AXA, the French insurance giant, released a trading update showing sluggish growth yesterday, with total nine-month sales climbing just 3.5 per cent to €70.5bn (£62bn).
Life and savings insurance, its biggest revenue source, saw nine-month sales grow three per cent to €43.9bn.
The update was not a full earnings report and did not detail profits, but chief executive and chairman Henri de Castries warned: “The decline in interest rates is expected to affect new business margins as measured at year end.”
Low interest rates reduce the amount of money that insurance companies can make from lending money.
Execution Noble’s Joe Dickerson says the update shows that Axa is suffering from the popularity of traditional policies (as opposed to unit-linked policies), which are less profitable when interest rates are low.
“They probably had hoped to escape that impact by selling non-traditional policies. But where the sales have held up is in traditional policies, which are sensitive to interest rates,” he said.
Axa has struggled in the US, where its business is shrinking. But yesterday the firm struck a deal with the Industrial and Commercial Bank of China to expand sales in China.