Axa SA (CS), Europe’s second-largest insurer, said first-half profit more than quadrupled on gains from asset disposals in China, Australia and New Zealand.
Net income rose to 4 billion euros ($5.7 billion) from 944 million euros a year earlier, the Paris-based insurer said in an e-mailed statement today. That beat the 3.57 billion-euro average estimate of 15 analysts surveyed by Bloomberg.
“Axa begins the second half of 2011 with a significantly increased exposure to high-growth markets,” Chairman and Chief Executive Officer Henri de Castries said in the statement. Axa set a 2015 target in June to reach annual operating profit of more than 6 billion euros compared with 3.88 billion euros last year as it expands in Asia and scales back in Canada and the U.K. Axa is aiming for 10 percent annual growth in operating earnings per share through 2015.
In the latest period, operating earnings, which exclude capital gains, one-time charges and asset-valuation swings, rose 11 percent to 2.22 billion euros, beating the 2.14 billion-euro estimate from analysts. Earnings from property and casualty insurance rose 17 percent, while profit from the life and savings unit, Axa’s biggest, fell 1 percent.
Axa shares have dropped 3.4 percent in 2011, less than the 7.9 percent decline of the 28-member Bloomberg Europe 500 Insurance Index. Germany’s Allianz SE (ALV), Europe’s largest insurer, has fallen 4.5 percent this year.
De Castries, 56, who at the height of the global financial crisis had to drop the firm’s 2012 earnings goals, is counting on growth in Asia. Axa, along with AMP Ltd., completed in April a A$13.3 billion ($14.2 billion) bid for Melbourne-based Axa Asia Pacific Holdings Ltd. for control of businesses in a region where wealth is growing at the world’s quickest rate. By completing the deal on Axa Asia Pacific, Axa gained direct control of its operations in Asian countries stretching from India to Indonesia.
Axa also booked a one-time gain of 691 million euros in the first half from the disposal of its business in Australia and New Zealand, the company said. Axa’s first-half earnings benefited from a 749 million-euro gain from the disposal of its stake in China’s Taikang Life Insurance Co. The French insurer is also seeking growth in the Chinese market. De Castries flew to Beijing in October to seal a life-insurance partnership with Industrial & Commercial Bank of China Ltd. ICBC bought a 60 percent stake in Shanghai-based AXA- Minmetals Assurance Co., while the French insurer holds 27.5 percent and China Minmetals Corp. owns 12.5 percent.
Axa sold most of its U.K. life-insurance businesses last year at a loss. The insurer said clients at its fund-management units in 2010 withdrew 64 billion euros of assets as U.S.-based Axa Rosenberg Group LLC suffered a coding error. Axa’s profit dropped 24 percent in 2010. BNP Paribas SA, Europe’s largest bank by assets and owner of a 5.2 percent stake in Axa, took a 534 million-euro impairment in the fourth quarter of 2010 on its holding because the insurer’s stock had often traded below book value since the start of the financial crisis.
In asset management, Axa had 23 billion euros in outflows in the first half, mostly from institutional clients withdrawing funds at New York-based unit AllianceBernstein LP.
Overall, Axa has said it expects a “turnaround of net flows” this year at its fund-management business, which should be able to attract 4 percent to 5 percent of net new money as a percentage of assets under management between 2012 and 2015, according to the June 1 presentation. Separately, Axa booked a 92 million-euro net impairment in the first half on its Greek sovereign-debt holdings, the insurer said today. Axa follows BNP Paribas, Societe Generale (GLE) SA and Germany’s Deutsche Bank AG in writing down holdings of Greek debt as part of a rescue plan from the Institute of International Finance. The plan requires investors to take a 21 percent loss on holdings that mature by 2020.