Axa Sa · EURONEXT:CS
Axa Sa — H1 2010 Earnings Presentation
41 slides from Axa Sa's earnings presentation, Aug 4, 2010
Slide 1: Half Year 2010 Earnings Presentation
Half Year 2010 Earnings August 4, 2010 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: AXA at a glance
AXA at a glance 3 – AXA 1H10 Earnings – August 4, 2010
Slide 4: Table of contents
Table of contents 1H10 financial performance: key highlights Page 5 by Henri de Castries, Chairman and CEO 1H10 financial performance: detailed presentation Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page 38 by Henri de Castries, Chairman and CEO 4 – AXA 1H10
Slide 5: Key highlights
Key highlights “In this uncertain economic environment, we implemented active measures to improve future margins and enhance the capital and growth profile of the Group, while delivering sustainable earnings” 9 Total revenues up 1,4% at €49.9 billion Disciplined growth 9 Life & Savings: NBV margin u
Slide 6: Disciplined growth
Disciplined growth Increase in new business profitability In Euro billion Revenues NBV(1) Disciplined growth +1.5% +20.7% Life & €616m Savings 30.1 30.9 €496m 1H09 1H10 1H09 1H10 Sustainable earnings Current Year Revenues loss ratio +0.4% -1.5 pts Of which 2.4% Property & price increases Casualty 78
Slide 7: Disciplined growth: top line growth in selected areas
Disciplined growth Top line growth in selected areas L&S revenues growth by geography (+1.5% overall) Disciplined growth France: Decision made not to compete in the low profitability South East Asia: Monte de Paschi US: continued family office businesses with leverage emerging Bancassurance discipli
Slide 8: Sustainable earnings
Sustainable earnings In Euro million -3% Disciplined growth 2,116 2,082 Underlying Increase in Life & Savings earnings Decrease in P&C and Asset Management 1H09 1H10 +29% Sustainable earnings 2,284 1,736 Strong increase from higher realized capital Adjusted gains and lower earnings impairments 1H09
Slide 9: Active capital management & strong balance sheet
Active capital management & strong balance sheet Enhancing AXA’s capital and growth profile… Continuing the repositioning of AXA UK life Disciplined growth €3.3 billion consideration from the sale of part of the UK life operations Lower growth / capital intensive Higher growth / capital light Growth
Slide 10: Strengthening our balance sheet
Active capital management & strong balance sheet … and strengthening our balance sheet In Euro billion 186% 188% Disciplined growth 171% 154% 127% Increase driven by sustained earnings Solvency 1 contribution and market effect FY06 FY07 FY08 FY09 1H10 Sustainable earnings Or 27%, including the expec
Slide 11: Table of contents
Table of contents 1H10 financial performance: key highlights Page 5 by Henri de Castries, Chairman and CEO 1H10 financial performance: detailed presentation Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page 38 by Henri de Castries, Chairman and CEO 11 – AXA 1H10
Slide 12: 1H10 financial performance: Disciplined growth
1H10 financial performance Disciplined growth Sustainable earnings Balance sheet 12 – AXA 1H10 Earnings – August 4, 2010
Slide 13: Resilient revenues in all businesses
Resilient revenues in all businesses Revenues by business In Euro million 1H09 1H10 % Life & Savings 30,065 30,881 +1.5% Property & Casualty 14,919 15,394 +0.4% Asset Management 1,503 1,670 +10.4% International Insurance 1,731 1,762 -0.2% Banking & Holdings 196 218 +10.5% Revenues 48,414 49,925 +1.4
Slide 14: Disciplined growth in Life & Savings: NBV up 21%
Disciplined growth in Life & Savings NBV up 21% while APE up 1% Life & Savings APE Life & Savings NBV In Euro million 1H09 1H10 % 1H09 1H10 % United States 576 505 -13% 6 62 +894% France 776 681 -12% 67 66 -0% United Kingdom 493 537 +6% 49 56 +10% Focus on margins in the US, France and Japan NORCE
Slide 15: Identified businesses with high profitability
Disciplined growth in Life & Savings Identified businesses with high profitability 1H10 1H10 APE APE contribution by contribution 1H10 NBV contribution product by product(€3.2 bn) by product (€616 mn) Protection Health Protection 48% 24% 9% Mutual Funds 12% & Others 20% Health 29% 3% 55% Investment
Slide 16: Improved Variable Annuity sales momentum in the US
Disciplined growth in Life & Savings Improved Variable Annuity sales momentum & profile in the US Improved Variable Annuity Increased range of sales momentum products Variable Annuity First Year Premiums ($million) Variable Annuity First Year Premiums 2,411 9% QoQ CAGR + - Accumulator - Retirement C
Slide 17: Strong profitability focus in France individual lines
Disciplined growth in Life & Savings Strong profitability focus in France individual lines General account products Unit-Linked Decision made not to compete in the low margin family office Numerous initiatives in place to support UL business: business with large contracts and one year high guarant
Slide 18: Disciplined growth in Property & Casualty
Disciplined growth in Property & Casualty Leveraging AXA brand and distribution networks Personal lines Commercial lines Price increase Revenues growth Price increase Revenues growth France +3.4% +5.1% +3.9% -0.1% Germany +0.5% -1.8% -0.6% -0.7% UK & Ireland +8.6% +13.7% +2.7% -10.6% Switzerland -0.
