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French insurer AXA sees lower earnings growth as low yields bite
[PARIS] French insurer AXA set on Tuesday lower earnings growth expectations for the coming years in a strategic plan incoming CEO Thomas Buberl has plotted to cope with historically low interest rates.
In the face of falling yields on its investments, AXA said it aimed at increasing earnings per share by 3 to 7 per cent annually in 2016-2020, down from a target of 5-10 per cent in its strategic plan for the last five years.
Faced with tighter regulation and declining investment returns, Europe's second-biggest insurer said it aimed to grow operations in areas such as property and casualty insurance for businesses, savings products tying up little capital and operations in Asia.
"These initiatives will position AXA to grow earnings and increase dividends, even in a context of continued low interest rates," AXA said in a statement.
AXA forecast a 12 to 14 per cent return on equity in the 2016-2020 period, compared to a 13 to 15 per cent target it had in the previous plan.
"(The new plan) takes into account the realities of today. We wanted to make a realistic plan," Gerald Harlin, chief financial officer of AXA, told journalists on a conference call.
The plan, due to be presented by Mr Buberl at an investor day on Tuesday, includes a target for 2.1 billion euros (S$3.2 billion) in cost savings by 2020.
The French insurer said it would also transform its business model to meet rapidly-evolving needs of customers in digital technologies and would develop its activities in areas such as prevention and care.