Hello, everyone. Welcome to the presentation of the AXA Half Year Earnings Day will be presented by Thomas Buble, CEO Frederic de Courtois, Deputy CEO and Alban de Marinelle, CFO. I turn it over to Thomas Buber. Thank you, Julien. Hello, everyone, and welcome to the presentation of the AXA Group's Half Year Earnings In a context that was still impacted by health uncertainties, AXA was able in the first half to adjust to its environment and achieve an excellent performance that tops its pre crisis level.
As you can see on Slide five, commercial activity at AXA was very brisk in the first half with revenues up by 7% at €54,000,000,000 The rise is 5% versus 2019. The first half also saw a sharp bounce of our underlying earnings. It doubled at €3,600,000,000 It was strongly impacted by the crisis last year to the tune of €1,500,000,000 essentially in our commercial P and C line, especially at AXA XL. Excluding the COVID effect last year, underlying earnings remained very solid at plus 12%. By the way, relative to the first half twenty nineteen, this is a rise of nearly 11.7% on a like for like basis, excluding AXA Equitable.
All of this shows the very good underlying earnings that we achieved in the first half. Our net income likewise was sharply up by 192% at EUR4 billion. This is a 38% rise if you strip out the effects of the COVID last year. Lastly, our Solvency ratio too is sharply higher by 12 points and reaches the lofty level of 212%. As we will see later, the first half was also an opportunity to carry on with our transformation and health development operations.
All these factors make us very confident about the implementation of our Driving Progress 2023 strategic plan, which we launched in December. On Slide six, you can see in greater details the strong growth momentum which we achieved in the first half. The rise of 7% of our revenues was driven by all our business lines. In Property and Casualty, we record a 4% growth driven by our Strategic P and C Commercial Lines plus 6%. In the Health business, we have a rise of 3% with nearly €8,000,000,000 in revenues.
In Life Savings and Pension, there's a strong bounce of 12% at €16,900,000,000 especially thanks to very good performance of the individual savings in France, essentially in unit linked accounts. Lastly, I'd like to underline a very good performance in Asset Management, where we come up with a growth of 17%. You will see on Slide seven, such growth turned out to be also very profitable. After a year that was strongly impacted by the COVID, our underlying earnings doubled at €3,600,000,000 This represents a 12% rise if you exclude the impact of the pandemic. By excluding that impact of the COVID, last year for us to pinpoint the quality of our growth, we can see a very good performance across all our markets, plus seven percent in France and in Europe at €2,400,000,000 up 6% in Asia at €658,000,000 plus 32% at AXA I'm at €170,000,000 I'd like to underscore as well the very good performance of AXA XL with their results up by 40% at over €619,000,000 Let's now turn to Slide eight and see the drivers of this good result at AXA our subsidiary, which is dedicated to large risk.
As you know, the AXA XL new management under the leadership of Scott Guenter took decisive steps to turn around our subsidiary. We are seeing the first results of it, a very sharp performance in the underwriting with a combined ratio at 95.8%. The renewal of underwriting made good progress in every portfolio as well as a favorable review of the reserves with a surplus of €400,000,000 Such actions were driven by the continuation of higher prices plus 15% in insurance and plus 10% in reinsurance. It's a good first half for AXA XL. We are confident about the future of our subsidiary operationally, but also in terms of their investment earnings.
These very good results are also the fruit of a strategy we are continuing to roll out as you can see on Slide nine. It's about focusing on our main markets. Those where we are leaders with a critical size and a business mix focused on our targeted segments, but likewise those where we have a high potential to become leaders in the coming years. Our strategy aims also at growing in segments that represent the future such as the health and the commercial P and C, especially through innovation. In the course of the first half and in spite of the pandemic, we continued to be very active in the implementation of our strategy.
