Axa Sa · EURONEXT:CS
Axa Sa — H1 2011 Earnings Presentation
49 slides from Axa Sa's earnings presentation, Aug 4, 2011
Slide 1: Half Year 2011 Earnings Presentation
Half Year 2011 Earnings August 4, 2011 Presentation
Slide 2: Cautionary note concerning forward-looking statements
Cautionary note concerning forward-looking statements Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements be
Slide 3: 1H11 key highlights
1H11 key highlights • Underlying earnings up 10% to Euro 2.2 billion Strong earnings growth • Adjusted earnings up 7% to Euro 2.4 billion • Net income quadrupled to Euro 4.0 billion Substantial increase in new business • L&S NBV margin up from 21% to 26% profitability • P&C current year combined rat
Slide 4: Table of contents
Table of contents 1H11 key highlights Page 5 by Henri de Castries, Chairman and CEO 1H11 financial performance Page 13 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page 45 by Henri de Castries, Chairman and CEO 4 – AXA HY11 Earnings – August 4, 2011
Slide 5: Strong earnings growth
Strong earnings growth +10% 1,997 2,222 Underlying Resumed earnings growth Earnings 1H10 1H11 +7% 2,393 Adjusted 2,187 Sustained capital gains Earnings generation 1H10 1H11 x4 3,999 Exceptional gains on Net Income disposals 944 1H10 1H11 Changes are at constant forex 5 – AXA HY11 Earnings – August 4
Slide 6: Life & Savings business overview
Life & Savings business overview Focus on selected businesses and areas leading to strong improvement in new business profitability >28% 26% 21% NBV margin 1H10 1H11 Ambition AXA 2015 Selectivity Acceleration G/A Protection & +16% 1H11 Unit-Linked G/A Savings Health 206 183 APE NBV in high 110 growt
Slide 7: Property & Casualty business overview
Property & Casualty business overview 1.3 pts improvement in all year combined ratio -1.3 pts 98.6% 97.2% <96% All year combined ratio 1H10 1H11 Ambition AXA 2015 Selectivity Acceleration -3.8 pts High growth 1H11 Direct markets Current year 103.1% 99.2% combined ratio Revenues Revenues 1H10 1H11 +9
Slide 8: Asset Management business overview
Asset Management business overview Higher revenues despite contrasted net flows AXA IM AllianceBernstein Changes are on a Changes are on a comparable basis comparable basis +5% +2% 1,065 1,024 634 Revenues 605 In Euro million 1H10 1H11 1H10 1H11 +3 1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2
Slide 9: Robust balance sheet
Robust balance sheet 186% 182% Mainly driven by underlying Solvency I earnings FY10 1H11 Coverage ratio 184% 178% Economic Strong economic solvency ratio solvency* FY10 1H11 Coverage ratio 29% 28% 28% Or 26% including expected Debt gearing proceeds from the announced sale of Canadian operations 1H10
Slide 10: Active capital allocation
Active capital allocation Acquisitions in high growth markets Buy out of minority interests in AXA APH Asia Life assets Operations in 8 countries Investment: €3.2 bn P/E: 27x Closing: 2011 Divestitures of mature entities and non strategic participations Canada Part of UK Life Australia & New Stake i
Slide 11: Ambition AXA
Ambition AXA Delivering on our objectives Underlying earnings per share Group operating free cash flows +7% In Euro per share Ambition AXA +11% • 1H11 in line to deliver on 2010-2015 Group operating free cash cumulative 0.90 Ambition AXA 0.85 0.81 2010-2015 CAGR flows ambition Euro 24 billion +10% 1
Slide 12: Table of contents
Table of contents 1H11 key highlights Page 5 by Henri de Castries, Chairman and CEO 1H11 financial performance Page 13 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page 45 by Henri de Castries, Chairman and CEO 12 – AXA HY11 Earnings – August 4, 2011
Slide 13: 1H11 financial performance
