AXA : Opportunities in the World s Largest Market Goldman Sachs Conference DENIS DUVERNE MEMBER OF THE MANAGEMENT BOARD FINANCE / CONTROL / STRATEGY JUNE 8, 2005
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. Goldman Sachs Conference June 8, 2005 - Page 2
Financial assets comprise more than half of US Household Wealth Retirement assets represent 22% of financial assets or $11.9 trillion and are expected to grow 7% overall per annum Total Wealth 2003 $54,126 Billion Financial Wealth 31% $16,748 Billion Retirement Plan Wealth 22% $11,902 Billion Non-financial Wealth 47% $25,476 Billion Deposits CDs MMFs 10% Securities Insurance Mutual Funds 21% IRAs 6% Defined Contribution 4% Private Defined Benefit 3% Gov t Plans 6% Annuities 3% Housing Wealth 30% Other Assets 6% Business Equity 10% Source: Merrill Lynch Research, July 2004 Goldman Sachs Conference June 8, 2005 - Page 3
AXA focuses on U.S. Asset Management and Life Insurance growth markets Products Compound Annual Growth Asset Value 2003 ($ Bn) 1998-2003 2003-2008 AXA Product / Market Focus Insurance Health Insurance* Life Insurance 4% 4% 3% 5% Variable Life 96 13% 8-9% Annuities Fixed Annuities 500 3% 6% Variable Annuities 1,026 5% 8% Retirement Plan Assets Defined Benefit 1,872-0.1% 6-7% Defined Contribution 2,322 0.3% 7-8% IRA 2,979 3% 10% Mutual Funds Money Market 1,983 9% 4% Long-term Funds 5,002 5% 9% Separate Accounts Personal Trust 1,929 13% 9% Managed Accounts 1,055 19% 11% Hedge Funds 818 17% 12% Source: ML Research, July 2004 *1997-2002 growth rate Goldman Sachs Conference June 8, 2005 - Page 4
The U.S. market is highly specialized by product, distribution and customer Customer Focus Cross Market Affluent Upper Mass Market Affluent Sales Channel Career Ind Agts. Agents Direct Broker Banks BGA Other Total Life Insurance (1) 43% 2% 22% 1% 32% 100% Variable Life (1) 44% 3% 53% 100% Variable Annuities (1) 23% 11% 17% 13% 34% 2% 100% Mutual Funds (2) 12% 28% 21% 6% 12% 21% 100% (1) LIMRA (2) Strategic Insight 64% of VA sales are through the wholesale channel 55% of Mutual funds are sold through the Advice channel: full-service securities firms, RIA firms & insurance agencies Goldman Sachs Conference June 8, 2005 - Page 5
AXA manages three businesses in the U.S. Managed Assets AXA Financial $598 bn Of Which: Alliance Bernstein $539 bn AXA Investment Managers / AXA Rosenberg $56 bn As of 12/31/04 Goldman Sachs Conference June 8, 2005 - Page 6
AXA Financial offers key growth products to clients through a balanced distribution network Life Insurance Annualized New Premiums by Distribution Channel Variable Annuity Sales by Distribution Channel Career 38% Other 10% Career 34% Banks 13% Independents 52% Brokers 20% Independents 31% Direct Response / Other 2% 70% of AXA Financial s 2004 first year life sales from AXA Advisors career distribution 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 Goldman Sachs Conference June 8, 2005 - Page 7
Margin expansion and growth should continue within AXA Advisors Total Premiums in $ Bns AXA Advisors Total Sales vs. Advisor Population $11.0 $9.0 $7.0 $11.1 $10.5 $10.5 $10.3 8,000 7,000 6,000 5,000 4,000 3,000 2,000 AXA Advisors 1,000 2002-2004 $5.0 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 2001 2002 2003 2004 0 Goldman Sachs Conference June 8, 2005 - Page 8
and through the full integration of MONY Advisors Added over 800 active MONY Advisors 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% * NBV Margin Goldman Sachs Conference June 8, 2005 - Page 9
Independent planners represent a compelling distribution opportunity for AXA Financial... Premiums in $ Billions The independent planner channel represents 48% of the wholesale market 80 60 40 20 0 2001 2002 2003 2004 Brokers Planner Bank 4-yr CAGR As a % of total +14% 21% +13% 48% -5% 31% The independent planner channel represents only 21% of AXA Distributors 2004 annuity sales, but 2001-2004 CAGR was 39%, and there s growth ahead Source: VARDS Wholesale VA Market $70 $72 $82 $84 Goldman Sachs Conference June 8, 2005 - Page 10
driving AXA Distributors targeted investment for growth in the Planner Channel Increased wholesaler headcount to 77 from 48 in 2004 Of which, 24 dedicated wholesalers added to planner channel Broker Wholesalers YE 03: 37 2005: 31 Planner Wholesalers YE 03: 0 2005: 24 AXA Distributors 2004 Annuity Sales $5.8 billion Broker 44% Planners 21% Banks 35% Bank Wholesalers YE 03: 12 2005: 22 In 2003, of the 37 broker wholesalers, 6 covered both BD & Planner channels Goldman Sachs Conference June 8, 2005 - Page 11
