The litigation environment in which the Group operates also continues to evolve. In continental Europe, the introduction of class actions, including in France in 2014, has, and is likely to continue to, increase litigation risks and costs for insurers, asset managers and other financial institutions. Most recently, on April 11, 2018, the EU Commission proposed a directive on representative actions for the protection of the collective interests of consumers, as part of its ‘New Deal for Consumers’ initiative. This proposed directive aims at enabling qualified entities to seek remedy through representative actions against infringements of provisions of EU law in a variety of areas (including data protection and financial services), in order to provide an eff ective and eff icient way of protecting the collective interests of consumers. The EU Parliament is expected to consider the adoption of this proposed directive in 2019, although the EU legislative calendar remains unclear.
AXA also squares its responsibilities as a co-operative, compliant taxpayer in each and every country in which it operates, with the need to support competitive business growth – serving all its stakeholders including investors, suppliers and employees.
Disclosure on tax matters and information on taxes connected with the Group’s activities in each country
The Consolidated Financial Statements present the reconciliation between the theoretical tax charge and the eff ective tax charge under IFRS. All diff erences are fully explained (see Note 19 “Tax” in Part 5 – “Consolidated Financial Statements” of this Annual Report). It should be noted that in many jurisdictions where AXA operates, the income and capital gains on savings-products benefit from a favorable tax treatment, also when such products are included in life insurance products. This leads to a lower eff ective tax rate for life insurance companies.
(1) The list of non-cooperative jurisdictions under French tax rules is given by a ministerial decree dated April 8, 2016 and is composed of the following countries: Botswana, Brunei, Guatemala, Marshall Islands, Nauru, Niue and Panama. As of December 1, 2018, pursuant to Article 238-0 A of the Code général des impôts, this list is extended to include the states and jurisdictions on the blacklist set out in Annex I to the conclusions adopted by the Council of the European Union on December 5, 2017, as updated from time to time (the most recent version of this list was published on November 9, 2018, and is composed of American Samoa, Guam, Samoa, Trinidad and Tobago, US Virgin Islands).
Certain material provisions of applicable French law, in force at the filing date of this Annual Report, and of the Company’s Bylaws are summarized below. Copies of AXA’s Bylaws are available at the Paris Trade and Companies Register (Registre du commerce et des sociétés du Tribunal de commerce de Paris) and on the Company’s website (axa.com).
In addition to French law provisions, AXA’s Bylaws and the Board’s Terms of Reference include a number of specific provisions concerning members of the Board of Directors and corporate off icers, including the following: Compensation
Notwithstanding the term of off ice for which the Chairman of the Board of Directors is appointed, his/her functions shall terminate, at the latest, at the end of the Ordinary Shareholders’ Meeting convened to approve the financial statements of the preceding fiscal year and held during the year the Chairman reaches the age of 70.
When the permanent representative of a legal entity member of the Board of Directors reaches 70 years old, the legal entity is deemed to have resigned automatically unless it designates a new representative within three months.
For additional information regarding the Board of Directors and corporate off icers of the Company, please see Part 3 – “Corporate governance” of this Annual Report.
Upon proposal by the AXA Board of Directors, 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 Statutory Auditors, the Board of Directors may distribute interim dividends to the extent of the distributable profit without prior approval of the shareholders. AXA’s Bylaws require AXA to distribute any dividends between its shareholders in proportion to their share in the capital.
AXA’s Bylaws provide that, the Shareholders’ Meeting may grant each shareholder the choice to receive dividends in either cash or additional ordinary shares.
Under French law, shareholders have preferential subscription rights to subscribe, on a pro rata basis, additional ordinary shares (and/or convertible, exchangeable or other securities giving a claim, directly or indirectly, to AXA ordinary shares). This subscription right is transferable and normally trades separately during the subscription period for a capital increase. Issuing additional shares without preferential subscription rights, except for issues already approved or authorized by AXA shareholders, requires the approval of two-thirds of the shareholders attending or represented at an Extraordinary Shareholders’ Meeting.
If AXA is liquidated, the assets remaining aft er it pays its debts, liquidation expenses and all prior claims will be used to repay AXA shareholders up to the amount of the liquidation balance and the par value of the shares held by each shareholder. Any surplus will be divided among all shareholders, subject to rights arising, if any, from diff erent classes of shares, in proportion to the rights they own in the Company’s share capital.
Under French law, shareholders of a French public company (société anonyme) have the power to amend AXA’s Bylaws. Such an amendment generally 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 reduce the individual rights vested in each shareholder (such as voting rights, right to distributable profits of the Company, right to sell one’s shares and right to sue the Company).
Shareholders are convened, meet and deliberate in accordance with applicable French laws and AXA’s Bylaws.
In accordance with the provisions of Article L.225-37-4, 9° of the French Code de commerce, the conditions for the participation to Shareholders’ Meetings are detailed in Article 23 of AXA’s Bylaws, which is expressly incorporated by reference herein.
In addition, the information referred to in Article L.225-37-5 of the French Code de commerce is made public in the corporate governance report approved by AXA’s Board of Directors’ and attached to the Board of Directors’ report of AXA included in this Annual Report. For further information, please refer to Appendix VII “Corporate governance report – Cross Reference Table” to this Annual Report.
There are no French anti-takeover statutes similar to the antitakeover statutes enacted by certain states in the United States and other jurisdictions. However, a number of French law provisions, in particular those resulting from the Law No. 2014384 of March 29, 2014 (visant à reconquérir l’économie réelle) or from certain provisions of the European Directive of April 21, 2004 (which was implemented in France in 2006) concerning takeover bids, may have certain anti-takeover eff ects. In the case of AXA, the relevant provisions include, among other things, the existence of AXA shares with double voting rights, which are described above, and specific notification requirements applicable when holdings exceed specified thresholds, as described below.
The Company’s share capital may be modified only under the conditions stipulated by the legal and regulatory provisions in force. The provisions of the Bylaws or the Board’s Terms of Reference shall not prevail over changes in the law governing the Company’s share capital.
This chapter describes our Corporate Responsibility (CR) Strategy in accordance with the provisions of the EU Directive 2014/95 (“NonFinancial Reporting” directive). In-depth information on the AXA Group’s Corporate Responsibility-related policies and practices is also available in the “Integrated Report”, in the online “Social Data Report” and on the AXA Group’s website (www.axa.com), in particular in the “Corporate Responsibility Section”.
In doing so, we are not only contributing to global economic growth but also ensuring social stability, in line with our ambition to “Empower People to Live a Better Life”. This approach is inherent to our business and it also drives our CR strategy. For more information on AXA’s business model, please refer to Chapter 1“Business overview” and Chapter 2“Activity report and capital management.”
Our CR strategy is an essential driver of employee engagement, customer trust and brand image. CR is also a risk/opportunity management concern: it enables AXA to reduce certain costs and business and operational risks, while providing market opportunities in emerging or future commercial segments. Our CR strategy is focused on the core topics of climate change and environment, health risk prevention, social inequalities & inclusion and using data for social good, while continuing to address broader environmental, social and societal concerns.
■ Social inequalities & inclusion: as an insurance company, we aim to provide protection and risk prevention to under-served populations, thereby contributing to global socio-economic development.
In 2018, the Group also developed a new “CR Framework” to identify future topics for engagement which takes into account the “Sustainable Development Goals” (UN SDGs), a UN-level vision. The UN SDGs are a set of 17 global goals developed by the United Nations General Assembly in 2015, covering social and economic development issues including poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanization, environment and social justice. The full framework is described in the following website: sustainabledevelopment.un.org.
AXA is also committed to be a responsible employer, striving to maintain employee engagement at the core of our business strategy and to create a workplace inspired by our values, which fosters diversity and equal opportunities for all, promotes employee participation, encourages professional development and supports employee well-being.
AXA also leverages its Stakeholder Advisory Panel to better evaluate future topics of interest. Indeed, in 2014, AXA created a Stakeholder Advisory Panel to advance the company’s role as an insurer in building a stronger, safer and more sustainable society. Twice a year, it gathers senior external and influential figures who are collectively representative of AXA’s stakeholder groups, as well as AXA’s top management and members of our Board of Directors.
The Panel is designed to provide an informal forum for in-depth discussions on global trends shaping the world by addressing a mix of business and sustainability issues. For example, the topics reviewed in 2018 included the AXA Research Fund’s strategy, the “Future of Learning”, AXA’s innovation strategy, the “Circular Economy”, our new CR framework for engagement, with an in-depth discussion on biodiversity and the twin epidemic of obesity and diabetes, AXA’s Health strategy in Africa, and the “Future of Trust”. External panelists are encouraged to provide long term views on AXA business and challenge its strategy with a CR perspective. It enables AXA to maximize its positive impact on clients and on the communities in which it operates. Full information about the Stakeholder Panel is available here: www. axa.com/en/about-us/stakeholder-advisory-panel.
These risks were correlated to the following impacts on AXA’s business: financial (impacting our profit bearing capacity), employee (impacting our human resources), reputational (impacting our brand image), operational (impacting our capacity to carry out our daily business operations) and environmental (impacting our investments, insurance or operations on environmental concerns).
The results were then cross-referenced with the AXA Group Operational Risk Profile (for more information on operational risks, please refer to Section 4.7 “Operational risk”) as well as AXA’s Emerging Risks Survey, which outlines major emerging risks for society at large (for more information on emerging risks, please refer to Section 4.8 “Other material risks”). The most material risks are also compared to the Dow Jones Sustainability Index’ evaluation to integrate a third-party analyst view. Based on this methodology, the following risks were identified: ■ social risks. The issues identified are: responsible employment practices, social dialogue and working conditions; employee development; talent attraction and retention. See Chapters 7.2 and 7.4 for further information; ■ human rights risks-related issues identified are: “inclusive” insurance solutions; customer protection; customer data; and preventing human rights violations within our supply chain. More information on these risks can be found in Sections 7.4, 7.5 and 7.6; ■ environmental risks relate to environmental and climate change-related issues, developed in Section 7.3; ■ societal risks-related issues include addressing the UN Sustainable Development Goals; partnerships and philanthropy; stakeholder engagement practices. See Section 7.4 and CR governance & stakeholder dialogue for further information; ■ fair business practices-related issues include ensuring our suppliers and contractors meet CR requirements; fighting bribery, corruption and tax evasion. See Sections 7.5 and 7.6.
The Group’s Environment, Social and Governance (ESG) performance is evaluated by specialized rating agencies. The Group generally ranks close to the top in its industry and is also included in main international sustainability indices. These ratings are described in further detail under Chapter 1.
PricewaterhouseCoopers Audit, one of AXA SA’s Statutory Auditors, appointed as an independent third party, presents in its report, featured in this Annual Report, their reasoned opinion on the compliance of the consolidated non-financial information statement disclosed in the Company’s management report prepared for the year ended December 31, 2018, with the French regulation, as well as on the fairness of the information.
An assessment of the social, environmental, societal, business conduct and human rights impacts of the Group’s activities has enabled the appropriate performance indicators to be defined in accordance with the requirements of the French Commercial Code.
The social data provided for in Section 7.1 are collected from 315 active entities of the AXA Group, all included in the consolidation scope of AXA (i.e. fully consolidated for the preparation of the consolidated financial statements as of December 31, 2018, in other words, the subsidiaries in which AXA holds, directly or indirectly, management control). Except for a few entities which may pre-consolidate data on a local level, the social indicators are consolidated at Group level.
The environmental data provided for in Section 7.3 “Own operations” are collected from 81 entities, in accordance with the same rules used to define the scope of the social indicators (i.e. subsidiaries that are consolidated using the full consolidation method as at December 31, 2018). AXA sites with fewer than 50FTEs are not included in the data collection, but are part of an extrapolation process. In 2018, environmental indicators were collected for 101,977 FTEs working on AXA sites (unless otherwise indicated) and were then extrapolated, continent by continent, to cover all 124,355 salaried FTEs (all types of contracts, including XL Group, for which FTE data was included on a pro-rata basis for Q4 2018) working at AXA Group in average in 2018.
