Swiftcover – back in profit next year?

Is AXA finally putting the problems at Swiftcover to bed? Chief executive Paul Evans reckons that AXA personal lines motor will be make an underwriting profit next year. Some might say that’s ambitious, considering that AXA personal lines motor posted a 121% combined ratio in 2011. AXA has significantly pruned business in its direct arm, and that should help. However, rivals privately say that Swiftcover is ‘extremely competitive’ once again, and they wonder if it is sustainable.

Evans is confident personal lines motor is now stable. His decision to bring in AXA commercial chief executive Amanda Blanc, well-experienced in this area from her days at Towergate, to oversee the sector, is a good managerial move. AXA has good relationships with the personal lines big boys such as Swinton and Budget, but there’s still plenty of scope for Blanc to chase down the good loss ratios with the regional independents. Aviva showed last year what a big boost personal lines broker can provide.

 If AXA can get the direct arm to make an underwriting profit next year, it will mean that it’s ahead of the 2015 deadline by which time Paris headquarters wants insurers in mature markets to hit a 97% combined ratio, drive through cost savings and grow significantly.

 In commercial, there was a three percentage point improvement in the combined ratio. We can assume that AXA’s underwriting profitability is still in loss-making territory (FSA 2011 returns show it to be at 116.4%), but that Blanc is making steady progress. Again, Blanc will have until 2015 to bring this book back into underwriting profitability.
AXA is making steady progress on the road to achieving improved performance by 2015. It is fixing the punctured tyre that was Swiftcover; now it must make sure there are no more breakdowns.