Low interest rates have had a detrimental effect on the profit of Switzerland’s largest property insurer, Axa Winterthur. The company still aims to invest heavily in new business segments this years.
Axa Winterthur, the Swiss unit of France’s Axa group, had a tough 2016 to communicate: It’s claim of having achieved a «good result» won't change the fact that the company performed worse last year than in 2015.
The overall business volume at the Winterthur-based company declined 0.4 percent to 11 billion Swiss francs, operating profit dropped 7.5 percent to 829 million and net income was down 13.8 percent to 801 million – more than 100 million francs less than in 2015.
Low Interest Rates Weigh on Profitability
Reasons for this result are to be found in lower yields on fixed-interest investments and higher hedging costs. Profitability also suffered from temporary swings at foreign-currency and interest-hedging derivatives. In short, Axa Winterthur struggled with the effects of the low or negative interest rates maintained by central banks.
The combined ratio – crucial in the insurance industry – added 20 basis points to 86.2 percent, the company said in a statement today.
Investments in Healthcare Market
Axa Winterthur, Switzerland’s largest property insurer, maintained its strategic development plan 2020 and aims to invest substantially according to this program. Axa will launch a new service in the health market of Switzerland this summer and also plans to offer new simple and digital add-on healthcare insurance products.
