It was fi led with the AMF on March 17 , 2010 and may be used in connection with a fi nancing transaction provided it is accompanied by a prospectus registered with the AMF.
Committee (referred to in this Annual Report as “IFRIC”) that were defi nitive and effective as at December 31, 2009, as adopted by the European Union prior to the balance sheet date.
and, consequently, may fall outside the target 40%-50% range in certain years. In assessing the dividend to be paid in any given year, management tries to strike the appropriate balance between prudent capital management and an attractive dividend for shareholders.
(ii) established a joint-venture in the Ukrainian P&C insurance market with UkrSibbank (the Ukrainian banking subsidiary of BNP
(u) Holding company that owns 100% of AXA Hayat Sigorta AS and 72.55% of AXA Sigorta AS
The table below summarizes AXA’s Life & Savings consolidated gross revenues and gross insurance liabilities by geographic region for the periods and at the dates indicated: LIFE & SAVINGS SEGMENT: GROSS REVENUES BY COUNTRY
Eastern Europe, Middle East and Latin America (Mexico). The products in these markets are offered through various distribution channels, including exclusive agents, salaried sales forces, brokers, independent fi nancial advisers, and bank networks. See the “Distribution channels” section below.
(1) Health products are classifi ed either in Life & Savings or Property & Casualty, depending on the features of the products but also market practice specifi c to each country. For example health product providing savings features or rider options are classifi ed in the Life & Savings segment.
& Casualty operations, based on gross revenues for the year ended December 31, 2009 and 2008, is presented below: Based on gross revenues in 2009
(a) In 2007, revenues represent business fronted by Colisée Re (ex AXA RE) until October 2007, and fully reinsured by Paris RE (fronting arrangement set in place in the context of the sale of Colisée Re’s (ex AXA RE) business to Paris RE in 2006).
AXA Assistance is one of the three leading worldwide assistance companies, in a market seeing the emergence of some specialized niche players (2).
The table below presents the International Insurance segment’s gross revenues and gross insurance liabilities by major product for the periods and at the dates indicated: INTERNATIONAL INSURANCE
AllianceBernstein and AXA Investment Managers. These companies manage assets on behalf of institutional clients, retail investors and private clients, as well as on behalf of companies affi liated with AXA.
AXA Bank targets private customers in retail banking and is an important element of pensions and asset management of AXA
AXA’s Management Board, will assume Group-wide responsibility on a international level for the Group’s Property & Casualty businesses, and (2) Christopher Condron, Chief Executive
• Increased restrictions on, and new disclosure requirements with respect to, confl icts of interest – in particular aimed at misaligned fi nancial incentives.
within the meaning of this legislation by the French insurance regulator, there can be no assurance that it will not become (or be deemed) a fi nancial conglomerate in the future. Due to the lack of uniform interpretation of this legislation by local insurance regulators throughout the various EU jurisdictions, AXA’s Belgian subsidiaries have been deemed a fi nancial conglomerate by the
There have been a number of other initiatives in Europe with implications for AXA’s European insurance subsidiaries, and the European insurance sector more generally, including the following: ■ T he regulatory reform initiatives referred to above; ■ Over the past several years a number of European jurisdictions, including France and Belgium, and other jurisdictions have enacted legislation that permits corporate entities to be charged with criminal offenses. The standard for attributing criminal conduct by corporate offi cers and employees to corporate entities is not clearly defi ned in many of these jurisdictions and government prosecutors and judges have broad discretion in this area. In recent years, indictments of corporate entities for alleged criminal offenses have become increasingly common.
“Investment Company Act”) and the shares of most of these funds are qualifi ed for sale in all states in the United States and the
District of Columbia, except for US funds offered only to residents of a particular state. Certain subsidiaries of AllianceBernstein and AXA Financial, Inc. are also registered with the SEC as transfer agents and broker-dealers that are subject to minimum net capital requirements. Asset management services rendered by AllianceBernstein and/or AXA Investment Managers to AXA
“class action” litigation mechanism that would allow groups of plaintiffs to bring collective actions. The scope and form of any such mechanism, as well as the timing of introduction, are currently under discussion.
Annuity industry sales declined by 23%, negatively impacted by uncertain equity markets and low investor sentiment towards equity-oriented investments. As well, overall industry redesign of Variable Annuity products offering generally lower benefi ts and higher charges reduced market demand. Offsetting that decline was a 25% increase in sales of Fixed Annuities as consumer preferences continued a shift to more conservative investment vehicles.
Turkey. The Life insurance market growth was +13% (12). The competition between Private Pension Plan players, due to higher tax incentive, continued to drive the market. Portugal.
(10) Source: Spanish Association of Insurance Companies: ICEA as of September 2009.
(15) Source: Moroccan Association of Insurance Companies as of Dec 2008.
Swiss market was a saturated and very competitive market with a continuing pressure on prices, especially in Motor business.
(4) Source: AMIS Asociación Mexicana de instituciones de Seguros as of September 2009.
(6) Source: Hellenic Association of Insurance Companies as of Sept 2009.
I Financial market conditions in 2009 2009 can be qualifi ed as a year of extreme contrasts, for both the capital markets and the real economy. In the fi rst quarter, bank shares plummeted, bringing the world’s stock markets down with them, and the interbank market was paralyzed. GDP was off by 1.6% quarter over quarter (qoq) in the United States, by 2.5%
With the global economy getting back on track, an improved economic outlook combined with lower OPEC quotas, oil prices recovered. The price of oil ended the year at $79 per barrel, propelled in December by the Northern hemisphere cold spell.
On January 6, 2009, the purchase of the last tranche of 8.16 million
and OYAK in 1999. Under the terms of the agreement, AXA
fi nanced the transaction with internal resources. This acquisition closed on July 22, 2008.
A rzteversicherung starting from the situation as at January 1, 2006 amounted to €367 million.
On December 21, 2007, AXA announced that it had reached an agreement with Reso Garantia’s (“RESO”) shareholders to acquire a 36.7% stake in the company for a total cash consideration of around €810 million. As part of this agreement,
Winterthur US repaid US$636 million, of which US$79 million had already been repaid in Q4 2006 (€506 million taking into account hedges put in place by AXA for this transaction at 1
In January 2009, AXA unwound €11 billion out of the fi rst €14 billion tranche and the €9 billion second tranche of the 2008 equity hedging program in order to lock in the positive mark-tomarket value. In addition, €2.5 billion calls on remaining exposure were bought back. This resulted in a € 46 million profi t.
