AXA, Europe's second biggest insurer, undershot expectations with its 2007 profit rise, knocking its shares lower, but said it expected further growth in 2008 despite a tough business environment.
AXA shares were down 3.2 percent at 23 euros at the market close, making the company one of the biggest loser on France's benchmark CAC-40 index. The CAC-40 index was down 2.1 percent.
"AXA is slowing down. The market will not appreciate this," said an analyst at a French investment bank who declined to be named.
Underlying profit rose 27 percent to 4.96 billion euros ($7.46 billion), with earnings boosted by AXA's takeover of Swiss insurer Winterthur.
A Reuters poll of 10 analysts gave an average underlying profit forecast of 4.98 billion euros.
Net profit rose 11 percent to 5.67 billion euros, also just below an average forecast for a net profit of 5.77 billion euros.
Earnings slowed down during the second half, with the second-half net profit coming in at 2.49 billion euros, 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 euros 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 euros.
AXA also proposed a dividend of 1.20 euros, up 13 percent.
Based on latest prices, AXA shares have fallen 16 percent since the start of 2008. The DJ Stoxx European insurance sector has fallen around 10 percent over the same period.