Slide 1: Half Year 2019 Earnings presentation
Half Year 2019 Earnings presentation August 1, 2019
Slide 2: Important legal information and cautionary statements
IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS AND THE USE OF NON-GAAP FINANCIAL MEASURES Certain statements contained herein may be forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, tr
Slide 3: Table of contents
Table of contents 1. Introduction & highlights A.05 Thomas Buberl, Group CEO 2. 1H19 Business performance A.15 Gérald Harlin, Deputy CEO & Group CFO 3. 1H19 Financial performance A.24 Gérald Harlin, Deputy CEO & Group CFO 4. Concluding remarks A.33 Thomas Buberl, Group CEO A3 Half Year 2019 Earnings
Slide 4: Half Year 2019 – Disciplined Execution
Half Year 2019 – Disciplined Execution ▶ +4% topline growth, notably on preferred segments ▶ +10% UEPS growth, with strong performance across the Group ▶ AXA XL progressing well, and in line with 2020 earnings target ▶ Strengthened balance sheet, delivery on selldowns and deleveraging ▶ Unique strat
Slide 5: Introduction & highlights
1 Introduction & highlights Thomas Buberl, Group CEO
Slide 6: +4% topline growth in 1H19, driven by preferred segments
+4% topline growth in 1H19, driven by preferred segments… P&C Commercial +6% +4% (32% of revenues1) 1H19 total revenues Health (12% of revenues1) +5% Euro 58 billion Protection (15% of revenues1) +3% A6 Half Year 2019 Earnings | August 1, 2019 All notes are on pages 39, 40 and 41 Back to agenda Chan
Slide 7: Very strong technical profitability
… with very strong technical profitability… P&C Health Protection Combined ratio Combined ratio Combined ratio 95.1% 93.9% 93.2% or 93.3% (-1.2 pts) (-0.7 pt) (-1.0 pt1) excl. AXA XL A7 Half Year 2019 Earnings | August 1, 2019 All notes are on pages 39, 40 and 41 Back to agenda Change on a constant
Slide 8: A solid contribution from AXA XL
…and a solid contribution from AXA XL… Strong and disciplined growth Delivery on earnings +9%1H19 revenues Euro 0.5 billion 1H19 underlying earnings ▶ Continued firming of the pricing cycle, with ▶ Synergies progressing well on costs, measurable price increases across most lines revenues and reinsur
Slide 9: +7% growth in underlying earnings
…resulting in a +7% growth in underlying earnings… Underlying earnings1 In Euro billion +7% 3.6 3.3 ▶ Continued strong performance across France, Europe, Asia, International and +5% contribution Transversal2 ▶ From AXA XL, net of reduced ownership of EQH (Euro -0.2bn) and temporary increase +2% in H
Slide 10: +10% growth in UEPS
… and +10% growth in UEPS Underlying earnings per share1 Adjusted earnings per share1 In Euro In Euro +10% +10% 1.46 1.62 1.33 1.47 +3% from favourable FX 1H18 1H19 1H18 1H19 A10 Half Year 2019 Earnings | August 1, 2019 All notes are on pages 39, 40 and 41 Back to agenda Change on a reported basis
Slide 11: Balance sheet strengthened by delivery on key priorities
AXA’s balance sheet is strengthened, by delivery on our key priorities… Reducing Reducing EQH ownership Debt Gearing3 59% 32% 30.8% Ca €0.6bn4 debt notified for repayment in August 39%1 Mandatory Exchangeable bonds 30.2% 25% - 28% Target range Economic by 2020 30% ownership2 FY18 1H19 FY18 1H19 A11
Slide 12: Resilient Solvency II ratio and re-affirmed ratings
… and as evidenced by a resilient Solvency II ratio and re-affirmed ratings Re-affirmed 190% AA- / Stable July, 2019 Negative outlook 1H19 Solvency II ratio1 Aa3 / Stable removed April, 2019 170% - 220% Target range Re-affirmed AA- / Stable April, 2019 A12 Half Year 2019 Earnings | August 1, 2019 Al
Slide 13: Well advanced transformation with a unique portfolio of scarce assets
AXA is very well advanced on its transformation journey, with a unique portfolio of scarce assets… Health ▶ On-boarding of XL to become the #1 Global Commercial P&C insurer, with leadership in Specialty and North American lines ▶ Leveraging our leading market positions in core 1H19 European markets,
Slide 14: Accelerating on Payer-to-Partner strategy
