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Law360, London (February 25, 2021, 1:54 PM GMT) -- French insurer AXA said Thursday it has taken a €1.5 billion ($1.8 billion) hit from claims arising from the COVID-19 pandemic, pushing down earnings for 2020 by 23%.
The Paris-based company said in its full-year results that most of the claims resulting from the pandemic that it received last year came from business interruption insurance. AXA SA added that claims had also been made for canceled events and on travel insurance.
Group-wide underlying earnings for insurance activities fell from €8.4 billion to €6.4 billion in the 12 months to December, the company said. Its most badly hit division was the property and casualty business, where underlying earnings plunged 51%, from €3.3 billion to €1.6 billion in the same period.
"Throughout the COVID-19 crisis, AXA has been actively fulfilling its role in society, serving its customers and supporting its employees, while contributing to the economic recovery," Thomas Buberl, chief executive of AXA, said.
The combined ratio — an indicator of underwriting profitability — for its property and casualty business rose from 96.4% to 99.5%. A combined ratio of under 100% reflects underwriting profit, while a figure of more than 100% indicates a loss.
Europe's second largest insurer enjoyed an €800 million bounce from fewer motor insurance claims in 2020. But it faced €600 million in claims from event cancelation and a further €500 million from credit, financial lines, liability and travel insurance claims. The biggest impact was a total €1.1 billion claims for business interruption from the pandemic.
Like many insurers, AXA has faced litigation from policyholders over its refusal to pay out on business interruption policies, even where they include clauses offering cover as a result of closures from an infectious disease outbreak.
In France, the insurer lost a high-profile Paris commercial court case in May 2020, brought by the owner of a restaurant, Maison Rostang, which has two-Michelin stars, over non-payment of business interruption insurance. AXA is reported to have settled with other restaurant owners with similar policy wording.
The company had been waiting for the outcome of a test case in London brought by the Financial Conduct Authority on behalf of 370,000 business owners.
AXA UK said on its website after the U.K. Supreme Court ruled in January in favor of policyholders that it has been inundated with calls from customers "under the misapprehension" that their claims have been made valid by the judgment.
The company said it was working through the ruling and would make payouts to valid claimants "as soon as possible."
--Editing by Joe Millis.
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