(the relevant sections of this Universal Registration Document corresponding to such required disclosures have been approved by AXA’s Board of Directors and are referred to in the cross reference table on page 477 of this Universal
We also continued to simplify the Group’s footprint, notably by divesting from insurance operations in Ukraine and banking activities in Belgium as well as announcing the disposal of our operations in Central and Eastern Europe, while pursuing the focus on our prominent geographies, such as France and Europe, where we are strengthening our positions, as well as Asia and the
AXA operates primarily in five geographies: France, Europe, Asia, AXA XL and International (including Middle East, Latin America and Africa).
Note: the Dow Jones Sustainability Index is a reference performance indicator for AXA: its methodology serves as the basis for the Group’s internal sustainability evaluation tool since 2010, and is one of the performance metrics used to calculate long- term incentives (Performance Shares) since 2016.
R eport). The six Principles for Responsible Investment are a voluntary and aspirational set of investment principles that encourage the incorporation of ESG issues into investment practices. PRI signatories are required to report publicly on their responsible investment activities each year, using asset-specific modules in the UN PRI reporting system. Answers are then assessed and results are compiled into an annual Assessment report.
For further information concerning Group subsidiaries (including the Group’s equity interest and voting rights percentages), please see Note 2 “Scope of consolidation” in Part 5 – “Consolidated
and off ers a broad range of Life & Savings, Property & Casualty,
Life & Savings, Property & Casualty and Health. Its off ering covers a broad range of products including motor, household, property and general liability insurance, banking, savings vehicles and other investment-based products for both Personal/Individual and Commercial/Group customers, as well as health, protection and retirement products for individual or professional customers.
& Savings, Property & Casualty as well as Health. Types and specificities of the products off ered by AXA vary depending on geographies: ■ in Japan, AXA primarily off ers protection, health and savings products, including notably medical whole life and medical term insurance as well as protection with unit-linked products; ■ in Hong Kong, AXA off ers individual life insurance (notably traditional whole life and to a lesser extent investment-linked), as well as protection and health products. In Property & Casualty, product off er includes traditional general insurance products such as motor, household and travel, as well as Commercial insurance; ■ in Asia High Potentials: • in Thailand, Indonesia and the Philippines, AXA off ers a broad range of both (i) Life & Savings and Health products including whole life, endowment, unit-linked, group term insurance, critical illness and hospital cash products, as well as (ii) traditional Property & Casualty off ers on both Personal and Commercial lines,
As in other geographies, AXA aims to become a partner for its customers, by considering the specificities of the respective markets in which it operates: ■ in Japan, AXA has further enhanced its Health off ering through the launch of a new cancer therapy product which not only covers customer needs of lump sum benefit for cancer diagnosis/hospitalization, but also provides access to a wide range of services including hotline, second opinion, as well as appearance and work support. On the protection side, AXA has widened its protection unit-linked off er by launching a long-term care product to support customers with nursing care needs; ■ in Hong Kong, AXA has launched new Health solutions certified under the Voluntary Health Insurance Scheme (“VHIS”), as well as deferred annuity product, both supported by government tax deduction incentives. Other significant product initiatives included the rejuvenation of a flagship protection with savings products; ■ in Asia High Potentials: • in the Philippines, AXA launched a simple and aff ordable family critical illness plan, as well as a value-added service that provides customers with free access to expert medical advice for cancer and cardiovascular diseases. AXA also enhanced its protection with savings off ers. An innovative
Banks to send a strong accommodative signal by both loosening their monetary policies and cutting interest rates. Interest rates quickly spiralled downwards to new historically low levels in the summer, with 10-year Government yields turning negative in several large countries. The combined eff ect of accommodative
growth in the first quarter of 2019 (+0.6%), benefiting mostly from government support, but gains reversed in the second part of the year as the economy took a toll from both the increase of the consumption tax and the damages from typhoon Hagibis, bringing annual GDP growth to 0.5%. In China, growth finally stabilized following a period of deceleration. Recent activity was supported by both monetary and fiscal measures but remained vulnerable to a slowdown in manufacturing activity and trade tensions. Asian stocks rose sharply in the first semester, recovering from the strong decline of the last quarter of 2018, and rose further throughout the rest of the year. As observed in other financial markets around the world, monetary policies were overall eased across Asian emerging markets.
France 2 13.2 3 8.8 FFA as of December 31, 2019.
Japan n/a n/a 13 2.9 Disclosed financial reports (excluding Kampo Life) for the
On June 20, 2019, AXA announced that Étienne Bouas-Laurent, previously CEO of AXA Hong Kong, would become D eputy C hief
Gérald Harlin remains Group Deputy CEO following the transition of his Group CFO responsibilities to Étienne Bouas-Laurent at year-end 2019.
Markets and a member of the AXA Group Management Committee, and replaces Guillaume Borie who was appointed Deputy CEO
The completion of the transaction follows the fulfilment of customary closing conditions, including the receipt of regulatory approvals.
On July 17, 2019, AXA announced the expansion of its Payerto -Partner strategy in emerging markets. AXA is creating a digital and physical health care ecosystem by launching its own medical centers, linked directly to its health insurance services.
These centers will provide access to advanced diagnostics, laboratory equipment and medical consultations in key specialties, thereby bringing to its customers an aff ordable, high-quality and seamless patient experience, in markets where access to economical and quality care still remains a challenge for many individuals and families.
The first AXA-C40 resilient cities report was unveiled today, with recommendations and use cases to drive multi-stakeholder cooperation and mitigate the eff ects of natural catastrophes on urban networks.
