AXA in the U.S. Profitable Growth Ahead

Transcription

1 AXA in the U.S. Profitable Growth Ahead UBS Global Financials Conference STAN TULIN VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER AXA FINANCIAL MAY 10, 2005

2 Cautionary Statements Concerning Forward-looking Statements Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predications 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 and can be affected by other factors that could cause actual results and AXA s plans and objectives to differ materially from those expressed or implied in the forward looking statements (or from past results). These risks and uncertainties include, without limitation, the risk of future catastrophic events including possible future terrorist related incidents, economic and market developments, regulatory actions and developments, litigations and other proceedings. Please refer to AXA's Annual Report on Form 20-F for the year ended December 31, 2003 and AXA s Document de Référence for the year ended December 31, 2004, 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 forwardlooking statements, whether to reflect new information, future events or circumstances or otherwise. UBS Global Financial Services May 10, Page 2

3 Baby Boomer retirement needs are driving U.S. life & annuity sales growth ($bn) Annualized Individual Life Premiums 2001 vs % CAGR 12 ($bn) Variable Annuity Sales 2001 vs % CAGR Insurers are uniquely positioned to offer mortality based income guarantees to fund Boomer retirement income Source: LIMRA and VARDS, 2004; Merrill Lynch Research, Asset Management 11/2003 UBS Global Financial Services May 10, Page 3

4 Career distribution remains an important channel to offer retirement planning advice to Baby Boomers and Life Insurance Annualized New Premiums by Distribution Channel Variable Annuity Sales by Distribution Channel Career 38% Other 10% Career 34% Banks 13% Independents 52% 70% of AXA Financial s 2004 first year life sales from career distribution Brokers 20% Independents 31% Direct Response / Other 2% 47% of AXA Financial s 2004 total VA sales from career distribution Source: LIMRA 2003, VARDS 2004; AXA Financial sales include 2H 04 MONY sales UBS Global Financial Services May 10, Page 4

5 AXA Financial offers one of the industry s most balanced Variable Annuity distribution platforms 100% AXA Financial s Variable Annuity Total Sales vs. Industry % Wholesale 53% Wholesale Wirehouses, Banks, Regionals, Financial Planners 50% 34% Retail 47% Retail AXA Advisors and MONY Advisors 0% Industry AXA Financial Source: VARDS 2004 UBS Global Financial Services May 10, Page 5

6 AXA Advisors has delivered organic growth and is focused on productivity improvements Total FY Premiums in $ Bns AXA Advisors FY Premiums $5.9 $6.4 $6.4 Avg Advisor production up 46% on 23% lower population Proprietary sales increased from 72% to 77% Strict production minimums and retiree buyout programs have reduced low performers Source: VARDS; AXA Financial numbers exclude 2H 04 MONY sales $ UBS Global Financial Services May 10, Page 6

7 Independent planners represent an exciting wholesale distribution growth opportunity for AXA Financial The independent planner channel represents 48% of the wholesale market, but only 21% of AXA Distributors 2004 annuity sales Premiums in $ Billions Wholesale VA Market $70 $72 $82 $84 4-yr CAGR As a % of total +14% 21% +13% 48% -8% 17% 0-3% 14% Wirehouse Regionals Ind Planner Bank AXA s CAGR in the planner channel was 39%, but there s growth ahead Source: VARDS UBS Global Financial Services May 10, Page 7

8 AXA Financial s organic initiatives in the wholesale channel target independent planners AXA Distributors has aggressively invested in third-party wholesale distribution, with heavy emphasis on planners Increased wholesaler headcount to 77 from 48 in 2004 Of which, 24 wholesalers added to planner channel Top tier distribution agreements signed in 2005 Morgan Stanley Bank One UBS Global Financial Services May 10, Page 8

