The bank aims to meet all regulatory capital obligations and to remain suffi ciently capitalized in the light of AXA internal capital model.
Insurance risks for both Life & Savings and Property & Casualty businesses are covered through 4 major processes, defi ned at
Group’s peak exposures thereby protecting its solvency by reducing volatility and to mitigate risk within the Group to benefi t from diversifi cation; ■ reviewing technical reserves; ■ monitoring emerging risks to share expertise within the underwriting and risk communities.
In each Life & Savings subsidiary, the AXA Group has set up a validation framework which notably relies on the results of the results of the economic capital calculation of AXA internal model to ensure that new products undergo a thorough approval process before they are put to market. This harmonized approach facilitates the sharing of product innovation across the Group.
In Property & Casualty , methods are adapted to the underwriting of risks, while maintaining the principle of local decision-making based on a documented approval procedure and using the output of the internal model. The aim is twofold: ■ for pre-launch business, the aim is to ensure that new risks underwritten by the Group have been scrutinized before proposing them to customers; ■ for post-launch business, appropriate profi tability and risks control are due to check the business remains in line with the
Group regularly monitors its exposure to these risks (mortality, longevity, morbidity…) and uses the results of this work to optimize its product design and its reinsurance coverage. These exposure analyses are supported by expert risk models in Life
For the Property & Casualty and Life & Savings operations, reinsurance programs are set up as follows: ■ risks are modeled through in-depth actuarial analyses conducted on each portfolio and protected with reinsurance cover in adequacy with the risk appetite limits set at Group level ; ■ specifi cally for natural catastrophe modelling, via the Group internal model, GRM uses several external models for assessing the risk associated with the main natural perils
(storms, fl oods, earthquake. …). Major Natural Catastrophes perils are modeled to a very large extent within the Internal
Model of AXA Group: up to 96% of AXA’s exposure to earthquakes, windstorms and Floods are covered by the internal model. From a modeling perspective, climate risks borne by the AXA Group account for 16% of its P&C risks based on a 200 year VaR measure.
More broadly, climate-related risks may be classifi ed as follows: ■ physical risks: direct impacts caused by weather-related events, such as fl oods and storms. These risks are described above.
■ liability risks: risks that could potentially arise from claims by parties who have allegedly suffered losses from climate change, and who seek to recover these losses from third parties who they believe may have been responsible (or are otherwise liable) for these losses. This is considered as an emerging risk at this stage given the paucity of relevant judicial precedent and the many open questions surrounding potential liability including the applicable duty of care, standards of proof and causality.
Overall, centralization and harmonization of reinsurance purchase is based on the same procedures for both the Life
Global P&C can place a variable part of the local treaties on the domestic reinsurance market. The remaining share is retained and and mitigated within AXA Global P&C through the pools and the remaining share externally ceded to reinsurers.
As opposed to the other internal pools where the risk is retained within AXA Global P&C, 95% of the Property Pool year-end financial result net of external reinsurance protections is retroceded back to local entities.
Casualty claims payable do not use a single method but a selection of approaches such as: ■ methods based on the development of claims (paid or incurred) using triangulation methods (e.g. chain ladder and link ratio) for which past experience is applied to each loss occurrence or underwriting year, in order to make reserves projections until their estimated fi nal development; ■ methods based on claims ratios (such as the ultimate claims ratio); ■ hybrid methods combining internal and exogenous data; ■ methods based on frequency and severity estimates.
• derivatives may be used to hedge the risk of a fall (fl oor) or a rise (cap) in interest rates,
AXA has defined a framework to identify and measure its operational risks that may arise from a failure in its organization, systems and resources or from external events. Ensuring an adequate mitigation of these risks across the Group is a key pillar of the Risk Management functions.
The implementation of the o perational r isk framework is not limited to insurance activities. It encompasses all AXA entities, including insurance companies, banking activities, AXA asset managers and internal service providers consistent with AXA
Emerging r isks are risks which may develop or which already exist and are continuously evolving. Emerging risks are marked by a high degree of uncertainty; as some of them will even never emerge.
AXA has established processes to qualify and quantify emerging risks which could develop over-time and become signifi cant.
The emerging risk framework encompasses a network of circa 50 people within AXA Group (based in insurance, bank, asset management and supporting entities such as AXA Technology
Emerging r isks surveillance is organized through a detection process including watch on scientific publications, court decisions, etc. Risks are monitored and classifi ed within a risk mapping constituted of six sub-groups (regulatory & legal, environmental, socio & political, economic & fi nancial, medical and technological). After prioritization of the monitored risks or after a warning from an entity, a working group is launched on a yearly basis by GRM to review a specifi c risk and its potential impact in terms of insurance.
By seeking to develop new solutions, acting as an advisor on risk management and actively contributing to the overall debate about the issues involved, along with other major market players,
Given the nature of strategic risks, there is no capital charge assessment but a strong strategic risk management framework to anticipate and mitigate these risks.
I Governance of i nvestment strategy and asset & liability management (ALM)
Group-wide community of local insurance companies CIOs, the central Investment & ALM Department and reports to the
In order to effi ciently coordinate local and global investment processes, decisions within the investment community are taken by two main governance bodies: ■ the Group Investment Committee which is co-chaired by the Group Deputy CEO and the CEO of AXA France. This committee defines investment strategies, steers tactical asset allocation, evaluates new investment opportunities and monitors the Group’s investment performance; ■ the Asset Liability Management Supervisory Committee for which the Group Investment and ALM Management
At an e ntity level, each i nsurance company has a l ocal Investment and ALM c ommittee whose terms of reference are approved by the local Executive c ommittees.
Approval Process (IAP). The IAP ensures key characteristics of the investment are analysed, such as risk and return expectations, experience and expertise of the investment management teams, as well as accounting, tax, legal and reputational issues.
Local IAP are also run for investments in new asset classes for local entities under the same principles.
Products involving hedging programs based on derivative instruments are designed with the support of dedicated teams at
The market risks arising from derivatives are regularly monitored taking into account the Group’s various constraints (Risk appetite, Internal model…). Such monitoring is designed to ensure market risks, coming either from cash or derivative instruments, are properly controlled and remain within approved limits.
Group Risk Management has established rules on authorized counterparties, minimum requirements regarding collateral, and counterparty exposure limits.
The operational risk related to derivatives is measured and managed in the context of AXA’s global operational risk framework. Furthermore, execution and management of derivatives are centralized within dedicated teams, reducing
CONSOLIDATED FINANCIAL STATEMENTS 4 4.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 198 4.2 CONSOLIDATED STATEMENT OF INCOME 200 4.3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 201 4.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 202 4.5 CONSOLIDATED STATEMENT OF CASH FLOWS 206 4.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 208
NOTE 29 Contingent assets and liabilities and unrecognized contractual commitments 333
6 Value of purchased business in force (b) 2,364 2,297 7 Deferred acquisition costs and equivalent 24,028 21,119 8 Other intangible assets 3,277 3,149
Tangible assets 1,432 1,322 14 Deferred policyholders’ participation assets 88 19 Deferred tax assets 2,083 1,406
Receivables arising from direct insurance and inward reinsurance operations 16,566 14,688
Other receivables 14,263 13,501 5 Assets held for sale (d) 2,988 1,181 12 Cash and cash equivalents 26,275 22,048
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders (c) 152,079 142,042
Liabilities arising from investment contracts with discretionary participating features 33,142 33,669
14 LIABILITIES ARISING FROM INSURANCE AND INVESTMENT CONTRACTS 675,127 635,656 15 Liabilities arising from banking activities (b) 32,639 37,402 16 Provisions for risks and charges 12,659 12,656 19 Deferred tax liabilities 5,156 5,741
Minority interests of consolidated investment funds and puttable instruments held by minority interest holders 10,525 10,241
Other debt instruments issued, notes and bank overdrafts (b) 3,692 1,993
Collateral debts relating to investments under a lending agreement or equivalent 25,635 21,331
Fees and charges relating to investment contracts with no participating features 371 327
Amortization of the value of purchased business in force (156) (228)
Income from operating activities before tax 8,009 7,710 10 Income (net of impairment) from investment accounted for using the equity method 214 (73)
(b) Net of investment management costs and including gains/losses from derivatives hedging Variable Annuities.
(d) Includes realized and unrealized forex gains and losses relating to investments at cost and at fair value through shareholders’ equity.
(e) Change in fair value of assets with fi nancial risk borne by policyholders is offset by a balancing entry in technical charges relating to insurance activities.
(g) Includes net balance of income and expenses related to derivatives on fi nancing debt (however excludes change in fair value of these derivatives).
Items that will not be reclassifi ed subsequently to Profi t or Loss (62) (1,239)
(a) Mainly undated subordinated debts (TSS, TSDI), and equity components of compounded fi nancial instruments (e.g convertible bonds) (see Note 13.1.1).
Equity component of compound fi nancial instruments - - - - -
Employee benefi ts actuarial gains and losses - - - - -
(b) Including changes in ownership interest in consolidated subsidiaries without losing control.
Change in goodwill impairment and other intangible assets impairment (c) (0) 19
Net increase / (write back) in impairment on investments, tangible and other intangible assets 725 619
Adjustment of non cash balances included in the operating income before tax 9,415 6,418
Adjustment for reclassifi cation to investing or fi nancing activities (1,444) 287
Investment income & expense recorded in profi t or loss during the period (f) (14,318) (14,143)
Net cash impact of transactions with cash impact not included in the operating income before tax 20,043 16,522
Purchase of subsidiaries and affi liated companies, net of cash acquired (223) (482)
Disposal of subsidiaries and affi liated companies, net of cash ceded 295 40
Purchases of equity instruments and non-consolidated investment funds (g) (h) (30,625) (23,956)
Purchases of investment properties held direct or not (g) (1,837) (2,089)
Purchases and/or issues of loans and other assets (h) (i) (43,490) (29,319)
Net cash related to purchases and issuance of investments (g) (h) (i) (148,725) (108,920)
Net cash related to sales and purchases of tangible and intangible assets (422) (342)
Increase in collateral payable / Decrease in collateral receivable 139,605 32,634
Decrease in collateral payable / Increase in collateral receivable (136,669) (31,324)
Net cash impact of assets lending / borrowing collateral receivables and payables 2,936 1,310
Acquisition / sale of interests in subsidiaries without change in control (132) (55)
Impact of change in consolidation method and of reclassifi cations as held for sale (l) (72) (24)
(b) Includes premiums/discounts capitalization and relating amortization, amortization of investment and owner occupied properties (held directly).
(j) Includes net cash impact of interest margin relating to hedging derivatives on fi nancing debt.
In 2014, the amount includes the assets and liabilities of the Mandatory Provident fund (MPF) and Occupational Retirement Schemes Ordinance (ORSO) businesses in Hong Kong that were classifi ed as held for sale.
The list of the main entities included in the scope of the AXA’s consolidated fi nancial statements is provided in Note 2 of the notes to the consolidated fi nancial statements.
The consolidated financial statements are prepared in compliance with IFRS standards and interpretations of the IFRS
Union before the balance sheet date with a compulsory date of January 1, 2015. The Group does not use the “carve out”
option allowing it not to apply all hedge accounting principles required by IAS 39.
The application of the amendments below as of January 1, 2015 had no material impact on the Group’s consolidated fi nancial statements.
November 21, 2013 July 1, 2014 Clarification of requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In addition, practical expedient of valuation is allowed if the amount of the contributions is independent of the number of years of service.
IFRS 9 – Financial Instruments, published on July 24, 2014, has replaced IAS 39. The new standard addresses the following items related to fi nancial instruments: ■ classification and measurement: IFRS 9 uses a single approach to determine whether a fi nancial asset is measured at amortized cost, fair value through Other Comprehensive
profi t or loss upon sale. Assets not meeting either of these categories are measured at fair value through profi t or loss.
Additionally, at initial recognition, an entity can use the option to designate a fi nancial asset at fair value through profi t or loss if doing so eliminates or signifi cantly reduces an accounting mismatch. For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in
The published effective date of IFRS 9 is January 1, 2018. The standard has not yet been endorsed by the European Union. On
December 9, 2015, the IASB published proposed amendments to the existing insurance contract s tandard, IFRS 4. The proposals address concerns related to the different effective dates of IFRS 9 on fi nancial instruments and the effective date of the future new Insurance Contract Standard (which will replace IFRS 4 and have a later effective date than IFRS 9). If the IASB goes forth with the changes in the proposals, entities would have two options to address the related concerns: (1) the overlay approach: an option for a company that issues insurance contracts to remove from profi t or loss the incremental volatility in profi t or loss caused by changes in the classifi cation of fi nancial assets upon application of IFRS 9 and (2) the deferral approach: an optional temporary exemption from applying IFRS 9 that would be available to companies whose predominant activity is to issue insurance contracts (would be available until the new
IFRS 15 – Revenue from Contracts with Customers, published on May 28, 2014 and amended on September 11, 2015 provides a principles-based approach for revenue recognition and introduces the concept of recognizing revenue for obligations as they are satisfi ed. The standard will apply to all contracts with customers, except for: insurance contracts, lease contracts, fi nancial instruments and certain contractual rights or obligations, non-monetary exchanges between entities in the same line of business to facilitate sales to customers and certain guarantees.
January 1, 2018. The standard has not been endorsed by the
European Union. The potential impact of the new standard on the Group’s consolidated fi nancial statements is being assessed.
IFRS 16 model a lessee is required to recognize (i) assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and (ii) depreciation of lease assets separately from interest on lease liabilities in the income statement. Lessors will continue to classify and account for their leases as (i) operating leases with recognition of the underlying assets; or (ii) fi nance leases by derecognizing the underlying asset and recognition of a net investment, similar to the current IAS 17 requirements. IFRS 16 is effective for annual periods beginning on or after January 1, 2019. The standard has not yet been endorsed by the European Union. The potential impact of the new standard on the Group’s consolidated fi nancial statements is being assessed.
IAS 12 - Income Taxes January 19, 2016 January 1, 2017 * Guidance on how to account for deferred tax assets related to debt instruments measured at fair value in particular for the assessment of future taxable profi t.
All amounts in the consolidated statement of fi nancial position, consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of cash fl ows, consolidated statement of changes in equity and in the notes are expressed in Euro million.
Companies in which AXA exercises signifi cant infl uence are accounted for under the equity method. Under IAS 28, signifi cant infl uence is presumed when AXA directly or indirectly holds 20%
The present value of future profi ts takes into consideration the cost of capital and is estimated using actuarial assumptions based on projections made at purchase date but also using a discount rate that includes a risk premium.
Investment contracts with no discretionary participating features do not benefi t from the exemption permitted by IFRS 4 in Phase I
To the extent that these other intangible assets can be estimated separately, they can also be measured by looking at the purchased marketing resources that will allow them to generate these future cash fl ows. The nature of the intangible assets recognized is consistent with the valuation methods used when purchasing the acquired entity.
The objective of valuation techniques is to arrive at the price at which an orderly transaction would take place between market participants (a willing buyer and a willing seller) at the measurement date. Valuation technique models include: • market approach: The consideration of recent prices and other relevant information generated by market transactions involving substantially similar assets or liabilities; • income approach: Use of discounted cash fl ow analysis, option pricing models, and other present value techniques to convert future amounts to a single current ( i.e.
discounted) amount; • cost approach: The consideration of amounts that would currently be required to construct or replace the service capacity of an asset.
Valuation techniques are subjective in nature and signifi cant judgment is involved in establishing fair values. They include recent arm’s length transactions between knowledgeable willing parties on similar assets if available and representative of fair value and involve various assumptions regarding the underlying price, yield curve, correlations, volatility, default rates and other factors. Unlisted equity instruments are based on cross checks using different methodologies such as discounted cash fl ows techniques, price earning ratios multiples, adjusted net asset values, taking into account recent transactions on instruments which are substantially the same if concluded at arm’s length between knowledgeable willing parties, if any. The use of valuation techniques and assumptions could produce different estimates of fair value. However, valuations are determined using generally accepted models (discounted cash fl ows, Black &
The dislocation of certain markets may be evidenced by various factors, such as very large widening of bid ask spreads which may be helpful indicators in understanding whether market participants are willing to transact, wide dispersion in the prices of the small number of current transactions, varying prices over time or among market participants, inexistence of secondary markets, disappearance of primary markets, closing down of dedicated desks in fi nancial institutions, distress and forced transactions motivated by strong needs of liquidity or other
diffi cult fi nancial conditions implying the necessity to dispose of assets immediately with insuffi cient time to market the assets to be sold, and large bulk sales to exit such markets at all costs that may involve side arrangements (such as sellers providing fi nance for a sale to a buyer).
