AXA SA · EURONEXT:CS
AXA SA — H1 2008 Earnings Presentation
29 slides from AXA SA's earnings presentation, Aug 7, 2008
Slide 1: Half Year 2008 Earnings Media Conference Call
Half Year 2008 Earnings August 7, 2008 Media Conference Call
Slide 2: Cautionary statements concerning forward-looking statements
Cautionary statements concerning forward-looking statements Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statem
Slide 3: Definitions
Definitions AXA's HY08 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at June 30, 2008 and have been subject to a limited review by AXA’s independent auditors. Adjusted earnings, underlying earnings, NBV are non-GAAP measures
Slide 4: Table of contents
Table of contents Key highlights 1H08 IFRS earnings Checking the Macroeconomic Radar Screen Concluding remarks Appendices Media Conference Call AXA HY 08 Accounts – August 7, 2008 – 4
Slide 5: First Half 2008 key highlights
First Half 2008 key highlights Positive net inflows in all business lines (increased retention in Life and Savings) and stable total revenues in line with 1Q08 trends Positive Underlying Earnings growth in line with February 28, 2008 outlook, reflecting business diversification and resilience of AXA
Slide 6: First Half 2008 key performance indicators
First Half 2008 key performance indicators Stable sales momentum vs. 1Q08 1Q08 1H08 L&S APE -6.3% -6.0% P&C revenues +2.0% +2.3% AM revenues +3.3% -2.7% Total revenues -0.5% -0.4% Positive net inflows Life & Savings Property & Casualty Asset Management € +6 billion +551,000 € +2 billion net new pers
Slide 7: Positive Underlying Earnings growth benefiting from business diversification
Positive Underlying Earnings growth benefiting from business diversification Underlying Earnings (Euro million) Change on a +7% Euro million 1H07 1H08 comparable basis 2,688 2,766 Life & Savings 1,489 1,396 -1% Property & 963 1,133 +20% Casualty Asset 286 285 +9% Management 1H07 1H08 Change is on a
Slide 8: Adjusted Earnings impacted by turbulent market conditions
Adjusted Earnings impacted by turbulent market conditions Adjusted Earnings Net realized capital gains (Euro million) 20% ROE(1) (Euro million) -1% Realized capital gains Impairments 3,424 3,290 Hedging of equity portfolio(2) Net realized 736 524 capital gains attributable to 762 834 shareholders 47
Slide 9: Underlying and Adjusted EPS
Underlying and Adjusted EPS Underlying EPS(1) Adjusted EPS(1) (in Euro) (in Euro) +5% -2% 1.28 1.58 1.54 1.22 1H07 1H08 1H07 1H08 CAGR FY04-HY08 CAGR FY04-HY08 +16% +14% Changes and CAGR (Compound Annual Growth Rate) are on a reported basis. (1) Fully diluted EPS are reported including impact in ear
Slide 10: Key highlights by geography/activity (change in underlying earnings)
Key highlights by geography/activity (change in underlying earnings) AXA-Equitable keeps #1 position in V.A. market / Strong net inflows thanks to improved retention / Negative U.S. technical margin due to relative underperformance of some separate account funds vs. indices used in delta (-22%) hedg
Slide 11: Operational Highlights – Key Takeaways (1/2)
Operational Highlights – Key Takeaways (1/2) AXA's half-year performance demonstrates the relevance of our strategy in an adverse environment Resilience of our underlying and adjusted earnings • Diversified earnings offset current weakness in the US • Measures implemented to reduce expenses in the
Slide 12: Operational Highlights – Key Takeaways (2/2)
Operational Highlights – Key Takeaways (2/2) We are well equipped to withstand a further deterioration in world economic conditions P&C and traditional life offset market sensitivity of savings and asset management Dynamic defensive balance sheet management Positive cash flows in all our segme
Slide 13: Table of contents
Table of contents Key highlights 1H08 IFRS earnings Checking the Macroeconomic Radar Screen Concluding remarks Appendices Media Conference Call AXA HY 08 Accounts – August 7, 2008 – 13
Slide 14: Life & Savings APE & NBV by region
Life & Savings APE & NBV by region 1H08 Comp. Comp. NBV Comp. APE NBV (Euro million Group share) growth growth margin growth US 808 -14% 144 -15% 17.8% -0.3 pts France 690 -3% 92 -23% 13.3% -3.4 pts NORCEE 660 +8% 209 +8% 31.6% +0.1 pt UK 692 -3% 54 -17% 7.7% -1.3 pts Asia Pacific (incl. Japan) 558
Slide 15: Property & Casualty: revenues and combined ratio
Property & Casualty: revenues and combined ratio Revenues Combined ratio Comp. Comp. (Euro million Group share) 1H07 1H08 1H07 1H08 growth growth NORCEE(1) 5,202 5,224 -0.1% 99.4% 96.7% -2.6 pts o/w Germany 2,202 2,199 -0.1% 101.0% 98.0% -2.9 pts o/w Switzerland 1,794 1,805 -0.9% 97.7% 92.8% -4.9 pt
