Axa SA (AXA) shareholders Thursday gave the French insurance company the right to issue up to EUR2 billion in preference shares, following reassurances from Chief Executive Henri de Castries that so far it had no need to raise fresh funds.

Axa disclosed its plan to seek authorization for a possible capital increase in February, when it posted an 84% net profit decline for 2008.

At the time, de Castries said the move was "an insurance policy" that would only be used as a last resort to defend the company if the financial crisis deepened.

Since then, de Castries has reassured investors several times that Axa's capital position remained strong. It slashed its annual dividend to EUR0.40 a share for 2008 from EUR1.20 a year earlier.

The Paris-based insurer said in February that 2008 net profit fell to EUR923 million from EUR5.67 billion in 2007, exceeding analyst forecasts of EUR469 million. Axa didn't give interim results, but a Dow Jones Newswires calculation estimated that it made a second-half net loss of EUR1.24 billion.

Analysts are increasingly worried about the capital position of insurance companies that are heavily invested in falling capital markets. They fear a wave of capital hikes similar to that experienced by banks.

Company Web site: www.axa.com

-By Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com