While notional amount is the most commonly used measure of volume in the derivatives market, it is not used as a measure of risk because the notional amount greatly exceeds the possible credit and market loss that could arise from such transactions. The AXA Group is exposed to credit risk in respect of its counterparties to the derivative instruments, but is not exposed to credit risk on the entire notional amounts. AXA actively manages counterparty risk generated by OTC (over-the-counter) derivatives through a specific Group-wide policy. This policy includes a limit framework and an exposure monitoring process. Limits are set specifically for each authorized counterparty, based on an internal scoring system. This policy also includes daily to weekly collateralization for the majority of the Group’s exposure. The notional amounts do not represent the amounts actually exchanged by the parties and thus are not a measure of the AXA Group’s exposure to derivative instruments. The AXA Group’s exposure is represented by the market value of a derivative contract at a given point in time.
As at December 31, 2008, the notional amount of hedging derivative instruments as defined by IAS 39 (fair value, cash flow and net investment hedges) of the AXA Group totaled €35,331 million (€28,305 million at the end of 2007 and €28,537 million at the end of 2006). Their net fair value was €–497 million (€1,596 million at the end of 2007 and €1,083 million at the end of 2006).
a) Swaps Swap contracts are agreements between two parties to exchange one set of cash flows for another set of cash flows. Payments are made on the basis of the swap’s notional value. AXA primarily uses (i) interest-rate swap contracts to manage cash flows arising from interest received or paid, and (ii) currency swap contracts to manage foreign-currency denominated cash flows or investments.
On a consolidated basis, the notional amount of such instruments at December 31, 2008 was €148,246 million (€116,307 million at the end of 2007 and €111,837 million at the end of 2006). Their market value was €–69 million (€1,429 million at the end of 2007 and €1,445 million at the end of 2006).
(iii) AXA Germany Life & Savings (notional amount of €8,136 million versus €884 million and €423 million at the end of 2007 and 2006 respectively) due to the active financial risk management program associated with the guaranteed minimum benefits on variable annuity products,
(v) AXA France Life & Savings (notional amount of €4,715 million versus €2,552 million and €2,702 million at the end of 2007 and 2006) to adjust the duration of the fixed income portfolio and to benefit from long term interest rate, and
(vi) the united States Life & Savings (notional amount of €3,183 million versus €85 million and €0 million at the end of 2007 and 2006 respectively) to reduce the economic impact of unfavorable changes to the Variable Annuity guarantees’ exposures attributable to movements in the equity and fixed income markets.
Currency swaps constitute another part of AXA’s hedging strategies to manage foreign currency cash flow exposures, and are primarily used by the Company (€36,615 million at end 2008 versus €28,698 million and €21,968 million respectively at the end of 2007 and 2006) and by AXA Japan mainly to hedge the foreign currency exposure related to internal debts and loans (€1,475 million versus €1,259 million and €3,071 million respectively at the end of 2007 and 2006).
The notional amounts of swaps used in net foreign investment hedge relationships totaled €21,558 million (€14,163 million at the end of 2007 and €9,554 million at the end of 2006), including €21,508 million of currency swaps used by the Company.
b) Options The option portfolio consists mainly of caps and floors. Interest rate caps and floors are option-like agreements where the seller agrees to pay the counterparty an amount equal to the difference, based on a notional amount, between the interest rate of the specified index and the interest rate cap or floor. These products are used to hedge against interest rate increases (caps) or decreases (floor). Caps and floors are used predominantly by the united States to hedge interest rates on contracts with guaranteed rates of return and by French Life & Savings operations to serve policyholder participation in an interest rate increase context.
At the end of 2008, the uS Life & Savings had €1,254 million open exchange-traded options on the S&P 500 index to mature on January 19, 2010, consisting of a long put and short call on the index with strike prices of 881.7 and 1,021.21, respectively, and a short put position at 613.5. These positions were established in the fourth quarter of 2008 to mitigate the adverse effects of equity market declines on AXA Equitable statutory reserves and protect downside equity exposure to 30% but limit the opportunity for upside to approximately 16%. At December 31, 2008, these positions were out of the money.
c) Futures and Forwards Futures are contracts that obligate settlement at a specified price and on a specified future date and can be traded on the market. Forwards are customized contracts between 2 entities where settlement takes place on a specific date in the future at today’s pre-agreed price.
As a result, 93% of the notional value of futures and forwards at the end of 2008 were used in hedging relationships that do not qualify for hedge accounting under IAS 39 (89% and 86% respectively at the end of 2007 and 2006).
d) Credit derivatives The AXA Group, as part of its investment and credit risk management activities, may use strategies that involve credit derivatives (Credit Default Swaps or CDS), which are mainly used as an alternative to corporate debt security portfolios, when coupled with government debt securities, but also as a protection on single corporate names or specific portfolios.
At December 31, 2008, the notional amount of credit derivatives carried by the Group was €30,873 million (including €8,148 million held through CDOs), of which: • €6,420 million relating to exposures held within investment funds of the “satellite investment portfolio” (see Note 1.7.2) not detailed in this note. Such credit default swaps were used mainly in France (€5,286 million) and Belgium (€885 million).
• €24,453 million held directly or within “core investment portfolio” or CDOs with a fair value of €–1,388 million detailed in the present note. Such credit derivatives were mainly used at AXA Japan on highly rated debt securities to enhance the returns on its portfolio (€11,618 million at the end of 2008 versus €4,253 million at the end of 2007 and €4,676 million at the end of 2006).
e) Mortality derivatives On November 13, 2006, AXA announced a €1 billion pluri-annual shelf program to transfer mortality risk to the capital markets, of which approximately €345 million (converted at the transaction date) was invested in 2006. This risk transfer resulted in a derivative contract between AXA and a special purpose vehicle called Osiris Capital plc, indexed to the mortality levels observed in various countries in which AXA operates (France, Japan, Australia and the united States for the 2006 investment). It is shown under the line item “Other derivatives”.
19.3. EFFECT OF HEDGING ON FINANCIAL INvESTMENTS The impact of derivative instruments is presented in the balance sheet within their related underlying financial assets (and liabilities, see section 19.4). The table below sets out the impact of derivative instruments on the related underlying assets.
Debt securities (at cost) that are not quoted in an active market 1,212 – – 1,212 – – – – 1,212 – – 1,212
Macro hedge and other derivatives 110 – – 110 4 – – 4 114 – – 114
Loans designated as at fair value through profit or loss 45 – – 45 – – – – 45 – – 45
Macro hedge and other derivatives – – – – 8 – – 8 8 – – 8
Investment property at amortized cost 12,793 – 66 12,859 2,306 – – 2,306 15,099 – 66 15,165
Debt securities available for sale 254,720 195 549 255,465 3,913 (19) – 3,894 258,633 177 549 259,359
Debt securities designated as at fair value through profit or loss 44,336 – (137) 44,199 182 – (125) 57 44,518 – (262) 44,256
Non controlled investment funds available for sale 5,336 (5) 4 5,336 76 – – 76 5,413 (5) 4 5,412
Non controlled investment funds designated as at fair value through profit or loss 2,177 – 10 2,187 63 – – 63 2,241 – 10 2,250
Loans held to maturity – – – – – – – – – – – –
Assets backing contracts where the financial risk is borne by policyholders 131,941 – 49 131,990 – – – – 131,941 – 49 131,990
(a) Carrying value, i.e net of impairment, discount premiums and related amortization, including accrued interest, but excluding any impact of derivatives. (b) Excluding macro hedge and other derivatives.
Investment property designated as at fair value through profit or loss 4,137 – – 4,137 – – – – 4,137 – – 4,137
Debt securities designated as at fair value through profit or loss 55,095 – 58 55,152 832 – (11) 822 55,927 – 47 55,974
(a) Carrying book value, i.e net of impairment, discount premiums and related amortization, including accrued interest, but excluding any impact of derivatives.
Debt securities held for trading 123 – (3) 120 1,042 – (23) 1,019 1,165 – (26) 1,139
Debt securities (at cost) that are not quoted in an active market – – – – – – – – – – – –
Non controlled investment funds available for sale 3,446 3 – 3,449 142 – – 142 3,588 3 – 3,591
Macro hedge and other derivatives (27) – – (27) 1,312 – – 1,312 1,285 – – 1,285
Assets backing contracts where the financial risk is borne by policyholders 182,726 – 101 182,827 – – – – 182,726 – 101 182,827
(b) Excluding macro hedge and other derivatives. (c) Macro hedge and other derivatives.
Debt securities available for sale 241,652 (83) (311) 241,258 5,645 – – 5,645 247,297 (83) (311) 246,903
Debt securities designated as at fair value through profit or loss 49,520 – 71 49,591 186 – (4) 182 49,706 – 67 49,772
Debt securities (at cost) that are not quoted in an active market 10 – – 10 1 – – 1 11 – – 11
Equity securities available for sale 35,761 (149) (8) 35,604 2,744 – (11) 2,733 38,505 (149) (19) 38,337
Equity securities designated as at fair value through profit or loss 22,076 (25) – 22,050 123 – – 123 22,198 (25) – 22,173
Equity securities held for trading 142 – – 142 332 – – 332 474 – – 474
Non controlled investment funds designated as at fair value through profit or loss 2,321 13 (15) 2,319 155 – – 155 2,476 13 (15) 2,474
Assets backing contracts where the financial risk is borne by policyholders 176,479 – 83 176,562 – – – – 176,479 – 83 176,562
The impact of derivative instruments is presented in the balance sheet within their related underlying financial liabilities (and assets, see section 19.3). The tables below set out the impact of derivative instruments on the related underlying liabilities.
Liabilities arising from investment contracts with no discretionary participating features 1,295 – – 1,295 1,452 – – 1,452 1,121 – (62) 1,059
Impact of Impact of Impact of value before derivative value before derivative value before derivative effect of instruments Impact of value including effect of instruments Impact of value including effect of instruments Impact of value including derivative subject to other derivative effects of derivative subject to other derivative effects of derivative subject to other derivative effects of instruments hedge accounting instruments derivatives instruments hedge accounting instruments derivatives instruments hedge accounting instruments derivatives
Minority interest of controlled investment funds and puttable instruments held by minority interests holders 5,108 – – 5,108 7,751 – – 7,751 7,224 – – 7,224
(c) Other debts are presented excluding the effect of derivatives on the face of the balance sheet. (d) Derivative instruments used to hedge the net investment in a foreign operation, and not attached to a debt on the face of the balance sheet.
Impact of Impact of Impact of Net carrying derivative Net carrying derivative Net carrying derivative value excluding instruments Impact of value including value excluding instruments Impact of value including value excluding instruments Impact of value including effect of subject to other derivative effects of effect of subject to other derivative effects of effect of subject to other derivative effects of (in Euro million) hedging value hedge accounting instruments derivatives hedging value hedge accounting instruments derivatives hedging value hedge accounting instruments derivatives
Total liabilities arising from insurance contracts 416,471 – (1,167) 415,304 424,363 – (98) 424,265 432,345 (21) (67) 432,258
Liabilities arising from investment contracts where the financial risk is borne by policyholders 46,520 – – 46,520 69,587 – – 69,587 67,673 – – 67,673
Total liabilities arising from investment contracts 85,896 – – 85,896 111,161 – (102) 111,059 101,399 – (62) 101,338
Macro hedge derivative instruments on insurance and investment contracts (liabilities) – – (7) – – – 13 – – – (13)
Other debt instruments issued, notes and bank overdrafts 6,644 26 6 6,676 6,258 2 – 6,260 8,714 (3) – 8,711
Payables arising from direct insurance and inward reinsurance operations 7,167 – 7 7,174 7,033 (14) – 7,018 7,947 – – 7,947
Payables arising from banking activities (b) 20,059 – 831 20,890 18,443 – 271 18,713 16,817 – 175 16,992
Derivative instruments on investments (hedge accounting) 77 452 529 54 (22) 33 67 (305) (238)
Total derivative instruments relating to other receivables (137) 17 (120) – (8) (8) – (19) (19)
Macro hedge derivatives on insurance and investment contracts (7) – (7) – 13 13 – (13) (13)
Macro hedge banking activities and other derivatives 103 728 831 – 271 271 – 175 175
Total net value of derivative instruments – liabilities (2) 134 35 (677)
Other derivatives on other receivables 2 (2) – – 1 1 – – –
Derivative instruments relating to financing debt, operating debt and other financial liabilities 46 432 479 (116) 68 (48) 17 (707) (689)
NOTE 20 > REVENuES BY SEGMENT AND NET REVENuES FROM BANKING ACTIVITIES
Of which fees and charges on investment contracts with no participation features 662 740 608
Contracts with financial risk borne by policyholders (unit-linked) 18,435 85,916 46,520 21,529 113,654 69,587 18,512 108,984 67,129
(b) Relates to liabilities arising from investment contracts without discretionary participation features and investment contracts without discretionary participation features where the financial risk is borne by policyholders.
(b) As described in Note 1.10, the contribution of discontinued operations is stated on a separate line of the income statement.
Total – Property & Casualty excluding International Insurance 26,913 6,383 1,231 164 34,691 12,665 47,356
Total – Property & Casualty including International Insurance 32,336 10,325 1,417 227 44,305 14,036 58,340
Change in fair value of investments designated at fair value through profit or loss 119 (7) (31)
Net investment result (excluding financing expenses) from the financial assets of insurance companies and companies in other business segments (excluding revenues from the financial assets of banks included in net revenues from banking activities) was as follows: Change in fair value of investments designated Net realized as at fair Change in Net investment investment value through investments Net investment (in Euro million) income gains and losses profit or loss impairment result
Debt securities (at cost) that are not quoted in an active market 30 – – – 30
Non controlled investment funds designated as at fair value through profit or loss 23 (6) (91) – (74)
Non controlled investment funds held for trading – (8) 1 – (7)
Other assets held by controlled investment funds designated as at fair value through profit or loss 283 277 326 886
Loans designated as at fair value through profit or loss 2 – 555 – 557
(a) Includes debt securities held by consolidated investment funds, designated as at fair value through profit or loss. (b) Includes equity securities held by consolidated investment funds, designated as at fair value through profit or loss. (c) Net investment result included an impact of €–2.7 billion related to Asset Backed Securities, of which €–0.8 billion was due to impairment charges, and €–1.9 billion was related to change in fair value of investments designated as at fair value through profit or loss. Also, note that the change in fair value of ABS had a gross impact of €–0.7 billion on shareholders’ equity.
Investment properties designated as at fair value through profit or loss 263 527 (541) – 250
Debt securities (at cost) that are not quoted in an active market – – – – –
Non controlled investment funds designated as at fair value through profit or loss 222 14 14 – 250
Other assets held by controlled investment funds designated at fair value through profit & loss 206 20 66 292
(a) Includes debt securities held by consolidated investment funds, designated as at fair value through profit or loss. (b) Includes equity securities held by consolidated investment funds, designated as at fair value through profit or loss.
Change in fair value of investments designated Net realized as at fair Change in Net investment investment value through investments Net investment (in Euro million) income gains and losses profit or loss impairment result
Equity securities designated as at fair value through profit or loss (c) 639 1,071 869 – 2,579
Other assets held by controlled investment funds designated as at fair value through profit or loss 208 (7) 16 217
Loans designated as at fair value through profit or loss – – (166) – (166)
Net investment income is presented net of impairment charges on directly-owned investment properties, and net of amortization of debt securities premiums/discounts. All investment management fees are also included in the aggregate figure.
The change in fair value of investments designated as at fair value through profit or loss consists mainly of: • adjustments relating to investments backing contracts where the financial risk is borne by policyholders which are offset by an adjustment of related policyholders reserves as there is a full pass through of the performance of held assets to the individual contract holder; • changes in the fair value of investments designated as at fair value through profit or loss held by funds of the “Satellite Investment Portfolios” as defined in Note 1.7.2; • changes in fair value of underlying hedged items in fair value hedges (as designed by IAS 39) or “natural hedges” (i.e. underlyings assets designated as at fair value through profit or loss part of an economic hedge not eligible for hedge accounting as defined by IAS 39).
Net result of reinsurance ceded was as follows: Property & International Inter-segment (in Euro million) Life & Savings Casualty Insurance eliminations TOTAL
Premiums ceded and unearned premium ceded (926) (1,032) (1,965) 158 (3,764)
In 2008, the €949 million improvement in the net result of reinsurance ceded compared to 2007 was mainly attributable to the Life & Savings segment (up €881 million) driven by the united States (up €985 million) as a result of: • a change in reserves ceded to Center Re (€+424 million) offset by a similar change in the caption “Technical charges relating to insurance activities”; • a €513 million increase of the ceded reserves due to the financial market impact on the Annuity business line.
Financing debt expenses amounted to €685 million in 2008, and included income and expenses relating to hedging derivative instruments on financing debt, mainly at AXA SA (€160 million).
Financing debt expenses amounted to €471 million in 2007, and included income and expenses relating to hedging derivative instruments on financing debt, mainly at AXA SA (€211 million).
Property & International Inter-segment (in Euro million) Life & Savings Casualty Insurance Total Insurance Asset management Banking Holdings eliminations TOTAL TOTAL TOTAL
(c) Change (capitalization and amortization) in deferred acquisition costs relating to insurance and investment contracts with discretionary participation features and changes in net rights to future management fees relating to investment contracts with no discretionary participation features.
Write back of depreciation for tangible assets 3 1 – 4 – – – – 5 (2) (18)
Increase / (write back) of provisions for risk and charges 8 (5) (9) (6) 39 1 (75) – (42) 30 22
Charges relating to owner occupied properties 289 269 54 613 240 11 16 (2) 877 854 709
(in Euro million) December 31, 2008 December 31, 2007 December 31, 2006 (a)
25.2. EMPLOYEE BENEFITS 25.2.1. Defined contribution plans The cost of the contributions paid was recognized as an expense in the income statement, and amounted to €82 million for the year ended December 31, 2008 (€75 million in 2007, €88 million in 2006 and €72 million in 2005).
25.2.2. Defined benefit plans The assumptions for each of the liabilities are consistent with the economic features of the corresponding countries’ plans. The weighted-average assumptions used by AXA for pension plans in the principal regions in which AXA operates were as follows: december 2008 assumptions Europe North America Japan Other
The assumptions used for 2007, 2006 and 2005 were as follows: december 2007 assumptions Europe North America Japan Other
25.2.3. Annual change in pension and other benefit obligation The annual change in the Defined Benefit Obligation (DBO) is calculated on the basis of: • Service cost for the period (representing the increase in the DBO attributable to one year of additional service), • Interest cost (cost of one year less discounting), • Employee contributions, • Change in plans (amendments, curtailments, settlements, business combinations, etc.), • Actuarial gains and losses (due to assumptions and experience), • Benefits paid by employer, plan assets and separate assets.
The table below presents the change in benefit obligation and the change in plan assets associated with pension plans and other benefit plans sponsored by AXA, together with an analysis of separate assets as of December 31, 2008. During the fiscal year 2008, the main change in the scope was the acquisition of Seguros ING, now AXA Mexico, which was completed on July 22, 2008.
