In the case of a temporary transfer, assets and related investment income remain attributable to AXA as they will be returned when they are no longer required to support the capital requirements of the With Profits Funds, under the stringent tests set out in the scheme. If all or part of the assets transferred are unlikely to be returned in the foreseeable future (taking into consideration the duration of the in force With-Profit policies), then the relevant part of the transfer would be designated permanent. Only a permanent transfer to the With Profits Funds would result in a charge against the profit and loss account. The maximum amount that could be transferred under the Scheme is capped at the market value of surplus assets in the Non Profit Funds, which was £1,000 million (€1,364 million) at December 31, 2007. The actual transfer at that date was nil.
On May 15, 2006, and after authorization on December 21, 2005 by the AXA Supervisory Board, the AXA Group (the AXA Mutuelles, AXA and its subsidiaries) and the Schneider Group entered into an agreement that provides for the maintenance of minimal cross-shareholdings. Under the terms of this agreement, the AXA Group undertakes to hold at least 2,583,300 shares of Schneider stock and the Schneider Group undertakes to hold at least 8,816,681 shares of AXA stock. The number of shares held under this cross-shareholding agreement will be adjusted as needed to reflect the impact of capital transactions, including but not limited to free allotments of stock or share tenders involving the same company (stock splits, business re-combinations, etc.). In addition, the parties have consented to a reciprocal repurchase option in the event of a hostile takeover attempt on either AXA or Schneider. In force for a period of one year as of the date of signature, this agreement is renewable automatically for successive periods of one year thereafter, unless one of the two parties decides to terminate beforehand, in which case it is required to give three months notice prior to the next renewal date. The agreement was made public by the AMF on May 31, 2006.
In addition to other employment-related obligations, various AXA subsidiaries are required to indemnify their employees against certain liabilities and costs that they may incur from time to time in performing activities within the scope of their employment duties. These activities may include, for example, service as a director, officer, agent, general partner, or in a similar capacity for (i) an AXA Group company other than the employee’s principal employer or (ii) a company outside the AXA Group where service is at the request of (or for the benefit of) the Group (e.g. joint ventures, partnerships, or special-purpose investment companies or funds). The potential amount of compensation relating to commitments covered by these obligations cannot be evaluated with any certainty.
In most cases, the amounts available for distribution from AXA’s insurance subsidiaries are limited to net income for the year and retained earnings calculated in accordance with the accounting policies used by the subsidiaries to prepare their financial statements. Further restrictions may be imposed by the local insurance regulators in countries where AXA operates. In some cases, amounts available for distribution are also subject to regulatory capital adequacy tests or the approval of an independent actuary, or subject to individual provisions contained in a company’s by-laws. In accordance with European Union directives, insurance companies with their registered office in a European Union member country are required to maintain minimum solvency ratios which must be supported by capital, retained earnings and reserves and unrealized capital gains on marketable securities and real estate as reported in regulatory filings in France or subject to approval by local regulators in some countries. AXA’s insurance operations in countries outside the European Union are also subject to local capital adequacy and solvency margin regulations. At December 31, 2007, AXA’s subsidiaries complied with the applicable solvency and capital adequacy requirements.
In the United Kingdom, from January 31, 2008, a temporary deferral period of up to six months was introduced for certain transactions involving the AXA Life Property Fund (£1.2 billion or e1.7 billion at December 31, 2007) and AXA Pension Property Fund (£0.9 billion or e1.3 billion at December 31, 2007), which is allowed under the terms of the customer’s policy. The transactions affected by the deferral are fund switches out, surrenders and transfers out of the fund. The deferred transaction will take place at the unit prices at the time the transaction is processed. The deferral period runs from the date the request is received by AXA. The imposition of this deferral period, consistent with policy terms, comes at a time when the demand for commercial property investment in the United Kingdom has been declining in recent months and when AXA has seen a significant increase in the level of withdrawals from these two Funds which invest in the United Kingdom commercial property. The contractual deferral period is designed to provide the funds’ managers with sufficient time to liquidate properties in an orderly fashion and at fair prices in order to protect the interests of all investors in the fund. Customers invested in the funds have been notified along with their advisers. AXA is monitoring the liquidity situation of these funds closely. In the event that sufficient liquidity to honor all outstanding withdrawal requests by the end of the deferral period cannot be generated through sale of properties held by the funds and other sources of liquidity available to the funds, AXA U.K., as sponsor of the funds, will be required to provide the funds with sufficient liquidity to honor these withdrawal requests.
On February 6, 2008, AXA announced it had entered into an agreement to acquire OYAK’s (50%) share in AXA OYAk Holding A.̧S. (“AXA OYAk”), a company established by AXA and OYAK in 1999. Under the terms of the agreement, AXA will pay a purchase price of $525 million (approximately €355 million) in cash for OYAK’s 50% share in AXA OYAK (in addition, according to the same agreement, AXA OYAK Holding will be buying, for $15 million (approximately €10 million), the 1.5% share that Mais Motors, an OYAK joint venture company, holds in AXA OYAK’s non-Life subsidiary). AXA OYAK enjoys a leading position (10% total market share1) on the fastgrowing Turkish insurance market. Mainly focused on nonLife, especially motor and property, the company experienced strong top-line growth in the past years and is one of the most profitable players in the market. The transaction, which was subject to local regulatory approval, is expected to close by early spring of 2008. Following closing, the parties have agreed that AXA OYAK and its subsidiaries will no longer use the OYAK name or trademark.
On February 12, 2008, AXA announced it had reached an agreement with ING for the acquisition of 100% of the share capital of its Mexican insurance subsidiary ING Seguros, for a consideration of US$1.5 billion (approximately €1.0 billion). ING Seguros is the third largest Mexican insurer (12% total market share, 5.5 million clients), with leading positions in key markets such as Motor (2nd largest player with a 17% market share) and Health (2nd largest player with a 19% market share). AXA intends to accelerate and complete the initiated turnaround of ING Seguros by dedicating seasoned management capabilities and leveraging the Group’s global platforms and expertise, notably in IT and reinsurance. Upon completion of the transaction, ING Seguros will be integrated to AXA’s Mediterranean Region unit and benefit from its know-how in underwriting, claims management, client segmentation, service and brand management. AXA will finance the transaction with internal resources. Completion of the transaction was subject to customary regulatory approvals and is expected to take place in the course of 2008.
On March 4, 2008, AXA UK announced that it made a formal offer to purchase 100% of the share capital of SBJ Group. The purchase, which was unanimously recommended by the Board of SBJ, was successfully completed on March 19, 2008. The acquisition of SBJ will complement and enhance AXA’s UK advisory and broking capability, bringing a number of strengths to the Group, including increased scale, a wider national presence and access to new market areas. SBJ, with its strong management team and high quality staff, will represent significant progress towards AXA’s stated strategic aim of building a leading presence in the advisory and broking markets. The businesses will continue to operate independently of AXA’s insurance company interests.
30.2. MATTERS CONCERNING AXA SUBSIDIARIES In addition to the Parent Company Litigations, several AXA subsidiaries are involved in lawsuits (both class action and individual), investigations, and other actions (the “Subsidiary Litigations”) arising in the various jurisdictions where they do business. The Subsidiary Litigations include the following: 30.2.1. United States Matters
A number of lawsuits have been filed against insurers in the United States involving insurers’ sales practices, alleged agent misconduct or misrepresentation, alleged failure to properly supervise agents, compensation of intermediaries and numerous other matters. Some of these actions have resulted in the award of substantial judgements against insurers (including material amounts of punitive damages) or in substantial settlements. In certain jurisdictions, juries have substantial discretion in awarding punitive damages.
AXA Equitable and certain of its subsidiaries, like other life and health insurers in the US, are involved in these types of litigations as well as a wide variety of other matters including the following: — A putative class action entitled Stefanie Hirt, et al. v. The
Equitable Retirement Plan for Employees, Managers and Agents, et al., was filed in August 2001 in the District Court for the Southern District of New-York against The Equitable Retirement Plan for Employees, Managers and Agents (the “Retirement Plan”) and The Officers Committee on Benefit Plans of AXA Equitable Life Insurance Company, as Plan Administrator. The action was brought by participants in the Retirement Plan who allege that a change effective January 1989 in the pension benefit formula from a final average pay formula to a cash balance formula violates the Employee Retirement Income Security Act of 1974 (“ERISA”). By order dated May 2003, the court certified the case as a class action, including a sub-class of all current and former Retirement Plan participants, who were subject to a 1991 change in application of the cash balance formula. In September 2006, the court granted summary judgment in favor of the defendants ruling that (a) the cash balance provisions of the Retirement Plan do not violate the age discrimination provisions of ERISA, (b) while the notice of plan changes provided to participants in 1990 was not adequate, the notice of plan changes provided to participants in 1992 satisfied the ERISA notice requirements regarding delivery and content, and (c) the claims of the named plaintiffs are barred by statute of limitations. The Court found that other individual class members were not precluded from asserting claims for additional benefit accruals from January 1991 through January 1993 to the extent that such individuals could show that the statute of limitations did not bar their claims. In October 2006, plaintiffs filed a notice of appeal. Defendants have crossed-appealed. The appeal has been fully briefed and a court hearing has been scheduled on April 22, 2008.
— In June 2006, AXA Equitable received a demand for arbitration from Centre Life Insurance Company (“Centre Life”) seeking to rescind the 100% quota share reinsurance agreement, effective July 1, 2000, between Centre Life and AXA Equitable, under which Centre Life reinsures portions of AXA Equitable’s individual disability income insurance business. The arbitration demand alleges that AXA Equitable provided Centre Life with inaccurate and incomplete data upon which Centre Life relied in order to establish the reinsurance premium paid by AXA Equitable as consideration in the transaction. In July 2007, Centre Life filed an amended arbitration claim in which Centre Life alleges claims substantially similar to those included in the original arbitration claim and seeks damages of $191.4 million plus statutory interest and attorneys’ fees. The arbitration is scheduled for March 2008.
On December 18, 2003, AllianceBernstein settled with the SEC and the Office of the New York State Attorney General (“NYAG”) regarding their investigations into trading practices in the shares of certain mutual funds sponsored by AllianceBernstein. AllianceBernstein’s agreement with the SEC was reflected in an Order of the SEC dated December 18, 2003 (amended and restated January 15, 2004). AllianceBernstein’s final agreement with the NYAG was reflected in an Assurance of Discontinuance dated September 1, 2004.
AllianceBernstein has taken a number of initiatives to resolve these matters. Most noteworthy was the establishment of a $250 million restitution fund to compensate fund shareholders for the adverse effect of market timing (the “Restitution Fund”) and the reduction of its fees by 20% (on a weighted average basis) with respect to investment advisory agreements with its sponsored U.S. long-term open-end retail funds for a minimum of five years, commencing on January 1, 2004 (AllianceBernstein has indicated that it does not intend to increase these fees at the end of this period). With the approval of the independent directors of AllianceBernstein’s U.S. registered mutual fund boards and the staff of the SEC, AllianceBernstein retained an Independent Distribution Consultant (“IDC”) to develop a plan for the distribution of the Restitution Fund. To the extent it is determined that the harm to mutual fund shareholders caused by market timing exceeds $200 million, AllianceBernstein will be required to contribute additional monies to the Restitution Fund. In September 2005, the IDC submitted to the SEC staff the portion of his report concerning his methodology for determining damages and a proposed distribution plan, which addresses the mechanics of distribution and in February 2006 the final portion of this report was submitted. The Restitution Fund proceeds will not be distributed until after the SEC has issued an order approving the distribution plan. Until then it is not possible to predict the exact timing, method or amount of the distribution.
From 1998 through 2001, subsidiaries of AXA, along with a syndicate of other insurers, participated in the Philips worldwide liability program (the “Policy”) providing certain insurance covers for Philips N.V. (“Philips”) and its subsidiaries on a worldwide basis. Thompson Hayward Agriculture & Nutrition LLC (“THAN”), an indirect U.S. subsidiary of Philips, made a claim under the Policy in respect of asbestos-related claims resulting from its distribution of raw asbestos fiber from 1961 to 1980. The insurers (including AXA Group subsidiaries) commenced a proceeding in the Netherlands in accordance with the forum selection clause in the Policy
The Royal Bank of Scotland Group plc (“RBS”) filed a lawsuit against Winterthur (UK) Holdings Limited and Winterthur Swiss Insurance Company (together “Winterthur”) on September 29, 2005. The litigation involves claims for (a) breach of warranty; and (b) misrepresentation, in connection with a share purchase agreement dated June 11, 2003 concerning the sale of Churchill Insurance Group plc by Winterthur (UK) Holdings Limited to RBS. The amount claimed by RBS is £37.1 million (on RBS’s primary case) or £50.5 million (on RBS’s secondary case), plus interest and costs. A trial is set for October 2008. Management believes that the claims of RBS in this matter are without merit and intends to vigorously defend this claim.
