APPENDICES 339 Appendix I Chairman of the Board of Directors’ Report 340
Appendix III Statement of the person responsible for the Annual Report 352
Appendix IX Commission regulation of April 29, 2004 – Correspondence table 400
as well as in Article 222-3 of the AMF General Regulations (Règlement Général de l’AMF) (please refer to the table on page 402 of this Annual Report which indicates the relevant sections of this Registration Document corresponding to disclosures required under Article 222-3 of the AMF General Regulations), and (ii) all disclosure matters required to be included in the Board of Directors’ Report to AXA’s Shareholders’ Meeting to be held on April 23, 2014, established pursuant to Articles L.225-100 and L.225-100-2 of the French Commercial Code (Code de commerce) (the relevant sections of this Registration Document corresponding to these required disclosures have been approved by AXA’s
of NYSE Euronext Paris, which we refer to in this Annual Report as “Euronext Paris”. The Company’s American Depositary Shares are referred to in this Annual Report as “ADS”. Since the delisting of AXA’s ADS from the New York Stock Exchange on March 26, 2010, AXA’s ADS are traded on the U.S. over-the-counter market and are quoted on the OTCQX platform under the ticker symbol
The average and closing exchange rates used in the preparation of the consolidated fi nancial statements, to translate into Euro the results of operations of the principal subsidiaries that are not denominated in Euro, are set out in the table below: Year End Exchange Rate Av erage Exchange Rate
The selected historical consolidated fi nancial data presented below have been derived from AXA’s consolidated fi nancial statements and related notes for the years ended December 31, 2013 and 2012 in accordance with IFRS.
(a) As described in note 1.2.1 of Part 4 - “Consolidated Financial Statements”, comparative information related to previous periods was retrospectively restated for the amendments to IAS 19.
(e) An annual dividend is generally paid each year in respect of the prior year after the Annual General Shareholders’ Meeting (customarily held in April or May) and before September of that year. Dividends are presented in this table in the year to which they relate and not in the year in which they are declared and paid. A dividend of €0.81 per share will be proposed at AXA’s Shareholders’ Meeting that will be held on April 23, 2014. The dividend will be payable on May 7, 2014, with an ex-dividend date of May 2, 2014.
(a) Proposal to be submitted to the Shareholders’ Meeting to be held on April 23, 2014.
(b) Individual shareholders who were residents of France for tax purposes were eligible for a tax relief of 40% on the dividend, i.e. €0.22 per share for fi scal year 2009.
(c) Individual shareholders who were residents of France for tax purposes were eligible for a tax relief of 40% on the dividend, i.e. €0.28 per share for fi scal year 2010.
(e) Individual shareholders who were residents of France for tax purposes were eligible for a tax relief of 40% on the dividend, i.e. €0.29 per share for fi scal year 2012.
existing under the laws of France. The Company’s registered offi ce is located at 25 avenue Matignon, 75008 Paris, France and its telephone number is +33 (0) 1 40 75 57 00. AXA was incorporated in 1957 but the origin of its activities goes back to 1852. The Company’s corporate existence will continue, subject to dissolution or prolongation, until December 31, 2059.
Sale of AXA’s Australian & New Zealand operations and acquisition of the AXA APH Asia Life operations; and
Acquisition of HSBC’s non-life insurance operations in Mexico; Signature of an agreement to acquire 50% of Tian Ping, a
Direct capabilities; Sale by AXA Investment Managers of a majority stake in AXA
Private Equity; Sale by AXA Financial, Inc. of a closed MONY portfolio; and
Signature of an agreement with Grupo Mercantil Colpatria to acquire a 51% stake in its composite insurance operations in
For information concerning subsidiaries with Group share of interests and voting rights percentages, please see Note 2 “Scope of consolidation” included in Part 4 – “Consolidated Financial Statements” of this Annual Report.
AXA’s current ratings, which are subject to change, are set forth below: Agency Theme AXA rating
research); ■ Europe 120 and France 20 (based on Vigeo research); ■ FTSE4GOOD (based on EIRIS research).
