From January 1, 2014 to December 31, 2014, the amount of
Level 3 assets increased to €10.9 billion, representing 2.4% of the total assets at fair value (2.5% in 2013 i.e. €10.2 billion).
Main movements related to Level 3 assets to be noted were the following: ■ €+1.9 billion of new investments; ■ €-0.4 billion of asset sales mainly debt instruments, equity securities and investment funds accounted as available for sale and as at fair value option; ■ €-0.6 billion of change in unrealized gains and losses; ■ €-0.3 billion reclassifi ed in Level 2 primarily due to the availability of more observable data; ■ €+0.1 billion of foreign exchange fl uctuation impact.
Assets quoted in an active market Assets not quoted in an active market or no active market
Fair value not based on a majority of observable market data (level 3)
Investments in real estate properties at amortized cost - 25,390 - 25,390 - 23,370 - 23,370
I Note 10 Investments in joint ventures and associates accounted for using the equity method 10.1. BREAKDOWN OF JOINT VENTURES AND ASSOCIATES
PT AXA Mandiri Financial Services 46 - 33 5 (32) 52
(a) Includes increase in capital, dividend distributions, changes in consolidation method, and impacts of revaluation to fair value of fi nancial investments in shareholders’ equity.
Ping is mainly focusing on motor insurance and has Property &
Casualty licenses covering most Chinese provinces as well as a direct distribution license covering these provinces with a market share of 0.8% (1).
IFRS 3 Business Combinations, adjustments to the initial accounting for the assets, liabilities and minority interests can be made within twelve months of the acquisition date if new information becomes available to complete the initial accounting.
Krungthai AXA Life Insurance Company Ltd 89 - 37 (12) (16) 98
Bharti AXA General Insurance Company Limited - - (3) (2) 19 14
Kyobo AXA Investment Managers Company Limited 29 - 2 (1) (2) 28
(c) Starting from 2013, these entities close their full year accounts as of December 31.
Change in unearned premiums net of unearned revenues and fees 3 (37) -
Dividends received by AXA from the associate - 7 - 6
(c) Based on closing foreign exchange rate. Using average foreign exchange rate, the impairment booked in the net income was €-251 million.
Premiums earned not yet written 3,596 - 3,596 3,596 3,406 - 3,406 3,406
Receivables arising from direct insurance and inward reinsurance operations 15,026 (338) 14,688 14,688 14,412 (316) 14,096 14,096
Receivables from brokers and general agents 19 (9) 11 11 31 (18) 13 13
(c) including €279 million deposits in the central banks in 2014 and €333 million in 2013.
The table below reconciles assets and liabilities cash and cash equivalent balances with the statement of consolidated cash fl ows: (In Euro million) December 31, 2014
Net cash and cash equivalents increased by €1,154 million compared to 2013 mainly due to: ■ the US Life & Savings €+1,527 million mainly refl ecting higher infl ows from sale of unit-linked contracts, higher repurchase agreements, partly offset by higher investments mainly in debt instruments; ■ France Life & Savings €-215 million as a result of higher positive infl ows from insurance business partly offset by higher investment; ■ the Company €-207 million mainly due to the reimbursement of the subordinated debt in January 2014 for €2,122 million partly offset by bond issuances for €1,910 million.
Regarding the consolidated statement of cash fl ows presented together with the primary fi nancial statements, net cash provided by operating activities totaled €12,935 million in 2014, compared to €5,317 million in 2013.
Net cash used in investing activities was €-8,329 million in 2014, mainly refl ecting: ■ €-8,855 million of net cash used in purchases and sales of fi nancial invested assets; ■ €+1,310 million of net cash impact of assets lending/
borrowing collateral receivables and payables; Net cash used in investing activities was €-11,473 million in 2013, mainly refl ecting: ■ €-8,799 million of net cash used in purchases and sales of fi nancial invested assets; ■ €-2,692 million of net cash impact of assets lending/
Insurance Company and the sale of a majority stake in AXA
The Consolidated Statement of changes in Equity is presented as a primary fi nancial statement.
AXA shares held by consolidated Mutual funds not backing contracts where fi nancial risk borne by policyholders.
November 7, 2014 with a 58% average take-up rate and resulted in the issuance of €984 million undated deeply subordinated resettable notes (initial coupon set at 3.941% per annum until the fi rst call date in 2024) and £724 million undated deeply subordinated resettable notes (initial coupon set at 5.453% per annum until the fi rst call date in 2026). Impact was €-105 million post tax on shareholder’s equity (Group Share)
As of December 31, 2014 and December 31, 2013, undated subordinated debt recognized in shareholders’ equity broke down as follows: (In Euro million)
October 26, 2006 - 600 MA$ (of which 300MA$ 7.5%) 600 402 600 386
equity included net accumulated fi nancial expenses of: ■ €-2,716 million as of December 31, 2014; ■ €-2,410 million as of December 31, 2013.
Undated subordinated debt often contains the following features: ■ early redemption clauses (calls) at the Group’s option, giving
As of December 31, 2013, the Company and its subsidiaries owned approximately 4 million AXA shares, representing 0.2%
At April 30, 2013 Shareholders’ Meeting, shareholders approved a dividend distribution of €1,720 million with respect to the 2012 fi nancial year.
Unrealized gains and losses (net of tax) – Assets available for sale 15,328 8,418
(e) Including unrealized gains and losses on assets held for sale operations.
At December 31, 2014, most of the unrealized gains on assets available for sale related to the Life & Savings segment, leading to signifi cant movements in shadow policyholders’ participation and other obligations.
In jurisdictions where participating business represents an important portion of contracts in force and where required minimum local policyholders’ share in the entities’ results (limited to investment or not) are signifi cant, the reconciliation between gross unrealized gains and losses on available for sale fi nancial assets and the corresponding net reserve recognized in shareholders’ equity were as follows as of December 31, 2014: (In Euro million)
Less unrealized gains and losses attributable to: Shadow accounting on policyholders’ participation and other obligations (14,268) (8,459) (3,363)
Minority interests’ share in unrealized gains and losses (c) (8) - -
(b) Net of shadow accounting on unearned revenues and fees reserves.
The change in reserves related to changes in fair value of available for sale fi nancial instruments included in shareholders’ equity as of December 31, 2014 and December 31, 2013 broke down as follows: (In Euro million)
Transfer in the income statement on the period (c) (538) (472)
The total impact of employee benefi ts actuarial gains and losses amounted to €-1,239 million (of which group share was €-1,230 million and minority interests was €-8 million) as of
The total impact of foreign exchange rate movement was €-2,453 million (of which €-2,361 million from group share and €-91 million from minority interest) as of December 31, 2013.
The €294 million increase in minority interests to €2,815 million was driven by comprehensive income and transactions with minority interests’ holders: ■ the comprehensive income for the period notably included the following: • net income attributable to minority interests for €+313 million; • reserves relating to changes in fair value through shareholders’ equity for €+54 million; • foreign exchange movements for €+193 million; ■ transactions with minority interests’ holders, mainly included: • dividend payout to minority interests’ holders for €-276 million.
The €149 million increase in minority interests to €2,520 million was driven by comprehensive income and transactions with minority interests’ holders: ■ the comprehensive income for the period notably included the following: • net income attributable to minority interests for €+304 million; • reserves relating to changes in fair value through shareholders’ equity for €+32 million; • impact from open market purchase of AllianceBernstein holding units for €-31 million; ■ transactions with minority interests’ holders, mainly included: • dividend payout to minority interests’ holders for €-237 million.
I Note 14 Liabilities arising from insurance and investment contracts 14.1. LIABILITIES ARISING FROM INSURANCE CONTRACTS (GROSS AND REINSURERS’ SHARE)
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 142,042 - - 142,042 125,593 - - 125,593
Reinsurers’ share in unearned premiums reserves 49 560 194 803 31 432 183 645
Reinsurers’ share in claim reserves (b) 1,366 2,114 1,425 4,905 1,198 1,729 1,810 4,736
Reinsurers’ share in other reserves 425 (5) - 420 356 4 - 360
Reinsurers’ share in liabilities arising from insurance contracts 14,358 2,669 1,619 18,646 13,472 2,164 1,994 17,630
Liabilities arising from investment contracts with discretionary participating features 33,669 33,850 of which measured at current assumptions (b) - -
Reinsurers share in liabilities arising from investment contracts with no discretionary participating features - -
TOTAL LIABILITIES ARISING FROM INVESTMENT CONTRACTS – NET OF REINSURANCE CEDED 73,355 70,852
Reinsurance’s share in investments contracts liabilities relating to policyholders’ participation (none in 2014 and 2013), as well as derivatives instruments (none in 2014 and 2013) are excluded from the table above.
Claim reserves as of January 1 36,093 7,330 43,423 35,411 7,760 43,171
Gross claims reserve as of January 1 (b) 37,183 7,584 44,767 36,555 8,018 44,573
Claim handling cost reserves as of December 31 1,123 261 1,384 1,090 253 1,344
Reinsurers’ share in claim reserves as of January 1 1,728 1,810 3,538 1,632 2,112 3,745
Reinsurers’ share in total claim expenses 1,192 (109) 1,083 898 120 1,018
Reinsurers’ share in claim reserves as of December 31 2,114 1,425 3,539 1,728 1,810 3,538
Technical reserves as of January 1 (a) 414,226 70,874 485,100 416,480 70,664 487,145
Change in reserves relating to technical and actuarial items (+/-) (b) 8,826 2,681 11,507 (1,313) 2,901 1,588
Change in scope of consolidation, portfolio transfers and change in accounting principles 272 (851) (580) (5,473) 194 (5,280)
Technical reserves as of December 31 (a) 450,479 73,449 523,928 414,226 70,874 485,100
(b) 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 .
In 2014, the change in scope of consolidation totalled €-580 million, mainly due to the classifi cation as held for sale of the Mandatory Provident fund (MPF) and Occupational
Reinsurers’ share in technical reserves as of January 1 (a) 13,473 23 13,495 6,162 18 6,180
Reinsurers’ share in collected premiums net of loadings on premiums (+) 1,273 15 1,288 2,254 2 2,257
Impact of foreign currency fl uctuation 623 1 624 (237) - (237)
Reinsurers’ share technical reserves as of December 31 (a) 14,358 94 14,452 13,473 23 13,495
Investment contracts with no Discretionary Participation Features (DPF) measured according to existing accounting policies 481 99
Outstanding questions on these issues are highly complex and are not yet suffi ciently advanced. Phase II discussions regarding insurance and certain investment contracts, even if re-activated at the IASB level soon after the issuance of
represents the loss reserves developed in the Group’s balance sheet on the reporting date for the year indicated in the column heading. 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 Group’s balance sheet as of December 31, 2005.
The second line entitled “Gross reserves for unpaid claims and claim expenses developed in 2014 adjusted for changes in exchange rates and scope of consolidation” indicates the amount that would have been developed initially at the booking date, had the exchange rates for the current year been used (for reserves recognized by AXA Group entities that do not use the Euro as their functional currency) and assuming an identical scope of consolidation to that used for the last diagonal of the table.
shows, for a given column N, the cumulative amount of payments related to years of occurrence prior to and including
LOSS RESERVES DEVELOPMENT TABLE: PROPERTY & CASUALTY AND INTERNATIONAL INSURANCE (EXCLUDING COLISÉE RE (EX AXA RE)
Gross reserves for unpaid claims and claims expenses developed in 2014 adjusted for changes in exchange rates and scope of consolidation (a) 27,645 28,982 43,012 44,903 45,372 45,649 45,877 46,236 46,994 48,264 49,868
Cumulative redundancy (defi ciency) from the initial gross reserves in excess of re-estimated gross reserves: (b)
This line also includes the impact of the unwind of discount rate on annuities (which are developed from 2006 on) for an amount of €119 million for 2013 .
