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AXA’s underlying earnings rise as AXA XL improves underwriting result

2nd August 2021 - Author: Luke Gallin

Global insurer AXA has reported a 101% increase in underlying earnings to €3.6 billion and a rise in net income to €4 billion for the first half of 2021, driven by an improved performance in its Property & Casualty (P&C) unit as a result of a strong underwriting result at AXA XL.

axa-logoAcross AXA’s operations in H1 2021, total revenues increased by 7% to almost €54 billion, reflecting growth in all business lines.

P&C revenue increased by 4% as Commercial lines grew at 6%, mostly as a result of favourable price effects, notably at AXA XL. At the same time, the Health unit saw its revenues increase by 3%, Life and Savings by 12%, while the Asset Management unit grew by 17% in the period.

The rise in underlying earnings to €3.6 billion was supported by underlying earnings growth of 323% within P&C, mostly due to the non-repeat of the impact of COVID-19 claims in H1 2020, and also a solid underwriting result at AXA XL.

The P&C segment’s underlying earnings reached more than €2.2 billion in H1 2021, as the AXA XL unit produced underlying earnings of €619 million, compared with a loss of €843 million a year earlier.

The firm attributes the improved result at AXA XL to higher pricing and portfolio re-underwriting.

Within P&C, the current year combined ratio improved by 8.4 percentage points, while the all year combined ratio improved by 8.3 percentage points, to 93.3%.

AXA attributes the better result to the non-repeat of COVID-19 claims in H1 2020, a strong improvement in the current year loss ratio excluding natural catastrophes, partially offset by higher nat cats, mainly at AXA XL.

The carrier attributes the higher cat losses at AXA XL to the Texas winter storm and also hailstorms in June across parts of Europe.

AXA has also provided an initial update on the impacts of the flooding across parts of Europe in July, saying that its preliminary estimate for claims stands at €400 million, before tax and net of reinsurance.

In the company’s Life & Savings arm, total revenues increased by 112% to €16.9 billion, as net flows reached more than €3 billion, and annual premium equivalent increased by 99% to €3 billion.

Overall, the Life & Savings unit has reported underlying earnings of €1.24 billion, which is growth of 10% from the same period last year.

In its Health business, AXA has reported total revenue growth of 3% to €7.9 billion, with growth occurring across most geographies.

Group business jumped by 5% to €3.8 billion, while individual business increased by 2% to €4.1 billion.

The Health segment’s combined ratio deteriorated slightly to 94.4% in H1 2021, driven mostly by the non-repeat of lower claims frequency in the context of COVID-19. Underlying earnings in the Health division increased by 5%, year-on-year, to €386 million.

Thomas Buberl, Chief Executive Officer (CEO) of AXA, commented: “AXA achieved an excellent performance in the first half of 2021. Revenues and underlying earnings grew strongly across the Group, in all geographies and business lines.

“Revenues were up 7%, reflecting strong business dynamics underpinned by P&C Commercial lines, up 6%, and by a strong growth in Life & Savings with a high-quality business mix. In Asset Management, AXA IM continued to perform very well in both Core and Alts platforms.

“The Group’s underlying earnings were Euro 3.6 billion in the first semester, up 101% and representing a 12% growth excluding the impact from Covid-19 last year. This strong result was achieved across all our markets, and notably at AXA XL with very good underwriting performance. Taking advantage of the continued favorable pricing momentum, AXA XL is well positioned to deliver its Euro 1.2 billion earnings target in 2021 and sustainable and profitable growth beyond.

“AXA’s balance sheet remained very strong, as illustrated by our solvency II ratio of 212% at the end of June, up 12 points from the end of 2020.

“As part of Driving Progress 2023, AXA continues its transformation journey with the deployment of innovative health services, notably with the launch of a digital health platform with Microsoft. The Group is playing an active role in society by supporting the economic recovery and strengthening further its engagement towards shaping climate transition.

“These excellent results reflect the collective efforts of all our colleagues, agents and partners. I would like to thank them for their relentless engagement, as well as our clients for their continued trust.”

Total asset management revenues increased by 17% to €704 million for AXA in H1 2021, driven mostly by higher management fees from both higher assets under management and an improved business mix.

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