Good afternoon, welcome to AXA's 2022 full year results presentation. Thanks to those who are here in person, and welcome also to those following us on the webcast. Presenting our results today is our Group CEO, Thomas Buberl; our Group Deputy CEO, Frédéric de Courtois; and our Group CFO, Albane de Mailly Nesle. We also have in the room the CEO of AXA France, Patrick Cohen; the CEO of AXA Europe and Latam, Antimo Perretta; and the CEO of AXA XL, Scott Gunter. After the presentation, we'll have a short Q&A session. We'll have a Q&A session. We'll first take the questions in the room, and then we'll go to the questions in the webcast. With that, I turn to Thomas.
Thank you very much, Anu, very warm welcome also from my side to you in London and everybody on the webcam. We are here today to present the full year results 2022, as you have seen this morning when we published it, AXA has delivered a very strong performance across the whole board. The group is in very good shape.
When we look at the key highlights, EUR 7.3 billion group underlying earnings, which is +4% relative to last year, if you were to look at the proper organic development without the pieces that we have sold, this number would have been +7%. +12% underlying earnings per share, which is well above the plan number that we have between 3% and 7%.
14.5% return on equity. 215% solvency, which is well above the 190% that we have as a threshold. EUR 5.5 billion cash remittance. I think we have probably in the history of AXA never seen such a high cash remittance. It shows you what we spoke about at the half year. The obsession that we have on cash is really showing up now in the numbers. Yesterday, the board has also looked at the question of capital management on dividend, which I come to in a minute, but also on share buyback, because as we told you, the board will look at this once per year to see how can we make sure that we deliver an attractive return.
Yesterday, the board has decided that the yearly slice of share buybacks for 2023 will be EUR 1.1 billion. This is the fruit of a very strong and disciplined execution of our new model. Certainly when you look at the share buybacks, it is a clear sign of a reflection of our very strong operational performance, but also of our very confident outlook going forward.
We did say clearly that share buybacks are a part of our toolbox and have now shown for the second time that it's also an active part of our toolbox. When we look at what is AXA today, because obviously you who have been following AXA over many years, it has changed significantly.
What we see AXA is today, it's much simpler, much more focused, and certainly much more driven towards a very consistent and foreseeable earnings pattern with a high degree of cash. Just to give you an idea of comparison, we looked it up earlier today, in 2016, we had EUR 100 billion revenue and made EUR 5.7 billion of underlying earnings. In 2022, we have again EUR 102 billion revenue and made EUR 7.3 billion of profit, 30% more on the same basis of revenue. Why is that the case? This was a deliberate strategic choice in making AXA what it is today, which is essentially two main parts.
One, we are the largest insurers for companies in the world for their physical assets, which is mainly done through AXA XL, but also for their human assets when we talk about employee benefits. When you look at going forward, where is the big growth momentum?
Where does the uncertainty around us crystallize the most? It is certainly for companies to find solutions for new risks or risks that are far more pronounced that have already been there. Being positioned as this global leader will also give us, going forward, a great opportunity to use that platform for much more growth. The second very strong and important leg of AXA is its leading positions in Europe and Japan.
In those markets, we have always a number one to five position, always focused on our core segments, be it commercial lines, be it protection, be it health, and also have a large and diverse distribution. Mainly based on proprietary agents, but also linking and investing in those agents to be fully phygital.
On the one hand, have a digital access, but also have a very modern way of serving our customers through digital. All of this has led to effect that we have a higher profit base, we have a more consistent and foreseeable and stable profit base, and certainly, the profit today is much more cash intense than it used to be.
This model of being focused as a global leader in insuring companies, but also having leading positions in Western Europe and Japan, which is a very complementary position, is also very different from any of our competitors. Therefore, this new platform gives us a great basis now of thinking beyond the existing plan, Driving Progress 2023, which will end at the end of this year.
Going forward and saying, "Look, how can we leverage this platform to grow even more?" When we look at growth, gross revenue as a whole have only increased 2%. This is the result of two actions. 1, we have pushed growth in the prioritized segments. The prioritized segments today make around 85% of the whole of AXA. The large majority. There we have achieved a 6% growth, which is a great result in this environment.
We've also got some businesses that we still need to restructure, that we still need to clean up. It is clear that after six years, we are towards the end of this exercise of cleaning up and restructuring. We should expect that this right sizing of shrinking businesses that are less core for us, be it the Nat Cat reinsurance or traditional general account, that this should be largely done by the end of 2023, which goes back to my point from earlier.
As of 2024, we've got the desired mix and the desired base to really focus on making this new platform grow even more. What is great to see, that this model has not only worked in calm times, but has also worked in very challenging times.
We've delivered a strong performance, and when you look at it beyond the business mix, what I personally value very much is our ability, organizational ability to react extremely fast. With more simplicity and more focus, we've also simplified and focused the organization much more. The link and the collaboration and dialogue with our markets is much faster. The actuarial models that we have and the technical capacities that we have are much better than we used to have.
In an inflationary environment, it is absolutely key to spot trends immediately and to decide quickly to react to them. I think this will be the very important theme in the presentations going forward. This ability to spot and quickly react is basically the result that you see in these numbers. I said earlier that one important element is really driving value for shareholders.
One is having good results, but also then making shareholders happy. With those results, the board of directors has decided yesterday to increase the dividend by 10% to EUR 1.70, which equals a 6% dividend yield. As I said earlier, the discretionary share buyback that is decided once a year, has been decided in February of EUR 1.1 billion.
Not to forget that there might be another share buyback coming from the German Life transaction that we have announced last year, under the assumption that this transaction closes this year. The share buyback, and I'm only talking about the EUR 1.1 billion, gives an additional 2% of yield, which sets us for this year at 70% total payout, which is very much in line with what you will see at competitors.
I'm now turning it over to Frédéric de Courtois, who will give us an update on the key operational priorities.
Good afternoon. I am very pleased with our results in a difficult context. I'd like to talk to you now about some of our key priorities: cash, inflation, Nat Cat, and our asset portfolio. I start with cash. Cash is our top priority. We've already said it. We've improved in 2022. There is more to come. You see here on the figures on the left that we've had EUR 5.5 billion remittance from our business units, most of them recurring. If I looked at the future, there are three important factors. The first one is, we believe that this cash remittance from our operating companies will continue to grow.
