SG Conference Dec 6, Denis Duverne CFO, Member of the Management Board

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Transcription:

SG Conference Dec 6, 2007 Denis Duverne CFO, Member of the Management Board

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. Please refer to AXA's Annual Report on Form 20-F and AXA s Document de Référence for the year ended December 31, 2006, for a description of certain important factors, risks and uncertainties that may affect AXA s business. In particular, please refer to the section " Special Note Regarding Forward-Looking Statements" in AXA's Annual Report on Form 20-F. 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. Definitions Adjusted Earnings are: net income before the impact of exceptional operations, goodwill and related intangibles amortization/impairments, and profit or loss on financial assets under the fair value option and derivatives. Underlying Earnings are: adjusted earnings excluding net realized capital gains attributable to shareholders. Denis Duverne December 6, 2007 2

Agenda Success of AXA s model Impact of current environment Conclusion Denis Duverne December 6, 2007 3

AXA is focused on financial protection, with a high level of diversification Focused business Savings & asset management Life & health P&C & international insurance 44% 25% 31% No universal banking No reinsurance and related activities Clients 2006 GWP Distribution Geography Denis Duverne December 6, 2007 4

AXA is focused on financial protection, with a high level of diversification Focused business Clients: mostly retail & SMEs Savings & asset management Life & health P&C & international insurance 44% 25% 31% No universal banking No reinsurance and related activities Life & Savings Group 18% Individual 82% P&C + AXA CS 8% Large corp. 38% SMEs 54% Individual 2006 GWP 1H07 APE 1H07revenues Distribution Geography Denis Duverne December 6, 2007 5

AXA is focused on financial protection, with a high level of diversification Focused business Clients: mostly retail & SMEs Savings & asset management Life & health P&C & international insurance 44% 25% 31% No universal banking No reinsurance and related activities Life & Savings Group 18% Individual 82% P&C + AXA CS 8% Large corp. 38% SMEs 54% Individual 2006 GWP 1H07 APE 1H07revenues Multidistribution strategy Life & Savings P&C 59% Non proprietary 49% Geography 41% Proprietary 51% 2006 APE 2006 Revenues Denis Duverne December 6, 2007 6

AXA is focused on financial protection, with a high level of diversification Focused business Clients: mostly retail & SMEs Savings & asset management Life & health P&C & international insurance 44% 25% 31% No universal banking No reinsurance and related activities Life & Savings Group 18% Individual 82% P&C + AXA CS 8% Large corp. 38% SMEs 54% Individual 2006 GWP 1H07 APE 1H07revenues Multidistribution strategy Global geographical reach Life & Savings 59% Non proprietary P&C 49% France 23% Int l insurance 5% North America 21% Proprietary 41% 51% 2006 APE 2006 Revenues Med region 9% Asia-Pacific 10% Northern Europe 22% UK & Ireland 10% Denis Duverne December 6, 2007 7

This strategy has positioned AXA as one of the world s largest asset gatherer Assets under management In Euro billion CAGR 2002-1H07: +15% 1,315 1,376 CAGR 2002-1H07: 742 775 871 1,064 569 689 758 Third party +17% 440 376 387 141 90 101 114 276 287 317 354 177 185 449 432 Unit-linked General Account +17% +10% 2002 2003 2004 2005 2006 1H07 Note: Data includes the impact of acquisitions, notably Winterthur (2006, 98bn of AUM) & Framlington (2005, 7bn of AUM), and disposals, notably AllianceBernstein s cash management business (2005, 24bn of AUM) Denis Duverne December 6, 2007 8

