Wednesday, October 10, 2007

AXA Research What Is This?

AXA (AXA) Launches Euro 100 Million Research Fund to Promote Academic Research blares the headline that I just cut and pasted. Sounds really nice promoting academic research. Is this a Trojan Horse of some description? What's this all about?

Fundamentals first. The 100 million Euros will be spread out over five years. The fund will be launched in Jan 08 at which time they will announce the governance structure. The fund will be led by an independent director from their Supervisory Board, and managed by a Scientific Board chaired by Ezra Suleiman professor of political science at Princeton University.

100 million Euros. When you Google the company, Google finance shows equity of approximately 45 million euros and a cash position of approximately 20 million euros. The announcement is equal to 500% of their current cash position and 200% of their equity. AXA you need to explain how you will fund this. Insurance company accounting is an art form in itself. But this should not involve re-insurance pools.

Conspiracy theory now follows. The research fund will place bets I mean fund research on following areas associated with AXA's business of Financial Protection:

-- Comprehension and prevention of core risks for the human being and his
environment: health and pandemics, population ageing and long term care,
environment and climate
-- Finance theories and financial markets
-- Sciences, technology and information systems: web 2.0 and
virtual worlds
-- Marketing, consumer expectations and behaviours
-- Human sciences and sociology of organizations.

Finance theories and financial markets. Hmm. Will they try to capture the budding quant market and hire the theoreticians when they are still starving grad students? It also sounds like some mad scientist is going to figure out how we think and then AXA can underwrite the correct risk less policy.

One critical question will be who owns the intellectual property rights to the research and how will it be exploited. AXA of course. But research pipelines as the pharmaceuticals will tell you are not sure things. So why make a flashy 100 million Euro announcement?

How and when will the shareholder benefit from this one?