By Ranamita Chakraborty
French insurance giant AXA expects to see the COVID-19 crisis having a material impact on its earnings in 2020 despite receiving ‘limited’ COVID-19-related claims in March and acknowledging that the precise implications of the pandemic remain uncertain at this stage.
In the first quarter of the year, the insurer said its reported revenue fell 9% over the same period last year to EUR31.7bn ($34.3bn). However, its revenues were up 4% on a comparable basis taking into account the deconsolidation of its US business and equitable holdings.
AXA expects the lockdowns in affected countries to impact its sales and revenues progressively – most notably through a reduction of new business activity across most lines of business with some offset anticipated from improved retention.
The insurer’s total revenues in March declined by 5% over the same period last year with trends for the month of April indicate a 12% overall reduction in gross revenues across most geographies as compared to April 2019.
The impacts are expected to be more significant in AXA’s life and savings business and to a lesser degree in its P&C and health business.
Meanwhile, in terms of claims, the insurers expects confinement measures across all geographies to have a material impact on the level of claims across a number of product lines most notably in event cancellation and business interruption.
According to a report from the Financial Times, an AXA spokesperson said that events being cancelled due to the virus could cost the group about EUR500m.
For business interruption, the insurer said it has limited claims notified to date and “it is too early to make an estimate of the level of potential claims”.
Concurrently, the insurer noted that other product lines such as D&O, liability and travel may also be impacted but likely to a lesser extent. It also said that no material deviation in credit insurance or in mortality claims has been observed.
Asia Insurance Review