PART I – CERTAIN PRELIMINARY INFORMATION ABOUT THIS ANNUAL REPORT 1.1 Presentation of Information 1.2 Exchange Rate Information 1.3 Cautionary Statements concerning the use of non-GAAP measures and forward-looking statements
1.2 exchange rate information The Company publishes its consolidated financial statements in Euro (“Euro”, “euro” or “€”). Unless noted otherwise, all amounts in this annual report are expressed in Euro. The currency of the United States will be referred to as “U.S. dollars” or “USD” or “U.S.$” or “$”. For historical exchange rate information, please refer to Part II “The AXA Group: Our global business operations, recent financial performance and financial condition”, Section 2.1 “Exchange Rate Information” of this Annual Report. For a discussion of the impact of foreign currency fluctuations on AXA’s financial condition and results of operations, please see Part II “The AXA Group: Our global business operations, recent financial performance and financial condition”, Section 2.3 “Activity Report” of this Annual Report.
Exclusive agents are individuals or firms commissioned by a single insurance company to sell its products exclusively on its behalf. Tied agents are exclusive agents.
The split of distribution channels used by AXA’s principal Life & Savings operations, based on consolidated gross revenues for the years ended December 31, 2008 and 2007, is presented below: BAsEd on gross rEvEnUEs in 2008
Also with effect from year end 2006, IBNR reserves related to construction insurance in France (so called “PSNEM”) and the annuity reserves for the Property & Casualty segment have been included in the loss reserve development table for Property & Casualty and the International Insurance (excluding AXA RE).
(In Euro million except percentages) 1998 1999 2000 2001 (c ) 2002 200� 2004 (d) 2005
Initial net claims reserves in excess of (less than) re-estimated net claims reserves as at December �1, 2008
Future policy benefits annuity reserves (separately developed in 2006) – – 2,492
Ratings agencies also take into account the Company’s consolidated solvency margin and the regulatory capital position of its insurance subsidiaries in assessing our financial strength and credit ratings. Ratings agencies may make changes to their internal models from time to time that may increase or decrease the amount of capital we must hold in order to maintain our current ratings. To the extent that our regulatory capital levels are deemed insufficient to meet rating agency criteria, our financial strength and credit ratings may be downgraded.
• The European Commission (the “Commission”), jointly with Member States, is carrying out a fundamental review of the regulatory capital regime of the insurance industry (the “Solvency 2” project) that will update the existing life, non-life, reinsurance and insurance groups directives. Its principal objective is to establish a solvency system that is better matched to the true risks of insurers, enabling supervisors to protect policyholders’ interests as effectively as possible and in accordance with common principles across the EU. Solvency 2 is expected to be based on the concept of three pillars: minimum capital requirements, supervisory review of firms’ assessments of risk and enhanced disclosure requirements. Its scope is expected to cover, among other matters, valuations, the treatment of insurance groups, the definition of capital and the overall level of capital requirements.
method of measuring the adjusted capital (statutory capital and surplus plus asset valuation allowance and other adjustments) that a life insurance company should have for regulatory purposes and that takes into account the risk characteristics of the company’s investments and products. AXA Equitable and AXA’s other U.S. life insurance subsidiaries expect that the statutory surplus will continue to be in excess of the minimum RBC levels required to avoid regulatory action.
Then the crisis extended to the “real economy”, impacting export credit. Consequently, manufacturing activity throughout the world collapsed in 4Q08. China, Russia and Brazil, which had still shown sustained growth in the first half of 2008, suffered a sharp downturn in their industrial production. The automobile sector was particularly hit by the fall in demand. In the United States, $17 billion of the TARP funds (Troubled Asset Relief Program of the United States) were used to keep General Motors and Chrysler afloat.
In 2006 AXA initiated in 2006 a strategic review regarding the future of its reinsurance activity, currently underwritten by AXA RE and reported in the “International Insurance” segment. Following the receipt of a binding offer on April 6, 2006 and consultation with the relevant workers’ councils, AXA announced on June 6, 2006 the signing of a definitive agreement to cede the business of AXA RE to Paris Re Holdings Limited. On December 21, 2006, AXA completed the sale of AXA RE’s business to Paris Re Holdings, in which AXA had taken a 3.4% stake. Under the terms of the agreement, the business of AXA RE had been ceded to Paris Re Holdings, with the risks and corresponding net income related to AXA RE’s 2006 claims experience accruing to Paris Re Holdings. This transaction generated a capital gain of €66 million net of tax on the business ceded. AXA guaranteed the reserves pertaining to losses incurred on or before December 31, 2005. Starting with the 2006 accounts, the accounting results of AXA RE accruing to the AXA Group mainly comprised the impact of the loss reserve developments on the corresponding run-off portfolio and were reported in the Other International Insurance segment.
OTHER In the United Kingdom, from January 31, 2008, a temporary deferral period of up to six months was introduced for certain transactions involving the AXA Life Property Fund (£0.8 billion or €0.9 billion at December 31, 2008) and AXA Pension Property Fund (£0.6 billion or €0.7 billion), which is allowed under the terms of the customer’s policy in order to help manage liquidity. In the event that sufficient liquidity to honor all outstanding withdrawal requests by the end of the deferral period cannot be generated through the sale of properties held by the funds’ and other sources of liquidity available to the funds, AXA UK, as sponsor of the funds, is required to provide the funds with sufficient liquidity to honor these withdrawal requests. As at December 31, 2008, liquidity in both funds has improved compared to when the deferral period was announced. The AXA Pension Property Fund has accelerated the payment of deferrals during the last quarter due to its strengthened liquidity position. However, current market uncertainty and difficult selling conditions warrant a prudent approach therefore both funds still keep in force the deferral notification (but will continue to accelerate deferred payments where forecast liquidity permits it).
Total life & Savings gross revenues were down 3% to €57,977 million, or down 4% on a comparable basis mainly due to France, the United States, the United Kingdom, and Japan, partly offset by Mediterranean and Latin American Region, Australia and Switzerland.
AXA Assistance revenues were up 11% to €751 million driven by strong development in Healthcare and Travel activities.
Net investment result excluding financing expenses (a) (27,620) 24,572 �0,286 �0,774
Valuation allowances on tangible assets (1) 4 18 18 change in value of goodwill (7) (1) – –
NB: Line items of this income statement are on an underlying earnings basis, and not on a net income basis.
b. Unit-linked management fees down €228 million (–10%) mainly driven by France (€–95 million or –23%), the United States (€–71 million or –6%) and the United Kingdom (€–49 million or –11%), due to lower average balances (down 17% in France, 8% in the United States and 3% in the United Kingdom) together with slightly lower average fees.
Asset Management underlying earnings amounted to €589 million. On a constant exchange rate basis, asset management underlying earnings increased by €35 million (+6%) mainly due to a deferred tax liability release on undistributed foreign earnings (€62 million) at AllianceBernstein, partly offset by lower gross revenues and investment result, together with deteriorating cost income ratio (+0.2 point to 67.3%) notably impacted by severance costs at AllianceBernstein.
c. €+159 million in the United Kingdom reflecting an undiscounted tax adjustment on unrealized gains attributable to policyholders in unit-linked life fund.
(a) including adjustement to reflect financial charges related to perpetual debt (recorded through shareholders’ equity). (b) Excluding change in fair value on invested assets and derivatives (recorded through shareholders’ equity), and excluding perpetual debt (recorded through shareholders’ equity).
