(BFM Bourse) – The French insurer published online indicators although very slightly below expectations for the first nine months of the year. But the impact of natural disasters has caused analysts to fear a budget overrun.
Axa underperforms the CAC 40 this Friday. The second European insurer behind Allianz, lost 0.8% at the start of the afternoon, after having even lost more than 4% in the morning. The Parisian index gained 0.3% at the same time.
The company headed by Thomas Buberl revealed indicators in line with or very close to expectations for the first nine months of the year.
The group published gross premiums (and other income), equivalent to its overall turnover, of 78.8 billion euros from January to the end of September, up 1% over one year in published data and 2% on a comparable basis. The figure turns out to be slightly lower – by 1% according to UBS – than the consensus.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
Property insurance on the rise
The company’s revenues were driven by property and casualty insurance, where premiums increased by 7% like-for-like.
This increase was fueled by growth in commercial insurance (+9%) due to favorable pricing effects across all geographies and an increase in volumes, and in personal insurance (+5%) thanks to favorable price effects in automobile insurance, explains the insurer.
Conversely, the dynamic in this segment was partly attenuated by the implementation of measures to reduce exposure to natural disasters at Axa XL Reinsurance (-3%).
The health, life, savings and retirement insurance segment saw its premiums contract by 2% over one year on a comparable basis.
The solvency ratio II, an important indicator in the insurance sector, stood at 230%, a little less than the 231% expected by analysts, again according to UBS.
“AXA has published a very strong activity report for the first nine months of 2023, once again highlighting that the company remains in very good health as we approach the 2023 financial year results and the day dedicated to investors, at the beginning of next year (in March, Editor’s note)”, judges Deutsche Bank.
No “fireworks”
Bank of America is more mixed. According to the American bank, the publication does not contain “any fireworks but nothing scary either”.
However, she notes a small subject regarding natural disasters. At the end of September, the cost of these disasters was in line with the budget planned by the company, i.e. 4 combined ratio points. The combined ratio is a key indicator for insurers, which relates compensation and operating costs to the premiums collected. Clearly, when this ratio exceeds 100% the insurer does not make any money.
In its press release, Axa indicates that it estimates that the preliminary amount of losses linked to Hurricane Otis, which hit Mexico in October, should amount to approximately 0.2 billion euros, before taxes and net of reinsurance. .
“We believe this eats up around 40% of Axa’s natural disaster budget for the fourth quarter, with several other events (e.g. winter storms) likely to have an impact. The loss from Hurricane Otis could cause concern some but is manageable at the group level”, Bank of America develops on this point.
“During the conference call, management appeared to take a cautious stance on natural disaster losses. They reaffirmed a budget of around 4% for natural disaster losses, although the tone was rather pessimistic about the “impact of these events on the year”, notes for its part the research office AlphaValue.
Also highlighting the impact of Hurricane Otis, the financial intermediary notes that this “suggests that the company’s initial expectations on losses linked to natural disasters may have been underestimated”. “Therefore, it is likely that consensus estimates and our own projections will be revised upwards from the 4% budget for natural disasters,” AlphaValue continues.
Regarding its outlook, Axa confirmed that it anticipates an operating profit of more than 7.5 billion euros in 2023, which Jefferies considers “reassuring”. The insurer also indicated that it would not issue additional debt between now and the end of the year. “This seems logical to us: Axa is rich in liquidity and debt is now more expensive,” judges Bank of America.
Julien Marion – ©2023 BFM Bourse
Are you following this action?
Receive all the information on AXA in real time: