Call Transcript & Summary

Hello, everyone, and good morning again. My name is Ashik Musaddi and I lead the European Insurance Research here at Morgan Stanley. I'm really pleased to welcome Frédéric de Courtois, Deputy CEO of AXA Group. Frédéric has been with AXA, has had different roles in AXA for quite some time. But I guess, one key phase was your stint in Generali where you did a phenomenal turnaround. And since you have been at AXA, we have seen a strategic change, et cetera, which we will discuss a bit more into details. But before that, Frédéric, why don't you come on stage and give us some opening remarks and then we go through the fireside chart in a bit. Frédéric?

Thank you, Ashik, for the nice introduction. Good morning to you all. Very happy to be with you. I'd like to tell you a few words about what we are, and I'll start directly with this. So first, it's important for you to understand that we've been through a very heavy transformation over the past years. We are much more focused geographically. We are a company focused on technical lines, and we want to be -- thanks to this transformation we've executed. We want to be a very cash-generative business. So what is AXA business today? It's made of the first part, which is that we are a global leader in Commercial lines. So 50% of our business is Commercial lines, B2B. So let's say, out of the EUR 100 billion premium, EUR 50 billion is B2B. Out of the EUR 50 billion, 2/3 is Commercial lines P&C. So AXA XL and the P&C business we have in our companies in Europe, and 1/3 is employee benefit outside of the U.S. So we're a big employee benefit player outside of the U.S. So 50% Commercial lines, 50% retail and SME, Western Europe, Japan and very few emerging markets. In addition to this, you know that we are a leading alternative European platform in asset management. So we are well positioned. We know what we are and don't expect changes. This is what we are, and this is what we will be over the coming years. If I look at the results at the end of '22, this has been good results. We are in strong shape in all dimensions. So of course, the EPS has grown strongly, good return on equity, good solvency ratio, and we are extremely focused on cash remittance. We said that we have increased cash remittance from our business unit to EUR 5.5 billion. And we say that there is more to come. On the word on investment, at the end, we are a risk management company. And my job as a Deputy CEO, and I mean shared the Finance, Risk Management and a few other issues, is to be a Risk Manager, to look at the various scenarios, very much focused on risk, very much focused on risk return. And I think what we've done over the past years is good. We have a strong ALM position. We have on all asset classes an allocation, which is on the safe side of the spectrum. So I believe we are well positioned on all these issues. If I look at revenues and EPS, on revenues, we've grown by 2%. What is important to understand is that we've chosen our businesses. We've chosen our businesses. So we've decreased some businesses that we don't like. So we've strongly decreased Cat reinsurance. We've decreased general account, and you know that we will decrease some health businesses. At the end of '23, [indiscernible] will be completed. And we grow the business we like and the business we like are the capital-light business. So we like the P&C business. We like the health business and we like the savings business when it is capitalized. So this transformation is almost executed and it will be finalized by year-end. All of this has allowed us to have a good underlying per share growth by 12%. And we have said that, at the end, the target for this year, you know that we had a target range of 3% to 7% EPS growth over the plan, will be exceeded by the end of 2023. Last comment on cash, capital and shareholders. So you're aware that we've increased dividend by 10%. You're aware that we've made a second discretionary buyback of EUR 1.1 billion. You know that we are also doing anti-dilution share buybacks when there is the opportunity. The next one may be when we close the German deal. And at the end, we look at our total payout ratio, and we have a 70% total payout ratio. So my comment on this is, all of this is consistent with our capital management policy. You know that we said that share buyback are an ongoing part of our capital management [ tool sheet ]. In addition, when the Board is making the decision on dividend and share buyback, it looks at the attractivity of our payout ratio. And they've looked at the 70% payout ratio. We believe this is a competitive payout and this is why we are at this level. All of this leads to an 8% yield to 6% dividend yield, 2% share buyback. Conclusion. We've transformed the group a lot. We are very much focused on execution. We know what we are. We have a very strong franchise in some businesses. So commercial lines, Western Europe and Japan. And we are well positioned to be a player, which delivers very attractive and predictable cash returns. Thank you.

