PARIS (Reuters) - AXA AXAF.PA, Europe's second-biggest insurer, expects its profitability to improve in the next two years thanks to U.S. business brought in by its new XL arm, and said it would now focus on expanding in Asia.

FILE PHOTO: A logo of insurer AXA at the company's offices in Brussels, Belgium, March 5, 2018. REUTERS/Yves Herman/File Photo

The French insurer said profits should be boosted by its $15 billion acquisition of Bermuda-based XL earlier this year, which helped to broaden AXA’s range of business.

AXA also lifted its expected synergies from the XL acquisition to 500 million euros ($564 million) from 400 million, and raised its dividend payout range to between 50-60 percent from 45-55 percent.

Following the XL deal and the stock market listing of its U.S. life insurance and asset management unit Axa Equitable Holdings EQH.N, AXA is now looking to develop more in Asia in areas such as China, health insurance and its branch network.

The company has already hired a series of leading managers in the region, such as Gordon Watson, chief executive officer for Asia.

“In just nine months, Gordon has attracted some of the best leaders in Asia with significant local expertise to propel AXA to become the next insurer of choice in the region,” AXA CEO Thomas Buberl said.

Buberl said last year that he wanted the company, the number two insurer in Europe after Germany's Allianz ALVG.DE, to focus on six emerging countries, with four of them in Asia.

Even though Asia represents about half of the world insurance market’s growth, “AXA in Asia has underperformed over the past few years,” Buberl said during a presentation to investors.

Earlier this month, the company said it had agreed to buy the 50 percent stake it didn’t own in its Chinese unit AXA Tianping for 584 million euros.

AXA also raised on Wednesday its expected adjusted return on equity (ROE) to between 14-16 percent in 2019 and 2020, up from a previous target of 12-14 percent.

It confirmed its target for underlying earnings per share to rise by 3-7 percent a year over the same period and expressed flexibility over possible future share buybacks.

The company said it will use the proceeds of rising profitability and the remaining shares it intends to sell in its U.S. unit to cut its debt to between 25 percent and 28 percent of its equity, down from 29 percent at the end of June. The funds will also finance dividend payments, acquisitions and share buybacks, Buberl said, without specifying.

AXA shares were up 0.9 percent on Wednesday afternoon, as analysts welcomed AXA’s latest financial targets.

“In our view, AXA are reassuring the market by raising adjusted ROE target of 14-16 percent and rewarding investors with a step-change in the payout ratio from the current 45-55 percent to 50-60 percent (we had forecasted 51 percent in 2020), more than exceeding our base case for the investor day,” wrote analysts at Jefferies, which kept a “buy” rating on AXA.

So far this year, the share price is underperforming the European insurance index .SXIP and remains below the level it was at when the firm announced the XL acquisition. Its share price is 13 percent down since January, while the index is 3.2 percent down.