We continue to simplify the footprint of the group with announcements about disposals of our non strategic businesses in Greece as well as in Malaysia. We also continue to roll out our forces in the health sector, especially through innovation. There are two chief examples to this effect. In Europe, the launch of a cooperation with Microsoft in order to create a healthcare digital platform and in France, the launch of the so called Angel service, which allows to provide solutions in terms of health cares that are customized for our customers. Health is at the heart of our strategy.
The pandemic reminded us that this is a fundamental challenge. It's a matter of survival not only in the health sector but also in the economic field. If we want to meet the challenges of the future, well, will be a decisive factor. On Slide 10, I'd like to come back in greater details to one of our five priorities as it relates to our strategic plan. It's about our commitments in the fight against climatic change.
AXA is an acknowledged leader as regards sustainable development as shown in our extra financial ratings, which you will find at the end of the presentation. Last year, during the presentation, our so called future risks report, we were fearing that the pandemic would, overlook this climate urgency. Fortunately, it was not the case. I mean, unfortunately the current environment reminds us of that challenge. I have in mind especially the heat waves and fires in The United States, but also the floods in China and in Europe.
Everywhere our teams are up in arms to help our clients. The recent events strengthen our determination to act right now. We are doing so at different levels. We launched the AXA Index for Progress. That index aims at setting ourselves targets, especially as regards the climate, sufficiently ambitious to allow AXA to fully play its role in the fight against climatic change.
We are also engaged in training all our employees towards the climate related challenges. We also placed our first issuance of green subordinated debt at €1,000,000,000 We published our 2021 climate report, which shows that the warming potential of our portfolios amounts to 2.7 Celsius degrees. We are more ahead of the market, but it's still a long way to go. Lastly, we are chairing now the net zero insurance alliance to play also a driving role during the COP26. Now turning to Slide 11, we are well advanced in our twenty twenty three driving progress, which we launched this year.
So let me remind you the five priority actions: well, develop health and protection, simplify the customer experience and continue with our efficiency efforts, strengthen the underwriting of performance, pursue our leadership as regards climatic challenges and also increase our cash flows. When you look at the KPIs of that plan, you can see that we are well positioned in the first half of the year. The underlying earnings per share increased by 7% for a target of a range of 3% to 7%. The adjusted equity profitability amounts to 16.6%, above our target of 13% to 15% lastly, and that's a very important indicator. Our solvency ratio amounts to 212% where we had a target around 190%.
As you can see, AXA really performed an excellent first half. Our strategy positions us perfectly to face the environment in the coming years. We are well organized in the implementation of our Driving Progress 2023 plan. And this is why we are very confident. I will now turn it over to Frederic de Courtois, Deputy CEO, who will drill into the details of the performance of our business lines.
Alban de Mainel, CFO, will then give you further details about our financial investment performance.
Thank you, Thomas. Hello, everyone. I am very happy to be with you today and to participate for the first time in AXA's earnings presentation. I will start with Slide 13 by going into the performance of our four lines of business, starting with the P and C business. You can see that revenue was up 4%.
It included growth of 6% in Commercial P and C with a favorable price impact of 7%. We generated growth of 7% with AXA XL, which was driven by a positive price impact of 11%, which was partially offset by continued reduction in some targeted exposures. In the Retail P and C business, we grew 1% as driven by higher volumes mainly in Non Motor Insurance. To say a few words of the Motor Insurance business, we experienced stable prices in France and in Europe across the board. If I now look at underlying earnings, we generated much higher underlying earnings to EUR 2,200,000,000.0, up 13 ex COVID.
This was due partially to much stronger and higher performance in underwriting, especially with AXA XL originating in higher prices and a repositioning of the enforced book, as mentioned by Thomas. This was partially compensated and offset by lower investment income and adverse ForEx. You can see that combined ratio stood at 93.3% in the first half, once again, thanks to very robust technical performance. If I analyze this combined ratio, you can see that ex cat nat, current year combined ratio improved strongly by 2.6 points as driven by higher prices and the repositioning of AXA XL in force book as well as lower frequency in France and Europe and lower expenses. Prior year reserve development was quite stable as compared with the previous year, minus 2.2%, including the impact of the out of court settlements as proposed to the French restaurant owners, which were booked in the previous year.
