(Bloomberg) -- Axa SA, France’slargest insurer, said it will stop investing in tobacco and divestall of its 1.8 billion euros ($2 billion) of assets in theindustry.

The Paris-based company will sell 200 million euros of stock intobacco companies and run off its bond holdings in the industry,valued at about 1.6 billion euros, the company said in a statementon its website Monday. It didn’t say which tobacco company stocksit holds.

“We strongly believe in the positive role insurance can play insociety, and that insurers are part of the solution when it comesto health prevention to protect our clients,” Deputy ChiefExecutive Officer Thomas Buberl said in the statement. “Hence, itmakes no sense for us to continue our investments within thetobacco industry.”

Organizations such as the Tobacco Free Portfolios Initiative arepushing for corporate divestment in the industry. The board of the$293 billion California Public Employees’ Retirement System hasasked its staff to review the pros and cons of its decision toabstain from tobacco investment. In 2010, Norway’s sovereign wealthfund, the world’s largest, excluded 17 tobacco companies, includingBritish American Tobacco Plc and Philip Morris International Inc.,from its portfolio based on ethical guidelines.

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The decision will come at a cost for Axa, Buberl said, withoutbeing more specific. The move is a “milestone step in the rightdirection” by Axa, Cary Adams, CEO of the Union for InternationalCancer Control, said in the statement.

Axa’s asset-management operations had net inflows of about 10billion euros in the first quarter, down from 19 billion euros ayear earlier, the company said this month. The insurer sold itsElevate business in the U.K. to Standard Life Plc and is in talksto sell its SunLife unit and its traditional investment and pensionbusiness there.

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