As of December 31, 2012, 1.6 million treasury shares backing contracts where fi nancial risk is borne by policyholders held in controlled investment funds were not deducted from shareholders’ equity. Their total estimated historical cost was €32 million and their market value €21 million at the end of
As described in Note 1.12.2 of the accounting principles, undated subordinated debt issued by the Group do not qualify as liabilities under IFRS.
Undated subordinated debt instruments are classifi ed in shareholders’ equity at their historical value as regards credit spread and interest rates and their closing value as regards exchange rates. The corresponding foreign exchange differences are cancelled out through the translation reserve.
In 2012, the change in other reserves was driven by €-292 million from interest expense related to the undated subordinated debt (net of tax), and €-23 million from foreign exchange rate differences.
In addition to the nominal amounts shown above, shareholders’ equity included net accumulated fi nancial expenses of: ■ €-2,125 million as of December 31, 2012; ■ €-1,834 million as of December 31, 2011.
AXA’s share capital and capital in excess of nominal value: ■ increase in capital of €+336 million of which employee share offering (December 2011) for €+332 million; ■ share-based payments for €+43 million.
At April 27, 2011 Shareholders’ Meeting, shareholders approved a dividend distribution of €1,601 million with respect to the 2010 fi nancial year.
APH Asian operations in accordance with the application of the new accounting principles on Business Combinations. The ownership increase in a controlled Company while maintaining the control is accounted for in shareholders’ equity and no additional goodwill is recognized.
The following table shows reconciliation between gross unrealized gains and losses on available for sale fi nancial assets and the corresponding reserve recognized in shareholders’ equity: (I n Euro million)
Less unrealized gains and losses attributable to: Shadow accounting on policyholders’ participation (20,116) (6,855)
Unrealized gains and losses (net of tax) - Assets available for sale 11,173 5,239
UNREALIZED GAINS AND LOSSES (NET OF TAX) – 100% - TOTAL 11,177 5,218
(c) Net of shadow accounting on unearned revenues and fees reserves.
(d) Including unrealized gains and losses on assets from discontinued operations.
(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, 2012: (I n Euro million)
Unrealized gains and losses (net of tax) - Assets available for sale 2,805 502 394
Unrealized gains and losses (net of tax) 100%, opening 5,218 6,736
Investments bought in the current accounting period and changes in fair value 6,659 (533)
(b) Transfer induced by disposal of fi nancial assets, impairment write-back following reevaluation, or transfer of expenses following impairment charge during the period, and debt instruments discount premium impacts.
The total impact of foreign exchange rate movement was €-634 million (of which €-614 million from group share and €-20 million from minority interest) as of December 31, 2012.
The total impact of employee benefi ts actuarial gains and losses amounted to €-821 million net group share (of which group share was €-817 million and minority interests was €-4 million) as of December 31, 2012.
(€+495 million), Switzerland (€+246 million), partly offset by the Company (€-510 million) driven by change in fair value of derivatives and debt hedging net investments in foreign operations.
The total impact of employee benefi ts actuarial gains and losses amounted to €-581 million net group share (of which group share was €-577 million and minority interests was €-4 million) as of December 31, 2011.
Liabilities arising from insurance contracts 302,560 50,569 9,249 362,378 299,666 48,879 9,601 358,146 of which measured at current assumptions (d) 10,995 - - 10,995 10,860 - - 10,860
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 113,921 - - 113,921 104,642 - - 104,642
Reinsurers’ share in future policy benefi t reserves 4,786 - - 4,786 4,921 - 1 4,923
Reinsurers’ share in unearned premiums reserves 3 374 195 572 1 404 153 557
Reinsurers’ share in other reserves 374 (34) - 340 353 (6) - 347
Note: Liabilities relating to unearned revenues and fees (see Note 7.3), to policyholders participation (see Note 14.8), and derivative instruments (see Note 20.4) are excluded from the table above.
Liabilities arising from investment contracts with discretionary participating features 36,350 37,858 of which measured at current assumptions (b) - -
Liabilities arising from investment contracts where the fi nancial risk is borne by policyholders 34,063 29,957
Reinsurers’ share in liabilities arising from investment contracts with discretionary participating features 13 14
TOTAL LIABILITIES ARISING FROM INVESTMENT CONTRACTS – NET OF REINSURANCE CEDED 70,646 68,176
Claim reserves as of December 31 35,483 7,760 43,243 34,423 8,138 42,561
Claim handling cost reserves as of December 31 1,143 259 1,402 1,155 250 1,405
Gross claim reserves as of December 31 (a) 36,626 8,018 44,645 35,579 8,388 43,967
Reinsurers’ share in claim payments (680) (547) (1,227) (512) (882) (1,394)
Impact of foreign currency fl uctuation 3 45 49 (16) (5) (21)
Opening reinsurers’ share in technical reserves (a) 6,050 19 6,068 5,675 270 5,945
Reinsurers’ share in change in reserves relating to technical and actuarial items (+/-) (b) (191) 1 (190) (196) (1) (197)
Reinsurers’ share in closing technical reserves (a) 6,162 18 6,180 6,050 19 6,068
Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (a) (d) 36,350 37,858
Investment contracts with no Discretionary Participation Features (DPF) measured according to existing accounting policies 251 380
(b) See Note 1.13.2. – Reserves measured according to IFRS 4.24 option which allows to evaluate certain portfolios with current assumptions.
However, many debates remain open: there are too many remaining uncertainties and AXA cannot reliably disclose fair value or value ranges for investment contracts with a discretionary participating features.
The fi rst line labeled “Gross reserves for unpaid claims and claim expenses developed initially at the booking date” represents the loss reserves developed in the Group’s balance sheet on the reporting date for the year indicated in the column heading.
The second line entitled “Gross reserves for unpaid claims and claim expenses developed in 2012 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
shows, for a given column N, an estimate of the fi nal cost of liabilities carried as of December 31 of year N in respect of all years of occurrence prior to and including N, at each future period end. The fi nal cost estimate varies year on year as information relating to losses still outstanding becomes more reliable.
The surplus (shortfall) of the initial reserve with respect to the re-estimated (gross) fi nal cost for each year represents, for a given year N, the difference between the amount shown in the second line (gross reserves for unpaid claims and claims expenses developed in 2012 adjusted for changes in exchange rates and scope of consolidation) and the amount shown in the fi nal diagonal under “Reserve re-estimated”.
A) LOSS RESERVES DEVELOPMENT TABLE: PROPERTY & CASUALTY AND INTERNATIONAL INSURANCE EXCLUDING COLISÉE RE (EX-AXA RE)
Gross reserves for unpaid claims and claims expenses developed initially at the booking date (a) 28,465 27,825 29,128 31,168 41,301 44,020 44,046 44,470 46,367 45,946 46,440
Gross reserves for unpaid claims and claims expenses developed in 2012 (b) 4,778 3,742 3,314 4,253
Initial net claims reserves in excess of (less than) re-estimated net claims reserves as of December 31, 2012
Property & Casualty and International Insurance (excluding Colisée RE (ex AXA RE)) (a) 46,440 45,946
(b) Includes reserves inward reinsurance (€1,125 million in 2012, €854 million in 2011).
There is considerable uncertainty as to the future cost of asbestos claims. The ultimate cost of claims is very much dependent on legal factors that are diffi cult to predict with any certainty. It is common to have issues of allocation of responsibility among parties, as well as involvement of multiple insurers and multiple policy periods. Such issues raise considerable coverage issues.
Due to the uncertainty surrounding asbestos claims, it is not possible to determine their future cost with the same degree of certainty as for other types of claims. Although AXA considers its reserves for asbestos claim to be adequate, it is possible that, under some adverse scenarios, they may turn out to be insuffi cient to cover future losses.
At year-end 2012, key data relating to Asbestos claims were as follows: (I n Euro million)
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 €1,030 million at year-end 2012 (€984 million at year-end 2011).
The following table shows liabilities and assets arising from policyholders’ participation as of December 31 2012.
Note 1.13.2) mainly in relation to unrealized gains and losses on invested fi nancial assets available for sale as described in
Occasional mismatches result mainly from administrative timing differences in the processing of day-to-day operations.
Liabilities arising from insurance and investment contracts 27,202 74,271 466,354 567,827 25,357 76,335 445,218 546,909 of which Life & Savings liabilities relating to contracts including a surrender option with some surrender benefi t before maturity 14,242 54,621 336,096 404,959 13,846 58,369 329,367 401,582 14.9.2. Insurance and investment contract liabilities – discount rates
As shown in the table below, as of December 31, 2012: 88%
were discounted, of which 11% were subject to a revision of the discount rate and 77% retained the rate set at inception, subject to the liability adequacy test described in Note 1.
The rates presented in the table below are weighted average rates for all the portfolios under consideration. For contracts with guaranteed rates that are revised annually, rates are considered at the closing date. The risk factors associated with the contracts are set out in Note 4.
(a) Subject to liability adequacy tests (not systematic but reviewed on a regular basis).
GMDB features provide a guaranteed death benefi t which may be higher than the contract account balances of the
Banking liabilities issued at fair value - Retail customers (a) 1,062 1,062 378 378
Macro-hedge derivatives and other derivatives relating to liabilities arising from banking activities (204) (204) 96 96
The fair value option is used to measure certain debt from banking activities designated at fair value through profi t or loss (€1,062 million in 2012 and €378 million in 2011). Such fair values are based on a majority of observable market data
In 2012, debt relating to investments under lending agreements and equivalent in banking activities amounted to €8,427 million.
Refi nancing with central banks 252 - - 252 791 - - 791
Macro-hedge derivatives and other derivatives related to liabilities arising from banking activities (3) (130) (71) (204) 94 27 (25) 96
As of December 31, 2012, the “Other provisions for risks and charges” mainly included provisions for tax liability
Debt component of subordinated notes, 2.5% due 2014 (€) 2,043 1,970
Debt component of subordinated convertible notes, 3.75% due 2017 (€) 1,482 1,419
Euro Medium Term Notes, 6.0% due through 2013, and BMTN 841 866
Derivatives relating to other fi nancing debt instruments issued (a) 1 52
Other fi nancing debt owed to credit institutions (under €100 million) 1 2
Financing debt owed to credits institutions at cost 831 816 807 617
The fair value of fi nancing debt as of December 31, 2012, excluding accrued interests, was €11,887 million, including related hedging derivative instruments. The fair value increased by €1,754 million compared to December 31, 2011 mainly due to the decrease in credit spreads in the period.
