AXA HALF YEAR 2016 EARNINGS. Presentation. August 3, 2016

Transcription

1 AXA HALF YEAR 2016 EARNINGS Presentation August 3, 2016

2 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, 2015, 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.

3 TABLE OF CONTENTS INTRODUCTION & HIGHLIGHTS PAGE A4 Thomas Buberl, incoming CEO FINANCIAL PERFORMANCE Gérald Harlin, Group CFO PAGE A13 CONCLUDING REMARKS Thomas Buberl, incoming CEO PAGE A38 A3 Half Year 2016 Earnings Presentation August 3, 2016

4 Introduction & highlights Thomas Buberl, incoming CEO

5 RESULTS Resilient earnings Strong balance sheet Profitable business growth Clear growth drivers despite adverse market conditions A5 Half Year 2016 Earnings Presentation August 3, 2016

6 RESILIENT UNDERLYING EARNINGS Underlying earnings Life & Savings In Euro billion In Euro billion +4% 0% restated Property & Casualty In Euro billion -6% restated Natural catastrophes were higher in than by Euro 0.1bn restated A6 Half Year 2016 Earnings Presentation August 3, 2016 Changes are at constant Forex and excluding Genworth and Portugal

7 RESILIENT EARNINGS Adjusted earnings Net income In Euro billion In Euro billion 3.5-2% % 3.2 restated restated A7 Half Year 2016 Earnings Presentation August 3, 2016 Changes are at constant Forex and excluding Genworth and Portugal

8 STRONG AND RESILIENT BALANCE SHEET Strong Solvency II ratio 1 Resilience to market movements 230% 170% 200% 197% Target range Ratio as of June 30, 2016 Interest rate +50bps Interest rate -50bps 197% 202% 192% Corporate spreads +75bps 196% Equity markets +25% 200% 1Q16 Equity markets -25% 188% High Solvency II ratio at 197% with strong operating return partly offsetting adverse market impacts and accrued dividend 2 A8 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

9 FOCUSED ON PROFITABLE GROWTH High new business profitability Life & Savings 37.3% NBV margin Euro 3.3 bn Annual Premium Equivalent Profitable business and growing revenues Property & Casualty 96.0% All year combined ratio +3.7% Gross revenues Asset Management Strong net inflows Euro 19 bn net inflows Euro 9 bn 2Q16 net inflows A9 Half Year 2016 Earnings Presentation August 3, 2016 Changes are on a comparable basis

10 HEALTH: HIGH QUALITY FRANCHISE Strong footprint Growth and high profitability * *Includes Health reported in both Life & Savings and Property & Casualty In Euro billion Other 1 Hong Kong 3% 14% 27% France 6,112 +3% 6,240 Mexico 4% Japan 11% Euro 6.2 billion gross revenues Gross revenues UK 17% 23% Germany restated 6 strongholds 5 targeted geographies 2 all year combined ratio 95.5% A10 Half Year 2016 Earnings Presentation August 3, 2016 Changes are on a comparable basis All notes are on pages A43 and A44

11 RESILIENCE TO ADVERSE MARKET CONDITIONS 74bps L&S INVESTMENT MARGIN 3.5% P&C INVESTMENT YIELD 1 in line with IR Day guidance 2.0% REINVESTMENT YIELD 1 A11 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

12 AMBITION 2020: CLEAR ACTIONS TO GROW EARNINGS Building blocks of underlying earnings per share CAGR E 1 Management control 8% UEPS CAGR Interest rates headwinds 3% 2% 1% 2% + = 3% - 7% -5% ; -1% Efficiency Growth Technical M&A 2015 margin 2020E UEPS CAGR A12 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

13 Financial performance Gérald Harlin, Group CFO

14 FINANCIAL PERFORMANCE Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A14 Half Year 2016 Earnings Presentation August 3, 2016

15 UNDERLYING EARNINGS UNDERLYING EARNINGS UNDERLYING EARNINGS BY SEGMENT In Euro million 0% In Euro million restated Change 3,075 3,063 Life & Savings 1,835 1,915 +4% Property & Casualty 1,286 1,176-6% Asset Management % International Insurance % Banking % Holdings % restated Underlying earnings 3,075 3,063 0% A15 Half Year 2016 Earnings Presentation August 3, 2016 Changes are at constant Forex and excluding Genworth and Portugal

