Axa Sa · EURONEXT:CS
Axa Sa — FY2013 Earnings Presentation
119 slides from Axa Sa's earnings presentation, Feb 21, 2014
Slide 1: Full year 2013 Earnings Presentation
Full year 2013 Earnings February 21, 2014 Presentation
Slide 2: Cautionary note concerning forward-looking statements
Cautionary note concerning forward-looking statements Certain statements contained herein may be 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
Slide 3: Earnings growth supported by strong solvency
2013 Earnings growth supported by strong solvency Ambition AXA program on track Transforming AXA Underlying Earnings Economic solvency ratio*1 Euro 4.7 billion (+18%) 206% (+7 pts) Underlying Earnings per share Debt gearing2 Euro 1.85 (+10%) 2013 24% (-2 pts) Dividend Adjusted Return on Equity3 Euro
Slide 4: Table of contents
Table of contents Introduction & highlights Page A5 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery in 2013 Page A12 by Denis Duverne, Deputy CEO FY13 financial performance Page A18 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A45 by Henri de
Slide 5: Strong earnings and free cash flow growth in 2013
Strong earnings and free cash flow growth in 2013… Underlying Earnings Adjusted Earnings In Euro billion In Euro billion +20% +18% 5.2 4.7 4.5 4.2 FY12* FY13 Net realized capital gains of Euro 434m within the Euro 300m to Euro 500m guidance Group Operating Free Cash Flows In Euro billion +12% 5.2 4.
Slide 6: Significant dividend growth
… translating into significant dividend growth… Earnings per share Dividend per share In Euro In Euro +13% Underlying earnings per share 0.81 +10% 1.85 0.72 1.69 FY12* FY13 Adjusted earnings per share FY12 FY13 +12% Payout 40% 40% ratio 2.03 1.81 Dividend policy: long term guidance unchanged Payout
Slide 7: Backed by a healthy balance sheet
… backed by a healthy balance sheet Economic solvency ratio* Solvency II Ready for the implementation of Solvency II starting January 1, 2016 206% Internal model approval process on track 199% Level II measures still under discussion 176% G-SIIs AXA designated as 1 of the 9 Global Systemical
Slide 8: Ambition AXA: years of selectivity in mature markets
Ambition AXA: 3 years of selectivity in mature markets Euro 8.5 Disposals in mature Less capital employed… billion markets since 2010* Underlying earnings FY10-13 CAGR Mature markets1 Mature markets (in Euro billion) … and still strong earnings 4.2 L&S APE +1% growth while the top line 3.7 3.7 4.0 g
Slide 9: Ambition AXA: years of acceleration in high growth markets
Ambition AXA: 3 years of acceleration in high growth markets L&S APE P&C Revenues Underlying earnings +17% CAGR +15% CAGR +28% CAGR High Strong top line and growth 1.1 4.5 0.6 earnings growth markets1 0.7 3.0 0.3 (in Euro billion) FY10 FY13 FY10 FY13 FY10 FY13 Successfully bridged Acquisition of the
Slide 10: Ambition AXA: years of efficiency
Ambition AXA: 3 years of efficiency Four key levers Efficiency 1 Increase distribution efficiency Cost savings on track (in mature Life & Savings and P&C entities) In Euro billion 2 1.7 Improve operational performance 1.2 3 Offset increased IT investments with Business as Usual IT cost reduction FY1
Slide 11: Table of contents
Table of contents Introduction & highlights Page A5 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery in 2013 Page A12 by Denis Duverne, Deputy CEO FY13 financial performance Page A18 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A45 by Henri de
Slide 12: We are focused on delivering on our Ambition AXA strategy
We are focused on delivering on our Ambition AXA strategy Ambition AXA Mature markets Sustainable growth in earnings & operating Free Selectivity Cash Flows High growth markets Double our size Acceleration Efficiency Everywhere with a focus on mature markets A12 – AXA FY13 Earnings – February 21, 20
Slide 13: Ambition AXA: delivering on financial objectives
Ambition AXA Delivering on financial objectives Underlying Earnings per share Group operating free cash flows In Euro per share In Euro billion 4.7 5.2 4.2 Ambition AXA 1.85 Ambition AXA 2011-2015 1.69 2010-2015 CAGR 1.57 1.57 cumulative +5% to +10% Euro 24 billion FY11 FY12 FY13 FY10 FY11 FY12 FY13
Slide 14: Selectivity
Selectivity We are reshaping the Life & Savings business and fostering P&C profitability Life & Savings: accelerating APE growth whilst P&C: continuing to grow the business whilst increasing margins improving profitability APE by product Gross revenues in Euro million In Euro million +5% FY13 +3% NB
Slide 15: Acceleration
Acceleration Double-digit topline evolution in high growth markets Life & Savings APE P&C revenues in Euro million in high growth markets in Euro million in high growth markets +11% vs. FY12 on a +14% vs. FY12 on a comparable basis comparable basis 1,061 1,070 4,520 925 3,843 3,335 667 2,990 FY10 FY
Slide 16: Efficiency
Efficiency We are on track to deliver our 2015 productivity gains Ambition AXA efficiency program Euro 1.2 billion savings achieved over 3 years in mature markets In Euro billion 1.7 Euro 0.6 billion from acquisition costs 0.5 P&C 0.7 1.2 ~ Euro 0.4 bn 0.3 Additional cost Life & Savings 0.6 saves an
Slide 17: Table of contents
Table of contents Introduction & highlights Page A5 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery in 2013 Page A12 by Denis Duverne, Deputy CEO FY13 financial performance Page A18 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A45 by Henri de
