Axa rebounds from pandemic as XL unit swings to profit

(Reuters) — Axa posted a 180% surge in first-half net income on Monday as the French insurer rebounded from a spike in pandemic-related claims that led to a €1.5 billion ($1.8 billion) charge last year.

Europe’s second-largest insurer, after Allianz, said it made nearly €4 billion of net profit in the first half, more than double the €1.43 billion a year earlier.

It said its Axa XL unit, hit last year by business interruption and event cancellation claims, recorded €619 million in underlying income from an €843 million loss a year earlier.

Axa CEO Thomas Buberl told reporters a turnaround at the unit was showing its first results.

“Taking advantage of the continued favorable pricing momentum, Axa XL is well positioned to deliver its €1.2 billion earnings target in 2021,” Mr. Buberl also said in a statement.

Axa’s underlying profit rose 93% in the first half to €3.64 billion. Excluding last year’s COVID-19-related claims, underlying earnings rose by 12%, Axa said.

Shares in Axa were up 3.29% at 0845 GMT, topping France’s CAC 40 index.

“Axa’s results are a clear beat to consensus expectations, with Axa XL’s underlying earnings up +40% (ex-COVID) being a particularly pleasing source of strength,” analysts at Jefferies said in a note.

However, Axa warned that July’s devastating floods in Germany and Belgium will cost it around €400 million before tax and net of reinsurance in a preliminary estimate.

The company in June reached a €300 million settlement with restaurant owners in France over pandemic-related insurance claims.

Chief Financial Officer Alban de Mailly Nesle said nearly half of the restaurant owners involved had expressed interest in the settlement.

“The campaign is going very well on the ground,” Mr. de Mailly told reporters.

In a separate statement, Axa said its board of directors had proposed renewing Mr. Buberl’s mandate as CEO and board member.

The proposal will be put to shareholders in April 2022 at the annual general meeting.

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