The Company is the holding company for the AXA Group, a worldwide leader in fi nancial protection. Based on available information at December 31, 2013, the AXA Group was one of the world’s largest insurance groups, with consolidated gross revenues of €91 billion for the year ended December 31, 2013. The AXA Group was also one of the world’s largest asset managers, with total assets under management as at
Management, and Banking. In addition, various holding companies within the AXA Group conduct certain nonoperating activities.
Profi t or loss on fi nancial assets (under fair value option) & derivatives (317) 45 45
The table below summarizes AXA’s Life & Savings consolidated gross revenues and gross insurance liabilities by geographic region for the periods and at the dates indicated: GROSS REVENUES BY GEOGRAPHIC AREA
America. The products in these markets are offered through various distribution channels. See the “Distribution channels”
Fees and charges relating to investment contracts with no participating features 323 334 32,781
Contracts with fi nancial risk borne by policyholders (Unit-Linked) 16,016 30% 15,232 28% 162,518
In the Property & Casualty segment, AXA operates mainly in the largest Western European markets. AXA also offers
The tables below sets forth gross written premiums and gross insurance liabilities by major product for the periods and as at the dates indicated: G ROSS WRITTEN PREMIUMS & INSURANCE LIABILITIES PER PRODUCT LINE
Property and Casualty loss prevention, risk management, underwriting and claims handling and to specialty markets
AXA Corporate Solutions Assurance. In the global risks market, AXA Corporate Solutions Assurance and its competitors are acting at a worldwide level with multinational clients placing their risks far beyond their countries of origin via international programs or in key global market places. AXA Corporate
AXA Assistance is one of the leading worldwide assistance companies (1), in a market where traditional assistance companies are developing their activities outside their home markets, while new players are focusing on limited product lines. AXA Assistance operates through four business lines: Vehicle, Travel, Health and Home. AXA Assistance provides services to banking and insurance companies, tour operators, telecommunications operators, gas, water and electricity utilities and automobiles manufacturers.
AXA Corporate Solutions Assurance mainly distributes its products through international brokers, but also domestic brokers. Marine and aviation business is distributed through specialized brokers.
(a) Based on estimated fair value at the dates indicated. Assets under management presented in this table are based on asset management companies only. AXA Group (including insurance companies) assets under management amounted to €1,113 billion as of December 31, 2013.
AllianceBernstein, a 63.7% subsidiary, is a leading global investment management fi rm based in the United States.
L.P., “AB Holding”, is listed on the New York Stock Exchange under the ticker symbol “AB”.
AllianceBernstein provides diversifi ed Asset management and related services globally to a broad range of clients including: ■ diversifi ed investment management services through separately managed accounts, hedge funds, Mutual funds, and other investment vehicles to private clients (such as high net worth (individuals and families), trusts and estates, and charitable foundations); ■ management of retail Mutual funds for individual investors; ■ management of investments on behalf of institutional clients; and
■ fundamental research, quantitative service and brokeragerelated services in equities and listed options for institutional investors.
At December 31, 2013, AllianceBernstein had €345.9 billion of assets under management, including €250.8 billion of assets managed on behalf of third party clients (2012: €349.0 billion and €245.7 billion, respectively). AllianceBernstein accounted for €2.097 billion or 61% of asset management segment consolidated gross revenues for the year ended December 31,
IM accounted for €1.363 billion or 39% of asset management segment consolidated gross revenues for the year ended
The operations in the Banking segment are conducted primarily in Belgium, France and Germany. For the years ended December 31, 2013 and 2012, the Banking segment accounted for €0.5 billion each year, or less than 1% of AXA’s consolidated gross revenues.
AXA Bank products and services in Belgium are mainly distributed by a network of 848 exclusive independent (1) bank agents. The bank’s products and offers are linked with insurance business and are primarily focused on retail products.
Based in Paris, AXA Banque had approximately 731,000 registered customers (1) at the end of 2013, with a retail banking product offer. Directly linked with the Group’s insurance business, banking products are offered to AXA France clients through its distribution networks. AXA Banque also manages direct clients through internet banking relationships.