16 ADJUSTED EARNINGS ADJUSTED EARNINGS DETAILS OF ADJUSTED EARNINGS In Euro million 3,457-2% 3,364 In Euro million restated Underlying earnings 3,075 3,063 Net realized capital gains/losses o/w realized capital gains o/w net impairments o/w hedging of equity portfolio Adjusted earnings 3,457 3,364 interest charges on undated debt restated Change is at constant Forex average adjusted shareholders' equity 41,270 44,225 Adjusted ROE % 14.6% A16 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

17 NET INCOME NET INCOME DETAILS OF NET INCOME In Euro million 3,077 +4% 3,207 In Euro million restated Adjusted earnings 3,457 3,364 Change in fair value & Forex o/w gains (losses) on interest rate economic hedges not eligible for hedge accounting under IAS 39 o/w gains (losses) on 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 restated Exceptional and discontinued operations Integration & restructuring costs Intangibles amortization and other Net income 3,077 3,207 Change is at constant Forex A17 Half Year 2016 Earnings Presentation August 3, 2016

18 FINANCIAL PERFORMANCE Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A18 Half Year 2016 Earnings Presentation August 3, 2016

19 L&S NEW BUSINESS SALES AND MARGINS BY MARKET In Euro million Mature markets High growth markets Total Total -2% New business sales (APE) 2,682-5% 2, % + = ,362 3,274 restated restated restated New business margin 35% +2 pts 37% -11 pts 48% 39% + = 37% 0 pt 37% restated restated restated A19 Half Year 2016 Earnings Presentation August 3, 2016 Changes are on a comparable basis

20 L&S NEW BUSINESS SALES AND MARGINS BY BUSINESS APE (Euro million) NBV margin Business line change Net Flows (Euro billion) restated G/A Protection & Health 1,326 +6% 54% G/A Savings % 16% of which G/A capital light % 26% Unit-Linked % 39% Mutual Funds & Other % 6% Total 3,274-2% 37% A20 Half Year 2016 Earnings Presentation August 3, 2016 Changes are on a comparable basis All notes are on pages A43 and A44

21 L&S UNDERLYING EARNINGS BY BUSINESS TOTAL LIFE & SAVINGS 1 (post-tax) In Euro million G/A PROTECTION & HEALTH (pre-tax) In Euro million G/A SAVINGS (pre-tax) In Euro million UNIT-LINKED (pre-tax) In Euro million 1,835 +4% 1,915 1,166-4% 1, % % 647 restated restated restated restated - + Non-repeat of exceptional positive reserve developments in France (Euro -0.1 billion) - Lower mortality margin in the US partly offset by Mexico and Japan Lower administrative expenses - + Lower investment margin Higher net technical margin - Lower management fees (Euro -0.1 billion) mainly due to lower average asset base (mainly linked to the decline and recovery in equity markets over the period) = Indicates negative one-off impacts which are partly offset by higher positive tax one-offs (Euro 0.1 billion) Changes are on comparable basis for pre-tax earnings and on constant forex excluding Genworth and Portugal for post-tax earnings A21 Half Year 2016 Earnings Presentation August 3, 2016 Full detail in appendix on pages B24 to B29

22 FINANCIAL PERFORMANCE Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A22 Half Year 2016 Earnings Presentation August 3, 2016

23 P&C REVENUES BY SEGMENT TOTAL In Euro million PERSONAL LINES In Euro million 18,183 +4% 18,602 +4% 10,231 10,326 Average price effect of +6.0% Motor revenues up 4% Non-motor revenues up 3% COMMERCIAL LINES In Euro million +3% 7,876 8,194 Average price effect of +3.5% Revenues evolution driven by tariff increases combined with higher volumes A23 Half Year 2016 Earnings Presentation August 3, 2016 Changes are on a comparable basis

