French insurer AXA to stop investments in tobacco industry

French insurer AXA, which plans to stop investments in the tobacco industry, over the impact of smoking on public health, said it planned to sell its €1.8 billion ($2.02 billion) of assets in the sector.

AXA said it would divest its €200 million of equity holdings in tobacco companies immediately and would also stop all investments in tobacco industry corporate bonds and run off its existing holdings worth about €1.6 billion.

"With this divestment from tobacco, we are doing our share to support the efforts of governments around the world," incoming AXA chief executive Thomas Buberl said in a statement.

"This decision has a cost for us, but the case for divestment is clear - the human cost of tobacco is tragic; its economic cost is huge."

AXA said that tobacco killed 6 million people every year and the figure was expected to increase to 8 million by 2030, mostly in developing countries. The company added that the cost to society was greater than that of alcohol or obesity.

According to AXA, the decision reflected a shift in the role of health insurers towards preventing health conditions, including increased use of technology.

In the same statement, the head of the Union for International Cancer Control (UICC) said that it would continue to encourage other companies to follow the lead given by AXA.

"We need companies like AXA to signal that investing in an industry that kills its customers is simply the wrong thing to do," UICC chief executive Cary Adams said.

"This announcement to divest 1.8 billion euros is a milestone step in the right direction."

AXA did not say which tobacco company stocks it held.

''We strongly believe in the positive role insurance can play in society, and that insurers are part of the solution when it comes to health prevention to protect our clients,'' deputy chief executive officer Thomas Buberl said in the statement. ''Hence, it makes no sense for us to continue our investments within the tobacco industry.''

Organisations such as the Tobacco Free Portfolios Initiative have been calling for corporate divestment in the industry. The board of the $293 billion California Public Employees' Retirement System had asked its staff to weigh the pros and cons of its decision to abstain from tobacco investment.