It will continue to grow because the result of our operating company will grow, and it will continue to grow also because we have some room to further improve the payout from some of these companies, especially XL, but not only. The first point is, it will continue to grow. The second point is that, as you know, we've made this reinsurance agreement between our holding company, AXA SA, and some of our business units to improve the fungibility of the cash. We have the option to further increase the scope of these reinsurance arrangements, which will further increase the fungibility of the cash within the group. The third important factor, which is well known to you, is that we continue to work hard on in-force transactions.
We confirm our target of EUR 30 billion-EUR 50 billion by the end of 2023. We have the ambition to be closer to the higher part of the range. This remains a priority after the German Life transaction that we hope to close by year-end, as Thomas mentioned. On inflation, I think that over the past two years, we've been extremely disciplined. We focused a lot on technical excellence, and I think we've been right to be extremely disciplined. Being extremely disciplined has allowed us this year, as Alban will explain, to maintain our technical margin in a difficult context. We believe that it puts us on the right track to reach the 93% combined ratio, which is our target for 2023. Of course, 93% based on IFRS 4, which means undiscounted.
We believe that we are on the right track to achieve this target in 2023 thanks to what we've done over the past two years and thanks to the discipline that we will maintain in 2023. If I look at the price increases over last year, I start with XL, and I'm sure you will have questions for Scott on this. The message is that price increases are still well ahead of loss trends, and this will lead to further margin increase for AXA XL over the coming years. In the middle, you see that we talk about our mid-core business, mainly in Europe. Here again, first, very good momentum on prices, especially at the beginning of 2023. Here again, the price increases is well ahead of the inflation, well ahead of the loss trend.
Here again, we are convinced that it will lead to further margin improvements for this for this business. The last business I would like to discuss on the right is the retail business, mainly France and Europe. You see here what our price increases have been on retail. What I can tell you is that first, there is a good momentum because prices have gradually improved over the year and again at the beginning of the year. What you see here is the price effect on the portfolio. There is a question of definition which is lower than the price increases that clients receive. We can come back to this in the questions if you have questions, but usually the price effect is about 2 points lower than the price increase.
Here for the retail, this is the price effect on the portfolio. What I can tell you is that, and I'm sure we'll come back to this, the price increases on, in retail in France and Europe in 2022 have been sufficient. They have been sufficient because you don't need to match with your price increases, the headline inflation. You have other effects that you need to take into account. You have, of course, frequency improvement. You have efforts on procurement. You have the mix effect. What I can tell you is that these price increases have been sufficient. We have nothing to catch up in 2023, except a notable exception, which is the UK, where we have to catch up in 2023.
In all other markets in continental Europe and France, we believe that we've made in 2022 the adequate price increases. We will remain extremely disciplined in 2023. As you see, the market, the price increases on the market is accelerating. Alban will show in a few minutes the impact on our claims ratio. Another important topic is our discipline on the costs. It's good that we've been disciplined since the beginning of our plan. You know that out of the EUR 500 million expense reduction that we objective that we have for 2023, we've reached EUR 400 million at the end of the year, which is good. What I can tell you is that in 2023, we will remain extremely focused on this. It will be challenging to reach our EUR 500 million target on costs.
What I can tell you is that whatever happens on costs, we will see based on the inflation in 2023, all of this will be more than compensated by price increases and by the increase in investment income. Last but not least, reserves, I'm sure you will come back to this in your questions. I would like first to reaffirm the strength of our reserves. I make a specific comment on XL. You know that we have this ADC on XL, the ADC is still untriggered. I would like to tell you a bit more about the strength of our reserves. We have a best-case scenario, the best-case scenario is inflation normalizing in 2025. What I can tell you is that we are extremely safe with this scenario.
We've also stress test this best-case scenario, and we've stress tested this best-case scenario in two directions. We first looked at what would happen if the normalization of the inflation comes later, one year, two years, three years and so on. We've stress test our best case in another direction, which is what happens if the normalization is not at the level we expect. What happens if we are one, two, three points higher and so on? I can tell you we are safe on all these scenarios. My third topic is on net CAT load. You see here that our net CAT load is broadly unchanged, EUR 2 billion or four points. I need to explain this a bit more because we had impacts in various directions.
The first impact is that there is inflation, so the load is increasing, of course. The second impact is that there was less capacity on the reinsurance market at the beginning of the year, which also increases the load. The third impact is an action we've made together with Scott, is that we've decided that we would reduce significantly again in 2023 the CAT exposure of AXA XL Re by about 35%. Then we slightly increase the quota share we have with AXA XL on property. The sum of this positive and negative, I don't know which is positive and negative, but the sum of these, all these effects is that the CAT load is, as I said, broadly unchanged compared to last year. Last year, it was 3.7 points, and it is 4 points this year.
We are happy with this. A last comment on the impact of increased prices. As you know, we have EUR 50 billion P&C premiums, and what I can tell you that the increased price impact at the beginning of the year on the renewal of ceded reinsurance is less than 0.5 points of our P&C premiums. This is extremely manageable. Asset portfolio. It's difficult to discuss this in a few minutes, but a few messages. First, on our liquid assets, you see that we have a cautious asset portfolio. I would insist especially on the fact that we only have 2% of BBB- corporate bonds. Based on the benchmark that I see, we are probably more cautious than most of our peers on this, and we are happy with this.
On alternative assets, we've always had a very rigorous process, cautious processes. Here again, we are happy with this. If I comment a bit more on some of the asset class, you know that we have significant exposure to real estate. On real estate, what is important for us is quality. Quality matters. We are focused on only on prime location green assets.
I cannot tell you what the real estate market, how it will move over the next years. What I can tell you is that we will be much better than the market. If I look at credit, we have of course, a non-liquid credit portfolio. We believe also on fees that we are in a good position. We've been extremely disciplined on the guarantees. We've been extremely disciplined on the leverage conditions on this credit.
Again, I'm not telling you that nothing will happen, but I'm telling you that we are comfortable with our position. If I look at Infra Equity and private equity, same speech. Infra Equity, we are mostly focused on green projects. Private equity, we are focused on EBITDA positive companies, so very low exposure to VC. Again, overall, an asset portfolio which may have seemed cautious a few years ago, and now which seems adequate, if I may say, given the circumstances. Conclusion, our priorities are clear. We are focused on disciplined execution, and we are going to continue to deliver. Thank you, and I leave the word to Alban.
