Profits fall sharply at insurance giant
THE UK arm of insurance group AXA yesterday reported a sharp drop in annual profits following a year of reorganisation which saw the sale of its life insurance business.
AXA, whose UK workforce includes around 1,000 people at offices in Civi Drive, Ipswich, reported underlying earnings for 2010 of �131million, down from �235m in 2009.
The combined operating ratio (claims and costs as a percentage of premium income) remained in the red at 105.3%, of which 3.3% was represented by claims relating to exceptional winter weather conditions at each end of the year.
AXA said the further increases in premiums for personal insurance, such as motor cover, were likely during 2011 as the market continued efforts to restore profitability, although other rates were expected to remain soft until 2012.
Following the �2.75billion sale of AXA Sun Life to Friends Provident in September, AXA UK has been restructured into four specialist units, personal insurance, commercial insurance, healthcare and wealth management.
Paul Evans, group chief executive for AXA UK & Ireland, said 2010 had been “a year of transformation” for company.
The four specialised businesses had been created to focus on the particular needs of consumers and intermediaries, and each had significant potential for profitable growth.
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“Our priorty for 2011 is to focus on delivering great service and valued products to consumers and businesses in those markets where AXA can leverage real competitive advantage,” he said.
Mr Evans conceded that, despite being an improvement on 2009, last year’s operating ratio of 105.3% was “disappointing” but said further improvements would come through during 2011 as premium increases applied across personal lines in 2010 took effect.
However, he added that “ further pricing action will be necessary together with ongoing productivity improvement.”
Earlier this month, AXA warned that more than 50 people at its Ipswich office faced possible redundancy following last year’s separation of its commercial and personal lines operations.
The French-owned firm said 27 of the 56 positions under threat were held by manager grade staff.