December 31, 2005. However, the proportional treaty set in place as part of the agreement between Coliseé Re and
Paris Ré protects AXA entirely from any claims occurring after January 1, 2006. Consequently, the table below shows the development of loss reserves recognized in Coliseé Re’s balance sheet at each year-end until December 31, 2005.
has been acquired by PartnerRe and terms of the agreements mentioned above remains in-force.
Initial net claims reserves in excess of (less than) re-estimated net claims reserves as of December 31, 2014
(b) Total gross claims and other reserves developed are presented on the basis of the loss reserves development table. The reserves of AXA Corporate Solutions Insurance US were included in Property & Casualty and International Insurance loss reserves. The reserves of Mosaic Insurance Company (ex AXA RE P&C Insurance Company) and Coliseum RE (ex AXA CS Reinsurance Company) (€72 million in 2014, €67 million in 2013) were included in Colisée RE’s (ex AXA RE) loss reserves development table.
(c) Includes reserves inward reinsurance (€1,222 million in 2014, €1,194 million in 2013).
AXA actively conducts its exposure to asbestos claims by using its unit specialized in non-life run-offs: AXA Liabilities
Reserves adequacy ratios 3-Year survival ratio excluding commutations (a) 38 years 42 years 39 years 42 years
Cumulative Payments to date / Projected Ultimate Cost 43% 42% 42% 41%
As a result of those various changes and after allowing for movements in exchange rates, AXA held total reserves for asbestos exposure (net of reinsurance) of € 1,050 million at year-end 2014.
The deferred policyholders’ participation and other obligations liability and deferred policyholders’ participation asset include the impact of shadow accounting (see defi nition in Note 1.14.2)
14.9. PAYMENT, SURRENDER PROJECTIONS, INSURANCE AND INVESTMENT CONTRACT LIABILITIES DISCOUNT RATES
The table below shows the breakdown of projected payments and surrenders related to insurance and investment contracts
These cash flows are based on assumptions regarding mortality, incapacity and disability, surrender and settlement frequency for Property & Casualty, which are consistent with past experience in the Group’s business. They are gross of reinsurance. Given the strong use of estimates, it is likely that actual payments will differ.
Liabilities arising from insurance and investment contracts 28,512 76,524 478,186 583,222 26,253 70,971 467,177 564,402 of which Life & Savings liabilities relating to contracts including a surrender option with some surrender benefi t before maturity 13,154 53,424 344,072 410,650 13,299 51,713 338,990 404,001 14.9.2. Insurance and investment contract liabilities – discount rates
Sub-total – Non Life and International Insurance 63,037 - 59,702 -
The risk of GMDB and GMIB features to AXA are related to the unhedged portion of the benefi ts and to the policyholder behaviour becoming materially different from the expected behavior. Reserves are established for these features on the basis of actuarial assumptions related to projected benefi ts and related contract charges. The determination of estimated
Banking liabilities issued at fair value – Retail customers 2,447 2,447 1,690 1,690
Macro-hedge derivatives and other derivatives relating to liabilities arising from banking activities (239) (239) (138) (138)
The fair value option is used to measure certain debt (Euro
are as follows: Banking liabilities issued at fair value: ■ €834 million at 2014 based upon market prices that are available in active markets and are considered as Level 1 fair values; ■ €1,333 million at 2014 (€1,690 million at 2013) mainly based on observable market data inputs and are considered as
■ €280 million fair values at 2014 not mainly based on observable market data inputs and are considered to be
(see Note 15.2), the carrying amounts may be considered as reasonable proxies for fair values. Thus, the fair value of amounts displayed above for these instruments are considered to be Level 3 fair values.
Other liabilities arising from banking activities relate to bonds issued with prices quoted regularly and publically available in active markets. As such, the fair values of these liabilities are considered as Level 1 instruments.
Banking liabilities issued at fair value – Retail customers 35 764 1,648 2,447 30 642 1,019 1,690
Other liabilities arising from banking activities 179 1,737 613 2,529 - 1,303 1,185 2,489
Macro-hedge derivatives and other derivatives related to liabilities arising from banking activities 23 (60) (201) (239) (1) (34) (103) (138)
mainly in the United States (€781 million). Other provisions for risks and charges other than provisions for tax liability amounted to €970 million mainly in the Holdings (€462 million), in Banking segment (€152 million), France (€88 million) and the
United Kingdom and Ireland (€72 million). For more details on litigations, please refer to Note 31.
(a) As described in Note 1.2.1, comparative information related to previous period was retrospectively restated for the application of IFRS 10 and 11.
Debt component of subordinated notes, 2.5% due 2014 (€) - 2,122
Subordinated debt maturity below 10 years fi xed rate 68 98
Other fi nancing debt instruments issued (under €100 million) 102 132
Other fi nancing debt owed to credit institutions (under €100 million) - 44
Main movements on fi nancing debt during the period were the following: ■ the repayment of €2,122 million subordinated debt maturing in 2014; ■ issuance of £750 million (€963 million as of December 31, 2014 foreign exchange rate) subordinated debt due 2054 with an initial coupon at 5.625% per annum fi xed until the fi rst call date in January 2034; ■ the repayment of €809 million Euro Senior Note due 2014.
Carrying value of fi nancing debt by contractual maturity as of December 31
Other debt instrument issued, notes and bank overdraft (b) 1,855 2,412
Debts relating to investments under total return swap agreement (c) 138 138
Debt relating to investments under lending agreements and equivalent (d) 21,331 20,909
(c) Amounts are included in the line item Other debt instruments issued, notes and bank overdrafts in 4.1 Consolidated statement of fi nancial position.
“Debt relating to investments under lending agreements and equivalent” totaled €21,331 million as of December 31, 2014, an increase of €422 million compared with December 31, 2013, or €130 million at constant exchange rate, mainly due to the increase in repurchase agreements activity in Switzerland
Collateralized debt – JPY Libor 3M +4bps annual interest – maturity March 27, 2021 130 -
OTHER DEBT INSTRUMENTS ISSUED, NOTES AND BANK OVERDRAFTS (OTHER THAN FINANCING DEBT) 1,855 2,412
Such fair values are mainly based on observable market data input (see Note 1.5 for a description of observable data) and are therefore classifi ed as level 2 instruments.
As of December 31, 2014, payables arising from direct outward reinsurance operations totaled €12,538 million, an increase of €312 million compared to December 31, 2013 mainly due to rise in ceded reserves in Life & Savings segment for France, partly offset by a decrease in current accounts payables to other insurance companies in Germany Life & Savings.
Impact of differences in tax rate and impact of taxes not linked to pre-tax income 71 (80)
Derocognition of deferred tax assets on tax losses of prior years (b) 6 14
Derecognition/Recognition of DTA on temporary differences of prior years (other than tax losses) (b) (3) (23)
Impact of adjustments, decrease in value and other items (115) (14)
(b) Derecognition of Deferred Tax Assets (DTA) arising on tax losses is shown in “Tax losses impact”.
Deferred tax Assets/(liabilities) concerning: ■ Reserves relating to the fair value adjustment of available for sale assets 9,806 16,569 (6,762) (3,580)
■ Reserves relating to hedge accounting and other items (59) 223 (281) (157)
■ Reserves relating to gains and losses on defi ned benefi ts pension plans 1,589 1 1,588 965
In 2014, the change in scope was mainly driven by the fi rst time consolidation of Colpatria (Colombia).
Recognized Deferred Tax Assets (DTA) on tax loss carried forward by maturity and expiration date: The tables below break down (i) in the fi rst part the maturity by which the Group expects to use the DTA accounted at year end and the corresponding tax losses carried forward, (ii) in the second part, the “expiration date” of the DTA, i.e. the latest date at which the
The €22,512 million DTA included €1,584 million of DTA on tax losses carried forward as of December 31, 2014.
DTA recognized on tax losses carried forward 6 23 12 6 5 6 70 607 848 1,584
In 2013, the €1,983 million net DTL position included €15,701 million DTA of which €2,216 million DTA on tax losses carried forward.
DTA recognized on tax losses carried forward 283 285 274 202 269 78 281 543 - 2,216
DTA recognized on tax losses carried forward 9 3 52 23 14 1 59 619 1,436 2,216
Unrecognized Deferred Tax Assets (DTA): The amount of the potential DTA which has not been recorded in the accounts at the end of the year as considered unrecoverable represented € 479 million (€514 million in 2013) of which: ■ €404 million concerned unrecognized DTA on € 1,764 million tax losses carried forward (€447 million DTA on €1,889 million tax losses carried forward in 2013). The major part of these losses has no maturity date (€1,565 million in 2014 and €1,669 million in 2013); ■ €75 million related to other unrecognized deferred tax assets (€68 million in 2013).
As of December 31, 2014, the notional amount of all derivative instruments totaled €433.5 billion (€403.3 billion at the end of 2013). Their net fair value as of December 31, 2014 totalled €256 million (€-923 million at the end of 2013).
Liability Management (ALM) strategy in insurance companies, as well as holdings and banks. Notional amount of such hedging strategies amounted to €424.0 billion as of December 31, 2014
(€393.1 billion at the end of 2013) and includes: (i) managing interest rate exposures on fi xed maturity investments, long-term debt and guaranteed interest rates on insurance contracts; (ii) reducing foreign-currency exposures on foreign-currency denominated investments and liabilities; (iii) managing liquidity positions (including the ability to pay benefi ts and claims when due) in connection with Asset
(v) limiting credit risk with regard to certain investments in corporate debt instruments.
was €-0.6 billion as of December 31, 2014 (€-1.6 billion at the end of 2013). This net total includes amounts recognized in the
Interest rate forwards to hedge in line with increase in asset base notably in Germany Life & Savings; ■ notional amount of credit derivatives increased by €+3.9 billion in order to decrease exposure to the corporate spread risk.
The AXA Group’s primary interest rate exposure is related to contracts with guaranteed benefi ts and the risk that the value of the fi nancial assets purchased with the consideration received from the contract holders is insuffi cient to fund the guaranteed benefi ts and expected discretionary participation payable to them. To hedge against potential adverse market conditions, derivative strategies are used to reduce the risk arising from the guarantee liability over time.
As of December 31, 2014, the notional amount of interest rate derivative instruments totalled €261.5 billion (€250.4 billion at the end of 2013). Their net fair value as of December 31, 2014 totalled €1,798 million (€722 million at the end of 2013).
These instruments are mainly used to: (i) hedge interest rate risk and interest volatility risk as part of the Asset Liability Management strategy associated with the guaranteed minimum benefi ts on Variable Annuity products, with notional amount of €59.6 billion at the end of 2014 (€51.1 billion at the end of 2013) mainly in the United
Life & Saving for €49.2 billion (versus €55.6 billion in 2013)
As of December 31, 2014, the notional amount of equity derivative instruments totalled €23.1 billion (€22.3 billion at the end of 2013). Their net fair value as of December 31, 2014 totalled €609 million (€256 million at the end of 2013). AXA
mainly uses (i) Currency future and forward contracts (63% of total notional amount of currency derivative instruments), (ii)
One of the main objectives of currency derivatives instruments is to limit variations in net foreign currency-denominated assets resulting from movements in exchange rates in order to protect partially or in full the value of AXA’s net foreign-currency investments in its subsidiaries and thus reduce the variability of Group consolidated shareholders’ equity against currency fl uctuations, but also of others key indicators such as liquidity, gearing and solvency ratios. Notional amount of derivatives used by the Company to hedge the foreign currency exposure increased from €21.5 billion in 2013 to €23.1 billion in 2014, mainly due to the continuous review of its Net Investment
commitments are matched by assets denominated in the same currency, some entities may invest in foreign currency denominated assets to diversify their investments. This is the case mainly in (i) Switzerland using such contracts to hedge exchange rate risk arising from their investments in equities and debt instruments denominated in non CHF currencies
strategies, leading to the creation of an asset that can be compared to a risk-free asset. CDS protections use by AXA in this context amounted to €3.4 billion in 2014 versus €4.0 billion in 2013; (iii) enhance the return mainly on government bonds portfolios by holding government bonds and at same time selling protection on very good quality names as an alternative to the direct purchase of a corporate bond. This type of
Assets backing contracts where the fi nancial risk is borne by policyholders 181,082 - 181,082 - - - 181,082 - 181,082
(d) Other investments held through consolidated investment funds designated as at fair value through profi t or loss.