Section 7.3 also describes the manner in which AXA strives to integrate environmental issues into our business, as an insurer and an investor. The perimeter of our responsible investment strategy (which includes climate finance) covers our General Accounts assets, while our climate-related insurance activities cover essentially our P&C Commercial lines business.
For the scopes defined above, indicators are 100% consolidated, unless otherwise indicated. In order to develop its CR Strategy and disclose its non-financial performance, AXA voluntarily complies with some international guidelines as specifically indicated in the relevant paragraphs of this Chapter 7. These guidelines include for example the Greenhouse Gas Protocol (ghgprotocol. org) for CO2-related KPIs. Other guidelines are highlighted where appropriate.
The social data provided for in Section 7.2 are collected through a reporting process defined by procedures associated with a list of indicators shared with all entities of the AXA Group. This process is updated and communicated to each entity on a yearly basis. Social data are provided by local correspondents into an IT tool dedicated to the social data reporting process. Consistency checks and quality controls are carried out before and during the data collect process. There is no estimation or extrapolation made on the data provided. Regarding data published in ratios and percentages, numerator and denominator are realigned for each calculation to exclude entities with empty data points. The social data from XL Group are integrated into the Group’s headcount, compensation and new hires data, but not for absenteeism, accidents and training.
As explained above, environmental data is collected from AXA sites with more than 50 FTEs as well as AXA-owned data centers. Environmental data contributors are required to gather all the relevant data into a dedicated reporting tool. For each site, contributors specify whether data has been measured or estimated based on the calculation rules defined in the Group’s reporting procedures. In 2018, environmental data was collected for 82% of our total FTEs, and the remaining 18% was extrapolated. For AXA-owned data centers, 100% of the data is reported on actual basis (no extrapolations). Please refer to Chapter 7.3 “Environmental reporting process and verification”n as well as perimeter notes below our environmental data table for further information. Environmental data and more generally policies regarding our investments and insurance business is handled by various teams including Group Investments, Group Corporate Responsibility and Group Insurance Off ice.
However for some specific risks such as Corruption, Customer Protection, Human Rights and CR requirements related to Responsible Procurement, the current disclosure includes internal policies, framework and due-diligences measures implemented by AXA. These are described in Sections 7.5 “Business Behavior” and 7.6 “Vigilance Plan”. In line with NonFinancial Directive requirements, the Group has been working towards the development of Key Performance Indicators for these specific topics as part of its 2019 non-financial disclosure.
Therefore, AXA is committed to analyze those trends, to anticipate and adapt its employer proposition and practices accordingly and develop our people to new ways to perform our business.
To achieve our purpose (“we want to empower people to live a better life”) and reveal the potential of our employees, we are committed to creating a workplace built on our values, a workplace which: ■ fosters diversity as it breeds performance and innovation, promotes equal opportunities for all and creates the conditions for everybody to express his/her full potential at work; ■ encourages employees’ participation in the decision-making process and enable them to take risks; ■ provides best in class solutions and opportunities to maintain employability and encourages continuous learning and professional development; ■ promotes a generational mix at work; ■ promotes the balance between work and life and safeguards health of people at work.
To confirm the relevance of our proposition and its adequate global execution, we have established a continuous dialogue with our people who have the responsibility to spot potential misalignments and suggest the management actions to repair. Regular employee engagement surveys are managed across the organization.
AXA’s overall salaried workforce on December 31, 2018, was 125,934 employees (open-ended and fixed-term contracts), which represents an increase of more than 8% compared to 2017. This increase is mainly due to the acquisition of the XL Group, which has a global footprint, representing some 7,400 employees.
For further details on the above figures and a comparison between 2017 and 2018, please refer to the tables at the end of Section 7.2.
Those have been identified through working groups with AXA Group experts from diff erent departments and also on internal documentation that AXA, as a mature insurance company and an expert in the management of all kind of risks, has been improving over the past years. They consist of documents developed by Group Risk Management (Operational Risk Grid) and by Group Human Resources (HR) Departments (Pager on AXA HR ambition and roadmap, and AXA HR Group Standards). AXA’s
Other aff iliates outside the scope of the EWC have also developed social dialogue agreements, but these are not monitored at Group level. More generally, beyond Europe, the Group strives to ensure that employees are fairly represented in all major countries where it is present. Sessions of exchange are planned regularly during the year between the Group and local Heads of Social Relations.
A s a responsible insurer and employer, it is in AXA’s DNA to protect all its personnel as per international best practices, under the legal requirements of “duty of care” and “duty of vigilance” and in three major dimensions: ■ “Physical security”: protection of employees from intentional threats (crime, terrorism, political and social instability); ■ “Health & safety”: protection of personnel from hazard and accidents (fire, pandemics, natural disasters, etc.); ■ “Crisis management”: when an incident requires extraordinary processes to be managed.
Maturity improvements are being monitored every quarter based on 20 points of control, in line with the objectives set by Group Management Committee.
The baseline defined by Group Security has been implemented in 90% of the Group as of end 2018 – in line with Group Management Committees objectives. The objective is to have 100% of the Group aligned and to reach higher maturity levels according to risk levels. The management of physical security is reflected through the global absenteeism rate of 5% in 2018 for salaried workforce and with the low proportion of absences due to work-related accidents, stable at 2%.
In an unpredictable business environment, with the emergence of new risks and competitors, AXA needs to ensure that its business, organization and people are ready to face new challenges. The insurance sector is changing fast as technologies and customers’ expectations disrupt the market. Therefore, business and support functions need to constantly adapt to the environment, which opens plenty of opportunities for AXA people to enhance their skills-set. Learning is more than a key lever to enable employees to grow and develop the skills of the future. A lack of career, skills and talent management, in a highly-competitive environment, could impact AXA’s competitiveness.
A standard performance management process has been set up and must be used by each AXA entity to cover 100% of its employees, at least once a year.
talent reviews and by understanding the competencies and skills needed for today and tomorrow; ■ employee development, to off er diff erentiating learning and development actions to employees; and
■ leadership management, to ensure current and future leaders, as well as High Potential profiles get the continuous support they need to lead and transform our business and culture.
AXA’s talent, performance, learning and development objectives focus on building the organization of tomorrow and transforming AXA into a self-learning organization in which people learn continuously in the flow of work, individually and collectively, from mistakes, feedback, setbacks and challenges, and are able to not only learn, but also unlearn and relearn continuously. One of the pillars of this transformation is a seamless digital ecosystem with the Global Learning Management System being its backbone and its accessibility to approximately 154,000 employees and distributors worldwide across 55 business units as of the end of 2018. AXA is also committed to developing its managers in the areas of leadership, integrity, collaboration and empowerment of their teams.
AXA focuses on delivering new digital learning experiences to foster a self-learning organization, leveraging on the latest approaches and technologies : ■ the partnership signature with Coursera offers over 550 courses on critical skills to all AXA employees with university certificates recognized on the market. In 2018, more than 7,800 employees have started a course and 2,400 have been certified. Overall, we have reached a total level of 19,000 courses started, i.e. more than 85,000 training hours delivered,
• after only one year of partnership with Coursera, this provider represents more than 80% of AXA’s total digital learning time, doubling from 2017,
In 2018, international mobility slowed down, although in the second half of the year the usual dynamic returned. As the result of 2018 the overall volume of employees supported by the CEMI in relations with their international moves remained stable (785 employees supported vs. 788 in 2017). For the third year in a row we keep observing a change in the range of assignments and transfer types. Traditionally, long-term assignments have always been popular, but the declining trend of the previous years continued in 2018 which decreased the portion of this population among active assignees 44% (vs. 50% in 2017). On the contrary, a trend on the rise is Cross-border commuting assignments, which reached an all-time high of 13% of international assignments (vs. 5% in 2016 and 8% in 2017).
As diversity and inclusion are important drivers to breed talent and innovation, attract and retain the best talents and remain the preferred employer of the market, AXA promotes diversity through its recruitment, learning and development and talent management processes. AXA Group has developed a Diversity and Inclusion (D&I) Policy and ambitious commitments to drive initiatives, including public commitments, linked to our Group D&I priorities. AXA’s leaders act as advocates for those commitments and are committed to support the Group to: reach gender balance across all levels of the organization; raise awareness on disability; maintain the momentum on the inclusion of LGBT community and embark our senior executives as advocates for D&I.
In March 2018, AXA reaff irmed its priority to reach gender parity by 2023 among Top Senior Executives’ population and focused on several actions: ■ ask top management to play a more active role to foster gender diversity – diversity objectives are set to all Top Senior Executives with a clear focus on gender diversity. Diversity in teams is a shared goal for AXA’s 150 Top Senior Executives. Management Committee and Partners members are involved in a sponsorship initiative launched in December 2018 targeting 30 talents: 23 women (among them 83% are in operational roles) and 7 men (among them 86% are in operational roles).
This sponsorship initiative is a component of two diff erent programs feeding the pipeline of future leaders: • launched in 2014, the “Group Sponsorship Tandem” program was designed to develop female talent across the Group. 42% of the women who have participated in the program from the first three waves got promoted to Top Senior Executive position as of end-2018,
• launched in 2017, the “Global Executive Development” program was a 2-year program built for executives, women and men, that the management believes have the potential to grow into key global leadership positions. 36% of participants of the 2017 wave were promoted to Top Senior Executive positions in 2018, aft er only 1 year of involvement; ■ strengthen gender balanced talent pipelines and succession plans – AXA entities have been requested to set up local targets of female representation at Executive Committee level (roughly 300 people) and executive level (roughly 3,000 people); ■ in addition, AXA has focused on designing an innovative learning solution to support 10,000 managers worldwide in the transformation journey, with the aim to equip them with key collaboration skills and modern networking leadership skills. The AXELERATE program combines a customized pulse survey (team barometer), mobile learning (pocket coach), large workshops facilitated by AXA managers, peer coaching and online courses. Core topics include AXA transformation strategy, networking leadership, empowerment and agile practices, as well as how to be inspiring as a leader. At the end of 2018, 4,500 managers have already participated in the AXELERATE journey worldwide and AXA targets to train 5,000 more managers in the AXELERATE program in 2019; ■ hire and promote talented women at leadership levels – AXA applies gender equality in recruitment processes. For each opened Senior position, the shortlisted applicants are at least one man and one woman. Recruiter managers are key players in that domain. In 2018, 200 Recruiters have received the Resourcing Academy training across seven major countries but also in International New Markets and in two of AXA major transversal operations (AXA Investment Managers and AXA Partners) which operate in up to 36 countries. D&I are some of the topics that are covered in that program; ■ the Resourcing Academy, available to entities subject to their needs, encourages best practice in terms of culture, diversity and inclusion in the selection process.
As of the end of 2018, the gender diversity within leadership teams was the following: HIGHLIGHT & KEY FIGURES: AXA’S LEADERSHIP TEAMS GENDER DIVERSITY
The Partners Group is composed of the members of the Management Committee and approximately thirty other senior executives from across the Group. Its principal role is to assist the Chief Executive Off icer and the Management Committee in the definition and implementation of key strategic initiatives.
In January 2018, AXA made public its support to the United Nations LGBTI Standards of Conduct for Business. AXA reinforced its partnerships with LGBT organizations to raise awareness across the Group and extend our network in those communities. Entities have continued to engage employees through participation to several LGBT events: sponsorship (or participation in) Pride marches and events. Entities have made significant progress in embedding LGBT as a business priority, with inclusive policies supporting same-sex couples named as beneficiaries.
On December 3, 2018, on the International Day of People with Disabilities, a global webinar was off ered to all AXA employees to raise awareness on the topic.
On December 10, 2018, AXA’s CEO Thomas Buberl committed to support the United Nations Women’s Empowerment Principles, in the name of all AXA entities.
