France’s AXA Group announced big earnings increases for the year 2005 with net profits up 12 percent to €4.173 billion ($4.98 billion). “Last year, AXA showed strong growth momentum, particularly in Life & Savings and Asset Management,” commented CEO Henri de Castries. “Significant value has been created in 2005 for our shareholders, as demonstrated by the record performance achieved this year.”
Other highlights noted in the report include:
— Underlying earnings up 24 percent to €3.3 billion [$3.94 billion]
— Adjusted earnings up 23 percent to €4.1 billion [$4.89 billion]
— Life new business value up 27 percent to €1.1 billion [$1.31 billion]
— Proposed Dividend of 88 € cents [$1.05] per share up 44 percent versus 2004
— Total assets under management reached €1.064 trillion [$1.2 trillion]
— Property & Casualty revenues up 3 percent to €18.9 billion [$22.56 billion].
— Combined ratio improved by 0.8 points to 97.7 percent.
– Asset management revenues were up 14 percent to €3.4 billion [$4.05 billion], with net inflows at a historical high of €56 billion [$66.85 billion].
About the only dark spots in AXA’s 2005 operations were the €40 million ($47.75 million) it suffered in losses from the urban riots that shook France last November and the revenue decrease at its reinsurance unit, AXA Re, which reported an 89 percent drop in underlying earnings to €11 million ($13.13 million). This was “driven mainly by a 16.4 point deterioration of the loss ratio to 99.2 percent, partially offset by a 4.7 point improvement of the expense ratio to 13.3 percent following on-going cost control and a favorable geographical mix of results positively impacting the overall tax rate,” said the bulletin. “Major losses recorded in 2005 represented 49.6 points of the loss ratio versus 25.1 points in 2004. The negative impact of 2005 major losses was mitigated by favorable development on prior year major loss reserves, as well as by a strong life net technical result.”
The report is also upbeat about AXA’s future. “The solid revenue growth and very strong earnings growth of 2005 mark the first milestones on AXA’s path towards reaching its Ambition 2012 objective of becoming the preferred company in its industry,” said the bulletin. “Management believes that the Group should benefit from this positive momentum in 2006:
– The combination of higher assets under management and the ongoing favorable trend for higher margin unit-linked products should underpin Life and Savings and Asset Management underlying earnings growth;
– In Property and Casualty – barring any major catastrophes – AXA’s geographic diversification and price discipline lead management to believe in a stabilization of loss ratios, despite a slightly less favorable underwriting environment;
– In International Insurance, a return to a more normalized claims environment would contribute to improved earnings.
Barring a significant downturn in the equity markets, net capital gains should contribute Euro 600 to 800 million [$716 to $955 million] to adjusted earnings in 2006.”
The complete report, earnings presentations and replay of the press conference may be accessed on the Group’s Website – www.axa.com – in French and English.
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