Slide 18: FY13 financial performance
FY13 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A18 – AXA FY13 Earnings – February 21, 2014
Slide 19: Underlying Earnings (1/2)
Underlying Earnings (1/2) Underlying Earnings Underlying Earnings by segment In Euro million Constant +18% In Euro million FY12* FY13 Forex 4,728 Life & Savings 2,603 2,793 +12% 4,155 Property & Casualty 1,877 2,105 +13% Asset Management 379 400 +8% International Insurance 167 202 +21% Banking 4 78
Slide 20: Underlying Earnings (2/2)
Underlying Earnings (2/2) In Euro million +73 +26 +36 +30 +251 4,728 -166 +323 4,155 FY12* Life & P&C International Asset Banking Holdings Forex FY13 Savings insurance management * Comparative information related to 2012 was retrospectively restated for the amendments to IAS 19 A20 – AXA FY13 Earnin
Slide 21: Adjusted Earnings
Adjusted Earnings Adjusted Earnings Details of Adjusted Earnings In Euro million +20% In Euro million FY12* FY13 5,162 434 Underlying Earnings 4,155 4,728 4,452 297 Net realized capital gains/losses 297 434 Net realized capital gains o/w realized capital gains 815 801 o/w net impairments -283 -301 o
Slide 22: Net Income
Net Income Net Income Details of Net income In Euro million In Euro million FY12* FY13 +14% 4,482 Adjusted earnings 4,452 5,162 Change in fair value & Forex 45 -317 o/w gains (losses) on interest rate economic hedges not 4,057 -173 -387 eligible for hedge accounting under IAS 39 o/w gains (losses) o
Slide 23: FY13 financial performance
FY13 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A23 – AXA FY13 Earnings – February 21, 2014
Slide 24: L&S – New business sales and margins by market
L&S – New business sales and margins by market In Euro million Mature markets High growth Total markets +5% o/w Asia1 up 16% +4% o/w CEE2 down 20% 6,170 6,335 5,109 5,265 New business sales (APE) + 1,061 +11% 1,070 = FY12 FY13 FY12 FY13 FY12 FY13 48% 44% 35% 32% 31% 29% New business margin + = FY12
Slide 25: L&S – New business sales and margins by business
L&S – New business sales and margins by business Continued improvement in business mix APE NBV Net Flows (Euro million) margin (Euro billion) YoY Business line FY13 FY13 FY12 FY13 change G/A Protection & Health 2,489 +4% 59% +4.8 +5.2 o/w Euro -0.9 billion due to the exit of an employee pension sche
Slide 26: L&S – Pre-tax Underlying Earnings by business
L&S – Pre-tax Underlying Earnings by business G/A Protection G/A Savings Unit-Linked Total & Health Life & Savings1 In Euro million In Euro million In Euro million In Euro million +13% 3,787 3,377 -7% 2,248 2,066 +129% -10% 1,055 691 640 481 FY12* FY13 FY12* FY13 FY12* FY13 FY12* FY13 + Higher margi
Slide 27: FY13 financial performance
FY13 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A27 – AXA FY13 Earnings – February 21, 2014
Slide 28: P&C – Revenues by segment
P&C – Revenues by segment Total In Euro million Personal lines In Euro million +1% 16,876 16,895 • Average price increase of +2.6% +2% • Portfolio growth in Direct and high 28,791 growth markets 28,315 • Selectivity and pruning in mature markets FY12 FY13 In Euro million Commercial lines +5% 11,216
Slide 29: P&C – Price increases by country and segment
P&C – Price increases by country and segment 2.9% price increase on average Personal lines Commercial lines FY13 Price Revenues Price Revenues Revenues increase growth increase growth growth 2014 market pricing trends +1.5% +1.3% +5.0% +5.5% • Price increases likely to continue in France personal ho
Slide 30: P&C – Revenues and margins by market
P&C – Revenues and margins by market Improved current year combined ratio and strong sales in high growth markets High growth Mature markets Direct Total In Euro million markets +2% 0% 28,315 28,791 22,257 21,996 o/w UK Direct down 4% o/w other countries1 up 7% Revenues + +14% + = 4,520 +5% 3,843 2,
Slide 31: P&C – Underlying Earnings
P&C – Underlying Earnings Improved combined ratio P&C Underlying Earnings Combined ratio In Euro million Current year Prior year reserve All-year combined ratio + developments combined ratio + Price increases +13% + Expense ratio improvement 2,105 + Lower frequency - Higher severity 98.9% 1,877 0.4%
Slide 32: FY13 financial performance
FY13 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A32 – AXA FY13 Earnings – February 21, 2014
Slide 33: AM – Assets under management
AM – Assets under management Improving net flows Average AUM and net flows in Euro billion Revenues in Euro million Average AUM Net flows Revenues +4% +10% 12 523 539 1,324 1,363 3 FY12 FY13 FY12 FY13 FY12 FY13 Average AUM and net flows in Euro billion Revenues in Euro million Average AUM Net flows
Slide 34: AM – Underlying Earnings
AM – Underlying Earnings Asset Management +6% on a comparable In Euro million In Euro million scope basis (excluding AXA Private Equity**) -1% 220 216 +8% 400 379 FY12* FY13 ** Sale of a majority stake in AXA Private Equity completed on October 1, 2013 In Euro million +20% 185 159 FY12* FY13 FY12* F
Slide 35: FY13 financial performance
FY13 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A35 – AXA FY13 Earnings – February 21, 2014
Slide 36: Shareholders' Equity
Shareholders’ Equity Shareholders’ equity Key drivers of change In Euro billion In Euro billion Including €-0.1bn due FY13 vs. FY12* to retrospective restatement for the amendments to IAS 19 - Change in net unrealized capital gains -2.4 53.6 52.9 - Dividends -1.7 - Forex movements net of hedging -2.