Benefits paid by plan assets and by separate assets (434) (443) (419) (402) – – (49) (50)
Benefits directly paid by the employer (270) (227) (128) (115) (44) (45) – –
Benefits paid by plan assets (370) (383) (246) (234) – – (4) (6)
Impact of foreign currency fluctuations (735) (546) 28 135 – – – –
Fair value of plan assets at the end of the year (B) 4,662 7,057 8,216 4,693 3 3 9 14
Fair value of separate assets at the beginning of year 739 2,480 2,697 2,265 – – – –
Benefits paid by separate assets (64) (60) (168) (168) – – – –
Underfunded status (plan by plan) (7,087) (6,098) (6,530) (6,729) (507) (502) (595) (703)
Liability and asset recognized in the balance sheet (excluding separate assets)
Net economic funding position (including separate assets) (6,206) (5,079) (3,950) (3,957) (506) (501) (595) (703)
(a) This amount includes the acquisition of Seguros ING in 2008, now AXA Mexico, the sale of the Netherlands activities in 2007 and the acquisition of Winterthur in 2006.
“Other benefits” includes (i) postretirement benefits other than pensions, principally health care benefits, and (ii) post employment benefits after employment but before retirement.
25.2.5. Pension and other benefits expense The annual expense for employee pension and other benefits recorded in the income statement, for the years ended December 31, 2008, 2007, 2006 and 2005 is presented below: Pension benefits Other benefits
Pension and other benefits expense 306 371 225 257 37 40 23 66
The decrease in expense from 2007 to 2008 was mainly due to changes in the pension schemes in Switzerland and in the united States.
Employer contributions and benefits directly paid by the employer 548 378 242 328 44 45 49 49
Net transfer In/(Out) (including acquisitions and disposals) (a) (b) 107 (2,280) (485) 121 (11) (20) (8) (23)
During 2008 the deterioration of the net economic funding position for pension benefits was mainly due to decline in market value of the plan assets and separate assets.
25.2.7. Change in the liability recognized in the balance sheet (excluding separate assets) The roll-forward of the balance sheet liability from January 1, 2008 to December 31, 2008 captures only the evolution of the liability recorded in the Group’s balance sheet and not the separate assets. Therefore it is not a full economic picture. The table below shows the detailed roll-forward of the balance sheet liability, with the separate assets added at each year end.
Benefits directly paid by the employer 270 227 128 115 44 45 45 44
Benefits paid by separate assets 64 60 168 168 – – – –
Net transfer In/(Out) (including acquisitions and disposals) (a) (b) 50 (2,253) (548) – (11) (20) (8) (23)
Actuarial gains and losses recognized in the SoRIE component (1,229) 1,022 392 (667) 19 54 24 (28)
(b) This amount includes the effect of the elimination of the insurance contract in Switzerland in 2007. (c) This amount includes the effect of the reclassification of assets in the United States as plan assets rather than separate assets in 2007.
Adjustment due to the sale of the Netherlands activities – (4) – – – (1) – –
Impact of foreign currency fluctuations (34) 10 24 (40) 3 (5) – (1)
The table below shows the total asset mix i.e. for plan assets and separate assets: Total Group Europe North America Other
25.2.11. Other employee benefits funded on a pay-as-you-go basis In the united States, AXA Financial provides certain medical and life insurance benefits (collectively, “postretirement benefits”) for qualifying employees, managers and agents retiring from AXA Financial based on years of service and age. The life insurance benefits are related to age and salary at retirement for certain grandfathered retirees, and a flat dollar amount for others. AXA Financial continues to fund the postretirement benefits costs for these plans on a pay-as-you-go basis. For 2008, postretirement benefits payments were made in the amounts of €36 million (€37 million in 2007 and €42 million in 2006), net of employee contributions.
(a) Net position (excluding separate assets) for pension benefits and other benefits as reported in Note 25.2.4. (b) It corresponds to a liability of €7,714 million (as at December 31, 2008) included in the balance sheet under the caption “provision for risks and charges”
In accordance with IFRS 2, the total employee share based compensation cost of €171.9 million for full year 2008 included expenses from share-based compensation instruments for grants made after November 7, 2002 which had not yet vested at December 31, 2003. The cost includes the expenses from share-based compensation instruments issued by the Group as well as by AXA subsidiaries. The unit cost of the equity settled instruments does not vary for a given plan. The total charge is amortized over the vesting period and adjusted at each future closing date for the difference between actual and expected lapse.
25.3.1. Share-based compensation instruments issued by the Group AXA SA STOCK OPTIONS Executive officers and other key employees may be granted options on AXA ordinary shares under employee stock option plans. These options may be either subscription options involving newly issued AXA ordinary shares or purchase options involving AXA treasury shares. While the precise terms and conditions of each option grant may vary, options are currently (i) granted at a price not less than the average closing price of the ordinary share on the Paris Stock Exchange during the 20 trading days preceding the date of grant, (ii) valid for a maximum term of ten years, and (iii) vest in instalments of 33.33% per year on each of the second, third and fourth anniversaries of the grant date.
For members of the Executive Committee (since 2006) and employees who are granted more than 5,000 options (since 2007), the first two instalments vest unconditionally at the end of the vesting period, while the vesting of the final instalment is subject to the fulfilment of certain conditions regarding the performance of the AXA shares compared to the DowJones Europe Stoxx Insurance index.
The number of outstanding options and the number of exercisable options as at December 31, 2008 are shown below by expiry date: eXpiry date of options Outstanding options Exercisable options
Number Exercise price Number Exercise price (in million) (in Euro) (in million) (in Euro)
Information on options granted after November 7, 2002 is shown in the table below: post november 7, 2002 aXa sa stocK option plans
The number of outstanding options and the number of exercisable options at December 31, 2008 are shown below by expiry date for AXA SA plans granted after November 7, 2002: eXpiry date of options Outstanding options Exercisable options
Total AXA and ex-FINAXA 54.2 46.9 42.5 25.1 15.6 9.4 options aXa and eX-finaXa
The option pricing assumptions and fair value for plans issued in 2008, 2007, 2006 and 2005 are as follows: Assumptions
The total cost of the AXA SA plans is amortized over the vesting period and an estimated 5% pre-vesting lapse rate is applied. On that basis, the expense recognized in profit or loss for the year ended December 31, 2008 was €48.2 million (€1.0 million for the 2004 grants, €3.7 million for the 2005 grants, €10.9 million for the 2006 grants, €14.4 million for the 2007 grants, €5.4 million for the 2008 grants and €12.9 million relating to AXA SA ordinary share options granted to AXA Financial employees).
The following tables show a summary of the u.S. holding company’s AXA ADR stock option plans: aXa adr stocK option plans Options Weighted price (in million) (in US $)
Weighted Weighted Number Exercise price Number Exercise price (in million) (in US $) (in million) (in US $)
From 2005 on, there are no more AXA ADR grants to employees or associates, only punctual advance for immaterial options have occurred (10,650 AXA ADR options granted in 2008, 8,440 granted in 2007 and 7,864 in 2006).
The traditional plan allows employees to purchase, through a personal investment, AXA shares (either through mutual funds (FCPE) or through direct share ownership) with a 20% discount. The shares are restricted from sale during a period of 5 years (except specific early exit cases allowed by applicable laws). Employees bear the risk of all movements in the share as compared to the subscription price.
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) with a discount. The leverage on the employees’ personal investment is in the form of a loan (non-recourse) from a third party bank. The shares are restricted from sale during a period of 5 years (except specific early exit cases allowed by applicable laws). Employees who participate in the leverage plan benefit from a guarantee on their personal investment and also receive a defined percentage of any upside appreciation (above the nondiscounted reference price) on the full leveraged amount invested. The leveraged plan is not accessible to Management Board and Executive Committee members.
Interest rate on employee loan 8.46% 8.29% 7.54% 7.47% 7.01% 7.34%
Total cost for AXA (in Euro million) 0.6 16.1 6.0 18.7 4.3 12.0
In 2005, 2006, 2007 and 2008, Performance Shares were issued to executive officers and other key employees in France only. Performance Shares are similar to Performance units, but the payment is equity-settled. In France, most of the Performance units granted to employees in 2004 were converted into Performance Shares in 2005. The total cost of Performance Shares was €19.7 million in 2008.
AXA FINANCIAL SHARE-BASED COMPENSATION PLANS The total cost of AXA Financial’s share-based compensation plans in 2008 included €–6.8 million in respect of AXA Financial Stock Appreciation Rights (as they are subject to variations in the basis of recognition due to changes in the market value of AXA ADRs) and €3.6 million in respect of AXA ADR Restricted Shares and Performance Accelerated Restricted Shares granted to senior executives and non-employee directors.
ALLIANCEBERNSTEIN SHARE-BASED COMPENSATION PLANS AllianceBernstein grants Restricted units and options to acquire AllianceBernstein units, which are valued and booked according to IFRS principles.
In 2008, AllianceBernstein granted to certain key employees the right to receive part of their deferred compensation in the form of options to acquire AllianceBernstein units. The 2008 total cost amounted to €13.8 million.
Options to acquire AllianceBernstein units were granted as follows: 13,825 options in 2008; 3,708,939 options in 2007; 9,712 options in 2006; and 17,604 options in 2005.
In 2007: • Short-term benefits: compensation paid to members of the Management Board in respect of 2007 totaled €14.1 million, including fixed salary, bonuses, directors’ fees and benefits in kind. • Share-based compensation: the expense recognized in 2007 in respect of share-based compensation granted to Management
The increase in 2008 compared to 2007 was mainly due to: • the acquisition of Seguros ING in Mexico (4,927 employees) and the consolidation of the Gulf Region (628 employees) in the
Mediterranean and Latin American Region; • the acquisition of SBJ Group (823 employees) in the united Kingdom.
The Group calculates a basic net income per ordinary share and a diluted net income per ordinary share: • The calculation of the basic net income per ordinary share assumes no dilution and is based on the weighted average number of outstanding ordinary shares during the period.
• The calculation of diluted net income per ordinary share takes into account shares that may be issued as a result of stock option plans. The effect of stock option plans on the number of fully diluted shares is taken into account only if options are considered to be exercisable on the basis of the average stock price of the AXA share over the period.
(in Euro million) (c) December 31, 2008 December 31, 2007 December 31, 2006
Weighted average number of ordinary shares (net of treasury shares) – opening 2,030 2,063 1,855
NET INCOME PER ORDINARY SHARE (d) (e) C = A / B 0.44 2.76 2.54
• Subordinated convertible Notes – February 8, 1999 due 2014 – – 38
In 2008, the Company was party to the following transactions with related parties which may be deemed to have been material to AXA or the related party in question or unusual in their nature or conditions.
Relationships with the Mutuelles AXA The Mutuelles AXA (AXA Assurances IARD Mutuelle and AXA Assurances Vie Mutuelle) are two mutual insurance companies engaged in the Property & Casualty insurance business and Life & Savings insurance business in France. Each Mutuelle is supervised by a board of directors elected by delegates representing policyholders. Certain members of the Company’s Supervisory Board and Management Board serve as directors or executive officers of the Mutuelles AXA.
The Property & Casualty insurance business generated in France by insurance brokers is underwritten through a coinsurance arrangement between AXA Assurances IARD Mutuelle and AXA France IARD, a Property & Casualty insurance subsidiary of the Company. Technical results are shared between these companies in proportion to their written premiums. Aggregate written premiums recorded in this coinsurance agreement amounted to €1,542 million in 2008 (of which €1,367 million was attributed to AXA France IARD).
Groupement d’Intérêt Economique (GIE) 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 Company was party during 2008 covered a variety of common services including services performed by the AXA Group’s central functions for the benefit of AXA Group companies (e.g., finance, accounting and reporting, tax, legal, marketing and brand, internal audit, human resources, procurement, information systems, risk management, cash management) as well as certain other services. Expenses invoiced by these GIEs to the Company and its subsidiaries are generally invoiced at cost and are included in the consolidated expenses reflected on Company’s audited consolidated financial statements.
Loans/Guarantees/Capital Contributions, etc. AXA has given numerous commitments and guarantees, including financing commitments, guarantees given to financial institutions and customers, pledged assets, collateralized commitments and letters of credit. For a detailed description of these commitments and guarantees, see Note 28 “Contingent assets and liabilities and unrecognized contractual commitments”. Certain of these guarantees are given by the Company for the benefit of its subsidiaries and affiliates for various business purposes including to promote development of their business (e.g. to facilitate acquisitions, integration of acquired businesses, distribution arrangements, internal restructurings, sales or other disposals of assets or businesses or similar transactions), to support their credit ratings, and/or to promote efficient use of the Group’s capital resources. In this context, the Company may guarantee repayment of loans or other obligations between its subsidiaries, guarantee obligations of its subsidiaries to third parties, or provide other types of guarantee for the benefit of its subsidiaries. The beneficiaries of these guarantees are generally required to compensate the Company at a negotiated rate based on prevailing market rates and conditions for guarantees of a similar nature. In addition, from time to time, the Company may provide comfort letters or similar letters to rating agencies and/or regulators for the benefit of its subsidiaries and affiliates for various business purposes, including facilitating specific transactions, achieving target ratings levels and, more generally, helping to develop the business of these subsidiaries.
The Company, from time to time, makes capital contributions, loans, other extensions of credit, or otherwise provides liquidity and capital resources to its subsidiaries and affiliates for various business purposes including to finance their business operations 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 affiliates from time to time including loans or other types of credit arrangements, acquisitions or sales of assets, securities or other financial instruments and/or similar transactions. In addition, the Company may from time to time borrow from its subsidiaries for various business purposes. These transactions are carried out on arms-length terms and conditions with loans and other extensions of credit bearing interest at varying rates that generally reflect prevailing market rates at the respective dates such loans were originated. In 2008, these transactions included loans from the Company to its uS subsidiary AXA Financial, Inc. in the amount of approximately €2.44 billion that were used principally to enhance the capitalization of AXA Financial’s insurance subsidiaries.
Key Management and Directors To the best of the Company’s knowledge, based on information reported to it: • At December 31, 2008, there were no loans outstanding from the Group to any member of AXA’s Management Board or
Investments in non-consolidated investment funds are limited to the shares in these funds which do not provide control and any material arrangements between AXA and these funds is disclosed in this Note 28, as appropriate.
(b) 2007 and 2006 numbers were revised to include letters of credit received by the US Life & Savings related to reinsurers (2007: €172 million and 2006: €211 million).
Letters of credit received increased by €328 million, to €1,930 million at the end of 2008, and were mainly related to the united States holding company (€1,426 million).
Commitments given totaled €33,424 million at the end of 2008, a decrease of €313 million as compared to the end of 2007.
Financing commitments given totaled €1,841 million at the end of 2008, and consisted of: • Financing commitments to customers (€1,652 million), mainly comprising commitments given related to credit lines and overdraft authorizations granted by AXA Banque to their customers (€805 million), and by AXA Bank Europe in the context of its retail activities (€530 million).
• Financing commitments to credit institutions (€190 million), including notably €96 million given to agents by France Property & Casualty, and €72 million financing commitment given by AXA Japan Life to the Japanese insurance protection fund.
Guarantee commitments given totaled €5,872 million at the end of 2008, and consisted of: • guarantee commitments given to credit institutions (€4,595 million) including mainly guarantees given by AXA SA
(€4,311 million); • guarantees commitments given to customers (€1,278 million) including €1,008 million granted by AXA Banque mainly consisting in gap guarantees on structured products, given to funds managed by AXA Investment Managers.
Pledged securities and collaterized commitments given totaled €12,854 million at the end of 2008, and mainly consisted of: • €6,745 million in Japan Life & Savings, including securities given as guarantees for cash deposits received in securities lending transactions (€5,850 million), securities pledged as part of derivative transactions (€60 million), securities given as guarantees for short-term security borrowings by Japanese entities (€820 million). Commitments were also received on these products.
(€565 million) and a multi tranche loan (€510 million), and a commitment given to “Protektor”, the German insurance guarantee fund (€368 million) in the case of a bankruptcy of the insurance companies.
• €2,910 million commitments given by France Life & Savings, €599 million given by France Property & Casualty, and €144 million given by AXA Corporate Solutions Assurance, notably including €2,066 million on Private Equity Funds.
• €618 million in the united Kingdom Life & Saving, mainly in commitments to AXA Private Equity funds (€501 million) and the Parallel Ventures (€12 million). These funds are vehicles (partnerships and similar vehicles) that allow exposure to private equity investments in the united Kingdom, the united States and European markets.
If all or part of the assets transferred are unlikely to be returned in the foreseeable future (taking into consideration the duration of the in force With-Profit policies), then the relevant part of the transfer would be designated permanent. Only a permanent transfer to the With Profits Funds would result in a charge against the profit and loss account. The maximum amount that could be transferred under the Scheme is capped at the market value of relevant surplus assets in the Non Profit Funds, which is estimated to be £1,000 million (€1,044 million) as at December 31, 2008. As at December 31, 2008 the transfer to the With-Profits Funds has a nil value. under the rules of the Scheme an annual test (“the Test”) must be performed at least once in a 12 month period and may result in an additional transfer. The completion of the Test, based on an effective date of January 1, 2009, may lead to a transfer but this is not expected to be permanent.
The 2005 agreement maintains the provisions of the prior agreement concerning minimal and stable cross-shareholdings. Pursuant to the agreement, the AXA Group undertakes to hold at least 43,412,598 shares of BNP Paribas and the BNP Paribas Group undertakes to hold at least 61,587,465 shares of AXA. These amounts are subject to adjustment to reflect the impact of certain capital transactions, including, but not limited to: capital increases, free allotments of stock, stock splits or similar transactions.
Agreement with Schneider On May 15, 2006, and after authorization by the AXA Supervisory Board on December 21, 2005, the AXA Group, the Mutuelles AXA and the Schneider Group entered into an agreement that provides for the maintenance of minimal cross-shareholdings. under
Supports provided without having a contractual or constructive obligation to do so The Group did not provide any material support without having a constructive obligation to do so to non consolidated entities during the period.
28.3. OTHER ITEMS: RESTRICTION ON DIvIDEND PAYMENTS TO SHAREHOLDERS Some AXA subsidiaries, principally insurance companies, are subject to restrictions on the amount of funds they may transfer in the form of cash dividends or otherwise. In most cases, the amounts available for distribution from AXA’s insurance subsidiaries are limited to net income for the year and retained earnings calculated in accordance with the accounting policies used by the subsidiaries to prepare their financial statements. Further restrictions may be imposed by the local insurance regulators in countries where AXA operates. In some cases, amounts available for distribution are also subject to regulatory capital adequacy tests or the approval of an independent actuary, or subject to individual provisions contained in a company’s by-laws. In accordance with European union directives, insurance companies with their registered office in a European union member country are required to maintain minimum solvency ratios which must be supported by capital, retained earnings and reserves and unrealized capital gains on marketable securities and real estate as reported in regulatory filings or subject to approval by local regulators in some countries. AXA’s insurance operations in countries outside the European union are also subject to local capital adequacy and solvency margin regulations. At December 31, 2008, AXA’s subsidiaries complied with the applicable solvency and capital adequacy requirements. In addition, the currency hedges used by AXA to manage foreign exchange rate risk may significantly impact the statutory results (parent only) of the Company and the amounts available for distribution as dividends to its shareholders because unrealized exchange rate gains and losses under these derivatives are recognized in the Company’s income statement.
