Board of Directors and are presented in the table on page 517 of this Annual Report), and (iii) all information required under Article R.225-83 of the French Commercial Code.
This registration document was fi led with the Autorité des marchés financiers (AMF) on March 15, 2012, in accordance with the provisions of Article 212-13 of its General Regulations. It may be used in support of a fi nancial transaction if supplemented by an information memorandum approved by the AMF. This document has been prepared by the issuer, and its signatories are responsible for its content.
October 2010 and December 2011, has not yet been formally submitted to the European Union. The Group, however, would not have used the earlier adoption option of the standard.
AXA originated from several French regional mutual insurance companies, known collectively as “les Mutuelles Unies”.
(l) Holding company that owns AXA Versicherung AG, AXA Lebensversicherung AG, AXA ART Versicherung AG and AXA Krankenversicherung AG.
At March 15, 2012, the relevant ratings for the Company and its principal insurance subsidiaries were as follows: Agency Rating Outlook
Part 1.3 – “Activity Report”, and Note 3 “Statement of income by segment” included in Part 4 – “Consolidated Financial
(f) Considering all companies part of the Group of Public Insurers independently.
Investment and savings products include: ■ deferred annuities, which may be purchased with either a single premium or regular premiums. A deferred annuity has two distinct periods: an accumulation period and an annuity payment period. Typically, more fl exibility is permitted in premium payments for longer deferred periods. The premium generally can be invested either in the general account of the insurer, or in a choice of unit-linked funds. Also known as individual Variable Annuities in the United States, these products often include optional guarantees (for a fee) such as guaranteed minimum income benefi t (GMIB), guaranteed minimum death benefi t (GMDB) and guaranteed minimum withdrawal benefi t (GMWB);
(a) Based on estimated fair value at the dates indicated. Assets under management presented in this table are based on A sset management companies only. AXA Group (including insurance companies) assets under management amounted to €1,064.6 billion as of December 31, 2011.
Based in Paris, AXA Banque had 746,883 registered customers at the end of 2011, with a retail banking product offer (innovative current accounts with advantages on insurance premiums, savings and credit). Directly linked with the Group’s insurance business, banking products are offered to AXA France clients through its distribution networks. AXA Banque also manages direct clients through internet banking relationships.
Germany (7). The market (incl. Pension funds) decreased by 5.7%, in 2011, due to a decrease in single premiums (-18.5%), after a strong peak in 2010. German Private Health reforms led to a 4.5% growth in the Health insurance market (8). In 2010,
■ In Spain (1), the market grew signifi cantly by +18.5% due to a higher customer appetite for insurance products in a context of less competition from banks; ■ In Italy (2), the market decreased by -18.7% notably due to the positive impact of a fi scal amnesty in 2010; ■ In Portugal (3), the market experienced a signifi cant decrease
(7) Source: AMIS: Asociacion Mexicana de instituciones de Seguros as of September 30, 2011.
Switzerland (12). The Property & Casualty market grew by 1.4%. The Swiss market is still saturated and very competitive with a continuing pressure on prices, especially in Commercial lines. AXA maintain edits position as market leader in Property
AXA announced the successful completion of the sale. The transaction generated an exceptional realized capital gain of €0.9 billion which was accounted for in net income. In addition, AXA is entitled to receive up to CAD 100 million (or ca.
and Non-Motor (+2%), primarily as a result of tariff increases in Mature markets and Direct business and higher volumes in
International Insurance revenues were up 1% both on reported and comparable basis to €2,876 million mainly driven by (i) AXA Corporate Solutions up 3% to €1,986 million mainly due to positive portfolio developments in Aviation & Space,
AUM decreased by €4 billion from year-end 2010 to €512 billion at the end of 2011 mainly as a result of €-3 billion unfavorable market impact, €-4 billion unfavorable change in scope related to the partial sale of the UK Life & Savings operations and €-1 billion net outfl ows, partly offset by €+5 billion favorable foreign exchange impact.
and France (€+25 million) mainly resulting from: (i) higher Investment margin (€+34 million or +1%), mainly as a result of (i) a lower allocation to policyholders in
(a) Including adjustement to refl ect net fi nancial charges related to undated debt (recorded through shareholders’ equity).
Net capital gains or losses attributable to shareholders net of income tax (11) (138)
Underlying earnings decreased by €166 million (-35%) to €312 million. On a constant exchange rate basis, underlying earnings decreased by €155 million (-32%).
On a constant exchange rate basis, net income decreased by €765 million (-187%). Net income decreased refl ecting (i) a €943 million goodwill reduction attributable to the Accumulator book of business considering the present market environment deterioration, and (ii) higher restructuring costs recorded in 2011 (€-29 million), partly offset by a more favorable change in the fair value of interest rate derivatives (€+261 million).
2010 underlying earnings amounted to €134 million, corresponding approximately to €191 million from the sold business and €-57 million from the retained business for the comparable scope.
On a constant exchange rate and on a comparable scope basis, the expenses increased by €5 million.
Income tax benefits increased by €16 million (78%) to €37 million. On a constant exchange rate and on a comparable scope basis, income tax benefi ts increased by €7 million (25%)
Protection and increasing single premiums from short term investment products partly offset by lower new business from unit-linked products, refl ecting a shift in customer sentiment towards traditional products and as a result of the repricing of Variable Annuities (“Twinstar”); ■ Health increased by €34 million (+31%) mainly driven by a favorable change in regulation.
As a result the underlying cost income ratio increased by 5.4 points to 58.2%.
(€+3 million mainly in Mexico), as a result of increased average asset base combined with lower policyholder bonuses.
