AXA. Gérald Harlin. Group CFO. November 29, Société Générale The Premium Review Conference

Transcription

1 AXA Gérald Harlin Group CFO November 29, 2012 Société Générale The Premium Review Conference

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. 2 AXA Société Générale The Premium Review Conference November 29, 2012

3 Today s key messages AXA s business model is proving resilient We are managing our balance sheet with discipline Our Ambition AXA plan is well designed to respond to current challenges 3 AXA Société Générale The Premium Review Conference November 29, 2012

4 AXA s business model is proving resilient with sustainable earnings Underlying Earnings Adjusted Earnings In Euro million In Euro million 2,402 2,427 2,228 2,305 1H11* Net Income 1H11* In Euro million Exceptional gains on the sales of Taikang Life stake ( 0.7bn) and Australian & New Zealand operations ( 0.7bn) 4,013 2,586 1H11* * Restated for the change in deferred acquisition costs (DAC) accounting methodology adopted retrospectively as at January 1, AXA Société Générale The Premium Review Conference November 29, 2012

5 supported by less market sensitive segments (1/2) pre-tax Underlying Earnings 1 Increasing and sustainable earnings in non-market sensitive segments G/A Protection & Health Property & Casualty and International In Euro million 1,083 1,069 1,196 G/A Protection & Health +9% 31% 44% 25% +5% Pre-tax Underlying Earnings 1H10* 1H11** P&C and International Savings and Asset Management 2-14% In Euro million Pre-tax Underlying Earnings 1,426 1,633 1,735 Changes are at constant Forex 1H10 1H11 * Not restated for the change in deferred acquisition costs (DAC) accounting methodology adopted retrospectively as at January 1, 2012 ** Restated for the change in deferred acquisition costs (DAC) accounting methodology adopted retrospectively as at January 1, AXA Société Générale The Premium Review Conference November All 29, notes 2012 are on page 23 of this document

6 Sources of earnings supported by less market sensitive segments (2/2) 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% 6 AXA Société Générale The Premium Review Conference November 29, 2012

7 and more de-risked and diversified US business Mix of business (APE) Continuing to diversify and de-risk 23% 28% 35% 28% Life 31% 46% 33% 19% 28% 25% 5% 11% 21% 21% Investment-Only VA Structured Capital Strategies Floating rate GMxB Fixed rate GMxB Reduced fixed rate GMxB (Accumulator) from 46% of APE in FY09 to 15% in 9M12 19% 12% 15% FY09 FY10 FY11 9M12 US Variable Annuity GMxB Underlying Earnings (post tax) 1 In Euro million, net of DAC and tax * FY07 FY08 FY09 FY10 FY11 Restated 2 1H11 Restated 2 Total VA base fees & other, less expenses 300 (19) GMxB Hedge Margin (7) (432) 16 (108) (291) (7) (90) o/w Basis 15 (234) (22) (13) (75) (9) (19) o/w Volatility (1) (174) (131) (66) (168) (20) (35) o/w Interest rates, credit spreads & other (20) (25) 168 (29) (48) 22 (36) Reserve impacts due to PH behavior and management actions - - (27) (97) (200) - (17) VA GMxB Underlying Earnings 293 (452) (325) 116 (7) Lapse experience in-line with assumptions Reserve impact mainly due to lower than expected partial withdrawals, partially offset by management actions 1. Notional tax rate of 35% 2. 1H11 & FY11 restated for the change in DAC accounting methodology adopted retrospectively as at January 1, AXA Société Générale The Premium Review Conference November 29, 2012

8 We are managing our balance sheet with discipline 8 AXA Société Générale The Premium Review Conference November 29, 2012

9 Comfortable solvency level, supported by strong operating return +13 pts Economic solvency ratio * 183% -3 pts -7 pts 174% +6 pts +3pts 183% -13 pts FY11 Change in US local solvency Operating return Dividend Market effects & Other June 30, Q12 Operating return Market effects & Other September 30, 2012 Debt gearing Solvency I ratio 26% 27% +1 point from the change in DAC accounting methodology 188% 207% >220% FY11** FY11 September 30, 2012 * 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 ** Not restated for the change in DAC accounting methodology adopted retrospectively as at January 1, AXA Société Générale The Premium Review Conference November 29, 2012

10 Well diversified General Account invested assets Invested assets (100%) In Euro billion FY11 % % Changes in asset allocation Fixed income % % o/w Govies and related % % o/w Corporate bonds % % o/w Asset backed securities 8 2% 8 2% o/w Mortgage loans & other % 23 5% Cash 29 6% 29 6% Listed equities 14 3% 14 3% Net inflows, investment income and maturities: invested mainly in corporate bonds Mark to market: fixed income assets benefiting from interest rates decrease and corporate spreads tightening Forex: depreciation of the Euro against most major currencies Real Estate 22 5% 22 5% Alternative Investments % 13 3% Policy loans 6 1% 6 1% Total Insurance Invested Assets % % 1. Mortgage loans & other include individual mortgage and loans held by the insurance companies of the Group (Euro 12 billion, mostly in Germany and Switzerland participating funds) and Agency Pools (Euro 2.5 billion) 2. Mainly Private Equity and Hedge Funds 3. invested assets referenced in page 57 of the financial supplement are Euro 662 billion including notably Euro 143 billion of Unit-linked contracts, Euro 35 billion related to the banking segment (of which Euro 20 billion mortgage & other loans) 10 AXA Société Générale The Premium Review Conference November 29, 2012

