In September 2016, the Management Committee validated “Women in Insurance” as a strategic priority for AXA, positioning it as a business growth opportunity for all the entities. 3 main areas were identified as a key focus: women as retail clients, as entrepreneurs and in the distribution force. AXA has developed a dual approach to respond to women’s needs and expectations: in mature markets, AXA wants to empower women to be financiallyindependent and for emerging markets, the objective is to empower women to live better lives. By end of 2017, the initiative has been rolled-out across 12 pilot entities.
A Physical Security policy is also applicable to AXA Group and requires all AXA entities to have documented physical security management framework. This ensures a minimum standard to be applied by AXA companies in order to protect AXA employees from intentional physical harm.
In Europe, health and safety commitments are covered by the European Works Council agreement, which was signed with the labor organizations in June 2009 and is available at www.axa.com.
AXA’s entities have undertaken initiatives to implement local policies and best practices, which they have tailor-made to their specific sectors and local environments. In accordance with AXA’s business environment, entities provide services and information campaigns on lifestyle risks, such as, certain types of cancer and cardiovascular problems, obesity, smoking, road safety or stress prevention.
courses have been launched and more than 18,000 are yet completed; ■ an increased access to all digital learning experience available in AXA through a one-shop zone, the Global Learning Management system, reaching 149,000 employees and distributors across 48 business units by the end of December 2017.
In addition, AXA has focused also on designing an innovative learning solution to support 10,000 managers worldwide in the transformation journey, with the aim to equip them with key collaboration skills and modern networking leadership. The AXELERATE program combines a customized pulse survey (team barometer), mobile learning (pocket coach), large workshops facilitated by AXA managers, peer coaching and online courses. Core topics include AXA transformation strategy, networking leadership, empowerment and agile practices, as well as how to be inspiring as a leader. In 2017, approximately 500 managers have already participated in the AXELERATE journey (AXA Switzerland, AXA France, AXA Partners).
Lastly, eff orts have also been addressed in Technical Excellence skills area with the launch of new programs such as “P&C H ealth Fraud awareness”, “Underwriting Fundamentals program” and
Average number of training days per salaried workforce 3.1 days 3.0 days
AXA’s Leadership Competencies, comprising of 7 behavioral competencies aligned with AXA’s values, were renewed in 2017 supporting all HR processes. Based on the renewed behavioral competency framework, an update of the “AXA 360°” feedback questionnaires and platform was carried out in 2017; these development tools are accessible to all AXA employees who wish to collect the perceptions and feedback from their professional environment in order to enrich and better steer their personal development plans. The updated questionnaires and tools will be available to all employees, managers, and executives in early 2018.
A XA is ranked 11th of the most talent-friendly employers globally in 2018 (based on PotentialPark global study 2018, which was conducted in 2017). AXA’s global career site on www.axa.com was refreshed to share more information about AXA’s culture and values. Employee stories were added to provide an authentic view of AXA as a place to work. This global career site is ranked 22nd in Europe and 19th in Asia. AXA’s global employer brand social media accounts “DiscoverAXA” on Facebook and Twitter are ranked 5th in Europe and 4th in Asia.
AXA has implemented an environmental reporting process since 2002. Managing our environmental footprint, in line with Grenelle 2 standards has become one of the pillars of our Corporate Responsibility strategy. This eff ort is undertaken by AXA Group’s Corporate Responsibility and operational teams (e.g. procurement, IT, marketing, HR). AXA has a target to reduce its carbon emissions covering all greenhouse gas emissions “Scopes (1)”: ■ Scope 1: emissions from fuel consumed on AXA sites as well as by AXA-owned car fleet; ■ Scope 2: emissions from purchased energy (essentially electricity consumed by AXA buildings); ■ Scope 3 (2): emissions from business travel and paper consumption.
Employee (FTE) by 25%. This target is broken-down into the following targets: ■ -35% power consumption (kwh/FTE) – Scopes 1&2; ■ -15% business travel: vehicle fleet (km/FTE) – Scope 1; ■ -5% business travel: air and train (km/FTE) – Scope 3; ■ -45% off ice paper (kg/FTE) – Scope 3; ■ -50% marketing and distribution paper consumption (kg/ client) – Scope 3.
(2) Please note that investment-related “indirect” Scope 3 emissions are analyzed in the Responsible Investment Section 7.4.
AXA’s power consumption includes the total energy consumed by our corporate sites and data centers in the reporting year. This includes on-site energy consumption for heating and cooling and purchased electricity for daily operational activities. In 2017, our total energy mix consists of electricity (73%), gas (15%), fuel/steam (8%) and chilled water (4%). To reduce our energy consumption and meet our 2020 environmental target, AXA relies on energy eff iciency measures, raising environmental awareness amongst employees about energy conservation and, where possible, leasing or buying buildings which have some type of environmental certification. In 2017, these measures have resulted in 10% decrease in total power consumption compared to 2016 and 21% compared to 2012.
emissions; notably rail is to be chosen over air for short distances when available, and businessclass flights, which have a larger CO
Business travel increased by 32% since 2012, and “normalized” (per employee) business travel also increased by 18% since 2012. However, this upward trend is slowing down as absolute business travel has decreased by 6% between 2016 and 2017, and normalized business travel decreased by 5% over the same period. These trends are generally correlated to our business development. The implementation of online collaborative tools help to curb the trend with the objective to meet our 2020 goal. Another enabler is the implementation of the “Green IT” systems to reduce business travel. In 2017, the Group had 66% utilization rate of “AXA Presence” video-conferencing rooms.
AXA’s car fleet consists of sales vehicles and benefits-related vehicles. In 2017, the total distance travelled by the Group’s car fleet has increased by 5% compared to 2016 and almost 1% compared to 2012. The Group has implemented fleet guidelines which define carbon emissions limits for all types of vehicles regardless of employee contributions. The Guidelines also feature vehicle security standards and promote employee access to “safe and green driving” courses. In 2017, AXA owned 24% of vehicles emitting equal to or less than 100g of CO
Employees are also encouraged to opt for hybrid or electric cars.
AXA’s use of paper is limited to off ice and marketing & distribution uses. The off ice paper consumption per FTE has decreased by 13% between 2016 and 2017. Many entities have implemented a printing policy which includes reducing the number of printers, and installing an employee badging system to collect all printed documents. In 2017, AXA’s marketing and distribution paper consumption per customer decreased by 29% compared to 2016, partly owing to a more accurate measurement process in some entities. AXA also strives to increase the volume of paper originating from recycled sources or sustainably managed forests . In 2017, AXA used 58% of off ice paper and 51% of marketing and distribution paper from recycled sources. The Group requires environmentally-friendly off ice paper as a minimum standard.
(GHG) Protocol: Scope 1, Scope 2 and Scope 3 (see above). AXA’s overall CO
emissions per FTE related to energy, paper and business travel (air, rail and car fleet) decreased by 11% between 2017 and 2016 and by 28% between 2012 and 2017. 46% of the Group’s CO
/km for all types of vehicles, regardless of employee contributions, and at 100g of CO
emissions from business travel and paper consumption. In 2017, its CO
emission from business travel decreased by 3% compared to 2012. More specifically, the total CO
year. This change is due to the increase in number of employees using personal transportation for commuting.