24 P&C PRICE EFFECT BY COUNTRY AND SEGMENT Personal Lines Price evolution Revenues growth Commercial Lines Price evolution 1 Revenues growth FY16 market pricing trends France +0.7% +2.8% +1.7% -2.0% Germany +2.7% +1.8% +0.7% +4.1% UK & Ireland +6.2% +6.5% +1.5% +5.4% Switzerland 0.0% +1.1% +0.1% +0.7% Belgium +2.4% -0.6% +1.2% +1.3% MedLA % +6.2% +12.2% +5.8% Increased pressure on prices from stronger competition Increased competition on brokerage in Personal lines Price hardening in Commercial lines Hardening of the cycle in Motor Increasing competition in Commercial Lines Continued price softening in both Personal and Commercial lines Price decreases in both Personal and Commercial lines from increased competition Price softening for Motor in Italy Signs of hardening in Spain Asia % +8.2% -1.0% -0.2% Direct +6.0% +6.8% Total +6.0% +4.0% +3.5% +2.6% Prices expected to increase Prices expected to be stable Prices expected to decrease A24 Half Year 2016 Earnings Presentation August 3, 2016 Changes are on a comparable basis All notes are on pages A43 and A44

25 P&C REVENUES AND MARGINS BY MARKET Mature markets High growth markets Direct Total In Euro million +4% +2% 14,082 14, % on an economic gross revenues basis 1 18,183 18,602 Revenues + + = +11% +6% 2,712 2,743 1,389 1,451 Current year combined ratio 96.0% 97.3% 99.9% 102.3% % 98.5% = 96.9% +1.3 pts 98.2% Changes are on a comparable basis for revenues and at constant Forex excluding Genworth and Portugal for current year combined ratio A25 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

26 P&C UNDERLYING EARNINGS P&C UNDERLYING EARNINGS In Euro million COMBINED RATIO Current year combined ratio + Prior year reserve developments All-year combined ratio 1,286-6% 1, % Higher natural catastrophe charges Higher claims severity Price increases and lower frequency 0.1% 98.2% 0.8% -1.8% -2.1% 95.1% 96.0% Natural catastrophes INVESTMENT INCOME (pre-tax) In Euro million Annualized investment yield of 3.5% vs. 3.7% in 1,071-3% 1,006 Changes are on constant forex excluding Genworth and Portugal A26 Half Year 2016 Earnings Presentation August 3, 2016 Full detail in appendix on pages B33 to B36

27 FINANCIAL PERFORMANCE Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A27 Half Year 2016 Earnings Presentation August 3, 2016

28 AM ASSETS UNDER MANAGEMENT Average AUM and net flows in Euro billion Revenues in Euro million Net flows (incl. Joint Ventures) 1 Average AUM (excl. Joint Ventures) Revenues (excl. Joint Ventures) % % 583 Euro 16 billion from Joint Ventures in Asia in vs. Euro 19 billion in Average AUM and net flows in Euro billion Revenues in Euro million Net flows Average AUM Revenues -1% -8% ,324 1, Changes are on a comparable basis A28 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

29 AM UNDERLYING EARNINGS ASSET MANAGEMENT In Euro million In Euro million +3% 222-3% In Euro million 108-9% 98 A29 Half Year 2016 Earnings Presentation August 3, 2016 Full detail in appendix on pages B40 to B41 Changes are at constant Forex

30 FINANCIAL PERFORMANCE Group earnings Life & Savings Property & Casualty Asset Management Balance sheet A30 Half Year 2016 Earnings Presentation August 3, 2016

31 ASSET & LIABILITY MANAGEMENT (1/4) Diversified and resilient investment portfolio Real estate 5% Listed equities 3% Cash 6% Other fixed income 2 7% Corporate bonds Total General Account invested assets 83% in Fixed income 33% Euro 598 billion 3 Alternative investments 1 42% 3% Policy loans 1% Govies & related Life & Savings 4.0% 3.9% Limited yield dilution Fixed income Assets duration as at June 30, 2016 Property & Casualty 3.8% 3.7% 3.7% 8.3 years 5.4 years Long asset duration leading to a slow yield dilution Life & Savings 3.6% 3.4% Average rating of government and related bonds FY10 FY11 FY12 FY13 FY14 FY15 * maintained in the AA range Property & Casualty Average rating of corporate bonds maintained in the A range 4.0% 4.0% 3.9% 3.9% 3.9% 3.6% 3.5% FY10 FY11 FY12 FY13 FY14 FY15 * * Annualized Full detail in appendix on pages B44 to B57 A31 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