Headcount (number of persons) as of December 31 2018 Evolution 2017
Average FTE of salaried sales force 16,634.1 ft e 15,818.9 ft e
Average age of salaried workforce 40.8 yrs 40.9 yrs ■ Non-sales force 40.7 yrs 40.8 yrs ■ Sales force 41.4 yrs 41.4 yrs
Disability (open-ended and fixed-term contract) Number of employees with disabilities – concerns entities operating in France only 743 emp. 770 emp.
■ Entries 19,533 emp. +16.5% 16,766 emp. ■ Departures 18,826 emp. -0.6% 18,942 emp.
Entries 15,165 emp. +14.0% 13,302 emp. ■ Number of external recruitments (including re-hires) 13,218 emp. 11,467 emp. ■ Number of fixed-term contracts transformed into open-ended contracts 1,915 emp. 1,637 emp. ■ Number of entries following mergers and acquisitions 32 emp. 198 emp.
■ Number of economic/collective layoff s 1,352 emp. 1,894 emp. ■ Number of individual layoff s 2,028 emp. 1,847 emp. ■ Number of retirements/pre-retirements 1,769 emp. 1,538 emp. ■ Number of departures due to external transfers (a) 129 emp. 1,252 emp. ■ Number of other departures 193 emp. 168 emp.
■ Number of external recruitments 5,531 emp. 5,337 emp. ■ Number of fixed-term contracts ended 3,319 emp. 3,509 emp.
(a) Salaried workforce who have left AXA because of an activity/job transfer to an external company or due to disposal of businesses, the employee is no longer under a contract with AXA.
Turnover rate of salaried non-sales force 14.4 % +0.1pt 14.3 %
Turnover rate of salaried sales force 22.8 % +0.5pt 22.3 %
Annual gross payroll of salaried sales force ■ Proportion of fixed pay (related to wages) 45.0 % 44.9 % ■ Proportion of variable pay (related to wages) 55.0 % 55.1 %
(1) The XL Group and Kamet entities did not report the training indicators.
Average number of training days per salaried workforce 2.7 days 3.1 days ■ Non-sales force 2.2 days 2.5 days ■ Sales force 6.1 days 6.6 days
As described above in the “Sustainability Risk Assessment” section, environmental protection, including the interconnected issues related to climate change and biodiversity loss, is a key concern for the AXA Group as an insurer, investor and a large multinational corporation. This chapter covers all three dimensions. The initiatives described below are in line with the UN Sustainable Development Goals (SDG) #12 (Responsible Consumption and Production) and #13 (Climate Action).
AXA’s position regarding climate change and environmental risks is not only to adapt, but also to take advantage of its expertise to provide solutions. Indeed insurers are well equipped to address climate-related risks. They can fund and promote research. They possess claims loss data, as well as models and tools to analyze and project this data. They have a duty to disseminate knowledge about new risks. Insurers, through their significant investments, are also well positioned to send the right signals to the investment community and to the specific companies they invest in.
AXA’s work focuses on enhancing knowledge on climate risk, and developing adequate insurance products and investment policies. This strategy addresses both the “carbon emissions mitigation” and the “adaptation/resilience” dimensions of climate change. To be eff ective, it requires both collective eff orts and more competitive initiatives.
These initiatives are detailed in the following pages. See also “Risk factors” Section 4.1.
AXA defines RI as the integration of Environmental, Social and Governance (ESG) considerations into investment processes, including ownership practices. Our conviction is that ESG integration may impact long-term investment performance by offering an enhanced understanding of risk drivers. This conviction is derived from academic research and empirical market data. It is also a way to strive for alignment between our investments and broader CR commitments. AXA developed a comprehensive RI strategy covering the Group’s General Account assets and is gradually extending it to its Unit-Linked investments. The process of ESG integration is coordinated centrally, with an active input from our asset managers that include ESG metrics in their investment analysis across asset classes and regions.
AXA created a Group-level Responsible Investment Committee (RIC), chaired by the Group Chief Investment Off icer, and including representatives from AXA Asset Management entities, Corporate Responsibility, Risk Management and Communications. The RIC reports to the Group Investment Committee, chaired by the Group Chief Financial Officer. In addition, the “ESG Footprint Committee” reviews risks posed by companies or sectors presenting a low ESG performance and/or serious and persistent controversies. AXA’s RI policy is supported by the RI Center of Expertise, a transversal working group from AXA’s local investment teams interacting with the CR network and the Group’s Asset Management entities. In addition, as mentioned in Section 7.1, the Board of Directors and Stakeholder Advisory Panel provide input into the Group’s CR strategy.
The AXA Group as well as its two Asset Management entities (AXA IM and AB Global) are signatories of the UN-backed principles for
The ESG methodology is adapted to diff erent asset classes: ■ corporates issuers (equity and debt): the ESG assessment consists in focusing on the most material and impactful key ESG issues at sector level, with a thorough selection of best data sources and most accurate ESG criteria. E, S and G factors are weighted diff erently in the overall ESG scores engineering depending on the sector. The overall score computation process also includes a monitoring of “core ESG” risks with the treatment of most severe basic principles violations, resulting in a systematic score discount for the most material controversies. Finally, ESG scores take into account the performance of each company within its peer group, considering issuers’ specificities (in particular regional) in the assessment of the ESG quality; ■ sovereign issuers: AXA’s ESG scoring framework for countries is based on public data sources such as the World Bank, the OECD, and the UN (e.g. environment, social and political risks). The criteria are adapted to the development levels of all countries; ■ Real Assets: AXA’s ESG scoring frameworks for Real Assets covers 3 asset classes: direct property, commercial real estate loans and infrastructure debt. The ESG scoring for these assets is based on proprietary questionnaires covering criteria such as energy eff iciency, environmental certificates, and accessibility; ■ finally, a “carbon footprinting”, which is applied to our equities, corporate Fixed Income and Sovereign Debt assets, complements the ESG metrics.
Converting international climate objectives (such as those derived from the COP21 Paris Agreement, French or EU energy mix targets) into quantitative investment targets is a new and complex risk modelling exercise. AXA is testing diff erent approaches since 2016. Building on previous eff orts, in 2018 AXA has decided to deepen its work based on the methodology provided by an external climate risk partner (Carbon Delta, also used in 2017), while also extending its use of internal “NatCat” models to cover a wider spectrum of our Real Assets investments. This work covers two broad areas: “transition risk” and “physical risks”, as defined by the TCFD and explained in more details below.
In addition to the aforementioned “transition” risks, climate change, and in particular, extreme weather events, may impact “Real assets” such as real estate. This is termed “physical” risks according to the TCFD guidelines. As an insurer, AXA has a significant amount of claims-related data that it can leverage to conduct a “physical risks” analysis on its Real Estate portfolio. Indeed AXA’s Investments and Group Risk Management teams collaborate to evaluate the financial impact of floods and windstorms on the buildings and infrastructure of these portfolios.
to investments (1) and insurance (see following section). These currently include the following sectors: ■ coal and oil sands: developed below; ■ “controversial weapons” manufacturers that are banned by international conventions (antipersonnel landmines, cluster munitions/cluster bombs chemical, biological and depleted uranium weapons, nuclear weapons proliferation); ■ tobacco manufacturers, whose products conflict with our role as one of the world’s largest health insurers; ■ palm oil producers which do not adhere to this industry’s best sustainability practices (notably regarding deforestation, land and labor rights); ■ soft commodity derivatives which may be responsible for inflating the price of basic food commodities.
In 2018, the Group extended its investment restrictions to the XL Group’s assets, representing an extra €660 million divested. In total, AXA’s divestments represent approximately €7.15 billion (coal, tobacco, oil sands, controversial weapons and palm oil, in decreasing order of magnitude, and including XL Group assets).
More specifically, regarding climate change, in 2015, AXA was the first global investor to initiate divestment from coal. Ahead of COP21, we signaled that while climate finance is a complex issue, it can nonetheless be tackled. This helped AXA and some peers to overcome paralysis by analysis and shift into “action” mode. In 2017, AXA strengthened its climate-related divestment strategy.
Carbon emissions will require significant curbing in order to reduce the risk of climate change, which may place business constraints on carbon-intensive industries, leaving some assets “stranded”, which in turn may lead to reduced valuations. This is why AXA decided to divest from the coal industry, by targeting coal mining and coal-based electric utilities based on 3 criteria: ■ electric utilities with coal share of power production (energy mix) over 30%; mining companies with coal share of revenues over 30%. This captures long term financial risks related to “stranded assets”; ■ companies that are actively developing new coal-based power capacity (with coal-based power “expansion plans” exceeding 3 gigaWatts. This approach captures “real” climate impact, beyond pure financial risks; ■ mining companies with annual coal production over 20 million t ons.
AXA has a target to invest €12 billion in “green” assets by 2020, which doubles the recommendations by Christiana Figueres, one of the main architects of the COP21, to dedicate 1% of institutional investments to green assets. This target includes notably green infrastructures, green bonds, Impact Investments, property and commercial real-estate loans with stringent environmental standards. AXA’s definition of “green” infrastructure is derived from an accepted and demanding market-based approach: the “Climate Bonds Initiative” classification. In addition, in the case of Real Estate assets and Commercial Real Estate loans (CRE), AXA applies the strictest environmental certifications & standards to classify the property or underlying asset of the CRE loan as Green. In December 2018, AXA’s green investments reached €11.3 billion.
In addition, AXA and the IFC, a member of the World Bank Group focused on the private sector, launched a $500 million partnership supporting an infrastructure fund that will notably finance green infrastructures in emerging countries, including renewable energy, water, green transport and telecoms. Coal and oil-sands related projects are explicitly excluded.
AXA’s divestments are complemented by an active engagement strategy. Indeed, as a shareholder and bondholder, AXA has the possibility to engage with the management of companies in which it invests in order to help catalyze positive change on certain issues (such as climate change, health, governance, market practices, etc.). This is undertaken directly by the Group and via AXA IM’s engagement team. In addition, AXA and AXA IM joined several shareholder coalitions, notably: ■ Climate Action 100+, a five-year investor initiative to engage with the world’s largest corporate greenhouse gas emitters to curb emissions, strengthen climate-related financial disclosures and improve governance on climate change; (1) Equity assets are divested immediately; debt assets are run-off (except for controversial weapons, for which debt assets are also divested immediately).
■ the UN PRI ESG Engagement Advisory Committee, providing strategic direction and feedback on themes for future collaborative engagements; ■ various other initiatives related to plastic pollution, the TCFD guidelines, arctic drilling, palm oil, the automotive industry, etc.
AXA has also joined or supported many Investor and Insuranceled coalitions over the years in the fields of ESG, RI and CR: UN PRI, UN PSI, IIGCC, Montreal Carbon Pledge, Science Based Targets, RE100, Caring for Climate Carbon Pricing Leadership Coalition, UN Global Compact, CDP, ORSE, EpE, BSR, Finance for Tomorrow, “Kyoto statement” of the Geneva Association, etc. Finally, AXA also supports climate-related academic research via the AXA Research Fund (see Chapter 7.4).
It is inconsistent to commercially support industries that the Group has divested from. Therefore, AXA also restricts insurance coverage for coal and oil sands-related assets (as well as for the other industries mentioned in the previous section, and arctic drilling). The exclusions cover the following: ■ the development of new coal capacity is strictly banned by not providing Construction covers (both Direct Insurance and Facultative Reinsurance) for any new coal plant and new coal mine. This applies whichever the region or client (regardless of our investment exclusion list); ■ property covers for existing coal power plants and coal mines are also banned. This does not apply to the least developed countries in the world, according to UN classification; ■ oil sands extraction business: both Property and Construction covers are banned (both Direct Insurance and Facultative Reinsurance); ■ oil sands transportation business, in particular via pipelines: both Property and Construction covers are banned (both Direct Insurance and Facultative Reinsurance); ■ oil & gas extraction in Arctic Region: both Property and Construction covers are banned (Direct Insurance and Facultative Reinsurance).
