(News Bulletin 247) – The second European insurer saw its premiums settle in line with expectations, but its solvency ratio thwarted forecasts. The CAC 40 tenant has also delivered its operating profit target for the current financial year.

Overall, French banks have not disappointed expectations during this earnings season. Still remained Axa, the last member of the CAC 40 in the “banking-insurance” sector to return its copy.

The number two European insurance company, behind Munich’s Allianz, has generally responded to analysts’ forecasts.

Over the first three months of the year, Axa recorded gross premiums and other income – which can be compared to turnover – up 1% year-on-year on a like-for-like basis to 31.8 billion euros. euros, very slightly lower (-0.3%) than the consensus figure, according to Jefferies.

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The dynamics of damage insurance

In recent years, Axa has undertaken a transformation that has led it to further strengthen its activities in non-life and business insurance to the detriment of businesses that are more dependent on market fluctuations, such as life insurance.

This can be observed somewhat in the dynamics of its activity. The group’s growth is in fact largely driven by non-life insurance, up 6% on a like-for-like basis, to 17.6 billion euros.

This growth is “supported by the increase in commercial insurance premiums (+7%) due to positive price effects and an increase in volumes, in particular at AXA XL (division resulting from the acquisition of XL Group in 2018 and specialized in non-life insurance and reinsurance for large companies, Ed) and in Europe, and in personal lines insurance (+4%) thanks to positive price effects, partly offset by the implementation of measures to reduce exposure to natural disasters at AXA XL Reassurance (-2%)”, developed the company.

On the other hand, premiums for the life, savings, retirement and health business contracted by 4%. The activity was penalized by the non-renewal of two major international contracts in collective health as well as the drop in savings premiums (-9%), mainly in France and Italy, due to “unfavorable market conditions” , explains the company.

Towards an increase in operating profit

Market-monitored indicator, the so-called “Solvency II” solvency ratio stood at 217% at the end of March against 215% at the end of December, significantly higher than the consensus of 208%, notes KBW. This good surprise is due in particular to “an excellent operational performance”, explains the group.

For UBS, this positive difference eclipses the slight disappointment on the company’s gross premiums.

Axa also indicated that it wants to generate an operating profit of more than 7.5 billion euros this year, compared with a figure of 6.1 billion euros in 2022, once the new accounting standard IFRS 17/9 is applied. . According to KBW, the consensus expects him an operating result of 7.8 billion euros for the 2023 financial year.

Axa has also raised its normalized operating return forecast for the Solvency II ratio between 25 and 30 basis points (0.25% and 0.30%) against 18 basis points to 22 basis points previously.

On the Paris Stock Exchange, all of these results, and in particular the solvency that exceeded expectations, were received positively by the market. The Axa share thus took nearly 3% around 10:20 a.m., marking the second strongest rise in the CAC 40.

For UBS, the good surprise on the insurer’s solvency is “likely to increase investors’ expectations” in terms of capital distribution, either dividends and/or share buybacks.