French insurance giant AXA today lowered its earnings forecast for 2008 and threw its previous long-term projections out the window.
"Chief Executive Officer Henri de Castries told shareholders in Paris today that the assumptions backing the 2012 profit goals ``have dramatically changed.'' The targets implied an 8 percent average annual increase in equity markets. For Axa to reach the goals, stock markets would have to surge 35 percent in 2009 and 2010..."
We're goiong to hear a lot more of that. Insurers and pension funds worldwide are going to have to revise their models as they see their 2008/09 results in tatters. Global equity markets could very well do 8%/year over the next 5 years but nobody is going to model it after what we've been through over the last 10.
AXA went on to add, "[we have] absolutely no need to raise funds...The company is under no pressure from the government or regulators to increase capital." If they were an American company, that statement would be a fool proof precursor to a large writedown and capital raise.