Financial Statements refl ects operating business segments; it is based on fi ve business lines: Life & Savings, Property & Casualty,
International Insurance, Asset Management and Banking. An additional “Holdings” segment includes all non-operational activities.
AXA performs an impairment test of goodwill at least annually based on cash generating units, using a multi-criteria analysis with parameters such as the value of assets, future operating profi ts and market share, in order to determine any signifi cant adverse changes. It also considers the interdependence of transactions within sub-groups. Within each cash generating unit, a comparison is made between net book value and the recoverable value (equal to the higher of fair value less costs to sell and value in use). Value in use consists of the net assets and expected future earnings from existing and new business, taking into account the cash generating units’ future cash fl ows.
(DOC) (see Note 7) but limited to incremental costs directly attributable to the provision of investment management services.
Group for economical reasons but not eligible for hedge accounting as defi ned by IAS 39,
■ as assets of the “Satellite Investment Portfolios”, refl ecting the strategic asset allocation based on a dynamic a sset m anagement aimed at maximizing returns.
For financial investments accounted for at amortized cost, including loans and assets classifi ed as “held to maturity” or assets designated as “Loans and receivables”, the impairment test is fi rst performed at the asset level. A more global test is then performed on groups of assets with similar risk profi le.
The Group is party to repurchase agreements and securities lending transactions under which financial assets are sold to a counterparty, subject to a simultaneous agreement to repurchase these fi nancial assets at a certain later date, at an agreed price. While substantially all of the risks and rewards of the fi nancial assets remain with the Group over the entire lifetime of the transaction, the Group does not derecognize the fi nancial assets. The proceeds of the sale are reported separately. Interest expense from repurchase and security lending transactions is accrued over the duration of the agreements.
The Group documents, at inception, the hedge relationship, as well as its Risk Management hedging objectives and strategy.
The Group holds financial investments that also include embedded derivatives. Such embedded derivatives are separately recorded and measured at fair value through profi t or loss if the impact is deemed material.
Subsidiaries held for sale remain within the scope of consolidation until the date on which the Group loses effective control. The assets and activities (assets and liabilities) concerned are measured at the lower of net carrying value and fair value net of selling costs. They are presented in separate asset and liability items on the balance sheet. The liabilities of subsidiaries
Claims reserves are based on historical claim data, current trends, actual payment patterns for all insurance business lines as well as expected changes in infl ation, regulatory environment or anything else that could impact amounts to be paid.
Germany or Switzerland. Participating business is less prevalent in the United States or in Japan.
netted against value of businesses in force or indirectly through deduction of future fees on premiums or margins.
In addition, at each balance sheet date, liability adequacy tests are performed in each consolidated entity in order to ensure the adequacy of the contract liabilities net of related DAC and
Contract specifi c risks (insurance risk, asset return risk, infl ation risk, persistency, adverse selection, etc.) directly related to the contracts are also considered.
from the liability adequacy test for any amount in excess of DPA,
In accordance with IAS 39, these contracts are accounted for using “deposit accounting”, which mainly results in not recognizing the cash flows corresponding to premiums, benefi ts and claims in the statement of income (see “Revenue recognition” paragraph below). These cash fl ows shall rather be recognized as deposits and withdrawals.
Pensions and other post-retirement benefits include the benefits payable to AXA Group employees after they retire
It should be noted that, a ll cumulative past actuarial gains and losses on all employee benefi t plans were recognized in retained earnings as of January 1, 2004, AXA Group’s transition date.
(Autorité des normes comptables). The cost of the leveraged formula plan is valued by taking into account the fi ve-year lockup period for the employees (as in the traditional plan) but adding the value of the advantage granted to the employees by enabling them to benefi t from an institutional derivatives-based pricing instead of a retail pricing.
1.19.2. Fees and revenues from investment contracts with no discretionary participating features
AXA Insurance Public Company Limited (Thailand) From Equity Method to Fulll Consolidation
Servis SA Merged with AXA Belgium SA - - 100.00 100.00
AXA Portugal Companhia de Seguros de Vida SA 95.09 94.89 95.09 94.89
Kyobo AXA General Insurance Co. Ltd. (South Korea) Relution 99.66 99.66 99.61 99.61
AXA Non Life Insurance Co. Ltd. (Japan) Disposal of shares 100.00 98.69 100.00 99.02
AXA Global Direct Seguros y Reaseguros SAU branch (Italy) 100.00 100.00 100.00 100.00
In most investment funds (particularly open-ended investment funds), minority interests are presented as liabilities under “Minority interests of consolidated investment funds”. As of December 31, 2015, minority interests in consolidated investment funds amounted to €10,525 million (€10,241 million as of December 31, 2014). Minority interests related to consolidated investment funds and real estate companies that are classifi ed in shareholder’s equity amounted to €1,194 million as of December 31, 2015
(including AXA and external share but excluding goodwill related to AXA’s holdings and before intercompany eliminations with other companies of the Group).
Excluding minority interests related to consolidated investment funds and real estate companies that are classified in shareholder’s equity, above entities represent 80% of minority interests of the Group as of December 31, 2015 (82% as of
Bharti AXA General Insurance Company Limited (India) Acquisition of shares 49.00 49.00 26.00 26.00
AXA Investment Managers Asia Holdings Private Limited 49.00 47.15 49.00 47.10
As of December 31, 2015, real estate companies accounted for using the equity method amounted to €169 million invested assets (€243 million at the end of 2014) and investment funds accounted for using the equity method amounted to €7,164 million invested assets (€4,324 million at the end of 2014), mainly in the United States, United Kingdom, Ireland,
Note 2.1). Other funds are no consolidated because they are not controlled or under signifi cant infl uence. By nature, and notably because of the power of decision usually given to the asset managers (internal or external to AXA), most of these funds are structured entities.
As investor, AXA interests in unconsolidated funds are limited to the investments held. These ones are fully recognised in the consolidated balance sheet. Depending on the nature of its
Information on these unconsolidated investment funds are provided in different sections of the Annual Report: ■ Section 1.2 “Information on the Company”: • Business overview: AXA’s total assets under management including assets managed on behalf of third parties,
(including assets managed on behalf of third parties) and revenues; ■ Section 1.3 “Activity report – Asset Management segment”; ■ Section 4.6. “Notes to the consolidated fi nancial statements”: • Note 9 - Investments with the breakdown of investments and detail on non-consolidated investment funds in
Executive Offi cer are both members of the Board of Directors.
They are assisted by a Management Committee in the day-today operational management of the Group and by an Executive
Committee to consider Group strategy. The fi nancial information relating to AXA’s business segments and holding Company activities reported to the Board of Directors twice a year is consistent with the presentation provided in the consolidated fi nancial statements
Property & Casualty, International Insurance, Asset Management and Banking. An additional “Holding companies” segment includes all non-operational activities.
Life & Savings: AXA’s Life & Savings products include a broad range of Investment and Savings products as well as Protection and Health products marketed to individual and commercial clients. The Life & Savings products offered by AXA include Term life, Whole life, Universal life, endowment, deferred annuities, immediate annuities, and other investment-based products. The
Management (including investment fund management) and related services offered by AXA Investment Managers and AB
entities, which are provided to a variety of institutional investors and individuals, including AXA’s insurance companies.
Fees and charges relating to investment contracts with no participating features 371 - - - - - - 371
Net realized gains and losses relating to investments at cost and at fair value through shareholders’equity 2,091 359 59 0 - 8 1 2,518
Net investment result excluding fi nancing expenses 16,028 2,133 290 9 (77) 109 (276) 18,218
Technical charges relating to insurance activities (62,960) (20,846) (2,646) - - - 133 (86,319)
Net result from outward reinsurance (269) (1,112) 145 - - - 356 (881)
Income from operating activities before tax 4,676 3,041 345 990 92 (650) (484) 8,009
Income (net of impairment) from investment accounted for using the equity method 164 45 1 1 - 3 - 214
Net income from operating activities before tax 4,781 3,076 336 975 82 (1,514) 0 7,735
Split between: Net consolidated income - Group share 3,808 2,132 226 482 49 (1,080) - 5,617
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (b) 12,133 (159) 31 49 - 268 3 12,325 of which change in fair value of assets with fi nancial risk borne by policyholders 9,520 - - - - - 0 9,520
Technical charges relating to insurance activities (71,182) (20,608) (2,164) - - - 512 (93,441)
Income from operating activities before tax 4,527 2,815 398 859 (43) (133) (713) 7,710
Income from investment accounted for using the equity method 120 (200) 1 1 - 5 - (73)
Split between: Net consolidated income - Group share 3,524 1,734 261 419 (49) (864) - 5,024
“Liquidity and Capital Resources” of this Annual Report: 4.1. RISK MANAGEMENT ORGANIZATION
Please refer to pages 179 to 185 of the “Quantitative and
An analysis of goodwill by cash generating unit is presented in the table below: (in Euro million)
December 31, 2015 and €14,906 million as of December 31, 2014.
(a) Property & Casualty: includes the acquisitions of Simplyh ealth (€+7 million) in United Kingdom and BRE Insurance in Poland (€+9 million).
Asset Management: includes the acquisition of Capital Fondsmaeglerselskab in Denmark by AB.
International Insurance: includes the disposal of ADHAP service at AXA Assistance.
For Life & Savings businesses, such valuation techniques include discounted cash fl ows taking into account: ■ the current shareholders’ net asset value plus future profi tability on business in force.
are industry specifi c valuation methods which are consistent with the principles of discounted earnings approaches as the value of business in force results from the projection of distributable earnings. The Group uses however both market consistent risk neutral approaches and traditional discounted cash fl ows projections. The current shareholders’ net asset value is adjusted to take into account any difference between the basis of cash flows projections used in the value of business in force calculations and IFRS; ■ the profi tability on future new business.
The value of new business is computed either on the basis of multiples of a standardized year of new business contribution (present value of projected future distributable profi ts generated from business written in a year) or on a projection of each of the expected annual future earnings when multiples are not appropriate. Major assumptions include expected growth, expenses, cost of capital, future investment margins, fi nancial market volatility, fi rst assessed on a risk free basis (basic test) and then on the basis of illustrative investment assumptions suitable for a traditional embedded value approach if the previous recoverable value is lower than the carrying amount.
For each group of units of the Property & Casualty and Asset
Management businesses (tested separately), the calculation uses cash fl ow projections based on business plans approved by management covering up to a fi ve years period and a risk adjusted discount rate. Cash fl ows beyond that period have been extrapolated using a steady growth rate and terminal value.
The results of cash fl ow projections exceed the carried amount of each related cash-generating unit or group of units. The goodwill for Ukraine, however, was fully impaired in 2014.
Life Protection distribution agreements in the country. Final consideration amounted to PLN 580 million (or €140 million (2)).
Direct b usiness segment since March 30, 2015. In accordance with IFRS 3 - Business Combinations, adjustments can be made within twelve months of the acquisition date if new information becomes available to complete the initial accounting.
transaction) of approximately €0.1 billion upon finalization, which would be accounted for in net income. AXA’s Portuguese operations affected by this proposed transaction are treated as held for sale in AXA’s Full year 2015 consolidated fi nancial statements.
As of December 31, 2015 comprehensive income amounted to €-7 million.
On September 1, 2015, AXA announced that it had completed the sale of its Mandatory Provident Fund (MPF) and Occupational
AXA recorded €0.2 billion exceptional capital gain at the closing date, which was accounted for in Net Income.
On December 2, 2015, AXA announced that it had completed the acquisition of 100% of Genworth Lifestyle Protection Insurance
This transaction is a key milestone for AXA to become a
European leader in credit and lifestyle protection, a business operated today by AXA Creditor.
AXA Creditor and Genworth LPI operations will represent a key pillar of AXA Partners, which has been launched earlier this year to develop and accelerate global partnership businesses.
The combined operations would rank #3 within the creditor insurance market in Europe, with a 9% market share (2 ), and would be a European leader in credit and lifestyle protection.
Genworth LPI is the #7 creditor insurance player in Europe (with 4% market share (2 )), providing credit and lifestyle protection insurance. The Company benefi ts from a broad distribution network based on well-established relationships with a wide range of leading fi nancial institutions. Over the past years, it has built a strong competitive advantage with its proprietary IT
This transaction will complement AXA’s credit and lifestyle protection activities presence in key mature markets such as France, Germany and Italy and will provide entry into new markets with strong fundamentals, notably the Nordics and
For the 12 months of 2015, Genworth gross written premiums amounted to €922 million.
UK GAAP. They were adjusted to fair value in the opening balance sheet and integrated as such with the Group’s fi nancial statements at year-end based on the AXA IFRS accounting policies.
Main adjustments were related to the technical reserves that have been calculated in accordance with AXA IFRS principles of aggregation, based on homogeneous set of contracts.
(2) Source: Finaccord Creditor Insurance in Europe PartnerBASE and market model (2014). Market shares and rankings based on the weighted share of non-captive partnerships across the creditor insurance market related to consumer fi nance and credit cards in Europe.
The opening balance sheet no longer contains deferred acquisition costs relating to the Life & Savings business, since they relate to future profi ts that are embedded in the Value of
In accordance with IFRS 3- Business Combinations, adjustments can be made within twelve months of the acquisition date if new information becomes available to complete the initial accounting, especially for the technical items (insurance liabilities, VBI) and real estate 5.3.6 Hungarian banking operations disposal
AXA Bank Hungary is a branch of AXA Bank Europe, managing a credit portfolio put in run-off in 2011, as well as daily banking operations. As this transaction is expected to result in an exceptional loss of €80 million accounted for in net income, a provision was booked in the Group consolidated fi nancial statements as of December 31, 2015.
The major classes of assets and liabilities of this operation classifi ed as held for sale included the following as of December 31, 2015: (in Euro million) December 31, 2015 (a)
Deferred acquisition costs relating to Life & Savings (a) 22,417 19,888
Deferred acquisition costs and equivalent relating to Life & Savings 22,093 19,299
7.2. ROLLFORWARD OF DEFERRED ACQUISITION COSTS AND EQUIVALENT – LIFE & SAVINGS
Changes in deferred acquisition costs and equivalent for Life & Savings were as follows: (in Euro million)
Life & Savings deferred acquisition costs and equivalent net carrying value as of January 1 18,174 1,125 16,634 943
DAC and similar costs capitalization for the period 2,178 133 1,871 202
Life & Savings deferred acquisition costs and equivalent net carrying value as of December 31 20,870 1,223 18,174 1,125
Unearned revenues and unearned fees reserves 2,339 727 2,356 681 of which shadow unearned revenues reserves (474) - (468) -
Other intangible assets represented €3,277 million net value as of December 31, 2015 and mainly included: (in Euro million)
Intangible assets recognized in business combinations and other business operations 3,394 942 24 2,427 2,299
8.2. BREAKDOWN OF INTANGIBLE ASSETS RECOGNIZED IN BUSINESS COMBINATIONS AND OTHER BUSINESS OPERATIONS
(a) In 2015, includes €95 million from the 10 years distribution agreement signed with mBank in Poland, €64 million signed by Singapore with SingPost and €24 million from the acquisiton of Simplyh ealth in the UK.
In 2014, includes €23 million in Greece due to the extension of the distribution agreement with Alpha Bank to Emporiki bank and €21 million on acquisition of Capital Fondsmaeglerselskab in Denmark by AB.
Other assets designated as at fair value through profi t or loss, held by consolidated investment funds 11,394 11,394 1.59%
Assets backing contracts where the fi nancial risk is borne by policyholders 194,601 194,601 27.21%
Investments (excluding those backing contracts where the fi nancial risk is borne by policyholders) 530,197 520,681 72.79%
Debt instruments (at cost) that are not quoted in an active market (c) 5,156 4,939 0.73%
Breakdown of the carrying value and fair value of investment in real estate properties at amortized cost, excluding the impact of all derivatives: (in Euro million)
Debt instruments (at cost) that are not quoted in an active market 5,825 6,040 5,825 227 12 4,991 5,208 4,991 219 2
Equity instruments available for sale 13,473 16,676 16,676 3,360 158 11,867 15,135 15,135 3,357 90
Non-consolidated investment funds available for sale 6,533 7,447 7,447 951 37 5,969 6,934 6,934 986 21
Debt instruments (at cost) that are not quoted in an active market 1,192 1,192 1,192 0 - 1,952 1,952 1,952 - -
Equity instruments available for sale 1,144 1,486 1,486 343 0 1,103 1,381 1,381 280 1
Non-consolidated investment funds available for sale 118 125 125 9 2 11 25 25 14 -
Debt instruments (at cost) that are not quoted in an active market 7,017 7,232 7,017 227 12 6,943 7,160 6,943 219 2
See also Note 9.9.1 “Breakdown of fi nancial assets subject to impairment”.
