9M20 Activity indicators
- AXA's activity rebounded in the third quarter:
- P&C revenues* up 2% vs Q3 2019
- Health revenues up 4% vs Q3 2019
- L&S net inflows** of Euro +0.9 billion in Q3 - Solvency II ratio*** stable at 180%
- Covid-19 claims**** estimate unchanged, at Euro 1.5 billion 2020 UE impact
AXA’s strategic choices in recent years, favoring technical risks over financial risks, have positioned the Group well for the future and are confirmed by the Group’s strong performance in the context of Covid-19. The Group recorded a dynamic rebound of revenues in the third quarter, with our preferred segments, P&C Commercial lines, Health and Protection growing by 3%.
The third quarter rebound in our business reflects the continued intensive engagement of our employees and distribution partners, embracing new ways of working and staying close to our clients during these challenging times. I would like to thank them for this. I would also like to thank AXA’s 108 million clients for their trust and loyalty. We will continue doing our very best to support them in this uncertain environment.
AXA XL continued to record strong price increases****** in the third quarter, with prices up 20% in Insurance. Scott Gunter and his new leadership team are taking decisive actions to enhance profitability, including exiting unprofitable lines like Management Liability and Financial Institutions in the UK and Lloyd’s in Q3. Going forward, we will ensure the company has the resources necessary to take full advantage of these attractive market conditions and the anticipated resumption in demand across most client segments in 2021 and beyond.
AXA continues its simplification journey, with the completion in October of the disposals of its Central and Eastern European operations for Euro 1.0 billion and Architas UK, and the announced transaction in India.
AXA expects only a limited impact on claims from the current second wave of lockdowns and has reaffirmed today its current best estimate of Euro 1.5 billion Covid-19 claims for 2020.
AXA’s Solvency II ratio was resilient in the third quarter, remaining stable at 180%, despite a decline in interest rates and volatile financial market conditions. The Group’s FY20 Solvency II position is expected to benefit from the inclusion of AXA XL in AXA Group’s internal model and the completion of previously announced disposals. AXA also expects its cash at Holding to be strong at the end of the year, in excess of its target level*******.
* Change in gross revenues is on a comparable basis (constant forex, scope and methodology).
** Life & Savings net flows include Health “life-like” business.
*** The Solvency II ratio is estimated primarily using AXA’s internal model calibrated based on an adverse 1/200 years shock. It includes a theoretical amount for dividends accrued for the first nine months of 2020, based on the full year dividend of Euro 1.43 per share initially proposed by the Board for FY19. Dividends are proposed by the Board, at its discretion based on a variety of factors described in AXA’s 2019 Univer sal Registration Document, and then submitted to AXA’s shareholders for approval. This estimate should not be considered in any way to be an indication of the actual dividend amount, if any, for the 2020 financial year. For further information on AXA’s internal model and Solvency II dis closures, please refer to AXA Group’s SFCR as of December 31, 2019, available on AXA’s website (www.axa.com). In compliance with the decision from AXA’s lead supervisor (the ACPR) from January 1, 2019, entities that were part of the XL Group (“XL entities”) have been fully consolidated for Solvency II purposes (as per the consolidation-based method set forth in the Solvency II Directive) and their contribution to the Group’s solvency capital requirement has been calculated using the Solvency II standard formula. Subject to the prior approval of the ACPR, the Group intends to extend its Internal Model to XL entities as soon as December 31, 2020.
**** “Covid-19 claims” includes P&C, L&S and Health net claims related to Covid -19, as well as the impacts from solidarity measures and from lower volumes net of expenses, linked to Covid-19. “Covid-19 claims” does not include any financial market impacts (including impacts on investment margin, unit-linked and asset management fees, etc.) relating to the Covid-19 crisis.
***** Underlying earnings (“UE”) and adjusted earnings are non -GAAP financial measures, or alternative performance measures (“APMs”). A reconciliation from APMs adjusted earnings and underlying earnings to the most directly reconcilable line item, subtotal or total in the financial statements of the corresponding period is provided on pages 19 and 20 of the Half-Year 2020 Financial Report. The above mentioned and other non-GAAP financial measures used in this press release are defined in the Glossary set forth on pages 60 to 67 of the Half-Year 2020 Financial Report.
****** Renewals only at AXA XL, price effect calculated as a percentage of renewed premiums.
******* Euro 1 billion to Euro 3 billion desired range.
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