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Fof and wrap costs hit Axa results

Axa UK saw a 44 per cent drop in underlying earnings for life and savings business last year from £174m to £97m.

Annual results for Axa UK show a 19 per cent decline in earnings from £354m to £288m but the life and savings arm, which includes Bluefin Advisory Services, was hit hardest by stockmarket falls and depreciated intangible assets.

The insurer attributes part of the fall in earnings to increased investment costs for initiatives such as its new fund of fund offering Architas and Elevate wrap.

Architas was set up in July last year and had £1.1bn of funds under management by the end of 2008, including funds transferred from Axa Framlington’s multi-manager operations.

Total annual premium equivalent for life and savings fell to £1,026m from £1,087m. Ten per cent revenue growth was seen in corporate pensions and there was 63 per cent APE revenue growth in Axa’s protection account.

Revenues in the group’s wealth management operations fell by £101m to £618m, with the group attributing the performance to market volatility, risk aversion for longer-term investment and tax legislation changes.

Bluefin Advisory Services, which was launched this year as a combination of Thinc Group and PIFC Consulting, saw funds under management increase by 53 per cent to £500m in 2008.

Axa UK group chief executive Nicolas Moreau says: “The poor state of the markets should not diminish the success we have achieved in terms of improving customer satisfaction and I am determined to continue with investments across our business to bring about further change while at the same time maintaining our competitive position.

“The current crisis has demonstrated that Axa UK’s business model is sound and that we are financially strong. Our asset portfolio and solvency margin remain robust in today’s weakened financial environment.”

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