Paris-based global insurance giant Axa is unlikely to attempt a take-over on Italy's Generali, confounding expectation of another industry mega-merger.
That, at least, is the view of US stockbroker Salomon Smith Barney's global insurance team.
The prediction is made in the broker's buy note on the insurer, issued after first half results to the end of June revealed stronger-than-expected growth in earnings.
Salomon Smith Barney bases its view on the rumoured Generali take-over on comments made by Axa's chief executive Claude Bebear in a recent meeting with analysts in Paris.
The broker argues that acquisitions are still an important part of Axa's strategy, but cites Japanese insurers as the most likely target.
The bank issued the up-beat assessment after noting that strong performance in Axa's non-life and financial services operations boosted earnings and left the company undervalued in relation to current share prices.
Axa enjoyed a 27% increase in profits in the first six months of the year compared to the same period in 1998, reaching £757m, while premium income and other revenue grew by 6% to £20.6bn.
The note approves of Axa's efforts to boost efficiency in recently acquired companies such as Guardian Royal Exchange and UAP, and in its own operations.
The bank's global insurance team predicts continued strong performance over the next three years, and now believes that Axa shares are a "core holding" for any European fund managers portfolio.
