Certain disclosures about market risks and related matters 3.2 Risk factors 160 3.3 Quantitative and qualitative disclosures about risk factors 177 3.4 Investment community and organization 194
AXA’s Property & Casualty segment offers a broad range of products including Motor, Household, property and general liability insurance for both Personal and Commercial customers, targeting mainly small-to medium-sized companies. In certain countries, Health products are classifi ed as Property & Casualty products (1).
Operations in this segment are principally focused on large risks, reinsurance and assistance.
The US market experienced moderate growth, with demand still weakened by higher prices.
Switzerland 1 13.0 1 13.0 SIA (Swiss Insurance Association) as of December 31, 2015 and December 31, 2014; Market share based on statutory premiums and market estimations by the SIA.
German Bund yield by 9 bps to 0.63%, the French 10-year government bond yield by 16 bps to 0.99% and the 10-year
Euro swaptions) decreased from 38.4% as of December 31, 2014 to 33.8% as of December 31, 2015.
Africa Re’s current shareholding comprises 41 member states, the ADB and more than 100 African insurance and reinsurance companies, together holding a 75% stake in the company, as well as other development fi nance institutions and strategic partners. Africa Re is a growing and profi table company, with gross written premiums of €539 million and net income of €89 million in 2014 (3). Africa Re has strong reinsurance market shares across the continent (4), notably in countries identifi ed as key priorities for AXA, such as Nigeria and Egypt.
Metrobank is the #2 bank in the Philippines in terms of assets and deposits (1), relying on a nationwide network of 938 branches. It offers a full range of banking services to large local and multinational corporations, SMEs, high net-worth individuals and retail clients. Metrobank has already been distributing AXA Philippines’ Life & Savings insurance products since 1999.
Insurance (“Genworth LPI”), for a total consideration of €465 million. This transaction is a key milestone for AXA to become a European leader in credit and lifestyle protection, a business operated today by AXA Creditor.
This transaction increases AXA’s exposure to the Brazilian market and its strong growth prospects. SulAmérica’s Large risks insurance business would bring signifi cant positions in
April 2015 that could, if adopted, substantially expand the range of activities that would be considered to be fi duciary investment advice under ERISA. Depending on the breadth of the fi nal rule, the investment-related information and support that AXA US affi liated advisors and employees could provide to plan sponsors, participants, and IRA holders on a nonfi duciary basis could be substantially limited compared to what is allowed under current law. This could have an adverse impact on the level and type of services AXA US can provide, as well as the nature and amount of compensation and fees that AXA US and its affi liated advisors receive for investmentrelated services to plans and IRAs. Management believes that the DOL is likely to adopt a fi nal rule in early 2016 with an effective date in the second half of 2016. The exact nature and scope of the impact under any new fi nal rule is indeterminable at this time. Consequently, management is not in a position at this time to quantify the potential impact of these rules on the new sales of AXA US with any degree of precision, however, based on the information currently available, management estimates that the range of potential impacts on the new sales of AXA US could be from 10% to 30% of APE (which would have represented 2% to 7% of the Group’s consolidated APE
Completion of the transaction is subject to customary conditions, including obtaining required regulatory approvals, and should be fi nalized during the second semester of 2016.
Net realized capital gains or losses attributable to shareholders 433 442
■ higher tax expenses and minority interests (€-18 million or +2%) driven by higher pre-tax underlying earnings, partly offset by higher positive tax one-off in the United Kingdom
• €+141 million following foreign exchange rate movements notably driven by a favorable change in fair value of economic hedge derivatives not eligible for hedge accounting under IAS 39.
(b) Excluding fair value of invested assets and derivatives and undated debt (both recorded through shareholders’ equity).
(d) Other correspond to Luxembourg, AXA Life Invest Services, Architas and Family Protect.
Net technical margin increased by €128 million (+22%) to €714 million mainly due to higher positive prior year reserve developments in Group Protection (€+102 million) as well as a favorable change in assumptions in Individual Protection
(-2%), refl ecting lower advisory account sales in line with the strategy to focus on existing customer base.
Investment margin increased by €87 million (+18%) to €581 million. On a constant exchange rate basis, investment margin decreased by €5 million (-1%) mainly explained by lower distributions from private equity investments and lower reinvestment yields on fi xed income assets, partially offset by higher income from indexed products due to higher average asset base.
Benefi ts business in line with strategy as well as an increase in legal expenses, partly offset by the effects of cost saving programs; ■ Deferred Acquisition Costs amortization decreased by €173 million mainly following the revision of lapse and other policyholder behavior assumptions.
(a) Before intercompany eliminations. Gross Revenues amounted to €4,194 million net of intercompany eliminations as of December 31, 2015.
Endowment products (run-off portfolios), and Group Life products (€-60 million); ■ Health revenues (38% of gross revenues) increased by €65 million (+4%) driven by higher revenues from the in-force portfolio refl ecting a steady growth and improved retention, partly offset by lower new business sales; ■ Investment & Savings revenues (19% of gross revenues)
increased by €142 million (+23%) mainly due to the success of Single Premium Whole Life products (€+213 million)
Net capital gains or losses attributable to shareholders net of income tax 30 19
On a constant exchange rate basis, expenses increased by €28 million (+9%) mainly due to higher investments in business infrastructure and transformation projects, and higher Deferred
(a) Before intercompany eliminations. Gross Revenues amounted to €31,265 million net of intercompany eliminations as of December 31, 2015.