In addition to the matters described above, AXA and certain of its subsidiaries are involved in various legal actions and proceedings of a character normally incident to their business. AXA and its subsidiaries are also subject to comprehensive regulation and supervision in each of the various jurisdictions where the Group operates and, from time to time, are subject to regulatory examinations, investigations and other actions as well as to proposed changes in law and/ or regulation that may significantly impact their business and results of operations. For additional information on these matters, please see “Additional factors that may affect AXA’s Business” in Part II of this Annual Report. Among the matters discussed therein is proposed legislation recently introduced in the US Congress House of Representatives in 2006 that would require European insurers that issued policies during the Holocaust era to furnish information concerning policies in force during that period to a federal registry maintained by the United States and would subject the insurers to certain sanctions if they fail to do so. This proposed legislation would also create a federal private right of action permitting introduction of civil litigation in US federal courts in connection with these matters. This legislation is currently pending. Management can not predict with any certainty at this time whether this proposed legislation will ultimately be adopted or the magnitude of the potential impact it may have on the AXA Group if adopted.
In accordance with the requirements of Article L.823-9 of the French Commercial Code relating to the justification of our assessments, we bring to your attention the following matters: — Your company details in notes 1.7.2, 4.4 and 9 of the notes to the financial consolidated statements its direct and indirect exposure to the current market crisis and the valuation methods it applies to financial assets.
We have assessed the appropriateness of the process put in place to identify these exposures, of the financial assets valuation, as well as of the information disclosed in the above mentioned notes.
— Certain consolidated balance sheet items that are specific to insurance and reinsurance business are estimated on the basis of statistical and actuarial data, such as actuarial reserves, deferred acquisition costs and their amortization, and the value of business in force. The methods and assumptions used to calculate the carrying values of these items are described in notes 1.12, 1.6.4 and 1.6.2 of the notes to the consolidated financial statements.
— Derivatives and hedging activities are recognized in accordance with the methods and procedures described in note 1.9 to the consolidated financial statements.
In accordance with professional standards applicable in France, we have also verified, the information given in the Group’s Management Report. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
We summarize below certain material provisions of applicable French law and our memorandum and articles of association (“statuts”). You may obtain copies of our statuts in French from the Greffe of the Paris Trade and Companies Register (Registre du Commerce et des Sociétés).
— acquire, manage and sell all listed or unlisted shares or securities, including all real and movable property, as well as all rights, listed or unlisted stock, and movable property related to said assets, and
Upon the proposal of the Compensation Committee, the Supervisory Board approves the amount and terms of compensation for each of the members of the Management
Under the Company’s statuts the age limit for members of the Supervisory Board is seventy. Notwithstanding the foregoing, members of the Supervisory Board who have exceeded such age limit can be appointed by shareholders for a two-year period, renewable once. However, in any case, the number of members of the Supervisory Board who have exceeded the age of seventy shall be no more than one third of the active members of the Supervisory Board.
C E R TA I N A D D I T I O N A L I N F O R M AT I O NPART VI
Board: ownership of shares worth at least three times his total annual compensation, and (ii) for the other members of the Management Board: ownership of shares worth at least twice their total annual compensation.
2006 Share capital reduction (through the cancellation of shares) following the merger of FINAXA into AXA — 337,490,816 — 5,379,990,858 1,869,195,640 4,280,458,016
Share capital increase in connection with the acquisition of Winterthur 208,265,897 3,613,841,064 2,082,658,975 4,769,289,053
Share capital reduction by cancellation of shares — 11,273,270 — 279,268,697 2,074,589,470 4,750,809,886
New equity issue reserved for employees of AXA (Shareplan 2006) 15,472,458 339,536,543 2,090,061,928 4,786,241,815
New equity issue reserved for employees of AXA (Shareplan 2007) 22,088,600 501,196,189 2,121,724,740 4,858,749,655
Exercise of stock subscription warrants 13,718 250 991 2,060,752,828 4,719,123,976 changes in share capital capital increase
The increase in share capital effected by capitalization of reserves, profits or share premium, requires a simple majority of the votes cast at an extraordinary meeting of shareholders. In the case of an increase in share capital in connection with the payment of a stock dividend (instead of a cash dividend), the voting and quorum procedures of an ordinary meeting of shareholders apply.
The shareholders may delegate to the Management Board the right to carry out any increase in share capital, provided that the shareholders, acting in an extraordinary shareholders’ meeting, have previously authorized this increase. The Management Board may further sub-delegate this right to AXA’s Chairman and Chief Executive Officer of the Management Board.
As provided in the French Commercial Code, AXA’s share capital may generally be decreased only with the approval of two-thirds of the shareholders present or represented by proxy voting together as a single class at an extraordinary shareholders’ meeting. The number of shares may be reduced in the event that AXA either exchanges or repurchases and cancels shares. As a general matter, reductions of capital occur pro-rata among all shareholders, except (1) in the case of a share repurchase program, or a public tender offer to repurchase shares (“offre publique de rachat d’actions” (OPRA)), where such a reduction occurs pro-rata only among tendering shareholders; and (2) in the case where all shareholders unanimously consent to a non prorata reduction. AXA may not repurchase more than 10%
Self-held shares must be fully paid and held by AXA in registered form. Self-held shares are deemed outstanding under French law but are not entitled to dividends, voting rights or preemptive rights.
With the exception of treasury shares that may be held by subsidiaries but which are non-voting, French law prohibits a company from holding AXA shares if AXA holds more than 10% of that company’s share capital. French law also prohibits AXA from owning any interest in a French company holding more than 10% of AXA’s share capital. In the event of a crossshareholding that violates this rule, the Company owning the smaller percentage of shares in the other company must sell its interests. Until sold, these shares are not entitled to voting rights. Failure to sell the shares held in violation of this rule is a criminal offence under French law.
dividends AXA may distribute dividends to its shareholders from net income in each fiscal year after deductions for depreciation and provisions, as increased or reduced by any profit or loss carried forward from prior years, and as reduced by the legal reserve fund allocation described below.
AXA’s statuts provide that AXA ordinary shares may be held in registered or bearer form. Any owner of ordinary shares of AXA may elect to have its ordinary shares held in registered form and registered in its name in an account currently maintained by BNP Paribas for, and on behalf of AXA, or held in bearer form and recorded in its name in an account maintained by an accredited financial intermediary, such as a French broker, bank or other authorized financial institution. Any shareholder may, at its expense, change from one form of holding to the other. Both methods are operated through Euroclear France (which we refer to in this Annual Report as “Euroclear”), an organization that maintains share and other securities accounts of French publicly quoted companies and a central depositary system through which transfers of shares and other securities in French publicly quoted companies between accredited financial intermediaries are recorded.
Registered ordinary shares must be converted into bearer shares before being traded on the Euronext Paris and, accordingly, must be registered in an account maintained by an accredited intermediary. A shareholder may initiate a transfer by giving selling instructions to the relevant accredited intermediary. Ordinary shares held in bearer
In addition, the statuts of AXA provide that any individual or entity acting alone or in concert with others, that acquires ordinary shares resulting in a direct or indirect holding of 0.5% or more of the outstanding share capital or voting rights of AXA, including through the acquisition of ADRs representing the ADSs, must notify AXA by registered letter with return receipt requested within five days of the date of the acquisition (“inscription en compte”) of the ordinary shares or in the case of a holder of ADRs representing ADSs, within five days of the registration of the ADRs representing the ADSs, as a result of which the shareholder, acting alone or in concert with others, has reached or exceeded that percentage. The individual or entity must further notify AXA pursuant to the above conditions each time an additional 0.5% threshold is passed. Any shareholder, including any holder of ADRs representing the ADSs, whose holding falls below any of these thresholds must also notify AXA. In addition and to permit holders of ordinary shares to give the notices required by law and the statuts, AXA is required to publish each month, the number of outstanding AXA ordinary shares and the corresponding number of voting rights, if there has been any change during the course of the month.
French law imposes additional reporting requirements on persons who, acting alone or in concert with others, acquire more than 10% or 20% of the outstanding shares or voting rights in AXA. These persons must file with the AMF and AXA a report disclosing their intentions for the 12-month period following the acquisition. The report must specify whether the acquirer intends to continue purchasing shares, to acquire control of AXA or to seek election of nominees to the Management Board or Supervisory Board. This report must be filed within ten trading days from the date that either of these thresholds has been crossed. The report is published by the AMF. Upon any change of intention, the acquirer must file a new report.
Under applicable French stock market regulations, and subject to limited exemptions granted by the AMF, any person or persons acting in concert acquiring one-third or more of the share capital or voting rights of AXA must immediately notify the AMF and initiate a public tender offer for the balance of AXA’s outstanding share capital. The tender offer must also be extended to all securities issued by AXA that are convertible into or exchangeable for equity securities.
Modification of shareholder rights Under French law, shareholders of a French joint stock corporation (société anonyme) generally have the power to amend the statuts of the Company. Such an amendment requires the approval of two-thirds of the shareholders attending or represented at an extraordinary shareholders’ meeting. However, no such extraordinary shareholders’ meetings may decide (i) to increase the liability of the shareholders in respect of the company or a third-party; or (ii) to undermine the individual rights vested in each shareholder (such as voting rights, the right to distributable profits of the company when allocated as dividends, the right to sell one’s shares and the right to sue the company).
APPENDIX III STATEMENT OF THE PErSON rESPONSiblE FOr THE ANNuAl rEPOrT (DOcuMENT DE réFérENcE) 404
— Valid financial authorizations to issue shares or other type of securities as of December 31, 2007 408
— use in 2007 of the various financial authorizations pertaining to capital increases 409
APPENDIX VII liFE & SAViNgS EurOPEAN EMbEDDED VAluE PluS OTHEr buSiNESS TANgiblE NET ASSET VAluE 433
— AXA’s Supervisory board’s comments on the Management board report, and the financial statements 447
— Statutory Auditor’s report on internal control procedures implemented by the company 399
The present report presents, according to the provisions of article l.225-68 of the French commercial code, the conditions of preparation and organisation of the Supervisory board’s work (Part i) as well as the internal control procedures implemented by the company (Part 2). The present report also presents the principles and the rules adopted by the Supervisory board in order to determine the compensation and the advantages granted to the corporate officers (Part 3).
The purpose of the internal control system maintened by AXA is to anticipate and mitigate the risks linked to AXA’s business. Making effective risk management solutions available to clients presupposes AXA’s ability to effectively monitor its own risks. implementing and monitoring stringent internal control policies and procedures throughout the group is critical to AXA’s daily operations and long-term development.
— operating processes are subject to controls and ongoing improvement, notably via the group-wide continuous process improvement program called “AXA way” and through the Sarbanes-Oxley 404 compliance program to evaluate the group’s internal control over financial reporting,
— AXA employees have appropriate resources to operate. The corporate Human resources Department has implemented processes for assessing and monitoring AXA employees, as well as providing ongoing training and development opportunities.
— description of corresponding action plans, including Hr and iT systems aspects,
AXA’s Management board maintains ongoing relationships with all of these bus through its bSD organization, which reports back to group Management on key projects being considered or under way at business unit level. Operating units draw up their strategic plans in accordance with preset targets by the Management board. The bSD teams prepare these preset targets, send them to the business units and monitor bus progress.
AXA has a dual governance structure, consisting of a Management board and a Supervisory board. To ensure that group business is actively managed between Quarterly business reviews, the Management board’s six members meet generally every week to discuss strategy and operations.
Each Management board member is assigned responsibility for some specific aspects of the company’s management, including finance and control.
Executive Committee in carrying out its duties, the Management board is assisted by an Executive committee, whose composition reflects the group’s structure. it consists of: — the members of the Management board, — the executives of main business units.
The Executive committee meets quarterly as part of the Qbr process.
Quarterly business reviews are divided into two parts: — meetings between the Management board and each business unit, — a meeting attended by Executive committee members.
in 2007, the following transversal issues were examined in detail: — P&c segmented price elasticity, — ”Accumulator” type business’ development, — the “Passport 2012” implementation, a tool designed by
During the actual review meeting, the Management board compares the actual business and performance of each business unit with the targets set out in the budget and in the annual target letter. The business unit’s performance is also assessed based on the market trends, the competitive environment and regulatory issues. in this way, quarterly business reviews enable the Management board to monitor operations on a regular basis.
A central team, group risk Management (grM), supported by local risk management teams within each operating unit, coordinates risk Management for the group. The types of risk covered include operating risks, asset and liability risks, and asset/liability mismatch risks. The principal control processes that fall under the responsibility of the risk Management Department are described below: — the local risk Management Department carries out regular reviews of the technical reserves established by Property & casualty and reinsurance operating units. grM performs regular reviews of models followed throughout the group in order to ensure the consistency between actuarial and financial standards,
— grM proposes annually to the Management board, with the support of AXA cessions, the main features of the Property & casualty reinsurance coverage program of the group,
The involvement of AXA cessions in the life reinsurance of AXA operating units is growing. As of today a minority part of the group’s life reinsurance cessions are handled through AXA cessions as per the Property & casualty process described above.
— AXA group Solutions offers AXA subsidiaries shared iT support application solutions that are consistent with the group’s general strategy,
The Management board mandates the development and publication of information Security policy to the entities, and is kept informed of implementation status.
group iS works through Transversal Officers (TOs) to ensure adequate reporting at group Management level on strategic or large-scale projects. The TOs report on implementation status of group iS strategy as well as the status of large projects to the group cOO (chief Operating Officer) and the group cFO (chief Financial Officer) and maintain ongoing relationships with all key operating units.