More detailed internal rules apply for complex cases such as “mixed risks” packages, etc. These restrictions were initiated in 2017; we believe AXA to be the first large insurer to have implemented such restrictions, which represent a significant commercial commitment. Indeed, in 2018, AXA extended its underwriting restrictions (coal, oils sands, tobacco, controversial weapons, palm oil, arctic drilling) to the XL Group’s operations, representing a significant commercial eff ort (premium impact in excess of €100 million ).
In addition to reorienting its investment strategy, the Group seeks to minimize its “indirect” impact on the environment by off ering insurance solutions that promote environmentally-friendly behavior. In the Commercial lines business, AXA XL underwriters have significant expertise and capacity for insuring clients in the energy industry, with a strong focus on renewable energy, and an explicit exclusion of coal and oil sands-related business (above). Some local entities also develop motor and car fleet insurance policies encouraging low CO2 emission vehicles, home insurance policies encouraging energy efficiency, renewable energy installations, and environmentally friendly claims strategies. As described in Section 7.4, AXA France has developed the comprehensive “Assurance Citoyenne” label, and AXA Global Parametrics offers parametric insurance products which, for example, help insured communities facing the consequences of climate-related disasters on agricultural crops (notably drought or flooding).
As part of AXA’s Sustainability Risk Assessment, the environmental impacts of our operations has been identified as one of the risks to mitigate. This mainly includes carbon emissions as well as water and paper consumption. In response to this risk, AXA has developed an environmental policy and strategy which covers both business and operational issues. AXA’s environmental footprint management also contributes to improving our operational eco-efficiency, notably through cost savings on energy, fuel, travel, paper and water.
Through its environmental policy and strategy, AXA, as an insurer, investor and global corporation, can play an important role in raising awareness about environmental protection amongst its stakeholders, contributing to improve the understanding of global and local environmental risks, and committing to address climate change. Through our strategy, we contribute to UN SDG #12 “Responsible Production and Consumption” (sub-target 12.6 “encouraging companies to adopt sustainable practices and to integrate sustainability information into their reporting cycle”).
AXA has implemented an environmental reporting process and related policies since 2002. Managing our environmental footprint, in line with EU Directive on Non-Financial Reporting, is one of the pillars of our CR strategy.
This process is based on an internal reporting tool and involves collecting information on power consumption, business travel, AXA-owned vehicle fleets and paper consumption, with their related CO2 emissions, as well as waste and water. To measure our environmental footprint, the Group CR team coordinates a network of around 300 dedicated environmental managers in local entities. This network monitors our annual progress on reduction targets, which helps local entities evaluate their own action plans and targets. The final results of this annual reporting process are disclosed in our Annual Reference Document.
AXA’s target for the 2012-2020 period is to reduce CO2 emissions per Full-Time Employee (FTE) by 25%, broken-down into the following sub-targets: ■ -35% power consumption (kwh/FTE) – Scopes 1&2; ■ -15% business travel: vehicle fleet (km/FTE) – Scope 1; ■ -5% business travel: air and train (km/FTE) – Scope 3; ■ -45% off ice paper (kg/FTE) – Scope 3; (1) As defined by the Greenhouse Gas Protocol www.ghgprotocol.org.
AXA’s CO2 emissions per FTE related to energy, paper and business travel (air, rail and car fleet) decreased by 14% between 2017 and 2018 and by 38% between 2012 and 2018 (our global 2020 target has thus been achieved ahead of schedule). 43% of the Group’s CO2 emissions are related to energy consumption, 35% from business travel (air and train), 15% from AXA’s vehicle fleet and 7% from paper.
SCOPE 1 CO2 EMISSIONS AXA’s Scope 1 emissions include CO2 emissions generated from gas and heating oil burned onsite, as well as fuel used by AXA’s car fleets. Scope 1 emissions per FTE decreased by 15% between 2017 and 2018 and by 37% since 2012. Concerning gas consumption, some entities (Switzerland, Germany) have largely replaced gas by steam, which has a lower carbon intensity per KWh. In 2018, AXA’s car fleet-related CO2 emissions decreased by 14% compared to 2017.
In addition, AXA also measures the carbon emissions related to its employee commuting, even though such indirect emissions may be considered to be outside of the scope of the Group’s responsibilities. In 2018, based on responses collected from 32 countries where AXA employees commuted a total of 920 million kilometers, out of which 50% were travelled by public transport, 6% by company cars, and 38% by personal vehicles and the rest by foot or bicycle. Employee commuting-related CO2 emissions per FTE increased by 16% compared to 2017 (representing 0.88 tons eq. CO2 per FTE). This increase in emissions is linked to a higher participation and response rate from AXA employees as well as more employees using personal transportation for commuting.
AXA’s power consumption includes the total energy consumed by our corporate sites and data centers during the reporting year. This includes on-site energy consumption for heating and cooling as well as electricity for daily operational activities. In 2018, our total energy mix consisted of electricity (74%), gas (14%), fuel/steam (9%) and chilled water (3%). We have achieved a 5% decrease in total power consumption between 2017 and 2018, and a 25% decrease compared to 2012. Our power consumption per FTE decreased by 12% between 2017 and 2018, and by 37% between 2012 and 2018. 53 AXA sites benefit from an environmental certificate from building certification programs such as Building Research Establishment Environmental Assessment Methodology (BREEAM), Leadership in Energy and Environmental Design (LEED), HQE (Haute Qualité Environnementale), etc.
In 2018, 55% of the electricity consumed by AXA originated from renewable energy sources (hydro, wind, solar, geothermal, biomass). AXA’s “RE100” target is to reach 100% by 2025.
Business travel per FTE decreased by 5% between 2017 and 2018, but increased by 13% between 2012 and 2018. Business travel trends are closely correlated to our business dynamics, despite the implementation of online collaborative tools which help to reduce business travel.
AXA’s use of paper concerns office (printing, measured per employee) and marketing & distribution (leaflets, etc., measured per customer). Our office paper consumption per FTE has decreased by 17% between 2017 and 2018, and by 54% between 2012 and 2018. Many entities have implemented a printing policy which includes reducing the number of printers per person and installing an employee badging system to collect all printed documents. In 2018, AXA’s marketing and distribution paper consumption per customer increased by 18% versus 2017 (but only increased by 6% between 2012 and 2018). This recent additional increase is linked to significant documentation requirements related to the AXA Equitable Holdings, Inc. IPO. We are aware that our 2020 Marketing & distribution paper target will prove challenging; the Group CR team will investigate more options to reverse this trend notably through further dematerialization.
AXA’s water consumption per FTE has remained stable between 2017 and 2018, and decreased by 19% between 2012 and 2018. This decrease in our water consumption is linked to better water management initiatives led by our local entities.
In 2018, AXA’s sorted paper for recycling decreased by 10% compared to 2017, and decreased by 39% between 2012 and 2018. This decrease in the total recycling rate is due to the overall decrease in off ice paper consumption (see paragraph above). 66% of ink cartridges and toners were recycled. AXA’s IT business unit, AXA Services, for which electronic waste is of particular relevance, is a key contributor to this eff ort, as it ensures compliance with the Waste Electronic and Electrical Equipment (WEEE) Directive. Unsorted waste has increased from 5% compared between 2017 and 2018, and decreased by 29% between 2012 and 2018. This is mainly due to better waste measurement processes in local entities as well as integration of new entities such as AXA Brazil, AXA Partners Malaysia and AXA XL. Finally, over 75 canteens in the Group collect and recycle organic waste from their restaurants.
Number of employees on site, Full-Time Equivalent (FTEs) FTE 115,328 124,355 Net internal area (sites) m2 1,777,687 1,705,774 POWER (SITES)
Water consumption (h) m3 927,017 1,003,964 KPI: Water consumption per person m3/FTE 8,04 8,07 Evolution compared to previous year 0% PAPER (i)
Off ice paper consumption T 1,815 1,616 KPI: Off ice paper consumption per person kg/FTE 16 13 Evolution compared to previous year -17% Paper recycled and/or garanteeing sustainable management: off ice % 58 58 Marketing and distribution paper consumption T 10,220 12,078 KPI: Marketing and distribution paper consumption per customer (j) kg/customer 0,10 0,12 Evolution compared to previous year 18% Paper recycled and/or garanteeing sustainable management: marketing & distribution % 51 41 WASTE
Unsorted waste (k) T 4,301 4,512 Sorted paper for recycling T 3,588 3,223 Cartridge and/or toners for recycling % 55 66
Data collected from 81 entities, including XL Group (XL Group environmental data was included on a pro-rata basis for Q4 2018). Key Performance Indicators (KPIs) highlighted in bold. AXA sites with fewer than 50 FTEs are not included in our data collection, but are part of our extrapolation process. (a) In 2018, environmental indicators were collected for 101,977 FTEs working on AXA sites (unless otherwise indicated in these footnotes) and were then extrapolated, continent by continent, to cover all 124,355 salaried FTEs (all types of contracts, including XL Group FTEs) working at the AXA Group in average in 2018. (b) Includes electricity, natural gas, heating oil, steam, chilled water data colleted from entities representing 93,740 FTEs. (c) This data has been collected from entities representing 86,364 FTEs.
(i) Paper data collected from entities representing 93,854 FTEs. ( j) The Group had 111 million customers in 2018.
As described under the Sustainability Risk Assessment section, doing business sustainably while adhering to United Nation Sustainable Development Goals (SDGs) is identified as an important topic for AXA. As an insurer, it is inherent to our business that we create and develop products that add value to society. Through our products, we encourage and reward healthy and socially responsible behavior, as well as help reduce social exclusion.
In addition, as part of its commitment to Health and disease prevention (one of the four pillars of its CR strategy), AXA decided in 2018 to tackle the rising incidence of obesity and type 2 Diabetes. Acknowledging the link between diet and lifestyle factors and this disease, AXA’s initiatives will be guided by health risk education and the promotion of healthy lifestyles.
Through the development of its “Emerging Customer” insurance off er across high-growth markets, AXA addresses social exclusion by enabling vulnerable segments of the population to access insurance services that accompany them in their economic progression and that provide a safety net that prevents them from falling back into poverty. Our approach is to design products that are simple, fair and accessible. A dedicated team based in Paris along with employees either fully or partially dedicated to the business locally provide expert support to AXA entities to drive growth. In 2018, AXA’s Emerging Customers business covered almost 9.3 million unique customers and has continued to develop various partnerships: ■ India: Bharti AXA General Insurance (BAGI) partners since 2017 with Airtel Payment Bank (APB) to insure APB clients with free personal accident insurance. The insurance is subsequently renewed for active clients, covering approx. 1 million customers every month in 2018. BAGI covers 1.8 million travellers on the national railways. In addition, BAGI also covers (with the support of the Indian government) more than 360,000 farmers through an agriculture insurance scheme across diff erent departments in India; ■ Indonesia: to address the lower middle-class customers asking for a loan, Mandiri-AXA General Insurance leverages its partnership with Mandiri Bank to propose Credit life, Personal Accident, and collateral insurance to all of Mandiri’s microbusiness clients; ■ Thailand: AXA GI launched a pilot to provide Personal Accident and Hospital Cash products in partnership with AIS, the first mobile network operator in Thailand, to reward loyal AIS prepaid customers. Alongside the Thai government, AXA GI is also insuring 2.6 million rice farmers; ■ Malaysia: In partnership with the Malaysian Post Off ice, AXA Malaysia is providing accessible accident and two-wheeler insurance to 110,000 customers. AXA Malaysia has also launched (in partnership with Merchantrade, the largest money transfer operator in the country) the first migrant insurance product for workers sending money back home; ■ Philippines: AXA Philippines works with TSKI, a leading Microfinance Institution (MFI), as well as several digital players to distribute insurance to emerging customers. AXA Philippines also participates to the Overseas Filipino Workers scheme, which provides protection to working migrants; ■ Morocco: AXA Morocco partners since 2012 with a MFI, Albaraka, to provide nearly 150,000 micro-entrepreneurs with credit life, property and hospital cash (“hospicash”) coverages; ■ local AXA entities have also established distribution partnerships in Nigeria (via a MFI), Egypt (MFI for credit and Health products), Brazil (via a leading retailer) and Mexico (MFI for P&C and credit life insurance to micro-entrepreneurs).