Payables arising from direct insurance and inward reinsurance operations 8,955 7,212
(c) Excludes debt relating to investments under lending agreements and equivalent in Bank segment (Note 15).
Minority interests in funds under this caption, totaled €3,775 million as of December 31, 2012 (€3,896 million as of
Other debt instruments issued, notes and bank overdrafts (other than fi nancing debt) by issuance are described below: (I n Euro million)
Vendome Commerce: mortgage loan based on Euribor 3M + 145bps, due 2013 173 180
REOF2: mortgage loan based on Euribor 3M + 65bps, due 2012 - 113
APIV+EHV: mortgage loan based on Libor CHF 3M + 120bps, due 2015 74 74
APIV+EHV: amortizing loan based on Euribor 3M + 160bps, due 2015 40 40
OTHER DEBT INSTRUMENTS ISSUED, NOTES AND BANK OVERDRAFTS (OTHER THAN FINANCING DEBT) 4,510 6,272
As of December 31, 2012 and December 31, 2011, the Group did not hold any debt other than fi nancing debt designated as at fair value through profi t or loss.
Such fair values are based on a majority of observable market data (see Note 9.10 for a description of observable data) and are therefore classifi ed as l evel 2 instruments.
As of December 31, 2012, payables arising from direct insurance and inward reinsurance operations totaled €8,955 million, an increase of €1,742 million compared to December 31, 2011 mainly due to increase of brokers and general agents payables in Property & Casualty segment.
As of December 31, 2012, payables arising from direct outward reinsurance operations totaled €5,352 million, an increase of €173 million compared to December 31, 2011.
The income tax charge was split as follows: (I n Euro million) December 31, 2012
Impact of differences in tax rate and impact of taxes not linked to pre-tax income (148) (64)
Tax losses of prior years used in the current year without DTA recognized previously (13) (23)
The impact of rate differences on notional tax charge represents the difference between the expected tax calculated at each entity level with the applicable standard rate and the tax calculated using the 36.10% French tax rate applicable to the Company. The blended standard rate was 30% in 2012 and 28% in 2011.
Net deferred tax balances broke down as follows: (I n Euro million)
■ Reserves relating to hedge accounting and other items 50 144 (95) (12)
Policyholder tax - Net deferred tax assets/(liabilities) - - - -
Change in scope and other variations (21) - (21) 868 (17) 851
Australian and New Zealand operations, (ii ) the impact of minority interests’ buyout of AXA APH Asian activities, and (iii ) retrospective restatement for the voluntary change in accounting policy on deferred acquisition costs (please refer to Note 1.2.1).
R ecognized Deferred Tax Assets (DTA) on tax loss carried forward by maturity and expiration date
The decrease in tax losses carried forward in 2012 mainly concerns the United States Life & Savings.
€19,128 million Deferred Tax Assets (DTA) included €2,160 million of DTA on tax losses carried forward as of
This Note includes all types of derivatives excluding derivative instruments that meet the defi nition of equity instruments (see Note 13 for details) or derivative instruments held by consolidated investment funds in the “satellite investment portfolio” (see Note 1.7.2)
Hedging derivative instruments are broken down as follows: (I n Euro million)
Note: This table includes all derivatives (assets and liabilities), i.e. hedge, macro-hedge and other, asset or liability positions as described in Note 1.9.
AXA uses derivatives primarily to hedge various risks stemming from both sides of the balance sheet in the context of its Asset
actively manages counterparty risk generated by derivatives through a specifi c Group-wide policy. This policy includes a limit framework and an exposure monitoring process. Limits are specifi cally set for each authorized counterparty, based on an internal scoring system. This policy also includes daily to weekly collateralization for the majority of the Group’s exposure.
December 31, 2012 totaled €1,628 million (€1,760 million at the end of 2011). AXA mainly uses (i) interest rate Swaps (65%
Japan Life & Saving for €23,558 million in 2012 (versus €13,199 million in 2011), and in the France Life & Saving for €36,764 million (versus €23,330 million in 2011); (iii) minimize the cost of Group debt and limit the short-tomedium term volatility of its net interest expenses mainly in the Company, with notional amount of €80,348 million in 2012 versus €53,055 million in 2011. This increase was mainly driven by the lengthening of interests rates debt position in order to protect the future net fi nancial charges from increase of interest rates and other changes following the refi nement of its foreign currency hedging policy; (iv) hedge interest rate risk exposures arising in the context of its ordinary banking activities, mainly at AXA Bank
AXA mainly uses (i) Equity futures and forwards (47% of total notional amount of equity derivative instruments) and (ii) Equity puts and calls (35%).
Life & Savings (notional amount of €9,951 million in 2012 compared with €10,031 in 2011), and Japan Life & Savings
& Saving for €979 million (versus €1,264 million in 2011), and in the France Life & Saving for €36 million (versus €7 million in 2011); (iii) hedge equity exposures relating to the Group investments in strategic shares (€2,472 million compared with €2,141 million in 2011).
In 2012, the notional amount of currency derivative amounted to €111,993 billion versus €166,572 million in 2011. Their market value was €-1,361 million versus €-2,977 million in 2011. AXA mainly uses (i) Currency future and forward contracts (49% of total notional amount of currency derivative instruments), (ii) Currency swaps (43%) and (iii) Currency option contracts (8%).
Main objective 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 shareholder’s equity against currency fl uctuations, but also of others key indicators such as liquidity, gearing and solvency ratios. Notional amounts of derivatives used by the Company to hedge the foreign currency exposure decreased from €107,596 million in 2011 to €47,741 million in 2012, as a result of the partial unwinding of net investment hedge strategies in JPY and CHF, in line with the refi nement of its foreign currency hedging policy.
While most of the operating units’ 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) Japan Life &
In accordance with IAS 21 and IAS 39, the translation difference relating to these debt instruments is recognized in profi t & loss and offsets most of the change in market value of associated derivative instruments, which is also recognized in profi t & loss.
The Group, as part of its investment and credit risk management activities, uses strategies that involve credit derivatives, which consist mainly of Credit Default Swaps (CDS). These instruments are used as an alternative to corporate bonds portfolios, when coupled with government debt instruments, but also as a protection on single names or specifi c portfolios.
Credit derivative instruments are mainly used to: (i) hedge credit risk involving the purchase of CDS as a protection mainly on single corporate names or specifi c portfolios (notional amount of €5,271 million in 2012 versus €2,809 million in 2011); (ii) implement credit risk hedging strategies by purchasing bonds and protection on the same name (i.e. CDS). During stressed market conditions, the credit derivative market is indeed more liquid than the cash market. For instance, holders of cash bonds may be unwilling or unable to sell the bonds that they hold as part of their longer-term investment strategies. For this reason, rather than simply selling their bonds, they turn to the CDS market to buy protection on a specifi c company or issuer and thus, contribute to increase the CDS market liquidity. This creates hedging opportunities (i.e. bond spread is higher than CDS
The impact of derivative instruments is presented in the consolidated statement of fi nancial position within their related underlying fi nancial assets (and liabilities see Note 20.4). The table below sets out the impact of derivative instruments on the related underlying assets.
Investment in real estate properties 17,191 - 17,192 2,461 - 2,461 19,652 - 19,653
Macro-hedge and other derivatives (1) 1,676 1,675 - (1,988) (1,988) (1) (313) (314)
Assets backing contracts where the fi nancial risk is borne by policyholders 134,227 4 134,230 - - - 134,227 4 134,230
TOTAL LIABILITIES ARISING FROM INVESTMENT CONTRACTS 70,664 (56) 70,608 68,195 (36) 68,158
Financing debt owed to credit institutions 831 - 831 807 - 807
Liabilities arising from banking activities 33,698 (204) 33,494 33,927 96 34,023
Net value of derivative instruments - assets (1) 651 (2,997) 0 (2,346) (570) (2,922) 1 (3,491)
Derivative instruments relating to fi nancing debt, operating debt and other fi nancial liabilities - 553 - 553 - 503 - 503
Principles applied by the Group in order to proceed with the classifi cation of fi nancial instruments into the IAS 39 fair value hierarchy categories and the fair value hierarchy applicable to such instruments are described in Note 9.10. Same principles apply as far as derivatives instruments are concerned.
The identifi cation of such derivatives among assets held at fair value representing instruments not quoted in an active market involves a signifi cant level of judgment. Inputs provided by external pricing services, information observable on data providers screens, rating agencies, external surveys are considered as observable. The extent to which such data are external to the Group and not assessed by internal valuation teams is one of the main criteria applied in assessing whether data are observable or not. Should those data be signifi cantly adjusted or would they be outdated because of the lack of new available factors, such inputs would be deemed unobservable.
Another area of judgment is the assessment of the signifi cance of an input against the fair value measurement in its entirety. As a result, a different cut between observable and unobservable data and variances in the weighting of the signifi cance of each input against the fair value measurement in its entirety could produce a different categorization .
(I n Euro million) December 31, 2012 December 31, 2011 (b)
INTERNATIONAL INSURANCE 2,987 2,876 of which direct premiums 2,059 1,963 of which reinsurance assumed 705 716 of which revenues from other activities 222 197
(c) As described in Note 1.2.1, comparative information related to previous periods was retrospectively restated for the voluntary change in accounting policy on deferred acquisition costs.
Life contracts (including endowment contracts) 22,442 160,166 1,315 20,097 154,952 1,508
Fees and charges relating to investment contracts with no participating features (b) 334 - 30,235 350 - 26,716
TOTAL - PROPERTY & CASUALTY INCLUDING INTERNATIONAL INSURANCE 32,791 10,452 1,230 172 44,645 15,174 59,818
Debt instruments designated as at fair value through profi t or loss (b) 821 - 951 - 1,772
(b) Includes debt instruments held by consolidated investment funds, designated as at fair value through profi t or loss.