Net capital gains or losses attributable to shareholders net of income tax 2 3
Contribution to consolidated gross revenues 27,046 27,413 25,986 of which High growth markets 3,335 2,990 2,990 of which Direct 2,102 1,928 1,928 of which Mature markets 21,609 22,495 21,067
Gross revenues increased by €65 million (+1%) to €5,596 million (1): ■ Personal lines (59% of gross revenues) were stable at €3,248 million as tariff increases were offset by negative net new contracts in both Motor and household; ■ Commercial lines (41% of gross revenues) were up by 3% to €2,304 million mainly driven by tariff increases partly offset by lower volumes in a context of selective underwriting.
Profi t or loss on fi nancial assets (under FV option) & derivatives (120) 5
decline within Property refl ects the continuing diffi cult market conditions.
(i) higher pre-tax underlying earnings, (ii) the geographical mix between the UK and Ireland and (iii) a negative tax adjustment
On a constant exchange rate basis, net income increased by €14 million (17%) due to the improvement in adjusted earnings together with the net realized gain from the sale of Denplan
(2) On a comparable basis, after reclassifi cation of small and medium enterprises from Commercial lines to Personal lines.
Net capital gains or losses attributable to shareholders net of income tax 5 40
Expense ratio rose by 0.2 point to 25.9% (with acquisition ratio down 0.2 point and an administrative expense ratio up 0.4 point) with an increase in high growth markets (+0.5 point)
Underlying earnings decreased by €6 million (-9%) to €-69 million. On a constant exchange rate basis, underlying earnings decreased by €6 million (-9%) mainly due to recognition of operational losses from non consolidated entities partly offset by lower fi nancial charges.
Current accident year loss ratio net of reinsurance is the ratio of: (i) current year claims charge gross of reinsurance + claimshandling costs + result of reinsurance ceded on current accident year, excluding the recurring interests credited to the insurance annuity reserves, to
A2 for counterparty credit rating on the Company, assigning a negative outlook. The negative outlook refl ects Moody’s view that (i) fi nancial risks stemming from the operating and investment exposure to weakened European sovereigns and banks have increased, as well as (ii) Moody’s expectations of continued weak economic growth in certain of AXA’s key markets. In November 2011, Fitch Ratings reaffi rmed the
Employees 121 2.2 FULL DISCLOSURE ON EXECUTIVE COMPENSATION AND SHARE OWNERSHIP 122
M anagement to the extent necessary or appropriate. He is also consulted by the Chairman of the Board of Directors on the agenda of every meeting of the Board of Directors as well as on the planning of Board meetings.
Member of the Board of Directors Chairman Europe of The Coca-Cola Company
Directors whose term of offi ce will end (Mr. François Martineau)
Mrs. Doina Palici-Chehab’s appointment as director would help maintain the proportion of women within the Board, considering the expiry of Ms. Wendy Cooper’s term of offi ce.
(1) Except otherwise stated, the following information concerning the members of the Board of Directors is updated on December 31, 2011.
Banca Monte dei Paschi di Siena S.p.A. (Italy), Chairman of the Board
Société Anonyme des Galeries Lafayette, non-voting member of the Board (Censor)
(Germany). In 1991, he joined McKinsey & Co. in Germany as consultant. Initially, he worked on assignments in different industries including steel, tourism, retail and banking. As a Senior Engagement Manager, he was a member of the fi nancial institutions practice. In 1997, he started as a senior associate for Goldman, Sachs & Co. oHG in Frankfurt am
Executive Offi cer do not currently exercise any professional activity or hold any directorships outside the AXA Group, other than functions within non-profi t organizations. Certain members of the Board of Directors, however, are corporate offi cers and/or directors of companies that may have agreements or enter into transaction from time to time with the AXA Group including extensions of credit, purchases of securities (for their own account or for third parties), underwriting of securities and/or furnishing of other types of services or goods. These agreements or deals are generally fully negotiated and
Committee Chairmen report to the Board of Directors on a regular basis following Committee meetings.
On December 31, 2011, the Finance Committee had seven members: Mr. Ramon de Oliveira (Chairman),
(a) As announced on January 16, 2012, Mr. Frank Keuper will retire. Mr. Thomas Buberl will succeed him as Chief Executive Offi cer of AXA Germany and will join the Executive Committee.
Global Head of Property & Casualty France 1,632,394 355,740 729,729 - 2,717,863
Chairman & Chief Executive Offi cer France 950,000 2,034,171 - 82,504 4,150 3,070,825
The only “Benefi ts in kind” for Messrs. Henri de Castries,
Total number of shares to be subscribed (a) 6,818,804 1,815,676 1,312,233 10,681 or purchased, from which to be subscribed - - - -
Chairman & Chief Executive Offi cer 18/03/2011 subscription or purchase 18/03/2021 100% of options: EuroStoxx
Deputy Chief Executive Offi cer in charge of Finance, Strategy and Operations 18/03/2011 subscription or purchase 18/03/2021 100% of options: EuroStoxx
Chief Executive Offi cer of AXA France 18/03/2011 subscription or purchase 18/03/2021 100% of options: EuroStoxx
March 20, 2011. At that date, a total of 1.398.136 shares had been acquired by 1,605 employees. These shares are subject to a 2-year restriction period until March 20, 2013.
Chief Executive Offi cer for the Northern, Central and Eastern Europe business unit and Global Head of Life & Savings and Health
I Transactions involving Company securities completed in 2011 by the members of the Board of Directors
The shareholders waived their preferential subscription rights so that this offering could be made to employees.
In countries that met the legal, regulatory and tax requirements for participation in SharePlan, two investment options were offered to the Group employees in 2011: ■ the traditional plan, offered in 41 countries; ■ the leveraged plan, offered in 38 countries.
(a) This number represents the theoretical maximum number of shares that may be purchased by the Company, calculated on the basis of the Company’s registered share capital on February 15, 2012, i.e. €5,397,982,320.80 divided into 2,357,197,520 shares. Based on the number of treasury shares already held directly by the Company on that date, AXA may purchase up to 234,043,431 of its own shares.