1H11 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet 13 – AXA HY11 Earnings – August 4, 2011
Slide 14: Underlying Earnings
Underlying Earnings Underlying Earnings Underlying Earnings by segment In Euro million Reported At constant In Euro million 1H10 1H11 basis +10% Forex 2,222 Life & Savings 1,320 1,310 -1% -1% 1,997 Property & Casualty 843 989 +17% +15% Asset Management 150 157 +5% +6% International Insurance 144 143
Slide 15: Underlying Earnings
Underlying Earnings Solid growth despite negative scope effect in Life & Savings In Euro million +10% +15 2,222 +50 +40 +120 2,082 1,997 +112 -84 -113 Non repeat of €64m provision on AXA Rosenberg 1H10 1H10 1H10 Life & Life & P&C, Asset Holdings Forex & 1H11 published Canadian restated for Savings S
Slide 16: Adjusted Earnings and Net Income
Adjusted Earnings and Net Income Adjusted Earnings In Euro million +7% 2,393 2,187 Higher Underlying Earnings and higher realized capital gains partly offset by higher impairments 1H10 1H11 ROE(1) 11.8% 13.5% Change is at constant Forex Net Income In Euro million x4 3,999 Exceptional gains on the sa
Slide 17: 1H11 financial performance
1H11 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet 17 – AXA HY11 Earnings – August 4, 2011
Slide 18: L&S – Scope overview
L&S – Scope overview Global footprint Well balanced business mix 1H11 APE by business G/A Protection § Operations in over 30 countries Unit-Linked & Health § # 1 global insurer(1) 32% 38% § Over 40 million customers Mutual Funds & other 1H11 APE by geography G/A Savings 10% 19% Asia-Pacific (incl. J
Slide 19: L&S – New business sales and margins by market
L&S – New business sales and margins by market Selectivity in mature markets & acceleration in high growth markets In Euro million Mature markets High growth Total markets(1) -1% -3% New business +11% sales (APE) 2,688 2,467 + 481 = 2,986 2,948 298 1H10 1H11 1H10 1H11 1H10 1H11 New business margin 1
Slide 20: L&S – New business sales and margins by business
L&S – New business sales and margins by business Improved business mix APE (Euro million) NBV margin (%) 1H10 1H11 % change 1H10 1H11 Strong sales in Switzerland (Group G/A Protection & Life), Germany (favorable change in Health 923 1,130 +14% 44% 47% regulation) and the US (new Indexed Universal Li
Slide 21: L&S – Underlying Earnings
L&S – Underlying Earnings Increase in all margins mainly offset by scope and US DAC reactivity In Euro billion -1% +9%** o/w €-139m from the UK o/w €+26m from AXA APH Mainly increase in US Increase average asset base DAC amortization with 75 bps margin* +180 -314 +187 1,320 -113 +63 -22 +8 1,310 1,2
Slide 22: L&S – Underlying Earnings
L&S – Underlying Earnings Increase in US GMxB Underlying Earnings US Variable Annuity GMxB Underlying Earnings (post tax) ( Euro million, net of DAC and tax*) 2009 2010 1H10 1H11 Total VA base fees & other, less expenses 171 303 95 92 GMxB Hedge Margin 16 (109) (91) 5 o/w Basis (21) (13) (17) (4) o/
Slide 23: L&S – Underlying Earnings by business
L&S – Underlying Earnings by business Pre-tax Underlying Earnings G/A Protection G/A Savings Unit-Linked Mutual Funds & Health & Other In Euro million In Euro million In Euro million In Euro million +1%(1) 1,087 1,094 +11%(1) +52%(1) 392 359 358 +2%(1) 254 40 23 1H10 1H11 1H10 1H11 1H10 1H11 1H10 1H
Slide 24: 1H11 financial performance
1H11 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet 24 – AXA HY11 Earnings – August 4, 2011
Slide 25: P&C – Scope overview
P&C – Scope overview Global scope Strong presence in Motor 1H11 Revenues by business § Operations in over 30 countries(1) Other § Over 55 million customers 12% § # 3 global insurer(2) Motor Construction 44% § # 2 amongst non-local insurers(3) in high 2% growth markets Liability 1H11 Revenues by geog
