As the tobacco industry struggles against stricter rules and tighter regulations in many parts of the world, it was dealt another blow when Axa, one of the world’s largest insurance companies, announced it would stop investing in the industry and also divest its current holdings. At present, it owns 184 million euros ($207 million) worth of shares in tobacco companies and bold holdings valued at 1.6 billion euros ($1.8 billion).

The shares will be sold immediately, the French insurer said, and the money from bonds would be realized once they mature.

Incoming Axa CEO Thomas Buberl, who takes over in September, said the divestment would cost the insurer money but would lead to savings as fewer people smoking would lead to fewer claims for tobacco-related diseases.

“The business case is positive. It makes no sense for us to continue our investments within the tobacco industry. The human cost of tobacco is tragic — its economic cost is huge,” he said.

The potential cost of quitting tobacco is huge, as U.S. public sector pension group California Public Employees’ Retirement System found out. The California investment group announced in April it was considering fresh investments in tobacco, after having exited the sector years ago, since a report revealed it had missed out on profits of about $3 billion as a consequence.

Buberl added that the planned divestment was part of the company’s efforts to support governments around the world that are trying to cut down the consumption of tobacco in their countries. He also said he wanted the move to encourage other institutional investors to take similar steps.

Other than Calpers, other large investors who have previously sold off their tobacco investments include California State Teachers’ Retirement System and Norway’s sovereign oil fund.

Alice Steenland, head of corporate responsibility at Axa, said tobacco “is a sunset industry. More and more countries are going to put controls on it,” adding: “Zero tobacco is the right amount of tobacco in terms of health. It is hard to ignore that as a health insurer.”

A number of countries have passed legislation governing the sales of tobacco products. Australia introduced a law for cigarettes to be sold in plain packaging in 2012, while the United Kingdom, France and Ireland recently passed similar rules.

A challenge by tobacco companies against the new rules in the U.K. was thrown out by the courts Thursday. The EU also upheld tough laws against tobacco sales, including a ban on flavored cigarettes, earlier in May, and the Indian government announced stringent laws about packaging, which prompted the country’s biggest tobacco company to suspend production in April.

According to the World Health Organization, about 6 million people die every year from direct or indirect tobacco consumption, including second-hand smoke. The bulk of the world’s estimated 1 billion smokers, about 80 percent, live in low- and middle-income countries.