UK and Ireland business boasts an uptick in profitability despite worsening current year COR

AXA’s group financial results for the year ending 31 December 2019 revealed a 5% uptick in revenue to €104bn, with its all-year property and casualty combined operating ratio (COR) improving to 96.4% (2018: 97.0%).

The insurer said this improvement was mainly to an improved claims experience (-0.6 points) and more favorable prior-year reserve developments (-0.2 points).

This helped the insurer report group net income of €3.9bn, up from €2.1bn in 2018.

AXA chief executive Thomas Buberl said the last financial year also represented a shift in the insurer’s strategy as it exited some business lines and integrated the XL Group into the company.

“The Group achieved a significant milestone in 2019 in its strategy to shift its profile away from financial markets and towards technical risk, by fully exiting the US Life & Savings market and integrating the XL Group, and at the same time reducing its debt gearing ratio,” he said.

“At AXA XL, impacted again by adverse claims experience in 2019, we are recording strong price increases and taking further steps to reduce volatility. I am also very happy to welcome Scott Gunter to the AXA Group to drive the next phase of development of AXA XL.”

Buberl also re-emphasised the insurer’s commitment to combating climate change.

“AXA’s active leadership role in fighting climate change also continued, as a global investor, a global insurer, and as a coalition builder,” Buberl said.

“In 2019, AXA doubled its green investments target, launched transition bonds as a new asset class, further strengthened its coal underwriting policy, established AXA Climate and joined the Net Zero Asset Owner Alliance.”

In the UK and Ireland, the insurer reported an all-year COR of 97.6%, a 0.8 percentage point improvement on 2018’s 98.4%, buoyed by a “positive price effect” in personal lines motor.

This is despite a 0.8 percentage point deterioration in the current year loss ratio, which was offset by improvement in prior year performance and a 0.2 percentage point reduction in the expense ratio.

Despite this profitable performance, the AXA XL arm of the group did not perform as strongly, reporting a 101.5% all-year COR as it announced a new chief executive.