Axa Sa · EURONEXT:CS
Axa Sa — FY2010 Earnings Presentation
60 slides from Axa Sa's earnings presentation, Feb 17, 2011
Slide 1: Full Year 2010 Earnings Appendices
Full Year 2010 Earnings February 17, 2011 Appendices
Slide 2: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 2 – AXA FY10 Earnings – February 17, 2011
Slide 3: Revenues by segment
Revenues Revenues by segment Reported Comparable In Euro million FY09 FY10 basis basis Life & Savings 57,620 56,923 -1% -3% Property & Casualty 26,174 27,413 +5% +1% Asset Management 3,074 3,328 +8% +5% International Insurance 2,860 2,847 0% -3% Banking & Holdings 395 459 +16% +16% Revenues 90,124 9
Slide 4: Underlying Earnings by region
Underlying Earnings by region In Euro million Underlying Earnings FY09 FY10 % Reported % Comparable Life & Savings 2,336 2,455 +5% +1% North America 549 488 -11% -15% France 470 607 +29% +29% NORCEE(1) 636 570 -10% -13% UK & Ireland 186 134 -28% -30% Asia-Pacific 390 562 +44% +34% MedLA 115 117 +2%
Slide 5: From Underlying Earnings to Net Income
From Underlying Earnings to Net Income Net realized capital gains/losses Key drivers of change in Net income In Euro million FY09 FY10 In Euro million FY09 FY10 Underlying Earnings 3,854 3,880 Adjusted Earnings 3,468 4,317 Net realized capital Change in fair value 612 185 gains/(losses) (386) 437 Of
Slide 6: FY10 sensitivities
FY10 sensitivities Impairments Net Income In Euro billion OCI net of hedges (including impairments) -25% -0.3 -0.4 -1.8 Equities +25% 0.0 +0.4 +2.2 -100 bps n.a. +0.3 +6.7 Interest rates +100 bps n.a. -0.1 -6.0 -75 bps n.a. +0.3 +1.5 Corporate spreads +75 bps n.a. -0.3 -1.4 Valuation:
Slide 7: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 7 – AXA FY10 Earnings – February 17, 2011
Slide 8: Life & Savings
Life & Savings 1 Revenues, new business volumes and profitability page 9 2 Underlying earnings margin analysis page 11 3 Underlying earnings margin analysis by product page 17 8 – AXA FY10 Earnings – February 17, 2011
Slide 9: L&S – Revenues and net inflows
1 L&S – Revenues and net inflows L&S revenues by region L&S Net inflows In Euro billion In Euro billion +8.6 +8.4 Mediterranean France High & LA region +1.3 +1.9 growth È -11% È +7% 7.0 +7.4 +6.5 14.6 Mature United FY09 FY10 NORCEE 15.0 States È +3% 9.5 È -3% 8.7 2.0 FY10 % of opening Asia-Pacific F
Slide 10: L&S – IRR and new business investments
1 L&S – IRR and new business investments FY09 FY10 “AA rating” New business “AA rating” New business Euro million APE APE NB IRR investments(1) NB IRR investments(1) France 1,602 8% -639 1,384 8% -623 US 994 9% -512 986 10% -311 UK 926 9% -345 545 8% -122 Japan 532 12% -207 465 12% -199 NORCEE 1,156
Slide 11: L&S – Underlying earnings margin analysis
2 L&S – Underlying earnings margin analysis Gross Margin Expenses Comp. Comp. In Euro million FY10 In Euro million FY10 Change(1) Change(1) Margin on revenues(2) 4,781 0% Acquisition expenses 3,153 -14% Admin. Expenses Margin on assets 5,370 +11% 4,016 -2% & other Technical margin 767 -56% VBI amort
Slide 12: L&S – Margin analysis
2 L&S – Margin analysis Details of margin on revenues Margin on revenues Average margin on L&S revenues(1) Ê Ê 8.4% +4% +5% business mix Margin on revenues(1) -1% country mix x Euro 4,781 million 0% Ê Ê Life & Savings revenues Euro 56,923 million -3% Ê Ê È Changes are on a comparable basis (1) Life
Slide 13: L&S – Margin analysis
2 L&S – Margin analysis Details of margin on unit-linked assets Unit-linked management fees Average management fees on unit-linked reserves (in bps) Ê 127 bps +3% Unit-linked 0% business mix management fees +4% country mix x +9% Ê Ê Euro 2,056 million Margin on assets(1) + Unit-linked average reserv
Slide 14: L&S – Margin analysis
2 L&S – Margin analysis Details of margin on General Account assets Investment margin Unit-linked management fees Ê Euro 2,056 million +9% Margin on assets(1) + Euro 5,370 million +11% Ê Ê Average management fees on (1) Including other fees (mainly mutual fund and brokers fees) of Euro 778 million (