11 with strong level of buffers to withstand external shocks Balance sheet net unrealized capital gains 1 In Euro billion Off balance sheet net unrealized capital gains In Euro billion Equities Corporate bonds Government bonds Real Estate and loans FY11 FY11 Net unrealized capital gains on Government bonds by issuer In Euro billion Eurozone peripheral countries 0.4 In Euro billion Policyholders participation reserves France Germany Belgium Switzerland Japan US -0.6 Other (mainly Netherlands and Austria) FY11 11 AXA Société Générale The Premium Review Conference November 29, 2012 All notes are on page 23 of this document

12 Resilient investment yields in low interest rate environment L&S investment policy Run-off of L&S Fixed income portfolio % 3.9% 3.8% 3.8% P&C investment policy Run-off of P&C Fixed income portfolio 4.0% 3.9% 3.9% 3.8% FY12E FY13E FY14E FY15E Book value and yield of asset basis (in Euro bn) FY12E FY13E FY14E FY15E 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% FY09 FY10 FY11 L&S Asset yield Guaranteed rate 4.0% 4.0% 4.0% 4.0% FY09 FY10 FY11 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) 1. Gross of interests credited to P&C reserves relating to annuities 12 AXA Société Générale The Premium Review Conference November 29, 2012

13 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 13 AXA Société Générale The Premium Review Conference November 29, 2012

14 Our Ambition AXA plan is well designed to respond to current challenges 14 AXA Société Générale The Premium Review Conference November 29, 2012

15 We are focused on delivering on our Ambition AXA strategy Mature markets Sustainable growth in earnings & operating Free Cash Flows Selectivity High growth markets Double our size organically Acceleration Efficiency Everywhere with a focus on mature markets 15 AXA Société Générale The Premium Review Conference November 29, 2012

16 Selectivity We are reshaping the Life & Savings business APE by product NBV margin Selectivity In Euro million 4,317 13% 4,255 11% 4,461 11% APE growth CAGR 9M10-9M12 NBV margin G/A Protection & Health Unit-Linked G/A Savings 44% 24% -4% 31% 31% 31% +3% 25% 25% >28% 22% Acceleration 25% 20% 17% -17% 31% 38% 40% +16% Efficiency 9M10 9M11 Mutual funds & other 9M12 G/A Savings 9M10 9M11 9M12 Ambition AXA 2015 Unit-Linked G/A Protection & Health 16 AXA Société Générale The Premium Review Conference November 29, 2012

17 Selectivity Combined ratio improvement is well on track, benefiting from a favorable P&C cycle and a unique Direct fanchise Combined ratio AXA Global Direct Direct disruptive strategy Selectivity Global integrated platform, with presence in 9 countries (in Europe and Asia) 98.6% -2.2 pts 97.2% 96.4% <96.0% More than 5 million policies sold in 2011 Targeting the most price sensitive clients, relying on converging IT solutions Next step: implementation of behavioral pricing Acceleration Direct premiums Euro billion Efficiency 1H10 1H11 Ambition AXA Source: Redburn Changes are on a reported basis 17 AXA Société Générale The Premium Review Conference November 29, Main European based peers

18 Acceleration We have already significantly increased our exposure to high growth markets High growth markets contribution High growth markets earnings Selectivity In Euro million P&C gross revenues 1,000 3,335 1,829 In Euro million Underlying earnings 459 Acceleration Contribution to Group P&C revenues FY07 FY11 4% 12% 11% 287 In Euro million Life & Savings NBV Efficiency Contribution to Group NBV FY07 FY11 6% 27% 27% FY07 FY11 4% 12% 12% 18 AXA Société Générale The Premium Review Conference November 29, 2012

19 Efficiency We are on track to deliver our 2015 productivity gains Selectivity Improve efficiency in mature markets In Euro billion Productivity gains Increase P&C distribution efficiency 1.5 Acceleration Improve operational performance Offset increased IT investments with Business as Usual cost reduction Capture external spend reduction 1.0 whilst maintaining cost discipline in high growth markets Efficiency Further potential on Life & Savings acquisition costs 2011 achievement achievement 2H12E E E 19 AXA Société Générale The Premium Review Conference November 29, 2012

20 We are committed to deliver on our financial objectives In Euro billion Underlying Earnings growth Earnings per share trajectory between 2010 and 2015 expected to remain within the 5-10% growth range 20 AXA Société Générale The Premium Review Conference November 29, 2012

21 Today s key messages AXA s business model is proving resilient We are managing our balance sheet with discipline Our Ambition AXA plan is well designed to respond to current challenges 21 AXA Société Générale The Premium Review Conference November 29, 2012

22 Q&A session Q&A session 22 AXA Société Générale The Premium Review Conference November 29, 2012

23 Notes Page 5 1. Excluding Holdings 2. Including G/A Savings, Unit-Linked and Banking Page Excluding Forex, minority interests and other 2. Excluding net unrealized gains on bank loans. Total off-balance sheet net unrealized gains, including net unrealized gains on bank loans, amounted to 4.2bn in vs. 4.3bn in FY11 23 AXA Société Générale The Premium Review Conference November 29, 2012