Furthermore, the United States Underlying earnings contribution in 2019 included operations up to November 13, 2019, and was fully reported in Income from aff iliates and associates. As a result,
+4.0 points), and (iii) the inclusion of XL Group contribution from January 1, 2018 to September 30, 2018 (€+9.9 billion or -10.3 points).
on a comparable basis mainly in Singapore (€-15 million) from strong market competition.
Health and Protection with Unit-Linked in Japan, as well as an assumption update in Protection combined with a favorable business mix in France, partly off set by lower interest rates mainly in France and Asia.
(a) Reclassification of German and Japanese activities of AXA Life Europe (previously reported as part of Germany and Japan respectively) into AXA Life Europe (included in Transversal & Central Holdings).
(+4%) versus 2018 on a reported basis. On a constant exchange rate basis, underlying earnings increased by €123 million (+2%), broken down as follows: ■ €+720 million at AXA XL as 2018 underlying earnings (€233 million) corresponding only to the fourth quarter of 2018 activity compared to a contribution of €507 million for 12 months of operations in 2019; ■ €-703 million at Equitable Holdings, Inc. mainly corresponding to the progressive dilution of AXA’s ownership following the subsequent Secondary Off erings; ■ €+106 million increase (+2%) to €5,500 million for the remainder of the Group.
(€+67 million) mainly from Property & Casualty (€+90 million) due to higher favorable prior year reserve developments and lower attritional losses mostly from lower frequency in Personal lines;
• the change in the fair value of foreign exchange derivatives not eligible for hedge accounting under IAS 39 net of foreign exchange rate movements on assets and liabilities denominated in foreign currencies, down €201 million to €-206 million, driven by the appreciation of main currencies against Euro; ■ higher integration and restructuring costs (€-103 million)
(1) Prudential information related to solvency, including the Solvency II ratio and the Eligible Own Funds (“EOF”) disclosed in the note and the table below, will be detailed in the Group’s 2019 SFCR that is expected to be published at a later stage and for which Group’s auditors will issue a report.
Underlying earnings increased by €36 million (+5%) to €798 million. On a constant exchange rate basis, underlying earnings increased by €6 million (+1%).
and Pure Protection (€+29 million) following the launch of a new disability product, partly off set by Protection with Savings
NBV Margin increased by 2.5 points to 55.5% mainly reflecting a positive impact in Health from the update of financial assumptions.
Adjusted earnings decreased by €129 million (-18%) to €574 million driven by lower underlying earnings and lower net realized capital gains mainly from equities.
+11%) mainly in Liability and Property, as well as in Personal lines (€+33 million or +3%) mainly from higher volumes in Motor; ■ Life & Savings (€+70 million or +10%) to €750 million, mainly driven by strong sales in Unit-Linked (€+60 million or +21%)
Commercial lines (€+22 million or +4%) mainly in Property and Liability; ■ Health (€+15 million or +20%) to €92 million, as a result of a strong commercial focus and the good performance of a new product launched at AXA MPS in 2018.
(€+14 million or +11%) from the sales of hybrid and Protected
to €761 million. On a constant exchange rate basis, underlying earnings before tax increased by €17 million (+2%): ■ Health (€+58 million or +15%) to €484 million. Excluding the impact of a refinement of investment and expense margins allocation between Health and Life & Savings, Health underlying earnings before tax increased by €11 million (+3%) mainly due to an improved morbidity experience in Medical Whole Life products (€+7 million) and higher volumes; ■ Life & Savings (€-29 million or -10%) to €290 million. Excluding the impact of a refinement of investment and expense margins allocation between Health and Life & Savings, Life & Savings underlying earnings before tax increased by €17 million (+6%)
Underlying earnings increased by €40 million (+8%) to €540 million. On a constant exchange rate basis, underlying earnings increased by €6 million (+1%).
On a constant exchange rate basis, adjusted earnings increased by €1 million (0%) mainly driven by higher underlying earnings.
Scope: (i) The Property & Casualty subsidiary in Thailand and the non-bancassurance Life & Savings subsidiary in Indonesia are fully consolidated; (ii) the Property & Casualty subsidiary in China
Gross revenues increased by €10 million (+7%) to €163 million. On a comparable basis, gross revenues decreased by €2 million (-1%): ■ Property & Casualty (€+3 million or +5%) to €67 million, in
(+10%): ■ Property & Casualty Insurance (€+1,337 million or +18%) to €9,123 million, mainly driven by both volume growth and tariff increases across most lines of business, notably North America
Net income reported was €173 million reflecting adjusted earnings (€585 million), integration and restructuring costs (€307 million) linked to the integration within AXA, exceptional operations (€-51 million) due to the repurchase of financing debt, and amortization of intangible assets (€-39 million) related to distribution networks.
to €577 million. On a constant exchange rate basis, underlying earnings before tax increased by €140 million (+32%): ■ Property & Casualty (€+105 million or +34%) to €410 million, mainly driven by (i) Morocco (€+40 million) from higher prior year reserve developments, (ii) Brazil (€+23 million) from a more favorable claims experience, (iii) Mexico (€+22 million) from an improved net technical margin mainly in Motor and a higher net investment income, (iv) Poland (€+17 million) from higher prior year reserve developments mainly in Motor and a higher net investment income, and (v) Colombia (€+7 million) from an improved net technical margin mainly in Workers’ Compensation.
(a) Net of intercompany eliminations. Gross Revenues amounted to €1,547 million before intercompany eliminations as of December 31, 2019.