The 3 main focus areas are: women as retail clients, as entrepreneurs and in the distribution force. AXA has developed a dual approach: in mature markets, AXA will empower women to be financially independent, and in emerging markets the objective is to empower women to “live better lives”. In 2018, 12 entities included “Women in Insurance” as a strategic priority and 18 products have been developed. This strategy is implemented through our “2020 Women Insurer of Choice” targets: ■ 45% of women retail clients; ■ 30% of SME clients to be women (mirroring the global market opportunity); ■ 25% of women in distribution and sales management; ■ 40% of women amongst recruits and promotions.
As announced publicly in May 2016, AXA decided to divest from and end insurance covers for the Tobacco industry. AXA believes supporting an industry which is the main cause of long-term non-communicable diseases, including cancer, heart disease and chronic respiratory illnesses, is not compatible with our role as one of the world’s largest health insurers, and our strategy to become our clients’ health risk prevention partner. We also believe that sending such a signal to markets and regulators reinforces the development of tobacco controls, which ultimately contribute to improving our customers’ health, and it is aligned with our broader CR strategy to promote a stronger and safer society. Our divestment covers €2.05 billion (including XL Group assets added in 2018): equity assets have been divested immediately, while debt assets are run off gradually.
AXA supports the “Tobacco-Free Portfolios” and supported the launch of the Tobacco-Free Finance Pledge at the UN General Assembly in September 2018. This initiative, co-founded by AXA, BNP Paribas, Natixis and AMP Capital, aims to “denormalize” relationships between the financial community and the tobacco industry. It is now supported by more than 130 investors representing $6.8 trillion in assets under management: the strong momentum launched with our divestment continues.
Our divestments are also mirrored on the underwriting side: AXA no longer covers the operations of tobacco manufacturers.
The AXA Research Fund supports academic projects led by toptier researchers all over the world in the fields of Health, Climate and Environment, New Technology and Socio-Economic issues. The Fund provides researchers with the means and freedom to complete their work successfully. The awarding of grants is based on strict academic criteria through a transparent and rigorous selection process which is overseen by an independent Scientific
Board. AXA’s support to scientific research goes beyond funding: to better inform decision making and build a platform for science, the AXA Research Fund provides grantees with communication resources, media and engagement opportunities and encourages exchanges and discussion around supported areas through conferences and events.
In 2018, through the Fund, AXA selected 13 Post-Doctoral Fellowships, 2 AXA Chairs, and 9 Joint Research Initiatives (AXA business/Academic partnerships) and among other strategic projects, supported a joint Chair on women’s entrepreneurship with partner private companies. As of December 31, 2018, the AXA Research Fund supported a total of 597 research projects led by researchers of 58 nationalities in 36 countries and a total project funding of €146.6 million.
More information on the AXA Research Fund is available at axaresearch. org.
AXA Hearts in Action is an international program for AXA employees, through which they carry out volunteering activities addressing various issues (for example disability, education, environment, health and social welfare). In 2018, more than 34,000 employees (estimate) volunteered their time, mainly through AXA Hearts in Action local programs set up in 38 AXA entities (73% of FTEs), making their skills and time available to conduct community investment projects. Their engagement represented approx. 97,000 hours (93,000 hours in 2017), dedicated by AXA employees to volunteering activities (during working hours).
The initiatives described below are notably in line with the UN SDG Goal #16 (Peace, justice and strong institutions).
To prevent this risk of bribery and corruption, AXA Group has introduced a Group ABC Policy that establishes minimum standards for ABC that must be implemented by AXA entities. This Policy has been regularly updated to take account of new regulations and most notably the recent French law known as “Sapin II”. A Group Anti-Bribery Off icer has been designated to design and reinforce the global ABC program at Group level and to guide its implementation across AXA. AXA entities have designated local Anti-Bribery Off icers to implement their ABC programs in accordance with AXA’s Policy. Processes and procedures are in place to monitor compliance with AXA ABC standards across the Group.
As a result, consumer protection regulations have become an increasingly important area for the financial services sector and AXA has taken significant action to comply with these requirements in each of its businesses operating in the EU. Similar regulatory developments regarding business conduct are also taking place in many other parts of the world in which AXA operates and similar measures are in place to respond to those and to share experience between businesses facing similar challenges. Compliance risks, including business conduct risks, are assessed on an annual basis and the results and any necessary mitigation actions are developed and shared with senior management.
AXA has established an Advisory Board of independent experts on data privacy and the ethics of Artificial Intelligence (AI): the “Data Protection and Ethics Panel”. The panel provides critical input to the Group’s teams in the area of data privacy and responsible use of AI. This panel meets twice a year and is an important forum to ensure that in a field that is developing very quickly, AXA’s strategy around the use of data receives input from independent experts.
The information related to AXA’s policy and control mechanisms to address data privacy risks are explained in the “Personal Data Protection” section in Chapter 7.6. Information related to why AXA considers data privacy as a key risk topic is detailed in the “EU Data Protection Reform” sections under Chapters 4.1 and 6.3.
■ High Level Expert Group on Artificial Intelligence – In 2018, AXA joined the High Level Expert Group (HLEG) on Artificial Intelligence whose mandate is to support the implementation of the European strategy on Artificial Intelligence. This includes developing recommendations on future-related policy development and on ethical, legal and societal issues related to AI, including socio-economic challenges. The AI HLEG will serve as the steering group for the European AI Alliance’s work, interact with other initiatives, help stimulate a multi-stakeholder dialogue, gather participants’ views and reflect them in its analysis and reports. As part of this High Level Expert Group, AXA has contributed to its first report on Responsible AI.
I Report by one of the Statutory Auditors, appointed as an independent third party, on the consolidated non-financial statement included in the Group management report
In our capacity as Statutory Auditor of AXA SA (hereinaft er the “entity”), appointed as an independent third party and accredited by COFRAC under number 3-1060 rév.2 (whose scope is available at www.cofrac.fr), we hereby report to you on the non-financial statement for the year ended December 31st, 2018 (hereinaft er the “Statement”), included in the management report pursuant to the legal and regulatory provisions of Articles L. 225-102-1, R. 225-105 and R. 225-105-1 of the French Commercial Code (Code de commerce).
INDEPENDENCE AND QUALITY CONTROL Our independence is defined by the provisions of Article L. 822-11-3 of the French Commercial Code and the French Code of Ethics (Code de déontologie) of our profession. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional guidance and applicable legal and regulatory requirements.
RESPONSIBILITY OF THE STATUTORY AUDITOR, APPOINTED AS AN INDEPENDENT THIRD PARTY On the basis of our work, our responsibility is to provide a report expressing a limited assurance conclusion on: ■ the compliance of the Statement with the provisions of Article R. 225-105 of the French Commercial Code; ■ the fairness of the information provided in accordance with Article R. 225-105 I, 3 and II of the French Commercial Code, i.e., the outcomes, including key performance indicators, and the measures implemented considering the principal risks (hereinaft er the “Information”).
NATURE AND SCOPE OF OUR WORK The work described below was performed in accordance with the provisions of Articles A. 225-1 et seq. of the French Commercial Code determining the conditions in which the independent third party performs its engagement and with the professional guidance of the French Institute of Statutory Auditors (“CNCC”) applicable to such engagements, as well as with ISAE 3000 – Assurance engagements other than audits or reviews of historical financial information
We were assisted in our work by our specialists in sustainable development and corporate social responsibility. We conducted about fift een interviews with the people responsible for preparing the Statement, representing Group Public Aff airs and Corporate Responsibility, Risk Management, Compliance, Tax, Legal, Procurement and Human Resources.
COMMENTS Without qualifying our conclusion and in accordance with Article A. 225-3 of the French Commercial Code, we have the following comments: ■ for some principal risks, including non-compliance by suppliers with the principles of the International Labor Organization and noncompliance with consumer protection regulatory requirements, the entity is currently working on the presentation of key performance indicators (see the “ Methodology and Reporting Scope, : Business Behaviour” section of the Statement); ■ the XL entity, representing 6% of the Group’s workforce, is not always included in the consolidation of certain indicators given the integration date in the fourth quarter of 2018 (see “Reporting Scope, Methodology and Perimeter“ and “AXA XL” sections of the Statement).
QUALITATIVE INFORMATION (ACTIONS AND RESULTS): ■ environment: information relative to environment and climate change; ■ human resources: information relative to employee relations and work conditions, learning environment and skills management, diversity and inclusion; ■ human rights: information relative to women in insurance, emerging customers, parametric insurance, business behaviour, responsible data use, responsible procurement; ■ social: information relative to the Sustainable Development Goals, stakeholder dialogue, corporate philanthropy and engagement; ■ corruption and tax evasion: information relative to corruption and tax policy.
As legally required, the AXA Group conducted an analysis to measure how the AXA Group’s activities and operations as defined by applicable laws potentially impact the environment and each of human rights, with a view to ensuring each identified potential risk is covered by an AXA Group policy; it being specified that according to AXA and pursuant to the United Nations’ principles, the definition of human rights includes the fundamental freedoms, health and safety.
IDENTIFICATION AND EVALUATION OF RISKS TO HUMAN RIGHTS AND THE ENVIRONMENT
Consequently, with the support of KPMG, the AXA Group developed a human rights risk assessment that identified the most relevant risks to human rights that the AXA Group should consider in conducting its business. These were identified as risks to the principles of equality before the law and nondiscrimination (with respect to minorities), freedom from all forms of forced or compulsory labour, child protection, freedom of association, collective bargaining, the right to just and favorable working conditions, liberty and security of the person, the right to health and an adequate standard of living, and the right to privacy.
AXA’s direct operations, focusing on financial services, do not generate major impacts on the environment. As a result, AXA’s environmental reporting and management processes focus on energy, water and paper consumption, as well as related CO2 emissions. AXA’s comprehensive environmental reporting process, which is verified by an independent third-party, allows AXA to evaluate its impact on and identify risks to the environment from its activities.
As an investor, AXA had proactively implemented a Global Responsible Investment Policy, available on the AXA Group’s website (www.axa.com), and built an analysis framework in order to identify potential indirect impacts on human rights and the environment. Please refer to Section 7.3 “Climate Change and the Environment – Investments” of this Annual Report for further information on AXA’s investment strategy.
As a business partner, AXA had implemented processes to identify and assess risks to human rights and the environment associated with its use of service providers and suppliers. AXA produced a matrix assessing the level of procurement risks and opportunities categorized by topic (social, environmental, enduse impact, supply chain, business integrity) that allows Group
Procurement and Corporate Responsibility teams to identify the risks and analyze their impacts. Risks associated with significant service providers and suppliers belonging to categories identified as medium or high risk are mapped and voluntarily assessed through a specific tool (EcoVadis) at least every two years.
AXA’s Human Rights Policy (the “Human Rights Policy”), available on the AXA Group’s website, aims at preventing the violation of human rights and reflects the AXA Group’s commitment to international general and sector-specific standards such as the United Nations Global Compact, the United Nations Principles for Responsible Investment and the UN Principles for Sustainable Insurance. The Human Rights Policy describes AXA’s commitments in its own operations as an employer and a responsible business partner but also as an insurer and an investor and how the protection of human rights is implemented at the core of AXA’s activities.
The AXA Group had implemented a security standard with which entities must certify compliance covering physical security and health and safety. These standards set out processes to identify local health and safety requirements, to report health and safety issues as well as consult and train AXA employees.
In addition to this leading position on data privacy, AXA has an Advisory Board of independent experts, established in 2015, whose purpose is to provide insights to the Group on strategy and governance in this area. The Advisory Board addresses data protection policies, legislation and ethics, the interaction of privacy and technology, and marketing and operational aspects of data privacy including use in the insurance industry, and assists AXA in positioning itself publicly with respect to data privacy issues.
