PARIS- AXA, Europe's second-biggest insurer after Allianz, said on Tuesday it would keep streamlining its business by selling assets in some countries and markets over the coming years as it seeks to boost returns.

The French company has been gradually exiting areas where it lacks scale, after Chief Executive Thomas Buberl engaged in a deep restructuring to cope with a negative interest rate environment when he took over the reins of the group in 2016.

"We will continue the simplification strategy over the next years and selling entities which have suboptimal scale, low return on equity or low cash remittance potential. This will generate cash," Buberl told investors and analysts during a strategy update.

He said that earnings dilution from further disposals would be compensated by share buybacks.

Among recent deals, in February Axa agreed to sell its operations in Poland, Czech Republic and Slovakia for 1 billion euros ($1.20 billion) to Austrian insurer Uniqa.

Axa also warned on Tuesday of a hit to its 2020 results as a result of the COVID-19 pandemic, which has led it to make payouts to customers including for cancelled events. It did not give any details, however.

It said it hoped to have underlying earnings per share on a compound annual growth rate of 3-7% between 2020-2023, and an underlying return on equity between 13-15% over the same period.

The group aims to save 500 million euros in costs by 2023 to boost its efficiency and profitability.

It also sees revenue in its health business in Europe growing by 5% at least a year between 2020 and 2023.

Asked about acquisitions, Buberl said Axa, which bought companies-focused XL in 2018 in a $15.3 billion deal, would prioritize organic growth.

"We will definitely focus on organic development but M&A should never be excluded", Buberl said.

Axa's share were up 0.61% at 1302 GMT. ($1 = 0.8357 euros)

(Reporting by Matthieu Protard and Sudip Kar-Gupta; editing by Louise Heavens, Sarah White and Emelia Sithole-Matarise) ((sudip.kargupta@thomsonreuters.com; +33 1 49 49 53 84;))