AXA Net Operating Profit Up 21.2% At $2.07 Billion

France’s AXA announced results slightly above analysts’ forecasts on Wednesday, stating: “Net income rose 21.2% to an all-time high of Euro 2,261 million {$2.07 billion} from Euro 1,865 million {$1.706 billion} in 1999 (including goodwill amortization, excluding one-off items).” The life insurance and asset management sectors were responsible for the gains, as net cash earnings from p/c insurance slumped 35.3 percent to €408 million ($374 million) from €630 million ($577 million) in 1999, largely due to increased reserves.

CEO Henri de Castries, who succeeded AXA’s legendary founder Claude Bébéar last May, stated, “We are very pleased with our results that were achieved during the year of increasing equity market volatility and in which we completed an unprecedented number of strategic transactions while investing to transform our operations.”

Even p/c results weren’t that bad, as revenues rose 3.7 percent to €15.58 billion ($14.26 billion). Commenting on the results, De Castries said, “We have strengthened reserves and will continue to take steps to improve our operations, including tightening standards in underwriting. Results were mixed as the benefit from rising rates was tempered by higher claims related to storms and floods.” He predicted improved results this year. AXA combined ratio in p/c rose to 113.9, compared to 111.6 in 1999.

Among the transactions AXA completed last year were the sale of Donaldson, Lufkin & Jenrette, its investment banking subsidiary, the sale to Germany’s Deutsche Bank of Banque Worms, the purchase of U.S. fund manager Sanford C. Bernstein and the acquisition of the minority shareholdings of its U.K. subsidiary Sun Life and Provincial and its U.S. subsidiary AXA Financial.

The capital gains recorded on these transactions added €1.64 billion ($1.5 billion) to AXA’s overall net earnings, which reached an all-time high of €3.904 billion ($3.57 billion), positioning the French giant for a new round of acquisitions.

Perhaps in anticipation, the company announced a 4-1 stock split and an adjustment of its American Depositary Shares on a 1-1 basis from the current 2-1 ratio, subject to shareholder approval at the annual meeting in May.

AXA also confirmed widely circulated rumors that it was holding talks with Deutsche Bank aimed at forging a cross selling agreement, which would give the company access to DB’s German banking network. The announcement indicates that the ongoing talks between DB and Allianz remain at a standstill, which has opened the door to the possibility that AXA may become a major competitor in its German rival’s backyard.

Topics Profit Loss Property Casualty AXA XL Germany