Word is out that the world’s largest insurer, AXA, has made the controversial decision to quit investing into the tobacco industry. The reason? The company no longer believes in supporting an industry that has been responsible for the death of over 6 million persons on an annual basis. According to the CDC, cigarette smoking alone accounts for almost half a million deaths in the United States every year. A little less than 10% of this number is due to second-hand smoke! AXA is taking a principled position and has resolved to sell approximately US$250 million worth of tobacco stocks. That’s a tidy sum!
This decision has been further fuelled by pressure from AXA’s clients to invest in companies that promote healthy lifestyle practices. Nevertheless, the company will not insist that its customers follow suit. They have simply taken a stand that they hope will pay dividends in the long run. As insurers, AXA, hopes to make a change and to become a part of the solution rather than remaining a part of the problem. Considering the fact that the tobacco industry is doing tremendously well, this decision begs the question of whether AXA is making the right decision. Only time will tell.
For year ended 2015, AXA made revenues of €98,534 million, a 6.6% increase over the previous year. The company realized net income of €5,617 million up from €5,024 the previous year. Dividends per share for 2015 stood at €1.10 up from €0.95 in 2014 while the average share price for 2015 stood at €22.96 (€18.62 in 2014). Net income per share ended at €2.19, up from €1.95 for 2014. AXA practices a progressive dividend policy. The organization is a French public company existing under the laws of France and is headquartered in Paris.