(b) Carrying value, i.e net of impairment, discount premiums and related amortization, including accrued interest, but excluding any impact of derivatives.
(e) Other investments held through consolidated investment funds designated as at fair value through profi t or loss.
TOTAL LIABILITIES ARISING FROM INSURANCE CONTRACT 513,516 (1,338) 512,179 473,928 (530) 473,397
Financing debt owed to credit institutions - - - 853 - 853
Derivative instruments relating to insurance and investment contracts 19 (2,856) - (2,837) 13 (1,099) - (1,086)
Macro-hedge banking activities and other derivatives 3 (80) (17) (93) 20 (115) - (95)
Net value of derivative instruments – liabilities (2) 22 (2,570) (17) (2,565) 33 (1,003) - (970)
LIFE & SAVINGS 55,345 55,331 of which direct premiums 50,551 50,704 of which reinsurance assumed 3,255 3,158 of which fees and charges on investment contracts with no participation features 327 323 of which revenues from other activities 1,211 1,147
INTERNATIONAL INSURANCE 3,292 3,143 of which direct premiums 2,360 2,244 of which reinsurance assumed 704 670 of which revenues from other activities 228 228
(d) Reso Garantia is accounted for using the equity method in the Group consolidated fi nancial statements on the basis of a closing at September 30. Given signifi cant movements in the Russian ruble exchange rate between September 30, 2014 and December 31, 2014, the balance sheet used as a basis of the equity method has been translated using December 31 exchange rate.
Life contracts (including endowment contracts) 21,493 165,030 334 22,090 154,664 1,008
TOTAL – PROPERTY & CASUALTY EXCLUDING INTERNATIONAL INSURANCE 30,295 7,877 1,058 64 39,295 14,785 54,080
TOTAL – PROPERTY & CASUALTY INCLUDING INTERNATIONAL INSURANCE 33,010 10,413 1,204 140 44,767 14,935 59,702
Investment in real estate properties as at fair value through profi t or loss 41 - 15 - 56
Non consolidated investment funds held for trading 2 - 5 - 7
Net result of reinsurance ceded was as follows: (In Euro million)
Premiums ceded and unearned premiums ceded (1,908) (2,050) (857) 484 (4,332)
Claims ceded (including change in claims reserves) 2,154 1,242 293 (490) 3,198
Premiums ceded and unearned premiums ceded (2,668) (1,889) (940) 400 (5,096)
Increase/(write back) of tangible assets amortization (0) 0 - (0) - - (0) - (0) 0
Charges relating to owner occupied properties 206 235 45 486 176 15 13 (0) 689 726
Expenses increased by €29 million compared to December 31, 2013. Excluding the favourable forex impact, the effect of the alignment of AXA Life Japan closing date with the Group calendar year in 2013 and the disposal of AXA Private Equity in 2013, expenses increased by €568 million, refl ecting: ■ higher expenses in high growth markets mainly as a consequence of the acquisition of Colpatria in Colombia as well as business growth; ■ higher expenses in AXA Bank Hungary driven by a oneoff provision as a result of the law voted on July 4th, 2014 which retroactively corrected the bid-ask spreads applied to retail loans in foreign currency and obliged all banks to compensate clients for past variable interest rate changes; ■ higher expenses in Asset Management mainly refl ecting business growth.
This was partly offset by the favorable impact from productivity programs in mature insurance markets.
The cost of the contributions paid was recognized as an expense in the income statement, and amounted to €161 million as of 26.2.2. Defi ned benefi t plans
The Group operates various defi ned post-employment benefi t plans mainly in the United Kingdom, the United States,
In the United Kingdom, United States and Germany, pensions in payment are generally updated in line with the retail price index or infl ation, as opposed to in other countries where pensions do not necessarily receive infl ationary increases once in payment.
Most of the defi ned pension benefi t plans are funded through long-term employee benefi t funds or covered by insurance policies or m utual funds. In Switzerland and Belgium, the main defi ned benefi t plans are contributory pension plans whereas in the United States, France and Germany, the main plans are non-contributory defi ned benefi t plans.
In France and Belgium, benefi t payments are managed by insurance companies or m utual funds.
The assumptions for each of the liabilities are consistent with the economic features of the corresponding countries’ plans. The weighted-average assumptions used by AXA for pension plans in the principal regions in which AXA operates were as follows: DE CEMBER 2014 ASSUMPTIONS
Pension benefi t obligation – assumptions as of December 31, 2013
Actuarial (gains) and losses arising from changes in fi nancial assumptions 2,540 (720) 74 (63) 2,613 (783)
Benefi ts directly paid by the employer (299) (314) (41) (37) (340) (351)
Fair value of plan assets at the beginning of year 9,536 9,164 5 4 9,541 9,168
Interest income on plan assets 378 320 0 0 378 320
Actual return on plan assets, excluding interest income 799 455 (1) (0) 799 455
Net transfer In/(Out) (including acquisitions and disposals) (0) (0) - - (0) (0)
Benefi ts paid by plan assets (453) (458) - (1) (453) (459)
Actual return on separate assets, excluding interest income 38 27 - - 38 27
Benefi ts paid by separate assets (106) (126) - (1) (106) (127)
Cumulative effect of asset ceiling at the beginning of the year 10 10 - - 10 10
Interest cost on asset ceiling 0 0 - - 0 0
Cumulative effect of asset ceiling at the end of the year 17 10 - - 17 10
Net position (excluding separate assets) (9,140) (7,261) (660) (542) (9,800) (7,802)
Net balance sheet position (including separate assets) (8,024) (6,223) (660) (542) (8,684) (6,765)
(a) In 2013, this amount mainly includes plan amendments or curtailments effect in the United States, in Switzerland, and in France.
Interest income on separate assets (32) (22) - - (32) (22)
Defi ned pension and other benefi ts expense (Service Cost + Net Interest Cost/Income) 429 375 31 32 460 407 26.2.6. Change in the liability (net of plan assets but excluding separate assets and assets within the insurance General Accounts backing employee benefi ts) recognized in the statement of fi nancial position
DESCRIPTION OF THE RELATIONSHIP BETWEEN SEPARATE ASSETS (OR REIMBURSEMENT RIGHT) AND RELATED OBLIGATIONS
mainly in France and Belgium. This represents the fair value of assets backing Defi ned Benefi t Obligations covered by both i)
(within the Group) and pension obligations remain on the balance sheet.
IAS 19 considers liabilities net of Plan Assets on the one hand and Separate Assets and a part of Swiss assets on the other hand separately while economically, Separates Assets and a part of Swiss assets should be considered as backing
Benefi t Obligation. The presentation required by IAS 19 seems to imply that such DBOs are not covered by corresponding assets.
Change in the liability recognized in the statement of fi nancial position
Adjustment due to separate assets (83) (61) - - (83) (61)
Benefi ts paid by separate assets 106 126 - 1 106 127
Actuarial gains and losses recognized in OCI (1,839) 1,062 (66) 131 (1,905) 1,193
Net balance sheet position at the end of the year (8,024) (6,223) (660) (542) (8,684) (6,765)
26.2.7. Sensitivity analysis of the Defi ned Benefi t Obligation (DBO): Gross of all assets
A description of the risk that pension schemes are exposed to is presented in Note 26.2.10. The sensitivity analysis for signifi cant actuarial assumptions showing how the defi ned benefi t obligation (totaling €20,974 million as of December 31, 2014 and €17,333 million as of December 31, 2013) would have been affected by changes in the relevant actuarial assumption that is reasonably possible for year ended as of December 31, 2014 and 2013 is presented below: E ffect of 0.50%
In summary, considering both the Swiss case (and other entities in a similar case) and Separate Assets, the net economic situation of the funding for Defi ned Benefi t plans is the following: (In Euro million)
Statement of fi nancial position liability (a) (9,140) (7,261) (660) (542) (9,800) (7,802)
Assets other than plan assets (b) 2,794 2,747 - - 2,794 2,747
which is a requirement that the Scheme has appropriate and adequate assets to meet its technical provisions and the
Statement of Funding Principles (SFP) which is a document prepared by the Trustees which sets out their policy for ensuring that the SFO is met. As part of the actuarial valuation, the appropriate level of future contributions to be paid to the pension plan is determined and a schedule of contributions is prepared by the Trustees of the pensions scheme following discussions with the entity. This includes a 10 year recovery plan to ensure that the Statutory Funding Objective (SFO) is met. The contributions for the recovery plan are based on the actuarial valuation performed every three years. However the schedule of contributions may change more frequently if signifi cant events occur in the year.
In Germany, there is no requirement to fund employee benefi t obligation.
Estimated future benefits to be paid by the assets or the employer
These estimated future contributions and benefi ts expected to paid are subject to uncertainty as they will be notably driven by economics of future years.
AXA Group as at December 31, 2014 and 2013, respectively (fair value hierarchy principles as described by the Group are described in Note 1.5.): December 31, 2014 Asset mix for plan assets
Local operating entities and trustees have the primary responsibility for managing the risks that plans are exposed to through a defi ned benefi t plan, in accordance with local legislation if any and the risk framework defi ned at local Level.
Liability Management (ALM) framework defi ning an optimal strategic allocation with respect to the liabilities structure.
All fi gures are gross of tax (In Euro million) 2014 2013
Performance Units does not include a loss of €12.0 million in 2014 before tax (gain of €81.0 million in 2013) on the hedging program through equity swaps in place at Group level. Including this hedging loss, the cost related to Performance Units and
A detail of each of the major plans and associated cost is presented in Note 26.3.1 and in Note 26.3.2.
Executive offi cers and other key employees may be granted options on AXA ordinary shares under employee stock option plans. These options may be either subscription options involving newly issued AXA ordinary shares or purchase options involving AXA treasury shares. While the precise terms and conditions of each option grant may vary, options are currently (i) granted at a price not less than the average closing price of the ordinary share on the Paris Stock Exchange during the 20 trading days preceding the date of grant, (ii) valid for a maximum term of ten years, and (iii) vest generally in instalments of 33.33% per year on each of the second, third and fourth anniversaries of the grant date. For options granted in 2014, the vesting remains in instalments of 33.33% per year but on each of the third, fourth and fi fth anniversaries of the grant date.
From 2007 to 2012, for the employees who were granted more than 5,000 options, the fi rst two instalments vest unconditionally at the end of the vesting period, while the fi nal instalment is subject to the fulfi lment of certain conditions regarding the performance of the AXA shares compared to the STOXX
Board since 2009, Management Committee since 2011, and Executive Committee in 2014, have been subject to the fulfi lment of this market-based performance condition.
The following table shows AXA SA stock options granted under all plans: Options (in million) Weighted price (In Euro)
Black & Scholes option pricing model. The effect of expected early exercise is taken into account through the use of an expected life assumption based on historical data. AXA SA
share price volatility is estimated on the basis of implied volatility, which is checked against an analysis of historical volatility to ensure consistency. The expected AXA SA dividend yield is based on the market consensus. The risk-free interest rate is based on the Euro Swap Rate curve for the appropriate term.
