Cutting unprofitable UK and Ireland business in 2013 offset the effect of rate increases
Exiting unprofitable business in the UK and Ireland continued to be a drag on AXA’s non-life revenue growth in the first nine months of 2014.
The French insurance group’s nine-month activity report said non-life revenues from mature markets increased by 1% to €18bn (£14.2bn) in the first nine months of 2014 (first nine months of 2013: €17.5bn).
The company said rate increases of 2.1% were partly offset by a change in business mix, mainly in the UK and Ireland, because of the continuing impact of the decision to exit unprofitable schemes and products, and because of slightly lower business volumes due to selective underwriting.
Mature markets make up 78% of AXA’s total non-life business.
Despite this, the UK business helped fuel growth in certain parts of AXA’s non-life book.
Revenues from direct business, which make up 8% of the total book, increased by 6% to €1.8bn (first nine months of 2013: €1.7bn), mainly driven by higher renewals and new business in the UK.
Personal lines revenues grew by 1% to €13.5bn (first nine months of 2013: €13.2bn), which AXA said was partly driven by rate increases of 1.7%, mainly in Germany, France, the UK and Ireland.
Commercial lines revenues were up 3% to €9.6bn (first nine months of 2013: €9.2bn), mainly driven by rate increases of 2.3% across the board, especially in France, the UK and Ireland.
AXA’s total non-life revenues grew by 2% to €23.2bn in the first nine months of 2014 (first nine months of 2013:€22.5bn), which the company said was mainly driven by average rate increases of 1.9% and higher volumes, mainly in the direct business and Asia.
Berenberg analyst Peter Eliot said that AXA’s non-life revenues had “exceeded our expectations despite a selective growth strategy”.
AXA deputy chief executive Denis Duverne said: “We have maintained our selective growth strategy in property and casualty, with an overall growth driven particularly by commercial lines and the direct distribution channel. We expect a similar growth trend to be maintained for the rest of the year.”