HEFTY weather-related payouts have contributed to a fall in profits at the UK arm of insurance giant Axa - but the company Axa's underlying earnings in the UK and Ireland, where its operation includes a major office in Ipswich, fell by 18% from �288million in 2008 to �235m last year, the group said today.

HEFTY weather-related payouts contributed to a fall in profits at the UK arm of insurance giant Axa last year- but the company said today the underlying trend was positive.

Axa's underlying earnings in the UK and Ireland, where its operation includes a major office in Ipswich, fell by 18% from �288million in 2008 to �235m last year, the group said today.

The result was “significantly impacted” by the economic climate and also by large exceptional items including “severe weather events” and commercial losses in with its general insurance business totalling �157m.

However, this had been partly offset by a favourable contribution from the restructuring of a portfolio of annuity liabilities in its life business of �106m.

Globally, the Axa group reported underlying earnings down 6% compared with 2008 at 3.854billion euros (about �3.343bn)

Overall revenues from UK general insurance fell 4% to �2.045billion in 2009, which Axa said reflected a strategic focus on profitability and the continuing soft market in the commercial sector.

However, it said there had been a hardening of market conditions within personal lines, in both direct sales and those through intermediaries, including a robust performance for motor insurance at Axa Insurance Direct with revenues up 44% following recent advertising campaigns.

Household revenue had also seen “strong growth”, up 16% overall, benefitting from growth through existing intermediaries and new deals such as one with Marks & Spencer, and the launch of a Direct household product.

Commercial lines revenues fell 15%, which Axa said reflected a focus on profitability rather than growth and a highly competitive market environment for new business.

Revenue growth in healthcare continued with revenues rising 4% to �1.112bn, fuelled mainly by growth in international markets alongside “modest” increases in UK corporate revenues, up 2% overall. However, UK personal healthcare revenues declined 5% due to the “difficult” economic environment.

Axa UK's life business saw total new business revenues fall 18% to �840m, largely due to the impact of the economic downturn on consumer sentiment towards long term savings and pensions.

The margin on new business increased from 9.7% to 10.5%, resulting from a change in business mix towards higher margin products and a programme to cut operational costs.

And although earnings were adverse affected by the stock market, which reduced investment returns and the value of annual management charges, the one-off profit from the annuity restructuring and a reduction in operating expenses saw underlying earnings from life and savings rise by 71% to �166m.

Nicolas Moreau, group chief executive of AXA UK, said: “2009 brought change at AXA as we sharpened our focus on profitable growth and operational efficiency.”

He added: “A real priority for me has been to ensure that we give customers and advisors an excellent service, so I am pleased that we have further improved our customer service levels this year and won a number of awards that recognise this.

“I believe that we have all the ingredients to succeed: a clear strategy, a strong brand, attractive propositions, improving customer service as well as strong capital management that will ensure that AXA UK remains in an excellent position in the year ahead.”