Good afternoon to all. I will take you the results line by line. I will start with P&C. The P&C revenues are up 2% with different dynamics. Commercial insurance is up 5%, mainly driven by France and Europe, which are up respectively 11% and 6%, with a good mix of volumes and price increases, as Frédéric just mentioned. On the reinsurance side, we're down 27%, that's very much the reduction of our net cat exposure, obviously mitigated by some price increases, but very much in line with our strategy. Personal insurance up 4%, mainly price increases, but also positive net new contracts.
I won't comment the right-hand part of the screen simply because Frederick mentioned it. I think it's more interesting to look at the impact on our loss ratio when you look at, for instance, personal and motor. When you want to do the bridge between 21 and 22 of our loss ratio, you need to remember that in 21, our loss ratio was 70.2%. You also remember that we had significant COVID frequency benefits that represented roughly EUR 500 million or 4.8% of loss ratio. The normalized loss ratio in 21, if you leave aside those frequency benefits, was 75%.
Obviously you have the impact of inflation, 1.9%, and that impact here on the screen is net of our procurement actions, our orientation action, it still is 1.9%. We have frequency benefits that are not linked to COVID, that are not one-offs, that are simply the trend that we see year after year of lower frequency simply because of security, because of better cars.
If you compare 2022 with 2019, overall, our frequency is down 8%, you see that trend. You have the price effect that is -1.5 points, and if you sum up all this, you see that our loss ratio in personal and motor went from a normalized 75% to a published 73.9% in 2022. It's the same mechanism for non-motor.
I won't comment on it. We can come back to that during the Q&A if you want. Now if you zoom out and look at the overall profitability of our P&C business, first thing to say is that our combined ratio obviously is flat, 94.6, as you see. It is in a context with several headwinds. When you look at Nat Cat, 2022 was again a heavy year in terms of Nat Cat. Our cat load went down from 5.7% to 4.9%, and that's notably thanks to the efforts made at XL Re to reduce the cat load. Efforts that, again, will be furthered in 2023. Now if you focus on the attritional loss ratio, including large losses, it's up 1.1 point.
You need to keep in mind two headwinds. One is the motor frequency benefit that I just mentioned, and that's worth 1 point at group level. In Ukraine, that cost us EUR 400 million, and that's another 0.8 point. We have 1.8 point headwind, and you see that the increase is only 1.1 point. Why is that? Simply because we saw a significant improvement in underwriting results in attritional loss ratio, notably at XL. XL, as such, represents a 0.5 points decrease in our loss ratio at group level. Expenses, the expense ratio is down 0.6 points, and that's an effect of what Frédéric described in our expense reduction plan and the fact that we reach overall EUR 400 million expense reduction in 2022. That's the technical part.
If you add to that the significant increase in investment income, EUR 350 million, you have underlying earnings that grow by 5%. Why did investment income grow significantly? Two reasons, mainly. The first one is inflation, but in the positive sense, because we have a number of assets that are inflation-linked in Turkey, but also in Western Europe, and notably in Belgium.
The second reason is simply that we start seeing the benefit of reinvestments at a higher yield. You see that notably in the balance sheets that have a shorter duration, like the UK. Overall, 5% increase in our P&C earnings, and as Frédéric said, we're on track for the 93% target that we have for 2023. Moving to life. On the life side, revenues are down by 5%.
Protection is up by 3%. That's mainly driven by Japan, where our protection with unit-linked product meets significant success. It's also Switzerland, with our group life business, that still produces significant APE growth as well. On the unit-linked side, minus 12%. That's mainly due, as I said already at half year, I think, to a large corporate contract that we had at AXA France in 2021.
We didn't have the repeat of that contract in 2022. When you look at retail, sales are roughly flat. They are down in Hong Kong because of fewer MCVs coming to Hong Kong. On the capital-light side, it's down minus 11%. That's Japan, where we had a significant product there that is selling less. Again, I think I explained that also at half year for FX reasons.
Traditional GA is down by 16%. What matters to us is what is on the right-hand side, which is the net flows. You see that we have significant positive net flows in the lines that we target: protection, unit-linked, capital-light GA. It's very negative in Traditional GA. I think what is important to keep in mind is it's not because of higher surrenders.
Surrenders are flat. It's because we write less traditional capital-heavy GA. On profitability. Life profits are up 11%, which is a very good performance, mainly driven by technical margin. What happened in 2022? First, in 2021, we had some negative one-offs that didn't repeat in 2022, and notably, in Japan and in France.
Second, we reviewed some actuarial assumptions, notably in France, that led us overall to an increase of roughly EUR 300 million profits in technical margin. Our investment margin is resilient at 63 basis points to 64 basis points last year. I want to also insist on the EUR 61 million of fees and revenues, less expenses, because of the capital market that were down, our unit-linked fees were down.
You saw that on some lines of business, our revenues were down as well, fees were a bit down as well. That was compensated by the efforts we made on expenses. Overall, underlying earnings are up 11% on the life side. Moving to health. Gross revenues on the health side are up 16%. That includes two large legacy international contracts written by AXA France.
They were three-year reinsurance contracts that grew significantly. They were quota shares, but didn't meet our profitability targets. We're not satisfied with the claims experience. We terminated those two contracts at the end of 2022. If you adjust for those two contracts, growth would have been 7% for the whole group on health on the revenue side. Combined ratio is up 1.3 point. Underlying earnings are down 11% for two reasons. One is those two contracts that I've just mentioned, and the other one is COVID claims that we had in Japan. You know that we sell whole-life medical products in Japan, and the Japanese government determines the diseases that are to be indemnified under those policies. COVID was on the list until last fall.
We can see the result of that. It has been removed from the list last fall. Therefore, we will not see that again in 2023. Those two impacts that we had on our health business, the French legacy contracts and COVID in Japan, you won't see that in 2023. Last of our business lines, asset management. Obviously it was a rough year for asset management given capital markets, but earnings are broadly flat, minus 2%.