Thank you, Frédéric. I guess you're very short but very crisp presentation and your strategic direction about product lines and your focus towards shareholder returns is very clear. So thanks a lot for that presentation. I guess before we go into the chat, basically, I guess, one thing I want to get a bit more color about this macro volatility that we are seeing coming out of SVB fallout. I mean, what are you seeing as an impact on AXA? I mean if you can give a bit of color and how do you see the situation evolving in the next few weeks or months?

It's a good and expected question. So let me talk about the direct and the indirect impacts. On direct impacts, so we have a EUR 66 million corporate bond exposure to SVB. So you know that the price today is about 50% of its value. So I would qualify this as an immaterial impact for us. I'm regularly asked what is our exposure to U.S. regional banks. What I can tell you is that on regional banks of the size and the type of SVB, so I would call them the lightly regulated regional banks. We have about EUR 300 million exposure on corporate bonds. And our insurance exposure, especially on E&O and D&O to this is immaterial. Difficult to give a number because insurance is insurance, that is not as -- but you know that our line size of this businesses is usually EUR 10 million to EUR 15 million, so max EUR 10 million to EUR 15 million per case. Plus, we have reinsurance, which leads to the fact I might comment on any way, it will be immaterial, whatever happens. What is the indirect impact? I think all of this has nothing to do with us. In other words, if I look at this -- and the main issue is liquidity at the end -- and our business is -- our life insurance business is a long-term business. We have clients who have with insurance surrender penalties. They have big tax benefits, especially in France. They have other benefits and they care about these benefits, the mortality benefits and so on and so on. So all this is very important to understand, and it's very different from what we have seen here. So it helps to explain the difference of the business between insurance and bank. And in addition, I would add that our clients at AXA are retail and mass affluent clients. So they are clients who care, who trust their agents, who trust the brand, and who do not move every day based on what they've seen on their Bloomberg Street. They invest for the long term. And all of this explains why -- we've said it at year-end, our surrender ratio was 4.9% in 2021. It was again 4.9% in 2022. I cannot tell you what it will be in 2023, but we see absolutely no sign and no reason to have an increased surrender rate. So we are very relaxed on this. Of course, we look at this. We put a lot of attention to fees, but we are very relaxed and we believe that our business is very different from what you have seen over the past days.

Thank you, Frédéric. That was very clear. So just to summarize, I mean, on lapses, definitely nothing material you're seeing as well as on the direct exposure. I mean we are talking about very, very low triple-digit exposure, not necessarily any impact. So very clear. I guess as we kick off the session, I guess, we can start with a polling question. And the poll is a very simple one is what do investors think are the key investment debates for AXA shares at the moment. I mean, the options are: Sustainability of margin in P&C; Confidence around AXA XL; Earnings and volatility; capital return; Maintaining the solvency ratio above 190%; Organic growth and risk around M&A. So if we can get some thoughts on these questions -- this question would be really great. [Voting]

I am interested to see the answers. I hope it's number five The wait is going to be over now.

Very close, #5 and #1. So that's organic growth and sustainability of P&C margin, and very good to see that the market is not really worried about risk around M&A. So that's a pleasing one. So I guess, why don't we kick off with my favorite one, #5, organic growth. I mean, the reason why this is kind of my favorite one is because over the past decade or so with low interest rates, I mean, there is a perception that investors have that this sector is kind of ex-growth, whether it's P&C, Life, there's not much of growth on the top line. And what we have seen with your results as well is the top line has been more or less flattish for quite some time, but your earnings have gone up, thanks to your hard work towards transforming the company with better margins and the discipline around cost, combined ratio, et cetera. So -- but how would you characterize organic growth in grand scheme of things at this point and going forward?

