The Irish business of French-owned Axa Insurance has paid €270 million of dividends to its parent over the past four years, including money that was temporarily stored up during the Covid-19 pandemic when regulators ordered insurers to avoid payouts and preserve capital.
The latest dividend, amounting to €70 million, was proposed in March, the largest insurer in the Irish market said in its latest annual so-called solvency and financial condition report (SFCR), published on its website.
The report also revealed that net profits at the insurer’s Irish operation rose threefold in 2023 to €95 million as insurance premiums rose 9 per cent to breach the €1 billion mark. Personal motor premiums accounted for €605 million – or 57 per cent – of the €1.07 billion total.
The unit’s insurance business rebounded to a net profit of €28 million last year from a €4 million loss in 2022. The company’s investment portfolio delivered a €75 million profit, up from €29 million the previous year.
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The comparable results for 2022 differ from those recorded in Axa Insurance’s 2020 SFCR, due to the introduction of a new accounting treatment for insurance contracts last year, known as the International Financial Reporting Standard 17 (IFRS 17).
The higher investment return was driven by rising bond prices as market interest rates – or yields – declined in anticipation of central bank rate cuts. Bond values move inversely to yields.
Axa Insurance also recouped some of the unrealised bond investment losses that had been accounted for in 2022 in its comprehensive result and not included its profit and loss account. It recorded a €34 million gain on such assets last year, compared to a €96 million loss taken in the previous year.
Moody’s estimates that European insurers racked up more than €500 billion of unrealised losses on their bond investments over the course of 2022. Still, most insurers’ capital levels remained well above regulatory requirements. Much of these losses have since been unwound.
The yield on German 10-year bonds, a benchmark for long-term European borrowing costs, declined over the course of 2023 from almost 2.6 per cent to about 2 per cent, amid heightened speculation towards the end of the year about the pace at which the European Central Bank (ECB) will cut rates.
The ECB had hiked its key deposits rate from minus 0.5 per cent to 4 per cent over the 15 months to last September in a battle against inflation. Euro zone bond yields have risen again since the end of last year, as investors have reined in expectations about the pace at which rates will fall.
The Paris-based Axa Group invested further in the Irish market last October when it acquired Laya Healthcare, the Republic’s second-largest health insurer, for €650 million.
It is understood that Laya will be consolidated in Axa Insurance’s results from 2024, when the company starts to underwrite health coverage, subject to Central Bank approval. Laya’s policies are currently underwritten by a unit of Swiss Re called Elips Insurance.
The increase in Axa’s motor premiums last year occurred against the backdrop of motor premiums increasing by close to 3 per cent, according to the Central Statistics Office (CRO), snapping a five-year period of sustained declines.
Axa Insurance chief executive Marguerite Brosnan and peers across the industry have said that a continuing decline in injury awards was offset, more recently, by a spike in motor damage costs due in inflation in the cost of labour and car parts.
The average motor premium fell 22 per cent between their peak in late 2017 and the end of 2022, according to Central Bank data, helped by an industrywide decline in claims costs after new personal injury guidelines were introduced in early 2021.
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