Half Year 2013 Earnings

Transcription

1 Half Year 2013 Earnings August 2, 2013 Presentation

2 Table of contents Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO financial performance by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Page A14 Concluding remarks Page A40 by Henri de Castries, Chairman and CEO A2 AXA Earnings August 2, 2013

3 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 because, by their nature, they are subject to known and unknown risks and uncertainties. Please refer to the section Cautionary statements in page 2 of AXA s Document de Référence for the year ended December 31, 2012, for a description of certain important factors, risks and uncertainties that may affect AXA s business. AXA undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. A3 AXA Earnings August 2, 2013

4 Strong growth in In Euro billion Underlying Earnings +16% In Euro billion Adjusted Earnings +26% bn bn Including exceptional 151m from partial sale of BNP Paribas equity stake Net realized capital gains Change is at constant Forex In Euro Change is on a reported basis * Retrospectively restated for the amendments to IAS 19 A4 AXA Earnings August 2, 2013 Underlying Earnings per share +11% published Change is at constant Forex Dividend policy: long-term guidance unchanged Payout ratio: 40-50% of Adjusted Earnings net of undated debt interest charges Realized capital gains: Euro million per year

5 Ambition AXA Financial objectives In Euro per share Underlying Earnings per share Group operating free cash flows Ambition AXA CAGR +5% to +10% in line with Ambition AXA plan Ambition AXA cumulative Euro 24 billion 1H10 published 1H11 published published Adjusted return on equity 2 Debt gearing Average adjusted shareholders equity 3 (in Euro billion) % 13.5% 13.8% % 13% to 15% 29% 28% 27% 26% 25% 1H10 published 1H11 published published Ambition AXA H10 published 1H11 published published Ambition AXA 2015 A5 AXA Earnings August 2, 2013 All notes are on page A42 of this document

6 Selectivity We are reshaping the Life & Savings business and fostering P&C profitability Life & Savings: resuming APE growth (+9% YoY) whilst increasing margins P&C: continuing to grow the business while improving profitability In Euro million 2,986 13% APE by product 2,948 3,064 10% 11% 3,310 12% NBV margin 3% in Euro million 14,691 Gross revenues 15,350 16,173 16,497 30% 32% 31% 34% 27% 26% 19% 17% 13% 10% 1H10 1H11 Combined ratio 31% 38% 41% 41% 54% 1H10 published 1H11 published 98.6% 97.2% 96.5% 95.7% 21% 24% 29% 33% NBV margin* Mutual funds & other Unit-Linked G/A Savings G/A Protection & Health 1H10 published 1H11 published * * Updated for actuarial and financial assumptions as of year end of respective accounting periods. will be updated at FY13. A6 AXA Earnings August 2, 2013 ** Retrospectively restated for the amendments to IAS 19

7 Acceleration Pursuing an active capital management Investments in high growth markets 3.2 bn 0.5 bn over 5 years 0.4 bn 0.5bn upfront + ca. 0.3bn over 3 years bn 0.9 bn 1.3 bn 2.0 bn 0.2 bn 0.8 bn A7 AXA Earnings August 2, 2013 Disposals of mature entities and non-strategic partnerships * Transaction pending, subject to customary closing conditions, including obtaining regulatory approvals

8 Acceleration Double-digit topline evolution in high growth markets in Euro million Life & Savings APE in high growth markets 1 in Euro million P&C revenues in high growth markets 1 2,272 1, ,417 1, H10 1H11 1H10 1H11 Contribution Contribution 10% to Group 16% 10% to Group 14% Life & Savings APE P&C revenues APE and revenues are as reported A8 AXA Earnings August 2, 2013 All notes are on page A42 of this document

9 Efficiency We are on track to deliver our 2015 productivity gains Euro 0.9 billion savings achieved since 2011 Ambition AXA efficiency program in mature markets In Euro billion ~ Euro 0.6 billion from acquisition costs P&C ~ ~ Euro 0.4 bn Additional cost saves announced at year end 2012 Life & Savings ~ Euro 0.2 bn Euro 1.1 billion from maintaining L&S and P&C administrative and claims handling costs 0.2 Operations Procurement IT FY11 FY12 2H13E - FY15E FY11 - FY15E ~ Euro 0.6 bn ~ Euro 0.3 bn ~ Euro 0.2 bn P&C Life & Savings A9 AXA Earnings August 2, 2013