(-2%) mainly driven by lower performance fees including realized carried interests (€-24 million) and distribution fees (€-7 million), partly off set by higher transaction fees (€+7 million).
(ii) proceeds from debt instruments issuance (mainly subordinated debt) and internal borrowings, (iii) the issuance of ordinary shares and (iv) proceeds from the sale of non-core businesses and assets, including equity participations.
Each of the major operating subsidiaries of the Group is responsible for managing its own liquidity position, in coordination with the
Tier 2 and Tier 3 items must not exceed 50% of the SCR.
Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approvals, and is expected during the fourth quarter of 2020.
AXA’s Solvency II position and free cash generation should remain strong and resilient to external shocks due to robust underwriting and reinsurance policies, a high quality asset portfolio and disciplined capital management.
The members of the Board of Directors are appointed for a four year term by the Shareholders’ Meeting. On December 31, 2019, the Board of Directors comprised fift een members – eight women and seven men. An overview of the Board of Directors and the profile, experience and expertise of each director is provided on pages 98 to 107 of this Annual Report.
GE China – 8F 1 Building 1 Huatuo Road – Zhangjiang
Citroen as well as Chairwoman of the Fonds Stratégique d’Investissement Investment Committee from 2008 to 2013.
France-KLM, Artémis, Bouygues, Fonds Stratégique d’Investissements, Fnac Darty, Peugeot S.A, Ponant,
MENAT, Africa, LATAM, and RUCIS. She is also a Senior Vice
Chief Finance & Risk Off icer of APG Group (the Netherlands).
Management. Mr. Ramon de Oliveira was also a member of the firm’s Management Committee since its inception in 1995. Upon the merger with Chase Manhattan Bank in 2001, Mr. Ramon de Oliveira was the only executive from
5 Not have been an auditor of the Company within the previous five years ✔ ✔ ✔ ✔ ✔
Security Operations Center (SOC), during which several presentations on the Group’s IT security were delivered.
The Committee focused, in particular, on the following issues: ■ the 2018 financial statements; ■ the 2018 Annual Report (Universal Registration Document); ■ the 2019 half-year financial statements; ■ internal control and risk management (reports on the financial and operational risks, compliance, litigation, Group IT security – cyber risk, on the Group’s Internal Financial Control (IFC) function, and the Group’s Standards…); ■ risk management, risk appetite and reporting framework; ■ compliance with the Solvency II regulations and the review of the
The principal missions of the Committee are: ■ to issue proposals to the Board of Directors on: – the recommendations to the Shareholders’ Meeting for the appointment and the re-appointment of the members of the Board of Directors,
Corporate Responsibility issues: ■ the review of the Company’s Corporate Responsibility strategy and the Group’s environmental policy; and
Mrs. Bettina Cramm, who is also an employee representative on AXA’s Board of Directors, is currently an employee of AXA
Employees of non-consolidated companies or companies accounted for using the equity method are not included in the above table.
Remuneration Policy is designed to support the Group’s longterm business strategy and to align the interests of its employees with those of other stakeholders by (i) establishing a clear link between performance and remuneration over the short, medium and long term, (ii) ensuring that the Group can off er competitive compensation arrangements across the multiple markets in which it operates while avoiding potential conflicts of interest that may lead to undue risk taking for short-term gain, and (iii) ensuring compliance with Solvency II regulations and any other applicable regulatory requirements.
executives between the median and the third quartile (or, in certain cases, beyond the third quartile) of the market reference.
(insurance companies and banks) which are principally based in the main European markets (France, Germany, Italy, the
■ Culture: Evolve culture, transform leadership and develop his own leadership
Individual performance is assessed both on (i) the achievement of results for each predetermined individual objective and
These amounts reflect the evolution of the AXA share price and were set at 93% of the deferred variable compensation granted in respect of the 2017 fiscal year and at 101% in respect of the 2018 fiscal year.
(b) This amount includes the payment of the Chief Executive Off icer’s 2019 variable compensation which will be withheld until the approval of the Shareholders’ Meeting on April 30, 2020.
+ UE over the 3 years immediately prior to the grant date the 2020 grant onwards)
(except for the Chief Executive Off icer) will be acquired aft er a 3-year acquisition period, corresponding to the performance measurement period, and 50% of the shares acquired will be subject to a further 2-year holding period. The Performance
Previous plans are still valid until their expiration (maximum duration period of 10 years). They were granted at market value, with no discount, and become exercisable by tranches, generally in thirds between 3 and 5 years following the grant date.
or purchased, from which to be subscribed corporate off icers: The first 10 employees
Expiry date of options 18/08/2020 18/08/2020 13/10/2020 13/10/2020 22/12/2020 18/03/2021 18/03/2021 04/04/2021 16/03/2022 13/06/2022
Solvency II ratio calculated during the acquisition period must be greater than or equal to 170%. However, if the average ratio is 150%, only half of the shares initially granted will be acquired.
Committee to benefit from a technical expertise and independent insights in comparing AXA’s compensation practices with general market practice.
In order to determine the Chief Executive Off icer’s target annual variable compensation, the Board of Directors sought to establish a balanced structure between the fixed part and the variable part of his cash compensation.
Off icer’s compensation pursuant to Article L.225-47 of the French Commercial Code and in accordance with Articles L.225-37-2 and
The Board of Directors, upon recommendation of its Compensation & Governance Committee, and in accordance with the recommendations set forth in the Afep-Medef Code, has considered that the most appropriate compensation structure for the Chairman of the Board of
This procedure provides for the Group Legal Department to be informed prior to the conclusion, amendment, renewal, extension or termination of any agreement falling within the scope of
(Shareholders’ Meeting for the approval of the financial statements for the year ended December 31, 2019)
We hereby inform you that we have not been advised of any agreements authorized and concluded during the year to be submitted for approval at the Shareholders’ Meeting in accordance with Article L.225-38 of the French Commercial Code.