The impact of Nat Cat was higher compared with prior year, and this is partially connected with the Texas freezes in the winter and the hailstorms in Switzerland. Now next page. And generally speaking, in the P and C business, you can see first that there was strong technical profitability as driven by the performance generated by AXA XL. Neutral impact of the lower frequency rate and the out of court settlements offered to the restaurant owners, which was in line with the guidance provided by the June press release. More favorable reserve developments on prior year, partially offset by the larger impact of nat cat and large losses.
And we knew excellent combined ratio level to 93.3%. Prior year reserve development will remain in the higher part of the bracket, that is that we had guided, 1.5% to 2.5%, given the very high level of our reserves. Now moving on to the second line of business, which is Life and Savings. We have had very high quality business mix with a large share of protection, unit linked products and general account products, which were not very hungry for capital. We grew revenue very strongly by 12% in the first half and interesting to be noted, up 4% compared with the first half of twenty nineteen.
I would like to underline three key items. Number one, very strong performance generated by France, up 20% as driven by the Retail Savings Products. This partially originated in higher sales of Unit Linked products, including in the pension savings products as well as the Euro Growth products, which were a little capital hungry. Unit Linked products and Euro Growth products account for today 55% of individual savings products, I. E, 16 points above the market.
This growth was driven by very strong commercial performance in the Proprietary Distribution Networks. The second factor I want to underline is the very strong dynamics in Asia, up 17, mainly originating in Japan and Hong Kong in the protection products and in the general account products, which are not very hungry for capital. The third factor on net inflows, this reflected a very high quality of our mix, which was oriented towards more fee based activities with technical risks and products which are less capital hungry. Now moving on to the next page, you can see that AXA grew its business mix towards very high quality business operations. You can see with the new business sales momentums, annual premium equivalent growing 9% and even 11% with respect to the pre COVID level.
This translated into very high quality of new business and very higher value creation. You can see that new business value was up by 15% and that the margin on new business, the new business margin grew by 2.5 points. Now on the next page and on underlying earnings for Life and Savings, you can see that underlying earnings grew 10%, which was driven by higher technical margin and the resilience in the investment margins. Now the technical margin benefited from two factors: number one, growth of business activity and better loss ratio in France and in Switzerland and the fact that the adverse one off events we experienced in the first half of twenty twenty did not repeat themselves, including the extension of protection cover and the reduction in the discounting rate of annuities in France. Investment margin remained stable at 69 basis points with a reduction of asset yields being offset by lower credited rates.
In the other factors on the right hand side, the dynamics of the fees on unit linked products due to higher inflows and higher asset values were offset by a number of factors, taxation, ForEx and the impact of disposals in Central And Eastern Europe and in Greece. Now with respect to our third line of business, that is the Health Insurance business. We generated fine growth across all geographies, including group cover in France and good combination of price impact and volume impact, which had a positive factor in Mexico. You can see that the combined ratio was almost stable. This was due to the lower frequency experienced in the first half of twenty twenty due to the COVID crisis, which did not persist, which was compensated by favorable reserve development for the first half of twenty twenty one.
Underlying earnings grew by 5%, which is very fine performance. So moving on to the fourth line of business, which is Asset Management. You can see that we generated very robust performance driven, on the one hand, by higher average assets under management and an improved business mix, thanks to alternative classes and third party clients. Our average assets under management with AXA I'm were up 7% to EUR867 billion, which was a record level. Also, inflows were very high to EUR18 billion across all lines of business in alternative products, in core and joint ventures in Asia and we noted very high increase in the business operations with third party clients.