(iv) a €8 million increase (+10%) in Life products refl ecting the strengthening of the AXA Protection brand in the market.
Health with positive volumes effect in Mexico and in Italy, as well as positive development in Property across the board, and
Seguros ING in Mexico (€6 million), Quadrifoglio Vita (€5 million), the brokerage company SBJ in the United Kingdom (€1 million), and the fi nancial advisor Genesys in Australia (€3 million), as well as the buyout of non-controlling interests in Turkey (€3 million), and on a constant exchange rate basis, Life & Savings underlying earnings increased by €747 million (+49%) mainly resulting from: ■ Lower investment margin (€-361 million or down 14%).
Kingdom, mainly as a result of internal restructuring of an annuity portfolio, and (iii) €68 million higher positive prior year reserve developments in Group lines in France, partly offset by (iv) €-103 million in Japan following reserves strengthening.
■ Higher expenses (up €551 million or +8%). Excluding the reclassifi cation from net technical margin to commissions in 2009 refl ecting contractual changes in Group Protection contracts in France (€190 million), expenses increased by €361 million (+5%), with acquisition expenses up €277 million
Excluding the contribution of Mexico, the all year loss ratio increased by 3.7 points to 70.7% mainly due to (i) higher impact of natural events in 2009 (+1.7 points mainly driven by Klaus storm for 0.8 point and other natural events across
International Insurance underlying earnings amounted to €286 million. On a constant exchange rate basis, underlying earnings increased by €102 million (+54%) mainly driven by improved run-off results driven by better market conditions.
Income tax expenses increased by €23 million (+12%) to €-208 million resulting from a lower level of non taxable dividends partly offset by lower pre-tax underlying earnings.
On a constant exchange rate basis, income tax expenses increased by €350 million. The tax expense increase was due to higher pre-tax underlying earnings partially offset by the benefi cial impact of a higher non-taxable investment income.
Profi t or loss on fi nancial assets (under FV option) & derivatives 191 (478) (96)
Net capital gains or losses attributable to shareholders net of income tax (145) (41) (1)
Net capital gains or losses attributable to shareholders net of income tax (1) (245) (15)
(€+95 million), higher net realized capital gains and lower net impairments on equities.
Vita. On a constant exchange rate basis and excluding Mexico and Quadrifoglio Vita, fees & revenues were in line with previous year.
(+7%) in a context of competitive markets was offset by lower revenues in Construction (-6%) and in Motor (-3%).
(-1.0 point) mainly in Construction, Transport and Industrial risks partly offset by a decrease in Motor.
Net investment result decreased by €136 million (-39%) to €216 million. On a constant exchange rate basis net investment result decreased by €117 million (-33%) as a result of lower cash, equity and bond yields.
Net capital gains or losses attributable to shareholders net of income tax (44) (43) 172
As a result, the combined ratio was up 5.8 points to 99.0%.
Expense ratio increased by 3.1 points to 27.6%. Excluding the non-recurring impacts (i) in 2008 (+2 points) mainly due to a positive change in own pension scheme and (ii) in 2009 mainly
Net investment result decreased by €3 million (-13%) to €21 million. On a constant exchange rate basis, net investment result decreased by €2 million (-9%) refl ecting lower interest rates.
Profi t or loss on fi nancial assets (under Fair Value option) & derivatives 20 (71) (1)
On a constant exchange rate basis, net income decreased by €51 million (-21%) as a result of adjusted earnings decrease partly offset by €65 million favorable change in fair value of assets and €28 million favorable change in exceptional operations primarily due to €31 million non-recurring tax impact from
Gross revenues decreased by €270 million (-16%) to €1,445 million (1). On a comparable basis and excluding distribution fees (retroceded to distributors), net revenues decreased by €193 million (-15%) mainly due to lower management fees (€-131 million), driven by lower average AUM
Net New Money: Infl ows of client money less outfl ows of client money. Net New Money measures the impact of sales efforts, product attractiveness (mainly dependent on performance and innovation), and the general market trend in investment allocation.
AXA intends to cancel in order to avoid any increase of in the number of its outstanding shares and/or dilution).
shareholders represented 5.9% of the outstanding share capital and 6.9% of the voting rights at December 31, 2009.
Services reaffi rmed the Aa3 counterparty credit and fi nancial strength ratings on AXA’s principal insurance subsidiaries and its
Supervisory Board must hold, within two years following his/her fi rst appoint ment, AXA shares with a value at least equal to the gross director’s fees earned during the previous fi scal year.
Banca Monte dei Paschi di Siena SpA Piazza Salimbeni, 3 53100 Sienna – Italy
Mrs. Isabelle Kocher, born in 1966, is a graduate of the É cole
Chairman of the Asian Civilisations Museum Board, a member of the National Heritage Board, a member of the Advisory
Chairman of the International Chamber of Commerce in 2003 and 2004, Mr. Fourtou co-chairs the Franco-Moroccan Economic
Vice-Chairman of the Board of Directors: ■ AXA Assurances IARD Mutuelle
Projects. In 1986, he was appointed Executive Vice-President in charge of Industrial business and then in February 1991,
Committee. The Committee examines the provisions envisaged by the Chairman of the Management Board in order to prepare the relief of the members of the Management Board; ■ T o examine in more depth certain Group Human Resources issues (Group training and development policy, international mobility…).
While the Management Board operates as a collective decisionmaking body under French law, each Management Board member has been assigned responsibility for a specifi c area of the Company’s management.