Slide 15: L&S – Margin analysis
2 L&S – Margin analysis Details of technical margin Technical margin & other Mortality & morbidity margin & other(1) Euro 1,584 million -22% Ê Technical margin + Euro 767 million -56% Ê Ê VA hedging margin Euro -818 million n.a. Ê In Euro million Basis -51 Volatility (equity and interest rates) -309
Slide 16: L&S – Margin analysis
2 L&S – Margin analysis Focus on gross technical margin Gross mortality, morbidity & surrender margin (pre-tax) Mainly non repeat of following 2009 items: In Euro million €0.2 billion gain in the UK, as a result of internal 2,136 restructuring of an annuity portfolio in the UK 1,584 €0.1 billion
Slide 17: L&S – FY10 Underlying Earnings by business
3 L&S – FY10 Underlying Earnings by business Strong contribution of Protection & Health business Euro million FY09 Pre-tax UE FY10 Pre-tax UE % change G/A Protection & Health 2,031 2,091 0% G/A Savings 522 635 +17% Unit-Linked 639 672 +3% Mutual funds & Other 10 101 n.a. Pre-tax underlying earnings
Slide 18: L&S – FY10 Margin analysis by business
3 L&S – FY10 Margin analysis by business G/A Protection Mutual Funds & G/A savings Unit-linked & Health Other Margin on 8% 3,813 384 480 premiums % of GWP 76 bps Investment 777 1,575 170 margin of avge G/A reserves Management 127 bps 2,056 fees of avge UL reserves Technical margin & Oth. 1,362 18 -5
Slide 19: L&S – Margin analysis by business
3 L&S –Margin analysis by business G/A Protection & Health Technical result Net investment margin Comp. Comp. In Euro million FY10 In Euro million FY10 change change Protection & Health Protection & Health GWP 23,879 +2% 144,444 +2% Average reserves x x Protection & Health Protection & Health 94.5%
Slide 20: L&S – Margin analysis by business
3 L&S – Margin analysis by business G/A Savings In Euro million Comp. Comp. FY10 FY10 change change G/A Savings G/A Savings 18,264 -8% 184,142 0% Gross revenues average reserves x x Non recurrence of €165m Average margin on G/A Savings average gain on UK annuity portfolio 2.1% +0.0 pt 86 bps +22 bps
Slide 21: L&S – Margin analysis by business
3 L&S – Margin analysis by business Unit-linked Comp. Comp. In Euro million FY10 FY10 change change Unit-linked Unit-linked 12,822 -5% 161,394 +5% Gross revenues Average reserve x x Average margin on Unit-linked average 3.5% -0.5 pt 127 bps +4 pts Unit-linked revenues Management fees Comp. FY10 chan
Slide 22: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 22 – AXA FY10 Earnings – February 17, 2011
Slide 23: P&C – Revenues and net new contracts
P&C – Revenues and net new contracts P&C revenues by region P&C personal net new contracts Canada In thousands In Euro billion È +6% +1,415 France +1,135 Asia High +347 +835 1.4 È +3% Growth È +7% 1.0 Direct +532 5.8 +458 Mature Mediterranean 6.9 +256 +122 Region UK &Ireland FY09 FY10 4.1 -0% È È +3
Slide 24: P&C – Revenues and price increases
P&C – Revenues and price increases Personal lines Commercial lines Price increase Revenues growth Price increase Revenues growth France +3.6% +4.2% +3.3% +0.8% Germany -0.2% -2.1% 0.0% -0.3% UK & Ireland +11.0% +12.5% +3.5% -8.3% Switzerland -0.6% +1.1% -0.9% -2.2% Belgium +2.6% +2.3% 0.0% -5.4% Can
Slide 25: P&C – Underlying Earnings analysis
P&C – Underlying Earnings analysis Net technical result Net investment income Comp. Comp. In Euro million FY10 In Euro million FY10 Change Change Revenues 27,413 +1.3% Average P&C assets 57,142 -1% x x Combined ratio(1) (in %) 99.1% +0.2 pt Average asset yield(5) 3.7% +1% (1) Combined ratio calculat
Slide 26: P&C – Details on Combined Ratio
P&C – Details on Combined Ratio Loss Ratio (%) +0.2 pt Combined Ratio Ê 70.9% +2.2 pts 71.1% 99.0% 99.1% -1.8 pts -0.2 pt FY09 Current Nat cat(1) Prior year FY10 Loss 70.9% 71.1% accident reserve Ratio year Dev. +0.3 pt change on a comparable basis Expense Ratio (%) -0.1 pt Expense È Ratio 28.1% 28.