(1) Information established by AXA based on data available for the year 2013.
In the United States, after an improving sales environment in 2012, 2013 experienced mixed results: increasing sales in the
Life and Fixed Annuity markets as the interest rate environment has slightly improved, partly offset by declining sales in the
Variable Annuity market, as a number of industry participants continued to reduce benefi ts, and to increase charges.
In Japan, the Life & Savings market grew moderately in 2013 in terms of premiums in spite of an Annuity market negatively impacted by tariff increases resulting from the low interest rate environment since the fi rst half of 2013.
In high growth countries, Life & Savings market continued to grow at a strong pace. Asian countries such as Hong Kong,
China, India, Thailand and Singapore, as well as other countries such as Mexico showed signifi cant growth rates. This mainly resulted from easier access to products, notably through the bancassurance channel, and a more innovative and customized products suite to meet clients’ needs. In Central
United States Life 14 2.2 12 3.2 LIMRA Life sales as of September 30, 2013 and 2012.
Japan 17 1.9 12 2.3 Life Insurance Association of Japan data base and Insurance Research Institute (exc. Kampo Life). For the 12 months ended September 30, 2013 and 2012 (measured on Gross Written Premiums).
Belgium 3 14.0 3 11.2 Assuralia (Belgium Professional Union of Insurance companies). Based on September 30, 2013 and 2012. Figures measured on gross written premiums.
Spain 12 2.4 13 2.1 Spanish Association of Insurance Companies. ICEA as of September 30, 2013 and 2012.
Hong Kong 5 8.7 4 8.7 Offi ce of Commissioner statistics as of September 30, 2013 and 2012 (measure on gross written premium individual life in-force business).
Indonesia 2 13.5 2 13.9 AAJI statistics as of January 6, 2014 and September 30, 2012 (measured on Weighted New Business Premium).
Singapore 10 2.6 11 2.4 LIA statistics report as of September 30, 2013 and 2012 (measured on APE).
India 14 1.3 18 0.9 IRDA statistics as of January 16, 2014 for 2013 data (measured on weighted new business premium) and November 30, 2012 for 2012 data (measured on APE).
China 12 0.9 27 0.4 CIRC statistics as of November 30, 2013 and September 30, 2012 (measured on total premium income).
Belgium 1 18.7 1 19.6 Assuralia (Belgium Professional Union of Insurance companies). Based on September 30, 2013 and 2012. Figures (measured on gross written premiums).
Spain 4 6.6 4 6.8 Spanish Association of Insurance Companies. ICEA as of September 30, 2013 and 2012.
Portugal 4 7.6 3 7.6 Portuguese Insurance Association as of September 30, 2013 and 2012.
Italy 5 4.6 7 4.4 Associazione Nazionale Imprese Assicuratrici (ANIA). Ranking and Market Share as of December 31, 2012 and September 30, 2011.
Greece 7 5.5 5 5.6 Hellenic Association of Insurance Companies as of June 30, 2013 and 2012.
Turkey 1 14.9 1 13.9 Turkish Association of Insurance Companies as of September 30, 2013 and 2012.
In 2013, the Property & Casualty market moderately grew in most mature countries as tariff increases in both Individual and
Greece, which were still impacted by an unfavorable economic environment. In high growth countries, the Property & Casualty market experienced a strong performance across the board.
Bund yields rose signifi cantly, as investors started to correct a signifi cant mispricing. Many investors pursued shorter duration strategies to mitigate the impact of the rate rise and further diversifi ed their credit exposure towards high yields, loans, and other credit instruments.
(2) Ranking established by AXA based on information available as of September 30, 2013.
Party election victory in Japan, while European and US shares benefi ted from a combination of massive liquidity injections by central banks, fading systemic risk in Europe, rerating of valuation multiples and a marginally improving economic environment. Moreover, delayed expectations for the commencement of US quantitative easing tapering boosted equity markets in the second half of the year with indices fi nishing the year at record highs.
November rate cut, while sluggish economic growth raised the prospect of further stimulus.
