Axa Sa · EURONEXT:CS
Axa Sa — H1 2004 Earnings Presentation
42 slides from Axa Sa's earnings presentation, Aug 6, 2004
Slide 1: Half year 2004 Earnings Press Conference
Half year 2004 Earnings August 6, 2004 Press Conference
Slide 2: 1st Half 2004: Table of contents
1st HALF 2004 : Table of contents 1 : Harvesting the fruits of our strategy 2 : Overview of Consolidated Results 3 : MONY integration 4 : Outlook Half Year 2004 Earnings - August 6, 2004 - Page 2
Slide 3: Harvesting the fruits of our strategy
Harvesting the fruits of our strategy Euro million 1H04 Growth Growth at cst FX Volume: Revenues 37 306 -0.4% +2.4%(1) Earnings: Underlying earnings 1,436 +32% +37% Adjusted earnings 1,590 +338% +355% Net income 1,444 +590% +621% Productivity: Life NB Contribution 368 +15% +21% Life NB A
Slide 4: Continuing to deliver strong earnings improvement in 1st Half 2004
Continuing to deliver strong earnings improvement in 1st Half 2004 Euro million Underlying Earnings 2,035 1,687 R(1 ) CAG 1,533 + 18% 1,436 1,196 R(1 ) 1,085 % CA G 1,022 + 19 876 % + 32 2000 2001 2002 2003 1H01 1H02 1H03 1H04 Per share (2) 0.77 0.89 0.97 1.14 0.50 0.58 0.61 0.77 (1) Compounded Annu
Slide 5: Growth driven by turnaround of businesses acquired 4 to 5 years ago
Growth has been driven by the turnaround of businesses acquired 4 to 5 years ago Underlying earnings Euro million 237 188 130 142 135 79 67 52 60 11 25 04 04 03 00 00 03 04 04 00 03 00 03 1H 1H 20 20 20 20 1H 1H 20 20 20 20 Japan UK Germany Belgium Life(1) P&C(2) P&C Life and P&C -233 EVENT: 2000 19
Slide 6: Other entities performed well despite difficult equity markets since 2000
And other entities have performed well despite difficult equity markets since 2000 688 Underlying earnings 651 million 580 1/1/00-12/31/03 1/1/00-6/30/04 S&P 500 -23.6% -21.6% 411 379 Stoxx 50 -43.6% -43.0% 325 155 127 89 4976 51 30 66 -32 04 04 04 04 04 20 0 20 0 20 0 20 0 20 0 03 03 03 03 03 0 0 0
Slide 7: True diversification, a key part of our strategy
This has resulted in true diversification, a key part of our strategy Underlying earnings breakdown(1) Other Other France Asset Asset 14% 3% France 24% Management Management 18% 29% 8% Australia/NZ +HK 4% 13% 4% Belgium Japan 4% 18% Germany 5% US 37% 11% 8% Southern Europe US UK Belgium 2000 1H04 3
Slide 8: The platform built is the cornerstone for sustainable and profitable growth
The platform that we have built is the cornerstone for sustainable and profitable growth Diversification Scale Group leverage No over-reliance on one activity / region Capacity to absorb shocks Benefit from group mutualization of resources (AXA Cessions, AXA Tech, Global Procurement, best prac
Slide 9: Profitable growth in all segments of the Group
Profitable growth in all segments of the Group Life & Savings P&C Unit-linked sales : +19%(1) Net portfolio inflows (6 months) +238,000 motor contracts(2) Euro million 1H04 change +57,000 Household contracts(2) vs 1H03(1) APE (3) 2,249 +3.8% Combined ratio NBC 368 +20.9% 1H03 1H04 change vs 1H03
Slide 10: Continued focus on improving efficiency
Continued focus on improving efficiency Life P&C Underlying cost income ratio(1) Administrative expense ratio Ö1H03: 82.7% Ö1H03: 11.1% Ö1H04: 77.3% Ö1H04: 10.3% Asset Management cost income ratio(2) Alliance Capital AXA Investment Managers 1H03 1H04 change 1H03 1H04 change vs 1H03 vs 1H03 73.