(%) Number of voting rights Voting rights (%) Number of shares
AXA and Schneider Electric informed the AMF of their decision not to renew their May 15, 2006 agreement. The termination of this agreement was published by the AMF on December 27, 2011. The current agreement will expire at the term planned by the agreement, i.e. on May 15, 2012.
Code, on agreements and commitments previously approved by the General Meeting which remained in force.
In force for a period of one year as of the date of its signature, this agreement is renewable automatically for successive periods of one year thereafter, unless one of the parties decides to terminate beforehand, in which case it is required to give a three month notice prior to the next renewal date.
The terms and conditions under which this severance benefi t would be granted are the same as for Mr. Henri de Castries except for the initial amount of the benefi t which would be equal to 12 months of average compensation (fi xed and variable) paid during the 24-month period preceding termination.
• increased restrictions on, and new disclosure requirements with respect to, related party transactions including payment of dividends, transfers of assets and/or liabilities and other transactions between related parties,
regime. In 2009, the Commission, the European Parliament and the European Council agreed on a compromise text for the Solvency II Framework directive that was adopted by the European Parliament in April. The fi nal text of the
Company’s right to manage the fund in case of repeated suspensions have also been included in the new rules. With respect to real estate investment companies existing on the effective date of the amendment, the new rules will only become mandatory as of January 1, 2013. This has a variety of potential implications including for sponsors of such funds, for unit-linked insurance policies that offer such funds as an underlying investment option and also for the liquidity situation of insurance companies that hold shares of real estate investment funds in their investment asset portfolio; ■ fi nally, there are numerous other legislative and regulatory initiatives within various European jurisdictions relating to a variety of matters, including such matters as distribution practices and changes to tax laws that may affect the attractiveness of certain of our products, which currently have favourable tax treatment.
IFRS and the interpretations of the IFRS interpretations c ommittee that were defi nitive and effective as of December 31, 2011 as adopted by the European Union (the “Standards”). The
associated expense and regulatory risk for AXA and other market participants, including the following: ■ anti-money laundering and anti-terrorism legislation has been enacted and continues to evolve in the many jurisdictions in which AXA and its subsidiaries operate.
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 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 and Variable Life products. In particular, protracted or steep declines in the stock or bond markets typically could reduce the popularity of unit-linked products. Also, the account value of these products could be affected by a downturn in fi nancial markets and decreased account values could decrease the fees generated by these products. In our asset management business, these adverse market conditions may impact the fl ow of investment capital into or from assets under management or supervision and could negatively impact the way customers allocate capital among money market, equity, fi xed income, or other investment alternatives.
December 2011, European leaders agreed to implement steps to encourage greater long term fi scal responsibility on the part of the individual member states and bolster market confi dence in the Euro and European sovereign debt; however, such
States of America, they have put that credit rating on review.
Euroz one and concerns over the Euroz one’s increasingly weak macroeconomic prospects. On January 13 , 2012, Standard &
Management monitors the Company’s consolidated solvency margin and the regulatory capital requirements of its insurance subsidiaries on an on-going basis both for regulatory compliance purposes and to ensure that the Company and its subsidiaries are appropriately positioned from a competitive point of view. Insurance regulators have broad discretion in interpreting, applying and enforcing their rules and regulations with respect to solvency and regulatory capital requirements and, during periods of extreme fi nancial market turmoil of the type we have experienced over the past four years, regulators may become more conservative in the interpretation, application and enforcement of these rules which may involve them, for example, imposing increased reserving requirements for certain types of risks, greater liquidity requirements, higher discounts/“haircuts” on certain assets or asset classes, more conservative calculation methodologies or taking other similar measures which may signifi cantly increase regulatory capital requirements.
Solvency II to international groups is still unclear and there is a risk of inconsistent application throughout Europe, which may place AXA at a competitive disadvantage with regard to other
Our accounting principles and policy with respect to the determination of allowances and impairments on our investments is set forth in Note 1.7.2 “Financial instruments classifi cation” in the 2011 consolidated fi nancial statements included in this Annual Report. The determination of the amount of allowances and impairments vary by investment type and is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available.
“long-tail” risks), a sustained increase in infl ation may result in (i) claims infl ation (i.e. 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. In addition, a failure to accurately anticipate higher infl ation and factor it into our product pricing assumptions may result in a systemic mispricing of our products resulting in underwriting losses which would negatively impact our results of operations. For additional information, please see Section 3.3 “Quantitative and qualitative disclosures about market risk and risk factors”
“Federal Reserve”) and/or European authorities could impose similar or other restrictions on the transfer of funds which could negatively impact the fungibility of our capital. In 2012, certain of our principal subsidiaries may pay reduced (or no) dividends and we expect that some of our subsidiaries may continue to be dependent on the Company for capital resources and funding which may require us to provide signifi cant amounts to our subsidiaries through loans, capital injections or other mechanisms. In addition, as noted above, currency hedges used by AXA to manage foreign exchange rate risk may signifi cantly impact the statutory results (parent only) of the Company and the amounts available for distribution as dividends to its shareholders because unrealized exchange rate gains and losses under these derivatives are recognized in the Company’s income statement. These factors may adversely impact the Company’s liquidity position and capacity to pay dividends on its ordinary shares. For further details, see the Section “Liquidity and capital resources” included in
Funds” or “Asset Transfer Programs”). These rebalancing mechanisms within the unit-linked funds are designed to reduce policyholders’ investment in higher risk assets at times of increased equity or interest rate volatility to protect their portfolio returns.
