Axa Sa · EURONEXT:CS
Axa Sa — FY2012 Earnings Presentation
67 slides from Axa Sa's earnings presentation, Feb 21, 2013
Slide 1: Full Year 2012 Earnings Appendices
Full Year 2012 Earnings February 21, 2013 Appendices
Slide 2: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B2 – AXA FY12 Earnings – February 21, 2013
Slide 3: Life & Savings – Scope overview
Life & Savings – Scope overview Global footprint Well balanced business mix FY12 APE by geography FY12 APE by business G/A Protection Unit-Linked & Health 32% 40% NORCEE MedLA 18% 7% Mutual Funds France & other G/A Savings 22% 11% 17% Total: Euro 6,170 million UK 9% Strong proprietary networks FY12
Slide 4: Property & Casualty – Scope overview
Property & Casualty – Scope overview Global footprint Strong presence in Motor FY12 Revenues by geography FY12 Revenues by business Motor Construction 44% Asia 2% 2% Other Other1 Health Direct business 1% 9% 11% unit Liability 8% France 7% Workers’ 20% Compensation Switzerland Property 3% 10% 24% To
Slide 5: Asset Management – Scope overview
Asset Management – Scope overview Complementary business models • Multi-expert model: structured by • Structured by “Investment Style” “Expertise” • Focus on growth equities, value Product • Expertise in fixed income, equities, equities, blend strategies, fixed quantitative equities income offer • F
Slide 6: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B6 – AXA FY12 Earnings – February 21, 2013
Slide 7: Revenues
Revenues Revenues by segment Reported Comparable In Euro million FY11 FY12 basis basis Life & Savings 52,431 55,016 +5% +3% Property & Casualty 27,046 28,315 +5% +3% Asset Management 3,269 3,343 +2% -3% International Insurance 2,876 2,987 +4% +3% Banking & Holdings 485 466 -4% -3% Revenues 86,107 90
Slide 8: Underlying Earnings by region
Underlying Earnings by region Underlying Earnings In Euro million Change at Reported FY113 FY12 change constant Forex Life & Savings 2,138 2,635 +23% +19% United States 235 522 +122% +107% France 620 706 +14% +14% NORCEE1 649 594 -8% -10% UK -6 -17 +173% +158% Asia-Pacific (incl. Japan) 575 712 +24%
Slide 9: 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 FY11* FY12 In Euro million FY11* FY12 Underlying Earnings 3,772 4,251 Adjusted Earnings 3,460 4,548 Net realized capital Change in fair value 110 45 (312) 297 gains/(losses) o
Slide 10: FY12 key sensitivities
FY12 key sensitivities P&L Balance sheet In Euro billion o/w Net Unrealized Net Income Impairments Capital Gains net of hedges and Losses • -25% - 0.2 - 0.2 - 1.4 Equities • +25% 0.0 - 0.1 + 1.7 • -100 bps + 0.8 + 8.2 Interest rates • +100 bps - 0.3 - 7.6 • -75 bps + 0.2 + 1.6 Corporate spreads • +7
Slide 11: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B11 – AXA FY12 Earnings – February 21, 2013
Slide 12: Life & Savings
Life & Savings 1 Revenues, new business volumes and profitability page B13 2 Underlying earnings margin analysis page B14 3 Underlying earnings margin analysis by product page B20 B12 – AXA FY12 Earnings – February 21, 2013
Slide 13: L&S – Revenues and net inflows
1 L&S – Revenues and net inflows FY12 L&S revenues by region L&S Net inflows Net flows by country/region In Euro billion In Euro billion FY11 FY12 France +0.7 +1.1 NORCEE +2.2 +1.5 MedLA France +1% +1% United States -0.7 -0.2 4.8 United Kingdom +0.7 +0.2 13.7 Asia Pacific (incl. Japan) +2.2 +3.3 NOR
Slide 14: L&S – Underlying earnings margin analysis
2 L&S – Underlying earnings margin analysis Gross Margin Expenses Comp. Comp. In Euro million FY12 In Euro million FY12 Change1 Change1 Margin on revenues2 4,955 +2% Acquisition expenses -3,972 +14% Margin on assets 5,065 +5% Admin. Expenses -2,885 -1% Technical margin 357 n.a. VBI amortization -179
Slide 15: L&S – Margin analysis
L&S – Margin analysis 2 Details of margin on revenues Margin on revenues Average margin on L&S revenues1 9.0% 0% -2% business mix Detail by product +1% country mix G/A Protection & Health: 14.7% G/A Savings: 3.0% Unit-Linked: 4.2% Mutual funds & other: 9.3% Margin on revenues1 x Euro 4,955 milli
