(Reuters) — French insurer Axa said on Thursday the planned €1 billion ($1.2 billion) sale of its Axa Life Europe unit to Cinven had collapsed, and that it would make no fourth-quarter shareholder payouts after net income fell 40% in the first half.

Axa, led by chief executive Thomas Buberl since 2016, also dropped its 2020 earnings target following a hike in COVID-19 related claims.

The second-largest European insurer, after Allianz, said first-half net profit fell to €1.43 billion from €2.33 billion a year before. Overall revenue fell by 10% to €52.4 billion.

Underlying earnings at the property and casualty business were down 72% to €544 million, largely due to COVID-19-related claims stemming from business interruption contracts and event cancellations.

“In the context of the material estimated impact from Covid-19 on underlying earnings in 2020, Axa's management has withdrawn its Ambition 2020 underlying earnings per share and adjusted return-on-equity targets,” the insurer said.

Axa said its board of directors had decided it would not propose an exceptional distribution of reserves to shareholders in the fourth quarter, following discussions with regulators.

The insurer said earlier this year it could consider proposing an additional fourth-quarter payout of up to €0.70 per share if financial market conditions improved.

Axa also said it and private equity firm Cinven had agreed to terminate their agreement related to the potential sale of its variable annuity products platform as “certain conditions to closing were not met by the agreed long stop date.”

“We had a deadline to complete this operation, until June 30. The conditions were not met," Axa's chief financial officer, Etienne Bouas-Laurent, told journalists during a press conference.

It had entered the exclusive talks in 2018 and said at the time the deal would include a €925 million cash payment from Cinven.

“We expect the cancelation of the second tranche of the dividend and the termination of the disposal of Axa Life Europe to weigh on the shares today,” analysts at Barclays said in a note.

Axa shares opened down 2%.

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