10 Our solvency level is comfortable, supported by strong operating return +13 pts Economic solvency ratio* 206% -8 pts -7 pt 204% FY12 operating return Dividend Market effects & other Debt gearing Solvency I ratio 26% 26% 233% 218% FY12 FY12 * Including US equivalence A10 AXA Earnings August 2, 2013

11 Last year s challenged businesses are recovering G/A Savings De-emphasizing while focusing on selectivity and improving profitability Net flows (In Euro billion) 10% 4% NBV margin Unit-Linked Further growth in Unit-Linked flows 1.1 Net flows (In Euro billion) H11 2H11 2H12 US Variable Annuities De-risked and stabilized US Variable Annuity book Variable annuities GMxB Underlying Earnings (In Euro million) H11* 2H11* 2H12 Asset Management Positive flows in the last 12 months, whilst improving investment performance -23 Net flows (In Euro billion) H11 2H11 2H12 * Restated for the change in DAC accounting methodology adopted retrospectively as at January 1, 2012 A11 AXA Earnings August 2, 2013

12 Continuing to deliver on Ambition AXA objectives whilst shaping AXA for the future Preparing for the world of tomorrow Ambition AXA Supplement Ambition AXA with: Ambition AXA continues to stretch our teams to outperform Selectivity Acceleration Efficiency Strategic thinking to address long term mega trends Acceleration of digital investments and leverage of technology to: Further sharpen our risk know-how Connect more effectively with our clients A12 AXA Earnings August 2, 2013

13 Table of contents Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO financial performance by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Page A14 Concluding remarks Page A40 by Henri de Castries, Chairman and CEO A13 AXA Earnings August 2, 2013

14 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A14 AXA Earnings August 2, 2013

15 Underlying Earnings (1/2) Underlying Earnings Underlying Earnings by segment In Euro million +16% In Euro million Reported basis Constant Forex 2,579 Life & Savings 1,396 1, % +12% 2,263 Property & Casualty 1,036 1,128 +9% +10% Asset Management % +24% International Insurance % -12% Banking 5 61 n.a. n.a. Holdings % +3% Underlying Earnings 2,263 2, % +16% Change is at constant Forex * Retrospectively restated for the amendments to IAS 19 A15 AXA Earnings August 2, 2013

16 Underlying Earnings (2/2) In Euro million ,579 2,263 Life & Savings P&C International insurance Asset management, Banking Holdings Forex & scope * Retrospectively restated for the amendments to IAS 19 A16 AXA Earnings August 2, 2013

17 Adjusted Earnings In Euro million Adjusted Earnings 2, m +26% 2, m Net realized capital gains Details of Adjusted Earnings In Euro million Underlying Earnings 2,263 2,579 Net realized capital gains/(losses) o/w exceptional gain from partial sale of BNP Paribas equity stake Adjusted Earnings 2,386 2,954 ROE 13.5%* 16.5% Change is at constant Forex Adjusted Earnings increase mainly driven by higher Underlying Earnings and realized capital gains, including Euro 151 million from the sale of a 2.4% equity stake in BNP Paribas. * Retrospectively restated for the amendments to IAS 19 A17 AXA Earnings August 2, 2013 All notes are on page A42 of this document

18 Net Income In Euro million Net Income -1% 2,544 2,467 Details of Net income In Euro million Adjusted Earnings 2,386 2,954 Change is at constant Forex Change in fair value & Forex o/w gains (losses) on interest rate and Forex economic hedges not eligible for hedge accounting under IAS 39 o/w change in fair value of assets accounted for as fair value option Exceptional and discontinued operations o/w closed MONY portfolio transaction Restructuring costs Intangibles amortization and other Net Income 2,544 2,467 Net Income mainly driven by increased Adjusted Earnings more than offset by negative impact of hedging derivatives not eligible for hedge accounting under IAS 39 * Retrospectively restated for the amendments to IAS 19 A18 AXA Earnings August 2, 2013

19 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A19 AXA Earnings August 2, 2013

20 L&S New business sales and margins by market In Euro million New business sales (APE) Mature markets +8% 2,590 2,773 High growth markets o/w Asia 1 up 24% o/w CEE 2 down 29% +15% = 3,064 Total +9% 3,310 New business 31% 41% 44% 27% + = margin 29% 33% A20 AXA Earnings August 2, 2013 Changes are on a comparable basis 3 All notes are on page A42 of this document