(b) Mediterranean & Latin American Region includes other than Direct operations in Italy, Spain, Portugal, Greece, Turkey, Morocco, Gulf Region, Mexico and Colombia.
(a) Before intercompany eliminations. Gross Revenues amounted to €6,020 million net of intercompany eliminations as of December 31, 2015.
Income tax expenses increased by €10 million (+18%) to €-66 million. On a constant exchange rate basis, income tax expenses increased by €4 million (+7%) refl ecting higher pre-tax underlying earnings.
Net income decreased by €16 million (-5%) to €315 million as the increase in adjusted earnings was more than offset by the unfavorable change in the fair value of fi xed income funds as a result of higher interest rates and corporate spreads widening.
Net technical result increased by €220 million (+22%) to €1,216 million. On a constant exchange rate basis, net technical result increased by €83 million (+8%): ■ the current accident year loss ratio decreased by 1.0 point to 67.3% driven by lower Nat Cat events as well as large claims; ■ the all accident year loss ratio decreased by 3.2 points to 61.0% as a consequence of an improved current accident year loss ratio and a higher positive prior year reserve development.
On a constant exchange rate basis, net income increased by €31 million (+7%) mainly driven by higher adjusted earnings, partly offset by an unfavorable change in the fair value of foreign exchange hedging derivatives not eligible for hedge accounting.
Expense ratio decreased by 0.3 point to 21.1% mainly driven by a decrease in commissions in the United Kingdom and cost saving initiatives in Spain and South Korea, partly offset by higher commissions in Poland following a change in business mix.
Net investment result increased by €9 million (+8%) to €124 million. On a constant exchange rate basis, net investment result increased by €2 million (+1%) mainly due to a higher average asset base as well as an improved investment yield following a change in asset allocation.
Underlying earnings increased by €10 million (+8%) to €135 million. On a constant exchange rate basis, underlying earnings increased by €3 million (+3%).
On a constant exchange rate basis, net income decreased by €15 million (-13%) as higher adjusted earnings were more than offset by recurring amortization of intangible assets and integration costs relating to the transaction with mBank in
India, Hong Kong, Malaysia, Singapore and Thailand, on a Group share basis. Indonesia operations are not consolidated. China and India are consolidated through equity method. Thailand is changed from equity method to full consolidation in 2015. China was consolidated through equity method for the fi rst time in 2014 as of February 20th.
Gross revenues increased by €246 million (+28%) to €1,108 million. On a comparable basis, gross revenues increased by €70 million (+8%): ■ Personal lines (49% of gross revenues) were up €35 million
Adjusted earnings decreased by €4 million to €59 million. On a comparable basis, adjusted earnings decreased by €5 million driven by lower underlying earnings, partly offset by higher net realized capital gains in China.
(a) Including AXA Liabilities Managers and AXA Corporate Solutions Life Reinsurance Company.
Property despite the explosion in Tianjin in China (€49 million net of reinsurance, +2.2 points); ■ the all accident year loss ratio increased by 1.4 points to 82.8% mainly due to lower prior year reserve developments.
Adjusted earnings decreased by €23 million (-13%) to €155 million driven by lower underlying earnings (€-13 million)
Underlying earnings increased by €2 million (+8%) to €25 million mainly driven by a strong growth of business and better expense management in all regions.
Underlying earnings and adjusted earnings increased by €32 million (+16%) to €224 million. On a constant exchange rate basis, underlying earnings and adjusted earnings decreased by €4 million (-2%).
Net income increased by €66 million to €7 million driven by higher adjusted earnings and a favorable change in fair value of hedging derivatives related to pensions not eligible for hedge accounting.
Group well to remain resilient and strong in an environment characterized by continued market volatility and extremely low rates.
Life Business In-force) amortization related to underlying margins, as well as amortization of other intangibles related to the in-force business.
Current accident year loss ratio net of reinsurance is the ratio of: ■ current year claims charge gross of reinsurance + claims handling costs + result of reinsurance ceded on current accident year, excluding the recurring interests credited to the insurance annuity reserves; to
(insurance and asset management) through a combination of organic growth, direct investments and acquisitions. This expansion has been funded primarily through a combination of
At December 31, 2015, other debt owed to credit institutions totalled €927 million (including €645 million of bank overdrafts), an increase of €236 million compared to €691 million at the end of 2014 (including €418 million of bank overdrafts).
Duverne’s experience, professional and personal qualifi cations as well as the complementary nature of their experience and profiles. After considering these factors and the preceding four years, the directors unanimously decided to maintain the
The Board of Directors is also required to approve certain types of material transactions including sales or acquisitions over €500 million; signifi cant fi nancing operations and other types of material transactions that are not within the Company’s announced strategy.
