Summer flooding to cost insurer £198m
AXA UK reported general insurance revenues had increased by 9% in the first half of 2007 to £1.86 billion, up from £1.71 billion in H1 2006. This was led by strong growth in UK Health, it said
It said the results were maintained despite the impact of the January storms (£37 million before tax) and June floods (£78 million before tax). AXA current estimate for the cost of the July floods is approximately £120 million before tax.
Personal motor in the UK contributed to a £91 million growth in personal lines revenue, helped by the Swiftcover acquisition in February 2007, and its “positive growth as an independent franchise”.
Increased competition in commercial casualty has caused premium volumes to be lower than anticipated. AXA said it remained committed to maintaining underwriting discipline and offering premium terms that are viable.
The growth in UK Health revenues has been maintained (revenue up 13% in H1 2007 at £537 million from £476 million at H1 2006) with significant volume growth across the majority of business lines, supported by innovative product development, higher direct sales and our successful partnership with Tesco.
In Ireland, general insurance revenues were down (-6% at €239 million in H1 2007 against €254 million for H1 2006) reflecting lower average premiums although the number of policies has increased by 2% at the end of June 2007 compared to the end of 2006, from approximately 727,000 to 742,000.
Total General and Health insurance underlying earnings decreased from £124 million in H1 2006 to £83 million in H1 2007 (excluding the earnings of general insurance brokers) which was brought about by two adverse weather events - storms in January and flooding in June (combined total £115 million before tax).
The impact of the two weather events has contributed to a deterioration in the general and health combined ratio from 96.7% for H1 2006 to 102.4% in H1 2007. Excluding the impact of these major claims incidents, the general and health combined ratio for H1 2007 would have been 95.5%.
Nicolas Moreau, group chief executive of AXA UK said: “It is very pleasing to be able to announce a set of results which show strong growth as well as an improved level of underlying earnings despite the destructive floods that we have seen during June. Our efforts are now focused on helping those customers who have been badly affected by these floods and by the more recent devastation seen in parts of the West Country.
“We have made good progress with our aspiration of becoming the trusted market leader, an objective I am absolutely committed to delivering. Over recent months we have moved the business forward very strongly as evidenced by our deliberate move into the distribution sector with acquisitions in the general, life and health sectors – we now operate the second-largest SME brokerage following the purchase of broking firm Smart & Cook in April 2007.”