(Reuters) – The CEO of Axa on Thursday expressed confidence in the French insurance company's corporate XL group after the business reported a loss in the first half of the year following an increase in COVID-19 related receivables.
Axa bought Bermuda-based XL 2018 in a $ 15 billion deal to broaden its range of businesses, but in February this year lowered its profit guide for the 2020 division, which focuses on offering property damage insurance to companies and other specialized insurance companies.
During the first half of the year, XL reported a loss of EUR 0.8 billion against revenue of EUR 0.5 billion a year earlier, Axa's earnings presentation showed on Thursday, when business breaks and claims for cancellation of events flowed in.
"It is true we had no good surprise … but we should not forget that COVID-1
"Exclusive "COVID is growing revenue faster than it claims to be, which is … the ultimate test for a healthy insurance business," he said. "I'm very confident in the XL."
Axa, Europe's second largest insurance company, after Allianz, also withdrew its 2020 revenue target following an increase in COVID-19-related receivables.
The company also said it had suspended € One billion ($ 1.18 billion) sale of its Axa Life Europe business to private equity group Cinven. Axa had entered into exclusive calls in 2018 and then said that the deal would include a cash payment of 925 million euros from Cinven.
The insurance company also scrapped plans to propose an additional payment of the fourth quarter of up to EUR 0.70 per share if economic market conditions improved.
AXA shares decreased by 4.5% at 1244 GMT.
"We expect the cancellation of the second tranche of the dividend and the completion of the divestment of Axa Life Europe to weigh on the shares," said a Barclays analyst in a note.
Axa's net profit for the first half of the year fell to EUR 1.43 billion from EUR 2.33 billion the year before. Total revenue fell by 10% to EUR 52.4 billion.
More insurance and risk management news about the coronavirus crisis here. Catalog