Axa shares plunge on profit warning

PARIS, Nov 25 (Reuters) - The global financial turmoil has forced AXA, Europe's second-biggest insurer based on premium income, to cut its 2008 underlying profit forecast and made its 2012 financial goals increasingly "obsolete".

The French insurer added, however, that its balance sheet remained strong with a solid regulatory solvency level, enabling it to absorb future market shocks.

Axa said it had a solvency 1 ratio of around 135 per cent at end October 2008.

"The current turmoil is an unprecedented challenge for financial institutions, but Axa has a clear business model, a solid balance sheet and highly engaged teams," Chief Executive Henri de Castries said in a statement released at an Axa investor conference in Paris.

AXA shares fell by as much as 13.3 per cent in early morning trade after they were suspended from trading at the opening. The stock was down 13.2 per cent at €11.66 by 0835 GMT.

Axa said it now expected its underlying profit in 2008 to be between €3.6bn and €4bn ($5bn).

In August Axa had forecast an underlying profit in line with that of 2007, which was €4.96bn, provided market conditions did not deteriorate materially.

"Even if market developments make increasingly obsolete the assumptions that underpinned Axa's 2012 financial targets, the fundamental growth drivers of the insurance industry are, if anything, reinforced by a crisis that increases customer risk aversion and retirement funding needs," Axa said on Tuesday.

Axa had previously targeted a tripling in its earnings and doubling in revenue by 2012.

Based on Monday's closing price of €13.44, Axa has a market capitalisation of €27.7bn according to Reuters data, putting it ahead of German rival Allianz and Italy's Generali.

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