Name (age) Principal Offi ce presently held in AXA Principal business address First appointment/term of offi ce
Chief Executive Officer – non director: ■ AXA Assurances IARD Mutuelle
Christopher Condron Member of the Management Board, President and Chief Executive Offi cer of AXA Financial, Inc. (United States) and Global Head of Life & Savings and Health
Denis Duverne Member of the Management Board, in charge of Finance, Strategy and Operations
and includes two components: ■ Group performance, as measured by underlying earnings per share, P&C revenues, New Business Value in Life & Savings and customer scope index; ■ I ndividual performance, which is evaluated by the
Variable compensation for the year 2006 paid in 2007 €3,045,987 €2,500,000 122%
In the tables below, compensations which are not paid in Euro have been converted on the basis of yearly average exchange rate for 2009 as follows: USD/EUR 0.717115 ; GBP/EUR
Mark Pearson (d) CEO of AXA Life Japan and AXA Japan Holdings
On the basis of the AXA share price on December 31, 2009, i.e.
Performance Shares granted to 6 employees outside France (the acquired shares will not be subject to any restriction period).
Pursuant to the AXA Group Compliance and Ethics Guide, executive offi cers must refrain from any purchase or sale of the
To the best of the Company’s knowledge based on information reported to it, the members of the Management Board made the following disclosures in the course of 2009 concerning their transactions involving Company securities in compliance with
In case of retirement between 60 and 65, the 25% and 75%
(health insurance, life insurance, disability insurance, retirement, etc.) to which Messrs. de Castries and Duverne are currently entitled as employees of AXA. In this context, the Supervisory
Company and/or its affi liated entities or economic interest groups in particular pursuant to Article L.225-197-2 of the
Number of shares transferred since the beginning of the program 2,691,693
These commitments shall take effect upon the effective renunciation by Mr. Duverne of his employment contract and will continue so long as he remains executive offi cer of AXA (including under renewed mandates).
BNP Paribas or AXA, and also provides for a reciprocal repurchase option in the event of a hostile takeover on either AXA or BNP Paribas.
These events and the continuing market upheavals, 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 and are also dependent upon customer behavior and confi dence. In our Life & Savings business, these conditions could affect the sales of our participating life insurance and
pension products, mutual funds, asset management services and products with fi nancial risk borne by the policyholders (unit-linked), including Variable Annuity products and V ariable L ife products.
Claims paying and credit strength ratings have become increasingly important factors in establishing the competitive position of insurance companies. Rating agencies review their ratings and rating methodologies on a recurring basis and may change their ratings at any time. Consequently, our current ratings may not be maintained in the future. In the context of
in the 2009 c onsolidated fi nancial statements included in this
During periods of declining interest rates, life insurance and annuity products may be relatively more attractive to consumers, resulting in increased premium payments on products with fl exible premium features, and a higher percentage of insurance policies remaining in force from year-to-year, creating asset liability duration mismatches. During a low interest rate period, our investment earnings may be lower because the interest earnings on our fi xed income investments will likely have declined in parallel with market interest rates. In addition, mortgages and fi xed maturity securities in our investment portfolios will be more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates. Consequently, we may be required to reinvest the proceeds in securities bearing lower interest rates.
For the year ended December 31, 2009, a signifi cant portion of AXA’s insurance gross premiums and fi nancial services revenues, as well as AXA’s benefi ts, claims and other deductions were denominated in currencies other than the Euro, primarily
The profi tability of AXA’s fl agship Accumulator series of Variable
Annuity products depends, among other factors, on AXA’s ability to effectively hedge the Accumulator guarantees. The Company has implemented and continues to pursue a number of initiatives, including re-design and re-pricing of certain product features, designed to improve the profi tability of these products and avoid future hedging losses on the Accumulator guarantees of the type experienced in 2008. There can be no assurance, however, that these initiatives will succeed in meeting their objective or that the re-designed and re-priced products will continue to be attractive to their target markets which, in either case, could have an adverse impact on AXA’s business, competitive position, results of operations and fi nancial condition.
The claims experience in our Life & Savings businesses could be inconsistent with the assumptions we use to price our products and establish our reserves and adversely affect our earnings
Annuity products, across major markets where we operate around the world. Our Life & Savings products, including our
We may, from time to time, retain insurance or reinsurance obligations and other contingent liabilities in connection with our divestiture, liquidation or run-off of various businesses. For example, on December 21, 2006, we completed the disposition of AXA RE’s (now called “Colisée Re”) business, our reinsurance subsidiary, but retained the risk related to adverse deviation of claims reserves for all accident years prior to January 1, 2006.
We face strong and increasing competition in all our business lines. Our competitors include mutual fund companies, asset management fi rms, private equity fi rms, hedge funds, commercial and investment banks and other insurance companies, many of which are regulated differently than we are and offer alternative products or more competitive pricing than we do. In addition, development of alternative distribution channels for certain types of insurance and securities products, including through the internet, may result in increasing competition as well as pressure on margins for certain types of products. These competitive pressures could result in increased pricing pressures on a number of our products and services, particularly as competitors seek to win market share, and may harm our ability to maintain or increase our profi tability. The fi nancial crisis resulted in a number of AXA’s direct competitors receiving substantial capital injections from government authorities. While certain of these institutions have taken steps to repay the public assistance they received, many others continue to benefi t from direct or indirect government support or are either majority or fully controlled by government authorities. This unprecedented situation, including the risk of government supported or controlled competitors attempting to use this support / control as a marketing advantage, may negatively impact the competitive position of AXA in certain markets and adversely affect its results of operations and fi nancial condition.
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 more in the future. These actions arise in various contexts including in connection with our activities as an insurer, securities issuer, employer, investment advisor, investor and taxpayer. Any one or a combination of this lawsuits or regulatory investigations could have a material adverse effect on our fi nancial condition or results of operations or cause us signifi cant reputational harm, which could seriously harm our business. Certain of these lawsuits and investigations seek signifi cant or unspecifi ed 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. Due to the nature of certain of these lawsuits and investigations, we cannot make an estimate of loss or predict with any certainty the potential impact of these suits or investigations on our business, fi nancial condition or results of operations.