Water scarcity is a global concern. Prudent water management can therefore play a significant role in sustainable use of this resource. AXA’s water consumption per FTE has decreased by 8% in 2017. Over time AXA entities have achieved a better level of management maturity and reporting quality regarding their water consumption patterns. Recent initiatives include the installation of water sensors in bathroom facilities for AXA France and water-saving initiatives at AXA Switzerland.
electronic waste is of particular relevance, also as it strives to ensure compliance with the Waste Electronic and Electrical Equipment (WEEE) Directive. Unsorted waste has decreased by 9% compared to 2016. This is mainly due to better waste measurement processes in local entities. Over 73 canteens in the Group collect to recycle organic waste from their restaurants.
Business travel: airplane and train (c) Thousands of km 349,099 328,523
emissions resulting from onsite power consumption, paper and business travel (airplane, train, AXA vehicle fleet) per person T. eq CO
Paper recycled and/or garanteeing sustainable management: off ice % 61 58
In addition to reducing its operational environmental footprint, the Group seeks to minimize its “indirect” impact on the environment by off ering insurance and investment solutions that promote environmentally-friendly behaviour. Please refer to Section 7.4 for further developments.
AXA’s work focuses on three main areas: enhancing knowledge on climate risk; reinforcing climate risk prevention services to help people better anticipate and adapt to the changing climate; and developing insurance products and investment policies that promote mitigation and adaptation.
In December 2017, during the “One Planet Summit” organized by the French Government, AXA launched a new climate strategy based on significant investment and insurance-related developments. AXA also has climate-related partnerships in place (UN Habitat, UNISDR, CARE). These are further developed in the Responsible Investment Section 7.4.
AXA defines Responsible Investment as the integration of Environmental, Social and Governance (ESG) considerations into investment processes, including ownership practices. Our conviction is that ESG integration may impact long-term investment performance by off ering an enhanced understanding of risk drivers. This conviction is derived from academic research and empirical market data. It is also a way to strive for alignment between our investments and broader Corporate Responsibility (CR) commitments. AXA developed a comprehensive RI strategy covering the Group’s €600 billion General Account assets and will extend it to its Unit-Linked investments. The process of ESG integration is coordinated centrally, with an active input from our asset managers that include ESG metrics in their investment analysis across asset classes and regions.
AXA created a Group-level Responsible Investment Committee (RIC), chaired by the Group Chief Investment Officer, and including representatives from AXA Asset Management entities, representatives of Corporate Responsibility (CR), Risk Management and Group Communication. The RIC reports to the Group Investment Committee, chaired by the Group Chief Financial Off icer. In addition, the “ESG Footprint Committee”, reviews risks posed by companies or sectors presenting a low ESG performance and/or serious and persistent controversies. AXA’s RI policy is supported by the RI Center of Expertise, a transversal working group from AXA’s local investment teams interacting with the CR network and the Group’s Asset Management entities. Finally, in 2016 the Group created a dedicated shareholder engagement-related function at Group level, to complement engagement initiatives already undertaken by AXA IM and AB, AXA’s in-house investment managers.
Insurance-related ESG risks and opportunities also benefit from a specific governance, notably the Group Underwriting Committee, which defines underwriting restrictions. The Group CR team provides a bridge with the RI-related governance. In addition, a dedicated team with Group Risk Management analyses Emerging Risks via a specific framework, tools and local network. These risks, which oft en relate to long term ESG issues, are monitored and their potential impact assessed within a risk mapping framework (regulatory & legal, environmental, social & political, economic & financial, medical and technological).
AXA’s RI strategy, embodied in its Global RI Policy (public on www. axa.com), is based on five main pillars: ■ integrating ESG performance scores into investment processes and decision-making, using KPIs and qualitative research across most of our assets. In addition to ESG, we implement a carbon footprinting methodology, as part of our “Montreal Pledge” commitment to assess and disclose the carbon intensity of our investments; ■ excluding sectors or companies that face acute social, human rights, ethical or environmental challenges. These sector policies (which apply both to investments and insurance) are disclosed on axa.com; ■ promoting “Green” investments across diff erent asset classes, based on proprietary criteria derived from a recognized market standard. These include bonds, infrastructures (debt and equity), property and commercial real estate loans. Please refer to Paragraph – “Risk Management – Integration of ESG and Climate-Related risks and opportunities”; ■ developing “impact investments” delivering positive environmental or social as well as financial returns which are actively tracked. AXA launched two impact funds, focusing on themes such as access to finance and healthcare, climate resilience, education, renewable energy, etc.; ■ active stewardship through voting and engagement on a range of ESG or sustainability issues.
The AXA Group as well as its two Asset Management entities (AXA IM and AB) are signatories of the UN-backed principles for Responsible Investment (UN PRI). The Group’s 2017 UN PRI score reached A+, confirming the maturity of its RI strategy.
AXA tracks its investments’ ESG performance with accuracy by leveraging AXA IM’s “RI Search” tool (and MSCI ESG data at AB), where cross-asset ESG scores and “impact-type” metrics are engineered and stored. They help monitor ESG risks, identify areas of improvement, set targets or guide shareholder engagement. The RI Search tool is also the dedicated recipient to manage ESG scores for non-listed assets, such as buildings properties, commercial real estate loans and infrastructure debt. This analysis process covers around 81% of AXA’s General Account assets (Sovereign and corporate bonds, equity, property, infrastructure and CRE debt). The ESG methodology is adapted to diff erent asset classes: ■ corporates issuers (equity and debt): the ESG assessment consists in focusing on the most material and impactful key ESG issues at sector level, with a thorough selection of best data sources and most accurate ESG criteria. E, S and G factors are weighted diff erently in the overall ESG scores engineering depending on the sector. The overall score computation process also includes a monitoring of “core ESG” risks with the treatment of most severe basic principles violations, resulting in a systematic score discount for the most material controversies. Finally, ESG scores take into account the performance of each company within its peer group, considering issuers’ specificities (in particular regional) in the assessment of the ESG quality; ■ sovereign issuers: AXA’s ESG scoring framework for countries is based on public data sources such as the World Bank, the OECD, and the UN. It currently covers more than 100 countries, both developed and emerging. This approach places the ESG assessment of countries at the heart of the notion of “sustainable growth” by analyzing fundamental issues such as the positioning of countries with regards to major climatic, social and political risks. These are appreciated, by internalizing the progresses made by each nation on long term sustainability topics. In this process, selection criteria are adapted to the level of the countries’ maturity and development; ■ Real Assets: AXA’s ESG scoring frameworks for Real Assets covers 3 asset classes direct property, commercial real estate loans and infrastructure debt. The ESG scoring for these assets is based on proprietary dedicated questionnaires. The overall asset ESG score is a combination of various sources of ESG risks assessment: the property/building, the property manager, the sponsor and/or the shareholder of the loan/debt. Criteria such as the buildings’ energy eff iciency, environmental certificates, their accessibility, and country factors (to reflect local regulation) are taken into account.