Slide 16: Improved P&C Combined Ratio while maintaining high reserving levels
Improved P&C Combined Ratio while maintaining high reserving levels Loss Ratio (%) Reserving ratio -2.1 pts +4pts to 198% Combined Ratio (%) 70.5% +1.3 pts -0.8 pt 68.4% 98.4 -2.6 pts 96.4 1H07 Current Prior Year Nat Cat** 1H08 accident Reserve year Dev. Loss 70.5 68.4 ** Kyril, UK floods and Emma -
Slide 17: Asset Managers' AUM roll-forward: positive net inflows
Asset Managers’ AUM roll-forward: positive net inflows Revenues exl. distribution fees on average AUM* 0.37% 0.37% 1H07 1H08 Euro billion 1,092 2 5 (73) 981 (44) +6 at AXA IM -4 at AllianceBernstein FY07 Net inflows Market Change in FX 1H08 appreciation scope Revenues (excluding distribution fees):
Slide 18: Positive earnings growth in Asset Management business
Positive earnings growth in Asset Management business Revenues Underlying Cost Underlying Earnings (Euro million) Income Ratio(1) (Euro million Group share) -2.7% -0.8 pt +9% 2,102 66.8% 285 1H08 1H08 1H08 Stable revenues, Lower compensation and Positive non recurring excluding distribution di
Slide 19: Adjusted Earnings and Net Income impacted by volatility of financial markets
Adjusted Earnings and Net Income impacted by volatility of financial markets Euro million 1H07 1H08 Underlying Earnings 2,688 2,766 Net realized capital gains 762 834 Net impairments -26 -786 Primarily equity impairments Equity portfolio hedging (intrinsic value) 0 477 Adjusted Earnings 3,424 3,290
Slide 20: Shareholders' equity roll-forward
Shareholders’ equity roll-forward Unrealized capital gains FY07 1H08 €+6.9 billion €+2.6 billion 2.1 Real estate, loans 2.1 (Off Balance Sheet) 5.2 2.8 Equities (through OCI) Fixed income assets (0.5) (though OCI) (2.4) Euro million 2,162 45,642 138 (2,473) 40,547 (4,300) (622) FY07 Net income Divid
Slide 21: Table of contents
Table of contents Key highlights 1H08 IFRS earnings Checking the Macroeconomic Radar Screen Concluding remarks Appendices Media Conference Call AXA HY 08 Accounts – August 7, 2008 – 21
Slide 22: Checking the macroeconomic radar screen
Checking the macroeconomic radar screen Equity gearing Solvency Fixed income assets Debt gearing & DAC assets liquidity Forex Inflation VA risk managementMedia Conference Call AXA HY 08 Accounts – August 7, 2008 – 22
Slide 23: Equity gearing (General Account exposure)
Equity gearing (General Account exposure) Hedges on general account equity exposure in Euro billion Various hedging strategies implemented including swaps, puts and calls 28 12 notably in Life participating funds Derivatives Notional level Protection trigger point Protection below Outstanding 14 pro
Slide 24: Asset portfolio: Quality and diversification
Asset portfolio: Quality and diversification Euro billion FY07 % 1H08 % Asset allocation Fixed income 298 78% 286 79% • Increased corporate bond exposure (average rating o/w Govies 135 35% 120 33% A+) to capture higher level of spreads currently available o/w Corporate Bonds 132 35% 138 38% • Lower
Slide 25: Asset portfolio: Fixed income
Asset portfolio: Fixed income Strict ALM: Strict Accounting • Duration & Convexity gap • Mark-to-market valuation based on external • Assets diversification & quality data (level 3 = non material) Fixed income exposure (excluding govies) Sensitivity Good quality portfolio: • Few credit events (lim
Slide 26: Strong Solvency & Balance Sheet = No Capital Increase Required
STRONG SOLVENCY & BALANCE SHEET = NO CAPITAL INCREASE REQUIRED Strong liquidity, supporting AXA’s high financial flexibility •Cash-rich business = Strong recurring positive cash flow across business lines •Cash management optimized through pooling vehicles •Conservative financing = ca. 50% of debt i
Slide 27: Other items on the macro economic radar
Other items on the macro economic radar (see appendices for details) • DAC (Deferred Acquisitions Costs) Assets Limited sensitivity of DAC assets to equity markets deviations • U.S. Variable Annuity Risk Management Short term variable annuity profitability marginally impacted by market turbulence /
Slide 28: Table of contents
Table of contents Key highlights 1H08 IFRS earnings Checking the Macroeconomic Radar Screen Concluding remarks Appendices Media Conference Call AXA HY 08 Accounts – August 7, 2008 – 28
Slide 29: First Half 2008 key highlights
First Half 2008 key highlights Positive net inflows in all business lines (increased retention in Life and Savings) and stable total revenues in line with 1Q08 trends Positive Underlying Earnings growth in line with February 28, 2008 outlook, reflecting business diversification and resilience of AXA