Interim Results 2016: Growth and profitability across Insurance and Healthcare delivers strong mid-year performance

3 August 2016

Posted in Financial results

by Daniel O’Byrne (see media contact)

  • Improved underwriting profitability (+£20 million in the first half 2016) for fourth consecutive year
  • Increased earnings (+8 per cent) and revenue (+7 per cent) year on year
  • Digital investment pays dividends in increasing Personal Direct Motor revenues (+£18 million)

AXA Group this morning published its half year 2016 results, which are available at AXA UK and Ireland produced a strong half year result despite a challenging economic environment and ongoing pressures within the insurance industry. The key highlights from AXA UK and Ireland's contribution1 include:

  • Underlying earnings up 8 per cent to £138 million (2015: £128 million)2
  • General Insurance and healthcare revenues rose by 7 per cent to £2.2 billion3 (2015: £2.1 billion) with growth in UK Personal Direct Motor (+8 per cent); Healthcare (+3 per cent) and Commercial Lines4 (+11 per cent)
  • Underwriting profitability from general insurance and healthcare activities, measured by combined operating ratio5 was broadly consistent at 98.2 per cent (2015: 97.9 per cent), while there was a £20 million year on year uplift in underwriting result

Technical excellence, digital and data have resulted in a strong performance for AXA’s Personal Direct operations with direct motor showing a £18 million increase in revenue with improved profitability. This performance has been supported by AXA’s ongoing programme to deliver greater transparency to customers across the business – publishing claims decline rates by product line, bringing greater transparency to policy coverage and AXA remains the only insurer to clearly show customers their previous year’s premium at renewal.

The Healthcare business delivered an increase in revenue of 3 per cent (12 per cent including Simplyhealth) to £766 million on a comparable basis following the successful acquisition and integration of Simplyhealth in H2 2015. In line with Personal Direct, the performance of this part of the business has been driven by a consistent focus on innovation to deliver superior customer service evidenced by a 97 per cent positivity rating on feefo.

AXA's UK Commercial lines business, which was recently voted Commercial Lines Insurer of the Year, delivered a 9 per cent increase in revenue in a highly competitive market. This has, in part, been delivered as a result of a diversification into larger, mid-market risks where a steady increase in market share has been achieved. The Direct Commercial business continues to build on its existing growth recording a 14 per cent increase in revenue year on year.

In Ireland, revenues increased 17 per cent at constant exchange rates as rate increases implemented to combat extreme claims inflation took effect.


Commenting on the results, AXA UK CEO, Amanda Blanc, said:

"In a challenging macro economic environment, these are a very strong set of results.

"Although we continue to deliver improved underwriting profitability, we are facing into some strong headwinds with deteriorating investment returns, rising claims costs across all motor classes and a challenging personal lines broker market.

"As such, we must focus on the factors that we can influence. The significant increase in motor repair costs, particularly at the higher end, is adding further pressure in a sector that is already blighted by compensation culture. The impact of spurious whiplash claims and the activity of claims management companies already place intense inflationary pressure on motor premiums and we continue to work with the Government and the wider industry to combat this.

"The other stand out point of pressure is the intermediated personal lines market. Profitability in this sector, particularly motor, remains challenging and stands in stark contrast to the performance of our direct motor book which continues to go from strength to strength.

"This performance is driven by a significant and continued investment in digital and data which allows us to deliver an intuitive and customer-focused offering. The ability to react to and act upon rapidly changing customer demands will continue to be the defining factor in personal lines and this is the challenge that faces brokers and insurers operating in this market.

"So although I am satisfied with these results and confident that we can maintain this trajectory to the year end, we are acutely aware that external forces continue to pose a threat and we will continue to review our position on an ongoing basis."