Independent Director. This Lead Independent Director has a number of specifi c powers including supervising the contribution of the independent directors to the Board’s work and acting as their spokesperson with the Executive Management to the extent necessary or appropriate. In particular, he examines, during preliminary sessions and with Executive Management, the agenda and planning of Board meetings as well as the quality of the information provided to the Board and its Committees.
François Martineau (64) Attorney at Law Lussan/Société d’avocats 282, boulevard Saint Germain – 75007 Paris – France French nationality
Kemna worked during almost twenty years in the fi nancial sector in the Netherlands for the Robeco and ING G roups, where she initially held the position of Global Chief Investment
Assessment) report, AXA’s Internal Model, and written policies required under the Solvency II regulation, dividend policy, selfassessment of the Board of Directors, independence of the
Civil Service, in particular for the Ministry of Industry and as technical adviser in the Ministry of Labour. In 1993, he joined the Rhône-Poulenc G roup and held various executive positions.
G roup and in 2008, Chairman & Chief Executive Officer. In
Mrs. Isabelle Kocher is a graduate of the École normale supérieure (ENS-Ulm), ingénieur du Corps des Mines and holds an aggregation in Physics. From 1997 to 1999, she was in charge of the budget of Telecommunication and Defense at the French Ministry of Economy. From 1999 to 2002, she was Advisor on Industrial Affairs of the French Prime Minister
In 1981, he was “Secrétaire de la Conférence”. In 1985, he was a lecturer at the University Paris I (Civil Procedure). In 1995, he was a Professor at the Paris Bar School (EFB) and since 1998, he is Honorary Professor at the Law and Political Sciences
Mrs. Deanna Oppenheimer graduated from the University of Puget Sound with degrees in political science and urban affairs. She completed the Advanced Executive Programme at the J.L. Kellogg School of Management at Northwestern
Each Committee issues opinions, proposals or recommendations to the Board of Directors on matters within the scope of its responsibilities. Nevertheless, under French law, Board
The Group Chief Financiel Offi cier as well as the Group Chief Risk Offi cer attend each Finance Committee meeting.
(1) On March 21st, 2016, Thomas Buberl was appointed Deputy CEO (Directeur Général Adjoint) of AXA and will be appointed Chief Executive Offi cer and director of AXA on S eptember 1st, 2016.
(j) In 2015, the increase by 931 in AXA Assistance was mainly driven by business growth, notably in the Mediterranean & Latin American Region and Asia.
■ ensure compliance of our practices with all applicable regulatory requirements.
Return on Equity – ROE), and customer satisfaction index; ■ performance of their business unit or functional area of responsibility (representing 30%), measured against objectives set at the beginning of the year; and
(a) This amount includes the part of the variable compensation with respect to 2014 and 2015 which has been deferred in accordance with the mechanism described on page 120 . The total amount paid will depend on performance conditions and may then vary.
In the tables of this Section, compensation not paid in Euro was converted into Euro on the basis of the following yearly average exchange rates for 2015: 1 USD = 0.89328574 EUR; 1 SGD =
Part 4 of this Annual Report. This value does not represent a current market value, a current valuation of these options and performance shares, nor the actual amounts that may be paid to benefi ciaries if and when the options are exercised or the performance shares are acquired.
During the fi scal year 2015, none of the members of the Board of Directors, except for its Chairman and the Deputy Chief Executive
The portion of options granted in 2015 to the executive offi cers of the Company (Chairman & Chief Executive Offi cer and Deputy
This external performance condition subjects the acquisition of the right to exercise the options to the achievement of a fully objective and public performance and allows to measure the relative performance of AXA compared to its main European competitors over a period of at least three years.
On December 31, 2015, this index included 36 companies of the sector.
Date of the Shareholders’ Meeting 20/04/2005 20/04/2005 20/04/2005 20/04/2005 20/04/2005 20/04/2005 20/04/2005 20/04/2005 20/04/2005 20/04/2005
STOCK OPTIONS GRANTED AND/OR EXERCISED BY THE TOP 10 BENEFICIARIES (OUTSIDE THE EXECUTIVE OFFICERS) DURING 2015
Stock options granted during the year by AXA or any eligible AXA Group subsidiaries, to the ten employees, outside management bodies’ members of the Company or of eligible AXA Group subsidiaries, who received the highest number of stock options (aggregate information)
Henri de Castries Chairman & Chief Executive Offi cer 2,203,893 -
Consequently, under this indicator: • no share shall be granted if AXA’s score is lower than the seventy-fi fth percentile (1); • 80% of the shares shall be granted if AXA’s score is equal to the seventy-fi fth percentile; • 100% of the shares shall be granted if AXA’s score is equal to the eighty-fi fth percentile; and
Total number of Performance Shares granted from which granted to Executive Directors: Acquisition date of the shares 18/03/2013 16/03/2014 22/03/2015 24/03/2016 (a) 19/06/2018
Discretionary management agreements signed by Messrs. Henri de Castries and Denis Duverne
retirement date, if this average is superior to 12 annual social security ceilings (1).
This AXA Pension Fund was implemented in 2011 and benefi ts to the employees of AXA Group entities in France falling within the scope of the Collective Agreement of December 18, 2009.
