AXA First Half Net Income Down
NU Online News Service, Aug. 14, 11:40 a.m. EST?The weak equity markets played a role in AXA Group's 75 percent drop in net income during the first half to 209 million euros ($236.7 million at current exchange rates), compared with 837 million euros ($947.9 million) in the same period last year.
The Paris-based company said this drop was due to the absence of recovery in the financial markets. Net income was impacted by further impairment charges attributable to shareholders of 1.1 billion euros ($1.3 billion) on equity securities in first-half 2003, versus 200 million euros ($226.5 million) in the first half of 2002.
Underlying earnings during the first half increased by 6 percent to 1.1 billion euros ($1.3 billion) from 1.0 billion euros ($1.1 billion) during the same period last year. AXA said earnings would have risen by 15 percent on a constant exchange rate.
The underlying earnings in AXA's property and casualty business came to 402 million euros ($455.3 million), up 174 million euros ($197.1 million) from 228 million euros ($258.2 million) in the first half of 2002, which was due to a 4 point improvement in the combined ratio to 101.8 in the first half of 2003 from 105.8 in the first half of 2002, AXA said.
Underlying earnings for international insurance were 50 million euros ($56.6 million), an increase of 78 million euros ($88.3 million) from the first half of 2002, when a loss of 28 million euros ($31.7 million) was reported. The company attributed this increase to the improved technical results of both AXA Re and AXA Corporate Solutions.
A.M. Best Co. has upgraded the financial strength ratings of AXA Group's U.S. subsidiaries, which were put in run-off in January. AXA Corporate Solutions Reinsurance Company and its wholly owned subsidiary, AXA Corporate Solutions Life Reinsurance, were upgraded to "B plus" from "B," with a stable outlook.
A.M. Best said the ratings reflect the Paris-based AXA Group's intent "to conduct an orderly run-off of its U.S. reinsurance operations by supporting their surplus and liquidity requirements while policyholder obligations are settled," the Oldwick, N.J.-based ratings agency said.
At the same time, A.M. Best affirmed the financial strength ratings of "A minus" of the following non-reinsurance companies: AXA Re Property and Casualty Insurance Company, AXA Re America Insurance Company, AXA Corporate Solutions Excess and Surplus Lines Insurance Company (all of Delaware), and AXA Corporate Solutions Lloyds Insurance Company of Texas.
"These ratings have been removed from under review and maintain a negative outlook," said A.M. Best. "The negative outlook reflects the uncertainty surrounding their financial performance and their future ownership following AXA Re group's decision in early 2003 to phase out its program business segment.
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