Investor Day November 7, Finance. Denis Duverne Deputy CEO

Transcription

1 Investor Day November 7, 2012 Finance Denis Duverne Deputy CEO

2 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, 2011, 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. B2 Finance November 7, 2012

3 Today s key messages We are mitigating the financial impact of unfavourable markets to deliver steady financial performance Our investment yields are resilient in a low interest rate environment Our solvency stands at very comfortable level B3 Finance November 7, 2012

4 B4 Finance November 7, 2012 We are mitigating the financial impact of unfavourable markets to deliver steady financial performance

5 What we said at June 2011 IR day Underlying Earnings per Share 10% CAGR Group operating Free Cash Flows Euro 24 billion Cumulative Adjusted Return on Equity 15% by 2015 Debt gearing 25% by Compound annual growth rate B5 Finance November 7, 2012

6 Financial markets assumptions are currently less favourable than initially expected 140 European equity markets growth below expectations (including dividend reinvested) 140 US equity markets growth in line with expectations (including dividend reinvested) FY10 FY11 FY12 FY13 FY14 FY15 80 FY10 FY11 FY12 FY13 FY14 FY15 Ambition AXA Realized Ambition AXA Realized Lower 10Y German Bund 1 Lower 10Y US Treasuries 1 5% 4% 3% 2% 1% 0% FY10 FY11 FY12 FY13 FY14 FY15 4% 3% 2% 1% 0% FY10 FY11 FY12 FY13 FY14 FY15 Ambition AXA Realized Ambition AXA Realized B6 Finance November 7, Market rate assumptions, not reinvestment yield

7 Some of our business lines are impacted by these adverse market conditions +2-3 pts Underlying Earnings per share What we said at June 2011 IR day: 10% UEPS CAGR pts 0/-3 pts -1 pt +4-5 pts Efficiency everywhere 10% Sensitivities to current market conditions Driven by : G/A Savings US VAs -1 pt Unit-Linked Asset Management -2 pts -2 pts +3-4 pts Acceleration in high growth markets Selectivity in mature markets Actively grow selected businesses 2x size 2.5x earnings 1.5bn pre-tax cost savings 2011 scope 2 effect 6% 1 equity markets return Flexibility CAGR Equity markets return Interest rates Top line / Net flows growth B7 Finance November 7, Including dividends 2. AXA APH and UK Life transactions

8 By strengthening our Ambition AXA current initiatives, we are mitigating the financial impact of unfavourable markets Selectivity P&C L&S Acceleration Decrease combined ratio faster Extract more value from inforce Accelerate shift towards Protection Asset Management Investment policy Efficiency Trust & Achievement Customer centricity Accelerate innovation and investment performance recovery Efficiency Adapt to preserve margins Euro 1.5 billion productivity gains is a minimum L&S acquisition expenses B8 Finance November 7, 2012

9 We are mitigating the financial impact of unfavourable markets Underlying earnings In Euro billion Earnings per share trajectory between 2010 and 2015 expected to remain within the 5-10% growth range B9 Finance November 7, 2012

10 We are mitigating the financial impact of unfavourable markets Adjusted ROE What we said at June 2011 IR day: 15% ROE by 2015 Sensitivities to current market conditions Adjusted ROE in the 13-15% range Life & Savings Property & Casualty 1 Asset Management Group 2 (before debt) Group 2 FY10 9% 12% 10% 10% 12% Ambition AXA FY15 Life & Savings 11% Property & Casualty 1 14% Asset Management 20% Group 2 (before debt) 12% Group 2 15% 12% 10% 13.5% 13.8% 15% ca. -2% 13-15% range // 1H11 1H12 // 2015E 2015E 2015E 1. Including International 2. Including Bank B10 Finance November 7, 2012

11 We are mitigating the financial impact of unfavourable markets Free Cash Flows over In Euro billion 24 L&S 11 What we said at June 2011 IR day: Euro 8-10bn net Free Cash Flows at Group holding level % to 85% remittance ratio (2) (6) (10) Holding net FCF in the Euro 6-10 bn range 40% of Adjusted Earnings net of undated debt charges range Group operating Free Cash Flows Cash to Group holding company Employee Shareplan 1 1. Based on 2010 level of Employee Shareplan Sale of 16% stake in Taikang and sale of Canadian operations AXA APH consideration Holding Dividends Additional Holding net costs & debt interests leverage capacity to be at Free Cash Flows with debt gearing 25% gearing at 25% Holding net Free Cash Flows with debt gearing at 25% B11 Finance November 7, 2012