Slide 37: Debt gearing at 24%
Debt gearing at 24% Total net debt Debt ratios In Euro billion Changes in 2013 13.0 12.3 Undated subordinated debt Early redemption of USD FY12 FY13 7.8 7.8 500m undated subordinated fixed rate notes Including Euro 2.1bn Placement of USD 850m Debt subordinated perpetual subordinated notes Gear
Slide 38: Economic solvency
Economic solvency in Euro billion Economic solvencya 206% 199% 206% Economic Solvency 47.3 50.8 45.6 22.9 22.9 24.7 Available capital Required capital FY12 published FY12 adjustedb FY13 adjustedc Key sensitivities Ratio as of Dec. 31, 2013 206% Interest rate +100 bps 219% Interest rate -100 bps 190%
Slide 39: General Account invested assets
General Account invested assets Invested assets (100% ) FY12 % FY13 % in Euro billion Changes in asset mix Fixed income 404 82% 388 83% o/w Govies and related 219 45% 210 45% • Net inflows, investment income and maturities: invested mainly in corporate o/w Corporate bonds 151 31% 144 31% and governm
Slide 40: Asset & Liability Management
Asset & Liability Management Resilient investment portfolio Asset yield Life & Savings investment margin1 Including exceptional dividends from Life & Savings Private Equity and Equity funds following market rally in Japan 4.0% 3.9% 3.8% 3.7% 80 bps 76bps 78 bps 73bps Guidance: 70-80 bps FY10 FY11 FY
Slide 41: Life & Savings operating Free Cash Flows
Life & Savings operating Free Cash Flows L&S operating Free Cash Flows New business IRR* FY13 In Euro billion In Euro billion +9% 4.3 2.3 FY10 10.9% 2.2 1.8 2.3 FY11 11.5% -2.0 1.4 FY12 12.5% Expected inforce surplus generation FY13 14.2% New business investments FY10 FY11 FY12 FY13 (capital and cas
Slide 42: Group operating Free Cash Flows
Group operating Free Cash Flows Operating Free Cash Flows In Euro billion +12% 5.2 Life & Savings 4.7 Strong increase driven 2.2 2.3 Property & Casualty1 by P&C Asset Management2 2.1 2.4 and Asset Management 0.4 0.5 FY12 FY13 Change on constant Forex Remittance ratio In Euro billion 5.2 4.7 4.2 3.9
Slide 43: Group Embedded Value
Group Embedded Value Group Embedded Value In Euro billion 18% operating return on Group EV from strong performance across all business segments 43.0 37.3 Key drivers of change in Group EV FY13 +• Operating return € +6.6 billion +• Non operating variance € +3.4 billion - • Forex & other € -2.6 billio
Slide 44: Table of contents
Table of contents Introduction & highlights Page A5 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery in 2013 Page A12 by Denis Duverne, Deputy CEO FY13 financial performance Page A18 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A45 by Henri de
Slide 45: Concluding remarks
Concluding remarks 2013 Strong performance, solid balance sheet Successful roll-out of A 3-pillar strategy on track Ambition AXA Property & Casualty Digital Commercial Lines, Direct Further embed digital technologies in the business 2014 Life & Savings Data Individual Protection & Health, Continuing
Slide 46: Q&A session
Q&A session Q&A session A46 – AXA FY13 Earnings – February 21, 2014
Slide 47: Notes
Notes Page A3 1. AXA internal economic model calibrated based on adverse 1/200 years shock 2. Debt gearing: (Net financing debt + undated subordinated debt) divided by (shareholders’ equity incl. undated subordinated debt excl. FV in shareholders’ equity + net financing debt) 3. Adjusted Return on E
Slide 48: Definitions
Definitions FY13 financial statements are subject to completion of audit procedures by AXA’s independent auditors. AXA's FY13 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at December 31, 2013. Adjusted earnings, underlying
Slide 49: Full Year 2013 Earnings Appendices
Full Year 2013 Earnings February 21, 2014 Appendices
Slide 50: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B2 – AXA FY13 Earnings – February 21, 2014
Slide 51: Life & Savings – Scope overview
Life & Savings – Scope overview Global footprint Well balanced business mix FY13 APE by geography FY13 APE by business G/A Protection Unit-Linked & Health 34% 39% NORCEE1 MedLA2 17% 7% Mutual Funds France & other G/A Savings 23% 12% 14% Total: Euro 6.3 billion UK 10% Strong proprietary networks Asia
Slide 52: Property & Casualty – Scope overview