Slide 26: P&C – Revenues by segment
P&C – Revenues by segment 3.5% price increase on average P&C Revenues Personal lines In Euro million +3.7% § Average price increase of +4.4% +2.7% § Increase in volumes more than offset 8,683 9,121 by lower guarantees 15,350 14,691 1H10 1H11 Commercial lines +1.1% § Average price increase of +2.1% 5
Slide 27: P&C – Revenues and margins by market
P&C – Revenues and margins by market Strong improvement across the board in current year combined ratio Mature High growth Direct Total markets markets (1) +2.7% In Euro million +1.2% Revenues 12,313 12,726 + +11.0% + +9.3% = 14,691 15,350 1,417 1,564 1,059 962 1H10 1H11 1H10 1H11 1H10 1H11 1H10 1H1
Slide 28: P&C – Underlying Earnings
P&C – Underlying Earnings Improved combined ratio with stable investment income P&C Underlying Earnings Combined ratio In Euro million Improved current year …lower prior year All year combined ratio… reserve developments combined ratio -3.8 pts -1.3 pts 103.1% 99.2% +15% 1.7% 0.1% 98.6% 97.2% -4.5%
Slide 29: P&C – Underlying Earnings
P&C – Underlying Earnings Price increases of 3.5% on average in mature markets and Direct business Personal lines Commercial lines Price increase Revenues growth Price increase Revenues growth France +4.0% +1.9% +5.8% +2.2% Germany +1.1% +5.6% +0.4% -0.6% UK & Ireland +10.8% +0.5% +3.4% +4.6% Switze
Slide 30: P&C – Underlying Earnings
P&C – Underlying Earnings Enlarged expense ratio down 0.8 pt Mature High growth Direct Total markets markets (1) -0.8 pt -0.8 pt +0.5 pt -1.8 pts Enlarged 33.1% 32.3% + 28.8% 29.3% + 29.1% = 32.4% 31.6% expense 27.4% ratio* 1H10 1H11 1H10 1H11 1H10 1H11 1H10 1H11 Excluding positive one-off effects,
Slide 31: 1H11 financial performance
1H11 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet 31 – AXA HY11 Earnings – August 4, 2011
Slide 32: AM – Scope overview
AM – Scope overview Complementary business models § AXA insurance companies as key clients; § Mostly third party: institutional, retail and Client mix successful diversification through third party private clients § Ability to deliver tailor-made investment solutions § Focus on US, Global and Non-US
Slide 33: AM – Assets under management and revenues
AM – Assets under management and revenues Revenues up 3% despite outflows Average AUM AllianceBernstein In Euro billion In Euro billion 1H11 Net outflows: Euro -24 billion +0% 862 849 Split by client Institutional Retail Private 269 (2) (2) (20) 1H10 1H11 AXA IM Revenues In Euro billion In Euro bill
Slide 34: AM – Focus on AllianceBernstein strategy
AM – Focus on Alliance Bernstein strategy § Improve investment performance and restore client confidence § Diversify our business across channels, investment services and geographies Key priorities § Develop innovative new products and services to meet clients’ evolving needs § Achieve greater opera
Slide 35: AM – Underlying Earnings
AM – Underlying Earnings Underlying Earnings AXA IM +25% In Euro million 99 78 Higher net revenues and contained expense base +6% 157 150 1H10 1H11 AllianceBernstein -15% Higher expenses mainly 71 due to promotion and 57 services on new 1H10 1H11 products, partly offset by higher revenues 1H10 1H11
Slide 36: 1H11 financial performance
1H11 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet 36 – AXA HY11 Earnings – August 4, 2011
Slide 37: Shareholders’ equity
Shareholders’ equity Key drivers of decrease Shareholders’ equity in shareholders’ equity In Euro billion 1H11 vs. FY10 49.7 46.4 +• Net income for the period €+4.0 billion -• 2010 dividend €-1.6 billion -• Forex movements net of hedging instruments €-1.5 billion FY10 1H11 -• Decrease in net unreali