Still with Asset Management, we improved the business mix, which grew our margins and grew our revenue by some 17%. We generated a very much improved cost income ratio, down 3.6 points to 67% in the first half, thanks to high cost discipline and higher revenues. Consequently, we grew our underlying earnings by 32% to €170,000,000 This mainly originated in the growth and the very high quality of all our business operations, including our alternative business. I would like to thank you. And I give now the floor to Alban de Maillenelle.
ALBAN As mentioned by Thomas and Frederic, we had an excellent first half twenty twenty one. And on Page 23, you see a recap of the growth of our underlying earnings by line of business and see with the exception of Health which is growing by 5%, the growth of our underlying earnings across all our lines is in double digit, especially in the P and C, whether you take into account or not the impact of the COVID in 2020. So that overall, our underlying earnings are increasing by 101% compared to last year or 12% excluding the COVID, just a slight deterioration on the holding line, which is due to the non repeat of exceptional investment result which we had in Germany in the first half twenty twenty. Moving to Page 24 now in the net income. The net income is sharply higher at €4,000,000,000 plus 191% compared to last year.
It's obviously driven by the rise of the underlying earnings but also by gains in investments, $547,000,000 due to the bullish market conditions. We came up with €257,000,000 of net capital gain mainly in shares and property. And we also saw the favorable impact of the market value on the investment assets, especially the investment funds and the hedge funds up to €182,000,000 And besides, we had a limited impact of exceptional restructuring costs and other elements on the intangible assets, which leads us to Page 25 to the profitability of our equity. The underlying profitability of equity at 16.6% at a very high level and above our target of 13% to 15%. As you know, there's still a seasonal effect in our equity profitably in the first half.
Each year, we pay out a dividend. Nevertheless, we are extremely confident about our target of 13% to 15%. Looking on the right hand side of the slide, you see the change of our shareholders' equity during that half year. They are slightly down, especially due to the decline in unrealized capital gains. This is due to the rise in the interest rates over the period, which reduces the value of our GOVs and corporate bonds.
You see, besides that, that the net income offsets or more than offsets the dividend that we paid out this year. The pension liabilities are positively contributing to the equity during this half, thanks to rising interest rates. And finally, in regard to the ForEx, there's a positive contribution related to the loss of value of the euro, especially versus the dollar between December 2020 and June 2021. So our shareholders' equity, therefore, all in all, at the end of the first half are at €68,400,000,000 So from the equity, we move to solvency, Page 26, with the Solvency II ratio very solid at 212% compared to 200% at the end of last year. This is due chiefly to the underlying return before dividend, which create 12% solvency, a sharp performance above our target, which is 18 points to 22 points per year.
As you know that we strip out the dividend that we would have to pay to the tune of six points and our method is to take half of the past dividend of 1.4 euros that we paid out this year. The impact of the market excluding currencies is the rise in interest rates, which is favorable to our solvency and to a lesser extent, the rise in the equity market. And the combination of these two factors creates three points of solvency. And lastly, as you know, we issued a subordinated debt that is green during that half year, which in this case contributes to four points of solvency. Last line regarding currency effects and others, all in all, they are at zero.
Actually, it's a slight negative due to the fact that we increased our equity exposure by reducing our hedging compensated by a slight positive related to changes in our model in that half year. Moving on now to our investments on Page 27 on the left hand side, you can see the return of reinvestments in bonds in the first half of the year, which are at 1.3% all in all. And that 1.3% is a weighted average between the investments in liquid bonds that we make like GAVs and corporate bonds, which gave us 0.9% for this semester. And investments, the so called alternative investments in property, debt or infrastructure debt or structured debt, there was a 2.3% return. Notice that we have a very strong quality of our investment because the average of our GOVIs in which we invested remained AA and single A for corporate bonds and alternative assets.
So much for reinvestments this year. Now when it comes to the returns of our assets across our balance sheet, you can see that on the P and C insurance, that return is slightly down by 2.8%, down to 2.6%. It's due to the fact that last year, we had high payout of private equity, which were not repeated for the same amount this year. And it's due also to the fact that our reinvestments are a bit lower, so therefore, it dilutes our overall return. On the Life, Savings and Pension, you will see that the investment page is stable at 69 basis points as specified by Frederic.