9 Opportunistic acquisitions like MONY will continue to target distribution expansion Added over 800 active MONY agents to sales force Top producer retention rate is over 90% Two Opportunities for MONY Advisors: #1 Increase Proprietary Sales #2 Sell higher margin* AXA products 57% (MONY 04) 4.4% 77% (AXA Financial 04) 21.2% Strong contribution from MONY partners wholesale life distribution: Mony Partners New Life Premiums $17m Q1 05 $3m * NBC margin Q3 '04 Q4 '04 UBS Global Financial Services May 10, Page 9

10 Alliance targets distribution growth in its successful Private Client business +23% 4-yr CAGR in net flows Private Client Inflows, $ billions Q'05 15% 12% 9% 6% 3% 0% % of total AUM Alliance has 14 Private Client offices providing access to 40% of high net worth population in the U.S. Strategic Plan: Offices accessing 60% of high net worth individuals Financial Advisors increased 14% to 220 in new offices to open in 2005: Atlanta, Denver and San Diego Expand PC model internationally Source: Claritas, HNW > $1million investable assets UBS Global Financial Services May 10, Page 10

11 Distribution initiatives complemented by innovative product development is key 3Q 05: Introduce a new 401k product targeting micro/small market Launch a new combined AXA/MONY Term portfolio 4Q 05: Introduce two new variable universal life products an accumulation and a protection variable product to better segment and compete in target markets 1Q 06: Update Athena Universal Life product to enhance profitability UBS Global Financial Services May 10, Page 11

12 critically supported by strong risk management practices Risk management is integral to every facet of business activity Keep competitive products in the marketplace Maintain a strong balance sheet and ratings AXA Financial comprehensively manages risk: Innovative guaranteed benefits hedging program Structured long-term solution to address AXXX reserving Product design management Counterparty risk in reinsurance UBS Global Financial Services May 10, Page 12

13 AXA Financial s growth strategy aligns management compensation with profitable growth Incentive compensation of AXA Financial organization built around 5 key metrics that drive profitability Net Sales 15% Expense Mgmt 20% New Business Value 15% Adjusted Earnings 10% Underlying Earnings 40% Shareholder targets drive management compensation UBS Global Financial Services May 10, Page 13

14 as well as AXA Advisors field management compensation 85% of field management compensation is based on profitability metrics Sales Goals 15% Expense Mgmt 25% NBV of New Sales 60% Shareholder targets drive field management compensation UBS Global Financial Services May 10, Page 14

15 Compensation strategy contributed to strong 2004 profitability improvement Improved NBC margins across all major products in YOY Change Variable Annuities Accumulator Retail Accumulator Wholesale APE NBC NBC Margin 29.4% 37.3% NBC NBC Margin 20.3% 28.4% NBC % Change +21% +6% Change in PTS EquiVest Retail % % +25% +0.3 Fixed Annuity % 4 4.5% +25% +2.7 Variable Life Retail % % +39% +8.2 Universal Life Retail % % +100% +3.3 Life Wholesale % % +33% +0.1 Other Lines of Business % % +48% +1.4 Subtotal Excluding MONY 1, % % +17% +3.4 MONY (1/2 year) % Total 1, % UBS Global Financial Services May 10, Page 15

16 MONY integration on schedule On target to achieve $175mm annual savings Incremental earnings contribution on track 2H 04 underlying earnings of $69mm $ mm underlying earnings for 2005 Consolidation of third-party life distribution channel completed in April 2005 Broker dealer and sales force consolidation to be completed early June Continue to consolidate office locations across the country to leverage space and resources Based on FGAAP earnings UBS Global Financial Services May 10, Page 16

17 Solid execution by AXA Financial has produced strong results and AXA Financial s Life & Savings New Business Contribution ($mm) % CAGR 366 ($mm) AXA Financial s Life & Savings Underlying Earnings % CAGR FGAAP earnings and NBV calculated using each year s average exchange rate UBS Global Financial Services May 10, Page 17

18 poised AXA shareholders to seize the growth inherent in the U.S. market Growth market focused Baby boomers Strong distribution Balanced and growing Proven execution Innovative product development Risk management Cost efficiency Merger integration UBS Global Financial Services May 10, Page 18

19 Thank you!