Nov. 6 (Bloomberg) -- Axa SA, Europe's largest insurer by market value, reported a 3.4 percent decline in third-quarter revenue as slumping stock markets led to lower sales of life and savings products in the U.S. and Britain.

Revenue fell to 20.1 billion euros ($25.9 billion) from 20.9 billion euros a year earlier, based on figures provided by the insurer today. Analysts surveyed by Bloomberg estimated revenue of 20.2 billion euros. Axa fell 9.2 percent today in Paris trading.

Insurers' profit has suffered as the global financial crisis roils markets, sapping demand for policies linked to stock performance and cutting the value of investments. Dutch insurer Aegon NV posted its first loss today since the company's creation in 1983, while London-based Old Mutual Plc said life policy sales fell 3.8 percent in the nine months through September.

``Insurance operations keep being difficult,'' said Clemence Bounaix, a fund manager at KBL Richelieu Gestion, which oversees $5.1 billion in Paris, including Axa shares. ``Activity is decelerating and asset management outflows are pretty worrisome.''

Axa fell to 15.15 euros, valuing the insurer at 31.3 billion euros and bringing this year's decline to 45 percent. That compares with the 43 percent drop in the Bloomberg Europe 500 Insurance Index in 2008.

Bloomberg calculated third-quarter revenue by subtracting Axa's first-half figures from nine-month data published today. The company declined to confirm the figures.

Capital Increase `Dodged'

Axa's solvency ratio, a measure of its ability to absorb losses, fell to 135 percent at the end of October, in part because of acquisitions in Mexico and Turkey, Chief Financial Officer Denis Duverne said on a conference call with journalists. The level, described by Duverne as ``comfortable,'' declined from 147 percent at the end of June, the CFO said.

``We have the impression that the specter of a capital increase is dodged,'' Bounaix said. ``Solvency is secured, at least for the short term.''

``We think that we will get out of this storm even stronger and more efficient,'' Duverne said.

The Dow Jones Stoxx 600, a benchmark for European equities, dropped 12 percent in the third quarter on concern the global credit crisis will stifle economic growth. A worsening market for insurance plans linked to stock market performance led MetLife Inc., the U.S. largest life insurer, to raise $1.99 billion in a share sale last month to replenish capital.

MetLife, Prudential, Aegon

Axa had an operating profit at its U.S. life and savings division, Duverne said. Still, the annuities business in the U.S., which had 123 million euros of hedging costs in the third quarter, suffered a ``strong'' reduction in profit because of ``extreme volatility'' in the markets, Duverne said.

Equity and bond-market performance helped cut third-quarter earnings by 38 percent at MetLife, and led Prudential Financial Inc., the No. 2 U.S. life insurer, to a quarterly loss. U.S. life insurers are in talks with the government for potential investments as companies jockey for the remaining $90 billion of the $250 billion set aside to prop up ailing financial companies.

Aegon got a 3 billion-euro lifeline from the Netherlands last week to shore up capital after it took charges related to the bankruptcies of Lehman Brothers Holdings Inc. and Washington Mutual Inc.

Axa's U.S. life and savings business recorded about 95 million euros of after tax capital losses, mostly from selling distressed bonds linked to Lehman and Washington Mutual, the French insurer said.

The third-quarter life and savings premium equivalent, a measure of sales for insurers, fell 9.9 percent to 1.55 billion euros from 1.72 billion euros a year earlier, based on numbers given by Axa. That compares with 1.6 billion-euro median estimate of 10 analysts surveyed.

The insurer, which gets most of its sales outside of France, is expanding in Mexico and Turkey after the 2006 purchase of Credit Suisse Group AG's Winterthur unit.

Total nine-month revenue fell to 69.46 billion euros from 71.65 billion euros a year earlier, Axa said.

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

Last Updated: November 6, 2008 12:24 EST