In accordance with European Union directives, insurance companies organized in European Union member countries are required to maintain minimum solvency margins which must be supported by capital, retained earnings and reserves, including unrealized appreciation or depreciation on securities and, in France or in certain other countries
(as approved by local regulators), unrealized capital gains on real estate as reported in regulatory filings. AXA’s insurance operations in countries outside of the European Union are also subject to capital adequacy and solvency margin regulations. At December 31, 2001, management believes AXA’s subsidiaries are in compliance with all applicable solvency and capital adequacy margin requirements.
In our capacity as independent accountants, we have audited the accompanying consolidated financial statements of AXA (the Company), stated in euros, for the year ended December 31, 2002.
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in France which require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements give a true and fair view of the Company and it subsidiairies financial position and their assets and liabilities as of December 31, 2002 and of the results of their operations for the year ended in accordance with accounting principles generally accepted in France.
2. U.S. GAAP commentary for 2002 and 2001 statements of income 3. Material differences between French GAAP and U.S. GAAP
U.S. GAAP Financial information The following information referred as ‘U.S. GAAP financial information’ reflects AXA Group consolidated financial statements, restated according to generally accepted accounting principles in the United States (“U.S. GAAP”).
French accounting principles, as described in Note 3 of the Notes to Financial statements are referred hereafter as
Accounting for business combinations, goodwill and other intangibles and impairment or disposal of long-lived assets On January 1, 2002, AXA adopted statement of Financial Accounting Standards (“FAS”) No. 141 “Business combinations ”, FAS 142 “Goodwill and other intangible assets”, and FAS 144 “Accounting for the impairment or disposal of long-lived assets”.
FAS 141: ACQUISITIONS: FAS 141 addresses financial accounting and reporting for business combinations, including investments accounted for under the equity method, collectively referred to in this section as “business combinations”, with an acquisition date on or after July 1, 2001. All business combinations in the scope of FAS 141 are to be accounted for using the purchase method whereby a goodwill asset is recorded for the excess of the purchase price over the estimated fair value of net identifiable assets acquired. If the goodwill is negative, it will no longer be set up as a deferred credit and included in income over the estimated useful life but rather recognized as an after-tax extraordinary gain in the income statement in the period of acquisition. Pooling-of-interests is no longer permitted. In addition, other intangible assets can be recognized apart from goodwill if the intangible either (i) reflects a contractual-legal right, or (ii) is separable, that is, capable of being separated, sold, divided, transferred (regardless of intent / existence in the market and either individually or with a group of related assets and liabilities). Prior to FAS 141, only intangibles that could be identified and named could be recognized as an asset apart from goodwill. FAS 141 had no material impact on the results of operations or financial position of AXA upon its adoption on January 1, 2002.
FAS 142: GOODWILL AND OTHER INTANGIBLE ASSETS: FAS 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets, including intangible assets that are acquired individually or with a group of other assets but not acquired in a business combination. Goodwill is no longer amortized, the carrying value of goodwill is frozen at January 1, 2002, tested for impairment at such date and subsequently subject to an annual impairment test (or, more frequently if triggering events
FAS 144: ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF: FAS 144 retains many of the fundamental recognition and measurement provisions previously required under FAS
No. 121, “Accounting for the impairment of long-lived assets to be disposed of”, except for the removal of goodwill from its scope, inclusion of specific guidance on cash flow recoverability testing and the criteria that must be met to classify a long-lived asset as held-for-sale. FAS 144 had no material impact on the results of operations or financial position of AXA upon its adoption on January 1, 2002.
Accounting for derivative instruments and hedging activities On January 1, 2001, AXA adopted statement of Financial Accounting Standards (“FAS”) No. 133, as amended
and the Derivatives Implementation Group (“DIG”) with regard to insurance contracts and features therein, adoption of the new requirements for embedded derivatives had no material impact on AXA’s consolidated financial condition and operating results under U.S. GAAP. There are currently no requirements to measure and recognize embedded derivatives under French GAAP.
– Fair value hedges. The entire change in fair value of the derivative is recorded in income along with the associated gain or loss on the hedged item attributable to the risk being hedged.
– Net investment hedges. The change in fair value of the derivative or non-derivative instrument attributable to the effective portion of the foreign currency hedge, together with the associated foreign exchange gain or loss on the hedged item, is recorded in a component of “other comprehensive income” as a part of the cumulative foreign translation adjustment. The change in fair value of the derivative attributable to the ineffective portion of the hedge is recorded in income.
Given that AXA’s hedging strategies are designed to comply with French GAAP measurement and recognition requirements, AXA’s consolidated net income as determined in accordance with U.S. GAAP is subject to increased volatility in future periods. Significant differences could arise between the AXA’s consolidated net income and shareholders’ equity under French GAAP as compared to U.S. GAAP in future periods.