Slide 19: 1H10 financial performance: Sustainable earnings
1H10 financial performance Disciplined growth Sustainable earnings Balance sheet 19 – AXA 1H10 Earnings – August 4, 2010
Slide 20: Underlying Earnings
Underlying Earnings Sustainable earnings base Underlying Earnings Underlying earnings by business In Euro million In Euro million 1H09 1H10 % -3% Life & Savings 1,232 1,325 +6% 2,116 2,082 Property & Casualty 986 923 -9% Asset Management 176 150 -15% International Insurance 122 144 +17% Banking 15 (
Slide 21: Life & Savings Underlying Earnings
Life & Savings Underlying Earnings Up 6% despite positive one-offs in 1H09 Key drivers of change in L&S L&S Underlying Earnings Underlying Earnings In Euro million 1H10 vs. 1H09(1) Investment margin +21%: €+0.2 billion +6% Increase in average asset base with a slight decrease in investment yields Lo
Slide 22: Focus on Life & Savings investment margin
Focus on Life & Savings investment margin Resilient margin benefiting from disciplined ALM Resilient investment margin Sustainable margin extraction in an illustrative scenario of persisting low rates 86 bps 4.0% 77 bps 3.75% 3.5% 66 bps Δ1.5% Δ 1.6% 2.5% 2.1% 1.9% 1H08 1H09 1H10 Annualized Investme
Slide 23: Focus on AXA's technical margin
Focus on AXA’s technical margin Technical margin mainly impacted by the non repeat of 1H09 one-offs Gross Technical margin In Euro million (pre-tax) -54% Gross mortality, morbidity & surrender margin (€-0.3 billion) Non repeat of 1H09 gain as a result of internal restructuring of an annuity 1,099
Slide 24: Property & Casualty Underlying Earnings
Property & Casualty Underlying Earnings Decrease in earnings but strong improvement in current year combined ratio Key drivers of change in P&C P&C Underlying Earnings Underlying Earnings In Euro million Improved current year …lower prior year Slight increase in combined ratio… reserve developments
Slide 25: Focus on reserve developments
Focus on reserve developments A strong track record across the cycle Prior year reserve development level (in % of gross earned premiums) +8.2% +6.1% +6.5% +5.3% +4.1% +3.9% +3.1% +3.2% +2.4% +1.5% 1H01 1H02 1H03 1H04 1H05 1H06 1H07 1H08 1H09 1H10 Reserving ratio (Net technical reserves/Net earned p
Slide 26: Asset Management Underlying Earnings
Asset Management Underlying Earnings Improved operating performance Asset Management Key drivers of change in Asset Underlying Earnings Management Underlying Earnings In Euro million -15% 1H10 vs. 1H09 €+65 million Tax one-off at 176 AllianceBernstein Asset Management revenues +10% €+166 million 150
Slide 27: Focus on AllianceBernstein and AXA IM
Focus on AllianceBernstein and AXA IM AllianceBernstein AXA IM improving momentum Increase in AUM Of which Euro -21 billion at In Euro billion AXA Rosenberg Increasing Average Assets Under Management 21 -17 21 In Euro billion +12% 524 499 325 329 364 FY09 Market Forex Outflows 1H10 appreciation 1H09
Slide 28: Adjusted Earnings
Adjusted Earnings Strong increase benefiting from higher realized gains and lower impairments Adjusted Earnings Net realized capital gains/losses (base for dividend policy) In Euro million In Euro million 1H09 1H10 +29% Underlying Earnings 2,116 2,082 2,284 Net realized capital (379) 202 1,736 gains
Slide 29: Net income
Net income Reduced by the sale of part of the UK Life operations Net income Key drivers of change in Net income In Euro million In Euro million 1H09 1H10 Adjusted Earnings 1,736 2,284 Change in fair value -279 219 +81% Of which impact from credit spreads & interest rates (1) 309 -44 2,422 Of which i
Slide 30: 1H10 financial performance: Balance sheet