In currency markets, the yen and sterling both started weakly against the US dollar, yet with time the pound held reasonably steady. The euro and dollar were affected by tensions in Syria and capital fl ight from emerging markets, and the euro was also boosted by robust German economic data and Angela
Merkel’s election victory. Fed tapering fears have seen markets climb and fall, but September’s surprise decision to postpone tapering weakened the dollar and slowed the yen’s downward slide.
Equity markets performed very well in 2013 across the globe, while remaining stable in emerging markets. The MSCI World
Index in London increased by 14% in 2013. The CAC 40 index in Paris increased by 18% and the Nikkei index in Tokyo appreciated by 57%.
The US 10-year T-bond ended the year at 3.04%, an increase of 126 bps compared to December 31, 2012. The 10-year
In Europe, the iTRAXX Main spreads decreased by 47 bps compared to December 31, 2012 and the year at 70 bps while the iTRAXX Crossover decreased by 196 bps to 286 bps. In the United States, the CDX Main spread Index decreased by 32 bps to 62 bps.
bancassurance agreement with HSBC in these countries as well as in China, India and Indonesia.
On April 1, 2013, AXA fi nalised the acquisition of HSBC’s P&C
The P&C bancassurance cooperation in Indonesia will be launched in due course.
AXA’s previously existing Chinese P&C operations have been integrated within the new joint venture.
Colpatria Seguros is the #4 (5) insurance player in Colombia (7%
Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approval, and is expected to take place in 2014.
AXA completed the sale of a majority stake in AXA Private Equity
On March 22, 2013, AXA announced that its asset management subsidiary, AXA Investment Managers (“AXA IM”) had received an irrevocable offer from an investor group for its entire stake in AXA Investment Managers Private Equity SA
December 31, 2013, the AXA Group held a 17% share in AXA
On April 10, 2013, AXA announced it had entered into defi nitive agreements with Protective Life Corporation (“Protective”)
(3) The scope of the transaction includes the four insurance companies of Grupo Mercantil Colpatria: Seguros Colpatria S.A. (Property & Casualty),
(4) EUR 1 = COP 2,593.68 as of November 6, 2013.
Subsequent to the acquisition, most new business was written out of other AXA Financial subsidiaries and MONY/MLOA were effectively placed in run-off, with the exception of some new business at MLOA, which is excluded from the transaction.
AXA has therefore disposed of a run-off mortality book primarily underwritten before 2004, with USD 10.5 billion (or
Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approvals.
On December 23, 2013, AXA announced it has entered into an agreement with Vienna Insurance Group to sell its Life
& Savings operations in Hungary (3). AXA continues to have banking operations in the country.
with two fully collateralized, multiyear protections against extreme European windstorm risk in Belgium, Denmark, France
Class B notes. A new “variable reset” mechanism has been included allowing AXA Global P&C, for each new risk period, to adjust the protection levels within predefi ned ranges with the spread being revised accordingly as predetermined at issuance.
As of December 31, 2013, AXA total share capital amounted to 2,417,865,471 shares.
would no longer be mandatory for clients. Failure to make a selection would be considered as an option for all new contributions to remain with the Polish Social Security
Institution (ZUS); ■ transfer of funds prior to retirement: the Law confi rms ten years before the retirement age there would be a gradual transfer of funds to the Polish Social Security Institution
(1) EUR 1 = USD 1.35, as of October 1, 2013.
(5.50% annual coupon, fi xed for life) and on January 18, 2013 the successful placement of €1 billion subordinated notes due 2043 (5.125% annual coupon, fi xed until the fi rst call date in July 2023 and fl oating thereafter with a step up of 100 basis points), to anticipate the refi nancing of part of subordinated debt instruments which matured on January 1st, 2014.
January 2034 and fl oating thereafter with a step up of 100 basis points. The initial spread over Gilt is 215 basis points.
Consolidated gross revenues for full year 2013 reached €91,249 million up 2% compared to 2012 on a comparable basis.
consolidated result for the 2013 annual accounts exceptionally covered a period of fi fteen months.
