Axa Sa · EURONEXT:CS
Axa Sa — FY2010 Earnings Presentation
57 slides from Axa Sa's earnings presentation, Feb 17, 2011
Slide 1: Full Year 2010 Earnings Presentation
Full Year 2010 Earnings February 17, 2011 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: Table of contents
Table of contents 2010 key highlights Page 4 by Henri de Castries, Chairman and CEO 2010 financial performance Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Business overview Page 44 by Mark Pearson, Nicolas Moreau, Jacques de Vaucleroy, members of the Management Committee Concludi
Slide 4: AXA at a glance
AXA at a glance Building in 25 years a world leader in insurance and asset management rd 3 Direct platform pan European 93 million clients worldwide 35% of workforce in Asia(1) 20% of new business value in high growth markets 10 new markets entered in 4 years Top 3 Agent distribution network in Euro
Slide 5: AXA's journey
AXA’s journey 2007 - 2009: Weathering the storm Resilience despite headwinds 2010: Setting the ground for our ambition Adapting to reflect lessons of the crisis and new market prospects 2011 and beyond: Ambition AXA Combining value and growth 5 – AXA FY10 Earnings – February 17, 2011
Slide 6: 2011 and beyond: Ambition AXA Key beliefs
2011 and beyond: Ambition AXA Key beliefs Long term pillars of AXA’ strategy AXA’s key beliefs reaffirmed … Mature markets will still represent the majority of Focus on core businesses of insurance and global insurance revenues mid term, with some asset management worldwide segments growing fast
Slide 7: 2010: Business discipline but headwinds in Asset Management
2010 Business discipline but headwinds in Asset Management Strong • Significantly improved business mix in Life & Savings leading to NBV margin increase from 16% to 20% margin improvement in mature markets • 3% average price increase and selective underwriting in Property & Casualty Superior perform
Slide 8: Adapting the organization and demonstrating agile capital allocation
2010 Adapting the organization and demonstrating agile capital allocation • New organization by business line to drive growth Building and efficiency, building on regional platforms and our organization and transversal capabilities prepared for the future • New CEOs for France, the US, NORCEE, Globa
Slide 9: Seizing opportunities in high growth markets
2010 Seizing opportunities in high growth markets ICBC-AXA*: partnered with the largest Expanded our footprint through bolt-on Chinese bank transactions CEE MedLA Asia ICBC is the largest bank in China by assets Romania Belarus Serbia Azerbaijan Malaysia and market value, with 216m individual clie
Slide 10: Key financial highlights
2010 Key financial highlights Significant increase 9 Life & Savings: NBV margin strongly up from 18% to 22% in new business profitability 9 Property & Casualty: Current year combined ratio improved by 2 pts 9 Underlying Earnings: €3.9 billion (vs. €3.9 billion in FY09) Solid earnings 9 Adjusted Earn
Slide 11: Table of contents
Table of contents 2010 key highlights Page 4 by Henri de Castries, Chairman and CEO 2010 financial performance Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Business overview Page 44 by Mark Pearson, Nicolas Moreau, Jacques de Vaucleroy, members of the Management Committee Concludi
Slide 12: 2010 financial performance
2010 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and free cash flows 12 – AXA FY10 Earnings – February 17, 2011
Slide 13: Underlying Earnings
Underlying Earnings Sustained performance Underlying Earnings Underlying Earnings by segment Reported Comparable In Euro million In Euro million FY09 FY10 basis basis Life & Savings 2,336 2,455 +5% +1% 3,854 3,880 Property & Casualty 1,670 1,692 +1% -2% Asset Management 355 269 -24% -26% Internation
Slide 14: Adjusted Earnings up 20%, Net Income up 18%
Adjusted Earnings up 20% Net Income up 18% before impact of UK Life operations partial sale Adjusted Earnings In Euro million +20% 4,317 3,468 Higher realized capital gains(2) and lower impairment charges FY09 FY10 ROE(1) 11% 12% Change is on a comparable basis(3) Net Income In Euro million +18% 4,3
Slide 15: Strong value creation
Strong value creation Group EV* per share In Euro per share +11% 14.9 13.4 24% operating return on Group EV more than offsetting the decrease in interest rates FY09 FY10 * L&S EV + tangible net asset value of other businesses Dividend per share +25% 0.69 Consistent dividend policy 0.55 Payout rati
