RegSol Blog

AXA Life Europe DAC fined €3,640,000 for failures in Corporate Governance and Risk Management

December 2022

On 8th December 2022, the Central Bank reprimanded and fined AXA Life Europe DAC (AXA) €3.64 million for failures in corporate governance, risk management and handling of conflicts of interest.

The fine relates to three breaches of European insurance regulations by AXA, authorised by the Central Bank in Ireland to carry out life insurance business and who set up a German branch in 2006 on a freedom of establishment basis where it started selling an insurance product known as TwinStar.

The German Federal Financial Supervisory Authority (BaFin) regulated the German branch for conduct of business.

Between 2006 and 2012, AXA sold around 350,000 TwinStar policies, of which approximately 203,000 remain in place.

When the policies first went on sale between 2006 and 2007, there was a reference in the documentation to a Parental Claims Guarantee (PCG) provided by AXA’s parent, AXA SA, to provide AXA with the necessary resources to pay all outstanding German policyholder claim liabilities, if AXA became unable to do so itself. The PCG was provided because AXA, as an Irish-based insurer, could not participate in the insolvency protection scheme for German life insurance companies.

In 2006, BaFin, wrote to AXA’s German branch and told it that the references to the guarantee in some of the documentation inferred a higher level of security than had actually been provided. This was because some policy documentation failed to make clear that the PCG was conditional and could terminate automatically if certain conditions were met.

In early 2018, the sale of AXA was being considered by its parent and as part of this consideration, the Central Bank became aware that policies sold in 2006 and 2007 may not have been updated to disclose the conditional nature of the PCG, despite the letter from BaFin. As a result, the Central Bank commenced an investigation.


The Central Bank’s investigation found that AXA's risk management systems had failed over a 13-year period, where it had not put in place an effective process to identify, manage, monitor and report the risks in around 30,000 TwinStar policies in not making it clear that the guarantee was conditional, despite the BaFin warning.

The Central Bank also found that AXA did not conduct an adequate assessment of potential conflicts when its board considered the guarantee issues in July 2018 and that between 2015 and 2021, it did not have effective policies and / or procedures established to identify potential sources of conflicts of interest or ensure that directors understood where conflicts of interest could arise and how such conflicts should be addressed if they did arise.

Mitigating factors

The Central Bank, however, was satisfied that AXA made early admissions to the three breaches in the case while also acknowledging that no previous enforcement action had been taken against the regulated entity.

To read the Central Bank Enforcement Action Notice in its entirety, you can click on the following link:

Public statement relating to Enforcement Action against AXA Life Europe DAC (