The option pricing assumptions and fair value at grant date for plans issued in 2014, 2013, 2012, and 2011 are as follows: Assumptions (a)
ADRs may continue to hold or trade those shares, subject to existing transfer restrictions, if any.
The following tables show a summary of the United States holding Company’s AXA ADR stock option plans: Options (in million)
The fair value of AXA ADR stock options was calculated using the Black & Scholes option pricing model. The effect of expected early exercise wa s taken into account through the use of an expected life assumption based on historical data.
receive the value of their assets in the form of AXA shares; or
On October 24, 2014, the AXA Group made an employee share offering at €14.75 per share for the traditional plan (discount of 20% to the reference price of €18.43 representing the average over the twenty trading days ending on October 23, 2014) and at €16.44 per share for the leverage plan (discount of 10.80%
In 2014, the cost of the lock-up period was measured at 19.64% for the traditional plan and 10.76% for the leveraged plan (due to different discounts). In addition to the lock-up cost, the opportunity gain offered to the employees under the leveraged plan was measured at 2.05%.
The table below shows the main features of the plan, the amounts subscribed, valuation assumptions, and the cost of the plan for 2013 and 2014: Traditional Leveraged Traditional Leveraged
TOTAL COST FOR AXA (IN EURO MILLION) 0.10 6.80 0.10 7.90
On March 16, 2012, AXA granted 50 free AXA ordinary shares
Performance Shares are granted to executive offi cers and other key employees in France. These P erformance Shares plans are equity-settled award plans subjected to a nonmarket performance criteria and have a two-year vesting period followed by a two-year restrictions period until 2013.
Performance Shares” the performance period is raised to 3 years and the vesting period to 4 years.
Performance Shares recorded as of December 31, 2014, was €78.2 million in earnings (€130.4 million as of 26.3.2. Share-based compensation instruments issued by AXA subsidiaries
AllianceBernstein grants Restricted AB Holding Units and options to acquire AB Holding Units, which are valued and booked according to IFRS principles.
During the fourth quarter of 2011, AllianceBernstein amended all outstanding year-end long-term incentive compensation awards of active employees, so that employees who terminate their employment or are terminated without cause may retain their award, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictions on competition, employee and client solicitation, and a clawback for failing to follow existing risk management policies. This amendment eliminated employee service requirement but did not modify delivery dates contained in the original award agreements.
Under the Incentive Compensation Program, AllianceBernstein made awards in December 2014 aggregating €132.6 million
Moreover, options to acquire AB Holding Units were granted as follows: 25,106 options were granted during 2014, 37,690 options were granted during 2013, 114,443 options were granted during 2012, and 70,328 options were granted in 2011.
At the end, the 2014 total cost amounted to €116.2 million
(€13.8 million in 2013), including fi xed salary, bonuses, directors’ fees and benefi ts in kind; ■ share-based compensation: the expense recognized in 2014 in respect of share-based compensation granted to Management Committee members was €7.6 million
The increase of salaried employees by 3,133 in 2014 was mainly driven by: ■ the Mediterranean and Latin American Region (+2,600)
Net income including impact of undated subordinated debt A 4,718 4,198
Weighted average number of ordinary shares (net of treasury shares) – opening 2,414 2,372
Assurances Vie Mutuelle, hereafter the “Mutuelles AXA”) are two mutual insurance companies engaged in the Property &
Casualty insurance business and Life & Savings insurance business in France. On December 31, 2014, the Mutuelles
AXA collectively owned 14.03% of the Company’s outstanding ordinary shares representing 23.61% of the voting rights.
The Mutuelles AXA and certain of the Company’s French insurance subsidiaries, AXA France IARD and AXA France
Vie (the “Subsidiaries”), are parties to an agreement pursuant to which they provide a full range of management services to manage the insurance operations and portfolios of the
Company was party during 2014 covered a variety of common services including services performed by the Group’s central functions (GIE AXA) for the benefi t of AXA Group companies
AXA has given numerous commitments and guarantees, including fi nancing commitments, guarantees given to fi nancial institutions and customers, pledged assets, collateralized commitments and letters of credit. For a description of these commitments and guarantees, see Note 29 “Contingent assets and liabilities and unrecognized contractual commitments” to the Group’s C onsolidated F inancial S tatements.
In addition, the Company may enter into various other types of transactions with its subsidiaries and affi liates from time to time for various other business purposes including in connection with liquidity, solvency and capital management initiatives designed to promote effi cient use and fungibility of the Group’s capital resources. These transactions may involve loans or other types of credit arrangements, acquisitions or sales of assets, securities or other fi nancial instruments (including swaps or other types of derivatives), securitization transactions, and/ or other types of arrangements or transactions to which the Company may be a direct party and/or guarantor.
Any material arrangements between AXA and these funds are disclosed in this Note.
These commitments broke down as follows: Financing commitments received totalled €14,285 million at the end of 2014, and mainly consisted of: ■ credit facilities received from banks for €12,750 million in the
Company mainly due to stand-by credit lines; ■ €1,033 million at AllianceBernstein including €826 million commitment lines with various banks and other lenders and €207 million stand-by credit lines; ■ €372 million commitment lines granted to Japan Life &
Guarantee commitments received totalled €18,935 million at the end of 2014, and mainly consisted of (i) guarantees from customers related to mortgage loans (€13,967 million) received by Switzerland Life & Savings (€7,491 million), AXA Bank
Pledged securities and collateralized commitments received totalled €37,306 million at the end of 2014, and mainly consisted of: ■ mortgage security collateral taken for loans totaled €23,373 million, mainly from AXA Bank Europe
Solutions Assurance and AXA Cessions); ■ €6,419 million collateral for derivatives mainly from AXA
related to forex and money market activities; ■ €2,979 million mainly received by Germany Life & Savings
(€299 million) due to covered bonds collaterals; ■ €1,036 million mainly received by France Life & Savings
(€969 million) mainly due to commitments received by real estate funds.
Commitments given totaled €65,378 million at the end of 2014, an increase of €7,265 million compared to the end of 2013, mainly due to a increase of €5,299 million in pledged securities and collateralized commitments mainly in relation with derivative instruments and repurchase transactions and similar operations (see below).
Guarantee commitments given totalled €7,463 million at the end of 2014, and mainly consisted of: ■ €7,332 million guarantee commitments given to credit institutions mainly from the Company with guarantees related to loans (€3,437 million); through guarantees related to fi nancial obligations (€1,987 million) and from AXA Bank
Letters of credit given totalled €301 million at the end of 2014 and were mainly from CS Life Re Company (€165 million) and from AXA L iabilities Managers (€88 million) .
Group employee insurance contracts; ■ €2,082 million as commitments to real estate funds mainly from France Life & Savings (€1,329 million) and the United
States Life & Savings (€411 million); ■ €327 million guarantees given by the Company as part of acquisition and disposal of companies; ■ €160 million of unamortized balance of the Company’s subordinated debt instruments: the Company issued subordinated debt with reimbursement premiums which are amortized over the life of the instrument at the effective interest rate for each debt.
AXA’s insurance subsidiaries and joint ventures are limited to net income for the year and retained earnings calculated in accordance with the statutory accounting policies used by the subsidiaries to prepare their local fi nancial statements. Further restrictions may be imposed by the local insurance regulators in countries where AXA operates. In some cases, amounts available for distribution are also subject to regulatory capital adequacy tests or the approval of an independent actuary, or subject to individual provisions contained in a company’s by-laws.
AXA SA is exposed to foreign currency fl uctuations notably stemming from its non Euro participations. The aim of the hedging programs of AXA SA is to protect the shareholder value while managing the associated costs.
The current appointment is for a period of 6 years, until the
Annual General Meeting of the shareholders called to approve the fi nancial statements for the fi scal year 2015.
According to Article 222-8 of the Autorité des marchés financiers (AMF) General Regulations, the table below distinguishes the fee amounts paid by AXA to each of the s tatutory a uditors in charge of auditing the Group’s fi nancial statements between the fees for the legal mission of s tatutory a uditors of the statements, for the diligence directly related to them, and for other services.
Statutory audit and certifi cation of local and consolidated fi nancial statements 23,732 24,061 65% 62% 10,212 10,288 79% 81%
AXA SA is involved in lawsuits, investigations and other actions arising in the various jurisdictions where it does business, including the following: In 2007, AXA SA completed the squeeze out of the minority shareholders at two German subsidiaries, AXA
(both class action and individual), investigations, and other actions arising in the various jurisdictions where they do business, including the following: 31.2.1. United S tates matters
L.P.) is included in the Annual Reports on Form 10-K for the year ended December 31, 2014 and subsequent reports on
(SEC fi le no. 000-29961) fi led with the SEC (collectively, the
A lawsuit was fi led in the United States District Court of the District of New Jersey in July 2011, entitled Mary Ann
“Investment Company Act”), for alleged excessive fees paid to AXA Equitable and FMG LLC for investment management services and asserts a variety of other claims including unjust enrichment. Plaintiff purports to fi le the lawsuit as a class action in addition to a derivative action and seeks recovery of the alleged overpayments, rescission of the contracts, restitution of all fees paid, interest, costs, attorney fees, fees for expert witnesses and reserves the right to seek punitive damages where applicable. In January 2013, a second lawsuit was fi led in the United States District Court of the District of New Jersey entitled Sanford et al. v. FMG LLC (“Stanford Litigation”). This suit was fi led derivatively on behalf of eight funds (four of which
are named in the Sivolella Litigation and four of which are new), and seeks recovery under Section 36(b) of the Investment
Company Act for alleged excessive fees paid to FMG LLC for investment management services. These two suits have been consolidated.
In April 2013, the plaintiffs in the Sivolella and Sanford Litigations amended the complaints to add additional claims under
Section 36(b) of the Investment Company Act for recovery of alleged excessive fees paid to FMG LLC in its capacity as administrator of EQ Advisors Trust. The Plaintiffs seek recovery of the alleged overpayments, or alternatively, rescission of the contract and restitution of the excessive fees paid, interest, costs and fees. In January 2015, defendants fi led a motion for summary judgment as well as various motions to strike certain of the Plaintiffs’ experts in the Sivolella and Sanford
Litigation fi led a motion for partial summary judgment relating to the EQ/Core Bond Index Portfolio, as well as motions in limine to bar admission of certain documents and preclude the testimony of one of defendants’ experts. AXA Equitable believes that it has strong defenses to these claims and will defend them vigorously.
New York statutory annual statement or elsewhere that certain reinsurance transactions with affi liated reinsurance companies were collateralized using “contractual parental guarantees”, and thereby AXA Equitable allegedly misrepresented its
“fi nancial condition” and “legal reserve system”. The lawsuit seeks recovery under Section 4226 of the New York Insurance
Policies during the relevant period. In June 2014, AXA Equitable fi les a motion to dismiss the complaint on procedural grounds, which was denied in October 2014. In February 2015, plaintiff s substituted two new named plaintiffs for the current named plaintiff, who had determined that he could not serve as the named plaintiff and class representative in the case. In March 2015, AXA Equitable fi led a motion to dismiss on substantial grounds. AXA Equitable believes that it has strong defenses to these claims and will defend them vigorously.
During the fi rst quarter of 2012, AllianceBernstein received a legal letter of claim (“Letter of Claim”) on behalf of Philips
(“Philips”) a former European pension fund client, alleging that AllianceBernstein Limited (a wholly-owned subsidiary of
AllianceBernstein organized in the U.K.) was negligent and failed to meet certain applicable standards of care with respect to the initial investment in and management of a £500 million portfolio of U.S. mortgage-backed securities. The alleged damages range between $177 million and $234 million, plus compound interest on an alleged $125 million of realized losses in the portfolio. On January 2, 2014, Philips fi led a claim form (“Claim”) in the High Court of Justice in London, England, which formally commenced litigation with respect to the allegations in the Letter of Claim. AllianceBernstein believes that any losses to Philips resulted from adverse developments in the U.S. housing and mortgage market that precipitated the fi nancial crisis in 2008 and not from any negligence or failure on their part. AllianceBernstein believes that it has strong defenses to these claims and will defend this matter vigorously.