Slide 27: P&C – Focus on reserve developments
P&C – Focus on reserve developments Prior year reserve development level (1) (in % of gross earned premiums) 5.4% 5.4% 2.7% 3.3% 1.4% 0.9% 0.3% 2004 2005 2006 2007 2008 2009 2010 Reserving ratio (Net technical reserves/Net earned premiums) 193% 193% 194% 186% 187% 187% 185% 2004 2005 2006 2007 2008
Slide 28: P&C – Details on current year loss ratios
P&C – Details on current year loss ratios Personal Motor Personal non motor 80.5 +1.3 79.1 70.2 +0.0 +1.2 +0.7 69.4 -0.4 -0.4 -2.3 -2.4 FY09 Current Nat cat Price effect Frequency & Others(1) FY10 Current FY09 Current Nat cat Price effect Frequence & Others(1) FY10 Current loss ratio (2) severity lo
Slide 29: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 29 – AXA FY10 Earnings – February 17, 2011
Slide 30: AM - Underlying Earnings
AM - Underlying Earnings Details of Asset Management margin analysis Margin Expenses Comp. Comp. In Euro million FY10 In Euro million FY10 Change Change Asset Management Asset Management fees 2,946 +4% 2,548 +13%(1) expenses +6% excluding Distribution revenues 382 +15% provision for AXA Rosenberg co
Slide 31: AM – Underlying Earnings
AM – Underlying Earnings Details on Asset Management revenues Average Asset Management fees on Assets under Management Ê Ê 34 bps +1% Asset Management fees x Ê Ê Euro 2,946 million +4% Average Assets under o/w performance fees (Euro 82 million, +9%) o/w research fees (Euro 322 million, -1%) Manageme
Slide 32: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 32 – AXA FY10 Earnings – February 17, 2011
Slide 33: Balance sheet
Balance sheet 1 General accounts invested assets Page 34 1.1 Government bonds & related page 35 1.2 Corporate bonds page 36 1.3 CDS page 38 1.4 Government and corporate bonds gross exposure page 39 to selected Euro-zone countries 1.5 ABS page 40 1.6 Equity page 46 1.7 Real Estate page 47 1.8 Hedge F
Slide 34: General Account invested assets
1 General Account invested assets Invested assets (100%) In Euro billion FY09 % FY10 % Changes in asset allocation Fixed income 328 81% 370 83% Net inflows: mainly invested in o/w Govies and related 154 38% 191 43% Government bonds o/w Corporate bonds 146 36% 150 34% Mark to market: Fixed income
Slide 35: 1.1 Government bonds and related
1.1 Government bonds and related Government bonds gross portfolio by country (Euro 191 billion gross) US 5% Asia 13% Other 3% Italy 10% Spain 5% Portugal 1% France 24% Greece 1% Ireland 1% NORCEE(1) 36% (1) AXA NORCEE + Austria & Netherlands Government bonds exposure to selected Eurozone countries,
Slide 36: 1.2 Corporate bonds
1.2 Corporate bonds Corporate bond portfolio by industry A+ average rating (Euro 150 billion gross) Other 9% Basic Energy BBB AAA Materials 4% 22% 10% 4% Others Consumer 3% Cyclical AA 5% 20% A Industrial 39% 6% Financials 47% Preferred shares: Euro 0.1(1) billion Utilities 8% Tier 1 debt: Euro
Slide 37: Corporate bonds breakdown by country
1.2 Corporate bonds breakdown by country (including CDS) P = Participating NP = Non-participating Euro billion As of December 31, 2010 US UK Japan Germany Switzerland France Other(1) Total P NP NP NP P NP P NP P NP P NP P NP AAA 0 0 0 3 0 3 1 4 2 1 1 11 4 AA 2 0 4 2 0 4 1 6 2 4 3 17 13 A 10 1 6 5 1
Slide 38: 1.3 Corporate bonds: focus on CDS overlay strategy
1.3 Corporate bonds: focus on CDS overlay strategy CDS overlay Investment Strategy: CDS are used as an alternative to investment grade corporate bonds Net Net Euro million Notional Notional As of Dec 31, 2009 As of Dec 31, 2010 AAA 798 126 AA 2,051 667 A 6,021 4,265 BBB 2,694 1,418 Below invst. gr
Slide 39: 1.4 Government and corporate bonds gross exposure to selected Euro-zone countries
1.4 Government and corporate bonds gross exposure to selected Euro-zone countries Life & Savings companies of which financial In Euro billion Government bonds Corporate bonds services France 39.8 13.7 6.2 Germany 21.1 12.4 5.7 Belgium 16.4 1.9 1.3 Italy 16.5 3.6 2.1 Spain 8.6 5.2 3.7 Portugal 1.8 0.