1.2. SCOPE OF CONSOLIDATION – Under U.S. GAAP, majority-owned companies, based on voting rights directly or indirectly of more than 50%, are fully consolidated.
Purchase price – Under both French GAAP and U.S. GAAP, the purchase price is determined at transaction date unless newly issued ordinary shares are exchanged. If ordinary shares are issued in connection with an acquisition, under French GAAP
U.S. GAAP, the purchase price includes the cost of settling or exchanging outstanding employee share options of the target company. However, in respect of a minority interest buyout, costs associated with settling or exchanging outstanding employee share options are included in the purchase price under French GAAP, but are excluded from the purchase price and recorded as compensation expense under U.S. GAAP.
Value of net assets acquired to determine goodwill Under French GAAP, the portion of assets acquired and liabilities assumed, other than in connection with a buyout of minority interests, are recorded at their estimated fair value. The insurance liabilities are maintained at the predecessor’s carrying value if the measurement basis is consistent with AXA’s French accounting principles. The portion of assets acquired and liabilities assumed in connection with a buyout of minority interests are maintained at carrying value at date of acquisition.
Determination of identifiable intangible assets French GAAP provides for the recognition of the present value of future profits of purchased Life insurance business in-force (VBI) as an intangible asset. Under U.S. GAAP, an intangible asset can be recognized at date of acquisition if there is either (i) a contractual or legal right or (ii) it is separable. Such intangible assets may include, but are not limited to, customer and contract lists and specific to Life insurance.
Under French GAAP, the goodwill asset is amortized over the remaining estimated useful life and subject to routine impairment testing. Any negative goodwill is amortized in income over the estimated remaining useful life under French
However, the after-tax gain or loss may differ between French GAAP and U.S. GAAP due to differences in the underlying accounting principles used for determining the value of net assets disposed.
GAAP. At the point in time when a portion or all of the issued shares are repurchased a portion or all of the provision will be released with a corresponding reduction in goodwill arising on the acquisition. Under U.S. GAAP, the aftertax gain is accounted for as a capital transaction and recorded in shareholders’ equity.
Fixed maturities, equity and real estate, other than assets allocated to UK “With-profit” contracts In respect of the accounting for fixed maturity and equity investments outside of the separate accounts (unit-linked)
asset portfolios, under French GAAP, fixed maturities and equity investments are, in general, carried at amortized cost and historical cost, respectively, less valuation allowances. Under U.S. GAAP, the accounting for these securities depends on the investment classification: – securities classified as “held to maturity’’ are reported at amortized cost,
– securities classified as “available for sale’’ are reported at fair value with changes in unrealized gains and losses included in “other comprehensive income” (a separate component of shareholders’ equity).
In respect of valuation allowances on impairment fixed maturity and equity securities and real estate investments, under French
prior to year end. If the impairment is deemed to be other-than-temporary, and in case of investments intended to be held, the impairment charge recorded is equal to the difference between the net carrying value and the greater of market value or other reference value determined based on the intended investment holding period, net worth, future cash flows and specific considerations relating to the industry sector/activities of the issuer.
Under U.S. GAAP, in general, an equity security is subject to an impairment review if the fair value is at least 80% or less of the net carrying value at year end for a period of 6 months or more and subject to specific qualitative factors effecting the industry or issuer. In addition and subject to certain market conditions and circumstances, securities with a fair value more than 20% at year end (regardless of continuous period in an unrealized loss position) and securities with an unrealized loss position for over than 12 months will be impaired as well.
fund. Therefore, changes in the estimated market value of these assets held in the “With-profit” fund impact the valuation of the fund and, therefore, the valuation of the underlying insurance liabilities.
January 1, 2001, the fixed maturity and equity investments allocated to UK “With-profit” contracts were classified as
“available-for-sale” and stated at market value. Consequently, the entire change in market value, being the net unrealized investment gains or losses, was recorded in “other comprehensive income” (a separate component of shareholders’ equity) even though the related impact of the change in unrealized gains and losses on assets on UK-
business have been reclassified from “available-for-sale” to “Trading”. These investments continue to be stated at market value, however, the changes in market value of these investments are no longer recognized in “other comprehensive income” (a separate component of shareholders’ equity), but are recognized in income. Consequently, from 2001, AXA’s presentation of “U.S. GAAP, except for adjustment for the change in unrealized investment gains and losses on assets allocated to UK “With-profit” contracts”, in the reconciliations of consolidated net income and consolidated shareholders’ equity from French GAAP to U.S. GAAP, was no longer necessary.
For French GAAP purposes, in 1996 Equitable Life changed its method of accounting for certain long-duration participating life insurance contracts in accordance with the provisions prescribed by FAS 120, “Accounting and reporting by mutual Life insurance enterprises and by insurance enterprises for certain long-duration participating contracts’’.
