Shares in AXA and Aegon rise 2.8 percent and 3.1 percent, outperforming a fall on benchmark stock markets, as the insurers are seen as benefiting from the shift in the outlook for U.S. interest rates.
U.S. Federal Reserve Chair Janet Yellen said on Wednesday that the Fed would probably end its massive bond-buying programme in the autumn, and could start raising interest rates around six months later, much earlier than what the market had been anticipating.
“For sure, the exit from the quantitative easing is positive for names exposed to the U.S. and AXA is one of them,” says Francois Boissin, an analyst at Exane BNP Paribas.
“These signals that rates could start to rise gradually is obviously quite reassuring for AXA’s business model. Rising interest rates make legacy guarantees less expensive, makes the value of options granted to policy holders less valuable, and in new businesses it helps insurers to secure future margins. It’s not going to be visible in earnings in the short term, it does however have a positive impact on the balance sheet, and new business prospects.”
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