Converting international climate objectives (such as those derived from the COP21 Paris Agreement, French or EU energy mix targets) into quantitative investment targets is a new and complex risk modelling exercise which AXA tested in 2016 using a methodology developed by the “2° Investing Initiative” think tank. Building on the results of the 2016 methodology, AXA is pursuing in 2017 a “test and learn” approach by reviewing an external methodology. AXA also extends its use of internal “NatCat” models to cover a wider spectrum of our Real Assets investments.
AXA is reviewing a framework that models transition risk based on “policy-related” risks arising from regulatory eff orts to curb carbon emissions and comply with the 2015 Paris Agreement to contain global warming below 2°C. This work focuses on our corporate bonds and equity portfolios (45% of AXA’s General Accounts assets). A top down approach splits emissions reductions targets by country (according to the “Nationally Determined Contributions”/NDCs of the Paris Agreement), then into sector-level targets based on policy research and eventually into company targets based on their individual assets/facilities. It also factors “green revenue” estimates derived from an analysis of green patents. The application of carbon price assumptions enables to project companies’ potential costs or gains associated with reaching the 2°C scenario per sector and country.
In addition to the above “transition” risks, climate change, and in particular, extreme weather events, may impact “Real Assets” such as real estate. This is termed “physical” risks. In 2016, AXA conducted such an analysis on a selection of €15 billion of Property assets. In 2017, AXA expanded this analysis to cover a broader scope of €34 billion of property, Commercial Real Estate debt and infrastructure debt. AXA’s Investments and Group Risk Management teams evaluated the financial impact of floods and windstorms on the buildings and infrastructure of these portfolios.
Our physical risk assessment uses “NatCat” models – generally used to assess the impact of natural catastrophes on insured exposure – combining stochastic events in Europe (windstorms and flood) and US (hurricanes) and geolocalised portfolio of Real Assets. Specific “destruction rates”, which factor location, building/infrastructure type and construction materials are then used to determine potential damage rates and derive a loss for each and every building/infrastructure.
When materially relevant, the Group’s underwriters and risk managers integrate environmental and social risks, as well as more generally ethical concerns in their product development processes and policies. This is notably undertaken via applying certain sector-specific and country-specific exclusions through the Group underwriting guidelines.
RISK MANAGEMENT – INTEGRATION OF ESG AND CLIMATE-RELATED RISKS AND OPPORTUNITIES
Carbon emissions will require significant curbing in order to reduce the risk of climate change, which may place business constraints on carbon-intensive industries, leaving some assets “stranded”, which in turn may lead to reduced valuations. Current valuation models may not account for such risks adequately. This is why AXA decided in 2015 to divest €500 million from the coal industry, by targeting coal mining and coal-based electric utilities which derive over 50% of their revenues from coal.
CORPORATE RESPONSIBILITY 7 7.4 RESPONSIBLE INVESTMENT, “ARTICLE 173”/CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
AXA offers insurance and savings solutions that promote environmentally-friendly behaviour. Initiatives include Motor and car fleet insurance policies encouraging low CO
AXA and/or AXA IM joined several shareholder coalitions, notably: UN PRI ESG Engagement Advisory Committee, providing strategic direction and feedback on themes for future collaborative engagements; Climate Action 100+, a five-year investor initiative to engage with the world’s largest corporate greenhouse gas emitters to curb emissions, strengthen climate-related financial disclosures and improve governance on climate change; UN PRI shareholder engagement initiative designed to promote adoption of the TCFD guidelines; a collective engagement initiative on Arctic Drilling, targeting oil & gas companies involved in oil exploration in the Arctic, as well as Arctic Council members; “Aiming for A”, a major collective shareholder engagement initiative urging certain companies to improve their reporting on transition risks; Automotive industry ShareAction initiative seeking to clarify carbon and SOX/NOX emissions standards from the automotive sector; UN PRI Palm Oil Initiative.
In addition to the ESG metrics described in Section 2, AXA tracks carbon-related KPIs. AXA signed the “Montreal Carbon Pledge” committing to assess and disclose the carbon intensity of its investments. The 2017 analysis, which covers 82% of AXA’s General Accounts assets (equities, corporate Fixed Income and Sovereign Debt), shows a decreasing average carbon intensity (203T CO
According to our calculations, AXA’s 2017 divestments from coal and tar sands activities could be considered to result in 37.8 million metric tons of CO
removed from AXA’s portfolio footprint. Similarly, AXA’s new green investments targets will result in 4 million tons of CO
The UN Sustainable Development Goals (SDGs) is a set of 17 Goals addressing a range of global sustainable development challenges. The AXA Impact Funds I & II, in their objectives and purpose, are investment vehicles demonstrating the role AXA and its underlying entities are playing in contributing capital towards the achievement of the SDGs. We have conducted a preliminary review of the SDGs relative to the Funds, its investee funds and underlying businesses and can report that the AXA Impact Fund I & II are aligned with the objectives of the SDGs and provides capital to businesses that directly address 10 of the 17 SDGs.
AXA is actively engaged in the financial inclusion space to better serve the middle class of tomorrow. Through the development of its “Emerging Customer” insurance off er across high-growth markets, AXA addresses social exclusion by enabling vulnerable segments of the population to access insurance services that accompany them in their economic progression and that provide a safety net that prevents them from falling back into poverty.
In addition to the above products addressing emerging markets, AXA also offers micro-insurance products in France since 2007. AXA France and Macif (a French mutual insurer) off er a microinsurance product, in partnership with the French organization to aid microenterprise development ADIE. Three policies are available: two Comprehensive Business Insurance packages for entrepreneurs starting up either at home or on dedicated business premises, a Motor Policy and a Business Liability off er. The average premiums are less than €1 per day.
By end of 2017, the initiative has been rolled-out across 12 pilot entities.
services AXA off ers. This dialogue also helps strengthen society, by making the Group’s knowledge, expertise and resources more widely available.
To support this, AXA’s Community Investment program promotes risk research and prevention. This approach is included in the Company’s Community Investment Guidelines encouraging AXA entities to focus their community investments on risk research and education. In 2017, 72% (1) of the nearly €33.5 million donated by AXA business entities and the Group (including the AXA Research Fund) were dedicated to community projects addressing these themes. In addition, AXA also provided support for other good causes, including healthcare, youth employment and humanitarian aid. Specific guidelines on Humanitarian Aid have also been drawn up.
Because Science holds the keys for progress and better lives, AXA launched in 2007 the AXA Research Fund, a unique global science philanthropy initiative dedicated to accelerating and sharing knowledge and solutions for key global challenges facing our societies.
AXA’s support to scientific research goes beyond funding. Convinced that to be useful, Science needs to be shared, the
AXA Research Fund also provides communications trainings, resources, media and engagement opportunities to help selected scientists disseminate their knowledge with a broader audience and foster scientific and society exchanges to enlighten decision making for a better future. The team is notably organizing research conferences to foster dialogues among experts and scientists on subjects such as country risk, data privacy, critical illness and resilient cities. Supported researchers are also invited to take part in media activities, with partners such as National Geographic or The Conversation, or science pop videos produced with science presenters, or at their own initiatives. They are also encouraged in sharing their science on open access media, and promote it through social media, with the help of AXA and their institutions communications teams.