Property & Casualty – Scope overview Global footprint Strong presence in Motor FY13 Revenues by business FY13 Revenues by geography Motor Construction 44% 2% Asia Other 3% 9% Health Other1 11% Direct business 1% Liability unit 7% Workers’ 8% France Compensation 20% Property 3% Switzerland 23% Total:
Slide 53: AXA's footprint in high growth markets
AXA’s footprint in high growth markets Life & Savings Property & Casualty FY13 APE by geography FY13 revenues by geography Poland 4% Other Singapore Czech Republic 3% 6% 6% Malaysia Mexico Hong Kong Philippines 4% 5% 7% 3% Singapore Mexico Hong Kong Ukraine 5% 35% 41% 2% China 7% Morocco Indonesia 6
Slide 54: Asset Management – Scope overview
Asset Management – Scope overview Complementary business models • Multi-expert model: structured by • Risk-reducing, return-seeking, diversifying strategies “Expertise” and customized solutions • Expertise in fixed income, equities, • Expertise in actively managed equity and fixed Product quantitati
Slide 55: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B7 – AXA FY13 Earnings – February 21, 2014
Slide 56: Revenues
Revenues Revenues by segment Change on Change on In Euro million FY12 FY13 comparable reported basis basis Life & Savings 55,016 55,331 +1% +2% Property & Casualty 28,315 28,791 +2% +2% Asset Management 3,343 3,461 +4% +8% International Insurance 2,987 3,143 +5% +5% Banking 466 524 +12% +13% Revenue
Slide 57: Underlying Earnings by geography
Underlying Earnings by geography Underlying Earnings Change on Change at In Euro million 1 FY12 FY13 reported constant basis Forex Life & Savings 2,603 2,793 +7% +12% United States 492 559 +14% +17% France 707 708 +0% +0% 2 NORCEE 590 622 +5% +6% UK -17 -12 +33% +30% Asia-Pacific (incl. Japan) 712 7
Slide 58: Retrospective restatements for the amendments to IAS 19
Retrospective restatements for the amendments to IAS 19 from January 1, 2013 The amendment to IAS 19 – Employee Benefits, published on June 16, 2011, became effective since January 1, 2013, and the comparative information in respect of 2012, has been restated (referred as “restated” in the table bel
Slide 59: FY13 key sensitivities
FY13 key sensitivities In Euro billion P&L Balance Sheet Net Unrealized o/w Impairments net Net Income Capital Gains and of hedges Losses -25% -0.6 -0.4 -1.1 Equities +25% +0.1 -0.1 +1.6 -100 bps +0.2 +7.4 Interest rates +100 bps -0.1 -6.9 -75 bps +0.2 +1.4 Corporate spreads +75 bps -0.2 -1.3 B11 –
Slide 60: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B12 – AXA FY13 Earnings – February 21, 2014
Slide 61: Life & Savings
Life & Savings 1 Revenues, new business volumes and profitability page B14 2 Underlying earnings margin analysis page B15 3 Underlying earnings margin analysis by business page B21 B13 – AXA FY13 Earnings – February 21, 2014
Slide 62: L&S – Revenues and net inflows
1 L&S – Revenues and net inflows FY13 L&S revenues by region L&S Net inflows In Euro billion Net flows by country/region In Euro billion FY12 FY13 France +1.1 +1.4 MedLA NORCEE +1.5 +0.5 France +16% +3% United States -0.2 -1.8 5.6 United Kingdom +0.2 +0.4 14.1 Asia Pacific (incl. Japan) +3.3 +1.8 NO
Slide 63: L&S – Underlying Earnings margin analysis
2 L&S – Underlying Earnings margin analysis Gross Margin Expenses Comp. Comp. In Euro million FY13 In Euro million FY13 Change1 Change1 2 Margin on revenues 5,139 +4% Acquisition expenses 4,415 +12% Margin on assets 5,277 +6% Admin. Expenses 2,859 0% Technical margin 726 +106% VBI amortization 167 -
Slide 64: L&S – Margin analysis
L&S – Margin analysis 2 Details of margin on revenues Margin on revenues Average margin on L&S revenues1 9.3% +0.2 pt +0.6 pt business mix Detail by product -0.4 pt country mix G/A Protection & Health: 14.8% G/A Savings: 2.9% Unit-Linked: 4.7% Mutual funds & other: 8.4% Margin on revenues 1 x Eu
Slide 65: L&S – Margin analysis: Unit-Linked assets
2 L&S – Margin analysis Details of margin on Unit-Linked assets Unit-Linked management fees Average management fees on Unit- Linked reserves 150 bps +2 bps Unit-Linked management +3 bps business mix -1 bp country mix fees x Euro 2,259 million +12% Margin on assets 1 Unit-Linked average reserves
Slide 66: L&S – Margin analysis: General Account assets