21 L&S New business sales and margins by business Continued improvement in business mix APE (Euro million) NBV margin Net flows (Euro billion) Business line YoY change YoY Change G/A Protection & Health 1,341 +9% 54% G/A Savings % 10% Unit-Linked 1, % 27% Mutual funds & Other % 3% Total 3,310 +9% 33% A21 AXA Earnings August 2, 2013 Changes are on a comparable basis for APE and reported basis for net flows

22 L&S Pre-tax Underlying Earnings by business Total Life & Savings G/A Protection & Health G/A Savings Unit-Linked In Euro million +15% 2,067 1,836 In Euro million 1,187-6% 1,086 In Euro million In Euro million % % Improved investment margin Less favorable claims development in France, Japan and the US + + Stable investment margin Lower expenses - Lower margin on revenues in line with lower sales Higher fees & revenues Higher technical margin (higher US GMxB hedge margin) Higher amortization of deferred acquisition costs * Retrospectively restated for the amendments to IAS 19 A22 AXA Earnings August 2, 2013 Changes are on a comparable basis Full detail in appendix on pages B13 to B23

23 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A23 AXA Earnings August 2, 2013

24 P&C Revenues by segment In Euro million Total +1% Personal lines 16,173 +2% 16,497 9,424 9,489 Average price increase of +3.0% Portfolio growth in Direct and high growth markets Volume decreases in mature markets +4% Commercial lines 6,691 6,944 Average price increase of +3.3% Portfolio growth in high growth markets A24 AXA Earnings August 2, 2013 Changes are on a comparable basis

25 P&C Price increases by country and segment 3.1% price increase on average Personal lines Price increase Revenues growth Commercial lines Price increase Revenues growth Market pricing trends France +1.7% +0.3% +5.4% +3.0% Germany +7.9% +0.2% +1.5% -0.9% UK & Ireland +3.6% -8.0% +4.3% +8.6% Switzerland 0.0% +2.4% -1.1% -1.4% Belgium +5.3% -1.5% +2.7% -4.2% MedLA % +2.9% +5.5% +10.3% Price increases likely to continue in personal household and commercial lines Continued market price increases in Motor Slowing pricing trends in personal lines Commercial lines remain very competitive Trends likely to continue Slowdown of pricing trends in personal lines Impact of economic slowdown in Southern Europe Asia 2-0.7% +7.4% +2.8% +12.8% Direct % +6.6% Total +3.0% +0.9% +3.3% +3.8% Prices expected to be stable Prices expected to increase Price increase expected to accelerate vs. price increase A25 AXA Earnings August 2, 2013 All notes are on page A42 of this document

26 P&C Revenues and margins by market Improved current year combined ratio with strong sales in high growth markets and Direct In Euro million Mature markets High growth markets Direct Total +2% 0% 16,173 16,497 Revenues 13,259 13, = 1, % 2,272 1,085 +7% 1,152 Current year combined ratio 98.3% 97.3% 99.4% 97.3% % 99.9% = 98.6% 97.5% * Retrospectively restated for the amendments to IAS 19 A26 AXA Earnings August 2, 2013 Changes are on a comparable basis

27 P&C Underlying Earnings Improved combined ratio P&C Underlying Earnings Combined ratio In Euro million +10% 1,128 Improved current year combined ratio Lower prior year reserve developments Price increases of 3% Lower claims frequency Higher large claims Higher nat cat o/w -73m from the floods in Germany All-year combined ratio 1, % 0.5% 97.5% 0.7% -2.1% -1.8% 96.5% 95.7% Natural Catastrophes In Euro million -2% Investment income 1,033 1,005 Asset yield stable at 3.9% Change is at constant Forex * Retrospectively restated for the amendments to IAS 19 A27 AXA Earnings August 2, 2013 Full detail in appendix on pages B27 to B30

28 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A28 AXA Earnings August 2, 2013

29 AM Assets under management Improving net flows In Euro billion 514 Average AUM +6% Net flows FY12 2H12 In Euro billion 342 Average AUM +5% Net flows FY12 2H12 A29 AXA Earnings August 2, 2013 Changes are on comparable basis

30 AM Underlying Earnings and revenues In Euro million Underlying Earnings In Euro million Revenues +12% +24% 1,575 1, Change is on a comparable basis 159 In Euro million Expenses +7% 1,303 1,378 Change is at constant Forex * Retrospectively restated for the amendments to IAS 19 A30 AXA Earnings August 2, 2013 Change is at constant Forex

31 financial performance Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A31 AXA Earnings August 2, 2013