Finally, from 2016 to 2018, the AXA Group is fully committed to the implementation of the General Data Protection Regulation (GDPR), through some thirty projects dedicated to data privacy implemented in the AXA Group involving over three hundred people and entities located in sixteen countries. The AXA Group welcomed the new Regulation of the European Parliament, which was already in accordance with the commitments made to stakeholders.
See further details in Section 7.5 “Business behaviour – Responsible data use and data privacy – Data privacy”.
As an insurer, AXA strives to incorporate Environmental, Social and Governance (ESG) criteria (including those relating to human rights) into its insurance business processes, in line with AXA’s commitment to the UN Principles for Sustainable Insurance. Further, underwriting guidelines define prohibited business and integrate AXA’s policies regulating insurance activities in sectors that represent increased risks, which policies can be directly or indirectly related to human rights.
AXA further seeks to support its customers’ rights while preventing or mitigating adverse human rights impacts that may arise from the provision of insurance products and services to corporate customers by: ■ ensuring fair treatment of all customers; ■ offering products and services which help reduce social exclusion and empower people to achieve positive health and safety outcomes; ■ providing customers with the means to express and resolve any disputes that may arise with AXA Group companies, notably through dedicated complaints departments.
Please refer to Section 7.3 “Climate Change and the Environment – Investments” of this Annual Report for further information on the protection of human rights in the context of AXA’s investments.
The AXA Group’s Environmental Policy, available on the AXA Group’s website, describes key actions aimed at reducing AXA’s direct and indirect environmental impacts.
AXA also seeks to minimize its indirect impact on the environment by off ering customers insurance and investment solutions that promote environmentally-friendly behaviour.
As an investor, AXA seeks to integrate ESG criteria considerations into its investment strategy. In line with the Group Responsible Investment Policy, available on the AXA Group’s website, the Group has in particular designed five sector policies to address investments in particularly sensitive sectors from an ESG perspective. These guidelines cover human rights and environmental concerns (i.e. controversial weapons, tobacco, coal mining, palm oil production), and entities are required to certify compliance.
The AXA Group ensures that it works with service providers and suppliers that meet AXA standards with respect to human rights and the environment. Please refer to Section 7.5 “Business behaviour – Responsible procurement” of the Annual Report for detailed information.
The current alert procedure allows all stakeholders (employees, business part ners, etc.) to share their doubts and/or report any practice, action or behaviour that they consider inappropriate, illegal, unethical. Alerts can be made within the relevant entity or also sent directly to the Group. Since 2017, the Group has had a dedicated email (speak-up@AXA.com) for receiving alerts from all geographical areas where the Group conducts business, irrespective of the stakeholders in question and without restrictions.
The AXA Group examines all alerts received with the objective of ensuring an adequate response (intervention of adequate actors, deployment of immediate corrective actions and/or precautionary measures, investigations etc.). Alerts are handled in accordance with a strict, independent process that includes key stakeholders in the Vigilance Plan where relevant. The author of the alert’s identity is treated in a confidential manner and no element enabling to identify him/her can be disclosed without his/her consent (except for judicial authorities). Furthermore, AXA does not tolerate any act of retaliation against anyone who makes a good faith report of actual or suspected misconduct and/or has participated in establishing the facts confirming a misconduct by providing evidence.
All AXA Group companies are required to define internal regulations and other policies governing whistleblowing pursuant to local laws and regulations. In 2018, aft er considering whether its employees had been sufficiently encouraged to report any deviant practices, the Group defined action plans aimed at bolstering its communications around the procedure. These action plans will be rolled out in all Group entities beginning in Q2 2019.
The AXA Group ensures the implementation of all policies and procedures described in this Vigilance Plan through a network of professionals including in compliance, data privacy, corporate responsibility and physical security.
In 2018, various working groups involving representatives from the Group Legal Department, the Human Resources Department, the Corporate Responsibility Department, the Procurement Department, the Compliance Department and the Risk Management Department were involved not only in reviewing the Vigilance Plan but also in its eff ective implementation.
In addition, in order to disseminate the Group’s Vigilance Plan as widely as possible and to raise awareness of its full content among all its stakeholders, a reporting process was established for Group entities. The Group entities were asked to review the Vigilance Plan, to discuss its provisions with their local Corporate Responsibility and Compliance Managers and express any comments on the Vigilance Plan, as well as on any diff iculties they might anticipate and/or encounter with its implementation.
The AXA Group is pursuing its commitment to applying these same principles and received a “Gold” score in its last EcoVadis evaluation.
For more information, please refer to Section 7.5 “Business behaviour – Responsible Procurement”.
APPENDIX II STATEMENT OF THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 445
APPENDIX VIII EUROPEAN COMMISSION REGULATION (EC) NO. 809/2004 OF APRIL 29, 2004 – CROSS-REFERENCE TABLE 482
(a.1) IFC SCOPE The IFC program includes primarily the entities which are individually significant to consolidated financial position or results of operations, as well as the entities which provide significant services to AXA and/or its consolidated subsidiaries (the “Group”).
■ unauthorized acquisition, use or disposition of Group assets that could have a material eff ect on the Group’s financial statements would be prevented or detected in a timely manner.
Outstanding control deficiencies are consolidated at Group level to evaluate their impact on Consolidated Financial Statements, compensating controls and other qualitative factors. This evaluation process is designed to identify any control deficiencies that may rise to the level of a material weakness. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented or detected on time.
Management conducted an evaluation of the eff ectiveness of AXA Group’s ICOFR in accordance with the IFC framework as described above. Based on this evaluation, management concluded that AXA Group’s ICOFR was eff ective as of December 31, 2018.
To the Board of Directors of AXA: As Statutory Auditors of AXA and at your request, we have performed audit procedures on AXA and its subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2018, in order to be able to obtain reasonable assurance as to whether AXA’s management’s assertion that internal control over financial reporting is eff ective, as included in management’s annual evaluation of internal control over financial reporting, is fairly stated.
The Company’s management is responsible for maintaining eff ective internal control over financial reporting and for establishing a statement on its assessment of the eff ectiveness of internal control over Financial reporting as of December 31, 2018. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS accounting principles. The assessment of the eff ectiveness of internal control over financial reporting is based on criteria established in the Internal Financial Control (IFC) framework, as described in management’s annual evaluation of internal control over financial reporting on page 442 of this Annual Report. Our responsibility is to express an opinion on the Company’s management’s assertion, based on our audit procedures.
In our opinion, the Company’s management’s assertion that internal control over financial reporting as of December 31, 2018 is eff ective, in all material respects, is fairly stated based on the criteria established in the IFC framework.
I confirm that, to the best of my knowledge, the financial statements have been prepared in accordance with applicable accounting standards and fairly present the assets and liabilities, the financial position and the profit or loss of the Company and its consolidated subsidiaries for the periods presented, and that the Board of Directors’ report, the various sections of which are mentioned on page 480 of this Registration Document, fairly presents the evolution of the business, results and financial position of the Company and its consolidated subsidiaries, and describes the principal risks and contingencies facing the Group.
The Statutory Auditors have provided me with a letter of completion of assignment, in which they confirm that they have verified the information relating to the financial position and the financial statements contained in this Registration Document and have reviewed the entire document.
Net income for the fiscal year ended December 31, 2018 resulted in a profit of €307 million compared to a profit of €4,958 million for the year ended December 31, 2017. This decrease was mainly due to capital losses on the disposal of AXA Equitable Holdings, Inc. shares (AXA’s ownership decreased from 100% to 59.25%), the impairment on the remaining shares and lower dividends received from subsidiaries.
Dividends received from subsidiaries amounted to €3,973 million, versus €4,989 million in 2017, representing a decrease of €1,016 million, mainly due to: ■ dividends received from French entities of €1,575 million, compared to €1,188 million in 2017, representing a €387 million increase primarily due to the €415 million dividend paid by AXA Partners Holdings Limited; ■ dividends paid by the European entities of €1,576 million, compared to €3,436 million in 2017, representing a decrease of €1,860 million, mainly due to the dividends paid by Belgium and Germany having decreased by €895 million and €634 million respectively following the exceptional dividends paid in 2017 thanks to capital surplus, as well as Switzerland for €444 million due to the acceleration of dividend payment in 2017; ■ €179 million in dividends paid by the Asian entities compared to €108 million in 2017; ■ €643 million in dividends received from other Group entities compared to €257 million in 2017, an increase of €386 million due to €163 million paid by AXA Global Re and €133 million paid by Colisée Re.
Capital operations resulted in a loss of €3,048 million in 2018, versus a gain of €122 million in 2017, and breaks down as follows: ■ a €1,869 million net impairment on investments, of which €1,449 million on AXA Equitable Holdings, Inc. remaining shares and €467 million on AXA Partners Holdings Limited shares, taking into account the above-mentioned dividend; ■ capital losses of €1,731 million on the disposal of AXA Equitable Holdings, Inc.; ■ a one-off profit of €479 million primarily due to the surplus premiums resulting from the mergers with Oudinot Participations and AXA France Assurance totalling €856 million, partly off set by the payment of interna l guarantees of €179 million in the context of a bus iness litigation, €106 million in premiums relating to hedging derivatives on equity markets and €62 million for the acquisition and integration costs of XL Group.
The corporate income tax benefit amounted to €762 million, compared to €1,048 million in 2017, and included €864 million of tax receivables from members of the tax consolidation group, partly off set by €66 million in corporate income tax expense for the fiscal year.
Intangible assets totaled €333 million. They mainly include the AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €26 million relating to the capitalization of soft ware expenses.
■ €1,872 million for the mergers referred to above; partly off set by: ■ €5,829 million for the book value of the AXA Equitable Holdings, Inc. shares sold; ■ €1,869 million in net impairments on investments referred to above.
Receivables from subsidiaries amounted to €774 million, compared to €3,773 million at year-end 2017, i.e. a decrease of €2,999 million primarily due to the repayment of $2 billion (€1,729 million) in loans granted to the US operations and the repayment of a €925 million loan granted to AXA Mediterranean Holding.
Marketable securities of €987 million represent the repurchase of AXA shares to meet its obligations to deliver shares and to eliminate the dilutive eff ect for certain share-based compensation schemes.
Cash instruments amounted to €290 million and concern the option premiums paid within the context of the purchase of protection on equity markets.
Cash and cash equivalents amounted to €1,538 million, compared to €990 million at the end of 2017, up €548 million given the proceeds coming from the disposal of the AXA Equitable Holdings, Inc. shares, additional loans granted by the subsidiaries, the dividends received, the issuance of subordinated debt at the end of March 2018, partly off set by the acquisition of XL Group, the dividend paid, and the repayment of undated subordinated debt.
Unrealized foreign exchange losses amounted to €3,133 million, including €2,829 million related to the deferred recognition of net foreign exchange losses in line with statutory hedge accounting principles, more than off set by unrealized gains on investments in subsidiaries. This item also reflects unrealized losses on assets and liabilities denominated in foreign currencies attributable to the eff ects of their revaluation at the closing exchange rate. The €124 million increase over 2017 is primarily due to the recognition in profits of the foreign exchange translation diff erences on the dollar following the partial disposal of AXA Equitable Holdings, Inc. shares.
Shareholders’ equity, before net income for the period and aft er the payment of the dividends relating to the prior fiscal year, stood at €40,274 million, i.e. an increase of €954 million, of which €1,016 million due to the merger premium with AXA France Assurance, €329 million for the capital increase reserved for employees, €38 million following the exercise of stock options, partly off set by €429 million related to the cancellation of shares bought back.
Provisions for risks and charges amounted to €561 million and mainly include €379 million of provisions for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group and a €44 million provision for exchangerate risk.
Subordinated debt amounted to €12,885 million, compared to €10,667 million in 2017, up €2,218 million, primarily due to the issuance of €2 billion in subordinated debt and an unfavorable foreign exchange rate impact of €176 million.