AXA Tech is responsible for ensuring that iT security policy is consistently and transparently implemented at the infrastructure level, in cooperation with their clients, the operating companies.
The group Marketing Department works closely with subsidiaries of the group in seven areas: strategic marketing and customer insight, offer and innovation, quality of service, customer programs, distribution, brand, marketing business plan and performance monitoring.
— challenge AXA subsidiaries in their action plans design and implementation through the drawing up of Marketing business Plans,
— identify and capitalize on local best practices, knowledge and expertise to step up the pace of their broader adoption within the group, such as the measure of advertising efficiency and the launch of a structure dedicated to the third-party distribution).
Group Procurement Department in order to reduce procurement costs and improve the management of the relationship with its major suppliers and vendors, AXA has set up a group Procurement Department. its primary missions are to (i) develop procurement expertise based on the group Procurement Standard within the main operating units so as to build a talent pool of professional buyers, (ii) negotiate global agreements with suppliers and vendors in compliance with the Standard, and (iii) reduce the overall costs and risks by establishing contractual and ethical standards.
The group legal Department is responsible for identifying and managing the significant legal risks to which the group is exposed. it provides expertise and advice on all significant corporate legal matters at the group level and manages the legal aspects of transactions undertaken by the group as well as significant litigation, regulatory, and compliance matters. The group legal Department works closely with the legal Departments of AXA’s principal subsidiaries on legal, regulatory, and compliance matters impacting those companies.
The role of the DcFg is described in detail in paragraphs “Monitoring of financial commitments” and “Management of the group financial structure”.
The guide was updated in 2005 and a new release was communicated in March 2006 by the group chief Financial Officer (cFO) to cEOs and chief Financial Officers (cFOs), heads of legal departments, of Hr and of internal communications throughout the group together with local implementation guidelines. Any problems encountered with, local adaptation of the guide due to legal requirements, distribution, understanding or certification must be reported to group relevant departments.
AXA is firmly committed to combating money laundering and terrorist financing and has maintained a group AMl charter since 2002. in line with this charter, each entity is required to introduce procedures based on certain general principles, on
top of applicable local regulations, and to appoint an anti-money laundering officer. The “know your customer” principle is crucial in this respect, and is fundamental to all transactions. The group charter is reviewed and adjusted on a regular basis by taking into account international legal and regulatory developments.
As far as the fight against internal fraud is concerned, a formal policy has been put into place and a network of correspondents dedicated to this task was set up in 2005. internal fraud has been divided up into four specific categories: Fraudulent Financial reporting; Misappropriation of Assets; improper or Fraudulent Financial Activity; Senior Management Frauds.
The collateral, securities, pledges and guarantees are governed by the Supervisory board’s internal regulations, which set notably an authorized annual limit, along with limits for each type of commitment. They are also subject to a specific procedure. The DJc and the DcFg are responsible for supervising these commitments and in particular for analyzing their legal nature, arranging their prior validation by management, and monitoring their execution. Most of these commitments are granted to subsidiaries to the ultimate benefit of third-parties, or relate to intra-group loans.
whenever a hedging strategy is implemented, the DcFg is in charge, if needed, of establishing the necessary documentation and efficiency testing for the hedging instruments’ classification.
DcFg is responsible for managing liquidity risk. Therefore, DcFg determines the required amount of committed credit facilities needed by the group to weather a liquidity crisis, and sets constraints on the debt maturity profile.
AXA remains constantly vigilant regarding contractual documentation clauses that may be binding on the group. This helps monitor that the AXA group is not exposed to default or early repayment clauses that may have a material adverse effect on its consolidated financial position.
information about off-balance sheet commitments can be found in the appendix to the company’s annual financial statements.
Local solvency regulations Each subsidiary’s Finance Department is responsible for producing regulatory information and for liaising with local regulators.
in addition, subsidiaries carry out simulations that take into account their regulatory requirements using extreme scenarii concerning assets (market value of equities and interest rate movements). These simulations are consolidated by the DcFg, enabling the latter to measure each subsidiary’s financial flexibility.
Consolidated solvency The group is subject to regulations that require additional monitoring for insurance companies. consequently, the Pbrc Department calculates an adjusted solvency margin on the basis of the group’s consolidated financial statements. This information is transmitted to the AcAM (the French insurance industry supervisory commission).
The DcFg also maintains a three-year forecast of the group’s consolidated solvency margin at all times, as well as sensitivity analyses using extreme equity market and interest rate scenarii.
The liquidity risk is managed by AXA’s various operating units. The DcFg monitors this risk at the consolidated level, carrying out standardized measurements of the maturity of resources available to the group. To this end, the DcFg has devised formal principles for monitoring and measuring resources, along with liquidity risk management standards: — liquidity is managed centrally and conservatively by the
— a liquidity contingency plan at the group level also provides AXA with the ability to withstand a liquidity crisis.
To ensure that the group has ample financial flexibility, the DcFg liaises with AXA subsidiaries to coordinate consolidated debt, and also manages this debt in terms of interest rate and exchange rate risk. The DcFg has devised formal principles for managing and measuring resources in terms of interest rate and exchange rate risk, with the aim of maintaining a standardized consolidated position. To this end, it relies on information transmitted by subsidiaries. An accounting reconciliation is carried out at the end of each half-year period.
Pricewaterhousecoopers, AXA’s financial statement auditor for its accounts filed with the SEc, delivered an unqualified “integrated audit” opinion on the group’s consolidated financial statements and internal control over financial reporting for the year ended December 31, 2006. Pwc’s “integrated audit” opinion can be found in item 18 of the group’s 2006 Annual report on Form 20-F filed with the SEc.
The quality of financial and accounting information depends upon the production, review and validation of financial information between the different services of the group Finance Department, and on the principle of having a single source of information. with very few exceptions, all financial information reported by the group comes from the Pbrc Department. Exceptions arise occasionally when the financial markets request management information that does not originate from the group’s accounting and financial consolidation systems.
Annual Report (Document de référence) Several departments within AXA (investor relations, internal communications and group legal) are involved in preparing the Annual report. The Pbrc Department coordinates its preparation and ensures the overall consistency of information. Each contributor works to ensure that the Annual report complies with standards and is clear. The Annual report is reviewed by the Management board.
The group Audit Department works on behalf of the Management board and the Audit committee to assess the effectiveness and efficiency of the group’s control systems. All group subsidiaries, companies, activities and projects fall within its scope.
The group Audit Department operates in accordance with a charter approved by the Management board and Audit committee.
The group Audit Department fulfills its responsibilities as follows: — coordinating internal audit teams, through establishing internal audit directives and standards, the annual riskbased audit process, and by monitoring the quality of work completed,
The Audit committees in the group play a strong role in monitoring the plans, staffing and reporting from the local internal Audit teams.
AXA way in 2002, AXA launched AXA way, its continuous process improvement program designed to optimize customer service quality, increase market share and develop distribution. A central unit, at group level, is in charge of managing a common methodology, defining standards, setting up global targets, tracking and monitoring the projects. This unit is also responsible for training local AXA way teams.
Since the launch of AXA strategic initiative Ambition 2012 in 2005, AXA way has been enabling the Differentiation Strategy, aiming to make of AXA the preferred company. key strategic processes have been identified, action plans
Since 1993, AXA has conducted periodic surveys that encourage employees to express their views on what it is like to work for AXA. Survey findings are communicated to all AXA employees, and serve as the basis of a formal dialogue with management that leads to the development of targeted action plans. A summary of the process and resulting plans are reviewed by the Management board. in 2002, the Scope survey process became an annual event.
major incident reporting system in accordance with the AXA compliance guide, AXA employees may submit any concerns they may have regarding issues related to accounting, internal control, auditing or fraud directly to the chairman of AXA’s Audit committee. AXA employees also have the option of speaking with their supervisor, or with a representative of their Hr, legal or compliance Department or the AXA legal Department.
The Pbrc’s role encompasses: — establishing and distributing consolidation standards and group reporting standards, and managing the worldwide network of Pbr teams,
— managing and coordinating the group’s accounts’ into iFrS, — coordinating the production of AXA’s Document de référence filed with the AMF, — coordinating AXA’s Form 20-F filed with the SEc, — developing and using management control tools, — analyzing quantitative data on group business and results, and key performance indicators, — liaising with the External Auditors (independent accountants) and contributing to Audit committee meetings as required.
Financial and accounting information is consolidated within the Finance Department in accordance with international Financial reporting Standards (iFrS) as adopted by the European union. As it relates to the financial statements included in this Annual report, there is no difference between iFrS as adopted by the E.u. and iFrS as adopted by the international Accounting Standard board.
As indicated in the previous paragraph, AXA subsidiaries are responsible for controlling the financial information produced locally for consolidation purposes. in this respect, the cFO of each entity sign offs on the accuracy of consolidated figures reported through Magnitude (consolidation tool of the group) and their compliance with both the group accounting manual and instructions.
Department, • notes to the consolidated financial statements, • all additional information to the notes and published in the group’s interim and annual report, — the analysis of results, shareholders’ equity and the main balance sheet items, — the activity and management reports.
This organization is used for all AXA group publications, i.e. interim and annual consolidated financial statements, quarterly revenue releases, and an annual statement of embedded value.
in all cases, the procedures are those described above, along with close collaboration with the Statutory Auditors of the group, which generally work as follows: — all changes in accounting standards are anticipated in collaboration with AXA’s accountants and its statutory auditors and implemented after approval adopted by the internal accountants, as well as the statutory auditors,
— the main audit issues are addressed and resolved in the phase prior to accounts closing through “clearance meetings” with local and central statutory auditors, and local and central finance teams,
— the principal options for closing the consolidated accounts are presented to the Management board and then to the Audit committee,
— the auditing of financial and accounting data is finalized at the accounts closing stage in meetings attended by local and central finance teams, as well as local and central statutory auditors who present the outcome of their audit work.
Neither the control environment nor the control system is static. consequently, AXA remains attentive to changes in this area, so that continuous improvements can be made to its own internal control system.
For information on the principles and the rules adopted by the Supervisory board in order to determine the compensation and the advantages granted to the corporate officers please see Part iii — “corporate governance, executive compensation, major shareholders and related matters”, “Full disclosure on executive and employees compensation and share in capital” Section 3.2 of this Annual report.
Pricewaterhousecoopers Audit Mazars & guérard 63, rue de Villiers 61, rue Henri régnault 92208 Neuilly-sur-Seine cedex 92400 courbevoie
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
AXA 1Q07 revenues up 34%, driven by strong organic growth and Winterthur integration (05/10/2007)
AXA 2007 annual Shareholders’ Meeting approves all resolutions, of which: free shares attribution plan to all AXA employees as part of the Company wide project Ambition 2012, appointment of two new directors, Jean-Martin Folz and Giuseppe Mussari (05/14/2007)
AXA has completed the sale of Winterthur’s US property & casualty insurance operations (06/01/2007)
AXA launches its second securitization of motor insurance risks on a Pan-European portfolio (06/04/2007)
AXA and BNP Paribas to join forces on the Ukrainian property & casualty insurance market (06/08/2007)
AXA allocates 50 free shares to all AXA employees worldwide (07/02/2007)
AXA announces the success of its second securitization of motor insurance risk (07/06/2007)
AXA to sell its operations in Taiwan to China Life Insurance Co. Ltd (07/25/2007)
AXA and BNP Paribas extend their partnership to take the 3rd place on the Ukrainian property & casualty insurance market (07/27/2007)
AXA has completed the sale of its Dutch insurance operations (09/06/2007)
AXA and Bao Minh Insurance enter into a strategic partnership in the Vietnamese insurance market (09/12/2007)
AXA announces the subscription prices for 2007 employee share offering (Shareplan 2007) (09/18/2007)
AXA joins the Dow Jones Sustainability STOXX and World Indices (09/19/2007)
AXA and BMPS finalize their partnership agreement on the Italian financial protection market (10/19/2007)
Filing of AXA’s Annual Report on Form 20-F for the year ended December 31, 2006 (10/29/2007)
AXA to hold today in Paris its investor conference on Ambition 2012 (11/13/2007)
AXA creates AXA Bank Europe to enhance the coordination of AXA’s European retail banking operations (12/03/2007)
AXA to take a stake in Russia’s 2nd largest insurer Reso Garantia (12/21/2007)
Appointments: Group IT, AXA Technology Services, Central & Eastern Europe Region (01/31/2008)
Extract of the minutes of the Management Board of 07/17/2007 regarding the decrease of the share capital (12/26/2007)
Extract of the minutes of the Management Board of 01/07/2008 regarding the increase of the share capital (02/01/2008)
Decision of the Chairman of the Management Board of 01/24/2008 regarding the increase of the share capital (02/01/2008)
A copy of the “BALO” dated March 14, 2007 containing the Notice of Meeting
A copy of the convening file sent to the shareholders as well as all documents at the disposal of the shareholders (R.225-81 and R.225-86)
Copies and acknowledgement of receipts of the recorded delivery letters sent to Statutory Auditors
From June 11 to June 13, 2007 From November 14 to November 16, 2007
Documents published abroad (20-f / 6-k) www.sec.gov form 6-k for may 2007: Press Release issued on May 10, 2007 by AXA, announcing its first quarter revenues form 6-k for june 2007: Press Release issued on June 4, 2007 by AXA, announcing the sale of its principal Dutch insurance operations to SNS Reaal
Free Translation of AXA’s French Document de Référence for the year ended December 31, 2006 filed with the AMF (the French stock exchange regulatory authority) on April 20, 2007 form 20-f (submitted as June 28, 2007)
form 6-k for August 2007: Press Release issued on August 9, 2007 by AXA, announcing first half 2007 performance form 6-k for November 2007: Press Release issued on November 8, 2007 by AXA, announcing first nine months 2007 activity indicators
StAtEmENt of tHE PERSoN RESPoNSIBlE i, the undersigned, having taken all reasonable care to ensure that such is the case, hereby certify that the information contain in this Annual report (Document de référence) is, to the best of my knowledge, in accordance with the facts and contains no material omission likely to affect this import.
i confirm that, to the best of my knowledge, the financial statements have been drawn up in accordance with applicable accounting standards and accurately show the position of the assets and liabilities, the financial position and the profit or loss of the company and of all businesses and firms included within the scope of the consolidated group, and that the Management report, the various sections of which are mentioned on page 473 of the present Annual report, accurately reflects the evolution of the business, the results and the financial position of the company and of all businesses and firms included within the scope of the consolidated group, and describes the main risks and contingencies which they are faced with.