Slide 16: 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 147 bps -2% Unit-Linked 0% business mix management fees -2% country mix x Euro 2,066 million 0% Margin on assets1 Unit-Linked average reserves + Euro 5,06
Slide 17: L&S – Margin analysis
2 L&S – Margin analysis Details of margin on General Account assets Investment margin Unit-Linked management fees Euro 2,066 million 0% Margin on assets1 + Euro 5,065 million +5% Average management fees on general account reserves 1. Including other fees (mainly mutual fund and brokers fees) of Eu
Slide 18: L&S – Margin analysis
2 L&S – Margin analysis Details of technical margin Technical margin Mortality & morbidity margin and other1 Euro 1,400 million -6% Technical margin + Euro 357 million n.a. GMxB Variable Annuity margin (vs. Euro -205 million in FY11) Euro -1,043 million -41% In Euro million Basis -51 Volatilit
Slide 19: L&S – Margin analysis
2 L&S – Margin analysis Focus on gross technical margin Gross mortality, morbidity & surrender margin (pre-tax) FY12 mortality, morbidity & surrender margin evolution mainly In Euro million explained by: 1,452 • Euro +0.1 billion in G/A Protection & Health mainly driven by more 1,400 favorable reser
Slide 20: L&S – FY12 Underlying Earnings by business
3 L&S – FY12 Underlying Earnings by business Euro million FY111 FY12 % change on comp. basis G/A Protection & Health 2,201 2,273 0% G/A Savings 553 692 +25% Unit-Linked -4 504 n.a. Mutual funds & Other 9 -44 n.a. Pre-tax Underlying Earnings 2,759 3,426 +23% Tax and minority interest -621 -791 Underl
Slide 21: L&S – FY12 Margin analysis by business
3 L&S – FY12 Margin analysis by business G/A Protection Mutual Funds & In Euro million G/A Savings Unit-Linked & Health Other Margin on 9% revenues 3,786 360 660 % of GWP 78 bps Investment margin 867 1,613 177 of avge G/A reserves Management 147 bps fees 0 0 2,066 of avge UL reserves Technical margi
Slide 22: 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 FY12 In Euro million FY12 change change Protection & Health Protection & Health GWP 25,706 +2% 155,885 +2% Average reserves x x Protection & Health Protection & Health 94.7%
Slide 23: L&S – Margin analysis by business
3 L&S – Margin analysis by business G/A Savings In Euro million Comp. Comp. FY12 FY12 change change G/A Savings G/A Savings 11,950 -12% 190,941 +3% Gross revenues average reserves x x Margin on G/A Savings G/A Savings revenues 3.0% +0.5 bp Investment spread 84 bps +4 bps Comp. FY12 change Technical
Slide 24: L&S – Margin analysis by business
3 L&S – Margin analysis by business Unit-Linked Comp. Comp. In Euro million FY12 FY12 change change Unit-Linked Unit-Linked 15,759 +19% 140,102 +2% Gross revenues Average reserve x x Average margin on Unit-Linked average Unit-Linked revenues 4.2% +0.2 pt Management fees 147 bps -2% Comp. FY12 change
Slide 25: Focus on US VA GMxB
Focus on US VA GMxB Refined hedging and reserving approach and strengthened policyholder behavior assumptions Refined hedging and reserving approach Prudent policyholder behavior assumptions • Market consistent valuation of annuity at point of Future lapse rates after the surrender charge period hav
Slide 26: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B26 – AXA FY12 Earnings – February 21, 2013
Slide 27: P&C – Revenues and net new contracts
P&C – Revenues and net new contracts FY12 P&C revenues by region P&C personal net new contracts In Euro billion In thousands Almost 90% of net new contracts in high growth markets & Direct Direct +2% France Asia +2% +1,522 +11% 2.2 0.5 5.7 MedLA High +1,124 +3% 7.1 UK & Ireland growth +910 +5% marke
Slide 28: P&C – Underlying Earnings analysis
P&C – Underlying Earnings analysis Net technical result Net investment income Comp. Comp. In Euro million FY12 In Euro million FY12 Change Change Revenues 28,315 +3% Average P&C assets 55,430 +1% x x Combined ratio1 (in %) 97.6% -0.3 pt Average asset yield3 3.6% -3% 1. Combined ratio calculated base