AXA is a major buyer of products and services, both for its internal operating needs and for services to its insured customers. From the outset, the Group’s internal buyers commit to respecting a specific Code of Ethic in addition to the Group’s Code of Professional Conduct. This Code substantiates our buyers’ commitment to fulfilling the principles of fairness, neutrality, confidentiality and transparency.
AXA’s Group Compliance and Ethics Guide (“the Guide”) seeks to establish Group-wide guidelines and rules to ensure that AXA Group companies and employees have a common understanding of applicable ethical standards, participate in the fight against corruption and conduct business accordingly. The Guide covers a variety of matters, including specific rules concerning conflicts of interest, transactions involving AXA securities and those of its listed entities, confidentiality and control of sensitive information as well as record keeping and retention. The Guide also seeks to reflect AXA’s values. Most of AXA’s principal operating entities have developed ethical guidelines that comply with local regulatory and statutory requirements. The Guide is available on the Group’s website (www.axa.com).
In addition to compliance with national law and regulations, AXA joined the United Nations’ Global Compact in 2003, formally committing to upholding and protecting principles for human rights. The Group Compliance and Ethics Guide refers to the UN Global Compact in its founding principles. Both the Compliance Guide and UN Global Compact adhesion are applicable to every AXA entity.
In addition to this broad macroeconomic role, AXA supports various stakeholders by identifying and underwriting risk, managing claims, and acting as a significant long-term investor.
The Board of Directors is responsible for preparing a company’s management report including the CSR Information required by Article R.225-105-1 of the French Commercial Code in accordance with the Social Data report referential, the Environmental Reporting Protocol and the Community Investment Survey Guide used by the Company (hereinaft er the “Guidelines”) and available on request from the Company’s head off ice.
On the basis of our work, our responsibility is to: ■ attest that the required CSR Information is included in the management report or, in the event of non-disclosure of a part or all of the CSR Information, that an explanation is provided in accordance with the third paragraph of Article R.225-105 of the French Commercial Code (Attestation regarding the completeness of CSR Information); ■ express a limited assurance conclusion that the CSR Information taken as a whole is, in all material respects, fairly presented in accordance with the Guidelines (Conclusion on the fairness of CSR Information).
Our work involved 11 persons and was conducted between October 2017 and March 2018 during a 7 week period. We were assisted in our work by our CSR experts.
We compared the CSR Information presented in the management report with the list provided in Article R.225-105-1 of the French Commercial Code.
We verified that the CSR Information covers the scope of consolidation, i.e., the Company, its subsidiaries as defined by Article L.233-1 and the controlled entities as defined by Article L.233-3 of the French Commercial Code within the limitations set out in the methodological information described at the bottom of the data tables “Workforce” and “AXA Group environmental indicators”, as well as the footnote of the paragraph “Volunteering” of the chapter 7 of the Annual Report.
We believe that the sampling methods and sample sizes we have used, based on our professional judgement, are suff icient to provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive procedures. Due to the use of sampling techniques and other limitations inherent to information and internal control systems, the risk of not detecting a material misstatement in the CSR information cannot be totally eliminated.
emissions resulting from onsite power consumption, paper and business travel per person; ■ usable occupied area and usable vacant area, including indicator net internal area.
To comply with recent requirements of French law (1), AXA has adopted a vigilance plan (the “Vigilance Plan”) that sets out how AXA has established and implemented safeguards to identify and prevent serious violations of human rights and environmental abuses.
(1) Law No. 2017-399 of March 27, 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ ordre and Article L.225-102-4 of the French Commercial Code.
It sets out, subject to local law and regulation, certain guiding principles and Group-wide policies designed to ensure that all AXA Group companies and their employees have a common vision of the AXA Group’s standards related to human rights and the environment and operate accordingly.
The Vigilance Plan extends to the activities and impacts of service providers and suppliers to AXA Group companies with whom there is an established business relationship insofar as these impacts and activities relate to business contracted with AXA Group companies.
The AXA Group considers its activities do not generate major (high) risks of human rights violations. The Group does estimate however that it may have potential direct and indirect impacts on the human rights of its employees and customers as well potential indirect impacts on the human rights of others through relations with corporate customers that are active in, or through investments in companies which are active in, sectors and/or countries with increased risk of human rights violations.
Consequently, with the support of KPMG, the AXA Group developed a human rights risk assessment that identified the most relevant risks to human rights that the AXA Group should consider in conducting its business. These were identified as risks to the principles of equality before the law and nondiscrimination (with respect to minorities), freedom from all forms of forced or compulsory labour, child protection, freedom of association, collective bargaining, the right to just and favourable working conditions, liberty and security of the person, the right to health and an adequate standard of living, and the right to privacy.
As in investor, AXA has proactively implemented a Global Responsible Investment Policy (2013), available on the AXA Group’s website (www.axa.com), and built an analysis framework
As a business partner, AXA has implemented processes to identify and assess risks to human rights and the environment associated with its use of service providers and suppliers. AXA produces a matrix assessing the level of procurement risks and opportunities categorized by topic (social, environmental, end-use impact, supply chain, business integrity) that allows procurement and corporate responsibility teams to identify the risks and analyse their impacts. Risks associated with significant service providers and suppliers belonging to categories identified as medium or high risk are mapped and voluntarily assessed through a specific tool (Ecovadis) at least every two years.
AXA’s Human Rights Policy (2017), available on the AXA Group’s website, aims at preventing the violation of human rights and reflects the AXA Group’s commitment to international general and sector-specific standards such as the United Nations Global Compact, the United Nations Principles for Responsible Investment and the UN Principles for Sustainable Insurance. The Human Rights Policy describes AXA’s commitments in its own operations as an employer and a responsible business partner but also as an insurer and an investor and how the protection of human rights is implemented at the core of AXA’s activities.
AXA is committed to protecting AXA employees’ human rights, specifically the principles of freedom of association, the right to just and favourable working conditions, and non-discrimination, through: ■ AXA Group’s Compliance & Ethics Guide, available on the AXA Group’s website, with which employees need to annually certify compliance; ■ promoting the 10 guiding principles of the UN’s Global Compact, of which principles 1 & 2 relate to human rights and principles 3 to 6 to labour standards, and encouraging reporting of breaches to the compliance function; ■ setting ambitious Diversity and Inclusion (D&I) targets and initiatives.
Please refer to Section 7.2 “Social Information” of the Annual Report for further information on AXA employee relations, collective bargaining and D&I.
The AXA Group has implemented a h ealth and s afety standard with which entities must certify compliance covering physical security, which set out processes to identify local health and safety requirements, consult and train AXA employees, and report health and safety issues.