The Statutory Auditors are: INCumBENt AuDItoRS PRICEwAtERHouSECooPERS AuDIt: 63, rue de Villiers — 92208 Neuilly-sur-Seine, represented by Mr. yves Nicolas and Mr. Eric Dupont, first appointed on February 28, 1989. The current appointment is for a term of 6 years, until the Annual general Meeting of the shareholders called to approve the financial statements for the fiscal year 2011.
Membership in a professional body: Mazars & guérard is registered as an independent auditor with the compagnie régionale des commissaires aux comptes de Paris.
mr. jean louis Simon: Exaltis — 61, rue Henri régnault — 92075 Paris-la Défense cedex, first appointed on April 21, 2004. The current appointment is for a term of 6 years, until the Annual general Meeting of the shareholders called to approve the financial statements for the fiscal year 2009.
Pursuant to Article 222-8 of the AMF general regulations, the table below shows the fee amounts paid by AXA to each of the statutory auditors in charge of auditing the group’s financial statements, distinguishing between the fees for, on the one hand, the legal mission of statutory auditors of the statements, as well as the diligence directly related to them, and, on the other hand, for other services.
Legal, tax and employment consulting 4,796 4,474 9% 8% 52 33 1% 1%
VAlID fINANCIAl AutHoRIZAtIoNS to ISSuE SHARES oR otHER tyPE of SECuRItIES AS of DECEmBER 31, 2007
Securities maximum nominal amount in case of debt instruments issuance in Euro maximum nominal amount of the capital increase in Euro term Expiration
Ordinary shares or securities granting a claim to shares of the Company at maturity through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (d)
Performance shares (actions gratuites) — 0.5% of the share capital (e)
NEw fINANCIAl AutHoRIZAtIoNS The following authorizations to issue shares or securities granting a claim to shares of the company require the shareholders’ consent. They will be submitted to the shareholders for approval on April 22, 2008: Issues without preferential subscription rights
Securities maximum nominal amount of the capital increase in Euro term Expiration
Shares issued in connection with the exercise of stock options 2% of the share capital (b) 38 months June 22, 2011
Shares reserved to a category of beneficiaries in connection with offerings reserved for employees 100 million (c) 18 months October 22, 2009
uSE IN 2007 of tHE VARIouS fINANCIAl AutHoRIZAtIoNS PERtAININg to CAPItAl INCREASES
Equity issue reserved for employees by virtue of the authorization granted by the shareholders at the Annual general Meeting of May 14, 2007 (23rd resolution), the Management board increased share capital in one offering, through the issue of shares to employees of the group under the Shareplan 2007 program. The shareholders waived their preferential subscription rights so that this offering could be made to employees. in the countries that met the legal and tax requirements, two investment options were proposed in 2007: — the traditional plan, offered in 35 countries, — the leveraged plan, offered in 35 countries.
AXA issued in November 2007 a total of approximately 22 million new ordinary shares each with a par value of €2.29, all of which were entitled to dividends for 2007.
Net income for the year ended December 31, 2007 was €1,765 million, compared with €1,433 million for the year ended December 31, 2006.
Dividends received from subsidiaries amounted to €2,177 million, corresponding to an increase of €596 million from the previous year.
Dividends received from European companies reached €1,830 million, which represented an increase of €550 million compared with 2006, including €741 million from AXA France Assurance as a result of the high level of capital gains realised in 2006. The main contributors were again AXA France Assurance and AXA Holdings belgium, which generated €1,415 million and €110 million respectively. AXA rE, whose activities were sold during 2006, distributed €143 million, corresponding to the whole amount of its 2006 earnings and its reserves available for distribution. AXA uk did not pay a dividend in 2007 owing to the local financing of acquisitions.
Dividends from insurance companies outside Europe contributed to a total of €213 million, up €103 million principally due to the €80 million dividends paid by AXA canada. AXA Financial did not pay any dividend, as the priority has been given to grant loans for $700 million from the uS insurance subsidiaries to AXA SA.
At December 31, 2007, total assets were €55,608 million, versus €51,707 million at December 31, 2006.
Intangible fixed assets totaled €322 million. They mainly included the AXA brand contributed by FiNAXA as part of the merger in 2005 and valued at €307 million based on brand royalties billed to group subsidiaries and to the Mutuelles AXA.
Investments in subsidiaries net of valuation allowances, totaled €47,733 million, versus €46,756 million at year-end 2006, representing an increase of €977 million. — AXA SA acquired full ownership of Hispanowin, winterthur’s Spanish holding company for €1,584 million from winterthur Swiss insurance company,
— AXA life Europe, a company created to write unit-linked life insurance contracts with guaranteed minimum features via its various branches in several European countries, received a capital injection of €111 million,
— on the opposite, winterthur Swiss insurance company repurchased some of its own shares from AXA SA, for a book value of €367 million,
Receivables from subsidiaries amounted €3,142 million, up €96 million from €3,046 million at end 2006, €1,269 million of which were attributable to new loans granted to support subsidiaries’ growth, offset by the repayment of loans amounting to €1,191 million granted to Financière Solutions, an entity financing winterthur’s subsidiaries.
other fixed assets increased by €500 million, including €264 million in AXA shares, mainly intended to cover sharebased compensations and €153 million in bonds, including €82 million related to the securitization of a pan-European personal motor insurance portfolio.
loans decreased by €449 million, with €499 million linked to the repayment of a short term advance granted in 2006 to giE AXA Trésorerie Europe.
miscellaneous receivables totaled €337 million as at December 31, 2007, mainly coming from financial interests receivables.
marketable securities, which amounted to €437 million, represented the company’s investment in mutual funds managed by the group.
Cash equivalents came to €2,542 million, in anticipation of the financing of the acquisitions of a stake in russia’s second largest insurer reso garantia, which was announced late 2007, and of the third largest Mexican insurer iNg Mexico, which was announced early 2008.
Cash instruments, which amounted to €105 million, included €87 million related to the remainder of the premium, spread over ten years, paid in January 2007 in respect of the call options put in place to eliminate the dilutive impact of the convertible bonds maturing in 2017.
Provisions for contingent liabilities stood at €1,166 million. They mainly consist in €514 million in provisions for the redemption of premiums on bonds, €153 million for exchangerate risks and €227 million for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group.
Subordinated debts amounted to €6,891 million, down €1,085 million from €7,976 million at end-2006 as a result of the redemption of two perpetual deeply subordinated notes, one in an amount of $400 million and the other in an amount of €559 million, representing a total of €833 million, plus €252 million in favourable currency effects.
unrealized foreign exchange gains amounted to €1,118 million in 2007, up from €663 million at December 31, 2006. This item reflects the positive effects derived from the revaluation of foreign currency-denominated loans and liabilities at the balance sheet exchange rate. This item recorded an increase on the previous year owing primarily to the appreciation in the Euro against the uS Dollar.
Allowances: for depreciation of buildings and deferred charges (12) (10) (19)
PRofIt oN oRDINARy ACtIVItIES BEfoRE tAX (VI = III + IV + V) 1,407 1,057 1,043
Net book value on the sale of fixed assets (1,633) (102) (29)
2 — INComE StAtEmENt SummARy a) Gross revenues before sales tax 1,474 1,349 1,788 1,882 2,628 b) Pre-tax income from continuing operations, before depreciation, amortization and releases 846 660 1,061 1,067 1,420 d) Net after-tax income after depreciation, amortization and releases 863 519 1,137 1,433 1,765 3 — PER SHARE DAtA
a) After tax income, before depreciation, amortization and releases 0.51 0.33 0.65 0.75 1.08 b) After tax income, after depreciation, amortization and releases 0.49 0.27 0.61 0.68 0.86
(b) Dividend of €1.20 per share proposed to the Shareholders’ Meeting on April 22, 2008, based on 2,060,753,492 outstanding shares.
AXA EQuIty AND lAw PlC 5 Old Broad Street London EC2N 1AD
AXA jAPAN HolDINg ComPANy lImItED 1-17-3 Shirokane — Minato-ku 108 — 8020 TOKYO
AXA lIfE HoNg koNg 151 Gloucester Road — Wan Chai — HONG KONG
AXA PoRtugAl ComPANHIA DE SEguRoS Rua Gonçalo Sampaio n° 39 — 4002-001 PORTO
Net Book Value of securities held loans and cash advances given by the company still outstanding guarantees and commitments given by the company last closing revenues available (a)
AXA ASSIStANCE 12 bis, boulevard des Frères Voisins — 92130 ISSY-LES-MOULINEAUX
AXA INVEStmENt mANAgERS Cœur Défense — Tour B — La Défense 4 — 100, esplanade du Général de Gaulle — 92932 PARIS LA DéFENSE
AXA koNZERN Ag Colonia — Allée 10 - 20 — 51067 KÖLN
AXA ASIA PACIfIC HolDINg lImItED (b) 447 Collins Street — MELBOURNE Victoria 3000
Net income for the period ended December 31, 2007 was €1,765 million, compared with €1,433 million at December 31, 2006.
1. HIgHlIgHtS The significant account movements are presented in the tables in these notes.
The financial statements as at December 31, 2007 are prepared and presented in accordance with the provisions of the 1999 chart of Accounts.
Balance sheet intangible assets include concessions, patents and brands, as well as goodwill of merger. Tangible assets include investments in real estate broken down into land and buildings, as well as fixtures and fittings.
— Other financial assets comprise securities representing less than 10% of the share capital and not investments in subsidiaries and affiliates.
— capital operations include gains or losses on the disposal of investments in subsidiaries and affiliates and portfolio management investments, impairment allowances and reversals in respect of these securities and related receivables, gains and losses arising from exchange rate movements, charges and reversals of provisions for risks and charges, plus exceptional income and expense.
Expenses charged over more than one period are loan issue costs which are spread over the lifetime of the issue, or for a maximum of 10 years where there is no predetermined maturity for the loan.
AXA SA has issued two subordinated bonds: — 2.5% bonds, maturity January 1, 2014: 9,185,581 bonds with a par value of €165 and a redemption value of €230.88 were in circulation at December 31, 2007. The redemption premium amounts to €606 million.
— 3.75% bonds, maturity January 1, 2017: 6,636,946 bonds with a par value of €165.50 and a redemption value of €269.16 were in circulation at December 31, 2007. The redemption premium amounts to €688 million.
These bonds have been recognised using the single transaction approach. The redemption premium, being the difference between the value at par and the redemption value of the bond issue, was not recognised as a liability at the time of the bond issue. redemption premiums have been amortised since 2002 and will be until maturity of the issue, using the compound interest method. The yield to maturity used is the rate which enables future payment of the redemption premium, assuming the two bonds were issued on January 1, 2002, namely 2.84% for the 1999 issue and 3.29% for the 2000 issue. The charge for the period amounts to €92 million, and the existing provision at December 31, 2007 is €514 million. The unamortised balance of €780 million is recognized as an off-balance sheet commitment.
— interest rate swaps: these transactions are recognised by applying the accrued interest method. A distinction is made in the income statement and balance sheet between income from the principal transaction, which is the subject of the swap, and the net income from the swap transaction. The nominal value of the swaps serving as bases for interest rate swaps is recognised off-balance sheet.
— Derivative products qualifying as hedges against foreign exchange risk (exchange rate or currency swaps, currency futures purchases) are recognised offbalance sheet as a reciprocal liability and receivable commitment. For currency options, the premium paid on acquisition is recognized as an asset on the balance sheet in the “cash instruments” account. At the moment the option is exercised, the premium is recorded in the income statement. The same is true when the option is not exercised at term. For option sales, a provision for risks and charges is recognized to take into account the unrealized loss. Other derivative instruments are recognized under off-balance sheet at their nominal value. unrealized losses arising from the estimated market value
of these financial instruments give rise to recognition of a provision for foreign exchange loss.
— Equity derivative products: equity option rights paid or received are posted to 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 forms a supplement to the acquisition price of the underlying, and a supplement to the sale price where the option is sold.