Slide 11: Our business model: strong and efficient local entities fueling external growth
Our business model : strong and efficient local entities fueling external growth Organic Growth • Through operational excellence External Growth • Revenue Growth + Margins • Only in Financial Protection • Productivity • In developed or high potential markets • Customer satisfaction and retention • E
Slide 12: Proposed minority buyout of AXA Asia Pacific Holdings
Proposed minority buyout of AXA Asia Pacific Holdings Rationale Î Increase exposure to the Asian region and its inherent growth Î Be in a better position to seize Asia external growth opportunities Î Further enhance diversification and quality of our results Î Simplify AXA’s structure Î Fully integr
Slide 13: 1st Half 2004: Table of contents
1st HALF 2004 : Table of contents 1 : Harvesting the fruits of our strategy 2 : Overview of Consolidated Results 3 : MONY integration 4 : Outlook Half Year 2004 Earnings - August 6, 2004 - Page 13
Slide 14: AXA is focused on generating profitable revenue growth
AXA is focused on generating profitable revenue growth 37.5 37.3 Euro billion Revenues Growth(1) ( 1) Life & Savings +1.6% .4% +2 P&C +4.2% Asset Mgmt +19.1% Gross Revenues Int’l Insurance -6.1% 1H03 1H04 Revenue growth boosted by P&C: Î Net inflows in individual motor Î Successful targeted strate
Slide 15: 2004 is a good vintage so far
2004 is a good vintage so far, all businesses post strong underlying performance Euro 1H04 1H03 Change 1H04 per million million Change at cst. FX share(2) Change Life & Savings 848 680 +25% +31% Property & Casualty 562 402 +40% +40% International Insurance 141 50 +180% +184% Asset Management 136 107
Slide 16: Life & Savings: strong underlying performance
Life & Savings: strong underlying performance Underlying earnings Change Change at 1H04 (Euro million) from 1H03 cst FX France 240 +4% +4% US 309 +11% +23% UK 53 +77% +74% Japan 79 +100m +104m Australia/NZ+HK 66 +15% +19% Other countries 102 -2% -2% Total L&S 848 +25% +31% Half Year 2004 Earnings -
Slide 17: Life & Savings: 1H04 New Business Margin increased to 16.4%
Life & Savings: 1H04 New Business Margin increased to 16.4% Group share 1H04 1H03 In Euro million, (1) (2) NB NB except margins in % APE NBC Main Drivers Margin Margin France 507 71 14.1% 8.4% Increased individual unit-linked sales US 687 130 18.9% 17.8% Accumulator '04 more profitable, hedging Japa
Slide 18: P&C: underlying earnings growth boosted by improved combined ratio
P&C: underlying earnings growth boosted by improved combined ratio Combined ratios(1) Underlying earnings Combined ratios in % Earnings in Euro million Improv't Improv't 1H04 1H04 from 1H03 from 1H03 France 99.9 -2.3 170 +33 Germany 99.5 -0.1 67 +43 UK & Ireland 98.5 -3.9 130 +71 Belgium(2) 100.3 -1
Slide 19: International Insurance: strong 1H04 results confirming turnaround
International Insurance: strong 1H04 results confirming turnaround 1H04 benefited from: Combined ratio In % 105.2 Continued benign claims environment 95.0 Expense ratio 13,1 No natural catastrophes 18,1 Selective underwriting Loss ratio 92,1 76,9 Improved reinsurance protections AXA RE (1)
Slide 20: Asset Management: revenue growth and continued expense control
Asset Management : revenue growth and continued expense control efforts Revenues were up 10%, or 19% at constant currency, fuelled by: Î Solid net inflows at AXA Investment Managers Î Strong equity markets’ recovery Asset Managers AUM Euro billion 696 712 646 648 668 628 1H03 2003 1H04 06/30/03 12
Slide 21: 1st Half 2004: Table of contents
1st HALF 2004 : Table of contents 1 : Harvesting the fruits of our strategy 2 : Overview of Consolidated Results 3 : MONY 4 : Outlook Half Year 2004 Earnings - August 6, 2004 - Page 21
Slide 22: MONY Integration & Synergies
MONY Integration & Synergies Cross-sell activity has started ÎAXA Financial & MONY salesforces trained in complementary product offerings: Equitable variable annuities available to MONY’s advisors MONY specialty risk products available to AXA Advisors ÎMONY Partners life wholesaling business
Slide 23: MONY - Expected expense savings and underlying earnings forecasts
MONY - Expected expense savings and underlying earnings forecasts Combined AXA Financial and MONY run-rate pre-tax merger operating expense savings of $175m starting in 2005 Incremental 2005 after-tax underlying earnings resulting from the implementation of the MONY acquisition are expected to b
Slide 24: 1st Half: Table of contents
1st HALF : Table of contents 1 : Harvesting the fruits of our strategy 2 : Environment and Trends 3 : Overview of Consolidated Results 4 : Outlook Half Year 2004 Earnings - August 6, 2004 - Page 24
Slide 25: So far, 2004 is a good year
So far, 2004 is a good year P&C and International Insurance will extract further productivity gains Life & Savings and Asset Management growth will accelerate owing to economic recovery and country- specific levers: Î US to leverage additional distribution power from MONY Î Asia/Pacific to be bo
Slide 26: Three to four years ago ... AXA today ...
