Axa Sa · EURONEXT:CS
Axa Sa — H1 2005 Earnings Presentation
37 slides from Axa Sa's earnings presentation, Sep 22, 2005
Slide 1: Half year 2005 Earnings
Half year 2005 Earnings September 22, 2005 Press Conference
Slide 2: Glossary
Glossary Adjusted Earnings Net income before the impact of exceptional operations, goodwill and related intangibles amortization/impairments, and profit or loss on financial assets under the fair value option and derivatives. For more details see glossary in the Management Report Underlying Earn
Slide 3: Table of contents
Table of contents 1 : Introduction 2 : Overview of financial performance 3 : Balance Sheet & Capital 4 : Conclusion Half Year 2005 Earnings – September 22, 2005 - Page 3
Slide 4: AXA continues to deliver very strong underlying earnings growth
AXA continues to deliver very strong underlying earnings growth Euro million Underlying Earnings 2 723 2 640 2 035 1 687 1 761 1 533 1 436 1 398 1 022 1 085 % + 26 2001 2002 2003 2004 2004 1H02 1H03 1H04 1H04 1H05 IFRS IFRS IFRS FGAAP FGAAP Per share(1): 0.88 0.96 1.12 1.43 1.42 0.58 0.61 0.77 0.77
Slide 5: Our profitable growth strategy is found throughout the organization
Our profitable growth strategy is found throughout the organization Euro million 1H05 Growth at constant FX(1) Life Life & Savings APE 2,515 +6.5% Life NBV 443 +20.1% Life NBV APE Margin 17.6% +2.1 pts P&C P&C revenues 10,314 +2.9% P&C Combined Ratio 97.5% -1.0 pt Asset Management Asset
Slide 6: Recent targeted operations will fuel future growth
Recent targeted operations will fuel future growth MONY integration and sale of Advest Northern Europe region Acquisition of Framlington (UK) Asset Management Seguro Directo (Portugal) P&C Joint venture with Bharti in India Life Affin in Malaysia Life Half Year 2005 Earnings – September 22,
Slide 7: Regular harvesting of capital gains is adding to adjusted earnings capacity
Regular harvesting of capital gains is adding to adjusted earnings capacity Euro million Adjusted Earnings 3 344 2 901 2 132 1 590 1 661 1 357 1 450 1 201 1 146 % 363 + 28 2001 2002 2003 2004 2004 1H02 1H03 1H04 1H04 1H05 IFRS IFRS IFRS FGAAP FGAAP Net capital gains/losses attributable to shareholde
Slide 8: The 1H05 activity indicators' evolution fits well into AXA's profitable growth strategy
The 1H05 activity indicators’ evolution fits well into AXA’s profitable growth strategy 36.5 34.9 Activity Indicators Growth(1) IFRS (Euro billion) Life & Savings APE +6.5% ( 1) .3% Life & Savings NBV +20.1% +3 P&C revenues +2.9% Asset Mgt revenues +5.7% Gross Revenues Int’l Insurance revenues +10.6
Slide 9: Strong positive net cash flows demonstrate AXA's ability to attract and retain clients
Strong positive net cash flows demonstrate AXA’s ability to attract and retain clients Euro billion Net Cash Flows Life & Savings(1) 4.5 4.8 3.5 3.5 1.9 With-Profits 1.0 -1.6 -1.0 Separate Account (4) General Account Total FY04 1H05 FY04 1H05 FY04 1H05 FY04 1H05 P&C(2) Asset Mgt(3) 1.3 1.6 15.6 6.5
Slide 10: Table of contents
Table of contents 1 : Introduction 2 : Overview of financial performance 3 : Balance Sheet & Capital 4 : Conclusion Half Year 2005 Earnings – September 22, 2005 - Page 10
Slide 11: Strong double-digit growth of underlying earnings
Strong double-digit growth of underlying earnings Euro 1H05 1H04 Change million million Change at cst. FX Life & Savings 972 815 +19% +22% Asset Management 154 123 +25% +30% Property & Casualty 695 577 +20% +21% International Insurance 103 138 -25% -26% OFS & Holdings -163 -256 -- -- Underlying earn
Slide 12: Life & Savings: Successful integration of MONY
Life & Savings: Successful integration of MONY MONY Contribution to Underlying Earnings ($ million) 79 69 49 % + 61 2H04 FGAAP 2H04 IFRS 1H05 IFRS The difference in the accounting treatment of restructuring charges between IFRS and FGAAP amounted to $-14m in 1H05 Salesforce integration completed
Slide 13: P&C earnings boosted by continued combined ratio and investment income improvement
