February 22, 2018 / 8:19 AM / a year ago

UPDATE 3-AXA to decide on possible share buybacks soon after U.S. IPO

* 2017 net profit 6.21 bln euros, above forecasts

* Dividend 1.26 euros/share, also above forecasts (Updates with AXA CEO comments)

By Maya Nikolaeva and Matthieu Protard

PARIS, Feb 22 (Reuters) - AXA Chief Executive Thomas Buberl promised investors on Thursday to decide quickly after the flotation of its American life insurance and asset management businesses what it would do with the proceeds from it.

AXA will float 20 to 30 percent of the business in the second quarter this year and could use the cash for acquisitions in health, protection, commercial property and casualty business or consider share buybacks.

"We have promised an underlying earnings per share growth of 3 to 7 percent. Every penny that lies in the bank not employed is a drag," Buberl told analysts during a call.

"We will have a very strong incentive on deciding relatively quickly after the IPO has happened and the money has hit the account what to do with the money."

French insurer AXA posted higher-than-expected 2017 net profit and stronger earnings in the United States, ahead of the planned IPO.

Analysts at Keefe, Bruyette & Woods estimated cash proceeds from the IPO in the region of 2.5 billion euros.


AXA, which ranks as Europe's second-biggest insurer in terms of market capitalisation behind Germany's Allianz, reported earnings per share growth at the top of its targeted range of 3-7 percent a year over the 2016-2020 period.

It said it had not been hit as hard as some of its rivals by a series of costly natural catastrophes in 2017, thanks to reinsurance contracts and its diversified business model.

AXA posted a 2017 net profit of 6.21 billion euros ($7.6 billion), while analysts had on average forecast net profit of 5.97 billion euros in a Reuters poll.

The company proposed a 2017 dividend of 1.26 euros a share, up 9 percent and corresponding to a payout ratio of 49 percent. The dividend topped analysts' estimates of 1.20 euros.

AXA's results came out better than those earlier this month from Allianz, with the German group reporting a worse than expected fourth-quarter net profit.

AXA shares were up 0.2 percent at 1604 GMT, but the stock nevertheless outperformed a weaker European insurance sector , as analysts welcomed AXA's results.

"2017 operating and capital momentum suggests a management team in tight control of their earnings destiny, with progress in the 5-year plan suggesting a future beat on 2020 targets," Jefferies analysts said.

Faced with tighter regulations and declining investment returns, AXA is seeking growth in areas such as property and casualty insurance for businesses, savings products that do not tie up too much capital, health insurance and Asian operations.

"Health was our fastest growing business in 2017," AXA said in a statement, adding it had for the first time crossed a 6 billion euros mark in terms of overall underlying earnings. ($1 = 0.8145 euros) (Reporting by Maya Nikolaeva and Matthieu Protard; editing by Alexander Smith and David Evans)

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