French insurer AXA has warned the 11th September terrorist attacks on the US have hit its profits harder than expected.

But the insurer added that it should match last year's dividend payment.

The company said it would need $700m (£434.5m) to cover the impact of the terrorist attacks. This is up on its previous estimate of $550m (£341.4m) made at the end of September.

It said falling equity markets and the global economic slowdown had reduced its average level of assets under management and growth in its life & savings premiums.

AXA also reversed expectations of capital gains for the full year and now sees a $400m (£248.3m) capital loss.

The company said its net cash earnings would be around $1.2bn (£744.9m), less than half the $2.54bn (£1.58bn) the company reported in 2000.

AXA added that 2002 should be a recovery year and that it would benefit from revenue growth and initiatives taken within the past 18 months.