1.6. EQUALIZATION RESERVES Under French GAAP, equalization reserves are recognized in respect of future catastrophe risks, which are determined in accordance with local regulatory requirements in certain jurisdictions in which AXA operates. Such reserves are not permitted to be recognized as a liability under U.S. GAAP until such losses are incurred.
Under French GAAP, the plan was accounted for as a business combination as it was a transaction with the policyholders, an equivalent third party interest. As a result, (i) assets and insurance liabilities transferred from the participating fund to the non-participating fund were re-estimated at fair value and or based on new assumptions for interest rates and mortality, (ii) VBI was recognized in respect of the profits to emerge on the unit linked business transferred to the non-participating fund, and (iii) the cost of the incentive bonus paid to policyholders that elected in favor of the Plan was established as goodwill.
1.8. IMPACT OF CHANGES IN FRENCH ACCOUNTING PRINCIPLES IN 2001 The implementation of new French regulations effective from January 1, 2001 resulted in certain one-time adjustments to the reconciliations of consolidated net income and consolidated shareholders’ equity from French GAAP to
Intercompany transactions Effective for intercompany transactions on or after January 1, 2001 and under the new French regulations, realized gains and losses on intercompany sales of assets are eliminated in their entirety, unless there is an other-thantemporary impairment that is to be recorded as a loss immediately, which is the similar to U.S. GAAP. No difference exists between French GAAP and U.S. GAAP in 2001 and thereafter.
However, in prior periods, French GAAP differed from U.S. GAAP, as French GAAP did not eliminate such gains and losses if the seller or buyer was an insurance or reinsurance company. Consequently, this difference is still presented in AXA’s reconciliation of consolidated net income and consolidated shareholders’ equity from French GAAP to
Restructuring provisions Under French and U.S. GAAP, the nature of costs that can be included in restructuring provisions is generally similar.
Under U.S. GAAP, the accounting for share-based compensation includes share options and other share-based compensation, such as employee share purchase programs. The accounting depends on whether (i) the share-based compensation has performance-based conditions, (ii) will be settled in cash or (iii) if non-performance based, the related share-based compensation is issued at a significant discount from the market price at date of grant.
AXA (the Company) that do not provide a guarantee for liquidity whereas under U.S. GAAP a compensation charge is recorded if at grant date the options are issued at a significant discount; and
– For all other share option plans issued by AXA (the Company) and other AXA entities, the principles for measuring share-based compensation under French GAAP are principally similar to those used under U.S. GAAP. However, the compensation expense is recorded over the vesting period in the income statement and included as a liability under French GAAP (decrease in net assets) whereas under U.S. GAAP the amount is recorded against shareholders’
Under French GAAP, AXA uses an actuarial methodology that is consistent to the measurement and recognition basis prescribed under U.S. GAAP, with the exception of the recognition of an additional minimum pension liability that is not recognized under French GAAP. For U.S. GAAP purposes, AXA has adopted FAS 87, “Employer’s accounting for pensions”, as of January 1, 1989. At the date of adoption a transition asset, reflecting the over-funded status of
AXA Equity & Law’s pension plan, was recorded and is being amortized over the remaining fifteen-year average service life of employees. If the accumulated benefit obligation exceeds the fair value of plan assets, an additional minimum pension liability is recorded such that the total liability in the balance sheet is at least equal to the unfunded accumulated benefit obligation. The after-tax amount is, in general, recorded in “other comprehensive income”
Under French GAAP, the determination of whether a valuation allowance should be recorded against deferred tax assets will consider an economic approach (based on thorough analysis of future statutory profits), as to whether the deferred tax asset is deemed recoverable. Under U.S. GAAP, FAS 109 gives greater weight to previous cumulative losses than the outlook for future probability when determining whether deferred tax assets are realizable.
De-recognition of transferred assets Assets transferred to entities in which AXA does not hold an ownership are permitted to be recognized as a disposal under French GAAP. Under U.S. GAAP any realized profit or loss on the disposal is eliminated if the transaction does not meet the requirements for de-recognition due to various factors including continuing involvement.
This decrease was principally due to: – The impairment charge on equity securities under U.S. GAAP (please refer to differences in principles described in section 1.4 of the current note), totaling €2,221 under U.S. GAAP (net Group share impact), compared to €614 million under French GAAP.
– The unfavorable impact of financial markets trends (i) on the value of investments in mutual funds and real estate companies, consolidated under U.S. GAAP at their market value (€–1,008 million), and (ii) on the profit emerging from the UK “With-profit” funds, of which 10% is recognized in the U.S. GAAP net income (impact: €–274 million).
