AXA First-Half Profit Falls, Says Capital Adequate

AXA, Europe's second-biggest insurer, reported lower first-half net profit on Thursday although the earnings came in above the average market forecast and AXA said it needed no capital increase.

Net profit fell 32 percent to 2.162 billion euros ($3.35 billion), partly because of writedowns on fixed income assets due to the global credit crunch.

AXA said this included a 237 million euro impact on asset backed securities (ABS) and a 502 million euro hit on fixed income funds.

Ten analysts polled by Reuters gave an average net profit forecast of 1.916 billion euros.

The company also beat the average market forecast with its first-half underlying earnings, which rose 3 percent to 2.766 billion euros. The average forecast was 2.509 billion.

The global credit crunch, which has been sparked by losses on U.S. subprime mortgages, has hit insurers around the world. Falling stock markets have affected insurers since many of them hold their assets in equities.

Earlier this month, reinsurers Munich Re and Swiss Re both posted lower profits due to the financial market turbulence.

There had been market speculation that AXA might have to raise capital but AXA said this was not the case.

"Strong solvency. No capital increase required," the company said in a presentation to investors.

AXA added that it aimed to propose a stable 2008 dividend of 1.20 euros per share and that its 2008 underlying earnings should be in line with those of 2007, provided market conditions did not deteriorate materially.

"AXA's business strategy is built to withstand severe economic conditions and we remain well positioned to benefit from any upturn in the market environment," Chief Executive Henri de Castries said.

AXA shares closed up 5 percent at 21.41 euros on Thursday. The stock has fallen over 20 percent since the start of 2008.