(b) AXA Assurances IARD Mutuelle (11.25% of capital ownership and 18.97% of voting rights) and AXA Assurances Vie Mutuelle (2.87% of capital ownership and 4.85% of voting rights).
With the following executive offi cers: Messrs. Henri de Castries (Chairman & Chief Executive Offi cer) and Denis Duverne (Deputy Chief Executive Offi cer)
While the full impact of such requirements can only be evaluated in the context of implementing regulations, such new legislation could have a substantial impact on AXA’s regulated Asset
Policyholders’ liabilities are currently accounted for according to IFRS 4 phase I which generally allows the continuation of accounting policies applied prior to the conversion to IFRS.
These events and the continuing market volatility, have had and may continue to have an adverse effect on our revenues and results of operations, in part because we have a large investment portfolio. Our investment income is an important factor of our profi tability, and our sales of insurance and asset management products (as well as level of surrenders and lapses)
Business in Force (VBI) and other intangible assets amortization and the value of our deferred tax assets and deferred participation assets. The value of certain of our businesses including, in particular, our US Variable Life and Variable Annuity businesses, is signifi cantly impacted by such factors as the state of the fi nancial markets and ongoing operating performance.
■ we may be required, as an issuer of securities, to pay higher interest rates on debt securities, debt and bank facilities to fi nance our operations, which would increase our interest expenses and reduce our results of operations.
In certain of our principal markets, an increase in infl ation, as measured by consumer price indices or other means, is a continuing risk. A sustained increase in the infl ation rate in our principal markets would have multiple impacts on AXA and may negatively affect our business, solvency position and results of operations. For example, a sustained increase in the infl ation rate may result in an increase in market interest rates, with the consequences noted above. A signifi cant and sustained increase in infl ation has historically also been associated with decreased prices for equity securities and sluggish performance of equity markets generally. A sustained decline in equity markets may (i) result in impairment charges to equity securities that we hold in our investment portfolios and reduced levels of unrealized capital gains available to us which would reduce our net income and negatively impact our solvency position, (ii) negatively impact performance, future sales and surrenders of our Unit-Linked products where underlying assets are largely invested in equities, and (iii) negatively impact the ability of our asset management subsidiaries to retain and attract assets under management, as well as the value of assets they do manage, which may negatively impact their results of operations. In addition, in the context of certain Property & Casualty risks underwritten by our insurance subsidiaries (particularly “long-tail” risks), a sustained increase in infl ation may result in (i) claims infl ation (+ an increase in the amount ultimately paid to settle claims several years after the policy coverage period or event giving rise to the claim), coupled with (ii) an underestimation of corresponding claims reserves at the time of establishment due to a failure to fully anticipate increased infl ation and its effect on the amounts ultimately payable to policyholders, and, consequently, (iii) actual claims payments signifi cantly exceeding associated insurance reserves which would negatively impact our results of operations.
could impose similar or other restrictions on the transfer of funds, including intra-group financing arrangements, which could negatively impact the fungibility of our capital. These factors may adversely impact the Company’s liquidity position and capacity to pay dividends. For further details, see Section 1.4 “Liquidity and capital resources” and Part 4 – Note 29.4 “Other items: Restriction on dividend payments to shareholders” of this Annual
The requirements in AG 48 became effective on January 1 , 2015 and apply in respect of certain term and universal life insurance policies written prior to, from and after January 1 , 2015 but not included in a captive reinsurer fi nancing arrangement as of
Interruptions or disruptions of our telecommunications and electronic data systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could potentially result in fi nancial loss, impairment to our liquidity, a disruption of our businesses, legal claims, regulatory sanctions or damage to our reputation. Management attempts to control these risks by maintaining a sound and well controlled environment in light of the characteristics of our business, markets and the regulatory environment in which we operate. Notwithstanding these measures, operational risk is part of the business environment in which we operate and we may incur losses from time to time due to these types of risks.
Please see Section 3.1 “Regulation” of this Annual Report for additional information on this matter.
(“FATCA”) withholding requirements and planned introduction of the Common Reporting Standard (“CRS”) across a multitude of jurisdictions where the Group does business, could result in higher tax expenses and payments and will result in higher compliance costs. Future interpretations or developments of tax regimes may also affect our tax liability, return on investments and business operations.
In addition, we have been named as defendants in numerous lawsuits (both class actions and individual lawsuits) and involved in various regulatory investigations and examinations and may be involved in such proceedings in the future. Certain of these lawsuits and investigations seek significant or unspecified amounts of damages, including punitive damages, and certain of the regulatory authorities involved in these proceedings have substantial powers over the conduct and operations of our business. Since 2014, the litigation environment has continued to evolve with the introduction of a class action system in France by a law dated March 17, 2014 and similar developments in certain other European jurisdictions which are likely to increase litigation risks and costs. Due to the nature of certain of these lawsuits and investigations, we cannot estimate the potential losses or predict with any certainty the potential impact of these suits or investigations on our business, financial condition, results of operations or reputation. Please see Part 4 – Note 31
In 2015, the Group Supervisor (ACPR – Autorité de contrôle prudentiel et de résolution) approved AXA’s internal model for the calculation of its regulatory capital requirements under Solvency II.