The United States APE increased by €118 million (+9%) to €1,322 million refl ecting higher sales of Unit-Linked products as a consequence of both higher (i) fi xed and fl oating rate
GMxB product sales (+31% or €+96 million) and (ii) non GMxB
South-East Asia, India and China APE increased by €84 million (+21%) to €463 million mainly driven by (i) China
(iii) Singapore (€+16 million) mainly as a result of strong G/A
(+21% or €+71 million), in particular in Group Life business refl ecting an exceptional growth in full coverage insurance contracts.
Hong Kong APE increased by €48 million (+12%) to €443 million mainly driven by higher sales of Unit-Linked products (+36%
Health sales slightly increased demonstrating a higher focus on more profi table Pure Protection and Health products.
Mediterranean and Latin American Region APE increased by €42 million (+10%) to €443 million mainly due to mature markets (€+39 million) refl ecting a strong performance of
MPS, and (ii) G/A Savings (+9% or €+11 million) mainly in Spain as a result of lower competition from the banks.
Germany APE decreased by €69 million (-15%) to €385 million mainly driven by (i) G/A Savings (-26% or €-31 million) in line with the strategy to decrease single premium short term investment product sales, and (ii) G/A Protection & Health
Health sales in 2012 in anticipation of a change in regulation capping brokers’ commissions.
Protection & Health (-46% or €-19 million) after the production of a large contract in 2012. This was partly offset by the higher focus on Unit-Linked business with the launch of new products generating €46 million of APE.
Property & Casualty gross revenues were up 2% on both a reported and comparable basis to €28,791 million. Personal lines increased by 1% mainly driven by the Mediterranean and Latin American Region, Direct, Switzerland and
United Kingdom & Ireland, France and Asia. Overall, average tariff increases amounted to 3%.
Personal lines (59% of P&C gross revenues) were up by 1% on a comparable basis, mainly stemming from Motor
(+2%) as a result of higher volumes in high growth markets and Direct, and tariff increases across the board, partly offset by lower volumes in mature markets in a diffi cult economic environment.
Motor revenues grew by €157 million or +2% mainly driven by: ■ Mediterranean & Latin American Region (+4%), primarily driven by Turkey (+36%) with strong tariff increases on third party liability products and AXA MPS (+50%) refl ecting the initiative to boost sales of Motor policies to bank clients, partly offset by Spain (-4%) with lower average premiums in a diffi cult environment; ■ direct (+4%), of which -5% in the United Kingdom and +7%
in other countries, mainly driven by higher new business and increased market fl uidity across the board, partly offset by lower average premiums in the United Kingdom and Spain; ■ Switzerland (+2%) driven by higher volumes and a higher average premium; ■ Asia (+8%) due to volumes notably following a strong increase in private car sales in Malaysia; ■ partly offset by the United Kingdom & Ireland (-5%) due to market tariff softening in both markets, Germany (-3%)
refl ecting lower volumes following signifi cant tariff increases and Belgium (-3%) driven by portfolio pruning and selective underwriting.
Motor revenues increased by €195 million or +8%, mainly driven by: ■ the Mediterranean and Latin American Region (+15%)
refl ecting growth in: ■ the United Kingdom & Ireland (+8%) due to positive Health portfolio development in the United Kingdom and abroad as well as tariff increases, strong new business and improved retention in Property; ■ Asia (+13%) primarily driven by tariff increases and new
Health large accounts in Hong Kong; ■ the Mediterranean & Latin American Region (+7%) mainly driven by positive portfolio developments in Health in the Gulf
Assistance up 10% to €937 million driven by higher volumes and (ii) AXA Corporate Solutions up 2% to €2,093 million mainly as a result of positive portfolio developments in Motor and Marine, partly offset by a decrease in Aviation in a softening market.
Assets Under Management (AUM), as well as higher distribution fees at AllianceBernstein and higher real estate transaction fees at AXA Investment Managers.