Membership in a professional body: PricewaterhouseCoopers Audit is registered as an independent auditor with the Compagnie Régionale des Commissaires aux Comptes de Versailles.
Mazars: Exaltis – 61, rue Henri Régnault – 92075 Paris-La Défense Cedex, represented by Messrs. Patrick de Cambourg and Jean-Claude Pauly, first appointed on June 8, 1994. The current appointment is for a term of 6 years, until the annual General Meeting of the shareholders called to approve the financial statements for the fiscal year 2009.
Membership in a professional body: Mazars is registered as an independent auditor with the Compagnie Régionale des Commissaires aux Comptes de Versailles.
Mr. Jean Louis Simon: Exaltis – 61, rue Henri Régnault – 92075 Paris-La Défense Cedex – 75012 Paris, first appointed on April 21, 2004. The current appointment is for a period of 6 years, until the annual General Meeting of the shareholders called to approve the financial statements for the fiscal year 2009.
29.2. FEES PAID TO STATUTORY AUDITORS Pursuant to Article 222-8 of the AMF General Regulations, the table below shows the fee amounts paid by AXA to each of the statutory auditors in charge of auditing the Group’s financial statements, distinguishing between the fees for, on the one hand, the legal mission of statutory auditors of the statements, as well as the diligence directly related to them, and, on the other hand, for other services.
Statutory audit and certification of local and consolidated financial statements 41,277 43,951 82% 82% 8,202 7,160 96% 91%
Legal, tax and employment consulting 4,405 4,796 9% 9% 84 52 1% 1%
30.1. MATTERS DIRECTLY CONCERNING AXA SA AXA SA is involved in lawsuits (both class actions and individual litigations), investigations, and other actions arising in the various jurisdictions where it does business, including the following: In 2007, AXA SA completed the squeeze-out of the minority shareholders at two German subsidiaries, AXA Konzern AG (“AKAG”) and Kölnische Verwaltungs-AG für Versicherungswerte (“KVAG”). Following the effective date of these squeeze outs in July 2007, certain former AKAG and KVAG shareholders brought an action in Germany alleging that the cash compensation offered by AXA SA was not adequate. Management believes that these claims are without merit and intends to vigorously defend them. Management also believes that these judicial proceedings are likely to continue for several years before they are definitively resolved due to the complexities, procedural and otherwise, of the matter.
• In June 2006, AXA Equitable received a demand for arbitration from Centre Life Insurance Company (“Centre Life”) seeking to rescind the 100% quota share reinsurance agreement, effective July 1, 2000, between Centre Life and AXA Equitable, under which Centre Life reinsures portions of AXA Equitable’s individual disability income insurance business. Centre Life alleged that AXA Equitable provided it with inaccurate and incomplete data upon which Centre Life relied in order to establish the reinsurance premium paid by AXA Equitable as consideration in the transaction and sought $207.2 million in damages plus statutory interest and attorneys’ fees. In September 2008 the arbitration panel awarded Centre Life a total of $21 million. Certain ancillary business expense claims and a counterclaim filed by AXA Equitable, which were not adjudicated in the hearing by agreement of the parties, were settled following the arbitration.
• AXA Equitable and/or AXA Advisors LLC is currently the subject of four putative class actions filed between July 2006 and September 2007 in Federal court alleging certain wage and hour violations with regard to certain sales personnel. Each of the cases seeks substantially the same relief under essentially the same theories of recovery: violation of the Fair Labor Standards
• A putative class action entitled Eagan, et al. v. AXA Equitable Life Insurance Company was filed in the District Court for the Central District of California in December 2006 against AXA Equitable as plan sponsor and fiduciary for an ERISA retiree health plan. The action was brought by two plan participants on behalf of all past and present employees and agents who received retiree medical benefits from AXA Equitable at any time after January 1, 2004, or who will receive such benefits in 2006 or later, excluding certain retired agents. Plaintiffs allege that (a) AXA Equitable’s adoption of a revised version of its retiree health plan in 1993 (the “1993 Plan”) was not authorized or effective, (b) that AXA Equitable has therefore breached the retiree health plan by imposing the terms of the 1993 Plan on plaintiffs and other retirees, (c) even if the 1993 Plan is controlling, AXA Equitable has violated the terms of the retiree health plan by imposing health care costs and coverage on plaintiffs and other retirees that are not authorized under the 1993 Plan, and (d) AXA Equitable breached fiduciary duties owed to plaintiffs and retirees by allegedly misrepresenting and failing to disclose information to them. The plaintiffs seek compensatory damages, restitution and injunctive relief prohibiting AXA Equitable from violating the terms of the applicable plan, together with interest and attorneys’ fees. The original trial date of May 2009 has been stayed, and the court has not set a new trial date. In January 2009, AXA Equitable filed a motion to dismiss the complaint for lack of subject matter jurisdiction. In February 2009, the court denied AXA Equitable’s motion to dismiss the complaint.
AllianceBernstein Matters On December 18, 2003, AllianceBernstein settled with the SEC and the Office of the New York State Attorney General (“NYAG”) regarding their investigations into trading practices in the shares of certain mutual funds sponsored by AllianceBernstein. In connection with this settlement, AllianceBernstein established a $250 million restitution fund to compensate fund shareholders for the adverse effect of market timing (the “Restitution Fund”). During 2008 an Independent Distribution Consultant (“IDC”) retained by AllianceBernstein to develop a plan for the distribution of the Restitution Fund confirmed that the Restitution Fund was sufficient to compensate for the harm to mutual fund shareholders from market timing activities and the SEC approved the IDC’s distribution plan on May 15, 2008. The IDC is expected to begin distributing payments from the Restitution Fund in February 2009.
30.2.2. Other Subsidiary Litigations Philips Litigation From 1998 through 2001, subsidiaries of AXA, along with a syndicate of other insurers, participated in the Philips worldwide liability program (the “Policy”) providing certain insurance covers for Philips N.V. (“Philips”) and its subsidiaries on a worldwide basis. Thompson Hayward Agriculture & Nutrition LLC (“THAN”), an indirect u.S. subsidiary of Philips, made a claim under the Policy in respect of asbestos-related claims resulting from its distribution of raw asbestos fiber from 1961 to 1980. The insurers sought to void the policy on grounds that Philips had failed to disclose material information concerning THAN and its business during subscription and underwriting of the Policy. Following litigation initiated in the Netherlands and united States, the parties reached a settlement in June 2008. The settlement had no material impact on the Company’s consolidated financial position or results of operations.
In addition to the matters described above, AXA and certain of its subsidiaries are involved in various legal actions and proceedings arising out of transactions involving the acquisition or sale of businesses or assets, mergers or other business combination transactions, the establishment or dissolution of joint ventures or other partnerships, public exchange or tender offers, buy-outs of minority interests or similar types of transactions (“M&A Transactions”). In connection with M&A Transactions, AXA and its subsidiaries from time to time: • are involved in legal actions or other claims brought by purchasers, joint venture partners, shareholders or other transaction parties asserting claims for damages on various theories (including misrepresentation, failure to disclose material information, failure to perform contractual duties, breach of fiduciary duties), seeking contractual indemnification, or otherwise seeking to impose liability on AXA and/or its subsidiaries, and/or;
• benefit from contractual rights to indemnification from third party sellers or other transaction counterparties that are designed to protect the Group against existing or potential future litigation exposures or other types of contingent liabilities of the acquired businesses or assets. These indemnities generally constitute unsecured obligations of the indemnifying party and, consequently, their value may be substantially impaired or rendered worthless in the event of the bankruptcy or insolvency of the indemnifying party.
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.
Some of the litigations described above have been brought on behalf of various alleged classes of claimants, and certain of the claimants in these actions seek significant or unspecified amounts of damages, including punitive damages. In some jurisdictions, juries have substantial discretion in awarding punitive damages.
On March 17, 2009, AXA announced that it will subscribe for its share (approximately 53.1%) to the AuD660 million capital increase 1 of AXA Asia Pacific Holdings (AXA APH), corresponding to an amount of approximately €178 million for AXA SA. This operation has (i) no impact on the Group’s Solvency I ratio and (ii) no material impact on AXA SA’s liquidity position, because AXA APH will use a portion of the proceeds from this capital increase to repay approximately €107 million of outstanding debt to AXA SA.
PricewaterhouseCoopers Audit MAZARS 63 rue de Villiers 61 rue Henri Régnault 92208 Neuilly-sur-Seine cedex 92400 Courbevoie
Statutory auditors’ report on the consolidated financial statements For the year ended December 31, 2008
These consolidated financial statements have been approved by the Management Board. Our role is to express an opinion on these consolidated financial statements based on our audit.
I – Opinion on the consolidated financial statements 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 financial statements are free of material misstatement. An audit involves performing procedures, on a test basis or by selection, to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
• The carrying values of purchase goodwill are tested at each closing for recoverability using the methods described in Note 1.6.1 and 5.2.2 to the consolidated financial statements. We have assessed whether the valuation approaches used rely on assumptions that are consistent with the forecasts that emerge from the strategic plans established by the Group.
• Derivatives and hedging activities are recognized in accordance with the methods and procedures described in Note 1.9 to the consolidated financial statements. We have assessed whether the hedging activities that abide by hedge accounting in accordance with hedge accounting rules have been duly documented, and whether this documentation includes an explanation of the hedging relationship, its efficiency and the Group’s objective in terms of risk management and hedging strategy.
These assessments were made in the context of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.
III – Specific verification As required by law we have also verified the information given in the Group’s management report. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
MEMORANDUM AND ARTICLES OF ASSOCIATION Memorandum and Articles of Association 416
ObjECTS AND PURPOSES Under Article 3 of its statuts AXA’s corporate purpose is generally to: • hold equity interests whatever their forms in any French or foreign companies or businesses, including insurance companies or businesses, • acquire, manage and sell all listed or unlisted shares or securities, including all real and movable property, as well as all rights, listed or unlisted stock, and movable property related to said assets, and • perform any and all industrial, commercial, financial, real estate or movable property transactions, directly or indirectly related to any of the foregoing.
MANAgEMENT bOARD AND SUPERvISORY bOARD MEMbERS In addition to French law provisions, AXA’s statuts and the Supervisory Board’s Rules of Procedure include a number of specific provisions concerning members of the Supervisory Board and Management Board, including the following: Compensation Upon the proposal of the Compensation Committee, the Supervisory Board approves the amount and terms of compensation for each of the members of the Management Board. Members of the Supervisory Board receive a fixed directors’ annual fee, the overall amount of which is determined by the shareholders at their Annual Meeting and apportioned by the Supervisory Board among its members. The Supervisory Board also may authorize that its members be compensated for the performance of special tasks or assignments in accordance with the provisions of French company law. In addition to directors’ fees, the Supervisory Board may decide to grant compensation to its Chairman and Vice-Chairman. Any Supervisory Board’s decision to award such compensation requires approval of the Supervisory Board (majority vote) at a duly convened meeting where at least half the members are present. For further information please see Part III “Corporate governance, executive compensation, major shareholders and related matters” of this Annual Report.
Neither French law nor AXA’s statuts require members of the Management Board to be shareholders of the Company. However, the Supervisory Board, acting on the recommendation of its Compensation Committee, has adopted guidelines for share ownership applicable to members of the Management Board. These guidelines provide that each member of the Management Board must hold during the entire duration of his/her functions on the Management Board, a number of AXA shares having a minimum value defined as set forth: (i) the Chairman of the Management Board is required to hold the equivalent of his total cash compensation received for the prior fiscal year (fixed salary plus variable compensation) multiplied by three, and (ii) the other Management Board members are required to hold the equivalent of their total cash compensation received for the prior fiscal year (fixed salary plus variable compensation) multiplied by two. Each Management Board member must comply with this requirement within a period of 5 years commencing on the later of (i) January 1, 2007, and (ii) the date of his/her first appointment to Management Board.
For additional information concerning the respective powers of the Management and Supervisory Boards, please see Part III “Corporate governance, executive compensation, major shareholders and related matters” of this Annual Report.
Exercise of stock subscription warrants 6,120 86,465 1,874,363,546 4,292,292,520 share capital increase in connection with the acquisition of Winterthur 208,265,897 3,613,841,064 2,082,658,975 4,769,289,053
Exercise of stock subscription warrants 3,953 47,259 2,085,862,740 4,776,625,675 share capital reduction by cancellation of shares – 11,273,270 – 279,268,697 2,074,589,470 4,750,809,886
New equity issue reserved for employees of AXA (sharePlan 2006) 15,472,458 339,536,543 2,090,061,928 4,786,241,815
New equity issue reserved for employees of AXA (sharePlan 2008) 24,735,608 403,190,812 2,089,110,866 4,784,063,883 31/12/2008 Exercise of stock options 47,303 399,237 2,089,158,169 4,784,172,207
CHANgES IN SHARE CAPITAL Capital increase Pursuant to the statuts of AXA and French law and subject to the exceptions described below, the share capital of AXA may be increased only with the approval of two-thirds of the shareholders present or represented by proxy voting together as a single class at an extraordinary general meeting.
Capital reduction As provided in the French Commercial Code, AXA’s share capital may generally be reduced only with the approval of two-thirds of the shareholders present or represented by proxy voting together as a single class at an extraordinary shareholders’ meeting. The number of shares may be reduced in the event that AXA either exchanges or repurchases and cancels shares. As a general matter, reductions of capital occur pro-rata among all shareholders, except (i) in the case of a share repurchase program, or a public tender offer to repurchase shares (“offre publique de rachat d’actions” (OPRA)), where such a reduction occurs pro-rata only among tendering shareholders; and (ii) in the case where all shareholders unanimously consent to a non pro-rata reduction. AXA may not repurchase more than 10% of its share capital within 18 months from the date of the shareholders’ meeting authorizing a shares repurchase program. In addition, AXA may not cancel more than 10% of its outstanding share capital over any 24-month period and may not hold more than 10% of its share capital in self-held shares and shares owned by subsidiaries.
Self-held shares must be fully paid and held by AXA in registered form, except the shares bought under a share repurchase program. Self-held shares are deemed outstanding under French law but are not entitled to dividends, voting rights or preemptive rights.
Preemptive rights Under French law, shareholders have preemptive rights to subscribe, on a pro-rata basis, for additional securities or other securities giving a right, directly or indirectly, to equity securities issued by AXA for cash. During the subscription period relating to a particular offering of shares, shareholders may transfer preferential subscription rights that they have not previously waived. In order to issue additional ordinary shares without preemptive rights, beyond issuances already approved or authorized by AXA shareholders, AXA must obtain the approval of its shareholders, together in an extraordinary meeting of AXA shareholders, and voting following a two-thirds majority of the voting rights.
Under French law, AXA is required to allocate 5% of its net income in each fiscal year, after reduction for losses carried forward from previous years, if any, to a legal reserve fund until the amount in that fund equals 10% of the nominal amount of its share capital. The legal reserve is distributable only upon AXA’s liquidation.
Upon proposal by AXA’s Management Board and subject to prior approval by the Supervisory Board, the shareholders of AXA may decide to allocate all or part of distributable profits to special or general reserves, to carry them forward to the next fiscal year as retained earnings, or to allocate them to the shareholders as dividends. If AXA has earned a distributable profit since the end of the previous fiscal year, as reflected in an interim balance sheet certified by its auditors, the Management Board may distribute interim dividends to the extent of the distributable profit without shareholders approval in accordance with French law. AXA’s statuts require AXA to distribute dividends between its shareholders pro-rata according to their shareholdings in the capital. Dividends are usually paid within the few business days following the date of the shareholders’ meeting approving their distribution. The right to receive the dividend is due to the shareholders at the date of payout.
AXA’s statuts provide that AXA ordinary shares may be held in registered or bearer form. Any owner of ordinary shares of AXA may elect to have its ordinary shares held in registered form and registered in its name in an account currently held by BNP Paribas Securities Services for, and on behalf of AXA, or held in bearer form and recorded in its name in an account held by an accredited financial intermediary, such as a French broker, bank or other authorized financial institution. Any shareholder may, at its expense, change from one form of holding to the other. Both methods are operated through Euroclear France (which we refer to in this Annual Report as “Euroclear”), an organization that maintains share and other securities accounts of French publicly quoted companies and a central depositary system through which transfers of shares and other securities in French publicly quoted companies between accredited financial intermediaries are recorded.
When AXA ordinary shares are held in bearer form by a beneficial owner who is not a resident of France, Euroclear may agree to issue, upon request by AXA, a bearer depository receipt (“certificat représentatif”) with respect to such ordinary shares for use only outside France. In this case, the name of the holder is deleted from the accredited financial intermediary’s books. Shares ownership, represented by a bearer depository receipt, will pass upon delivery of the relevant receipt outside France.
In addition, the statuts of AXA provide that any individual or entity acting alone or in concert with others, that acquires ordinary shares resulting in a direct or indirect holding of 0.5% or more of the outstanding share capital or voting rights of AXA, including through the acquisition of ADRs evidencing the ADSs, must notify AXA by registered letter with return receipt requested within five days of the date of the acquisition (“inscription en compte”) of the ordinary shares or in the case of a holder of ADRs evidencing ADSs, within five days of the registration of the ADRs evidencing the ADSs, as a result of which the shareholder, acting alone or in concert with others, has reached or exceeded that percentage. The individual or entity must further notify AXA pursuant to the above conditions each time an additional 0.5% threshold is crossed. Any shareholder, including any holder of ADRs evidencing the ADSs, whose holding falls below any of these thresholds must also notify AXA. In addition and to permit holders of ordinary shares to give the notices required by law and the statuts, AXA is required to publish each month, the number of outstanding AXA ordinary shares and the corresponding number of voting rights, if there has been any change during the course of the month.
LIqUIDATION RIgHTS If AXA is liquidated, the assets remaining after it pays its debts, liquidation expenses and all prior claims will first be used to repay AXA shareholders up to the amount of the liquidation balance and of the shares par value held by each shareholder. Any surplus will be divided among all shareholders, subject to rights arising, if any, from the different classes of shares, in proportion of the rights they own in the Company’s sharecapital.
SHAREHOLDERS’ MEETINgS Under French law, prior to any ordinary and/or extraordinary shareholders’ meeting, a notice of Meeting must be published in the Bulletin des annonces légales obligatoires, or “BALO”, at least 35 days prior to the meeting date (or 15 days if convened, in the event that the Company is subject to a tender offer, for purposes of approving measures the implementation of which would be likely to cause such tender offer to fail) and must indicate, in particular, the agenda and the proposed resolutions.
Shareholders are convened, meet, and deliberate in accordance with applicable French law and AXA’s statuts. All shareholders are entitled to attend these meetings, either in person or by proxy, provided that they show valid proof of ID and share ownership. The right to attend the shareholders’ meetings of companies whose stock is traded on a regulated market or transactions of a central depository is evidenced by an accounting entry showing the number of shares in the name of the shareholder of record (or the intermediary of record for the account) in accordance with the seventh paragraph of Article L. 228-1 of the French Commercial Code, on the third business day preceding the meeting at midnight (Paris time), either in the nominee share ownership records kept by the Company or in the bearer share records kept by a qualified intermediary. The accounting registration or recording of the shares in the bearer share accounts on the books of the qualified intermediary is evidenced by a certificate of attendance delivered by the latter.