Group’s risk appetite, with strengthened reporting, risk limits and decision processes; ■ performing a second opinion on key processes, such as the defi nition of characteristics for new products before launch,
In order to effi ciently manage local and global risks, the decision process within the risk governance structure is divided into 2 main levels: 1. the Group Management Committee defines business objectives and capital allocation with respect to investment return and risk. It also defi nes the Group appetite for risks in terms of impact on its key fi nancial indicators. The Group
(Unit-Linked, Variable Annuities…) and decrease the Group’s value; ■ a change in foreign-exchange rates would have limited impact for the operating units since foreign-currency commitments are matched to a large extent by assets in the same currency or covered by hedges, but it could affect the earnings contribution in euros; ■ furthermore, P&C activities are subject to infl ation which may increase the compensation payable to policyholders, so that the actual payments may exceed the associated reserves set aside. This risk can be signifi cant for long-tail businesses but is managed through regular pricing adjustments or specifi c protections against peaks of infl ation.
The main fi nancial risks for the AXA Group are as follows: ■ interest-rate, spread risk and equity risk related to the operating activities of Group subsidiaries; ■ exchange-rate risk related to the operating activities of Group subsidiaries; ■ risks relating to the management of holding companies’
IFRS shareholders’ equity at December 31 54,185 14,290 68,475 50,388 14,831 65,219
The Group EV equals the Life & Savings EEV plus the adjusted net value of other-than-life businesses, refl ecting the consolidated
(VIF) plus the Life & Savings “Adjusted Net Asset Value” (ANAV).
(2.0% in 2014) and despite the fact that AXA follows a strict effi ciency plan; ■ projected expenses are adjusted for non-recurring items and one-time strategic spending; ■ some benefits from future mortality improvement on Life business is included, while annuity business does have an allowance for the costs of increasing longevity in all markets; ■ the cost of non-fi nancial risks is allowed for through the cost of holding hard capital; ■ a weighted average tax rate of 28.2% was assumed in 2015
Savings business of 4% to 10% higher value and -4% to 10%
lower value (2014: 1% and -1%) refl ect the impacts on equities including derivatives on equities.
In Belgium, the Group’s Property & Casualty companies do not have any signifi cant exposure to exchange-rate risk.
At December 31, 2015, the economic breakdown of the total value of ABS (€10.3 billion excluding assets held for sale, as well as CMOs and Agency pool ABS) was: 74% in CLO, 3% in
GRM has developed and deployed common models and metrics to consistently measure risks throughout the Group (in particular via its economic capital framework). This enables the Group to check that its exposure complies with consolidated risk appetite limits along the dimensions of earnings, value, capital and liquidity. These tools also contribute substantially to monitoring the major risks (claims frequency deviation, claims severity, reinsurance, pricing consistency and natural catastrophes).
Elaborating Group reinsurance cover is one of the major Group’s insurance and risk management activities.
• other products are managed with the surplus required to cover guarantees.
(incl. underwriting) and risk communities and ensures adequate underwriting policies are defi ned.
The objectives of the reputation risk management approach are in line with AXA’s overall enterprise risk management approach aiming to develop a reputation risk culture.
Three main objectives drive the reputation risk management approach: ■ proactively manage reputation risks, avoid or minimize negative issues impacting on the reputation of AXA and build trust among all of AXA stakeholders.
The implementation of the r eputation r isk f ramework encompasses all AXA activities including insurance, asset management, banking as well as internal service providers.
AXA, as an insurance company, follows an investment strategy mainly driven by Asset Liability Management (ALM). The overall objectives of all investment decisions are to ensure that AXA’s obligations and commitments to policyholders are met at all times, to protect the solvency of the Group’s entities, and to generate superior returns over time.
ALM constraints are also taken into account when new insurance products are being designed as part of the product approval process (see section “Insurance risk – Product approval”).
Assets backing contracts where the fi nancial risk is borne by policyholders (c) 194,601 181,082 9 Investments from insurance activities 715,282 680,651 9 Investments from banking and other activities 37,579 39,535 10 Investments accounted for using the equity method 2,306 1,842 14 Reinsurers’ share in insurance and investment contracts liabilities 19,734 18,895
Liabilities arising from investment contracts with no discretionary participating features and where the fi nancial risk is borne by policyholders 39,564 35,246
Net increase / (write back) in other provisions (e) (248) 64
CASH AND CASH EQUIVALENT AS OF DECEMBER 31 (k ) 25,630 21,631
The following amendments are not expected to have a material impact on the Group’s consolidated fi nancial statements: Amendments Publication date
IFRS 10, IFRS 12, and IAS 28 December 18, 2014 January 1, 2016 *
(adjustment in the acquisition price conditional upon on one or more events). In the estimate of the contingent element, attention is paid to use assumptions that are consistent with the assumptions used for the valuation of intangible assets such as
Valuation techniques may be used when there is little observation of transaction prices as an inherent characteristic of the market, when quotes made available by external pricing providers are too dispersed or when market conditions are so dislocated that observed data cannot be used or need signifi cant adjustments.
