AXA beats profit forecasts, avoids worst of Los Angeles fire claims

By Mathieu Rosemain

PARIS (Reuters) - French insurer AXA reported better-than-expected full-year earnings on Thursday, boosted by increased premiums from individual insurance policies, fewer claims and increased margins for its natural catastrophe coverage.

Europe's third-biggest insurer by market capitalisation said it expected its results this year would see a pre-tax impact of about 100 million euros from the Los Angeles wildfires, among the lowest in the industry for claims.

CEO Thomas Buberl reaffirmed the insurer's commitment to covering natural disasters, following criticism from some campaigners over a sharp decline in exposure at AXA XL’s reinsurance unit.

"We're going to stay involved in natural disasters because it's a risk that we absolutely have to take for our customers, in a very diversified way, which means we have to choose our exposures carefully," Buberl said, calling for more prevention.

AXA XL Re saw a 60% drop in natural disasters' exposure over two years. Such exposure is falling across the industry as insurers, rather than reinsurers, pick up more business.

The Los Angeles wildfires in January, which killed more than two dozen people and damaged or destroyed nearly 16,000 structures, are set to become the costliest in U.S. history, with analytics firm CoreLogic estimating related insurance claims of $35 billion to $45 billion. 

AXA's full-year net income jumped by 10% from a year earlier to 7.89 billion euros ($8.28 billion), beating an average forecast of 7.75 billion euros by 19 analysts in a company- compiled poll. 

Underlying earnings climbed 6%, while total revenue rose 7% to 110.3 billion euros.

AXA's shares, which have risen 18% in the past year, were down 1.4% at 1041 GMT.

BULLISH ON U.S.

AXA's deputy CEO Frederic de Courtois told reporters he saw the United States as providing "strong growth potential."

"The U.S. market is an important one for us," he said.

AXA's property and casualty division, which accounts for more than half its total revenues, posted an all-year combined ratio of 91% - a ratio below 100% means higher premium earnings than claims payouts. 

AXA's margins improved in Germany, Britain and for natural catastrophe insurance. 

Ariel Le Bourdonnec, insurance campaigner at Reclaim Finance, said the results showed AXA and others insurers' "winning strategy" of reducing their exposure to natural disasters "despite the climate crisis."

Analysts at JPMorgan said AXA's results were "in-line and on-track for targets".

AXA's solvency II ratio, a key measure of financial strength, came in at 216%, in line with expectations.

The Paris-based insurer, which stuck with its medium-term financial targets, also announced a 1.2 billion euro share buyback plan. 

That is on top of an expected 3.8 billion-euro buyback that will follow the sale - scheduled for the second quarter-end - of its asset management arm to BNP Paribas. 

($1 = 0.9528 euros)

(Reporting by Mathieu Rosemain; Additional reporting by Michal Aleksandrowicz; Editing by Tommy Reggiori Wilkes, Tomasz Janowski and Susan Fenton)