In accordance with applicable laws and regulations, shareholders may also transmit proxy or mail voting cards in paper form and/or, subject to approval by the Management Board published in the notice of Meeting, by electronic means.
MODIFICATION OF SHAREHOLDER RIgHTS Under French law, shareholders of a French joint stock corporation (société anonyme) generally have the power to amend the statuts of the Company. Such an amendment requires the approval of two-thirds of the shareholders attending or represented at an extraordinary shareholders’ meeting. However, no such extraordinary shareholders’ meetings may decide (i) to increase the liability of the shareholders in respect of the company or a third-party; or (ii) to undermine the individual rights vested in each shareholder (such as voting rights, the right to distributable profits of the company when allocated as dividends, the right to sell one’s shares and the right to sue the company).
ANTI-TAKEOvER PROvISIONS There are no French anti-takeover statutes similar to the anti-takeover statutes enacted by certain states in the United States. However, a number of French law provisions including certain provisions of the European Directive of April 21, 2004 concerning takeover bids implemented in France in 2006, may have certain anti-takeover effects. In the case of AXA, the relevant provisions include, among other things, the Company’s ability to repurchase its own shares regarding legal requirements and the existence of AXA shares with double voting rights.
Each AXA ADR evidences one ADS, which in turn represents one AXA ordinary share. The ordinary shares underlying the ADSs represented by ADRs are deposited with the custodian (currently BNP Paribas) under the terms of an amended and restated deposit agreement dated April 27, 2001 (referred to herein as the “deposit agreement”), among AXA, The Bank of New York Mellon, as depositary, and the holders from time to time of ADRs issued under the deposit agreement. The deposit agreement has been filed as an exhibit to the Company’s registration statement on Form F-6, filed with the SEC on June 12, 2001 (registration number 333-13376). Additional copies of the deposit agreement are available for inspection at the Corporate Trust Office of The Bank of New York Mellon in New York and at the principal Paris office of the custodian, currently BNP Paribas, or any of their successors. The deposit agreement is governed by New York law and sets forth the full terms and conditions governing the ADRs and ADSs.
Under current French company law and AXA’s statuts, there are no general limitations on the right of non-resident or non-French persons to own or, where applicable, vote the ordinary shares, whether held in the form of ordinary shares or ADSs. However, both European Union and non-European Union residents must file a déclaration administrative or administrative notice, with French authorities in connection with the acquisition of a controlling interest in any French company. Under existing administrative foreign direct investment regulations and administrative rulings, ownership by non-residents of France of more than 33.33% of a listed company’s share capital or voting rights is regarded as a controlling interest, but a lower percentage might be held to be a controlling interest in certain circumstances. The factors that will be taken into account in making that determination include the existence of: • an option of the acquiring party to buy additional shares, • loans and guarantees granted by the acquiring party to the French company in amounts evidencing control over the financing of the French company, and • patent licenses granted by an acquiring party or management of technical assistance agreements with the acquiring party that place the French company in a dependent position vis-à-vis that party or its group.
Under current French insurance regulations, any person, or group of persons acting in concert, who is not a resident of a member state of the European Economic Area must obtain authorization from the French Ministry of the Economy prior to entering into a transaction to acquire a direct or indirect interest, or to increase or decrease its direct or indirect interest, in AXA if such transaction would allow that person, or group of persons acting in concert, to (i) acquire control of, or cease to control, AXA or (ii) increase its interest to 10%, 20%, 33.33% or 50% of AXA’s voting right, including, in each case, through the holding of ADRs evidencing ADSs.
TAXATION The following generally summarizes the material U.S. federal income tax and French tax consequences to U.S. Holders of the ownership and disposal of ordinary shares or ADRs evidencing ADSs. It applies to you only if you hold your shares or ADRs evidencing ADSs as capital assets for tax purposes. For purposes of this discussion a “U.S. Holder” is any one of the following: • an individual who is a citizen or resident of the United States, • a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or of any political subdivision of the United States, including the District of Columbia, • an estate, the income of which is subject to U.S. federal income taxation regardless of its source, • a trust, if a court within the United States is able to exercise primary supervision over the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or • a person otherwise subject to U.S. federal income tax on its worldwide income.
You should consult your own tax advisor regarding the United States federal, state and local and the French and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances, in particular if you are eligible for the benefits of the Treaty.
FRENCH TAXATION OF DIvIDENDS general statement The following is not a description of the French tax treatment applicable to shareholders resident in France (“French Resident Holders”) but only addresses the main French tax consequences that may apply to U.S. Holders.
The term “dividends” used in the following discussion means dividends within the meaning of the relevant income tax treaties where applicable, or, where not defined by such treaties, within the meaning of French domestic tax law as set forth in administrative guidelines dated February 25, 2005 (4 J-1-05) (the “Administrative Guidelines”).
French Resident Holders may instead opt for a withholding tax equal to 18% of the dividends received and, in such a case, will not be eligible to the crédit d’impôt mentioned above.
Under French domestic law, shareholders who are not resident of France for tax purposes (“Non-French Resident Holders”) are not eligible for the benefit of this crédit d’impôt. Non-French Resident Holders are generally subject to a 25% withholding tax, to be levied by the paying agent of such dividends. This withholding tax is reduced to 18% of dividends distributed to Non-French Resident Holders who are residents of certain States located within the European Economic Area. Qualifying Non-French Resident Holders may also be eligible for a reduced rate of French withholding tax on dividends (generally to 15%, 5% or 0%) under the applicable tax treaty.
However, Non-French Resident Holders who benefit from a tax treaty which provides for the refund of the “avoir fiscal” (a special tax credit that has been repealed by the 2004 French Finance Law) may be entitled to the refund of the crédit d’impôt (less applicable withholding tax).
The Administrative Guidelines set the requirements under which Non-French Resident Holders may obtain a reduction or an elimination of the French withholding tax under an income tax treaty. The immediate application of the reduced withholding tax rate is available to those Non-French Resident Holders that may qualify for the so-called “simplified” procedure (within the meaning of the Administrative Guidelines). Under the “simplified procedure”, Non-French Resident Holders may claim the immediate application of the reduced withholding tax rate, provided that: (i) they provide to the financial institution managing their securities account, before the dividend payment date, a certificate of residence conforming with the template attached to the Administrative Guidelines and certified by the tax authorities of their State of residence. Each financial institution managing the Non-French Resident Holder’s securities account must communicate to the French paying agent before the dividend payment date the amount of dividends eligible to the reduced withholding tax rate; and
Non-French Resident Holders eligible for treaty benefits, who are not entitled to the “simplified procedure” and whose identity and tax residence are not known by the paying agent at the time of the payment of the dividends, are subject to a 25% French withholding tax levied at the time the dividends are paid. Such Non-French Resident Holders may, however, be entitled to a refund of the withholding tax in excess of the applicable tax treaty rate under the so-called “standard” procedure (as detailed within the Administration Guidelines), provided that the Non-French Resident Holder files with the French paying agent an application for refund on forms No. 5000-FR and/or 5001-FR (or any other relevant form to be issued by the French tax authorities) certified by the competent tax authorities of his State of residence, before December 31 of the second year following the date of payment of the withholding tax rate to the French tax authorities, unless otherwise provided for by the applicable income tax treaty. However, such refund will not be paid before January 15 of the year following the year in which the dividend is paid.
Application of the 15% withholding tax rate at source will be available only if the appropriate forms mentioned in the Administrative Guidelines are duly sent to the paying agent before the dividend payment date. However, where the U.S. Holder’s identity and tax residence are known to the French paying agent, the latter may apply the 15% withholding tax rate to dividends it pays to such U.S. Holder even if the U.S. Holder does not comply with the requirements set forth in the preceding paragraph.
Copies of the forms No. 5000-FR and 5001-FR, together with instructions, are available from the IRS. Certificates of residence mentioned in the Administrative Guidelines may also be available from the IRS and the French Centre des impôts des non-résidents at 10, rue du Centre, 93463 Noisy-le-Grand, France. Information regarding the identity and address of the paying agent will be available from the Company.
The AXA shareholders should consult their own tax advisors to determine whether the Treaty provisions are applicable to their particular situation and which formalities need to be complied with in order to obtain Treaty benefits.
FRENCH TRANSFER TAX Transfers of AXA ordinary shares and ADRs evidencing ADSs will not be subject to French transfer taxes unless the transfer is effected by means of a written agreement that is executed or enforced within France. Should such written agreement be executed or enforced in France, it would be subject to transfer taxes at the rate of 3% up to a maximum of €5,000 per transfer.
As discussed above, payments of dividends to a U.S. Holder will be subject to French withholding tax. For U.S. federal income tax purposes, a U.S. Holder may generally elect to treat these French withholding taxes as either a deduction from gross income or a credit against the U.S. federal income tax liability of that U.S. Holder. For foreign tax credit purposes, dividends will generally be income from sources outside the United States and will, depending on the U.S. Holder’s circumstances, either be “passive income” or “general income” which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you. The rules governing the U.S. foreign tax credit are complex, and additional limitations on the credit apply to individuals receiving dividends from foreign corporations if the dividends are eligible for the 15% maximum tax rate on dividends described above. U.S. Holders are urged to consult their tax advisors regarding the availability of the U.S. foreign tax credit under their particular circumstances.
Tax on sale or exchange of AXA ordinary shares or ADRs For U.S. federal income tax purposes, a U.S. Holder generally will recognize gain or loss on any sale, exchange or other disposition of ordinary shares or ADRs evidencing ADSs, unless a specific non -recognition provision applies. That gain or loss will be measured by the difference between the U.S. dollar value of the amount of cash, and the fair market value of any other property, received and the U.S. Holder’s tax basis in the ordinary shares or the ADRs, determined in U.S. dollars. A U.S. Holder’s tax basis in the ordinary shares or the ADRs will generally equal the amount paid by that U.S. Holder for the ordinary shares or the ADRs or, in the case of ordinary shares acquired by way of Stock Distribution, the amount included in income at the time of the Stock Distribution.
backup withholding and information reporting Under certain circumstances, a U.S. Holder who is an individual may be subject to information reporting requirements and backup withholding, currently at a 28% rate on dividends received on, and proceeds from the disposition of, ordinary shares or ADRs evidencing ADSs. This withholding generally applies only if that individual holder: • fails to furnish (generally on an Internal Revenue Service Form W-9) his or her taxpayer identification number to the U.S. financial institution that is in charge of the administration of that holder’s ordinary shares or ADRs or to any other person responsible for the payment of dividends on the ordinary shares or ADRs,
• furnishes an incorrect taxpayer identification number, • is notified by the IRS that he or she has failed to properly report payments of interest and dividends and the IRS has notified
Any amount withheld from a payment to a U.S. Holder under the backup withholding rules will be allowable as a credit against such U.S. Holder’s U.S. federal income tax liability, provided that the required information is furnished to the IRS.
Use in 2008 of the various financial authorizations pertaining to capital increases 448
APPENDIX X: COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE 550
In accordance with Article L.225-68 of the French Commercial Code, the Chairman of the Supervisory Board is required to report annually on internal control and risk management procedures implemented by the Company.
In preparing this report, the Chairman of the Supervisory Board has consulted, as he deemed appropriate, with members of AXA management and has taken into account information furnished to the Supervisory Board with respect to the group’s internal control environment. This report was reviewed by the Audit Committee before being reviewed and approved by the Supervisory Board at its meeting of March 18, 2009.
In this report, the term “group” refers to AXA SA (the “Company”) together with its direct and indirect consolidated subsidiaries.
These mechanisms and procedures principally include: (i) the group’s corporate governance structures which are designed to ensure appropriate supervision and management of the group’s business and a clear allocation of roles and responsibilities at the highest level; (ii) management structures and control mechanisms designed to ensure that group senior management has a clear view of the principal risks confronting the group and the tools necessary to analyze and manage these risks; (iii) internal control over financial reporting (“ICoFR”), designed to ensure the accuracy, completeness and timeliness of the group’s consolidated financial statements and the other financial information that the group reports to the markets; and (iv) disclosure controls and procedures designed to ensure that management has the information necessary to make fully informed disclosure decisions on a timely basis and that the Company’s disclosures material information (both financial and non-financial) to the markets is timely, accurate and complete.
These mechanisms and procedures, taken together, constitute a comprehensive control environment that management believes is appropriate and well adapted to the group’s business.
Audit Committee The Supervisory Board has established four Committees to assist it in fulfilling its responsibilities: Audit Committee, Finance Committee, Selection, ethics, governance and human Resources Committee and Compensation Committee. These committees exercise their activities under the responsibility of the Supervisory Board and report regularly to the Supervisory Board on matters within the scope of their responsibility.
All of these Supervisory Board Committees constitute an important part of the group’s overall internal control environment, however, the Audit Committee plays a particularly important role in reviewing internal control and risk related issues.
Subsidiary Level Governance Structures AXA’s principal subsidiaries, whether publicly traded or not, are generally governed by: • a board of directors whose membership includes independent or non-executive directors; and • various board committees including a compensation committee and an audit committee, whose membership includes independent or non-executive directors.
MANAGEMENT STRUCTURES AND CONTROLS In order to manage the various risks to which it is exposed, the AXA group has various management structures and control mechanisms designed to ensure that management has a clear and timely view of the principal risks confronting the group and the tools necessary to analyze and manage these risks.
each quarter the executive Committee conducts Quarterly Business Reviews (QBRs), during which performance of the AXA group is reviewed. These QBRs were introduced in 2000 to provide management with a clear and consistent framework for: (1) reviewing operational performance and monitoring the progress of key projects using quantifiable standards of measurement defined in collaboration with the Management Board; (2) assessing the status of group transversal projects; and (3) exchanging ideas and information on key group strategic orientations.
These QBRs constitute an important management control mechanism to monitor the operating performance of the group and its principal business units on a continuing basis and to identify any new material risks or issues facing the group in a timely manner.
For more information about the executive Committee including its composition, please see Section 3.1 “Directors, Senior Management and employees” of the group’s 2008 Annual Report.
PBRC (Planning, Budgets, Results Central) The PBRC department within the group Finance department is responsible for consolidation, management reporting and control over accounting and financial information. It works with local PBR units within the finance departments of group subsidiaries.
The local PBR units are responsible for producing their contribution to the group consolidated financial statements.
Accounting and financial information is consolidated in accordance with International Financial Reporting Standards (IFRS) as adopted by the european Union (e.U.). As it relates to the financial statements included in the group’s 2008 Annual Report, there is no difference between IFRS as adopted by the e.U. and IFRS as adopted by the International Accounting Standards Board.
The information system is based on “Magnitude”, a consolidation tool managed and updated by a dedicated team. This system is also used to deliver the management reporting information used to produce an economic perspective on the consolidated financial statements. The process through which this management reporting information is produced and validated is the same as that used to prepare consolidated financial information.
Finally, PBRC issues instructions to subsidiaries, giving detailed information on the consolidation process, changes in accounting standards and in Magnitude.
TRANSveRSAL PRoCeDUReS: In all cases, the procedures are those described above, which generally work as follows: • All changes in AXA group accounting policies are anticipated by PBRC experts and implemented after discussions with the
The group Legal Department is structured in five Practice 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: • Mergers & Acquisitions & Corporate Law; • Corporate Finance & Securities Law; • Corporate governance & Company Law; • Litigation, Regulatory & Compliance; • Business Support & Development and US Legal Matters.
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 and ensure open lines of communication across the group’s global Legal & Compliance organization, the group general Counsel has established and chairs a global Legal Steering group composed of the general Counsels of the AXA’s principal subsidiaries. This Steering group meets on a regular basis and serves as an effective forum for addressing transversal issues, sharing best practices and experiences in a wide variety of areas, and ensuring open lines of communication between general Counsels across the group. In addition, in order to drive integration deeper into the organization, a series of global Practice groups have been established which are composed of staff attorneys from Legal and Compliance Departments throughout the group. These groups are organized around substantive areas of expertise (e.g. Compliance, Corporate/M&A, Corporate governance) or specific themes (e.g. emerging Issues & Trends) and are charged with carrying out specific defined assignments and reporting back to the global Legal Steering group.
group Audit also performs the group’s Chief Fraud Control officer role and oversees the implementation of AXA’s standard on internal fraud control globally.
AXA’s internal audit organization is structured around the central group Audit Department that coordinates and supervises the group’s overall internal audit process and capability, and the internal audit teams set up within group subsidiaries. The group Audit Department operates mainly through: • overseeing of the internal audit teams within operating units; • strategic and transversal internal audit assignments.
The head of the group Audit Department reports to the Chairman of AXA’s Management Board (with a functional reporting line to AXA’s Chief Financial officer) and also has a direct and regular contact with the Chairman of AXA’s Audit Committee. In carrying out his duties, the head of group Audit liaises with other control and monitoring functions, including group Risk Management, PBRC and group Legal, as well as Statutory Auditors.
This internal management committee is chaired by two members of the AXA Management Board, the group CFo and group Coo, and is co-managed by group Risk Management and group Legal.
ICoFR is a process designed under the supervision of AXA’s principal executive and financial officers to provide reasonable but not absolute assurance regarding the reliability of financial reporting and the preparation of its published financial statements. 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 the assets of the group; • Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with the 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 • Provide reasonable assurance that unauthorized acquisition, use or disposition of group assets that could have a material effect on the group’s financial statements would be prevented or detected in a timely manner.
AXA has selected the CoSo framework 2 to evaluate its ICoFR. In line with this framework, AXA has organized its ICoFR system around five key items: (1) entity Level Controls (eLC), (2) IT eLC, (3) Financial Statement Closing Process (FSCP), (4) Business Processes and (5) IT general Controls (ITgC).
AXA has developed a top-down/risk-based approach to its Sarbanes 404 program by being more focused on risk than on coverage percentage and by using management judgment rather than a purely prescriptive approach. This risk-based approach is in line with “Management guidance” and “Auditing Standard 5” released by the SeC and the Public Company Accounting oversight Board (PCAoB).
on that basis, a scoping methodology has been developed in order to determine which entities, accounts and disclosures are subject to the Sarbanes 404 program. entities have been classified into four levels depending on risk assessment: • Level 1 entities are individually significant and have to cover the five items mentioned above; • Level 2 entities provide significant services to the group and have to cover eLC and IT eLC, as well as appropriate business processes; • Level 3 entities are significant when aggregated and have to cover eLC, IT eLC and FSCP; and • Level 4 entities relate to other entities and they do not have to evaluate their ICoFR. however, they are subject to Sarbanes
The implementation of an adequate ICoFR and its evaluation requires that, for every item in scope, management needs to document the processes and their related key controls, to test the design and operational effectiveness of key controls, and to remedy any control deficiency identified.
(3) PricewaterhouseCoopers Audit’s Report to be found in the AXA 2008 Annual Report an Form 20-F.
CONCLUSION The AXA group believes it has put in place a comprehensive system of internal control procedures and mechanisms that is appropriate and well adapted to its business and the global scale of its operations.
however, all internal control systems, no matter how well designed, have inherent limitations and do not constitute a guaranty or provide absolute certainty. even systems determined to be effective by management may not prevent or detect human errors, systems malfunctions, fraud, or misstatements and can provide only reasonable assurance. In addition, effective controls may become inadequate over time because of changes in conditions, deterioration of compliance with procedures or other factors.