Slide 38: Increase in economic solvency
Increase in economic solvency Economic solvency1 Sensitivities In Euro billion 178% 184% 50.3 46.7 Ratio as of June 30, 2011 184% 28.3 Interest rate +100bps 187% 25.4 Interest rate -100 bps 172% Equity markets +25% 187% Equity markets -25% 181% Corporate spreads +75 bps 169% December 31, 2010 June 3
Slide 39: Debt gearing at 28%
Debt gearing at 28% Net financial debt Debt ratios In Euro billion FY08 FY09 FY10 1H11 17.7 Debt 15.2 14.4 35% 26% 28% 28% Gearing(1) 7.4 13.5 7.7 7.4 Or 26% including expected 7.4 proceeds from the announced sale of Canadian operations 6.2 Stable gearing vs. FY10 mainly driven by: 6.7 6.5 6.0 § +4
Slide 40: General Account invested assets
General Account invested assets Invested assets (100%) In Euro billion FY10 % 1H11 % Changes in asset allocation Fixed income 365 83% 356 82% § Scope effect: Euro -3 billion related to the o/w Govies and related 188 42% 187 43% announced sale of Canadian operations, mainly govies and corporate bonds
Slide 41: Greek Government bonds impairment
Greek Government bonds impairment Before P&L impairment After P&L (Unrealized losses already reflected in Shareholders’ Equity) impairment As of June 30, 2011 Gross Gross Net* Net* Gross book % of book market unrealized unrealized unrealized (In Euro million) value value value losses losses losses M
Slide 42: Exposure to other European peripheral countries government bonds
Exposure to other European peripheral countries government bonds – June 30, 2011 AFS OCI Gross Gross Net* Gross book % of book market unrealized unrealized In Euro billion value value value gains/losses gains/losses Italy 17.6 17.1 97% -0.5 -0.1 Spain 11.1 10.2 92% -0.9 -0.2 Portugal 2.2 1.5 65% -0.
Slide 43: Net unrealized gains on total fixed income assets
Net unrealized gains on total fixed income assets Net unrealized gains on fixed income assets In Euro billion June 30, 2011 +3.3 +2.6 -0.7 Total excluding Italy, Italy, Spain, Portugal, Total net Spain, Portugal, Greece Greece and Ireland govies and Ireland govies unrealized gains Estimated net unre
Slide 44: Table of contents
Table of contents 1H11 key highlights Page 5 by Henri de Castries, Chairman and CEO 1H11 financial performance Page 13 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page 45 by Henri de Castries, Chairman and CEO 44 – AXA HY11 Earnings – August 4, 2011
Slide 45: Ambition AXA
Ambition AXA We started to deliver on our objectives Underlying earnings per share Group operating free cash flows +7% In Euro per share Ambition AXA +11% • 1H11 in line with our 2010-2015 expectations to deliver on cumulative 0.90 Ambition AXA Group operating free cash 0.85 0.81 2010-2015 CAGR Euro
Slide 46: Objectives for the remainder of 2011
Objectives for the remainder of 2011 “Going forward, as the macro-environment remains uncertain, we should continue to benefit from our selective approach in mature markets, our acceleration in high growth markets and the ongoing efficiency programs which started to deliver" • Continue to drive our
Slide 47: Q&A session
Q&A session Q&A session 47 – AXA HY11 Earnings – August 4, 2011
Slide 48: Notes
Notes Page 6 (1) Change on a comparable basis corresponds to: For activity indicators, constant exchange rates, scope and methodology For earnings and profitability indicators, constant exchange rates Page 8 (1) Figures provided are, for benchmarkable accounts, based on representative accounts and c
Slide 49: Definitions
Definitions AXA's 1H11 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at June 30, 2011 and are subject to completion of a limited review by AXA’s independent auditors. Adjusted earnings, underlying earnings, Life & Savings EE