Assets designated as available-for-sale, trading assets, investments designated as at fair value through profi t or loss and all derivatives are measured at fair value, i.e. the amount for which an asset could be exchanged, between knowledgeable,
Claims reserves include the claims incurred and reported, claims incurred but not reported (IBNR) as well as claim handling costs.
As of December 31, 2015, investment funds represented a total of €106,740 million invested assets (€98,458 million at the end of 2014), corresponding to 281 investment funds mainly in France,
investment, AXA receive interests or dividends and can realize capital gains or losses in case of sale. These investments are subject to impairment testing as usual fi nancial assets.
Net income from operating activities before tax 4,554 2,606 390 831 (53) (1,201) 0 7,128
Mediterranean and Latin America Region 1,439 - 1,439 1,506 - 1,506
On March 30, 2015, AXA announced that it completed the acquisition of 100% of BRE Insurance (1), mBank’s Property &
of the private medical insurance business of Simplyh ealth for a total consideration of £50 million or €68 million. Simplyh ealth has been operating in the UK PMI market for 13 years. Employing around 400 people in Bristol, it provides health cover for over 200,000 people, individually and through its SME and corporate customers. The acquisition will further strengthen AXA’s presence in the UK healthcare market and clearly evidences its continuing commitment to being the preferred provider in each of its key strategic business areas.
Ageas signed the disposal of AXA’s Portuguese operations for a net cash consideration of €191 million on October 16, 2015, including in particular AXA’s entire stake in AXA Portugal
Finalization of the transaction is expected during the first semester of 2016, subject to required regulatory approvals.
Financial investments and loans designated as at fair value through profi t or loss 29,667 28,984 10,056 68,707 29,136 27,326 7,461 63,924
A reconciliation of the summarized fi nancial information to the carrying amount of the joint ventures is as follows: (in Euro million)
Current accounts receivables from other Companies 1,658 (1) 1,656 1,656 1,502 (1) 1,501 1,501
October 26, 2006 - 600 MA$ (of which 300 MA$ 7.5%) 600 400 600 402
As of December 31, 2014, the Company and its subsidiaries owned approximately 0.6 million AXA shares, representing 0.02% of the share capital, a decrease of 3 million shares compared to December 31, 2013.
November 7, 2014 with a 58% average take-up rate and resulted in the issuance of €984 million undated deeply subordinated resettable notes (initial coupon set at 3. 941% per annum until the fi rst call date in 2024) and £724 million undated deeply subordinated resettable notes (initial coupon set at 5. 453% per annum until the fi rst call date in 2026). Impact was €-105 million post tax on shareholder’s equity (Group Share) due to the premium offered to the holders.
Unrealized gains and losses (net of tax) - Assets available for sale 13,142 15,328
Outstanding questions on these issues are highly complex and are not yet suffi ciently advanced. Phase II discussions regarding insurance and certain investment contracts, even if re-activated at the IASB level soon after the issuance of IFRS 4, are still insuffi ciently developed. After a Draft Statement of principles issued in 1997, a Phase II Discussion Paper was published in
(b) In 2006, Winterthur’s operations were integrated within AXA. Total loss reserves developed amounted to €41.3 billion including €8.7 billion in respect of Winterthur (fi nal fi gure after PGAAP re-opening).
Under the terms of the agreement, AXA retains exposure to any changes in the final cost of claims occurring before
Gross reserves for unpaid claims and claims expenses developed in 2015 4,253
The general principles for establishing insurance liabilities are set out in Note 1 of the consolidated fi nancial statements. Liabilities are based on estimates, and one of the key assumptions used in these estimates is the discount rate.
(€2,829 million in 2015 and €2,447 million in 2014), including the Euro Medium Term Notes.
mainly based on non-observable market data inputs and are considered to be Level 3 fair values; ■ retail customers (€ 19,523 million at 2015), Corporate customers (€4,596 million at 2015), and Interbanking refi nancing (€2,992 million at 2015), are not traded in active markets and quoted prices are not available. Given the short maturities of main liabilities arising from banking activities
Refi nancing with central banks 180 464 - 644 150 180 - 330
Derivatives on fi nancing debt instruments issued (a) (39) (39) (53) (53)
More than 1 year up to 5 years More than 5 years
Deferred tax assets recognized on tax losses of prior years (40) (16)
■ Reserves relating to gains and losses on defi ned benefi ts pension plans 1,599 14 1,585 1,588
Liability Management and local regulatory requirements for insurance and banking operations; (iv) l imiting equity risk; (v) l imiting credit risk with regard to certain investments in corporate debt instruments.
Euro and US Dollar) with a total notional amount of €50.4 billion in 2015 versus €34.4 billion in 2014, and (ii) Japan Life & Savings using future and forward foreign currency contracts to hedge exchange-rate risk arising from its investments in fi xed-maturity debt instruments denominated in non JPY currencies with a total notional amount of €13.9 billion in 2015 versus €15.5 billion in 2014.
