Axa Sa · EURONEXT:CS
Axa Sa — FY2012 Earnings Presentation
54 slides from Axa Sa's earnings presentation, Feb 21, 2013
Slide 1: Full Year 2012 Earnings Presentation
Full Year 2012 Earnings February 21, 2013 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 Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery Page A13 by Denis Duverne, Deputy CEO FY12 financial performance Page A21 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A51 by Henri de Castrie
Slide 4: Resumed earnings growth with strong Free Cash Flow generation
Resumed earnings growth with strong Free Cash Flow generation Underlying Earnings Operating Free Cash Flows1 In Euro billion In Euro billion +9% +11% 4.3 4.7 4.2 3.8 FY11* FY12 FY11 FY12 Pre-tax +10% Underlying Earnings 5.2 5.9 Changes are at constant Forex Change is on a reported basis * Restated f
Slide 5: Comfortable solvency level, supported by strong operating return
Comfortable solvency level, supported by strong operating return Economic solvency ratio* +26 pts +6 pts 206% -7 pts -2 pts 183% FY11 FY12 operating FY11 dividend Market effects Other FY12 return Debt gearing Solvency I ratio 27% 233%1 26% 188% At historical highs FY11** FY12 FY11 FY12 * Including U
Slide 6: Dividend yield above 5%
Dividend yield above 5% In Euro per share 0.69 0.72 Strong earnings and operating Free Cash Flows generation FY11 FY12 Robust balance sheet Dividend yield of 5.4% based on share price as at 31/12/2012 Payout ratio1 of 40% A6 – AXA FY12 Earnings – February 21, 2013 All notes are on page A53 of this d
Slide 7: Our business model
Our business model Focused multi-liner Global & efficient Core businesses: Optimize footprint and cost structure Property & Casualty Active capital management Protection & Health Attract talent Savings and Asset Management Customer centric Deliver financial performance 102 million client
Slide 8: Well diversified earnings and reserves
Well diversified earnings and reserves Underlying Earnings Insurance reserves FY12 total Underlying Earnings: Euro 4,251 million FY12 average reserves: Euro 546 billion (+3% vs. FY11) Split of pre-tax Underlying Earnings1 by product Split of insurance reserves by product Property & Casualty G/A Prot
Slide 9: Property & Casualty and International businesses
Property & Casualty and International businesses Build on strong footprint to leverage growth opportunities Global footprint Well diversified product portfolio FY12 Revenues by geography FY12 Revenues by business Other 1% International International Continental Personal 10% 10% Europe Motor Direct 5
Slide 10: Protection & Health business
Protection & Health business Proven track record of profitable growth Balanced geographic scope Growing new business and In Euro million In Euro million consistent underwriting result Other 5% 2,445 France 2,184 High growth 1,802 25% markets 22% APE US Germany 8% 10% FY10 FY11 FY12 Japan Switzerland
Slide 11: Savings and Asset Management businesses
Savings and Asset Management businesses Well positioned to benefit from markets recovery Savings Asset Management Average FY12 savings reserves: AuM split by client Third party Euro 331 billion clients AXA companies 48% 52% G/A Savings Spread business 19% 58% 25% Notably in France, Germany, the
Slide 12: Table of contents
Table of contents Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery Page A13 by Denis Duverne, Deputy CEO FY12 financial performance Page A21 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A51 by Henri de Castrie
Slide 13: 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 A13 – AXA FY12 Earnings – February 21, 20
Slide 14: We are progressing on Ambition AXA financial objectives
We are progressing on Ambition AXA financial objectives Underlying Earnings per share Group operating Free Cash Flows In Euro per share In Euro billion +8% 0% Ambition AXA Ambition AXA 4.7 1.69 2010-2015 CAGR 4.2 2011-2015 1.57 1.57 3.7 cumulative +5% to +10% Euro 24 billion FY10 FY11 FY12 FY10 FY11
