Insurer Axa cuts profit forecast

Global stock market turmoil has hit Axa and other insurers

Shares in Axa, Europe's second-biggest insurer, have sunk 15% after the firm cut its profit forecasts.

The firm blamed the market turmoil and said its longer-term financial targets were becoming increasingly "obsolete".

Axa chief Henri de Castries, said the current crisis was an "unprecedented challenge" for financial institutions.

Axa said its underlying profit for 2008 would now be 3.6bn-4bn euros (£3.4bn; $5.1bn), whereas in August it had predicted about 5bn euros.

Banks and insurers have been hit by the worst financial crisis since the 1930s, which began when US homeowners started to default on their loans, but which has since spread to markets around the globe.

'Obsolete assumptions'

Axa shares fell by as much as 15% in early morning trading after the announcement, but then recovered slightly to stand down 7%.

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 Henri de Castries, Axa chief executive Axa's share price

The company's share price has now fallen 60% since the beginning of the year.

The insurer said the global financial crisis had forced it to rethink its longer-term future targets. It had previously forecast that it would double its revenues by 2012 .

However, in a statement the company maintained that it could benefit from the economic downturn.

"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."

Mr de Castries said: "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."

In its statement Axa said its "solid" balance sheet would give it the ability to resist additional stock market turmoil.