P&C earnings boosted by continued combined ratio and investment income improvement Combined ratios(1) Technical Result(2) Ratios in % Results in Euro million Improvement Improvement 1H05 from 1H04 1H05 from 1H04 France 98.5 -1.0 37 +26 Germany 96.7 -2.5 47 +35 UK & Ireland 97.3 -0.2 58 +3 Belgium 96
Slide 14: International Insurance: 1H05 results reflected expense improvement but were impacted by major losses
International Insurance: 1H05 results reflected expense improvement but were impacted by major losses AXA RE results reflected: AXA CSA results were impacted by: Continued selective underwriting Continued selective underwriting Euro 73m net cost of major losses: Increased large claims Erwin
Slide 15: Table of contents
Table of contents 1 : Introduction 2 : Overview of financial performance 3 : Balance Sheet & Capital 4 : Conclusion Half Year 2005 Earnings – September 22, 2005 - Page 15
Slide 16: Shareholder's equity: +15% driven by earnings and market improvements
Shareholder’s equity: + 15 % driven by earnings and market improvements Euro billion Total FV of invested assets in SH equity euro 7.5 bn 34 0.2 2.3 1.1 32 1.7 30 (1.2) 28 26 28.5 +15% 32.7 24 22 20 12/31/04 SH Equity Chge in FV of Inv. Currency fluct. Dividend paid H105 Net income Super subord. 06/
Slide 17: Unrealized capital gains attributable to shareholders
Unrealized capital gains attributable to shareholders Euro billion Unrealized gains on Alliance Capital Off balance sheet unrealized gains 10.1 Unrealized gains recorded in SH equity 7.9 1.5 7.2 7.2 1.1 6.2 1.0 1.1 1.1 2.2 4.4 2.3 0.8 7.5 2.2 6.1 5.8 5.0 3.9 0.6 3.7 1.6 12/31/00 12/31/01 12/31/02 12
Slide 18: Strong deleveraging of the balance sheet
Strong deleveraging of the balance sheet Gearing 54% 49% 46% 43% 42% 39% 38% 2000 2001 2002 2003 2004 2004 H105 IFRS IFRS FGAAP Half Year 2005 Earnings – September 22, 2005 - Page 18
Slide 19: Table of contents
Table of contents 1 : Introduction 2 : Overview of financial performance 3 : Balance Sheet & Capital 4 : Conclusion Half Year 2005 Earnings – September 22, 2005 - Page 19
Slide 20: 2005 appears to be on the right track
2005 appears to be on the right track 1st Half 2005 : very good results All indicators pointing in the right direction Growth is benefiting from “bolt on” acquisitions AXA is on track to deliver strong double-digit earnings growth for 2005 Half Year 2005 Earnings – September 22, 2005 - Page 20
Slide 21: Achievements and opportunities are encouraging
Achievements and opportunities are encouraging Achievements Life and VA sales in the US IFA U/L bonds sales in the UK Life sales in Belgium P&C in France and Southern Europe Medical and Traditional products in Japan Asset management net inflows Opportunities Bancassurance in Japan Fu
Slide 22: Our long-term growth prospects are very good
Our long-term growth prospects are very good Half Year 2005 Earnings – September 22, 2005 - Page 22
Slide 23: Disclaimer and Cautionary Statements Concerning Forward-looking Statements
Disclaimer and Cautionary Statements Concerning Forward-looking Statements AXA's independent auditors have carried out a limited review on AXA's consolidated first half 2005 financial statements. AXA's 1H05 earnings have been prepared in accordance with IFRS and interpretations expected to be applic
Slide 24: Financial Protection - Be Life Confident
A A % FINANCIAL PROTECTION Be Life Confident
Slide 25: Appendices
Half year 2005 Earnings Appendices
Slide 26: Unmatched revenues' diversification
Unmatched revenues’ diversification 1H05 IFRS insurance revenues by geography AXA APH Others International Insurance 2% 3% France Southern Europe 7% 27% 7% Japan 7% 1H05 IFRS revenues 10% UK+Ireland 19% by operating segment 18% US Int’l Insurance Northern 7% Europe Property & Casualty 28% Life & 60%
Slide 27: This diversification is also unique from an underlying earnings perspective
