"We are very confident in our ability to reach the big targets of our 'driving progress 2023' strategic plans."
- Frédéric de Courtois, AXA Partners deputy chief executive
Following the announcement of the costs during its interim results on Wednesday (03/08/22), Thomas Buberl, AXA chief executive, has since told the Financial Times that the Ukraine war loss figure, which is net of recoveries from reinsurance, was AXA’s “best estimate [of losses] at this stage.”
Buberl continued that “we are in the middle of this war [and] nobody knows what the next phase will look like.”
According to Buberl, aviation was responsible for the majority of the predicted losses, due to hundreds of planes being left stranded. AXA also disclosed losses with its political risk cover for events such as damage to buildings during the course of the war.
Alongside other leading insurance rivals, AXA has experienced the knock-on effect of inflation from the rising cost of claims. However, despite reporting a “more uncertain” economic backdrop, AXA noted growing income in markets such as health insurance has offset the financial impact of the war in Ukraine.
Buberl has said that AXA will be increasing commercial insurance prices by more than inflation, according to the Financial Times.
He also noted that, unlike other companies, AXA has benefited from having its own repair network to keep down the cost of motor insurance claims.
Last month, UK motor insurers Direct Line and Sabre issued profit warnings, prompted by the rising cost of claims. Direct Line was declared the biggest faller on the FTSE 250 forcing a delay on the second £50m instalment of their buyback programme.
Commenting at the time, Penny James, Direct Line chief executive said that Direct Line had “already taken actions including increasing prices and deploying new pricing capability to restore margins."
Since then, many insurance executives have said that the economic fallout of the war in Ukraine was likely to raise commercial insurance prices, reports the Financial Times.
Buberl added predictions of high single-digit price increases in commercial insurance for the next 12 to 24 months, citing Ukraine claims as well as natural catastrophe pay-outs for extreme weather.
Despite the impact of the Ukraine war on the global insurance industry, AXA still feels confident in its 2023 strategic growth targets with Frédéric de Courtois, AXA Partners deputy chief executive, commenting that the company is “very confident in [their] ability to reach the big targets.”
