AXA has shown appetite to expand its footprint in the health insurance market following its agreement to buy Irish health insurer Laya Healthcare, but has yet to express the same desire for bolt-on acquisitions in the UK.

The French insurer announced on Thursday it would acquire Laya from Corebridge Financial, a subsidiary of AIG, for a consideration of €650m (£560m) as the deal “affirms its ambition to grow its European franchise, by expanding its operations in a buoyant, fast-growing health insurance market”.

Thomas Buberl, chief executive of AXA, praised the Irish firm for having high customer retention “in a market that still has growth potential” and for having a substantial employee benefits business - one of the segments that AXA wants to pursue further.

He added the acquisition of Laya sits well in the French group’s business model, helps strengthen its current footprints in Europe and consolidate its market position in the health segment. 

Presenting AXA’s half-year results to investors on Thursday, he said: “We don't only look at Laya as how can it help us in Ireland, but also how can it help us beyond Ireland in the group to get further along this question around health services as a core component of ours.”

Buberyl said the Laya deal generated discussions around AXA’s long-term potential M&As in the UK, but clarified the company had no such plans: “The UK for us is a core market. We are envisioning very much to grow organically in UK so if there's a question around concrete M&A targets, I will tell you. This is not the case.”

He also referred to the challenges the UK’s National Health Service is facing such as staff shortages, patients backlog and growing pressure on the service as a result of ageing population:  “When it comes to the European health markets, we don't see the same phenomenon that we see with the NHS in the UK.” 

AXA’s underlying earnings in the life and health division were down by 13% at €1.6bn in the first half of the year, compared with nearly €1.9bn in H1 last year, under the IFRS 17 and 9 basis. In the health segment, the decline was driven by higher claims in the UK.  

At an earlier presentation, chief financial officer said Alban de Mailly Nesle explained the “very significant increase” in claims frequency on the health side  was due to capacity issues with the NHS.

He said: “The NHS is simply saying to patients with private health insurance to go directly to specialists without going through the triage of their own GPs. For that, it has an impact. What it means is necessary price increases and better claims management. We need to do our own triage on this a well."

de Mailly Nesle also anticipated the issue would continue in the second half of the year. 

Despite higher health claims in the UK, Buberl told investors: “Every difficulty also has its opportunity. 

“If you look at the NHS challenges and what it means for the average British customer, it means that he or she needs to think how they have a better and faster access to healthcare because most likely the NHS issues will not be resolved within the next six months.”

Buberl believed that because of these issues and through initial customer reactions to the health service, “that the inflow into private healthcare in the UK will certainly increase over time”. 

He queried: “How can we change and evolve our offering, both in more modular products but also in mirroring the general practitioner approach that the NHS has traditionally taken?”

Health pressures in Europe are not as apparent at the moment, Buberl noted, but using France as an example, he said costs are “significantly increasing” for the country’s healthcare system.

He saw opportunities for the private sector to “take over more of the potential that traditionally has been solved in the public sector”, adding: “We need to position ourselves as the leading health insurer in Europe.”

Laya, currently the second largest health insurer in the country, has around 28% of market share, serving close to 700,000 policyholders and generating around €800m premiums per annum. 

It operates as a managing general agent with a digitalised platform and a direct distribution network.

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals, and is expected to take place by the end of 2023.