(iii) enhance the return mainly on government bonds portfolios by holding government bonds and at same time selling protection on very good quality names as an alternative to the direct purchase of a corporate bond. This type of
TOTAL - PROPERTY & CASUALTY EXCLUDING INTERNATIONAL INSURANCE 30,295 7,877 1,058 64 39,295 14,785 54,080
The board of trustees, generally composed of representatives of the Company and plan participants in accordance with the plan’s regulations is responsible for governance of the plans including investment decisions and contribution schedules in order to meet the existing minimum funding requirement or funding regime objective, jointly with AXA at local level.
Fair value of separate assets at the end of the year 1,276 1,116 - - 1,276 1,116 Change in the cumulative effect of asset ceiling Cumulative effect of asset ceiling at the beginning of the year 17 10 - - 17 10 Interest cost on asset ceiling 1 0 - - 1 0 Changes in the asset ceiling, excluding the interest cost 0 6 - - 0 6
(c) In 2015 and 2014, this amount includes additional contributions paid to plan assets in the United Kingdom and in the United States to reduce the defi cit.
A description of the risk that pension schemes are exposed to is presented in Note 26.2.10. The sensitivity analysis for signifi cant actuarial assumptions showing how the D efi ned B enefi t O bligation (totaling €21,716 million as of December 31, 2015 and €20,974 million as of December 31, 2014) would have been affected by changes in the relevant actuarial assumption that is reasonably possible for year ended as of December 31, 2015 and 2014 is presented below: effect of 0.50%
The terms and conditions of AXA Financial’s share-based compensation programs generally were not impacted by the delisting and deregistration except that AXA ordinary shares generally will be delivered to participants in lieu of AXA ADRs at exercise or maturity of outstanding awards and new offerings are expected to be based on AXA ordinary shares. In addition, due to United States securities law restrictions, certain blackouts on option exercise are expected to occur each year when updated fi nancial information for AXA will not be available.
shares based on the achievement of performance criteria defi ned by AXA. The performance’s period and measurement is 2-years (similar to Performance Units granted in 2011 and 2012). The vesting period (service condition) is 3 years (similar to Performance Units granted in 2011 and 2012). However, as opposed to Performance Units granted in 2012 and 2011, under the 2013 International Performance Shares plan, the settlement will be made in shares rather than in cash (except where the settlement in shares is impossible for legal or other reasons).
France by insurance brokers is mainly underwritten through a coinsurance arrangement between AXA Assurances IARD
Company was party during 2015 covered a variety of common services including services performed by the Group’s central functions (GIE AXA) for the benefi t of AXA Group companies
Commitments received by AXA totalled €75,762 million at the end of 2015, and decreased by €4,268 million compared to the end of 2014, mainly due to a decrease in pledged assets and collaterals (€4,869 million) and in Other commitments
green energy. These local producers allege fi nancial losses due to ERDF’s delay in processing their applications to be connected to the public grid within the statutory period, resulting in their inability to profi t from attractive buyback rates under certain
Board meeting held on March 19, 2016, AXA’s Board of Directors unanimously decided to separate the functions of Chairman of the Board of Directors and Chief Executive Offi cer, and approved the following appointments effective upon Mr. Henri de Castries’
For further information, please see Part 2 – “Corporate governance” of this Annual Report.
An individual aged 70 or older may be appointed or reappointed to the Board of Directors exclusively for a two-year term of offi ce.
Group Management Services (GMS) (1) Departments focused principally on internal control and risk related matters
The RCC is responsible for monitoring operational risks, compliance risks, regulatory risks, country risks and reputation risks. The RCC provides guidelines and challenges the level of risk appetite implemented by AXA, as well as the risk assessment and proposed action plan. It also approves the operational risk profi le of the Group and coordinates the second line of defense.
Commission (COSO). It is designed to defi ne the IFC scope and governance, ensure consistency and quality in AXA’s fi nancial reporting, and provide an overall framework for the annual
Organizations of the Treadway Commission (COSO). It is designed to define the IFC scope and governance, ensure consistency and quality in AXA’s fi nancial reporting, and provide an overall framework for the annual IFC programme.
Ordinary shares reserved for a specifi c category of benefi ciaries in connection with offerings for employees – 135 million (a) 18 months October 27, 2017
Eastern Europe R egion, compared to €1,442 million in 2014, down €320 million mainly due to the negative impact of low interest rates on statutory profi ts; ■ €893 million dividends from AXA France Assurance versus €1,326 million in 2014, down €433 million as a result of the negative impact of interest rates on statutory profits and fi nancing of external growth, notably the acquisition of BRE
395-70, Shindaebang-dong, Dongjak-gu – SEOUL – South Korea 40, rue du Colisée – 75008 PARIS
2004-06 relating to the defi nition, recognition and measurement of assets, repealed and replaced by regulation ANC n°2014-03 chapter “titre II, chapitre I Actifs non fi nanciers»; application of these regulations has had no impact on the Company’s fi nancial statements.
■ Derivatives used by your Company are assessed pursuant to the rules contained in paragraph 2.12 of the notes to the fi nancial statements. We checked that the implementation of hedge accounting, if applicable, was documented appropriately. In all other cases, we verifi ed that adequate provisions were recorded for the unrealized losses.