With the same assessment, December 31, 2014 amounts would have been €220,739 million, €10,689 million and €189,547 million for respectively government and government like debt instruments, other debt instruments issued by government related and corporate debt instruments.
Equity instruments as of December 31, 2015 8,832 8,412 569 1,619 3,157 981 1,314 2,942 27,827
Equity instruments as of December 31, 2014 7,246 6,753 970 1,395 2,526 988 1,352 3,844 25,076 9.5. CONTRACTUAL MATURITIES AND EXPOSURE TO INTEREST RATE RISK
Carrying value of associated liabilities (a) 1,358 28,186 181 2,276 25,794 1,388
Non-consolidated investment funds mainly holding equity securities 2,406 418 2,825 2,332 344 2,675
Non-consolidated investment funds mainly holding debt instruments 5,145 225 5,370 4,336 256 4,591
Derivatives related to non-consolidated investment funds (83) - (83) (182) - (182)
The amortized cost of non-consolidated investment funds available for sale was as below: ■ funds mainly holding equity securities: €939 million in 2015 compared to €909 million in 2014; ■ funds mainly holding debt instruments: €2,363 million in 2015 compared to €1,960 million in 2014; ■ other funds: €3,350 million in 2015 compared to €3,111 million in 2014.
Debt instruments (at cost) that are not quoted in an active market (c) 7,019 (0) 7,019 1 7,020 6,953 - 6,953 (61) 6,891
Equity instruments available for sale 16,761 (2,144) 14,617 3,550 18,167 15,093 (2,123) 12,971 3,457 16,428
(b) Asset value including impairment, discounts/premiums and accrued interests, but before revaluation to fair value of assets available for sale.
Impairment - Non-consolidated investment funds 1,029 49 (100) - (29) 950
The breakdown by valuation method of investments recognized at fair value excluding derivatives (detailed in Note 20.3 and Note 20.5)
Financial investments and loans available for sale 278,915 122,846 3,861 405,622 268,075 125,832 3,456 397,363
Investments in real estate properties - 1,107 - 1,107 - 1,023 - 1,023
Other assets held by consolidated investment funds designated as at fair value through profi t or loss 2,006 6,266 3,289 11,561 1,776 5,778 1,569 9,123
■ used by the Group in the limited cases of application of mark to model valuations.
Since the 2008 fi nancial crisis, a signifi cant volatility related to corporate spreads has been observed leading to transfers between level 1 and 2 with both yield and bid ask spreads widening and narrowing from one closing to another. Since 2010, this volatility has also been experienced on European government bonds with yields and bid ask spreads which widened signifi cantly leading to transfers from level 1 to level 2.
In 2015, Italian government bonds were reclassifi ed from level 2 to level 1 consistent with sustained improved market liquidity for those instruments. At December 31, 2015 Irish, Portuguese and Spanish sovereign bonds were classifi ed in level 2. For these sovereign bonds classifi ed in level 2, trends observed in previous years were confi rmed in 2015. These market indicators will continue to be monitored to assess the sustainability of those improvements. Therefore, the classifi cation as at December 31, 2015 was maintained compared to December 31, 2014.
(€21,634 million Italian government bonds) and €13,841 million transferred from Level 1 to Level 2 primarily corporate bonds.
signifi cant adjustments are performed or unobservable data are used. Private equity funds of funds are measured on the basis of the latest net asset values of funds provided to the Group.
Level 3 assets increased to €13.9 billion, representing 2.9% of the total assets at fair value (2.4% in 2014 i.e. €10.9 billion).
Main movements related to Level 3 assets to be noted were the following: ■ €+2.8 billion of new investments; ■ €+0.6 billion of change in unrealized gains and losses; ■ €+0.4 billion of foreign exchange fl uctuation impact; ■ €-0.2 billion reclassified in Level 2 primarily due to the availability of more observable data; ■ €-0.8 billion of asset sales, redemptions and settlements mainly of debt instruments, equity securities and non-conso investment funds accounted as available for sale and of equity securities, non-conso investment funds, other assets held by controlled investment funds and debt instruments accounted as fair value through P&L.
TOTAL FAIR VALUE OF INVESTED ASSETS AT AMORTIZED COST 451 56,006 39,387 95,844 47 51,281 38,983 90,311
9.11. INVESTMENTS BACKING CONTRACTS WHERE THE FINANCIAL RISK IS BORNE BY POLICYHOLDERS
Kyobo AXA Investment Managers Company Limited 31 - 2 1 (2) 33
(b) AXA Mansard Insurance plc acquisition amounts include minority interests for €18 million.
On December 8, 2014, AXA announced it had completed the acquisition of 100% of Assur Africa Holdings which held a 77% stake in the composite insurance company Mansard
On December 1, 2015, AXA and Bharti Enterprises announced that AXA had increased its stake from 26% to 49% in its life and general insurance joint-ventures in India, Bharti AXA Life
ICBC-AXA Assurance Co Ltd (previously AXA Minmetals Assurance Co Ltd) 147 - 4 30 126 307
Kyobo AXA Investment Managers Company Limited 28 - 2 3 (1) 31
(b) Reso Garantia is accounted for using the equity method in the Group consolidated fi nancial statements on the basis of a closing at September 30. Given signifi cant movements in the Russian ruble exchange rate between September 30, 2014 and December 31, 2014, the balance sheet used as a basis of the equity method has been translated using December 31 exchange rate.
(c) The contribution to the net income of the period includes the impairment (€-251 million) of part of the value of the associate due to deteriorated economic perspectives in Russia.
(d) AXA Tian Ping has been accounted for using the equity method since February 20, 2014.
Financial information for main joint ventures is as follows (including AXA and external share but excluding goodwill related to AXA’s investment): (in Euro million)
As of December 31, 2015, the Group share of interest in ICBC-AXA Assurance Co Ltd and AXA Tian Ping were respectively 27.5%
(a) AXA Tian Ping has been accounted for using the equity method since February 20, 2014.
Receivables from brokers and general agents 16 (8) 8 8 19 (9) 11 11
Receivables arising from outward reinsurance operations 953 (75) 878 878 930 (60) 871 871
(b) including €424 million deposits in the central banks in 2015 and €279 million in 2014.
The table below reconciles assets and liabilities cash and cash equivalent balances with the statement of consolidated cash fl ows: (in Euro million) December 31, 2015 December 31, 2014
Holdings and repayment of debt; ■ France Life & Savings (€+565 million) as a result of increase in other investment funds, and also the increase of pure cash mainly driven by BNP securities; ■ Germany Life (€+648 million) relates to the investments in very short term government bonds and corporate bonds; ■ the Company (€-214 million) mainly due to the redemption of €1,000 million senior debt in January 2015 partly offset by dividends received from subsidiaries net of the dividend paid to shareholders and carry back receivable cash payment.
Net cash used in investing activities was €-8,329 million in 2014, mainly refl ecting: ■ €-8,855 million of net cash used in purchases and sales of fi nancial invested assets; ■ €+1,310 million of net cash impact of assets lending /
Net cash relating to fi nancing activities totalled €-5,808 million in 2015 mainly driven by: ■ fi nancing debt with a repayment of €1,165 million subordinated debt in 2015 (€1,000 million by AXA SA and €165 million by
Net cash relating to fi nancing activities totalled €-4,128 million in 2014 mainly driven by: ■ undated subordinated debt issued for of €+997 million (net of fees) and an early redemption call of €-35 million; ■ fi nancing debt with a repayment of €2,122 million subordinated debt maturing in 2014 and €809 million of Euro senior Note due on 2014 and an issuance of £750 million (€963 million as of December 31, 2014 foreign exchange rate) subordinated debt due 2054; ■ dividends payments of €-2,235 million.
During 2015, the following transactions had an impact on AXA’s share capital and capital in excess of nominal value: ■ a capital increase of €668 million including the employee share offering (December 2015) of 19 million shares for €375 million net of related charges; ■ a capital decrease of 51 million shares for €1,149 million in order to eliminate the dilutive effect of share-based compensation schemes (AXA SA’s stocks options and performance shares plans); ■ share-based payments for €30 million.
Undated notes - 375 MUS$, variables rates 375 344 375 309
equity included net accumulated fi nancial expenses of: ■ €-3,021 million as of December 31, 2015; ■ €-2,716 million as of December 31, 2014.
During 2014, the following transactions had an impact on AXA’s share capital and capital in excess of nominal value: ■ employee share offering (December 2014) of 19 million shares for €313 million net of related charges; ■ stock-option exercise of 4 million shares for €53 million; ■ share-based payments for €35 million.
On October 29, 2014, AXA launched a liability management exercise and offered to eligible holders of four series of existing notes the possibility to exchange them for new undated deeply subordinated resettable notes. This transaction is part of AXA’s active management of its refi nancing program aiming to ensure adequate visibility and optimum terms for the renewal of its outstanding debt maturing in the coming years.
Unrealized gains and losses (net of tax) - Equity accounted companies (d) 210 140
UNREALIZED GAINS AND LOSSES (NET OF TAX) – 100% - TOTAL 13,352 15,469
(b) Unrealized gains and losses on total available for sale invested assets including loans.
(c) Net of shadow accounting on unearned revenues and fees reserves and held for sale activities.
(d) Including unrealized gains and losses on assets held for sale operations.
Less unrealized gains and losses attributable to: Shadow accounting on policyholders’ participation and other obligations (12,255) (7,090) (2,982)
Shadow accounting on Value of purchased Business In force - - (81)
Unrealized gains and losses (net of tax) - Equity accounted companies 31 - -
UNREALIZED GAINS AND LOSSES (NET OF TAX) – 100% - TOTAL 2,842 824 510
Minority interests’ share in unrealized gains and losses (c) (7) 0 -
Unrealized gains and losses (net of tax) 100%, opening 15,469 8,426
The negative impact in equity of actuarial losses arising from employee defi ned benefi ts obligation was mainly explained by: ■ the effect of the decrease in the discount rates in Switzerland; ■ the underperformance of assets covering employees’ Defi ned
■ the increase in the infl ation rate and pension growth rates
AXA IM (€+214 million) and Switzerland (€+185 million), partly offset by Russia (€-223 million), Japan (€-76 million), and the
The total impact of employee benefits actuarial gains and losses amounted to €-1,239 million (of which group share was €-1,230 million and minority interests was €-8 million) as of
• reserves relating to changes in fair value through shareholders’ equity for €+54 million,
• foreign exchange movements for €+193 million; ■ transactions with minority interests’ holders, mainly included: • Dividend payout to minority interests’ holders for €-276 million.
Liabilities arising from insurance contracts 332,733 56,431 9,613 398,776 308,437 54,080 8,957 371,474 of which measured at current assumptions (d) 14,464 - - 14,464 11,366 - - 11,366
Reinsurers’ share in future policy benefi t reserves 12,893 26 (3) 12,916 12,518 - - 12,518
Reinsurers’ share in unearned premiums reserves 47 551 202 799 49 560 194 803
Reinsurers’ share in claim reserves (a) 1,538 1,918 1,929 5,385 1,366 2,114 1,425 4,905
Reinsurer’s share in insurance contracts liabilities relating to policyholders’ participation (€155 million in 2015 and €154 million in 2014), as well as derivatives instruments (none in 2015 and 2014) are excluded from the table above.
Liabilities arising from investment contracts where the fi nancial risk is borne by policyholders 42,926 39,299
Reinsurers’ share in liabilities arising from investment contracts with discretionary participating features 97 89
Reinsurers share in liabilities arising from investment contracts where the fi nancial risk is borne by policyholders 5 4
TOTAL LIABILITIES ARISING FROM INVESTMENT CONTRACTS - NET OF REINSURANCE CEDED 76,505 73,355
Gross claims reserve as of January 1 (a) 39,295 7,703 46,998 37,183 7,584 44,767
Loss reserves development (prior years) (553) (251) (804) (516) (237) (753)
Change in scope of consolidation and change in accounting method (175) (19) (194) 383 157 540
Claim reserves as of December 31 39,483 7,934 47,417 38,172 7,442 45,614
Claim handling cost reserves as of December 31 1,190 264 1,454 1,123 261 1,384
Reinsurers’ share in claim reserves as of January 1 2,114 1,425 3,539 1,728 1,810 3,538
Reinsurers’ share in total claim expenses 707 973 1,679 1,192 (109) 1,083
Reinsurers’ share in claim payments (976) (493) (1,469) (932) (519) (1,451)
Reinsurers’ share in claim reserves as of December 31 1,918 1,929 3,847 2,114 1,425 3,539
Change in reserves relating to technical and actuarial items (+/-) (b) 5,161 1,148 6,310 8,826 2,681 11,507
Reinsurers’ share in technical reserves as of January 1 (a) 14,360 94 14,453 13,473 23 13,495
Reinsurers’ share in collected premiums net of loadings on premiums (+) 1,541 15 1,556 1,273 15 1,288
Reinsurers’ share in surrenders, maturities and other claims and benefi ts paid net of charges and penalties (-) (1,193) (15) (1,208) (1,080) (5) (1,086)
Reinsurers’ share in change in reserves relating to technical and actuarial items (+/-) (b) (440) 7 (433) 144 2 146
Change in scope of consolidation and change in accounting principles 1 - 1 (74) 58 (16)
Impact of foreign currency fl uctuation 588 1 590 623 1 624
(Non Unit-Linked) – Liabilities arising from: Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (a) (d) 33,142 33,669
Investment contracts with no Discretionary Participation Features (DPF) measured according to existing accounting policies 538 481
Investment contracts with no Discretionary Participation Features (DPF) measured at current unit value (d) 39,564 35,246
(c) & (d) As unit-linked contracts, such contracts share the same reserves measurement determined on the basis of held assets units fair value (“current unit value”). Only the valuation of related assets is different: ■ for unit-linked contracts with a discretionary participating feature (c), an asset representing the deferred acquisition costs is recognized in continuity with previous accounting policies; ■ for unit-linked contracts with no discretionary participating feature (d), an asset representing the rights to future management fees is recognized in accordance with IAS 18 (Rights to future management fees also known as Deferred Origination Costs “DOC”) – see Note 1.7.3 and Note 7.
A new Exposure Draft was issued in June 2013. Most of the comment letters posted in October 2013 rejected the proposal for participating contracts as too complex and not refl ecting the Asset and Liability (ALM) management principles which are the essence of the insurance business. In 2015, the IASB
tentatively decided to make changes to the proposed insurance accounting model for contracts with participation features. The discussed approach will apply only to contracts that meet specifi ed conditions. In February 2016, the IASB decided to commence the drafting process for the fi nal standard and any remaining issues will be handled during this process which they still intend to fi nalize in 2016. In this context, too many uncertainties remain outstanding to defi ne how to determine the fair value of participating contracts. As a result, AXA cannot reliably disclose fair value or value ranges for investment contracts with a discretionary participating features.
The loss reserves development table shows movements in loss reserves between 2005 and 2015, based on previously applied accounting standards, in accordance with IFRS 4. All contracts concerned are insurance contracts as defi ned by IFRS.
The second line entitled “Gross reserves for unpaid claims and claim expenses developed in 2015 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
Gross reserves for unpaid claims and claims expenses developed initially at the booking date 31,168 41,301 44,020 44,046 44,470 46,367 45,946 46,440 47,031 49,868 51,997
Gross reserves for unpaid claims and claims expenses developed in 2015 adjusted for changes in exchange rates and scope of consolidation 28,879 43,553 45,315 45,856 46,217 46,447 46,940 47,622 48,532 50,480 51,997
Cumulative redundancy (defi ciency) from the initial gross reserves in excess of re-estimated gross reserves: (a)
(a) It is not appropriate to extrapolate future redundancies or future defi ciencies based on the loss reserves development presented in the table, as conditions and trends that have affected development of the liability in prior periods may not necessarily occur in the future periods. Redundancy or defi ciency disclosed includes forex impact between one year and the next.