These hedging techniques are designed to reduce the economic impact of unfavorable changes to certain of our exposures under the Accumulator guarantees due to movements in the equity and fi xed income markets and other factors. In certain cases, however, we may not be able to apply these techniques to effectively hedge our risks or may choose not to hedge certain risks because the derivative market (s) in question may not be of suffi cient size or liquidity, the cost of hedging may be too expensive, the nature of the risk itself may limit our ability to effectively hedge or for other reasons. The operation of our hedging program is based on models involving numerous estimates and management judgments, including among others, mortality, lapse rates, election rates, volatility and interest rates and correlation among various market movements. There can be no assurance that ultimate actual experience will not differ materially from our assumptions, which could adversely impact our results of operations and fi nancial condition. In 2008, for example, we incurred substantial losses under the Accumulator guarantees principally because (i) the assumptions underlying our hedging models did not adequately
Equitable to the extent that AXA Bermuda maintains suffi cient assets in an irrevocable trust (or letters of credit) to back the liabilities assumed under these reinsurance arrangements. The level of assets required to be held in trust (and/or the amount of required letters of credit) fl uctuates depending on market and interest rate movements, mortality experience and policyholder behaviors and may increase in certain circumstances which may impact AXA Bermuda’s liquidity. In addition, pursuant to its hedging programs, AXA Bermuda may be required to post collateral and/or cash settle hedges when there is a decline in fair value of specifi ed instruments declines (which would occur, for example, in the event of a rise in interest rates or equity markets) and AXA Bermuda may not be able to transfer assets from the trust to satisfy these obligations. Management believes that AXA Bermuda has adequate liquidity and credit facilities to deal with a range of market scenarios and increasing reserve but there can be no assurance that AXA Bermuda will have suffi cient liquidity in all scenarios. In the event AXA Bermuda were not able to post required collateral or cash settles such hedges when due it may be required to reduce or eliminate its hedging programs which may cause it to be unable to continue providing certain reinsurance to AXA Equitable. In addition, Bermuda regulatory authorities recently proposed new regulations that, if enacted, will impose more stringent capital requirements on AXA Bermuda and could, under certain circumstances, adversely impact certain capital management benefi ts to AXA Equitable.
International Insurance businesses. With the exception of disability annuities and workers compensation liabilities that are deemed structured settlements, the claims reserves are not discounted. Reserves do not represent an exact calculation
The evolution of these risks poses major challenges for the insurance sector over the coming years and could adversely affect our business and operating results due to potential increases in claims, the emergence of new types of liabilities and growing uncertainties about the size of maximum potential losses, which have become harder to assess and to predict on the basis of past events.
Diffi cult market conditions may require us to offer rights, warrants or similar securities at prices much below the thencurrent market price in order to help fund acquisitions and other expansion plans, as well as improvements to our existing infrastructure and other business activities. This may adversely affect the market price of our ordinary shares and our ADS on the over-the-counter markets and have a dilutive effect on the ownership and voting percentages of existing shareholders.
AXA ADS would receive upon the sale in France of any AXA
metrics/standards but also culture – for business lines to write risks within a risk appetite validated locally and by the
Risk M anagement 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
IFRS shareholders’ equity at December 31 42,272 6,290 48,562 41,502 8,196 49,698
Life & Savings Value of Inforce (VIF) 17,098 - 17,098 20,087 - 20,087
Switzerland Life & Savings foreign exchange exposure amounted to €21,061 million (circa 34% of assets) at the end of 2011, of which €19,110 million were hedged.
Risk Committee meets every two weeks to validate new credit investments, to review portfolio of investments, and analyze adequacy to the risk limits. This portfolio of investments is essentially composed of papers eligible to the
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders (c) 104,642 108,587
Change in unearned premiums net of unearned revenues and fees (549) (451)
Capital in excess of nominal value - - - 247 -
Employee benefi ts actuarial gains and losses (c) - - - - -
(b) Including changes in ownership interest in consolidated subsidiaries without losing control. Notably dilution impact from AllianceBernstein deferred compensation (€-42 million Group share, offset in minority interests) and €-171 million from open-market purchase of AllianceBernstein holding units (€-106 million Group share and €-64 million minority interests).
Purchases of equity instruments and non controlled investment funds (h) (g) (15,430) (17,270)
CONSOLIDATED FINANCIAL STATEMENTS/FULL YEAR 2011 4 4.5 CONSOLIDATED STATEMENT OF CASH FLOWS
Separate Financial Statements from January 1, 2009, the principles described below are those that apply from that date.
The variable costs of writing insurance contracts and investment contracts with discretionary participating features, primarily related to the underwriting of new business, are deferred by recognizing an asset. In Property and Casualty, DAC are amortized over the terms of the policies, as premium is earned.
The Group is party to repurchase agreements and securities lending transactions under which fi nancial assets are sold to a counterparty, subject to a simultaneous agreement to repurchase these fi nancial assets at a certain later date, at an agreed price. If substantially all of the risks and rewards of the fi nancial assets remain with the Group over the entire lifetime of the transaction, the Group does not derecognize the fi nancial assets. The proceeds of the sale are reported separately.
Financing debts issued to fi nance the solvency requirements of operational entities or to acquire a portfolio of contracts are isolated in a specifi c aggregate of the statement of fi nancial position.
The main area of change relates to the implementation of a higher granularity to internal reportings on fi nancial investments with limited impacts on disclosed aggregates. In parallel, a review of the main risk drivers of fi nancial instruments was performed taking into account Solvency II principles and the characteristics determining the capital charges computations.
The Group has built up an organization by Global business lines for both Life & Savings and Property & Casualty in order to improve the speed and effectiveness of the organization and further leverage its size.
International Insurance: This segment’s operations include insurance products that specifi cally relate to AXA Corporate
Net investment result excluding fi nancing expenses 13,966 1,906 393 (50) (2) 679 (692) 16,199
Net income from operating activities before tax 2,903 2,288 414 191 (236) (1,003) 31 4,589
Result from discontinued operations net of tax 6 93 - - - 902 - 1,002
Kingdom (€577 million) and Belgium (€563 million); ■ Asset Management net goodwill (€4,427 million) was
New Zealand operations and acquired the AXA APH Asia Life operations.