Mutuelles AXA do not hold a majority of the total voting power in AXA, efforts by the Mutuelles AXA to decline or deter a future offer to acquire control of AXA, which other shareholders may fi nd attractive, may prevent other shareholders from realizing a premium for their AXA ordinary shares or ADRs. The Mutuelles
Risk management is a local responsibility, subject to Group standards, guidelines and monitoring of the risk exposure, and within a clearly defi ned local Risk Appetite consistent with the
Group through reduction of shareholders’ value; ■ 9% at the end of 2009 (7% at the end of 2008 and 8% at the end of 2007) of the Group’s Life & Savings technical reserves cover separate-account products with related interest-rate or equity guarantees provided by the insurance company, called
■ 16% at the end of 2009 (18% at the end of 2008 and 17%
■ Life & Savings business: 78% of Group assets at the end of
US dollars (€3,200 million in 2009, €3,001 million in 2008, and €2,629 million in 2007), but also in pound sterling (€288 million in 2009, €371 million in 2008, and €674 million in 2007) and
These limits depend on the issuer’s risk, based on the computation of the weighted average credit rating of all the bonds pertaining to this issuer (corporate, government, state-owned companies and agencies). Note 9.4 of Part 4 – “consolidated fi nancial statements ” sets out the debt securities portfolio by issuer type.
The breakdown of all reserves ceded to reinsurers by reinsurer rating as at December 31, 2009 (€11.3 billion) was as follows: BBB
Casualty as a regular technical & risk audit with methods adapted to the underwriting of risks, while maintaining the principle of local decision-making based on a documented approval procedure.
This framework includes pricing control systems used by insurance operations as part of their product development process, such as those described in the previous section. This type of analysis quantifi es and demonstrates the benefi ts of the diversifi cation created by AXA’s wide range of businesses and regional operations.
Group regularly monitors its exposure to these risks (mortality, longevity, long-term care, etc.) and uses the results of this work to enhance the structure of its product ranges and its reinsurance coverage. These exposure analyses are completed by risk models in Life & Savings (mortality, longevity, dependance,…).
4.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 214 4.2 CONSOLIDATED STATEMENT OF INCOME 217 4.3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 218 4.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 220 4.5 CONSOLIDATED STATEMENT OF CASH FLOWS 224 4.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 226
6 Value of purchased business in force (b) 3,617 4,405 4,373 7 Deferred acquisition costs and equivalent 18,789 18,756 16,757
Receivables arising from direct insurance and inward reinsurance operations 12,687 12,629 12,140
Derivative instruments relating to other fi nancial liabilities 108 23 140
Shareholders’ equity as at January 1, 2009 2,089,157 2.29 4,784 17,840 (547)
Capital in excess of nominal value - - - 370 -
Other fi nancing cash impact and non cash adjustment (53) 100 4
Since the balancing entry to this liability is not specifi ed by current IFRS, and since IFRIC’s Agenda Committee decided in 2006 not to take any position on the accounting treatment of these transactions, the Group’s method is (i) to reclassify noncontrolling interests from equity to liability, (ii) to re-measure this liability at the present value of the option price and (iii) to recognize the difference either as an increase in goodwill for puts existing before January 1, 2009 or as a decrease in equity (Group share)
receivables and gains/losses on intra-group transactions are eliminated: ■ I n full for controlled subsidiaries, and; ■ T o the extent of AXA’s interest for entities consolidated by equity method or proportionate consolidation.
1.6.4. Deferred acquisition costs (DAC) relating to insurance contracts and investment contracts with discretionary participating features – Deferred origination costs (DOC) relating to investment contracts with no discretionary participating features
Undated subordinated debts and any related interest charges are classifi ed either in shareholders’ equity (in the “other reserves”
The current income tax expense (benefi t) is recorded in the income statement on the basis of net amounts estimated to be payable (or recoverable) in relation to taxable operations recorded during the year and based on the local tax regulation.
Deferred tax assets and liabilities emerge from temporary differences between the accounting and fi scal values of assets and liabilities, and when applicable from tax loss carryforwards.
Deferred tax assets are recognized to the extent that it is probable that future taxable profi t will be available to offset the temporary differences.
Pensions and other post-retirement benefi ts include the benefi ts payable to AXA Group employees after they retire (retirement compensation, additional pension benefi t, Health insurance).
(including any embedded surrender option, i.e. without taking into account the “insurance” component); ■ T he Group accounting methods do not otherwise require to recognize all obligations and rights arising from the “deposit”
Region and in majority relating to the Life & Savings segment.
IFRS rules even though AXA’s investments in these CDO’s assets represented only approximately €63 million out of the €393million.
Health products. The Property & Casualty segment aggregates seven geographical operating components: France, Germany, the United Kingdom and Ireland, Switzerland, Belgium, the
Net revenues from banking activities - - - - 472 1 (86) 388
Change in fair value of other investments at fair value through profi t or loss (b) 25,744 262 5 494 - 642 1 27,148 of which change in fair value of assets with fi nancial risk borne by policyholders 23,870 - - - - - (9) 23,861
Other operating income and expenses (78,465) (24,536) (3,718) (3,898) (344) (601) 803 (110,760)
Please refer to pages 194 to 203 of the “Quantitative and Qualitative
(c) Includes the goodwill in connection with the put to re-purchase units of the former shareholders of Sanford C. Bernstein until 2008.
(e) Following a revaluation of deferred tax assets booked at the time of the Nippon Dantaï acquisition, goodwill was reduced by an equivalent amount (€70 million in 2005, equivalent to €73 million at December 31, 2009 due to change in foreign exchange).
American Region (€889 million); ■ Property & Casualty net goodwill (€4,524 million) were the
ELLA Bank (AXA Bank Hungary) 53 7 - 2 (3) - 59
New Zealand operations (including local holdings) are classifi ed as held for sale separately from other assets and liabilities in the consolidated statement of fi nancial position as at December 31, 2009, with no impact on shareholders’ equity. AXA SA also booked €141 million deferred tax expense on the temporary difference between the consolidated value and the tax base of the shares that it holds.
On June 30, 2008 the agreement on the sale by Banca MPS
In accordance with IFRS 3, i.e. within 12 months following the acquisition date, the Group adjusted certain items impacting the allocation of the purchase price, resulting in a €33 million increase in the goodwill to €512 million as at December 31, 2008. Most of the increase in goodwill was due to adjustments to provisions for liabilities and claims reserves.
Investment in real estate properties at amortized cost 18,165 12,859 2.50%
Investment in real estate properties include buildings owned directly and through real estate subsidiaries. Investment in real estate properties measured at fair value on the balance sheet mainly consist of assets backing UK with-profi t contracts.