And now the impact of the lower gross returns is compensated, therefore, by the decline in rates credited to our policyholders. And we are planning a gradual dilution of the investment margin in Life and Savings and Pension C that our forecast is between 55% between 2021, '20 '20 '3 because it's 130 basis point differential compared to our guaranteed rate. And constantly, we try to optimize our Life portfolio. And lastly, we have a small duration gap between our assets and liabilities in the Life business. Lastly, a slide on our gearing ratio, which is in line with our forecast and notice here that our gearing ratio is slightly up from up to 27.6% in the first half.
There again, there's a seasonality effect due to the fact that we pay out a dividend in the first half. Likewise, we raised that subordinated debt I mentioned before of €1,000,000,000 which increases our gearing ratio and that ratio should naturally go down by the end of the year because the equity at the end December will include the nondistributed profits of the second half. You will notice as well that as regards our ratings, the three ratings agencies confirm our ratings in the first half and Fitch revised its outlook from stable to positive. I thank you and hand over to Thomas Buble for the conclusion. Thank you, Albert and Frederic.
In conclusion, we can say that AXA achieved an excellent performance in the first half of this year. We generated a sharp growth of the revenues and of the underlying earnings throughout our regions and lines of businesses. Our P and C profitability bounced back, especially at AXA XL after a year that was impacted by the COVID-nineteen. We continued our strategic actions towards simplifying the group and towards innovation in the health area. We are very confident about the implementation of our 2023 driving progress.
Thank you for your attention. We are now ready to answer all your questions.
We have a first question from Lionel Garnier of The Revenue Magazine. You have the floor, sir. Yes. Hello, everyone. Thank you for taking my questions.
I have three questions, three short questions. Number one, with the solvency ratio, which is as high as the one you are showing, will it change the way you will be thinking on share buyback or any possible acquisitions? What will you do? Or will you remain above the brackets in a satisfactory level? You are mentioning €69,000,000 of goodwill.
What does it consist in? Can we expect more impairments as you'll be selling some more assets? And number two, can you give us some substance on the way you are and you have been turning around AXA XL? It has been sensitive news in the last few years. How are things going?
Are you in line with your plan? Are you ahead of the plan? What can you say about that? PIERRE Thank you very much, Lionel, for your three questions, says Thomas Bubel. I suggest that Alban de Maillenel answers the second question and I will answer the first and the third question.
So let me start with the first question. The Solvency II ratio, which is at a very high level. Number one, we are very happy to have such a very high Solvency II ratio at 212% because this is evidence that our strategy has been effective to focus on technical risks and to generate a very robust balance sheet. Now with respect to share buybacks and potential acquisitions, we were very clear when we launched our strategic plan Driving Progress 2022 back in December. What we said was we would be continuing with a very strong disciplined policy on capital management and the amounts that we gain from disposals of assets starting from the December 1 are being utilized to offset the dilution of our earnings.
When we conduct disposals, we book them at a time when these disposals are closed. And what we are talking about today is basically Greece and Malaysia at the time I'm speaking. With respect to potential acquisitions, we were very clear as well. We have a very strong presence in many markets. And if there are opportunities out there in these key markets and in our key segments, we'll be prepared to look into those.
But it will always have to be compared favorably with our stock price multiples. With your third question as to the turnaround of AXA XL, yes indeed, we are very happy with the growth of 40% of earnings with AXA XL. This is the result of the very hard work posted by Scott Guenter and his team. He put together a new team last year and this management team fully embraced and rolled out a much clearer and a much simpler organizational structure with this team on board with clearer, simpler roles and responsibilities. We reviewed every portfolio, every contractor across all geographies.