On December 20, 2011, AXA announced that it has signed and closed the sale of Denplan to Simplyhealth Group Limited.
Debt instruments designated as at fair value through profi t or loss (c) 29,474 29,474 5.23%
Debts instruments designated as at fair value throught profi t or loss (a ) 1,342 2,831 4,565 8,738
(c) Corresponds to fi nancial assets held for trading purposes and fi nancial assets recognized designated as at fair value through profi t or loss.
Equity instruments available for sale 4,423 2,919 998 1,007 1,308 870 563 1,548 13,636
Other Non controlled investment funds at fair value through profi t or losses 2,615 - 155 -
The breakdown by valuation method of fi nancial assets recognized at fair value is as follows: (in Euro million )
Other assets held by controlled investment funds designated as at fair value through profi t or loss 1,801 2,804 809 5,414 1,911 2,933 404 5,248
As of December 31, 2011, the Company and its subsidiaries owned approximately 17 million AXA shares, representing 0.8%
■ share-based payment for €59 million; ■ realized losses on AXA shares for €15 million; B) TREASURY SHARES
A) RESERVE RELATED TO CHANGES IN FAIR VALUE OF AVAILABLE FOR SALE FINANCIAL INSTRUMENTS INCLUDED IN SHAREHOLDERS’ EQUITY
Minority interests’ share in unrealized gains and losses (d) 3 (203)
The total impact of employee benefi ts actuarial gains and losses amounted to €-581 million net Group share (of which
(d) Notably includes “interests credited and policyholders’ participation credited to reserves”, “fees on account balance and investment management fees” and “change in reserves relating to other technical and actuarial items”.
Impact of foreign currency fl uctuation 151 (3) 148 288 1 290
(Unit-Linked) – Liabilities arising from contracts where fi nancial risk is borne by policyholders: Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (b) (d) 3,621 4,700
For example, the amount of €31,168 million appearing in the fi rst line of the table in the 2005 column represents all loss reserves developed in all years of occurrence prior to and including 2005, recognized on the Company’s balance sheet as of December 31, 2005.
This line also includes the impact of the unwind of discount rate on annuities (which are developed from 2006 on) for an amount of €116 million for 2010.
Liabilities arising from insurance and investment contracts 25,357 76,335 445,218 546,909 25,020 73,333 438,248 536,600 of which Life & Savings liabilities relating to contracts including a surrender option with some surrender benefi t before maturity 13,846 58,369 329,367 401,582 12,893 55,117 324,284 392,294
Life & Savings – unlocked discount rate 36,760 3.18% 29,195 3.40%
The fair value option is used to measure certain debts from banking activities designated as at fair value through profi t or loss (€378 million in 2011 and €68 million in 2010). Such fair values are based on a majority of observable data (see
Note 9.9 for a description of observable data) and are therefore considered as Level 2 instruments.
Debt component of subordinated notes, 2.5% due 2014 (€) 1,970 1,901
ERIV: mortgage loan based on Euribor 3M + 85bps, due 2013 + 2x1 year 88 100
Other debt owed to credit institutions designated as at fair value through profi t or loss - -
OTHER DEBT INSTRUMENTS ISSUED AND BANK OVERDRAFTS (OTHER THAN FINANCING DEBT) (d) 6,272 6,504
(b Following the refi nement of the IFRS chart of accounts in 2011 some aggregates of December 31, 2010 statement of fi nancial position have been reclassifi ed in order to present a comparable basis (see Note 1.20).
The income tax charge was split as follows: (in Euro million )
Policyholders’ tax - Deferred tax through profi t or loss - 12 - - (12) -
(b) As described in Note 1.10, the contribution of discontinued Canadian operations is reclassifi ed on a separate line of the income statement in order to present a comparable basis.
TOTAL RECOGNIZED DTA BY EXPECTED DATE OF USE 2,988 691 791 698 2,764 291 2,874 4,238 - 15,335
Unrecognized DTA on tax losses carried forward 12 1 3 2 2 1 5 12 310 348
Sub-total equity derivatives 22,334 1,535 291 166 714 2,044 Interest rate payer swaps 21,077 7,569 5,722 6,091 6,582 46,994
(c) Following the refi nement of the IFRS chart of accounts in 2011 some aggregates of December 31, 2010 statement of fi nancial position have been reclassifi ed in order to present a comparable basis (see Note 1.20).
(b) Following the refi nement of the IFRS chart of accounts in 2011 some aggregates of December 31, 2010 statement of fi nancial position have been reclassifi ed in order to present a comparable basis (see Note 1.20).
This policy also includes daily to weekly collateralization for the majority of the Group’s exposure.
(i) 44% of the derivative instruments used consisted in swap contracts (48% at the end of 2010), (ii) 32% were options, mainly caps, fl oors and swaptions (26% at the end of December 2010), (iii) 19% were futures and forwards (20% at the end of 2010) and (iv) 5% were credit derivatives (6% at the end of 2010). Credit derivatives are mainly used as an alternative to corporate bonds portfolios, when coupled with government debt instruments, but also as a protection on single names or specifi c portfolios. In 2011, the Group held €6.7 billion Credit
At December 31, 2011, interest rate swaps accounted for 74 % of all swaps used by the Group (versus 70 % at the end of 2010). They are used mainly by: (i) the Company to limit the variability of its future net interest expenses resulting from its interest rate exposure on debt issued or amounts borrowed (notional amount of €53,055 million compared to €56,371 million at the end of 2010); (ii) AXA Bank Europe to hedge interest rate risk exposures arising in the context of its ordinary banking activities, in order to achieve an appropriate interest rate spread between its interest-earning assets and interest-bearing liabilities (notional value of €27,286 million versus €20,162 million at the end of 2010); (iii) Japan Life & Savings (notional amount of €22,522 million versus €15,882 million at the end of 2010) to manage interest rates on its fi xed income assets and to hedge guaranteed minimum benefi ts features included in Variable
Non controll ed investment available for sale 6,820 (148) - 6,672
Investments in real estate properties designated as at fair value through profi t or loss 1,122 - - 1,122
Minority interests of controlled investment funds and other puttable instruments held by minority interest holders 3,896 - - 3,896 4,855 - - 4,855
Life contracts (including endowment contracts) 20,097 154,952 1,508 20,276 153,821 996
Debt instruments designated as at fair value through profi t or loss (b) 1,726 - 1,326 - 3,052
Claims ceded (including change in claims reserves) 1,437 482 554 (221) 2,253
(b) Includes all acquisition expenses relating to insurance and investment contracts before capitalization/amortization of deferred acquisition expenses and equivalents.
