Business insurance provider reports drop in profits

After a year of reorganisation directives that included the selling off of its life insurance division, business insurance provider AXA UK recently reported its annual profits have dropped sharply.

The commercial insurance provider’s UK division reported £131 million in earnings in 2010.  This represents a large drop from the £235 million it earned the previous year.  AXA UK employs approximately 1,000 staff at its Ipswich offices.

The combined ratio for AXA UK’s operations, which incorporates costs and claims as a percentage of the income it brings in through premium payments, tallied up at 105.3 per cent.  3.3 per cent of that figure was the result of claims due to particularly severe weather conditions in early and late 2010.

The insurer stated that many of its rates are likely to remain soft well into next year.  However, further personal insurance premiums are highly likely to rise in 2011 due to the continued efforts of the insurance market to return to a profitable footing.

AXA UK has been restructured into four specialised operating units in the wake of their sale of AXA Sun Life for £2.75 billion to Friends Provident last fall.  The business is now divided evenly between wealth management, health care, personal insurance, and professional indemnity insurance units.

AXA UK and Ireland group chief executive Paul Evans stated that the company had recently undergone a year that has been heavily transformative.  Mr Evans stated that the insurer’s priorities for the coming year are on the delivery of valued products and exemplary service to its customers and businesses in each new division.

The group chief executive did admit that he was disappointed by AXA UK’s  high operating ratio last year.  However the 105.3 per cent total ratio for 2010 compares favorably to 2009 figures.

However, he added that “ further pricing action will be necessary together with ongoing productivity improvement.”

Earlier this month, AXA warned that more than 50 people at its Ipswich office faced possible redundancy following last year’s separation of its commercial and personal lines operations.

The French-owned firm said 27 of the 56 positions under threat were held by manager grade staff.

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