Slide 15: Ambition AXA: reshaping the Life & Savings business
Ambition AXA: reshaping the Life & Savings business Higher profitability through improved business mix APE by product NBV margin G/A Protection In Euro million Unit-Linked G/A Savings APE growth & Health CAGR NBV margin by product 53% 28% 5% 6,170 FY10-FY12 5,780 5,733 11% 31% 13% 10% >28% 25% 22% 3
Slide 16: Ambition AXA: fostering P&C profitability
Ambition AXA: fostering P&C profitability Combined ratio improvement well on track, with a unique Direct franchise AXA Group combined ratio AXA Global Direct Change is at constant Forex Unique Direct franchise Global integrated low cost platform, with presence o/w +0.7pt from reserve in 9 countrie
Slide 17: Ambition AXA: acceleration in high growth markets
Ambition AXA: acceleration in high growth markets Growing high growth markets1 contribution ICBC-AXA on track to create a leading franchise In Euro million China APE in Euro million, 100% share 3,843 3,335 July 2012: launch of the new joint-venture P&C 1,000 gross revenues FY07 FY11 FY12 108 Contrib
Slide 18: Ambition AXA: improving flows in Asset Management
Ambition AXA: improving flows in Asset Management Rebounding assets under management Growing Underlying Earnings Average AUM in Euro billion In Euro million 863 870 836 382 321 269 FY10 FY11 FY12 Improving net flows In Euro billion 1H10 2H10 1H11 2H11 1H12 6 2H12 -6 -8 -25 -23 FY10 FY11 FY12 -39 Con
Slide 19: Ambition AXA cost savings plan
Ambition AXA cost savings plan On track to deliver an increased Euro 1.7 billion target Ambition AXA efficiency program Euro 0.4 billion savings achieved in FY12 in mature markets In Euro billion 1.7 Additional Euro 0.2 billion from 0.2 Life & Savings acquisition costs 1.0 Euro 1.1 billion from main
Slide 20: Table of contents
Table of contents Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery Page A13 by Denis Duverne, Deputy CEO FY12 financial performance Page A21 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A51 by Henri de Castrie
Slide 21: FY12 financial performance
FY12 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and operating Free Cash Flows A21 – AXA FY12 Earnings – February 21, 2013
Slide 22: Underlying Earnings (1/2)
Underlying Earnings (1/2) Underlying Earnings Underlying Earnings by segment In Euro million Reported Constant In Euro million FY11* FY12 basis Forex +9% 4,251 Life & Savings 2,138 2,635 +23% +19% 3,772 Property & Casualty 1,848 1,895 +3% +1% Asset Management 321 382 +19% +14% International Insuranc
Slide 23: Underlying Earnings (2/2)
Underlying Earnings (2/2) In Euro million o/w Euro -117m from reserve strengthening in Turkey +134 4,251 +397 +25 +16 +10 -103 Lower positive prior year 3,772 reserve developments Improved VA GMxB results in the US FY11* Life & Savings P&C International Asset Holdings Forex FY12 insurance management
Slide 24: Adjusted Earnings
Adjusted Earnings Adjusted Earnings Details of Adjusted Earnings In Euro million In Euro million FY11* FY12 +28% Underlying Earnings 3,772 4,251 4,548 Net realized capital gains/(losses) (312) 297 3,460 Realized capital gains/losses 682 815 Impairments (840) (283) Hedging of equity portfolio (154) (
Slide 25: Net Income
Net Income Net Income Details of Net income In Euro million +44% In Euro million FY11* FY12 Adjusted Earnings 3,460 4,548 -4% Change in fair value 110 45 4,190 4,152 Exceptional and discontinued 2,069 (94) operations1 2,807 Restructuring costs (281) (244) Intangibles amortization and Excluding €1.4b
Slide 26: FY12 financial performance
FY12 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and operating Free Cash Flows A26 – AXA FY12 Earnings – February 21, 2013
Slide 27: L&S – New business sales and margins by market
L&S – New business sales and margins by market In Euro million High growth Mature markets Total markets +3% +2% o/w AXA Asia1 up 17% 6,170 o/w CEE down 34%2 5,733 4,808 5,109 New business +4% sales (APE) + 925 1,061 = FY11 FY12 FY11 FY12 FY11 FY12 42% 44% 29% 31% New business 25% margin 22% + = FY11
