European citizens have chosen the security of life and health insurance over volatile risk investments, allowing two of the continent’s biggest insurance providers to record booming profits. Allianz and Axa beat analyst forecasts today, raking in staggering profits of 2.37bn euros and 2.6bn euros respectively.
For market leader Allianz who beat financial pundits’ operating profit predictions of 2.2bn on Friday, takings are up 2.8 percent from last year. Axa was pencilled to bring in an estimated net income of 2.11bn euros in the first six months of the year, which it also beat. The insurer also recorded a 3 percent rise in health insurance in its operating profit.
Both companies reported an increase in share prices after their operating profits were revealed this morning. While Allianz were up 6 percent, Axa were up 5 percent by 1530 GMT today.
At a time of financial turbulence in Europe, traditional life and health insurance is viewed as a little or no risk investment, opposed to policies where returns are based solely on market performance.
Allianz Chief Executive Officer Michael Diekmann said in the statement: “Our operative business is stable and remains on course. Despite the challenging environment, we confirm our outlook”, while finance chief Oliver Baete said:”The customer assumes correctly that Allianz is more stable than his own government.”
Chief Financial Officer Gerald Harlin for Axa told reporters: “Our strategy has been for several years now to develop in business lines that are not market sensitive — property and casualty, health, protection.”
Reuters quotes a London-based analyst commenting: “All the big companies have been trying to push the plain vanilla products. When people are nervous about the economy, health insurance is probably an easier sell than, say, pensions.”