You're right to care about this, because at the end, what matters to us is the growth of the bottom line. But at some point, you also need to grow the top line in order to grow the bottom line. If you look at AXA performance over the past years, we've reshuffled a lot of the business. And the growth has been more or less in line with the GDP growth, more or less, which was a mix of higher growth in the business we prefer, as I've explained, and decrease on some of the businesses. What we see for the future is that, in line with the market dynamics, AXA is a group which should grow the top line by about GDP plus 2%. And it will come from -- compared to what we're doing today, it will come from various factors. I mean the first one is -- we've exited already the businesses we don't like. We'll not see it anymore. We improve AXA XL. So at AXA XL, you should see growth in line with the price increases, which has not been the case over the past 2 to 3 years. Plus, we are going to see some organic growth opportunities. And I'm seeing especially 3 areas on which we will deliver growth. The first one is, we are investing to grow the middle market business, which is a business that we do extremely well in 4 countries: France, Switzerland, Germany and Belgium. And we are not doing elsewhere. So in our thinking, we are and we've started to invest in this. It's about investing in IT, it's about investing in hiring teams -- underwriting teams. We believe there is a good opportunity for us to grow the middle market in the U.S., in some countries in Europe and in Australia. And on this business, you could argue rightly that some other players are saying that they want to increase the middle market. Of course, this is a profitable business. They are only 4 to 5 players, which are really able to -- for example, to do global programs for middle markets. The second area, which we like is employee benefit. So we have a EUR 12 billion business on employee benefit outside of the U.S. And by the way, we have no intention to enter the U.S. market. But what we see is that post-COVID, employees care about their benefits and employers who struggle to attract and retain talent, give more benefits to their employees. So we see post-COVID, a good growth in these businesses, and we believe it will continue. The third area is that, for specific reasons, on the Life business in 4 countries, we have very good growth opportunities. This is about Japan, this is about Switzerland, this is about Germany, and this is about Belgium. So we are going to be focused -- we'll publish our next plan at the end of February of '24. So I would not anticipate our plan. But yes, we are going to be focused on organic growth. And this is not about strong growth because the insurance, it's very easy to grow strongly. What is important is to grow profitably, but we believe that GDP plus 2% is a kind of ballpark figure that we can achieve over the coming years.

That's very clear. And I guess it's still a bit early for investors to start pricing that in. But I guess the way you have executed over the past 5 years on transforming the company, I guess, all eyes will be there on this execution as well, and I'm pretty sure it would be a pleasure to watch. One thing I would ask is rising interest rates. I mean, does that help your organic growth story? Or would you say that, okay, even if interest rate goes down from these levels, I mean, your plan still remains a bit robust.

So what is the -- what is the impact of the -- what are the main impacts of rising interest rates? Of course, rising interest rates are good news for insurance companies. I'll start with this. It's pretty neutral on the life savings business because we are ALM matched, so there are no strong benefits. We have strong benefits on the P&C and health and protection business. You will have benefits on IFRS 17, which will be partially compensated by the unwind of the discount rate. So you will have to learn IFRS 17. So strong benefits, partially compensated by the unwind on the reserves and so on and so on. On the local results, and as a consequence on the dividends of our BUs, you only have the first impact, which is the very positive impact of increased interest rates because the local companies do not follow IFRS 17, so it's easier. So we will see strong impacts on dividend and local results in our local business units. Apart from this, are there other impacts? We do not plan or foresee any change in our direction on our various businesses. In other words, we made a strong -- for instance, we've made a strong shift to move away from annual guaranteed products on the savings business. We are regularly asked whether we are going to come back to fees because interest rates have increased. The answer is no. And the answer is no for 2 simple reasons. First, because we care about capital and risk management. And the second part is that, it takes you 5 years to convince your distribution channels to shift from one business to the other. So you do not change every year, the business mix, just like this. So we focus on our business. So strong impact -- positive impact on the bottom line. No change on the business overall.

Okay. That's very clear. And I guess, I mean, just like 1 data point from this morning, I mean, we ran a poll this morning for a bigger audience. And one of the questions I asked is, what do you think is the biggest opportunity for insurers overall -- European insurers for next 3 to 5 years? And one of the consensus was clearly it's about organic growth. So definitely, our focus on organic growth is very topical, I would say. So I hope it was really well...

