Axa SA, France’s largest insurer, was downgraded by Standard & Poor’s as the economic slump in Europe weighs on results.
The insurer’s credit rating was cut to A- from A as “unfavorable investment market conditions and weak economic prospects are likely to dampen AXA group’s earnings growth,” the ratings firm said yesterday in a statement on the Paris-based company.
European nations have been forced to impose tax increases and spending cuts as they grapple with their debt, pressuring economic growth. Falling yields on bonds have hurt insurers’ investment income. The long-term ratings on Axa’s core insurance operating units were cut to A+ from AA-.
Axa, led by Chief Executive Officer Henri De Castries, has sought to expand in Asia and other emerging markets in search of higher growth than in Europe. The company has also been focusing on less capital-intensive products, the ratings firm said.
“The continued recession in the Eurozone, protracted period of low interest rates, and still-high potential volatility in investment markets might be a challenge, however,” according to S&P.
Axa last month lowered earnings targets through 2015 because “unfavorable” financial markets are weighing on its life insurance and asset-management businesses. The company expects operating-earnings-per-share to climb 5 percent to 10 percent annually until 2015 compared with a previous target of 10 percent, the insurer said in a presentation on its website in November.
Helene Caillet, a spokeswoman for Axa, said the company doesn’t comment on actions by ratings firms.