Afep-Medef recommendations, of his employment contract from September 1, 2016, the date on which he became Chief Executive
Risk control and risk mitigation 203 4.7 OPERATIONAL RISK 206 4.8 OTHER MATERIAL RISKS 207
Conversely, in periods of increasing interest rates, the estimated fair value of certain of our fixed-income investments may decrease, which could negatively impact our Solvency II ratio and net income; surrenders of life insurance policies and fixed annuity contracts may accelerate, as policyholders seek higher returns, which may cause us to accelerate amortization of deferred policy acquisition costs or to liquidate fixed maturity investments in order to obtain liquidity to satisfy such obligations, which may result in realized investment losses; our fee income may decrease due to a decline in the value of our asset managers’ fixed income assets under management, which could result in lower management fees and have an adverse impact on Asset Management net inflows. In addition, we may be required, as an issuer of securities, to pay higher interest rates on debt securities, debt and bank facilities, which may increase our interest expenses.
Financial Statements” of this Annual Report, and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the investment assets and the prospects for near-term recovery. For certain asset classes, particularly debt instruments, management’s evaluation involves a variety of assumptions and estimates about the operations of the issuer of the instrument and its future earnings potential. Management updates its evaluations regularly and reflects changes in allowances and impairments as such evaluations are revised. There can be no assurance, however, that management has accurately assessed the level of impairments taken and allowances reflected in our financial statements, and the need for and timing of any additional impairments and/or allowances may have a material adverse eff ect on our results of operations and financial position.
Receivables from reinsurers: rating processes and factors” of this Annual Report.
(increased litigation, expanded theories of liability, higher jury awards and settlement expectations), as well as mass tort claims related to exposure to harmful products or substances (e.g., asbestos, opioids, talc, glyphosate, lead paint), on our estimation of claims reserves and ultimate costs for claims is diff icult to assess and could be material. Our estimation may also be more diff icult during times of adverse economic conditions due to unexpected changes in behavior of claimants and policyholders, including an increase in fraudulent reporting of exposures and/or losses, reduced maintenance of insured properties or increased frequency of small claims.
Our competitors include mutual fund companies, asset management firms, private equity firms, hedge funds, commercial and investment banks and other insurance or reinsurance companies, many of which are regulated diff erently from us and off er alternative products or more competitive pricing than we do.
We may have contingent liabilities from discontinued, divested and run-off businesses and may incur other off -balance sheet liabilities that may result in charges to our income statement
NAIC approved banks, our letter of credit facility capacity could be significantly diminished, especially in situations of adverse capital and credit market conditions where the cost of replacement facilities may be significantly increased or prohibitive. See the paragraph above “Adverse capital and credit market conditions may significantly aff ect our ability to meet liquidity needs, our access to capital and increase our cost of capital”.
Jobs Act of 2017 (the “US Tax Act”) to have an overall net positive economic impact on the Group, additional regulatory guidance under the US Tax Act is expected to be issued and significant guidance under the US Tax Act remains in proposed form. We continue to evaluate the implementation of the US Tax Act and assess the magnitude of the various impacts it may have.
Executive Management oversees the implementation of the internal control system and the existence and appropriateness of internal control, as well as Risk Management monitoring systems within the Group.
GRM is headed by the Group Chief Risk Off icer, who reports to the Chief Risk and Investment Off icer, with an administrative reporting line to the Group Chief Executive Off icer.
Group Solvency II Internal Control Policy, first approved by the Audit Committee and the Board of Directors of AXA SA in
Executive Off icer and to the Group Chief Risk Off icer. They are independent from operations and Internal Audit departments.
related to Solvency II; ■ liaising with the Statutory Auditors and contributing to Audit
At entity level, AXA’s subsidiaries are responsible for recording and controlling accounting and financial data that comply with the AXA Group Accounting Manual and reflect consolidation rules under IFRS accounting standards. In this respect, the Chief
Group. Adherence to this policy is expected to be promoted and monitored by all entity heads of Risk Management Department
The Solvency II Committee is supported by risk technical working groups reviewing changes proposed to the Internal Model and presenting conclusions of these diligences to the Solvency II
Departments in charge of the model, through controls and validation activities using validation tools such as sensitivity tests, back testing, scenario testing, and stability analysis and any other relevant activity.
ALM studies are performed by the Investment & ALM department with the support of internal asset managers when appropriate and a second opinion is provided by the Risk Management
Products involving hedging programs based on derivative instruments are designed with the support of dedicated teams at AXA Investment Managers and AXA SA. In a similar way, this set-up ensures that all entities benefit from technical expertise, legal protection and good execution of such transactions within the following governance framework for derivatives.
■ in order to benefit from a more asset-specific and/or geographical expertise, the Group may also decide to invest through external asset managers. In such event, thorough due diligence analyses are performed by the Investment and the
The sensitivities of the EOF to changes in major economic assumptions were calculated as follows for the 2019 values: ■ upward shift of 50 basis points in reference rates simulates a sudden shock to the initial conditions. This means changes to: 1) the current market values of fixed-interest assets, with related possible changes to projected capital gains/losses and/
Government related bonds fair values (€241 billion) by country was as follows: Spain
The AXA Group, following the acquisition of XL Group, is also exposed to credit risk through various insurance and assumed reinsurance businesses that either: ■ embed a credit component, such as Trade Credit Insurance,
■ are sensitive to credit risk, i.e. there is a strong correlation between a credit event and claims under the (re)insurance cover, such as Directors & Off icers (D&O) and Errors & Omissions (E&O).
