Nov. 25 (Bloomberg) -- Axa SA, France's largest insurer, cut a full-year profit forecast and said its 2012 targets have become ``increasingly obsolete'' as the financial crisis leads to a global economic slowdown.

Axa, which fell 2.4 percent in Paris trading, expects 2008 profit excluding investment swings and merger-related costs of between 3.6 billion euros ($4.62 billion) and 4 billion euros. In August, the insurer predicted earnings would match 2007's 4.96 billion euros unless markets deteriorated ``materially.''

Insurers' profit has suffered as the financial crisis roils markets, sapping demand for policies linked to stock performance and cutting the value of investments. Axa said today the market plunge makes the company's goal of doubling revenue and tripling earnings between 2004 and 2012 ``increasingly obsolete.''

``They set aside their targets waiting to see how the markets normalize,'' said Pierre Flabbee, a Paris-based analyst at Kepler Capital Markets. ``That's an acceptance of reality.''

Axa fell 32 cents to 13.12 euros, valuing the insurer at 27 billion euros. The stock has dropped 52 percent so far this year, more than the 48 percent decline in the Bloomberg Europe 500 Insurance Index.

Capital Plans

Chief Executive Officer Henri de Castries told investors in Paris the assumptions backing Axa's 2012 profit goals ``have dramatically changed.'' The targets implied an 8 percent average annual increase in equity markets. For Axa to reach the goals, stock markets would have to surge 35 percent in 2009 and 2010, and climb 8 percent annually in the following two years.

The Dow Jones Stoxx 600, a benchmark for European equities, has tumbled 31 percent since the end of June on concern the global credit crisis will stifle economic growth. Falling stock prices, on top of losses tied to the U.S. subprime mortgage market, forced some insurers to seek more capital to build a bigger cushion against losses.

Insurers worldwide posted about $144 billion of subprime- related losses since the start of last year, and raised about $90 billion, data compiled by Bloomberg show. Life insurers' unrealized losses on investments including commercial mortgage- backed securities will surge 70 percent in this quarter, Morgan Stanley analyst Nigel Dally said last week.

Dutch insurer Aegon NV got a 3 billion-euro lifeline from the Netherlands in October after it took charges related to the bankruptcies of Lehman Brothers Holdings Inc. and Washington Mutual Inc. The insurer, based in The Hague, posted a third- quarter loss, its first ever. MetLife Inc., the biggest U.S. life insurer, raised $1.99 billion in a share sale last month to replenish capital.

No Capital Needed

Axa, based in Paris, can absorb further shocks and has ``absolutely'' no need to raise funds, said de Castries, 54. The company is under no pressure from the government or regulators to increase capital, Chief Financial Officer Denis Duverne said.

There are ``attractive'' takeover opportunities, though Axa won't make purchases ``that are dilutive for shareholders,'' de Castries said, without identifying targets.

``Clearly, the number of opportunities is going to grow'' after the crisis and ``there are very few players left with the ability to do deals,'' he said.

To contact the reporter on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net; Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net.

Last Updated: November 25, 2008 12:06 EST