This line also includes the impact of the unwind of discount rate on annuities (which are developed from 2006 on) for an amount of €119 million for 2013.
(d) Following the disposal of Canadian operations, amounts in its respect were not reported for the current year while previously disclosed amounts were unchanged.
(e) The comparative information related to previous periods was restated for the implementation of IFRS 10 and 11.
Partner RE and terms of the agreements mentioned above remains in-force.
(b) Represents premiums earned subsequent to the accounting year end and premiums reinstatements / experience-rated premiums received and accrued from the ceding insurers as assumed losses were incurred.
Property & Casualty and International Insurance (excluding Colisée RE (ex AXA RE)) (a) 51,997 49,868
TOTAL GROSS CLAIM RESERVES AND OTHER RESERVES FOR PROPERTY & CASUALTY AND INTERNATIONAL INSURANCE 54,406 52,135
There is considerable uncertainty as to the future cost of asbestos. 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.
AXA’s reserving practices, and despite the particularly long-tail nature of those risks, reserves for asbestos are undiscounted.
At year-end 2015, key data relating to Asbestos claims were as follows: (in Euro million)
The decrease in deferred policyholders’ participation liability mainly relates to a reduction in unrealized gains on assets available for sale in France and Germany partially offset by an increase of other temporary differences not necessarily linked to financial assets in Switzerland. The increase in deferred policyholders’ participation assets relates to unrealized losses on assets available for sale in Hong Kong Life & S avings.
(excluding contracts where the financial risk is borne by policyholders) of Life & Savings, Property & Casualty and
Liabilities arising from insurance and investment contracts 27,333 68,969 514,259 610,561 28,512 76,524 478,186 583,222 of which Life & Savings liabilities relating to contracts including a surrender option with some surrender benefi t before maturity 13,095 49,892 367,310 430,297 13,154 53,424 344,072 410,650 14.9.2. Insurance and investment contract liabilities – discount rates
As shown in the table below, as of December 31, 2015: 87%
of Life & Savings reserves (excluding unit-linked contracts) were discounted, and 12% were subject to a revision of the discount rate and 76% retained the rate set at inception, subject to the liability adequacy test described in Note 1.
Life & Savings – unlocked discount rate 42,557 3.17% 36,670 3.47%
Sub-total – Non Life and International Insurance 66,043 - 63,037 -
The estimated impact of the unlocking of discount rates relating to Life & Savings reserves was €-525 million reserve increase for 2015 (compared to €3,207 million reserve increase for 2014)
GMDB features provide a guaranteed death benefi t which may be higher than the contract account balances of the unit-linked contract, depending on performance of the unit-linked assets.
and GMIB liabilities is based on models which involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, policyholders’
behaviour assumptions and GMIB election rates. There can be no assurance that ultimate experience will not differ from management’s estimates. In addition to providing for risk through establishing reserves, AXA also manages the risk through a combination of reinsurance programs and active fi nancial Risk
Guaranteed annuity purchase rates provide contract-holders with a guarantee that at a future date the accumulated balance on their contract will be suffi cient to purchase a lifetime annuity at currently defi ned rates. The risk to AXA in these features is either that longevity will improve signifi cantly so that contract-holders electing to exercise this benefi t will live longer than assumed in the guaranteed purchase rates, or that investment returns during the payout period will be lower than assumed in the guaranteed purchase rates. Reserves are established for these features on the basis of actuarial assumptions related to projected benefi ts and related contract charges. The determination of this estimated liability is based on models which involved numerous estimates and subjective judgments, including those regarding expected rates of return and volatility, policyholders’ behaviour assumptions, mortality, and benefi t election rates. There can be no assurance that ultimate experience will not differ from management’s estimates. In addition to providing for risk through establishing reserves, AXA also manages these risks through asset-liability management programs including derivatives to protect against a decline in interest rates.
Banking liabilities issued at fair value - Retail customers 2,829 2,829 2,447 2,447
are as follows: ■ banking liabilities issued at fair value – Retail customers
• €1,258 million at 2015 (€1,333 million at 2014) mainly based on observable market data inputs and are considered as
(see Note 15.2), the carrying amounts may be considered as reasonable proxies for fair values. Thus, the fair value of amounts displayed above for these instruments are considered to be Level 3 fair values; ■ other liabilities arising from banking activities relate to bonds issued with prices quoted regularly and publically available in active markets. As such, the fair values of these liabilities are considered as Level 1 instruments.
In 2015, debt relating to investments under lending agreements and equivalent in banking activities amounted to €4,083 million
Macro-hedge derivatives and other derivatives related to liabilities arising from banking activities (87) (151) (26) (264) 23 (60) (201) (239)
TOTAL LIABILITIES ARISING FROM BANKING ACTIVITIES 25,864 4,773 2,002 32,639 30,187 4,865 2,350 37,402
As of December 31, 2015, the “Other provisions for risks and charges” mainly included provisions for tax liability (€896 million)
mainly in the United States (€780 million). Other provisions for risks and charges other than provisions for tax liability amounted to €754 million mainly in the Holdings (€368 million), in Property
Subordinated debt maturity below 10 years fi xed rate 46 68
Derivatives relating to other fi nancing debt instruments issued (a) (39) (53)
(ii) AXA’s average spread by maturity and currency, distinguishing subordinated and senior debt and (iii) options included in issued contracts, such as issuer redemption options.
The fair value of financing debt as of December 31, 2015, excluding accrued interests, was €9,225 million, including related hedging derivative instruments. The fair value decreased by €996 million compared to December 31, 2014 mainly due to the repayment of fi nancial debts instrument issued and the increase in interest rates.
The table below sets out the contractual maturities of fi nancing debt (excluding the impact of derivatives detailed in Note 20.1).
Other debt instrument issued, notes and bank overdraft (a) 3,539 1,855
Debt relating to investments under lending agreements and equivalent (c) 25,635 21,331
Minority interests in funds under this caption totaled €10,525 million as of December 31, 2015, an increase of €284 million compared with December 31, 2014, mainly coming from France Life & Savings, Belgium Property & Casualty due to increase in Group share of the funds partially offset by Belgium
Life & Savings and Switzerland Life & Savings due to reduction in portfolio.
Savings, Japan Life & Savings and U S Life and Savings.
Collateralized debt – JPY Libor 3M + 4bps annual interest – maturity March 27, 2021 144 130
OTHER DEBT (OTHER THAN FINANCING DEBT) - OWED TO CREDIT INSTITUTIONS 282 273
OTHER DEBT INSTRUMENTS ISSUED, NOTES AND BANK OVERDRAFTS (OTHER THAN FINANCING DEBT) 3,539 1,855
The fair value of other debt instruments issued and bank overdrafts (other than fi nancing debt) were €3,539 million as of December 31, 2015. Among the elements included in the preceding table, fair value is only calculated for other debt instruments issued.
As of December 31, 2015 and December 31, 2014, the Group did not hold any debts other than Financing debt designated as at fair value through profi t or loss.
As of December 31, 2015, payables arising from direct insurance and inward reinsurance operations totaled €9,760 million, a increase of €929 million compared to December 31, 2014 mainly due to increase in payables to policyholders, brokers and general agents and reinsurance operations in Switzerland
As of December 31, 2015, payables arising from direct outward reinsurance operations totaled €12,917 million, an increase of €379 million compared to December 31, 2014 mainly due to rise in ceded reserves coming from ACS Assurance, US Life
Property & Casualty partly offset by a decrease in current account payables to other insurance companies in MedLA
The reconciliation between the theoretical tax charge (pre-tax profi t multiplied by the applicable tax rate in France for the period concerned) and the effective tax charge was as follows: (in Euro million) December 31, 2015 December 31, 2014
Income from operating activities, gross of tax expenses (excluding result from investments consolidated using equity method) 7,521 7,201
Impact of differences in tax rate and impact of taxes not linked to pre-tax income 57 71
Deferred tax assets not recognized on tax losses of the year 17 23
Derocognition of deferred tax assets on tax losses of prior years (a) 1 6
Derecognition/Recognition of DTA on temporary differences of prior years (other than tax losses) (a) (3) (3)
Impact of adjustments, decrease in value and other items (68) (115)
This tax rate is composed of the following items: a basic tax rate (33.3%), a social contribution (1.1%) and a temporary exceptional contribution (3.6%). The blended standard rate was
■ Reserves relating to hedge accounting and other items (27) 234 (261) (281)
In the table above, the net deferred tax position corresponds to the difference between deferred tax assets (DTA) and deferred tax liabilities (DTL) carried on the Group’s consolidated statement of financial position. Note that the breakdown of DTA/DTL
The change from net liability position €-4,335 million in 2014 to €-3,073 million in 2015 mainly came from a signifi cant decrease in unrealized capital gains on fi xed income assets.
DTA recognised on tax losses carried forward 6 23 12 6 5 6 70 607 848 1,584
The amount of the potential DTA which has not been recorded in the accounts at the end of the year as considered unrecoverable represented €582 million (€479 million in 2014) of which: ■ €497 million concerned unrecognized DTA on €2,512 million tax losses carried forward (€404 million DTA on €1,764 million tax losses carried forward in 2014). The major part of these losses has no maturity date (€2,257 million in 2015 and €1,565 million in 2014); the significant increase of nonrecognised DTA mainly concerned the Genworth group integrated on December 1, 2015 for the fi rst time; ■ €85 million related to other unrecognized deferred tax assets
Derivative instruments used in hedges of net investment in a foreign operation
Liability Management (ALM) strategy in insurance companies, as well as holdings and banks. Notional amount of such hedging strategies amounted to €432.8 billion as of December 31, 2015
was €-0.5 billion as of December 31, 2015 (€-0.6 billion at the end of 2014). This net total includes amounts recognized in the
For further detail on Asset Liability Management governance, please refer to page 194 of Section 3.4 “Investment Community and Organization”.
States Life & Savings (notional amount of €31.8 billion in 2015 versus €27.6 billion in 2014), Germany Life & Savings
& Saving for €52.8 billion (versus €49.2 billion in 2014) and in Japan Life & Saving for €22.5 billion in 2015 (versus €24.0 billion in 2014); (iii) minimize the cost of Group debt and limit volatility of fi nancial charges, mainly in the Company, with notional amount of €41.8 billion in 2015 versus €58.0 billion in 2014, mainly due to the management of its interest rate derivatives in a context of low but volatile interest rate environment; (iv) hedge interest rate risk exposures arising in the context of its ordinary banking activities, mainly at AXA Bank Europe, in order to manage an interest rate exposure between its interest-earning assets and interest-bearing liabilities mainly by interest rate swaps (notional value of €14.9 billion in 2015 versus €15.6 billion in 2014).
As of December 31, 2015, the notional amount of equity derivative instruments totalled €28.3 billion (€23.1 billion at the end of 2014). Their net fair value as of December 31, 2015 totalled €511 million (€609 million at the end of 2014). AXA
These instruments are mainly used to: (i) hedge equity risk as part of the Asset Liability Management strategy associated with the guaranteed minimum benefi ts on Variable Annuity products, which totalled €11.7 billion at the end of 2015 (€10.8 billion at the end of 2014) mainly in the United States Life & Savings (notional amount of €11.1 billion in 2015 compared with €9.9 billion in 2014); (ii) hedge the exposure to equity risk within the General
States Life & Savings (notional amount of €6.9 billion in 2015 compared with €5.2 billion in 2014), and in Japan
commitments are matched by assets denominated in the same currency, some entities may invest in foreign currency denominated assets to diversify their investments. This is the case mainly in (i) Switzerland using such contracts to hedge exchange rate risk arising from their investments in equities and debt instruments denominated in non CHF currencies (mainly
A description of e xchange-rate risk related to the operating activities of Group subsidiaries and the Company is included in
Section 3.3 Quantitative and qualitative disclosures about risk factors with amounts of exposures to exchange-rate risk and corresponding hedges.
In 2015, the notional amount of credit derivatives held by the
“S atellite I nvestment P ortfolio” (€1.0 billion); see Note 1.8.2).
Assets backing contracts where the fi nancial risk is borne by policyholders 181,082 (0) 181,082 - - - 181,082 (0) 181,082
20.4.1. Liabilities arising from insurance investment contracts and other fi nancial liabilities
TOTAL LIABILITIES ARISING FROM INSURANCE CONTRACT 550,856 (653) 550,202 513,516 (1,338) 512,179
TOTAL LIABILITIES ARISING FROM INVESTMENT CONTRACTS 76,606 (114) 76,492 73,449 (75) 73,374
As of December 31, 2015, derivatives related to banking liabilities shown in Note 15 are used to hedge interest rate risk exposures in the context of ordinary banking activities, in order to achieve an appropriate interest rate spread between its interest earning assets and interest bearing liabilities. Related hedged assets are disclosed in Note 9.4.2 and liabilities in Note 15.
Derivative instruments relating to fi nancing debt, operating debt and other fi nancial liabilities - 603 - 603 - 365 - 365
Net value of derivative instruments - liabilities (2) 14 (1,151) (12) (1,149) 22 (2,570) (17) (2,565)
Total revenues (a) (in Euro million) December 31, 2015 December 31, 2014
LIFE & SAVINGS 59,211 55,345 of which direct premiums 54,100 50,551 of which reinsurance assumed 3,276 3,255 of which fees and charges on investment contracts with no participation features 371 327 of which revenues from other activities 1,464 1,211
PROPERTY & CASUALTY 31,265 29,460 of which direct premiums 30,411 28,902 of which reinsurance assumed 783 495 of which revenues from other activities 71 63
INTERNATIONAL INSURANCE 3,615 3,292 of which direct premiums 2,545 2,360 of which reinsurance assumed 823 704 of which revenues from other activities 246 228
(c) Reso Garantia is accounted for using the equity method in the Group C onsolidated F inancial S tatements on the basis of a closing at September 30. Given signifi cant movements in the Russian ruble exchange rate between September 30, 2014 and December 31, 2014, the balance sheet used as a basis of the equity method has been translated using December 31 exchange rate.
Life contracts (including endowment contracts) 22,727 177,493 851 21,493 165,030 334
Contracts with fi nancial risk borne by policyholders (unit-linked) 17,383 152,079 42,926 15,650 142,042 39,299
Fees, commissions and other revenues 246 228 - 21. 3.4. Liabilities arising from insurance contracts in the Property & Casualty and International Insurance segments
TOTAL - PROPERTY & CASUALTY INCLUDING INTERNATIONAL INSURANCE 34,513 11,101 1,270 114 46,998 16,039 63,037 21.4. NET REVENUES FROM BANKING ACTIVITIES
Net investment result (excluding fi nancing expenses) from the fi nancial assets of insurance Companies and Companies in other business segments (excluding revenues from the fi nancial assets of banks included in net revenues from banking activities) was as follows: (in Euro million)
Investment in real estate properties at amortized cost 817 166 - (68) 916
Equity instruments designated as at fair value through profi t or loss (c) 227 - 247 - 474
Non-consolidated investment funds available for sale 345 175 (85) (74) 361
Non-consolidated investment funds held for trading 2 - (26) - (24)
Non-consolidated investment funds available for sale 279 159 169 (49) 558
Loans designated as at fair value through profi t or loss 0 - 1 - 1
Premiums ceded and unearned premiums ceded (2,310) (2,224) (1,000) 499 (5,035)
Commissions received from / paid to reinsurers 36 313 158 (30) 476
In 2015, fi nancing debt expenses, which includes income and expenses relating to hedging derivative instruments on fi nancing debt, amounted to €488 million (€509 million in 2014) mainly in the Company: €435 million (€460 million in 2014).
Change in deferred acquisition expenses and equivalents (b) (1,291) (25) (9) (1,325) - - - - (1,325) (1,252)
Mediterranean & Latin America region, refl ecting the full impact of the consolidation of Colpatria in Colombia in April 2014, as well as in Asia notably following the change in consolidation methodology from equity method to full consolidation in 2015 in Thailand; ■ higher expenses in Direct business (€53 million) as a consequence of the acquisition of BRE Insurance in Poland as well as business growth in Japan and France; and
Other staff expenses and employees’ profi t sharing (a) 332 334
(a) Including redundancies and early retirement expenses (triggering event = set up of the plan), and profi t sharing with employees in France.