Amortization of value of purchased life business in force (473) (357) (232) (241)
Underlying operating earnings before tax 862 711 575 income tax expenses / benefits (185) (178) (111)
Amortization of VbI increased by €7 million (+16%) to €–50 million.
Adjusted earnings decreased by €1,229 million (–144%) to €–378 million. On a constant exchange rate basis, adjusted earnings decreased by €1,257 million (–148%) primarily due to lower underlying earnings and higher losses on fixed income assets.
As a result, the underlying cost income ratio increased by 12.8 points to 94.7%.
APE decreased by €85 million (–15%) to €482 million. On a comparable basis, APE decreased by €52 million (–10%) mainly driven by individual business which decreased by €46 million (–9%), notably: • Life: APE decreased by €23 million (–11%) to €188 million mainly due to lower revenues from lower margin products not actively promoted (Endowment, Whole Life and Group) and lower Term products revenues due to a regulator review of the tax deductibility; • Investment & Savings: APE decreased by €9 million (–10%) to €76 million mainly due to lower sales of variable annuity products following turbulent market conditions and heavier regulatory sales process; • Health: APE decreased by €14 million (–6%) to €212 million due to strong sales of medical products in 2007 and to the bankruptcy of a large non-proprietary distributor in the last quarter of 2008.
As a consequence, underlying earnings decreased by €139 million (–76%) to €43 million.
Investment margin increased by €48 million (+79%) to €109 million. On a constant exchange rate basis, investment margin increased by €44 million (+73%) mainly due to less investment income allocated to policyholders.
Net income decreased by €228 million (–169%) to €–93 million. On a constant exchange rate basis, net income decreased by €225 million (–167%), mainly due to lower adjusted earnings (€–175 million), unfavorable change in fair value of alternative investments (€–36 million) and higher foreign currency losses (€–9 million).
As a consequence, the underlying cost income ratio increased by 17.9 points to 91.0%.
Central and Eastern Europe Gross revenues increased by €45 million (+11%) to €467 million. On a comparable basis, gross revenues increased by €5 million (+1%) mainly driven by Czech Republic and Poland, partly offset by Hungary.
(a) Mediterranean & Latin American Region includes italy, Spain, Portugal, Greece, Turkey, Morocco, Gulf Region and Mexico. (b) Restated in full year 2006 means the restatement of The Netherlands’ activities as discontinued businesses.
• Commercial lines (40% of gross revenues) were up by 3% to €2,217 million notably driven by a strong portfolio development in Construction (+9%), and a moderate growth in Property (+2%) and Liability (+3%) in a context of competitive markets.
• Commercial lines (45% of the gross revenues) were down 1% to €2,019 million. Motor decreased by 2%, principally reflecting rate reductions in Ireland to address the increased competition whereas the United Kingdom remained resilient. Non-Motor decreased by 1% with a deterioration across most business lines with the continued focus on profitability in a soft, competitive market, partly offset by 11% growth in Health.
Net technical result decreased by €20 million (–1%) to €1,643 million. On a constant exchange rate basis, net technical result increased by €234 million (+14%). • The current accident year loss ratio decreased by 2.8 points to 69.3%, as a result of the non recurring 2007 adverse weather events (–6.6 points) partly offset by a higher frequency of large claims in Commercial Property and increased injury claims and inflation in third party damage claims in United Kingdom Commercial motor.
Underlying earnings were stable at €4 million on both current and constant exchange rate bases.
Malaysia Gross revenues increased by €8 million (+14%) to €66 million. On a comparable basis, gross revenues increased by €10 million (+18%) mainly driven by the Motor business boosted by the strong car sales.
Net capital gains or losses attributable to shareholders net of income tax (8) 27 32
Underlying earnings increased by €4 million (+1%) to €318 million. On a constant exchange rate basis, underlying earnings increased by €27 million (+9%).
Adjusted earnings decreased by €29 million (–82%) to €6 million, mainly due to a strong decrease in the net realized capital gains and impairments on equities and CDOs, as a consequence of the bad performance of stock markets and of the credit crisis, partly offset by the rise of the underlying earnings (€+29 million).
Net realized capital gains or losses attributable to shareholders 1,185 27 23 23
(a) includes notably cdOs and Real Estate entities. (b) Restated in full year 2006 means the restatement of The Netherlands’ activities as discontinued businesses.
(ii) Change in UFR (Unearned Fees Reserve– capitalization net of amortization) is presented in the line “Change in unearned premiums net of unearned revenues & fees” in the underlying Statement of Income, whereas it is located in the line “Fees & Revenues” in the Margin analysis.
Property & Casualty and International Insurance Liquidity needs can be affected by actual claims experience if significantly different from the estimated claims experience (see Note 14.6 of Part V – Consolidated Financial Statements).
At year end 2008, AXA’s position remained strong on its 4 main sources of liquidity: • Net inflows with positive cash-flows across all business lines (information on cash flows from operations is provided in Note 12.2 to the Financial Statements included in this Annual Report). • Increased cash position – At December 31, 2008, AXA’s consolidated balance sheet included cash and cash equivalents of €30,811 million (2007: €17,192 million), net of bank overdrafts of €1,415 million (2007: €1,493 million). At December 31, 2008, the Company’s cash and cash equivalents amounted to €4,123 million net of bank overdrafts of €3 million, an increase of €1,590 million from December 31, 2007, as a result of a liquidity risk management adapted to prevailing market conditions and to margin calls from banks relating to collateral agreements.
• The Group’s financial strength gives it broad access to various different markets via standardized debt programs: for example, at the end of 2008, €5 billion (€5 billion at the end of 2007) of French commercial paper, $1.5 billion of US commercial paper (implemented in 2008) and a €12 billion (€12 billion at the end of 2007) program under EMTN documentation.
Financing debt owed to credit institutions At December 31, 2008, the amount of debt owed by AXA and its subsidiaries to credit institutions was €1,216 million versus €175 million at the end of 2007. The increase of €1,042 million on a constant exchange rate basis was mainly due to AXA SA new credit line of €1,000 million for 5 years (“club deal” banking pool) in order to finance AXA development, including the acquisition of Reso Garantia.
A European Directive dated October 27, 1998 requires a consolidated solvency margin calculation effective for periods ending on or after December 31, 2001. France transposed this directive under an ordinance dated August 29, 2001, decreed on March 14, 2002 and applicable from 2002. Additional supervision of credit institutions, investment companies and insurance companies belonging to “financial conglomerates” was introduced by the European Parliament and Council Directive 2002/87/EC of December 16, 2002. France transposed this directive through an ordinance dated December 12, 2004, which introduced the notion of financial conglomerate into the Insurance Code. According to article 20 of the Insurance Code, the provisions of this ordinance applied for the first time to periods starting on or after January 1, 2005.
These developments could have a material adverse effect on our business, liquidity position, results of operations, revenues and financial condition by, for example, increasing our need for cash in order to meet increased surrender requests and/or collateral calls, causing us to liquidate assets at unattractive prices or to borrow at unattractive rates to raise necessary cash, and/or negatively impacting our ability to sell new insurance policies or other products due to negative publicity associated with a downgrade and the associated impact on public confidence in us.