Slide 40: 1.5 Asset Backed Securities by underlying type of asset
1.5 Asset Backed Securities by underlying type of asset Economic breakdown of ABS by asset type(1) Ca. 60% AAA & AA As of December 31, 2010 Total ABS = Euro 10.3 billion Mortgage-backed Other asset-backed UK RMBS AAA € 0.3 billion 37% AA 22% US Subprime & Alt-A NR/Equity A € 0.8 billion CLO 8% 8% €
Slide 41: 1.5 Credit risk management: ABS investments
1.5 Credit risk management: ABS investments Group ABS exposure remained fairly stable mainly driven by: • -15% decrease due to maturities and amortization, mainly on Consumer ABS • -8% sales notably Consumer ABS • +5% increase in asset value, mainly on CLOs partly offset by CMBS • +18% purchase nota
Slide 42: 1.5 Focus on Mortgage-Backed Securities
1.5 Focus on Mortgage-Backed Securities Euro million Prime Residential US Subprime As of December 31, 2010 Commercial MBS UK RMBS US Alt-A RMBS MBS RMBS (unless indicated) % of par @ 31/12/07 98% 92% 96% 72% 59% % of par @ 31/12/08 91% 77% 59% 45% 14% % of par @ 31/12/09 89% 75% 59% 42% 14% % of par
Slide 43: 1.5 Focus on US Subprime RMBS by vintage
1.5 Focus on US Subprime RMBS by vintage Euro million As of 2004& December 31, 2008 value 2007 value 2006 value 2005 value value Total value Prior 2010 AAA 0 - 3 95% 0 - 11 94% 18 89% 31 91% AA 0 - 1 92% 7 92% 67 92% 22 82% 96 90% A 0 - 0 98% 7 76% 80 83% 14 55% 101 77% BBB 0 - 8 51% 21 78% 58 68% 9
Slide 44: 1.5 Focus on other asset-backed securities
1.5 Focus on other asset-backed securities Euro million CDO CLO Consumer ABS As of December 31, 2010 Consumer ABS is comprised of the following: % of par @ 31/12/07 78% 90% 98% Leases 16% % of par @ 31/12/08 42% 75% 90% Other Consumer 26% % of par @ 31/12/09 62% 70% 92% Operating 12% % of par @ 31
Slide 45: 1.5 Focus on CDO
1.5 Focus on CDO Euro million Investment High Structured Other Total As of December 31, 2010 grade Yield Finance CDOs AAA 921 0 0 4 925 AA 10 2 12 8 33 A 3 0 15 3 21 BBB 11 9 1 9 29 Below invst. grade 296 28 27 19 369 Equity / Non rated 202 57 5 80 344 Value 1,442 96 60 122 1,721 Shareholder Exposur
Slide 46: 1.6 Update on equity hedges
1.6 Update on equity hedges Euro 9 billion net equity exposure Estimated shareholders’ exposure as of December 31, 2010 In Euro billion FY09 FY10 (excluding Australia/NZ assets that (excluding Australia/NZ assets that are accounted as held for sale) are accounted as held for sale) Local hedging in p
Slide 47: 1.7 Real Estate investments
1.7 Real Estate investments Defensive portfolio with good performance over the long term Key indicators Market value FY10 market value by Split by type (in Euro billion) country France Switz. Belgium Germany France Office 21(1) 37% ~50% ~45% ~75% ~70% Residential ~10% ~50% ~0% ~5% Other 5% Commercia
Slide 48: 1.8 Hedge Fund investments
1.8 Hedge Fund investments Stable performance Key indicators Market value (in Euro billion) Exposure and concentration risk • Mostly management of funds of hedge funds 5 • Stable exposures throughout 2010 • Top 10 fund managers represent ~30% of portfolio market value • Broad strategy diversificatio
Slide 49: 1.9 Private Equity investments
1.9 Private Equity investments Diversified portfolio built over the long run Key indicators Market value Breakdown by geography Breakdown by expertise Performance (in Euro billion) 7 54% Europe AXA Private Equity voted Others ~69% Buyout “The firm considered most Infras- 4% likely to outperform for