2 L&S – Margin analysis Details of margin on General Account assets Investment margin Unit-Linked management fees Euro 2,259 million +12% Average management fees on Margin on assets 1 + general account reserves Euro 5,277 million +6% 80 bps +1 bp 1. Including other fees (mainly mutual fund +2
Slide 67: L&S – Margin analysis: technical margin
2 L&S – Margin analysis Details of technical margin Technical margin Mortality & morbidity margin and other 1 Euro 943 million -32% Technical margin + Euro 726 million +106% GMxB Variable Annuity margin Euro -217 million - (vs. Euro -1,043 million in FY12) In Euro billion o/w basis 5 o/w volat
Slide 68: L&S – Focus on gross technical margin
2 L&S – Margin analysis Focus on gross technical margin Gross mortality, morbidity & surrender margin (pre-tax) In Euro million FY13 mortality, morbidity & surrender margin evolution mainly explained by: 1,399 • Euro -0.3 billion in G/A Protection & Health mainly driven by the US 943 (Euro -0.2 bill
Slide 69: L&S – FY13 Underlying Earnings by business
3 L&S – FY13 Underlying Earnings by business Euro million FY12* FY13 % change on comp. basis G/A Protection & Health 2,248 2,066 -7% G/A Savings 691 640 -10% Unit-Linked 481 1,055 +129% Mutual funds & Other -44 26 - Pre-tax Underlying Earnings 3,377 3,787 +13% Tax and Minority interest -774 -994 Und
Slide 70: L&S – FY13 Margin analysis by business
3 L&S – FY13 Margin analysis by business In Euro million G/A Protection Mutual Funds G/A Savings Unit-Linked & Health & Other 9% Margin on 3,932 309 769 revenues % of GWP 80 bps Investment 865 1,597 202 margin of avge G/A reserves 150 bps Management 2,259 fees of avge UL reserves Technical 1,115 -19
Slide 71: L&S – G/A Protection & Health
3 L&S –Margin analysis by business G/A Protection & Health Technical result Net investment margin Comp. Comp. In Euro million FY13 In Euro million FY13 Change 1 Change 1 Protection & Health Protection & Health average 26,581 +4% 154,738 +3% Gross revenues reserves x x Protection & Health Protection
Slide 72: L&S – G/A Protection & Health combined ratio
3 L&S –Margin analysis by business G/A Protection & Health – Details on Combined Ratio Combined Ratio Expense Ratio1 +0.9pt 94.6% 95.5% • Expense ratio improved by 0.3 point, due Expense 14.5% to growing volumes and efficiency efforts 14.7% Ratio across the board Loss 81.0% 79.9% Ratio Loss Ratio •
Slide 73: L&S – G/A Savings
3 L&S – Margin analysis by business G/A Savings In Euro million Comp. Comp. FY13 FY13 Change 1 Change 1 G/A Savings G/A Savings 10,696 -10% 182,962 -2% Gross revenues Average reserves Mainly in Japan from x x model and assumption changes Margin on G/A G/A Savings 2.9% -0.1 pt 87 bps 0 bp Savings rev
Slide 74: L&S – Unit-Linked
3 L&S – Margin analysis by business Unit-Linked In Euro million Comp. Comp. FY13 FY13 change 1 change1 Unit-Linked Gross Unit-Linked 16,520 +7% 150,673 +11% revenues Average reserves x x Average margin on UL average 4.7% +0.5 pt 150 bps +2 bps UL revenues Management fees Comp. FY13 change Margin on
Slide 75: Focus on the US book while growing Underlying Earnings
Focus on the US Significant progress in de-risking and stabilizing Variable Annuity book while growing company’s Underlying Earnings US contribution to AXA Group Earnings Robust US Underlying Earnings growth In Euro million 559 12% 20% 235 492 of AXA Underlying Earnings: of AXA Life & Savings Underl
Slide 76: Focus on the US: Variable Annuity GMxB buyout offer
Focus on the US Successful Variable Annuity GMxB buyout offer significantly reduces GMxB tail risk exposure while benefiting policyholders Following a successful GMDB buyout pilot offer in 4Q12, AXA US offered in 2H13 a similar exchange for selective policyholders having both living and death benefi
Slide 77: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B29 – AXA FY13 Earnings – February 21, 2014
Slide 78: P&C – Revenues and net new contracts
P&C – Revenues and net new contracts FY13 P&C revenues by region P&C personal net new contracts In Euro billion In thousands Mature markets: loss of contracts in the UK following the exit from partnerships as well as in Germany and Belgium following tariff Direct increases +5% France +1,124 Asia +3%
Slide 79: P&C – Underlying Earnings analysis
P&C – Underlying Earnings analysis Net technical result Net investment income In Euro million In Euro million FY13 Change* FY13 Change* Revenues 28,791 +2% Average P&C assets 56,529 +2% x 1 3 x Combined ratio (in %) 96.6% -1.1 pts Average Asset Yield 3.6% -1% 1. Combined ratio calculated based on gr
