AXA UK returns to profit in 2011 after re-pricing

AXA UK made an underlying profit of £133m in 2011, compared with a £63m loss in 2010.

The current year combined ratio, which excludes the effects of prior-year reserve movements, improved by 6.4 percentage points to a profitable 98.9% (2010: 105.3%).

AXA UK & Ireland’s general insurance revenues increased 4% to £3.8bn.

AXA UK & Ireland chief executive Paul Evans attributed the £196m change in fortunes in part to repricing and mild weather. “Underwriting and rating actions taken over the past 18 months, together with the benefit of relatively benign weather conditions during 2011, have restored general insurance underwriting profitability,” he said in a statement.

He also credited the restructure completed in early 2011, which focused the UK operations on four core areas: general insurance for individuals, general insurance for businesses, wealth management and healthcare.

However, Evans added that the combined ratio improvement came despite a personal motor combined ratio of 101.7% for 2011. “It is clear that the impact of strong rating actions over the past two years have been undermined by increasing levels of personal injury claims inflation, in particular, whiplash claims,” Evans said.

AXA said the shift of its personal lines business to a single platform for all products, brands and distribution channels helped it cut its 2011 expense ratio to 11.5%. The company expects further efficiency gains this year.

On the commercial lines side, AXA has opened new branches to support commercial brokers with local underwriters, and launched a direct-to-consumer channel for smaller commercial customers. The division will launch a refreshed product suite in the first half of this year.

“Overall, I am pleased with AXA UK’s progress in 2011,” Evans said. “Economic conditions here, and in Europe, suggest that 2012 is likely to be a difficult year for our markets, but we are now in good shape, and I am optimistic that the turn-around seen in 2011 will continue into 2012.”

Evans also praised Prime Minister David’s Cameron’s plan of action on compensation culture agreed after Tuesday’s summit with the UK’s top insurers.  

“Once the unacceptable financial incentive for claims management companies to elicit false claimants is eliminated, and the burden of proof for whiplash claims increased, drivers can rightly expect a better deal from their motor insurance,” Evans said.

“We want to spend our time quickly compensating those who have suffered genuine injury – not paying out lottery windfalls to those who choose to play the system at the cost of the honest driver.

“I look forward to continuing this dialogue with government as we work together to bring about the promised reforms.”