AXA XL Re’s Revenue Down By 21% On Nat Cat Reduction

AXA XL Re’s Revenue Down By 21% On Nat Cat Reduction

AXA, a multinational insurer, today revealed that its first-half 2022 gross revenues increased by 1% to €55 billion, despite a sharp decline in natural disaster exposure within AXA XL Reinsurance.

Along with an increase in gross sales, French insurer AXA also reported underlying earnings that increased by 4% year over year to €3.9 billion and net income that increased by 4% to €4.1 billion compared to around €4 billion last year.

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Property & Casualty (P&C) segment revenue increased by 1% to €29.3 billion in H1 2022, contributing to the period’s overall revenue growth. The commercial lines segment of P&C saw a 1% increase in revenue to €19.7 billion, driven by a 4% increase in commercial lines insurance, which was somewhat offset by a sizable decline at AXA XL Reinsurance.

In AXA XL Reinsurance, the company tried to further lower the book’s volatility in the first six months of the year, which resulted in a 21% year-over-year drop in revenue to €2.2 billion. According to the company, this decrease in vulnerability to natural disasters is consistent with its strategy and was somewhat offset by favorable price impacts.

AXA XL Re’s Revenue Down By 21% On Nat Cat Reduction

At AXA XL Insurance, revenues came in slightly lower with favourable price effects across all lines and higher new business in property.

Within its personal lines business, revenues increased by 3% year on year to €9.5 billion, which the company attributes to higher revenue in non-motor and motor.

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All in all, the P&C segment has produced a combined ratio of 93.7% for H1 2022, which is up 0.7 percentage points. According to AXA, the slight increase reflects higher motor frequency from the non-repeat of mobility restrictions in France and in Europe in H1 2021, yet with the overall frequency still being below pre-Covid levels.

Additionally, the firm notes higher large losses primarily from the impact of the war in Ukraine of €300 million, pre-tax and net of reinsurance.

However, these were partly offset by a reduction in the expense ratio, while AXA says that the impacts of natural catastrophe events and prior reserve development were broadly stable.

Underlying earnings at P&C were up by 4% to €2.8 billion, which the firm attributes to higher investment income and lower taxes, partly offset by the slightly higher combined ratio.

AXA XL Re’s Revenue Down By 21% On Nat Cat Reduction

Within its Life & Savings operation, AXA is reporting that total revenues fell by 5%, year-on-year, to €16 billion. While protection revenues increased by 2%, this was more than offset by an 11% decline in unit-linked revenues and a 12% decline in G/A savings revenues. Overall the Life & Savings unit saw its underlying earnings increase by 7% to more than €1.3 billion.

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When we look at the company’s health division, we see that overall sales rose by 13% to €8.8 billion, with AXA claiming growth in all regions. Individual business climbed by 6% to €4.3 billion while group business increased by 21% to €4.5 billion. In the first half of 2022, the Health combined ratio was 94.9 percent, while underlying earnings rose by 2 percent to €402 million.

On the asset side of the balance sheet, AXA reported average assets under management of €771 billion, net inflows of €14 billion, and overall asset management revenue increase of 4% to €788 million.

“AXA delivered a good performance in the first half of 2022, highlighting the robustness of our operating model in a more difficult climate,” said Thomas Buberl, Chief Executive Officer (CEO) of AXA. Strong organic earnings growth was seen across all of our business lines as the Group’s underlying earnings per share increased by 11%.

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AXA XL Re’s Revenue Down By 21% On Nat Cat Reduction

“Revenue growth was of high quality, with an excellent mix towards technical and fee-based business, notably across Health, Commercial Lines Insurance and Asset Management. In the meantime, we continued to reposition our portfolio away from Property Catastrophe Reinsurance and traditional General Account business.

“We reported strong technical profitability across all businesses, in particular in France and Europe delivering attractive and consistent performance, and AXA XL recording resilient results despite the impact of the war in Ukraine.

“Today the Group announced a Euro 1.0 billion share buy-back reflecting our robust operational performance, the strength of our balance sheet, and continued execution of our capital management initiatives. AXA is committed to financial discipline and to delivering long term shareholder value.

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“The macroeconomic environment has become more uncertain. The Group is entering this period in a strong position, with a Solvency II ratio of 227%, and a resilient and diversified mix of business, which continues to shift away from financial risks.

AXA XL Re’s Revenue Down By 21% On Nat Cat Reduction

We are vigilant and are taking actions to counterbalance impacts from inflationary pressures and market volatility. We remain very confident in delivering our Driving Progress 2023 key targets, notably underlying earnings per share growth at the high end of our target range.

“The Group is well prepared to navigate this evolving environment thanks to the collective efforts and relentless engagement of all our colleagues, agents and partners and the continued trust of our clients.”

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