Analysts at JP Morgan have lowered their underlying earnings estimates by 2% to 2.5% to reflect more subdued revenue growth in the first quarter of 2022 than was previously estimated, as well as to account for a potential higher level of large losses.
Q1 2022 saw roughly $12 billion to $14 billion of insured losses from multiple natural catastrophe events, according to JP Morgan’s data.
Major loss events included European Windstorm Nadia, UK & European storms in February, a Japanese earthquake, Australian floods and weather-related events in the US.
Looking at AXA XL specifically, JP Morgan expects the company to bear a small share of these losses, tempered by the fact that management are taking action to reduce exposure property-catastrophe reinsurance risk at AXA XL Re.
On previous occasions, AXA XL has taken a 1% to 2% market share of global natural catastrophe losses, analysts noted.
They added that AXA is unlikely to announce significant P&C losses related to geopolitical tensions surrounding the Russia-Ukraine conflict and has limited asset exposure to both countries.
According to JP Morgan, AXA has less than €50 million of direct assets in Russia and Ukraine and has €144 million of debt exposure to Nordstream 1.
The company also does not receive dividends from its stake in an unlisted Russian insurer (RESO) and exited the Ukrainian insurance market a few years ago.
AXA has €310 million of some insured in political risk contracts related to Russia and Ukraine, of which 50% is reinsured, and it may have exposure to contingent risks due to aviation leasing issues, although it is not clear what the impact would be.
JP Morgan notes that AXA’s Deputy CEO has mentioned that if claims did occur in relation to aviation leasing, the worst case loss would be equivalent to a small-to- mid sized catastrophe event.