The Group Financial Risk Committee is regularly informed of the main credit risks including those related to (re)insurance businesses.
(boni-mali) back-tests has been performed, the regulatory and economic context references are taken into account and material deviations are explained; ■ the operational losses relating to the reserving process have been adequately quantified; and
Property & Casualty reserves cover Specialty insurance business; ■ 11% at the end of 2019 (12% at the end of 2018) of the Group’s
Capital in excess of nominal value - - - (227) -
Note: Amounts are presented net of impacts of shadow accounting and its eff ects on policyholder participation, deferred acquisition costs, and value of business in force.
Capital in excess of nominal value - - - 951 -
Net change in liabilities arising from insurance and investment contracts (c) 22,226 (7,235)
(i) Includes net cash impact of interest margin relating to hedging derivatives on financing debt.
(k) As of December 31, 2019, amounts included the assets relating to AXA Bank Belgium, AXA Life Europe and the remaining Group Life portfolio in Switzerland, for which disposal processes were not finalized at year-end. Held for sale classification previously applied for the AXA Wealth Management (HK) Limited portfolio has been unwound.
Amendments to IAS 39, IFRS 9 and IFRS 7 – Temporary exceptions from applying specific hedge accounting requirements, related to Phase 1 of the IBOR reform were issued in September 2019 and endorsed by the European Union on January 15, 2020. They should be applied for annual periods starting from January 1, 2020, but earlier application as of December 31, 2019 is permitted.
reform should not generally cause hedge accounting to terminate. However, any hedge ineff ectiveness should continue to be recorded in the income statement under both IAS 39 and
IFRS 7 as of December 31, 2019, for hedging relationships directly impacted by the IBOR reform qualified as fair value hedges and cash flow hedges to ensure the prospective assessments and highly probable requirements are still met given the uncertainty arising from the transition to the new reformed interest rates. The early adoption of the amendments has no material impact on the
related to future services and the CSM of the group at that date; and
IASB proposal. The amendments permitting the temporary exemption are effective for annual periods beginning on or after January 1, 2018. Disclosures related to financial assets required during the deferral period are included in the Group’s consolidated financial statements.
* With earlier application being permitted (subject to conditions in some cases) but not elected by the Group.
These projections include assumptions regarding claims, expenses and financial revenues, or they can be estimated on the basis of the New Business Value. In line with accounting practices in force before the adoption of IFRS, which may continue to be applied under IFRS 4, future premiums relating to acquired business may be recognized in the “Value of acquired business in force” item.
If, aft er the period of twelve months, a deferred tax asset, initially considered as not recoverable, finally meets the recognition criteria, the corresponding tax benefit is recorded in the consolidated statement of income without a corresponding adjustment in goodwill.
The results and financial position of all Group entities that have a functional currency (i.e. the currency of the primary economic environment in which the entity operates) diff erent from the
Internal mark to model valuations are therefore normal market practices for certain assets and liabilities inherently scarcely traded or exceptional processes implemented due to specific market conditions.
contribution (present value of projected future distributable profits generated from business written in a year) or on a projection of each of the expected annual future earnings when multiples are not appropriate. The determination of the future earnings arising from the new business relies upon the use of operational and economic assumptions, both of which are compliant with the requirements of the diff erent regulatory frameworks.
For debt instruments classified as “held to maturity” or “available for sale”, an impairment based respectively on future cash flows discounted using the initial eff ective interest rate or on fair value is recorded through the income statement if future cash flows may not be fully recoverable due to a credit event relating to the instrument issuer. A downgrade of an entity’s credit rating is not, of itself, evidence of impairment. If the credit risk is eliminated or improves, the impairment may be reversed. The amount of the reversal is also recognized in the income statement.
Gross written premiums correspond to the amount of premiums written by insurance and reinsurance companies on business incepted in the year with respect to both insurance contracts and investment contracts with discretionary participating features, net of cancellations and gross of reinsurance ceded. For reinsurance, premiums are recorded on the basis of declarations made by the ceding company, and may include estimates of gross written premiums. Any subsequent diff erences arising on such estimates are recorded in the period they are determined.
Retroactive loss portfolio transfer contracts are evaluated to determine whether they meet the established criteria for reinsurance accounting, and, if so, at inception, written premiums are fully earned and corresponding losses and loss expense recognized. The contracts can cause significant variances in gross premiums written, net premiums written, net premiums earned, and net incurred losses in the years in which they are written.
(including any embedded surrender option, i.e. without taking into account the “insurance” component); ■ the Group accounting methods do not otherwise require the recognition of all obligations and rights arising from the
Information on these unconsolidated investment funds are provided in diff erent sections of this Annual Report: ■ Section 1.1 “Key figures”: AXA’s total assets under management including assets managed on behalf of third parties; ■ Section 2.3 “Activity report”; ■ Section 5.6 “Notes to the consolidated financial statements”: • Note 9 “Investments” with the breakdown of investments and detail on non-consolidated investment funds in
Amortization of the value of purchased business in force - (60) (24) (557) (0) (3) - - (644) (644)
December 31, 2019, and starting that date the entity is fully consolidated in AXA Group’s financial statements. The impact of a full consolidation of AXA Tianping activities between
(4) Total consideration transferred amounted to €1,167 million, including the fair value of the initial participation for €541 million and the costs related to a Net Invesment Hedge costs for €36 million.
