AXA XL to inject €1bn capital

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The AXA XL is set to inject €1bn of capital into the parent group to take advantage of favourable conditions and boost its position following pandemic losses.

Publishing nine-month indicators, AXA XL recorded gross revenues of €13.96bn from €14.17bn last year, although on a comparable basis growth was 1percent. The business achieved insurance rate increases of 16 percent during the nine months and 8 percent in reinsurance. Rate increases accelerated in Q3, when insurance recorded prices were up 20 percent and reinsurance 10 percent

AXA said it will ensure AXA XL “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”. According to a Reuters report, AXA is preparing to inject €1bn into AXA XL to strengthen its capital following Covid-19 claims.

“We want to be sure that… we allocate capital to where we want to grow. It’s important that XL is able to seize opportunities, while there have also been losses linked to Covid this year,” Reuters quoted CFO Etienne Bouas-Laurent as saying in a call with journalists. “We have an intention to increase the capital at XL in this context,” he said.

AXA XL’s Q3 losses from natural catastrophes – including US Hurricanes Laura, Isaias and Sally, California wildfires and the US derecho windstorm – are running €300m higher than the normalised level for the second half of the year. AXA said it expects only a limited impact on claims from the second wave of Covid-19 lockdowns and reaffirmed its estimate of €1.5bn pandemic losses for 2020.

AXA said AXA XL will exit underperforming lines of business where necessary to meet profitability targets. “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,” AXA said.

AXA group reported revenues down 8 percent in the first nine months to €73.39bn, or 2 percent lower on a comparable basis. P&C revenues across the group were unchanged at €37.98bn, but up 2 percent in Q3 driven by commercial lines.

CEO Thomas Buberl said AXA’s group revenues recovered from a 10 percent decline in Q2 in line with Covid-19 lockdown.

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