AXA targets above-GDP growth in healthy commercial lines
AXA has revealed a new strategy for 2024 to 2026 that includes an ambition to continue growth in its core P&C commercial lines, on the back of the ongoing healthy market for carriers that helped deliver further strong premium growth for the insurer in 2023 and an impressive combined ratio of 93.2%, down 4.2 points on 2022.
As it announced 45% higher group net profit to reach €7.2bn for the year, the Paris-based insurer said it aims to deliver above-nominal GDP revenue growth in commercial lines to meet continued demand from corporates.
AXA said that it will leverage its global scale, product capabilities and diversified distribution to drive this growth.
The group also seeks to expand in the P&C mid-market, including in ‘white spaces’ across Europe, where the group can grow its market share and through selective initiatives in the US.
The company said it will increase efforts to address emerging risks such as cyber and the energy transition.
“The group will focus on disciplined cycle management at AXA XL and leverage use of data analytics to strengthen SME and mid-market pricing and risk selection capabilities in order to sustain its technical excellence. The group will also leverage proprietary risk consulting services to drive higher customer loyalty and margin, by integrating its Digital Commercial Platform across entities,” said the group.
The hard market was kind to AXA in 2024. Gross written premiums and other revenues were up 7% to reach €53bn.
Commercial lines premiums rose by 9% to reach €33bn, driven by an increase of 5% at AXA XL Insurance. This reflected higher volumes in property and specialty lines.
Continued underwriting discipline in international casualty, and healthy growth in Asia, Africa and EME-LATAM, up 33%, also helped drive the rise.
AXA XL Reinsurance saw premiums fall by 5% to €2.3bn, mostly driven by a reduction in property cat exposure, in line with the group’s strategy. This was partly offset by favourable price effects. Specialty premiums were higher, mostly from better pricing, said the group.
P&C underlying earnings were up 73% to €5bn, driven by a higher technical margin, higher financial result from investment income and positive tax one-offs at AXA XL and Europe.
Commenting on the results, Henry Heathfield, insurance equity analyst for ratings agency Morningstar, commented: “Despite the slight miss in earnings versus consensus, AXA’s property and casualty division has continued to deliver strong price development, with a rise of 8.5% in personal and a 10.3% rise in reinsurance lines. However, pricing in commercial insurance is weaker, with a lower 4.5% rise. Nonetheless, the all accident year combined ratio, at 93.2%, remains strong and a slight improvement on the 93.3% that we forecast.”