France believes that it has strong defences to these claims and will defend this matter vigorously.
ERDF (a subsidiary of the primary electric utility in France) has notifi ed claims for coverage under a professional liability policy underwritten by AXA Corporate Solutions. The underlying liabilities in question arise out of a series of lawsuits (more than 500 individual suits) brought against ERDF by local electricity producers in France engaged in production of solar/green energy. These local producers allege fi nancial losses due to
to the public grid within the statutory period, resulting in their inability to profi t from attractive buyback rates under certain
under the terms of the insurance policy for compensation of these losses in this specifi c case. AXA CS has appealed this decision to the French Cour de cassation. AXA CS believes that strong defences exist to the claims brought against ERDF.
In addition to the various matters noted above, AXA and certain of its subsidiaries are also involved in numerous legal actions and proceedings arising out of transactions involving the acquisition or sale of businesses or assets, mergers or other business combination transactions, the establishment or dissolution of joint ventures or other partnerships, public exchange or tender offers, buy-outs of minority interests or similar types of transactions (“M&A Transactions”). In connection with M&A Transactions, AXA and its subsidiaries from time to time: ■ are involved in legal actions or other claims brought by purchasers, joint venture partners, shareholders or other transaction parties asserting claims for damages on various theories (including misrepresentation, failure to disclose material information, failure to perform contractual duties, breach of fi duciary duties), seeking contractual indemnifi cation, or otherwise seeking to impose liability on
France and Belgium, have enacted legislation that permits corporate entities to be charged with criminal offences. The standard for attributing criminal conduct by corporate offi cers and employees to corporate entities is not clearly defi ned in many of these jurisdictions and government prosecutors and judges have broad discretion in this area. In recent years, complaints against or indictments of corporate entities for alleged criminal offences have become increasingly common and certain AXA Group companies have been the subject of penal complaints and/or indictments from time to time including in Belgium and France. While a criminal complaint against or indictment of a corporate entity may not pose material fi nancial risk, it has broad potential implications for a regulated fi nancial institution like AXA both from a reputation point of view and from a regulatory perspective because a criminal conviction can have potentially far reaching negative implications for AXA
Although the outcome of any lawsuit cannot be predicted with certainty, particularly in the early stages of an action, management believes that the ultimate resolutions of the matters described above are not likely to have a material adverse effect on the consolidated fi nancial position of AXA, taken as a whole. However, due to the nature of such lawsuits and investigations and the frequency of large damage awards and regulatory sanctions in certain jurisdictions (particularly the
January 15, 2015 to discontinue the minimum exchange rate of 1.20 franc per euro and lower interest rate on sight deposit balances to -0.75%, the Swiss franc increased sharply against the euro. This appreciation, if durable, is expected to have a mechanical effect on the translation reserve included in the shareholders’ equity of AXA in Switzerland and on earnings translation in 2015. In addition, the decisions of the SNB are expected to affect signifi cantly the fi nancial and economic environment of AXA Winterthur including long term government bond yields, stock market performance and economic growth in Switzerland.
December 31, 2014, on: ■ the audit of the accompanying consolidated fi nancial statements of AXA; ■ the justifi cation of our assessments; ■ the specifi c verifi cation required by law.
In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Group at December 31, 2014 and of the results of its operations for the year then ended in accordance with International
We have assessed the appropriateness of the fi nancial asset valuation process, as well as the information disclosed in the above mentioned notes;
■ certain consolidated statement of fi nancial position items that are specifi c to the insurance and reinsurance business are estimated on the basis of statistical and actuarial data, such as technical reserves, policyholders’ deferred participation, deferred acquisition costs and their amortization, and the value of business in force. The methods and assumptions used to calculate the carrying values of these items are described in Notes 1.14, 1.7.3 and 1.7.2 to the consolidated fi nancial statements.
Changes in the capital 343 5.2 DESCRIPTION OF AXA’S SHARE CAPITAL 344
Offi cer and the Deputy Chief Executive Offi cer(s) receive compensation in the amount and on conditions set by the
Notwithstanding the above, the Board of Directors’ Bylaws provide that no directors’ fee shall be paid to directors who are also E xecutive O ffi cers (i.e. the Chief Executive Offi cer and
Meeting convened to approve the fi nancial statements of the preceding fi scal year and held during the year the Chairman reaches the age of 70.
Executive Offi cer is appointed, his/her functions shall terminate at the latest at the end of the Ordinary Shareholders’ Meeting convened to approve the fi nancial statements of the preceding fi scal year and held during the year the Chief Executive Offi cer reaches the age of 65. The same rule applies for the Deputy
In accordance with the Afep-Medef Code, the directors shall be shareholders of the Company and own a signifi cant number of shares in the Company; if they do not own such shares at the time they are fi rst appointed, they shall use their directors’
Shareholders’ Meeting, subject to the provisions regarding double voting rights described below. On May 26, 1977, the
Shareholders’ Meeting decided that each ordinary share fully paid up and held in registered form by the same person for at least two full fi scal years entitled its holder to double voting rights with respect to such share.
Upon proposal by the AXA Board of Directors, the shareholders of AXA may decide to allocate all or part of distributable profi ts to special or general reserves, to carry them forward to the next fi scal year as retained earnings, or to allocate them to the shareholders as dividends. If AXA has earned a distributable profi t since the end of the previous fi scal year, as refl ected in an interim balance sheet certifi ed by its Statutory Auditors, the Board of Directors may distribute interim dividends to the extent of the distributable profi t without prior approval of the shareholders. AXA’s Charter requires AXA to distribute dividends between its shareholders in proportion to their share in the capital.
AXA’s Charter provides that, the Shareholders’ Meeting may grant each shareholder the choice of receiving dividends in either cash or additional ordinary shares.
Under French law, shareholders have preferential subscription rights to subscribe, on a prorata basis, additional ordinary shares (and/or convertible, exchangeable or other securities giving a claim, directly or indirectly, to AXA ordinary shares). This subscription right is transferable and normally trades separately during the subscription period for a capital increase. In order to issue additional shares without preferential subscription rights, except for issues already approved or authorized by AXA
AXA shareholders up to the amount of the liquidation balance and the par value of the shares held by each shareholder. Any surplus will be divided among all shareholders, subject to rights arising, if any, from the different classes of shares, in proportion of the rights they own in the Company’s share capital.
(société anonyme) have the power to amend the Charter of the
Extraordinary Shareholders’ Meetings may decide (i) to increase the liability of the shareholders in respect of the Company or a third-party; or (ii) to reduce the individual rights vested in each shareholder (such as voting rights, the right to distributable profi ts of the Company when allocated as dividends, the right to sell one’s shares and the right to sue the Company).
and must indicate, in particular, the agenda and the proposed resolutions.
ID and share ownership as specifi ed under French Law. This ownership is justifi ed by a book entry showing the number of shares in the name of the shareholder (or the intermediary for the account), on the second business day preceding the meeting at midnight (Paris time), either in the registered share accounts kept by the Company or in the bearer share accounts kept by a qualifi ed intermediary.
States and other jurisdictions. However, a number of French law provisions in particular those resulting from the law dated
In the event of failure to comply with the notifi cation requirements described above, shares exceeding the fraction that should have been notifi ed will be deprived of voting rights at Shareholders’ Meetings if, at such meetings, the notifi cation failure has been recorded and if one or more shareholders jointly holding at least 5% of the share capital so request.
On December 31, 2014, AXA’s share capital was comprised of 2,442,276,677 ordinary shares, each with a par value of €2.29. All these shares were fully paid up and non assessable and began earning dividends on January 1st, 2014. The following table sets forth changes in the number of shares from January 1st, 2012 to December 31, 2014: Date Transaction
APPENDIX III STATEMENT OF THE PERSON RESPONSIBLE FOR THE ANNUAL REPORT 358
APPENDICES A APPENDIX I CHAIRMAN OF THE BOARD OF DIRECTORS’ REPORT
Offi cer decided by the Board of Directors please see Part 2 –
Board of Directors with respect to the Group’s internal control environment. This report was assessed by the Audit Committee before being reviewed and approved by the Board of Directors during its meeting of March 19, 2015.
Group Governance Standards require, among other things, the boards of AXA’s principal subsidiaries to establish an a udit c ommittee and a compensation committee. The a udit
AXA currently has a 10-member Management Committee which is an internal committee that assists the Chief Executive
Executive Committee – Quarterly Business Reviews (“QBR ”) – strategic plan
AXA currently has a 19-member Executive Committee which is composed of the members of AXA’s Management Committee, the Chief e xecutive o ffi cers of the Group’s principal subsidiaries and/or business units and selected other senior executives.
At the end of the fi rst three quarters of each year, the
These QBR constitute an important management control mechanism to monitor the operating performance of the Group and its principal business units on a continuing basis and to identify any new material risks or issues facing the Group in a timely manner.
During the fourth quarter, each business unit presents its strategic plan to the Group’s strategic plan steering committee chaired by the Deputy Chief Executive Offi cer. The Group’s strategic plan is reviewed by the Management Committee and approved by the Board of Directors.
To this end, GRM develops and deploys a number of risk measurements, monitoring instruments and methods, including a standardized methodology and framework for stochastic modelling (through AXA’s internal model).
The PBRC Department within the Group Finance Department is responsible for consolidation, management reporting, internal fi nancial control program, as well as actuarial indicators and economic balance sheet. These missions are performed for regular closings, forecasts and strategic plan exercises.
(Document de Référence) fi led with the AMF; ■ coordinating the production of reports fi led with the ACPR
(Autorité de C ontrôle P rudentiel et de R ésolution) related to
AXA’s Statutory Auditors for review before being made available to AXA subsidiaries.
At PBRC level, accounting, fi nancial and economic information reported by entities are analyzed by teams that liaise with subsidiaries on a full-time basis. In particular, these teams analyze the compliance with the “AXA Group Accounting
All internal audit teams across the Group report to the Group’s
Compliance Committee to ensure that the Group has: (i) a comprehensive view of the various risks facing the Group on a continuing basis, (ii) a dedicated forum for reviewing, analyzing and prioritizing these risks, (iii) defi ned action plans to manage these risks and (iv) optimal coordination and communication between the different departments managing these risks.
or another senior executive stating their conclusion as to the effectiveness of the Company’s ICOFR.
