Axa XL posted a €233 million ($372 million) underlying loss last year, dragged down by significant natural disaster claims.

Californian wildfires and Hurricane Michael cost it €335 million ($545 million) and €261 million ($417 million) respectively. But a hardening market bodes well for the division, formed from Axa’s acquisition of XL Group last year.

“We have achieved measurable rate increases [last year] and the outlook for [this year] looks to be as favourable,” Axa XL CEO Greg Hendrick said.

“Our financials were impacted by two significant nat cat events in the US in the fourth quarter. At January 1 we refined and added to our catastrophe protections and are in alignment with the group’s risk appetite.”

The property and casualty business achieved a 3% rise in gross revenue to €35.32 billion ($56.4 billion). Its combined operating ratio worsened by 0.8 percentage points to 97%.