[ The silly ] stuff in big groups is that usually you have good opportunities, which you can see is good organic growth opportunities and you don't seize them because you have budget, local companies miss 10 million to invest in an underwriting teams and so on. So I believe this is an efficient way to go.

I agree. I agree. Then the other topic which came up was around sustainability of P&C margins, commercial lines, retail, et cetera. Now the way I think about it is 4, 5 years back, your commercial lines reinsurance combined ratio was pretty high. Personal lines was good but still not at the level where you are seeing at the moment. I mean we are -- if I'm not wrong, you are at about 93%, 94% combined ratio, which is pretty impressive. Where do you see these margins heading towards? And if not higher, what is the visibility that you will be able to hold to these margins?

So first, we maintain our objective to be at 93% at year-end?

At the group level?

At the group level. So our P&C business is made of commercial lines and retail. So if I look at my P&C business, it is more or less EUR 50 billion, 2/3 commercial line, 1/3 retail. And of course, the 2 markets have very different dynamics. Commercial Lines, we see -- we still see really strong price increases, both at AXA XL and our Commercial Line business in Europe. So well ahead of inflation. And for the mid core business, especially in Europe, it's also pushed by automatic indexation. So we have price increases plus automatic indexation. How long will it last? Obviously, I don't know. I'm extremely confident that it last in -- on full year '23. At the end, this is a capacity gain. Today, the market lacks capacity, and the capacity is extremely correlated to the overall financial environment -- so the level of interest rates and the liquidity. So it depends on your view on this. My view is that it will pay for some time and that it will stay for some time. But as a consequence, prices were still good for some times in commercial lines and my bet would be beyond '23. But again, that's difficult to say. On the retail, the price dynamics are a bit different. What we are seeing is that we've made price increases in retail, which has been everywhere sufficient except in the U.K. Don't ask me why the U.K. market was late. It has started to wake up in Q4 with a very strong price increases in Q4, we still have to catch up in 2023. On the rest, I need to be clear on fees. The people see that we've increased prices by 2% in retail last year. The first technical comment is that to increase prices by -- when we say 2%, this is the price effect, and to have a price effect on our portfolio of 2%, you need to increase prices by about 4%. And the reason is simple, is that, clients who receive higher price increases create more than the others. So we've increased prices by 4%. The price effect was 2%. Then why hasn't been sufficient? First, because we started to see inflation on claims last year only around mid-year. Second, because we have a 2% frequency decrease, long-term frequency decrease every year on the motor business because of technology. And third, because we make 1% to 2% procurement gain every year, because, for instance, we don't buy spare parts from car manufacturers. So let's say that if you have a price effect of 2%, you can compensate for an inflation of about 5% to 6%. We believe that 2% next year will not be sufficient. We could see the paradox because probably that inflation will start to decrease, probably. But again, there was a time lag for insurance on when we've seen inflation. So we will have a full year impact on inflation in '23. My guess -- but again, we are pricing motor business every month now. So my guess is that we will need to have a price effect by about 2 points higher than last year. And we are doing it.

Yes. But Frédéric, 1 thing, what would you say. I mean, are you expecting margins to expand driven by commercial lines? Or would you say, in your planning, you have more or less, all you're trying to do is to make sure you get the current margins.

So on retail, which is 1/3 of our business, I'm expecting margins to remain stable except in the U.K. where they should decrease at the end. But this is not a big business for me. On Commercial Lines, I'm 100% convinced that margin will increase. First, the AXA XL results last year was 1.2, but it was a heavy year on Cat and we had especially the impact of EUR 400 million loss on Ukraine. So the normalized result of XL was higher than 1.2. Then the Commercial Lines business is driven by price increases that have been made over the past years and which have been only partially earned. So you will -- and we know what the price increases have been over the past years, and by the price increases of the current year. And as I've said, whereas we see loss trend of about 4% to 5% on commercial lines, we are increasing prices by 8% to 9%, which is a margin expansion. So margin will increase in the commercial lines.