Some plans do not have benefi ts linked to salary increase or to infl ation.
The table below presents the change in benefi t obligation and the change in plan assets associated with pension plans and other benefi t plans sponsored by AXA, together with an analysis of separate assets as of December 31, 2011.
Net transfer In/(Out) (including acquisitions and disposals) (a) (b) (c) (519) 40 924 (27) (811) - - - - (3)
Impact of foreign currency fl uctuations (137) (490) (12) (242) 191 (18) (36) 9 (20) 54
December 31, 2011 was €8.7 million. As of December 31, 2011 the total cost of these plans was fully recognized.
For 2011 grants, the number of Performance Units defi nitely acquired will be known after two years and will be paid one year later in cash by the employing entity, provided that the benefi ciary is an employee of the AXA Group at that date.
In 2011, net income per ordinary share stood at €1.75 on both basic and fully diluted basis, of which €1.32 attributable to continuing operations and €0.44 from discontinued operations on a basic calculation, and €1.31 attributable to continuing operations and €0.43 from discontinued operations on a fully diluted basis.
Internal Commitments granted by the Company to the subsidiaries are disclosed in Appendix VI - AXA parent company fi nancial statements: subsidiaries and participating interests.
Other commitments given decreased by €2,377 million compared to 2010 mainly from the Company (€-1,074 million)
On May 15, 2006, and after authorization by the AXA Supervisory
Court of Justice which rendered a decision on March 1, 2011 holding that Article 5 (2) of the Gender Directive is invalid with effect from December 21, 2012. While AXA was not party to this litigation, the effect of this decision will be to generally prohibit use of gender in the pricing of insurance contracts issued in the European Union by insurers writing business in the
In addition to litigation risks of the type described above, AXA
■ Derivatives and hedging activities are recognized in accordance with the methods and procedures described in Note 1.9 to the consolidated fi nancial statements. We have assessed whether the hedging activities that abide by hedge accounting have been duly documented in accordance with hedge accounting rules.
Shareholders may participate either in person, be represented by a spouse, a partner with whom a civil solidarity pact was entered into, another shareholder, the Chairman of the
The Company’s share capital may be modifi ed only under the conditions stipulated by the legal and regulatory provisions in force. The provisions of the Charter or the Bylaws shall not prevail over changes in the law governing the Company’s share capital .
In order to manage these risks, the Group has put in place a comprehensive system of internal controls designed to ensure that Management is informed of signifi cant risks on a timely and continuing basis, has the necessary information and tools to appropriately analyze and manage these risks, and that the
■ various board committees including a compensation committee and an a udit c ommittee, whose membership include independent or non-executive directors.
Several GMS Departments have responsibility for managing and/or monitoring some aspects of internal control and/or risk related matters, however, the following four GMS Departments are primarily focused on these matters as part of their principal day-to-day management responsibilities: GROUP RISK MANAGEMENT DEPARTMENT
Annual Report, there is no difference between IFRS as adopted by the EU applied by AXA and IFRS as adopted by the
& Chief Executive Offi cer with a direct and unfettered line of communication to the Chairman of the Group’s Audit
The Committee is comprised of the following 11 GMS Departments, each of which is responsible for presenting to the Committee the signifi cant risks 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 Global P&C; 9. AXA Global Life; 10. Group Human Resources; 11. Group Communication and Corporate Responsibility
However, all internal control systems, no matter how well designed, have inherent limitations and do not constitute a guaranty or provide absolute certainty. Even systems determined to be effective by Management may not prevent or detect all human errors, all system malfunctions, all fraud or all misstatements and can provide only reasonable assurance. In addition, effective controls may become inadequate over time because of changes in conditions, deterioration of compliance with procedures or other factors.
A material weakness is a defi ciency or a combination of defi ciencies in internal control over fi nancial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s fi nancial statements will not be prevented or detected on a timely basis.
I Report of the Statutory Auditors on Internal Control over Financial Reporting
To the Board of Directors of AXA: As Statutory Auditors of AXA and at your request, we have performed audit procedures on AXA and its subsidiaries (the “Company”)
APPENDIX IV STATEMENT OF THE PERSON RESPONSIBLE FOR THE ANNUAL REPORT
Performance shares (actions gratuites) (f) – 1% (g) 38 months June 27, 2014
Dividends received from subsidiaries amounted to €4,307 million, and include in 2011 €1,086 million exceptional dividends out of which €826 million representing the cash proceeds from the disposal of shares in Taikang Life by
Net financial expenses, including interest expenses net of interest income from loans and investments, totaled €994 million, around €200 million lower than the 2010 fi gure of €1,195 million.
Subordinated debt totaled €7,030 million, up from €6,996 million in 2010. There was a €84 million increase relating to exchange-rate effects, partly offset by €50 million of loan repayments.