Slide 80: P&C – Details on Combined Ratio
P&C – Details on Combined Ratio Expense Ratio rollforward 26.9% Combined Ratio 26.5% -0.2 pt -0.2 pt 97.7% 96.6% Expense Ratio 26.9% 26.5% FY12 1 Acquisition Administrative FY13 expenses expenses -0.4 pt change on a comparable basis Loss 70.8% 70.1% Ratio Loss Ratio rollforward 70.8% +0.4 pt 0.0 pt
Slide 81: P&C – Focus on reserve developments
P&C – Focus on reserve developments Prior year reserve development level (in % of gross earned premiums) 5.4% 5.4% 3.1% 2.7% 1.7% 1.4% 1.2% 1.2% 0.9% 0.3% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Reserving ratio (Net technical reserves/Net earned premiums) 193% 193% 186% 194% 187% 187% 186%
Slide 82: P&C – Details on current year loss ratios
P&C – Details on current year loss ratios Personal Motor Personal non motor +0.5pt 75.3% +0.6pt 64.4% +1.1pts 74.0% +1.2pts 64.0% -1.5pts -1.4pts -2.1pts -0.1pt 1 1 FY12 Nat Cat Price effect Frequency & Other FY13 CY FY12 Nat Cat Price effect Frequency & Other FY13 CY CY loss ratio severity loss rat
Slide 83: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B35 – AXA FY13 Earnings – February 21, 2014
Slide 84: AM – Underlying Earnings margin analysis
AM - Underlying Earnings Details of Asset Management margin analysis Margin Expenses In Euro million FY13 Change* In Euro million FY13 Change* Asset Management 1 Asset Management fees 2,908 +7% 2,203 0% expenses Distribution revenues 552 +16% 1 Investment result 98 -18% Distribution expenses 552 +13
Slide 85: AM – Asset Management revenues
AM – Underlying Earnings Details on Asset Management revenues Asset Management fees on average Assets under Management 33 bps +1 bp Asset management fees x Average Assets under Management Euro 2,908 million +7% o/w perfomance fees Euro 120 million (-10%) Euro 893 billion +5% o/w research fees
Slide 86: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B38 – AXA FY13 Earnings – February 21, 2014
Slide 87: Balance sheet
Balance sheet 1 General accounts invested assets Page B40 1.1 Government bonds & related page B41 1.2 Corporate bonds page B42 1.3 CDS page B45 1.4 ABS page B46 1.5 Equity page B50 1.6 Real Estate page B52 1.7 Hedge Funds page B53 1.8 Private Equity page B54 1.9 Mortgage loans page B55 2 Solvency Pa
Slide 88: General Account invested assets
General Account invested assets Invested assets (100% ) FY12 % FY13 % in Euro billion Changes in asset mix Fixed income 404 82% 388 83% 219 45% 210 45% • Net inflows, investment income and o/w govies and related maturities: invested mainly in corporate o/w Corporate bonds 151 31% 144 31% and governm
Slide 89: 1.1 Government bonds and related
1.1 Government bonds and related Breakdown by geography Breakdown by segment Other2 Ireland 2% P&C 2% The Netherlands 12% 2% Other 6% Supranational Institutions 2% L&S Austria France 87% 3% 20% US 5% 1 Spain Gross unrealized capital 6% gains and losses Switzerland In Euro billion 7% Germany 15% 25.3
Slide 90: 1.2 Corporate bonds
1.2 Corporate bonds Breakdown by industry Breakdown by segment Other2 Technology 2% 2% Basic materials P&C 5% Other 15% 2% Energy 5% L&S Consumer 83% cyclical 6% Banks 32% Industrial 1 7% Gross unrealized capital gains and losses Utilities In Euro billion 8% Communications 9.2 9% Consumer non-cyclic
Slide 91: 1.2 Focus on banking corporate bonds
1.2 Focus on banking corporate bonds As of Dec 31, 2013 Gross market Senior debt Subordinated debt value Total Non Lower Upper in Euro billion Secured Tier 1 Preferred secured Tier 2 Tier 2 United States 0.4 6.3 1.3 0.0 0.1 0.0 8.0 France 3.1 3.1 1.0 0.0 0.0 0.0 7.2 UK 1.2 2.9 0.4 0.0 0.1 0.0 4.7 Ge
Slide 92: Corporate bonds breakdown by country and rating
1.2 Corporate bonds breakdown by country and rating (including CDS) P = Participating NP = Non-participating in Euro billion France US Belgium Germany Switzerland Japan Other1 Total As of December 31, 2013 P NP P NP P NP P NP P NP NP P NP P NP AAA 2.6 1.1 0.1 1.2 0.1 0.1 3.7 0.7 1.4 0.4 0.5 0.2 0.3
Slide 93: 1.3 Focus on CDS