Perpetual deeply subordinated notes are classified as “Other shareholder’s equity” where, as for ordinary shares, there is no contractual obligation to remit cash or any other financial asset. Other shareholder’s equity includes €6,323 million of perpetuals deeply subordinated notes, an increase of €1,499 million from the 2006 figure of €4,824 million. in order to finance maturing issues, two new bonds were issued in 2007 in the amounts of €750 million and £700 million, totalling €1,755 million. Favourable currency effects on perpetual subordinated bonds amount to €309 million.
The company heads a tax consolidation regime group. The tax consolidation regime provides that tax savings should be recognized directly in the company’s financial statements. However, a provision for the return of tax savings is recognised where there is a high probability that the benefit will accrue to subsidiaries as a result of the prospect of future taxable income resulting from the group’s strategic planning.
3. NotES to tHE BAlANCE SHEEt (IN mIllIoNS of EuRoS) 3.0. movements in intangible assets
This account includes the AXA brand, transferred by FiNAXA at the time of the merger, and valued at €307 million. it also includes €16 million of goodwill recognised following the complete transfer of assets and liabilities between Société de gestion civile immobilière (Sgci) and the company.
Since January 1, 2007, acquisition expenses on investments in affiliates are capitalised (included in the purchase price) and are subject to amortization over five years.
AXA’s share capital is represented by 2,060,753,492 shares with a par value of €2.29, giving a total value of €4,719,125,496.68 at December 31, 2007.
in 2007, the company issued two perpetual deeply subordinated notes for €750 million and £700 million.
(a) This reversal is net of charges: it represents total tax to be recognised in respect of movements in deficits between December 31, 2006 and December 31, 2007. The €255 million provision for deferred tax includes a €227 million provision for the risk of tax savings being paid back to consolidated subsidiaries.
(b) This charge includes a €159 million financial provision reflecting the negative mark to market for an equity swap with another group subsidiary to hedge an equity portfolio.
Value at December 31, less than 1 year 1 to 5 years more than 5 years
(a) Dividends received from investments in subsidiaries are under the fiscal “parent-subsidiary” regime and are tax-exempt. (b) The tax expense includes the deduction or taxation of unrealized income or expense not recognized in the income statement, such as on and off-balance sheet translation variance. (c) A positive sign indicates tax income.
Commitments to buy back shares and bonds from Group entities 672
Subordinated bond redemption premium (see § 2.9 of this note) 780 5.2 Commitments in respect of shareholder pacts
On December 15, 2005, and after authorization on June 29, 2005 by the AXA Supervisory board, the AXA group (AXA and its subsidiaries) and the bNP Paribas group entered into an agreement that replaces the one in force since September 12, 2001 (and amended on October 26, 2004). The new agreement maintains the existing provisions in terms of minimal and stable cross-shareholdings (the AXA group undertakes initially to hold at least 43,412,598 shares of bNP Paribas stock; the bNP Paribas group undertakes initially to hold at least 61,587,465 shares of AXA stock; these amounts will be adjusted thereafter to reflect the impact of capital transactions, including but not limited to free allotments of stock or share tenders involving the same company (stock splits, business re-combinations, etc.), and capital increases involving either bNP Paribas or AXA), and also provides for a reciprocal repurchase option in the event of a hostile takeover attempt on either AXA or bNP Paribas. in force for a period of five years as of the date of signature, this agreement is renewable automatically for an initial period of two years and for successive periods of one year thereafter, unless one of the two parties decides to terminate beforehand, in which case it is required to give three months notice prior to the next renewal date. The agreement was made public by the AMF (Autorité des marchés financiers) on December 21, 2005.
On May 15, 2006, and after authorization on December 21, 2005 by the AXA Supervisory board, the AXA group (the AXA Mutuelles, AXA and its subsidiaries) and the Schneider group entered into an agreement that provides for the maintenance of minimal cross-shareholdings. under the terms of this agreement, the AXA group undertakes to hold at least 2,583,300 shares of Schneider stock and the Schneider group undertakes to hold at least 8,816,681 shares of AXA stock. The number of shares held under this cross-shareholding agreement will be adjusted as needed to reflect the impact of capital transactions, including but not limited to free allotments of stock or share tenders involving the same company (stock splits, business re-combinations, etc.). in addition, the parties have consented to a reciprocal repurchase option in the event of a hostile takeover attempt on either AXA or Schneider. in force for a period of one year as of the date of signature, this agreement is renewable automatically for successive periods of one year thereafter, unless one of the two parties decides to terminate beforehand, in which case it is required to give three months notice prior to the next renewal date. The agreement was made public by the AMF on May 31, 2006.
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in compliance with the assignment entrusted to us by the shareholders, we hereby submit our report for the year ended December 31, 2007 on: — the audit of the financial statements of AXA, as attached to this report, — the justifications of our assessments, — the specific verifications and information required by
in our opinion, the financial statements give a true and fair view of the company’s financial position and its assets and liabilities as of December 31, 2007 and of the results of its operations for the year then ended in accordance with accounting rules and principles applicable in France.
II — justifications of our assessments in accordance with the requirements of Article l.823-9 of the French commercial code relating to the justification of our assessments, we would like to bring to your attention the following matters: — Financial assets are recorded using the methods applying to each category and described in paragraph 2.5 of the notes to the financial statements. we have assessed whether the impairment tests performed by the company depending on the invested assets situation and the volatility of financial markets are appropriate and we also assessed the reasonableness of the resulting provisions. On investments in subsidiaries for which impairment is based on the value in use and the intent to hold, we have assessed the data used to determine the value in use of the main investments in this portfolio and obtained confirmation of the intent to hold.
— in accordance with the policies described in paragraph 2.9, liabilities are recorded at the year-end for redemption premiums on convertible notes issued by the company whenever the prevailing stock price is lower than the discounted redemption value of the underlying note. we have tested the reasonableness of the assumptions used to establish these estimates against factors such as stock price volatility and the maturities of outstanding convertible notes issued by the company.
we have no matter to report regarding: — the fairness of the management report provided by the Management board and the documents remitted to the Shareholders on the company’s financial situation and financial statements, and their conformity with the financial statements,
life & Savings European Embedded Value plus other Business tangible Net Asset Value > APPENDIX VII
2007 lIfE & SAVINgS EuRoPEAN EmBEDDED VAluE Euro million — group share
Closing life & Savings EEV at 12/31/07 15,738 22,752 38,490 oPERAtINg REtuRN oN lIfE & SAVINgS EEV 11%
The group EV is not an estimate of AXA’s “fair value”, regardless of how one might define “fair value”. it does not include the value of business to be sold in the future, nor does it include any value for future profits from existing business for other-than-life businesses i.e. Property & casualty, international insurance, Asset Management and Other Financial Services.
life & Savings Adjusted Net Asset Value (ANAV) + other Business tangible Net Asset Value (tNAV) 15,738 (3,650) 12,088 life & Savings VIf 22,752 22,752 group EV = life & Savings EEV + other Business tNAV at 12/31/2007 38,490 (3,650) 34,840
— Some benefit from future mortality improvement on life business is included, while annuity business does have an allowance for the costs of longevity increasing in all markets.
As described above, the life & Savings ViF valuation under AXA’s market-consistent framework does not depend on assumed future asset returns, but rather on the actual riskfree yield curves observable in the market on each valuation date (consistent with financial market practices for valuing assets, the swap curve is used as the basis for risk-free yields). The life & Savings ViF valuation also depends on stochastic projections of multiple scenarios, rather than a single scenario. For comparison to traditional Embedded Values and other techniques, AXA performs a calculation that determines the “implied risk Discount rate” (iDr) which would equate the cash flows from a single scenario with “real world” economic assumption to the life & Savings ViF. The following table summarizes the “real world” assumptions for 2006 and 2007 used in determining the iDrs: fI Return Equity Return Cash Return Real Estate Return
2006 iDr shown in these tables are for AXA including winterthur, although winterthur NbV written in 2006 was before the acquisition was final and was not part of AXA’s 2006 results.
Expected return on VIF + Required capital (Unwind of IDR) 2,526
Subsidiary ownership structure changes reflects impacts from transfers which were made between group companies of shares in other group entities. At the total life & Savings level the impact is to reduce EV by E—1,003 million although at the total group level the impact is nil.
IDR) of E2,526 million is the mechanical effect of rolling forward the beginning of year ViF at the prior year implied risk Discount rate (the unwind calculation is based on iDr multiplied by ViF + required capital).
— operational experience changes of E131 million is the impact of actual versus expected experience for items like mortality, expenses, lapse rates, etc.
— operational assumptions changes of E—291 million is the impact on ViF of changes in future assumptions for items like mortality, expenses, lapse rates, etc.
operating Return on life & Savings EEV of E4,229 million is the combination of the New business Value and the operating performance from existing business as just outlined. it represents 11% of the Opening life & Savings EEV.
Change in investment assumptions is zero. This line would reflect changes to investment assumptions such as volatilities and correlations between asset classes, which are not directly driven by investment market data observed at year-end. For 2007 no such changes were made.
Exchange rate movements impact of E—2,036 million is predominantly due to the strengthening of the Euro versus the Dollar and the yen. This amount does not reflect the impact of AXA’s foreign currency hedging program which is in the Holdings segment.
life & Savings EEV of acquired/disinvested business of E—340 million was mainly related to the disposal of the Netherlands partially offset by realized life & Savings Segment gains with this sale and MPS acquisition in italy.
Closing group EV = life & Savings EEV + other Business tNAV at 12/31/07 38,490 (3,650) 34,840 operating Return on group EV — — 19%
(a) Other business tangible net asset value 2006 has been adjusted to correct the mark-to-market of debt and correction of goodwill in group Share amount to tie to the updated one in the Financial Supplement
The Other business Tangible Net Asset Value’s decrease of 32% (38% decrease at constant currency and scope) to e—3 650 million was due to the dividends paid to shareholders and share buybacks as well as the elimination of intangibles from the acquired business, which more than offset the positive contribution of the operating return and exchange rate movements of other business.
The 19% operating return on group EV was driven by the very solid business performance of the year in all business segments (life & Savings, Property & casualty and Asset Management). group EV return, unlike life & Savings EEV return, benefits from debt leverage as the debt is allocated to the Other business segment.
Estimated downward parallel shift of 100 bp in reference interest rates (1,416) (400)
10% higher value of real estate at start of projection 491 10 10% lower value of real estate at start of projection (493) (11)
Upward parallel shift of 25% of the volatility on bonds (372) (42)
in arriving at these conclusions, Tillinghast relied on data and information provided by AXA. This opinion is made solely to AXA in accordance with the terms of Tillinghast’s engagement letter. To the fullest extent permitted by applicable law, Tillinghast does not accept or assume any responsibility, duty of care or liability to anyone other than AXA for or in connection with its review work, the opinions it has formed, or for any statement set forth in this opinion.”
Appointment of Mr. François Martineau to serve as a member of the Supervisory board
Appointment of Ms. wendy cooper to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group tenth resolution (Not approved by the management Board)
Appointment of Mr. rodney koch to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group
Appointment of Mr. Frédéric Souhard to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group thirteenth resolution (Not approved by the management Board)
Authorization granted to the Management board to purchase the company’s shares
Authorization granted to the Management board to increase the company’s share capital by the issue of shares or other securities with a claim on the company’s share capital, reserved for members of the company’s savings plan
Authorization granted to the Management board to increase the company’s share capital, with waiver of the preferential subscription rights, to a category of beneficiaries twentieth resolution
Authorization granted to the Management board to reduce the share capital through the cancellation of shares twenty-first resolution
REPoRt of AXA’S mANAgEmENt BoARD oN tHE PRoPoSED RESolutIoNS To the Shareholders of AXA: we have called you to this joint Ordinary and Extraordinary Meeting to submit a number of resolutions for your consideration, pertaining to: — Approval of the parent company and consolidated financial statements of AXA for the year ended December 31, 2007, determination of the dividend payable in respect of 2007, and approval of the special report submitted by the Statutory Auditors on regulated agreements (i); — Appointment of two new members to the Supervisory board (ii); — renewal of the authorizations relative to the stock repurchase program and the cancellation of shares (iii); — renewal of the authorizations granted to the Management board to grant stock subscription or purchase options as well as free shares to eligible employees of the AXA group (iV); and
— renewal of the authorization granted to the Management board to issue equity securities or other types of securities with a claim on the share capital of the company through the company savings plans (V).
The purpose of the third resolution is to determine the appropriation of earnings for fiscal year 2007. The amount available for earnings appropriation is 2,479,122,236 euros, which is comprised of earnings for the period ended of 1,765,325,129 euros and retained earnings of 713,797,107 euros. Accordingly, the Management board of your company has decided to recommend this year the payment of a dividend of 1.20 euros per share, representing a global distribution of 2,472,904,190 euros, which is an increase of 11.47% compared with last year. The rest of the distributable earnings, a total of 6,218,046 euros, will be allocated to retained Earnings. if approved, this dividend would be paid out on April 29, 2008 and the ex-dividend date would be on April 24, 2008. in accordance with the bylaws of AXA, this proposed earnings appropriation and the date of the dividend payout were approved by the Supervisory board of your company at its Meeting on February 27, 2008.