Slide 50: 1.10 Mortgage loans & other
1.10 Mortgage loans & other Low risk mortgage loan portfolio Key indicators FY10 market value by country Very secured Market value portfolio: (in Euro billion) Other Germany 98% Residential 17 9% FY10 default rate 32% Switzerland Commercial 0.04% 2% FY10 loan to value 37% 94% Residential 22% 72% Com
Slide 51: Continued increase in Solvency I ratio
2 Continued increase in Solvency I ratio Solvency I ratio at 182% +17pts -7pts +1pt 182% 186% 171% 25% 27% 154% 17% Positive impact from interest rates partly offset 127% by credit and FX FY06 FY07 FY08 FY09 Underlying Dividend Market FY10 Earnings effects & Other UCG on fixed income assets 51 – AXA
Slide 52: Solvency I reconciliation to shareholders' equity & sensitivities
Solvency I reconciliation to shareholders’ 2 equity & sensitivities Available financial resources(1) Solvency I In Euro billion In Euro billion SH equity 100% 54 43 Intangibles(2) - 30 Surplus 19 Admitted sub debt(3) +4 Locally admitted assets +3 Dividend to be paid -2 Requirement 23 Real estate(4)
Slide 53: Economic capital model
2 Economic capital model FY10 Economic capital by Coverage ratio geography Holdings & other UK France 10% 5% 22% Asia ca. 175% Pacific 12% 167% 22% US & 22% NORCEE Canada 8% MedLA Group share, before diversification FY10 Economic capital by risk Operational 6% P&C risks FY09 FY10 15% 52% Market 21%
Slide 54: Net financial debt and long-term maturities
3 Net financial debt Long-term maturities Total net debt Contractual maturity breakdown In Euro billion In Euro billion Undrawn credit lines Euro 11 billion 6.2 17.7 Cash & cash equivalent Euro 22 billion 15.2 7.4 13.5 0.9 1.9 0.2 2.4 1.6 0.2 0.0 1.7 0.2 0.8 1.0 0.3 7.7 2011 2012 2013 2014 2015 2016
Slide 55: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 55 – AXA FY10 Earnings – February 17, 2011
Slide 56: L&S Embedded Value increased by Euro 4.7 billion
L&S Embedded Value increased by Euro 4.7 billion L&S Embedded Value Euro million of which Euro 2,617 40,476 (2.6)bn due to 6,091 UK disposal (129) (1,367) 35,745 +18%* (2,481) FY09 L&S EV Scope changes & Operating return Investment FX impacts Others FY10 L&S EV opening experience and adjustments ass
Slide 57: L&S Embedded Value key sensitivities
L&S Embedded Value key sensitivities Impact on L&S Impact on L&S NBV EEV Key sensitivities Euro Euro % % million million Sensitivity to equity markets 10% increase +69 +5% +1,401 +3% 10% decrease -70 -5% -1,536 -4% Sensitivity to interest rates Upward 100bps parallel shift +7 +1% +781 +2% Downward 1
Slide 58: Life & Savings operating Free Cash Flows
Life & Savings operating Free Cash Flows FY09 FY10 In Euro million Expected L&S operating Expected L&S operating New business New business inforce surplus free cash inforce surplus free cash investments (1) investments (1) generation flows generation flows France 773 (639) 134 873 (623) 250 US 972 (
Slide 59: Table of content
Table of content Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and cash flows Other 59 – AXA FY10 Earnings – February 17, 2011
Slide 60: US DAC sensitivities to stock market movements
US DAC sensitivities to stock market movements US 2011 equity market performance Underlying In Euro billion Earnings(1) -10% 0.0 -25% 0.0 -40% -0.1 (1) Net of tax 60 – AXA FY10 Earnings – February 17, 2011