Slide 28: L&S – New business sales and margins by business
L&S – New business sales and margins by business Continued improvement in business mix APE (Euro million) NBV margin FY11 FY12 Change FY12 Strong sales in South-East Asia, India and G/A Protection & China (marketing campaigns and launch of 2,184 2,445 +7% 53% ICBC-AXA joint-venture), Hong Kong, Japa
Slide 29: L&S – Underlying Earnings
L&S – Underlying Earnings Underlying Earnings Rollforward In Euro million In Euro million Lower charges on US GMxB High growth markets +18% Variable Annuity Mature markets +19% +599 +19% 2,635 +32 2,635 +91 -458 -9 352 +243 2,138 2,138 Higher DAC amortization, mainly 281 in the US, and new business
Slide 30: Focus on the US
Focus on the US FY12 VA GMxB losses limited to under 1% of Group earnings US Variable Annuity GMxB Underlying Earnings (post tax)* In Euro million, net of DAC and tax* FY11** 1H12 FY12 Total VA base fees & other, less expenses 165 100 276 GMxB hedge margin (291) (90) (156) o/w Basis (75) (19) (16) o
Slide 31: FY12 financial performance
FY12 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and operating Free Cash Flows A31 – AXA FY12 Earnings – February 21, 2013
Slide 32: P&C – Revenues by segment
P&C – Revenues by segment In Euro million Total Personal lines +3% 16,309 16,876 +3% • Average price increase of +2.9% • Increase in volumes (+1,124k net new 28,315 contracts) offset by lower average 27,046 premium FY11 FY12 Commercial lines +3% 11,216 10,535 • Average price increase of +3.1% • More
Slide 33: P&C – Price increases by country and segment
P&C – Price increases by country and segment 3.0% price increase on average Personal lines Commercial lines FY12 Price Revenues Price Revenues Revenues increase growth increase growth growth 2013 market pricing trends France +2.3% +1.7% +5.7% +3.1% • Trends likely to continue in personal lines Germa
Slide 34: P&C – Revenues and margins by market
P&C – Revenues and margins by market Strong sales in high growth markets and improved current year combined ratio High growth Mature markets Direct Total In Euro million markets +3% +2% o/w UK Direct down 17% 28,315 o/w other countries up 9% 27,046 21,609 22,257 Revenues + +12% + = 3,843 +2% 3,335 2
Slide 35: 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 +1% Reserve + Price increases - strengthening in 1,895 + Lower expenses Turkey (+0.6pt) 1,848 - Increase in f
Slide 36: FY12 financial performance
FY12 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and operating Free Cash Flows A36 – AXA FY12 Earnings – February 21, 2013
Slide 37: AM – Assets under management
AM – Assets under management Improving net flows In Euro billion Average AUM FY12 net inflows: Euro +3 billion +2% 3 3 503 523 0 -3 1Q12 2Q12 3Q12 4Q12 FY11 FY12 In Euro billion Average AUM FY12 net outflows: Euro -4 billion -3% 4 333 348 -2 -3 -3 FY11 FY12 1Q12 2Q12 3Q12 4Q12 Changes are on a compa
Slide 38: AM – Underlying Earnings and revenues
AM – Underlying Earnings and revenues Underlying Earnings Revenues In Euro million In Euro million -3% 3,269 3,343 +14% 382 321 FY11 FY12 Change is on a comparable basis Expenses In Euro million -5% 2,764 2,745 FY11 FY12 FY11 FY12 Change is at constant Forex Change is at constant Forex A38 – AXA FY1
Slide 39: FY12 financial performance
FY12 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and operating Free Cash Flows A39 – AXA FY12 Earnings – February 21, 2013
Slide 40: Shareholders’ equity
Shareholders’ equity Shareholders’ equity Key drivers of change In Euro billion FY12 vs. FY11 53.7 48.6 +• Increase in net 1 unrealized € +6.1 billion capital gains -2.1 46.4 +• Net income for the period € +4.2 billion -• FY11 dividends € -1.6 billion - • Change in pension benefits € -0.8 billion Ch
Slide 41: Economic solvency
Economic solvency Economic solvency1 Key sensitivities including US equivalence In Euro billion 183% 206% 47.3 39.9 Ratio as of December 31, 2012 206% Interest rate+100 bps 213% Interest rate -100 bps 191% 21.8 22.9 Equity markets +25% 209% Equity markets -25% 200% Corporate spreads +75bps* 204% FY1