Slide 29: P&C – Details on Combined Ratio
P&C – Details on Combined Ratio Loss Ratio (%) -0.1 pt Combined Ratio 70.9% +0.5 pt 70.8% 97.9% 97.6% -0.3 pt -0.3 pt Loss 70.9% 70.8% FY11 Current Nat Cat Prior year FY12 Ratio accident reserve year dev. -0.1 pt change on a comparable basis Expense Ratio (%) Expense -0.2 pt 27.0% 26.8% Ratio 26.8
Slide 30: 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% 1.4% 1.7% 0.9% 1.2% 0.3% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Reserving ratio (Net technical reserves/Net earned premiums) 193% 193% 186% 194% 187% 187% 186% 187% 186%
Slide 31: P&C – Details on current year loss ratios
P&C – Details on current year loss ratios Personal Motor Personal non motor 77.1% 64.8% +1.1pts 64.5% -0.2pt +1.8pts 75.4% -0.4pt +1.4pts -1.7pts -1.7pts -2.3pts 1 1 FY11 Nat Cat Price effect Frequency & Other FY12 FY11 Nat Cat Price effect Frequency & Other FY12 Current severity Current Current sev
Slide 32: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B32 – AXA FY12 Earnings – February 21, 2013
Slide 33: AM - Underlying Earnings
AM - Underlying Earnings Details of Asset Management margin analysis Margin Expenses Comp. Comp. In Euro million FY12 In Euro million FY12 Change Change Asset Management Asset Management fees 2,850 -4% -2,248 -9%1 expenses Distribution revenues 493 +5% Investment result 107 -1%1 Distribution expense
Slide 34: AM – Underlying Earnings
AM – Underlying Earnings Details on Asset Management revenues Average Asset Management fees on Assets under Management 33 bps -4% Asset Management fees x Euro 2,850 million -4% Average Assets under o/w performance fees (Euro 137 million, +14%) o/w research fees (Euro 321 million, -5%) Management
Slide 35: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B35 – AXA FY12 Earnings – February 21, 2013
Slide 36: Balance sheet
Balance sheet 1 General accounts invested assets Page B37 1.1 Government bonds & related page B38 1.2 Corporate bonds page B39 1.3 CDS page B42 1.4 ABS page B43 1.5 Equity page B47 1.6 Real Estate page B49 1.7 Hedge Funds page B50 1.8 Private Equity page B51 1.9 Mortgage loans page B52 2 Solvency Pa
Slide 37: General Account invested assets
General Account invested assets Invested assets (100%) FY11 % FY12 % In Euro billion Changes in asset allocation Fixed income 384 82% 404 82% • Net inflows, investment income and maturities: invested mainly in corporate o/w govies and related 207 44% 219 45% and government bonds o/w Corporate bonds
Slide 38: 1.1 Government bonds and related
1.1 Government bonds and related Breakdown by geography Breakdown by segment Other2 The Netherlands Other 2% ~2% ~7% P&C Supranational institutions ~11% 3% Austria 3% Spain L&S 3% France ~87% 24% US 6% 1 Switzerland Gross unrealized capital 7% gains and losses Japan In Euro billion 12% 25.3 Italy 8%
Slide 39: 1.2 Corporate bonds
1.2 Corporate bonds Breakdown by industry Single A range AAA Other ~8% ~11% AA Technology Basic materials BBB 2% ~11% 5% Other ~29% A Energy 2% ~41% 5% Consumer cyclical Breakdown by segment 5% Other2 Industrial 7% ~2% P&C Banks 34% ~14% Utilities 9% L&S Communications ~84% 9% 1 Gross unrealized cap
Slide 40: 1.2 Focus on banking corporate bonds
1.2 Focus on banking corporate bonds As of Dec 31, 2012 Gross market Senior debt Sub debt value Total Non Lower Upper in Euro billion Secured Tier 1 Preferred secured Tier 2 Tier 2 United States 0.2 7.2 1.9 0.0 0.1 0.0 9.3 France 2.7 3.2 1.1 0.0 0.0 0.0 7.0 Netherlands 2.7 2.6 0.3 0.0 0.1 0.0 5.7 Sp
Slide 41: 1.2 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, 2012 US UK Japan Germany Switzerland France Other1 Total P NP NP NP P NP P NP P NP P NP P NP AAA 0 0 0 1 3 1 2 1 3 1 0 0 9 4 AA 1 2 0 3 1 0 2 0 3 1 2 1 9 7 A 3 9 1 7 5 1
Slide 42: 1.3 Corporate bonds: focus on CDS