(€148 million) relating to the partial release of the dilution profit set up at the time of acquisition of Sanford Bernstein, as under U.S. GAAP, this dilution profit was entirely accounted within shareholder's equity, and (ii) the realized gain on the disposal of AXA Australia health activities (€87 million).
(reinsurance accepted, as these contracts are derivative instruments, accounted for at fair value under U.S. GAAP.
– These unfavorable items were partly offset by the fact that goodwill is no longer amortized from 2002 (€+588 million impact), and by the impact of fair value accounting for derivatives under FAS 133 (€+412 million).
(ii) A higher impairment charge on equity securities for €–940 million,
(iv) The recognition of deferred tax liabilities on future distribution in United Kingdom for €–345 million,
(vi) Partly offset by the fact that goodwill is no longer amortized from 2002 (€+301 million).
In the Property & Casualty segment, U.S. GAAP net income Group share is lower by €–961 million compared to
French GAAP, mainly due to (i) the unfavorable impact of financial markets trends on the value of investments in mutual funds and real estate companies for €–515 million, (ii) a higher impairment charge on equity securities for €–546 million, partly offset by (iii) the fact that goodwill is no longer amortized from 2002 (€+103 million).
The U.S. GAAP net income Group share in the International Insurance segment is lower by €–262 million compared to French GAAP, as a result of (i) the valuation difference on reinsurance contracts accepted that cover guaranteed minimum income benefits, which are treated as derivatives instruments under U.S. GAAP rather than valued as insurance contracts (€–148 million), (ii) a higher impairment charge on equity securities for €–56 million, and (iii) the unfavorable impact of financial markets trends on the value of investments in mutual funds for €–67 million.
(i) the fair value accounting under FAS 133 for derivatives (€+498 million), partly offset by (ii) the elimination of the realized gain on the disposal of AXA Australia health activities (€–87 million), (iii) a higher impairment charge on equity securities (€–66 million), and (iv) the compensation charge of €–61 million arising on the employee stock purchase plan.
2.2. STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2001
Net Income 1,484 520 (a) Excluding the impact of exceptional operations.
– A €762 million release of unallocated policyholder dividend liability (included in future policy benefits) to income as a result of the transfer of non-participating business from the existing participating “With-profit” fund to a nonparticipating fund, as a result of the fund restructuring in connection with the plan. This was offset by a €433 million charge against income corresponding to the payment of the incentive bonus paid to the “With-profit” policyholders that elected in favor of the plan by one of the UK holding companies. Under French GAAP, these items were recorded in AXA’s consolidated shareholders’ equity, which resulted in an overall decrease of €79 million after the recognition of (i) goodwill of €451 million corresponding to the incentive payment to the “With-profit” policyholders and the direct costs associated with this transaction, and (ii) a value of purchased life business in force of €466 million.
of the cost of bonus is included in AXA’s consolidated net income. Under U.S. GAAP 10% of all changes in the
but not under French GAAP: Property & Casualty segment (€367 million).
Material differences (net of taxes): Differences in scope of consolidation (1,198) 4 581
Cost of stock options (buyout of minority interests) (272) (286) (211)
Unrealized investment gains on real estate allocated to UK “With-profit” contracts NA NA 273
Consolidated shareholders’ equity in accordance with U.S. GAAP, except for adjustment for the change in unrealized gains on real estate assets allocated to UK “With-profit” contracts NA NA 31,834
(a) In 2001, the impact of the financial reorganization in the UK of €2,698 million was reclassified from the item “Goodwill and purchase accounting” to the item “Investment accounting and valuation” to present this impact in coherence with the presentation of the results 2001.
Ot he r F ina nc ial inf or m at io n
Investment accounting and valuation (excluding UK “With-profit” related assets) (2,154) (58) (31)
Investment accounting for UK “With-profit” business assets: – Elimination of net unrealized investment losses (gains) – – 682
– Reclassification of fixed maturities and equity securities at January 1, 2001 – 3,853 –
Consolidated Net income in accordance with U.S. GAAP (2,887) 1,484 3,248
4.1. PRESENTATIONAL DIFFERENCES The following condensed U.S. GAAP consolidated financial statements reflect the effects of the material differences between French GAAP and U.S. GAAP on consolidated net income and shareholders' equity identified as well as differences of presentation between French GAAP and U.S. GAAP.
Under French GAAP total premiums received for all insurance contracts are recorded as revenues in AXA’s consolidated operating results, including for (i) life insurance contracts with flexible premiums, charges or guarantees
Under U.S. GAAP and in respect of universal life contracts and investment contracts, the policy charges, such as, insurance administration and surrenders during the period, are recorded as revenues. The premiums received less policy charges along with the benefit payments are credited directly to or against the liability, using deposit accounting. Expenses include the interest credited to the policy account balances and benefit payments made in excess of account balances.
