Global insurer and reinsurer AXA has announced that total revenues declined by 2% to €79.7 billion for the nine month period ended September 30th, 2020, as stable revenues within its property and casualty (P&C) business were offset by lower volumes as a result of COVID-19, alongside a decline in personal lines revenue during the period.
According to AXA, the 2% dip in total revenues, year-on-year, reflects strong growth of 4% in Q1, followed by a strong decline of 10% in Q2 related to COVID-19 lockdown measures, and a recovery of -1% in Q3 on the back of a partial resumption of economic activity.
In P&C, total revenues were stable at €38 billion, driven by stable commercial lines revenue of €24.5 billion. The firm notes that revenues for 9M 2020 were driven by a 3% rise in revenues at AXA XL Insurance from continued favourable pricing effects, largely offset by a 6% reduction in revenues at AXA XL Reinsurance from further exposed reductions in the property cat arena.
Within personal lines, revenues fell by 1% to €13.4 billion in 9M 2020, driven by declines in Europe, somewhat offset by growth in Asia.
Commenting on the performance of AXA XL, the property & casualty and specialty risk division of AXA, the company highlights an elevated level of natural catastrophe events through the third-quarter and into the final quarter of the year. This includes the likes of Hurricanes Laura, Isaias, and Sally in the U.S., alongside the derecho event, California wildfires and other smaller events.
As a result, the re/insurer estimates that AXA XL may pay claims of around €300 million, before tax and net of reinsurance, in excess of the normalised level for nat cats for the second half of the year.
Staying with AXA XL, and AXA notes that price increases on renewals remain strong and accelerated further in Q3 2020, coming in up 20% in Insurance and up 10% in Reinsurance. For the first nine months of the year, price increases at AXA XL were +16% in Insurance and +8% in Reinsurance.
Discussing the impacts of the ongoing COVID-19 pandemic, AXA states that at this time it only expects a limited impact from pandemic-related claims linked to the current second wave of lockdowns. Additionally, the firm has reconfirmed that its current best estimate for the impact on its 2020 underlying earnings for the Group from COVID-19 P&C claims and solidarity measures remains at €1.5 billion.
Thomas Buberl, AXA’s Chief Executive Officer (CEO), commented: “AXA’s strategic choices in recent years, favoring technical risks over financial risks, have positioned the Group well for the future and are confirmed by the Group’s strong performance in the context of Covid-19. The Group recorded a dynamic rebound of revenues in the third quarter, with our preferred segments, P&C Commercial lines, Health and Protection growing by 3%.
“The third quarter rebound in our business reflects the continued intensive engagement of our employees and distribution partners, embracing new ways of working and staying close to our clients during these challenging times. I would like to thank them for this. I would also like to thank AXA’s 108 million clients for their trust and loyalty. We will continue doing our very best to support them in this uncertain environment.
“AXA XL continued to record strong price increases in the third quarter, with prices up 20% in Insurance. Scott Gunter and his new leadership team are taking decisive actions to enhance profitability, including exiting unprofitable lines like Management Liability and Financial Institutions in the UK and Lloyd’s in Q3. Going forward, we will ensure the company has the resources necessary to take full advantage of these attractive market conditions and the anticipated resumption in demand across most client segments in 2021 and beyond.”
Within its Health business, AXA has announced that total revenues grew 7% to €11.3 billion in 9M 2020, with growth evident across all geographies in each of the year’s three quarters. Group business jumped by 8% to €5.3 billion, while individual business increased by 7% to €6 billion.
In Life and Savings, AXA has reported that total revenues fell by 7% to €22.8 billion. Net flows amounted to +4.3 billion and new business value fell by 2% to €1.8 billion.
For the nine month period ended September 30th, 2020, AXA has announced that total asset management revenues grew by 3% year-on-year to €922 million.
“AXA continues its simplification journey, with the completion in October of the disposals of its Central and Eastern European operations for Euro 1.0 billion and Architas UK, and the announced transaction in India.
“AXA expects only a limited impact on claims from the current second wave of lockdowns and has reaffirmed today its current best estimate of Euro 1.5 billion Covid-19 claims for 2020.
“AXA’s Solvency II ratio was resilient in the third quarter, remaining stable at 180%, despite a decline in interest rates and volatile financial market conditions. The Group’s FY20 Solvency II position is expected to benefit from the inclusion of AXA XL in AXA Group’s internal model and the completion of previously announced disposals. AXA also expects its cash at Holding to be strong at the end of the year, in excess of its target level,” said Buberl.