Okay. That's very clear. One thing you touched base on this Cat losses, et cetera. Climate change is a big topic. But at the same time, I mean, price increases that we are seeing in reinsurance is absolutely amazing. But you're not chasing that business. Is there any specific reason what you're trying to do here?

Yes, there is. But actually -- you've seen that we've maintain our Cat loss, which is the average Cat that we expect at EUR 2 billion, so more or less stable. And we are happy with this, and this is a strategic decision. The main reason is, we don't like too much volatility. Of course, our business is about taking risk, but we don't want to have too much volatility. And this is why we've compensated -- the Cat flow has increased for 2 reasons last year: First, because of inflation. And then because we have higher retention because the reinsurance market was difficult. And to compensate for fees we will decrease AXA XL re-cat exposure. And so this is a strategic move. We will not come back to this. In other words, don't expect us to underwrite more Cat business over the next years. In addition, despite high price increases, I'm not totally sure that price are adequate. If you look at the Cat experience over the past years, and again, we had really 4 to 5 bad years on Cat, I would argue that prices are not totally adequate. But again, the main reasoning is volatility, and we will not come back to this.

Before I continue with some of my more questions, I'll just quickly check on the floor if there are any questions on the floor. And in that case, I guess one topic, which you mentioned as well is the focus on rewarding the investors. Now one of the key criteria or say, drivers of that is sustainability of cash flows. So how are you thinking about the sustainability of cash flows year after year, which could lead to -- when your capital allocation decision -- but let's first focus on cash flows and then we go into capital allocation a bit.

Yes, absolutely. So first, the fact that the cash flows are strong, so remittances from our business units are strongly increasing at AXA is the result of the transformation we've made over the past years. So we've moved from a life business, mainly life business, to mainly P&C and health business, much more capital light, which has significantly increased the remittances from our company. So what we've said is, I said that it was 5.5 last year. It will continue to increase because it takes time to see the impact but we are on the right path. In addition, we said that we have some still under leverage opportunities. We have this famous Citadel project, whereby we reinsure our local insurance company and the holding, which is a recurring impact and which we have the option to expand. And then we -- I have said that there are some business units for which we are not satisfied, and there are potential to increase remittance -- I have mentioned XL, I have mentioned Hong Kong, I have mentioned Japan. So there is potential to further increase and to have growing remittance.

So by clearly growing remittance -- but are there any specific areas of room? I mean, you mentioned XL. But where can we go? I mean would you say that last year's numbers were there's quite a bit of room there? Or there's a bit of here, there's a bit there?

Yes. No, what we said, if you look at business unit results for AXA is more or less [ EUR 1 billion ]. And we had a 73% remittance from these business units last year. And we've said that, thanks to the Citadel, thanks to the fact that we are a more capital-light business, thanks to the fact that we address the 3 business units that I mentioned, the 73% will increase. I haven't said by how much.

No, that's very clear. So then that leads us to the allocation of it, because if you're getting a lot of cash flows, then ultimately, we need to think about how you're using those cash flows. Now last year you announced a buyback of 1 billion this year. You announced a buyback of 1.1 billion. How should we think about? Is it more recurring in nature, you would say? Or yes -- or there are other things in your agenda as well, which we need to keep an eye on.