Workforce Planning across its main entities, covering a majority of AXA’s workforce to map the evolution of its workforce.
This compensation policy is designed to support the Group’s long-term 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 offer competitive compensation arrangements across the multiple markets in which it operates while avoiding potential confl icts 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 requirement.
■ Number of departures due to external transfers (b) 150 emp. 814 emp.
Turnover rate of salaried workforce 14.6 % 0.0 pt 14.6 %
■ Proportion of absences due to work related accidents 1.9 % 2.1 %
AXA set a new Global Key Performance Indicator (KPI) target for the 2012-2020 period: ■ 25% carbon emissions per FTE.
Disaster Risk Reduction (UNISDR), particularly in supporting the implementation of the March 2015 Sendai Framework and is working closely on issues of climate change with both the
such as fuel tanks for backup electricity generators, or major air conditioning systems. In 2015, the Group reported 35 sites with a specifi c permit. Their impact on the neighbouring environment is minimal. Nevertheless, being classifi ed, those facilities benefi t from adequate maintenance and their compliance with local legal obligations is monitored regularly. The full range of expenditures incurred to promote environmental preservation is minor, local and of a heterogeneous nature, and as such, is not monitored at Group level. No specifi c provisions or guarantees covering environmental risks have been set aside, considering the limited litigation risks arising from the management of AXA’s direct environmental footprint. Furthermore, in 2015, 39 sites were reported to have some form of environmental certifi cation.
Given that its operations are largely decentralized and its staff spread across a number of different locations. AXA’s activities generally have no signifi cant direct impact on local employment or development in any specifi c region. Nor does AXA engage in signifi cant levels of subcontracting.
However, AXA does promote economic growth and social development more broadly through its insurance, savings and investment services. The Group provides support to 103 million customers around the world, including individuals, local communities and businesses. Indeed AXA’s business is to protect people and businesses. These services help our customers protect what is most important to them – their lives, their property and belongings, their health, and their savings –
AXA has a set of Stakeholder Engagement Principles, published on its corporate website. These principles apply to all AXA’s businesses worldwide, and set out the Group’s overall approach to stakeholder engagement. Engaging with stakeholders, AXA
Africa, including both company funds and those contributed by AXA employees).
l’initiative économique (which helps people excluded from the usual circuits set up their own business) and a French mutual insurer, MACIF, offers since 2007 basic covers sold at cost; ■ India: Bharti AXA GI pioneered insurance for low income segment by 2009 to distribute Personal Accident, Health and Hospital Cash products through retailers and Cooperative
signatory since 2007. AB signed the UN PRI in 2011 and the
Our work involved 7 persons and was conducted between end of November 2015 and beginning of March 2016 during a 15 week period. We were assisted in our work by our CSR experts.
■ Total workforce, including indicators headcount of salaried workforce as at the end of the year and average FTE of salaried workforce; ■ Distribution of employees by sex, by age and by geographic zone, including indicators headcount of salaried non-sales and sales force men and women by professional category, average age and average seniority of salaried non-sales force; ■ Recruitments and departures, including indicators external recruitments, resignations, dismissals and involuntary turnover of salaried non-sales force; ■ Compensations and evolutions, including total gross payroll of salaried non-sales force and gross fi xed payroll of salaried sales force; ■ Absenteeism, including indicator absenteeism rate and proportions by type of absence of salaried non-sales and sales force; ■ Organization of labour relations; ■ Work accidents, in particular frequency and gravity as well as work disease; ■ Training policy; ■ Total number of training hours, including indicators average number of days and training costs; ■ Measures taken in favour of the equality between men and women; ■ Measures taken in favour of the employment and the insertion of handicapped people; ■ Respect of the freedom of association and of the right of collective bargaining; ■ Elimination of segregation in terms of employment and professions.
Sections Pages 1. Business and trends/Earnings/Financial position and key performance indicators 20 to 88 and 368 to 393 2. Use of fi nancial instruments by the Company when relevant for assessing its assets and liabilities, fi nancial position, and profi ts and losses 3. Description of major risk factors and uncertainties 154 to 193 4. Acquisition of signifi cant equity interests in companies headquartered in France 369 5. Events subsequent to fi scal year end/Outlook 30 to 31 ; 85 ; 94 and 341 to 342 6. Dividend distributions over the last three years 5 7. Information on market and liquidity risks (interest rate, exchange rate and stock price fl uctuation risk) 89 to 94 and 160 to 176 8. Purchase and sale of the Company’s own shares 146 10. Transactions involving Company stock completed by corporate offi cers 141 to 142 11. Directorships and positions held by corporate offi cers of the Company 102 to 107 12. Relevant provisions in the event of a public takeover bid on the Company 348 15. Adjustment of the rights of holders of securities with a claim on the capital of the Company n/a 16. Social and environmental information 395 to 414 17. Research and development activities n/a 18. Terms of payment 369 19. Agreements between a corporate offi cer or a shareholder of the Company and a subsidiary of the Company
Report of the Statutory Auditors on the fi nancial statements of the Company parent only 392 to 393
Report of the Statutory Auditors on the report of the Chairman of the Board of Directors 360 to 361