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Henri de Castries

You can forgive AXA CEO Henri de Castries for feeling misunderstood.

Henri de Castries

Age: 54

Company: AXA

Year named CEO: 2000

Company employees: 214,044

12-month stock performance: –40.5 percent

Compensation: E3.3 million ($4.7 million)

You can forgive AXA CEO Henri de Castries for feeling misunderstood.

When U.S. insurance giant American International Group was teetering, investors seemed to suspect that all insurance companies had skeletons in their closets. In February AXA reported that its revenues had fallen 2.1 percent in 2008, to €91.2 billion; net income plunged 84 percent, to €923 million, reflecting the plummeting value of the group’s equity holdings. Then in March, AIG reported a $61.7 billion quarterly loss, the largest ever by a corporation. A week later AXA’s shares fell to an adjusted low of €5.88.

De Castries describes this time as a “period of maximum fear” in financial markets. “People believed the insurance companies would be following the banks down. We were surprised by the reaction, because our earnings were in line or slightly better than expectations,” he says. To counter the angst, de Castries met with analysts and investors to tell them that AXA had no hidden problems and was performing well under the circumstances. “We explained that we would not need a rights issue. We told them the business was cash-flow positive,” he says. “But it took a while for the fear to ­dissipate.”

AXA’s shares have staged a 123 percent comeback since the March low. Its man­agers “are more focused on their core insurance business and stay away from exotic financial investments,” says the manager of a European fund that holds AXA shares.

AXA’s revenues slipped 5 percent in the first quarter of 2009, to €27.6 billion. Although the company generated €3.3 billion of new life and casualty business, stock market declines reduced assets under management by 27 percent, to €799 billion. De Castries insists that the company is braced for further weakness.

“One should never underestimate the probability of the worst-case scenario,” he says. “The financial crisis is the equivalent of a once-in-­every-200-years hurricane. It may never happen, but if it does, ­you’d better be ­prepared.”

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