2nd UPDATE: AXA 2009 Net Up Sharply; Aims To Lift Margins

French insurance company AXA SA (AXA) said Thursday that net profit almost quadrupled in 2009 after it shook off the worst effects of the financial crisis and cleaned up activities that were hurt at the end of last year.

Net profit leapt to EUR3.61 billion from EUR923 million a year earlier, beating an average EUR2.97 billion forecast from eight analysts polled by Dow Jones Newswires.

AXA didn't give a breakdown of interim figures but, according to a Dow Jones Newswires calculation, it swung to a EUR2.29 billion net profit in the second half of 2009 from a loss of around EUR1.24 billion a year earlier.

"AXA should benefit from favorable trends in the insurance and asset management markets, its leading brand, innovative products and improving quality of service," said Chief Executive Officer Henri de Castries.

"Our 2010 priorities will focus on optimizing margins in all business lines, through improvement of business mix in life, combined ratio in property & casualty, and net inflows in asset management," he said, adding that margins improved slightly in 2009.

The company said uncertainty in financial markets was still too great for it to adjust the financial targets set out in its Ambition 2012 strategic plan, but said management will do so "when it has better visibility."

It doesn't plan a global cost reduction program for 2010 but said it remains committed to improving productivity, while keeping an eye on acquisition opportunities as they crop up.

AXA has launched talks with the National Australia Bank Ltd. (NAB.AU) which made an offer for its AXA Asia Pacific Holdings Ltd (AXA.AU) wealth management unit.

The National Australia Bank bid trumped an earlier offer from AMP Ltd. (AMP.AU), which said earlier Thursday that it was still interested in AXA APH, fueling speculation it could come back with a revised bid.

AXA said "the completion of this transaction is uncertain, but the rationale for AXA is clear and compelling."

AMP's initial bid was dismissed by the target's independent directors. NAB has offered A$6.43 cash a share--which values AXA Asia Pacific at A$13.2 billion--or a combination of cash and shares.

AXA owns 53.9% of AXA APH and both bidders have promised to sell it the unit's Asian assets once a takeover is agreed.

AXA's deputy CEO Denis Duverne told reporters that the French insurer is "confident" it will acquire the Asian assets at the price now being offered.

At 1214 GMT, AXA shares were up 0.3%, at EUR15.60, in line with the CAC-40 benchmark index.

"AXA's full-year results tick nearly all the boxes," said Nomura analyst Nick Holmes, noting that "solvency has been restored to pre-credit crisis levels." He rates AXA stock at buy. The solvency ratio increased to 171% at the end of December from 138% at the end of June.

AXA aims to increase prices by 1%-5% across most of its major lines and "the pricing environment in 2010 should be supportive," the analyst said.

Oddo analyst Nicolas Jacob said the company's proposed dividend of EUR0.55 per share was above market expectations. He also rates AXA at buy.

Despite the bottom line gains, full-year revenue slid 1.2% to EUR90.12 billion from EUR91.22 billion a year ago, hit mainly by lower life & savings business in the U.K. and U.S.

Overall, Life & savings revenue was down 0.6% at EUR57.6 billion, while property & casualty rose 0.5% to EUR26.2 billion.

-By Geraldine Amiel, Dow Jones Newswires; +331 40171740; geraldine.amiel@dowjones.com;

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