… and is accelerating on its Payer-to-Partner strategy Health P&C Commercial Vertical Integration Risk Advisory Services Creating ecosystems that combine health Risk consulting provided by AXA XL clinics with AXA’s insurance services in emerging markets SiteForward Client risk visualization portal M
Slide 15: Business performance
2 Business performance Gérald Harlin, Deputy CEO & Group CFO
Slide 16: Underlying earnings
Underlying earnings In Euro million Underlying earnings by geography 1H18 1H19 Change +7% France 816 873 +7% 3,620 3,298 Europe 1,271 1,333 +4% Asia 544 620 +8% +5% contribution International 210 240 +16% Transversal 198 174 -12% AXA XL 77 502 - United States 465 283 - +2% contribution Central Holdi
Slide 17: France | Continued earnings growth from higher technical margin
France | Continued earnings growth from higher technical margin, notably in P&C Underlying earnings In Euro million +7% 873 +3% 816 Stable P&C Commercial lines +6% Health + Strong improvement in claims experience and more favorable PYD +3% Protection L&S in P&C revenues + Increased technical margin
Slide 18: Europe | Increased technical profitability, with disciplined growth
Europe | Increased technical profitability, with disciplined growth Underlying earnings In Euro million +4% 1,333 +2% 1,271 Spain +4% P&C Commercial lines Italy +3% Health + Improved claims experience in -2% Protection UK & P&C and Health (Germany, Ireland UK & Ireland, Spain and Italy) revenues Bel
Slide 19: Asia | Strong earnings growth across the region
Asia | Strong earnings growth across the region Underlying earnings In Euro million +8% 620 544 Asia High Potentials + Higher profit contribution from Asia High Potentials notably from Thailand and China +5% +5% P&C Commercial lines +3% Health +11% Protection revenues + Higher volume growth in Prote
Slide 20: International | Delivering strong profit growth
International | Delivering strong profit growth and demonstrating potential Underlying earnings In Euro million +16% 240 210 + Higher contributions across all +6% +7% P&C Commercial lines +11% Health +4% Protection business lines in Mexico revenues + More favorable claims experience in Brazil (P&C)
Slide 21: AXA IM | Lower earnings following a challenging market environment
AXA IM | Lower earnings following a challenging market environment Underlying earnings In Euro million -12% -8% 139 123 Euro +4 billion Net inflows (excl. Asian JVs) - Lower performance, transaction Gross revenues and management fees Euro 0.6 billion Asian JVs (Euro -6 billion) + Lower expenses 123b
Slide 22: AXA XL | Solid earnings contribution and improved business mix
AXA XL | Solid earnings contribution and improved business mix Underlying earnings Euro 502 million +9% 6% Specialty +15% P&C Insurance +2% Reinsurance (o/w -7% Prop. Cat) revenues + Broad based price increases and volume growth Firming pricing cycle + Early delivery of expense synergies P&C CoR Ins
Slide 23: United States | Lower earnings contribution with reduced EQH ownership
United States | Lower earnings contribution in line with reduced ownership of EQH Underlying earnings In Euro million 465 Reduced economic ownership1 to 30% ▶ March 2019: 12% sold for USD 1.5 billion US Life 283 ▶ June 2019: 9%1 sold for USD 1.0 billion2 - Reduced ownership (Euro -0.2bn) + Higher in
Slide 24: Financial performance
3 Financial performance Gérald Harlin, Deputy CEO & Group CFO
Slide 25: Underlying earnings
Underlying earnings In Euro million Underlying earnings by geography 1H18 1H19 Change +7% France 816 873 +7% 3,620 3,298 Europe 1,271 1,333 +4% Asia 544 620 +8% +5% contribution International 210 240 +16% Transversal 198 174 -12% AXA XL 77 502 - United States 465 283 - Temporary increase in financia
Slide 26: Adjusted earnings
Adjusted earnings In Euro million Details of adjusted earnings +8% 1H18 1H19 4,006 3,628 Underlying earnings 3,298 3,620 Net realized capital gains/losses 330 386 o/w realized capital gains 447 448 o/w net impairments -76 -42 o/w hedging of equity portfolio -41 -20 Adjusted earnings 3,628 4,006 1H18
Slide 27: Net income
