Axa, Europe’s second-biggest insurer, reported a weaker than expected 4 percent rise in its first-half net profit, hit by lower investment returns, higher claims and despite a boost from real estate sales.

Europe’s biggest insurer after Germany’s Allianz said it made a profit of 3.2 billion euros ($3.6 billion), falling short of the consensus market forecast of 3.6 billion.

A 1 billion-euro gain from the sale of two properties in New York City was partly offset by disposals of units in the UK and Portugal and losses on financial instruments, Axa said.

“Net income at 3.2 billion euros is the highest level since 2011 but was below expectations due to higher losses on hedging and equity investments,” RBC analyst Paul De’Ath said in a note to clients.

Axa’s shares were 1.7 percent lower at 12.1 euros by 1020 GMT, when the STOXX Europe 600 insurance sector index was down 0.3 pct.

Like other big insurers struggling to grow in many developed markets, Axa is working to streamline its organization to concentrate on improving profits while also developing digital product offerings to reach new customers.

Analysts said flat operational or “underlying” earnings of 3.1 billion euros were better than expected, given the rise in damage claims and fallout from the UK’s vote to leave the EU.

“We have delivered resilient underlying earnings … despite market headwinds and a higher cost of natural events,” said Axa’s new chief executive, Thomas Buberl, pointing out that interest rates had fallen since Britain’s Brexit vote in June.

Lower interest rates tend to hit insurers’ investment income.

Meanwhile natural catastrophe claims, mainly from storms in Germany and floods in France and Belgium, cost the insurer 100 million euros in the first half. Claims for the bomb attacks in Brussels in March amounted to 24 million euros, the company said.

In June it set lower earnings growth expectations for the coming years in a strategic plan drawn up by Buberl to cope with historically low interest rates.

The group is increasing its focus on underwriting margins, efficiency, digital business and selective growth in products that do not tie up large amounts of regulatory capital, said Buberl, who formally takes over as group CEO from Henri de Castries in September.

Total group revenue fell 0.5 percent to 54 billion euros in the first six months of the year. A 4 percent revenue gain in the Property & Casualty division and a 5 percent rise in International Insurance were offset by declines of 2 percent and 8 percent, respectively, in the Life & Savings and Asset Management divisions.

Axa’s Solvency II ratio – a measure of its capital strength under new EU risk measurement rules for the insurers – edged down to 197 percent of the requirement from 200 percent at the end of March due to shaky financial markets, but was still within Axa’s target range of 170 percent to 230 percent.

“It seems clear near-term earnings growth will be a challenge before the transformation program begins to bite, which is one reason for our relative caution,” said UBS analyst James Shuck, who has a “neutral” recommendation on the stock. ($1 = 0.8921 euros)