Financial debt amounted to €19,522 million, compared to €13,230 million at December 31 2017, an increase of €6,292 million, reflecting the increase in loans granted by Group entities to manage the company cash position, as a way to upstream to the company cash related to the pre-Initial Public Off ering reorganization transactions and as a contribution to the financing of the acquisition of XL Group.
Unrealized foreign exchange gains totaled €1,099 million, compared to €1,253 million at December 31, 2017. This item reflects the eff ects derived from the revaluation of foreign currency denominated assets and liabilities at the closing exchange rate. It decreased mainly due to an unfavorable impact of the US dollar on debts.
Invoices issued during the period and not paid at the closing date
Percentage of revenue VAT included of the period 39.72% 19.12% 9.93% 1.78% 5.46% 36.28%
Total Amount VAT included of invoices concerned (euros) 590,357 2,616,851 17,600 - 48,534 2,682,985
Financial operations on securities Reversals to provisions for marketable securities - -
Net book value on the sale of fixed assets (6,422) (197)
III. NET INCOME FOR THE FINANCIAL YEAR VI + VII + VIII 307 4,958
a) Aft er tax income, before depreciation, amortization and releases 1.00 0.71 0.31 1.44 0.90 b) Aft er tax income, aft er depreciation, amortization and releases 0.98 0.72 0.18 2.04 0.13
(a) Dividend proposed at year end 2018 is submitted to the Shareholders‘ Meeting of April 24, 2019 and based on 2,424,916,626 outstanding ordinary shares.
Cash flow for the year 1,327 3,501 Increases in shareholders’ equity 368 576
Sale or decrease in fixed assets ■ Intangible assets - - ■ Tangible fixed assets - - ■ Financial assets 8,697 1,773
Calle monseñor Palmer numéro 1 - PALMA DE MALLORCA - Iles Baléares
General Guisan-str, 40 - CH-8401 WINTERTHUR - Suisse - - -
AXA US HOLDINGS INC 859,030 (2) 100.00% 798,031 525 Washington Blvd # 3300, Jersey City, NJ 07310, États-Unis - - 313 Terrasses de l’Arche - 92727 Nanterre - France - - -
100, Esplanade du Général De Gaulle - Cœur Défense Tour B - - -
RESO GARANTIA (RGI Holdings B.V.) 133,008 586,840 39.34% 805,217 Ul, Svetlanskaya, 250/1, Vladivostok,Primorsky Territory - - Far Eastern federal district, 690000 Russian Federation - - -
1) Subsidiaries not shown in Section A - - a ) French subsidiaries (total) - - 94,566 b) Foreign subsidiaries (total) - - 160,995 2) Participating interests not shown in Section A - - a ) in French companies (total) - - 8,025 b) in foreign companies (total) - - 134,085
Net income for the fiscal year ended December 31, 2018 resulted in a profit of €307 million compared to a profit of €4,958 million for the year ended December 31, 2017.
The financial statements as at December 31, 2018 are prepared and presented in accordance with the provisions of the 2014 Chart of Accounts (regulation ANC n°2014-03 dated June 5, 2014).
Since January 1, 2005, AXA has applied regulations CRC 2002-10 related to depreciation and amortization of assets (amended by regulations CRC 2003-07 and CRC 2005-09), and CRC 2004-06 related to the definition, recognition and measurement of assets, repealed and replaced by regulation ANC n°2014-03 chapter “titre II, chapitre I Actifs non financiers”; application of these regulations has had no impact on the Company’s financial statements.
The application of regulations 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 (regulation ANC n° 2014-03 chapter “titre VI, chapitre II, section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salariés”).
BALANCE SHEET Intangible assets include concessions, patents, brands and soft ware.
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 the Company deems held for the long term; ■ other financial assets comprise securities representing less than 10% of the share capital and which are not investments in subsidiaries and aff iliates.
Disposals of investments in subsidiaries and affiliates are measured using the weighted average unit cost method.
Intangible assets totaled €333 million. They mainly included the AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €26 million relating to the capitalization of soft ware expenses.
Financial assets are measured at acquisition cost or transfer cost. At the balance sheet date, the acquisition cost is compared to the fair value, and the lower of these two values is then recognized in the balance sheet.
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 when the hedge accounting can not be applied; ■ 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.
This account includes the AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €26 million relating to the capitalization of soft ware expenses.
December 31, 2018 Less than 1 year 1 to 5 years More than 5 years
Miscellaneous receivables and currents accounts with subsidiaries 255 255 - 3. 5. Miscellaneous receivables and subsidiaries’ current accounts
The Company’s share capital is represented by 2,424,916,626 shares with a par value of €2.29, giving a total value of €5,553,059,073.54 at December 31, 2018. These shares were all entirely subscribed and paid with rights from January 1, 2018.
Movement in shareholders’ equity compared to opening balance 2,038 (1,737 )
(a) Proposed dividend at year end 2018 is submitted to Shareholders’ Meeting of April 24, 2019.
Other shareholders’ equity including the undated deeply securities (TSS), amounted to €4,032 million, compared to €4,640 million in 2017, due to the $750 million (or €569 million) repayment of TSS.
Undated deeply Subordinated Notes (nominal) 4,567 (569) (38) 3,960 3.11. Provisions for risks and charges
(a) The €396 million provision for deferred taxes at end of the period includes €379 million of provisions for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group.
December 31, 2018 Less than one year 1 to 5 years More than 5 years
(a) Debt relating to non-current assets totaled €75 million and included shares issued by AXA Life Europe but not yet fully paid. (b) Of which 212 million of expenses payable.
■ Directors’ fees allocated to members of the Board of Directors €2 million.
Income tax expense (b) - 762 762 * A positive sign indicates tax benefit.
(b) The corporate income tax benefit amounted to €762 million compared to €1,048 million in 2017. It mainly included €864 million of tax receivables from members of the tax consolidation group, partly off set by €66 million in corporate income tax expense for the fiscal year.
(c) External and internal loans. (1) A 100 bps rise in interest rates leads to a 3.7% improvement in the fair value of debt, a -8.2% deterioration in the fair value of loans, and an improvement of 61.1% in the fair value of loans.
I Statutory Auditors’ report on the financial statements (For the year ended December 31, 2018)
In compliance with the engagement entrusted to us by your Shareholders’ Meeting, we have audited the accompanying financial statements of AXA SA for the year ended December 31, 2018.
Our responsibilities under those standards are further described in the “Statutory Auditors’ Responsibilities for the Audit of the Financial Statements” section of our report.
At December 31, 2018, investments in subsidiaries and aff iliates represented €71,317 million, a significant balance sheet item. They are initially carried at acquisition cost or their contribution value. At the end of the fiscal year, an impairment allowance is recognized if the acquisition cost is less than the value at closing date.
As described in Note 2.5 to the financial statements, the value at closing date corresponds to the value in use and is determined by management on the basis of the share price, the equity value (including unrealized gains), or the future prospects of the subsidiary. Estimating the value in use of these types of investments requires a significant degree of judgment from management in terms of selecting the measurement methods, depending on the investment in question, and in determining which data and assumptions should be used to estimate the expected profits when these are taken into account in the valuation. The value of future profits is estimated on the basis of the European Embedded Value (EEV) calculations for the Life & Savings segment published by the Group, or similar calculations for the other activities. In particular, management determined at December 31, 2018 that the value in use of the participation in AXA Equitable Holding Inc. was less than the net book value. As a result, an impairment has been accounted for €1,449 million as described in Note 3.3. Given the inherent uncertainty involved in the use of forecasts (in terms of whether or not they will be achieved) and in the judgment required to assess value in use, we deemed the correct measurement of investments in subsidiaries and aff iliates, particularly those based on forward-looking data, to be a key audit matter.
To assess the reasonableness of the estimated value in use of investments in subsidiaries and aff iliates, based on the information provided to us, our audit work consisted primarily of verifying that the estimated values determined by management were based on an appropriate measurement method and assumptions, depending on the investment concerned. For valuations based on forecast data: ■ assess the appropriateness of the methodology and assumptions used with regard to the Solvency II texts and the European Embedded Value principles published by the CFO Forum when the values in use of life and non-life insurance companies are based on these frameworks; ■ for the other entities, obtain the projections for cash flow and operating cash flow for the businesses produced by their respective operational management teams, and: – check the consistency of the historical data used with the audited financial statements, – check that the assumptions made are consistent with the economic environment at the closing date and at the date the financial statements were prepared,
– compare projections made in previous periods with actual results in order to assess the reliability of the estimates,
We also verified the recording of provisions for contingencies where the Company is exposed to the losses of a subsidiary with negative equity.
INFORMATION PRESENTED IN THE MANAGEMENT REPORT WITH RESPECT TO THE COMPANY’S FINANCIAL POSITION AND THE FINANCIAL STATEMENTS We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the other documents provided to shareholders with respect to the financial position and the financial statements, reminded that it is not our responsibility to conclude on the fair presentation and consistency with the financial statements of the solvency related information required by Article L. 355-5 of the French Insurance Code (Code des assurances).
Concerning the information given in accordance with the requirements of Article L. 225-37-3 of the French Commercial Code (Code de commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your Company from controlling or controlled companies. Based on this work, we attest to the accuracy and fair presentation of this information.
OTHER INFORMATION In accordance with French law, we have verified that the required information concerning the identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.
OBJECTIVES AND AUDIT APPROACH Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements taken as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
REPORT TO THE AUDIT COMMITTEE We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified.
The information is disclosed in the “Embedded Value and Solvency II Own Funds Report 2018” which is available on AXA’s website (www.axa.com).
This glossary includes definitions of non-GAAP financial measures, or alternative performance measures (“APMs”), indicated by an asterisk*, that Management believes are useful to understand the Group’s business and analyze the Group’s performance. The scope of the following definitions of APMs remains unchanged compared to prior periods, except that the scope of certain definitions was updated to take into account the impact of the issuance by AXA of mandator y exchangeable bonds into shares of AXA Equitable Holdings, Inc. (AEH) in May 2018, which are recorded in “shareholders’ equity - Minority interests” and “financial debt”.
• AXA Art (insurance activities); ■ United States (insurance activities, AB and holdings); ■ International, consisting of: • AXA Bank Belgium (banking activities),
The split between current engines and high potentials is detailed below: ■ Current Engines: Belgium, France, Germany, Hong Kong, Italy, Japan, Spain, Switzerland, UK & Ireland, AXA XL, the United States and AB; ■ High Potentials: Brazil, China, Indonesia, Mexico, the Philippines and Thailand.
“On a comparable basis” means the following: ■ data for the current period were restated using the prevailing foreign currency exchange rates for the same period of prior year (constant exchange rate basis); ■ data in one of the two periods being compared were restated for the results of acquisitions, disposals and business transfers (constant structural basis) and for changes in accounting principles (constant methodological basis).
Adjusted Earnings represent the net income (Group share) as disclosed in the table set forth on pages 49 and 50 of this Annual Report, before the impact of the following items net of policyholder participation, deferred acquisition costs, VBI, taxes and minority interests: ■ integration and restructuring costs related to material newly acquired companies as well as restructuring and associated costs related to productivity improvement plans; ■ goodwill and other related intangibles; ■ exceptional operations (primarily change in scope and discontinued operations); ■ profit or loss on financial assets accounted for under fair value option (excluding assets backing liabilities for which the financial risk is borne by the policyholder), foreign exchange impacts on assets and liabilities, and derivatives related to invested assets and liabilities.
■ exclude derivatives involved in the economic hedging of realized gains and impairments of equity securities backing General Account and shareholders’ funds, for which cost at inception, intrinsic value and pay-off flow through adjusted earnings, and only time value flows through net income when there is no intention to sell the derivatives in the short term (if not, flows through adjusted earnings).
Diluted Earnings per share (diluted EPS) represent AXA’s consolidated earnings (net of financial charges related to undated subordinated debt and preferred shares recorded through shareholders’ equity - Group share, and mandatory exchangeable bonds recorded through shareholders’ equity – Minority interests and financial debt), divided by the weighted average number of outstanding ordinary shares, on a diluted basis (i.e. including the potential impact of all outstanding dilutive stock options being exercised, performance shares, and conversion of existing convertible debt into shares, provided that their impact is not anti-dilutive).
