AXA estimates EUR 400m loss from European floods, after reinsurance

AXA Group reported higher revenues across its business, driven by improving pricing and market conditions, with its AXA XL business on-track for its targeted earnings for the year, but also gave an early estimate of exposure to recent European flooding.

Across its global insurance and reinsurance business, AXA has reported EUR 54 billion of revenues for the first-half of 2021, up by 7% against the prior year.

Underlying earnings reached EUR 3.6 billion, which is 101% up on H1 2020 given the one-off impacts of the COVID-19 pandemic last year, but still up by 12% excluding COVID-19 claims.

“AXA achieved an excellent performance in the first half of 2021,” Thomas Buberl, Chief Executive Officer of AXA commented on the results.

“Revenues and underlying earnings grew strongly across the Group, in all geographies and business lines.

“Revenues were up 7%, reflecting strong business dynamics underpinned by P&C Commercial lines, up 6%, and by a strong growth in Life & Savings with a high-quality business mix. In Asset Management, AXA IM continued to perform very well in both Core and Alts platforms.

“The Group’s underlying earnings were Euro 3.6 billion in the first semester, up 101% and representing a 12% growth excluding the impact from Covid-19 last year. This strong result was achieved across all our markets, and notably at AXA XL with very good underwriting performance. Taking advantage of the continued favorable pricing momentum, AXA XL is well positioned to deliver its Euro 1.2 billion earnings target in 2021 and sustainable and profitable growth beyond.”

AXA said that its commercial lines revenues were up by 6%, which was mostly driven by the favourable pricing achieved by its AXA XL unit.

P&C reinsurance revenues surpassed EUR 3 billion for AXA, up from just over EUR 2.7 billion in the prior half-year.

Within this, specialty and other lines grew strongest at 24%, while property treaty reinsurance business grew by 21%, both largely driven by the higher rates available.

AXA XL also had a strong underwriting results, which helped to ensure that revenues are earning through, alongside the 7% P&C revenue growth, as well as 15% insurance and 10% reinsurance price rises, which should help to ensure the run-rate continues as well.

This higher pricing and actions to re-underwrite the portfolio are twin factors in helping to drive a better AXA XL result, although natural catastrophe losses were a slight offsetting factor, especially the US winter storms in Q1 and European hail storms in Q2.

The combined ratio at AXA XL fell to 95.8% in H1 2021, despite these catastrophe effects, while P&C overall at AXA reported a combined ratio of 93.3%.

AXA also gave a look ahead to expected impacts of the recent severe European flood event, which is the largest Q3 catastrophe so far.

AXA said that it estimates its losses from the floods that hit Germany, Belgium, and other parts of Western and Central Europe will be around EUR 400 million, which is reported before tax and net of expected reinsurance recoveries.

The only other loss estimate for the floods that we have so far is from reinsurance firm Swiss Re, which said last week it expects a mid-triple digit million combined loss from the severe flooding in Europe in July and also the unrest and rioting seen in South Africa.