AXA UK announces job cuts

AXA UK revealed that it expects to make up to 500 redundancies as part of the continued transformation of the business, when announcing its half year results today.

The company said it is moving to the next phase of its new operating model with the creation of 11 strategic business units.

In a statement, AXA said: “As a result up to 500 redundancies are expected to be made within the support services and related functions subject to consultation.

“The company will manage the process with sensitivity to limit the number of compulsory redundancies where possible by focusing on reducing headcount through natural attrition, redeployment and more efficient use of contractors.”

AXA Ireland has already announced plans to cut 120 jobs in an effort to reduce its cost base. The company expects to make a combined annual saving of £80m in three years.

In its half year results, it said underlying earnings for AXA UK had increased 14% to £183m for the first half of 2008, up from £160m from H1 last year. UK commercial revenues are down £44m.

Its general and health insurance revenues, including distribution, remained flat at £1,872m in the first half of 2008, compared to £1,861m in the same period last year.

It said conditions remained tough in many sectors, helped by "strong competition and a delay to a satisfactory hardening of premium rates in many mainstream channels".

“The developments we have outlined signal our intent to improve continually our effectiveness and efficiency to ensure that the business model is well prepared to withstand changing market conditions.

Nicolas Moreau

Swiftcover, AXA UK’s internet-only motor insurer, saw its revenue increase £30m on a comparable basis in the first half of the year.

AXA's broking arm Venture Preference saw its annual GWP increase by 40% to £0.7bn, following the acquisition of SBJ.

Household revenue increased by £13m in H1 2008, while a reduction in premiums of £10m for the first six months of 2008 in the travel sector was blamed on an increased focus on profitability.

In the Republic of Ireland its personal motor revenue fell 5%. it said the fall reflected a continued reduction in average premiums, which have now reduced by 40% in the last 5 years.

Nicolas Moreau, group chief executive of AXA UK, said: “The developments we have outlined signal our intent to improve continually our effectiveness and efficiency to ensure that the business model is well prepared to withstand changing market conditions – as well as our determination to provide customers with tangible service excellence.

“Conditions in many property and casualty sectors remain challenging and show little sign of improvement in the short term. Despite these tough markets we have delivered a robust result for the first six months of the year because we have been resolute in following our UK strategy.

“We have successfully launched our mutual fund proposition and I am confident that the launch of Architas, our new multi-manager investment company, the refresh to our single premium pension proposition and the full launch of our Wrap platform later on this year will provide added impetus. With the solid foundations we have in place across all our businesses in the UK and Ireland, I am confident that we will continue to thrive in the demanding months ahead.”

Globally, AXA reported underlying earnings up 7% (on a comparable basis) to €2,766m for H1 2008.