Insurance group AXA posts 40% increase in UK and Ireland earnings
- Credit: Archant
Insurance group AXA today reported a 40% jump in annual earnings in the UK and Ireland – the fourth year in a row that the business has achieved double-digit growth.
Underlying earnings for 2014 came in at £250million, up from £178m the previous year, helped by a 3% increase in general insurance revenues to £3.8billion, from £3.7bn in 2013.
The growth in revenue was led by commercial lines and UK direct motor insurance, both up 8% year-on-year, and healthcare, which was 5% up.
Underwriting profitability from UK & Ireland operations also improved significantly with the combined operating ratio (the ratio of expenses to premium income) improving by 1.8 of a point to 97.1%, from 98.9% the previous year.
The group added that its UK life and savings business, including AXA Wealth and SunLife, moved sharply into profitability thanks to cost savings combined with an 11% increase in AXA Wealth funds under mangement to £28.2bn.
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French-owned AXA, which has a major office in Civic Drive, Ipswich, also said it was committing 20m euros (around £14.7m) to provide start up finance, primarily to British entrepreneurs developing innovative ideas of benefit to the future of the insurance, healthcare and financial technology industries.
Paul Evans, AXA UK & Ireland group chief executive, said: “AXA UK has once again delivered strongly in 2014, achieving revenue growth whilst continuing to improve the quality of underwriting, contributing to a 40% in profitability – the fourth consecutive year of double digit earnings growth despite the evident challenges from economic and market headwinds over that period.
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“The turn-around of UK operations is progressing ahead of plan. AXA Wealth, retained from the disposal of AXA Life in 2010, is now profitable and well placed to take full advantage of the retirement reforms in April; the commercial business now exceeds £1billionii of GWP (gross written premium) at a current year combined ratio of 94.6%; and the direct motor business has returned to growth with a current year combined ratio of 97.7%.”
However, he warned: “Markets remain tough, and whilst every effort is made to reduce costs, and claims fraud so as to keep premiums down, there are clear signs that premium rates must soon increase in some sectors.
“For example, with the still anticipated benefits from personal injury reforms reflected fully in reduced motor premiums, premiums must surely rise this year to take account of the increasing frequency of accidents that can already be seen from increased car usage as lower fuel costs and the wider economic recovery take effect, both here and in Ireland.”
Looking ahead Mr Evans added: “I am very pleased with the progress across all our businesses in 2014 and whilst we remain focused on delivering the final year of our existing strategy, we are turning now to develop our next five year plan to 2020.
“This will be an exciting period during which time business models must evolve to respond to developing customer needs and ways of doing business. Never has it been more important to place the customer at the heart of everything we do, as we’ve already demonstrated.
“Our business practices will continue to be reformed to earn the trust of our customers, we will also develop new propositions that engage the customer beyond the normal touch points of purchase, renewal and claim and will responsibly harness customer data to provide truly bespoke products, services and experiences.
“We are entering a period during which product and service model innovation will be crucial to success across all our markets. We are therefore announcing today an initial commitment of €20million to provide start-up finance, primarily to British entrepreneurs, aiming to bring innovative ideas to market that could have relevance to our customers.
“The commitment will be managed by a new AXA Group entity, AXA Strategic Ventures, which will deploy up to €200million in start-up finance across Europe.”