French insurer AXA has today reported better-than-expected full-year earnings, boosted by increased premiums from individual insurance policies and fewer claims for natural catastrophes.
Full-year net income jumped by 10% from a year earlier to €7.89 billion, beating the €7.75 billion average of 19 analyst estimates compiled by the company.
Underlying earnings climbed 6%, reaching a record, while total revenues rose 7% to €110.3 billion, slightly above the €109.7 billion analyst average.
AXA, Europe’s third-biggest insurer by market capitalisation, said it expected a pre-tax impact of about €100m from this year’s Los Angeles wildfires, among the lowest in the industry for claims.
Germany’s Munich Re said this week it expected about €1.2 billion in claims resulting from the wildfires. Hannover Re, another German reinsurer, has said it could face claims totalling €700m.
The Los Angeles wildfires, which killed more than two dozen people and damaged or destroyed nearly 16,000 structures, are set to become the costliest in US history, with analytics firm CoreLogic estimating related insurance claims of $35 billion to $45 billion.
European insurers had reduced exposure to California after previous wildfires but would still be “materially affected”, credit ratings agency Fitch has said.
AXA’s deputy CEO said it would continue investing into the US.
“The US market is an important one for us,” Frederic de Courtois told reporters, citing its “strong growth potential.”
AXA’s property and casualty division, which accounts for more than half its total revenues, posted an all-year combined ratio of 91%, an improvement of more than two percentage points from a year earlier.
A ratio below 100% means insurers earn more from premiums than they pay in claims.
AXA’s margins improved in Germany, Britain and for natural catastrophe insurance, Chief Financial Officer Alban de Mailly Nesle said.
Analysts at JPMorgan said AXA’s were “in-line and on-track for targets” while Citi said there was “nothing unusual in the outlook comments.”
Shares in AXA have risen 18% in the past year, outpacing wider stock market gains.
AXA’s solvency II ratio, a key measure of financial strength, came in at 216%, in line with expectations.
The Paris-based insurer, which stuck with its medium-term financial targets, unveiled a €1.2 billion share buyback plan.
That is on top of an expected €3.8 billion buyback that will follow the sale – scheduled for the second quarter-end – of its asset management arm, AXA Investment Managers, to BNP Paribas.
AXA also hiked its 2024 dividend by 9% to €2.15 a share.
