AXA urges reform of insurer accounting rules-paper

FRANKFURT, June 18 (Reuters) - French insurer AXA (AXAF.PA) wants international accounting rules changed to better align them to the long-term nature of insurers' obligations, its chief executive was quoted as saying on Thursday.

"We have obligations of eight years or longer on average to our life insurance customers but we must value the securities that cover these obligations on a quarterly basis," Henri de Castries was quoted by the Financial Times Deutschland newspaper as saying.

Insurers must be allowed to smooth losses from, for example, share price declines over the lifetime of its obligations, de Castries was quoted as telling a journalist briefing.

Like other insurers and banks, AXA was forced to take writedowns on its equity and fixed income investments last year as financial markets collapsed around the world.

AXA's net profit fell 83 percent to 923 million euros ($1.29 billion) in 2008 after it took 1.8 billion euros in charges on the fair value of financial instruments.

Had the company been allowed to smooth the losses, its 2008 result would have been about 3 billion euros higher, de Castries was quoted by the paper as saying.

"The rules mean we will hardly be able to invest in equities anymore. That is exceptionally bad for Europe's economy because not enough equity capital will be made available," he said.

"We can live with any rules, even the current ones, but they hurt our clients and the share markets," he added.

De Castries told a French parliament hearing last week that about 5 percent of AXA's investments were held in equities but that it was moving in the direction of 3 percent, compared with holdings of around 20 percent in 2000.

The G20 meeting of leading industrialised and emerging market countries agreed in April that accounting rules should be amended to avoid amplifying economic cycles.

The International Accounting Standards Board, which sets accounting rules used in over 100 countries, including the 27-nation EU, has agreed to revamp its IAS 39 fair value or mark-to-market rule in stages so that key parts come into force by the end of the year in time for 2009 annual company results. [nL951467]

De Castries also demanded that financial houses that received emergency state aid in the crisis be forbidden from acquiring other companies until they repay the state, the paper quoted him as saying.

($1=.7165 Euro)

(Editing by Jon Loades-Carter)

((Reporting by Jonathan Gould; Reuters Messaging: jonathan.gould.reuters.com@reuters.net; +49 69 7565 1242)) Keywords: AXA/ Keywords: AXA/ =2

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