By Maya Nikolaeva and Matthieu Protard
PARIS (Reuters) – French insurer AXA SA <AXAF.PA> lowered 2020 profit guidance for its companies-focused XL unit and named a new chief executive for XL, as it stepped up measures to reduce exposure to risks stemming from natural disasters that become more frequent.
Insurers are becoming increasingly concerned about the impact of bad weather linked to climate change, with an increase in wildfires in California among the most costly in recent years.
AXA guided that earnings at the AXA XL unit, which is focused on offering property damage coverage to companies and insurance in specialist areas from ships to arts, would be 200 million euros ($215.90 million) lower than previously expected in 2020, at 1.2 billion euros.
“We have taken a set of measures which are of two kinds. The first is to reduce underwriting where we see risk…The second is linked to reinsurance contracts,” Etienne Bouas-Laurent, AXA’s chief financial officer, told journalists.
“Of course, it means we give up turnover, but at the same time we protect ourselves better against frequency risk. We had reinsurance contracts that protected us well against the severity of an event, but not enough against the frequency”.
AXA appointed Scott Gunter, previously senior vice president of insurer Chubb Ltd <CB.N>, as chief executive of AXA XL. Gunter replaces Greg Hendrick, whom AXA said was leaving to pursue opportunities outside the group.
AXA, the second-largest European insurer after Allianz <ALVG.DE>, reported a 4% rise in 2019 underlying earnings, as higher results from property and casualty insurance helped offset weaker life and savings business.
Globally, Bouas-Laurent said the insurer was on track to meet its 2020 goals.
AXA’s revenue rose by 5% in 2019.
(Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Lisa Shumaker)