As an insurer, AXA strives to incorporate Environmental, Social and Governance (ESG) criteria (including those relating to human rights) into its insurance business processes, in line with AXA’s commitment to the UN Principles for Sustainable Insurance. Further, underwriting guidelines define prohibited business and
Please refer to Section 7.5 “Societal Information – Businessr elated s ocietal i nitiatives” of the Annual Report for further information on ESG integration in products & services.
The AXA Group ensures that it works with service providers and suppliers that meet AXA standards with respect to human rights and the environment. Service providers and suppliers can be assessed through a “due diligence” process, when relevant at the “request for proposal” stage, by AXA Group companies on corporate responsibility issues (environment, labour practices, fair business practices and sustainable procurement) through Ecovadis. AXA buyers are required to sign a specific procurement Code of Ethics in addition to the Group Compliance & Ethics Guide.
All AXA employees are encouraged to promptly report any practices or actions that they believe are inappropriate or inconsistent with any of the policies set forth in this Vigilance Plan. While reporting in good faith is encouraged, AXA employees are not obligated to do so and reporting is entirely voluntary.
Most alert procedures currently apply to serious violations relating to financial, banking and accounting matters, the fight against corruption, discrimination, workplace harassment and the protection of health, hygiene and security at work.
AXA will require all AXA Group companies to either implement an alert procedure with respect to human rights and the environment, or extend the scope of their existing alert procedure to this scope.
APPENDIX II STATEMENT OF THE PERSON RESPONSIBLE FOR THE REGISTRATION 405 DOCUMENT
APPENDIX VIII EUROPEAN COMMISSION REGULATION (EC) NO. 809/2004 440 OF APRIL 29, 2004 – CROSS-REFERENCE TABLE
APPENDICES A APPENDIX I MANAGEMENT’S ANNUAL EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING
Since its delisting from the New York Stock Exchange (NYSE) in March 2010 and its deregistration with the United States Securities and Exchange Commission (SEC) in June 2010, the Group has maintained an annual Internal Financial Control (IFC) program designed to evaluate the eff ectiveness of AXA Group’s ICOFR. AXA’s Statutory Auditors provide a reasonable assurance report on AXA Group’s ICOFR each year.
The IFC framework is based on the “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). It is designed to define the IFC scope, governance, and principles in order to ensure consistency and quality in AXA Group’s financial reporting.
The IFC program is steered by the Group IFC Committee chaired by the Group CFO and involves the Planning Budgets Results Central (PBRC) Department, other relevant AXA departments, and representatives from each in-scope entity. The IFC program and the conclusion of management as to the eff ectiveness of AXA Group’s ICOFR are also reviewed by AXA’s Audit Committee.
■ unauthorized acquisition, use or disposition of Group assets that could have a material effect on the Group’s financial statements would be prevented or detected in a timely manner.
At each year-end, the in-scope entities are required to perform an evaluation of their ICOFR as part of an internal certification process. This process involves formal sign-off by the entity’s process owners and culminates with a formal management report from the entity’s CFO or another senior executive off icer stating their conclusion as to the eff ectiveness of the entity’s ICOFR.
(b) Management’s annual evaluation on ICOFR based on the IFC framework
PricewaterhouseCoopers Audit and Mazars have performed audit procedures in order to be able to obtain reasonable assurance as to whether management’s conclusion as to the eff ectiveness of AXA Group’s ICOFR based on the IFC framework is fairly stated.
To the Board of Directors of AXA: As Statutory Auditors of AXA and at your request, we have performed audit procedures on AXA and its subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2017, in order to be able to obtain reasonable assurance as to whether AXA’s management’s assertion that internal control over financial reporting is eff ective, as included in management’s annual evaluation of internal control over financial reporting, is fairly stated.
In our opinion, the Company’s management’s assertion that internal control over financial reporting as of December 31, 2017 is eff ective, in all material respects, is fairly stated based on the criteria established in the IFC framework.
I, the undersigned, having taken all reasonable care to ensure that such is the case, hereby certify that the information contained in this Registration Document is, to the best of my knowledge, in accordance with the facts and contains no material omission likely to render it misleading or inaccurate.
I confirm that, to the best of my knowledge, the financial statements have been prepared in accordance with applicable accounting standards and fairly present the assets and liabilities, the financial position and the profit or loss of the Company and its consolidated subsidiaries for the periods presented, and that the Board of Directors’ report, the various sections of which are mentioned on page 438 of this Registration Document, fairly presents the evolution of the business, results and financial position of the Company and its consolidated subsidiaries, and describes the principal risks and contingencies facing the Group.
Net income for the fiscal year ended December 31, 2017 resulted in a profit of €4,958 million compared to a profit of €432 million for the year ended December 31, 2016. This increase was mainly due to the improvement of net financial expenses and higher dividends received from subsidiaries.
Dividends received from subsidiaries amounted to €4,989 million, versus €3,521 million in 2016, representing an increase of €1,468 million, mainly due to: ■ €1,188 million in dividends from France versus €1,360 million in 2016, a decrease of €172 million due to the decrease in statutory profit of insurance entities; ■ €3,436 million in dividends from European entities compared to €1,683 million in 2016, an increase of €1,753 million mainly due to dividends paid by Belgium and Germany, up €1,319 million and €791 million respectively thanks to capital surplus; ■ €108 million in dividends paid by Asian entities compared to €203 million in 2016; ■ €257 million in dividends received from other Group entities compared to €275 million in 2016.
The corporate income tax benefit amounted to €1,048 million compared to €692 million in 2016. It mainly included €710 million of tax receivables from members of the tax consolidation group, €369 million representing the refund of the 3% tax on dividends paid to shareholders, €96 million due to the eff ect of the lower tax rate on future fiscal years linked to provisions for tax credit repayment risk partly off set by €133 million in corporate income tax expense for the fiscal year.
At December 31, 2017, total assets amounted to €73,065 million, versus €74,181 million at December 31, 2016.
Receivables from subsidiaries amounted to €3,773 million compared to €3,527 million at the end of 2016, i.e. an increase of €246 million reflecting $944 million (€801 million) in loans granted to the US operations partly off set by the repayment of £350 million (€409 million) by AXA UK Plc and €83 million due to foreign exchange impact.
Cash and cash equivalents amounted to €990 million compared to €2,949 million at the end of 2016. This €1,959 million decrease is mainly due to repayment of external and internal debts and purchases of AXA shares partly off set by dividends received from subsidiaries net of the dividend paid to shareholders and by the issuance of $1 billion in subordinated debt (€946 million).
Unrealised foreign exchange losses amounted to €3,009 million, including €2,629 million related to the deferred recognition of foreign exchange losses in line with statutory hedge accounting principles, more than off set by unrealised gains on investments in subsidiaries. This item also reflects unrealised losses on assets and liabilities denominated in foreign currencies attributable to the eff ects of their revaluation at the closing exchange rate. The decrease of €402 million compared with 2016 is mainly due to favourable impact of the US dollar on debts.
Other payables in the amount of €307 million represent an increase of €120 million, mainly due to an increase in debts related to Group entities belonging to the French tax consolidation group.