In addition, MONY added a successful and growing life wholesaling capacity Strong and growing contribution from MONY Partners wholesale life distribution leveraged by AXA Financial s: Solid financial ratings Innovative products MONY Partners First Year Life Premiums of AXA Products $17m $20m $3m Q3 '04 Q4 '04 Q1'05 Goldman Sachs Conference June 8, 2005 - Page 12
Innovative product development is key to continue the momentum 3Q 05: Introduce a new 401k product targeting micro/small market Launch a new combined AXA/MONY Term product 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 Goldman Sachs Conference June 8, 2005 - Page 13
Alliance Capital s AUM across most business units have been increasing $452 Billion at Dec 31, 2001 $539 Billion at Dec 31, 2004 Private Client $40 Institutional $239 By Unit Private Client $64 Institutional $311 Retail $173 up 19% Retail $164 Value $98 F.I. $156 By Service Value $193 F.I. $193 Growth $168 Passive $31 AUM includes cash management (CMS) AUM of $42bn and $29bn as of YE 01 and YE 04 respectively. The bulk of CMS AUM is to be transferred to Federated Investors during 2Q 05 as previously agreed. Growth $123 Passive $30 Goldman Sachs Conference June 8, 2005 - Page 14
with notable success in the private client unit Dec 31, 2001 Dec 31, 2004 Private Client Positive PC Net Flows $40bn up 60% $64bn FY 04: $4.7 bn +24%YOY Q1 05: $2.3bn +38%YOY Alliance has 14 Private Client offices near 40% of high net worth population in the U.S. Strategic Plan: Offices near 60% of high net worth individuals Financial Advisors increased 14% to 220 in 2004 3 new offices to open in 2005: Atlanta, Denver and San Diego Exploring expansion of PC model internationally Source: Claritas, HNW > $1million investable assets Goldman Sachs Conference June 8, 2005 - Page 15
AXA Investment Managers is also strongly contributing to U.S. expansion AXA Rosenberg Active quantitative global equity money manager Founded 1985 by Barr Rosenberg & associates in Orinda (SF Bay Area) Majority owned by AXA IM since 99 Proprietary quantitative model 18,000 listed companies evaluated in real time Structured Finance Developing offer to US Institutional clients for 18 months, through the launch of Investment Grade synthetic CDO (Overture) and the launch of CDO of ABS (Iona), in USD AXA IM US Fixed Income Mgt AXA IM Inc. provides institutional asset management in the US Investment Grade and US High Yield markets to a variety of US and overseas clients AXA Private Equity AXA Private equity teams have offered products to US Institutional clients since 1999 AXA Private Equity has a portfolio of around 250 US funds: 165 through Secondary acquisitions and 84 through Primary commitments Goldman Sachs Conference June 8, 2005 - Page 16
as demonstrated by AUM growth AXA Rosenberg Asset growth 2002-2004 AXA IM US Fixed Income Mgt Asset growth 2002-2004 60 5 $ Bn 50 40 30 20 10 0 2002 2003 2004 $ Bn 4 3 2 1 0 2002 2003 2004 AXA Rosenberg US Structured Finance AXA Rosenberg Group Asset growth 2002-2004 USHY USIG AXA Private Equity Asset growth 2002-2004 $ Bn 30 25 20 15 10 5 0 2002 2003 2004 $ Bn 12 10 8 6 4 2 0 2002 2003 2004 Structured Fin US Structured Fin Group Private Equity US Private Equity Total Goldman Sachs Conference June 8, 2005 - Page 17
In addition to the various growth initiatives the Group remains heavily focused on efficiency AXA Financial / Mony Integration On target to achieve $175mm annual savings Alliance Capital Cost / Income Ratio AXA Investment Managers Cost / Income Ratio 70.8% 70.9% 69.9% (1) 2002 2003 2004 81.5% 79.6% 76.8% 2002 2003 2004 All ratios or numbers on a French GAAP basis (1) Excluding the net charge for mutual fund matters and legal proceedings. Goldman Sachs Conference June 8, 2005 - Page 18
In the US as in the rest of the world AXA is focusing on a single vision A world leader in Financial Protection with the ambition to beat local competition in selected markets through excellence in: Product Innovation Underwriting, Pricing, Claims Management, Investment Performance Distribution Management Quality of Service Leveraging Group Resources and Human Capital Productivity Drive Revenue Growth and Margins Superior Value Creation For All Stakeholders Goldman Sachs Conference June 8, 2005 - Page 19
Thank you!