Analysts at Berenberg are forecasting improved results for AXA ahead of the company’s forthcoming H1 results, including better underwriting both on a group level and within the AXA XL business unit.
During Q1 2022 results, AXA said that AXA XL’s Russia loss would be at about the same level as the cost of the Texas freeze in February 2021, which is estimated to cost around $350 million.
In addition, it reported no significant natural catastrophe losses in Q1 2022, leading Berenberg to estimated a 94.0% H1 2022 combined ratio for AXA XL, down from 95.8% in H1 2021.
Underwriting at AXA XL also benefited from continued rate rises of 8% in Q1 2022 after 11% in full-year 2021.
Berenberg believes this means that the group combined ratio also improved, albeit by just 0.5ppt to 92.8%, in H1 2022E. By comparison, consensus forecasts a rise to 93.9%.
Analysts also forecast underlying earnings at €3.7 billion for H1, including €650 million in H1 2022 underlying earnings at AXA XL, ahead of both H1 2021’s €619 million.
Further forecasts anticipate a second €0.5 billion buyback to be announced at the H1 2022 results, with buybacks now considered to constitute a core part of AXA’s capital management toolkit.
“We believe the group’s strong solvency … should allow it to announce another €500m buyback at the H1 2022 results, to follow the €500m announced at FY 2021 and completed on 27 April 2022,” Berenberg explained.