Loans designated as at fair value through profi t or loss (b) - 8 - 8
TOTAL FINANCIAL INVESTMENTS EXPOSED TO INTEREST RATE RISK 35,105 79,057 213,273 327,436
Cost after impairment but before reva luation to fair value (c)
Debt instruments (at cost) that are not quoted in an active market 1,804 - 1,804 - 1,804
Non controlled investment funds available for sale 6,229 (1,077) 5,152 589 5,741
As at December 31, 2008, the turmoil reached a further point of dislocation. Many fi nancial institutions closed their desks dedicated to structured assets deals and were no longer in a position of delivering meaningful quotes with the appropriate knowledge and dedication at the end of year 2008. The lack of activity with very few prices representing arm’s length transactions between willing market participants restricted the possibility and the relevance to refer to the very limited number of observed deals. As a result, more valuation techniques were introduced at year end based on a maximum use of observable inputs whenever possible. Such modeled based valuation were maintained at the end of the year 2009 because of the continued inexistence of primary markets and the lack of transactions representing fair values during the period on the secondary market.
Bharti AXA Life Insurance Company Limited - - (30) (13) 50 7
In 2008, “Acquisitions & disposals” notably included: ■ Reso Garantia, with a goodwill of €588 million at December 31, 2008 and a Property & Casualty renewals intangible of €20 million; At December 31, 2009, the goodwill of Reso Garantia had a net value of €582 million.
Banque de marchés et d’arbitrage 7 - - - - 7
Philippines AXA Life Insurance Corporation 11 - 5 (1) - 14
Credit risk exposure, mainly relating to receivables from mortgage activities in banks and reinsurers, is covered in Note 4 “Financial and insurance risk management”.
Of which measured at current assumptions (e) 7 - - 7
Reinsurers share in liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 27 - - 27
(f) For the detail of P&C and International Insurance IBNR, see Note 20.2.4.
Reinsurers’ share in future policy benefi t reserves 6 6 6 6 9 9
Loss reserves development (prior years) (2,076) 45 (2,031) (2,173) (279) (2,452) (1,531) (157) (1,687)
Impact of foreign currency fl uctuation 362 (288) 74 (636) 97 (539) (432) (529) (961)
Investment contract with no Discretionary Participation Features (DPF) measured at fair value - 57 541
(in Euro million except percentag es) 1999 2000 2001 (c) 2002 2003 2004 (d) 2005
Percentages of original net reserve (a) 26.7% 33.9% 36.0% 48.3% 32.5% 21.1% 35.2%
■ M any of the features themselves would qualify as insurance contracts under phase I.
Financing debt owed to credit institutions 921 797 1,216 1,227 175 175
Other debt instruments issued held as trading - - - - - - - - -
Policyholder tax – Deferred tax through reserves relating to the fair value adjustment of available for sale assets - - 3 - - 2
TOTAL RECOGNIZED DTA BY EXPECTED DATE OF USE 1,921 539 345 374 470 144 656 3,888 - 8,338
“macro-hedging” derivatives as defi ned by the IASB in its amendment to IAS 39.
AXA uses derivative instruments to hedge some equity and real estate exposures and to manage various types of risks, including interest rate risk, exchange rate risk and credit risk. Details of the impact of derivative instruments on fi nancial investments and liabilities are provided in section 19.3 and 19.4.
(€206 million); ■ €31,072 million held directly or within “core investment portfolio” or CDOs. Such credit derivatives were mainly used at AXA Japan on debt instruments to enhance the return on its govies portfolio (notional amount of €9,780 million compared to €11,618 million at the end of 2008). In addition, AXA Japan also used credit derivatives to form negative basis trades, for a notional amount of €2,538 million.
(a) Assets and liabilities of the Australian and New Zealand operat ions (including local holdings) are classifi ed as held for sale separately from other assets and liabilities in the consolidated statement of fi nancial position as at December 31, 2009 (see Note 5.3.3).
Investment in real estate properties designated as at fair value through profi t or loss 2,398 - - 2,398
Debt instruments designated as at fair value through profi t or loss 55,095 - 58 55,152
(c) Financing debt, other debt instruments issued, notes and bank overdrafts, and Payables arising from banking activities issued are disclosed in the consolidated statement of fi nancial position net of the impact of derivatives. As a result, the amount showing in the column “value including effect of derivatives” is their carrying value.
(b) Excludes liabilities relating to unearned revenues and fees, and policyholder bonuses, along with derivatives relating to insurance and investment contracts.
Debt instruments designated as at fair value through profi t or loss (a) 2,278 (525) (4,447) - (2,694)
(b) Claims handling expenses are included in the “Technical charges relating to insurance activities” profi t or loss caption.
(c) This amount includes the effect of the elimination of the insurance contract in 2007 and the reclassifi cation of general account assets as plan assets in 2009 in Switzerland.
Employer contributions and benefi ts directly paid by the employer 600 548 378 242 328 40 44 45 49 49
Net transfer In/(Out) (including acquisitions and disposals) (a) (b) 983 107 (2,280) (485) 121 - (11) (20) (8) (23)
In the United States, AXA Financial provides certain medical and life insurance benefi ts (collectively, “postretirement benefi ts”) for qualifying employees, managers and agents retiring from AXA
A t the end of the 5 years restricted period, the employees can, depending on their residence country, do any one of the following: (1) receive the cash value of their assets ; (2) receive the value of their assets in the form of AXA shares ; or (3) transfer their assets invested in the leveraged plan into the traditional sub-fund.
AXA issued Performance Units to executive offi cers and other key employees outside France in 2004, 2005, 2006, 2007, 2008 and 2009.
The total cost of the Performance Units recorded in earnings in 2009 was €21.4 million (€3.7 million for the equity-settled portion and €17.7 million for the cash-settled portion).
In 2009, AllianceBernstein granted to certain key employees the right to receive deferred compensation in the form of Restricted
As at January 1, 2007, the effect of convertible bonds is no longer integrated in the calculation of diluted net income per ordinary share. Indeed, to neutralize the dilutive impact of the 2017 convertible bonds, AXA purchased from a banking counterparty, call options on AXA shares with an automatic exercise feature.