And you can see the result today, which is performance posted on the back of very high discipline on our exposures. And over the period, we reduced our exposure levels while taking advantage of a highly favorable cycle with price increases. Price increases over 15% in primary insurance, increases of 10% in reinsurance, and this cycle is continuing today and will remain highly disciplined in this respect going forward, and we'll be continuing with this strategy. Albert, over to you to answer the second question with the €69,000,000 of impaired goodwill. Well, thank you for this question.
When we buy a company, we basically recognize some intangible items, goodwill, which is not depreciated as well as other intangible assets like portfolio value, which can be depreciated. The €69,000,000 which are booked this year is standard depreciation of portfolio value, no accelerated depreciated or no goodwill depreciation per se. With respect to special items or one off items, you may have noted that we proceeded with a reinsurance transaction in Hong Kong back in July on one book. And this transaction will have an impact, one off impact, negative loss of €100,000,000 net loss. Thank you, Alban.
Thank you, Lionel, for your three questions. Moving on to the next question please, Sister Maboubelle. We have the next question by Kevin Foublay from AFP. I would like to know, with respect to the €300,000,000 budget that you have allowed for the litigation cases with restaurant owners, about half of the restaurant owners approach you. What will be the lead time for restaurant owners to approach you?
And what will you be saying to the other half, which who haven't responded to encourage them to approach you and come closer to you? And also, some restaurant owners did not approach you because they consider that AXA could do more, asking for more money. When you look at this excellent performance beating underlying earnings of 2020 and 2019. Couldn't AXA do more for these distressed restaurant owners? Thank you for your question, sir, says Thomas Bobel.
I suggest that Patrick Cohen will answer your question. Before he does, I will briefly answer the second the last part of your question, sir. Can AXA do more? Well, I would just like to put the €300,000,000 into perspective. The impact of the COVID pandemic had a cost of 1,500,000,000 for AXA.
AXA has 100,000,000 clients. For 15,000 clients, I. E, the French restaurant owners, we will take €300,000,000 for these out of court settlements to put this issue behind us. So I think that you would agree that, relatively speaking, this is a very high amount. Now Patrick Cohen, can you answer the question as to where we stand and what is being done for the second half of restaurant owners who still haven't approached us?
And until when can they approach us as part of this out of court settlement process? Thank you, Thomas. Thank you, Kevin, for your question. Hello, everyone. So as you mentioned, we decided to funnel €300,000,000 to offer our French BI coverage restaurant owners, offer them an out of court settlement solution, which is an unprecedented, broad based offer to put the COVID crisis behind us and to engage energy and efforts on the recovery, on the rally of the business, which is the next phase.
And over and after the dispute management, one month into the transaction, are in line with our road map because more than half of the 15,000 French clients concerned initiated the out of court settlement process. Our offer was well received by these people and this can be explained by a number of factors. The first factor is that it's been a simple approach, simple process for our clients. The financial offer has been attractive. And also, our networks have been fully engaged to provide support and assistance to our clients into this process.
I'm very happy to note that the historical relationship we've enjoyed between the tight agents of AXA and the restaurant owners even got closer. And to give you an order of magnitude, every day, we have new we have 20 new restaurant owners taking insurance coverage with AXA France. Now with respect to the lead time, this transaction is open until the September 30. So we encourage our French restaurant owner, friends and clients to participate in this out of court transaction because we believe, as many of them do, that we are entering a new phase of recovery. It's important to turn the page on growth now and on serving our clients best.
Thank you very much, Kevin. Siste Thomas Bouboule, moving on to the next question. Next question is by Jean Petit from Investier Magazine. Over to you, sir. Yes, hello, gentlemen.
I have a question on the disposal of AXA Bank in Belgium. I would like to know where the disposal stands. I believe it's ongoing but not yet finalized, right? Also, do you have the intent of disposing the reinsurance business of AXA XL as there were rumors on the grapevine of a disposal and a sale to Covia. A third additional question on the restaurant owners.