The term of office of Mr. claude bébéar as a member of the Supervisory board, is set to expire at the close of this Meeting. Accordingly, you are being asked to appoint Mr. François Martineau to replace him for a term of four years, pursuant to Article 10 of the bylaws of your company. if appointed, Mr. François Martineau’s term of office would therefore expire at the close of the Shareholders’ Meeting called in 2012 to approve the financial statements for the fiscal year ending on December 31, 2011. The Supervisory board, following the recommendation of its Selection, Ethics, governance and Human resources committee, has issued a favorable opinion on the appointment of Mr. François Martineau to serve as a member of the AXA Supervisory board. The Supervisory board has assessed the independence of Mr. François Martineau on the basis of the recommendations contained in the report AFEP / MEDEF dated 2002 and came to the conclusion that Mr. Martineau shall be considered as independent. A brief biography of Mr. François Martineau appears in the exhibits to this report.
both the Management board and the Supervisory board believe that Ms. wendy cooper is the best candidate to serve as an employee shareholders representative on the AXA Supervisory board for the following reasons: (i) she received strong support from the employee shareholders with direct voting rights during the preliminary phase for selection of candidates, (ii) the nomination of Ms. cooper as a board member would internationalize and feminize the Supervisory board, and (iii) the American employees of AXA’s subsidiaries in the uS hold, behind France, the largest portion of assets in the group employees savings plans.
The Management board requests that Shareholders once again authorize the board to purchase up to 10% of the company’s outstanding share capital, or 5% of the total number of shares comprising the share capital in the case of shares acquired by the company for the purpose of holding them for subsequent payment or tender in a merger, spin-off or contribution.
The maximum unit price of purchase may not exceed 45 euros.
in the event of a public offer on the company’s shares, the company may opt to pursue the execution of its stock repurchase program in accordance with Article 232-17 of the AMF’s general regulations, but only if (i) the offer to purchase company shares is paid for exclusively in cash and (ii) the repurchase transactions are conducted within the context of the pursuit of a program that is under way, are consistent with the objectives mentioned in points b) and d) above and not likely to compromise the success of the offer. in this respect, the Management board believes it is important that the company may, if need be, repurchase shares of its own stock even in the event of a public offer, in order to comply with its obligations vis-à-vis bond holders that have an immediate or future claim on shares of the company (objective d) described above) or for the purpose of hedging stock purchase options or free shares plans (objective b) described above).
in compliance with Article 12 of the bylaws of your company, this resolution was approved by the Supervisory board of AXA at its meeting on February 27, 2008.
IV — Authorizations to be granted to the management Board to allot free shares and stock options
These shares would be considered as definitively granted after an acquisition period of at least two years, and the beneficiaries would then have to hold their freely allotted shares for a minimum period of two years as of the definitive grant date. However, the Management board may decide not to impose or to reduce this mandatory holding period for shares whose acquisition period has been set to last for at least four years. Moreover, AXA’s policy is that freely allotted shares be definitely granted under the conditions that (i) the beneficiary is still employed by the AXA group at the date of the definitive grant and that (ii) some conditions of collective performance, measuring both the AXA group performance and the beneficiary’s entity performance, have been fulfilled. Those performance conditions are being modified each year depending on the strategic targets of the AXA group. As an example, the targets used in 2007 were related to the underlying earnings and adjusted earnings, both for the AXA group and the entity of the beneficiary. in 2006, the performance targets were for both the AXA group and the entities, the underlying earnings, the P&c revenue and the New business Value in life.
by virtue of the aforementioned 24th resolution passed by the Shareholders on May 14, 2007, the Management board of your company granted 50 free shares of stock to nearly 112,000 AXA employees worldwide, working in 54 different countries, on July 1st, 2007. in 2009, the Management board plans to make a second grant of 50 free shares of stock to all AXA employees, provided that at year-end 2008 the group’s performance and achievements are in line with its Ambition 2012 plan objectives, measured on the basis of the following two criteria: underlying earnings per share above 2.41 euros (net of interest on TSS and TSDi debt) and a customer satisfaction index higher than 82%.
For more information on AXA’s policy regarding free allotment of shares, please refer to the Section “Executive compensation” of the 2007 Annual report (Document de référence) filed with the AMF (Autorité des marchés financiers).
Pursuant to Articles l.225-177 to l.225-185 of the French commercial code, we are asking you to authorize the Management board, for a period of thirty-eight months starting from the close of this Meeting, to grant to some or all employees and eligible corporate officers of the AXA group, in one or more times, stock subscription and/or stock purchase options, giving the right to subscribe newly issued shares or to purchase existing shares acquired through shares repurchase programs carried out by the company in accordance with the law.
The terms and conditions proposed by the Management board for setting the purchase or subscription price for the shares acquired through the exercise of options are the following.
The Management board shall determine, on the day it grants the options, the subscription or purchase price of the shares in accordance and within the limits set forth by applicable laws, provided that such price shall not be lower than the average price of the company’s shares on the Paris Stock Exchange over the twenty trading days preceding the date on which the Management board grants the options.
All options so granted shall be exercised within a period of ten years commencing from the grant date. in accordance with applicable legislation, as for the options granted to the eligible corporate officers, the Supervisory board may prohibit the exercise of options for as long as their beneficiaries hold their positions or immediate resale with the obligation to own in registered form all or some of the shares that result from the exercise of options for as long as they hold their position. Notwithstanding the foregoing, if the Supervisory board decides to prohibit, pursuant to the provisions of Article l.225-185 of the French commercial code, the exercise of the options for as long as the beneficiaries hold their positions, the deadline for exercise shall not expire before a minimum period of six months starting from the date the prohibition ends. The period for exercising the options will be postponed accordingly.
The total number of subscription options granted under this authorization shall not entitle beneficiaries to subscribe to a number of shares exceeding 2% of the number of shares comprising the share capital of the company on the date on which the Management board grants such options, an amount that is separate from the ceiling set under the resolution concerning the free allotment of shares (16th resolution of this Meeting) and from the ceilings set in the other financial authorizations proposed to this Meeting or adopted by the Annual general Meeting of May 14, 2007 and that are still in force.
This authorization, if granted, would cancel and replace the unused portion of that granted by the Shareholders at their Annual general Meeting held on April 20, 2005 under the twenty-sixth resolution, which authorized the Management board to grant stock options.
As provided for by law, the Management board shall inform each year the Shareholders at the ordinary general Meeting of transactions carried out within the framework of this authorization.
V — Authorizations to be granted to the management Board to issue equity securities or other securities with a claim on the capital of the Company through employees savings plan under the 18th resolution, we are asking the Shareholders, as provided for by Articles l.225-138-1 and l.225-1296 of the French commercial code, and Articles l.443-1 and following of the French labor code, to authorize the Management board, with the option of sub-delegation to any person authorized by law, to increase the share capital, in one or several offerings, at its sole discretion, through the issue of shares or other securities granting access to the company’s share capital, and reserved for employees or former employees, who are enrolled in AXA’s employersponsored company savings plan, for a period of eighteen months and up to a maximum nominal amount of 100 million euros. This authorization would also entail a waiver by the Shareholders of their preferential subscription rights with respect to equity securities or other securities issued by virtue of this delegation in favor of members of a company savings plan, possibly for free allotment. it also entails a waiver of their preferential subscription right to subscribe to shares that the company may issue for any securities that may be issued by virtue of this resolution.
However, you would also be authorizing the Management board to reduce or waive the aforementioned discount, as it deems appropriate, in particular to take into account new international accounting standards, or locally applicable legal, accounting, tax or social provisions.
continuing on from the 18th resolution, the 19th resolution proposes to authorize the Management board to decide to increase the share capital of the company, in one or more times, these issues of shares being reserved to the category of beneficiaries having the following characteristics: any bank or any entity held by such bank, which, at the request of the company, participates in the implementation of a structured offer for employees and corporate officers of entities affiliated to the company within the meaning of Articles l.225-180 of the French commercial code and l.444-3 of the French labor code and incorporated outside France.
Such a capital increase would allow employees and corporate officers of entities of the AXA group, who are residents in certain countries outside France, to benefit from an offer as close as possible, in terms of economic profile and taking into account legal or tax constraints that may exist locally, to the offer which would be made to the other employees of the group pursuant to the use of a 18th resolution.
Total nominal amount of shares that may be issued by virtue of this authorization will be limited to 100 million euros and will be deducted from the total nominal amount of shares that may be issued pursuant to the 18th resolution of this Meeting so as the total amount of the capital increase that could result from the implementation of the 18th and 19th resolutions should not exceed 100 million euros of nominal value.
in the event the Management board would decide to use the authorizations above, supplementary reports will be established by the Management board and the Statutory Auditors, in compliance with the legislation currently in force.
SuPPlEmENtARy mANAgEmENt BoARD REPoRt — CAPItAl INCREASE RESERVED foR AXA gRouP EmPloyEES (NoVEmBER 28, 2007) At its meeting on May 28, 2007, the AXA Management board decided to increase the share capital of the company by issuing a maximum number of 65,502,183 shares of the company for employees of the AXA group companies, in France and abroad.
This issuance was conducted within the framework of the authorization granted to the Management board under the twenty-third resolution adopted by the Shareholders at their Meeting on May 14, 2007, by virtue of the relevant provisions of Articles l.225-138-1 and l.225-129-6 and following of the French commercial code and l.443-1 of the French labour code.
This authorization was granted to the Management board for a period of 26 months as of the date of the Shareholders’ Meeting in question, for the purpose of increasing the company’s share capital in one or more issues, acting on the basis of its own deliberations, by issuing shares reserved for group employees or former employees, provided they are members of the AXA group employee savings plan (Plan d’Epargne d’Entreprise du groupe) or the international Employee Stock Purchase Plan (iESPP), up to a maximum nominal amount of 150 million euros.
The holders of fund units were entitled to an investment leverage mechanism, which allowed them to limit their personal contribution to 10% of the subscription price for these shares, while also being guaranteed — via a swap made by the fund — that the break-up value of their units upon fund wind-up and/or at maturity, or in cases provided for by law, in the event of any early redemption before this date, would be equal to their personal contribution and a percentage of the gain on all of the shares for which they have subscribed via the fund.
Fund regulations, approved by the AMF (Autorité des marchés financiers) on July 3, 2007 and July 13, 2007, provide further details on this operation.
in connection with the traditional plan, for all countries (including germany), the subscription price was equal to 80% of this reference price (or its counter-value in local currency), and in connection with the investment leverage plan, for all countries (excluding germany, where it was equal to 100% of the reference price), the subscription price was equal to 85.75% of this reference price (or its counter-value in local currency).
Employees subscribed for a total of e50,582,894 (nominal value) in this reserved capital increase, duly noted by the Management board on November 28, 2007, consisting in the issuance of: — 3,186,392 new shares subscribed at a price of e23.23 each under the traditional plan, earning dividends as from January 1, 2007,
— 17,023,582 new shares subscribed at a price of e24.89 each under the investment leverage plan (excluding germany), earning dividends as from January 1, 2007,
The announcement made by the Management board on November 29, 2007, relating to the issuance of 22,088,600 new shares, did not have any material impact on the AXA share price on the date it was released.
in accordance with applicable laws, the Management board submitted to the Supervisory board for its review AXA’s financial statements for 2007 (company’s financial statements — parent only — and the consolidated financial statements) as well as the Management board’s report on the company’s and the group’s business for the financial year elapsed.
in addition, the Supervisory board reviewed the financial resolutions put to the vote at your Meeting, and requiring its prior authorisation. These resolutions were approved by the Supervisory board, which does not have any objections or specific remarks in respect thereof.
Furthermore, as Mr. claude bébéar’s term of office as a member of the board is set to expire at the close of the Meeting of April 22, 2008, the Management board asks you to consider the appointment of Mr. François Martineau to replace him. Following the recommendation of its Selection, Ethics, governance and Human resources committee, the board has issued a favourable opinion on the appointment of Mr. Martineau, whose know-how and skills as an international lawyer will constitute an important contribution to the Supervisory board.
The term of office of Mr. Jacques Tabourot, who was appointed by the Shareholders’ Meeting in 2004 on the recommendation of the employee shareholders of the AXA group, is also due to expire at the close of the Meeting of April 22, 2008. This Meeting is also required to replace him. Amongst the nine candidates whom you are called to vote on, the Supervisory board, following the recommendation on its Selection, Ethics, governance and Human resources committee, issued a favourable opinion on the appointment of Ms. wendy cooper, whose nomination is recommended by the Management board.
The Supervisory board is confident that the AXA group has the ability to ensure the long-term growth of the group with ambitous objectives.
Special report of the Statutory Auditors on the free allotment of existing or new shares reserved for employees and corporate officers
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in our capacity as Statutory Auditors of AXA, and in accordance with the relevant terms of Article l.225-197-1 of the French commercial code, we have prepared this report on the proposed free allotment of existing or new shares to some or all employees and eligible corporate officers of the company and its affiliated companies or economic interest groups, within the meaning of Article l.225-197-2 of the French commercial code.
we have no particular observations to make on the information given in the Management board report on the proposed free allotment of shares.
This is a free translation into English of the statutory auditors’ report issued in French and which is provided solely for the convenience of English readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in our capacity as Statutory Auditors of AXA and in accordance with the terms of our assignment pursuant to Article l.225-177 and the second paragraph of Article r.225144 of the French commercial code, we hereby submit our report on stock purchase or subscription options granted to some or all employees and to some or all eligible corporate officers of the company or any of its affiliated companies or any economic interest groups within the meaning of Article l.225-180 of the French commercial code.
