AXA's 'no pain, no gain' strategy

After a tough 2011 in personal lines motor, the signs are that AXA is starting to get back on track.

The French insurer’s results for the first nine months of 2012 gave a glimpse of things to come, with revenues for the UK and Ireland non-life business up 5% compared with the same period last year.

Globally the company is performing well, with total non-life revenues climbing 4% in the first nine months.

Commercial proved to be the strongest area, with motor benefiting from revenue rises in the UK and Mexico, and UK and Ireland driving growth in non-motor.

In personal lines, UK and Ireland non-motor was another key contributor, particularly in the direct space, where revenues increased 19%.

Corrective measures

However, AXA’s direct business was dogged by falling personal motor revenues, tied to lower UK sales.

AXA underwent a significant portfolio cleansing in the first quarter of 2012, resulting in the personal lines motor book being cut by 23%.

But UK and Ireland chief executive Paul Evans maintains that the insurer’s loss-making personal lines motor book should return to profitability next year as a result of the recent pruning.

The main issue has been the deterioration of prior-year claims reserves of AXA’s UK motor results over the last two years, but according to Evans that is no longer the case and won’t provide a distraction for pricing.

AXA put up personal lines rates by 4.9% and commercial rates by 4% during the first nine months of 2012, and the indication is that future increases will be in line with those as it seeks to improve margins in 2013.