Insurance claims drop helps Axa's Irish profits up by 120%

Profits surged by almost 120 per cent at Axa Insurance in the first half of the year, with a fall-off in insurance claims the main driver behind the rise.

Axa's Irish operation made an after-tax profit of €51 million in the six months ending June 30th, up from €23 million in the same period of 2002.

The company said the increase was largely due to a "fall in the frequency of motor claims".

Mr Paul Moloney of Axa's corporate affairs department said it was difficult to establish exactly why the frequency of motor claims had dropped, but suggested a growing focus on insurance fraud had been effective.

Mr Moloney also highlighted the Government's penalty points scheme, and the attendant improvement in road safety, as a factor behind the easing in claims.

He said enforcement of the penalty points system remained an issue, however, pointing to anecdotal evidence that many drivers could be reverting back to old, bad habits as initial fears of punishment wear off.

Motor insurance accounts for up to 85 per cent of Axa's Irish business, making it the second-largest motor insurance provider in the State after Hibernian.

Mr Moloney said positive trends on claims had led to a 6 per cent drop in motor premiums for consumers in the year to date.

He predicted that further declines in the cost of insurance would follow but said such things did not happen "instantaneously", with Axa always required to balance customer needs with those of shareholders.

The link between insurers' profits and the cost of cover for consumers is under investigation by an Oireachtas committee. The chairman of the Committee on Enterprise and Small Business, Mr Donie Cassidy, TD, has called on the insurance industry to "stop whingeing" and help to deliver cheaper premiums.

Premium income at Axa grew by 5 per cent to €295 million over the first six months, despite the overall reduction in premium levels.

Axa was also boosted in the first half by good weather, which led to a decline in household claims.

The company's operation in the North, which is included in the overall Irish numbers, also had a positive first half.

Axa's French parent has meanwhile reported a 75 per cent slump in profits in the first half, blaming securities writedowns and the weak US dollar. Net profit fell to €209 million after writedowns, from €837 million in the first half of 2002.

When investment losses were excluded from the Axa group results, however, they beat estimates.

Shares in the Paris-based insurer rose by nearly 5 per cent after the company said it should be able to beat a key underwriting profitability target by year-end.

Axa chief executive, Mr Henri de Castries, said the company still had considerable room for improvement and would take advantage of appropriately priced acquisition opportunities in Europe and the US to fuel growth.

(Additional reporting Reuters)