The Group operates various defi ned post-employment benefi t plans mainly in the United Kingdom, the United States, Germany,
The defi ned benefi t plans within AXA are mostly fi nal salary pension plans or are based on a cash balance formula, which provide with members, benefi ts in the form of a guaranteed level of lump-sum payable at retirement age or pension payable for life. The level of benefi ts is generally based on members’
(with effect from July 31, 2015) so that the scheme is closed to future accrual and a new defi ned contributions benefi t plan was established from this date.
Signifi cant demographic assumptions used by AXA are mortality tables in the measurement of the Group’s obligations under its defi ned benefi t schemes. These assumptions are often set based on actuarial advice in accordance with published statistics and experience in each country. Translated into averages remaining life expectancy at retirement age (between 60 and 65 in average), the mortality assumptions would give: ■ 22.6 years for male and 25.0 years for female retiring at end of December 2015; ■ 25.1 years for male and 27.5 years for female retiring at end of December 2025 (i.e. 10 years after the reporting date).
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 S eparate A ssets and the balance sheet position.
Defi ned Benefi t Obligation at the end of the year (A) 21,093 20,310 623 665 21,716 20,974 Change in plan assets Fair value of plan assets at the beginning of year 11,187 9,536 5 5 11,191 9,541 Interest income on plan assets 347 378 0 0 347 378 Actual return on plan assets, excluding interest income (411) 799 (1) (1) (412) 799
Net transfer In/(Out) (including acquisitions, disposals and reclassifi cations) (b) 93 - - - 93 Benefi ts paid by separate assets (116) (106) - - (116) (106)
Cumulative effect of asset ceiling at the end of the year 19 17 - - 19 17 Funded status
Cumulative impact of asset ceiling (19) (17) - - (19) (17) Liability and asset recognized in the statement of fi nancial position (excluding separate assets) Net position (excluding separate assets) (9,415) (9,140) (618) (660) (10,033) (9,800) Fair value of separate assets at the end of the year 1,276 1,116 - - 1,276 1,116 Net balance sheet position (including separate assets) (8,139) (8,024) (618) (660) (8,757) (8,684) (a) In 2015, this amount mainly includes plan amendments or curtailments effect in Ireland and France.
The annual expense for employee pension and other benefi ts recorded in the income statement (included in Note 26.1.), for the years ended December 31, 2015 and 2014 is presented below: (in Euro million)
Interest income on plan assets (347) (378) (0) (0) (347) (378)
Interest income on separate assets (18) (32) - - (18) (32)
26.2.6. Change in the liability (net of plan assets but excluding S eparate A ssets and assets within the insurance General Accounts backing employee benefi ts) recognized in the statement of fi nancial position
Obligation between entities within the Group are effectively backed by General Account assets (available to general creditors in case of bankruptcy), they are not taken into consideration in the pension assets disclosures.
Consistently with IAS 19 requirements, the roll-forward of the statement of fi nancial position liability from January 1, 2015 to
December 31, 2015 shown below only captures the evolution of the liability recorded in the Group’s statement of fi nancial position net of Plan Assets and does not include Separate Assets and
(which are presented in Note 26.2.8.). The table below shows the detailed roll-forward of the statement of fi nancial position liability, with the S eparate A ssets added at each year end.
Statement of fi nancial position liability at the beginning of the year (9,140) (7,261) (660) (542) (9,800) (7,802)
Benefi ts paid by separate assets 116 106 - - 116 106
Actuarial gains and losses recognized in OCI (38) (1,839) 80 (66) 43 (1,905)
Fair value of separate assets at the end of the year 1,276 1,116 - - 1,276 1,116
Net balance sheet position at the end of the year (8,139) (8,024) (618) (660) (8,757) (8,684)
One year increase in the life expectancy (derived from adjusted mortality rates) would result in an increase of 3.5% of the Defi ned
Statement of fi nancial position liability (a) (9,415) (9,140) (618) (660) (10,033) (9,800)
ESTIMATED EMPLOYER CONTRIBUTIONS TO THE PLAN FOR THE NEXT ANNUAL REPORTING
AXA Group as at December 31, 2015 and 2014, respectively (fair value hierarchy principles as described by the Group are described in Note 1.5.): Asset mix for P lan A ssets
Local operating entities and trustees have the primary responsibility for managing the risks that plans are exposed to through a defined benefit plan, in accordance with local legislation if any and the risk framework defi ned at local l evel.
■ a decrease in corporate bond yields will result in an increase in plan liabilities even if this effect will be partially offset by an increase in the value of the plans’ bonds,
In most countries, Trustees or Investment Committees set the general investment policies and guidelines regarding the allocation of plan assets in accordance with the long term horizon of the benefi t plans. The investment strategy is reviewed regularly, following actuarial valuations of the funded benefi t plans.
Statement of fi nancial position reconciliation (in Euro million) December 31, 2015 December 31, 2014
(a) Net position (excluding S eparate A ssets) for pension benefi ts and other benefi ts as reported in Note 26.2.6.
(c) It corresponds to a liability of €10,374 million as of December 31, 2015 (€10,116 million as of December 31, 2014) included in the statement of fi nancial position under the caption “provision for risks and charges”, and an asset included in the statement of fi nancial position under the caption “other receivables”.
All fi gures are gross of tax (in Euro million) 2015 2014
(loss of €12.0 million in 2014) on the hedging program through equity swaps in place at Group level. Including this hedging gain, the cost related to Performance Units and International
Committee since 2014, have been subject to the fulfi lment of this market-based performance condition.
(b) The options with market performance criteria were valued at €1.39 per option granted in 2015 and €1.78 per option granted in 2014, based on a Monte-Carlo model. The options without performance criteria were valued at €1.47 per option granted in 2015 and €2.03 per option granted in 2014, based on the Black & Scholes model.
December 31, 2015 was €4.6 million (€6.1 million for the year ended December 31, 2014).
In fi rst quarter 2010, AXA voluntarily delisted the AXA ADRs from the New York Stock Exchange and filed to deregister and terminate its reporting obligation with the SEC. AXA’s deregistration became effective in second quarter 2010.
Following these actions, AXA ADRs continue to trade in the overthe -counter markets in the United States and be exchangeable into AXA ordinary shares on a one-to-one basis while AXA
The expected dividend yield on AXA SA shares was based on the market consensus. The risk-free interest rate was based on the U.S. Treasury bond curve for the appropriate maturity.
The leveraged plan allows employees to purchase, on the basis of 10 times their personal investment, to AXA shares (either through Mutual funds (FCPE) or through direct share ownership)
At the end of the 5 years restricted period, the employees can, depending on their residence country, do any one of the following: (1) receive the cash value of their assets; (2) receive the value of their assets in the form of AXA shares; or (3) transfer their assets invested in the leveraged plan into the traditional sub-fund.
The cost of this plan is valued taking into account the fi ve-year lock-up period, as recommended by the ANC (Autorité des
The table below shows the main features of the plan, the amounts subscribed, valuation assumptions, and the cost of the plan for 2014 and 2015: Traditional Leveraged Traditional Leveraged
Amount subscribed by employee (in Euro million) 30.1 34.5 23.7 29.0
Total number of shares subscribed (in million shares) 1.7 17.0 1.6 17.7
[B] Cost of the lock-up for the employee 19.68% 8.54% 19.64% 10.76%
TOTAL COST FOR AXA (IN EURO MILLION) 0.10 7.70 0.10 6.80
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.
(2+2 or 4+0 plan), based on a market price of €13.18 per share on March 16, 2012 and an estimated 5% pre-vesting lapse rate.
(PSi) plan, benefi ciaries of Performance Shares have the right to receive at the settlement date, a certain number of AXA
In 2014 and 2015, the terms and conditions for the grant made are similar to 2013 grants, except that for 50% of 2014 grants and 100% of 2015 grants, the performance period is raised to 3 years and the vesting period to 4 years.
Performance Shares recorded as of December 31, 2015, was €102.3 million in earnings (€78.2 million as of December 31, 2014).
AXA Investment Managers grants Performance S hares to certain key employees as part of its overall LTI policy that also includes DIP (Deferred Incentive Plan). The Investment
Managers shares or, more specifi cally rights to acquire shares upon completion of a specifi ed vesting period depending on applicable local regulations, and subject to fulfi lment of certain performance conditions. The p erformance condition is based on the achievement of Actual AXA Investment Managers Underlying
The total cost of Investment Managers Performance Shares recorded as of December 31, 2015 amounted to €7.8 million in earnings (€7.7 million as of December 31, 2014) gross of tax.
During the fourth quarter of 2011, AB amended all outstanding year-end long-term incentive compensation awards of active employees, so that employees who terminate their employment or are terminated without cause may retain their award, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictions on competition, employee and client solicitation, and a clawback for failing to follow existing r isk m anagement policies.
Under the Incentive Compensation Program, AB made awards in December 2015 aggregating €159.7 million (€132.6 million in December 2014) of which €144.1 million in the form of
Compensation costs/expenses: ■ short-term benefits: compensation paid to members of the Management Committee in 2015 totaled €20.6 million
(€15.5 million in 2014), including fixed salary, bonuses, directors’ fees, benefi ts in kind and other short-term benefi ts; ■ share-based compensation: the expense recognized in 2015 in respect of share-based compensation granted by AXA SA
(€7.6 million in 2014); ■ post-retirement benefi ts: the estimated cost to the Group of providing defi ned benefi t pensions and other post-retirement benefi ts to members of the Management Committee for the current year of service measured in accordance with IAS 19 amounted to 6.2 million (4.4 million in 2014).
At December 31, 2015, the Group employed 98,279 salaried people on a full-time equivalent basis (96,279 at the end of
The increase of salaried employees by 2,000 in 2015 was mainly driven by: ■ AXA Assistance (+931) mainly driven by business growth, notably in the Mediterranean & Latin American Region; ■ the United Kingdom and Ireland (+914) mainly refl ecting the transfer of claims staff from Direct to Non-Direct business
(+375) and business expansion; ■ Asia (+774) refl ecting the change in consolidation methodology from equity to full consolidation in Thailand (+489) along with business growth across Malaysia (+99), Singapore (+89) and
Hong Kong (+71); ■ AXA Business Services (+567) following business growth; ■ the Mediterranean & Latin American Region (+269) mainly attributable to business growth notably in Colombia, the Gulf region and Mexico.
Weighted average number of ordinary shares (net of treasury shares) - opening 2,442 2,414
Fully diluted - weighted average number of shares (c) D 2,441 2,432
In 2015, net income per ordinary share stood at €2.19 on a basic calculation, all attributable to continuing operations, and €2.18 on a fully diluted basis also all attributable to continuing operations.
France. On December 31, 2015, the Mutuelles AXA collectively owned 14.13% of the Company’s outstanding ordinary shares representing 23.82% of the voting rights.
From time to time the Company enters into GIEs with certain of its subsidiaries. GIEs are intercompany partnerships, governed by French law, created to perform various common services for their members and to allocate associated costs and expenses among their members. The allocation of costs and expenses invoiced to GIE members may be based on various agreed criteria including particular activity drivers. The GIEs to which the
Expenses invoiced by the GIE AXA to its members in 2015 and 2014 amounted to respectively €22 8 million and €213 million.
and/or to promote the development of their business (e.g. to facilitate acquisitions, integration of acquired businesses, distribution arrangements, internal restructurings, or similar transactions). These transactions may involve the Company entering into various types of transactions with its subsidiaries and affi liates from time to time including loans or other types of credit arrangements, acquisitions or sales of assets, securities or other fi nancial instruments and/or similar transactions. The
To the best of the Company’s knowledge, based on information reported to it: ■ on December 31, 2015, there were no loans outstanding from the Group to the Company’s two executive offi cers or to any member of the Company’s Board of Directors; ■ 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 of 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.
These commitments broke down as follows: Financing commitments received totalled €14,439 million at the end of 2015, and mainly consisted of: ■ credit facilities received from banks for €12,652 million in the
Savings as part of its operations; ■ €190 million stand-by credit lines at AXA Banque France.
Guarantee commitments received totalled €21,329 million at the end of 2015, and mainly consisted of (i) guarantees from customers related to mortgage loans (€15,677 million) received mainly by Switzerland Life & Savings (€8,788 million), AXA
(€209 million), (ii) €2,359 million other guarantees received from customers mainly at AXA Banque France and (iii) €3,288 million guarantees received from credit institutions mainly at AXA
Pledged securities and collateralized commitments received totalled €32,437 million at the end of 2015, and mainly consisted of: ■ mortgage security collateral taken for loans totaled €21,684 mi l l ion, main ly f rom AXA Bank Europe
and France Life & Savings (€542 million) from an increase in collaterals deposit according to the variations of the derivatives to cover the risk of the counterparty; ■ security reverse repurchase agreements and similar operations totaled €2,290 million mainly in Japan Life & Savings
Other commitments received totaled €3,880 million at the end of 2015, and mainly consisted of: ■ €2,950 million mainly received by France Life & Savings
(€433 million), and Belgium (€376 million) related to mortgages as guarantees to debt instruments; ■ €773 million mainly received by Switzerland Life & Savings
Guarantee commitments given totalled €7,886 million at the end of 2015, and mainly consisted of €7,760 million guarantee commitments given to credit institutions mainly from the
Pledged securities and collateralized commitments given totalled €39,093 million at the end of 2015, and mainly consisted of: ■ security repurchase agreements and similar operations totaled €30,506 million mainly in France Life & Savings (€9,322 million),
Life & Savings (€854 million); ■ pledged assets and collaterals for loans totaled €1,666 million coming from AXA Banque France; ■ other pledged assets / collaterals totaled €1,716 million mainly in AXA Bank Europe (€1,197 million) due to securities in its own investment portfolio given as collateral for derivative instruments and Hong Kong Life & Savings (€298 million)
Other commitments given totalled €14,545 million at the end of 2015 and mainly consisted of: ■ €5,766 million commitment to Private Equity funds mainly from France Life & Savings (€1,926 million), Switzerland Life
and Germany Property & Casualty (€181 million); ■ €2,765 million commitments to invested assets other than
(€220 million); ■ €835 million as commitments to insurance regulatory and insurance protection funds given mainly by Germany Life &
The Group did not provide any material support without having a contractual or constructive obligation to do so to structured entities during the period.
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.
Messrs. Jean-Claude Pauly and Gilles Magnan, fi rst appointed on June 8, 1994. 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 2015.
Statutory audit and certifi cation of local and consolidated fi nancial statements 28,025 23,732 67% 65% 10,067 10,212 76% 79%
External audit fees are also paid by certain Affi liates and Mutual funds which are not required to be included in the table above.
With respect to all signifi cant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable, and the amount of the loss can be reasonably estimated, we establish a reserve and record an estimated loss for the expected outcome of the litigation. However, it is often diffi cult to predict the outcome or estimate of a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, the litigation is in its early stages, or when the litigation is highly complex or broad in scope.
German minority buy-out transactions, there is a substantial risk that this expert opinion may recommend a signifi cant increase in the cash compensation to be paid to minority shareholders.
The expert report will be subject to judicial review and further litigation which is likely to last more than 2 years. Consequently, the fi nancial impact of this matter cannot be estimated with any certainty at this time.
(both class action and individual), investigations, and other actions arising in the various jurisdictions where they do business, including the following: 31.2.1. United States matters
AB (SEC fi le no. 000-29961) fi led with the SEC (collectively, the
States subsidiaries are involved in these types of litigations as well as regulatory inquiries, investigations or actions with respect to these and a wide variety of other matters related to the ownership 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 SEC Reports.
In July 2011, a derivative action was fi led in the United States
Litigation”). These lawsuits were fi led on behalf of a total of twelve Mutual funds and in each case seek recovery under
The plaintiffs purport to fi le the lawsuits as class actions in addition to derivative actions and seek recovery of the alleged overpayments, rescission of the contracts, restitution of all fees paid, interest, costs, attorney fees, and expert witness fees.
AXA Equitable believes that it has strong defenses to these claims and will defend them vigorously.
New York statutory annual statement or elsewhere that certain reinsurance transactions with affi liated reinsurance companies were collateralized using “contractual parental guarantees”, and thereby AXA Equitable allegedly misrepresented its “fi nancial condition” and “legal reserve system”. These lawsuits seek recovery under Section 4226 of the New York Insurance Law of the equivalent of all premiums paid by the class for life insurance policies and annuity contracts during the relevant period. In the second half of 2015, the court granted AXA Equitable ’s motion to dismiss for lack of subject matter jurisdiction. Plaintiffs have appealed. AXA Equitable believes that it has strong defenses to these claims and will defend them vigorously.
