AXA says first half net income up 4%, below expectations

AXA reported a 4 per cent rise in net profit for the first half of 2016.
AXA reported a 4 per cent rise in net profit for the first half of 2016. PHOTO: REUTERS

PARIS (REUTERS) - AXA, Europe's second-biggest insurer, reported a 4 per cent rise in net profit for the first half of 2016, boosted by proceeds from real estate disposals but held back by natural catastrophe costs and lower asset management revenue.

Despite the rise, net income of 3.2 billion euros (S$4.82 billion) in the first six months fell short of the average forecast in a Reuters poll of 3.6 billion.

"We have delivered resilient underlying earnings... despite market headwinds and a higher cost of natural events," incoming chief executive Thomas Buberl said in a statement, pointing out that interest rates had fallen since Britain's vote to leave the European Union in June.

Lower interest rates hurt insurers' investment income.

The natural catastrophe charges were mainly from storms in Germany and floods in France, combined with higher claims in Belgium as a consequence of floods in May and June, Axa said.

Total group revenue at Europe's biggest insurer after Allianz fell 0.5 per cent to 54 billion euros. Gains in Property & Casualty and International Insurance revenues were offset by declines in the Life & Savings and Asset Management business divisions.

Axa in June set lower earnings growth expectations for the coming years in a strategic plan Buberl drew up to cope with historically low interest rates.

The group is increasing its focus on underwriting margins, efficiency, digital business and selective growth in products that do not tie up large amounts of regulatory capital, said Buberl, who takes over as group CEO from Henri de Castries in September.