AXA CS helps improve group profit but don’t expect terms to relax

The group reported that total international insurance revenues were up 2% to €2.86bn on an underlying basis, as ACS delivered revenues also up 2%. The group said that the increase was mainly driven by new business in liability and marine lines that were partly offset by lower construction revenues. ACS delivered revenues of €1.93bn on a reported basis last year compared with €1.95bn in 2008, a fall of 1.2%. On an underlying basis the revenues increased by 2.3%. AXA said that its international insurance underlying profits were up 54% to €286m. ACS’s net profit, after tax and minority interests, was €160m last year compared with €27m in 2008.hideGroup total revenues were down 3% to €90.1bn. AXA reported underlying profits of €3.9bn against €4bn in 2008 and net profit of €3.6bn against €0.9bn in 2008. Security conscious insurance buyers will be pleased to hear that the group Solvency I ratio was up 44 points to 171% and debt gearing down 8 pts to 26%. The group said that the Solvency I ratio benefited from earnings (+18 points), capital increases (+11 points) and “favourable market conditions”, mainly on fixed income assets (+17 points) because of tightening credit spreads. AXA also said that the group Solvency II ratio, based on QIS4 calibrations (that will be replaced by tougher QIS5 calibrations) amounted to about 185% as of December 31, 2009 compared with 150% as of December 31, 2008. Henri de Castries, Chairman of AXA’s Management Board, said that the 2009 results confirmed the “strength” of the group’s business model, illustrated by the return of its solvency to pre-crisis levels and the strong rebound in its net income. He said that, based on this “solid” performance, AXA’s Management Board would propose to shareholders a 38% increase in dividend. “In spite of uncertainties around the macro-economic context and taking into account the evolution of the regulatory framework, AXA should benefit from favourable trends in the insurance and asset management markets, its leading brand, innovative products and improving quality of service,” said Mr. de Castries. Phillipe Rocard, CEO of ACS told Commercial Risk Europe in January that his focus would be to improve the corporate insurer’s profitability as well as service and that the impending arrival of Solvency II would ensure that the focus on the combined ratio would be sharper than ever (see full interview here). Insurance buyers, brokers and rival insurers at the annual AMRAE conference in Deauville, Normandy confirmed that Mr. Rocard means business as ACS was said to be one of the few insurers in the French corporate insurance market that was prepared to stand firm on rates at the recent year-end renewal. Mr. de Castries appeared to confirm the main group board commitment to improving the non-life combined ratio, partly because of the tougher capital requirements expected of Solvency II. He said: “Our 2010 priorities will also focus on optimizing margins in all business lines, through improvement of business mix in life, combined ratio in property & casualty, and net inflows in asset management.”

AXA CS helps improve group profit but don’t expect terms to relax

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