This diversification is also unique from an underlying earnings perspective 1H05 insurance underlying earnings by geography AXA APH Others Southern Europe France 4%4% Int’l Insurance 5% 25% 6% Japan 6% 1H05 underlying earnings* 12% UK+Ireland 22% by operating segment 16% US Int’l Insurance Northern
Slide 28: Life & Savings: robust performance in a continued low interest rate environment
Life & Savings: robust performance in a continued low interest rate environment Underlying earnings Change Change at 1H05 (Euro million) from 1H04 cst FX US 388 +71 +89 o/w MONY* 61 +61 +64 o/w which AXA-Equitable 327 +9 +25 France 249 +31 +31 Japan 118 +38 +43 AXA APH** 66 -2 -- UK 43 +5 +6 Belgium
Slide 29: Life & Savings underlying earnings were driven by fees & revenues and technical margin
Life & Savings underlying earnings were driven by fees & revenues and technical margin Euro million Margin Analysis of Underlying Earnings 1H04 1H05 Growth 1H04 1H05 1H04 1H05 4 067 Underlying 1 098 -5% 3 672 (-3% cst FX) Investment 1 153 Gross margin Margin 9%st FX) +16% % +1 c + 1@1 cst FX) @ 2 43
Slide 30: Excluding MONY, Life & Savings underlying earnings were still up a robust 15%
Excluding MONY, Life& Savings underlying earnings were still up a robust 15%* Comparable scope (excluding MONY in 1H05) 1H04 1H05 Underlying Investment Margin down 9% (-7% at cst FX): 1 053 Lower investment yield in Japan due to higher currency hedge costs and a 1 153 fixed income (FI) portfolio r
Slide 31: Life & Savings: 1H05 significant items in Japan
Life & Savings: 1H05 significant items in Japan Net* realized gains due to portfolio restructuring of Euro 200m Non-recurring items: Euro million Net* impact Release of valuation allowance on DTA: +303 Î In underlying earnings +188 Î In adjusted earnings +114 Change in future investment assumpti
Slide 32: Life & Savings: separate account evolution bodes well for the future
Life & Savings: separate account* evolution bodes well for the future Euro billion Life & Savings Separate Account Balances** All periods at June 30, 2005 exchange rates 128 124 121 108 111 106 103 12/31/03 avg 1H04 06/30/04 avg FY04 12/31/04 avg 1H05 06/30/05 * Contracts with financial risk borne b
Slide 33: P&C: better combined ratio due to improved loss and administrative expense ratios
P&C: better combined ratio due to improved loss and administrative expense ratios… Improv't Loss ratio improved owing to: Ratios (in %) 1H05 from Î Still improving personal claims frequency 1H04 Î Benign commercial claims environment Loss, excl. CH(1) 65.5 -1.4 Î Reduced claims handling costs due
Slide 34: Asset Management: strong AUM increase and better cost income ratios
Asset Management: strong AUM increase and better cost income ratios* Asset Managers attracted Euro 16bn** of long-term net inflows in 1H05, as a result of ongoing strong momentum in: Î AXA IM’s third party activity: Euro 10bn inflows Î Alliance Capital’s private client business: Euro 3bn inflows A
Slide 35: From underlying earnings to net income
From underlying earnings to net income Euro 1H05 1H04 Change 1H05 per million million Change at cst. FX share(2) Change Underlying earnings 1,761 1,398 +26% +28% 0.93 +21% Net capital gains(1) 370 263 Adjusted earnings 2,132 1,661 +28% +31% 1.12 +24% Profit or loss on financial assets under FV optio
Slide 36: 1H05 net income included only Euro 27m of exceptional operations vs. Euro 126m in 1H04
1H05 net income included only Euro 27m of exceptional operations vs. Euro 126m in 1H04 1H05 exceptional operations were: Î Sale of AXA Assistance participation in CAS: Euro 23m net capital gain Î Sale of Alliance Capital Cash Management Services: Euro 3m net capital gain 1H04 exceptional operati
Slide 37: 1H05 profit or loss from financial assets under FV option and derivatives
1H05 profit or loss from financial assets under FV option and derivatives comes from: Euro million 1H05 1H04 Change Life & Savings 41 -1 +43 Property & Casualty 47 12 +35 International Insurance + Asset Mgt + OFS 5 -4 +9 Holdings 26 -22 +48 Profit or loss on financial assets under FV 119 -16 +135 op