AXA reaps rewards as profits more than double, revenue hits €100bn mark in 2021
AXA is reaping big rewards after it “significantly transformed and simplified the group” in recent years. The global re/insurer more than doubled its profits in financial year 2021, driven by growth in all business lines and positive market impacts.
The group's net profit increased by staggering 135% to €7.3 billion in 2021, compared with €3.2 billion in the previous year. AXA attributed the improvement to increase in underlying earnings, a favorable change in the fair value of invested assets and derivatives from positive market impacts, and higher net realised capital gains.
Total revenues rose by 6% to hit the €100 billion mark, with growth in all business lines. This compares to the revenue of €97 billion seen in 2020.
In property and casualty business, commercial lines contributed €32.7 billion to the results, up 5% mainly from positive price effects, notably at AXA XL. While personal lines revenues increased by 1% to €16.6 billion due to higher revenues in non-Motor across all geographies, from higher volumes and favorable price effects.
The company posted AXA XL underlying earnings of €1.2 billion, in line with the target set for 2021, driven by higher pricing and re-underwriting measures. Nat Cat charges in excess of load were offset by favorable prior year reserve developments, mainly linked to a release of Covid-19 IBNR reserves.
P&C all year combined ratio came in at 94.6%, improving by 4.9 points compared to the previous year.
Commenting on the results, Thomas Buberl (pictured), chief executive officer of AXA, said: “ AXA delivered an excellent performance in 2021 on all fronts. We have significantly transformed and simplified the Group in recent years and this strategy is producing strong results, with revenues and earnings increasing across all lines of business.”
“We have continued to achieve particularly strong revenue growth in our technical and fee-based businesses, with P&C Commercial lines, Health and Protection each growing by +5%, Asset Management up +20% and Unit-Linked +25%,” he added.
The group announced its intention to transform AXA S.A., the holding company of AXA Group, into the group’s internal reinsurer. AXA S.A. would become a licensed reinsurer and absorb its current captive internal reinsurer, AXA Global Re, in a merger.
AXA S.A. intends to reinsure part of its European P&C carriers through annually renewable quota share reinsurance treaties. The initiative aims to enhance capital fungibility across the Group, in line with our capital management policy.
Subject to obtaining regulatory and shareholders approval, the transformation is expected to close by June 30, 2022 with retroactive effect for the new reinsurance treaties to January 1, 2022.
The Group expects €2+ billion additional cash at AXA SA by 2026 as a result of this transformation, of which Euro €1+ billion additional cash by 2023, comprising a one-time cash impact resulting from the merger of AXA S.A with AXA Global Re, and accelerated cash remittance.
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