Ratings review prompts insurer to slash rates in motor and household
AXA is preparing to slash rates on personal lines business and take a cut in profits in an effort to boost revenues.
Acting underwriting director Roy Watkinson said the insurer had undergone a "major review of its ratings" for its personal, motor and household books that would see it shave as much as 5% off rates in some areas.
Watkinson said: "Where we are profitable we will cut rates to get volume. And where we are less profitable we will put rates up."
He said AXA would look for rate cuts on some personal motor risks, but on household there would be "across the board" cuts of as much as 5%.
Watkinson added that the company was looking for 5% growth on both its personal and commercial lines books in 2005.
He defended the company's rating on its commercial lines book, despite criticisms from brokers of "irresponsible" rate cuts, particularly for commercial property.
"I don't think we have had to make too many rate cuts to get new business," he said. "There is no way that I want to write business at a loss."
He said no rate reductions had been made on auto-rated business and that employers' liability risks had seen increased rates of 8%.
But on property he admitted that 10% rate cuts were "do-able", saying: "Property has made money in recent years. You can give away a few points and still make money."
AXA's Q1 result
AXA reported a 1.8% decline in its UK property and casualty book in the first quarter of 2005, falling to €1,067m (£732m).
For the group, revenues grew by 2% overall to €5,903m (£4,055m).
Personal and commercial lines both grew by 2%.
In the UK, commercial motor revenues fell by 7%.