We had a decrease in our assets under management because of higher rates, because of lower equities, minus EUR 100 billion, but we had very good net inflows, notably on the Alts platform, EUR 15 billion, but also on the others. We had an average management fee that went up thanks to a better mix within AXA IM.
You see that cost containment was also quite efficient because our cost income ratio was up only by 0.3 point. That explains how we managed to keep our underlying earnings at AXA IM broadly flat in 2022. If I summarize all this on this slide, 5% for P&C, plus 11% for life and savings, minus 11% on health, minus 2% on asset management. That's a growth of underlying earnings of 4%. You will remember that we sold a number of companies because we wanted to simplify the organization. That's what Thomas described at the beginning. When you look at the real organic growth, leaving aside the impact of those disposals, we are up 7%, which is a very good performance.
The net income is down 11%, that's mainly due to funds, fixed income funds that are fair valued through P&L and had a negative impact because of the rising in interest rates. Moving from underlying earnings to underlying earnings per share. You have the 4% of earnings growth, which as you know, we show at constant FX. If you add to that the positive FX impact, 4%, and the capital management impact due to share buyback, another 4%, you come to the 12% UEPS growth that we had in 2022. Moving to balance sheet items. Cash remittance, EUR 5.5. Frédéric mentioned it. The important thing for us is it is between five and six, which was our 2023 target.
We are in that target, but we're one year ahead, and most of that comes from traditional remittance, dividends from our subsidiaries. The various impacts, you know them. Dividend last year of EUR 3.5 billion. Share buyback. Bear with me for a second because that's a number of share buybacks that EUR 0.8 billion, which was sort of half the EUR 1.7 billion we had decided the previous year. There is EUR 0.5 billion, which was the anti-dilution buyback that we announced a year ago. There is the EUR 1 billion discretionary buyback that we announced in August. All that sums up to EUR 2.3 billion. Holding costs and interest, EUR 1 billion, as always.
Debt issuance, as we told you, we issued a net debt of EUR 1 billion, which is in line with our plan, and EUR 600 billion coming from disposals. At the end of the year, we have EUR 4.5 billion at the Holdco level, above our one, two, three target level. Moving to solvency. Quite a few things to say on that slide. First, at the end of it, our Solvency II ratio remains at a very good level of 215%, which is significantly above the target level that we have said, which is 190%.
We had very good capital generation in 22, 23 points. You see that like before, this capital generation comes without higher capital requirements because our growth is done with capital-light products and with also the benefits of, for instance, the reduction in general account, which is capital heavy. Very good capital generation. Dividend, share buybacks, that's -24 points. Here again, we have obviously the dividend to be paid this year, EUR 3.9 billion. We also have two years of buyback. We have the EUR 0.5 billion and the EUR 1 billion of last year and the EUR 1.1 billion of this year. It is a significant use of our solvency when you sum that up. We benefited from regulatory changes.
You will remember that's mostly the change that we had in Japan or for Japan solvency when we couldn't use IBOR and swap any longer. That was a 5 points benefit, and you see that. By the way, in Q1, there will be two regulatory changes. One is that we will lose that benefit because the EIOPA has now said that we should get back to swap, and that would cost us the 5 points that we saved last year. There is also a change in the reference portfolio of the EIOPA, with less weight put on government bonds and corporate bonds, and therefore, the dynamic VA will be less efficient in 2023, and that will be a cost of 4 points.
There are probably two or three things that you could not see from the outside when trying to determine our solvency. I'm not talking about the market sensitivities because I think that we were in line and you saw that market movements cost us 3 points. Those 3 points are +18 from higher interest rates, -11 from higher volatility, equity and interest rates. Minus 10 from equity down, larger spreads, inflation and other. That's in line with our sensitivities when you apply that country by country, bearing in mind that, for instance, in Japan, interest rates hardly moved up. That's not what I wanted to describe. What I wanted to describe is three aspects that you couldn't see from outside.
The first one is at the holding company level, we had a tax litigation. We lost that tax litigation. It was a 15-year-old litigation. That cost us 2 points of solvency without any cash impact, without any PNL impact. The second aspect is the fact that as we have equity hedgers, those equity hedgers are taken pro rata temporis. In other words, if it's a one-year hedge, then I take 100% of it. If it's a six-month hedge, I only take half of the benefit. That benefit reduced a little bit over the year. It's completely in our hands to change that and to regain those solvency benefits if we want to.
The third aspect is on our reserves, we moved the equivalent of 2 points of solvency from our excess reserves to our best estimate reserves ahead of the move to IFRS 17. As you know, our excess reserves are already in our capital base for Solvency II, so reducing it obviously has an impact on solvency. That excess reserve will disappear with IFRS 17. Those are the various aspects on our Solvency II results. Overall, a good set of earnings and a robust balance sheet. I can only insist on what Frédéric said earlier, on the fact that notably on inflation, we'll be extremely vigilant in 2023. Thomas, if you want to conclude.
Thank you, Alban. Concluding, you have seen from all three of us, AXA is in great shape. The new platform, which is simple, focused, and really cash-oriented, works. We are well on our way in the plan, Driving Progress 2023. Both, or on the underlying earnings per share, +12% last year, which brings us to +10% over the three years from 2020 to 2022. One year to go, it should be relatively clear that we will exceed this target range. When you look at the return on equity at 14.5%, also well in the limits or the boundary of 13%-15%. On the Solvency II ratio, well above our 190% target capital ratio with 215%.
What Alban said, was very important when you look at the drivers of solvency, both in terms of the capital generation after dividend, but also the much reduced sensitivity to market movements due to our new business mix. It's a very healthy development and generation of solvency. Certainly the cash remittance, as I said earlier, EUR 5.5 is something that we have never seen beforehand. We set ourselves a target of EUR 14 billion cumulative over those three years. There as well, without being too, you know, far reaching, I'm sure we will achieve and overachieve that target as well. Thank you very much for listening. We are now moving to your questions and our answers. Let's start with Michael Huttner.
I think you are the most senior person in the room because you've been following AXA for the longest. There you go.