Non-executive chairman of AXA UK PLc (United Kingdom) and AXA Equity and Law PLc (United Kingdom)
Business address Association Française des Entreprises Privées (AFEP) – 11, avenue Delcassé – 75008 Paris, France
Directorships currently held Director or member of the Supervisory Board: • Saint-Gobain • Société Générale • Alstom • Carrefour • Solvay (Belgium)
Business address AXA UK PLC – 5 Old Broad Street – London EC2N 1AD – United Kingdom
Previous directorships held during the last five years Fox-Pitt, Kelton Group Limited (United Kingdom), Chairman Director or member of the Supervisory Board: • Pinault-Printemps-Redoute • Fox-Pitt, Kelton Limited (United Kingdom) • Swiss Re Capital Markets Limited (United Kingdom) • CX Reinsurance (United Kingdom)
The Committee may request external consulting expertise in connection with matters within the scope of its responsibility.
Missions and activities The Selection, Ethics, Governance and Human Resources Committee has the following principal missions: • to issue proposals to the Supervisory Board, for the appointment of: – members of the Supervisory Board including its Chairman and its Vice-Chairman, – members of the Management Board including its Chairman, and the Vice-Presidents, – non-voting members, – members of the Supervisory Board Committees and their Chairmen, • to examine appointment and succession of key Group management personnel including Management Board members and key management personnel at Group subsidiaries including members of the Executive Committee; • to examine in detail certain Group human resources issues (Group training and development policy, international mobility…)
Claude BRUNET, Member of the AXA Management Board 51, French nationality.
Christopher CONDRON, Member of the AXA Management Board 61, American nationality.
For Management Board members who have an operational role (A. Bouckaert, C. Condron and F. Pierson), the proportion of their variable remuneration linked to the Group results accounts for 30%, the proportion linked to their operational entity results for 40% and the proportion linked to their individual performance for 30%.
The 47% aggregate decrease in variable compensation for AXA’s Management Board in 2008 is the largest year-on-year percentage reduction since the establishment of AXA’s Management Board in 1997 and puts the aggregate 2008 variable compensation for AXA’s Management Board at levels more than 35% below the aggregate variable compensation paid to the current members of AXA’s Management Board for 2003 (when the Group’s underlying earnings (€2.0 billion) were at a level of less than half the Group’s 2008 underlying earnings and the dividend was at a comparable level to that of 2008).
At each date of grant, the fair value of stock options and performance shares/units is determined based on iFRs norms. This is an historical value at the date of grant, calculated for accounting purposes as described in the Note 25.3.1 of the 2008 consolidated Financial statements included in Part V of the Annual Report. This value does not represent a current market value or other current valuation of these options and performance shares or the actual proceeds if and when the options are exercised or the performance shares are acquired. On May 10, 2007, the fair value of one option was e6.63 for options without performance condition and e5.89 for options with performance condition, and the fair value of one performance share/unit was e27.40. On April 1, 2008, the fair value of one option was e3.39 for options without performance condition and e2.89 for options with performance condtion, and the fair value of one performance share/unit was e16.98.
Frank Keuper cEO germany germany 450,000 720,000 – 24,682 13,203 1,207,885 450,000 – – 24,682 13,203 487,885 gerald Lieberman cOO AllianceBernstein
Start date of exercise 26/05/2001 26/05/2001 09/06/2001 09/06/2001 18/11/2001 05/07/2002 05/07/2002 12/07/2002 13/11/2002
Number of options exercised at 31/12/08 – – – – – – – – –
Number of options exercised at 31/12/2008 – – – – – – –
François Pierson chairman & cEO AXA France 14/03/2003 14/03/2003 20/03/2008 17/12/2008
Stock options held by Executive Committee members (options granted but not exercised as of December 31, 2008)
Indemnities due for non-competition clause yes No yes No yes No yes No
Certain of the Company’s shares are entitled to double voting rights as described in Part VI “Certain additional information” – “Voting rights” Section of this Annual Report. Of the Company’s 2,089,158,169 outstanding ordinary shares as of December 31, 2008, 495,306,020 shares entitled their holders to double voting rights as of that date.
As of December 31, 2008, AXA employees and agents held 5.86% of the Group’s outstanding ordinary shares and 6.77% of the voting rights. These shares are owned through mutual funds or directly, in the form of shares or ADRs.
Our exposure to credit spreads primarily relates to market price and cash flow variability associated with changes in credit spreads. A widening of credit spreads will increase the net unrealized loss position of the investment portfolio and losses associated with credit based non-qualifying derivatives where we assume credit exposure. Credit spread tightening will reduce net investment income associated with new purchases of fixed maturity securities. Recent credit spreads on both corporate and structured securities have widened, resulting in continuing depressed pricing. In this context, continuing challenges include the prolonged weakness in the financial markets, investor anxiety over the worldwide economy, rating agency downgrades of various structured products and financial issuers, unresolved issues with structured investment vehicles and monoline credit insurers, deleveraging of financial institutions and hedge funds and a serious dislocation in the inter-bank market.
On going volatility in interest rates and credit spreads, individually or in tandem with other factors such as lack of pricing transparency, market illiquidity, declines in equity prices and the strengthening or weakening of foreign currencies against the
Our business is subject to extensive laws and regulation and to significant litigation risks in the various countries where we operate; changes in existing or new laws and government regulations in these countries and/or an adverse outcome in any significant pending or future litigation or regulatory investigation may have an adverse effect on our business, financial condition, results of operations, reputation or image in the market place We are subject to detailed and comprehensive regulation and supervision in all the jurisdictions in which we operate. Our insurance operations are subject to insurance laws and regulations, which are generally intended to protect policyholders, not our shareholders or creditors. Changes in existing insurance laws and regulations may materially affect the way in which we conduct our business and the products we offer. In addition, changes in pension and employee benefit regulation, social security regulation, financial services regulation, taxation and the regulation of securities products and transactions may also adversely affect our ability to sell new policies or our claims exposure on existing policies. Our asset management operations are also subject to extensive regulation in their respective jurisdictions. These regulations are primarily intended to protect investors in the securities markets or investment advisory clients and generally grant supervisory authorities broad regulatory powers. Changes to these laws and regulations may adversely affect our asset management operations. We are also subject to increasing regulation under various laws and regulations governing the solvency of insurers and other financial institutions including with respect to such matters as capital adequacy, intra-group transactions, “double-gearing” of capital at multiple levels within a consolidated group (e.g. at the consolidated Group, holding company and operating company levels). As a large, multinational financial services provider we are also increasingly subject to detailed and comprehensive regulations governing such matters as money laundering, “know your customer,” prohibited transactions with countries or counterparties subject to sanctions, and bribery and other anti-corruption measures.
As a global business, we are exposed to various local political, regulatory and economic conditions, business risks and challenges which may affect the demand for our products and services, the value of our investment portfolios and the credit quality of local counterparties We offer our products and services in Europe, North America, the Asia/Pacific region, the Middle East and Africa through whollyowned and majority-owned subsidiaries, joint ventures, companies in which we hold non-controlling equity stakes, agents and independent contractors. Our international operations expose us to different local political, regulatory, business and financial risks and challenges which may affect the demand for our products and services, the value of our investment portfolios, the
The holders of AXA ADSs in the United States may not be able to participate in offerings of rights, warrants or similar securities to holders of our ordinary shares on the same terms and conditions as holders of our ordinary shares In the event that we offer rights, warrants or similar securities to the holders of our ordinary shares or distribute dividends payable, in whole or in part, in securities, the Deposit Agreement provides that the depositary (after consultation with AXA) shall have discretion as to the procedure to be followed in making such rights or other securities available to ADR holders including disposing
– The in-force with-profits policies of AXA UK are managed with a significant surplus of free assets, used to adjust performance over the duration of such policies, while at the same time reflecting financial market performance in policyholders’ revenues.