12 Debt gearing close to 2015 target Debt gearing +1 point from the change in DAC accounting methodology 28% 26% 27% 25% FY10 FY11 1H12 FY15 Ambition AXA target Key drivers + - Cash remittance from entities to Group holding company Net income contribution to Shareholders Equity Holding costs and debt interest charges Shareholders dividend B12 Finance November 7, 2012

13 B13 Finance November 7, 2012 Our investment yields are resilient in a low interest rate environment

14 Our investment yields are resilient in low interest rate environment L&S investment policy P&C investment policy Run-off of L&S Fixed income portfolio Run-off of P&C Fixed income portfolio % % 3.8% 3.8% 4.0% 3.9% 3.9% 3.8% FY12E FY13E FY14E FY15E FY12E FY13E FY14E FY15E Book value and yield of asset basis (in Euro bn) Book value and yield of asset basis (in Euro bn) L&S spread above guaranteed rate P&C gross asset yield 1 3.9% 4.0% 3.9% 3.8% 2.5% 2.4% 2.2% 2.2% L&S Asset yield Guaranteed rate 4.0% 4.0% 4.0% 4.0% FY09 FY10 FY11 1H12 FY09 FY10 FY11 1H12 Decreasing L&S guaranteed rate due to lower guarantees in new business Limited dilution with long duration (> 7 years in L&S and > 5 years in P&C) B14 Finance November 7, Gross of interests credited to P&C reserves relating to annuities

15 Investment policy in Fixed income for Life & Savings and P&C entities Cash-flow from asset portfolio reinvested 9M12 investment policy on Fixed income G/A invested assets Fixed income 1 Cash flows to be reinvested Total Fixed income reinvestments Euro 38 billion Euro 384 billion Maturities Coupons Asset sales ABS ~8% Short duration high yield ~8% Loans ~2% Government bonds ~27% FY11 Secured financial bonds ~10% Corporate bonds ~45% At end September 2012, Euro 38 billion already reinvested YTD mainly in high grade corporate bonds at 2.7% Reinvestment rate on Fixed income assets for Life & Savings and P&C entities 9M12 Eurozone 3.2% Total 2.7% 1. Market value B15 Finance November 7, 2012

16 B16 Finance November 7, 2012 Our solvency stands at very comfortable level

17 Our solvency level stands at very comfortable level, supported by strong operating return +13 pts Economic solvency ratio 1 183% -3 pts -7 pts 174% +6 pts +3pts 183% -13 pts FY11 Change in US local solvency 1H12 Operating return Dividend Market effects & Other June 30, Q12 Operating return Market effects & Other September 30, % Solvency I ratio 207% >220% At historical highs FY11 1H12 September 30, Economic solvency ratio assuming US equivalence. AXA Equitable required and available capital are based on the New York State RBC framework, assuming a 300% RBC required capital level B17 Finance November 7, 2012

18 Today s key messages We are mitigating the financial impact of unfavourable markets to deliver steady financial performance Our investment yields are resilient in a low interest rate environment Our solvency stands at very comfortable level B18 Finance November 7, 2012

19 B19 Finance November 7, 2012 Appendices

20 Sources of earnings Emergence of earnings by source 64% of earnings come from sources insensitive to financial markets FY11 P&C and International Protection & Health Unit-Linked and Asset Management GA Savings Total Investment margin Management fees net of GMxB hedge margin 10% 3% 8% 15% 21% 15% 36% Upfront loadings Technical / underwriting result 36% 16% 5% 5% 1% 1% 22% 42% 64% Non market sensitive Gross margin 46% 24% 22% 9% 100% Expenses 46% 20% 27% 8% 100% Pre-tax earnings 46% 34% 11% 9% 100% 80% Less market sensitive 20% B20 Finance November 7, 2012