Thank you so much. A, congratulations. These are record numbers. B, I only have two questions. I detect, but I may be wrong, you've just been skiing. My question is. 2023 and beyond, you know, from when you were skiing and, you know, waiting for the queue or whatever it is, what does it look like? You know, the next plan. Then the second one on cash. I love cash. I think it's fantastic. EUR 5.5 billion is a real, is an amazing number. You alluded to lots of possibilities, including AXA XL. Could you give us a few more hints about 2023? That's it.
Good. Thank you, Michael. Just to repeat your questions. The first one was on what the next plan could look like, and second one on cash. I'll talk about the next plan and Alban, if you could talk about some more highlights on cash.
As I mentioned earlier, we are now in the last year of the Driving Progress 2023, so full attention is really to get this plan to a good ending. You've seen that on two KPIs we have already exceeded the good ending. On the others, we need to make sure that we are staying in the line. You see from all three of us and also my colleagues at the table over there, that we are very confident to achieve that plan.
Nevertheless, we want to think ahead. What I said earlier is that with this, with the end of this plan, very significant transformation of AXA comes to an end because for those of you who have not been in the room for as long as Michael has been in the room, after the financial crisis, we were 80% in financial risk.
At the end of this year, hopefully we'll be less than 15% in financial risk, keeping the same revenue of EUR 100 billion. This gives us a new, a focused, a more simpler platform that is much more cash generation-rating as our old business mix used to be. The focus of the next plan will clearly be around how do we make this platform grow.
We don't want to, you know, think about this next year, so because in about a year's time we will publish that plan. We are starting to think about this already now. Those three gentlemen that sit over there, we are in regular discussions already with what are their growth initiatives, how can we already fund them now, so that we basically flow into a new plan, which is very much focused on growth. Obviously, notwithstanding that the question around expense discipline and the success that we have had on technical discipline will continue. Alban, on cash.
On cash, there are a few items to take into account. First, the transformation of AXA SA into a reinsurer. We had said that we would have EUR 1 billion by the end of 2023. We had EUR 300 million in 2022, that gives you an idea of what's left to be done in 2023. On usual remittance, you know that usual remittance includes part of that benefit because that transformation allows to reduce the capitalization of some entities. The usual remittance should grow more than our earnings. That's very much in line with what Frédéric said. You also have some enforced transactions for which we will have the benefit also in 2023.
Can you give us the details on AXA XL?
On AXA XL, I believe the today, the remittance ratio for AXA XL is around 60%. It can grow in 2023. I'm looking at Scott for that. I count on him.
Let's stay at the same table and go to Andy.
Thanks. It's Andrew Sinclair from Bank of America. Three from me, please. Firstly, just on reinsurance and cat risk management. I saw there was an increase in the retentions for U.S. hurricane and U.S. earthquake, but on slide B 27 in the appendices, I saw that the one in five, one in 10-year scenario is unchanged on the downside, one in 20 barely changed. Just really wondered how is there not more risk from hurricanes coming through in those numbers? Is that a big de-risking of the book on an underlying basis? That's question one. Secondly is on XL. Just really wondered about ability to grow XL's exposures in 2023. Looks like exposure has still been shrinking slightly on the insurance side.
Is the insurance side going to move to exposure growth in 2023? Thirdly was on holding company cash. Lovely to see a buyback, great, but I'm immediately going to push you for more. Looking at the cash that's coming from the reinsurance changes, looking from higher remittances in 2023, I mean, you've got a EUR 1 billion-EUR 3 billion Holdco cash target. You've got EUR 4.5 billion now. Sounds like you'll be in the region of EUR 6 billion by the end of 2023. What are thoughts on that cash? You seem to be building it faster than returning it. Thank you.
Very good. Frédéric, for you, the first question around reinsurance Nat Cat, the retention increase. Scott, how can we make XL grow in terms of exposures and not only in terms of prices? Alban, if you can talk about the question on holding cash. Andy, around this holding cash, we are very happy about being above the EUR 1 billion-3 billion. We are in a period that is colored by a lot of uncertainty, and having a good cash position lets you sleep well at night. Frédéric.
I start on reinsurance. As I've said, we faced various challenges during the reinsurance renewals. There was a lack of capacity for the lower tranches. With very few exceptions, we don't have holes in what we call the tower. You should not forget on the other side of the equation that we've significantly reduced our exposures, especially in AXA XL Re. The sum of all of these has an impact on the cat load. Of course, it has an impact also on the one to 10 and one to 20 scenarios. What I can tell you is that on the one to 10 and one to 20 scenarios, the impact is not more than 6%-7% of on these scenarios.
Thank you. Scott, growth of AXA XL in 2023.
Sure. Just on the exposure for us, you've exposure a couple of different ways. One is the value increases or revenue increases of those clients. For the most part, as you know, that trails the inflation. The inflation goes up, and then we get the value increases sorta as the counts come up for renewal. We expect to see positive exposure growth in the lines that have values.
For example, property, marine cargo, those kind of growth areas. The other lines that have exposure, such as revenue turnover, that depends on the economy and depends what's happening. We do expect to see positive exposure growth in the renewal portfolio. Another piece of exposure that we're looking at is working closely with our colleagues at AXA GI.
We're looking to grow our exposure in the middle market business, particularly in Europe, UK, and the US. That exposure for those middle market clients, we expect to see that exposure from a risk standpoint growth for XL next year.
Alban, on the cash projections.
On the cash, a few thoughts. One, all the cards on the table to determine what will be the cash at the end of the year because we talked about the remittance. You know that we issue EUR 1 billion net debt, and you saw the dividend and the buyback that we want to do this year. Second, we are happy to be in that position cash-wise. Fundamentally, the question you're asking is the question for our board next year when we have that cash at Holdco, and they determine what they want to do with it in terms of dividend, buybacks or other. We're happy to be.
On that EUR 1 billion of net debt issuance, do you still want to be issuing net debt when you've got that level of cash?
I think it's also a question of solvency. That's what we said for this plan. We might review that for the next plan, but we'll tell you about this next year.
Thank you.
The only certainty is that we don't want to pile up cash.
Yes. Yes.
Glad to hear it, Peter.
Thank you very much. Yeah, Peter Eliot from Kepler Cheuvreux. Three from me, please. Alban, just on the minus 4 points from the reference portfolio to come, I mean, I know some of the weightings have changed and some of them have gone down, but I was struggling really to sort of get to 4 points. I'm just wondering if you could say sort of which particular bucket it is that caused that. I mean, Japanese govies maybe went down a bit, but I'm struggling to see what should impact you more than others in the changes that we've seen there. The second question was on the life technical margin. Great, great result, obviously. Take your comments on the French changes.