This information is aggregated across AXA’s insurance operations, which allows strategic asset allocation to be monitored and adjusted if necessary.
FOCUS ON ThE MAIN FINANCIAL RISKS The main financial risks for the AXA Group are as follows: • Interest-rate and equity risk related to the operating activities of Group subsidiaries. • Credit risk. Please read the next part “Credit risk” included in the Part IV – Section 4.2 – Quantitative and Qualitative Disclosures about Market Risk and Risk Factors.
Net unrealized capital gains/ losses, not included in iFRs shareholders’ equity 1,846 – 1,846 683 – 683 683 1,394 2,077
Life & Savings Other businesses group Life & Savings Other businesses group
RISKS RELATINg TO ThE MANAgEMENT OF hOLDINg COMpANIES’ FOREIgN EXChANgE EXpOSURE AND DEBT For the purpose of optimizing the financial management and control of financial risks linked to holding companies, the Group Central Finance Department has defined and introduced formal management standards, as well as guidelines for monitoring and assessing financial risks, which enable it to measure the positions of each affiliate in a consistent manner. These standards have been approved by the Management Board.
In addition, risks resulting from regulatory or other restrictions on dividend payments from the Group’s operating subsidiaries or limitations on AXA’s ability to reduce these subsidiaries’ shareholders’ equity is closely monitored. The Group’s operating subsidiaries must comply with local regulations in the various countries where they operate, particularly minimum solvency requirements, which may restrict their ability to pay dividends to the Company or other Group companies, reduce their shareholders’ equity, incur debt, engage in certain types of transactions with affiliates (including loans) or take certain other actions. As a result, internal cash flow projections (including dividend pay-outs) must take into account these constraints and possible future regulatory changes.
(a) At December 31, 2008, the AA rating portion of 43% included 7% for swiss Re. Note that swiss Re rating was downgraded by standard & Poor’s to A+ on February 18, 2009.
At December 31, 2007, the breakdown of reserves ceded to reinsurers (€11.3 billion) by reinsurer rating was: 9% in AAA, 31% in AA, 36% in A, 1% in BBB/BB/B, and 22% in other.
REINSURANCE Definition of reinsurance requirements Reinsurance purchasing is an important part of the Group’s insurance activities and risk management. For the Property & Casualty and Life & Savings operations, reinsurance programs are set up as follows: • Reinsurance placement is mainly handled centrally by AXA Cessions. • Prior to ceding risks, in-depth actuarial analyses and modeling are conducted on each portfolio by AXA Cessions and GRM
• External fraud. • Employment practices and workplace safety. • Clients and business practices. • Damage to physical assets.
INSURANCE COVER FOR ThE gROUp’S pROpRIETARy RISK The purchase of insurance on the Group’s proprietary assets and risks is largely decentralized with Group subsidiaries responsible for identifying risks and purchasing their own insurance, such as property damage and public liability insurance, according to their local exposures and market conditions. As part of the general governance principles, subsidiaries may arrange protection with external insurers or with an internal AXA Group insurer.
AXA Financial and their subsidiaries, which traditionally arrange cover within their local market. • Reviewed and approved annually by the Management Board to ensure that AXA has achieved competitive terms and conditions.
Assets backing contracts where the financial risk is borne by policyholders (b) 131,990 182,827 176,562 9 Investments from banking and other activities 12,615 13,703 16,295 10 Investments in associates – Equity method 1,018 147 144
Derivative instruments relating to insurance and investment contracts (1,176) (187) (163)
Other operating income and expenses (53,761) (110,760) (102,004) Income from operating activities before tax 1,070 8,152 8,066 10 Income arising from investments in associates – Equity method 21 13 34
Net operating income 1,236 5,911 5,635 Result from discontinued operations net of tax – 480 123
Net gains and losses recognized directly through shareholders’ equity (7,158) (3,959) (1,000)
Net cash impact of transactions with cash impact not included in the operating income before tax 21,513 17,967 17,188
Amendments to standards and Interpretations published and effective in 2008 The application in 2008 of the following amendments and interpretations, had no significant impact on the Group’s consolidated financial statements: • Reclassification of Financial Assets (Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7
On December 31, 2008, there is no standard or interpretation published by the IASB and effective as at January 1, 2008, but not yet endorsed by the European union, which is applicable to the Group.
Investment contracts with no discretionary participating features do not benefit from this exemption permitted by IFRS 4 in phase I of the IASB’s insurance project, i.e. the fair value of acquired liabilities is booked through the recognition of an asset corresponding to the value of acquired business in force. Liabilities relating to investment contracts with no discretionary participating features are measured directly at fair value. In accordance with IAS 39, the fair value of these contracts cannot be less than surrender value when they contain a demand feature.
Bluefin Advisory Services Limited (previously Thinc Group) 100.00 99.99 100.00 99.99
Companies consolidated by equity method listed below exclude investment funds and real estate entities: voting Ownership voting Ownership Change in scope rights interest rights interest
Securitization of motor insurance portfolios On December 9, 2005, AXA announced the closing of the €200 million securitization of its French motor insurance portfolio. Since the threshold for transferring risk to the financial markets was not reached, the recognition of this operation in AXA’s consolidated financial statements mainly involves the consolidation of the vehicle carrying the portion subscribed by AXA, and the recognition on the balance sheet under other liabilities of a €200 million deposit received from reinsurers.
Property & Casualty: This segment includes a broad range of products including mainly motor, household, property and general liability insurance for both personal and commercial customers (commercial customers being mainly small to medium-sized companies). In some countries, this segment includes health products.
From 2007 on, the Holding companies segment (that includes all non-operational activities), also includes some financial vehicles including certain Special-Purpose Entities such as consolidated CDOs, formerly disclosed as part of the segment “Other Financial Services” which was renamed “Banking”. This change was applied retrospectively to all periods presented.
(a) Includes cash and cash equivalents, deposits and guarantees, various debtors and assets covering employee benefit liabilities. (b) Includes SPEs and CDOs previously disclosed in the Other Financial services segment which was renamed “Banking”.
Unearned revenues and unearned fees reserves 2,454 – – – – – – 2,454
Liabilities arising from policyholder’s participation 19,121 205 – – – – (4) 19,322
Bank operating expenses – – – – (64) 5 – (59)
Change in goodwill impairment and other intangible assets impairment (32) (91) – – (3) – – (126)
Inter- Life & Property & International Asset Holdings segment (In Euro million) Savings Casualty Insurance Management Banking companies (a) eliminations TOTAL
4.2. MARkET RISkS (INCLUDING SENSITIvITY ANALYSES) Please refer to pages 208 to 217 of the “Quantitative and Qualitative Disclosures About Market Risk and Risk Factors” section.
4.3. CREDIT RISk Please refer to pages 218 to 221 of the “Quantitative and Qualitative Disclosures About Market Risk and Risk Factors” section, except for the breakdown of CDS by underlying debt securities’ rating on page 220.
Bluefin Insurance Group Ltd (previously Venture Preference limited) – 264 – – (17) – 246
5.3.2. Transactions of recent past periods Acquisition of Alpha Insurance (2007) On March 28, 2007, AXA and Alpha Bank, Greece’s second largest bank, signed a long-term exclusive agreement to pursue and strengthen the existing bancassurance partnership for €255 million. At December 31, 2008, the goodwill had a net value of €123 million.
Acquisition of Citadel (2006) On March 1, 2006, AXA Canada acquired Citadel for €221 million. At December 31, 2008, the goodwill had a net value of €83 million.