1H10 financial performance Disciplined growth Sustainable earnings Balance sheet 30 – AXA 1H10 Earnings – August 4, 2010
Slide 31: Further improvement in Solvency I ratio
Further improvement in Solvency I ratio in a still uncertain environment Solvency I ratio at 188% 186% +8pts 188% +9pts 171% 25% 33% 154% 17% Positive impact from interest rates partially offset by credit, 127% equities and FX FY06 FY07 FY08 FY09 Underlying Market 1H10 earnings effects UCG on fixed
Slide 32: Shareholders' equity up €2.4 billion
Shareholders’ equity up €2.4 billion Key drivers of change in Shareholders’ equity In Euro billion shareholders’ equity 48.6 1H10 vs. FY09 46.2 +• Net income for the period €+0.9 billion +• Variation gains of unrealized capital €+1.2 billion +• Forex movements net of hedging instruments €+2.1 billio
Slide 33: Improved interest cover with debt gearing impacted by forex
Improved interest cover with debt gearing impacted by forex movements Net financial debt Debt ratios In Euro billion FY08 FY09 1H10 • Gross financial debt impacted by 17.7 5,25% subordinated debt raised in Interest 16.1 April in anticipation of the refinancing Cover(3) 8.5x 7.9x 9.3x of upcoming cal
Slide 34: General Account invested assets
General Account invested assets Up €43 billion mainly benefiting from interest rates decrease & forex movements Invested assets (100%) In Euro billion FY09 % 1H10 % Changes in asset allocation Fixed income 328 81% 362 81% Net inflows: Mainly invested in o/w Govies and related 154 38% 177 40% Gover
Slide 35: Life & Savings normalized underlying capital generation
Life & Savings normalized underlying capital generation Based on reported EV* Estimated In Euro billion 2007 2008 2009 1H10 Expected VIF surplus generation +3.6 +4.0 +3.2 Expected VIF required capital change** -0.5 -0.9 +0.2 New business strain -1.7 -1.5 -1.7 New business required capital change** -
Slide 36: Total normalized underlying capital generation
Total normalized underlying capital generation Estimated In Euro billion 2007 2008 2009 1H10 L&S normalized underlying capital generation +0.9 +1.0 +0.8 +0.4/+0.5 IFRS P&C underlying earnings (incl. International) +2.1 +2.6 +2.0 +1.1 IFRS AM underlying earnings (incl. banking) +0.6 +0.6 +0.4 +0.1 Ch
Slide 37: Table of contents
Table of contents 1H10 financial performance: key highlights Page 5 by Henri de Castries, Chairman and CEO 1H10 financial performance: detailed presentation Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page 38 by Henri de Castries, Chairman and CEO 37 – AXA 1H10
Slide 38: Focus on businesses with the right scale, position, growth and profitability
Focus on businesses with the right combination of scale, competitive position, growth profile and profitability Priorities Further 1 Continue to develop 2 Redeploy capital more While enhancing selected businesses efficiently throughout maintaining a our capital & through internal growth the group ac
Slide 39: Q&A session
Q&A session Q&A session 39 – AXA 1H10 Earnings – August 4, 2010
Slide 40: Notes
Notes Page 6 (1) New Business Value is the value of the new business sold during the reporting period. The new business value includes both the initial cost (or strain) to sell new business and the future earnings and return of capital to the shareholder. (2) Change on a comparable basis corresponds
Slide 41: Definitions
Definitions AXA's 1H10 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at June 30, 2010 and are subject to completion of a limited review by AXA’s independent auditors. Adjusted earnings, underlying earnings, Life & Savings EE