32 Shareholders equity In Euro billion Shareholders equity Key drivers of change vs. FY12* Including -0.1bn due to retrospective restatement for the amendments to IAS 19 - Decrease in net unrealized capital gains -2.5 billion Dividends -1.7 billion - Forex movements net of hedging instruments -1.0 billion + Net income for the period +2.5 billion + Change in pension benefits +0.3 billion FY12* + Other +0.3 billion * Retrospectively restated for the amendments to IAS 19 A32 AXA Earnings August 2, 2013

33 Economic solvency In Euro billion Economic solvency 1 including US equivalence Key sensitivities 206% 204% or 208% including proceeds from closed MONY portfolio Ratio as of December 31, % Interest rate+100 bps 213% Interest rate -100 bps 190% Equity markets +25% 208% Equity markets -25% 198% Corporate spreads +75bps* 202% FY12* Available capital Required capital Economic solvency ratio * Net of change in liquidity premium as defined in QIS 5 A33 AXA Earnings August 2, 2013 All notes are on page A42 of this document

34 Stable debt gearing at 26% In Euro billion Net financial debt Debt ratios Placement of USD 850m perpetual subordinated notes in January 2013* Early redemption of USD 500m undated subordinated fixed rate notes FY Placement of Euro 1bn of subordinated debt due 2043 in January 2013* Debt Gearing 2 26% 26% or 25% including proceeds from closed MONY portfolio Redemption of Euro 0.9bn of senior notes maturing in June 2013 Interest Cover 3 9.3x 11.6x FY12 Undated subordinated debt Subordinated debt 1 Senior debt Cash * Both transactions are part of the refinancing of up to Euro 2.1 billion that corresponding to the outstanding subordinated debt instruments maturing January 1, 2014 A34 AXA Earnings August 2, 2013 All notes are on page A42 of this document

35 Asset & Liability Management (1/4) Diversified and resilient investment portfolio Investment portfolio overview Asset yield* Life & Savings Property & Casualty Real Estate 5% Alternative investments 1 3% 3.8% 3.8% 3.9% 3.9% Listed equities 4% Cash 5% Other fixed income 2 7% Corporate bonds 31% Policy loans 1% Govies and related 45% FY12 FY12 AXA asset yield definition: Net underlying investment income on General Account assets Average General Account asset base at amortized cost Duration Assets duration as at June 30, 2013 Life & Savings 7.2 years Property & Casualty 4.8 years total General Account invested assets 3 : Euro 476 bn Duration gap close to 1 year Interest rates increase expected to reduce duration gap * Annualized A35 AXA Earnings August 2, 2013 Full detail in appendix on pages B35 to B53 All notes are on page A42 of this document

36 Asset & Liability Management (2/4) Current investment policy Current investment policy on Fixed income Diversification towards new asset classes ABS ~5% Short duration high yield ~8% Secured financial bonds ~5% Corporate bonds ~31% Loans ~10% Government bonds ~41% of which Euro 4 bn on European peripheral countries Investments in higher yielding less liquid fixed income asset classes: Alternative credit funds Pan-European mid-cap corporate loans reinvestment rate on Fixed income assets for Life & Savings and Property & Casualty entities Eurozone 3.3% US 2.6% Japan 2.1% Switzerland 2.1% Total 2.9% Amount reinvested Euro 29 billion Infrastructure debt Commercial real estate loans A36 AXA Earnings August 2, 2013

37 Asset & Liability Management (3/4) Life & Savings investment spreads and margin Inforce business New business Spread above guaranteed rates Resilient investment margin 1 Spread above guaranteed rate 3.8% +160bps 72 bps 77 bps Guidance: bps +240 bps 2.9% 2.2% 0.5% * * * Yield on total L&S asset base Yield on L&S fixed income assets L&S average guaranteed rate L&S average guaranteed rate Significant buffer to cover guarantees and to manage crediting rates to preserve investment margin Average reserves of Euro 345 billion Products sold to attract higher margin Unit-Linked business * Annualized A37 AXA Earnings August 2, 2013 All notes are on page A42 of this document

38 Asset & Liability Management (4/4) Expected positive impact from rising interest rates Interest rates sensitivity Main impacts Underlying earnings Limited short term sensitivity Progressive positive impact due to higher reinvestment yields +100 bps 3 Net income Unfavourable change in fair value of assets accounted for as fair value option, and interest rate and Forex economic hedges not eligible for hedge accounting under IAS 39 Embedded value Group L&S EEV up +5% 1 US L&S EEV up +23% 1 Economic Solvency Estimated +9 pts on the ratio 2 1. As of FY12 2. As of 3. For EEV and Economic Solvency: parallel shift in reference interest rates as defined in 2012 Embedded Value Report. A38 AXA Earnings August 2, 2013 All notes are on page A42 of this document