The change in Value of Business In-force (“VBI”) in the Life & Savings segment was as follows: (in Euro million) 2008 2007 2006 Restated (a) (b)
Unearned revenues and unearned fees reserves 2,072 382 1,823 409 1,741 339
Bluefin Advisory Services Limited (previously Thinc Group) 36 33 – (9) – – – (12) 47
Amortization and Purchase Amortization Purchase impairment Net value at Acquisition increases and Disposal decreases write back Net value at January 1, during following impairment during following following Currency December 31, (in Euro million) 2006 the period adjustments allowance the period adjustments disposal impact 2006
Other assets designated as at fair value through profit or loss, held by controlled investment funds 6,353 6,353 1.24% 13 13 0.10% 6,365 6,365 1.21%
Macro hedge and other derivatives 110 110 0.02% 4 4 0.03% 114 114 0.02%
Loans designated as at fair value through profit or loss (b) 45 45 0.01% – – – 45 45 0.01%
Debt securities (at cost) that are not quoted in an active market 1,212 1,132 1,212 – 80 – – – – – 11 11 11 – –
Debt securities available for sale 258,328 258,633 258,633 10,448 10,142 247,645 246,153 246,153 4,764 6,256 240,661 247,297 247,297 8,163 1,527
Additional information on the credit risk associated with debt securities is provided in Note 4 “Management of financial and insurance risks”.
Debt securities designated as at fair value through profit or loss (a) 3,709 10,405 18,183 32,296
9.6. EXPOSURE TO PRICE RISk After excluding the effect of derivatives (detailed in section 19.3) and equity securities of real estate companies, the breakdown by industry of equity securities owned across the Group is as follows: (in Euro million)
Equity securities available for sale 12,819 2,765 5,056 1,808 4,663 2,910 1,885 1,819 2,074 35,799
Sub-total: Equity securities held directly 15,558 5,008 5,443 2,538 6,165 4,224 2,959 2,144 2,711 46,750
Total Equity securities as at December 31, 2007 21,077 5,440 5,662 2,677 6,561 4,275 3,127 2,226 4,797 55,843
Non-controlled investment funds break down as follows: Insurance Other activities Total Insurance Other activities Total Insurance Other activities Total
c) Assets not quoted in an active market The fair values of financial instruments that are not traded in an active market are estimated: • using external and independent pricing services, or • using valuation techniques.
In the years ended December 31, 2008, 2007 and 2006, AXA received cash dividends from equity-accounted companies totaling €3 million, €5 million and €4 million, respectively.
Credit risk exposure, mainly relating to receivables from reinsurers, is covered in Note 4 “Financial and insurance risk management”.
(a) Fair value is equal to net carrying value. (b) Includes SPEs and CDOs previously disclosed in the caption “Arising from banking activities”.
Net cash provided by operating activities totaled €21,319 million in 2008, as compared to €19,413 million in 2007, mainly due to the cash received on GMxB derivatives in the uS Life & Savings, partly offset by the unfavorable operating performance in 2008.
In addition, AXA paid a €96 million premium for call options on AXA shares with an automatic exercise feature, to fully neutralize the dilutive impact of the 2017 convertible bonds.
Unrealized gains and losses (net of tax) 100%, as at December 31 (443) 4,753 7,966
c) Employee benefits actuarial gains and losses The main contributors to the €612 million increase in actuarial gains and losses on employee benefit obligations were the united Kingdom (€+299 million), Germany (€+137 million), the united States (€+53 million) and France (€51 million). Pension liabilities often have longer duration that the assets held. In the 2007 context of rising interest rates and stability of equity markets, pension liabilities declined more that the corresponding assets, leading to a positive impact on Group shareholders’ equity.
Total recognized income and expense for the period (SoRIE) – – – – – (2,880) (67) – – (1,388) 6,278 1,942 490
Employee benefits actuarial gains and losses through OCI (b) – – – – – – – – – – 252 252 8
Future policy benefit reserves Life & Savings 258,302 – 804 259,105 239,649 – 228 239,877 252,682 – 285 252,967
Reinsurers’ share in future policy benefit reserves 15 15 13 13 12 – 12
Reinsurers’ share in liabilities arising from investment contracts with discretionary participating features 15 15 13 13 12 – 12
(b) Excluding claim handling cost reserves. (c) In accordance with IFRS 3, i.e. within 12 months following the acquisition date, the Group adjusted certain items impacting the allocation of Winterthur purchase price. (d) As described in Note 1.10, the contribution of discontinued operations is stated on a separate line of the income statement.
(a) It is not appropriate to extrapolate future redundancies or future deficiencies based on the loss reserves development presented in the table, as conditions and trends that have affected development of the liability in prior periods may not necessarily occur in the future periods. Redundancy/deficiency disclosed includes forex impact between one year and the next.
Claims reserves at end of year (a) 82 69 82 68
The surrender value of contracts including a surrender option as of December 31, 2008 amounted approximately to €218 billion.
Information on the fair value figures presented in this note is provided in addition to information on carrying values and should be used with caution. On the one hand, these estimates are based on snapshots taking into account closing dates of parameters such as interest rates and spreads, which in fact fluctuate over time, and resulting in instantaneous values, and on the other hand because there are many possible methods of making these estimates.
December 31, 2006 (in Euro million) December 31, 2008 December 31, 2007 Restated (b)
HOHO 1: class B Mezzanine Class B Subordinated Mortgage-backed notes, maturity 2030, 7%, Fixed rated – – 13
Derivatives on other debt instruments issued (other than financing debt) – Other 6 – –
These movements were partly offset by: • a €462 million decrease on CDO and real estate vehicles’ other debt instrument issued due to Aria, Jazz1 and Concerto2; • a €352 million decrease from AXA Bank Europe due to the reimbursement of a €500 million note to the European Central
• Deferred tax through reserves in relation to stock options 17 1 16 97 142
In the table above, the “net deferred tax position” column corresponds to the difference between deferred tax assets (DTA) and deferred tax liabilities (DTL) carried on the Group’s consolidated balance sheet. Note that the breakdown of DTA/DTL disclosed in these tables corresponds to the deferred tax before the netting that occurs for balance sheet presentation purpose.
Deferred tax through reserves in relation to stock options 87 – 67 (12) – 142
TOTAL recognized DTA by latest date of possible use 647 98 96 97 721 17 714 899 10,034 13,324
Collars – – – – – – – – – –
In the tables above, the fourth column includes derivatives that do not qualify for hedge accounting under IAS 39, but whose objective is nevertheless to provide economic hedging of a risk, with the exception of certain credit derivatives. They include “macro-hedging” derivatives as defined by the IASB in its amendment to IAS 39.
As at December 31, 2008, the notional amount of all derivative instruments totaled €330 billion (€234 billion and €238 billion respectively at the end of 2007 and 2006). The €97 billion increase versus FY07 is mainly attributable to the Company (€54 billion) notably related to the hedging program set up in order to reduce the exposure of AXA’s shareholders’ equity to equity investments and to limit the solvency I coverage ratio volatility. Their net fair value as at December 31, 2008 totaled €3,754 million (€2,108 million and €933 million respectively at the end of 2007 and 2006).
The notional amounts of swaps used in fair value hedge relationships totaled €4,537 million as at December 31, 2008 (€6,002 million at the end of 2007 and €5,117 million at the end of 2006), including €2,682 million of interest rate swaps for AXA Bank Europe to hedge a portfolio interest risk and €843 million for AXA Japan (mainly including €444 million of equity swaps and €400 million of interest rate swaps on directly-held Euro debt securities).