Net income In Euro million Details of net income -19% 1H18 1H19 Includes: 2,796 – Equity hedges (Euro -0.3bn) Adjusted earnings 3,628 4,006 – Interest rate swaps on 2,333 Change in fair value and Forex -346 -767 debt (Euro -0.3bn) To be compared with a Euro +6.1bn increase in o/w gains/losses on eco
Slide 28: Shareholders’ equity
Shareholders’ equity In Euro billion 66.7 1H19 vs. FY18 62.4 + Change in net unrealized capital gains +6.1 + Net income for the period +2.3 - Interest charges on deeply subordinated debt -0.1 - Change in pension benefits -0.4 - Forex and other -0.5 - Dividends -3.2 FY18 1H19 Adjusted 14.4% 18.3% ROE
Slide 29: High quality investment portfolio and resilient yield
High quality investment portfolio and resilient yield 1H19 Total General Account invested assets 1H19 New fixed income investments 82% in Fixed Income with 8.1 years duration: 9.1yrs (L&S) and 4.9yrs (P&C) BIG credit (7%) 43% ABS (~9%) Govies & related Euro Euro 18% 547 28 ~35% Other1 Investment gra
Slide 30: Investment margin and yield evolution in line with Ambition 2020
Investment margin and yield evolution in line with Ambition 2020 L&S investment margin1 P&C yield2 -16 bps 69 bps 67 bps 3.3% 3.1% 3.0% 1H18 1H19 1H18 1H19 1H19 (excl. EQH and (excl. AXA XL) (excl. AXA XL) (incl. AXA XL) post Swiss transformation) A30 Half Year 2019 Earnings | August 1, 2019 All not
Slide 31: Continued strong operational performance in P&C
Continued strong operational performance in P&C 1H19 combined ratio P&C combined ratio evolution (excluding AXA XL) (including AXA XL) Current year Prior year reserve All-year combined ratio + developments combined ratio (-1.2pts) 96.8% 96.8% 95.1% 95.4% 2.9% 94.5% 2.7% 2.0% 93.3% -1.7% -2.3% -2.1%
Slide 32: Resilient Solvency II ratio
Resilient Solvency II ratio Solvency II ratio1 Key sensitivities In Euro billion Ratio as of June 30, 2019 190% 193% 190% Interest rate +50bps 198% +8 pts 58.2 57.9 Interest rate -50bps 177% -13 pts 30.2 30.5 Corporate spreads +50bps 187% -3 pts Available capital Required capital Equity markets +25%
Slide 33: Concluding remarks
4 Concluding remarks Thomas Buberl, Group CEO
Slide 34: Half Year 2019 – Disciplined Execution
Half Year 2019 – Disciplined Execution ▶ +4% topline growth, notably on preferred segments ▶ +10% UEPS growth, with strong performance across the Group ▶ AXA XL progressing well, and in line with 2020 earnings target ▶ Strengthened balance sheet, delivery on selldowns and deleveraging ▶ Unique strat
Slide 35: Q&A
Q&A
Slide 36: AXA Investor Relations | Keep in touch
AXA Investor Relations | Keep in touch Call us Meet our management Investor Relations +33 1 40 75 48 42 +33 1 40 75 46 85 September 10 & 11 Barclays Global Financial Services Conference New York Andrew Wallace-Barnett Head of Investor Relations François Boissin +33 1 40 75 39 82 September 24 & 25 Bo
Slide 37: Thank you
Thank you
Slide 38: Scope
Scope Note: Following the acquisition of XL Group in 2018, the segment reporting has been revised and retroactively restated in this presentation. ▪ France: includes insurance activities, banking activities and holdings in France. ▪ Europe: includes Switzerland (insurance activities), Germany (insur
Slide 39: Notes (1/3)
Notes (1/3) Page A6 1. Segment weights calculated using 1H19 revenues excluding EQH (Life & Savings and AB). Page A7 1. The change in Protection combined ratio excludes the 1H18 contribution of AXA US Life & Savings. Underlying Combined Ratio is an APM. For further information, please refer to the r
Slide 40: Notes (2/3)
Notes (2/3) Page A12 1. The Solvency II ratio is estimated primarily using AXA’s internal model calibrated based on an adverse 1/200 years shock and assuming US equivalence. It also includes a theoretical amount for dividends accrued for the first half of 2019, based on the full year dividend paid i
Slide 41: Notes (3/3)
Notes (3/3) Page A29 1. Others includes Real estate (Euro 31 billion), Listed equities (Euro 20 billion), Cash (Euro 25 billion), Alternative investments (Euro 21 billion) mainly in Private Equity (Euro 10 billion) and Hedge Funds (Euro 6 billion), and Unlisted Equities (Euro 5 billion). 2. Other Fi