Global re/insurer AXA has reported that its gross revenues increased by 4% to €57.9 billion in the first half of 2019, boosted by growth in its recently integrated AXA XL division.
AXA XL recorded gross revenues of €10.4 billion for the first six months of the year, representing an increase of 9% when compared to the same period in 2018.
This growth was largely driven by the division’s property & casualty (P&C) insurance business, which increased revenues by €616 million, or 15%, due to both volume growth and rate increases across most lines of business.
AXA XL’s P&C reinsurance business, in contrast, only increased gross revenues by €50 million, or 2%, compared with the previous year.
This was driven by volume growth and rate increases in specialty lines, partly offset by lower premiums in property catastrophe due to its reduced exposure to natural catastrophes.
The division also recorded revenue growth of €137 million, or 6%, for its P&C specialty business, while life & savings remained stable. Additionally, pricing was up by 5% for insurance and 2.4% for reinsurance over the period.
AXA XL’s combined ratio was 98.3% during H1 2019. This compares with combined ratios of 95.1% for AXA’s P&C business, 93.2% for protection, and 93.9% for health.
Thomas Buberl, Chief Executive Officer (CEO) at AXA, said that the integration of AXA XL was “progressing well” and confirmed that the division was on track to meet its earnings target of €1.4 billion by 2020.
“The new entity had a very good first half of the year in terms of financial performance,” he explained. “We are also beginning to see the full potential of combining AXA XL’s expertise in commercial risks with the power of AXA’s distribution.”
AXA also reported a 7% increase in its underlying earnings versus H1 2018, which were up €322 million to €3.6 billion.
“This growth has been very profitable,” Buberl commented. “This strong figure was driven by our key markets, notably Europe and Asia. It also reflects the very good quarter of our new entity, AXA XL, which generated 502 million euros in earnings.”
However, looking at net income, the Group’s results were down €463 million, or -17%, to €2.3 billion, largely driven by an unfavourable change in the value of derivatives net of foreign exchange impacts, which was down €547 million to -€789 million.
AXA also attributed the drop in income to higher adjusted earnings, a change in the value of assets due to a decrease in interest rates, the impact of exceptional and discontinued operations, higher integration and restructuring costs, and the impact of goodwill and other related intangibles.
Net income reported by AXA XL was €394 million, reflecting adjusted earnings of €547 million, integration and restructuring costs of -€82 million, exceptional operations of -€45 million, and the amortisation of intangible assets at -€20 million.
Buberl continued: “AXA XL had a great first half with continued and disciplined growth in revenues and a solid contribution to the Group’s earnings. Synergies are materializing well, and AXA XL should benefit from the increasingly positive pricing context.”
“AXA is very well advanced on its transformation journey,” he added. “The Group has reduced its sensitivity to financial markets, created the #1 Global P&C Commercial lines insurance platform and strengthened its position as a world leader in Health insurance.”