Equity securities designated as at fair value through profit or loss 19,322 – – 19,322 271 – – 271 19,593 – – 19,593
Investment property at amortized cost 12,025 – 20 12,045 1,776 – – 1,776 13,801 – 20 13,821
Investment property at amortized cost 13,260 – – 13,260 548 – – 548 13,808 – – 13,808
Investment property designated as at fair value through profit or loss 5,364 – – 5,364 608 – – 608 5,972 – – 5,972
Debt securities held to maturity – – – – – – – – – – – –
Impact of Impact of Impact of derivative derivative derivative Carrying value instruments Impact of Carrying value Carrying value instruments Impact of Carrying value Carrying value instruments Impact of Carrying value excluding effect subject to hedge other derivative including effect excluding effect subject to hedge other derivative including effect excluding effect subject to hedge other derivative including effect (in Euro million) of hedging value (a) accounting (b) instruments (c) of derivatives (d) of hedging value (a) accounting (b) instruments (c) of derivatives (d) of hedging value (a) accounting (b) instruments (c) of derivatives (d)
Derivatives on insurance & investment contracts (hedge accounting) – – – – – – (21) – (21)
(a) Other derivatives instruments that do not qualify for hedge accounting according to IAS 39. (1) and (2) refer to Note 9.9 regarding the principles applied by the Group in order to proceed with the classification of financial assets into the IAS 39 fair value hierarchy categories.
Derivatives (hedge accounting) – Reinsurance – – – – – – – – –
Derivatives on other receivables (hedge accounting) (138) – (138) – (9) (9) – (19) (19)
TOTAL Claims Unearned Claim expense reserves premium TOTAL Claims Claim expense reserve on including IBNR reserves Technical (in Euro million) reserves IBNR reserves IBNR and expenses & others Liabilities
Non controlled investment funds held for trading – 3 (1) – 2
Investment properties designated as at fair value through profit or loss 278 336 384 – 998
Claims ceded (including change in claims reserves) 859 308 777 (63) 1,882
(a) As described in Note 1.10, the contribution of discontinued operations is stated on a separate line of the income statement. (b) Includes all acquisition expenses relating to insurance and investment contracts before capitalization/amortization of deferred acquisition costs and equivalents.
Benefit obligation at the beginning of the year 12,955 14,734 11,421 9,573 506 604 716 581
Adjustment due to separate assets 15 (23) (232) (210) – – – –
Total cost for AXA = [a] – [b] + [c] (as a percentage of the reference price) 1.53% 3.22% 6.55% 3.35% 6.59% 3.15%
Financing commitments decreased by €1,309 million, including €–761 million in Switzerland Life & Savings and Property & Casualty following reclassification of financing commitments given to private equity funds to the caption “other commitments” from 2008 on (€1,083 million as of year-end 2008), a €–403 million decrease in AXA Bank Europe and a €–279 million decrease in AXA Banque, both related to credit lines and overdrafts authorizations granted to their customers.
Transfers to the Uk with-profits funds The scheme governing the financial reorganisation of AXA Sun Life in 2001 (the “Scheme”) details arrangements under which assets from the inherited estate, attributed to AXA through the reorganisation, may be transferred on a temporary, or permanent, basis to the With Profits Funds as required to support the capital requirements of these funds, as determined under the scheme. In the case of a temporary transfer, assets and related investment income remain attributable to AXA as they will be returned when they are no longer required to support the capital requirements of the With Profits Funds, under the stringent tests set out in the scheme.
RBS Warranty Claim The Royal Bank of Scotland Group plc (“RBS”) filed a lawsuit against Winterthur (uK) Holdings Limited and Winterthur Swiss Insurance Company (together “Winterthur”) on September 29, 2005 claiming breach of warranty and misrepresentation in connection with Winterthur’s 2003 sale of Churchill Insurance Group plc to RBS. The parties concluded a settlement of this litigation in 2008 which had no material impact on the Company’s consolidated financial position or results of operations.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2008 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European union.
II – Justification of our assessments The financial crisis has gradually taken hold of the real economy with wide-ranging consequences for companies, notably in terms of business activity and financial balance. Very high volatility of active financial markets, infrequency of transactions on inactive financial markets as well as the lack of visibility on the business outlook have created specific conditions for the preparation of financial statements this year, and especially for accounting estimates required by the applicable accounting principles. In this context and in accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters: • Your company details in Notes 1.7.2, 4.3 and 9.9 of the notes to the consolidated financial statements the valuation methods it applies to financial assets. We have assessed the appropriateness of the process of the financial assets valuation, as well as of the information disclosed in the above mentioned notes.
French law requires mergers and certain consolidations to be approved by two-thirds of the shareholders present or represented at the extraordinary general meeting called to decide on such matters. French law also requires the affirmative vote of the shareholders of the surviving corporation of a merger at an extraordinary general meeting. However, no general meeting of shareholders of the merged company is required in the case of a merger of a wholly-owned subsidiary with its parent company.
For purposes of the Treaty, French tax law and the Code, U.S. owners of ADRs will be treated as owners of ordinary shares underlying the ADSs represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United States federal income tax.
Under the Treaty, the reduced rate of the withholding tax is applicable provided that certain procedural requirements described below are satisfied.
The requirements provided by the Administrative Guidelines and referred to in more detail above apply to a U.S. Holder, although the U.S. Internal Revenue Service (the “IRS”) is not required to certify the certificate of residence, provided that (i) the U.S. Holder provides the U.S. financial institution managing such holder’s securities account a certificate of residence conforming with the template attached to the Administrative Guidelines and (ii) the U.S. financial institution managing the U.S. Holder’s securities account in the United States certifies to the French paying agent that the U.S. Holder complies with all the requirements for obtaining the reduced rate set forth in the Administrative Guidelines. If the certification by the U.S. financial institution managing the U.S. Holder’s securities account in the United States is not obtained, the IRS should then certify the abovementioned certificate of residence and, upon certification, the U.S. Holder should furnish it to the French paying agent.
Similarly, regulated companies such as RICs, REITs and REMICs (“Regulated Companies”) will have to send to the financial institution managing their securities account a certification from the IRS indicating that they are classified as a Regulated Company under the relevant sections of the Code. This certification must be produced each year.
In order to manage these risks, the group has put in place a comprehensive system of internal control designed to ensure that management is made aware of significant risks on a timely and continuing basis, has the necessary information and tools to appropriately analyze and manage these risks, and that the group’s financial statements and other market disclosures are timely and accurate.
For more information about the Audit Committee including its composition and the principal matters it handled in 2008, please see Section 3.1 “Directors, Senior Management and employees” of the group’s 2008 Annual Report.
PBRC department is also responsible for controls relating to the preparation and processing of accounting and financial information.
Group Legal & Compliance The group Legal Department is responsible for identifying and managing the significant legal and compliance risks to which the group is exposed. It provides expertise and advice on all significant corporate legal matters at the group level and manages the legal aspects of transactions undertaken by the group as well as significant litigation, regulatory, and compliance matters.
Group Risk and Compliance Committee In 2008, the management established a group Risk and Compliance Committee to ensure that the group has: • a comprehensive view of the various risks facing the group on a continuing basis; • a dedicated forum for reviewing, analyzing and prioritizing these risks; • defined action plans to manage these risks; and • optimal coordination and communication between the different departments managing these risks.