2. IFC Management Reports required to be submitted by the CFO or another senior executive of every in-scope
Medef (Mouvement des entreprises de France) in April 2010 and revised in June 2013 (hereafter the “Afep-Medef Code”), which is available at AXA’s registered offi ce or on its website
In order to take into account certain specifi cities of its governance practices, AXA has decided to adapt the following provisions of the Afep-Medef Code: ■ section 9.4 of the Afep-Medef Code related to the independence of parent company directors holding a directorship in a Group subsidiary: the Company considers the fact that certain members of the AXA Board of Directors hold a non executive directorship in one or more Group subsidiaries wholly owned, directly or indirectly, by AXA
does not (i) place them in a situation of confl ict of interest, nor (ii) impair their independence in any way. The Board believes that permitting its members to sit on the boards of certain Group subsidiaries is benefi cial to the Board’s overall knowledge and appreciation of the Group’s operations, strategy and risk profi le. Directors who also serve on the boards of Group subsidiaries, however, are required to abstain from participating in the decisions of the AXA Board which could affect the interests of the entity in which they hold a directorship; ■ section 16.2.1 of the Afep-Medef Code related to the review of the accounts by the Audit Committee: for practical reasons, the review of the accounts by the Audit Committee generally occurs on the day preceding the Board of Directors’ review, and not two days before as it is recommended by the Afep-
Audit Committee identifi es one or more issues which require specifi c attention during the December session, it has the possibility to organize an ad hoc meeting to ensure the
Committee has adequate time to consider and address any issues concerning the Company’s annual accounts; ■ section 23.2.4 of the Afep-Medef Code relative to stock options and performance shares: (i) holding of shares subsequent to subscription options or allotment of performance shares: in 2007, the Company decided to implement strict rules pertaining to shareholding requirements for executive offi cers. This policy requires each executive offi cer to hold, during the entire duration of his/her functions, a minimum number of AXA shares representing a multiple of his/her annual cash compensa tion
(ii) exercise of stock options: pursuant to the Afep-Medef Code, companies shall determine periods preceding the disclosure of their fi nancial statements during which the exercise of the stock options is not allowed (“sensitive periods”). To date, the sensitive periods are determined by applying the
AXA Group’s Compliance and Ethics Guide. They generally begin 30 days prior to the disclosure of the annual or halfyear earnings releases and 15 days prior to its quarterly fi nancial information releases. During sensitive periods, the
AXA Group’s Compliance and Ethics Guide (i) permits the exercise of AXA stock options but (ii) prohibits the sale of shares acquired upon exercise of stock options (“subscription and sale” transactions). Consequently, benefi ciaries of options may exercise options at their pre-determined strike price at any time but may not sell AXA shares obtained upon exercise (or otherwise engage in transactions involving AXA
securities) during sensitive periods (or during other periods outside of sensitive periods when they may be in possession of material non-public information).
AXA’s Board of Directors which is included in this Annual Report.
In our capacity as Statutory Auditors of AXA, and in accordance with Article L.225-235 of the French Commercial Code, we hereby report to you on the report prepared by the Chairman of the Board of Directors of your Company in accordance with Article L.225-37 of the French Commercial Code for the year ended December 31, 2014.
It is our responsibility: ■ to report to you on the information set out in the Chairman’s r eport on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information; and
We attest that the Chairman’s r eport sets out the other information required by Article L.225-37 of the French Commercial Code.
APPENDIX II MANAGEMENT’S ANNUAL EVALUATION OF I NTERNAL C ONTROL O VER F INANCIAL R EPORTING
AXA’s ICOFR. AXA’s Statutory Auditors provide a reasonable assurance report on AXA’s ICOFR each year.
Organizations of the Treadway Commission (COSO). It is designed to defi ne the IFC scope and governance, ensure consistency and quality in AXA’s fi nancial reporting, and provide an overall framework for the annual IFC programme.
and his deputy, is responsible for establishing and maintaining adequate ICOFR.
■ provide reasonable assurance that unauthorized acquisition, use or disposition of Group assets that could have a material effect on the Group’s fi nancial statements would be prevented or detected in a timely manner.
In line with the COSO framework, AXA’s ICOFR is organized around the following key process categories: Entity-Level
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 time.
(b) Management’s annual evaluation on ICOFR based on AXA’s IFC Standard
Control standard of AXA (the “AXA’s IFC standard”), which is an internal control and governance standard, as described in the management’s annual evaluation of internal control over fi nancial reporting on page 355 of this Annual Report. Our responsibility is to express an opinion on the Company’s management’s assertion, based on our audit procedures.
APPENDICES A APPENDIX III STATEMENT OF THE PERSON RESPONSIBLE FOR THE ANNUAL REPORT
APPENDIX III STATEMENT OF THE PERSON RESPONSIBLE FOR THE ANNUAL REPORT
I, the undersigned, having taken all reasonable care to ensure that such is the case, hereby certify that the information contained in this Annual Report is, to the best of my knowledge, in accordance with the facts and contains no material omission likely to render it misleading or inaccurate in any material respect.
December 31, 2013, which are incorporated by reference in this document. This report, set out in pages 330 and 331 of the
FINANCIAL AUTHORIZATIONS TO ISSUE SHARES OR OTHER TYPES OF SECURITIES VALID AS OF DECEMBER 31, 2014
Capitalization of reserves, earnings or premiums – 1 billion (a) 26 months June 30, 2015
Ordinary shares and other securities giving a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise 6 billion (c) 2 billion (d) 26 months June 30, 2015
Ordinary shares and other securities giving a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (b) 6 billion (c) 545 million 26 months June 30, 2015
Ordinary shares or securities giving access to the capital, reserved for employees - 135 million (e) 18 months October 23, 2015
Performance shares (actions gratuites) (f) - 1% (g) 38 months June 23, 2017
(h) At the date on which stock options are granted by the Board of Directors.
The following authorizations to issue shares or securities giving a claim to ordinary shares of the Company require the shareholders’
Ordinary shares and other securities giving a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (b) 6 billion (d) 2 billion (e) 26 months June 30, 2017 issues without preferential subscription rights for shareholders
Maximum nominal amount of the capital increase (in Euro ) Term Expiration
In 2014, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 27, 2011 (resolution 21)
3,100,000 stock options have been granted, each of which gives the holder a right to acquire an AXA share (either newly issued or existing) at a specifi ed strike price.
Dividends received from subsidiaries amounted to €3,342 million, up from €3,189 million in 2013, representing an increase of €153 million.
Eastern Europe region, compared with €727 million in 2013. In 2014, AXA Versicherungen AG (Switzerland) paid a dividend of €600 million whereas in 2013 it did not pay out any dividends in order to fund the acquisition of Chinese
P&C insurer Tian Ping; ■ €1,326 million dividends from AXA France Assurance, up from €1,285 million in 2013; ■ €70 million dividends paid by the Mediterranean and Latin
American Region, compared to €169 million in 2013; down €99 million, AXA Mediterranean Holding decreased its dividend in order to fund the acquisition of Colpatria Seguros in Colombia; ■ €114 million dividends received from AXA Life Insurance Co.,
Ltd (Japan), down from €275 million in 2013, €336 million capital surplus being payed through a capital reduction; ■ No dividend received from AXA UK against €82 million in 2013 due to local solvency constraints.
Net financial expenses, including interest expenses net of interest income from loans and investments, totaled €1,102 million, compared to €1,063 million in 2013. This €39 million increase derived from the unwind of interest rate derivatives.
The corporate income tax benefi t amounted to €646 million, compared with a tax benefi t of €558 million in 2013. It mainly included €762 million of tax receivables from members of the tax consolidation group in France, offset partially by the €59 million payment related to the French tax of 3% on dividends paid to shareholders.
Investments in subsidiaries net of valuation allowances totaled €62,586 million, versus €65,449 million at year-end 2013, representing a decrease of €2,863 million, refl ecting: ■ €2,430 million capital reduction of Finance Solution, an intragroup treasury fi nancing company, as intra-group loans are now granted directly by AXA SA; ■ a €336 million capital reduction of AXA Life Insurance Co.,
Ltd (Japan) given its surplus capital; ■ €434 million in allowances to provisions for subsidiaries referred to above, partly offset by: ■ respectively €180 million, €54 million and €51 million increases in capital of AXA Asia, Family Protect and AXA
Cash instruments totaled €50 million versus €76 million in 2013, refl ecting a €26 million decline due to the restructuring of
Unrealized foreign exchange losses amounted to €2,448 million, of which €2,072 million related to the deferred recognition of foreign-exchange losses in line with the principles of hedge accounting, offset by unrealized gains on investments subsidiaries. The €1,077 million increase compared to 2013 is mainly due to the maturity on exchange position in Swiss Franc and Yen. This item also refl ects unrealized losses on assets and liabilities denominated in foreign currencies attributable to the effects of their revaluation at the closing exchange rate.
Other shareholders’ equity included undated deeply subordinated notes amounting to €6,441 million, compared to €6,165 million in 2013, owing to €298 million in negative foreign-exchange effects.
Provisions for risks and charges amounted to €1,780 million and mainly consisted in €577 million for redemption premium related to the subordinated convertible note maturing in
January 2017, €511 million of provisions for foreign-exchange risk and €410 million of provisions for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group. The €907 million reduction mainly came from the release of the provision for the subordinated bond that matured in January 2014.
Subordinated debt totaled €8,843 million, compared to €8,134 million in 2013. This €709 million increase was primarily attributable to the debt issuances of £750 million (€910 million)
Unrealized foreign exchange gains amounted to €785 million at year end 2014, down from €1,216 million at December 31, 2013. This item refl ects the effects derived from the revaluation of foreign-currency denominated assets and liabilities at the closing exchange rate. It declined compared to 2013 due to
Code). At December 31, 2013, they amounted to €9 million, €3 million of which was due within three months.
Net book value on the sale of fi xed assets (187) (123)
III. NET INCOME FOR THE FINANCIAL YEAR VI + VII +VIII 2,392 1,727
a) Capital - Ordinary shares (in Euro million) 5,313 5,398 5,470 5,537 5,593 b) Ordinary shares (numbers in million) 2,320 2,357 2,389 2,418 2,442 c) Bonds convertible into ordinary shares (numbers in million) (a) 7 7 7 7 7 2 - INCOME STATEMENT SUMMARY (IN EURO MILLION)
a) Gross revenues before sales tax 4,134 4,719 3,438 3,289 3,394 b) Pre-tax income from continuing operations, before depreciation, amortization and releases 2,529 2,992 1,850 1,776 1,785 d) Net after-tax income after depreciation, amortization and releases (488) 8,649 3,261 1,727 2,392 3 - PER SHARE DATA (IN EURO)
(b) Net dividend distribution of €1,960 million at year-end 2013 took into account shares issued after March 17, 2014 “AXA Miles 2012” capital increase with dividends rights starting January 1, 2013.
(c) Dividend proposed at year end 2014 is submited to the Shareholders‘ Meeting of April 30, 2015 and based on 2,442,276,677 outstanding ordinary shares.
Les collines de l’Arche - 76 route de la Demi Lune 92057 PARIS LA DEFENSE
Graadt van Roggenweg 500 - Postbus 30800 3503 AP UTRECHT - Netherlands 2) Participating interests (10 to 50%-owned)
a) French subsidiaries (total) 73 b) Foreign subsidiaries (total) 180 2) Participating interests not shown in section A
I Notes to the fi nancial statements as at December 31, 2014
The fi nancial statements as at December 31, 2014 are prepared and presented in accordance with the provisions of the 2014 Chart of Accounts (regulation ANC n°2014-03 dated
(amended by regulations CRC 2003-07 and CRC 2005-09), and CRC 2004-06 relating to the defi nition, recognition and measurement of assets, repealed and replaced by regulation
; application of these regulations has had no impact on the
In accordance to regulation CRC 2008-15, repealed and replaced by regulation ANC n°2014-03 chapter “titre VI, chapitre II, section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salariés”
Article 945-50) treasury shares are recorded in “Marketable securities”. At December 31, 2014 49,719 shares were allocated to hedging purposes, representing €0.9 million.
Find below a summary of options and performances or units shares granted in 2014 and 2013 to members of the Management
Tangible assets include investments in real estate, split between land and buildings, as well as fi xtures and fi ttings.
AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA.
The fair value of investments in subsidiaries and affi liates is their going concern value for the fi rm. This may be determined as a function of (i) their share price, or (ii) their shareholders’ equity
These bonds have been recognized using the single transaction approach. The redemption premium, being the difference between the value at par and the redemption value of the bond issue, was not recognized as a liability at the time of the bond issue. Redemption premium have been amortized since 2002 and will be until maturity of the issue, using the compound interest method. The yield to maturity used (3.29%) is the rate which enables future payment of the redemption premium, assuming the bond was issued on January 1, 2002.
