Bank of America has named European insurance giant AXA one of its top picks for the insurance sector, given its attractively low valuation and generous dividend. The investment bank thinks AXA stock is a bargain, as it is expected to earn much more than its share price would imply. AXA trades at seven times its projected 2024 earnings, for a 9.2% return on total capital, Bank of America analyst Andrew Sinclair said in a note to clients on June 5. That yield includes a 6.8% dividend yield plus a 2.4% yield on companies repurchasing their own stock. AXA’s valuation is said to be one of the lowest in the industry, even with forecasts for a steadily rising dividend yield. BofA thinks AXA could trade at 9.4 times its projected 2024 earnings, implying a total return potential of about 30%, including a 7% dividend yield. Shares of the French multinational have risen 3.8% so far this year, and the current dividend yields 6.2%. Bank of America expects Paris-listed shares to rise 30 percent to 35 euros ($37.5) over the next 12 months, and U.S.-listed shares to rise to $37.59. Analysts at Wall Street banks on the CS-FR 1Y line said AXA looked more attractive following changes in accounting rules, known as IFRS17. The bank has already adopted this new system in its forecasts, reducing uncertainty about future earnings. Now, the company’s EPS is growing 7% annually from 2023 to 2026. Meanwhile, the dividend per share is expected to grow 9% annually from 2022 to 2025. Even with increased payouts to investors and plans to buy back 1.5 billion euros of its own shares annually, Bank of America thinks AXA will still be able to grow its available cash from 4.5 billion euros at the end of 2022 to 5.5 billion euros at the end of 2025. The Sinclair report also said AXA was not overly concerned about the impact of the North Atlantic hurricane season. According to Bank of America analysts, the company’s XL unit, which was exposed to natural disaster events in the past, has significantly reduced its risk. As such, AXA’s earnings are unlikely to be hit hard by any potential hurricane damage. In addition, AXA’s property and commercial insurance business has been steadily increasing margins, according to the investment bank. This is due to pricing outpacing claims inflation, a positive trend expected to continue through 2023.