(free shares granted to employees and subject to performance conditions) had no impact on the Company’s fi nancial statements.
Intangible assets include concessions, patents and brands, software as well as goodwill of mergers.
Deferred charges correspond to debt issue costs, which are spread over the lifetime of the issue or for a maximum of 10 years when the debt has no predetermined maturity.
Immobilière (SGCI) and the Company and €58 million relating to the capitalization of software costs.
Amounted to €1,071 million at year-end 2011, down from €1,190 million at December 31, 2010. This item reflects the positive effects derived from the revaluation of foreign-currency denominated assets and liabilities at the balance sheet closing exchange rate. This item declined compared with 2010 owing mainly to increases in the US dollar and sterling exchange rates, which had an adverse impact on liabilities.
In force for a period of one year from the date of signature, this agreement is renewable automatically for successive periods of one year thereafter, unless one of the parties decides to terminate it beforehand, in which case the terminating party is required to give a three months notice prior to the next renewal date.
average infl ation rate was assumed in 2011 (2.0% in 2010); ■ expenses are adjusted for non-recurring expenses and one-time strategic spending; ■ some benefi t from future mortality improvement on Life business is included, while annuity business does have an allowance for the costs of longevity increasing in all markets; ■ non-fi nancial risks are provided for through the cost of holding capital consistent with the necessary amount to obtain a AA rating at each entity level; ■ a weighted average tax rate of 31.0% was assumed in 2011
Upward shift of 25% of the volatility on bonds (1,084) (91)
European Embedded Value Principles and Guidance defi ned by the European Insurance CFO Forum; ■ a review of the consistency of the methodology used and implemented by management with that described in the EV Report; ■ a review of the internal consistency of the economic assumptions and of their consistency with observable market data; ■ a review of the consistency of the operational assumptions with regard to past, current and expected future experience; ■ a review of the testing performed by management on the underlying models used to calculate the EEV Information; ■ checking by review and reconciliation the consistency of the EEV Information with the methodology and assumptions in the EV
Authorization granted to the Board of Directors to reduce the share capital through the cancellation of ordinary shares
Code, provides that individuals who are deemed to be French residents for tax purposes, and whose income is eligible for the 40% tax relief may, barring certain exceptions, opt for a 21% fl at deduction at the source, calculated on the basis of the gross amount of income received.
Mr. François Martineau as member of the Board of Directors, whose term of offi ce expires at the end of this Shareholders’
Swiss Re Group where he became a member of the Executive
Code and determined that Mr. Lippe could be considered as independent. A short biography of Mr. Stefan Lippe appears in the exhibits to this report.
“direct” process) as well as a consultation of the members of the s upervisory b oards of the FCPEs (Fonds Communs de Placement d’Entreprise) with indirect voting rights (the
Mrs. Doina Palici-Chehab’s experience of the insurance sector, her knowledge of the Group as well as her very international profi le. Furthermore, Mrs. Doina Palici-Chehab’s appointment as director would help maintain the proportion of women within the Board, considering the expiry of Ms. Wendy Cooper’s term of offi ce.
Additional information on the use by the Board of Directors of the authorization to issue shares or securities giving claims to the Company’s share capital in the context of the Company savings plan approved by the Shareholders’ Meeting of
June 16, 2011, on the principle and the timetable for a new increase in the capital of the Company through the issue of a maximum of 65,502,183 shares of the Company reserved for the employees of the French and foreign entities of the AXA
This capital increase is being submitted to your approval p ursuant to Articles L.225-129-6 of the French Commercial Code and
Code in the event of a reduction of capital by cancellation of purchased shares, we hereby submit this report on our assessment of the reasons and conditions pertaining to the proposed capital reduction.
First resolution Approval of the Company’s fi nancial statements for the fi scal year 2011 - parent only The shareholders, having fulfi lled the quorum and majority requirements pertaining to ordinary general s hareholders’
(ii) if none of the seventh to fourteenth resolutions receive a number of votes “in favor” superior to the majority of voting rights held by attending or represented shareholders, none of the candidates elected by the employee shareholders shall be appointed to the Board of Directors by the Shareholders’
Article 10 of the Bylaws; ■ resolve that (i) if several of the seventh to the fourteenth resolutions receive a number of votes “in favor” superior to the majority of voting rights held by attending or represented shareholders, the resolution receiving the highest number of votes “in favor” shall be considered as the sole resolution adopted and the other resolutions will accordingly be deemed rejected by this Shareholders’ Meeting; and that
m eetings, and having reviewed the Board of Directors’ report: 1) Hereby authorize the Board of Directors, with the right to sub-delegate as provided by law, in accordance with the provisions of Articles L.225-209 et seq. of the French
The purchases of the Company’s ordinary shares may not, under any circumstances, result in the Company holding more than 10% of the ordinary shares representing its share capital.
February 15, 2012, without taking into consideration the shares already held, the maximum global amount that may be allocated by the Company to the ordinary share repurchase upon this resolution would be €8,250,191,320, corresponding to 235,719,752 ordinary shares acquired at the maximum unit price, excluding charges, of €35 determined hereinabove and on the basis of the share capital on February 15, 2012.
Directors, with the right to sub-delegate as provided by law, in order to, in accordance with applicable legal and regulatory provisions, carry out all authorized reallocations of repurchased shares for the purposes of the program or any of its objectives, or their assignment, on or off market, it being specifi ed that such reallocations and assignments may apply to shares repurchased upon authorizations concerning prior programs.
2) Resolve that the Board of Directors will have full powers, with the right to sub-delegate as provided by law, to implement this resolution and specifi cally to: • establish the defi nitive amount of such capital reduction(s), determine the terms and conditions of such reduction(s), and duly record such reduction(s); • charge the difference between the book value of the cancelled ordinary shares and their nominal value on any available premiums and reserves, including the legal reserve up to a maximum of 10% of the cancelled capital; • amend the Bylaws accordingly; • complete all formalities and declarations necessary with all authorities, and more generally do all that is necessary.
