By Mathieu Rosemain
PARIS (Reuters) -French insurer AXA reported better-than-expected full-year earnings on Thursday, boosted by increased premiums from individual insurance policies and fewer claims for natural catastrophes.
Full-year net income jumped by 10% from a year earlier to 7.89 billion euros ($8.28 billion), beating the 7.75 billion-euro average of 19 analyst estimates compiled by the company.
Underlying earnings climbed 6%, reaching a record, while total revenues rose 7% to 110.3 billion euros, slightly above the 109.7 billion-euro analyst average.
AXA, Europe’s third-biggest insurer by market capitalisation, said it expected a pre-tax impact of about 100 million euros from this year’s Los Angeles wildfires, among the lowest in the industry for claims.
Germany’s Munich Re said on Wednesday it expected about 1.2 billion euros in claims resulting from the wildfires. Hannover Re, another German reinsurer, has said it could face claims totalling 700 million euros.
The Los Angeles wildfires, which killed more than two dozen people and damaged or destroyed nearly 16,000 structures, are set to become the costliest in U.S. history, with analytics firm CoreLogic estimating related insurance claims of $35 billion to $45 billion.
European insurers had reduced exposure to California after previous wildfires but would still be “materially affected”, credit ratings agency Fitch has said.
AXA’s deputy CEO said it would continue investing into the United States.
“The U.S. market is an important one for us,” Frederic de Courtois told reporters, citing its “strong growth potential.”
AXA’s property and casualty division, which accounts for more than half its total revenues, posted an all-year combined ratio of 91%, an improvement of more than two percentage points from a year earlier.
A ratio below 100% means insurers earn more from premiums than they pay in claims.
AXA’s margins improved in Germany, Britain and for natural catastrophe insurance, Chief Financial Officer Alban de Mailly Nesle said.
Analysts at JPMorgan said AXA’s were “in-line and on-track for targets” while Citi said there was “nothing unusual in the outlook comments.”
Shares in AXA have risen 18% in the past year, outpacing wider stock market gains.
AXA’s solvency II ratio, a key measure of financial strength, came in at 216%, in line with expectations.
The Paris-based insurer, which stuck with its medium-term financial targets, unveiled a 1.2 billion euro share buyback plan.
That is on top of an expected 3.8 billion-euro buyback that will follow the sale – scheduled for the second quarter-end – of its asset management arm, AXA Investment Managers, to BNP Paribas.
AXA also hiked its 2024 dividend by 9% to 2.15 euros per share.
($1 = 0.9528 euros)
(Reporting by Mathieu RosemainEditing by Tommy Reggiori Wilkes and Tomasz Janowski)