December 31, 2000 presented separately the net income and net income per ordinary share (on a basic and diluted basis) arising from continuing operations and discontinued operations of DLJ (including the gain realized on the sale), and (ii) the condensed consolidated balance sheets under U.S. GAAP at December 31, 2000 present separately the net assets attributable to DLJ as a single line item. Such presentational requirements do not exist under French GAAP.
Consolidated Net income Year ended December 31, 2002 U.S. GAAP French GAAP
Consolidated Net income Year ended December 31, 2000 U.S. GAAP Adjusted French GAAP
Variations of unearned premium reserves, net of reinsurance (435) (435) (445)
Insurance claims and claims expenses, net of reinsurance (37,142) (37,142) (64,053)
Income from discontinued DLJ operations, net of tax 192 192 191
Gain on disposal of discontinued DLJ operations, net of tax 2,105 2,105 2,071
Commentaries NET INCOME Net income for the fiscal year ended December 31, 2002 was €1,066 million, versus €1,620 million for the year ended
The decrease in dividends from European insurance companies primarily reflects lower dividends from Germany (which paid an exceptional dividend in 2001), Belgium and the United Kingdom, and is attributable to financial market depreciation, which reduced the excess solvency margins of these subsidiaries.
The increase in dividends received from insurance companies outside Europe is primarily attributable to AXA Financial, which paid out a dividend of €302 million, compared with €199 million the previous year.
Net financial charges were €129 million in 2002, down by €220 million compared with the previous year.
Financial minority interests and the operations in Japan. Consequently, AXA SA was able to benefit from the reduction in interest rates that occurred in 2002.
The decrease is attributable to expense reduction efforts undertaken by the Group, and reflects principally lower brand advertising expenses, which decreased by €6 million, and lower Group Management Services reinvoicing.
Realized gains on securities were €2 million in 2002, compared with €110 million in 2001, generated by gains realized on the sale of Credit Suisse securities.
Capital transaction results, which include realized capital gains and losses, allowances for the impairment of financial assets and subsequent releases thereof, allowances to contingency and loss reserves, realized foreign exchange gains or losses, and non-recurring items, were a net loss of €2 million, versus a net loss of €93 million in 2001.
Capital gains (net of releases) totaled €89 million, compared with €406 million in 2001. In 2002, capital gains included €54 million on the sale of Schneider securities, and €10 million on the sale of Simco securities. In 2001, they included a capital gain of €150 million on the sale of BNP Paribas securities and the release of a €147 million valuation allowance on AXA Italia Spa securities.
The foreign exchange gain totaled €49 million in 2002, compared with a loss of €23 million in 2001. This gain, related to the appreciation of the euro in 2002, primarily reflected the early redemption of dollar-denominated debt in late 2002.
Allowances to the contingencies and loss reserve totaled €102 million at year-end 2002, compared with €193 million at year-end 2001. In 2002, these allowances primarily concerned redemption premiums payable on convertible bonds.
The 2001 allowances included a €123 million guarantee given to Compagnie Financière de Paris by the Company to cover estimated losses on loans held by Banque Worms after this entity was sold to Deutsche Bank.
Tax expense of €134 million primarily relates to a foreign exchange unrealized gain on debt denominated in foreign currencies due to the significant appreciation of the euro.
Pursuant to the tax consolidation agreement, tax savings are recorded directly in the financial statements of the parent company of the tax group. This had no impact on the year’s financial statements, since the entire tax savings generated by loss-making subsidiaries (€140 million) has been provisioned to cover the risk that income from these subsidiaries become taxable again.
BALANCE SHEET At December 31, 2002 the balance sheet totaled €38,950 million, versus €39,371 million at December 31, 2001.
Investments and receivables from controlled subsidiaries, net of valuation allowances, increased from €34,771 million in 2001 to €35,883 million in 2002.
The Company participated in new equity issues totaling €320 million, including €196 million for AXA Re, following losses recorded in 2001.
In addition, the Company sold Schneider securities as well as its equity interest in Simco, when Gecina made a bid to acquire the latter. The Company’s equity interest in Crédit Lyonnais was sold to AXA Life UK to optimize its asset allocation. In total, the three transactions amounted to €204 million.
Other long-term security interests and receivables decreased by €287 million versus the previous year.
In addition, Sofinad repaid €85 million of the loan granted by the Company in 2001, and AXA France Assurance in an effort to reduce its long-term debt, made an early repayment of €194 million.
LIABILITIES Shareholders’ equity, excluding 2002 earnings and after the payment of dividends in respect of the prior year, totaled €26,072 million, an increase of €262 million, including €254 million in respect of new equity issues reserved for employees and €8 million in respect of subscription options exercised.
Other share capital of €1,892 million includes the issue of perpetual notes in December 1997 for €941 million and in June 1998 for €217 million, as well as €734 million of other undated subordinated euro notes.
