According to international insurer The AXA Group, the strong fall in the equity market over the last few months, which has impacted certain industries— including the insurance sector—is disconnected with the fundamentals of the economy.
AXA stated that the current fall in the equity market will not affect the group’s ability to run its businesses in satisfactory technical conditions.
It further noted the following:
* Insurance companies are by nature long term holders of assets including equities, due to the long term nature of their commitments towards policyholders. The group’s exposure to equity was 16 percent of invested assets as of Dec. 31, 2001, in line with European market practice.
* Life and Savings and Property & Casualty activities are strong. First half 2002 revenues, to be released on Aug. 8, are expected to be up at least four percent. This has resulted into very strong positive cash flows. Life and Savings sales net of redemptions were approximately Euro 10 billion in the first half of the year.
* The cost savings program of Euro 700 million in 2002 is on target. If stock market trends are weighting on Unit-linked and Asset Management margins, our Property & Casualty are delivering the expected upturn in profitability. As a consequence, the group first-half operating earnings will show a significant improvement versus the first half in 2001.
* Technical reserves are more than adequately covering our commitments towards policyholders. Despite falling equity markets, solvency margins of group insurance entities are adequate.
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