AXA, Europe's second biggest insurer, undershot expectations with its 2007 profit rise, but said it expected further growth in 2008 despite a tough business environment.AXA shares were down 3.1%t at €23.10 in early morning trade, making the company the biggest loser on France's benchmark CAC-40 index. The index was down 0.4%.
“Their organic growth was a bit less than the market had hoped for and their outlook has disappointed the market,” said Iris Finance chairman and fund manager Michael Sellam. Sellam added he had recently sold his AXA holding at €24.
Underlying profit rose 27% to €4.96 billion ($7.46 billion), with earnings boosted by AXA's takeover of Swiss insurer Winterthur.
However, a Reuters poll of 10 analysts gave an average underlying profit forecast of €4.98 billion.
Net profit rose 11% to €5.67 billion, also just below an average forecast for a net profit of €5.77 billion.
Earnings slowed down during the second half, with the second-half net profit coming in at €2.49 billion, down from €3.18 billion in the first half of the year.
Along with many other financial companies, AXA has been affected by the global credit crunch caused by losses in the U.S. subprime mortgage sector.
Earlier this month, Europe's biggest insurer Allianz posted a record 2007 net profit of nearly €8 billion but also announced subprime writedowns at its banking arm.
AXA said that despite the difficult business environment, it expected further earnings growth this year.
“In the context of a less favorable macroeconomic environment since the beginning of the year, AXA should achieve positive revenue and underlying earnings growth in 2008,” AXA Chief Executive Henri de Castries said in a statement.
AXA said its net investment in securities wrapped by monoline insurers, a sector of the insurance industry hit hard by the credit crisis, stood at €0.8 billion.
AXA also proposed a dividend of €1.2, up 13 %.
Based on latest prices, AXA shares have fallen 16% since the start of 2008. The DJ Stoxx European insurance sector has fallen around 10% over the same period. (Reuters)