1.3 Focus on CDS • CDS mainly used as alternative to investment grade corporate bonds • Net CDS exposure excluding NBT strategy mainly corresponds to an “overlay” strategy (synthetically replicate corporate bonds by selling CDS on top of government bonds to enhance return) • NBT strategy: buy credit
Slide 94: 1.4 Asset Backed Securities by underlying type of asset
1.4 Asset Backed Securities by underlying type of asset Breakdown by asset type1 Breakdown by rating Mortgage-backed Other asset-backed US Subprime, Alt-A & NC RMBS € 0.9 billion Prime Residential NR/Equity AAA € 0.4 billion 7% 51% Commercial MBS High Yield € 0.9 billion 14% CLO € 4.8 billion BBB 11
Slide 95: 1.4 Credit risk management: ABS investments
1.4 Credit risk management: ABS investments Group ABS exposure increased mainly driven by: • Positive market effect of Euro 1 billion mainly driven by performance of all asset classes specially CLOs and investment grade CDOs • Net outflows of Euro 0.6 billion, comprised of Euro 2.9 billion of purcha
Slide 96: 1.4 Focus on Mortgage-Backed Securities
1.4 Focus on Mortgage-Backed Securities Euro million Prime Residential US Subprime As of December 31, 2013 Commercial MBS UK & NC RMBS US Alt-A RMBS MBS RMBS (unless indicated) % of par @ 31/12/10 87% 69% 65% 51% 21% % of par @ 31/12/11 80% 59% 57% 45% 27% % of par @ 31/12/12 88% 61% 71% 52% 52% % o
Slide 97: 1.4 Focus on CDO
1.4 Focus on CDO Euro million High Other Investment grade Structured Finance Total As of Dec 31, 2013 Yield CDOs AAA 1,097 - 15 3 1,114 AA 4 - - 2 6 A 12 9 - 3 24 BBB 488 - - 2 489 Below investment grade 7 10 20 10 47 Equity / Non rated 138 12 2 108 261 Total exposure 1,747 31 37 127 1,942 Sharehold
Slide 98: 1.5 Equity portfolio overview
1.5 Equity portfolio overview Breakdown by geography Breakdown by segment Other2 3% Rest of the World BNP Paribas P&C 13% 6% 21% L&S Other Eurozone countries 76% 9% France excl. BNP Paribas Belgium 20% 1 5% Gross unrealized capital UK gains and losses 6% In Euro billion 3.2 Japan 6% 2.5 Switzerland
Slide 99: 1.5 Shareholders' exposure to equity
1.5 Shareholders’ exposure to equity Estimated shareholders’ exposure to equity (In Euro billion) FY12 FY13 15 18 7 4 Gross Group share Gross Group share nominal net of hedge, nominal net of hedge, 100% tax & PB 100% tax & PB B51 – AXA FY13 Earnings – February 21, 2014
Slide 100: 1.6 Real Estate investments
1.6 Real Estate investments Defensive portfolio with good performance over the long term Key indicators Market value FY13 market value by Split by type (in Euro billion) country Others 8% France Switz. Germany Belgium US 241 US 5% Office ~ 47% ~ 39% ~ 66% ~ 78% ~ 0% Germany 9% Residential ~ 11% ~ 47
Slide 101: 1.7 Hedge Fund investments
1.7 Hedge Fund investments Diversified portfolio of hedge funds Key indicators Market value Exposure and concentration risk (in Euro billion) 4 • Management of diversified funds of hedge funds and alternative credit programme • Top 10 fund managers in diversified portfolios represent ~60% of market
Slide 102: 1.8 Private Equity investments
1.8 Private Equity investments Diversified portfolio built over the long run Key indicators Market value Breakdown by geography Breakdown by expertise (in Euro billion) Japan Other Infrastructure Venture 3% 4% 9% 6% 8 Private debt 15% US Europe Buy-out 32% 61% 69% FY13 Environment AXA portfolio retu
Slide 103: 1.9 Mortgage loans & other
1.9 Mortgage loans & other Low risk mortgage loan portfolio Key indicators Market value FY13 market value by country2 (in Euro billion) Other Germany Very secured 10% 221, 2 29% Residential 28% portfolio: 93% Residential 71% Commercial Belgium FY13 default rate 7% 7% Commercial 0.23% FY13 loan to va
Slide 104: Focus on net unrealized capital gains
Focus on net unrealized capital gains Balance sheet net unrealized Off balance sheet net capital gains1 unrealized capital gains In Euro billion In Euro billion 3 Equities Real Estate and loans2 11.2 Corporate bonds 1.5 Government bonds 8.4 2.8 1.9 3.5 3.4 1.5 6.8 5.0 FY12 FY13 FY12 FY13 Net unreali
Slide 105: Exposure to Eurozone peripheral countries government bonds
Focus on exposure to Eurozone peripheral countries government bonds Exposure by issuer Gross book value Gross book value Gross book value Gross market value in Euro billion Dec. 31, 2012 June 30, 2013 December 31, 2013 December 31, 2013 Italy 16.4 18.2 19.1 20.1 Spain 7.6 9.6 10.7 11.1 Ireland 2.7 2