AllianceBernstein revenues were up 7% to €2,097 million on a comparable basis, primarily due to higher management fees
AXA Investment Managers revenues were up 10% to €1,363 million on a comparable basis. Excluding distribution fees (retroceded to distributors), revenues increased by €81 million (+8%) mainly driven by (i) higher management fees
Equity (€-22 billion), AUM increased by €15 billion as a result of (i) €-6 billion unfavorable foreign exchange rate impact and (ii) €-4 billion negative scope impact, more than offset by
(iii) €+14 billion from market appreciation and (iv) €+12 billion net infl ows.
Net banking revenues increased by 13% on both reported and comparable basis to €524 million driven by (i) France
The amendment to IAS 19 – Employee Benefi ts, published on June 16, 2011, became effective since January 1, 2013, and the comparative information in respect of 2012, has been restated (referred as “restated” in the tables of this document)
Fees and revenues from investment contracts without participating feature 323 334 334
Change in unearned premium reserves net of unearned revenues and fees (296) (441) (441)
Net investment result excluding fi nancing expenses (b) 33,254 28,770 28,771
Amortization of value of purchased life business in force (167) (179) (179)
On a constant exchange rate basis, Life & Savings underlying earnings increased by €323 million (+12%). On a comparable scope basis, mainly restated for closing date alignments with
Group calendar, Life & Savings underlying earnings were up €217 million (+8%) mainly attributable to the United States
(€+12 million), partly offset by Switzerland (€-32 million) mainly resulting from: ■ higher investment margin (€+31 million or +1%) mainly attributable to (i) Japan (€+149 million) mainly due to a higher investment income boosted by exceptional dividends from private equity and equity funds in a rising Japanese stock market and (ii) Belgium (€+33 million), partly offset by (iii) the
(ii) France (€+21 million) and (iii) Japan (€+35 million) mainly due to higher Separate Account balances following equity market rally,
This was partly offset by (iii) France (€-59 million) mainly due
Protection and Retirement businesses and (iv) Japan (€59 million) refl ecting a more unfavorable effect of model and assumption changes in 2013 and (v) Switzerland (€50 million) from a deterioration in disability and mortality claims experience; ■ higher expenses (€-465 million or +7%) as a result of: • €-462 million higher acquisition expenses primarily driven by (i) the United States (€-592 million) stemming from higher DAC amortization (€-557 million) refl ecting reactivity to higher margins on GMxB business as well as unfavorable changes in expected future margins on variable and interest-sensitive life products due to updated mortality assumptions, partly offset by Germany (€+109 million)
Property & Casualty underlying earnings amounted to €2,105 million. On a constant exchange rate basis, Property
• stable positive prior year reserve developments amounting to -1.2 points,
(ii) 0.2 point decrease in the administrative expenses ratio benefi tting from various effi ciency programs net of infl ation,
American Region (€+26 million) mainly refl ecting a higher asset base in Turkey; ■ higher tax expenses and minority interests (€-139 million or +14%) driven by higher pre-tax underlying earnings and by higher impact from minority interests.
Holdings and other companies underlying earnings amounted to €-851 million. On a constant exchange rate basis, underlying earnings increased by €26 million mainly attributable to (i) AXA UK holdings (€+15 million) mainly resulting from lower fi nancing costs following the settlement of a loan and higher tax one-off credits and (ii) AXA SA (€+2 million) mainly due to the hedging program on Performance Units at Group holding level and an increase in dividends received from non-consolidated subsidiaries, partly offset by the new French tax of 3% on dividends paid by the Company (€-46 million).
Group net capital gains attributable to shareholders amounted to €434 million. On a constant exchange rate basis,
Net income amounted to €4,482 million. On a constant exchange rate basis, net income increased by €572 million
Private Equity (€+165 million), partly offset by the realized loss from the disposal of the Hungarian Life & Savings operations (€-50 million) and by the realized loss from the closed Mony portfolio transaction (€-11 million), partly offset by an unfavorable change in fair value of fi nancial assets and derivatives in 2013 compared to a favorable change in 2012: down €-382 million to €-317 million which can be analyzed as follows: • €+129 million from the change in fair value of assets accounted for as under fair value option,
As of December 31, 2013, consolidated shareholders’ equity totaled €52.9 billion. The movements in shareholders’ equity since
December 31, 2012 are presented in the table below: (in Euro million)
December, 31 2012 published IAS 19 Restatement 31 Décembre 2012 restated
Net income (Euro per Ordinary Share) 1.76 1.75 1.65 1.64 1.61 1.60 10% 9%
Underlying earnings (Euro per Ordinary Share) 1.86 1.85 1.69 1.69 1.65 1.64 13% 13%
(a) Restated means comparative information related to previous periods was retrospectively restated for the amendments to IAS 19.
