A spokesperson for Axa (NYSE: AXA) told BestWire that market conditions had not remained flat but had obviously seen a significant amount of volatility due to the effects of the credit crunch.

According to Axa, its new underlying earnings estimates reflects lower asset fees as well as nonrecurring variable annuity hedging costs, notably on basis risk and volatility, and deferred acquisition cost unlocking.

In a statement, Henri de Castries, chief executive officer of Axa, said that the current turmoil was an unprecedented challenge for financial institutions, and that the company intends to pursue the operational initiatives of its Ambition 2012 plan, to allow the company to emerge better positioned from the crisis.

Axa further stated that its management board believes that the current economic environment validates its long-term choice of a strategy focused on life and savings, property/casualty and asset management, along with a wide geographical diversification.

At the start of November, Axa announced that its total revenue for the first nine months of 2008 came to 69.4 billion euros, down 3.1% from the same period a year ago on weaker international numbers (BestWire, Nov. 6, 2008).

(By Marc Jones, London news editor: marc.jones@ambest.com)

Axa had said in August 2008 underlying profit should be in line with that of 2007, which was 4.96 billion euros, provided market conditions did not deteriorate materially.

In Tuesday's statement Axa said that its balance sheet remained "solid", with a solvability ratio of around 135 percent, which gave it the ability to resist additional market turmoil.

AXA shares closed at 13.44 euros on Monday, yielding a market capitalisation of 27.7 billion euros according to Reuters data, putting it ahead of German rival Allianz and Italy's Generali.

Banks and insurers across the globe have been hit by the worst financial crisis in around 80 years, which began when U.S. homeowners started to default on their loans. ($1=.7940 Euro) Keywords: AXA/ (Reporting by Dominique Vidalon, Caroline Jacobs, Pascale Denis, Editing by Caroline Jacobs, paris.equities@news.reuters.com; Reuters Messaging: caroline.jacobs.reuters.com@reuters.net; +33 1 49 49 53 43)

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The insurer has also gained approval from the CIRC to set up a branch in Tianjin. The new branch will have six months for construction and it will not be allowed to operate insurance business during the construction period.

Earlier this month, Axa-Minmetals was approved by the CIRC to increase its registered capital from 705 million yuan to 905 million yuan (105.7 million euros).

Established in June 1999, Axa-Minmetals Assurance is the first Sino-French insurance company with headquarters in Shanghai. It is also the first life insurance company granted the establishment permission after the establishment of the CIRC.

Currently, Axa-Minmetals has operations in nine Chinese cities, including Shanghai, Beijing, Guangzhou, Shenzhen, Nanjing, Foshan, Dongguan, Wuxi and Changzhou. It palns to continue strategic business expansion across China.

Its Chinese parent, China Minmetals Corp., founded in 1950, is mainly engaged in the development, production, trading and operation involving metals and minerals. It also operates businesses in finance, real estate and logistics. In 2007, the company realized total business volume of $21.8 billion (17.5 billion euros), with a profit of 7.1 billion yuan.

(By Rebecca Ng, Hong Kong news editor: Rebecca.Ng@ambest.com)

Axa said it had seen strong performances in Northern, Central and Eastern Europe, but had been hit by a slowdown in the United States as a result of lower universal life sales, including product repricing, and lower variable annuity sales in what it described as a "challenging environment."

The group also saw a negative impact from fiscal changes in the United Kingdom and Japan.

The company said that its group solvency position remained solid despite the tough financial market conditions, and that it had benefited from an equity hedging program it had put into place.

(By Marc Jones, London news editor: marc.jones@ambest.com)