Axa heads towards 35pc cost cutting

By RICHARD BRADDELL

WELLINGTON - Axa New Zealand is well on its way to a 35 per cent cost reduction target after making 20 per cent, or $18 million, in savings in the past year.

The renamed New Zealand arm of National Mutual Holdings said yesterday that it had boosted operating earnings to $17.9 million in the September 30 financial year, up from $14 million in 1998.

A $24.5 million net contribution to the group result also took into account investment profits earned on reserves of $7 million, a $9 million turnaround on the previous year.

Parent Axa National Mutual Holdings yesterday reported a 47 per cent rise in net profit to $A302 million after a year of focusing on Australian and New Zealand restructuring and Asian expansion.

New Zealand chief executive Ross McEwan said current year savings had already been identified. Much of them would come from product rationalisations last year that chopped the entire product range, including insurance and fund products, from 31 services to 16.

Axa New Zealand's ultimate parent, Paris-headquartered Axa, is footing the bill for promotion of the new name which Mr McEwan said had already achieved "total recall" by 80 per cent of the public, a result well ahead of expectations.

While the product rationalisation was expected to result in some customer losses as they were faced with the choice of migrating to new products, the losses were within worst expectations, although the rationalisation was a factor in a 2.3 per cent fall in total premium income.

Premium income of $425 million was made up of $225 million in annual premiums and $200 million in single premiums.

Mr McEwan said Axa's cost stringency had been applied across the board, with staff down by 70 to 440.