fueled by strong and stable cash flows L&S net inflows In Euro billion +11*% 10.0** 10.8** UL: +9.5 Non UL: -0.3 9.2 Annualized reported net inflows growth 2005-07 Europe US Asia/ Pacific +11% +10% +8% +15% 2005 2006 9M2007 % Gross Reserves 3% 3% 3% Annualized *:Annualized reported growth ** Excluding Netherlands for - 0.1 and -0.3 in 2005 and 2006 9M07 net inflows* in % gross reserves Reported Restated** (Australia) Restated*** (Aust.&UK) +3% +4% * Annualized ** Including Australian Mutual funds *** Excluding UK With Profits and including Australian Mutual funds +2% +3% +5% +3% +2% +3% +8% +4% +3% +8% Asset Management net inflows In Euro billion 38 34 35 22 17 8 2005 2006 9M07 2005 2006 9M07 Denis Duverne December 6, 2007 9

and leading to a track record of strong and steady earnings growth Underlying earnings In Euro million Adjusted earnings In Euro million CAGR 2002-06: +24% 3 337 4 010 +29% CAGR 2002-06: +40% 4 281 5 140 +21% 2 730 2 688 3 409 3 424 1 687 2 035 +19% on a comparable basis 1 357 1 450 +14% on a comparable basis 2002 2003 2004 2005 2006 1H07 2002 2003 2004 2005 2006 1H07 Average annual growth rate of underlying earnings on a comparable basis between 2002 and 2006 was 28% Average annual growth rate of adjusted earnings on a comparable basis between 2002 and 2006 was 41% Note: 2002 and 2003 are in French GAAP 2004, 2005, 2006 and 1H07 are in IFRS 2005 and 2006 have been adjusted to reflect the transfer of TSDIs (hence the related interest charge) to shareholders equity. Denis Duverne December 6, 2007 10

Last but not least, AXA s model is supported by a strong alignment of interests between shareholders, management and employees Exercize partly depending on performance of AXA shares vs. sector index Management Board Executive Committee Top 300 All employees Long term 4-10 years Medium term 2-4 years Stock options Performance shares 51% 15% 43% 15% 25% 15% Over 11,000 employees hold AXA options or performance shares Short term 1 year Short term incentive comp. 27% 28% 31% 20% Present Fixed Salary 7% 14% 29% 80% Variable share 93% 86% 71% >20% Over 100,000 employee shareholders through the AXA Miles program The Chairman and the other members of the Management Board must own shares worth at least 3 and 2 times, respectively, their total annual compensation Denis Duverne December 6, 2007 11

Agenda Success of AXA s model Impact of current environment Conclusion Denis Duverne December 6, 2007 12

Current market environment is contrasted Positive, even if decelerating global economic growth Rising corporate spreads S U B P R I M E C R I S I S Weak & volatile but resilient equity markets Continued strengthening of the Euro vs. most currencies raising investors concerns about insurers asset base, operating performance and balance sheet strength Denis Duverne December 6, 2007 13

AXA Group : a large and diversified invested asset base Economic breakdown, based on market value as of June 30, 07 Total: Euro 610 bn Fixed income 47% Separate account, UK With profits and other 38% Alternative investments 2% Real estate 4% Subprime MBS + CDOs + CLOs 1% Other ABS 1% Listed equities 7% Fixed income assets by rating NR 1% BIG 2% BBB 9% A 25% AAA 37% AA 26% Denis Duverne December 6, 2007 14

Current market environment has a manageable impact on our assets Limited impact of ABS Fair value of subprime MBS, CDOs and CLOs of 2.9bn as of 30/09/07*, of which 0.1bn of structured finance CDOs Average mark to market of the portfolio was 89% as of 31/10/2007 No off-balance sheet exposure, and notably no credit enhancement activity and no credit commitments to conduits or SIV No funding issue for insurers as long term natures of liabilities and inverted cash cycle Centralized underwriting and monitoring CDS: a non issue AXA uses plain vanilla CDS as part of the management of the corporate bond portfolio Notional value of CDS portfolio: 6.0 bn (30/06/07) No underlying ABS, 99.6% of investment grade corporate issuers Average rating is A, spread over 400 issuers, with investments subject to Group concentration limit * Net of policyholder participation and tax Denis Duverne December 6, 2007 15