AXA complies with the recommendations of the AFeP / MeDeF Code that are in line with the long-established corporate governance principles initiated by the Company. AXA applies the recommendations of the AFeP / MeDeF Code in the conditions detailed, for the most part, in Sections 3.1 “Directors, Senior Management and employees” and 3.2 “Full disclosure on executive compensation and share ownership” of the group’s 2008 Annual Report describing corporate governance mechanisms and containing information about executives’ compensation.
In order to take into account certain specificities of its governance practices, AXA has decided to adapt the following provisions of the AFeP / MeDeF Code: • To the extent the AFeP / MeDeF Code only refers to companies managed by Board of Directors (Conseil d’Administration), the Company had to make the necessary adjustments to reflect its dual corporate governance structure consisting of a
• Section 14.2.1 of the AFEP / MEDEF Code relative to the review of the accounts by the Audit Committee: for practical reasons, the review of the accounts by the Audit Committee generally occurs on the day preceding the Supervisory Board’s review, and not two days before as it is provided for by the AFeP / MeDeF Code. however, the Company endeavours, so far as possible, to provide the members of the Audit Committee with the required documents early enough to allow their proper examination.
(ii) Exercise of stock options: pursuant to the AFeP / MeDeF Code, companies shall determine periods preceding the disclosure of their financial statements during which the exercise of the stock options is not allowed (“sensitive periods”). To date, the sensitive periods are determined by applying AXA group’s Compliance and ethics guide. They generally begin 30 days prior to the disclosure of the annual and half-year earnings. The Compliance and ethics guide prohibits the sale of shares acquired subsequent to the exercise of stock options (“subscription and sale” transactions), but does not prohibit, in accordance with common practice, the simple exercise of options that is not followed by the sale of the shares acquired subsequently.
Statutory Auditors’ report, prepared in accordance with Article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Supervisory Board of AXA
It is the Chairman’s responsibility to prepare, and submit to the Supervisory Board for approval, a report describing the internal control and risk management procedures implemented by the Company and providing the other information required by article L.225-68 of the French Commercial Code in particular relating to corporate governance.
• to attest that the report sets out the other information required by article L.225-68 of the French Commercial Code, it being specified that it is not our responsibility to assess the fairness of this information.
we conducted our work in accordance with professional standards applicable in France.
Information concerning the internal control procedures relating to the preparation and processing of financial and accounting information The professional standards require that we perform procedures to assess the fairness of the information on internal control procedures relating to the preparation and processing of financial and accounting information to establish the consolidated financial statements in accordance with IFRS, as adopted by the european Union set out in the Chairman’s report. These procedures mainly consisted of: • obtaining an understanding of the internal control procedures relating to the preparation and processing of financial and accounting information on which the information presented in the Chairman’s report is based, and of the existing documentation; • obtaining an understanding of the work performed to support the information given in the report and of the existing documentation; • determining if any material weaknesses in the internal control procedures relating to the preparation and processing of financial and accounting information that we may have identified in the course of our work are properly described in the Chairman’s report.
on the basis of our work, we have no matters to report on the information given on internal control procedures relating to the preparation and processing of financial and accounting information, set out in the Chairman of the Supervisory Board’s report, prepared in accordance with article L.225-68 of the French Commercial Code.
AXA announces the subscription prices for its 2008 employee share offering (SharePlan 2008) (09/16/2008)
AXA: non material equity exposure to Lehman Brothers and AIG (09/16/2008)
AXA adopts the recommendations of AFEP-MEDEF concerning the compensation of executive officers (12/18/2008)
Full year 2008 Earnings – Resilient operating performance in a challenging environment (02/19/2008)
AXA to subscribe to AXA Asia Pacific Holdings’ capital increase: no impact on the Group’s Solvency, non material impact on liquidity (03/17/2008)
Notice of Meeting (Shareholders’ Meeting to be held on 04/22/2008) (03/28/2008)
Notice of Meeting (Shareholders’ Meeting to be held on 04/30/2009) (02/27/2009)
(a) Press releases issued prior to March 18, 2008 were listed in the Annual Information Document included in the AXA 2007 Annual Report.
Extract of the minutes of the Supervisory Board’s Meeting of 04/22/2008 regarding the appointment of the Chairman and Vice-Chairman of the Supervisory Board
Extract of the minutes of the Management Board of 11/28/2008 regarding the increases of the share capital
Decision of the Chairman of the Management Board of 01/21/2009 regarding the increase of share capital
A copy of the convening file sent to the Shareholders as well as the documents for their information (R.225-81 et R.225-86)
The list of the Shareholders at 16 days before the Annual Meeting
Form 6-K for April 2008: Free translation of AXA’s French Document de Référence for the year ended December 31, 2007 filed with the AMF (the French stock exchange regulatory authority) on March 28, 2008
STATEMENT OF THE PERSON RESPONSIBLE I, the undersigned, having taken all reasonable care to ensure that such is the case, hereby certify that the information contained in this Annual Report (Document de Référence) is, to the best of my knowledge, in accordance with the facts and contains no material omission likely to render it misleading or inaccurate in any material respect.
Paris, March 26, 2009 henri de Castries Chairman of the Management Board
FINANCIAL AUTHORIZATIONS TO ISSUE SHARES OR OTHER TYPES OF SECURITIES AS OF DECEMBER 31, 2008 AXA’s authorizations to issue ordinary shares or other type of securities that were valid as of December 31, 2008 are summarized in the tables below: Issues with preferential subscription rights for shareholders
Capitalization of reserves, earnings or premiums – 1 billion (a) 26 months July 14, 2009
Maximum nominal amount of the capital Maximum nominal increase in Euro or amount in case in percentage of of debt instruments the outstanding Securities in Euro share capital Term Expiration
Ordinary shares or securities granting a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (d) 6 billion (b) 1 billion (c) 26 months July 14, 2009
Shares issued in connection with the exercise of stock options – 2% (i) 38 months June 22, 2011
NEW FINANCIAL AUTHORIZATIONS The following authorizations to issue shares or securities granting a claim to shares of the Company require the shareholders’ consent. They will be submitted to the Shareholders’ Meeting for approval on April 30, 2009: Issues with preferential subscription rights for shareholders
Preferred shares reserved for AXA Assurances IARD Mutuelle and AXA Assurances Vie Mutuelle – 1 billion (e) 18 months October 30, 2010
Preferred shares – 1 billion (e) 26 months June 30, 2011
More than 35,000 employees in 37 countries took part in SharePlan 2008, and participating employees invested a total of approximately €460 million, as follows: • €29.3 million in the traditional plan, and • €431 million in the leveraged plan.
Stock options and performance shares Stock options In 2008, by virtue of the authorizations granted by the shareholders at the Annual general Meetings of April 20, 2005 (26th resolution) and April 22, 2008 (17th resolution) 9,176,347 stock options (i.e. 9,075,344 stock options by virtue of the 2005 authorization and 101,003 stock options by virtue of the 2008 authorization) giving the right to their beneficiaries to subscribe new AXA ordinary shares, have been granted by the AXA Management Board.
MANAgeMeNT BoARD’S RePoRT Parent company financial statements Net income Net income for the year ended December 31, 2008 was a loss of €1,253 million compared to a profit of €1,765 million in the previous year. This loss was mainly due to a €2,181 million allowance for an exchange-rate risk provision, arising from the Company’s policy of hedging net foreign currency investments in order to protect the group’s consolidated shareholders’ equity against currency movements. In the Company’s consolidated financial statements, hedge accounting is applied to net investments in subsidiaries, such that exchange rate movements have no impact on group results. In the parent company financial statements, however, investments in subsidiaries are recorded in euro at the historical cost, leading to unrealized exchange rate losses on debt being fully booked. Foreign exchange exposure management continued in 2008, including implementation of additional hedging positions on $1.5 billion, JPy437 billion and ChF3.25 billion.
Dividends received from subsidiaries amounted to €2,674 million, corresponding to an increase of €496 million from the previous year.
• Colisée Re (formerly AXA Re) paid a €243 million dividend, of which €230 million resulted from the appropriation of 2007 earnings. • The €183 million dividend paid by AXA Insurance (formerly AXA winterthur in Switzerland) was the first ever paid to the group since its acquisition. At the time of its 2007 restructuring, AXA Insurance had paid €367 million to the Company through capital reductions.
Dividends received from insurance companies outside europe were stable, totaling €199 million compared to €213 million in 2007. The main contributors in 2008 were AXA Asia Pacific holding (€100 million) and AXA Canada (€64 million).
The Company recorded a loss of €12 million from investment operations, due to the sale of mutual fund units within the group.
• Allowances for provisions for contingent liabilities totaled €709 million, up from €287 million in 2007. This amount included a €591 million financial provision relating to the mark-to-market writedown of an equity swap with another group company intended to hedge an equity portfolio, while the annual allowance for provisions for the redemption of bond premiums was €95 million.
• Net exceptional items resulted in a loss of €545 million, including a €755 million loss due to the expiry of an intra-group equity swap and a €187 million profit on sales of call options as part of the option-based hedging strategy on equity markets.
Balance sheet At December 31, 2008, total assets were €64,208 million, versus €55,608 million at December 31, 2007.
• AXA SA injected €300 million of capital into AXA Mediterranean holding as part of the financing of the Seguros INg acquisition and the buy-out of the minority shareholders in the Turkish unit AXA oyak.
Receivables from subsidiaries amounted to €4,622 million, versus €3,142 million at end-2007, representing a rise of €1,480 million. This increase arose mainly from the $3 billion (€2.156 billion) of loans granted to AXA Financial to support its subsidiaries’ solvency ratio, partly offset by the repayment of €618 million of loans granted to entities.
Other financial assets, net of provisions, fell by €418 million, of which a €240 million decrease due to the sale of AXA treasury shares and a €121 million decrease linked to the new classification under Marketable Securities of treasury shares held to foster regular trading of AXA’s securities as well as the funds entrusted with the investment services provider in charge of the liquidity program.
Cash instruments totaled €760 million, including €564 million of option premiums paid by the group as part of option-based hedges on equity markets, and €77 million relating to the remainder of the premium paid in 2007, amortized over 10 years, for call options to neutralize the dilutive impact of the 2017 convertible bonds. Cash instruments also included €93 million of premiums paid to buy currency options, aimed at protecting the 2009 foreign currency earnings of the main subsidiaries.
Unrealized foreign exchange losses totaled €461 million, up €411 million due to the impact on debts of the yen and the American Dollar rallies against the euro. This item reflected unrealized losses on receivables and debts denominated in foreign currencies arising from their revaluation at the balance sheet closing exchange rate. Any hedge arranged through off-balance sheet derivatives and resulting in unrealized gains at year-end was not taken into account, in line with accounting principles in force.
LIABILITIeS Shareholders’ equity, before 2008 net income and after the payment of dividends relating to the prior year, totaled €28,610 million. This represented an increase of €538 million, mainly driven by the €460 million capital increase reserved for employees and a €63 million increase through the exercise of stock options.
Subordinated debt totaled €6,924 million, up from €6,891 million in 2007, due to exchange rate fluctuations.
Financial debts amounted to €17,981 million. This represented an increase of €9,405 million, including €2,353 million relating to issues of commercial paper, €1 billion relating to the ReSo garantia acquisition and €6 billion granted by group entities as part of the group’s cash pooling arrangements and initiatives to optimize intra-group financing.
Debt relating to non-current assets totaled €168 million and included shares issued by entities but not yet fully paid, including €75 million for AXA Life europe and €54 million for AXA Italia.
Other payables amounted to €208 million, down €729 million due to the repayment of a €790 million of debt issued in relation to the purchase of hispanowin shares.
Net carrying Net carrying value as at value as at Gross carrying Amortization Net carrying December 31, December 31, (in euro million) value and provisions value 2007 2006
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX (VI = III + IV + V) 1,549 1,407 1,057
Net book value on the sale of fixed assets (301) (1,633) (102)
III. NET INCOME FOR THE FINANCIAL YEAR VI + VII +VIII (1,253) 1,765 1,433
b) Ordinary shares (numbers in million) 1,908 1,872 2,093 2,061 2,089 c) Bonds mandatorily convertible into ordinary shares (numbers in million) 16 16 16 7 7 (a)
(a) Since January 1, 2007, AXA’s 2017 bonds can still be converted, but any dilutive impact created by the issuance of new shares resulting from the conversion of the bonds is neutralized by the automatic exercice of call options on the AXA shares which have been put in place.
(b) Dividend of €0.40 per share proposed to the Shareholders’ Meeting of April 30, 2009, based on 2,089,158,169 outstanding ordinary shares at December 31, 2008.
STATEMENT OF CASH FLOWS Year ending Year ending Year ending December 31, December 31, December 31, (in euro million) 2008 2007 2006
AXA GENERAL INSURANCE HONG KONG 15 27 99.99% 65 65 66 4 11 Dec. 31, 2008 30th Floor, PCCW Tower, Taikoo Place, 979 King’s Road Quarry Bay, HONG KONG
AXA ASSISTANCE 42 14 99.99% 48 48 870 15 Dec. 31, 2008 6, rue André Gide – 92320 CHATILLON – 92130 ISSY LES MOULINEAUX
AXA Canada (b) 220 360 100.00% 104 104 1,100 61 64 Dec. 31, 2008 2020 rue University – MONTREAL – QUEBEC H 3A 2A5
AXA EQUITY AND LAW PLC 1 1,105 99.96% 1,133 1,133 Dec. 31, 2008 5 Old Broad Street LONDON EC2N 1AD
AXA OYAK HOLDING AS 132 (17) 50.00% 81 81 24 24 11 Dec. 31, 2008 Meclisi Mebusan cad n° 15 – Salipazari 80040 – ISTANBUL
AXA France ASSURANCE 378 4,270 100.00% 3,415 3,415 880 815 737 Dec. 31, 2008 26, rue Drouot – 75009 PARIS
COLISEE RE (ex. AXA RE) 319 213 99.99% 843 515 83 (14) 243 Dec. 31, 2008 39 rue du Colisée – 75008 PARIS
AXA MEDITERRANEAN HOLDING 106 1,633 100.00% 2,449 2,449 55 9 175 90 Dec. 31, 2008 Calle monseñor Palmer numéro 1 – PALMA DE MALLORCA
AXA PORTUGAL COMPANHIA DE SEGUROS 37 39 83.01% 72 72 366 18 21 Dec. 31, 2008 Praca Marquês de Pombal, 14 – LISBONNE 1050
AXA REINSURANCE IRELAND 32 74 100.00% 107 107 Dec. 31, 2008 Wolfe Tone House – Wolfe Tone Street – DUBLIN – Irlande
OUDINOT PARTICIPATIONS 9,150 3,657 100.00% 12,299 12,299 Dec. 31, 2008 21, avenue Matignon – 75008 PARIS
SAINT-GEORGES RE 10 6 99.99% 82 33 1 11 13 Dec. 31, 2008 9, avenue de Messine – 75009 PARIS
KYOBO AUTO ASSURANCE 73 5 92.36% 157 157 326 Dec. 31, 2008 395-70 Shindaebang-dong, Dongjak-gu SEOUL
WINTERTHUR SWISS INSURANCE COMPANY 114 1,905 100.00% 5,171 5,171 2,702 2,156 202 183 Dec. 31, 2008 General Guisan-str,40 CH-8401 – Winterthur
AXA INVESTMENT MANAGERS 53 639 73.67% 1,369 1,369 174 73 151 94 Dec. 31, 2008 Cœur Défense – Tour B – La Défense 4 – 100 Esplanade du Général de Gaulle 92932 Paris La Défense
In the Company’s consolidated financial statements, hedge accounting is applied to net investments in subsidiaries, such that exchange rate movements have no impact on group results. In the parent company financial statements, however, investments in subsidiaries are recorded in euro at the historical cost, leading to unrealized exchange rate losses on debt being fully booked.
Foreign exchange exposure management continued in 2008, including implementation of additional hedging positions on $1.5 billion, JPy437 billion and ChF3.25 billion.
2. ACCOUNTING PRINCIPLES 2.1. General principles The financial statements as at December 31, 2008 are prepared and presented in accordance with the provisions of the 1999 Chart of Accounts.
According to CRC regulation 2008-15, the treasury shares held to foster regular trading of AXA’s securities as well as the funds entrusted with the investment services provider in charge of the liquidity program are now recorded in “Marketable securities”. At December 31, 2008, they amounted to €63 million and €57 million, respectively, compared to €60 million and €94 million, respectively, at the end of 2007. At December 31, 2007, these amounts were recorded in “other financial assets”.
The application of CRC regulation 2008-15 dated December 4, 2008 relating to the accounting treatment of stock options (subscription and purchase) and performance shares/units (free shares granted to employees and subject to performance conditions) had no impact on the Company’s financial statements.
Find below a summary of options and performances shares granted in 2008 and 2007 to Management Board members paid by AXA SA.
Value Value of performance Value Value of performance of options granted shares granted during of options granted shares granted during (in euro) during the year the year during the year the year
2.2. Presentation of the financial statements Balance sheet Intangible assets include concessions, patents and brands, as well as goodwill of mergers. Tangible assets include investments in real estate, split between land and buildings, as well as fixtures and fittings.
Securities are classified using the following criteria: • Investments in subsidiaries and affiliates are securities representing at least 10% of the share capital of the issuing company plus those which AXA deems held for the long term.
• Disposals of investments in subsidiaries and affiliates are measured using the weighted average unit cost method.
2.3. Tangible assets Tangible assets are recognized at acquisition cost or transfer value. Buildings are depreciated using the straight line method over fifty years, and fitting work is depreciated over five or ten years as appropriate.
2.8. Prepayments and accrued income Deferred charges correspond to debt issue costs, which are spread over the lifetime of the issue or for a maximum of 10 years when the debt has no predetermined maturity.
2.9. Subordinated bonds AXA SA has issued two subordinated bonds: • 2.5% bonds, maturity January 1, 2014: 9,185,581 bonds with a par value of €165 and a redemption value of €230.88 were in circulation at December 31, 2008. The redemption premium amounts to €606 million.
on January 11, 2007, the meetings of holders of AXA’s 2014 and 2017 convertible bonds were held to vote on an amendment of the final conversion dates of the bonds to January 26, 2007 in exchange for a cash payment in respect of the value of the conversion option.
The general Meetings of 2014 convertible bondholders accepted the amendment. As a result, holders who did not convert their bonds by January 26, 2007 received €16.23 per bond on January 31, 2007. The general Meeting of 2017 bondholders 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, 2008, the remaining amount to be amortized was €77 million.
2.11. Unrealized foreign exchange gains/losses Foreign currency receivables and liabilities are adjusted at the balance sheet date exchange rate. The matching item for this adjustment is a translation variance asset account when the difference is an unrealized loss, and a translation variance liability account when it is an unrealized gain. These items do not flow through the income statement but a provision for foreign exchange risk is made to recognize unrealized losses relating to the translation variance asset.