Underlying Earnings per share* corresponds to Underlying Earnings (net of financial charges related to undated subordinated debt and preferred shares recorded through shareholders’ equity - Group share, and mandatory exchangeable bonds recorded through shareholders’ equity - Minority interests and financial debt), divided by the weighted average number of outstanding ordinary shares.
The calculation of Return on Equity (“RoE”) is based on following principles: ■ for net income RoE: calculation is based on consolidated financial statements, i.e. shareholders’ equity including undated subordinated debt (“Super Subordinated Debts” TSS/“Undated Subordinated Debts” TSDI), preferred shares and mandatory exchangeable bonds (MEB) recorded through shareholders’ equity – Minority interests and financial debt, and Other Comprehensive Income “OCI”, and net income not reflecting any interest charges on TSS/TSDI; ■ for adjusted RoE* and underlying RoE: • undated subordinated debt (TSS/TSDI) and mandatory exchangeable bonds are treated as financing debt, thus excluded from shareholders’ equity,
• interest charges on TSS/TSDI, preferred shares and mandatory exchangeable bonds are deducted from earnings,
disclosures, please refer to AXA Group’s SFCR for FY 2017, available on AXA’s website (www.axa.com). As in previous disclosures all AXA US entities are taken into account assuming US equivalence. The contribution to the AXA Group Solvency II ratio from the entities that were part of the XL Group (“XL entities”) as at December 31, 2018, was calculated in accordance with the equivalence regime, based on the Bermudian Standard Formula SCR, plus a 5% addon required by the AXA’s lead supervisor (ACPR), as a transitional measure. Furthermore, i n compliance with the decision from ACPR, XL entities will be fully consolidated for Solvency II purposes (as per the consolidation-based method set forth in the Solvency II Directive) and their contribution to the Group’s solvency capital requirement will be calculated using the Solvency II standard formula from March 31, 2019. Subject to the prior approval of the ACPR, the Group intends as soon as FY 2020 to extend its i nternal m odel to XL entities.
Debt Gearing refers to the level of a company’s debt related to its equity capital, usually expressed as a percentage. Debt Gearing is used by Management to measure the financial leverage of the Group and the extent to which its operations are funded by creditors as opposed to shareholders. AXA’s Debt Gearing is calculated by dividing the gross debt (financing debt and undated subordinated debt) by total capital employed (consolidated shareholders’ equity excluding undated subordinated debt and reserves relating to the change in the fair value of financial instruments and of hedge accounting derivatives plus gross debt).
LIFE & SAVINGS HYBRID AND G/A CAPITAL LIGHT PRODUCTS Hybrid products: Savings products allowing clients to invest in both Unit-Linked and General Account funds; G/A c apital light products: General Account Savings products which, at inception, create more EOF than the economic capital they consume.
■ other fee revenues, e.g., fees received on financial planning or sales of third party products.
Underlying VBI amortization includes VBI (Value of Purchased Life Business In-force) amortization related to underlying margins.
• change in URR (Unearned Revenue Reserve – capitalization net of amortization) is presented in the line “Change in unearned premiums net of unearned revenues and fees” in the underlying Statement of Income, whereas it is located in the line “Fees & Revenues” in the Margin Analysis; ■ for investment contracts without DPF: • deposit accounting is applied. As a consequence, fees and charges related to these contracts are presented in the U nderlying Statement of Income within Gross Consolidated Revenues on a separate line, and in Margin Analysis in the lines “Fees & Revenues” and “Net Technical Margin”,
• change in UFR (Unearned Fee Reserve - capitalization net of amortization) is presented in the line “Change in unearned premiums net of unearned revenues & fees” in the U nderlying Statement of Income, whereas it is located in the line “Fees & Revenues” in the Margin Analysis.
INSURANCE RATIOS (APPLICABLE TO PROPERTY & CASUALTY, HEALTH AND PROTECTION ACTIVITIES) Current accident year loss ratio net of reinsurance is the ratio of: ■ current year claims charge gross of reinsurance + claims handling costs + result of reinsurance ceded on current accident year, excluding for the discounted reserves the unwind of the discount rate used in calculating technical reserves; to
Underlying cost income ratio is the ratio of: ■ general expenses excluding distribution related expenses; to
Exhibits 20. Table of the Company’s financial results over the last five years 453 21. Report of the Statutory Auditors on the corporate governance report 471 to 472
This Annual Report includes all the elements required to be included in AXA’s corporate governance report established pursuant to Articles L.225-37 et seq. of the French Commercial Code (Code de commerce).
Sections Pages 1. Principles and criteria for determination of the compensation of the corporate off icers 154 to 157 2. Corporate off icers’ compensation 128 to 153 3. Directorships and positions held by the corporate off icers 108 to 115 4. Agreements between a corporate off icer or a shareholder of the Company and a subsidiary of the Company 126 5. Table of the capital increase delegations 382 to 384 6. Exercise of Executive Management 100 to 101 7. Composition and conditions of preparation and organization of the Board of Directors’ work 101 to 124 8. Application the principle of balanced representation of women and men on the Board of Directors 101 to 102; 105 to107 9. Board of Directors’ diversity policy 101 to 104 10. Gender diversity within leadership teams 408 to 409 11 . Limitation of the powers of the Chief Executive Off icer 118 and 125 12. Corporate Governance Code of reference 158 13. Conditions for the participation to Shareholders’ Meetings 395 to 396 14. Anti-takeover provisions 396
APPENDIX VIII EUROPEAN COMMISSION REGULATION (EC) NO. 809/2004 OF APRIL 29, 2004 – CROSS-REFERENCE TABLE
Registration Document filed with the Autorité des marchés financiers (“AMF”) on March 11, 2019.
Pages 7. Organizational structure 7.1. Brief description of the Group and the issuer’s position within the Group 6 to 11; 14 7.2. List of the issuer’s significant subsidiaries 247 to 252 8. Property, plants and equipment 8.1 Existing or planned material tangible fixed assets n/a 8.2 Environmental issues that may aff ect the issuer’s utilization of the tangible fixed assets 414 to 423 9. Operating and financial review 9.2. Operating results 9.2.1 Significant factors materially aff ecting the income 52 to 54 9.2.2 Reasons of the change in net sales or revenues 45 to 48 9.2.3 Strategies and governmental, economic, fiscal, monetary or political information that materially aff ect or could materially aff ect, directly or indirectly, the issuer’s operations 10. Capital resources 10.1. Issuer’s capital resources 90 to 95 and 321 to 323 10.2. Sources and amounts of the issuer’s cash flows 90 to 93 ; 224 to 225 and 298 to 299 10.3. Borrowing requirements and funding structure of the issuer 90 to 95 and 321 to 323 10.4. Restrictions on the use of capital resources 90 to 95 10.5. Anticipated sources of funds needed to perform commitments 90 to 93 11. Research and development, patents and licenses 427 12. Trend information 12.1 Most significant recent trends in production, sales and inventory, and costs and selling price 12.2 Known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material eff ect on the issuer’s prospects 13. Profits forecasts or estimates n/a 13.1 Assumptions upon which the issuer has based its forecasts or estimates n/a 13.2 Report of the independent auditors n/a 13.3 Comparability between the basis retained for forecasts and estimates and the historical financial information n/a 13.4 Statement validating the forecasts and estimates contained in pending prospectuses n/a 14. Administrative, management, and supervisory bodies and senior management 14.1. Composition-Information about members 100 to 126 14.2. Conflicts of interests 126; 148 to 149; 159; 360 to 361 15. Remuneration and benefits 15.1. Amount of remuneration paid and benefits in kind 128 to 151 15.2. Amounts set aside or accrued to provide pension, retirement or similar benefits 152 to 153; 358 16. Board practices 16.1. Current terms of off ice 106 to 107 16.2. Members of the administrative, management supervisory bodies’ service contracts with the issuer or any of its subsidiaries providing for benefits upon termination of employment 16.3. Information about the issuer’s audit committee and remuneration committee 122 and 124 16.4. Statement related to corporate governance 158
APPENDICES A APPENDIX VIII EUROPEAN COMMISSION REGULATION (EC) NO. 809/2004 OF APRIL 29, 2004 - CROSS-REFERENCE TABLE
Pages 17. Employees 17.1. Number of employees 127 and 404 17.2. Shareholdings and stock options 137 to 150 17.3. Arrangements for involving the employees in the capital of the issuer 380 to 381 18. Major shareholders 18.1 Identification of major shareholders 379 to 380 18.2 Voting rights of major shareholders 379 to 380 ; 395 18.3 Ownership and control of the issuer 379 to 381 18.4 Arrangements, known to the issuer, the operation of which may at a subsequent date result in a change in control of the issuer n/a 19. Related party transactions 159; 360 to 361 20. Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses 20.1. Historical financial information* 216 to 376; 446 to 473 20.2. Pro forma financial information n/a 20.4. Auditing of historical annual financial information 20.4.1 Statement attesting that the historical financial information has been audited 370 to 376; 470 to 473 20.4.2 Other audited information by the auditors 160 to 161 ; 431 to 434 and 444 20.4.3 Sources of the financial data not extracted from audited financial statements n/a 20.5. Age of latest financial information n/a 20.6. Interim and other financial information 20.6.1 Quarterly or half yearly financial information and related audit reports n/a 20.6.2 Interim financial information n/a 20.8. Legal and arbitration proceedings 366 to 369 20.9. Significant change in the issuer’s financial or trading position 95 and 96 ; 369 21. Additional information 21.1. Share capital 21.1.1 Subscribed share capital 379 21.1.2 Shares not representing capital n/a 21.1.3 Treasury shares held by the issuer, on its behalf or by its subsidiaries 379 to 380 21.1.4 Convertible, exchangeable securities or securities with warrants 382 21.1.5 Acquisition rights and/or obligations over authorized but unissued capital or an undertaking to increase the capital n/a 21.1.6 Options on share capital of the members of the Group n/a 21.1.7 Historical information on share capital 380
Pages 21.2. Memorandum and Articles of association 21.2.2 Members of the administrative, management and supervisory bodies 100 to 126 ; 394 to 395 21.2.3 Rights, privileges and restrictions attaching to each class of existing shares 395 to 396 21.2.4 Description of actions necessary to change shareholders rights 395 21.2.5 Convening of and admission to Annual Ordinary and Extraordinary General Meetings 21.2.6 Provisions likely to defer, delay or prevent a change in control of the issuer 396 21.2.7 Statutory declarations of threshold crossing 396 21.2.8 Conditions governing changes in share capital, where more restrictive than legal provisions 22. Material contracts n/a 23. Third party information and statement by experts and declarations of any interest 23.1. Statement or report by the person acting as an expert 431 to 434 23.2. Information obtained from third parties n/a 24. Documents on display 385 25. Information on holdings 247 to 252 ; 456 to 461 * Pursuant to Article 28 of European Commission Regulation (EC) no. 809/2004, the following items are incorporated by reference: ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2017 and the Statutory Auditors’ report thereon, presented respectively on pages 188 to 330 and on pages 331 to 336 of the Annual Report (Registration Document), the French version of which was filed with the AMF on March 19, 2018 under reference no. D.18-0145; ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2016 and the Statutory Auditors’ report thereon, presented respectively on pages 224 to 369 and on pages 370 to 371 of the Annual Report (Registration Document), the French version of which was filed with the AMF on March 23, 2017 under reference no. D.17-0218.
This Annual Report includes all the components of the Annual Financial Report (Rapport Financier Annuel) referred to in paragraph I of Article L.451-1-2 of the French Monetary and Financial Code (Code monétaire et financier) as well as in Article 222-3 of the AMF General Regulation.
Statement made by the person responsible for the Annual Financial Report 445
Report of the Statutory Auditors on the consolidated financial statements of the Group 370 to 376