(c) Excluding fair value of invested assets and derivatives and undated debt (both recorded through shareholders' equity).
(b) Mediterranean and Latin American Region includes Italy, Spain, Portugal, Greece, Turkey, Morocco and Mexico.
South-East Asia, India and China (d) 92 86 86 o/w. high growth markets 394 352 352
APE increased by €53 million (+4%) to €1,431 million: ■ Unit-Linked sales (19% of APE) rose by €66 million (+32%)
(-8%), following the focus on Unit-Linked oriented offers on both Individual Savings (-7%) and Group Retirement (-14%)
business; ■ G/A Protection and Health sales (45% of APE) increased by €33 million (+5%) driven by €40 million increase in Individual
Health and Protection as a result of the success of new products in Health “Modulango” and in Pure Protection (Long
Investment margin decreased by €31 million (-3%) to €1,179 million mainly due to an increase in unallocated policyholder bonus reserve. The decrease in investment income, notably due to lower investment yields on fi xed income assets, was offset by lower amounts allocated to policyholders.
to €-1,436 million, mainly due to the non recurrence of a €-69 million negative one-off DAC adjustment in 2012
Adjusted earnings increased by €173 million (+21%) to €1,003 million mainly driven by higher net realized capital gains
Profi t or loss on fi nancial assets (under FV option) & derivatives (301) (103) (103)
Gross revenues increased by €75 million (1%) to €11,304 million (1). On a comparable basis, gross revenues increased by €415 million (+4%): ■ variable Annuity revenues (64% of gross revenues) increased by 10% refl ecting strong sales results for non-GMxB
Sponsored products; ■ life revenues (23% of gross revenues) decreased by 5%
primarily driven by lower sales of Protection products and lower renewal premiums in both Unit-Linked and non-Unit-
APE increased by €78 million (+6%) to €1,322 million. On a comparable basis, APE increased by €118 million (+9%): ■ variable Annuity APE was up 18% to €728 million. The increase is due to sales growth in the non-GMxB investment only products (up 81% versus 2012) partly offset by lower sales of fi xed rate GMxB products, in line with strategy. Non-
GMxB investment only and fl oating rate GMxB products launched since 2010 represented a combined 63% of full year 2013 Variable Annuity sales; ■ life APE decreased by 24% to €180 million driven by a decrease in G/A Protection products which were down 33%
Investment margin decreased by €39 million (-7%) to €502 million. On a constant exchange rate basis, investment margin decreased by €24 million (-4%) principally due to lower yields on fi xed income assets, partly offset by lower crediting rates.
Net technical margin rose by €519 million to €-113 million. On a constant exchange rate basis, net technical margin increased by €516 million driven mainly by the non repeat of 2012 reserve strengthening for GMxB policyholder behavior assumption changes and favorable GMxB attribution results versus prior year, partly offset by an adverse mortality experience and changes to mortality assumptions in the Life business.
As a result, the Underlying cost income ratio increased by 3.0 points to 71.3%.
On a constant exchange rate basis, net income decreased by €194 million (-59%). This was primarily driven by (i) an unfavorable change in fair value of economic hedge derivatives not eligible for hedge accounting under IAS 39, mainly attributable to higher interest rates, (ii) €11 million loss on closed Mony portfolio transaction, and (iii) higher restructuring costs of €65 million driven by real estate lease write-offs, generating relocation savings, all (iv) partially offset by higher adjusted earnings.