If I look, actually, I mean, every region pretty much has come up with a record year on that front, and it was also sort of very much sort of H2 loaded. If we look at the H2 run rate, I think it was like EUR 1.7 billion. I'm just wondering if there's anything else we should normalize in that or how you would look at that on an ongoing basis. Maybe the third one, share buyback. Thomas, your comments at the start made it sound like it was a sort of an annual decision on the discretionary. I guess in the past, we've seen announcements at Q2 or Q3 are a little bit more ad hoc.
It sounded like maybe that was a little bit of a change in approach, and I was just wondering if you could clarify how we should think of that. Thank you very much.
Thank you, Peter. I suggest, Alban, you take the first two questions around the reference portfolio and the life technical margin, and I'll answer Peter's question on the share buyback.
On the first question, on the reference portfolio, I can't see why we would be more affected than competitors, because the reason for that is simply when spread widens, as you know, you take the reference portfolio spread, and you sort of apply it to determine your risk adjustment. The change in weights in the reference portfolio just means that overall, that spread widening for the reference portfolio will be smaller, and therefore, they would be less contracyclical. That applies to everyone. That's not us in particular. We are just saying that ahead so that you can determine what our solvency will be at the end of Q1.
On the life technical margin, I signaled that in France there was a one-off coming from a change in actuarial assumptions. The rest, and in particular the good growth that we had in Japan with protection with unit link, that's stable.
I guess it's the second time that you've been. Sorry. It's the second time that we've seen a little bit of, or that you flagged a little bit of an impact on the solvency ratio from the reference portfolio. I think the first time a few years ago was, came from Japan. Others haven't done that, so I just wondered, but maybe something for offline or nothing more you can say.
Yeah. It's not, it's not at all specific to Japan. It's really our bond portfolio and the reference portfolio, which is more European than Asian or whatever.
On the share buybacks. Our policy is relatively clear. The board has set out to say, "Look, AXA wants to deliver a attractive return to shareholders, which is benchmarked also with competition." The board has determined this year that 70% is the number that they want to go for, and you've seen the 10% increase in dividend and the EUR 1.1 billion share buyback. The board takes once a year a look on this and looks at what are we doing with the available excess cash in order to get to that attractive capital return to shareholders. The decision has been taken in February this year, and we will look at this again next year when the new round is starting.
Obviously, the share buybacks that are there to offset dilution of earnings because we have sold a portfolio or a company, that's a different story. I mentioned earlier the German Life book. There the policy was always when we sell something, and it has been announced at the point of closing, there's a share buyback happening in order to offset the dilution, which is still the case for the open case of the German Life portfolio. If it was to close this year, and that's very much dependent on regulatory approval, then the dotted box that you saw on the slides is exactly that discretionary share buyback of the EUR 300 million, should it be the EUR 300 million at closing. It's an annual decision.
Thanks very much.
Let's move here to Dominic, and we'll go to the back lot later on.
Sorry. Hi. Dominic O'Mahony, BNP Paribas Exane. Thanks for the questions. three for me as well, please. first, just wondering. Very helpful to hear that the lapse experience is perfectly normal during full year 2022. Could you just give us an update whether there's any change so far in full year 2023, or is the lapse experience continuing to be, sort of normal? second was just on life investment margins, which I think came in at 63 basis points for the year, which clearly is good and in your range. It was quite a lot higher at half year. I think it was 70 basis points at half year.
Just wondering whether there's something we need to think about for our forward-looking numbers, what sort of run rate it is, whether something happened in H2. Third question, you're going to call me greedy. Just on the cash topic. If I look at the 5.2 organic from it, and I strip out the EUR 1 billion of Holdco costs, I think that's about a 60% payout on full year 2021 earnings. Is that I'm trying to work out whether that's you folks being conservative and thinking you're well ahead of your targets anyway, or whether there might be a factor holding back cash remittance, which, and if there is, whether you could share it with us. Thank you.
Very good. I suggest that because Alban has already spoken about the lapse experience, let's zoom into a market. This topic often comes up in France, so I would like to ask Patrick to talk about the beginning of this year and his lapse experience or non-lapse experience, I suggest, in France. Alban, if you could take the second question around the life margin, is it sustainable? Frédéric, if you could take the third one around the cash development and upstreaming to the entities since you've spoken about it before. Patrick.
Yeah. Thank you for the question, and good afternoon, everyone. In terms first of TOCF, it is stable in France, and I think what is important to notice is that the diversified savings strategy that we're pursuing is working quite well. To the extent that we have a positive TOCF of EUR 2.2 billion on unit-linked. We have a positive TOCF of EUR 1.8 billion on Euro Croissance, which is our capital-light GA, and minus EUR 5.1 billion on the general accounts. If you look overall at the GA lapse, it is stable in our proprietary networks. That's a combination of many thing, even given the raise on the Livret A, which is now at 3%.
First, it's, I'd say the expertise of our very specialized, agent network, their proximity, the long tenure they have with their customers. The second, there are some parts of the product in terms of tax benefit on inheritance benefits that I would say lapse effect, in France. We do not expect lapses to increase, also in 2023.
Alban, on the life investment margin.
You're absolutely right. It was higher at half year, but there is seasonality because in the first half, that's when you get the dividends on the equities. There was also more distribution from funds and in particular private equity fund. You didn't have that on the second half of the year, while you had the distribution or the provision for distribution to the policy holders. That explains the difference between H1 and H2. It is, I think it's fair. Going forward with IFRS 17 it will be difficult to follow, but yes.
Yes, there was that as well, IFRS 17. Frédéric, on cash.
On cash, Dominique. First, I'm not sure to understand your 60%, I'll anyway give an answer. The remittance from our local companies today is at 73%. If I take all my BUs, they pay 73% as a dividend, 73% of their IFRS result. We believe it will improve, as I've said. We have especially four areas where we're working and we believe we can have improvements. The first one already mentioned is we believe we can significantly improve the remittance ratio at AXA XL already from 2023. The second one, which is more difficult to solve, but on which we are working hard, is AXA Hong Kong, because AXA Hong Kong only has a 40% remittance ratio for regulatory reasons.