Subordinated debt (€5,623 million versus €5,884 one year prior) includes €2,617 million in subordinated convertible notes and €3,006 million in subordinated convertible notes issued in December 2000 to finance the acquisition of the minority interests of AXA Financial. This decrease primarily reflects currency fluctuations.
Other liabilities totaled €420 million, versus €381 million at December 31, 2001, reflecting €105 million payable to
Unrealized foreign exchange losses were €70 million in 2001 and €279 million in 2002. The losses offset foreign exchange gains related to payables and receivables denominated in non-euro currencies than the euro at the yearend reporting date.
Available for appropriation, as follows: • Allocation to the legal reserve €6,407,437
• Allocation to the special reserve for long term capital gains €189,232,454
The shareholders are also asked to approve the drawing of €376,636,061 from the special reserve for long-term capital gains
• to the payment of a dividend withholding tax of €81,264,769
LIABILITIES As at December 31, As at December 31, As at December 31,
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX (VI = III + IV + V) 1,202 1,460 1,190
Net book value on the sale of fixed assets (768) (1,165) (365)
III. NET INCOME FOR THE FINANCIAL YEAR VI + VII +VIII 1,066 1,620 1,058
A. Detailed information on subsidiaries and investments below in excess of 1% of AXA’s shareholders’ equity 1) Subsidiaries (at least 50% ownership)
AXA HOLDING UK 62 (51) 100.00% 61 140, Frenchurch Street, EC3M 6BL, London
AXA ASSISTANCE 42 54 100.00% 48 12 bis, boulevard des Frères Voisins 92798 Issy-les-Moulineaux Cedex 9
AXA OYAK HOLDING AS 60 (17) 50.00% 45 Meclisi Mebusan caddasi N 81 Oyak hann
AXA FRANCE ASSURANCE 358 3,190 100.00% 3,070 370, rue Saint Honoré, 75001 Paris
LOR PATRIMOINE 53 0 100.00% 53 23, avenue Matignon, 75008 PARIS
AXA CORPORATE SOLUTIONS HOLDING (b) 313 1,233 94.99% 1,325 39 rue du Colisée, 75008 Paris
AXA INSURANCE INVESTMENT HOLDING 51 (1) 100.00% 78 77, Robinson road - # 11, 00 SIA Building 068896 Singapore
(1) For insurance companies: gross written premiums. For real estate companies: rents. For holding companies: dividends. For financial services companies : gross banking products.
Net book Loans and cash Guarantees and Last Last closingvalue of advances given commitments closing result Dividends Closing date securities by the company given by the revenues available received and other held still outstanding Company available1 observations
A. Detailed information on subsidiaries and investments below in excess of 1% of AXA’s shareholders’ equity
AXA AURORA 260 25 100.00% 565 Plaza de Federico Moyua n° 4, 48009 Bilbao
AXA FINANCIAL, Inc., (b) 4 11,628 96.10% 11,706 1290, avenue of the Américas, New York 10104
AXA Portugal COMPANHIA DE SEGUROS 37 16 83.01% 72 Praca Marquês de Pombal, 14 - 1058-801 Lisboa
AXA INVESTMENT MANAGERS SA 47 577 47.42% 110 Cœur Défense - Tour B - La Défense 4 - 100, esplanade du Général-de-Gaulle, 92932 Paris-La Défense
AXA KONZERN AG 80 555 25.49% 697 Gereonsdriesch 9-11 postfach, 50670 Köln
AXA ASIA PACIFIC HOLDING LIMITED (b) 629 200 42.65% 541 447 Collins Street, Melbourne, Victoria 3000
B. General information on other entities and participating interests 1) Subsidiaries not set out in paragraph A
a) French subsidiaries (total) 78 b) Foreign subsidiaries (total) 301 2) Participating interest not set out in paragraph A
a) in French companies (total) 57 b) in foreign companies (total) 48
TOTAL (A + B) 36,108 (1) For insurance companies: gross written premiums.
For real estate companies: rents. For holding companies: dividends. For financial services companies: gross banking products.
