Britain's second largest private medical insurance (PMI) provider has reported a fall in domestic revenues as more consumers gave up their healthcare cover in the first half of this year. However, lapse rates in the domestic PMI market appear to be slowing, AXA UK said today.
Growth in international business also helped AXA UK to offset difficult trading conditions in healthcare domestically.
The insurer also reported strong growth in domestic protection business, boosted by both direct and intermediated sales channels.
AXA UK's accounts show that healthcare trading performance has been "steady" despite an increase in lapse rates in UK personal and SME lines, aided by "strong growth" in international business.
That meant that growth in healthcare has continued with revenues increasing 3% from £585m in H1 2008 to £605m in H1 2009. Corporate business is performing "well" with revenues up 9% mainly in international markets, particularly in the Middle East, with "modest" growth within the UK, AXA said.
However, in spite of achieving "average" premium growth, revenues have declined 4% in personal business due to lower volumes arising from increasing lapse rates. Nevertheless, retention initiatives appear to be slowing the increase in lapse rates experienced in the first quarter of the year, the insurer said.
However, total general and healthcare insurance revenues - which include AXA Insurance including Swiftcover, AXA Ireland and AXA PPP - remained flat at £1,866m in H1 2009 compared to £1,872m in H1 2008. Total general insurance and health insurance underlying earnings in the UK and Ireland declined by 43% from £135m for H1 2008 to £77m for H1 2009.
The insurer said that weather-related events at the beginning of the year in the UK and Ireland, a large commercial property insurance loss, and low interest rates giving lower investment income all adversely impacted earnings. The insurer saw an increase in its general insurance and healthcare combined ratio from 98% in H1 2008 to 100% in H1 2009.
Overall revenues at AXA-owned Bluefin Advisory Services, which provides financial advice and wealth management and corporate consulting services, increased 27% to £39m in H1 2009, primarily reflecting the positive impact of the SBJ Benefit Consultants acquisition. While revenues have held up in the Corporate and Wealth Management divisions the financial advice division has been impacted by a "combination of market issues", AXA said.
More positively, AXA said its Protection business performed "strongly" despite difficulties in the mortgage market. Revenue is up 26% in the AXA Protection Account and further revenue growth is anticipated following the launch in July of new online underwriting capability for advisers. Sun Life Direct has also had a "strong" first half with revenue growth up 28% due to improved response rates from both corporate partners customers and direct advertising campaigns. A bancassurance deal with Yorkshire and Clydesdale Banks was completed in February providing a "significant" source of business for both of the wealth management and protection businesses, AXA said.
Globally, AXA reported underlying earnings versus H1 2008 down 26% to €2,116m, adjusted earnings down 50% to €1,736m and net income down 38% to €1,323m (on a comparable basis).
In the UK & Ireland, underlying earnings increased by 2% from £183m in H1 2008 to £186m in H1 2009; the result was "significantly" impacted by a positive exceptional item of £106m in the Life business.