AXA to divest tobacco industry assets

Last week brought the interesting news that french insurer AXA is to divest from tobacco industry investment as such investment is at odds with its role as a health insurance provider.

Comments on this topic vary from surprise at a major investor exiting a key defensive sector to ‘why did this not happen sooner?’

There is also comment around whether or not this will apply to AXA IM – the group’s investment arm – as opposed to AXA HQ.

Personally I am not sure how anyone can justify supporting a sector that sells products that are intentionally addictive and a cause of cancer…

For reference here are some links to recent commentary:

  • http://www.investmenteurope.net/regions/france/axa-group-exits-tobacco-but-not-necessarily-axa-im/
  • http://www.bloomberg.com/news/articles/2016-05-23/axa-to-sell-2-billion-of-tobacco-assets-as-it-divests-industry
  • http://www.ft.com/cms/s/0/5d79c0cc-1ea4-11e6-a7bc-ee846770ec15.html

 

The AXA release that announced this news follows:

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AXA Group divests tobacco industry assets

download press release here. (pdf 331.11 KB)

May 23, 2016

Smoking poses the biggest threat to public health in the world today

  • Role of health insurers is changing: healthcare, in the future, won’t be just about cure, it will be about prevention
  • As a responsible health insurer and investor, the AXA Group has decided to divest its tobacco industry assets, currently valued at approximately 1.8 billion euros

The incidence of long term non-communicable diseases (NCDs), including cancer, heart disease and chronic respiratory illnesses, is sharply rising and are currently responsible for 68% (1) of all deaths worldwide. For cancer alone, unhealthy lifestyle choices contribute to nearly 50% of cases (1).

In parallel with the rise of NCDs, AXA’s role as a health insurer is changing: prevention is becoming more important, with increased use of technology.

Tobacco consumption is the major cause of long term non-communicable diseases. Today, tobacco kills 6 million people per year, a figure that is expected to rise to 8 million by 2030, mostly in developing countries (2). Unless urgent action is taken to reverse this trend, tobacco will kill one billion people worldwide during the 21st century (2). Its cost, estimated at 2.1 trillion euros per year (3), equals the combined expenses of war and terrorism. The damage to health from tobacco products is more costly to society than that caused by alcohol or obesity.

In this context and as a responsible health insurer, the AXA Group has decided to divest its tobacco industry assets, currently valued at approximately 1.8 billion euros, as follows:

  • AXA will sell its equity holdings in tobacco companies immediately, the current estimated value of which is approximately 0.2 billion euros,
  • AXA will stop all new investments in tobacco industry corporate bonds and run off its existing tobacco industry bond holdings, currently valued at approximately 1.6 billion euros.

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