1.3 Corporate bonds: focus on CDS • CDS mainly used as alternative to investment grade corporate bonds • Overlay strategy: synthetically replicate corporate bonds by selling CDS on top of government bonds to enhance return • NBT strategy: buy credit derivatives on corporate names to form negative ba
Slide 43: 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 As of Dec 31, 2012 Total ABS = Euro 9 billion Mortgage-backed Other asset-backed NR/Equity AAA 7% 44% US Subprime, Alt-A & NC RMBS High Yield CLO 19% € 0.8 billion € 3.9 billion BBB Prime Residential
Slide 44: 1.4 Credit risk management: ABS investments
1.4 Credit risk management: ABS investments Group ABS exposure increased mainly driven by: • Market effect of Euro 1 billion mainly driven by performance of CMBS and Investment Grade CDO’s • Net flows of Euro 0.3 billion, comprised of Euro 2.4 billion of purchases mainly on CLO’s and Consumer ABS, a
Slide 45: 1.4 Focus on Mortgage-Backed Securities
1.4 Focus on Mortgage-Backed Securities Euro million Prime Residential US Subprime As of December 31, 2012 Commercial MBS UK & NC RMBS US Alt-A RMBS MBS RMBS (unless indicated) % of par @ 31/12/09 89% 75% 59% 42% 14% % of par @ 31/12/10 87% 69% 65% 51% 21% % of par @ 31/12/11 80% 59% 57% 45% 27% % o
Slide 46: 1.4 Focus on CDO
1.4 Focus on CDO Euro million Investment High Structured Other Total As of December 31, 2012 grade Yield Finance CDOs AAA 1,076 - 2 10 1,088 AA 20 - 1 55 76 A 2 7 - 8 17 BBB 12 15 - 4 31 Below invst. grade 401 11 17 10 438 Equity / Non rated 77 13 22 137 248 Value 1,588 46 42 223 1,899 Shareholder E
Slide 47: 1.5 Equity portfolio overview
1.5 Equity portfolio overview Breakdown by geography Breakdown by segment Rest of the World Other1 8% ~4% P&C ~19% BNP Paribas Other Eurozone countries 19% 12% Switzerland L&S 4% ~77% UK 4% France excl. BNP Belgium 2 Paribas Gross unrealized capital 4% 21% gains and losses In Euro billion Germany 2.
Slide 48: 1.5 Shareholders' exposure to equity
1.5 Shareholders’ exposure to equity Estimated shareholders’ exposure to equity as of Dec. 31, 2012 In Euro billion FY11 FY12 14 15 6 4 Gross Group share net Gross Group share net nominal of hedge, tax & nominal of hedge, tax & 100% PB 100% PB B48 – AXA FY12 Earnings – February 21, 2013
Slide 49: 1.6 Real Estate investments
1.6 Real Estate investments Defensive portfolio with good performance over the long term Key indicators Market value FY12 market value by Split by type (in Euro billion) country France Switz. Belgium Germany France 231 36% Office ~47% ~45% ~75% ~70% Residential ~11% ~50% ~0% ~10% Other 5% US 6% Comm
Slide 50: 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) • Mostly management of diversified funds of hedge funds 4 • Top 10 fund managers represent ~40% of portfolio market value • Comprised of 10 strategic categori
Slide 51: 1.8 Private Equity investments
1.8 Private Equity investments Diversified portfolio built over the long run Key indicators 2012 Awards Market value Breakdown by geography Breakdown by expertise (in Euro billion) • Gold award for “Best French Mid and Other Upper Mid-Market LBO Fund”– Private Infrastructure 8 Asia 7% Venture Equity
Slide 52: 1.9 Mortgage loans & other
1.9 Mortgage loans & other Low risk mortgage loan portfolio Key indicators Belgium FY12 market value by country Very secured Market value portfolio: (in Euro billion) Other Germany 37% Residential 100% Residential 221, 2 7% 7% FY12 default rate 27% 63% Commercial 0.07% FY12 loan to value 75% Residen
Slide 53: 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 Equities Real Estate and loans2 11.2 Corporate bonds 1.5 Government bonds 2.8 3.5 5.2 3.2 0.9 1.2 6.8 3.1 FY11* FY12 FY11* FY12 Net unreali
Slide 54: Focus on exposure to Eurozone peripheral countries government bonds
Focus on exposure to Eurozone peripheral countries government bonds Exposure by issuer Or Euro 13.0 billion with AXA MPS JV at Group share AFS OCI Gross book value Gross book value Gross book value Gross market value in Euro billion Dec. 31, 2011 June 30, 2012 December 31, 2012 December 31, 2012 Ita