(Annual Meeting of Shareholders held on April 22, 2008 — 18th resolution)
— The Management board may also substitute all or part of the discount with the allotment of shares or other securities with a claim to the company’s capital, in application of the provisions indicated in its report.
in compliance with Article r.225-116 of the French commercial code, we will prepare a supplementary report when and if your Management board makes use of this authorization.
Special report of the Statutory Auditors on the reduction of share capital by cancellation of repurchased shares
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in our capacity as Statutory Auditors of AXA and as required under the provisions of Article l.225-209, paragraph 7, of the French commercial code in the event of a reduction of capital by cancellation of repurchased shares, we hereby present our report on our assessment of the reasons for and terms of the proposed capital reduction.
it is the responsibility of the Management board to prepare a supplementary report in accordance with Articles r.225115 and r.225-116 of the French commercial code. we are required to give our opinion on the fairness of the figures taken from the financial statements, on the proposal to waive the shareholders’ preferential subscription rights and on certain other information provided in this report.
we have no matters to report on: — the fairness of the figures taken from the company’s financial statements and given in the supplementary report of the Management board; — the conformity of the terms and conditions of the transaction with the delegation of authority granted by the Annual general Meeting of May 14, 2007 and with the information provided at that Meeting; — the proposal to waive the shareholders’ preferential subscription rights, which you have already approved, and the calculation method of the subscription price and final amount of the issue price; — the presentation of the impact of the issue on the position of holders of shares or securities giving access to the share capital based on the shareholders’ equity and the stock price.
Approval of the Company’s financial statements for 2007 — parent only
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Management board reports, the Supervisory board report relative to the Management board report and the financial statements for the year ended December 31, 2007, and the Auditors’ report on the consolidated financial statements, hereby approve the company’s consolidated financial statements for the year ended December 31, 2007 as presented, together with the transactions reflected therein or referred to in the aforementioned reports.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, upon the proposal of the Management board and having noted that earnings for the year ended December 31, 2007 amount to €1,765,325,129, hereby note that earnings for the year ended December 31, 2007 increased by prior-year retained earnings bring the distributable earnings amount up to: €2,479,122,236 hereby resolve to allocate the total distributable earnings as follows: — to the payment of a dividend of €2,472,904,190 — to retained earnings €6,218,046
Other than the dividend referred to above, no other earnings, whether or not eligible for the above-mentioned 40% tax relief, are distributed pursuant to this general Meeting.
For information, the following dividends per share, dividends with tax relief and dividends without tax relief were granted for the preceding three fiscal years: fiscal year 2004 fiscal year 2005 fiscal year 2006
in the event that the company holds certain of its own shares at the time dividends are made available for payment, the corresponding dividends shall be appropriated to retained earnings.
Appointment of Mr. François Martineau to serve as a member of the Supervisory Board
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, hereby appoint Mr. François Martineau to serve as a member of the Supervisory board, replacing Mr. claude bébéar whose term of office expires at the end of this general Meeting, for a four-year term, as provided for in Article 10 of the company’s bylaws, expiring at the close of the general Meeting of Shareholders in 2012 called to approve the financial statements for the year ending December 31, 2011.
Appointment of Mr. Gilles Bernard to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
Appointment of Mr. Alain Chourlin to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Mr. Alain chourlin to serve as a member of the
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the
recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Ms. wendy cooper to serve as a member of the Supervisory board, replacing Mr. Jacques Tabourot, whose term of office expires at the end of this general Meeting, for a four-year term, as provided for in Article 10. c of the company’s bylaws, expiring at the close of the general Meeting of Shareholders in 2012 called to approve the financial statements for the year ending December 31, 2011; — also decide that (i) in the event that several of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, only that resolution receiving the highest number of votes in favor shall be considered as having passed; the other resolutions in the aforementioned series shall be considered as rejected; and finally decide that (ii) in the event that none of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, then no candidate shall be appointed to serve as a member of the Supervisory board by the present general Meeting.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Mr. rodney koch to serve as a member of the
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Mr. Hans Nasshoven to serve as a member of the Supervisory board, replacing Mr. Jacques Tabourot, whose term of office expires at the end of this general Meeting, for a four-year term, as provided for in Article 10. c of the company’s bylaws, expiring at the close of the general Meeting of Shareholders in 2012 called to approve the financial statements for the year ending December 31, 2011; — also decide that (i) in the event that several of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, only that resolution receiving the highest number of votes in favor shall be considered as having passed; the other resolutions in the aforementioned series shall be considered as rejected; and finally decide that (ii) in the event that none of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, then no candidate shall be appointed to serve as a member of the Supervisory board by the present general Meeting.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Mr. Frédéric Souhard to serve as a member of the Supervisory board, replacing Mr. Jacques Tabourot, whose term of office expires at the end of this general Meeting, for a four-year term, as provided for in Article 10. c of the company’s bylaws, expiring at the close of the general Meeting of Shareholders in 2012 called to approve the financial statements for the year ending December 31, 2011; — also decide that (i) in the event that several of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, only that resolution receiving the highest number of votes in favor shall be considered as having passed; the other resolutions in the aforementioned series shall be considered as rejected; and finally decide that (ii) in the event that none of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, then no candidate shall be appointed to serve as a member of the Supervisory board by the present general Meeting.
Appointment of Mr. Jason Steinberg to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Mr. Andrew whalen to serve as a member of the Supervisory board, replacing Mr. Jacques Tabourot, whose term of office expires at the end of this general Meeting, for a four-year term, as provided for in Article 10. c of the company’s bylaws, expiring at the close of the general Meeting of Shareholders in 2012 called to approve the financial statements for the year ending December 31, 2011; — also decide that (i) in the event that several of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, only that resolution receiving the highest number of votes in favor shall be considered as having passed; the other resolutions in the aforementioned series shall be considered as rejected; and finally decide that (ii) in the event that none of the resolutions numbering from the sixth to the fourteenth resolution receive more votes than a majority of all the votes to which the shareholders present today or duly represented may cast, then no candidate shall be appointed to serve as a member of the Supervisory board by the present general Meeting.
4) Determine, pursuant to Article r.225-151 of the French commercial code, that the maximum global amount allocated to the share repurchase program under this resolution is €9,273,390,705, corresponding to no more than 206,075,349 shares acquired on the basis of the maximal unit price of €45 determined above, and of the share capital as of February 18th, 2008 (date on which the Management board approved this resolution); 5) resolve that the acquisition, sale or transfer of these shares may be completed and paid for by all appropriate means in accordance with applicable laws and regulations, including through open market transactions or private agreements, over-the-counter and in particular through block trades, by using financial derivatives or warrants or, more generally, through securities with a claim on shares of the company, or through public offerings, at such time as the Management board shall decide; 6) resolve that, in the event of a public offer on the AXA shares, the company may opt to pursue the execution of its share repurchase program in accordance with Article 23217 of the AMF general regulations, and only if (i) the offer to purchase company shares is paid for exclusively in cash and if (ii) the repurchase transactions are conducted pursuant to a program that is under way, related to the objectives mentioned above in points b) and d) of paragraph 2) above and not likely to compromise the success of the offer.
The Shareholders grant full authority to the Management board, which may delegate this authority as it deems appropriate and in accordance with applicable laws, to implement this authorization, to determine the terms and conditions in accordance with applicable laws and this resolution, and in particular the power to execute share trading orders, conclude any agreements including for the purpose of complying record-keeping requirements on buy and sell transactions, file all required disclosures with the AMF or any other such organizations, comply with all formal, legal and other requirements and, as a general matter, take all measures necessary or appropriate in connection therewith.
This authorization replaces and renders null and void the unused portion of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the thirteenth resolution. it shall remain in force for a period of not more than 18 months, starting from the date of this Meeting.
Authorization granted to the Management Board to allot free shares to employees and eligible corporate officers of the AXA Group
The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, and having reviewed the Management board report and the Auditors’ Special report, pursuant to the provisions of Articles l.225-197-1 and following of the French commercial code, authorize the Management board to allot free existing shares or shares of the company to be issued, in accordance with the terms and conditions set forth below.
These shares may be granted, in one or several times, to some or all employees and eligible corporate officers of the company and its affiliated companies or economic interest groups within the meaning of Article l.225-197-2 of the French commercial code.
The total number of freely allotted shares granted by virtue of this authorization may not exceed 1% of the number of shares comprising the company’s share capital on the day of their allotment by the Management board, it being specified that this upper limit does not take into account the number of shares that may be issued in connection with any adjustments made to safeguard the rights of the beneficiaries of free share allotments.
These shares shall be definitively granted: i) either, for all or some part of the shares granted, after a minimum acquisition period of four years has expired, ii) or after a minimum acquisition period of two years has expired.
generally, take all subsequent formalities or measures that may be required; — Stipulate the possibility, during the acquisition period, of making adjustments to the number of free allotted shares as a result of possible operations on the company’s share capital in order to preserve the beneficiaries’ rights; provided that the shares allotted as a consequence of these adjustments, if any, will be deemed allotted on the same day as for the shares initially granted; — More generally, with the option of sub-delegation, record the dates on which the shares are definitively granted and the dates as of which these shares may be sold according to applicable legal restrictions, conclude any agreements, draw up any documents, carry out the related formalities and filings and accomplish any other actions that may be required.
As provided for by law, the Management board shall inform the Shareholders at their ordinary general Meeting of all transactions carried out by virtue of this authorization.
The total number of options granted under this authorization shall not entitle option holders to subscribe to a number of shares exceeding 2% of the share capital of the company on the date on which the Management board grants such options, it being specified that this upper limit does not take into account the number of shares to be issued, as the case may be, in connection with adjustments that may be necessary to safeguard the rights of option holders, as the law provides.
2) The Management board shall determine, on the day it grants the options, the subscription or purchase price of the shares in accordance with the terms and within the limits set forth by applicable laws, provided that such price shall not be lower than the average price of the company’s shares on the Paris Stock Exchange over the twenty trading days preceding the date on which the Management board grants the options.
During the option’s validity period, their price shall not be modified, unless the company carries out one of the financial or securities transactions specified by applicable law. in this event and acting in accordance with applicable laws, the Management board shall take the measures necessary to safeguard the interests of the the options holders, taking into account the impact of the transaction(s). The Management board may temporarily suspend the right to exercise options in the event of a financial transaction that gives rise to an adjustment pursuant to Article l.225-181, paragraph 2 of the French commercial code, or in the event of any other financial transaction for which it deems useful the suspension of said right.
3) This authorization automatically entails a waiver by the Shareholders of their preferential subscription rights, in favor of the beneficiaries of subscription options, to the shares that will be issued as options are exercised.
Purchase and subscription options shall be exercised before the expiration date determined by the Management board, which may not exceed 10 years starting from the grant date. Notwithstanding the foregoing, in case of a prohibited exercise of these options imposed by the Supervisory board to a corporate officer pursuant to the provisions of Article l.225-185 of the French commercial code, the deadline for exercise shall not expire before a minimum period of six months starting from the date the prohibition expires and will be postponed accordingly.
required to finalize the capital increase(s) to be carried out in accordance with this authorization, amend the bylaws accordingly and, more generally, to do whatever is necessary to implement this resolution.
As provided for by law, the Management board shall inform the Shareholders at their ordinary general Meeting of transactions carried out pursuant to this authorization.