Debt instruments designated as at fair value through profi t or loss (c) 1,010 - (60) - 950
Equity instruments designated as at fair value through profi t or loss (e) 198 - (16) - 182
Non consolidated investment funds available for sale 231 96 50 (79) 298
Assets backing contracts where the fi nancial risk is borne by policyholders - - (4,977) - (4,977)
(c) Includes debt instruments held by consolidated investment funds, designated as at fair value through profi t or loss.
(d) Includes net realized gains and losses relating to investments at cost and at fair value through shareholders’ equity on Taikang Life (€830 million gross or €798 million net).
In 2012, fi nancing debt expenses, which includes income and expenses relating to hedging derivative instruments on fi nancing debt, amounted to €568 million (€329 million in 2011) mainly in the Company: €505 million (€281 million in 2011).
(b) As described in Note 1.10, the contribution of 2011 discontinued Canadian operations is classifi ed in a separate line of the income statement.
(c) Includes all acquisition expenses relating to insurance and investment contracts before capitalization/amortization of deferred acquisition expenses and equivalents.
(d) Change (capitalization and amortization) in deferred acquisition expenses relating to insurance and investment contracts with discretionary participation features and changes in net rights to future management fees relating to investment contracts with no discretionary participation features.
Charges relating to owner occupied properties 238 231 47 516 372 12 22 (1) 922 773
Casualty; ■ as well as higher expenses both in High Growth and Direct markets.
Other staff expenses and employees’ profi t sharing (a) 440 347
(a) Including redundancies and early retirement expenses (triggering event = set up of the plan), and employees’ profi t sharing in France.
The cost of the contributions paid was recognized as an expense in the income statement, and amounted to €111 million as of
December 31, 2012 (€103 million in 2011, €96 million in 2010, €89 million in 2009 and €82 million in 2008).
The weighted-average assumptions used by AXA for pension plans in the principal regions in which AXA operates were as follows: DECEMBER 20 12 ASSUMPTIONS
(a) The salary increase rate assumption in Japan was adjusted to include a defi ned benefi t plan reclassifi ed in the scope of IAS 19 as of January 1, 2012.
The expected return on assets is the weighted average between the asset allocation and the expected return for each asset category, which is established by an AXA Group assumptions committee and is consistent with long-term assumptions used in other Group indicators.
The table below presents the change in benefi t obligation and the change in plan assets associated with pension plans and other benefi t plans sponsored by AXA, together with an analysis of separate assets as of December 31, 2012.
General Account assets was reclassifi ed as plan assets and the plan for the active employees is now an autonomous foundation with its own assets.
During the year 2008, the main change in scope was the acquisition of Seguros ING, now AXA Mexico, which was completed on July 22, 2008.
Benefi t obligation at the beginning of the year 16,353 15,732 13,661 11,729 12,955 624 606 534 511 506
Benefi ts directly paid by the employer (331) (310) (275) (310) (270) (43) (40) (37) (39) (44)
Impact of foreign currency fl uctuations 66 365 1,018 241 (493) (8) 18 36 (9) 19
Benefi t obligation at the end of the year (A) 17,947 16,353 15,732 13,661 11,729 689 624 606 534 511
Net transfer in/(out) (including acquisitions and disposals) (a) (b) (10) (519) 40 924 (27) - - - - -
Impact of foreign currency fl uctuations 92 228 528 230 (735) - - - - -
Actual return on separate assets 75 (6) 59 31 (25) - - - - -
Net transfer in/(out) (including acquisitions and disposals) (a) (48) (13) 21 58 48 - - - - -
Impact of foreign currency fl uctuations - - - 0 (5) - - - - -
Plans with a negative net position (Liability) (8,719) (7,981) (7,846) (7,431) (7,015) (685) (619) (600) (529) (506)
Net position (excluding separate assets) (8,719) (7,981) (7,840) (7,423) (6,995) (685) (619) (600) (529) (506)
(b) This amount includes the reclassifi cation of General Account assets as plan assets in 2009 in Switzerland.
The annual expense for employee pension and other benefi ts recorded in the income statement (included in the “employee benefi ts expenses” presented in Note 26.1), for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 is presented below: (I n Euro million)
Expected return on plan assets (477) (436) (399) (362) (470) (0) (0) - (0) (0)
Expected return on separate assets (37) (42) (40) (34) (35) - - - - -
Pension and other benefi ts expense (393) (448) (517) (404) (306) (36) 4 (44) (37) (37)
Net transfer in/(out) (including acquisitions and disposals) (a) (b) (68) 72 (32) 983 107 1 15 - 0 (11)
The roll-forward of the statement of fi nancial position liability from January 1, 2012 to December 31, 2012 only captures the evolution of the liability recorded in the Group’s statement of fi nancial position and not the separate assets. This does not refl ect a full economic picture. The table below shows the detailed roll-forward of the statement of fi nancial position liability, with the separate assets added at each year end.
Adjustment due to separate assets (88) (7) (70) (41) 15 - - - - -
Benefi ts directly paid by the employer 331 310 275 310 270 43 40 37 39 44
Net transfer in/(out) (including acquisitions and disposals) (a) (20) 86 (52) 884 50 1 15 - 0 (11)
Impact of foreign currency fl uctuations 26 (137) (490) (12) (242) 8 (18) (36) 9 (20)
(c) This amount includes additional contributions paid to plan assets in the United Kingdom and in the United States to reduce the defi cit in 2010, 2011 and 2012.
January 1, 2008 and December 31, 2012 due to adjustments arising on plan liabilities and adjustments arising on plan assets and separate assets.
SoCI at the beginning of the year (4,042) (3,150) (2,442) (955) 308 (60) 3 30 67 45
Experience and assumptions adjustments on plan liabilities (1,459) (672) (704) (1,634) 799 (81) (60) (29) (35) 20
Experience adjustments on plan assets and separate assets 299 (161) 164 151 (2,028) (1) (1) - (0) (1)
SoCI at the end of the year (5,216) (4,042) (3,150) (2,442) (955) (140) (60) 3 30 67
During 2012, the change in the SoCI was mainly due to actuarial losses on pension liability (due to the decrease in discount rate in most countries, especially in the Eurozone Countries, in the United States, and in Switzerland), partially balanced by experience gains on plan assets and separate assets (due to performance higher than expected).
As of December 31, 2012, the cumulative impact after deduction of deferred tax and policyholder amounted to €-3,436 million (€-2,624 million at the end of 2011).
From year N+11 until the last benefi t payments is paid 24,915 552
The estimated amount of 2013 employer contributions for pension benefi ts is €325 million (€292 million estimated in 2011 for 2012). These amounts are subject to uncertainty as they will be driven by economics of future years and are cash contributions with no direct link to the pension and other benefi ts expense under IFRS.
As pension liabilities have a long-term nature, a mix of equity instruments, debt instruments and real estate investments is used in plan assets and separate assets.
The table below shows the asset mix for plan assets at the end of 2012: Asset mix for plan assets Total Group Europe North
The table below shows the asset mix for plan assets and separate assets at the end of 2012: Asset mix for plan assets and separate assets Total Group Europe North
In the United States, AXA Financial provides certain medical and life insurance benefi ts (collectively, “postretirement benefi ts”) for qualifying employees, managers and “fi nancial professionals” retiring from AXA Financial based on years of service and age. The life insurance benefi ts are related to age and salary at retirement for certain grandfathered retirees.
In accordance with IFRS 2, the total employee share based compensation cost of €202.5 million for full year 2012 included expenses from share-based compensation instruments for grants made after November 7, 2002 which had not yet vested as of December 31, 2003.
A detail of each of the major plans and associated cost are presented in Note 26.3.1 a) to e) and in Note 26.3.2.
For the employees who are 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 Eurostoxx Insurance index. From 2010, all options granted to the members of the
The fair value of AXA SA stock options is calculated using the 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
The option pricing assumptions and fair value for plans issued in 2012, 2011, 2010, 2009 and 2008 are as follows: Assumptions (b)
The total cost is amortized over the vesting period and an estimated pre-vesting lapse rate is applied. On that basis, the expense recognized in profi t or loss for the year ended
The following tables show a summary of the U.S. holding Company’s AXA ADR stock option plans: Options (in million)
On October 25, 2012, the AXA Group made an employee share offering at €9.50 per share for the traditional plan (discount of 20% to the reference price of €11.86 representing the average over the twenty trading days ending on October 24, 2012) and at €9.82 per share for the leverage plan (discount of 17.19%
In 2012, the cost of the lock-up period was measured at 19.81% for the traditional plan and 17.07% 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 2.80%.
The table below shows the main features of the plan, the amounts subscribed, valuation assumptions, and the cost of the plan for 2011 and 2012: Traditional Leveraged Traditional Leveraged
Amount subscribed by employee (in Euro million) 17.8 27.3 19.1 31.4
Total number of shares subscribed (in million shares) 1.9 27.8 2.3 34.5
Total cost for AXA = [A] – [B] + [C] (as a percentage of the reference price) 0.19% 2.92% 1.51% 2.91%
TOTAL COST FOR AXA (in Euro million) 0.04 9.65 0.36 10.58
These 50 AXA Miles shares granted in 2012 will vest upon completion of a two or four year vesting period (i.e., in 2014 or 2016) depending on applicable local regulations, and subject to fulfi lment of certain conditions.
Performance Shares are issued to executive offi cers and other key employees.
AXA issues Performance Units to executive offi cers and other key employees outside France.
For 2011 and 2012 grants, the number of Performance Units defi nitely acquired will be known after two years and will be paid one year later in cash by the employing entity, provided that the benefi ciary is an employee of the AXA Group at that date.
The total cost of the Performance Units recorded in earnings in 2012 was €66.5 million (0 for the equity-settled portion).
The total cost of AXA Financial share-based compensation plans in 2012 included €0.3 million in respect of AXA Financial
Compensation plan are in the form of restricted Holding units or cash which are granted to certain key employees.
It resulted in the immediate recognition in 2011 of the cost of all unvested share-based compensation instruments granted from prior years amended at that date and amounted €234.5 million (100%, gross of tax) instead of an amortization over a maximum of four years.