2.12. Derivative products • Interest rate swaps: these transactions are recognized by applying the accrued interest method. A distinction is made in the income statement and balance sheet between income from the principal transaction, which is the subject of the swap, and the net income from the swap transaction. The nominal value of the swaps serving as bases for interest rate swaps is recognized off-balance sheet.
• 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. when the option is exercised, the premium is recorded in the income statement. The same is true when the option is not exercised at term. For option sales, a provision for risks and charges is recognized to take into account the unrealized loss. other derivative instruments are recognized off-balance sheet at their nominal value. Unrealized losses arising from the estimated market value of these financial instruments give rise to recognition of a provision for foreign exchange loss.
• equity derivative products: equity option rights paid or received are posted in a suspense account on payment or receipt of funds. At the balance sheet date, if the option has not been exercised, the rights received, representing possible income, are not recognized in the income statement. A provision is created against rights paid if it is likely, given market trends, that the option will not be exercised. when the option is exercised, this represents an addition to the acquisition price of the underlying instrument, and an addition to the sale price when the option is sold.
2.13. Other shareholders’ equity Perpetual deeply subordinated notes are classified as “other shareholders’ equity” when, like for ordinary shares, there is no contractual obligation to remit cash or any other financial assets. other shareholders’ equity included €5,805 million of perpetual deeply subordinated notes at December 31, 2008, versus €6,323 million at December 31, 2007, representing a decrease of €518 million due to exchange rate fluctuation impact.
3. NOTES TO THE BALANCE SHEET (IN EURO MILLION) 3.0. Movements in intangible assets This account includes the AXA brand, transferred by FINAXA at the time of the merger, and valued at €307 million. It also includes €15 million of goodwill recognized following the complete transfer of assets and liabilities between Société de gestion Civile Immobilière (SgCI) and the Company.
(d) Of which €240 million due to the sale of AXA treasury shares and €154 million at January 01, 2008 linked to the new classification under Marketable
Securities of treasury shares held to foster regular trading of AXA’s securities as well as the funds entrusted with the investment services provider in charge of the liquidity program.
Other financial assets – 34 – 34 3.3. Statement of receivables by maturity
Miscellaneous receivables and currents accounts with subsidiaries 427 427 – –
3.6. Unrealized foreign exchange losses amounted to €461 million, up €411 million mainly due to impacts on debts of the yen and American Dollar rallies against the euro. This item reflects unrealized losses on receivables and debts denominated in foreign currencies arising from their revaluation at the balance sheet closing exchange rate. Any hedge arranged through offbalance sheet derivatives and resulting in unrealized gains at year-end is not taken into account, in line with accounting principles in force.
(in euro million except per share data in euro) Year ending December 31, 2007 Year ending December 31, 2008
3.9. Other shareholders’ equity other shareholders’ equity amounted to €5,805 million, compared to €6,323 million at the end of 2007.
Translation Value at variance/ Value at (in euro million) December 31, 2007 Issues accrued interests December 31, 2008
Perpetual Deeply Subordinated Notes (nominal) 6,205 – (505) 5,700 3.10. Provisions for contingent liabilities Releases for Releases for Value at Allowances for the period the period Value at end (in euro million) beginning of period the period (provisions used) (provisions not used) of period
(a) The €350 million provision for deferred taxes includes a €322million provision for the risk of tax savings being paid back to consolidated subsidiaries. (b) This charge includes a €591 million financial provision reflecting the negative mark to market impact of an equity swap with another Group subsidiary to hedge an equity portfolio.
Subordinated debts amounted to €6,924 million, compared to €6,891 million at the end of 2007, the increase of €33 million resulting from exchange rate fluctuations.
Other payables (b), including tax and social payables 209 209 –
(a) Remaining capital to be called up, of which €75 million regarding AXA Life Europe and €54 million concerning AXA Italia. (b) Of which €202 million of expenses payable.
3.14. Unrealized foreign exchange gains amounted to €1,612 million in 2008, compared to €1,118 million at December 31, 2007. This account reflects the positive effects derived from the revaluation of foreign-currency denominated loans and liabilities at the balance sheet closing exchange rate. The increase in this item in 2008 arose from the positive impact of exchange rate movements on debts, mainly those denominated in British pound.
4.1. Executive remuneration • Directors’ fees €1,100 k • other remuneration (net of recharging) €5,400 k
The 2005 agreement maintains the provisions of the prior agreement concerning minimal and stable cross-shareholdings. Pursuant to the agreement, the AXA group undertakes to hold at least 43,412,598 shares of BNP Paribas and the BNP Paribas group undertakes to hold at least 61,587,465 shares of AXA. These amounts are subject to adjustment to reflect the impact of certain capital transactions, including, but not limited to: capital increases, free allotments of stock, stock splits or similar transactions. In addition, the agreement includes an option for each party to repurchase its shares in the event of a hostile change of control of the other party.
AgReeMeNT wITh SChNeIDeR on May 15, 2006, and after authorization by the AXA Supervisory Board on December 21, 2005, the AXA group, the Mutuelles AXA and the Schneider group entered into an agreement that provides for the maintenance of minimal cross-shareholdings. Under the terms of this agreement, the AXA group undertakes to hold at least 2,583,300 shares of Schneider stock and the Schneider group undertakes to hold at least 8,816,681 AXA ordinary shares. The number of shares held under this cross-shareholding agreement will be adjusted as needed to reflect the impact of certain capital transactions, including, but not limited to: capital increases, free allotments of stock, stock splits or similar transactions. In addition, the agreement includes an option for each party to repurchase its shares in the event of a hostile change of control of the other party.
6. SENSITIVITY By virtue of its business, AXA SA is mainly exposed to interest rate and exchange rate risks. The table below shows an estimate of changes in the fair value of debt, loans and hedging instruments in the event of a 1% rise in the interest rate curve or a 10% depreciation of the euro.
The information used for calculating the fair value of financing debt is market prices at the end of the period, using (i) market rates for each currency, (ii) AXA’s average spread by maturity and for the main currencies, distinguishing between subordinated debt and senior debt, and (iii) options included in issue contracts, such as issuer redemption options.
The above mentioned financial statements have been approved by the Management Board. our role is to express an opinion on these financial statements based on our audit.
I – Opinion on the Company’s financial statements we conducted our audit in accordance with the professional standards applicable in France, which require that we plan and perform the audit in order to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management as well as evaluating the overall financial statement presentation. we believe that the elements and information we gathered constitute an adequate and appropriate basis for our opinion.
II – Justifications of our assessments The financial crisis, which progressively developed into an economic crisis, impacts the businesses in various ways, in particular regarding their activities and financial stability. The high volatility on financial markets that are still active, the decrease of transactions on financial markets that are no longer active and the limited visibility are various factors that give rise to specific circumstances for the preparation of the financial statements this year, in particular with respect to the accounting estimates required by accounting principles. In this context, we have carried out our own assessments and we would like to bring to your attention the following matters, in accordance with the requirements of Article L.823-9 of the French Commercial Code: • Financial assets are recorded using the methods applying to each category and described in paragraph 2.5 of the notes to the financial statements.
Regarding investments, for which impairment is based on the value-in-use and the intent to hold, we have assessed the data used in order to determine the value-in-use of the main investments in the portfolio and obtained confirmation of the intent to hold.
• In accordance with the policies described in paragraph 2.9 of the notes to the financial statements, liabilities are recorded at the year-end for redemption premiums on convertible bonds issued by the Company whenever the prevailing stock price is lower than the discounted redemption value of the underlying note. we have tested the reasonableness of the assumptions used for calculation, having regards the stock market volatility and the maturities of outstanding convertible bonds issued by the Company.
• Derivatives used by your Company are assessed pursuant to the rules contained in paragraph 2.12 of the notes to the financial statements. we have checked that the implementation of a hedge accounting, as the case may be, was documented. In the other cases, we verified that adequate provisions for the unrealized losses were recorded, in particular, the provision for foreign exchange losses, that affects significantly the net income of the year, as indicated in the introduction to the notes to the financial statement of AXA SA.
III – Specific verifications and information In addition, we have carried out the specific verifications required by law, in accordance with the professional standards applicable in France.
The group ev of AXA is the sum of the Life & Savings eev and the other businesses IFRS shareholder’s equity. other businesses include Property & Casualty, Asset Management, Banking, International Insurance, and holdings and other Companies segments.
It is noteworthy that for other-than-life businesses, the presentation is designed to align with the group ev standard proposed by the Market Consistent embedded value (MCev) Principles©, issued by the CFo Forum in June 2008. In prior years, AXA had published a group ev using a different definition regarding the contribution of other-than-life businesses (differences arising mainly from the treatment of perpetual subordinated debts and other-than-life intangible assets). A comparison between both methodologies for 2007 figures is provided below.
The group ev is not an estimate of AXA’s “fair value”, regardless of how one might define “fair value”. It does not include the value of business to be sold in the future, nor does it include any value for future profits from existing business for other-than-life businesses.
The following table presents an analysis of movement of AXA’s group ev during the year 2008: Other businesses IFRS Restated (a) Published (b)
Life & shareholders Group Group Group (euro million – group share) Savings EEV equity EV 07/08 EV 06/07 EV 06/07
Total return on Group EV was –31% in 2008 compared to 12% in 2007 for the restated group ev. The main drivers of lower return were the sharp drop in the return on Life & Savings eev and lower unrealized gains/losses in IFRS shareholders’ equity of other businesses, reflecting the adverse market conditions.
The table below shows the reconciliation of Life & Savings IFRS shareholders’ equity to Life & Savings ANAv: (euro million – group share) 2008
“Life & Savings New Business value” (NBv) measures the value of new business sold during the year. It includes the vIF on new business, as well as the upfront costs associated with acquiring new business (often called “strain”). Therefore NBv combines elements which increase vIF balances from one year to the next and elements which reduce the ANAv from one year to the next. Life & Savings eev does not include any value for future sales.
“Life & Savings Annualized Premium equivalent” (APe) is a measure of the new business volume which includes 100% of sales of regular recurring premium business and 10% of sales of single premium business. The “APe Margin” is the ratio of NBv to APe.
Change on a (euro million – group share) 2007 2008 Change comparable basis
rating at each entity level. • A weighted average tax rate of 31.7% was assumed in 2008 (32.4% in 2007). • In 2008, a premium over the swap rate (100 bps in the US and 50 bps in other countries except Japan) is included in the reference rate, reflecting the ability, in current market, for insurers with long term liabilities to earn risk-free returns in excess of swaps as a result of their investment in corporate bonds and the potential to purchase credit default swaps. In prior years, any such premium had been immaterial.
As described above, the Life & Savings vIF valuation under AXA’s market-consistent framework does not depend on assumed future asset returns, but rather on the reference rate described above. The Life & Savings vIF valuation depends on stochastic projections of multiple scenarios, rather than a single scenario. For comparison to traditional embedded values and other techniques, AXA performs a calculation that determines the “Implied Risk Discount Rate” (IDR) which would equate the cashflows from a single scenario with “real world” economic assumptions to the Life & Savings vIF. The following table summarizes the “real world” assumptions for 2007 and 2008 used in determining the IDRs: FI Return Equity Return Cash Return Real Estate Return
2008 New Business Value of E985 million reflects the strain (first year loss) and vIF impacts described above.
Operating Return on Life & Savings EEV of E3,487 million is the sum of the New Business value and the operating performance from existing business. It represents 9% of the adjusted opening Life & Savings eev.
Total Return on Life & Savings EEV (before currency effects and capital flows) of E–13,689 million combines the operating Return with the Investment impacts. It represents –35% of the adjusted opening Life & Savings eev.
Capital flows of E1,857 million reflect net transfers into the Life & Savings segment in 2008 including dividends paid, received and capital injections.
Closing Life & Savings EEV of E27,209 million is the total value at the end of the year, representing the prior year balance plus opening adjustments, plus Total Return, plus capital flows, plus eev of acquired/disinvested business and the exchange rate impact.
LIFE & SAVINGS EUROPEAN EMBEDDED VALUE SENSITIVITIES The sensitivities of 2008 Life & Savings eev and NBv to changes in major assumptions were as follows: Life & SavingS SenSitivitieS (euro million – group share) EEV 2008 NBV 2008 (a)
Upward parallel shift of 100 basis points in reference interest rates 1,293 119
The methodology and assumptions used also comply with the eev guidance (noting the disclosed exception concerning the treatment of affiliated investment management companies, where the value of their profits for managing assets for the Life & Savings segment are not included in the Life & Savings eev).
Towers Perrin has also performed limited high-level checks on the results of the calculations and has confirmed that any issues discovered do not have a material impact, at the group level, on the disclosed embedded value, new business value, analysis of movement, and sensitivities. Towers Perrin has not, however, performed detailed checks on the models and processes involved.
Fourth resolution Approval of the Statutory Auditors’ Special Report on regulated agreements
Seventh resolution Re-appointment of Mr. Michel Pébereau to the Supervisory Board
Eighth resolution Re-appointment of Mrs. Dominique Reiniche to the Supervisory Board
Twelfth resolution Delegation of authority to the Management Board in order to increase the share capital of the Company by issuing ordinary shares or securities giving a claim to ordinary shares of the Company or one of its subsidiaries, with preferential subscription rights of shareholders
Eigthteenth resolution Delegation of authority to the Management Board in order to issue ordinary shares as a result of an issue, by subsidiaries of the Company, of securities giving a claim to the Company’s ordinary shares
Ninteenth resolution Delegation of authority to the Management Board in order to issue securities that entitle to an allotment of debt instruments, without increase of the Company’s share capital
Twenty-second resolution Authorization granted to the Management Board to reduce the share capital through the cancellation of ordinary shares
Twenty-fourth resolution Delegation of authority to the Management Board in order to increase the share capital of the Company by issuing preferred shares, with preferential subscription rights of ordinary shareholders
REPORT OF AXA’S MANAGEMENT BOARD ON THE PROPOSED RESOLUTIONS To the Shareholders of AXA: we have called you to this ordinary and extraordinary general Meeting with the intention of submitting to your approval a number of resolutions pertaining to: • Approval of the parent Company and consolidated financial statements of AXA for the year ended December 31, 2008, determination of the dividend, and approval of the Statutory Auditors’ Special Report on regulated agreements (I); • Appointment and re-appointment of members to the Supervisory Board (II); • Renewal of the authorizations granted to the Management Board relative to the share repurchase program and the cancellation of shares (III); • Renewal of the delegations of authority granted to the Management Board in order to increase the share capital (Iv); • Renewal of the delegation of authority granted to the Management Board in order to issue securities without a claim to the share capital (v); • Renewal of the delegations of authority granted to the Management Board in order to issue ordinary shares or other types of securities with a claim to ordinary shares of the Company through the Company savings plans (vI); • granting delegations of authority to the Management Board so as to increase the share capital by issues of preferred shares (vII).
The purpose of the 3rd resolution is to resolve the appropriation of earnings for the fiscal year 2008 that reveals losses amounting to €1,253 million. Accordingly, the Management Board of your Company recommends to balance these losses by charging the sum of €17,248,117 on the beneficiary retained amounts and the sum of €1,235,518,823 on the reserve for contingencies (réserve pour éventualités diverses).
exercising the option for a flat deduction at source is binding and has to be renewed at each payment. however, this option leads the loss of the 40% tax relief mentioned hereinbefore, of the lump-sum abatement of €1,525 or €3,050, depending on the marital status and the tax credit upper limit resulting from other distributions received by the natural person in the course of the same calendar year.
Pursuant to the relevant provisions of Article 243 bis of the French general Tax Code, the table below summarizes dividend payout information, with and without the 40% tax relief, in the previous three fiscal years.
II – Appointment and re-appointments of members to the Supervisory Board Ordinary resolutions 5 to 9 you are being proposed to re-appoint Mrs. Dominique Reiniche and Messrs. Jacques de Chateauvieux, Anthony hamilton and Michel Pébereau, whose terms of office expire at the end of this general Meeting, as members of the Supervisory Board for a four-year term, pursuant to Article 10 of the Company’s Bylaws. If re-appointed, their term of office would expire at the end of the general Meeting of Shareholders called in 2013 to approve the financial statements of the preceding fiscal year. Short biographies of Mrs. Dominique Reiniche and of Messrs. Jacques de Chateauvieux, Anthony hamilton and Michel Pébereau, appear in the exhibits to this report.
III – Authorization enabling the Company to buy shares of its own stock and, as the case may be, to cancel these shares Ordinary resolution 10 and extraordinary resolution 22
These shares may be acquired for the purpose of: a) optimizing the liquidity of AXA securities, notably to foster regular and liquid trading in the securities through a liquidity contract that complies with the Association française des marchés financiers (AMAFI) Code of conduct approved by the AMF, b) (i) hedging stock options offered to some or all employees or eligible corporate officers of the Company and/or affiliated entities or economic interest groups as defined in Article L.225-180 of the French Commercial
The acquisition, sale or transfer of these shares may be completed and paid for by all appropriate means in accordance with applicable laws and regulations, including through open market transactions or private agreements, over-the-counter and in particular through block trades, by using financial derivatives or warrants or, more generally, through securities with a claim on shares of the Company, or through public offer, at such time as the Management Board shall decide.
In compliance with Article 12 of the Bylaws of your Company, this resolution was approved by the Supervisory Board of AXA at its Meeting on February 18, 2009.
In the 22nd resolution, the Management Board also requests from your general Meeting to grant full authority, for a period of 18 months, to the Management Board, which may delegate such authority, to reduce the Company’s share capital through the cancellation, in one or more times, of the shares acquired by the Company by virtue of Article L.225-209 of the French Commercial Code, within the limit of 10% of the Company’s share capital in any given 24-month period. This resolution would replace and render null and void the unused portion of the resolution that has been granted by the Shareholders at their general Meeting on April 22, 2008 under the 20th resolution.
IV – Authorizations to be granted to the Management Board to increase the share capital Extraordinary resolutions 11 to 18
Pursuant to the regulatory provisions pertaining to capital increases, your Management Board reported on the business of the Company in 2008 and since the beginning of the 2009 fiscal year in the Management Board Report that is presented to your Meeting. This Report is included in the 2008 Annual Report filed with the AMF and is made available in accordance with applicable laws and regulations, in particular on AXA’s website (www.axa.com).
Therefore, the Management Board proposes, in the 11th to 18th resolutions, to renew, for a period of 26 months, the delegations of authority allowing it to issue shares or other securities with a claim on the share capital and to choose, in the most appropriate manner with respect to market conditions, the most suitable means for the financing of the group development. These new authorizations would replace and render null and void the unused portion of the authorizations bearing the same objective that have been granted by the Shareholders at their Meeting on May 14, 2007.
• €2 billion in nominal value that is, for reference purpose only, approximately 41.80% of the share capital as at January 21, 2009, for capital increases by issue of ordinary shares or securities with a claim on ordinary shares, with preferential subscription rights of Shareholders (12th resolution); • 20% of the share capital as at the date of this general Meeting within the limit of a nominal amount of €1 billion for capital increases by issue of ordinary shares or securities with a claim on ordinary shares, without preferential subscription rights for the Shareholders, provided that (i) this upper limit is common to the issues that may be carried out pursuant to the 13th resolution and the 16th to 18th resolutions (issue of securities in the event of a public exchange offer initiated by the Company, in return for contribution in kind, up to the limit of 10% of the share capital, outside the event of a public exchange offer, or as a result of the issue of securities giving a claim to the AXA’s share capital by the subsidiaries of the Company) and (ii) is to be deducted from the upper limit of €2 billion that is provided for in the event of a capital increases with preferential subscription rights of Shareholders.