32 ASSET & LIABILITY MANAGEMENT (2/4) Diversified and resilient investment portfolio Government and related bonds rating 42% of total General Account invested assets in Corporate bonds rating 1 33% of total General Account invested assets in 43% AA AA 14% 33% A AAA Non rated 1% 23% Below investment grade 1% Euro % Euro 199 AAA billion 12% billion BBB 16% A Below investment grade 8% 33% BBB Average rating of government and related bonds maintained in the AA range Average rating of corporate bonds maintained in the A range A32 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

33 ASSET & LIABILITY MANAGEMENT (3/4) Well diversified and high quality new investments New fixed income investments in Resilient new investment yield Investment Grade credit Average rating: A ~49% new investments ~10% Government bonds & related Average rating: AA ~35% Below Investment Grade credit* ABS ~6% Yield on new investments in fixed income assets for Life & Savings and Property & Casualty entities ** Eurozone 2.0% US 2.6% Japan 0.7% Switzerland 1.2% Total 2.0% Focus on investment grade credit ~86% Corporate bonds ~6% Other loans ~8% Commercial Real Estate loans Euro 45 billion Amount invested in Fixed income in *Mainly short duration high yield **Annualized A33 Half Year 2016 Earnings Presentation August 3, 2016

34 ASSET & LIABILITY MANAGEMENT (4/4) L&S General Account investment spreads and margin Inforce business New business Spread above guaranteed rates Resilient investment margin 1 Spread above guaranteed rate +140 bps 78 bps 74 bps Guidance: 3.4% bps +160 bps 2.0% 2.0% 0.4% * * * * Yield on total L&S asset base Reinvestment 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 360 billion Products sold to attract higher margin Unit-Linked business *Annualized A34 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

35 SHAREHOLDERS EQUITY Shareholders equity Key drivers of change In Euro billion In Euro billion vs. FY Change in net unrealized capital gains +6.8 Net income for the period +3.2 Dividends Change in pension benefits -0.8 Forex movements net of hedging Subordinated debt -0.1 Other -0.4 FY15 A35 Half Year 2016 Earnings Presentation August 3, 2016

36 DEBT & RATINGS Financial debt Debt ratios In Euro billion Euro 2 billion debt issued in to refinance in advance part of outstanding debt Debt Gearing 2 Interest Cover 3 FY15 26% 10.7x 28% 16.2x Explained by Euro 2 billion debt issued in to refinance in advance part of outstanding debt Ratings A+ positive as of 29/10/ FY Aa3 stable as of 25/07/2016 Undated subordinated debt AAstable as of 28/06/2016 Subordinated debt 1 Senior debt A36 Half Year 2016 Earnings Presentation August 3, 2016 All notes are on pages A43 and A44

37 SOLVENCY II RATIO Solvency II ratio Key sensitivities In Euro billion Ratio as of June 30, % 205% 197% Solvency II ratio Interest rate +50bps 202% +5 pts Interest rate -50bps 192% -5 pts Corporate spreads +75bps 196% -1 pt Available capital Required capital Equity markets +25% 200% +3 pts FY15 Equity markets -25% 188% -9 pts Solvency II ratio roll-forward 205% +8 pts -5 pts -16 pts +5 pts 197% FY15 Operating return Dividend Market impact excl. forex Subordinated debt, forex & other A37 Half Year 2016 Earnings Presentation August 3, 2016

38 Concluding remarks Thomas Buberl, incoming CEO

39 AMBITION 2020 FOCUS TRANSFORM Selective growth New customer experience Efficiency and margins From Payer to Partner Capital and cash Adapt capabilities A39 Half Year 2016 Earnings Presentation August 3, 2016

40 AMBITIOUS TARGETS SET ON REALISTIC ASSUMPTIONS UNDERLYING EARNINGS PER SHARE 3-7% CAGR E GROUP OPERATING FREE CASH FLOWS EUR bn Cumulative 2016E-2020E ADJUSTED RETURN ON EQUITY SOLVENCY II RATIO 12% - 14% 2016E-2020E 170% - 230% Target range A40 Half Year 2016 Earnings Presentation August 3, 2016

41 AXA S STRENGTHS Strong and resilient balance sheet Most diversified composite insurer Strong cash flows supporting dividends Early mover in Life & Savings product mix Proven track record in efficiency gains Clear vision From payer to partner Renewed and dynamic management team A41 Half Year 2016 Earnings Presentation August 3, 2016

