Global insurer AXA has posted solid revenue increases across the board for the first quarter, but warned that the coronavirus pandemic will have a material impact on the group’s earnings in 2020.
Total revenues were up 4% with growth in all business lines, with Property & Casualty (+3%), driven by Commercial lines (+5%) mainly from positive price effects, Health (+8%), with growth across all geographies, Life & Savings (+4%), from Unit-Linked and Protection, partly offset by G/A Savings, and Asset Management (+11%).
P&C revenues internationally were up 2% to €1.1 billion, mainly driven by Commercial lines notably from positive price effects in Colombia in Property and in Turkey from both Property and Motor, partly offset by the loss of a large contract in Brazil.
AXA XL’s P&C Insurance revenues were up 10% to €4.6 billion, mainly driven by Property (+19%) following strong rate increases as well as a positive volume effect in both International and North America, Casualty (+11%) mainly reflecting strong price increases (+10%), and Specialty (+10%) benefiting from strong price effects in Aviation.
P&C Reinsurance revenues with AXA XL increased by 2% to $1.9 billion, mainly driven by Specialty and other lines, partly offset by continued selective underwriting in Property Cat (-11%).
Looking forward with the COVID-19 pandemic in mind, AXA expects the lockdowns in affected countries to impact its sales and revenues progressively, most notably through a reduction of new business activity across most lines of business, with some offset anticipated from improved retention.
The impacts are expected to be more significant in L&S, and to a lesser degree in P&C and in Health.
AXA says claims notified related to COVID-19 in March have been limited at this early stage.
However, confinement measures across all geographies are expected to have a material impact on the level of claims across a number of product lines, most notably in Event Cancellation and Business Interruption.
“The Group performed well in the first quarter of 2020,” said Thomas Buberl, CEO of AXA. “Revenues were up 4%, once again with growth across all lines of business and geographies, notably supported by a strong pricing environment in P&C Commercial lines.
“AXA’s balance sheet remains resilient in these volatile market conditions, with a Solvency II ratio at 182%, and after the repayment of Euro 1.3 billion subordinated debt in April, AXA’s debt gearing was reduced to below 28%.
“The Covid-19 crisis has created unprecedented health, economic and financial challenges. AXA’s priority has been to protect the safety of our 160,000 employees and partners and allow them, as well as our distributors, to continue providing undisrupted services to our 108 million customers. Exceptional measures have been implemented to help our most impacted clients, particularly SMEs.
“AXA has also leveraged its medical networks and teleconsulting services for its clients while supporting medical responses in the regions in which it operates. We have contributed to solidarity funds to support healthcare professionals, research, affected companies, and economic recovery. AXA has initiated discussions with peers and public authorities to better insure future health risks.
“Although Covid-19 related claims notified in March were limited and the precise implications of the crisis remain uncertain at this stage, we believe that the effects of the Covid-19 crisis will have a material impact on our earnings in 2020.”
Buberl is confident in AXA’s strategy and its execution, and the need for enhanced insurance coverage in preferred segments confirms growth potential post-crisis.
“I would particularly like to express my gratitude to all AXA colleagues and partners for their unwavering commitment during this crisis, and their support as we prepare for a safe and progressive end to global lockdowns,” he added.