These upper limits are separate and distinct from the upper limits provided for the issues of preferred shares that may be carried out pursuant to the 23rd to 25th resolutions set at €1 billion in nominal value limited to an issue gross income (inclusive of the share premium) of €2 billion.
Finally, the maximum nominal amount of debt instruments giving a claim to the Company’s share capital and issued pursuant to the 12th to 17th resolutions shall not exceed €6 billion.
The upper limits of capital increase specified in the resolutions shall be appraised without taking into account the additional amount of ordinary shares to be issued in order to safeguard, as required by law and applicable contractual terms providing for other cases of adjustment, the rights of owners of securities or other rights giving a claim to the share capital of your Company.
Delegations of authority submitted to the vote of your general Meeting are detailed hereinafter: Capital increase by means of capitalization of reserves, earnings or premiums (11th resolution) In the 11th resolution, your Management Board requests from your general Meeting, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, a delegation of authority to increase the capital by means of capitalization of reserves, earnings or premiums, within the upper limit of a maximum nominal amount of €1 billion. This upper limit is separate and distinct from the upper limits of the others resolutions submitted to the vote of your Meeting. The capital increases that may result from this resolution could be achieved, at the discretion of the Management Board, either by freely allotting shares or by increasing the nominal value of existing shares.
It is specified that in the event the Management Board would implement of the delegations of authority resulting from the 23rd to 25th resolutions relative to the issue of preferred shares, the owners of such preferred shares would be deprived from all rights in the capital increases carried out by virtue of this resolution, except in the event of a capital increase by mean of capitalization of reserves, in which case any free allotment of new shares to their benefit would give rise to the allotment of preferred shares from the same category as the preferred shares entitling to the free allotment.
The total nominal amount of debt instruments that may be issued by virtue of this resolution shall not exceed €6 billion at the date of the decision to issue, provided that this upper limit is separate and distinct from the amount of securities entitling to the allotment of debt instruments that would be issued by virtue of the 19th resolution submitted to this general Meeting, as well as from the amount of the debt instruments issued upon decision or authorization of the Management Board in accordance with Article L.228-40 of the French Commercial Code.
The Management Board would be able to issue, through a public offer and/or a private placement, ordinary shares or securities giving a claim to ordinary shares of the Company or one of its subsidiaries, which may consist, in particular, in debt instruments, be combined with the issue of such debt instruments, or consist in instruments enabling the issue of such debt instruments, under the same conditions as those referred to in the 12th resolution. The total nominal amount of debt instruments that may be issued by virtue of this delegation, likewise the 12th resolution, shall not exceed €6 billion at the date on which the decision to issue is made, provided that this upper limit is separate and distinct from the amount of securities giving the right to an allotment of debt instruments that would be issued by virtue of the 19th resolution submitted to this general Meeting, as well as from the amount of the debt instruments issued upon decision or authorization of the Management Board in accordance with Article L.228-40 of the French Commercial Code.
The issue price of the securities issued pursuant to this resolution would be set in compliance with the laws and regulations in force at the time of the issue. Currently applicable laws and regulations provide for a price at least equal to the volume-weighed average quoted price of the share over the last three trading days preceding the setting of the price, with a maximum discount of 5%.
In the event this option would be put into effect, the Management Board would establish a complementary report, certified by the Statutory Auditors, and detailing the definite and final conditions of such operation and containing information for an assessment of its actual impact on the Shareholders’ situation.
The issue of such securities would be authorized by the extraordinary Meeting of Shareholders of the concerned subsidiary, and the issue of shares of the Company to which these securities would entitle to would be resolved concurrently by your Management Board on the basis of this financial resolution, after prior approval by the Supervisory Board in accordance with Article 12 of the Bylaws.
V – Authorizations granted to the Management Board to issue securities without a claim on the share capital Extraordinary resolution 19
VI – Specific authorizations to be granted to the Management Board to issue ordinary shares or other securities with a claim on ordinary shares of the Company through employees savings plans Extraordinary resolutions 20 to 21
however, if you authorize it, the Management Board could reduce or waive the aforementioned discount, as it deems appropriate, in particular to take into account new international accounting standards, or, inter alia, locally applicable legal, accounting, tax or social provisions.
For further information concerning the use, by your Management Board, of the authorization to issue shares or securities giving a claim on the Company’s share capital pursuant to employee savings plan approved by your general Meeting on April 22, 2008, please see Section 3.2 “Full disclosure on executive compensation and share ownership” and Appendix vII (Supplementary Management Board Report – Capital increase reserved for AXA group employees (November 28, 2008)) of the Annual Report for 2008 filed with the AMF and made available to the Shareholders in accordance with the laws and regulations, in particular on the AXA’s website (www.axa.com).
The subscription price of the shares issued pursuant to this 21st resolution shall not be more than 20% lower than the average quoted price of the Company’s share on euronext Paris over the twenty trading days preceding the decision setting the opening date of subscriptions to the capital increase, nor higher than this average. In addition, the Management Board shall be entitled to decide the reduction or cancellation of any discount so granted in order to take into account, inter alia, legal, social, tax and accountancy regulations applicable locally.
VII – Authorizations to be granted to the Management Board to increase the share capital by issues of preferred shares Extraordinary Resolutions 23 to 26
To provide the Company with the required flexibility to reinforce its core capital as necessary, the Management Board requests, in the 23rd to 25th resolutions, a delegation of authority from your general Meeting to issue preferred shares without voting rights, as governed by Articles L.228-11 et seq. of the French Commercial Code. These preferred shares shall be eligible without limit in the consolidated solvency margin. Such preferred shares shall in no event be convertible into ordinary shares of AXA.
we draw to your attention that these limits are separate and distinct from those set in relation to share capital increases by way of issues of ordinary shares provided for in resolutions 11 to 21.
Any preferred share issued as a result of these delegations shall not have voting rights at the General Meetings of Shareholders nor preferential subscription rights in relation to future capital increases in cash. Preferred shares shall have the right to a preferential dividend and shall rank senior to ordinary shares in the event of a winding-up. In addition, there may be different categories of preferred shares with different financial rights according to their date of issue.
If no dividend is paid on any preferred shares, in part or in full, in respect of a given fiscal year, the preferred dividend cannot be carried forward to future fiscal years.
within the limits of the proposed delegations, the Management Board shall use its authority as necessary, and in particular to determine the amount of any issue, the number of preferred shares to be issued, the applicable issue price, the amount of the preferred dividend, to create new categories of preferred shares as necessary, to determine the measures necessary to complete any such increase of capital and to implement the necessary changes to the Bylaws. In accordance with Article 12 of the Company’s Bylaws, the issuance of any preferred shares shall be subject to the prior authorization of the Supervisory Board.
Furthermore, additional reports shall be prepared by the Management Board and the Statutory Auditors in accordance with applicable law at the time that the Management Board uses the above delegations of authority.
The 27th resolution proposed to your approval is intended to grant full authority to carry out all formal publication, filing and other requirements as the case may be, following this Annual Meeting.
SUPPLEMENTARY MANAGEMENT BOARD REPORT – CAPITAL INCREASE RESERVED FOR AXA GROUP EMPLOYEES (NOVEMBER 28, 2008) At its meeting on May 26, 2008, the AXA Management Board decided on the principle of a new share capital increase of the Company through the issuance a maximum number of 43,668,122 shares of the Company reserved for employees of AXA group companies or economic interest groups, in France and abroad (“SharePlan 2008”).
Pursuant to the authorization granted to the Management Board by the eighteenth resolution adopted by the Shareholders’ Meeting on April 22, 2008, and in accordance with the provisions of Articles L.225-138-1 and L.225-129-6 et seq. of the French Commercial Code and Article L.3331-1 et seq. of the French Labour Code, the Management Board has used the aforementioned authorization by determining the final terms of the offering at its meeting of September 15, 2008.
The decision of the Shareholders’ Meeting mentioned above entailed the waiver by the shareholders of their preferential subscription rights, in favor of group employees who are members of a company employee savings plan, to the shares or securities to be issued (for free, as the case may be), and a waiver of their preferential subscription rights to the ordinary shares that the aforementioned securities may give access.
1. Definitive conditions of the operation In addition to the classic plan for increasing capital for the benefit of employees, the group is offering a leveraged plan. In connection with this leveraged plan, several different employee shareholding funds (FCPe) have been set up for French residents and for residents of other countries. Under the leveraged plan, holders of fund units will be entitled to an investment mechanism allowing them to limit their personal contribution to 10% of the subscription price for these shares. Pursuant to a swap agreement entered into by the fund, the redemption value of the fund unit at maturity of the fund, or prior to maturity in the event of an early exit as provided for by law, would be equal to an employee’s personal contribution, which is guaranteed, and a percentage of any gain on all of the shares for the employees have subscribed via the fund.
In accordance with applicable law, the Management Board decided that the issue price of the new shares would correspond to: • for the classic plan, 80% of the arithmetical average of the opening prices of the AXA shares quoted on the Compartment A
As a result, the Management Board, at its meeting of September 15, 2008: 1°/ took due note that the average price of the 20 opening stock price quotes for the AXA shares through September 12, 2008, equals e21.47 (hereinafter the “Reference price”); 2°/ decided, for the classic plan, that the unit subscription price of new shares offered in the share capital increase reserved for employees will equal e17.18, i.e. 80% of the Reference price, rounded off; 3°/ decided, for the leveraged plan, that the unit subscription price of new shares offered in the share capital increase reserved for employees will equal e18.43, i.e. 85.85% of the Reference price, rounded off; 4°/ decided that the unit subscription price of new shares with stock subscription warrants offered in the share capital increase reserved for employees in germany (for the leveraged offering) will equal e21.47, i.e. 100% of the Reference price, rounded off.
Moreover, the impact of this issue on the interest in consolidated shareholders’ equity attributable to the group as of June 30 2008, for a shareholder who owns one AXA share and who does not subscribe to the capital increase would be the following: • In case the capital increase would be entirely subscribed via the classic plan: Interest in consolidated shareholders’ equity as of June 30, 2008 (per share)
After the issue of a maximum of 43,668,122 new shares €19.60
After the issue of a maximum of 43,668,122 new shares €19.62
Figures indicated above have been determined on the basis of the theoretical maximum number of shares that may be issued in connection with SharePlan 2008. By way of illustration, for SharePlan 2007, 22,088,600 were issued as it follows: 3,186,392 new shares subscribed under the traditional plan, 17,023,582 new shares subscribed under the leveraged plan (excluding germany) and 1,878,626 new shares with warrants under the leveraged plan in germany.
In accordance with the provisions of Article R.225-116 of the French Commercial Code, this report will be made available to shareholders at the Company’s head office no later than fifteen days following the Management Board’s meeting and will be submitted to the shareholders at their next general Meeting.
In accordance with applicable laws, the Management Board submitted to the Supervisory Board for its review AXA’s financial statements for 2008 (Company’s financial statements – parent only – and the consolidated financial statements) as well as the Management Board’s report on the Company’s and the group’s business for the financial year elapsed.
The Supervisory Board states to the Shareholders’ Meeting that it does not have any comment on the financial statements and report submitted by the Management Board.
Furthermore, the term of office of Mrs. Dominique Reiniche as well as Messrs. Jacques de Chateauvieux, Anthony hamilton and Michel Pébereau are due to expire at the close of the Meeting of April 30, 2009. The Management Board asks you to reappoint them for a four-year term. Following the recommendation of its Selection, ethics, governance and human Resources Committee, the Board has issued a favourable opinion on these reappointments.
Consequently, the Board recommends you to approve the 2008 financial statements as well as all of the other resolutions put to the vote at your Meeting and approved by the Management Board.
The Supervisory Board is confident that the AXA group has the ability to ensure the long-term growth of the group.
Special Report of Statutory Auditors on the issue of shares and/or securities giving a claim on ordinary shares or debt instruments of the Company, with or without preferential subscription rights
(General Meeting of the Shareholders on April 30, 2009 – 12th, 13th, 14th, 15th, 16th, 17th and 18th resolutions)
In our capacity as the Statutory Auditors of AXA, and in accordance with the terms of our appointment pursuant to the French Commercial Code, and in particular pursuant to its Articles L.225-135, L.225-136 and L.228-92, we hereby submit our report on the proposed delegation of authority to the Management Board for various issues of ordinary shares and securities, on which you are being asked to deliberate and vote.
– issue ordinary shares and/or securities giving a claim on ordinary shares of the Company or, pursuant to Article L.228-93 of the French Commercial Code, of a company in which the Company directly or indirectly owns more than half of the capital, without preferential subscription rights. The Management Board may grant Shareholders a priority right to subscribe shares as of right and/or on the basis of their exact rights (13th resolution),
– issue ordinary shares and/or securities giving a claim on ordinary shares of the Company in return for securities tendered to the Company in France or abroad during a public exchange offer initiated by AXA and complying with the conditions set in Article L.225-148 of the French Commercial Code (16th resolution),
• to authorize it, under the 14th resolution, in the event of an issue without preferential subscription rights, under the terms set forth in the 13th resolution (in particular with respect to the maximum nominal amount), to set the issue price under the conditions defined by the Shareholders and up to a maximum of 10% of the share capital for each 12-month period.
• to authorize it, for a 26-month period, to resolve the issue of ordinary shares and/or securities with a claim on ordinary shares, in return for the contributions in kind made to the Company in the form of shares or securities giving a claim to the capital (17th resolution), within the limit of 10% of the share capital.
To the extent the 15th resolution is approved, the number of securities, which are to be created pursuant to the delegations of authority referred to in the 12th to 14th and the 16th to 18th resolutions, may be increased in the conditions set forth in Article L.225-135-1 of the French Commercial Code and within the upper limits set forth in the 12th and 13th resolutions.
your Management Board is required to prepare a report in accordance with Articles R.225-113, R.225-114 and R.225-117 of the French Commercial Code. our role is to express an opinion on the fairness of the figures resulting from the financial statements, on the proposal for suppression of the preferential subscription rights and on other information pertaining to the issue contained in this report.
Notwithstanding subsequent review of the finals terms of any issue that would be resolved, we have no matters to report concerning the methods used to set the issue price of shares to be issued, such methods being detailed in the Management Board’s report for the 13th and 14th resolutions.
In accordance with Article R.225-116 of the French Commercial Code, we will submit a complementary report, as the case may be, when your Management Board will recourse to these authorizations in the event of issues of ordinary shares without preferential subscription rights and of issues of securities with a claim on the capital.
on the basis of its report, your Management Board proposes to your general Meeting: • to authorize it, for a 26-month period, to resolve the issue, in one or several times, in France, or abroad and/or on the international market, in euros or in any monetary unit established by reference to several currencies, bonds with bond warrants attached, and, more generally, securities entitling to the allotment, immediately or in the future, of debt instruments such as bonds and related securities, subordinated securities that have or have not a term date, or all other securities granting, in a same issue, the same claims on the Company and to set the definitive terms of such issue.
The nominal amount for which all the aforementioned securities may be issued may not exceed €2 billion, or the equivalent amount in another currency or any monetary unit established by reference to several currencies, provided that this maximum nominal amount is independent from the amount of any debt instruments that would be issued by virtue of the twelfth to seventeenth resolutions and that any redemption premiums above the nominal value shall be added to this amount.
It is specified that: • the maximum nominal amount of €2 billion is separate and distinct from the debt instruments that would be issued pursuant to the 12th to 17th resolutions; • this authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the twenty-second resolution.
your Management Board is required to prepare a report in accordance with Articles R.225-113 and R.225-114 of the French Commercial Code. our role is to express an opinion on the fairness of the figures resulting from the financial statements, and on other information pertaining to the issue contained in this report.
PricewaterhouseCoopers Audit Mazars 62, rue de villiers 61, rue henri Régnault 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
(General Meeting of the Shareholders on April 30, 2009 – 21st resolution)
Acting on the basis of its report, your Management Board proposes that you authorize it, for a period of 18 months, to resolve one or several capital increases and that you waive your preferential subscription rights to any securities to be issued, full authority to determine the terms and conditions of this transaction and that you waive your preferential subscription rights.
It is specified that: • the aggregate nominal amount which may result from this resolution and the 20th resolution shall not exceed the above mentioned nominal amount of €150 million; • your Management Board proposes that you waive your preferential subscription rights on the ordinary shares to be issued pursuant to this authorization and to reserve the subscription rights to the category of beneficiaries meeting the following characteristics: any bank or any entity held by such bank, which, at the request of the Company, participates in the implementation of a structured offer for some or all employees, corporate officers and general insurance agents of companies or economic interest groups affiliated to the Company within the meaning of Articles L.225-180 of the French Commercial Code and Articles L.3344-1 and L.3344-2 of the French Labor Code, incorporated outside France, such structured offer being similar, in terms of economic profile, to the offer made to other employees and corporate officers of the Company or its affiliated companies or economic interest groups within the meaning of Article L.225-180 of the French Commercial Code and Articles L.3344-1 and L.3344-2 of the French Labor Code, that would carried out by virtue of a capital increase made pursuant to the twentieth resolution submitted to this Meeting; • the issue price of the new shares to be issued pursuant to this authorization (i) shall not be more than 20% lower than an average quoted price of the share of the Company on euronext Paris over the twenty trading days preceding the day on which the Management Board sets the opening date of the subscription to a capital increase carried out by virtue of the twentieth resolution, nor higher than this average, and, (ii) shall not be more than 20% lower than an average quoted price of the share of the Company on euronext Paris over the twenty trading days preceding the day on which the Management Board sets the opening date of the subscription to a capital increase reserved to a beneficiary comprised in the category defined hereinbefore, provided that the structured offer referred to hereabove would not be established concurrently to a capital increase carried out by virtue of the twentieth resolution, nor higher than this average; • the Management Board shall be entitled to decide the reduction or cancellation of any discount so granted, if it deems appropriate, in order to take into account, inter alia, legal, social, tax or accountancy regulatory rules applicable locally.
To the extent that the amount of the issue price is not set, we do not express any opinion as to the finals terms according to which the capital increase will be carried out, and consequently, as to the proposal for suppression of the preferential subscription rights.
In accordance with Article R.225-116 of the French Commercial Code, we will submit a complementary report, as the case may be, when your Management Board will make use of this authorization.
PricewaterhouseCoopers Audit Mazars eric Dupont – yves Nicolas Patrick de Cambourg – Jean-Claude Pauly
(General Meeting of the Shareholders on April 30, 2009 – 22nd resolution)
In our capacity as Statutory Auditors of AXA and as required under the provisions of Article L.225-209 paragraph 7 of the French Commercial Code in the event of a reduction of capital by cancellation of repurchased shares, we have prepared our report on our assessment of the reasons and conditions of the proposed capital reduction.
we performed our work in accordance with the standards of our profession applicable in France. These standards require that we plan and perform procedures to assess whether the reasons and the conditions of the capital reduction are proper.