39 Table of contents Introduction & highlights Page A4 by Henri de Castries, Chairman and CEO financial performance by Denis Duverne, Deputy CEO & Gérald Harlin, Group CFO Page A14 Concluding remarks Page A40 by Henri de Castries, Chairman and CEO A39 AXA Earnings August 2, 2013

40 Main achievements in Ambition AXA: halfway there and well on track Growth and performance APE +9% and P&C revenues +2% Underlying earnings +16% Adjusted earnings +26% Adjusted Return on Equity 16.5% Economic Solvency at 204% Shareholders equity at 51.5bn Debt gearing at 26% Strong balance sheet Ambition AXA: successful implementation Selectivity with an improved business mix Acceleration in high growth markets organically and through acquisitions Efficiency reinforced to improve our competitiveness Unit-Linked: Further growth in flows G/A Savings: De-emphasizing while focusing on selectivity and profitability US: De-risked and stabilized the VA book Asset Management: Positive flows in the last 12 months Last year s challenged businesses are recovering A40 AXA Earnings August 2, 2013

41 Q&A session Q&A session A41 AXA Earnings August 2, 2013

42 Notes Page A5 1. Compound annual growth rate 2. Adjusted 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 3. Average shareholders equity excluding undated debt and reserves related to change in fair value Page A8 1. In Life & Savings, high growth markets are: Hong Kong, Central & Eastern Europe (Poland, Czech Republic, Slovakia and Hungary), South-East Asia (Singapore, Indonesia, Philippines and Thailand), China, India, Morocco, Mexico and Turkey In Property & Casualty, high growth markets are: Morocco, Mexico, Turkey, Gulf region, Hong Kong, Singapore, Malaysia, India, Thailand, Lebanon, Russia, Ukraine and Poland (excl. Direct) Page A17 1. Includes realized capital gains/ losses, impairments and equity portfolio hedging Page A20 1. Excluding Japan 2. Closing of pension fund new business in Poland and Hungary following changes in regulation 3. Change on a comparable basis corresponds to: For activity indicators, constant exchange rates, scope and methodology For earnings and profitability indicators, constant exchange rates Page A25 1. Mediterranean and Latin American Region: Italy, Spain, Portugal, Turkey, Mexico, Morocco, Greece, Lebanon and Gulf region (P&C only) 2. Hong Kong, Malaysia and Singapore, on a 100% share basis 3. Direct P&C operations in UK, France, Belgium, Spain, Portugal, Italy, Poland, South Korea and Japan Page A33 1. AXA internal economic model calibrated based on adverse 1/200 years shock Page A34 1. Including Euro -0.3 billion of reversal of mark-to-market on interest rate derivatives vs. Euro -0.4 billion in FY12 2. (Net financing debt + undated subordinated debt) divided by (shareholders equity incl. undated subordinated debt excl. FV in shareholders equity + net financing debt) 3. Including interest charge on undated subordinated debt Page A35 1. Mainly Private Equity and Hedge Funds 2. Mortgage loans & other include residential loans (Euro 12 billion), commercial & agricultural loans (Euro 10 billion) and agency pools (Euro 2 billion) 3. invested assets referenced in page 57 of the financial supplement are Euro 664 billion, which include notably Euro 155 billion of Unit-Linked contracts and Euro 36 billion related to the banking segment, and exclude Euro 5 billion of assets related to the closed MONY portfolio which is accounted for as held for sale. Page A37 1. Group investment margin on total General Account business A42 AXA Earnings August 2, 2013

43 Definitions AXA's results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at June 30, 2013 and are subject to completion of a limited review by AXA s independent auditors. Adjusted earnings, underlying earnings and NBV are non-gaap measures and as such are not audited, may not be comparable to similarly titled measures reported by other companies and should be read together with our GAAP measures. Management uses these non-gaap measures as key indicators of performance in assessing AXA s various businesses and believes that the presentation of these measures provides useful and important information to shareholders and investors as measures of AXA s financial performance. For a reconciliation of underlying and adjusted earnings to net income see page 8 of the appendix presentation. Life & Savings New Business Value (NBV) is the value of the new business sold during the reporting period. The new business value includes both the initial cost (or strain) to sell new business and the future earnings and return of capital to the shareholder. A43 AXA Earnings August 2, 2013