The future of AXA UK's private motor business has been called into question following demands from the French parent company for a written report into dismal underwriting results.
The UK motor business, which registered a combined ratio of 120% in 2002 and 124% in 2003 (FSA figures), is thought to have achieved similarly poor results for the first half of 2004. Sources said this led to demands from Paris for a written explanation.
A source said: "The French are crawling all over the results. The heat has really been turned up. They were asked on Monday for a written report into the problem."
Brokers report that turmoil within the division has led to two consecutive rate decreases as the insurer fights to gain market share.
A broker said: "AXA told us last week there was another price drop in the pipeline. We think it might be a couple of points.
"They must think that because their book is shrinking their expense ratio is pushing up their operating ratio."
Another broker questioned whether the business would not be forced into a radical rethink over the next few months.
He said: "This sort of review has happened before. It feels to me like I will be getting a call in the next six months saying a strategic repositioning is to take place. A combined ratio of over 120% is a cancer."
AXA's interim results showed a 17% drop in revenue for personal motor, a result it put down to the softening market and the move away from the direct channel.