FULLY DILUTED NET INCOME PER ORDINARY SHARE (d) F = E/D 1.51 0.43 2.67
Guarantee commitments received totaled €9,559 million at the end of 2009, and mainly consisted in: ■ G uarantees related to mortgaged loan from customers
(€2,801 million) including €2,070 million guarantees to loan and €258 million to IT contracts; ■ G uarantees commitments given to customers (€375 million)
If all or part of the assets transferred are unlikely to be returned in the foreseeable future (taking into consideration the duration of the in force with-profi t policies), then the relevant part of the transfer would be designated permanent. Only a permanent transfer to the with-profi t f unds would result in a charge against the profi t and loss account. As at December 31 2009 the maximum amount that could be transferred under the Scheme is capped at the market value of relevant surplus assets in the n onprofi t f unds, which is estimated to be £750 million (€863 million)
September 2007 in Federal court alleging certain wage and hour violations with regard to certain sales personnel. Each of the cases seeks substantially the same relief under essentially the same theories of recovery: violation of the Fair Labor
Equitable as plan sponsor and fi duciary for an ERISA retiree health plan. The action was brought by two plan participants on behalf of all past and present employees and agents who received retiree medical benefi ts from AXA Equitable at any time after January 1, 2004, or who will receive such benefi ts in 2006 or later, excluding certain retired agents. Plaintiffs allege that (a) AXA Equitable’s adoption of a revised version of its retiree health plan in 1993 (the “1993 Plan”) was not authorized or effective, (b) that AXA Equitable has therefore breached the retiree health plan by imposing the terms of the 1993 Plan on plaintiffs and other retirees, (c) even if the 1993 Plan is controlling, AXA Equitable has violated the terms of the retiree health plan by imposing health care costs and coverage on plaintiffs and other retirees that are not authorized under the 1993 Plan, and (d) AXA Equitable breached fi duciary duties owed to plaintiffs and retirees by allegedly misrepresenting and failing to disclose information to them. The plaintiffs seek compensatory damages, restitution and injunctive relief prohibiting AXA Equitable from violating the terms of the applicable plan, together with interest and attorneys’ fees. In March 2007, AXA Equitable fi led a motion to dismiss. In July 2007, the plaintiffs fi led an amended complaint that (i) redefi ned the scope of the class to now include all retired employee and independent contractor agents formerly
AXA and certain of its subsidiaries are involved in various legal actions and proceedings arising out of transactions involving the acquisition or sale of businesses or assets, mergers or other business 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
The Supervisory Board also may authorize that its members be compensated for the performance of special tasks or assignments in accordance with the provisions of French company law. In addition to directors’ fees, the Supervisory Board may decide to grant compensation to its Chairman and Vice-Chairman.
Under AXA’s Charter, the actual dividend payment date is decided by the Management Board after a prior authorization by the Supervisory Board. AXA must pay any dividend within nine months of the end of its fi scal year. Dividends not claimed within fi ve years of the date of payout become the property of the
In addition, the Charter of AXA provide that any individual or legal entity acting alone or jointly, that acquires shares resulting in a direct or indirect holding of 0.5% or more of the share capital or voting rights of AXA, including through the acquisition of
I Part 1 Conditions of preparation and organization of the Supervisory Board’s work
All of these Supervisory Board Committees constitute an important part of the Group’s overall internal control environment, however, the Audit Committee plays a particularly important role in reviewing internal control and risk related issues.
■ GRM coordinates the activity of decentralized operational risk teams to ensure proper and consistent identifi cation, measurement and management of the most important operational risk.
Group as well as signifi cant litigation, regulatory, and compliance matters.
Group meets on a regular basis and serves as an effective forum for addressing transversal issues, sharing best practices and experiences in a wide variety of areas, and ensuring open lines of communication between General Counsels across the
Committee the signifi cant risk within its scope: 1. Group Risk Management (GRM); 2. Group Corporate Finance and Treasury (DCFG); 3. Group Audit; 4. Group Legal & Compliance; 5. Group Tax; 6. Planning Budgets Results Central (PBRC); 7. Information Technology (IT)/Operational Excellence; 8. AXA Cessions; 9. Group Human Resources; 10. Group Communication.
Supervisory Board and the Management Board decided to adopt all of the AFEP/MEDEF recommendations, including the recommendations on the compensation of executive offi cers dated October 2008, as AXA’s Corporate Governance Code of reference.
transactions), but does not prohibit, in accordance with common practice, the simple exercise of options that is not followed by the sale of the shares acquired subsequently.
Form 6-K for August 2009: Press Release issued on August 5, 2009 by AXA, announcing fi rst half 2009 performance
Form 6-K for February 2010: Press Release issued on February 17, 2010 by AXA, announcing that its Supervisory Board approved proposed amendments to its Charter that will be submitted to a vote of shareholders at AXA’s General Shareholders’ Meeting on April 29, 2010
Dividends received from European companies totaled €2,352 million, an increase of €24 million, resulting from the following factors: ■ A €1,987 million dividend from AXA France Assurance, representing an increase of €1,250 million, of which €900 million paid in shares; ■ A €134 million dividend paid by German entities, versus none in 2008; ■ N o dividend from AXA Holdings Belgium, as opposed to a €1,053 million dividend in 2008 arising from the capital gain realized on the sale of the Netherlands activities in 2007; ■ N o dividend distribution from Colisée RE (formerly AXA RE)
December 2009 and the €393 million capital increase reserved for employees.
Net book value on the sale of fi xed assets (38) (301) (1,633)
Wolfe Tone House - Wolfe Tone Street - DUBLIN - Irlande 23, avenue Matignon 75008 PARIS
BAO MINH INSURANCE CORPORATION 29 46 16.60% 53 26 Ton That Dam, Districk 1, Ho Chi Minh City - VIETNAM
a) French subsidiaries (total) 115 b) Foreign subsidiaries (total) 249 2) Participating interests not shown in section A
On January 11, 2007, the meetings of holders of AXA’s 2014 and 2017 convertible bonds were held to vote on an amendment of the fi nal conversion dates of the bonds to January 26, 2007 in exchange for a cash payment in respect of the value of the conversion option.
