Chief executive warns of £122m cuts in UK by Jason Woolfe
AXA's level of customer service in personal lines "doesn't match our expectations", admitted UK group chief executive Dennis Holt.
Speaking to Insurance Times at the announcement of last week's results he added: "I would expect a material improvement [in personal lines] to be visible within the next 12 months."
AXA saw a 34% decline in its UK motor book last year as a result of cutting unprofitable business.
Holt said: "It was a conscious decision. We did it on a very focused basis because a very significant portion of that book was irretrievably unprofitable.
"That business would never have made a proper return. I doubt it was capable of running at any level of profit.
"We believe that now, on our commercial lines business, we have an efficient platform and we can grow significantly off that business."
In personal lines, the company aimed to be at the same stage after completing more rationalisation and cost-cutting.
"It's not just a slash and burn strategy. It's a strategy for getting the right platform for growth."
But he warned brokers needed to look at their own operations.
A visit to a broker's office would reveal "a huge amount of inefficiency" especially over the amount of information re-entered into computer systems. This also took place in insurers' offices, he said.
AXA Insurance chief executive Peter Hubbard said: "The big issue is around how efficient the relationship is between the insurer and the broker. Great customer service and efficient, low cost operations go hand in hand with each other."
AXA Group aims to slash €196m (£122m) of costs in the UK. This is 28% of the overall €700m (£435m) of cuts planned worldwide in the group.
It announced the cuts as it revealed its profits had fallen by a half.
Group cash earnings were €1.2bn (£745m) in 2001 compared to €2.3bn (£1.3bn) in 2000.
The earnings results were in line with the company's December profit warning. Group profits were dented by its estimated $600m (£422m) bill from the 11 September attacks, the decline in stock markets and the global economic slowdown.
The UK, which generates 16% of the group's revenues is being targeted for the largest cost cuts of all the global group's operations.
This is despite unit costs in the UK being cut by 13% last year through new IT, cuts which brought down the number of products to 40 from 67 and cuts in staff numbers.
Holt said: "We are not talking specifically about head counts but as a result [of the savings] there will be fewer heads around than there are today.
"In the life business we've already done much of that."
AXA Group's chief executive Henri de Castries said the UK restructuring programme was "going according to plan."
Overall, the group will find two thirds of its savings from life and savings and one third in its property and casualty operations.
UK earnings from property and casualty operations fell to €42m (£26m) last year, the worst performance of any of the group's property and casualty operations.
The combined ratio for property and casualty business in the UK was 117.3%, an improvement on 2000's figure of 126.7%. The combined ratio shows claims and costs as a percentage of premiums.
AXA's results