Together with Thomas, with Alban, with all the team, we are working hard on this. We've already improved it because it was 25%, so we've moved up to 40%, and we have hope to continue to improve it. The third one is Japan, on which we've made a good job. We've progressively increased the payout in Japan to 70%. We probably have some more way to go. The last one that Alban mentioned is Citadel. You know that Citadel, so the reinsurance arrangement between AXA IC and the business units. First, it doesn't cover the full scope of our entities, so some of our entities are out. Belgium is out for various reasons. The European business at AXA XL is out for various reasons. We are going to look at this again.
The quota share is at 25%, and we believe, subject of course to regulatory approval, but based on what we know that we have some room to improve it, which will again improve the remittance ratios. I don't know if I have answered.
Andrew, let me guess, your question will be on solvency.
No.
Oh, it's not. Bad guess.
It's a couple of questions really on reserve releases. I think you had a EUR 1 billion PYD reserve release, and you've got EUR 1.3 billion still above the buffer, best estimate buffer. Should we expect that to come down to the best estimate buffer over this year? I suppose related to that, you've had such strong pricing in commercial lines and reinsurance, it would not be a surprise if you were building a bit of caution into the current year reserve set up. I mean, is there any comment you'd like to make on that? Finally, on the P&C investment income, that was up EUR 350 million. Obviously reinvestment rates, you're going to be continuing to reinvest at higher rates. What likely benefit are you likely to get on investment income this year in P&C?
Thank you, Andrew. Alban, I suggest you take all three questions. On the first one, the EUR 1.3 billion buffer above best estimates. Second one, the question around commercial line pricing and the cushion, which covers XL but also the other geographies. The question around P&C investment income and the uptick from high yields.
On the buffer, the EUR 1.3 billion GA excess reserves. Unfortunately, that disappears with IFRS 17. That's the part when we showed you the opening balance sheet that was already in net assets. That part will not go to P&L. Are we cautious in our current year? I'd say we are cautious in our current year like we are cautious in our reserves. We want to have prudent reserves. That's even under IFRS 17, even with our best estimate, it will err on the side of caution, but there's no particular caution in addition to that for our current year. On P&C investment income. Overall, we invested at 2.90% in 2022.
In December, that was 4.4%. I'm not sure we'll be able to have that the whole of 2023. That gives you an idea of the additional investment income that we may have. Bear in mind that in the EUR 350, a significant part came from inflation. It depends on how much inflation we'll have in Europe and in Turkey. I say that because you saw probably that our yield on P&C went from 2.6%-2.8%. If you strip out Turkey and Colombia, which are two high inflation countries, it went up from 2.4% to 2.6%. The 2.6% is closer to the yield that we have, say, in Western Europe and XL overall.
Let's go to the back to, Ashik.
Yeah, thank you. Good afternoon. Ashik Musaddi, Morgan Stanley. Just have a couple of questions, actually. I mean, first of all, on solvency. I mean, your solvency was pretty high at north of 220%. Those levels are pretty comfortable because your sensitivity to interest rates are still high. Falling below 210 now, if I include the 9 points hit you're flagging, so you'll be at 205 somewhat. If interest rates fall, I mean, you can easily go below towards 190, even a bit lower. What is your thinking around that? Is there any way to lock in interest rate benefit so that your sensitivity is reduced and we don't see any potential negatives? Can something be done on that? Be the first question.
Secondly, I guess there was some mention about quota share. You have increased the quota share agreements, et cetera. Can you just elaborate a bit more as to where it was earlier and what has happened and how does that change the cat exposure? Thank you.
Thank you, Ashik. I suggest, Alban, you talk about the first question around the solvency roll forward after the technical adjustments that we have on IBOR and reference portfolio. Frédéric, if you could go back to.
Scott.
Oh, it's Scott. Okay. Let's do Scott on the quota share XL because it's an XL related question. Alban.
Several items. First, when you look at our solvency creation in a given year, if you look at this year, we create 23 points, but after dividend, you still have 9 points remaining. That would offset when, before any potential share buyback next year, but that would offset the impact of the two regulatory changes I mentioned. That's the first point.
Second point, when you look at the benefit of higher interest rates, it's 18 points. We keep a duration gap, which is low around 0.5, but we could reduce it further and even come to the other side of the duration gap, which as you said, would lead us to lock in those benefits. That's something that we are thinking about. We need to find a moment when we would do that.
A significant part of that 18 points benefit was offset by the higher volatility in equity and interest rates. If at some point for a given level of interest rates, volatility comes down because that stabilizes, we would regain part or all of those 11 points. That also needs to be kept in mind.
I guess, Alban, we could also decide to reinstall the equity hedges.
Absolutely.
Which would again add solvency.
Yeah.
Scott, on the quota share.
On the quota share. We purchased a quota share for our property business. That's North America as well as Europe and Australia, Asia. Due to the improvement in our portfolio, notice the 2 point improvement in the attritional loss ratio improved for AXA XL. We got significant interest in reinsurers offering more capacity for this property quota share. We took. The pricing was appropriate, so we took the advantage of buying a little more quota share. That quota share also includes cat cover. It includes wind, it includes earthquakes. As a result, we get a little bit of more help on the cat side when we purchase more quota share.
Let's move to Farooq.
Hi, everybody. Thank you very much. You mentioned in quite big font in your presentation the 70% payout ratio, and you said this is in line with our peers. Is this now a kind of a philosophy to be in line with peers on payout ratio, whatever that means in the new world? That's question one. Question two for Scott. Looking, you know, right at the back at the slides, slide B 28, where you show the lines of business. I mean, you seem to have de-risked everywhere. Look at specialty, primary casualty, financial lines. It's been contraction of premium versus pricing. It's been really big. In 2023, you're doing further XL re-contraction. Are you also gonna contract apart from the quota share?
Are you going to sort of from a written basis, also gonna continue contracting line sizes in other areas? The last question on higher yields in P&C. If you could just help technically, if we move to a IFRS 17 world where you have an immediate discount rate which reflects current yields, and if you net off the impact of the inflation-linked bond benefit, is that still an immediate jump that we get in earnings because yields have gone up? I'm just curious. Thank you.