Slide 16: Increase in Operating Free Cash Flows
Increase in Operating Free Cash Flows Operating Free Cash Flows(1) Euro billion 3.7 3.1 Life & Savings 0.8 1.4 Strong increase in L&S Property & Casualty* 2.0 2.0 Operating Free Cash Flows Asset Management** 0.4 0.3 FY09 FY10 From Operating Free Cash Flows to Group Net Free Cash Flows Euro billion 3
Slide 17: Robust Balance Sheet
Robust Balance Sheet 182% 171% Solvency I Mainly driven by sustained ratio earnings contribution FY09 FY10 Coverage ratio ~ 175% 167% Economic Strong economic capital capital model* position FY09 FY10 Coverage ratio 35% 28% 26% Mainly due to unfavourable Debt Forex impacts gearing FY08 FY09 FY10 * A
Slide 18: 2010 financial performance
2010 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and free cash flows 18 – AXA FY10 Earnings – February 17, 2011
Slide 19: L&S – Scope overview
L&S – Scope overview Global footprint Well balanced business mix FY10 APE by business G/A Protection Operations in over 30 countries Unit-Linked & Health # 1 global insurer(1) 31% 31% Over 40 million customers Mutual Funds & other FY10 APE by geography G/A Savings 13% 25% Asia-Pacific (incl. J
Slide 20: L&S – New business sales and margins by markets
L&S – New business sales and margins by markets Strong sales in high growth markets and margin improvements in mature markets In Euro million Mature markets High growth Total markets(1) -2% -5% 5,754 6,188 540 540 New business +25% sales (APE) 5,214 5,114 + 667 = 5,648 5,780 434 FY09 FY10 FY09 FY10
Slide 21: L&S – New business sales and margins by business
L&S – New business sales and margins by business Strong NBV margin increase benefiting from improved business mix APE (Euro million) NBV margin (%) FY09 FY10 % change FY09 FY10 G/A Protection & Mainly discontinuation of a lower 1,845 1,802 -4% 41% 47% margin protection product in Health Japan Discip
Slide 22: L&S – Underlying Earnings
L&S – Underlying Earnings Increase in both investment margin and fees partly offset by technical margin net of DAC In Euro billion Non recurrence of FY09 positive one-offs & GMxB reserve adjustment for lower surrender assumptions (see page 16 in appendix) 76 bps in FY10 vs. 68 bps in FY09 Lower DAC
Slide 23: L&S – Underlying Earnings by business
L&S –Underlying Earnings by business Pre-tax Underlying Earnings increased for all businesses G/A Protection G/A Savings Unit-Linked Mutual Funds & Health & Other In Euro million In Euro million In Euro million In Euro million 0% 2,091 +3% 2,031 +17% 672 639 635 147 522 246 na 101 10 FY09 FY10 FY09
Slide 24: 2010 financial performance
2010 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and free cash flows 24 – AXA FY10 Earnings – February 17, 2011
Slide 25: P&C – Scope overview
P&C – Scope overview Global scope Unique proprietary network FY10 Revenues by channel Operations in over 30 countries(1) Agents Over 55 million customers 40% # 4 global insurer(2) # 2 amongst non-local insurers(3) in high growth markets Direct & other 10% Brokers - IFAs FY10 Revenues by geog
Slide 26: P&C – Revenues by segments
P&C – Revenues by segments 3% price increase on average P&C Revenues Personal lines In Euro million +4% Average price increase of +3.8% +1% Strong net new contracts of 15,824 16,893 +1.4 million in FY10 vs. +1.1 million in 27,413 FY09 mainly in high growth markets 26,174 and Direct FY09 FY10 Com
Slide 27: P&C – Revenues and margin by markets
P&C – Revenues and margin by markets Strong sales in direct and high growth markets and improvement of current year combined ratios Mature High growth Direct Total markets markets (1) In Euro million +1% 0% Revenues 22,206 22,587 + +6% + +19% = 26,174 27,413 2,511 2,990 1,836 1,457 FY09 FY10 FY09 FY
Slide 28: P&C – Underlying Earnings
P&C – Underlying Earnings Improved profitability benefiting from price increases Key drivers of change in P&C P&C Underlying Earnings Underlying Earnings In Euro million Improved current year …lower prior year All-year combined ratio… reserve developments combined ratio -2% -2.0 pts 1,692 104.4%* 10
Slide 29: 2010 financial performance
2010 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and free cash flows 29 – AXA FY10 Earnings – February 17, 2011
Slide 30: AM – Scope overview
