Axa's cash and capital positions beat expectations, shares climb

PARIS (Reuters) - Axa SA, Europe's second-biggest insurer, beat expectations on cash and capital positions for 2020, sending its shares higher despite a slump in profit due to COVID-19 related claims.

Axa had cash holdings of 4.2 billion euros ($5.1 billion) as of end-December, well above its target of 1 billion to 3 billion euros - a buffer that Credit Suisse analysts said puts the company "back into the category of one of the strongly-capitalised major insurers in the sector".

Its solvency II ratio - a measure of capital strength – stood at 200%, above analysts' expectations of 190%.

The stronger performance in cash and capital helped it reinstate a 1.43 euro dividend per share - in line with 2019 results. That compares with 0.73 euro last year when European insurers were required to cut dividends to maintain reserves during the pandemic.

Speaking at a conference call with journalists, Axa CEO Thomas Buberl expressed confidence for 2021.

Axa's shares surged after the results, up 4.28% at 1145 GMT.

But net profit came in at 3.16 billion euros, down from 3.86 billion euros a year ago and far below a Refinitiv I/B/E/S estimate of 4.4 billion euros.

Underlying earnings fell by 34% while revenue was down 7%.

Claims for business interruption and event cancellations due to the new coronavirus outbreak amounted to 1.5 billion euros, in line with a previous estimate.

Axa CFO Etienne Bouas-Laurent told reporters that "good momentum" in prices at its company-focused XL unit, which was badly hit by the pandemic, would continue until the end of the year.

Buberl also said he expected earnings at Axa XL to rebound this year after the unit posted an 1.4 billion euro loss last year.

The insurer had said in November it would inject around 1 billion euros into the XL unit, which has also been hit by costs stemming from natural catastrophes.

Axa said last year it would keep streamlining its business by selling assets over the coming years in an effort to boost returns.

($1 = 0.8199 euros)

(Reporting by Matthieu Protard; editing by Edwina Gibbs and Jason Neely)