Total General Insurance and Healthcare – AXA Insurance including Swiftcover, AXA Ireland and AXA PPP – insurance revenues remained flat at £1,866m in H1 2009 compared to £1,872m in H1 2008.
Overall revenues (GWP) in UK General Insurance were down 4% in H1 2009 to £1,064m. Within the Personal Lines Intermediary and Corporate Partnerships areas of AXA UK’s general insurance business the main area of growth was in Household (up 12%) largely due to the successful launch of a new Marks & Spencer deal. This was offset by falling revenues in both creditor (down 29%) and travel (down 20%) linked to the economic downturn.
Strong revenue growth has been achieved in Personal Direct with Swiftcover, AXA UK’s internet-only motor insurer, revenues up 61% and customer policy numbers climbing 25% to 652,000, and AXA Household – both have benefited from strong advertising campaigns.
Against a backdrop of a continuing soft market UK Commercial Lines revenues overall were down 10% due to a focus on retaining profitable business as well as a highly competitive market for new business. Liability was down 24%, Commercial Motor down 8% and Property down 4%.
General Insurance continues to make strategic changes to the business to achieve consistent profitability through exiting unprofitable business, reducing the cost base (a headcount reduction was announced in June), and delivering improved customer service, in particular in Commercial Lines. The business will invest in growth markets primarily Personal Lines and in particular Personal Direct – while also investing in IT platforms that will help improve further the customer service.
In Ireland, where 84% of our portfolio is personal motor and household, rate increases are being applied by the main insurers to a more acceptable level and while they remain too low further rate increases are anticipated in the second half of the year. Revenues are up slightly at 1% to €221m due to strong performance in the broker segment in the Republic of Ireland, improved business in Northern Ireland as well as a 4% increase in Household revenues. However, direct personal motor revenues in the Republic of Ireland have declined following a change in business mix to lower risk, lower premium business.
Growth in Healthcare has continued with revenues increasing 3% from £585m in H1 2008 to £605m in H1 2009. The Corporate business is performing well with revenues up 9% mainly in International markets, particularly in the Middle East, with modest growth within the UK. Despite achieving average premium growth, revenues have declined 4% in personal business due to lower volumes arising from increasing lapse rates – however retention initiatives appear to be slowing the increase in lapse rates experienced in the first quarter.
Total General Insurance and Health insurance underlying earnings in the UK and Ireland declined by 43% from £135m for H1 2008 to £77m for H1 2009. Weather related events at the beginning of the year (£32m*;) in the UK and Ireland, a large Insurance Commercial Property loss, and low interest rates giving lower investment income – all adversely impacted the earnings which also saw an increase in the general insurance and healthcare combined ratio from 98% in H1 2008 to 100% in H1 2009.
* : January weather in UK and Ireland (£16m) plus typhoon Klaus (£16m)
