Axa Group chief executive Henri de Castries branded "insufficient underwriting" as a key reason why AXA UK turned in an "unsatisfactory" performance in property and casualty insurance for the six months to June 30, 2001.

De Castries told Insurance Times that the firm's UK general insurance operation was not performing as well as he would like.

"The contribution of the UK was not where we would like to see it in the long run, but we are going through a restructuring phase both on the property and the life side," he said.

The interim results revealed that the company's UK operation failed to break even in property and casualty insurance.

Consolidated revenue from insuring property and casualty in the UK shrank by 2.5% for the first six months of the year, compared to the same period in 2000.

Referring to property and casualty, he said: "The earnings should be close to break even this year, but next year the profit should be a real one. We are not satisfied so far by the levels we have reached, but it is starting from a low point."

Property and casualty operations in France, Germany and Belgium turned in positive figures.

De Castries said AXA had acquired UK insurance companies with "insufficient underwriting" which had affected earnings on its property and casualty side.

But net cash earnings for property and casualty insurance in the UK rose by E50m (£30m). This rise was attributed to strong rate increases, cost cutting and stricter underwriting in private motor insurance from the second half of 2000.

De Castries said the acquisition of Guardian Royal Exchange, completed in May 1999, had also added IT worries to the company's troubles.

However, he was pleased with the addition of UK chief executive Dennis Holt.

Net cash earnings from all UK insurance operations rose by 20% to f94m (£56.4m) from f78m (£46.8m) for the same period last year.

UK results showed strong growth in earnings from life insurance and the rise in net cash earnings was attributed to the firm's greater ownership in AXA Sun Life. Consolidated revenue from life insurance and savings in the UK grew by 18%.

The company has cut 1,600 UK staff from its general insurance workforce in the past two years and de Castries expected such cost cutting measures to start taking a greater effect.

Globally, the group performed well, with net cash earnings rising by 33% to f1.54bn (£924m) in the first half of 2001.

Assets under management rose by 6% to f950bn (£570bn) from the level on December 31, 2000 and the group's reported earnings reached f1.22bn (£732m), compared to the first half of 2000.