By Myles Neligan
LONDON (Reuters) - Europe's two biggest insurers, Allianz
Allianz, Europe's No.1 insurer, made an operating profit of 2.37 billion euros ($2.88 billion) in the second quarter, up 2.8 percent on a year ago, and ahead of the 2.2 billion penciled in by analysts, it said on Friday.
Second-ranked Axa also beat forecasts with net income of 2.6 billion euros in the first six months of the year, outstripping the 2.11 billion euros expected by analysts.
Both companies benefited from resilient sales of traditional life insurance contracts which carry little or no investment risk, in contrast to products such as unit-linked policies where customer returns depend entirely on market performance.
"The customer assumes correctly that Allianz is more stable than his own government," Allianz finance chief Oliver Baete told reporters on a conference call.
Shares in Allianz and Axa were up 3.2 percent and 3.4 percent respectively by 6:38 a.m. EDT (1038 GMT), outperforming a 2.75 percent increase in the Stoxx 600 European insurance share index <.SXIP>
"All the big companies have been trying to push the plain vanilla products," said a London-based analyst who asked not to be named.
"When people are nervous about the economy, health insurance is probably an easier sell than, say, pensions."
European equity markets have fallen steeply in volatile trade since the onset of the credit crunch in 2007, with the subsequent euro zone sovereign debt crisis adding to the turmoil.
Sales of traditional life products at Allianz rose 3.5 percent to 5.8 billion euros in the second quarter, while premiums from riskier investment-focused policies fell 4.2 percent to 7.1 billion euros.
The German insurer said sales had been strong in critically-indebted Spain and Italy, which have suffered credit rating downgrades amid austerity measures designed to shore up membership of the euro zone.
France's Axa said its life insurance arm benefited from a 5 percent jump in sales of traditional health and protection policies, while savings products were down 6 percent and unit-linked premiums fell 3 percent.
Axa's overall life insurance profit rose 3 percent, lagging a 4 percent increase at its property and casualty (P&C) division thanks to rising prices in several European markets.
"We have a strong trend in our protection and P&C markets, but it's tougher in savings because of the economic situation, " Axa fiancé chief Gerald Harlin told reporters.
Allianz's life insurance operating profit jumped 20 percent in the second quarter, outweighing a 16 percent decline at its property and casualty insurance unit as claims from heavy flooding in Thailand last year escalated.
(Additional reporting by Jonathan Gould in Frankfurt and Christian Plumb in Paris; Editing by David Cowell)
