AXA SA fell the most in almost four months after profit missed estimates and the French insurance group agreed to buy a majority in Italian car insurer Prima Assicurazioni.
The stock fell as much as 7%, the biggest intraday decline since April 7, after first-half net income declined 2.4% to €3.92 billion. That missed the €4.68 billion estimate by analysts in a Bloomberg poll.
“Standing out for us is the 8% headline earnings miss and 9% equity miss,” KBW analyst William Hawkins said in a note.
AXA Chief Executive Officer Thomas Buberl is seeking to strengthen the core business after selling the asset management arm this year. The Paris-based company on Friday announced that it will take a 51% stake in Prima for about €500 million ($572 million) to strengthen its motor business in the country and bolster its direct distribution.
Buberl said in an interview on Bloomberg TV that he’ll continue to look for acquisitions as the insurance industry consolidates.
“There will be a flight to size” in insurance, he said on Friday.
“The deal is fair (but not compelling) in terms of value,” Philip Kett, an analyst at Jefferies, wrote in a note.
Goldman and Blackstone are among the Italian auto insurer’s early backers, having invested €100 million in 2018. Carlyle invested four years later.
Put options with an exercise price tied to Prima’s earnings have been granted respectively to Axa and minority stakeholders for the remaining 49%, according to Friday’s statement. The deal is expected to be completed by the end of the year.
Photograph: AXA branding. Photo credit: Marco Bertorello/AFP/Getty Images
Topics Profit Loss
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