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The profit hike demonstrated an improvement from last year, when the insurer was hit hard by the stock market slump. Investment earnings of A$55.4 million "were in stark contrast" to a loss of A$140.4 million in the first half of 2008, said Axa.
The group's profit after tax, before investments and nonrecurring items, fell 18% to A$267 million in the first half. Operating earnings declined 13% to A$255.5 million.
Australia and New Zealand experienced a decline of 47% and 39% in operating earnings to A$75 million and NZ$16.4 million (US$11 million), respectively. New business value fell 9% to A$63.7 million for Australia, and was down 34% to NZ$5.1 million for New Zealand.
New Zealand continues to be "a very difficult market," suffering from five successive quarters of negative economic growth to March 2009, said Axa in a statement. Recent data indicates the June quarter will also be negative, said the insurer.
The French insurance group saw positive business performance in Asian markets. Hong Kong's operating earnings increased 1% to HK$969.4 million (US$125 million) in this first half. The market shows a trend of switching towards higher margin products, contributing to a 2% rise in new business value to HK$555.3 million. Value of new business margin rose to 51% from 47% a year ago, said the insurer.
Southeast Asia posted a 10% rise in operating earnings to A$17.2 million for the first half. However, India and China continued to post a negative A$19.9 million in operating earnings in this first half, widening from a negative A$15.2 million a year ago.
"In Asia, we are operating in markets with very favorable demographics for our industry and high savings rates. Also whilst the global economy is slowing quite sharply, economies in many of the countries in which we operate are likely to grow faster than world averages," said Andrew Penn, chief executive of Axa Asia Pacific.
In the first half of 2009, about two-thirds of the group's operating earnings came from investments in Asia. The prospect for longer term growth remain strong in Asia, said Penn in a statement.
In the past year, plunging stock markets made a material impact on insurer's revenue. The Australian stock market fell 54% to its low point on March 6, 2009, and this caused a reduction in average funds under management across the industry, noted Penn.
Product and geographic diversification is an important part of Axa's business model. Penn said this strategy "has served us well." "Our financial protection and traditional life business has grown as consumers have become more risk averse," he added.
This year "has been very difficult so far and it looks like it will continue to be so," said Penn. Though financial performance in some markets are lower than a year ago, Penn said the insurer's results are still strong, taking account of severity of market downturn.
Axa has total assets in excess of regulatory capital requirements of A$1.45 billion and total debt to equity ratio of 30%, below the insurer's target range of 40% to 50%, said Penn.
(By Iris Lai, Hong Kong bureau manager: Iris.Lai@ambest.com)
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