AXA’s ownership in EQH decreased from 60.1% (3) (4) to 48.3% (4 ).
(2) EUR 1 = USD 1.1293 as of June 6, 2019 (Source: Bloomberg). Greenshoe: EUR 1 = USD 1.1219 as of July 5, 2019 (Source: Bloomberg).
AXA Switzerland completed the transformation and most of the related assets and liabilities have been transferred to the occupational Foundations during the first half of 2019.
Debt instruments (at cost) that are not quoted in an active market (d) 11,271 10,901 1.85%
Breakdown of the carrying value and fair value of investment in real estate properties at amortized cost, including the impact of all derivatives, except derivatives related to macro-hedges which are shown separately, is as follows: (in Euro million)
Financial investments and loans designated as at fair value through profit or
Financial assets included in these investments are valued at fair value through profit or loss under the fair value option.
(b) From December 31, 2019, AXA Tianping is fully consolidated within AXA Group (see Note 5.3.1).
It was partly off set by: ■ AXA SA (€+1,373 million) mainly from the proceeds coming from the disposal of Equitable Holdings, Inc. shares and dividends received, partly offset by the dividends paid to the shareholders, and the repayment of loans made by the operating entities; ■ Belgium (€+264 million) mainly due to the repayment of an intra-group loan.
Equitable Holdings, Inc.; ■ subordinated debt issued (€+5,685 million), the repayment of financing debt (€-1,681 million) and undated subordinated debt in 2018 (€-665 million); ■ dividends payments of €-3,414 million.
(A) of Note 14.1.1, were split by as follows: (in Euro million)
Note: Liabilities relating to unearned revenues and fees (see Note 7.3), to policyholder participation (see Note 14.9), and derivative instruments (see Note 20.4) are excluded from the table above. Reinsurers’ share in insurance contracts liabilities relating to policyholders’ participation (€18 million in 2019 and €23 million in 2018), as well as derivative instruments (none in 2019 and 2018) are excluded from the table above.
Sub-total liabilities arising from investment contract (D = A+B+C) 52,547 53,593
Investment contracts with no Discretionary Participation Features measured according to existing accounting policies 67 4,837
(deficiency) from the initial gross reserves in excess of re-estimated gross reserves: (d)
Liabilities arising from insurance of which Life & Savings liabilities relating to contracts including a surrender option with some surrender benefit before maturity 13,727 48,243 295,810 357,780 14,481 57,692 354,384 426,557 14.10.2 Insurance and investment contract liabilities – discount rates
December 31, 2019) are not discounted, with the exception of disability annuities and workers’ compensation liabilities that are deemed structured settlements and where the discount rate is revised regularly. Undiscounted reserves are not sensitive to interest rate risks in the financial statements.
GMDB and GMIB liabilities is based on models which involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, policyholder behavior assumptions and GMIB election rates.
(a) Hedging instruments in accordance with IAS 39 and economic hedge derivatives not eligible for hedge accounting.
Data used when calculating the fair value of financing debt are period-end market data that reflect (i) interest rates by currency,
The income tax charge was split as follows: (in Euro million)
Impact of adjustments, decrease in value and other items (76) (95)
The rollforward of current tax position (excluding Uncertain Tax Positions) is broken down as follows: (in Euro million)
This Note covers all types of derivatives including derivative instruments held by consolidated investment funds in the
Liability Management (ALM) strategy in insurance companies, as well as holdings and banks. Notional amount of such hedging strategies amounted to €430.6 billion as of December 31, 2019
The market turmoil that started in 2008 highlighted increasing importance of Risk Management and led to additional hedging activity over the 2008-2012 period. Since then, AXA has continued the use of derivatives to hedge risks, increasing or decreasing derivative positions in accordance with AXA’s governance framework for derivatives.
Property & Casualty products; they also lead to a reduction of the capital requirements for those business activities under
As of December 31, 2019, the notional amount of currency derivative amounted to €157.6 billion versus €166.9 billion at the end of 2018. Their market value was €-1,820 million versus €-2,295 million at the end of 2018. AXA mainly uses (i) currency future and forward contracts (55% of total notional amount of currency derivative instruments), (ii) currency option contracts
(ii) Japan using future and forward foreign currency contracts to hedge exchange-rate risk arising from its investments in fixedmaturity debt instruments denominated in non JPY currencies with a total notional amount of €17.2 billion at the end of 2019 versus €13.2 billion at the end of 2018.
The Group mitigates counterparty credit risk of derivative instruments by contractually requiring collateral for most derivative contracts. As of December 31, 2019, the adjustment to the fair value of derivatives for non-performance risk was not material.
(c) Includes equity instruments held by consolidated investment funds, designated as at fair value through profit or loss.
Fair value of plan assets at the end of the year (B) 11,465 12,139 6 5 11,470 12,145
■ an increase in inflation rate or an increase in life expectancy will result in higher plan liabilities thus, an increase in future employer contributions in countries where there are minimum funding requirements.
For the leveraged plan, the cost also includes the opportunity gain implicitly provided by AXA by enabling its employees to benefit from an institutional price for derivatives as opposed to a retail price.