Zweiman case was removed from New York state court to the
During the fi rst quarter of 2012, AB received a legal letter of claim
(“Letter of Claim”) on behalf of Philips Pension Trustees Limited and Philips Electronics UK Limited (“Philips”), a former European pension fund client, alleging that AB Limited (a wholly-owned subsidiary of AB organized in the U.K.) was negligent and failed to meet certain applicable standards of care with respect to the initial investment in and management of a £500 million portfolio of U.S. mortgage-backed securities. The alleged damages range between $177 million and $234 million, plus compound interest on an alleged $125 million of realized losses in the portfolio. On
January 2, 2014, Philips fi led a claim form in the High Court of
Justice in London, England, which formally commenced litigation with respect to the allegations in the Letter of Claim. AB believes that any losses to Philips resulted from adverse developments in the U.S. housing and mortgage market that precipitated the fi nancial crisis in 2008 and not from any negligence or failure on their part. AB believes that it has strong defenses to these claims and intends to defend this matter vigorously.
During the fourth quarter of 2012 a lawsuit was fi led against AXA
in Madrid by a real estate development company, 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. On the June 11, 2015, the Court of First Instance of Madrid ruled in favor of KLEC and awarded damages of €18 million to KLEC which have been reserved in AXA’s consolidated accounts. Both parties have appealed. AXA Spain believes that it has strong defenses to support its appeal and will defend this matter vigorously.
decision, ruled that AXA CS was liable to ERDF under the terms of the insurance policy for compensation of these losses in this specifi c case. AXA CS has appealed this decision to the French
York federal court under the US Anti-Terrorism Act for aiding and abetting terrorism due to certain accounts it maintained.
NatWest and, in the event of an adverse outcome, (ii) the number of deemed separate incidents that would trigger coverage, and
(including for their ability to obtain and/or maintain licenses to engage in certain types of regulated business activities such as
In addition to the matters noted above, AXA and its subsidiaries are also involved in various legal actions and proceedings of a character normally incident to their business including claims litigation arising in connection with the Group’s insurance business and litigation arising from the Group’s Asset
Beyond litigation risks of the type described above, AXA and its subsidiaries are subject to comprehensive regulation in the
“Risk Factors” in Part 3 of this Annual Report and Note 29 to the Group’s consolidated fi nancial statements in Part 4 of this
M anagement cannot make an estimate of loss, if any, or predict whether or not these matters, individually or in the aggregate, will have a material adverse effect on AXA’s consolidated results of operations in any particular period.
In order to meet its obligation to deliver shares and to eliminate the dilutive effect of certain share-based compensation schemes (1), AXA bought on February 2, 2016, 20,100,000 shares for €460 million. These shares will either be delivered to the beneficiaries of share-based compensation schemes or cancelled, all in accordance with the share repurchase program (2).
AXA Bank Hungary is a branch of AXA Bank Europe, managing a credit portfolio put in run-off in 2011, as well as daily banking operations. As this transaction is expected to result in an exceptional loss of €80 million accounted for in Net income, a provision was booked in the Group consolidated fi nancial statements as of December 31, 2015.
On February 8, 2016, AXA and Africa Internet Group (“AIG”), a leading e-commerce group in Africa announced a partnership whereby AXA would become the exclusive provider of insurance products and services through Jumia and other AIG online and mobile platforms in Africa. As part of the partnership, AXA will also invest €75 million and own approximately 8% of the capital of AIG. Completion of the transaction is subject to customary closing conditions, including the closing of a previous investment round, and is expected to take place in the fi rst quarter of 2016.
(2) AXA share repurchase program has been authorized by the General Shareholders’ Meeting of April 30, 2015.
signed an agreement to sell its 50% interest in a property located at 1285 Avenue of the Americas, for a price of $825 million, with completion expected during the fi rst semester of 2016.
On January 27, 2016, AXA completed the sale of a property located at 787 7th Avenue, for a price of $1,950 million. As a consequence, both properties have been reclassifi ed as held for sale as of December 31, 2015. AXA expects to realize an exceptional gain of ca. $1.1 billion (or ca. €1.0 billion) after tax on these disposals, which will therefore be accounted for in net income during the fi rst half of 2016.
AXA launched a global initiative to scale up its protection of tomorrow’s Emerging Middle Class
On March 24, 2016, AXA announced the successful placement of EUR 1.5 billion of Reg S subordinated notes due 2047 to institutional investors to refinance, in advance, part of its outstanding debt. The initial spread over swap is 275 basis points. The initial coupon has been set at 3.375% per annum corresponding to a reoffer yield of 3.462%. It will be fi xed until the fi rst call date in July 2027 and fl oating thereafter with a margin including a 100 basis points step-up.
Settlement of the notes is expected to take place on March
4.7 REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS
4.7 REPORT OF THE STATUTORY AUDITORS ON THE C ONSOLIDATED F INANCIAL S TATEMENTS
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement.
An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the consolidated fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Group at December 31, 2015 and of the results of its operations for the year then ended in accordance with International
In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: ■ Your Company describes in Notes 1.8.2 and 9 to the consolidated fi nancial statements the valuation methods it applies to fi nancial assets.
■ Certain consolidated statement of fi nancial position items that are specifi c to the insurance and reinsurance business are estimated on the basis of statistical and actuarial data, such as technical reserves, policyholders’ deferred participation, deferred acquisition costs and their amortization, and the value of business in force. The methods and assumptions used to calculate the carrying values of these items are described in Notes 1.14, 1.7.3 and 1.7.2 to the consolidated fi nancial statements.
■ The carrying value of goodwill is tested for impairment at each closing date using the methods described in Notes 1.7.1 and 5.2.2 to the consolidated fi nancial statements.
■ Derivatives and hedging transactions are recognized in accordance with the methods and procedures described in Note 1.10 to the consolidated fi nancial statements. We assessed whether transactions that qualify for hedge accounting have been duly documented in accordance with hedge accounting rules.
In addition to French law provisions, AXA’s Charter and the Board of Directors’ Bylaws include a number of specifi c provisions concerning members of the Board of Directors, including the following: COMPENSATION
Notwithstanding the term of offi ce for which the Chairman of the
Board of Directors is appointed, his/her functions shall terminate, at the latest, at the end of the Ordinary Shareholders’ Meeting convened to approve the fi nancial statements of the preceding fi scal year and held during the year the Chairman reaches the age of 70.
The rights of the holders of double voting rights may only be modifi ed or cancelled upon the decision of an Extraordinary
Shareholders’ Meeting and after authorization by a special meeting of the holders of these rights.
Under French law, shareholders have preferential subscription rights to subscribe, on a prorata basis, additional ordinary shares (and/or convertible, exchangeable or other securities giving a claim, directly or indirectly, to AXA ordinary shares). This subscription right is transferable and normally trades separately during the subscription period for a capital increase. In order to issue additional shares without preferential subscription rights, except for issues already approved or authorized by
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.
March 29, 2014 (visant à reconquérir l’ économie réelle) or from certain provisions of the European Directive of April 21, 2004
AXA, the relevant provisions include, among other things, the existence of AXA shares with double voting rights.
On December 31, 2015, AXA’s share capital was comprised of 2,426,458,242 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 1 , 2015. The following table sets forth changes in the number of shares from January 1 , 2013 to December 31, 2015: Date Transaction
New equity issue reserved for employees of AXA (SharePlan 2014) 19,253,990 263,799,925 2,440,974,398 5,589,831,371
New equity issue reserved for employees of AXA (SharePlan 2015) 18,736,297 327,179,193 2,462,887,941 5,640,013,385
APPENDICES A APPENDIX I CHAIRMAN OF THE BOARD OF DIRECTORS’ REPORT 352
APPENDIX IX COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE
(Part 1) as well as the internal control and Risk Management procedures implemented by the Company (Part 2). The report also presents the principles and the rules adopted by the Board of Directors in order to determine the compensation and the other benefits granted to the Company’s executive officers
G overnance Code of reference and specifi es the provisions of that code, if any, that have not been applied by the Company and the reasons why they have not been applied (Part 4).
“The Chairman & Chief Executive Offi cer” Section of this Annual
Code, the Chairman of the Board of Directors is required to report annually on the internal control and Risk Management procedures implemented by the Company.
In this context, the following report provides a summary of the AXA Group’s principal internal control mechanisms and procedures that allow management to conclude that the Group has a sound and comprehensive system of internal control well adapted to its business and the specifi c risks inherent to its activities. This report is not intended to provide a comprehensive description of all internal controls and procedures in place within the Company and its subsidiaries, but rather to provide an overview of the Group’s principal internal control mechanisms and procedures.
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 detail in this Annual Report. Please see, in particular, Part 3 – “Regulation,
Risk Factors, c ertain disclosures about market risks and related matters” and Part 4 – “Consolidated Financial Statements” –
These mechanisms and procedures principally include: ■ the Group’s corporate governance structures which are designed to ensure appropriate supervision and management of the Group’s business as well as clear allocation of roles and responsibilities at the highest level; ■ management structures and control mechanisms designed to ensure that the Group executives have a clear view of the principal risks the Group faces and the tools necessary to analyse and manage these risks; ■ Internal Control Over Financial Reporting (ICOFR), designed to ensure the accuracy, completeness and timeliness of the
■ disclosure controls and procedures designed to ensure that executives have the necessary information to make fully informed disclosure decisions on a timely basis and that the
Company’s disclosures on material information (both fi nancial and non-fi nancial) to the markets are timely, accurate and complete.
Executive Management oversees implementation of the internal control system and the existence and appropriateness of internal control and Risk Management monitoring systems within the
Directors as well as the structure and composition of the Board of Directors’ Committees is set forth in Section 2.1 “Corporate offi cers, executives and employees” of this Annual Report.
All the Board Committees constitute an important part of the Group’s overall internal control environment and plays a particularly important role in reviewing internal control and risk related issues. The Committee reviews the Group’s internal control systems and procedures for Risk Management.
For more information about the Audit Committee’s assignments and activities, its composition and the principal matters it handled in 2015, please see Section 2.1 “Corporate offi cers, executives and employees” of this Annual Report.
AXA has taken steps designed to harmonize corporate governance standards throughout the Group. This effort is focused, among other matters, on standardizing, to the extent practicable, principles relating to various corporate governance matters including b oard composition and size, directors’
AXA Group has various management structures and control mechanisms designed to ensure that executives have a clear and timely view of the principal risks facing the Group and the tools necessary to analyse and manage these risks.
Chief Executive Offi cer and the Deputy Chief Executive Offi cer in the operational management of the Group. The Management
For more information about the Management Committee including its composition, please see Section 2.1 “Corporate offi cers, executives and employees” of this Annual Report.
On January 1, 2016, AXA had a 17-member Executive Committee composed of the members of AXA’s Management Committee, the Chief Executive Offi cers of the Group’s principal subsidiaries and/or business units and selected other senior executives.
While the Executive Committee is an i nternal c ommittee with no formal decision making power, it plays an important role in assisting the Executive Management to effectively manage the
At the end of the fi rst three quarters of each year, the Management
During the fourth quarter, each business unit presents its strategic plan to the Group’s Strategic Plan Steering Committee chaired by the Deputy Chief Executive Offi cer. The Group’s strategic plan is reviewed by the Management Committee and approved by the Board of Directors.
■ the actuarial function, which is, in particular, responsible for overseeing the calculation of technical provisions (including ensuring the appropriateness of the methodologies and underlying models used as well as the assumptions made in the calculation of technical provisions), assessing the suffi ciency and quality of the data used in the calculation of technical provisions and comparing best estimates against experience.
Several GMS Departments are responsible for managing and/or monitoring some aspects of internal control and/or risk related matters. However, the following four GMS Departments are primarily focused on these matters as part of their principal day-to-day management responsibilities: GROUP RISK MANAGEMENT DEPARTMENT
R eport is reviewed by the Solvency II Steering Committee and then presented to the Management Committee, the Audit
Committee of the Board of Directors and the Board of Directors which approves the conclusions of the Group ORSA R eport and authorizes the fi ling of the Group ORSA R eport with the ACPR.
The PBRC Department within the Group Finance Department is responsible for consolidation, management reporting, the internal fi nancial control program, as well as actuarial indicators and the economic balance sheet. These missions are performed for regular closings, forecasts and strategic plan exercises. PBRC
related to Solvency; ■ liaising with the Statutory Auditors and contributing to Audit
The information system is based on “Magnitude”, a consolidation tool managed and updated by a dedicated team. This system is also used to deliver management reporting information used to produce an economic perspective on the consolidated fi nancial statements and the economic balance sheet. The process through which this management reporting information and the economic balance sheet are produced and validated is the same as the one used to prepare consolidated fi nancial information.
“AXA Group Accounting Manual” and refl ect consolidation rules under IFRS accounting standards. In this respect, the Chief
Financial Offi cer of each entity signs off on the accuracy of their respective contribution to the consolidated fi gures reported through Magnitude and their compliance with both the Group accounting manual and instructions in all frameworks produced
(IFRS, Embedded Value, actuarial indicators and economic balance sheet) within the internal fi nancial control program.
Groups which are organized around the substantive matters that the department manages on a continuing basis in addition to one-off projects or issues that arise from time to time. These Practice Groups are: (i) Corporate (Mergers &
Guide which applies to all AXA Group employees worldwide and (iii) fi nancial crime matters including the Group’s global Anti-
Money Laundering Program, the Group’s anti-corruption/bribery program, the Group’s Cross-Border Business Standard and the
The Group Legal Department works closely with the legal departments of AXA’s principal subsidiaries on legal, regulatory, and compliance matters impacting those companies. In order to optimize integration, coordination, ensure open lines of communication across the Group’s global Legal & Compliance
Chief Financial Offi cer and the Group Chief Operating Offi cer and is managed by Group Risk Management. The RCC usually meets on a quarterly basis.
The RCC is comprised of the following GMS Departments, each of which is responsible for presenting to the Committee the signifi cant risks within its scope: Group Risk Management,
AXA’s Internal Control Over Financial Reporting (ICOFR) is a process designed under the supervision of AXA’s Chief Financial
AXA’s ICOFR includes policies and procedures that: ■ pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of Group assets; ■ provide reasonable assurance that transactions are recorded as necessary to permit the preparation of fi nancial statements in accordance with the applicable generally accepted accounting principles; ■ provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorization of executives and managers of the Group; and
AXA has implemented a comprehensive program, managed by PBRC, entitled Internal Financial Control (IFC), designed to ensure that AXA’s Chief Executive Offi cer and Deputy Chief
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; 2. IFC Management reports required to be submitted by the CFO or another senior executive of every in-scope
AXA Group company, as part of the IFC program; 3. Disclosure Controls & Procedures Certifi cates required to be submitted by AXA’s Executive Committee members, regional CFOs and certain other senior executives
For information on the principles and rules adopted by the Board of Directors in order to determine the compensation and the advantages granted to the corporate offi cers please see Part 2 – Section 2.2 “Full disclosure on executive compensation and share ownership” of this Annual Report.
Medef (Mouvement des entreprises de France) in April 2010 and revised in June 2013 and November 2015 (hereafter the “Afep-
Medef Code”), which is available at AXA’s registered offi ce or on its website (www.axa.com) under the “Corporate governance”
Medef Code. However, the Company’s practice is to provide the members of the Audit Committee with documents early enough to allow suffi cient time to examine the documents thoroughly. In addition, the Audit Committee holds a specifi c session in December of each year to discuss in detail the accounts closing process and any issues arising. If at that time the Audit Committee identifi es during the December session one or more issues which require specifi c attention, it has the possibility to organize an ad hoc meeting to ensure the
■ Section 23.2.4 of the Afep-Medef Code relative to stock options and performance shares: (i) holding of shares subsequent to subscription options or allotment of performance shares: pursuant to the Afep-
Medef Code, performance shares awarded to executive offi cers are conditional upon the executive offi cers acquiring a certain number of shares prior to the vesting date. In 2007, the Company decided to implement strict rules pertaining to shareholding requirements for executive offi cers. This policy requires each executive offi cer to hold, during the entire duration of his/her functions, a minimum number of AXA shares representing a multiple of his/her annual cash compensation (fi xed salary plus annual variable compensation) received for the previous fi scal year. The
Chairman & Chief Executive Offi cer is consequently required to hold the equivalent of his/her total cash compensation multiplied by three and the Deputy Chief Executive Offi cer is required to hold the equivalent of his/her total cash compensation multiplied by two. AXA shares and ADS
(i) permits the exercise of AXA stock options but (ii) prohibits the sale of shares acquired upon exercise of stock options
(“subscription and sale” transactions). Consequently, beneficiaries of options may exercise options at their pre-determined strike price at any time but may not sell
I Report of the Statutory Auditors p repared 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, 2015)
It is the Chairman’s responsibility to prepare, and submit to the Board of Directors for approval, a report describing the internal control and r isk m anagement procedures implemented by the Company and providing the other information required by Article L.225-37 of the French Commercial Code in particular relating to corporate governance.