and our sales performance is very healthy Activity indicators comparable growth October 2007 - positive news flow 1H07 +11% 9M07 October 2007 was the 2 nd best month ever for VA sales in the US Life & Savings APE +5% Industry* AXA +10% We have also recorded a growing momentum for non US sales of VA type products P&C Revenues +2,4% Industry* +3,9% AXA +4% AllianceBernstein AUM have increased by $24bn in October vs. end of September Non US VA average monthly APE Asset management revenues +17% +22% +23% In Euro million 4 12 23 Industry* AXA 2006 9M07 October 2007** * Source: SG ** Preliminary Denis Duverne December 6, 2007 16

Through turbulences, we benefit from our very strong financial strength Consolidated regulatory solvency 186% 180% Financial strength ratings S&P Moody s Fitch AA Aa3 AA Internal models (Short term & Long term economic capital) are calibrated @ AA 2006 1H 2007 Solvency II s QIS3 calibrated to sustain equity and real estate shocks of 32% and 20% respectively Our financial strength gives us the capacity to sustain market shocks very significantly harsher than current market conditions Our financial flexibility is further supported by earnings power (consolidated interest coverage is above 11x) Denis Duverne December 6, 2007 17

and our disciplined capital management Use of cash flows Dividend In Euro per share 0.88 Dividend yield* ~4% 1.06 0.61 Dividend pay-out 40-50% 0.34 0.38 2002 2003 2004 2005 2006 Organic growth financing 30% Improves over time as growth is driven by less capital intensive business (UL, Asset Mgmt) Free cash flows 20-30% Adjusted earnings = 100% Share buy-backs (dilution control program): 70 million shares bought back in 2007 ( 2.1bn) Bolt-on acquisitions focusing on Distribution Emerging markets Note: 2002 and 2003 are in French GAAP 2004, 2005 and 2006 are in IFRS * Based on AXA share price of November 29, 2007 and 2006 dividend paid in 2007 Denis Duverne December 6, 2007 18

Agenda Success of AXA s model Impact of current environment Conclusion Denis Duverne December 6, 2007 19

AXA is delivering on the identified drivers of its Ambition 2012 target of trebling underlying EPS between 2004 and 2012 Underlying EPS key value drivers 2004-2012 initial breakdown 2004-2012 15% initial p.a. targets +2/3pts +1pt +8/10pts (1) +2pts (2) +1pt(3) +1pt 0/-3pts Top line growth Admin costs Business Mix Capital management Investment return Winterthur Flexibility +8pts +3pts +1pt +2pt +1pt 0pt Real 2004-2007 observations (4) 17% p.a. +2pt (5) (1) Combined ratio maintained at 1H06 level to 2012 (2) Administrative costs up ca. 4% p.a. and Asset Management CIR down ca. 1% p.a. (3) Life & Savings (UL in reserves from ca. 30% to ca. 40%), Asset Management (Internal / Third party) (4) Based on FY07 analyst consensus data (5) Higher technical margins Denis Duverne December 6, 2007 20

and we are confident in our ability to reach these long term objectives 2007-08 outlook* Underlying EPS x3 over 2004-12 In 2007, underlying EPS should grow in line with Ambition 2012 targets In 2008, underlying EPS should grow at high single / low double digit rate, despite the strength of the Euro impacting the translation of non-euro earnings 2004 +20% 2005 +16% 2006 2007 Brokers estimates 2008 2009 2010 2011 2012 Current subprime crisis has very strong impact on the insurance industry s valuation, with little differentiation between players This crisis may end up being a good stress test for a long term improvement of the valuation of the insurance industry We are confident in our business model and our ability to achieve Ambition 2012 objectives *from Nov 13 Ambition 2012 investor day Denis Duverne December 6, 2007 21

IR calendar (2008) Jan. 31: Full Year 2007 activity indicators release Feb. 28: Full Year 2007 earnings publication Apr. 22: AGM Contact: investor.relations@axa.com / +33 (0) 1 40 75 48 42