Net Book Loans and cash Guarantees and Last Last closingvalue of advances given commitments closing result Dividends Closing date securities by the company given by the revenues available received and other held still outstanding Company available1 observations
b) Ordinary Shares (numbers in million) 350 356 416 1,734 1,762 c) Bonds mandatorily convertible into ordinay shares (numbers in million) 2 9 16 16 16 2 - INCOME STATEMENT SUMMARY
b) Pre-tax income from continuing operations, before depreciation, amortization and changes in reserves 827 1,165 1,199 1,481 1,223 c) Total pre-tax income, including capital gains and losses before depreciation, amortization and changes in reserves 909 1,189 1,143 1,402 1,222 e) Net after-tax income after depreciation, amortization and changes in reserves 944 1,160 1,058 1,620 1,066 3 - PER SHARE DATA
– to acquire, manage and / or dispose of equity interests in French or foreign companies or businesses, regardless of their legal form, to perform any and all transactions directly or indirectly related to the foregoing or in furtherance thereof,
No. 572 093 920 in the Paris Trade and Company Register
Net profits for the fiscal year and any retained earnings, less any prior losses and amounts appropriated to reserves in accordance with applicable law, constitute the distributable profit. Shareholders have control over this profit, and may decide at the annual general meeting on its appropriation as well as on the distribution of sums drawn from the reserves under its control. In such case, the shareholders’ decision expressly indicates the reserve accounts from which amounts are to be drawn.
Mr. Gérard Dantheny, first appointed on February 28, 1989. The current appointment is for a term of 6 years, until the annual general meeting of the shareholders called to approve the financial statements for the fiscal year 2005.
Alternate auditors: – Mr. Patrick Frotiée, 32, rue Guersant - 75017 Paris, first appointed on May 17, 1995. The current appointment is for a period of 6 years, until the annual general meeting of the shareholders called to approve the financial statements for the fiscal year 2005.
(a) PricewaterhouseCoopers has ceded its consulting activity on September 30, 2002. Most of the fees perceived in 2002 for information technology and services consulting were in respect of this activity and should disappear in 2003. (b) Other services rendered by PricewaterhouseCoopers mainly concern France (€1.4 million of which €0.2 million for the
OWNERSHIP OF THE AXA TRADEMARK BY FINAXA Finaxa owns the name “AXA” and the AXA trademark and, for this reason, is responsible for managing and protecting the trademark. In 1996, the Company and Finaxa entered into a licensing agreement pursuant to which Finaxa granted the Company a non-exclusive license to use the AXA trademark in countries in which the Company and its subsidiaries currently have operations. This license grants AXA the right to grant sublicenses to use the AXA trademark and / or its derivatives around the world. As of February 1, 2003, the Company had granted 27 sublicenses.
AGREEMENT WITH BNP PARIBAS On September 12, 2001, the AXA Group (AXA, Finaxa and the Mutuelles AXA) and the BNP Paribas group entered into an agreement that provides for maintaining a certain level of cross-shareholding between the parties (respectively a 4.9% ownership interest by the AXA Group in BNP Paribas and a 22.25% ownership interest by BNP Paribas in Finaxa). The agreement also grants each party a preemptive right to acquire the other party’s minimum equity investment following the termination of the agreement as well as an option to repurchase the ownership interests of the other party if there is a change in control of the other party. Furthermore, the AXA Group guarantees the liquidity of BNP Paribas’ holdings in ordinary shares of Finaxa. The agreement was concluded for a term of three years from the date of execution, renewable automatically for subsequent terms of three years, unless either party provides notice of termination at least three months before the end of the current term. This agreement was made public by the Conseil des Marchés Financiers on September 28, 2001.
New equity issue reserved for employees of AXA 686,930 322,857,100 344,086,003 3,147,334,380 Conversion of bonds into shares 6,050,063 1,222,806,120 350,136,066 3,202,673,949 Exercise of stock options 152,755 24,332,792 350,288,821 3,204,071,190 1999 Share capital increase through capitalization of reserves (conversion of equity capital into euros) – – 350,288,821 3,205,142,712 Exercise of stock options 211,833 3,976,555 350,500,654 3,207,080,984 Conversion of bonds into shares 542,441 16,705,461 351,043,095 3,212,044,319 New equity issue reserved for employees 184,321 16,671,834 351,227,416 3,213,730,856 Exercise of stock options 624,365 16,208,125 351,851,781 3,219,443,796 Conversion of bonds into shares 1,036,410 31,931,307 352,888,191 3,228,926,947
(a) To rebuild the special long-term capital gains reserve. (b) Following the public exchange offer for Royale Belge. (c) In French francs until December 31, 1998, and in euros as of 1999.
(c) In French francs until December 31, 1998, and in euros as of 1999.
Date Operations Number Number Amount of share of shares Issue of shares after capital after the issued premium the operation operation in euros
CAPITAL OWNERSHIP To the best of the Company’s knowledge, the table below summarizes its capital ownership and voting rights at
As of February 28, 2003, the Mutuelles AXA directly or indirectly owned, primarily through Finaxa (a listed holding company), 20.47% of the share capital and 33.15% of voting rights in meetings of the Company’s shareholders. Finaxa holds 95.40% of the share capital and 97.15% of the voting rights of ANF, a holding company that owns 0.31% of the share capital and 0.51% of the voting rights in meetings of the Company’s shareholders.