Very good. Let me quickly start with the 70%. I mean, obviously, the board of directors will always look at what is an attractive Capital yield for the investor, which is this year being determined to be 70% and in the components you have seen. Again, this is something that happens on an annual basis because these things might change. The 70% are not fixed. This is this year's view. It might change next year. I think as an approach, it's a good orientation to say, "Look, we want to be an attractive dividend yield.
We compare ourselves to competitors, and we will engineer dividend and a potential share buyback depending on what the board decides on a yearly basis, to a reasonable and attractive level. Scott, B 28, around, will there be more contraction? Yes or no?
The simple answer is there won't be more contraction. If you look at that chart, the one that stands out is the financial lines. What that is, that's the impact. In 2021 with the IPO SPAC marketplace in the United States at the time, we're one of the largest writers of public D&O. We were able to take advantage of that marketplace. It was very robust. Write a lot of business. It's a one-time deal, right? You sort of write it. It was for IPO, it was for SPACs, it doesn't renew, right? As a result, we took a pretty significant reduction in volume just because, you know, the market kind of froze up. There wasn't any IPO. That volume wasn't really a risking issue. That was just it just disappeared, right?
The other pieces of the business, you'll notice that property basically held flat. Net balance of loss, we sort of flat relative to rate. Casualty, we did a little more work on some line sizing, particularly in the European casualty business, 'cause it's starting to get impacted by some of the Social Inflation factors. We kind of reduced some exposure there. We're essentially done that work, right? We're on the insurance side. On the reinsurance side, you know, as Frédéric de Courtois and Thomas Buberl and Alban de Mailly Nesle mentioned, we're continuing to knock out some cat exposure. We're reducing our cat exposure, another round of cat exposure reduction. We do expect the other lines to grow to offset that reduction. With the rate and the offset, we expect to kind of be pretty close to flat on the reinsurance business.
Alban, higher yields and the discounting in IFRS 17.
I wouldn't like to spoil the pleasure of the discussion we'll have in May when we present the 2022 IFRS 17 numbers. A few things. One, investment income stays the same for most asset classes under IFRS 17 compared to IFRS 4. The big difference is equity capital gains, which as you will remember from our November presentation, will not go to P&L, would go directly to capital, to balance sheet. You will have effectively the benefit of the discount on the 2022 numbers. Since we're talking of IFRS 17, one or two things to add. One is, we steered the 2022 numbers to IFRS 4.
Our PYDs, as you will see in the appendix, and we refer to that, are made of the excess reserves, and those excess reserves under IFRS 17 do not exist. That will also create a difference compared to IFRS 4.
We have time for one more person to ask because you've always got more than one question. Let's go into the middle to Will.
Sorry, I forgot one thing, just to be clear, 'cause I saw you raising your eyebrows on this. Investment income stays the same. You have the unwind of reserves that I forgot that will come also in IFRS 17.
For the two people, Hadley and William, who still have got questions, we will make sure by the time you exit this building, your questions have been answered. Will.
Okay, I'll try and make it quick. Personal motor looks like it's performing exceptionally well relative to peers. Are you doing anything differently? Geographic mix, dispersion explanation? We hear lots of phrases like inflation loads being thrown around. Do you think you're already capturing that in notional? Second one is just perhaps helpful to provide some color on German, Swiss January pricing renewals from personal lines and what you're currently pricing in U.K. motor as a year-on-year trend. You mentioned it's a challenging market. Thank you.
Thank you, Will. Antimo, these are two questions for you. You have the pleasure to answer the last two questions. The first one on personal motor, what are we doing differently? Since you are looking at many markets, you can also maybe give some examples of some concrete markets. The second question was around German, Swiss repricing. Nobody's better placed than you.
First, what we are doing better. It's clearly that we have a strong footprint in P&C retail special motor. We are working on different elements. The first is put a lot of innovation insights. I'll give a couple of example. Second is also the relationship with car dealer, with tied agents, helps a lot to put, I would say, the retention rate very high. Then also the discipline and the process in the liquidation of the claims. We are working really fast and in a very good customer satisfaction manner.
This is the three level that we are working. If I go to the innovation, we are working a lot with new t ools that, an example is in Switzerland, Neuroo. It's a startup that we have built with image recognition, where we can with after damage, we can really look at the damage, have really quick the answer, is covered or not.
We can also organize very quick the repair, and we can also go to a settlement. If you go to a settlement, normally what you are paying is 20% less. That's a little bit the way that we are working. In this way, what we are also doing is when the customer has 1 contract with us, we are trying to develop the customer to more contract because then the retention rates and it will increase. This about the, about the P&C and motor business. The second question please, again.
Was about Swiss and German renewal pricing.
Yeah. In Swiss and German renewal prices, if I look to the inflation, is that we have seen that in Switzerland we didn't have inflation in the market, so in the claims. We see that our price, we adapt the price very quick. We put new innovation product on the market. This has helped us a lot to have good renewal in the P&C retail but also in commercial line. The second element in Germany is working also with adaptation on the price, not 1 per year, but every month. This has helped us a lot because we are doing price increase, price adaptation every month. This helps also to have different system compared to our competitors.
Because our competitors, all the renewal comes at the end of the year. The end in Germany, we are coming every month. The attention for us is not all the portfolio should be renewed at the end of the year, but we have this distribution between all the months on the year. This has helped also a lot. Overall, I think technical capability on an underwriting good relationship, innovation in the product, this has helped a lot to do more retention compared to our peers in the markets.
Will, it also goes back, I think the secret goes back to our organizational model. We are simpler, we are focused, we have less priorities to look at, we can really drill down. In a period like this where things are changing so quickly, having your eye on the ball very quickly, also deciding the reaction very quickly is absolutely key. I think this is the secret behind the numbers. You see a very high fluidity in the team, very strong challenging connection and quick reaction. This is also the way we want to continue. I'm sorry that we have to interrupt here. I know we still have questions in the room, you will get your answer before you leave the building.
I'm also sorry that, if there were any questions on the webcast, we'll make sure that you get your answer in writing. Thank you very much for having been here today. Thank you for asking questions, and we wish you now a great rest of your afternoon and evening. Thank you.