Unrealised foreign exchange gains amounted to €1,253 million at year end, versus €856 million at December 31, 2016. This item reflects the eff ects derived from the revaluation of foreign currency denominated assets and liabilities at the closing exchange rate. It increased compared to 2016 mainly due to the positive impact of the fall of the US dollar and pound sterling on liabilities.
Payment delay group 0 day 30 days 60 days 90 days More than 91 days
Total Amount VAT included of invoices concerned (euros) 83,282 951,677 5,635,798 - 4,271,971 10,859,446
Percentage of revenue VAT included of the period 23% 30% 9% 14% 16% 70%
Total Amount VAT included of invoices concerned (euros) - - 5,335,120 2,719,750 255,274 8,310,144
Net book value on the sale of fixed assets (197) (108)
a) Gross revenues before sales tax 3,289 3,394 2,709 3,608 5,287 b) Pre-tax income from continuing operations, before depreciation, amortization and releases 1,776 1,785 1,079 252 3,799 d) Net aft er-tax income aft er depreciation, amortization and releases 1,727 2,392 1,747 432 4,958 3 – Per share data (in Euro)
a) Aft er tax income, before depreciation, amortization and releases 0.81 1.00 0.71 0.31 1.44 b) Aft er tax income, aft er depreciation, amortization and releases 0.71 0.98 0.72 0.18 2.04
6, rue André Gide – 92320 CHATILLON – France 25, Boulevard du Souverain – 1170 BRUXELLES – Belgium 23, avenue Matignon – 75008 PARIS – France
Buldiing 11 Chiswick – 566 Chiswick High Road – LONDON W4 5XR – England 21, avenue Matignon – 75008 PARIS – France 21, avenue Matignon – 75008 PARIS – France
a) French subsidiaries (total) 91 b) Foreign subsidiaries (total) 151 2) Participating interests not shown in Section A
a) in French companies (total) 42 b) in foreign companies (total) 165
The application of regulations relating to the accounting treatment of stock options (subscription and purchase) and performance shares/units (free shares granted to employees and subject to performance conditions) had no impact on the Company’s financial statements (regulation ANC n°2014-03 chapter “titre VI, chapitre II, section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salariés”).
Find below a summary of options and performances or units shares granted in 2017 and 2016 to members of the Management Committee paid by the Company: (in Euro)
Tangible assets include investments in real estate, split between land and buildings, as well as fixtures and fittings.
The income statement distinguishes between ordinary operations and capital operations: ■ ordinary operations include dividends, revenues from other investments, financial expenses, operating expenses and income from transactions in investments; I Notes to the financial statements as at December 31, 2017
■ capital operations include gains or losses on the disposal of investments in subsidiaries and affiliates and portfolio management investments, impairment charges 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, and exceptional income and expense.
Tangible assets are recognized at acquisition cost or transfer value. Buildings are depreciated using the straight line method over fift y years, and fitting work is depreciated over five or ten years as appropriate.
Financial assets are measured at acquisition cost or transfer cost. At the balance sheet date, the acquisition cost is compared to the value in use , and the lower of these two values is then recognized in the balance sheet.
This multi-criteria analysis reflects the long-term nature of AXA’s ownership in these subsidiaries and excludes factors relating to short-term market volatility. Net book value is compared with the going concern value, which is the value of the assets and expected profits of existing and new business, taking into account the entity’s future prospects. The value of future profits is estimated on the basis of calculations of the European Embedded Value of the Life & Savings business published by the Group, or similar calculations for other activities.
Receivables are measured at nominal value. An impairment provision is charged in the event of risk of non-recovery.
When the option is exercised, the premium is recorded in the income statement. The same is true when the option is not exercised at term. For option sales, a provision for risks and charges is recognized to take into account the unrealized loss. Other derivative instruments are recognized off -balance sheet at their nominal value. Unrealized losses arising from the estimated market value of these financial instruments give rise to recognition of a provision for foreign exchange loss when the hedge accounting can not be applied; ■ Equity derivative products: equity option rights paid or received are posted in a suspense account on payment or receipt of funds. At the balance sheet date, if the option has not been exercised, the rights received, representing possible income, are not recognized in the income statement. A provision is created against rights paid if it is likely, given market trends, that the option will not be exercised. When the option is exercised, this represents an addition to the acquisition price of the underlying instrument and an addition to the sale price when the option is sold.
Other shareholders’ equity includes the undated deeply securities (TSS), amounted to €4,640 million, compared to €5,206 million in 2016, taking into account the €335 million repayment of TSS and a positive currently translation adjustment of €225 million.
(a) Net reversal of impairments on investments in subsidiaries for €506 million mainly explained by reversal for impairments on shares Family Protect (€202 million) and AXA Life Invest shares (€176 million) following their liquidation and also € 191 million in AXA Global Life shares following its merger with AXA Global P&C becoming AXA Global Re and benefiting from its capital surplus.
Miscellaneous receivables and currents accounts with subsidiaries 709 709 - 3. 5. Miscellaneous receivables and subsidiaries’ current accounts
Unrealized foreign exchange losses amounted to €3,009 million, including €2,629 million related to the deferred recognition of foreign exchange losses in line with statutory hedge accounting principles, more than off set by unrealised gains on investments in subsidiaries. This item also reflects unrealised losses on assets and liabilities denominated in foreign currencies attributable to the eff ects of their revaluation at the closing exchange rate. The decrease of €402 million compared with 2016 is mainly due to favorable impact of the US dollar on debts.
Other shareholders’ equity including the undated deeply securities (TSS), amounted to €4,640 million, compared to €5,206 million in 2016, taking into account the €335 million repayment of TSS and a positive currently translation adjustment of €225 million.
Amortization of convertible bond redemption premiums 689 - 689 - -
December 31, 2017 Less than one year 1 to 5 years More than 5 years
Subordinated debts stood at €10,667 million versus €11,399 million in 2016, a decrease of €732 million mainly reflecting €1,094 million repayment of the 2017 convertible subordinated bond (excluding redemption premium), a favorable foreign exchange impact of €557 million partly offset by the issuance of $1 billion in subordinated debt (€946 million).
Financial debts amounted to €13,230 million versus €14,343 million as of December 31, 2016, a decrease of €1,113 million, mainly due to fewer loans being granted by
December 31, 2017 Less than 1 year 1 to 5 years
Other payables, including tax and social payables (b) 307 307 -
Unrealized foreign exchange gains amounted to €1,253 million at year end, versus €856 million at December 31, 2016. This item reflects the eff ects derived from the revaluation of foreign currency denominated assets and liabilities at the closing exchange rate. It increased compared to 2016 mainly due to the positive impact of the fall of the US dollar and pound sterling on liabilities.
(a) External and internal debts. (b) Both eligible and not eligible derivatives.
(c) External and internal loans. (d) A 100 bps rise in interest rates leads to a 5.6% improvement in the fair value of debt, a 11.1% improvement in the fair value of derivatives, and a -1.9% deterioration in the fair value of loans.
I Statutory Auditors’ report on the financial statements For the year ended December 31, 2017
In compliance with the engagement entrusted to us by your Shareholders’ Meeting, we have audited the accompanying financial statements of AXA SA for the year ended December 31, 2017.