This authorization, which cancels and replaces the unused portion of that granted by the Shareholders on April 20, 2005 under the twenty-sixth resolution, is granted for a period of 38 months as of the date of this Meeting.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, having reviewed the Management board report and the Auditors’ Special report, drawn up in compliance with legislation currently in force, 1) Hereby authorize the Management board in accordance with Articles l.225-138-1 and l.225-129-6 of the French commercial code, and Articles l.443-1 and following of the French labor code, to issue equity, in one or several offerings, at its sole discretion, through the issue of shares or other securities granting access to the company’s share capital, and reserved for employees or former employees of the company and its affiliated companies or economic interest groups within the meaning of Article l.225180 of the French commercial code and Article l.4443 of the French labor code, who are enrolled in AXA’s employer-sponsored company savings plan, provided the issue of shares may be paid either in cash or through the incorporation of reserves, earnings or premiums and the free allotment of shares or other securities granting access to capital to employees; 2) Hereby resolve that the nominal amount of shares issued by virtue of this resolution shall not exceed 100 million euros. Furthermore, this maximum amount does not take into account the face value of ordinary shares that may be issued for the purpose of making any adjustments that may be required to safeguard the rights of holders of securities with a claim on the company’s share capital, pursuant to applicable laws, provided that the aggregate nominal amount of capital increase which may result from this resolution and the nineteenth resolution shall not exceed the nominal amount of 100 million euros; 3) resolve that this authorization entails a waiver by the Shareholders of their preferential subscription rights with respect to shares or other securities issued by virtue of this authorization for members of a company savings plan, as well as with respect to shares or other securities to be issued, possibly for free allotment, in connection with this resolution. it also entails a waiver of their preferential right to subscribe to ordinary shares to which these securities may give access; 4) Hereby resolve that pursuant to Article l.443-5 of the French labor code, the discount off the average price of the company’s shares on the Paris Stock Exchange during the twenty trading days preceding the day on which the Management board formally determines the opening date of the subscription period shall not exceed 20%. Notwithstanding the foregoing, the Shareholders expressly authorize the Management board to reduce or waive the aforementioned discount, as it deems appropriate, in particular to take into account the new international accounting standards, or, inter alia, locally applicable legal, accounting, tax or social regulations. The Management board may also substitute all or part of the discount with the allotment of shares or other securities with a claim on the company’s share capital, in accordance with the provisions below; 5) resolve that the Management board shall be allowed to make grants of free shares or other securities giving immediate or deferred access to the share capital of the company, it being understood that the total benefit resulting from this grant (”abondement”) may not exceed applicable legal or regulatory thresholds; 6) resolve that the characteristics of any other securities giving access to the share capital of the company shall be determined by the Management board in accordance with the conditions set forth in applicable laws and regulations; 7) within the limits and under the terms and conditions stipulated hereinabove, the Shareholders hereby grant full authority to the Management board to determine the terms and conditions of such transactions, in particular: — to decide whether the issues may be subscribed by eligible employees directly or through employee mutual funds; — to reduce, if it deems appropriate, the number of companies participating in the offer compared with the number of companies eligible for the employersponsored company savings plan; — to determine the procedures and conditions of the issuances that will be effected by virtue of this authorization, in particular regarding the terms of full payment, dividend earning and subscription price, in accordance with applicable legislation; — to determine the opening and closing dates of the subscription period; — to set the deadline for full payment of the shares or other securities subscribed; — to record the amount of the capital increase to be carried out in accordance with the number of shares or other securities with a claim on the company’s share capital subscribed; — at its sole discretion and as it deems appropriate, to charge the expenses related to the capital increases to the amount of the resulting premiums, and to draw from this amount the sums required to bring the legal reserve to one-tenth of the new share capital resulting from each increase; — to take all measures and undertake all subsequent formalities necessary regarding the share capital increases, in particular those pertaining to the listing of the securities thereby created, and more generally to do whatever is necessary to implement this resolution.
This authorization, which cancels and replaces the unused portion of that granted by the Shareholders at their Meeting of May 14, 2007 under the twenty-third resolution, shall remain in force for a period of 18 months as from the date of this Meeting.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, having reviewed the Management board report and the Auditors’ Special report, and in compliance with the French commercial code, notably the provisions of its Articles l.225129 and following and l.225-138: 1) Authorize the Management board to decide to increase the share capital of the company, in one or more times, through the issue of ordinary shares within the limit of a maximum number of shares representing a nominal amount of 100 million euros, these issues being reserved to the category of beneficiaries defined hereafter provided that the aggregate amount that may be carried out under this resolution and the eighteenth resolution of this Meeting shall not exceed the nominal amount of 100 million euros; 2) Decide to waive the preferential subscription rights of the shareholders to the shares to be issued under this authorization and to reserve the subscription to the category of beneficiaries having the following characteristics: any bank or any entity held by such bank, which, at the request of the company, participates in the implementation of a structured offer for employees and corporate officers of companies or economic interest groups affiliated to the company within the meaning of Articles l.225-180 of the French commercial and l.444-3 of the French labor code, incorporated outside France, allowing them to benefit from an offer as close as possible, in terms of economic profile, to an offer that would be made under the 18th resolution; 3) Decide that the subscription price of the shares issued pursuant to this authorization shall not be more than 20% lower than the average of the quoted price of the shares of the company on the Paris Stock Exchange during the twenty trading days preceding the decision setting the subscription opening date to a capital increase realised by virtue of the eighteenth resolution, or higher than this average; the Management board shall be entitled to decide to reduce or cancel any discount so granted in order to take into account, legal, social, tax or accountancy regulatory rules applicable locally; 4) Decide that the Management board will have full powers, with authority to subdelegate such powers within the limits of the law, to implement this authorization, and in particular to: — Set the date and the subscription price of the shares to be issued, as well as the other terms and conditions of the issues, including, the date (which may be retroactive) on which the shares to be issued will pay dividends, and the terms of payment of the issue price; — Set the list of beneficiaries of the cancellation of the preferential subscription rights within the category above defined as well as the number of shares to be subscribed by each of them; — record the amount of the capital increase and amend the bylaws accordingly; — Offset expenses against the amount of the issue premium if it deems appropriate; — Take any measures necessary to complete the issues; — carry out all formalities following the capital increases and generally do whatever is necessary.
This authorization, which cancels and replaces the unused portion of the prior authorization granted by the Shareholders at their Meeting of May 14, 2007 under the twenty-fifth resolution, shall remain in force for a period of 18 months as from the date of this Meeting.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary meetings, hereby grant full authority to the bearer of an original, an extract or a copy of these minutes to comply with all formal publication, filing and other requirements and more generally to do whatever is necessary.
“conférence” Secretary lecturer at the university of Paris i: civil Procedure
Since 1987 Partner of ScP lussan & Associés, law firm fRANçoIS mARtINEAu born on June 11, 1951
Number of AXA shares Number of AXA shares held as of December 31, 2007: -
member European works council and staff representative — AXA belgium (belgium)
Number of AXA shares Number of units held as of December 31, 2007 in AXA Mutual funds invested in AXA shares: 214
Chairman AXA Actions relais 2005 et 2006 Mutual fund AXA Diversifiés 2002 to 2004 Mutual fund
Company Secretary North-East region Distribution and Sales division — AXA France
Senior Vice President & Associate general Counsel AXA Equitable (united States)
Employee of AXA Equitable, responsible for the government relations function representing the company’s legislative and regulatory positions before u.S. congress, state legislatures, state insurance departments, state and national trade associations and other external audiences (manages 6 persons).
Number of AXA shares Number of AXA shares and/or AXA ADr held on December 31, 2007: 22,786 plus 404 units held in the 401(k) Plan of AXA Equitable
Professional Certifications certified Management Accountant (cMA) Passed certified Public Accountant Exam (not licensed) clu, chFc, FlMi competent Toast Master certified Siebel consultant
Number of AXA shares Number of AXA shares and/or AXA ADr held on December 31, 2007: 3,941 plus 628 units held in the 401(k) Plan of AXA Equitable
iT — Developer Sector: Accounting, Mortgages, acquired knowledge of works constitutions Act
Principal function Member of the works council of Head Office in AXA Service Ag (germany)
Chairman Actionnariat Salariés AXA Mutual fund Economic commission of the group works council for France member AXA’s European works council group works council for France central works council — AXA France
for more than 15 years worked in the Accounting Department (private individual and professional sinisters) — AXA France. currently, full-time dedicated to elective and representative mandates at the level of the group European works council, the group works council in France and the group works council of AXA France.
AXA way Black Belt AXA Equitable (united States): to lead Six Sigma improvement projects that redesign business processes to increase revenue and productivity and reduce costs in an effort to improve customer satisfaction. Partner with business representatives together with senior level sponsorship to assess current processes, generate solutions and implement improvements.
manager of the Departments Accumulator commissions, Accumulator Death claims, Accumulator Disbursements, and Accumulator Fund Transfers Processing
from 1994 to 1998 Assistant branch Manager, branch Operations coordinator and Head Teller at Fleet bank (now bank of America — united States)
from 1998 to 2006 Manager, Accumulator Operations at AXA Financial, inc. (united States)
Principal function AXA way black belt — AXA Equitable (united States)
Number of AXA shares Number of AXA shares and/or AXA ADr held on December 31, 2007: 3,040 plus 2,254 units held in the 401(k) Plan of AXA Equitable
Marketing Degree from SuNy at Plattsburgh clu Degree (1992) chFc Degree (1994)
Appointment as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA group (not approved by the management Board)
Further information on AXA group’s social and environmental activities or practices is available in the Activity and Sustainable Development report and on AXA group’s website (www.axa.com), notably within the “corporate responsibility” section. The 2007 Activity and Sustainable Development report will be available online at www.axa.com or upon request to the individual Shareholders Department, 25 Avenue Matignon, 75008 Paris, France.
AXA SA employees are not eligible for “participation” benefits as provided for in the agreement on group profitsharing dated March 24, 2006 and signed within the group union representation, but they do benefit from a share in the organization’s profits. in 2007, the total profit sharing-based amount (“intéressement”) distributed to AXA SA employees was 77,670 euros. AXA SA employees also benefit from the group’s Savings Plan.
in 2006, AXA’s Supervisory board adopted a new version of its compliance and Ethics guide, available via its public (www.axa.com) and private (group intranet) websites. The purpose of this guide is to describe the group’s main internal regulations aimed at ensuring that all AXA group entities and their employees share a common understanding of applicable ethical norms and practices, and that employee work is performed in compliance with said norms.
in addition to national regulations, AXA has, in February 2003, adhered and committed to respect and promote the ten guiding principles of the united Nations global compact relating to human rights, labour rights, the environment and the fight against corruption. These principles are essentially based on the universal Declaration of Human rights, the international labour Organization’s Declaration on Fundamental Principles and rights at work, the rio Declaration on Environment and Development and the united Nations convention against corruption.
ENVIRoNmENtAl INfoRmAtIoN because AXA SA is a holding company, its activity has no significant impact on the environment. being fully aware of environmental issues at stake, however, AXA has defined several environmental and sustainable development objectives for its main operating entities.
within this framework, AXA has fixed quantitative objectives for the 2007-2009 period with regards to energy, cO2 emissions, and paper and water consumption, as follows: — Power consumption (kwh/FTE): 5% reduction.
— cO2 emissions (T/FTE): 5% reduction. — water consumption (m3/FTE): 5% reduction.
8. Purchase and sale of the Company’s own shares 155 9. Executive compensation 132 to 153 10. Transactions involving Company stock competed in 2007 by corporate officers 150 to 153 11. Directorships and positions held by corporate officers of the Company 118 to 122 and 125 to 127 12. Relevant provisions in the event of a public takeover bid on the Company 386 to 387 13. Capital ownership 156 to 157 14. Employee shareholders 158 to 159 15. Adjustment of the rights of holders of securities with a claim on the capital of the Company n/a 16. Social and environmental information 472 17. Research and development activities n/a
INfoRmAtIoN ItEmS – ANNEX 1 of tHE CommISSIoN REgulAtIoN N° 809/2004 3. Selected financial information ......................................................................................................................................................... 4 to 5 4. risk factors ................................................................................................................................................................39 to 43 and 166 to 194 5. information about the issuer 5.1. History and development of the issuer ............................................................................................................................. 9 to 11 6. business overview ...................................................................................................................................................... 18 to 34 and 44 to 47 7. Organizational structure 7.1. brief description of the group .......................................................................................................................................... 13 to 16 7.2. list of significant subsidiaries ..................................................................................................................................... 218 to 224 8. Property, plants and equipment.......................................................................................................................................................... n/a 9. Operating and financial review ........................................................................................................................... 55 to 105 and 197 to 375 10. capital resources 10.2. Sources and amounts of cash flows ........................................................................................... 110 to 113; 202 to 203 and 270 10.3. borrowing requirements and funding structure .............................................................................. 110 to 113 and 300 to 307 10.4. restrictions on the use of capital resources .............................................................................................................. 110 to 113 10.5. Anticipated sources of funds needed ........................................................................................................................... 110 to 113 11. r&D, patents and licenses ..................................................................................................................................................................... n/a 12. Trend information................................................................................................................................................................ 54; 106 and 372 13. Profits forecasts or estimates .............................................................................................................................................................. n/a 14. Administrative, Management, and Supervisory bodies and senior management 14.1. information on members of the Administrative, Management or Supervisory bodies ................................. 116 to 128 14.2. Administrative, Management and Supervisory bodies’ conflicts of interests ......................... 127 to 128 and 148 to 150
Annual information Document (art. 222-7) .................................................................................................................................. 400 to 403 compensation paid to Statutory Auditors in 2007 and 2006 (art. 222-8) ......................................................................... 406 to 407
Description of the company’s own share buyback program (art. 241-2) ............................................................................... 154 to 155 * Pursuant to Article 28 of commission regulation (Ec) n° 809/2004 of April 29, 2004, the following items are incorporated by reference: — AXA’s consolidated financial statements for the year ended December 31, 2006 and the Statutory Auditors’ report on them, respectively presented on pages 250-438 and on pages 439-440 of the Annual report (Document de référence) n° D07-0362 filed with the AMF (Autorité des Marchés Financiers) on April 20, 2007; — AXA’s consolidated financial statements for the year ended December 31, 2005 and the Statutory Auditors’ report on them, respectively presented on pages 232-396 and on pages 397-398 of the Annual report (Document de référence) n° D06-0267 filed with the AMF (Autorité des Marchés Financiers) on April 13, 2006.
you will find below the references to the extracts of the Document de référence corresponding to the various parts of the Annual Financial report.
Report of the statutory auditors on the Report of the Chairman of the Supervisory Board 399
Table of contents PART I — CERTAIN PRELIMINARY INFORMATION ABOUT THIS ANNUAL REPORT 1 1.1 Presentation of Information 1 1.2 Exchange Rate Information 2 1.3 Cautionary statements concerning the use of non-GAAP measures and forward looking statements 2