Pursuant to the provisions of a French law of July 3, 2008, the Supervisory Board and the Management Board decided to adopt all of the AFeP / MeDeF recommendations, including the recommendations on the compensation of executive officers dated october 2008, as AXA’s reference code of corporate governance.
Form 6-K for May 2008: Press Release issued on May 7, 2008 by AXA, announcing its first quarter 2008 activity indicators
Form 6-K for November 2008: Press Release issued on November 6, 2008 by AXA, announcing the first nine months 2008 activity indicators
DOCUMENTS PERTAINING TO THE COMPANY The following documents may be consulted at the AXA group Legal Department located 21, avenue Matignon – 75008 Paris (France) until the filing of AXA’s next Annual Report (Document de Référence): • The Bylaws of the Company; • The reports and other documents prepared by any expert at the Company’s request, any part of which is included onto or referred to in this Annual Report; • The parent Company financial statements as well as the consolidated financial statements of the Company for each of the two financial years preceding the publication of this Annual Report.
Ordinary shares and other securities granting a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise 6 billion (b) 1.5 billion (c) 26 months July 14, 2009
Shares reserved for a specific category of beneficiaries in connection with offerings for employees – 100 million (e) 18 months October 22, 2009
Restricted shares (actions gratuites)/ AXA Miles Ambition 2012 Plan (g) – 0.7% (h) 38 months July 14, 2010
Ordinary Shares or securities giving access to the capital, reserved for employees – 150 million (g) 18 months October 30, 2010
Capital operations resulted in a loss of €3,636 million in 2008, versus a profit of €318 million in 2007. This 2008 loss broke down as follows: • A €1,990 million exchange-rate loss, as opposed to a €564 million gain in 2007, including the aforementioned €2,181 million allowance for a currency risk provision on loans and receivables denominated in foreign currencies. Conversely, realized exchange rate gains totaled €191 million, mainly arising from the renewal of net foreign currency investment hedges that had expired during the year.
Loans increased by €725 million, including €719 million related to a $1 billion credit facility granted to shareholders in ReSo garantia and guaranteed by these shareholders’ interests in ReSo garantia.
AXA PARTICIPATION 2 3 497 100.00% 455 455 18 16 24 Dec. 31, 2008 23, avenue Matignon – 75008 PARIS
VINCI B.V. 1,439 2,616 100.00% 4,285 4,285 700 29 144 Dec. 31, 2008 Graadt van Roggenweg 500 – Postbus 30800 3503 AP UTRECHT – PAYS BAS
This multi-criteria analysis reflects the long-term nature of AXA’s ownership in these subsidiaries and excludes factors relating to short-term market volatility. Net book value is compared with the going concern value, which is the value of the assets and expected profits of existing and new business, taking into account the entity’s future prospects. The value of future profits is estimated on the basis of calculations of the european embedded value of the Life & Savings business published by the group, or similar calculations for other activities. For other investments, the fair value is the share price for listed securities and the likely trading value for unlisted securities.
• 3.75% bonds, maturity January 1, 2017: 6,636,896 bonds with a par value of €165.50 and a redemption value of €269.16 were in circulation at December 31, 2008. The redemption premium amounts to €688 million.
(in euro million) Gross value Less than 1 year 1 to 5 years More than 5 years
3.7. Share capital AXA’s share capital is represented by 2,089,158,169 shares with a par value of €2.29, giving a total value of €4,784,172,207 at December 31, 2008.
Credit line for 5 years (“club deal” banking pool) 1,000 1,000
“embedded value” (ev) is a valuation methodology often used for long term insurance business. It attempts to measure the present value of cash available to shareholders now and in the future and accordingly is presented net of taxes and minority interests. “european embedded value” (eev) is a refinement of this methodology based on Principles issued by the CFo Forum of european insurers, which AXA adopted during 2005. AXA publishes eev only for its Life & Savings business.
LIFE & SAVINGS EEV Life & Savings eev is the sum of two elements: • “Adjusted Net Asset value” (ANAv) which measures the current balance sheet wealth, • “value of Inforce” (vIF) which measures the present value of future shareholder profits for the business currently in the portfolio, adjusted for the cost of holding capital that cannot be distributed while the business is in force.
10% higher value of real estate at start of projection 522 17 10% lower value of real estate at start of projection (538) (22)
The term of office of Mr. henri Lachmann as a member of the Supervisory Board, is set to expire at the close of this Meeting. Accordingly, you are asked to appoint Mr. Ramon de oliveira for a term of four years to replace Mr. Lachmann, pursuant to Article 10 of the Bylaws of your Company. If appointed, Mr. de oliveira’s term of office would therefore expire at the close of the Shareholders’ Meeting in 2013 to approve the Company’s financial statements for the fiscal year ending on December 31, 2012. The Supervisory Board, on the recommendation of its Selection, ethics, governance and human Resources Committee, has rendered a favorable opinion on the appointment of Mr. Ramon de oliveira, managing partner of the consulting firm Logan Pass Partners, to serve as a member of AXA’s Supervisory Board. The Supervisory Board and its Selection Committee considered Mr. de oliveira’s significant knowledge of the financial and insurance sectors acquired, in particular, during his 25-year career at JP Morgan (in Paris, New york and London) and through his directorships (director of The hartford Insurance Company since 2005) together with his very international profile. The Supervisory Board has assessed the independence of Mr. Ramon de oliveira on the basis of both the recommendations contained in the AFeP / MeDeF Code of corporate governance dated december 2008 and the Sarbanes-oxley Act and came to the conclusion that Mr. de oliveira qualifed as independent in accordance with these criteria. A brief biography of Mr. de oliveira appears in the exhibits to this report.
The upper limits of capital increases that may result from the 11th to 18th resolutions detailed hereinafter are the followings: • €1 billion in nominal for capital increases by means of capitalization of reserves, earnings or premiums (11th resolution), which represents, for reference only, approximately 20.9% of the share capital as at January 21, 2009, provided that this upper limit is separate and distinct from the upper limits that may result from the other resolutions submitted to your Meeting;
As regard markets volatility, the exercise of the option detailed hereinabove would allow your Company to take advantage of potential opportunities to realize an issue of securities when the market conditions would not allow the carrying out of an issue in the conditions set forth in the 13th resolution.
Such capital increase would allow employees, corporate officers or general agents of the AXA group’s affiliated entities, who are residents in certain countries outside France, to benefit from an offer as close as possible, in terms of economic profile, to the offer which would be offered to the other employees of the group pursuant to the 20th resolution.
MoDIFICATIoNS To The ByLAwS According to the 26th resolution, the Management Board proposes to your general Meeting that upon any issue of preferred shares, the Bylaws be modified to include the characteristics of the relevant preferred shares. Applicable law requires that the characteristics of preferred shares be described in full in the Bylaws.
Considering the issue price and the volume of shares being issued, the capital increase should not have a significant impact on the quoted share price.
The total nominal amount of capital increases that may be carried out, immediately or in the future, may not exceed: • €2 billion for the capital increases through the issue of ordinary shares or securities giving a claim on ordinary shares, with preferential subscription rights maintained, carried out pursuant to the 12th resolution, • 20% of the share capital at the date of this general Meeting, within the limit of €1 billion, for the capital increases through the issue of ordinary shares or securities giving a claim on ordinary shares, without preferential subscription rights, carried out pursuant to the 13th to 18th resolutions, provided that this amount shall be deducted from the upper limit of €2 billions of provided under the 12th resolution,
More over, to the extent that this report does not specifies the methods used to set the issue price of shares to be issued pursuant to the 12th, 16th and 17th resolutions, we can not express any opinion as to the choice of the calculation elements of the issue price.
