Improvements in 2003 results help to cut underwriting losses

AXA Insurance UK has revised its 2004 combined ratio target on the back of its 2003 results.

Chief executive Peter Hubbard told Insurance Times that the business was "well on our way to beating the 104% by 2004 objective" which it announced as part of its Beyond First Choice strategy in January.

Hubbard said that internally, the target for 2004 had been reduced to 103%. Taken as a stand-alone business, AXA Insurance UK's combined ratio in 2003 was 107.4%.

But Hubbard said that excluding an increase in prior year reserves, the business had an underlying combined ratio of 101.4%.

Hubbard said that gross written premium for AXA Insurance UK rose 6% in 2003 to £1.82bn.

Personal lines premium income dropped 4.5% to £760m though he said that if the figure was adjusted to reflect the joint venture with the RAC, AXA's personal lines growth was "flat" during 2003. Hubbard said the deal allowed AXA " to take a profit share not just the premium".

He said the outlook for 2004 remained strong with private motor rates increasing early in the year after falling in the second half of 2003. Household rates remained firm, while rates in travel, pet and creditors insurance were rising.

He attributed a decrease in AXA Insurance UK's loss ratio from 65.2% to 58.8% to improvements in intermediary segmentation, risk segmentation, a benign weather year and to the benefits of its claims reorganisation.

Premium income in the commercial business rose 16% on 2002 as it exceeded £1bn for the first time.

He said the £80m improvement in profitability was a "very big shift".

Hubbard said that in commercial business it was "more difficult to carry rate changes, but we are".