ECONOMY

Axa says half of French restaurateurs ready to accept Covid settlement

AXA SA updates

French insurer Axa said half of its restaurateur clients in the country had either accepted a settlement for pandemic losses or had expressed interest in doing so, as it seeks to move on from a bruising dispute with the hospitality industry.

The insurer offered compensation to 15,000 restaurant owners in June at a total cost of €300m, or 15 per cent of the turnover of the restaurant industry during the period when business was disrupted by Covid-19. 

Thomas Buberl, Axa’s chief executive, told the Financial Times that he believed the company was making “very good progress” in the discussions.

“I’m confident we’ll reach an agreement with the large majority of them [restaurateurs] by the time the transaction expires,” he said. Restaurateurs have until September 30 to accept the offer. 

Hospitality groups have been embroiled in a bitter stand-off with their insurers over whether their business interruption policies should have paid out due to forced closures during pandemic lockdowns.

Burberl revealed the progress as the group delivered underlying earnings of €3.6bn in the first half of the year. That was double the amount in the same period in 2020, when the group suffered substantial Covid-related losses, and 11 per cent ahead of analysts’ consensus estimates.

The company’s shares rose 4 per cent to €22.70 by late morning on Monday.

Axa, the second-largest European insurer, is embroiled in about 1,500 separate court cases with restaurateurs in France that are “going in all kinds of directions”, Buberl said. The group has also faced legal challenges in Germany, Switzerland and the UK.

“We want to focus on life after Covid and make sure that we look forward and not backwards,” Buberl said, though he stressed the company’s position that “when it is a decision of the French state to close all restaurants, it is not our responsibility”.

He added: “If you have one restaurant that is having difficulties, we can always help. If all of a sudden, all of the restaurants are in difficulty, then the insurance mechanism doesn’t work any more.” 

Axa’s results were bolstered by a strong underwriting performance at its Axa XL division, which benefited from an upswing in commercial insurance prices.

In the period, the expected cost to the group of the French settlement offer was offset by the lower frequency of motor insurance claims, an industry-wide trend during the pandemic. “We have put [the pandemic] behind us, and we are looking forward now,” said Buberl. 

On the disputed business-interruption policies, Buberl conceded that “some of the contracts were not phrased in a crystal clear way”, and stressed that the company had now undertaken to clarify all contracts internationally “that had any risk of being misinterpreted”.

After the ransomware attack that hit Axa’s Asian operations earlier this year, Buberl said the insurer had not had to pay any compensation to affected customers. “The situation is well under control,” he added.

Axa also announced on Monday that its board had proposed to extend Buberl’s tenure for another four years, subject to a shareholder vote next April.

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