(€115.4 million in December 2011) of which €92.2 million in the form of Restricted Holding units (€94.5 million in 2011), elected in January 2013 and representing 6.5 million restricted Holding
The total granted in 2012 including these awards was 9.9 milion restricted Holding Units (10.5 million Restricted Holding units in 2011).
Moreover, options to acquire AllianceBernstein Units were granted as follows: 114,443 options were granted during 2012; 70,328 options were granted in 2011; 387,661 options were granted in 2010.
In 2012: ■ short-term benefi ts: compensation paid to members of the Management Committee in 2012 totaled €13.1 million, including fi xed salary, bonuses, directors’ fees and benefi ts in kind; ■ share-based compensation: the expense recognized in 2012 in respect of share-based compensation granted to
Long-term benefi ts: Amounts provisioned or recognized by AXA SA and its subsidiaries for the payment of pensions or retirement benefi ts to the members of the Management Committee totaled €46.0 million as of December 31, 2012 (43.8 million as of 26.5. SALARIED WORKFORCE
At December 31, 2012, the Group employed 94,364 salaried people on a full-time equivalent basis (95,710 at the end of 2011, excluding salaried people at disposed Bluefi n business in the UK and contractors at AXA Technology).
The decrease of salaried employees by -1,346 in 2012 was mainly driven by: ■ AllianceBernstein (-446) due to a global staff reduction plan; ■ the US (-427) mainly due to the restructuring plan undertaken in June 2011, offshoring and outsourcing; ■ Germany (-367) due to productivity programs; ■ France (-318) mainly due to a decrease in commercial staff; Partly offset by Hong Kong (+255) as a consequence of the integration of HSBC acquired business.
Net income per ordinary share takes into account interest payments related to undated subordinated debt classifi ed in shareholders’
Increase in capital (excluding stock options exercised) (c) 2 2 2
Potentially dilutive instruments: Fully diluted - weighted average number of shares (d) D 2,349 2,305 2,305
FULLY DILUTED NET INCOME PER ORDINARY SHARE F = A/D 1.64 1.69 1.75
In 2011 restated, net income per ordinary share stood at €1.69 on both basic and fully diluted basis, of which €1.26 attributable to continuing operations and €0.44 from discontinued operations on a basic calculation, and €1.26 attributable to continuing operations and €0.43 from discontinued operations on a fully diluted basis.
AXA collectively owned 14.35% of the Company’s outstanding ordinary shares representing 23.05% of the voting rights.
The Property & Casualty insurance business generated in France by insurance brokers is underwritten through a coinsurance arrangement between AXA Assurances IARD
Mutuelle 11%. Technical results are shared between these companies in proportion to their written premiums. Aggregate written premiums recorded in this coinsurance agreement amounted to €1,708 million in 2012 (of which €1,520 was attributed to AXA France IARD).
which is a type of French inter-company partnership more fully described below. There are no agreements between the
Group companies (e.g. fi nance, accounting and reporting, tax, legal, marketing and brand, internal audit, human resources, procurement, information systems, risk management, cash management) as well as certain other services. Expenses invoiced by these GIEs to the Company and its subsidiaries are generally invoiced at cost and are included in the consolidated expenses refl ected in the Company’s audited consolidated fi nancial statements. Expenses invoiced in 2012 and 2011 amounted to respectively €551 million and €563 million for GIE
“AXA parent C ompany fi nancial statements: subsidiaries and participating interests”.
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.
To the best of the Company’s knowledge, based on information reported to it: ■ on December 31, 2012, there were no loans outstanding from the Group to any of the Company’s executive offi cers or to any member of the Company’s Board of Directors; ■ during 2012, the daughter of a member of the Board of
Directors was employed by a subsidiary of the Company on arms-length basis and remains an employee of that subsidiary as of the date of this Annual Report; ■ various members of the Company’s Board of Directors as well as various other executive offi cers and directors of other
AXA Group companies may, from time to time, purchase insurance, wealth management or other products or services offered by AXA in the ordinary course of its business. The terms and conditions of these transactions are substantially similar to the terms and conditions generally available to the public or to AXA employees in general. In addition, certain members ot the Board of Directors are corporate offi cers, directors or have interests, directly or indirectly, in companies that may have agreements or enter into transactions from time to time with AXA Group entities including extensions of credit, loans (including investments in loans to French midcap companies developed by AXA France with banking partners) purchases of securities (for their own account or for third parties), underwriting of securities and/or furnishing of other types of services or goods. These agreements or deals are generally fully negotiated and performed on arm’s length terms and conditions.
I Note 29 Contingents assets and liabilities and unrecognized contractual commitments
Guarantee commitments received totaled €15,647 million at the end of 2012, and mainly consisted of (i) guarantees from customers related to mortgage loans (€13,819 million) received by Switzerland Life & Savings (€6,950 million), Switzerland
(€18,138 million) and AXA Bank Hungary (€3,455 million); ■ s ecurity reverse repurchase agreements and similar operations totaled €3,398 million mainly in Germany Life &
and AXA Bank Europe (€531 million); ■ €3,274 million collaterals for reinsurance operations of which €2,063 million in the United States Life & Savings; ■ €2,614 million collateral for derivatives mainly from AXA
(€731 million); Letters of credit received totaled €650 million at the end of 2012.
and Belgium Property & Casualty (€245 million) related to mortgages as guarantees for debt instruments.
Pledged securities and collaterized commitments 26,503 54 7 11,985 38,549 45,895
Financing commitments given totaled €3,122 million at the end of 2012, and mainly consisted of fi nancing commitments to customers (€3,023 million), notably comprising loan commitments granted at AXA Bank Europe (€1,139 million),
Guarantee commitments given totaled €6,414 million at the end of 2012, and mainly consisted of: ■ €6,244 million guarantee commitments given to credit institutions (including €1,073 million guarantees in case of insolvency or default in AXA Bank Europe) mainly driven by the Company (€4,359 million) including €4,142 million loans guarantees and €209 million backing IT contracts; ■ €170 million guarantee commitments given to customers mainly at AXA Banque (€70 million).
Pledged securities and collaterized commitments given totaled €38,549 million at the end of 2012, and mainly consisted of: ■ €11,602 million in AXA Bank Europe to fi nancial institutions in respect of security repurchase agreements and similar operations (€8,628 million), pledged assets for loans
(€1,807 million); ■ €7,791 million in Japan Life & Savings, including pledged assets for security repurchase agreements and similar operations (€6,974 million) and pledged assets for loaned stock (€614 million); ■ €2,804 million in Switzerland Life & Savings in respect of pledged assets for securities repurchase agreements and similar operations; Letters of credit given totaled €195 million at the end of 2012 and were mainly from Colisée RE (ex-AXA RE) related to the run-off activities of reinsurance operations (€131 million).
Other commitments given totaled €10,794 million at the end of 2012 and mainly consisted of: ■ c apital call options in respect of unfunded commitments to
Savings (€275 million); ■ €1,609 million guarantees given by the Company as part of
Group employee insurance contracts; ■ €1,293 million commitments given by France Life & Savings as commitments to real estate funds;
■ €475 million in Germany Life & Savings commitments given to “Protektor” and “Medicator”, the German insurance guarantee funds in the case of a bankruptcy of insurance companies; ■ €380 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; ■ €282 million guarantees given by the Company as part of acquisition and disposal of companies.
AXA subsidiaries are required to indemnify their employees against certain liabilities and costs that they may incur from time to time in performing activities within the scope of their employment duties. These activities may include, for example, service as a director, offi cer, agent, general partner, or in a similar capacity for (i) an AXA Group Company other than the employee’s principal employer or (ii) a Company outside the
The Group did not provide any material support without having a contractual or constructive obligation to do so to non consolidated entities during the period.
Some AXA subsidiaries, principally insurance Companies, are subject to restrictions on the amount of funds they may transfer in the form of cash dividends or otherwise.
AXA’s insurance subsidiaries 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.
While AXA seeks to manage its exposure to foreign currency fl uctuations through hedging, fl uctuations in the exchange rates may have a signifi cant impact on AXA’s results of operations and cash fl ows. For example, an appreciation of
Euro against foreign currencies in 2012 and future periods may adversely affect AXA’s results of operations and the price of its securities. In addition, the currency hedges used by AXA to manage foreign exchange rate risk may signifi cantly impact the
February 28, 1989. The current appointment is for a term of 6 years, until the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year 2017.
Statutory audit and certifi cation of local and consolidated fi nancial statements 27,414 26,712 63% 64% 8,474 7,942 80% 77%
Legal, tax and employment consulting 4,107 4,537 10% 11% 11 68 0% 1%
(b) Consistently with its nature, Solvency II and EEV related fees have been reclassifi ed from “Other services” to “Other specifi c audit assignment”.
In the United States, certain AXA subsidiaries are involved in a number of lawsuits (both class actions and individual litigations), investigations and other actions in various states and jurisdictions where they do business. A detailed description of signifi cant matters involving AXA Equitable Life Insurance
or in substantial settlements. In certain jurisdictions, juries have substantial discretion in awarding punitive damages.
AXA’s United States subsidiaries are involved in these types of litigations as well as in a wide variety of other matters including regulatory inquiries, investigations and/or actions, in connection with the ownership and/or management of real estate, asset or investment management activities, corporate transactions, employee benefi t disputes, alleged discrimination in employment practices, as well as other matters. For additional details on these matters, please see the Subsidiary
Directors hired an independent law fi rm to conduct an internal investigation into this matter and an independent consultant was engaged to assist in assessing the impact of this error on the performance of each client’s account. On February 3, 2011, the United States Securities and Exchange Commission charged three AXA Rosenberg entities with securities fraud for concealing this error, which was determined to have caused $217 million in investor losses. Without admitting or denying the SEC’s fi ndings, AXA Rosenberg Group LLC (“ARG”), AXA
Rosenberg Research Center LLC (“BRRC”) consented to the entry of an SEC order that required them to cease and desist from committing or causing any violations and any future violations of certain provisions of US federal securities laws; censured them; and ordered them jointly and severally to pay a $25 million penalty. The SEC’s order also required ARG, ARIM
compliance functions and hiring of an independent compliance consultant to conduct a comprehensive review of the fi rms’
During 2011, three putative class action lawsuits were fi led against AXA Rosenberg on behalf of AXA Rosenberg clients in the Federal District Court for the Northern District of California.
an “accounting” of underperformance against benchmarks attributable to the coding error and (iii) requested damages in an unspecifi ed amount to be determined at trial. All of these actions were consolidated into a single putative class action lawsuit, and in the fourth quarter of 2011, the parties entered into an agreement to settle all of the claims in the lawsuit. On
Funds Management Group, LLC (“FMG LLC”). The lawsuit was fi led derivatively on behalf of eight funds. The lawsuit seeks recovery under Section 36(b) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), for alleged excessive fees paid to AXA Equitable and FMG LLC for investment management services. In January 2013, a second lawsuit under Section 36(b) of the Investment Company Act, entitled Sanford et al. v. FMG LLC, was fi led in the same court.
