Audemars Piguet Market Announcement

Key Points from the Discussion

• The program creates a distinct advantage for purchasing new AP watches directly from boutiques, potentially impacting gray market pricing by offering an added layer of security not available elsewhere.
• While seemingly 'free,' this insurance model will likely be factored into the overall cost of AP watches or drive more profitable direct-to-consumer sales, similar to how traditional insurance companies operate.
• The online registration process for the guarantee is straightforward and painless, though many long-time collectors already have comprehensive third-party insurance for their entire collections.
• This initiative aligns incentives between original owners and Audemars Piguet, potentially leading to stricter enforcement against servicing stolen watches by refusing parts, especially for models like the Royal Oak.
• There's a significant financial risk for AP, with potential claims reaching 80 million CHF, representing a notable percentage of their estimated 2 billion CHF revenue, especially if client behavior becomes more careless due to the insurance.
• Concerns exist about potential fraud, where individuals might engineer the 'theft' of their own watches to obtain a replacement, complicating the pre-owned market and servicing of watches later identified as stolen.
• Compared to annual third-party jewelry insurance policies, which are often inexpensive, AP's program effectively covers two years of insurance, a minuscule cost relative to the watch's purchase price and production cost, suggesting AP might self-insure.