The professional standards require that we perform procedures to assess the fairness of the information on internal control and Risk
report, prepared in accordance with Article L.225-37 of the French Commercial Code.
APPENDICES AAPPENDIX II MANAGEMENT’S ANNUAL EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING
The IFC programme is steered by the Group IFC Committee chaired by AXA’s CFO and involves the Planning Budgets Results
AXA’s ICOFR includes policies and procedures that: ■ pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of Group assets; ■ provide reasonable assurance that transactions are recorded as necessary to permit the preparation of fi nancial statements in accordance with the applicable generally accepted accounting principles; ■ provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorization of management and directors of the Group; and
In order to assess the effectiveness of ICOFR, fi nancial reporting risks are initially identifi ed at AXA Group level with a focus on identifying those risks that may result in a material misstatement of AXA’s consolidated fi nancial statements not being prevented or detected in a timely manner. This top-down and risk-based approach enables to identify in-scope AXA Group companies and processes.
For every key process category, the in-scope AXA Group companies (i) document the significant processes and/or controls, as well as the rationale of how the associated risk of material misstatement 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 with insight into risks, and (iii) remediate identifi ed control defi ciencies.
internal control over fi nancial reporting as of December 31, 2015, in order to be able to obtain reasonable assurance as to whether
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, 2015. 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 over fi nancial reporting is based on criteria established in the Internal Financial
Control Standard of AXA (“AXA’s IFC Standard”), which is an internal control and governance standard, as described in management’s annual evaluation of internal control over fi nancial reporting on page 362 of this Annual Report. Our responsibility is to express an opinion on the Company’s management’s assertion, based on our audit procedures.
In our opinion, the Company’s management’s assertion that internal control over fi nancial reporting as of December 31, 2015 is effective, in all material respects, is fairly stated based on the criteria established in AXA’s IFC Standard.
I confi rm that, to the best of my knowledge, the fi nancial statements have been prepared in accordance with applicable accounting standards and fairly present the assets and liabilities, the fi nancial position and the profi t or loss of the Company and its consolidated subsidiaries for the periods presented, and that the Board of Directors’ report, the various Sections of which are mentioned on page 415 of this Annual Report, fairly presents the evolution of the business, results and fi nancial position of the Company and its consolidated subsidiaries, and describes the principal risks and contingencies facing the Group.
The Statutory Auditors prepared a report on the Company’s Consolidated fi nancial statements for the year ended December 31, 2014, which are incorporated by reference in this document. This report, set out in pages 336 and 337 of the Registration Document was fi led with the AMF on March 26, 2015 under number D.15-0208.
FINANCIAL AUTHORIZATIONS TO ISSUE SHARES OR OTHER TYPES OF SECURITIES VALID AS OF DECEMBER 31, 2015
AXA’s authorizations to issue shares or other types of securities that were valid as of December 31, 2015 are summarized in the tables below: Issues with preferential subscription rights for shareholders
Capitalization of reserves, earnings or premiums – 1 billion (a) 26 months June 30, 2017
(in Euro or in percentage of the share capital) Term Expiration date
Ordinary shares or securities giving access to the capital, reserved for employees – 135 million (f) 18 months October 30, 2016
(h) At the date on which performance shares are granted by the Board of Directors.
Performance shares (actions de performance) (b) – 1% (c) 38 months June 27, 2019
(c) At the date on which performance shares are granted by the Board of Directors.
Please see Part 2.3 “Major shareholders and related party transactions”, Section “Employee shareholders” of this Annual
In 2015, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 23, 2014 (resolution 18)
2,459,256 performance shares were granted by the AXA Board of Directors.
Dividends received from subsidiaries amounted to €2,552 million, versus €3,342 million in 2014, representing a drop of €790 million.
Dividends received from insurance companies decreased by €669 million to €2,329 million mainly due to the following factors: ■ €1,122 million dividends from the Northern, Central and
Insurance; ■ €2 76 million dividends from the Mediterranean and Latin
Seguros in Colombia; ■ no dividends paid by AXA Life Insurance Co., Ltd (Japan), compared to €114 million in 2014, €292 million capital surplus was paid in 2015 through a capital reduction.
Operating expenses stood at €513 million, compared to €452 million in 2014, an increase of €61 million mainly attributable to programs designed to develop the business through improved digital capabilities.
Capital operations resulted in a loss of €106 million in 2015, versus a loss of €24 million in 2014, and breaks down as follows: ■ a €189 million foreign exchange profi t, versus €330 million in 2014, mainly coming from hedging adjustments on investments in subsidiaries in foreign currencies; ■ €270 million in net allowances to provisions for investments in subsidiaries, of which €214 million for FamilyProtect due to the redeployment of its portfolio to other AXA Group companies and pending its liquidation; ■ €99 million in allowances to provisions for risks and charges, versus €93 million in 2014, which mainly includes the annual allowance of €55 million to provisions for 2017 subordinated bond redemption premium; ■ €64 million of realized gains from the sale of 1% of AXA Life
Insurance Co., Ltd (Japan) to Nippon Life and the sale of AXA
The corporate income tax benefi t amounted to €784 million, compared with a tax benefi t of €646 million in 2014. It mainly included €815 million of tax receivables from members of the tax consolidation Group in France, partly offset by the €70 million payment related to the French tax of 3% on dividends paid to shareholders.
Intangible assets totaled €343 million. They mainly included the AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €36 million relating to the capitalization of software costs.
Company Ltd; ■ respectively €74 million and €60 million increases in capital of
AXA China and AXA Africa Holding to foster the development of their businesses; p artly offset by: ■ a €292 million capital reduction of AXA Life Insurance Co.,
Ltd (Japan) given its surplus capital; ■ a €273 million capital reduction of Finance Solutions following the liquidation of this entity; ■ €270 million in net allowances to provisions for investments in subsidiaries referred to above.
Receivables from subsidiaries stood at €4,034 million versus €3,521 million at year-end 2014, representing an increase of €513 million primarily due to a loan granted to AXA UK Plc for £350 million (€477 million).
Cash instruments totaled €15 million versus €50 million in 2014, a €35 million decrease mainly due to unwinding Japanese
Shareholders’ equity, before net income for the period and after payment of the dividends relating to the prior fi nancial year, stood at €40,905 million, a decrease of €479 million, including €1,149 million related to the cancellation of shares bought back, partly offset by a €375 million capital increase reserved for employees and €293 million following the exercise of stock options.
Other shareholders’ equity included undated deeply subordinated securities which totaled €6,734 million, versus €6,441 million in 2014, taking account of the €262 million negative foreign exchange effects.
Subordinated debt stood at €9,187 million versus €8,843 million in 2014, taking account of the €339 million negative foreign exchange effects.
Financial debt totaled €13,557 million versus €11,349 million at December 31, 2014, up €2,208 million, which primarily takes into account internal loans granted by sub-holdings to manage the cash position and outstanding commercial papers, partially offset by the redemption of €1 billion of senior debt in
Yen and US Dollar exchange rate trends, which adversely impacted liabilities.
At December 31, 2014, they amounted to €8 million, €5 million of which was due within three months.
In 2015, The Company did not acquire any signifi cant equity interests within the meaning of Article L.233-6 of the French
(b) Dividend proposed at year end 2015 is submited to the Shareholders‘ Meeting of April 27, 2016 and based on 2,426,458,242 outstanding ordinary shares.
AXA BANK EUROPE SA 681 724 100.00% 960 25, boulevard du Souverain – 1170 BRUXELLES – Belgium 23, avenue Matignon – 75008 PARIS
NBF Platinium Tower 1-17-3 Shirokane – Minato-ku 108 – 8020 TOKYO – Japan
Les collines de l’Arche – 76 route de la Demi Lune 92057 PARIS LA DEFENSE
Buldiing 11 Chiswick – 566 Chiswick High Road – LONDON W4 5XR – England 21, avenue Matignon – 75008 PARIS
Graadt van Roggenweg 500 – Postbus 30800 3503 AP UTRECHT – Netherlands 2) Participating interests (10 to 50%-owned)
Colonia Allee, 10-20 – 51067 KOLN – Germany 100 , Esplanade du Général De Gaulle – Cœur Défense Tour B
a) French subsidiaries (total) 85 b) Foreign subsidiaries (total) 151 2) Participating interests not shown in Section A
a) in French companies (total) 59 b) in foreign companies (total) 130
Since January 1, 2005, AXA has applied regulations CRC 200210 relating to depreciation and amortization of assets (amended by regulations CRC 2003-07 and CRC 2005-09), and CRC
Find below a summary of options and performances or units shares granted in 2015 and 2014 to members of the Management
AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €36 million relating to the capitalization of software costs.
The Company has issued subordinated bonds with following features : ■ 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, 2015. The redemption premium amounts to €688 million.
The General Meeting did not approve the amendment. As a result, to fully neutralize the dilution impact of the 2017 convertible bonds, AXA bought call options on AXA shares with an automatic exercise mechanism from a bank counterparty for a total cash amount equivalent to the payment proposed to bondholders. This €96 million premium is to be amortized over the residual ten-year term of the bond. At December 31, 2015, the remaining amount to be amortized was €10 million.
n° 2013-02, so as to measure any additional adjustment necessary to ensure the coverage of defi ned post-retirement benefi t obligations and for accounting purpose. The method 1, as defi ned by this Recommendation has been applied: past service costs are spread in profi t and loss over the vesting period and the expected return on asset is used in developing the net periodic pension cost. Pursuant to this review and following a €27 million payment to an external organism to fund the related obligations, the employee benefi t liability recognised was nil as at December 31, 2015 and 2014. Additional information on employees’ defi ned benefi t obligations is provided in Note 26.2.
■ Derivative 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.
(a) The net increase of €953 million was explained by : ■ a €663 million capital increase of AXA Global Life to deploy the internal reinsurance program for AXA Group; ■ €465 million for the acquisition of Genworth Financial European Group Holdings Ltd; ■ a €215 million capital increase of Société Beaujon mainly to fi nance the acquisition of Mansard Insurance Plc and the increased investment in Bharti AXA General Insurance Company Ltd; ■ respectively €74 million and €60 million increases in capital of AXA China and AXA Africa Holding to foster the development of their businesses; p artly offset by: ■ a €292 million capital reduction of AXA Life Insurance Co., Ltd (Japan) given its surplus capital; ■ a €273 million capital reduction of Finance Solutions following the liquidation of this entity.
(c) The increase of €254 million was mainly attributable to margin calls paid to bank counterparties under collateral agreements linked to the management of derivative instruments, which stood at €970 million at year-end 2015, compared with €727 million at year-end 2014.
(a) €270 million in net allowances to provisions for investments in subsidiaries, of which €214 million for FamilyProtect due to the redeployment of its portfolio to other AXA Group companies and pending its liquidation.
Miscellaneous receivables and currents accounts with subsidiaries 194 194 - 3. 5. Miscellaneous receivables and subsidiaries’ current accounts
The Company’s share capital is represented by 2,426,458,242 shares with a par value of €2.29, giving a total value of €5,556,589,374.18 at December 31, 2015. These shares were all entirely subscribed and paid with rights from January 1, 2015.
Other shareholders’ equity amounted to €6,734 million, compared to €6,441 million at the end of 2014, taking account of the €262 million negative foreign exchange effects.
Amortization of convertible bond redemption premiums 577 55 - - 632
Financial debt totaled €13,557 million versus €11,349 million at December 31, 2014, up €2,208 million, which primarily takes into account internal loans granted by sub-holdings to manage the cash position and outstanding commercial papers, partially offset by the redemption of €1 billion of senior debt in January 2015.
Other payables, including tax and social payables (b) 258 258 -
(a) Debt relating to non-current assets totaled €366 million and included shares issued by entities but not yet fully paid, including €237 million for AXA Global Life, €75 million for AXA Life Europe and €54 million for AXA Life Invest Reinsurance.
■ Directors’ fees allocated to members of the Board of Directors: €1.6 million.
Income tax expense (b) - 784 784 * A positive sign indicates tax benefi t.
Commitments to buy back shares and bonds from Group entities 51 -
Of which fi nancial guarantees given to Group entities 13,822 -
The table below shows an estimate of changes in the fair value of debt, loans and hedging instruments in the event of a 1%
(d) A 100 bps rise in interest rates leads to a 4.7% improvement in the fair value of debt, a 9.0% improvement in the fair value of derivatives, and a -0.2% deterioration in the fair value of loans.
This Note does not omit any material commitment or any which might become material in the future.
In our opinion, the fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Company at December 31, 2015 and of the results of its operations for the year then ended in accordance with French accounting principles.
■ Provisions are recorded at the year-end for redemption premiums on convertible bonds issued by the Company, in accordance with the policies described in paragraph 2.9 of the notes to the fi nancial statements. We reviewed the reasonableness of the assumptions used to calculate these provisions, as regards stock market volatility and the maturities of outstanding convertible bonds issued by the Company.
Concerning the information given in accordance with the requirements of Article L.225-102-1 of the French Commercial Code relating to remuneration and benefi ts received by corporate offi cers and any other commitments made in their favor, we have verifi ed its consistency with the fi nancial statements, or with the underlying information used to prepare these fi nancial statements and, where applicable, with the information obtained by your Company from companies controlling it or controlled by it. Based on this work, we attest to the accuracy and fair presentation of this information.
The information is disclosed in the “Embedded Value 2015 report” which is available on AXA Group website under Investor Relations/
In 2012, the AXA Group joined two major initiatives in the area of corporate responsibility: (1) the Group is a founding signatory to the UN Principles for Sustainable Insurance, a voluntary framework to integrate environmental, social and governance criteria into the insurance business; (2) the Group signed the
As a result, the footprint of AXA’s salaried workforce in 2015 was: 61.2% in Europe (vs. 62.6% in 2014), 20.5% in Asia-Pacifi c-
13.7% in 2014) and 4.1% in Africa (vs. 3.6% in 2014).
AXA continued to recruit in 2015 and hired more than 18,650 employees on open-ended contracts (excluding entries due to mergers and acquisitions), of which more than 3,800 were sales employees.
In addition, AXA, UNI Europe Finance and all French trade unions signed a major European agreement on anticipating change. The agreement, negotiated within the European Works Council, sets out an approach for social dialogue with the purpose of anticipating change in the sector in order to adapt employee skills to future needs and thus preserve jobs. According to the EWC, this agreement is unique in the insurance sector. It offers significant means to secure employment in Europe.
Both, quantitative and high level qualitative analyses were performed to identify AXA’s workforce challenges and needs in terms of headcount, level of experience, knowledge, and skills required for AXA current and future success, with a special focus on jobs impacted by digitization and AXA business transformation overall.
This has resulted in an increase in employee trust, engagement, empowerment, work-life-balance and productivity. Moreover it has also boosted the attraction and retention of diverse talent and yielded a reduced environmental footprint.
In 2015, total compensation cost was €8.6 billion, which corresponds to an increase by 10.1% compared to 2014. On a constant foreign exchange basis, total compensation cost increased by 4.2%.
Employee shareholders represented 6.2% of the outstanding share capital and 8.1% of the voting rights as of December 31, 2015.
were leveraged in 2015 as a way to engage AXA’s employees across the globe on various inclusion topics. “Allies@AXA Pride”, a group on sexual orientation, and “WoMen@AXA”, a group on gender equality, have grown in membership during the year (with over 1,000 members in total).
Working parents were made another key topic in 2015: Research was conducted into the current benefi ts made available to new parents across the Group and plans for improved provision are being drawn up for implementation in 2016.