Employee benefi t liability was reviewed and a valuation was carried out to measure any additional adjustment necessary to ensure the coverages of future post-retirement pension obligations and retirement indemnities commitments. Pursuant to this review and following €27 million contributions made to an external institution to fund the related obligations, the employee benefi t liability recognized at December 31, 2014 was nil.
When a loan or borrowing generates an unrealized translation loss, but is hedged, a provision for unhedged risk is registered.
A provision is created against rights paid if it is likely, given market trends, that the option will not be exercised. When the option is exercised, this represents an addition to the acquisition price of the underlying instrument and an addition to the sale price when the option is sold.
at the time of the merger in 2005, and valued at €307 million.
(c) The decrease of €1,314 million is mainly attributable to margin calls paid to bank counterparties under collateral agreements linked to the management of derivative instruments, which amounted to €727 million at end-2014, compared with €2,059 million at end-2013.
Less than 1 year 1 to 5 years More than 5 years
Undated deeply Subordinated Notes (nominal) 6,058 - 298 6,356 3.11 Provisions for risks and charges
Financial debts came to €11,349 million, versus €11,557 million at December 31, 2013, representing a reduction of €208 million mainly due to loan repayments to AXA Group entities.
Value at December 31, 2014 Less than 1 year 1 to 5 years
Unrealized foreign exchange gains amounted to €785 million at year end 2014, down from €1,216 million at December 31, 2013. This item refl ects the effects derived from the revaluation of foreign-currency denominated assets and liabilities at the closing exchange rate. It declined compared to 2013 due to Pound Sterling and US Dollar exchange rate trends, which adversely impacted liabilities.
■ Directors’ fees allocated to members of the Board of Directors K€1,450.
(2) A 10% depreciation of the Euro leads to a -3.9% deterioration in the fair value of debt, a -18.6% deterioration in the fair value of derivatives and a 7.9% improvement in the fair value of loans.
Affi liated companies (consolidated entities) (value net of provisions for impairment) (In Euro million)
December 31, 2014, on: ■ the audit of the accompanying fi nancial statements of AXA SA; ■ the justifi cation of our assessments; ■ the specifi c verifi cations and information required by law.
In our opinion, the fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Company at December 31, 2014 and of the results of its operations for the year then ended in accordance with French accounting principles.
■ derivatives used by your Company are assessed pursuant to the rules contained in paragraph 2.12 of the notes to the fi nancial statements. We checked that the implementation of hedge accounting, if applicable, was documented. In all other cases, we verifi ed that adequate provisions were recorded for the unrealized losses.
The information is disclosed in the “Embedded Value 2014 report” which is available on AXA Group website under Investor Relations/
In accordance with the provisions of the Articles L.225-102-1 and R.225-104 of the French Commercial Code, the following information describes the manner in which the Company takes into account the social, societal and environmental impacts of its business.
Auditors, appointed as an independent third party, presents in their assurance report attached at the end of this appendix, their attestation of completeness on the consolidated social, environmental and societal information disclosed in the
In 2012, the AXA Group joined two major initiatives in the area of corporate responsibility: (1) the Group is a founding signatory to the UN Principles for Sustainable Insurance, a voluntary framework to integrate environmental, social and governance criteria into the insurance business; (2) the Group signed the UN Principles for Responsible Investment (UN PRI), a voluntary framework to integrate environmental, social and governance criteria into the investment value chain. Both AXA
AXA strives to be a responsible employer, placing employee engagement at the heart of its business strategy. Achieving this has meant creating a workplace built on AXA’s values which foster diversity and equal opportunities for all, promote employee participation, encourage professional development and support employee wellbeing. For additional and more comprehensive information, refer to the 2014 “Social Data
AXA’s overall salaried workforce on December 31, 2014, was 116,034 employees (open-ended and fi xed-term contracts), which represents an increase of 2.8% compared to 2013.
of Colpatria’s insurance operations in Colombia (81.4% as a proportion on total increase).
AXA continued to recruit in 2014 and hired more than 17,000 employees on open-ended contracts (excluding entries due to mergers and acquisitions), of which 4,200 were sales employees. Out of that total number of hires, more than 450 persons were re-hires into the Company.
has also set up a European Works Council (EWC), whose extensive role goes beyond regulatory requirements. The EWC
In addition to the work of the EWC, numerous collective bargaining agreements are signed on a local basis.
interests, AXA undertakes to maximize opportunities for internal and external redeployment, when applicable, for all
LinkedIn to leverage their resources and optimize the use of social networks to aid recruitment.
International mobility remained stable, with about 550 assignments in 2014. The main objective of international assignments is the deployment and development of key expertise and leadership skills in mature as well as developing markets. In 2014, AXA’s Centre of Expertise for International
AXA’s employees who were on international assignments within the Group, and an extension of the service to cover more employees is planned for 2015. Revised international mobility policies were rolled out globally, aiming to reinforce the purpose of different types of international assignments for both the individual and the business as well as provide more tailored support to each type of assignment.
“Superblock” initiative, AXA Winterthur (Switzerland) also moved 1,000 employees into new, modern and agile working conditions in 2014.
AXA’s compensation policy aims to attract, develop and retain best talents by ensuring that (1) pay levels are market competitive, (2) internal equity relies on differentiated individual and collective performance and (3) pay-outs are affordable and in line with the Company’s fi nancial results.
In 2014, total compensation cost was €7.82 billion, which corresponds to an increase by 2.6% compared to 2013. On a comparable Foreign Exchange basis, total compensation cost increased by 2.9%.
AXA promotes diversity & inclusion (D&I) by creating a working environment where all employees are treated with dignity and respect and where individual differences are valued.
Tandems were formed with the Group’s Executive Committee members. In addition, AXA held a women’s conference for a second consecutive year, aiming to foster networking among senior executive men and women and 2014’s focus being on the topic “Insurance for Women” which was led in partnership with the International Finance Corporation (IFC).
As AXA strives to be the most inclusive company in the fi nancial services industry, “sexual orientation” has been made another key focus area in 2014. A total of 11 sexual orientation awareness workshops were conducted in six countries.
LGBT (Lesbian, Gay, Bi-sexual and Transgender) employees and their allies/friends, the Company launched a global
The proportion of absences due to sick leave decreased while the proportion due to pregnancy increased. As AXA operates in an environment that generates business through management of capital and fi nancial services (total absenteeism rate due to work-related accidents is 0.1%), the Group does not monitor gravity, severity nor frequency of work-related accidents on a global level. Systems, procedures and processes are in place and in compliance with local health, safety and welfare legislation, wherever necessary.
Throughout 2014, the AXA Group continued to deploy a common developmental experience in all AXA entities worldwide under the “Learning@ AXA” banner. AXA moved from more than 40 heterogeneous management programs across the Company to one single common suite of courses, with the aim to align key management practices. In 2014, this program was delivered in 50 entities with 22 languages available; more than 5,000 managers were trained. Also in 2014, new common on-boarding courses, graduate programs, and technical P&C
(Property and Causality) and L&S (Life and Savings) programs were deployed across the Group.
These programs aim to create a common understanding of how emerging technologies transform AXA’s business.
A performance management standard has been established to ensure that the Group’s performance-based pay policy, formalized skill mapping and the evaluation of training needs run effi ciently. During 2014, 76,000 employees were already making use of AXA’s PeopleSoft platform for performance management (38,000 employees in 2010). The Group also delivered a multidimensional feedback platform, “AXA 360°”, enabling all AXA employees to get qualitative feedback from their professional network and to build a more comprehensive and tailored development plan. A total of 1,030 employees went through the process in 2014, supported by a community of coaches.
States. The objective is to develop the “pride of belonging” to
Through communication campaigns, AXA has ensured a better visibility of its employer value proposition adapted to its markets and target talents (e.g. innovative agile working models in Switzerland, actuarial programs in Asia).
Marketing or Data d epartments). The objective of the program is to attract and retain high-potential talents and support them in order to gain the skills necessary to become AXA’s future leaders. The program offers graduates a local permanent contract, a high quality induction program including a business acceleration conference at AXA’s international headquarters in
Paris, and the opportunity to have one international rotation in another AXA entity. In 2014, more than 1,000 applications were received and 39 graduates were hired.
Total headcount of salaried workforce (open-ended and fi xed-term contract) 116,034 emp. +2.8% (b) 112,869 emp.
Headcount of salaried workforce with fi xed-term contract 4,621 emp. 4,098 emp.
Average FTE of salaried non-sales force 90,353.5 fte +2.6% 88,061.1 fte
■ Number of fi xed-term contract transformed into open-ended contract 1,421 emp. 1,473 emp.
■ Number of entries following mergers and acquisitions (b) 305 emp. 90 emp.
■ Number of departures due to external transfers (c) 29 emp. 48 emp.
Net headcount evolution of salaried non-sales force (entries versus departures) 1,751 emp. 1,461 emp.
Net headcount evolution of salaried sales force (entries versus departures) 150 emp. 202 emp.
Compensation costs of salaried workforce (d) 7,818 M€ +2.6% 7,622 M€
■ Proportion of fi xed pay (related to wages) 77.3 % 77.5 %
■ Proportion of variable pay (related to wages) 52.8 % 53.0 %
■ Proportion of absences due to sickness 65.3 % 66.2 %
■ Proportion of absences due to work related accidents 2.1 % 2.2 %
Absenteeism rate of salaried non-sales force 4.8 % -0.1pt 4.9 %
■ Proportion of absences due to sickness 65.9 % 67.0 %
■ Proportion of short term sick absences 87.9 % 84.2 %
Absenteeism rate of salaried sales force 3.6 % +0.2pt 3.4 %
■ Proportion of absences due to work related accidents 2.4 % 3.6 %
■ Proportion of absences linked to maternity/paternity leave 37.6 % 36.2 %
AXA is committed to reducing its direct impact on the environment by actively managing its energy, paper and water consumption, as well as carbon emissions and waste. AXA is also conscious of the role it can play in promoting environmental protection awareness amongst its stakeholders, contributing to improve the understanding of global and local environmental risks, and committing to address climate change.
built its buildings (representing approximately 25% of the total area occupied). In 2014, 576,435 m2 of green space used by
target for the 2012-2020 period: ■ -25% carbon emissions per FTE
AXA‘s power consumption per FTE decreased by 11% in 2014 compared to 2013. AXA entities made signifi cant steps forward on reducing their energy footprint. For example: ■ AXA Technology Services has further pursued its Green
IT program based on servers refreshes, data center consolidation and virtualization, PC refreshes and power management. For example, data centers in Germany and
with the support of WWF organization; ■ some entities have selected more energy effi cient buildings in cases of location transfers (e.g. AXA Assicurazioni,
-emission factor 7-times lower than oil. In addition, 3 of their buildings have installed a photovoltaic system producing about 175,000 kWh per year.
emissions per FTE related to energy, paper and business travel (air, rail and car fl eet) decreased by 3% between 2013 and 2014. 55% of Group CO
program offering an innovative and environment-friendly way of mobility. Employees are free to use the car-sharing vehicles for their business and private rides, which helps reduce their fl eet.