Measurement of investments in subsidiaries and aff iliates (See Notes 2.5, 3.2 and 3.3 to the financial statements)
At December 31, 2017, investments in subsidiaries and affiliates represented €62,373 million, a significant balance sheet item. They are initially carried at acquisition cost or their contribution value. At the end of the fiscal year, an impairment allowance is recognized if the acquisition cost is less than the value at closing date. As described in note 2.5 to the financial statements, the value at closing date corresponds to the value in use and is determined by management on the basis of the share price, the equity value (including unrealized gains), or the future prospects of the subsidiary. Estimating the value in use of these types of investments requires a significant degree of judgment from management in terms of selecting the measurement methods, depending on the investment in question, and in determining which data and assumptions should be used to estimate the expected profits when these are taken into account in the valuation. The value of future profits is estimated on the basis of the European Embedded Value (EEV) calculations for the Life & Savings segment published by the Group, or similar calculations for the other activities. Given the inherent uncertainty involved in the use of forecasts (in terms of whether or not they will be achieved) and in the judgment required to assess value in use, we deemed the correct measurement of investments in subsidiaries and aff iliates, particularly those based on forward-looking data, to be a key audit matter.
To assess the reasonableness of the estimated value in use of investments in subsidiaries and aff iliates, based on the information provided to us, our audit work consisted primarily of verifying that the estimated values determined by management were based on an appropriate measurement method and assumptions, depending on the investment concerned. For valuations based on forecast data: ■ Assess the appropriateness of the methodology and assumptions used with regard to the Solvency II texts and the European Embedded Value principles published by the CFO Forum when the values in use of life and non-life insurance companies are based on these frameworks; ■ For the other entities, obtain the projections for cash flow and operating cash flow for the businesses produced by their respective operational management teams, and: : – Check the consistency of the historical data used with the audited financial statements; – Check that the assumptions made are consistent with the economic environment at the closing date and at the date the financial statements were prepared; – Compare projections made in previous periods with actual results in order to assess the reliability of the estimates; – Verify the accuracy of the value in use calculated; – Confirm that the value in use, which is based on projected cash flows, has been adjusted to account for debts; We also verified the recording of provisions for contingencies where the company is exposed to the losses of a subsidiary with negative equity.
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the other documents provided to shareholders with respect to the financial position and the financial statements.
We attest that the Board of Directors report on corporate governance sets out the information required by articles L.225-37-3 and L.225-37-4 of the French Commercial Code.
Concerning the information given in accordance with the requirements of Article L.225-37-3 of the French Commercial Code (code de commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your company from controlling or controlled companies. Based on this work, we attest to the accuracy and fair presentation of this information.
We were appointed as statutory auditors of AXA SA at the Shareholders’ Meetings held on February 28, 1989 for PricewaterhouseCoopers Audit and on June 8, 1994 for Mazars. At December 31, 2017, PricewaterhouseCoopers Audit and Mazars were in the twenty-ninth and in the twenty-fourth consecutive year of total uninterrupted engagement, respectively.
Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements taken as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
■ Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the internal control.
■ Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgement, were of most significance in the audit of the financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report.
The information is disclosed in the “Embedded Value & AFR 2017 report” which is available on AXA’s website (www.axa.com).
• Asia – Direct, consisting in: • AXA Global Direct Japan,
• The Philippines (insurance activities); • Asia Holding; ■ United States (insurance activities, AB and holdings); ■ International, consisting in: • AXA Bank Belgium (banking activities),
• Turkey (insurance activities and holding); ■ Transversal & Central Holdings, consisting in: • AXA Investment Managers,
The split between current engines and high potentials is detailed below: ■ Current Engines: Belgium, France, Germany, Hong Kong, Italy, Japan, Spain, Switzerland, UK & Ireland, the United States and AB; ■ High Potentials: Brazil, China, Indonesia, Mexico, the Philippines and Thailand.
Adjusted Earnings represent the net income (Group share) as disclosed in Part 5 – “Consolidated Financial Statements” of this Annual Report, before the impact of the following items net of policyholder participation, deferred acquisition costs, VBI, taxes and minority interests: ■ integration and restructuring costs related to material newly acquired companies as well as restructuring and associated costs related to productivity improvement plans; ■ goodwill and other related intangibles; ■ exceptional operations (primarily change in scope and discontinued operations); ■ profit or loss on financial assets accounted for under fair value option (excluding assets backing liabilities for which the financial risk is borne by the policyholder), foreign exchange impacts on assets and liabilities, and derivatives related to invested assets.
Earnings per share (EPS) represent AXA’s consolidated earnings (aft er interest charges related to undated debts recorded through shareholders’ equity), divided by the weighted average number of outstanding ordinary shares.
Diluted earnings per share (diluted EPS) represent AXA’s consolidated earnings (aft er interest charges related to undated debts recorded through shareholders’ equity), divided by the weighted average number of outstanding ordinary shares, on a diluted basis (i.e. including the potential impact of all outstanding dilutive stock options being exercised, performance shares, and conversion of existing convertible debt into shares, provided that their impact is not anti-dilutive).
Hybrid products: Savings products allowing clients to invest in both Unit-Linked and General Account funds; G/A Capital light products: General Account Savings products which, at inception, create more AFR than the economic capital they consume.
Life & Savings Net Inflows are defined as the collected premiums (including risk premiums, fees and revenues), net of surrenders, maturities, claims paid and other benefits paid. This definition is applicable to all Life and Savings products as well as Life-like Health products, with the exception of Mutual F unds products.
The value of newly issued contracts during the current year. It consists of the present value of future profits aft er the costs of acquiring business, less (i) an allowance for the time value of financial option and guarantees, (ii) cost of capital and nonfinancial risks. AXA calculates this value net of tax.
Even though the presentation of the Margin Analysis is not the same as the Statement of Income (underlying basis), it is based on the same GAAP measures as used to prepare the Statement of Income in accordance with IFRS.
■ interests and bonuses credited to policyholders and unallocated policyholder bonuses (and the change in specific reserves purely linked to invested assets returns) related to the net investment income as well as the unwind of the discount rate used in calculating technical reserves.