The second lawsuit was fi led derivatively on behalf of eight funds
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
Sistema KLEC, alleging breach of contract in connection with an arrangement entered into by AXA Spain in 2008 for the development of up to 125 agencies. The plaintiff claims damages on alternative theories for amounts ranging from approximately €149 million to €623 million. AXA Spain believes that it has strong defenses to these claims and will defend them vigorously. A preliminary hearing in this case is set for
Many of these claims relate to potential future contingencies that have not yet transpired and, consequently, the extent to which they may give rise to future liability (if any) for AXA UK
Group’s consolidated results of operations or fi nancial position in any event.
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
and its subsidiaries are subject to comprehensive regulation in the various jurisdictions where they do business. In this context, AXA and its subsidiaries are subject, from time to time, to examinations, investigations, enforcement proceedings and other actions by regulatory and law enforcement authorities
CONSOLIDATED FINANCIAL STATEMENTS FULL YEAR 2012 4 4.7 REPORT OF THE STATUTORY AUDITORS
I Report of the statutory auditors on the consolidated fi nancial statements (For the year ended December 31, 2012)
We have assessed the appropriateness of the process of the fi nancial assets valuation, as well as the information disclosed in the above mentioned notes.
■ Certain consolidated balance sheet items that are specifi c to insurance and reinsurance business are estimated on the basis of statistical and actuarial data, such as actuarial reserves, future policyholders’ benefi ts, 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 1.13, 1.6.3 and 1.6.2 to the consolidated fi nancial statements.
We have assessed the reasonableness of the assumptions used to calculate these values, particularly with respect to the Group’s experience and its regulatory and economic environments as well as the overall consistency of these assumptions. We also have assessed the appropriateness of the change in accounting policy mentioned above and its related disclosure in note 1.2.1.
We have verifi ed that the valuation methods used take into account the nature of tax differences, business plans established by the Group and, when accounting policies permit, its intentions.
Offi cer and the Deputy Chief Executive Offi cer(s) will receive compensation which amount and conditions will be set by the Board of Directors, upon proposal of the Compensation
For further information please see Part 2 – “Corporate governance ” of this Annual Report.
Double voting rights may be terminated at any time upon the decision of an Extraordinary Shareholders’ Meeting, after authorization by a Special Meeting of the holders of these rights.
In order to issue additional shares without preferential subscription rights, except for issues already approved or authorized by AXA shareholders, AXA must obtain the approval of a two-thirds majority of voting rights at an Extraordinary
At least 15 days (or 6 days in certain cases) prior to the date set for the meeting on fi rst call, and at least 10 days (or 4 days in certain cases) before any second call, the Company shall send a fi nal notice containing all the information requested by Law by mail to all registered shareholders who have held shares for more than one month prior to the date of this fi nal notice and publish this fi nal notice in a Bulletin of legal notices as well as the BALO.
Meeting convened to decide on such matters. French law also requires the affi rmative vote of the shareholders of the surviving corporation of a merger at an Extraordinary Shareholders’
On December 31, 2012, AXA’s share capital was comprised of 2,388,610,984 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, 2012. The following table sets forth changes in the number of shares from January 1, 2010 to December 31, 2012: Date Transaction
New equity issue reserved for employees of AXA (SharePlan 2012) 29,685,889 215,710,432 2,386,986,593 5,466,199,298 31/12/2012 Exercise of stock options 1,624,391 13,225,275 2,388,610,984 5,469,919,153
APPENDIX III STATEMENT OF THE PERSON RESPONSIBLE FOR THE ANNUAL REPORT 342
In this context, the following report provides a summary of the AXA Group’s principal internal control mechanisms and procedures that allow m anagement to conclude that the
The AXA Group is engaged in the fi nancial protection and wealth management business on a global scale. As such, it is exposed to a very wide variety of risks – insurance risks, fi nancial market risks and other types of risks – which are described in
The Board of Directors has established four Committees to assist it in fulfi lling its responsibilities: Audit Committee,
Directors as well as the structure and composition of the Board of Directors’ Committees is set forth in Section 2.1 “Directors, senior management and employees” of this Annual Report.
For more information about the Audit Committee’s assignments and activities, its composition and the principal matters it handled in 2012, please see Section 2.1 “Directors, senior management and employees” of this Annual Report.
AXA’s principal subsidiaries, whether publicly traded or not, are generally governed by (i) a board of directors or a s upervisory b oard whose membership typically includes independent or non-executive directors and (ii) various board committees including a compensation committee and an a udit c ommittee, whose membership include independent or non-executive directors.
The 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 in addition to any other board committees that they consider necessary or appropriate for their specifi c businesses. The role, duties, and composition of these committees (including the requirements for participation of independent directors) are specifi ed in the a udit c ommittee guidelines and the c ompensation c ommittee standard. The a udit c ommittees have a critical role in reviewing fi nancial results and other fi nancial information prepared by the management, fi nancial reporting and control processes, critical accounting policies, particular accounting issues, key risks and systems of internal control, fraud and similar issues.
AXA currently has a 17-member Executive Committee which is an internal committee composed of the members of
Committee conducts QBRs, during which the performance of the AXA Group is reviewed. These QBRs were introduced in 2000 to provide m anagement with a clear and consistent framework for: (1) reviewing operational performance and monitoring the progress of key projects using quantifi able standards of measurement defi ned in collaboration with the
Executive Offi cer. The Group’s strategic plan is reviewed by the Management Committee and approved by the Board of
For more information about the Executive Committee including its composition, please see Section 2.1 “Directors, senior management and employees” of this Annual Report.
or monitoring some aspects of internal control and/or risk related matters, however, the following four GMS Departments are primarily focused on these matters as part of their principal day-to-day management responsibilities: GROUP RISK MANAGEMENT DEPARTMENT
Group and is supported by local Risk Management teams within each operating unit. The types of risks covered include risks coming from the invested assets, from the insurance liabilities, asset/liability mismatch risks and operational risks.
The PBRC Department within the Group Finance Department is responsible for consolidation, management reporting and control over accounting and fi nancial information. It works with local PBR units within Finance Departments of Group subsidiaries.
PBRC has defi ned and implemented a set of policies and procedures to ensure that the consolidation process leading to the consolidated fi nancial statements is timely and accurate.
All internal audit teams across the Group report directly to the
The committee is comprised of the following 11 GMS Departments, each of which is responsible for presenting to the Committee the signifi cant risks within its scope: Group Risk Management, Group Corporate Finance and Treasury, Group Audit, Group Legal & Compliance, Group
In accordance with the IFC Standard, the in-scope AXA Group companies must (i) document the signifi cant processes and controls, as well as the rationale of how the associated risk of material misstatements due to error or fraud can be reduced to an acceptable level, (ii) test the design and operational effectiveness of key controls based on the test plans elaborated by m anagement with insights into risks, and (iii) remediate identifi ed control defi ciencies.
AXA SA has implemented a formal internal review and sign-off process pursuant to which all Executive Committee members,
This process is based on the following four pillars: 1. CFO Sign-Off Certifi cates required to be submitted by all local CFOs to PBRC, together with the required subsidiary fi nancial reporting & consolidation information.
3. Disclosure Controls & Procedures Certifi cates required to be submitted by AXA Executive Committee members, regional CFOs and certain other executives (including heads of GMS Departments) pursuant to which each of these executives is required to review the Group’s
Statements: PBRC provided regional CFOs with the contribution of the companies under their responsibility to the consolidated fi nancial statements in order to facilitate their certifi cation on the accuracy and completeness of the information in the Annual Report of the Group.
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: ■ s ection 14.2.1 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
Company decided to implement strict rules pertaining to shareholding requirements for AXA’s Chief Executive
Board of Directors has decided that it was not appropriate to compel Executive Offi cers to acquire a number of
AXA shares once the compulsory holding period of their performance shares has expired; (ii) exercise of stock options: pursuant to the AFEP/MEDEF
Section 23 of AXA’s Charter (“statuts”), copies of which are available at the Paris Trade and Companies Register (Registre du commerce et des sociétés du tribunal de commerce de
I Report of the Statutory Auditors prepared in accordance with Article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors of AXA (For the year ended December 31, 2012)
On the basis of our work, we have no matters to report on the information given on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information, set out in the Chairman of the Board of Directors’
AXA’s internal control over fi nancial reporting (ICOFR) is a process designed under the supervision of AXA’s Chief
IFC involves primarily the entities which are individually signifi cant to AXA’s consolidated fi nancial position or results of operations, as well as the entities which provide signifi cant services to AXA
The IFC programme is monitored by a Steering Committee chaired by AXA’s CFO and involves the Planning Budgets
Management conducted an evaluation of the effectiveness of AXA’s ICOFR in accordance with the AXA IFC Standard as described above. Based on this evaluation, management concluded that AXA’s ICOFR was effective as of December 31, 2012.
The Company’s management is responsible for maintaining effective internal control over fi nancial reporting and for establishing a statement on its assessment of the effectiveness of internal control over fi nancial reporting as of December 31, 2012. A company’s internal control over fi nancial reporting is a process designed to provide reasonable assurance regarding the reliability of fi nancial reporting and the preparation of fi nancial statements for external purposes in accordance with IFRS accounting principles. The assessment of the effectiveness of internal control is based on criteria established in the Internal Financial Control standard of
In our opinion, the Company’s management’s assertion that internal control over fi nancial reporting as of December 31, 2012, is effective, in all material respects, is fairly stated based on the criteria established in the IFC standard.