AM – Scope overview Complementary business models Multi-expert model: structured by Structured by “Investment Style” “Expertise” Focus on growth equities, value Expertise in fixed income, equities, equities, blend strategies, fixed Product quantitative equities income offer Focus on altern
Slide 31: AM – Assets under management and revenues
AM – Assets under management and revenues Higher revenues mainly due to higher average AUM despite continued outflows AllianceBernstein Average AUM In Euro billion In Euro billion FY 10 Net outflows: -44bn€ +3% Split by client Split by investment 863 Instit. Retail Others Equity 7 0 810 (6) (1) Fixe
Slide 32: AM – Focus on Alliance Bernstein
AM – Focus on Alliance Bernstein Investment outperformance in 2H10 Since Market Cumulative Returns vs. Peers Bottom 104% AB Global Value 81% Lipper Global Large Cap Value Peer Group* 23% 22% 18% 17% 15%13% 9% 8% 4% 4% 3% 3% (16)%(13)% 2Q 09 3Q 09 4Q 09 1Q 10 3Q 10 4Q 10 3/9/09 to 12/31/10 2Q 10 Ou
Slide 33: AM – Focus on AXA IM
AM – Focus on AXA IM A promising rebound thanks to a robust value proposition Net New Money excluding Underlying earnings In Euro billion AXA Rosenberg In Euro million 191 +9 +11% excluding AXA Positive inflows from 2010 Rosenberg provision onwards 171 125 -9 Across 3rd party client segments FY10
Slide 34: AM – Underlying Earnings
AM – Underlying Earnings In Euro million -26% +12% 355 +35 +6 334 293 (62) 269 (66) FY09 Tax one-off at FY09 Increase in Forex FY10 Net provision FY10 AllianceBernstein excluding average AuM excluding for AXA one-offs one-offs Rosenberg coding error Full detail in appendix on pages 30 and 31 Changes
Slide 35: 2010 financial performance
2010 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and free cash flows 35 – AXA FY10 Earnings – February 17, 2011
Slide 36: Shareholders' equity increased by Euro 3.5 billion
Shareholders’ equity increased by Euro 3.5 billion Key drivers of increase in Shareholders’ equity shareholders’ equity In Euro billion 49.7 FY10 vs. FY09 46.2 37.4 +• Net income for the period €+2.7 billion +• Increase gains in unrealized capital €+1.5 billion • Forex movements net of FY08 FY09 FY1
Slide 37: Improved interest cover with debt gearing at 28%
Improved interest cover with debt gearing at 28% Net financial debt Debt ratios In Euro billion Net financial debt impacted by forex movements FY08 FY09 FY10 17.7 Debt 35% 26% 28% Gearing(3) 15.2 7.4 13.5 7.7 7.4 Interest Cover(4) 8.5x 7.9x 8.5x 6.2 6.7(1) 6.0 Undated subordinated debt 4.2 Subordina
Slide 38: 2010 financial performance
2010 financial performance Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded value and free cash flows 38 – AXA FY10 Earnings – February 17, 2011
Slide 39: Group EV increased by Euro 3.7 billion
Group EV increased by Euro 3.7 billion Group EV at €34.2 billion Key drivers of increase in group EV (In Euro billion) +• Operating return €+7.2 billion 34.2 30.4 - • Investment experience €-2.2 billion 20.1 +• Capital increase €+0.4 billion 18.5 VIF - • Dividend €-1.3 billion 12.0 14.1 - • Forex &
Slide 40: L&S New business Internal Rate of Return (IRR)
L&S New business Internal Rate of Return (IRR) Well on track to deliver 200bps increase vs. FY09 “AA rating”* New Business IRR +60bps 10.9% 10.3% FY09 FY10 New Business IRR increase notably driven by lower new business investments and improved business mix (mainly in the US), partly offset by decrea
Slide 41: Life & Savings operating Free Cash Flows
Life & Savings operating Free Cash Flows Strong increase vs. 2009 2009 2010 Expected 2011** Euro billion Euro billion Euro billion 3.4 3.6 1.7 1.4 0.8 (2.2) (2.5) Expected inforce surplus New business investments* Life & Savings operating free generation* cash flow Both higher free cash flow generat
Slide 42: Life & Savings Free Cash Flows emergence from inforce and new business
Life & Savings Free Cash Flows emergence from inforce and new business Expected undiscounted cash Expected undiscounted cash flows from 2010 inforce flows from 2010 New Business Euro billion Euro billion 18 1.5 16 1 14 0.5 12 10 0 2010 1-5 6-10 11-15 16-20 21-25 26-30 31-35 8 -0.5 6 -1 Years 4 -1.5
Slide 43: Table of contents
Table of contents 2010 key highlights Page 4 by Henri de Castries, Chairman and CEO 2010 financial performance Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Business overview Page 44 by Mark Pearson, Nicolas Moreau, Jacques de Vaucleroy, members of the Management Committee Concludi
