Insurer AXA to restructure Swiss unit; H1 earnings to be hit

PARIS (Reuters) - French insurer AXA said it would restructure its Swiss arm, resulting in a hit to net income of around 400 million Swiss francs ($418 million) in the first half of 2018, although the move is set to yield better returns in the longer run.

AXA, Europe's second-biggest insurer by market value behind Allianz, said it would make its Swiss Group Life insurance unit a semi-autonomous business focusing on small-to-medium sized enterprises (SMEs).

In addition to the hit to first-half earnings, AXA also said this move would result in a temporary reduction in its underlying earnings of around 20 million euros from 2019.

However, it added the change - subject to regulatory approvals - was also expected to free up around 2.5 billion Swiss francs in terms of capital requirements in 2019, and lead to an enhanced cash remittance to AXA over the next three years.

"In the prevailing environment, this re-orientation should enable us to offer our Swiss SME clients more attractive occupational benefits solutions creating prospects of higher pensions on retirement, at lower costs," said Antimo Perretta, Chief Executive Officer of AXA in Europe.

AXA has been undertaking measures to reduce its exposure to volatile financial markets and to cope with the impact of tougher regulation on the financial and insurance sectors.

Last month, AXA announced the acquisition of insurer XL Group for $15.3 billion to create what it said would be a world leader in property and casualty insurance.

The French company also reaffirmed its 2020 financial targets, under which AXA aims to increase earnings per share by 3 to 7 percent a year over the 2016-2020 period.

($1 = 0.9566 Swiss francs)

(Reporting by Sudip Kar-Gupta; Editing by Kim Coghill and Edwina Gibbs)