This transaction is related to the share repurchase program under which the Company may repurchase its own shares up to a maximum of 10% of its share capital under the conditions set forth in Article L.225-209 of the French Commercial Code. This share repurchase program is also submitted for approval to your general Meeting (10th resolution) and would be granted for a period of eighteen months.
In our capacity as Statutory Auditors of your company, and in accordance with Articles L.228-112 and L.225-138 of the French Commercial Code, we hereby submit our report on the proposed B category preferred shares issue of up total gross issue proceeds of €2 billion subject to such amount not exceeding €1 billion in total nominal amount, reserved for AXA Assurances IARD Mutuelle Company and AXA Assurances vie Mutuelle Company, a transaction that is being submitted for your consideration and vote.
your Management Board is asking that you, acting on the basis of its report, delegate to it, with the power to sub-delegate, the full authority to decide the terms of this transaction over a period of 18 months from the general meeting and is proposing that you waive your preferential subscription rights to any preferred shares to be issued within the limitations provided in the bylaws and resolutions submitted for your vote and consideration.
It is specified that: • The aggregate amount of capital increases done by means of issues of preferred shares which may be carried out under this resolution as well as the 24th and 25th resolutions submitted to this general meeting, shall not exceed, in addition to the limits provided by law, total gross issue proceeds of €2 billion subject to such amount not exceeding €1 billion in total nominal amount.
• The terms to determine the preferred dividend, which will be announced each year at the general meeting and paid to preferred shareholders, will be determined by the Management Board at the time of its decision to carry out the issue, within the limitations provided in the Bylaws. This dividend shall be determined within a range of a multiple between 1.2 and 1.8 of the dividend paid for any ordinary share in respect of the prior fiscal year.
In addition, this preferred dividend may not be less than the minimum dividend nor greater than the maximum dividend set by the Management Board at the time of its decision to carry out the issue. The minimum dividend will be between 6% and 8% of the current amount of the relevant preferred share in respect of the prior fiscal year (this amount corresponds to the issue price of the preferred share, as reduced in the event of absorption of losses) and the maximum dividend will be between 10% and 14% of the same amount.
In compliance with Article R.225-116 of the French Commercial Code, we will prepare a supplementary report when and if your Management Board makes use of this authorization.
Special Report of the Statutory Auditors on the preferred shares issue maintaining the preferential subscription rights of Shareholders
your Management Board is asking that you, acting on the basis of its report, delegate to it, with the power to sub-delegate, the full authority to decide the terms of this transaction over a period of 26 months from this general meeting; within the limitations provided in the bylaws and resolutions submitted for your vote and consideration.
It is specified that: • The aggregate amount of capital increases done by means of issues of preferred shares which may be carried out under this resolution as well as the 23rd and 25th resolutions submitted to this general meeting, shall not exceed, in addition to the limits provided by law, total gross issue proceeds of €2 billion subject to such amount not exceeding €1 billion in total nominal amount.
• The preferred shares to be issued shall not have voting rights at general meetings nor preferential subscription rights to any capital increase in cash. They will have a right to a preferred dividend and a priority right in any winding-up over that of ordinary shares. They will not be convertible into ordinary shares.
• The issue price of the preferred shares will be decided by the Management Board at the time of its decision to carry out the issue. It will be equal to the volume-weighted average quoted price of AXA’s ordinary shares on euronext Paris during the 20 day trading period preceding the date on which the decision to issue the preferred shares is made.
As the amount of the issue price is not yet determined, we express no conclusion on the final terms and conditions under which the capital increase will be carried out.
Special Report of the Statutory Auditors on the preferred shares issue without preferential subscription rights of Shareholders
It is specified that: • The aggregate amount of capital increases done by means of issues of preferred shares which may be carried out under this resolution as well as the 23rd and 24th resolutions submitted to this general meeting, shall not exceed total gross issue proceeds of €2 billion subject to such amount not exceeding €1 billion in total nominal amount.
• The issue price of the preferred shares will be decided by the Management Board at the time of its decision to carry out the issue. The issue price (i) will be equal to the volume-weighted average quoted price of AXA’s ordinary shares on euronext Paris during the 20 day trading period preceding the date on which the decision to issue the preferred shares is made and/or (ii) in the event preferred shares fungible with other preferred shares are already issued and listed, will be equal to the minimum authorized by law.
• The terms to determine the preferred dividend, which will be announced each year at the general meeting and paid to preferred shareholders, will be determined by the Management Board at the time of its decision to carry out the issue, within the limitations provided in the Bylaws. The dividend shall be determined within a range of a multiple between 1.2 and 1.8 of the dividend paid for any ordinary share in respect of the prior fiscal year.
In addition, this preferred dividend may not be less than the minimum dividend nor greater than the maximum dividend set by the Management Board at the time of its decision to carry out the issue. The minimum dividend will be between 6% and 8% of the current amount of the relevant preferred in respect of the prior fiscal year (this amount corresponds to the issue price of the preferred share, as reduced in the event of absorption of losses) and the maximum dividend will be between 10% and 14% of the same amount.
• The preferred shares may be repurchased by AXA in accordance with the terms set out in the Bylaws and in particular, at any time as from the fifth anniversary of their issue date, subject to the prior approval by the French insurance regulator (Autorité de Contrôle des Assurances et Mutuelles). They shall be repurchased at their issue price increased by, in certain cases, a rate corresponding to the rate set by the Management Board, at the time of its decision to carry out the issue, to calculate the minimum dividend (i.e. comprised between 6% and 8%).
As the amount of the issue price is not yet determined, we express no conclusion on the final terms and conditions under which the capital increase will be carried out and consequently on the proposal that is made to you to waive your preferential subscription rights although the principle of waiving your preferential subscription rights logically follows from the nature of the transaction envisaged and submitted for your approval.
Special Report of the Statutory Auditors on the insertion in the Bylaws of the terms of repurchase or reimbursement of the preferred shares
In our capacity as Statutory Auditors of your Company, and in accordance with Article R.228-20 of the French Commercial Code, we hereby submit our report on the terms of repurchase or reimbursement of the category B preferred shares whose insertion in the Bylaws is envisaged as part of a transaction that is being submitted for your consideration and vote.
your Management Board is required to prepare a report stating the terms of the repurchase or reimbursement of these preferred shares and to make available its and the Auditors’ reports provided under Article R.228-19 of the French Commercial Code. our role is to assess the terms of the repurchase or reimbursement of the category B preferred shares whose insertion into the bylaws is envisaged.
In compliance with Article R.228-19 of the French Commercial Code, we will prepare a report upon the decision by your Management Board to issue category B preferred shares, in accordance with the provisions of the bylaws.
PricewaterhouseCoopers Audit Mazars & guérard 63, rue de villiers 61, rue henri Régnault 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
Pursuant to this delegation of authority, the Management Board decided, at its Meeting of September 15, 2008, to carry out a capital increase by issuing a maximum amount of 43,668,122 shares of the Company having the following issue prices: • under the traditional plan, a unit price of €17.18, equal to 80% of the average closing price of the AXA share over the 20 trading days preceding, and including, September 12; • under the leverage plan, a unit price of €18.43, equal to 85.85% of the average closing price of the AXA share over the 20 trading days preceding, and including, September 12; • for the shares with stock warrants attached (actions à bons de souscription d’actions) offered to employees in germany, a unit price of €21.47, that is 100% of the average opening price of the AXA share over the 20 trading days preceding, and including, September 12.
It is the responsibility of the Management Board to prepare a supplementary report in accordance with Articles R.225-115 and R.225-116 of the French Commercial Code. we are required to give our opinion on the fairness of the figures resulting from the financial statements, on the proposal to waive the shareholders’ preferential subscription rights, and on certain other information concerning the issue and contained in this report.
PricewaterhouseCoopers Audit Mazars & guérard eric Dupont – yves Nicolas Patrick de Cambourg
Second resolution Approval of the consolidated financial statements for 2008 The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Management Board Reports, the Supervisory Board Report relating to the Management Board Report and the financial statements for the year ended December 31, 2008, and the Statutory Auditors’ Report on the consolidated financial statements, hereby approve the Company’s consolidated financial statements for the year ended December 31, 2008 as presented, together with the transactions reflected therein or referred to in the aforementioned reports.
Third resolution Earnings appropriation and declaration of a dividend of €0.40 per share The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, upon recommendation of the Management Board and having noted that losses for the year ended December 31, 2008 amount to €1,252,766,940 hereby resolve to appropriate the losses of the fiscal year 2008 as follows: • appropriation on the retained earnings for an amount of €17,248,117 • appropriation on the reserve for contingencies (réserve pour éventualités diverses) for an amount of €1,235,518,823 hereby resolve the distribution of a dividend to the benefit of shareholders, charged on the reserve for contingencies (réserve pour éventualités diverses), that amount to €835,663,267.60.
For information, the following dividends per share, dividends with tax relief, and dividends without tax relief, were granted for the preceding three fiscal years: Fiscal year 2005 Fiscal year 2006 Fiscal year 2007
For dividends received as from January 1st, 2008, the beneficiaries having opted for a flat deduction at source are not entitled to the aforementioned tax relief.
Fourth resolution Approval of the Statutory Auditors’ Special Report on regulated agreements The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Statutory Auditors’ Special Report on agreements falling within the scope of Article L.225-86 of the French Commercial Code (Code de commerce), hereby approve the aforementioned report, which does not mention the existence of any new regulated agreements falling within the scope of the aforementioned Article and that were entered into over the year ended December 31, 2008.
Ninth resolution Appointment of Mr. Ramon de Oliveira to serve as a member of the Supervisory Board The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings and pursuant to Article 10 of the Company’s Bylaws, hereby appoint Mr. Ramon de oliveira to serve as a member of the Supervisory Board, replacing Mr. henri Lachmann whose term of office expires at the end of this general Meeting, for a four-year term expiring at the close of the general Meeting of Shareholders in 2013 called to approve the financial statements of the preceding fiscal year.
2) Resolve that these ordinary shares may be acquired for the purpose of: a) optimizing the liquidity of AXA ordinary shares, notably to foster regular and liquid trading in the securities through a liquidity contract that complies with the Association Française des Marchés Financiers (AMAFI) Code of conduct approved by the AMF, and agreed to with an investment service provider, in compliance with market practice accepted by the AMF, provided that, for the calculation of the 10% limit provided for in paragraph 1) of this resolution, the number of such repurchased shares will be equal to the purchased shares minus the shares that would have been resold within the duration of this resolution b) (i) hedging stock options offered to some or all employees or eligible corporate officers of the Company and/or affiliated entities or economic interest groups as defined in Article L.225-180 of the French Commercial Code, (ii) granting free shares to some or all eligible corporate officers, employees, former employees and general insurance agents enrolled in a employer-sponsored company savings plan sponsored by the Company or the AXA group, (iii) granting free shares to some or all employees or eligible corporate officers of the Company and/or its affiliated entities or economic interest groups notably in accordance with Article L.225-197-2 of the French Commercial Code, in connection with the provisions of Articles L.225-197-1 et seq. of the French Commercial Code, and (iv) assigning shares to some or all employees, former employees, eligible corporate officers and general insurance agents of the Company or the AXA group in connection with the implementation of any employee savings plan in accordance with the applicable laws and regulations, notably the Articles L.3332-1 et seq. of the French Labor Code, or any other employee savings plans, c) holding shares for the purpose of subsequent payment or in exchange in respect of potential external growth acquisitions, in compliance with the market practice accepted by the AMF, d) delivering shares upon exercise of rights attached to debt instruments giving a claim on the Company’s share capital by way of repayment, conversion, exchange, presentation of a warrant or in any other manner e) canceling some or all of these shares, provided that the Management Board is duly authorized by the Shareholders, under an extraordinary resolution, to reduce the capital through the cancellation of the shares acquired pursuant to a share repurchase program, or, f) in general, performing all operations admissible, or to be subsequently admitted, by the laws and regulations in force.
4) Resolve that the acquisition, sale or transfer of these shares may be completed and paid by all appropriate means in accordance with the applicable laws and regulations, including through open market transactions or private agreements, over-the-counter and in particular through block trades, by using financial derivatives or warrants or, more generally, through securities entitling to shares of the Company, or through public offerings, at such time as the Management Board shall decide.
Resolve that, in the event of a public offer on the AXA’s shares, the Company may pursue the execution of its share repurchase program in accordance with Article 232-17 of the AMF general Regulation, and only if (i) the offer to purchase Company shares is paid for exclusively and entirely in cash and if (ii) the repurchase transactions carried out pursuant to a program in progress are consistent with the objectives mentioned in points b) and d) of paragraph 2) above and are not likely to compromise the success of the offer.
This authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the fourteenth resolution. It is granted for a period of 26 months, starting from the date of this Meeting.
2) Resolve that the securities giving a claim to the share capital of the Company or a Subsidiary issued by virtue of this resolution may, in particular, consist in debt instruments, be combined with the issue of such debt instruments, or consist in instruments enabling the issue of such debt instruments. These securities may or may not be subordinated or dated, and may be issued in euros, in any other currency, or in any monetary unit established by reference to several currencies.
of debt instruments that may be issued by virtue of the nineteenth resolution hereinafter, as well as from the amount of the debt instruments issued upon decision or authorization of the Management Board in accordance with Article L.228-40 of the French Commercial Code.
This authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the fifteenth resolution. It is granted for a period of 26 months, starting from the date of this Meeting.
Thirteenth resolution Delegation of authority to the Management Board in order to increase the share capital by issuing ordinary shares or securities giving a claim to ordinary shares of the Company or one of its subsidiaries, without preferential subscription rights of shareholders The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, having reviewed the Management Board Report and the Statutory Auditors’ Special Report, and having noted that the share capital of the Company is fully paid up, pursuant to the provisions of Articles L.225-129-2, L.225-135, L.225-136, L.228-92 and L.228-93 of the French Commercial Code, 1) hereby authorize the Management Board to resolve one or several capital increases by issuing ordinary shares of the
3) Duly note that this delegation entails the express waiver by the Shareholders of their preferential rights to subscribe to the Company’s ordinary shares to which the securities issued by virtue of this delegation may give a claim to.
This authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the eighteenth resolution. It is granted for a period of 26 months, starting from the date of this Meeting.
Sixteenth resolution Delegation of authority to the Management Board in order to increase the share capital by issuing ordinary shares or securities giving a claim to the Company’s ordinary shares, in the event of a public exchange offer initiated by the Company The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, and having reviewed the Management Board Report and the Statutory Auditors’ Special Report, pursuant to the provisions of Articles L.225129 to L.225-129-6, L.225-148 and L.228-92 of the French Commercial Code, 1) hereby authorize the Management Board to issue ordinary shares and/or securities giving an immediate and/or deferred claim, by any means, to ordinary shares of the Company existing or to be issued, in return for securities tendered during a securities public exchange offer initiated by the Company, in France or abroad, in compliance with local regulations, for securities of another company listed on one of the regulated market referred to in the Article L.225-148 of the French Commercial Code, and decide, if need be, the waiver of the Shareholders’ preferential subscription rights to the ordinary shares and/or securities to be issued, in favor of the owners of the securities tendered in the public exchange offer.
2) Duly note that this delegation entails the express waiver by the Shareholders of their preferential rights to subscribe to the ordinary shares to which the securities issued by virtue of this delegation may give a claim to.
This authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the nineteenth resolution. It is granted for a period of 26 months, starting from the date of this Meeting.
Seventeenth resolution Delegation of authority to the Management Board in order to increase the share capital by issuing ordinary shares or securities giving a claim to ordinary shares in return for contributions in kind up to a maximum of 10% of the share capital, outside the event of a public exchange offer initiated by the Company The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, and having reviewed the Management Board Report and the Statutory Auditors’ Special Report, pursuant to the provisions of Articles L.225129 to L.225-129-6 and L.225-147 of the French Commercial Code, 1) hereby authorize the Management Board to issue ordinary shares and/or securities giving an immediate and/or deferred claim, by any means, to ordinary shares of the Company existing or to be issued, in return for the contributions in kind made to the Company in the form of shares or securities giving a claim to the capital, where the provisions of Article L.225-148 of the French Commercial Code do not apply.
2) Resolve to waive the preferential subscription rights of Shareholders with respect to the ordinary shares and securities issued by virtue of this resolution, in favor of the owners of the shares or securities tendered as contributions in kind, and duly note that this delegation entails the express waiver by the Shareholders of their preferential right to subscribe to the Company’s ordinary shares which may be granted with respect to the securities to be issued by virtue of this delegation.
3) Resolve that the Management Board shall have full powers, with the option to sub-delegate authority under the provision of the law, to implement this resolution, with the agreement of any boards of directors, management boards, or other competent governing or managing bodies of the Subsidiaries that issued the securities referred to in this resolution, and in particular to: • define the amounts and terms of the issues; • determine the terms of the issue and the category of the securities to be issued; • set the date – even retroactive – as of which the securities to be created shall earn dividends; • take all necessary measures to safeguard the rights of owners of securities giving a claim to shares of the Company, in compliance with the laws and regulations, and if applicable, the contractual terms providing for other cases of adjustment; • take all measures and conclude all agreements in furtherance of each issue, in compliance with applicable French or foreign laws and regulations; • amend the Bylaws such as necessary in order to allow the use of this delegation, in accordance with its report submitted to this Meeting.
The nominal amount for which all the aforementioned securities may be issued may not exceed €2 billion, or the equivalent amount in another currency or any monetary unit established by reference to several currencies, provided that (i) this maximum nominal amount is independent from the amount of any debt instruments that would be issued by virtue of the twelfth to seventeenth resolutions and, (ii) any redemption premiums above the nominal value shall be added to this amount.
2) Resolve that the Management Board shall have full powers, including the option to sub-delegate authority under the provision of the law, to give effect to this resolution, and in particular to: • carry out the said issues up to the aforementioned maximum nominal amount, and determine the date, type, amounts and currency for said issues; • determine the characteristics of the securities to be issued as well as of the debt instruments to which the said securities would give claim to, in particular, the nominal value, the date – even retroactive – as of which they shall earn dividends, the issue price with, if applicable, an issue premium, the interest rates fixed and/or variable, and the redemption date, or, for variable rate securities, the methods for determining the interest rates and the conditions of capitalization of the interests; • determine, having regard to market conditions, the terms of amortization and/or early redemption of the securities to be issued as well as of the debt instruments to which such securities would give a claim to, with, as the case may be, a fixed or variable premium, or even the repurchase by the Company; • decide to confer a guarantee or warranties to the securities to be issued as well as to debt instruments to which such securities would give a claim to, as required, and determine their type and characteristics; • in general, determine all terms and conditions for each issue, conclude all agreements with banks and organizations, take all necessary measures, and comply with all formal, legal, and other requirements in furtherance of the issues.
This authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the twenty-second resolution. It is granted for a period of 26 months, starting from the date of this Meeting.
Twentieth resolution Authorization granted to the Management Board in order to increase the share capital by issuing ordinary shares or securities giving a claim to the Company’s ordinary shares, reserved for employees enrolled in the employersponsored Company savings plan The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary meetings, having reviewed the Management Board Report and the Statutory Auditors’ Special Report, drawn up in compliance with the law, and in particular