Let's cross the pond and take a look at one of the world's largest insurance and asset management companies -- France's AXA (NYSE:AXA).
This global giant enjoyed a pretty good 2005. While reported net income rose 12% for the full fiscal year, adjusted earnings climbed 23%, and underlying earnings were up 24%. As you might imagine, then, there is more than one valid way to discuss the company's "earnings" -- though results were above expectations all the same.
Growth was surprisingly well-balanced. Underlying earnings in the life and savings sectors were up about 24% on a combination of good fee growth, better yields from the company's portfolio, and a healthy 27% rise in new business growth. On the property/casualty front, earnings were up about 22%, with AXA experiencing decent renewals, and the overall combined ratio improved slightly from 98.5 to 97.7. (Remember -- lower is better.) Asset management also did very well; earnings were up 32% atop a 14% increase in revenue and a 16% jump in assets under management.
The black sheep of the family this year was the international insurance business, where earnings fell by 51%. All you really need to know about this is that reinsurance is a major part of this segment; like other reinsurers, AXA took a big hit from the 2005 hurricanes.
With the company boosting its dividend by about 44%, maybe it would seem as though growth is not really in the picture for the future. Not so. In fact, I believe AXA is very much looking for ways to expand its business in places such as Asia and the United States.
In the U.S., AXA has a very strong variable-annuity business -- it's about fourth in market share behind the likes of TIAA-CREF, MetLife (NYSE:MET), and Hartford (NYSE:HIG) -- but it could benefit from a better distribution channel. Accordingly, I wouldn't be too surprised if it took a go at companies such as Prudential (NYSE:PRU) or Nationwide (NYSE:NFS).
While these shares aren't especially cheap, they do offer the attractive combination of a well-run business, a good dividend yield, and the prospects of better future performance. That's not exactly an unappealing profile, even if the appreciation potential seems a little limited for the short term.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
