AXA profit drops 39% in H1 due to COVID-19; CEO stresses 'resilience'

French insurer AXA reported a decline in half year profit with most notable impact in AXA XL commercial lines. Chief executive Thomas Buberl said the rest of the group was "resilient", with the impacts from COVID-19 claims largely offset by lower frequency in motor and growth in health and asset management.

The group net profit decreased by 39 percent to €1.4 billion in the first half of 2020, compared with €2.3 billion in the same period of 2019.

Total revenues were down 2 percent to €52.4 billion in H1 2020, compared with €57.9 billion in H1 2019.

The company booked €1.5 billion COVID-19 claims in the first half of 2020.

Property/casualty combined ratio was up 6.5 percentage points to 101.7 percent, reflecting the impact from COVID-19 related claims.

AXA's commercial lines revenues were stable at €18.4 billion, driven by strong growth in the first quarter mainly from positive price effects, but it was offset by a decline of 10 percent in the second quarter in the context of COVID-19.

The personal lines revenues decreased by 2 percent to €9.6 billion, driven by France and Europe -mainly from lower new business activity during the COVID-19 lockdown period, and international - from lower Motor revenues notably in Mexico and Turkey. This was partly offset by Asia, mainly from higher revenues in South Korea from direct business.

“In the first half of 2020, AXA demonstrated its resilience in the challenging context of the Covid-19 pandemic. Revenues were down 2%, to Euro 52 billion, reflecting strong growth in the first quarter offset by lower business activity in the second quarter," said Buberl. "Growth in Health remained strong throughout the first six months of the year, at +9%, and price increases in P&C Commercial lines continued to accelerate.

"The Group’s underlying earnings were Euro 1.9 billion, down 48%, and were up 1% excluding Covid-19 claims3 and the disposal of Equitable Holdings. The impact of Covid-19 on AXA’s earnings was in line with our previously published guidance. Commercial lines were the most impacted, notably at AXA XL. The rest of the Group was resilient, with the impacts from Covid-19 claims largely offset by lower frequency in Motor and growth in Health and Asset Management.

"AXA’s Solvency II ratio was resilient at 180%, its debt gearing was reduced by 1.2 points to 27.6%, and cash remittance amounted to Euro 4.9 billion, confirming the strength of the Group’s balance sheet in volatile market conditions.

Buberl added: "AXA’s strategic vision and business profile shift are more relevant than ever, notably with its growing and profitable Health business, and an unparalleled opportunity to benefit from the hardening pricing cycle in P&C Commercial lines. With a clear focus on technical risks, the Group is well positioned for a prolonged period of low interest rates."