AXA’s water consumption per FTE is stable (-0.1%) between 2013 and 2014. Since 2008, AXA entities have achieved a better level of management maturity and reporting quality regarding their water consumption patterns. Related recent initiatives include the installation of water sensors in bathroom facilities for AXA MPS and water-saving faucets at various entities (e.g. AXA Philippines, AXA China).
due to better measurement process and the decrease of paper consumption for some entities (e.g. AXA Insurance UK, AXA
Switzerland, AXA Seguros Mexico). Concerning the recycling of ink cartridges and toners, AXA has a positive trend increasing from 61% to 63% in 2014. Indeed, AXA’s IT business unit, AXA
Numerous offers with environmental added-value have been developed by various AXA entities in the Property & Casualty business segment: ■ in the retail product line: Motor insurance policies/products encouraging low CO
emission vehicles (e.g. promoting electric, hybrid and low emitting), home insurance policies encouraging energy effi ciency (e.g. environmental appliances upgrades), renewable energy installations (e.g. wind, solar power, etc.), and environmental claims strategies (e.g. repair rather than replace auto spare parts). In addition, prevention devices (e.g. smartphone applications) to help raise customer and general public awareness are also being developed; ■ in the commercial product line: • encouraging “green” buildings or car fl eets in the SME
through their signifi cant investments, are also well positioned to send the right signals to the investment community and to specifi c invested companies. This strategy addresses both the “mitigation” and the “adaptation” dimensions of climate change. They are not solely self-interested or commercially driven, but they need to be global and collective to be effective.
All along 2014, the Group was invited to refl ect on the role of the insurance sector in the context of climate change and more specifi cally on the missions an insurer with an international dimension like AXA should carry to meet with costumers’
This work has mobilized several entities of the Group and led to the adoption of a climate risk statement identifying three areas of commitment: ■ enhancing knowledge on climate risk; ■ reinforcing climate risk prevention services to help people better anticipate and adapt to the changing climate; and
December) where should be adopted the new international climate agreement that will succeed to the Kyoto Protocol.
States’ discussions over the issue of natural disaster and risk prevention for the Sendai World Conference on disaster risk reduction.
AXA also take part in the refl ection launched by the UN
“Sustainable Development Charter” (Fédération française des sociétés d’assurances: AXA France, 2009) and Investor
such as fuel tanks for backup electricity generators, or major air conditioning systems. In 2014, the Group reported 37 sites with a specifi c permit. Their impact on the neighbouring environment is minimal. Nevertheless, being classifi ed, those facilities benefi t from adequate maintenance and their compliance with local legal obligations is monitored regularly. The full range of expenditures incurred to promote environmental preservation is minor, local and of a heterogeneous nature, and as such, is not monitored at Group level. No specifi c provisions or guarantees covering environmental risks have been set aside, considering the limited litigation risks arising from the management of AXA’s direct environmental footprint. Furthermore, in 2014, 46 sites were reported to have some form of environmental certifi cation.
Number of employees on site, Full-Time Equivalent (FTEs) FTE 103,554 105,767
Paper recycled and/or garanteeing sustainable management: marketing & distribution % 60 60
(a) In 2014, environmental indicators were collected for sites representing 90,988 FTEs (unless otherwise indicated in these footnotes) and were then extrapolated, continent by continent, to cover all 105,767 salaried FTEs working at the AXA Group as of 31/12/2014. In 2013, this process took place on the basis of data collected from 89,830 FTEs, extrapolated to 103,554 FTEs.
(d) Home/workplace commute estimations are based on an annual online transportation survey, issued to every AXA salaried employee. This data has been collected from 23,220 FTEs and then extrapolated. Sites whose response rate was below 5% have been excluded from the data consolidation process.
(g) Does not include company cars, to avoid double counting with the AXA vehicle fl eet data.
(h) This data has been collected from 84,015 FTEs. Some sites in Asia and America are not equipped with water meters, which prevents accurate measurement and excludes them from the reporting scope before extrapolation. However, entities are starting to better track their water consumption with the installation of water meters (e.g. data centers, AXA Ireland).
This means designing reliable insurance and investment solutions to meet the needs of our customers, managing risks and claims, acting as a major long-term investor, but also sharing our business expertise by helping to build better understanding of the risks faced by individuals and Society.
All entities are required to ensure that 50% of their community investment projects are aligned with the CR fl agship theme of
Since 2007, €131 million (1) have been committed to 449 research projects in 32 countries.
AXA Research Fund both undertakes long-term partnerships with top-tier academia and helps them share their discoveries to enrich public debate. Searching today will help better protect tomorrow.
à l’initiative économique (which helps people excluded from the usual circuits set up their own business) and a French mutual insurer, MACIF, offers since 2007 basic covers sold at cost.
(2) In 2014, the societal data of the AXA Group was collected amongst 81,238 FTE representing 77% of the total number of Fte (2014 social data).
■ Indonesia: To address the lower middle class customers asking for a loan, AXA leverages its partnership with
provides an ESG score for each security and assesses these scores against peers, thus enabling the portfolio managers to take ESG risks into account in their decision-making process.
RIC’s mandate is to develop a global approach to responsible investment which takes into account both controversial sectors from a reputational standpoint, and the more positive inclusion of ESG issues in investment processes, from a performance and risk management perspective.
The RIC developed the Group’s RI Policy. The policy defi nes the corporate governance practices – such as effective and accountable boards, shareholder rights and transparent remuneration policies – that AXA asset managers are expected to encourage, including via engagement and voting. Moreover, the Policy allows for a structured development of investment guidelines for sectors that pose particularly acute environmental or ethical challenges. Finally, the RI Policy initiates the Group’s
AXA is a major purchaser of products and services for the purpose of its internal operations as well as services provided to its policyholders. The volume of purchases equalled €12.8 billion in 2014. The buyers are required to sign a specifi c Procurement code of ethics in addition to the Group
International France and, therefore, supports TI’s vision, values and founding principles disclosed in their so-called “Charter”.
I Report by one of the Statutory Auditors, appointed as an independent third party, on the consolidated environmental, labour and social information presented in the management report For the year ended at the 31st of December, 2014
In our capacity as Statutory Auditor of the company AXA, appointed as an independent third party and certifi ed by COFRAC under number 3-1060 (1) , we hereby present to you our report on the [consolidated] environmental, labour and social information for the year ended…, presented in the management report (hereinafter the “CSR Information”), in accordance with Article L.225-102-1 of the French Commercial Code (Code de commerce).
On the basis of our work, it is our responsibility to: ■ certify that the required CSR Information is presented in the management report or, in the event that any CSR Information is not presented, that an explanation is provided in accordance with the third paragraph of Article R.225-105 of the French Commercial
We conducted interviews with the individuals in charge of the relevant departments, we reviewed the Company’s sustainable development strategy with respect to the labour and environmental impact of its activities and its social commitments and, where applicable, any initiatives or programmes it has implemented as a result.
(2) ISAE 3000 – Assurance engagements other than audits or reviews of historical financial information.
For any consolidated Information that was not disclosed, we verifi ed that the explanations provided complied with the provisions of
With regard to the CSR Information that we considered to be the most important: ■ at parent entity level, we consulted documentary sources and conducted interviews to substantiate the qualitative information
(organisation, policy, action), performed analytical procedures on the quantitative information and verifi ed, using sampling techniques, the calculations and the consolidation of the data. We also verifi ed that the information was consistent and in concordance with the other information in the management report; ■ at the level of a representative sample of entities, composed of AXA Germany, AXA Dubaï, AXA Seguros Spain, AXA US, AXA
Assistance France, AXA Banque France, AXA Corporate Solutions France, AXA Direct Assurance France, AXA France, AXA
of headcount, between 16% and 35% of quantitative environmental data and between 22% and 27% of quantitative social data.
LABOUR INFORMATION: ■ Total workforce, including indicators headcount of salaried workforce as at the end of the year and average FTE of salaried workforce.
■ Distribution of employees by sex, by age and by geographic zone, including indicators headcount of salaried non-sales and sales force men and women by professional category, average age and average seniority of salaried non-sales force.
■ Work accidents, in particular frequency and gravity as well as work disease.
■ Total number of training hours, including indicators average number of days and training costs.
■ Measures taken in favour of the equality between men and women.
■ Measures taken in favour of the employment and the insertion of handicapped people.
■ Measures to prevent, recycle and eliminate waste, including indicators unsorted waste, sorted paper for recycling and percentage of cartridges and/or toners for recycling.
■ Water consumption and supply according to local constraints, including indicator water consumption per person.
■ Usable occupied area and usable vacant area, including indicator net internal area.
■ Inclusion of social and environment issues in the purchase policy.
APPENDICES A APPENDIX IX COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE
Annual Report (Registration Document) fi led with the AMF on March 26, 2015
Pages 3. Selected fi nancial information 4 to 5 5. Information about the issuer 5.1 History and development of the issuer 6 to 7 6. Business overview 9 to 19 and 20 to 23 7. Organizational structure 7.1. Brief description of the Group 6 to 10 7.2. List of signifi cant subsidiaries 221 to 226 8. Property, plants and equipment n/a 9. Operating and fi nancial review 10. Capital resources 10.1. Capital resources 87 to 92 and 262 to 267 10.2. Sources and amounts of cash fl ows 87 to 92 ; 200 to 201 and 10.3. Borrowing requirements and funding structure 87 to 92 and 283 to 284 10.4. Restrictions on the use of capital resources 87 to 92 10.5. Anticipated sources of funds needed 87 to 92 11. R&D, patents and licenses n/a 13. Profi ts forecasts or estimates n/a 14. Administrative, Management, and Supervisory bodies and senior management 14.1. Information on members of the Administrative, Management or Supervisory bodies 94 to 11 1 14.2. Administrative, Management and Supervisory bodies’ confl icts of interests 105 and 13 6 to 137 15. Remuneration and benefi ts 15.1. Amount of remuneration paid 113 to 140 15.2. Amounts set aside or accrued to provide pension, retirement or similar benefi ts 139
Pages 16. Board practices 16.1. Date of expiration of the current term of offi ce 98 to 99 16.2. Information about members of the management bodies’ service contracts with the issuer or any of its subsidiaries 16.3. Information on the Audit Committee and the Remuneration Committee 107 and 109 16.4. Statement of compliance with the country of incorporation’s corporate governance regime 352 17. Employees 17.1. Number of employees 112 and 391 to 394 17.2. Shareholdings and stock options 122 to 13 0 and 137 to 13 8 17.3. Arrangements for involving the employees in the capital of the issuer 143 to 144 19. Related party transactions 143 20. Financial information concerning the issuer’s assets and liabilities, fi nancial position and profi ts and losses 20.1. Historical fi nancial information * 192 to 33 5 20.2. Pro forma fi nancial information n/a 20.4. Auditing of historical annual fi nancial information 33 6 to 337 and 384 to 385 20.5. Age of latest fi nancial information 40 6 20.6. Interim and other fi nancial information n/a 20.8. Legal and arbitration proceedings 332 to 335 20.9. Signifi cant change in the issuer’s fi nancial or trading position 24 to 28 ; 87 to 92 and 33 5 21. Additional information 21.2. Memorandum and Articles of association 34 0 to 34 3 22. Material contracts n/a 23. Third party information and statement by experts and declarations of any interest 402 to 404 24. Documents on display 6 25. Information on holdings 7 and 221 to 226 * Pursuant to Article 28 of Commission Regulation (EC) n° 809/2004 of April 29, 2004, the following items are incorporated by reference: ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2013 and the Statutory Auditors’ report on them, respectively presented on pages 188-329 and on pages 330-331 of the Annual Report (Registration Document), the French version of which was fi led with the AMF (Autorité des marchés fi nanciers) on March 21, 2014 under reference n° D.14-0184; ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2012 and the Statutory Auditors’ report on them, respectively presented on pages 176-320 and on pages 321-322 of the Annual Report (Registration Document), the French version of which was fi led with the AMF (Autorité des marchés fi nanciers) on March 21, 2013 under reference n° D.13-0199.
You will fi nd below the references to the extracts of the
Registration Document corresponding to the various parts of the Annual Financial Report.
Consolidated fi nancial statements of the Group 192 to 33 5
Statement made by the person responsible for the Annual Financial Report 358
Report of the Statutory Auditors on the consolidated fi nancial statements of the Group 33 6 to 337
Report of the Statutory Auditors on the Report of the Chairman of the Board of Directors 353 to 354