42 Q&A HALF YEAR 2016 EARNINGS

43 NOTES (1/2) Page A8 1. The Solvency II ratio is based on AXA s internal model calibrated based on adverse 1/200 year shock and assuming US equivalence. AXA s internal model was approved by ACPR on November 18, Solvency II took effect January 1, Solvency II ratio is estimated including a theoretical amount for dividends accrued for the first semester of 2016 based on half of the full year dividend paid in 2016 for FY Dividends are declared by the Board at its discretion based on a variety of factors described in AXA s Annual Reports and then submitted to AXA s shareholders for approval. This estimate should not be considered in any way to be an indication of the actual dividend amount, if any, for the 2016 financial year Page A10 1. Other MedLA countries (Gulf, Spain, Turkey, Colombia, Italy, Morocco, Greece), Asia P&C, South-East Asia, India & China, Belgium, the US and Luxembourg 2. Gulf, Malaysia, Thailand, China and Indonesia Page A11 1. Investment and reinvestment yields are annualized. Reinvestment yield is on new investments in fixed income assets for Life & Savings and Property & Casualty entities Page A12 1. Average annual growth over the 5 year plan period; period-to-period results may vary Page A16 1. 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 Page A20 1. G/A Savings products which, at inception, create more AFR than the economic capital they consume 2. figures were restated to take into account the reclassification at of non-gmxb Variable Annuity product (SCS) in the US from G/A Savings to Unit-Linked, to align with classification for APE and NBV. This reclassification explains the difference with the net flows reported page 75 of the financial supplement Page A24 1. Renewals only 2. Mediterranean and Latin American Region: Italy, Spain, Greece, Turkey, Mexico, Morocco, Colombia, Gulf Region and Brazil 3. Hong Kong, Malaysia, Singapore and Thailand, on a 100% share basis Page A25 1. Economic gross revenues: all entities are consolidated on a group share basis Page A28 1. AXA IM s joint ventures in Asia (China, Korea and India) are included at 100% in net flows, opening and closing assets under management but are excluded from revenues and average assets under management as they are not fully consolidated A43 Half Year 2016 Earnings Presentation August 3, 2016

44 NOTES (2/2) Page A31 1. Mainly Private Equity and Hedge Funds 2. Other fixed income include Asset backed securities (Euro 11 billion), residential loans (Euro 12 billion), commercial & agricultural loans (Euro 19 billion) and agency pools (Euro 1 billion) 3. invested assets referenced in page 57 of the financial supplement are Euro 795 billion, which include notably Euro 164 billion of Unit- Linked assets, Euro 36 billion related to the banking segment and Euro -2 billion of government bonds CDS and bond forwards. Page A32 1. Corporate bonds not rated by external rating agencies are reallocated under AXA s internal ratings: AAA : Euro 0.3 billion / AA : Euro 1.3 billion / A : Euro 3.2 billion / BBB : Euro 4.2 billion / BIG : Euro 2.2 billion Page A34 1. Group investment margin on total Life & Savings General Account business Page A36 1. Including Euro 0.7 billion of reversal of mark-to-market on interest rates derivatives in vs. Euro -0.6 in FY15 2. Starting, debt gearing is calculated gross of Holding company cash. FY15 debt gearing net of cash was reported at 23%. 3. Including undated debt interest charges A44 Half Year 2016 Earnings Presentation August 3, 2016

45 DEFINITIONS AXA s financial statements are subject to a completion of limited review by AXA s independent auditors. AXA's results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission as of June 30, Underlying Earnings, Adjusted Earnings, APE, NBV and Group Operating Free Cash Flows 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 pages A16 and A17 of this 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. Life & Savings high growth markets: APE and NBV: China, Czech Republic, Hong Kong, India, Indonesia, Mexico, Morocco, Philippines, Poland, Singapore, Slovakia, Thailand and Turkey; Revenues: Colombia, Czech Republic, Hong Kong, Indonesia (excl. bancassurance entity), Mexico, Morocco, Poland, Singapore, Slovakia and Turkey. Property & Casualty high growth markets: Revenues: Brazil, Colombia, the Gulf region, Hong Kong, Malaysia, Mexico, Morocco, Singapore, Thailand, and Turkey. A45 Half Year 2016 Earnings Presentation August 3, 2016