Underlying fees & revenues include: ■ revenues derived from mutual fund sales (which are part of consolidated revenues); ■ loadings charged to policyholders (or contractual charges) on premiums of all Life & Savings products; ■ loadings on deposits received on all Life & Savings products and fees on funds under management for separate account (Unit-Linked) business; ■ deferred income such as capitalization net of amortization of URR (Unearned Revenue Reserve) and UFR (Unearned Fee Reserve); and
Underlying net technical margin includes the following components: ■ the difference between income or earned premiums for assuming risk and the actual cost of benefits or claims charges; ■ surrender margin: the diff erence between the benefit reserve and the surrender value paid to the policyholder in the event of early contract termination; ■ GMxB (Variable Annuity guarantees) active financial r isk m anagement: the net result from GMxB lines corresponding to explicit charges related to these types of guarantees less cost of hedging. It also includes the unhedged business result; ■ policyholder bonuses if the policyholders participate in the risk margin; ■ ceded reinsurance results; ■ other changes in claims and insurance reserves: all the reserve strengthening or release coming from changes in valuation assumptions, claims experience, additional reserves for mortality risk and other technical impacts such as premium deficiencies net of derivatives if any; and
There are certain material differences between the detailed line-by-line presentation in the Statement of Income and the components of Life & Savings Margin Analysis as set out below: ■ for insurance contracts and investment contracts with Discretionary Participation Features (DPF): • gross premiums (net of deposits), fees and other revenues are allocated in the Margin Analysis based on the nature of the revenue between “Fees & Revenues” and “Net Technical Margin”,
Current accident year loss ratio net of reinsurance is the ratio of: ■ current year claims charge gross of reinsurance + claims handling costs + result of reinsurance ceded on current accident year, excluding for the discounted reserves the unwind of the discount rate used in calculating technical reserves; to
Underlying expense ratio is the ratio of: ■ underlying expenses (excluding claims handling costs, including changes in VBI amortization); to
Assets under management (AUM) are defined as the assets whose management has been delegated by their owner to an a sset m anagement company such as AXA Investment Managers and AB. AUM only includes funds and mandates which generate fees and exclude double counting.
The following references to the sections of this Annual Report correspond to the components of the corporate governance report as approved by the Board of Directors of the Company.
Sections Pages 1. Principles and criteria for determination of the compensation of the corporate off icers 132 to 135 2. Corporate off icers’ compensation 106 to 131 3. Directorships and positions held by the corporate off icers 86 to 92 4. Agreements between a corporate off icer or a shareholder of the Company and a subsidiary of the Company 5. Table of the capital increase delegations 346 to 348 6. Exercise of Executive Management 82 and 83 7. Composition and conditions of preparation and organization of the Board of Directors’ work 83 to 102 8. Application the principle of balanced representation of women and men on the Board of Directors 83 to 85 9. Limitation of the powers of the Chief Executive Off icer 96 and 103 10. Corporate g overnance c ode of reference 136 11. Conditions for the participation to Shareholders’ Meetings 358 and 359 12. Anti-takeover provisions 359
APPENDIX VIII EUROPEAN COMMISSION REGULATION (EC) NO. 809/2004 OF APRIL 29, 2004 – CROSSREFERENCE TABLE
Pages 1. Responsible persons 1.1 Indication of responsible persons 405 1.2 Statement by responsible persons 405 2. Statutory Auditors 2.1 Names and addresses of the auditors 328 2.2 Resignation, removal or re-appointment of auditors 328 3. Selected financial information 3.1 Historical financial information 13 to 15 3.2 Financial information for interim periods n/a 4. Risk factors 142 to 154 and 169 to 185 5. Information about issuer 5.1 History and development of the issuer 17 and 18; 349 6. Business overview 6.1 Principal activities 19 to 23 and 34 to 36 6.2 Principal markets 26 to 29 6.3 Exceptional factors 30 to 33 6.4 Dependence on patents or licenses, industrial, commercial or financial contracts or new manufacturing process n/a 6.5 Basis for statements made by the issuer regarding its competitive position 12; 27 to 29 7. Organizational structure 7.1 Brief description of the Group and the issuer’s position within the Group 4 to 7; 12 7.2 List of the issuer’s significant subsidiaries 219 to 224 8. Property, plants and equipment 8.1 Existing or planned material tangible fixed assets n/a 8.2 Environmental issues that may aff ect the issuer’s utilization of the tangible fixed assets 375 to 380 9. Operating and financial review 9.2 Operating results 34 to 72
Pages 10. Capital resources 10.1 Issuer’s capital resources 73 to 78; 260 to 266 10.2 Sources and amounts of the issuer’s cash flows 73 to 76; 196 and 197; 259 and 260 10.3 Borrowing requirements and funding structure of the issuer 73 to 78; 283 to 285 10.4 Restrictions on the use of capital resources 73 to 78 10.5 Anticipated sources of funds needed to perform commitments 73 to 76 11. Research and development, patents and licenses 390 and 391 12. Trend information 12.1 Most significant recent trends in production, sales and inventory, and costs and selling price 78 to 80; 332 and 333 12.2 Known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material eff ect on the issuer’s prospects 13. Profits forecasts or estimates n/a 14. Administrative, management, and supervisory bodies and senior management 14.1 Composition-Information about members 82 to 104 14.2 Conflicts of interests 104; 127 and 128 and 323 and 324 15. Remuneration and benefits 15.1 Remuneration and benefits in kind 106 to 135 15.2 Pension, retirement or similar benefits 130 and 131; 321 16. Board practices 16.1 Current terms of off ice 84 and 85 16.2 Members of the administrative, management supervisory bodies’ service contracts with the issuer or any of its subsidiaries providing for benefits upon termination of employment 16.3 Information about the issuer’s Audit Committee and Remuneration Committee 100 and 102 16.4 Statement related to corporate governance 136 17. Employees 17.1 Number of employees 105 and 364 to 370 17.2 Shareholdings and stock options 115 to 128 17.3 Arrangements for involving the employees in the capital of the issuer 344 and 345 18. Major shareholders 18.1 Identification of the main shareholders 343 and 344 18.2 Voting rights 343 and 344; 357 and 358 18.3 Ownership and control of the issuer 343 to 345 18.4 Arrangements, known to the issuer, the operation of which may at a subsequent date result in a change of control of the issuer n/a 19. Related party transactions 137 and 323 to 324 20. Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses 20.1 Historical financial information* 188 to 339; 406 to 431 20.2 Pro forma financial information n/a 20.4 Auditing of historical annual financial information 334 to 339; 428 to 431 20.5 Age of latest financial information n/a 20.6 Interim and other financial information n/a 20.8 Legal and arbitration proceedings 329 to 332 20.9 Significant change in the issuer’s financial or trading position 78 and 79; 332 and 333
Pages 21. Additional information 21.2 Memorandum and Articles of association 357 to 359 22. Material contracts n/a 23. Third party information and statement by experts and declarations of any interest 23.1 Statement or report by the person acting as an expert 393 to 395 23.2 Information obtained from third parties n/a 25. Information on holdings 219 to 224; 416 to 419 * Pursuant to Article 28 of European Commission Regulation (EC) No. 809/2004, the following items are incorporated by reference: ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2016 and the Statutory Auditors’ report thereon, presented respectively on pages 224 to 369 and on pages 370 to 371 of the Annual Report (Registration Document), the French version of which was filed with the AMF on March 23 , 2017 under reference no. D.17 -021 8; ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2015 and the Statutory Auditors’ report thereon, presented respectively on pages 198 to 342 and on pages 343 to 344 of the Annual Report (Registration Document), the French version of which was filed with the AMF on March 31, 2016 under reference no. D.16-0233.
The following references to sections of this Annual Report correspond to the components of the Annual Financial Report.
Report of the Statutory Auditors on the financial statements of AXA, the parent company 428 to 431
THIS ANNUAL REPORT IS ALSO AVAILABLE ON THE COMPANY’S WEBSITE AT