Pursuant to this review, the employee benefi t liability amounted to €6 million at December 31, 2009.
In force for a period of fi ve years starting from December 16, 2005, this agreement is renewable automatically for an initial period of two years and for successive periods of one year thereafter, unless one of the two parties decides to terminate the agreement earlier, in which case the terminating party is required to give three months notice prior to the next renewal date.
(ii) A 10% depreciation of the Euro leads to a 3.6% increase in the fair value of debt, a 6.8% decrease in the fair value of loans and a 196.4% decrease in the fair value of derivatives.
We have assessed whether the impairment tests performed by the Company, depending on the invested assets situation and the volatility of fi nancial markets, are appropriate and we also assessed the reasonableness of the resulting provisions. Regarding investments, for which impairment is based on the value-in-use and the intent to hold, we have assessed the data used in order to determine the value-in-use of the main investments in the portfolio and obtained confi rmation of the intent to hold; ■ I n accordance with the policies described in paragraph 2.9 of the notes to the fi nancial statements, liabilities are recorded at the year-end for redemption premiums on convertible bonds issued by the Company whenever the prevailing stock price is lower than the discounted redemption value of the underlying note. We have tested the reasonableness of the assumptions used for calculation, having regards the stock market volatility and the maturities of outstanding convertible bonds issued by the Company; ■ D erivatives used by your Company are assessed pursuant to the rules contained in paragraph 2.12 of the notes to the fi nancial statements. We have checked that the implementation of a hedge accounting, as the case may be, was documented. In the other cases, we verifi ed that adequate provisions for the unrealized losses were recorded, in particular, the provision for foreign exchange losses, of which the release affects signifi cantly the net income of the year, as indicated in note 3.10 to the fi nancial statement of
Life & Savings segment in 2009 including dividends paid, received and capital injections.
Upward shift of 25% of the volatility on bonds (1,239) (82)
In arriving at these conclusions, Towers Watson relied on data and information provided by AXA. This opinion is made solely to AXA
Board relative to the share repurchase program and to the cancellation of shares (V); ■ R enewal of the delegations of authority granted to the
AXA’s Bylaws, this proposal for allocation of earnings and the date for the dividend payout were approved by the Supervisory
The regulated commitments authorized during the fi scal year 2009 and up until February 17, 2010 are submitted to your approval in separate resolutions (resolutions 5 to 7).
IV – Re-appointment of Mazars as incumbent Statutory Auditor and appointment of a new alternate Statutory Auditor
Mr. Jean- Louis Simon. The term of offi ce of Mr. de Turkheim would expire at the end of the General Shareholders’ Meeting convened in 2016 to approve the fi nancial statements of the preceding fi scal year.
The purchase, sale or transfer of these shares may be completed and paid by all appropriate means in accordance with the applicable laws and regulations, including through open market, private or over-the-counter transactions, notably through block trades, by using fi nancial derivatives or warrants or, more generally, securities giving a claim to shares of the Company, or through public offerings introduced by the Company, at such time as the Management Board shall decide.
In compliance with Article 12 of the Bylaws of your Company, this resolution was approved by the Supervisory Board of AXA at its meeting on February 17, 2010.
February 17, 2010 such amendments and (ii) recommended the adoption of a structure with a Board of Directors in which
Appointment of Mr. Henri de Castries as Chairman and CEO (PDG)
Bylaws. Their respective terms of offi ce would expire at the end of the General Shareholders’ Meeting convened in 2014 to approve the fi nancial statements of the preceding fi scal year. The Supervisory Board, upon recommendation of its
(5.86%) and Mr. Jason Steinberg (3.91%). No candidacies were submitted within the “indirect process”.
Directors. The Vice-Chairman may be re-appointed. He/she may be dismissed at any time by the Board of Directors.
may be held at the Vice-Chairman’s discretion either before or after each meeting of the Board or at any other time the Vice-Chairman would deem appropriate.
Pursuant to a swap agreement entered into by the FCPE, the redemption value of the FCPE unit at maturity of the FCPE, or prior to maturity in the event of an early exit as provided for by law, would be equal to an employee’s personal contribution, which is guaranteed in euro, and a percentage of any gain on all of the shares for the employees have subscribed via the FCPE.
2.3 IMPACT OF THE RIGHTS ISSUE ON THE SITUATION OF HOLDERS OF STOCK OPTIONS, WARRANTS AND 2017 CONVERTIBLE BONDS, AND BENEFICIARIES OF FREE SHARES ALLOCATION PLANS
(Paris time), the rights of benefi ciaries under stock option plans whose options are not currently exercisable, the rights of warrant holders who have not exercised their warrants at the latest by
This summary should be read as an introduction to the Prospectus. Any decision to invest in the securities issued in connection with this transaction should be based on a thorough review of the Prospectus. If an action is brought before a court in respect of information contained in the Prospectus, the plaintiff investor may be required to bear the cost of translating the Prospectus prior to the commencement of judicial proceedings pursuant to the national legislation of the member States of the European Community or of the parties to the agreement on the European Economic Area. The persons who have prepared the summary, including, where applicable, its translation, may be liable only if the contents of the summary are misleading, inaccurate or contradict other parts of the Prospectus.
The combined ratio was 95.5% as at 31 December 2008 and 98.0% as at 30 June 2009.
If the transaction with AAPH is successful, the combined impacts of this transaction and the Rights Issue will be as follows: ■ D ilution of -5% to earnings per share in 2010, assuming a short-term reinvestment of liquidity; ■ A n increase of 8 points to the Solvency I ratio (1); and
(1) Totals are net of accounting impacts and effects on participation of policyholders, carried over acquisition costs, and the value of acquired portfolios.
Lockup undertakings by the Company and the AXA Mutuelles 90 days from the date of execution of the underwriting agreement
Prior to the issue of new shares pursuant to this Rights Issue 18.80 18.96
(2) In the event all currently exercisable stock options and warrants are exercised in full and including only preferential subscription rights attached to shares allocated upon conversions of Convertible Bonds that occur no later than 20 November 2009.
Publication of the summary of the French Prospectus in the national press.
