French insurer Axa SA (AXA) Wednesday said first-half net profit dropped 39%, hurt by weaker earnings across its three main divisions, but it still beat market expectations.

The company said it remains ready to ride out any further market turbulence.

"We are prepared to withstand a further possible market downturn and we are well-positioned to benefit from a market upturn," Chief Executive Henri de Castries said.

The group said its Solvency 1 ratio reached 133% at the end of June, up from 127% at the end of December.

Net profit for the six months ended June 30 decreased to EUR1.32 billion from EUR2.16 billion a year earlier, significantly above an average EUR592 million forecast by a Dow Jones survey of nine analysts. The profit was also a stark improvement compared with the EUR1.24 billion net loss the insurer suffered in the second half of 2008.

Underlying earnings, which exclude capital gains or losses on financial assets, slid 24% to EUR2.12 billion from EUR2.77 billion a year earlier. That was still above the EUR1.73 billion expected by analysts.

Axa's asset-management activities, where a EUR13 billion fall in assets under management dragged down revenue, reported the steepest drop in underlying earnings, down 38% to EUR176 million.

The group's two largest earnings generators, its life-and-savings and property-and-casualty divisions, posted 12% and 13% declines in underlying earnings, respectively.

Revenue fell 1.8% to EUR48.41 billion from EUR49.32 billion a year ago, slightly beating the EUR47.9 billion forecast by analysts.

Axa shares closed Tuesday up 0.7%, or EUR0.11, at EUR15.31, slightly outperforming the Stoxx 600 European insurance index.

The stock has gained 18% in the past six months, outshining the Stoxx 600 insurance index, as financial markets have begun to return to normal and fears of a potential capital increase have subsided.

Company Web site: www.axa.com

-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com