Slide 55: Asset & Liability Management
Asset & Liability Management Life & Savings investment spreads for main entities Inforce New business 4.3% 340bps 3.2% 320bps • G/A reserves: Euro 95 billion France 0.9% • G/A Savings new business sales with 0.0% long term guarantees stopped in 1998 FY12 FY12 70bps 130bps 4.1% 3.0% • G/A reserves: E
Slide 56: Solvency I
2 Solvency I Solvency I ratio at 233% +40 pts 233% +18 pts 188% -13 pts 171% 182% 127% Of which +32 pts on fixed income assets FY08 FY09 FY10 FY11 Underlying URGL FX & other FY12 Earnings Solvency I Sensitivities In Euro billion Ratio as of December 31, 2012 233% 56 44 Interest rate +100bps 176% 32
Slide 57: Solvency I reconciliation to shareholders' equity
Solvency I reconciliation to shareholders’ 2 equity Available financial resources(1) In Euro billion SH equity 100% 56 Intangibles - 26 Admitted sub debt (2) +4 Locally admitted assets +2 Dividend to be paid -2 Real estate(3) +8 Pension benefit +4 Other(4) + 10 Available capital 56 (1): AXA is not a
Slide 58: Economic solvency rollforward
2 Economic solvency rollforward Economic solvency ratio* of which Refinement in the economic parameters modeling, notably improvement in yield FY11 183% curve modeling in line with Solvency 2 +6 pts +26 pts framework FY12 operating return FY11 dividend payment -7 pts Improvement of inflation risk mo
Slide 59: Economic capital model
2 Economic capital model Coverage ratio* FY12 Economic capital* by geography Holdings & other 15% 206% 23% France UK 183% 5% Asia Pacific 13% NORCEE United States 8% 27% MedLA 9% 100% basis, before diversification FY12 Economic capital* by risk Operational 6% 6% P&C risks 20% FY11 FY12 45% 43% Marke
Slide 60: Net financial debt
3 Net financial debt Long-term maturities Total net debt Contractual maturity breakdown In Euro billion In Euro billion 13.4 13.0 • Undrawn credit lines Euro 12 billion • Cash & cash equivalent Euro 30 billion 6.2 7.8 7.8 2.1 0.2 2.2 1.6 1.9 0.2 1.0 0.8 1.0 0.3 0.4 2012 2013 2014 2015 2016-2020 2021
Slide 61: Table of content
Table of content Business overview Group Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and Cash Flows B61 – AXA FY12 Earnings – February 21, 2013
Slide 62: EEV methodology update
EEV methodology update Methodology adjustments and related impacts Operating 2012 methodology adjustments effects NBV EEV IRR FCF Change in required capital definition Euro +0.1pt Switch from AA reference to 150% of local not significant +0.1bn required capital Yield curve modeling adjustments Refin
Slide 63: Life & Savings Embedded Value
Life & Savings Embedded Value Required In Euro billion L&S 2012 Life & Savings Free Cash Flow = VIF + ANAV capital EV breakdown (included in ANAV) Opening (FY11) 38.2 17.1 21.1 16.0 3.8 +0.5 -1.3 Modeling adj., FX -0.9 0.2 1.7 (1.5) (0.6) 2.2 & scope Existing business 3.7 (0.1) 3.8 (0.5) contributio
Slide 64: 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 +75 +4% +1,211 +3% 10% decrease -89 -5% -1,271 -3% Sensitivity to interest rates Upward 100bps parallel shift +88 +5% +2,360 +5% Downwar
Slide 65: L&S – IRR and new business investments
L&S – IRR and new business investments FY11 FY12 New business New business Euro million APE NB IRR1 APE NB IRR1 investments2 investments2 France 1,340 8.7% (592) 1,378 8.9% (595) US 1,018 10.7% (291) 1,244 13.2% (288) UK 535 7.7% (146) 535 4.3% (196) Japan 463 11.7% (242) 598 11.8% (330) NORCEE 1,28
Slide 66: L&S – operating Free Cash Flows
L&S – operating Free Cash Flows FY11 FY12 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 1,067 (592) 475 1,175 (595) 581 US 721 (291) 430
Slide 67: 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 2012 inforce flows from 2012 New Business Euro billion Euro billion 20 2,0 1,5 1,0 15 0,5 0,0 10 2012 1-5 6-10 11-15 16-20 21-25 26-30 31-35 -0,5 -1,0 5 -1,5 -2,0 -