Cost cutting and tougher underwriting failed to stem losses at AXA UK despite growth at group level.

The French group achieved a 10% increase in underlying earnings, up to €1.69bn (£1.16bn) last year from €1.53bn (£1.05bn) the year before, but still saw fit to cut its dividend, sending the stock down slightly on the announcement.

Much of the growth came from its property and casualty business, which improved its combined ratio to 106.5% from 112.5% in 2001.

This came as the group beat its own cost-cutting target by slashing €866m (£597m) off its overheads, compared to a goal of €700m (£482m) set in 2001.

The UK and Ireland combined ratio failed to improve as much, but still fell by 3.6% to 105.8% as strict underwriting and price rises paid off.

In the UK alone, property and casualty earnings fell by a third to a loss of €149m (£103m) from a loss of €112m (£77m) in 2001.

l AXA is looking to move some operations to the Indian call centre its group already owns. The Bangalore centre is already used by AXA/PPP Healthcare and AXA Life.

AXA Insurance chief executive Peter Hubbard said: "There has to be a business case and we have to look at the impact on our staff in the UK ."