AXA’s H1 revenues unchanged YOY despite growth targets

The sale of two real estate properties in New York boosted AXA’s first half net income while underlying earnings remained unchanged despite the company’s growth ambitions.

AXA’s net income was up 4 percent year-over-year in the first half of 2016 at €3.21 billion. The positive impact from the gain on the sale of two real estate properties in New York was partly offset by the net impact of the disposal of the UK Life & Savings and Portuguese operations and unfavourable changes in the fair value of some financial assets and derivatives.

Underlying earnings remained unchanged compared with the first half of 2015 at €3.10 billion. Total revenues in the first half decreased slightly to €54.04 billion compared to €54.32 billion in the same period of 2015.

Nevertheless, Thomas Buberl, incoming AXA CEO, was satisfied with Axa’s results. “AXA’s strong performance in the first half of 2016 reflects once again the pertinence of our business model and strategic choices in an environment which continues to be characterized by low interest rates and higher market volatility. We have delivered resilient underlying earnings of €3.1 billion despite market headwinds and a higher cost of natural events. Our balance sheet remains very strong with a Solvency II ratio at 197 percent, well within our target range,” he said.

Buberl reiterated that “in our Ambition 2020 strategy, unveiled on June 21, we committed to focus on clear growth drivers in order to achieve our objectives even in these adverse market conditions.”

In the important life & savings business, revenues were down 2 percent year over year at €31.0 billion due to lower revenues in unit-linked and mutual funds among others. Underlying earnings in the segment, however, were up 4 percent over the period at €1.9 billion.

“In Life & Savings, we focused on profitable business growth with increased sales of protection & health and capital light savings products,” Buberl said.
In property & casualty revenues were up 4% year over year at €18.6 billion, mainly driven by a positive price effect of 4.9% on average, according to the company. Underlying earnings in the segment were down 6 percent year-over-year, mainly driven by higher natural catastrophe charges.

The current year combined ratio in property & casualty deteriorated by 1.3 points to 98.2% driven by an increase in the loss ratio. The current year loss ratio increase was driven by higher natural catastrophe charges mainly from storms in Germany and floods in France, combined with higher claims in Belgium as a consequence of the floods in May and June 2016 and the terrorist attacks in March 2016.

“In property & casualty, we delivered strong growth in both personal and commercial lines while maintaining our emphasis on profitability,” Buberl noted.