FINANCIAL AUTHORIZATIONS TO ISSUE SHARES OR OTHER TYPES OF SECURITIES VALID AS OF DECEMBER 31, 2012
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) 1 billion 26 months June 27, 2013
Ordinary shares or securities giving access to the capital, reserved for employees – 135 million (e) 18 months October 25, 2013
Ordinary shares reserved for a specifi c category of benefi ciaries in connection with offerings for employees – 135 million (e) 18 months October 25, 2013
USE IN 2012 OF THE VARIOUS FINANCIAL AUTHORIZATIONS PERTAINING TO CAPITAL INCREASES
Please see Part 2.3. “Major shareholders and related party transactions”, Section “Employee shareholders” of this Annual
In 2012, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 27, 2011 (resolution 21), 4,584,469 stock options giving the right to their benefi ciaries to subscribe or to acquire existing or newly issued AXA shares, were granted by the AXA Board of Directors.
In 2012, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 27, granted by the AXA Board of Directors.
Dividends received from subsidiaries amounted to €3,303 million in 2012, down from €4,307 million in 2011, representing an increase of €82 million excluding the exceptional dividends referred to above.
Dividends received from insurance companies increased by €165 million to €3,033 million mainly due to the following: ■ a €1,385 million dividend from AXA France Assurance, compared with €1,064 million in 2011, arising from a higher statutory profi t; ■ a €73 million dividend from AXA UK, compared with €9 million in 2011; ■ €1,152 million of dividends received from the Northern,
Central and Eastern Europe Region, compared with €867 million in 2011; ■ €126 million of dividends paid by the Mediterranean and
Mediterranean and Latin American Region resulted from the decline in statutory profi t in Italy and the reinforcement of the local solvency level in Spain; ■ dividends received from companies located mainly in Asia totaling €239 million, down from €501 million in 2011 owing to the lower statutory profi t in Japan and the disposal in 2011 of the Australian business.
Dividends received from fi nancial subsidiaries and other holding companies decreased by €83 million to €270 million from €353 million in 2011. They included €140 million of dividends paid by Finance Solutions, a Group’s fi nancing and cash management company, and €114 million from AXA Investment
Swiss franc referred to above versus a foreign-exchange loss of €329 million in 2011; ■ releases of provisions for contingent liabilities totaled €502 million, primarily comprising provisions for unrealized losses on derivatives; ■ allowances for provisions for contingent liabilities totaled €340 million. €198 million corresponded to unrealized losses on derivatives, of which €196 million for the mark-to-market revaluation of an external equity swap intended to hedge an equity position, plus an annual allowance of €107 million for provisions for bond redemption premiums. In 2011, allowances amounted to €1,086 million of which €786 million corresponded to unrealized losses on derivatives;
It included mainly €531 million of tax receivable from members of the tax consolidation group in France and €129 million allowance for provisions for the risk of tax repayments.
France and a €235 million release of the provision for the risk of tax repayments.
Intangible assets totaled €361 million. They mainly included the AXA brand contributed by FINAXA as part of the merger in 2005 and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €54 million relating to the capitalization of software costs.
Holding to fi nance the acquisition of HSBC’s non-life insurance business in Mexico; ■ €230 million and €106 million capital increases respectively by AXA Life Europe and AXA Reinsurance Ireland to sustain their development; ■ a €134 million increase in Beaujon’s capital to foster the development of its subsidiaries, notably in Poland, the Czech
Receivables from subsidiaries totaled €214 million, down from €711 million at end-2011. This €497 million decrease was primarily attributable to the reimbursement of the
Loans totaled €47 million, down from €810 million in 2011, representing a fall by €763 million resulting from the reimbursement of a USD1 billion credit facility granted to shareholders in RESO Garantia.
Tax receivables reached €503 million, including a €491 million carry back receivable.
Cash and cash equivalents totaled €2,265 million, down €725 million driven by the signifi cant decline of outstanding commercial paper by €1,729 million partly offset by the reimbursement of a USD1 billion loan granted to RESO
Cash instruments totaled €48 million, down from €654 million in 2011, representing a €606 million decline resulting from the maturity of premiums paid in 2011, of which €260 million of premiums for share call options and €327 million of premiums paid for Swiss franc and Japanese Yen hedging strategies.
Provisions for contingent liabilities amounted to €2,872 million, and mainly consisted in €1,018 million for redemption premiums related to subordinated notes, €532 million of provisions corresponding to the mark-tomarket revaluation of derivative instruments, €461 million of provisions for exchange-rate risk and €541 million of provisions for the possible repayment of tax savings owed to subsidiaries belonging to the French tax consolidation group.
Financial debt stood at €13,354 million, compared with €15,243 million at December 31, 2011. This represented a decrease of €1,889 million due to a €1,729 million fall in outstanding commercial paper (€801 million at December 31, 2012), which is primarily used to fi nance margin calls under collateral agreements, protecting the Company from counterparty risk on derivative instruments, and €101 million in currency effects.
December 31, 2011. This item refl ects the positive effects derived from the revaluation of foreign-currency denominated assets and liabilities at the balance sheet closing exchange rate. It declined compared with 2011 mainly driven by an increase in the sterling exchange rate, which had an adverse impact on liabilities.
Net book value on the sale of fi xed assets (2,278) (2,814)
III. NET INCOME FOR THE FINANCIAL YEAR VI + VII + VIII 3,261 8,649
(a) Since January 1, 2007, AXA‘s 2017 bonds can still be converted, but any dilutive impact created by the issuance of new shares resulting from the conversion of the bonds is neutralized by the automatic exercise of call options on the AXA shares which have been put in place.
(b) Dividend of €0.72 per share proposed to the Shareholders‘ Meeting of April 30, 2013, based on 2,388,610,984 outstanding ordinary shares.
Wolfe Tone House, Wolfe Tone Street - DUBLIN 1 - Ireland 40, rue du Colisée - 75008 PARIS
Guarantees and commitments given by the C ompany under commitments made by subsidiary/
Wolfe Tone House - Wolfe Tone Street - DUBLIN - Ireland
a) french subsidiaries (total) 72 b) foreign subsidiaries (total) 199 2) Participating interests not shown in section A
a) in french companies (total) 39 b) in foreign companies (total) 104
In accordance to CRC regulation 2008-15, treasury shares are recorded in “Marketable securities”. At December 31, 2012, 57,048 shares were allocated to hedging purposes, representing €0.7 million.
The application of CRC regulation 2008-15 dated December 4, 2008 relating to the accounting treatment of stock options
SA: Stocks options, performance shares and performance units plans are described in Part 2 – Section 2.2 “Full disclosure on executive compensation and share ownership” of this Annual
Intangible assets amounted to €361 million, and mainly included the AXA brand contributed by FINAXA as part of the merger in 2005 and valued at €307 million based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA.
AXA SA has issued two subordinated bonds: ■ 2.5% bonds, maturity January 1, 2014: 9,185,581 bonds with a par value of €165 and a redemption value of €230.88 were in circulation at December 31, 2012. The redemption premium amounts to €606 million; ■ 3.75% bonds, maturity January 1, 2017: 6,613,129 bonds with a par value of €165.50 and a redemption value of €269.16 were in circulation at December 31, 2012. The redemption premium amounts to €688 million.
The General Meetings of 2014 convertible bondholders accepted the amendment. As a result, holders who did not convert their bonds by January 26, 2007 received €16.23 per bond on January 31, 2007.
■ i nterest rate swaps: these transactions are recognized by applying the accrued interest method. A distinction is made in the income statement and balance sheet between income from the principal transaction, which is the subject of the swap, and the net income from the swap transaction. The nominal value of the swaps serving as bases for interest rate swaps is recognized off-balance sheet.
■ d erivative products qualifying as hedges against foreign exchange risk (exchange rate or currency swaps, currency futures) are recognized off-balance sheet as a reciprocal liability and receivable commitment. For currency options, the premium paid on acquisition is recognized as an asset on the balance sheet in the ‘cash instruments’ account.
When the option is exercised, the premium is recorded in the income statement. The same is true when the option is not exercised at term. For option sales, a provision for risks and charges is recognized to take into account the unrealized loss. Other derivative instruments are recognized off-balance sheet at their nominal value. Unrealized losses arising from the estimated market value of these fi nancial instruments give rise to recognition of a provision for foreign exchange loss when the hedge accounting can not be applied.
■ e quity derivative products: equity option rights paid or received are posted in a suspense account on payment or receipt of funds. At the balance sheet date, if the option has not been exercised, the rights received, representing possible income, are not recognized in the income statement.
Other shareholders’ equity included €6,360 million of undated subordinated notes at December 31, 2012, versus €6,341 million at December 31, 2011, representing an increase of €19 million mainly due to exchange rate fl uctuation impact.
(c) The decrease is mainly due to margin calls paid to bank counterparties under collateral agreements linked to the management of derivative instruments, which amounted to €3,366 million at end-2012, compared with €3,972 million at end-2011, mainly due to the unwinding of the foreign-exchange positions.
Other shareholders’ equity amounted to €6,360 million, compared to €6,341 million at the end of 2011.
Amortiz ation of convertible bond redemption premiums 911 107 - - 1, 018
(a) The €619 million provision for deferred taxes includes a €541 million provision for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group.
Loans granted by Group entities 2, 458 310 861 1, 287
Amounted to €1,017 million at end-2012, down from €1,071 million at December 31, 2011. This item refl ects the positive effects derived from the revaluation of foreign-currency denominated assets and liabilities at the balance sheet closing exchange rate. It declined compared with 2011 mainly driven by an increase in the sterling exchange rate, which had an adverse impact on liabilities.
(1) A 100 bps rise in interest rates leads to a 3.1% decrease in the fair value of debt, a 3.4% decrease in the fair value of loans, and a 19.0% increase in the fair value of derivatives.
■ because there are a number of possible ways to perform these calculations.