First, when we say that share buybacks are an ongoing part of our capital management toolkit. We believe that the ongoing part is pretty clear. We believe that you should -- you investors to judge us on facts, and we start to build a track record on this. I have said also that the Board looks at the competitivity of this payout ratio. This is something we very much look at, and that this year, [ just ] at 70%, and we are competitive, and they were happy with this. Sometimes I'm asked why 1.1 because they consider that at the end with 1.1, we had a competitive payout ratio. So this is the way we think. Then if you look at other possible topics. First, we want to pay, and this is what we are doing in '23. We want to pay everything. So what I mean by everything is, share buyback, dividend, interest on the debt and cost of the holding company with regular remittance. So in other words, you will not see us issue debt to make share buyback. That's not the plan. The second consideration I would make is that, when we discuss about our new plan at the end of -- at the end of February 2024, of course, there is an issue on the table, which is the debt. And we have -- you remember that we had said that we issued over the current plan EUR 1 billion a year, we maintained the leverage ratio stable. This is something which will be on the table, of course, at the end of '24. My third consideration is that you will see increase in the cash at the holding company. So we are already above the target range that we have, which is between EUR 1 billion to EUR 3 billion -- more around EUR 4.5 billion now. It will continue to increase because we are continuing to do in-force actions because we have a few -- not much, but we have a few things to sell. So the EUR 4.5 billion will continue to increase. So legitimate question is, what are you going to do with all of this? My first answer is, we will tell you at the end of February '24. But my second consideration is, don't expect much from us on M&A. In other words, first, there are very few opportunities. Then we are very disciplined, especially the comparison with the share buyback is a strong criteria. And then in any case, and you've seen it in Spain, we've made a small acquisition in Spain. Even if we do something, it will be something bolt-on to reinforce the country where we have strong synergies. So no surprise, M&A policy.

That must be a pleasing commentary for investors, I would say.

I've seen that everybody is reassured now, so...

Well exactly...

Maybe my comment is useless, but...

It's still important, at least it's coming from you. We'll just quickly check if there are any questions on the floor. And in that case, I guess, I mean, staying with the same topic, capital, how do you see -- do you worry that capital or leverage could be a bottleneck for your cash plan?

That the capital... what?

Capital or leverage could be a bottleneck for your cash plan or return to investors just because of heightened volatility in the market. I mean if interest rate goes down, you might lose a bit of solvency, so it becomes a bottleneck or how comfortable you are on the capital side of the story?

So you are right to ask because we've discussed a lot about the cash. It's good to discuss about the capital. First, so I have a [ 215 ] in solvency ratio. I say that I have a 9-point negative impact due to regulatory measures. First, we have a strong capital generation. So we have a capital generation by about 23 points a year. My dividend is about 14 points. I have -- let's assume I continue to make share buyback. It's about 4 points. So I generate about 4 points a year of capital. Then if you look at the volatility that we have, the volatility that we have at the end of 2022 on our solvency margin was low, totally in line with our sensitivities. It is true that we have some sensitivity to interest rates. I'll make 2 comments on this. The first one, as you are professional people, I would encourage you to look at the sensitivity -- how the sensitivities are calculated. In other words, not all insurance companies are calculating in the same way, especially some of them do not increase -- do not include the sensitivity on the risk margin, which is a big part of the sensitivity. So our sensitivity is all inclusive, if I must say. Then you have to take into account that, if I look, for instance, at 22, 2/3 of the positive impact on the interest rate increase were compensated by negative impact of volatility. So at the end, the positive impact has not been huge of the increase of interest rates. I'm extremely comfortable with my solvency. I'm comfortable with the solvency we said at or above 190%. Sometimes I receive comments from investors and I care about the comments from our investors that they like 200%, maybe because this is a round number. But let's say that around this, good to hear. I'm comfortable.

No, that's -- I guess, I mean, why 200% -- I mean I'm also in the same camp of 200%. It just -- it sounds nice. And given your size and your scale, I guess, it's always good to have a bit of buffer because then there is no concept of financial distress or concept like that. I think that's why probably we are in the same camp of 200%...

It would be fine line for all of us. I mean -- to be at 300% would be bad management -- at 300% would be bad management. 200%, yes.

It's reasonable. That's clear. Just in case -- there's any -- there is 1 question from audience. Mark?

Mark Teeger, Morgan Stanley. Yes, you mentioned growth -- some life growth opportunities. I think you said Japan, Switzerland, Belgium. What is it about those markets that's attractive and there is room for growth. That's any mature markets like others, right, and some low rates, but interested to hear what -- where you see the opportunity and how?

