AXA has offered a settlement to 15,000 French restaurant owners that purchased non-damage business interruption insurance after previously denying coverage during the 2020 COVID-19 lockdowns.

AXA estimates the cost of these settlements will be approximately €300 million (US$365.5 million) before tax and reinsurance – a cost that is “expected to be offset by favorable developments in 2021 related to COVID-19 in France and Europe,” said AXA in a statement.

AXA didn’t respond to a question about what consists “favorable developments” — lower COVID-19 rates or rising insurance premiums, or both?

The proposed offer, which is open from June 21 until Sept. 30, 2021, aims to cover 15% of the revenue of the activity of these restaurant owners during the COVID-19 lockdown periods of March 14, 2020 and October 29, 2020.

A research note issued by Berenberg Capital Markets applauded the settlement for three reasons:

1. It covers all 15,000 non-damage business interruption clients, even those who have gone to court and lost and those that have now become insolvent,
2. The claims can be paid quickly, starting on June 21, and
3. The timing of the offer is good, as it was announced the day after French restaurants opened for indoor business.

“We believe the settlement augurs well for AXA’s future growth and profitability in France, its largest non-life insurance business,” said the Berenberg research note, which was authored by analysts Michael Huttner and Thomas Bateman.

Nevertheless, the note added, AXA continues to maintain that its policies did not provide cover for a pandemic-enforced lockdown.

“On this topic, the French courts have made contradictory rulings, and AXA’s new and renewal contracts have been rewritten to make the exclusion extra clear; the settlement is an elegant way of moving forward and avoiding lengthy and expensive court cases,” continued the Berenberg note.

A research note from the Royal Bank of Canada (RBC) said the settlement offer “raises the question of whether COVID-19 claims are in the rearview mirror.”

“For AXA, the impact to earnings from this settlement is neutral for 2021. Settling will remove any uncertainty and likely create some goodwill with policyholders,” said the research note authored by Kamran Hossain, analyst for RBC Europe Ltd.

During the COVID-19 crisis, AXA has supported hundreds of thousands of customers and contributed “significantly to the financing of the economy and the recovery,” said Patrick Cohen, CEO of AXA France, in a statement.

“We regret the lack of understanding that has developed with some of our restaurant customers, even though this sector has been particularly affected by the health crisis,” Cohen added.

“At a time when restaurateurs can finally welcome their customers back to their establishments, we want to act so that everyone can look to the future and resolutely embark on the path of business recovery,” he said. “Unprecedented in its scale for AXA France, this initiative will be carried out throughout France by our 3,000 general agents and all of our distribution partners with the support of our teams.”

*This story ran previously in our sister publication Insurance Journal.