Firm's net income down 38%
AXA chief executive Philippe Maso says the group will no longer write commercial business that is not profitable.
“We are no longer prepared to write business at any price,” he said. “It means that if we can’t pass the rate increases that we expect, or if the overall profitability is not good enough, we don’t write the business. So we have dropped 9%.”
Maso’s pledge follows the fall in revenues in Axa’s UK general insurance businesses, down 4% in the first half of 2009 to £1.06bn. Commercial lines’ revenue was down 10%, with liability down 24%, commercial motor down 8% and property down 4%.
“We have been expecting rates to increase on commercial lines for more than 18 months,” Maso added. “It has not happened as expected and as I had hoped. This is something that we have to live with. In the meantime, we have to be rigorous in terms of the business we write.”
Personal lines fared slightly better. The main area of growth was in household, up 12% following a successful launch with a new Marks & Spencer deal. But this was offset by falling revenues in both creditor (down 29%) and travel (down 20%).
Maso said that he did not think competition in the commercial sector would continue. “No one can sustain the current level of competition. The top five players have the muscle to fight a bit longer, but the other players will have to come back. Everyone has the means to write a profitable business, but this hasn’t happened for the past two years.”
Globally, underlying earnings dropped 26% to €2.12bn (£1.8bn) in the first half of 2009. Net income was down 38% to €1.32bn.