It is a good question. In fact, the first is our 4 rich markets, there is potential. But this is more about -- the opportunity is more about AXA position and I'll discuss about the 4 markets. Japan, historically, before AXA took over this company, it was a savings company, and we've transformed it into a health and protection company. And we have a great business in Japan. Japan is 10% of our results. This is really a great business, a great distribution. And we believe that there is potential to come back to savings with the Unit-Linked business in Japan. Switzerland. So you remember that we have totally transformed the group business from a capital-heavy business to capital-light business. We had released EUR 2 billion of capital and we are still doing a good group business in Switzerland. We have almost stopped -- this is the life of big companies. We have almost stopped the individual business in Switzerland because of IT transition. This is the life of insurance companies. So we're almost not done in dividend business in Switzerland over the past 2 to 3 years because, yes, transition takes 2 to 3 years. So now that we are at the end of the transition, we start again to do life business in Switzerland on the individual side. Germany is because we believe we have more potential in Germany, especially if I compared to France. And Belgium, we have to confess when we make mistakes. I think this is a mistake we've made in the past. We've stopped the individual savings business in Belgium. I think it was 6, 7, 8 years ago. And now we realized that it was probably a mistake. We are #1 and #2 Belgium insurance company and other lines of business. This is mainly a broker market. It was probably a mistake to stop this business, and we're going to do it again. So again, we are going to do it in a disciplined way. But for specific reasons to AXA, there are 4 good markets in which we can develop the business.

Thank you. Any further questions from the audience? In that case, I mean, I wanted to touch base on 1 topic, which in the morning poll came up as one of the key concerns that investors see for the insurance sector, and that's the exposure to liquid credit, illiquid assets. Now as interest rates were low, it's fair to say that for the [ chase by yield ] or for asset portfolio optimization, ensure there has been a flight towards these asset classes. Now how do you see that risk evolving? Where do you think AXA is in, especially given the volatility we are hearing around real estate market, illiquid asset market is where more concerns are coming through. So where are we on that for AXA?

So first, you're absolutely right, Ashik, that we've seen insurance companies increase their exposure to illiquid assets for good reasons. There were 2 reasons actually. The first one is a lack of opportunity -- other opportunity. And the second one is that we have loan liabilities, we can capture the famous illiquidity premium. Today, we have alternatives. When interest rates are high, we have alternatives. So our current bucket of illiquid assets, including everything, is 23% of our balance sheet. We will not -- the trend of increasing this bucket is behind us. It doesn't mean that we will aggressively decrease it, but we have more opportunities to invest in liquid assets. This is the first point. Then if I look at the risk on our illiquid assets, maybe I'll focus on real estate and CRE asset class, to discuss about PE, about infrastructure and so on. Globally, I'm not bullish on these markets. In other words, I think that prices are relatively high. The debt cost has increased. There are some trends for office space. Office is about 23% of our -- 25% -- maybe 25% of our portfolio. So there are some trends that do not make me bullish on the part of the real estate and CRE is the same because at the end, you're exposed to [ things ]. What I believe is that AXA is only in prime location and mostly on green assets and that it makes the difference. I'm not telling you that our value will not decrease on real estate. I don't know at the end what the market will do. I'm telling you I will do much better than the market. Because if you look at London and Paris and so on, it changes absolutely everything, whether you have buildings in the center and good buildings or buildings that are far away. So we have -- we are -- you know that we are the first real estate asset management in Europe. We are -- we have a very strong track record over the past 30 years. We are bringing value to our buildings because in fact, we are restructuring buildings, we are -- we believe mid- to long term, we will continue to bring value to this market and to these assets and have a good track record. On the market overall, we should pay attention over the coming years of what happens.

Thank you. I guess from this discussion, what I have learned is, definitely you're progressing really very well towards your vision and really all the best, and thanks a lot for sharing your thoughts with our investors. I hope it was clear. Thanks a lot, everyone, for attending. Thank you.

Thank you, Ashik.