PARIS (Reuters) – French insurer AXA said on Tuesday that the coronavirus crisis would have a material impact on its 2020 earnings and said that it could face around 500 million euros in claims for events cancellations.
AXA expects the lockdowns across different countries to impact its sales and revenues progressively, as new business activity would be reduced.
It said that total revenues in March declined by around 5% year-on-year, adding that initial trends for April indicated an 12% reduction in gross revenues across most countries where it operates.
“We believe that the effects of the COVID-19 crisis will have a material impact on our earnings in 2020,” Chief Executive Thomas Buberl said in a statement.
Countries around the world have introduced lockdowns to limit the spread of the coronavirus, forcing many businesses to close.
Insurers worldwide have struggled to work out the potential losses from the health crisis, as customers file claims across numerous policy types, from workers compensation to events cancellation to broader commercial liabilities.
AXA said that the lockdowns will have a significant impact on the level of claims across a number of product lines, “most notably in event cancellation and business interruption”.
It cited preliminary estimate for total potential events cancellation claims related to the pandemic in the mid-triple-digit million euros, or around 500 million euros.
The insurer added that it was too early to give any guidance on business interruption claims.
The company’s first-quarter revenue was down 9% on a reported basis and up 4% on a comparable basis.
Axa’s solvency II ratio – a measure of its capital strength under the EU risk-measurement rules for insurers – stood at 182% at end-March, down 16 percentage points versus end-2019, driven by unfavorable market conditions.
(Reporting by Maya Nikolaeva; Editing by Sarah White and Lisa Shumaker)