Group level, describing a set of rules which every local entity is expected to adhere to and implement in order to ensure a consistent management of the Group, its risks and ethics. In
The sick absence rate in 2015 remained stable at 3.1%. As AXA
To ensure that AXA remains a leader also in the protection of its own employees, a study in 18 major entities was launched in late 2015 with the objective of identifying any exposure across the Company to Health, Safety or Physical Security risks.
AXA focuses on delivering common learning solutions to support the business needs within all AXA entities in four major domains: (1) Leadership Excellence, (2) AXA Excellence, (3)
Management System” (GLMS), and some are delivered exclusively on “Massive Online Open Course” f ormat (MOOC).
Since 2012, more than 35 business units implemented and deployed the “Global Learning Management System”. By the end of the year 2015, more than 65,000 employees accessed the system for their learning needs, and by early 2017 more than 100,000 employees are expected to have access to the
“Marketing in the Digital Age”) aiming to help AXA employees better understand and participate in the Company’s ongoing digital transformation. Furthermore, more than 13,000 employees have played the “Gamifi ed Corporate Open Online
Course” (COOC) “Do you speak Digital?”. Another innovative experience designed especially for AXA’s (Senior) Executives was the “Digital Reverse Mentoring”, connecting digital savvy employees with their leaders and acting as their mentors on new technology, social media usage and trends. In 2015, 450 employees mentored mentors worldwide covered 558 mentees delivering 2,232 hours of mentoring.
In 2015, OTR was specifi cally leveraged to better plan for the skills needed going forward in the context of digitization and to safeguard and build on AXA’s key technical expertise.
A performance management standard has been established to ensure that the Group’s performance-based pay policy, formalized skill mapping and the evaluation of training needs run effi ciently. During 2015, more than 76,000 employees were already making use of AXA’s PeopleSoft platform for performance management. The Group also provides with a multidimensional feedback platform, “AXA 360°”, enabling all AXA employees to get qualitative feedback from their professional network and to build a more comprehensive and tailored development plan.
Headcount (number of persons) as of December 31 2015 Evolution 2014
Total headcount of salaried workforce (open-ended and fi xed-term contract) 120,486 emp. +3.8% 116,034 emp.
Headcount of salaried workforce with fi xed-term contract 5,232 emp. 4,621 emp.
■ Non salaried temporary staff and contingent workers 4,845.2 fte 3,497.6 fte
Average length of service of salaried workforce 10.8 yrs 11.2 yrs
■ Number of entries following mergers and acquisitions 156 emp. 305 emp.
Net headcount evolution of salaried sales force (entries versus departures) 210 emp. 150 emp.
Internal mobility rate of salaried workforce 8.9 % 0.0 pt 8.9 %
Turnover rate of salaried sales force 24.8 % -2.9 pts 27.7 %
■ Proportion of fi xed pay (related to wages) 76.8 % 77.3 %
■ Proportion of variable pay (related to wages) 23.2 % 22.7 %
■ Proportion of fi xed pay (related to wages) 83.4 % 83.1 %
■ Proportion of variable pay (related to wages) 54.4 % 52.8 %
Average number of training days per salaried workforce 3.0 days 3.0 days
Absenteeism rate of salaried workforce 4.7 % +0.1 pt 4.6 %
■ Proportion of absences linked to maternity/paternity leave 31.8 % 32.6 %
■ Proportion of absences due to sickness 59.9 % 60.0 %
■ Proportion of absences due to work related accidents 2.4 % 2.4 %
■ Proportion of absences linked to maternity/paternity leave 37.7 % 37.6 %
emissions being AXA’s main environmental concern. Activities and facilities are not likely to generate noise and odor emissions.
No complaints, to AXA’s knowledge, related to this type of pollution were fi led against the Group. AXA’s operations and land use do not signifi cantly threaten biodiversity, nor water resource, as water consumption is mainly limited to building usage. Land use is limited to the space where AXA built its buildings (representing approximately 21% of the total area occupied). In 2015, 559,968 m2 of green space used by AXA
AXA. As a result, AXA’s environmental reporting and management processes focus on energy, water and paper consumption, as well as related CO
This target is broken-down into the following targets: ■ -35% power consumption (kwh/FTE); ■ -15% business travel: vehicle fl eet (km/FTE); ■ -5% business travel: air and train (km/FTE); ■ -45% offi ce paper (kg/FTE); ■ -50% marketing and distribution paper consumption (kg/
In addition, the Group has also set two environmental targets that are unrelated to carbon emissions: ■ 95% of paper must originate from recycled or sustainable sources; ■ -15% water consumption.
emissions related to home-work commuting and help raise employee awareness on alternative modes of transportation.
For example, data centers in Germany decreased their consumption by 2.3 GWh thanks to virtualization (94% versus 90% in 2014); ■ some entities have improved their energy efficiency by upgrading their installations. For instance, AXA General
Insurance Japan changed lighting to LEDs in one of its call centers and renovated their air-conditioning reducing their electricity consumption by 20%; ■ some entities have selected more energy effi cient buildings in cases of location transfers (e.g. AXA Mexico, AXA Sigorta).
AXA headquarters renovated one of its buildings achieving a 13% reduction between 2013 and 2015.
AXA’s premises use electricity (72% of fl oor space), gas (18%
(3% of fl oor space). Of note, the proportion of renewable energy consumed by AXA’s premises is 36%. Major improvements have been accomplished end of 2015 as all French entities (e.g. AXA
France, AXA Corporate Solutions France) have switched their energy mix to 100% renewable.
Some entities have adapted these guidelines to meet their local specifi cities. For instance, AXA Germany, is among the fi rst company in Germany to have implemented a “fl exible driving”
program offering an innovative and environment-friendly way of mobility. Employees are free to use the car-sharing vehicles for their business and private rides, which helps reduce the entity’s car-fl eet size.
To encourage employees to reduce travel, the Group has installed 50 video-conferencing rooms since 2008. These are estimated to have saved 225,855 trips and 333,013 tons of
In 2015, AXA’s marketing and distribution paper consumption per customer decreased by 2% compared to 2014 mainly explained by a more accurate measurement process in some entities (e.g. AXA UK, US). AXA is also working on increasing the volume of paper originating from recycled sources or sustainably managed forests. In 2015, AXA used 62% of offi ce paper and 65% of marketing and distribution paper from recycled sources.
Group seeks to minimize its “indirect” impact on the environment by offering insurance and investment solutions that promote environmentally-friendly behaviour.
Numerous offers with environmental added-value have been developed by various AXA entities in the Property & Casualty business segment: ■ in the retail product line: initiatives include Motor insurance policies/products encouraging low CO
also created a reinsurance pool to develop infrastructures producing renewable energy.
AXA was an active supporter of the COP21 UN climate talks, which took place in Paris in December 2015. In the run-up to
UN Principles for Sustainable Insurance and the UN Principles for Responsible Investment.
Mining players deriving over 50% of their turnover from coal related activities representing around €500 million; ■ green investments: in May 2015, the Group also committed to tripling its green investments aiming to reach over €3 billion by 2020 for its General Accounts, originating principally from investments in renewable energy infrastructures, green bonds and private equity; ■ carbon footprinting, “carbon asset risk” analysis: AXA
is also a mandatory disclosure requirement for all insurers operating in California starting from 2016, as announced by this State’s insurance commissioner in January 2016.
risks, which AXA intends to address through more refi ned analyses and shareholder engagement.
The Group is also committed to promoting research and education to better understand and protect against climate risk: the AXA Research Fund will dedicate €35 million to climate risk research by 2018. In addition, AXA works on climate issues through its partnership with the humanitarian organization CARE; this partnership is focused in part on disaster risk reduction efforts among vulnerable populations in both Africa and Asia.
Disclosures, signed the Montreal Pledge (which commits investors to measuring and publishing details of the carbon footprint of their investment portfolio) and, in the run-up to the UN Climate talks in Paris last year, signed the “French
Number of employees on site, Full-Time Equivalent (FTEs) FTE 112,000 116,303
Paper recycled and/or garanteeing sustainable management: offi ce % 61 62
KPI: Marketing and distribution paper consumption per customer (j) kg/customer 0.15 0.15
Paper recycled and/or garanteeing sustainable management: marketing & distribution % 60 65
Stable reporting perimeter compared to 2014, representing the 41 most signifi cant countries where the AXA Group is present. Key Performance Indicators (KPIs) highlighted in bold.
(b) Includes electricity, natural gas, heating oil, steam, chilled water and covers 91,681 FTEs.
(d) Home/workplace commute estimations are based on an annual online transportation survey, issued to every AXA salaried employee. This data has been collected from 19,879 FTEs and then extrapolated. Sites whose response rate was below 5% have been excluded from the data consolidation process.
providing long-term peace of mind which allows them to build and invest in the future.
AXA’s stakeholders include any individual or group affected by the Company’s business operations or who may, in turn, affect the environment in which AXA operates – its performance, reputation or business activities. AXA’s stakeholders include its customers, employees, business partners, governments and regulators, and those in civil society.
Engagement may take place through regular discussions, meetings, conferences, surveys or more formal structures, such as the Company’s European Works Council. AXA may also work directly with stakeholders through strategic partnerships
CARE, which has been in place since 2011). AXA also has a
Stakeholder Advisory Panel, which meets twice a year and provides high-level input to the Company’s strategy and its approach to corporate responsibility.
AXA’s approach to community investment also covers a number of other activities and initiatives, including: ■ employee volunteering (through local volunteering programs and the AXA Hearts In Action initiative); ■ the AXA Research Fund; ■ strategic partnerships (including the partnership with CARE, aimed at helping vulnerable populations better prepare for climate-related risks. Since 2011, AXA has donated €4.7 million); ■ support for arts and heritage (including AXA’s support to the
AXA employees worldwide support disadvantaged people through “AXA Hearts In Action”, the Group’s employee volunteering program. In 2015, thousands of AXA Hearts In
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. “Green” products are described in the “Environmental 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
Banks network; ■ Indonesia: To address the lower middle class customers asking for a loan, AXA leverages its partnership with Mandiri
Bank to propose Credit life, Personal Accident, and protection for natural/sickness death; ■ Thailand: AXA GI launched a partnership with AIS, the fi rst mobile network operator in Thailand, to distribute Personal
Accident and Hospital Cash products embedded in a dedicated prepaid plan with SIM card (freemium approach); ■ Morocco: AXA partners since 2012 with a Microfinance institution, Albaraka, to provide 120,000 micro-entrepreneurs with credit life, property and hospicash coverages; ■ Nigeria: AXA Mansard ventured into microinsurance in
Investment Policy, AXA aims to use its infl uence as a large asset owner to encourage ESG best practice within the companies in which it invest. This is refl ected in our voting and shareholder engagement activities on a range of ESG topics; ■ exclusion of sectors or companies that face acute social, human rights, ethical or environmental challenges (current exclusions: controversial weapons, coal mining and coalbased power generation, palm oil & forestry, soft commodities derivatives); ■ development of “impact investments” delivering positive environmental or social (as well as fi nancial) returns. Two funds have been launched: the AXA Impact Fund, focusing on social issues such as fi nancial inclusion, and the AXA Renewable
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 a dedicated Responsible
Investment (RI) research team as well as a global ESG research capacity through its platform, RI Search©. This tool covers more than 5,000 companies, 100% of the MSCI World index and 150 countries with ESG research from many sources. RI Search©
(1) In 2015, data is drawn from almost 80% of the Group’s total number of FTEs (2015 social and environmental data). In 2015, the methodology was changed to no longer include the hours of the (full or part time) salaried project managers in the volunteering hours.
issues, such as RI & “smart beta” investing, research on the skills shortage in the Oil & Gas sector, Board diversity in the largest European companies, and ESG integration in equity and sovereign debt asset classes. Further information can be found at www.axa-im.com/en/responsible-investment. AXA IM
Organisation principles. In addition, the Group applies social and environmental criteria to assess supplier performance. These criteria enable the Group to improve service quality and reduce some supply chain risks.
seeks to establish Group-wide guidelines and rules to ensure that AXA Group companies and employees have a common understanding of applicable ethical standards, participate in the fi ght against corruption and conduct business accordingly.
AXA also has a number of products or services that have specifi c social or environmental objectives (as well as fi nancial). These include micro-insurance products, certain applications aimed at risk prevention, particularly in health, and Group’s ‘green’ and
I Report by one of the Statutory Auditors, appointed as an independent third party, on the consolidated human resources, environmental and social information presented in the management report For the year ended at the 31st of December, 2015
In our capacity as Statutory Auditor of AXA S.A., appointed as an independent third party and certifi ed by COFRAC under number 3-1060 (1), we hereby report to you on the consolidated human resources, environmental and social information for the year ended at the 31st of December 2015, included in the management report (hereinafter named «CSR Information»), pursuant the article L.225102 -1 of the French Commercial Code (Code de commerce).
The Board of Directors is responsible for preparing a company’s management report including CSR Information required by article
R.225-105-1 of the French Commercial Code and with the Social Data Report referential, the Environmental Reporting Protocol and the Community Investment Survey Guide used by the Company (hereinafter the «Guidelines»), summarised in the management report and available on request from the company’s head offi ce.
We performed our work in accordance with the French professional standards and with the order dated 13 May 2013 defi ning the conditions under which the independent third party performs its engagement and with ISAE 3000 (2) concerning our conclusion on the fairness of CSR Information.
We compared the CSR Information presented in the management report with the list provided in article R.225-105-1 of the French
We verifi ed that the CSR Information covers the scope of consolidation, i.e., the Company, its subsidiaries as defi ned by article
L.233-1 and the controlled entities as defi ned by article L.233-3 of the French Commercial Code within the limitations set out in the methodological information described at the bottom of the data tables “Social data 2015 – AXA Group” and “AXA Group environmental indicators”, as well as the footnote of the paragraph “Volunteering” of the Appendix VII of the management report.
(organisation, policies, actions), performed analytical procedures on the quantitative information and verifi ed, using sampling techniques, the calculations and the consolidation of the data. We also verifi ed that the information was consistent and in agreement with the other information in the management report; ■ at the level of a representative sample of entities, composed of AXA Belgium, AXA Bank Europe, AXA US, AXA France, GIE AXA,
Philippines, AXA Insurance UK, Winterthur Life UK, AXA UK Holding and AXA PPP Healthcare UK selected by us on the basis of their activity, their contribution to the consolidated indicators, their location and a risk analysis, we conducted interviews to verify that procedures are properly applied, and we performed tests of details, using sampling techniques, in order to verify the calculations and reconcile the data with the supporting documents. The selected sample represents on average 35% of headcount, between 36% and 59% of quantitative environmental data and between 26% and 31% of quantitative social data.
You will find below the references to the extracts of the
Exhibits 20. Table of the capital increase delegations 366 to 367 21. Table of the Company’s fi nancial results over the last fi ve years 373 22. Chairman of the Board of Directors’ report 352 to 359
APPENDICES AAPPENDIX IX COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE
Pages 3. Selected fi nancial information 4 to 5 5. Information about the issuer 5.1 History and development of the issuer 6 to 7 6. Business overview 9 to 19 and 20 to 23 7. Organizational structure 7.1. Brief description of the Group 6 to 10 7.2. List of signifi cant subsidiaries 226 to 232 8. Property, plants and equipment n/a 9. Operating and fi nancial review 10. Capital resources 10.1. Capital resources 89 to 94 and 267 to 272 10.2. Sources and amounts of cash fl ows 89 to 94 ; 206 to 207 and 266 to 267 10.3. Borrowing requirements and funding structure 89 to 94 and 288 to 289 10.4. Restrictions on the use of capital resources 89 to 94 10.5. Anticipated sources of funds needed 89 to 94 11. R&D, patents and licenses n/a 12. Trend information 30 to 31 ; 85 ; 94 and 341 to 342 13. Profi ts forecasts or estimates n/a 14. Administrative, Management, and Supervisory bodies and senior management 14.1. Information on members of the Administrative, Management or Supervisory bodies 96 to 113 14.2. Administrative, Management and Supervisory bodies’ confl icts of interests 107 to 108 and 139 to 140 15. Remuneration and benefi ts 15.1. Amount of remuneration paid 115 to 144 15.2. Amounts set aside or accrued to provide pension, retirement or similar benefi ts 142 to 143
Statement made by the person responsible for the Annual Financial Report 365
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 352 to 359
www.axa.com on which you will fi nd the aggregate regulated information published by our Company.