Three to four years ago ... We were recognized as having a track record for acquiring weakened companies at an attractive price Our challenge was to demonstrate our ability to turn around acquisitions and increase our core business margins AXA today ... Has built a strong platform for Financia
Slide 27: More profitable growth is embedded in our operating model
More profitable growth is embedded in our operating model The benefits of our model: One clearly identified business - Financial Protection Unparalleled diversification Focused on operational excellence From here, we will: Strengthen our organic growth Continue to lower unit costs Take a
Slide 28: 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 29: Appendices
Appendices A A 6 FINANCIAL PROTECTION Be Life Confident
Slide 30: Appendices
Appendices Glossary Environment and trends Life & Savings margin analysis P&C combined ratio analysis Expense analysis Purchase GAAP accounting for MONY Half Year 2004 Earnings - August 6, 2004 - Page 30
Slide 31: Glossary
Glossary Adjusted Earnings Net income before the impact of exceptional operations and goodwill amortization. Underlying Earnings Adjusted earnings excluding net capital gains attributable to shareholders and claims associated with the September 11, 2001 terrorist attacks. Adjusted and underlying
Slide 32: Environment and trends: Life & Savings
Environment and trends : Life & Savings Opposite trends in L&S markets: Î Flat in Belgium and Japan Î Growth in the US Î Strong growth in HK, Australia and France Main drivers of Life & Savings insurance markets: Î Pension reforms Î Unit-linked products back in favor Î Growing importance of Prot
Slide 33: Environment and trends: P&C
Environment and trends : P&C Rates flattening in individual lines Commercial lines: lower rating increases in a more competitive market Favorable claims environment in all countries and all lines of business: Î Low level of large losses, although slightly higher than in 1H03 Î Low level of wea
Slide 34: Environment and trends: international insurance
Environment and trends : international insurance Continued benign environment, both in terms of large claims and natural catastrophes Increased competition, encouraged by customers and fueled by new entrants, both on reinsurance and large risks Despite competition, tariffs continue to benefit
Slide 35: Environment and trends: Asset management
Environment and trends : Asset management US Europe Continuing shift from Specialization of growth to value equity Institutional Clients management mandate Global mandates gaining Growth in alternative asset traction among institutional classes (hedge funds, real clients estate, CDOs) Top
Slide 36: Life & Savings: performance driven by gross margin growing faster than expenses
Life & Savings: performance driven by gross margin growing much faster than expenses Margin Analysis of Pre-tax & Pre-minority Underlying Earnings(1) Euro million 1H03 1H04 Growth(2) 1H03 1H04 1H03 1H04 3 752 Underlying 1 172 +11% 3 400 Investment 1 056 Gross margin Margin 9% +2 Fees & 2 194 +11% 1
Slide 37: Life & Savings: 1H04 Underlying Investment Margin increased
Life & Savings: 1H04 Underlying Investment Margin increased on the back of stable yields 1H03 1H04 Underlying Investment Margin was up 11%, or 15% at constant currency, owing 1 172 to: 1 056 Higher Investment Income Euro million, pre-tax & pre-minorities Î Higher general account balance Î Stable y
Slide 38: Life & Savings: 1H04 Fees & Revenues strongly increased
Life & Savings: 1H04 Fees & Revenues strongly increased on higher average separate account balances 1H03 1H04 Fees & Revenues increased 11%, or 14% at constant currency, resulting from: Separate Account fees up 24% at constant Euro million, pre-tax & pre-minorities FX, in line with average S/A bal
Slide 39: Life & Savings: 1H04 Technical Margin
Life & Savings: 1H04 Technical Margin reflected offsetting reserve actions and incremental Japan conversions & surrenders 1H03 1H04 Technical margin was up 4%, or 11% at constant currency, owing mainly to: Euro million, pre-tax & pre-minorities Offsetting reserve actions in 1H03 (UK and Japan) and
Slide 40: P&C: combined ratio improvement due to better expense ratios
P&C: combined ratio improvement due to better technical and administrative expense ratios Improv't Technical result improved owing to: Ratios (in %) 1H04 from ÎFavorable personal claims frequency 1H03 ÎBenign commercial claims environment Loss, excl. CH 67.6 -2.0 ÎNo mali Claims handling 4.8 -0.6
Slide 41: 1H04 economic expenses decreased compared to 1H03
1H04 economic expenses decreased by Euro 49 million compared to 1H03 1H04 1H03 Change AXA Consolidated general 8,442 8,297 + 144 expenses(1) Non commissions expenses 3,813 3,850 - 37(2) excl. Asset Management Economic expenses 3,813 3,862 - 49 (at 1H03 exchange rates) (1) Before DAC/VBI capitalizati
Slide 42: Key Principles of Purchase GAAP accounting on MONY's balance sheet
Key Principles of Purchase GAAP (“PGAAP”) accounting on MONY’s December 31, 2003 US GAAP balance sheet MONY’s balance sheet ASSETS LIABILITIES & EQUITY US GAAP at Dec. 31, 2003 - In $ billion Fair valued under PGAAP Fair valued Invested Actuarial under PGAAP Assets Reserves 12.8 11.8 Written off und