Can you confirm that allowance of more than €1,000,000,000 was booked, a provision booked for this exposure and risk with the restaurant owners. Thank you for your question, sir. I suggest that Alban de Maenel answers your first question on where we stand with respect to the disposal of AXA Bank in Belgium. And to the third question, with this so called restaurant owners provision, I will answer briefly the second question on reinsurance. As you know, reinsurance as a business is a business which contributes a lot to AXA Group via the reinsurance business, we haven't seen emerging markets in which it is not yet possible to provide primary insurance.
Number two, reinsurance helps us in diversifying our risks and exposures across the world. AXA is a large company. AXA is a global company, but AXA has not a presence in all markets. And in The U. S.
Retail insurance market, we only have access to this market via the reinsurance business, I. E, reinsurance provides a lot to AXA. Alban, can you answer the first and third question? ALBAN Yes, thank you, says AXA. With respect to AXA Bank in Belgium, the regulatory process is ongoing, and we're still very confident that we'll be finalizing this transaction probably by the last quarter of twenty twenty one.
Now with respect to the French restaurant owners, you will have seen the press release we issued in June saying that the cost of this out of court settlement offer to the restaurant owners should be on the order of €300,000,000 and we have no reason for amending this estimate. Thank you, Alban. Moving on to the next question.
The next question comes from Cathy Coeur from Insurance Time. Madam, please go ahead. Hi. I had a question regarding your P and C business in The UK specifically. In The UK, obviously, pandemic restrictions have been easing in terms of our national lockdown.
I was just wondering what trends you perhaps to see arising within The UK general insurance market moving forwards into the rest of the year and what impact you think this may have on your business?
Thank you very much for your questions. So in The UK, we obviously have got a very strong business in three areas. One is the commercial business, second one is the retail business and third one is the health business. We have seen that these businesses have obviously also been impacted by COVID as we've seen in all the other countries. We are currently experiencing very good movements on the commercial line business, so strong price increases and also a good development of the business.
The Health business is also moving very well. We are the number two in the market. And obviously, after COVID, you have you are experiencing a very strong demand of our customers, but also of new customers on the Health business. On the individual and retail business, this has always been a business that is a little more competitive in The U. K.
And therefore, you see that the price level has been stable to slightly decreasing. Nevertheless, with the new FCA judgment around the better balance between new business pricing and portfolio pricing, we will clearly see an opportunity for us as well in this market to progress even further.
Lovely. Thank you very much.
Pleasure. Let's pass to the next question.
The next question comes from Christopher Condi from Insurance BIM. Sir, please go ahead.
Thank you very much. And I will also, ask my question in English. Your your translators have been excellent today. Thank you to them. For the nat cat natural catastrophe budgets for 2021, given we have had some severe losses, from the floods in July, what is your forecast for the whole year?
Will it be above, last year? And and how, so any indication on that would be very helpful. And a second question on the Hong Kong reinsurance deal, are you looking to do more of those kinds of deals in the future? Thank you.
Thank you, Christopher, for both questions. I suggest Alban will answer them on the nat cat budget 2021 and the reinsurance deal or potential further ones.
PIERRE So a few comments on the nat cat. At half year and despite the Texas freeze and the hailstorms that we had in Europe, we were roughly at half our budget. So those are significant events, but nevertheless they are captured by our modeling and therefore our budgeting. To that, we will add the €400,000,000 cost of the floods in Germany and in Belgium. So what will be the end of the year?
Obviously, it's difficult to say given the difficult predictability of those nat cat, but that gives you an idea of where we stand given that roughly at half year, we were at half our budget. On Hong Kong, yes, we want to do more of this. We want to make sure that on our in force book, we reduce the amount of capital that we dedicate to that kind of business and notably like in Hong Kong when guaranteed interest rates are at a high level. So you will probably see more of that, yes.
Thank you.
