The unit, which accounts for about a quarter of Axa’s life- and-savings revenue, plans to increase property loans to 2 percent of its 140 billion euros ($185 billion) of assets from 1 percent, Nicolas Moreau, chief executive officer of the business, said in an interview in Paris.
“The loan market is evolving and insurers talk with banks to co-originate,” he said. “It could make considerable amounts that insurers keep on their balance sheet.”
Banks, which dominate Europe’s $1.3 trillion real-estate lending market, may be pushed by stricter capital requirements to offload more than 200 billion euros of property loans this decade, according to CB Richard Ellis Group Inc. That comes as the European Union’s Solvency II rules make real-estate debt more attractive than buying property for insurers and the sovereign debt crisis reduces the appetite for government bonds.
“It’s a groundswell,” said Pierre Flabbee, a Paris-based analyst at Kepler Capital Markets who recommends buying Axa shares. “Insurers are looking for corporate debt investments at a time when returns on public debt are low, and real-estate debt can be an opportunity.”
Axa’s real-estate unit last month raised 2 billion euros to invest in debt in European countries, including Germany, France and the U.K. The division will invest “primarily” in senior debt backed by prime properties, the company said Feb. 27.
Non-bank lenders increased their share of European commercial real-estate lending to about 24 percent in 2010 from 13 percent in 1997, London-based property adviser DTZ Holdings Plc estimates. Prudential Plc’s M&G unit, Cairn Capital Ltd. and Matrix Property Fund Management Ltd. are also raising debt- lending funds.
Direct property investments by Axa’s French unit should remain stable at about 8 percent of its assets, Moreau said.
The French operation will also start offering clients a life-insurance product with returns linked to real estate at the end of the first half, Moreau said. It aims to attract 300 million euros to 500 million euros in annual savings, or about 5 percent of the division’s annual inflows, he said.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at firstname.lastname@example.org