Slide 106: Asset & Liability Management (1/2)
Asset & Liability Management (1/2) Life & Savings investment spreads and margin Inforce business New business Spread above Spread above guaranteed rates guaranteed rate +150bps 3.7% +230 bps 2.9% 2.2% 0.6% FY13 FY13 Yield on total L&S asset base Yield on L&S fixed income assets L&S average guarantee
Slide 107: Asset & Liability Management (2/2)
Asset & Liability Management (2/2) Life & Savings investment spreads for main entities Inforce New business 4.1% 320bps 3.3% 330bps • Average G/A reserves: Euro 97 billion France 0.9% • G/A Savings new business sales with 0.0% long term guarantees stopped in 1998 FY13 FY13 60bps 130bps 4.0% 3.1% • A
Slide 108: Solvency I
2 Solvency I Solvency I ratio at 221% +20 pts 233% 221% -23 pts -9 pts 182% 188% 171% Of which -25 pts on fixed income assets FY09 FY10 FY11 FY12 Underlying URGL Forex FY13 Earnings & other Solvency I Sensitivities In Euro billion 56 Ratio as of December 31, 2013 221% 52 Interest rates +100bps 172%
Slide 109: Solvency I reconciliation to shareholders' equity
2 Solvency I reconciliation to shareholders’ equity Available financial resources1 In Euro billion FY13 shareholder’s equity (100%) 55 Intangibles - 25 Admitted sub debt 2 +4 Locally admitted assets +2 Dividend to be paid -2 Real estate3 +8 Pension benefit +3 Other4 +7 Available capital 52 1. AXA is
Slide 110: Economic capital model
2 Economic capital model Coverage ratio* FY13 Economic capital* by geography Holdings & other 199% 206% 15% 25% France UK 50.8 5% Asia Pacific 45.5 12% NORCEE 6% United States 29% 9% MedLA 24.7 100% basis, before diversification 22.9 FY13 Economic capital* by risk Operational 5% 6% P&C risks 19% FY1
Slide 111: Economic Solvency roll-forward
Economic Solvency roll-forward Economic solvency FY12 206% -8 pts Based on Group EV operating return computed at FY12 dividend implied discount rate which is based on a 1 Management case FY12 adjusted 199% FY13 operating return +26 pts Market impact net 2 of liquidity premium -5 pts of which 3 U
Slide 112: Net financial debt
3 Net financial debt Long-term maturities Total net debt Contractual maturity breakdown In Euro billion In Euro billion 1.3 • Undrawn credit lines Euro 13 billion 1.7 13.0 12.3 • Cash & cash equivalent Euro 21 billion 6.0 7.8 7.8 0.8 0.3 2.1 1.9 2.2 1.0 0.1 0.2 2014 2015 2016 2017-2020 2021-2025 202
Slide 113: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B65 – AXA FY13 Earnings – February 21, 2014
Slide 114: EEV methodology update
EEV methodology update Modeling changes and opening adjustments 2013 adjustments effects NBV EEV Closed MONY portfolio transaction Not applicable Euro -0.2bn MONY is a CB Yield curve modeling adjustments Refinement in the economic parameters Not significant Euro -0.5bn modelling, following the lates
Slide 115: Life & Savings Embedded Value
Life & Savings Embedded Value Required In Euro billion L&S 2013 Life & Savings Free Cash Flow = VIF + ANAV capital EV breakdown (included in ANAV) +0.4 In Euro billion Opening (FY12) 44.2 22.6 21.6 15.6 3.8 Modeling adj. and -1.4 (0.9) (0.8) (0.2) (0.0) 2.2 +0.1 2.3 scope -0.7 Existing business 2.9
Slide 116: 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 +89 +4% +1,458 +3% 10% decrease -95 -4% -1,591 -3% Sensitivity to interest rates Upward 100bps parallel shift +32 +1% +1,346 +3% Downwar
Slide 117: L&S – IRR and new business investments
L&S – IRR and new business investments FY12 FY13 New business New business Euro million APE NB IRR1 APE NB IRR1 investments2 investments2 France 1,378 8.9% (595) 1,431 9.7% (543) US 1,244 13.2% (288) 1,322 16.4% (325) UK 535 4.3% (196) 647 6.0% (173) Japan 598 11.8% (330) 504 12.4% (296) NORCEE 1,13
Slide 118: L&S – operating Free Cash Flows
L&S – operating Free Cash Flows FY12 FY13 In Euro million Expected New business L&S Expected New business L&S inforce surplus operating free inforce surplus operating free investments 1 investments 1 generation cash flows generation cash flows France 1,175 (595) 581 1,179 (543) 635 US2 749 (288) 461
Slide 119: 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 flows from 2013 inforce* from 2013 New Business Euro billion Euro billion 25 2.0 1.5 20 1.0 0.5 15 0.0 2013 1-5 6-10 11-15 16-20 21-25 26-30 31-35 -0.5 10 -1.0 -1.5 5 -2