Board sets the opening date of the subscription to a capital increase carried out by virtue of the 12th resolution, and (ii) shall not be higher nor more than 20% lower than the average quoted price of the AXA share on Euronext Paris over the twenty trading days preceding the day on which the Management Board sets the opening date of the subscription to the capital increase reserved to benefi ciaries comprised in the category defi ned hereinbefore, provided that the structured offer referred above would not be established concurrently to a capital increase carried out by virtue of the 12th resolution; ■ T he Management Board may decide to reduce or cancel of any discount so granted, if it deems appropriate, in order to take into account, inter alia, legal, accounting, tax or social provisions applicable in some benefi ciaries’ country of residence; REPORT OF THE STATUTORY AUDITORS ON THE CAPITAL INCREASE WITHOUT PREFERENTIAL SUBSCRIPTION RIGHTS, IN FAVOR OF A CATEGORY OF BENEFICIARIES
Savings Plan (P.E.E.G) of AXA subsidiaries in France; and to (ii) corporate offi cers, general insurance agents and employees or former employees enrolled in the Group International Savings Plan (P.I.A.G) of AXA subsidiaries outside France, as authorized by your General
Tax Code (Code général des impôts), all individuals deemed to be French resident for tax purposes are eligible for a 40% tax relief on the dividend, that is €0.22 per share, provided that the option for a fl at deduction at source provided under Article 117 quater of the French General Tax Code has not been exercised in relation to these dividends or other earnings received during the same fi scal year.
The shareholders, having fulfi lled the quorum and majority requirements pertaining to Ordinary Shareholders’ Meetings, and having reviewed the Statutory Auditors’ Special Report on agreements referred to in Article L.225-86 of the French
The shareholders, having fulfi lled the quorum and majority requirements pertaining to Ordinary Shareholders’ Meetings, having reviewed the Management Board’s Report, and upon proposal of the Supervisory Board, hereby re-appoint Mazars as incumbent Statutory Auditor for six fi scal years. Its term of offi ce would expire at the end of the General Shareholders’ Meeting convened in 2016 to approve the fi nancial statements of the preceding fi scal year.
or any other similar authority , comply with all formal, legal and other requirements and, as a general matter, take all appropriate measures in connection therewith.
Bylaws accordingly; • charge, if need be, all expenses on the amount of the issue premiums; • take any measures necessary to the furtherance of the issues; • undertake all formalities resulting from capital increases and in general, to take all necessary measures.
AUTHORIZATION GRANTED TO THE MANAGEMENT BOARD IN ORDER TO REDUCE THE SHARE CAPITAL THROUGH THE CANCELLATION OF ORDINARY SHARES
Directors may sub-delegate its authority under legal conditions and to undertake of all formalities and fi lings required in view of the aforementioned amendments of the Bylaws; ■ G rant full authority to the Board of Directors, with the option to sub-delegate its authority under legal conditions, to undertake all formalities and fi lings required in view of the aforementioned amendments of the Bylaws.
APPOINTMENT OF MR. JOHN COULTRAP TO THE BOARD OF DIRECTORS UPON PROPOSAL OF THE EMPLOYEE SHAREHOLDERS OF THE AXA GROUP
APPOINTMENT OF MR. PAUL GEIERSBACH TO THE BOARD OF DIRECTORS UPON PROPOSAL OF THE EMPLOYEE SHAREHOLDERS OF THE AXA GROUP
In the event of a capital increase, the shares may be paid up, upon decision of the General Shareholders’ Meeting or of the
Article 12 – Assignments and powers of the Board of Directors 1. The Board of Directors shall exercise the powers vested by law. In particular, it determines the orientations of the
The Board of Directors shall choose one of these two forms of Executive Management in accordance with the quorum and majority conditions provided for in Article 14 of these
When the Board of Directors chooses to part the roles of
3. The Chief Executive Offi cer is vested with the broadest powers to act on behalf of the Company. He/she exercises these powers within the scope of the corporate purpose, and subject to the powers expressly assigned by law to the
2. Notwithstanding the term of offi ce for which a Deputy
Shareholders’ Meeting convened to approved the fi nancial statements of the preceding fi scal year and held during the year the Deputy Chief Executive Offi cer reaches the age of sixty-fi ve.
The online completion and signature of these forms could be done directly on the secured website that has been set up to centralize the management of Shareholders’ Meetings, via a secure username (log-in) and password system, compliant with the fi rst sentence of the second point of Article 1316-4
I Information concerning the candidates to the AXA’s Board of Directors
Number of AXA shares held as of December 31, 2009: 8,517
(Philosophy Degree), University Paris I (Law Master), and of l’Institut d’Études Politiques de Paris. Mr. François Martineau has been Attorney since 1976. In 1981, he was “Secrétaire de la
(Civil Procedure). In 1995, he was a Professor at the Paris Bar
Number of AXA shares held as of December 31, 2009: none
Mrs. Isabelle Kocher is a graduate of the École Normale Supérieure
Effective labor-management communications and social dialog pave the way for the stability needed to implement the Group’s development strategy. Such communications with staff or their representatives are therefore organized and conducted by each Group company on a regular basis. AXA also has set up a European Works Council (EWC), whose extensive role goes beyond the regulatory requirements in force. The EWC is made up of staff representatives from AXA’s largest European subsidiaries, who meet in order to receive and exchange information on the social, strategic and economic issues that concern the Group, and maintain an ongoing dialog between employees and management.
A diverse workforce helps AXA effectively meet diverse market and customer needs globally and locally, as well as improve its competitiveness through innovation. It also helps attract the most talented people in all populations and foster internal morale and engagement, without ignoring the benefi ts of enhanced people management and optimized teamwork. Moreover, it enhances the brand image. In 2009, signifi cant progress has been made with the senior sponsorship of a member of the Management
, 2,574 trips for a total of 28 million km. In 2010,
Although AXA’s paper consumption decreased by 3% between 2007 and 2008, it is not possible to track performance in 2009, as the reporting standards have changed for this indicator. AXA now tracks both offi ce paper and marketing and distribution paper separately, in order to more accurately measure our impact.
Report of the Statutory Auditors on the fi nancial statements of the Company-parent only 460 to 461