Ukraine losses dent H1 earnings

Losses related to Russia’s invasion of Ukraine have been a prominent feature of first half earnings for insurers this week.

Grounded planes and damaged buildings from Russia’s invasion of Ukraine cost French insurer Axa some EUR 300mn pre-tax. 

CEO Thomas Buberl told the Financial Times the Ukraine war loss figure, which is net of recoveries from reinsurance, was Axa’s “best estimate [of losses] at this stage”. 

“We are in the middle of this war, nobody knows what the next phase will look like,” he told the paper, adding that the group’s general approach was to be “prudent” in estimating such losses. Aviation was responsible for the majority of the predicted losses, he added.

Overall Axa reported 1% growth in gross revenues to EUR55 billion for the first half of 2022, although its subsidiary Axa XL Reinsurance saw revenues decrease by 21% on the back of a reduction in natural catastrophe exposure as it sought to reduce volatility in the book.

London-listed insurer Hiscox also disclosed $48 million of expected losses, net of recoveries, from Russia and Ukraine in its interim results on Wednesday. It swung to a first-half loss of $107mn before tax after the bond market sell-off hit its investments.

Overall, Hiscox reported a loss of $107.4 million in the first half of 2022, as a negative investment result more than offset an improved underwriting performance in the period.

In its London Market division, Hiscox noted that deliberate reductions in “under-priced” natural catastrophe exposure led to a 3% decline in GWP to $591.9 million, with growth continuing in “attractive business classes, such as casualty, marine, energy and flood”.

The majority of the ultimate net loss related to the ongoing war in Ukraine was absorbed by the London Market division, contributing some 10 percentage points to the combined ratio, which rose from 81.7% in H1 2021 to 86.1% in H1 2022.

Hiscox reported a loss of $107.4 million in the first half of 2022, as a negative investment result more than offset an improved underwriting performance in the period.

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