France’s AXA Group estimated that, after assessing the consequences of the WTC attacks, the impact of potential permanent impairments on assets and difficult market conditions, it expected cash earnings for 2001 to be approximately €1.2 billion ($1.08 billion), down from analysts estimates that it would earn between €1.5 to €2.2 billion ($1.35 to $2 billion) this year.
In addition to WTC losses, estimated at around $600 million before taxes, the drop in share prices and interest rates, along with the slowdown in the global economy, has adversely impacted AXA’s securities portfolio. The company warned that might also affect the Group’s in reserves by approximately €700 million($630 million) for provisions for long-term impairment.
“Consequently, the contribution of net capital gains to cash earnings for the second half of the year is forecast to be a negative Euro 0.4 billion [$361 million], including the effect of provisions for long-term impairment of assets,” said the announcement.
AXA stated, however, that it was expecting a solid recovery in 2002 as changes in strategy, improving market conditions and cost cutting measures aimed at saving around $630 million annually begin to take effect.
The announcement was a preliminary assessment for the year. AXA is scheduled to report the actual financial results for 2001 on March 14, 2002.
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