In our opinion, the fi nancial statements give a true and fair view of the Company’s fi nancial position and its assets and liabilities as of December 31, 2012 and of the results of operations for the year then ended, in accordance with accounting rules and principles applicable in France.
The prolonged economic and fi nancial uncertainties continue to give rise to specifi c considerations with respect to the determination of assumptions underlying the preparation of the fi nancial statements, in particular, the future evolution of interest rates utilized in the accounting estimates. In this context and in accordance with Article L.823-9 of the French Commercial Code requiring Statutory
Auditors to justify their assessment, we bring to your attention the following matters: ■ fi nancial assets are recorded using the methods applying to each category and described in paragraph 2.5 of the notes to the fi nancial statements; We have assessed whether the impairment tests performed by the Company, depending on the invested assets situation and the volatility of fi nancial markets, are appropriate and we also assessed the reasonableness of the resulting provisions. Regarding investments, for which impairment is based on the value-in-use and the intent to hold, we have assessed the data used in order to determine the value-in-use of the main investments in the portfolio and obtained confi rmation of the intent to hold; ■ in accordance with the policies described in paragraph 2.9 of the notes to the fi nancial statements, liabilities are recorded at the year-end for redemption premiums on convertible bonds issued by the Company whenever the prevailing stock price is lower than the discounted redemption value of the underlying note. We have reviewed the reasonableness of the assumptions used for calculation, having regards the stock market volatility and the maturities of outstanding convertible bonds issued by the Company; ■ 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 have checked that the implementation of a hedge accounting, as the case may be, was documented. In the other cases, we verifi ed that adequate provisions for the unrealized losses were recorded.
The information is disclosed in the “Embedded Value 2012 report” which is available on AXA Group website under Investor Relations /
Auditors, 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 Company’s management report prepared for the year ended December 31, 2012 Pursuant to Article L.225102 -1 of the French Commercial as well as their limited assurance report on a selection of information.
Moreover, the footprint of AXA’s salaried workforce in 2012 was 66% in Europe (vs. 67% in 2011), 19% in Asia-Pacifi c (vs. 18%
AXA continued to recruit in 2012 and hired more than 16,000 employees, of which almost 4,800 were sales employees. Out of that total number of hires, 373 persons were re-hires into the Company.
The introductory part of the Group EWC agreement is based on a number of international benchmark documents, such as the
EWC’s framework agreement. Other affi liates outside the scope of the EWC have also developed social dialogue agreements, but these are not monitored at Group level. More generally beyond Europe, the Group strives to ensure that employees are fairly represented in all major countries where it is present.
Group to a certain number of measures in favor of employees when major organizational changes impact their jobs. AXA
In addition, AXA went past a signifi cant milestone when Group management, UNI Europe Finance and all French trade unions signed a major European agreement on anticipating change.
AXA’s compensation policy aims to attract, develop and retain best talents by ensuring that (1) pay level are market competitive, (2) internal equity relies on differentiated individual and collective performance, (3) payouts are affordable and in line with company fi nancial results.
In 2012, total compensation expense amounts to €7.74 billion, which correspond to a decrease of 1.9% on a reported basis.
On a comparable Foreign Exchange basis, the decrease of 2012 versus 2011 would amount to 5.0%.
(the nature and type of which may vary by entity depending on local competitive and cost considerations) In all cases, local minimum requirements are respected and generally exceeded on a large scale for a majority of AXA employees across all geographies.
Miles” program has been designed to both acknowledge the outstanding contributions of the Company’s employees and to further engage and motivate them for the many challenges that lie ahead. Employee shareholders represented 7.4 % of the outstanding share capital and 9.0 % of the voting rights at
is an equal opportunity employer in all aspects of the work environment. AXA opposes all forms of unfair or unlawful discrimination and does not tolerate discrimination based on age, race, nationality, ethnic origin, gender, sexual orientation, religion, marital status, or disability. AXA cultivates a diverse and inclusive environment where all employees feel fully engaged and a part of the Company’s business and strategy to become the “Preferred Company.”
In 2012, AXA Group D&I focused on ensuring it had the necessary infrastructure to deliver its D&I strategy. The aim was to involve leadership and garner support from key functions, leveraging talent and knowledge. D&I executive sponsors from several AXA entities are members of the Group D&I Advisory
Council, who report to AXA Deputy CEO Denis Duverne, also the AXA Group D&I executive sponsor.
AXA development initiative, the “Talent Tandem,” as a “best practice” in 2012.
AXA also strongly further encouraged and supported the integration of disabled employees. In France, the number of employees with disabilities went from 746 in 2011 to 809 in 2012.
Group level, all entities undertake initiatives to implement local policies as well as best practices, tailor-made to their specifi c sector and local environment.
The total absenteeism rate remains stable in 2012 at a level of 4.9%. The proportion of absences due to work-related accidents decreased while the proportion due to pregnancy increased. With a total absenteeism rate due to work related accidents of less than 0.1% and operating in an environment that generates business through management of capital and fi nancial services, the AXA Group does not monitor gravity, severity or frequency of work-related accidents on a global level. Systems, procedures and processes might be in place to comply with local health, safety and welfare legislation, if necessary. In 2012, AXA Asia fi ne-tuned H&S policies at many entities, which subsequently were awarded national recognition for commendable Workplace Health Promotion Programs. AXA
Gulf introduced an extensive range of health and wellbeing initiatives to accommodate different locations and employee populations. The aim was to increase employee engagement and satisfaction by improving education and standards of health and wellbeing. In addition, the policy reached out to each employee’s family members to help improve their health and wellbeing as well. AXA UK launched its innovative “Be Healthy”
Over the years, AXA has developed a comprehensive framework for identifying and measuring operational risks, arising from potential organizational, systemic or resource-based failures or as a result of external events. Ensuring an adequate approach to mitigating these risks across the Group is an essential function of Risk Management Departments. With respect to its employment practices, AXA defi ned Human Resources Key
Risk Indicators in support of a safer and healthier environment for AXA’s workforce.
AXA’s skills development result remained high with 83.2% of its employees taking a training course at least once during the year. The average number of training days per employee remained stable at 2.6 days per year.
(2) prepared leadership to have a more positive impact on the organization and drive required change, (3) aligned key management practices, thus enabling a desired culture shift,
(4) enhanced technical know-how required to deliver on the socalled “Ambition AXA” strategy and (5) raised business acumen among non-experts to foster cross-functional collaboration and reinforce employee affi liation through a consistent on-boarding experience.
A performance management standard has been established to ensure that the Group’s performance-based pay policy and evaluation of training needs run effi ciently. During 2012, 62,000 employees were already making use of AXA’s PeopleSoft platform for Performance Management (38,000 employees in 2010). The Group also delivered a new “AXA 360” platform to all entities to accelerate its leaders’ development through feedback on their leadership skills. A total of 2,000 executives and managers went through this process.
An AXA leadership framework defi ned what skills were expected from the Company’s leaders to meet AXA’s challenges and achieve its ambition. Until recently, it only concerned senior managers. In 2012, it was simplifi ed and adjusted for all AXA
employees and is set to be embedded into all performance and talent management-related processes by 2013.
Moreover in 2012, AXA leveraged and enhanced its global presence on external platforms, such as LinkedIn.com, further leveraging technologies and helping to improve AXA’s attraction and brand awareness for candidates.
AXA has a long-term vision of becoming a preferred employer for all generations, with a focus on university graduates. In 2012, AXA successfully launched its global risk graduate program for risk management professionals, an activity where there is an ongoing business need to recruit. The two and a half year program has been redesigned in close collaboration with Group Risk Management. The objective is to attract high potential talents and support them to gain the skills necessary to become AXA’s future leaders. Following three weeks of targeted promotion of the program in April 2012 to selected schools and universities in Europe, 320 applications were received. The program offers graduates a local permanent contract, with the fi rst assignment in one country for a period of 12 months, second assignment of 18 months abroad based on an exchange, with the aim for the graduate to return to their original entity following these 18 months overseas. The program’s successful launch confi rmed that a well-structured, packaged and targeted program can have a real impact on the
Total headcount of salaried workforce (open-ended and fi xed-term contract) 113,422 emp. -0.9% 114,488 emp.
Average FTE of salaried non-sales force 88,225.6 fte -1.3% 89,367.5 fte
Number of employees with disabilities - concerns entities operating in France only 809 emp. 746 emp.
■ Number of fi xed-term contract transformed into open-ended contract 1,028 emp. 1,339 emp.
■ Number of re-hires in the Company 343 emp. 423 emp.
■ Number of entries following mergers and acquisitions 521 emp. 254 emp.
■ Number of departures due to external transfers (c) 1,138 emp. 5,307 emp.
■ Number of fi xed-term contract transformed into open-ended contract 79 emp. 200 emp.
■ Number of entries following mergers and acquisitions 199 emp. 75 emp.
■ Number of departures due to external transfers (c) 242 emp. 280 emp.
Net headcount evolution of salaried non-sales force (entries versus departures) 1,236 emp. 586 emp.
■ Number of fi xed-term contracts ended 3,186 emp. 4,309 emp.
Net headcount evolution of salaried sales force (entries versus departures) 134 emp. -246 emp.
■ Number of fi xed-term contracts ended 95 emp. 499 emp.
Turnover rate of salaried non-sales force 12.3 % -6.5% 13.1 %
■ Proportion of fi xed pay (related to wages) √ 78.0 % 72.8 %
■ Proportion of fi xed pay (related to wages) √ 83.8 % 80.2 %
■ Proportion of variable pay (related to wages) √ 16.2 % 19.8 %
■ Proportion of fi xed pay (related to wages) √ 48.2 % 39.5 %
■ Proportion of variable pay (related to wages) √ 51.8 % 60.5 %
■ Proportion of part-time salaried sales force 2.9 % 2.7 %
Absenteeism rate of salaried workforce √ 4.9 % 2.7% 4.8 %
■ Proportion of absences due to work related accidents √ 1.8 % 2.1 %
■ Proportion of absences linked to pregnancy √ 25.3 % 24.3 %
Absenteeism rate of salaried non-sales force √ 5.2 % 3.8% 5.0 %
■ Proportion of absences due to sickness √ 73.6 % 74.6 %
• Proportion of long term sick absences √ 21.7 % 21.1 %
■ Proportion of absences due to work related accidents √ 1.7 % 1.8 %
Absenteeism rate of salaried sales force √ 3.3 % -3.8% 3.4 %
■ Proportion of absences due to work related accidents √ 2.3 % 4.5 %
■ Proportion of absences linked to pregnancy √ 31.4 % 30.3 %
(b) The increase in the number of executives is mainly due to banding or level reallocation process carried out in the US in 2012, in addition to efforts for better alignment with the standardized defi nitions.