Slide 44: Focus on the US
Focus on the US Diversified, innovative and disciplined: positioned for growth Variable Annuities Life 2010 US Variable Annuity First Year Premiums: USD 4.4 billion 2010 US Life APE: USD 246 million Other Universal Life 1% Accumulator Retirement Cornerstone SCS Other VA 37% 4Q09 2Q10 4Q10 Term Div
Slide 45: Focus on the US - VA GMxB
Focus on the US - VA GMxB Improved 2H10 hedge attribution and positive underlying earnings US Variable Annuity GMxB Net Underlying Earnings ( Euro million, net of DAC and tax*) 2009 1H10 2H10 2010 Total VA base fees & other, less expenses 171 95 208 303 GMxB Hedge Margin 16 (91) (17) (109) o/w B
Slide 46: Focus on the US: Achievements and outlook
Focus on the US Achievements and outlook 2010 Achievements New innovative products comprise 38% of total life and variable annuity first year premium by FY2010 Annuity / Retirement: Retirement Cornerstone Structured Capital Strategies Life: Indexed Universal Life Market Stabilizer Option (MSO) Funds
Slide 47: Focus on France
Focus on France 2010: Focus on profitability L&S P&C Market Market remaining very focused on top line Market driving rates up at year environment growth end Underlying NBV margin AXA indiv. UL share vs. Underlying Earnings Earnings market* 20% +6% +29% 17% 17% 15% 9.0% 11.5% 15% 14%14% 14% 13% 406 4
Slide 48: Focus on France: 2011 priorities
Focus on France 2011: Growth in selected profitable segments 2011 priorities Continue price increases (Motor +4.5% and Household +7%) and claims transformation program P&C Continue selective underwriting in P&C commercial lines Accelerate UL sales among both L&S new cash (to reach 25% UL) and
Slide 49: Focus on NORCEE
Focus on NORCEE 2010: Focus on profitability in mature markets, and strengthening the position in high growth markets Life & Savings Property & Casualty Pro-active re-pricing of G/A savings in Commercial lines: portfolio pruning and Belgium with guarantees rates brought down stricter underwritin
Slide 50: Focus on Asia Life
Focus on Asia Life 2010 Robust sales growth of 39% (1) outpacing most of our peers Market leading positions in Indonesia and Philippines where we ranked #2 in both markets Significant market shares in Hong-Kong (9%)(2), Thailand (9%)(3) and Indonesia (12%)(4) ICBC to become a shareholder and
Slide 51: Table of contents
Table of contents 2010 key highlights Page 4 by Henri de Castries, Chairman and CEO 2010 financial performance Page 12 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Business overview Page 44 by Mark Pearson, Nicolas Moreau, Jacques de Vaucleroy, members of the Management Committee Concludi
Slide 52: Key financial highlights
2010 Key financial highlights Significant increase 9 Life & Savings: NBV margin strongly up from 18% to 22% in new business profitability 9 Property & Casualty: Current year combined ratio improved by 2 pts 9 Underlying Earnings: €3.9 billion (vs. €3.9 billion in FY09) Solid earnings 9 Adjusted Earn
Slide 53: 2011 and beyond: Ambition AXA
2011 and beyond: Ambition AXA Key beliefs AXA’s key beliefs Long term pillars of AXA’ strategy reaffirmed … Mature markets will still represent the majority of Focus on core businesses of insurance and global insurance revenues mid term, with some asset management worldwide segments growing fast
Slide 54: Key objectives 2011
2011 Key objectives Life & Savings: y Accelerate profitable growth, benefiting from more favorable financial markets and continuing strong performance in high growth markets y Further drive our new business sales towards selected profitable segments, notably Protection & Health and Unit-Linked pro
Slide 55: Q&A session
Q&A session Q&A session 55 – AXA FY10 Earnings – February 17, 2011
Slide 56: Notes
Notes Page 4 (1) Including active distributors Page 14 (1) ROE: Return corresponds to adjusted earnings net of interest charges on undated debt. Equity corresponds to average shareholders’ equity excluding undated debt and reserves related to change in fair value (2) Including Euro 190 million from
Slide 57: Definitions
Definitions 2010 financial statements are subject to completion of audit procedures by AXA’s independent auditors. AXA's FY10 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at December 31, 2010. Adjusted earnings, underlying