AXA’s insurance subsidiaries and joint ventures are limited to net income for the year and retained earnings calculated in accordance with the statutory accounting policies used by the subsidiaries to prepare their local financial statements. Further restrictions may be imposed by the local insurance regulators in countries where AXA operates. In some cases, amounts available for distribution are also subject to regulatory capital adequacy tests or the approval of an independent actuary or subject to individual provisions contained in a company’s by laws.
combination transactions, the establishment or dissolution of joint ventures or other partnerships, public exchange or tender offers, buy-outs of minority interests or similar types of transactions (“M&A Transactions”). In connection with M&A
(See Notes 1.3.2, 1.7.1 and 5 to the consolidated financial statements)
An impairment test of goodwill, as stated in Note 1.7.1 to the consolidated financial statements, is performed at least once a year to ensure that the net carrying amount does not exceed the recoverable amount and there is no impairment. The recoverable amount corresponds to the higher of fair value less costs to sell and value in use.
We assessed the adequacy of the disclosures in the financial statements.
The traditional plan allowed employees to subscribe through a personal investment to AXA shares (either through Mutual funds (FCPE) or through direct share ownership, depending on countries) with a 20% discount. The shares are held within the Group Company Savings Plans and are restricted from sale
2017 Share capital reduction by cancellation of shares (4,247,422) (93,006,551) 2,420,901,708 5,543,864,911
Maximum nominal amount of the capital increase (in Euro) Term Expiry date
Performance shares (actions de performance ) (d) – 1% (e) 38 months June 24, 2022
SFCR for the year ended December 31, 2019 is expected to be published on May 14, 2020, on the same website.
Framework”), the ACPR has broad resolution powers with respect to insurance groups, insurance holding companies, such as
January 15, 2020 and EIOPA is expected to issue its opinion in
European Union. As (re)insurance companies need an EU license for providing insurance services in the European Union, the GDPR
January 3, 2022, and Libor, as it is likely that contributing banks will cease providing submissions for the calculation of Libor aft er 2021.
Risk Management eff orts, investment strategies and product design, amongst others.
and the PRIIPs Regulation entered into force at the beginning of
anti-corruption agency (Agence française anticorruption), which was given strengthened supervisory and enforcement powers.
AXA Tianping, our new P&C insurance entity in the Chinese market 398
(3) No information, documents or items contained in AXA’s 2019 Integrated Report and the 2019 Group Human Capital Report, or available on the Company’s website in connection therewith, is incorporated by reference in this Annual Report.
The AXA-WWF report and the creation of the Climate and Biodiversity Impact Fund
For many years now, AXA has been pursuing a proactive diversity and inclusion policy (described in Section 7.2 “Social Information”): ending discrimination against women and girls (SDG 5.1), guaranteeing the equal participation of women in management positions (SDG 5.5). The program “Women in insurance” developed in Section 7.4 “Inclusive Insurance” constitutes the “business” component of the program, providing women with adapted financial protection solutions.
Operational Risk Profile (for more information on operational risks, please refer to Section 4.7 “Operational risk” of this Annual
as well as perimeter notes below our environmental data table for further information. Environmental data and more generally policies regarding our investments and insurance business are handled by various teams including Group Investment, Group
approach: an environment that sustains diff erent forms of flexible work arrangements (teleworking, part-time work, hot desking, desk sharing, flexible hours, compressed work week). In 2019, 32% of AXA salaried employees under open-ended contracts do teleworking (36% of non-sales and 8% of sales salaried forces).
and in three major dimensions: ■ “Physical security”: protection of employees from intentional threats (crime, terrorism, political and social instability); ■ “Health & safety”: protection of personnel from hazard and accidents (fire, pandemics, natural disasters, etc.); ■ “Crisis management”: when an incident requires extraordinary processes to be managed.
(ii) raise awareness on disability and (iii) maintain the momentum on the inclusion of LGBT+ community.
Headcount (number of persons) as of December 31 2019 Evolution 2018 2017
■ Proportion of fixed pay (related to wages) 81.2 % 77.2 % 76.2 %
In addition, several important steps were taken in 2019: ■ in May 2019, the AXA Group published recommendations for stronger action on biodiversity risks (
Responsible Investment policy (published on the Group’s website: www.axa.com/en/about-us/responsible-investment), is based on five main pillars: ■ developing and integrating ESG, climate and biodiversityrelated metrics into investment processes and decisionmaking, using KPIs and qualitative research across most of our assets; ■ excluding sectors or companies that face acute social, human rights, ethical or environmental challenges. These sector restrictions (which apply both to investments and insurance)
“warming potential” described above, which is a forward-looking and dynamic concept, is a relevant answer to this objective insofar as it is similar to a “projected carbon footprint”.
AXA notably encourages this transition through active shareholder engagement and client communication. In particular, as a shareholder, AXA engages, alone or within specific investor coalitions such as Climate Action 100+, with the companies concerned (whether client or portfolio companies), in order to encourage them to develop and disclose an exit or closure plan.
Green or climate bonds are a recent but successful instrument designed to support projects with climate or environmental added value. However, it is also important to support carbon intensive players that are actively decarbonizing but have not yet reached the “greenness” that makes these eff orts eligible to green bonds. This is why AXA IM developed the concept of
transport shift ing from heavy fuel to gas, and industrial process improvements. The details of this project are available online and in our 2020 TCFD report. AXA IM is working with peers and policymakers to define acceptable “Transition Bonds principles”.
Group has divested from. Therefore, AXA also restricts insurance coverage for coal and oil sands-related assets (as well as in the other industries mentioned in the previous section), and arctic drilling. Since 2017, the underwriting restrictions ban Property and Construction covers for coal mines, coal plants, oil sands extraction sites or associated pipeline. In November 2019,
(insurers, pension funds etc.), convened under the auspices of the UN Principles for Responsible Investments, and launched during the 09/2019 UN Climate Summit. Its members collectively commit to transition their investment portfolios to net-zero greenhouse gas emissions by 2050, with united investor action to align portfolios with a 1.5°C scenario. The
footprint, managing our use of natural resources including water and energy, and reducing our waste. Thanks to a network of around 300 dedicated environmental managers in local entities, AXA monitors evolution on its reduction targets, which helps local entities evaluate their own action plans and targets.