(d) As per the defi nition of compensation, it includes the individual fi xed pay, the individual variable pay, employer social contribution and collective profi t sharing (if any) and excludes equity based compensation (stocks options, performance shares, AXA Miles).
AXA’s operations and land use do not signifi cantly threaten biodiversity, nor water resource, as water consumption is limited to building usage.
emissions, paper and water consumption for the 2008-2012 period: ■ power consumption (kWh/Full Time Employee [FTE]): 20%
/FTE): 20% reduction; ■ water consumption (m3/FTE): 15% reduction; ■ paper consumption (kg/FTE): 15% reduction (vs. 2009).
(e.g. procurement, IT, marketing, HR teams) to ensure it sets ambitious 2020 reduction targets, which will steer AXA to a more sophisticated and embedded environmental strategy.
This program is based on: server refreshes, data center consolidation and virtualization; PC refreshes; and PC power management. Entities have also implemented on-site energy consumption actions and seek green certifi cates (e.g. AXA
AXA’s premises use electricity (78% of fl oor space), gas (15%
of fl oor space) and fuel/steam (7% of fl oor space). Of note, the proportion of renewable energy consumed by AXA’s premises is 36%.
emissions per FTE related to energy and business travel (air, rail and car fl eet) decreased by 4% between 2011 and 2012 and exceeded its 20% target to achieve a 34% decrease between 2008 and 2012. 57% of Group CO
These will be updated periodically. To encourage employees not to travel, the Group since 2008 has installed 50 videoconferencing rooms, which saved 60,000 trip and 64,000 tons of CO
AXA’s water consumption per FTE decreased by 2% between 2011 and 2012 and achieved a 4% decrease compared to 2008 and 2012, which is below the 15% target. The main reasons for this are a more accurate measurement process and a broader reporting scope than in 2008, both of which lead to the identifi cation of previously unreported sources of consumption. However, AXA entities have achieved a better level of management maturity and reporting quality regarding their water consumption patterns. Related initiatives include the installation of water-saving faucets at various entities. For example, AXA Business Services India installed water level controllers for the overhead tanks to stop overfl ow. The entity also recycles rainwater.
decrease for marketing and distribution paper consumption between 2009 and 2012, hence exceeding its 15% target.
A signifi cant number of entities have implemented a printing policy to help reduce offi ce paper consumption which includes reducing the number of printers, and installing an employee badging system to collect all printed documents. AXA is also working on increasing the volume of paper originating from recycled sources or sustainably managed forests. In 2011, AXA
AXA’s unsorted waste has positively decreased by 13% and sorted paper for recycling increased by 14% between 2011 and 2012. This refl ects that a signifi cant number of entities are sorting their waste (e.g. AXA UK, AXA Winterthur, Affi n
GI Berhad, AXA France, etc.). Ink cartridges are also being recycled by entities, where recycling has increased from 48% to 51%. Indeed, in 2012, AXA’s IT business unit, AXA Technology
Services, for which electronic waste is of particular relevance, strives to ensure compliance with the Waste Electronic and
AXA over achieved its objectives on carbon emissions and paper consumption, where AXA was more self-reliant.
Numerous offers with environmental added-value have been developed by various AXA entities in the P&C business segment: ■ i n the retail product line: m otor insurance policies/ products encourage low CO
AXA Assistance has, for example, launched a “community platform” application called “Plug and move” for electric vehicles, which offers itinerary services, geo-localization and information on recharging stations for electric vehicles; ■ i n the Commercial product line: • the Global Business Line P&C has set a 2011-2015 target to achieve 100M€ of New Business from at least 3 “green”
AXA over the past year has been particularly active in the area of research and education about climate-related risks: ■ AXA/IPSOS survey on individual perception of climate risks published in October 2012: a survey that aims to understand how individuals perceive climate risks; ■ AXA Paper on climate risks published in October 2012: an overview of climate risks and their potential evolution, compiling current scientifi c understandings of climate change; ■ h igh-level expert 4th of October 2012 conference organised by AXA, where the Group CEO, Henri de Castries, opened the event: Climate change: fears and expectations of the general public. What collective answers?; ■ «Where the rain falls» program and reports in partnership with CARE International: an international research project
such as fuel tanks for backup electricity generators, or major air conditioning systems. In 2012, the Group reported 46 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 2012, 42 sites were reported to have some form of environmental certifi cation.
emissions resulting from onsite power consumption and business travel (airplane, train, AXA vehicle fl eet) per person T. eq CO
√ KPI: Offi ce paper consumption per person kg/FTE 31 28
(b) Indicator reviewed by PricewaterhouseCoopers Audit which do not indicate any inconsistency.
(c) Includes electricity, natural gas, fuel, steam and covers 93,261 FTEs.
(d) This data has been collected from 92,455 FTEs. In 2012, entities business travel per employee remained stable compared to 2011.
(g) The AXA vehicle fl eet covers 91,775 FTEs. Performance in 2012 remains stable.
(h) Does not include company cars, to avoid double counting with the AXA vehicle fl eet data.
(i) This data has been collected from 85,703 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).
(k) The Group had 102.000.000 customers in 2012 and 101.000.000 in 2011.
(l) Unsorted wasted covers 72,393 FTE, which is low as many entities are currently unable to monitor this waste fl ow.
Protecting its clients from risks and unexpected events is at the core of AXA’s purpose. This is why AXA is committed to use its skills, resources and expertise to build a better understanding of the risks faced by individuals and society at large.
AXA’s products – general insurance, savings and associated services – do not pose direct health and safety concerns for our customers. On the contrary, through our products, we encourage and reward healthy and environmentally responsible behavior, as well as help reduce social exclusion.
Information” section above as well as on www.axa.com in more detail.
AXA focuses on microinsurance projects that address social exclusion while being breakeven in the long term, by enabling vulnerable segments of the population to access insurance services. Current initiatives include: ■ France: AXA, in partnership with the Association pour le Droit
à l’Initiative Economique (which helps people excluded from the usual circuits set up their own business) and a French mutual insurer, MACIF, offers since 2007 basic covers sold at cost; ■ India: AXA microinsurance products (Personal
Leveraging AXA IM’s multi-expert model, AXA IM embeds global Environmental, Social and Governance (ESG) research across all asset classes and provides investors the opportunity to select the level of ESG integration that best fi ts their needs and objectives. To do so, AXA IM has built a global ESG
Responsible Investment (UN PRI) signatories since 2007 and 2009 respectively. AllianceBernstein also signed up to the UN
In 2012 the RIC developed and approved the Group’s fi rst RI
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.
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 €11 billion in 2012 . The buyers are required to sign a specifi c Procurement code of ethics in addition to the Group
I Attestation of completeness and limited assurance report of one of the Statutory Auditors on selected social, environmental and societal information Year ended December 31, 2012
“Information”), prepared in accordance with the reporting framework used by the AXA Group (the “Reporting Framework”) and available at the Group Corporate Responsibility Department.
Our independence is defi ned by regulatory requirements, the profession’s Code of Ethics as well as by the provisions set forth in
Based on the work performed, we attest the completeness of the required Information in the management report.
2. Limited assurance report on a selection of consolidated social and environmental information and designated by (√ )
This is a free translation into English of the Statutory Auditor’s review report issued in the French language and is provided solely for the convenience of English speaking readers. The review report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
• performed test of details, on a sample basis, to verify the calculations performed and reconcile the data used with supporting documentation.
Mexico, AXA Ukrainia, AXA Assistance and AXA Corporate Solutions France; ■ for social information: AXA UK, AXA Life Japan, AXA Direct Japan, ABS India, AXA Tech Shared Services India, AXA Bank Belgium,
(1) This information include: number of AXA employees on site, number of AXA non-salaried permanent AXA staff on site, usable occupied area, usable vacant area, total of electricity consumption, total of power consumption, total of power consumption per person, professional distances covered by train and by plane, professional distances covered by all AXA’s vehicles fl eet (classifi cation by CO
APPENDICES A APPENDIX VIII BOARD OF DIRECTORS’ REPORT - CORRESPONDENCE TABLE
Sections 1. Business and trends/Earnings/Financial position and key performance indicators 20 to 81 and 346 to 372 2. Use of fi nancial instruments by the Company when relevant for assessing its assets and liabilities, fi nancial position, and profi ts and losses 3. Description of major risk factors and uncertainties 140 to 174 4. Acquisition of signifi cant equity interests in companies headquartered in France 348 5. Events subsequent to fi scal year end/Outlook 25; 78; 87 and 320 6. Dividend distributions over the last three years 5 7. Information on market and liquidity risks (interest rate, exchange rate and stock price fl uctuation risk) 82 to 87 and 143 to 155 8. Purchase and sale of the Company’s own shares 131 10. Transactions involving Company stock completed by corporate offi cers 126 11. Directorships and positions held by corporate offi cers of the Company 94 to 98 12. Relevant provisions in the event of a public takeover bid on the Company 326 15. Adjustment of the rights of holders of securities with a claim to the capital of the Company n/a 16. Social and environmental information 374 to 391 17. Research and development activities n/a 18. Terms of payment 348
Exhibits 19. Table of the capital increase delegations 343 to 345 20. Table of the Company’s fi nancial results over the last fi ve years 352 21. Chairman of the Board of Directors’ Report 330 to 336
Statement made by the person responsible for the Annual Financial Report 342
Report of the Statutory Auditors on the fi nancial statements of the Company-parent only 371 to 372
Report of the Chairman of the Board of Directors on the conditions of preparation and organization of the Board’s work and on internal control procedures 330 to 336
Report of the Statutory Auditors on the Report of the Chairman of the Board of Directors 337 to 338