Elected on April 29, 2010 – Term expires at the 2012 Shareholders’ Meeting
Number of AXA shares and/or number of units in AXA Mutual funds invested in AXA s hares held on December 31, 2011: 17,614
Italy (Property & Casualty and Life & Savings), subsidiaries of the Victoire/Suez Group (which became part of the UAP
■ the defi nition of a CR key performance indicator which enables precise tracking of local and Group CR performance, and is included in annual management objectives. This KPI is derived from AXA’s CR self-assessment tool, which entities use annually to assess their maturity in the broad fi eld of CR, benchmark their performance and identify appropriate steps to take towards developing an advanced CR strategy that has local relevance while remaining in line with the Group’s
Europe (42.1 years/13.9 years) and Americas (38.6 years/7.2 years) in comparison with Asia Pacifi c/Middle East (38.1 years/6.1 years) and Africa (33.3 years/5.8 years).
Labour Organization’s standards, as well as AXA’s own set of core values and commitments. The agreement’s appendix also contains certain recommendations in case of restructuring, as detailed in the following section.
■ AXA will do its utmost to prevent compulsory redundancies and other collective transfers, by pursuing other approaches whenever possible. More specifi cally, AXA endeavours to: 1) seize the opportunities offered by natural headcount attrition to facilitate employment issues; 2) make every effort to help employees, analyse their skills and career paths and offer them training and reassignment opportunities, when feasible; 3) give priority to voluntary departures and redeployments instead of redundancies and other forms of collective transfers; and 4) deal with decisions of international transfer of business (for example in the case of off-shoring)
Finance and all the French representative trade unions, of a major European agreement on anticipating changes. This agreement, negotiated within the European Works Council, sets out a social dialogue approach with the purpose to anticipate changes within the sector in order to adapt the employees’
Compensation policy Rules governing compensation are designed to ensure that pay levels are both competitive with market rates and tailored to various individual criteria, which take into account not only individual skills and performance, but also the team contribution. In all cases, performance is assessed based on the extent to which objectives have been met. As in any company, reward and recognition at AXA are key drivers to foster employee engagement and to a fulfi lling and successful career. Reward and recognition at AXA are balanced between tangible and intangible elements. Reward is more than just pay and benefi ts, and it covers a large part of the work experience with the Company. A “Total Reward Strategy” has been defi ned to meet three key criteria: 1) attract and retain talents from the market, by offering competitive packages and differentiating high performers; 2) defi ne fairness as the combination of internal equity and meritocracy (for any given job responsibilities, superior performance deserves greater compensation); 3) the overall compensation costs must be in line with our economic performance as compared to the market. This is the key to become the “Preferred Company” also for our customers and shareholders.
Local initiatives: gender Several Diversity and Inclusion initiatives have been implemented in 2011 across the AXA Group in order to support gender balance, as part of their D&I policies. On this topic,
AXA Asia Life also conducts a study twice a year to capture the gender diversity in the top three layers of leadership in the leading Insurance organizations in Asia. The latest one, carried in July 2011, demonstrated AXA Asia Life has a signifi cantly higher percentage of “women as leaders” compared to other
“Mission Handicap” enables hundreds of employees to benefi t from adapted working schedules, transportation and real estate services. These efforts also apply to the parents of children with disabilities. AXA Thailand was awarded as the “Organization that provided contribution for People with disabilities”. This award was presented to the local Chief Executive Offi cer by the Deputy Minister of the Ministry of Social Development and
Local initiatives Various local initiatives in this area include for example AXA
It addresses their expectations and provides support for their development. AXA Leadership Framework is a cornerstone of global Talent Management processes. A simplifi ed version will be embedded into these processes in 2012. The target population is 100% of AXA’s employees.
Thailand, Peru and Tanzania. The project aims at better understanding the impacts that changes in rainfall patterns have on vulnerable populations regarding food security and migration, as well as helping them address these challenges through adaptation projects.
AXA joined the United Nations’ Global Compact in 2003, formally committing to uphold the following two principles for fundamental human rights: 1) Taking the steps needed to protect and comply with internationally proclaimed human rights; 2) Taking the steps needed to ensure that they do not knowingly aid or abet human rights violations.
Environment section for further information). This is notably undertaken via the following initiatives: ■ The Group’s Controversial weapons policy (2007) prohibits
■ Number of entries following mergers and acquisitions 75 emp. 28 emp.
■ Proportion of absences due to sickness 73.6 % 71.7 %
■ Proportion of absences due to work related accidents 4.5 % 5.1 %
In addition to these core objectives, AXA aims at improving its waste management, especially electronic waste, in particular by implementing the Waste Electronic and Electrical Equipment
(Environmental Protocol, reporting tool, organization), as well as the data collection processes of eight signifi cant European,
AXA Tech expects a saving of 88 GWh by the end of 2012, compared with a 2008 power consumption basis. To reach this target, several actions have been implemented such as a server refresh and PC refresh which deploys low energy consumption servers and computers. Among the 5,600 servers eligible for the refresh, 2,300 will be replaced in 2012. At the end of 2011, 47,300 PC had been changed to low consumption
AXA’s offi ce and marketing and distribution paper consumption decreased by 27% and 17% respectively between 2010 and 2011. AXA tracks both offi ce paper and marketing and distribution paper separately, in order to measure its impact more accurately.
AXA IM also pursues a “RI mainstreaming” strategy across asset classes, together with specifi c RI products and shareholder engagement services integrating ESG risks and opportunities.
Number of employees on site, Full-Time Equivalent (FTEs) FTE 122,671 104,972
(c) This data has been collected from 92,267 FTEs. In 2011, entities business travel per employee remained stable compared to 2010.