Slide 42: Debt gearing
Debt gearing Net financial debt Debt ratios In Euro billion 13.4 13.0 FY11 FY12 7.8 7.8 Debt Gearing2 27%* 26% 6.8 6.9 Interest Cover3 9.1x 9.3x 3.3 3.3 4.5 5.1 Debt gearing improvement mainly affected by dividends received from entities net of FY11 FY12 dividend paid Undated subordinated debt Senio
Slide 43: Asset & Liability Management (1/3)
Asset & Liability Management (1/3) Interest rate management in General Account Life & Savings Duration gap L&S asset yield L&S net investment margin 3.9% 3.8% 73 bps 78 bps Guidance: Asset duration as at December 31, 2012 70-80 bps Life & Savings 7.7 years Property & Casualty 4.7 years FY11 FY12 FY1
Slide 44: Asset & Liability Management (2/3)
Asset & Liability Management (2/3) Investment policy in Fixed income for Life & Savings and P&C entities Investment portfolio overview Current investment policy on Fixed income Alternative investments1 ABS ~7% Loans Real Estate 3% ~7% 5% Short duration Government bonds high yield Policy loans ~7% ~3
Slide 45: Asset & Liability Management (3/3)
Asset & Liability Management (3/3) Life & Savings investment spreads Inforce business New business Spread above New business reinvestment rate on fixed guaranteed rates income assets above guarantees offered 160bps 3.8% 200bps 2.7% 2.2% 0.7% FY12 FY12 Yield on total L&S asset base Yield on L&S fixed
Slide 46: FY12 financial performance
FY12 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet Embedded Value and operating Free Cash Flows A46 – AXA FY12 Earnings – February 21, 2013
Slide 47: Group Embedded Value
Group Embedded Value Group EV at €37.3bn In Euro billion 37.3 31.5 19% operating return on Group EV from strong performance across all business segments Key drivers of change in Group EV FY11 FY12 FY12 IFRS TNAV +• Operating return € +6.3 billion In Euro billion +52% 21.6 € +0.9 billion 14.2 +• Inve
Slide 48: Life & Savings operating Free Cash Flows
Life & Savings operating Free Cash Flows In Euro billion FY10 FY11 FY12 New business New business New business IRR at 10.9% IRR at 11.5% IRR at 12.5% 4.3 3.9 3.6 2.2 1.8 1.4 -2.2 -2.2 -2.2 Expected inforce surplus New business investments Life & Savings operating Free generation (capital and cash st
Slide 49: Group operating Free Cash Flows
Group operating Free Cash Flows Operating Free Cash Flows In Euro billion 4.7 4.2 Life & Savings 1.8 2.2 Strong increase driven by Property & Casualty1 2.1 2.1 Life & Savings Asset Management2 0.4 0.4 FY11 FY12 Remittance ratio In Euro billion Excluding proceeds from disposals 4.7 4.2 3.7 3.5 Operat
Slide 50: Table of contents
Table of contents Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO Update on Ambition AXA delivery Page A13 by Denis Duverne, Deputy CEO FY12 financial performance Page A21 by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Concluding remarks Page A51 by Henri de Castrie
Slide 51: Main achievements in 2012
Main achievements in 2012 Ambition AXA: halfway there and well on track Growth and performance Ambition AXA: successful implementation Selectivity shift towards products that address Underlying earnings +9% ever-evolving client needs Adjusted earnings +28% Acceleration in high growth markets
Slide 52: Q&A session
Q&A session Q&A session A52 – AXA FY12 Earnings – February 21, 2013
Slide 53: Notes
Notes Page A4 1. Operating Free Cash Flows correspond: (i) for Life & Savings, to the expected inforce surplus generation (cash and capital) net of New Business investment (capital and cash strain). (ii) For Property & Casualty and Asset Management, to the underlying earnings, realized capital gains
Slide 54: Definitions
Definitions FY12 financial statements are subject to completion of audit procedures by AXA’s independent auditors. AXA's FY12 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at December 31, 2012. Adjusted earnings, underlying