In accordance with Article R.225-116 of the French Commercial Code, we will submit a supplementary report, as the case may be, when your Management Board will make use of this authorization in the event of an issue of securities that entitle to an allotment of debt instruments.
your Management Board is required to prepare a report in compliance with Articles R.225-114 and R.228-17 of the French Commercial Code. our role is to assess the proposed capital increase, the proposed waiver of preferential subscription rights and certain other disclosures pertaining to the issuance and contained in this report.
Tenth resolution Authorization granted to the Management Board to purchase shares of the Company The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Management Board Report and the Description of the share repurchase program established in compliance with Articles 241-1 et seq. of the Autorité des Marchés Financiers (the “AMF”) general Regulation: 1) hereby authorize the Management Board, pursuant to Articles L.225-209 et seq. of the French Commercial Code, to purchase a maximum of 10% of the total number of ordinary shares comprising the Company’s share capital at any given time, or 5% of the total number of shares comprising the Company’s share capital in the case of shares acquired by the Company with the purpose of holding them for subsequent payment or tender in a merger, spin-off or contribution, provided that these limits may be assessed at any time whatsoever, by applying the percentage to an adjusted amount of share capital after the completion of capital transactions that may affect it after the date of this Meeting. The number of shares of its own stock that the Company can hold at any given time must not exceed 10% of the existing ordinary shares outstanding.
Fifteenth resolution Authorization granted to the Management Board to increase the amount of the initial issue of shares or securities, with or without preferential subscription rights, decided respectively by virtue of the twelfth to fourteenth and sixteenth to eighteenth resolutions The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, and having reviewed the Management Board Report and the Statutory Auditors’ Special Report, pursuant to the provisions of Article L.225135 -1 of the French Commercial Code, hereby authorize the Management Board to resolve, with the option to sub-delegate authority under the provision of the law, for each issue carried out by virtue of the twelfth to fourteenth and sixteenth to eigthteenth resolutions, to increase the number of ordinary shares and/or securities issued, in compliance with the laws and regulations, if it notices an extra demand for subscriptions conforming to market practice, and within the upper limits provided for in the twelfth and thirteenth resolutions respectively.
3) Resolve that the issue price of the ordinary shares or securities to be issued by virtue of this resolution will be set in accordance with Articles L.3332-18 et seq. of the French Labor Code, provided that, pursuant to the above-mentioned Articles, the maximum discount set shall not exceed 20% off an average quoted price of share on euronext Paris over the twenty trading days preceding the day on which the Management Board formally resolve the opening date of the subscription period. Notwithstanding the above, the Shareholders expressly authorize the Management Board to reduce or suppress the aforementioned discount, as it deems appropriate, in particular in order to consider the new international accounting standards, or, inter alia, locally applicable legal, accounting, tax or social provisions. The Management Board may also substitute all or portion of the discount by the allotment of ordinary shares or securities giving a claim to the Company’s capital, in application of the provisions hereinafter.
3) Resolve that the aggregate amount of share capital increases which may be raised through issues of preferred shares pursuant to this delegation and the delegations provided for in resolutions 24 and 25, shall not exceed, in addition to the limits provided by law, €2 billion in total gross issue proceeds, subject to such amount not exceeding €1 billion in total nominal amount, without taking into account the nominal value of ordinary shares to be issued in order to safeguard the rights of owners of securities or other rights giving access to the Company’s capital, in compliance with applicable law and, if applicable, contractual terms providing for other cases of adjustment. These limits are separate and distinct from those provided for in resolutions 11 to 21 of this general Meeting.
4) Duly note that the ordinary shareholders will have preferential subscription rights to preferred shares to be issued by virtue of this resolution pro rata the number of shares they own. The Management Board will set the conditions and restrictions under which the ordinary shareholders may exercise their subscription rights on the basis of their exact rights, as provided by law. Furthermore, the Management Board may grant ordinary shareholders the right to subscribe an additional number of shares as of a right, anyhow to be exercised pro rata their subscription rights and limited to the number of shares requested.
5) Resolve that in the event of a preferred shares issue being undersubscribed, the Management Board may implement any or all of the options, in the order it considers appropriate, granted to it by Article L.225-134 of the French Commercial Code, in particular, by offering all or a portion of the unsubscribed preferred shares to the public.
Twenty-sixth resolution Amendments of the Bylaws to include preferred shares The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, and having reviewed the Management Board Report, as well as the Statutory Auditors’ Special Report and the amended Bylaws attached as an exhibit hereto and describing the characteristics of the preferred shares and subject to the implementation by the Management Board of any one of resolutions 23, 24 or 25 relating to preferred share issues (such condition precedent will be deemed fulfilled just before the issue of the relevant preferred shares), 1) Resolve to approve the amended Bylaws, in their entirety, such as they appear in the exhibit attached hereto. The proposal of amended Bylaws, which describe the characteristics of the preferred shares, is deemed to be part of this resolution.
only candidates having received more than 2% of the votes cast during the consultation process of employees Ordinary Shareholders shall be submitted to the vote of the Shareholders’ general meeting.
This list must contain the names of at least two candidates. The candidate list shall be mentioned in the convening notice of the Shareholders’ general meeting called to appoint the employees Ordinary Shareholders representative to the Supervisory Board.
when the amount of a collateral, warranty or surety exceeds the limit set for the period under consideration, any enforcement action for the limit excess is void against third parties who are not cognizant of the limit.
4. The Supervisory Board may set up one or more special committees for which it sets the composition (including its own members) and it assigns tasks ; these committees perform their duties under the Supervisory Board’s supervision. each committee presents its activity report at the following Supervisory Board meeting.
2. The Supervisory Board may also grant compensation to the Supervisory Board members for their performance of special tasks or assignments, in accordance with the terms and conditions provided by law.
b) Consolidated financial statements The Management Board shall submit the consolidated financial statements to the approval of the Shareholders’ annual general meeting at the same time as it submits its report, the Company’s financial statements and the Company’s consolidated financial statements. The Shareholders’ annual general meeting shall deliberate and decide on all issues relating to the consolidated financial statements of the previous fiscal year ended.
The workforce is slightly younger (39 years old on average), and the proportion of men to women is relatively stable, with 51% men and 49% women. The increase of Managers in 2008 (12%) in part corrects the decrease observed in 2007 (–16%) and reflects the general growth amongst experts and employees in 2007 (12%).
WORKFORCE (number of persons) as at December 31 2007 data Change 2007/2008 2008 data
(d) Absenteeism rate: Number of absence days (sickness, maternity, work-related accident...) / number of working days per employee and per year x the average FTE.
In this context, AXA sets quantitative key Performance Indicators (kPIs) to reduce its impact related to energy, Co2 emissions, paper and water consumption for the 2007-2009 period: • Power consumption (kwh/Full Time employee [FTe]): 5% reduction. • Co2 emissions (T eq. Co2/FTe): 5% reduction. • water consumption (m3/FTe): 5% reduction. • Paper consumption (T/FTe): 2.5% reduction.
CO2 emissions resulting from home/workplace commute T eq. CO2 107,208 133,773
Change in reporting perimeter: 19 new countries and numerous new sites have been incorporated into the 2008 reporting perimeter, representing a 29% increase in FTEs covered by the reporting compared to 2007. Of note, Key Performance Indicators (KPIs) are highlighted in bold.