AXA’s environmental reporting is part of a broader management system that includes internal controls, processes and progress in deploying objectives. The data collected and reported through the reporting process is validated locally by the entity CFOs. In addition, the firm PricewaterhouseCoopers conducts audits at the Group and entity levels to ensure data quality and measure the eff ectiveness of local environmental management systems.
emissions related to gas consumption by 6% compared to 2018, is explained by the fact that some entities in Germany released part of occupied buildings. The increase of 21% of CO
Paper recycled and/or garanteeing sustainable management: off ice % 58 58 58
Unión Hidalgo and use it as an example to continue insuring
(total of 150,000-200,000 insured km). This project which was launched operationally in November 2019 also fosters employee engagement by identifying volunteers among AXA retired employees to supervise the young people among the Partners companies through AXA Hearts in Action.
Research Fund) were dedicated to projects on these themes: Climate and the Environment
A wide variety of activities were carried out by AXA employees, both during and outside of CR Week: for example, beach cleanups, tree planting, support for disadvantaged young people or women in diff iculty, solidarity races, and solidarity collections of toys or used mobile phones.
This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of
RESPONSIBILITY OF THE STATUTORY AUDITOR, APPOINTED AS AN INDEPENDENT THIRD PARTY
QUALITATIVE INFORMATION (ACTIONS AND RESULTS): ■ environment: information relative to environment and climate change; ■ human resources: information relative to employee relations and work conditions, learning environment and skills management, diversity and inclusion; ■ human rights: information relative to women in insurance, emerging customers, parametric insurance, business behaviour, responsible data use, responsible procurement; ■ social: information relative to stakeholder dialogue, corporate philanthropy and engagement; ■ corruption and tax evasion: information relative to corruption and tax policy.
(i) adopted a vigilance plan (the “vigilance plan”) that sets out safeguards established and implemented by it to identify and prevent serious violations of human rights and environmental abuses and (ii) submitted a report on the application of this vigilance plan during the year 2019 which is included in this section.
(1) Law No. 2017-399 of March 27, 2017 relating to the duty of vigilance of parent companies and instructing companies (“devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre”) and Article L.225-102-4 of the French Commercial Code.
As an insurer, AXA strives to incorporate Environmental, Social and Governance (ESG) criteria (including those relating to human rights) into its insurance business processes, in line with AXA’s commitment to the UN Principles for Sustainable Insurance.
– Investments” and 7.4 “Inclusive insurer – Business-related societal initiatives” of this Annual Report for further information on integration of ESG criteria in our products and services.
Following this assessment, where gaps were identified as follows, remedial action plans were implemented and include the following: ■ the addition of a corporate responsibility clause requiring relevant suppliers to be socially responsible and to comply with the standards referred to above that the Group committed to abide by (including the core standards of the International
undertook a review of the CR clause in order to ensure that it is consistent with the Group’s policy and the vigilance plan requirements. For further information on the CR clause, please refer to Section 7.5 “Business behaviour – Responsible p rocurement” of this Annual Report.
department, other relevant AXA departments, and representatives from each in-scope entity. The IFC program and the conclusion of management as to the eff ectiveness of AXA Group’s ICOFR are also reviewed by AXA’s Audit Committee.
Group’s ICOFR in accordance with the IFC framework as described above. Based on this evaluation, management concluded that
framework, as described in management’s annual evaluation of internal control over financial reporting on page 440 of this Annual
a) Capital – Ordinary shares (in Euro million) 5,557 5,554 5,554 5,553 5,536 b) Ordinary shares (numbers in million) 2,426 2,425 2,425 2,425 2,418 c) Bonds convertible into ordinary shares (numbers in million) 7 7 - - 2 – Income statement summary (in Euro million)
AXA BANK BELGIUM (ex AXA BANK EUROPE SA) 636,318 506,058 100.00% 915,000 25, Boulevard du Souverain – 1170 BRUXELLES – Belgium - - 313, Terrasses de l’Arche – 92727 Nanterre - France - - 313, Terrasses de l’Arche – 92727 Nanterre – France - - 313, Terrasses de l’Arche – 92727 Nanterre – France - - -
AXA GROUP OPERATIONS SAS (ex AXA SERVICES SAS) 38,893 118,101 99.92% 236,406 81, rue Mstislav Rostropovitch – 75017 Paris – France - - 5 Old Broad Street – LONDON EC2N 1AD – United Kingdom - - -
Meclisi Mebusan cad n° 15 – Salipazari - - 100, Esplanade du Général De Gaulle – Cœur Défense Tour B - - 51, avenue de la Gare - 1611 Luxembourg - - -
At the balance sheet date, the acquisition cost is compared to the fair value, and the lower of these two values is then recognized in the balance sheet.
(ii) the impact of the issuance by AXA of mandatory exchangeable bonds into shares of EQH (the “MEBs”) in May 2018, which were recorded in “shareholders’ equity - Minority interests” and
Operating net banking revenues are disclosed before intercompany eliminations and before realized capital gains/
losses or changes in fair value of “fair-value-P&L” assets and hedging derivatives.
This document is printed in compliance with ISO 14001.2004 for an environment management system.