The Mutuelles AXA, acting as a group, directly and indirectly holds controlling interest in Finaxa (70.13% of the share capital and 79.83% of voting rights as of February 28, 2003). Each of the Mutuelles AXA is party to an agreement pursuant to which it grants the other parties a preemptive right to acquire its shares of Finaxa.
Number of shares Capital ownership Voting rights of which: – Mutuelles AXA 48,903,116 2.78% 4.45%
At December 31, 2002, the members of the AXA Management Board and AXA Supervisory Board owned 1,515,531 shares and AXA ADRs, equal to 0.09% of the Company’s share capital.
(a) Amounts taking into account a four-for-one stock split. (b) Proposal submitted to the Extraordinary and Ordinary Shareholders’ Meeting held on April 30, 2003. (c) Including shares issued in connection with the buyout of the minority interests in AXA Financial on January 2, 2001.
Summary of share option plans AXA By virtue of the various authorizations granted by extraordinary meetings of shareholders and following the acquisition of options granted in absorbed companies, the Board of Directors (and subsequently the Management Board) of the
Options exercisable as of 09/30/99 04/20/00 06/09/01 06/09/01 11/18/01 Expiration date 09/29/07 04/19/08 06/08/09 06/08/09 11/17/09 of stock options
Stock options granted in plans from July 5, 2000 onward may be exercised under the following conditions: – 33.33% of the total grant is exercisable at the end of the second year following the date of the grant; – 66.66% of the total grant is exercisable at the end of the third year following the date of the grant; – 100% of the total grant is exercisable at the end of the fourth year following the date of the grant.
Number of shares subscribed at 02/28/03 (3) 0 0 0 0 0
FINAXA FINAXA is a form of limited liability company (French société anonyme) with registered capital stock of €203,759,693.85 at March 18, 2003. Its stock option grants are summarized in the following tables: Date of Board meeting 04/13/94 07/10/96 05/07/98 Date of Shareholders’ meeting 04/27/90 06/15/95 05/28/97
Date of Board meeting 05/26/99 05/26/99 07/05/00 05/30/01 Date of Shareholders’ meeting 05/28/97 05/26/99 05/26/99 05/26/99
MOFIPAR MOFIPAR is a form of limited liability company (French société anonyme) with registered capital stock of €11,039,240.70. It was established in 1993. Additional capital of €11,491,355.70 shall be duly registered when the
AUTHORIZATIONS TO ISSUE SHARES AND OTHER SECURITIES The authorizations to issue shares and other securities, which were granted to the Management Board at the extraordinary and ordinary annual general meeting of shareholders held on May 3, 2002, and the authorizations submitted for approval by the shareholders at the meeting scheduled on April 30, 2003, are summarized in the tables below: Issues with preferential subscription rights
Company’s equity, excluding shares reserved for employees and shares resulting from stock options, may not exceed €2 billion.
Shares reserved for employees – 150 billion 26 months June 30, 2005
Maximum number of shares that can be bought or sold .............................................................................173,418,727
At the annual general meeting of the shareholders scheduled for April 30, 2003, the shareholders will once again be asked to authorize the Management Board to trade in the Company’s shares, notably for the purpose of stabilizing the market price, under the following conditions: Maximum purchase price .......................................................................................................................................... €30
This stock repurchase program was the subject of the prospectus (note d’information) number 03-211, dated
Persons responsible for this annual report (document de référence) PERSONS RESPONSIBLE FOR THIS ANNUAL REPORT (DOCUMENT DE RÉFÉRENCE) To the best of our knowledge, the information contained in this document accurately reflects the true financial position of the Company. It comprises all information required to enable investors to reach an informed opinion of the assets, activities, financial position, earnings and prospects of the Company. It contains no misleading omissions.
STATEMENT BY THE INDEPENDENT ACCOUNTANTS In our capacity as independent accountants of AXA and pursuant to Regulation 98-01 of the Commission des Opérations de Bourse (the French Securities and Exchange Commission), we have examined in accordance with French professional standards the information concerning the financial position and historical financial statements contained in this annual report (document de référence).
This annual report is the responsibility of the Chairman of the Management Board. Our responsibility is to express an opinion on the accuracy of the information contained herein concerning the financial position and financial statements.
– AXA’s European consolidated solvency margin, the estimates at December 31, 2002 were calculated following the basis of European Directives.
Based on the procedures described above, we have nothing to report regarding the accuracy of the information concerning the financial position and financial statements presented in this annual report.
PERSONS RESPONSIBLE FOR INFORMATION Mr. Gérard de La Martinière Mr. Denis Duverne AXA 25, avenue Matignon - 75008 Paris
on April 9, 2003. It may be used in connection with a financial transaction only if accompanied by a prospectus (note d’information) that has received the visa of the Commission des Opérations de Bourse.