Any other questions? We have a question from Reggio Conversoli. How is our business in Italy, especially your partnership with MPS? What is your comment on negotiations between the Uniqueredit and the Italian state, do you think the NPS towards UniCredit could affect your partnership with them?
Thank you. Alban, over to you. Thank you for this question. Look, we are very satisfied with our partnership with BNPS, which is fully part of our strategy and the Italian market is quite strategic for us. Therefore, yes, this partnership with AXA MPS matters a lot for us.
Now, like you, we saw the announcement last week of the discussions between the Italian Finance Minister Unit Credit and BNPS. It is too early to make a comment. Of course, we'll be very mindful and perhaps part of this and that partnership is important and the Italian market is strategic for us. Thank you, Alban. Any further questions?
Anyone? Michel Fritrop, over to you, sir. Mister Vintrop, your mic is open now. Go ahead. Hello.
I thank you for my question, for taking it. It's not the question of a specialist. Mr. Buber underlined earlier that the COVID cost €1,500,000,000 to AXA and this year underlying earnings is driven mainly due to the non recurrence of the claims related to the COVID. Could you explain very quickly in what way the COVID cost you €1,500,000,000 last year and why in the first half such a difference?
Of course, thank you for your question. Alban will explain how come it cost us and how it cost us €1,500,000,000 Thank you for your question. Well, last year, the cost was at €1,500,000,000 related to the COVID as part of our insurance business. Just let me share with you a few examples to make it more tangible. We insurance the cancellation of events in our Excel subsidiary.
So a number of sports or artistic events were called off and we had to pay. We insure also a number of cases such as business interruptions, such as closures of businesses. And in this respect as well, we had to pay, as an insurer. Also, we took up in Europe and in France solidarity steps towards our policyholders with regard to their premiums or to add to the refund of their daily compensation or daily wages, we acted as an insurer and as a citizen company. And this was part of that 1,500,000,000 Conversely, in 2021 due in particular to the fact that there were less lockdown in France and around the globe, we didn't have the same effects.
Having said that, you would have noticed that we decided to get close to our restaurant owners to reach an agreement with them. So we suggested to put €300,000,000 on the table to put an end to this. Thank you. Thank you, Alban. Any other questions?
Mr. Rene Garget, over to you, sir. Thank you for giving me the floor. I have one last question. You are very discreet about China.
In your report, you don't highlight it very much except to say that they are either losses of contracts or price pressures. Could you shed some light about the profitability and the growth you experienced in China? Thank you for that. Thank you for your question. Alban, over to you.
Could you make a comment on China? In China, we have three businesses, one about P and C, one about Life in Partnership with ICBC and one about Asset Management. Starting with Asset Management first, Frederic mentioned it. Through our joint ventures in Asia, we have about €100,000,000,000 of assets under management, especially €66,000,000,000 in our joint venture in China. It's a business which is, flourishing well and we are very happy about it.
Next, we have a partnership with ICBC. So, it's about life insurance in which we sell through their agents, their branches and the joint ventures agents and there as well the portfolio and the business is developing well and we have growing business there. We're happy with it. Lastly, we have a P and C insurance business, which is involved in motor insurers and health insurance. In regard to the motor insurance, there's a regulatory change in China whose effect was negative on the profitability of the sector as a whole, because it led to a reduction in prices, a reduction in prices which was not passed along on the reduction of fees or proportionally on the reduction of claims.
Although our technical profitability is better than the average in the market. We had to face such new regulation, adjust our portfolio and get rid of the policies that were the less profitable. Now in regard to the health insurance, this is a market where we want to grow. We had a contract that was specific with a digital platform last year, which we did not want to renew given the conditions that were suggested to us this year. However, we want to grow in the health insurance sector in China.
Thank you, Alban. Thank you, Lennell. Any other questions? I don't think so. In that case, I would like to thank you for your questions and for your attention.
And I wish you a beautiful summer. Thank you very much and we'll be back soon.