For consistency, 2013 fi gures have been compared to the same scope as 2012, i.e. excluding Bluefi n Corporate Consulting which was sold in April 2012. This is referred to as “comparable scope” basis in the commentary below.
Gross revenues decreased by €79 million (-12%) to €569 million (1). On a constant exchange rate and comparable scope basis, gross revenues decreased by €32 million (-5%).
(RDR) in 2013, which banned initial commission and associated fall in upfront revenues on new sales. The reduction in upfront revenues has been compensated by an associated reduction in commissions and expenses.
IFA sales up by €92 million (+59%) as the platform grew faster than the market and continues to establish itself as one of the leaders in the UK platform market. The other signifi cant growth area was on the Corporate Investment Services business which saw two signifi cant new schemes in 2013.
Investment margin increased by €1 million (+41%) to €4 million. On a constant exchange rate and comparable scope basis, the investment margin increased by €1 million.
Net technical margin decreased by €1 million (-34%) to €2 million. On a constant exchange rate and comparable scope basis, net technical margin decreased by €1 million.
Income tax benefits decreased by €41 million (-76%) to €13 million. On a constant exchange rate and comparable scope basis, income tax benefi ts decreased by €40 million
(-75%) due to a decrease in one-off tax benefi ts (€-28 million)
Net capital gains or losses attributable to shareholders net of income tax - 13
Profi t or loss on fi nancial assets (under FV option) & derivatives (9) 28
For consistency, a twelve months period in 2013 adjusted for foreign exchange rates movements has been compared with 2012. This is referred to as “comparable basis” in the commentary below.
■ Health revenues (36% of gross revenues) remained stable at €1,992 million with strong new business from Disability
Cancer decreasing inforce portfolio; ■ Investment & Savings revenues (21% of gross revenues)
Investment margin amounted to €153 million. On a comparable basis, investment margin increased by 149 million mainly due to higher investment income boosted by exceptional dividends from private equity and equity funds in a rising Japanese stock market.
On a comparable basis, net technical margin decreased by €59 million mainly due to a more unfavorable effect of model and assumption changes in 2013 notably driven by a change in longevity assumptions.
(-2%) mainly due to lower new business and ongoing expense control management.
As a result, the underlying cost income ratio improved by 7.3 points to 61.5%.
Net income increased by €23 million to €438 million. On a comparable basis, net income increased by €13 million, due to higher adjusted earnings (€+49 million) and a more favorable change in fair value of funds invested in Japanese Equity and private equity (€+12 million), partly offset by a less favorable change in fair value of credit derivatives (€-33 million) and a negative impact from yen depreciation (€-6 million).
Profi t or loss on fi nancial assets (under FV option) & derivatives 11 (5)
Gross revenues decreased by €113 million (-2%) to €6,542 million (1): ■ Life revenues (60% of gross revenues) decreased by €206 million (-5%) to €3,919 million in line with the strategy to reduce G/A single premium sales; ■ Health revenues (40% of gross revenues) increased by €93 million (+4%) to €2,623 million due to premium adjustments to cover medical infl ation.
APE decreased by €69 million (-15%) to €385 million: ■ Life sales (64% of APE) decreased by €55 million (-18%) to €248 million in line with the strategy to reduce G/A single premium sales as well as the curtailment of “Twinstar”
to €69 million mainly due to a higher share allocated to policyholders.
Fees & revenues decreased by €70 million (-21%) to €270 million mainly due to lower loadings following new business sales decrease.
Net technical margin rose by €36 million to €41 million mainly due to lower hedge costs on GMxB products in a context of improved fi nancial market conditions.
Expenses decreased by €+109 million to €-158 million mainly from lower DAC amortization as a result of model refi nements as well as from lower commissions in line with the volume decrease.
Net income increased by €33 million (+27%) to €152 million due to the increase in adjusted earnings and a favorable change in the fair value of economic hedge derivatives not eligible for hedge accounting.
(€+108 million) resulting from the continuing success of the savings product Protect Star.
Fees & revenues increased by €5 million (+2%) to €288 million.
Net technical margin fell by €52 million (-27%) to €143 million.
On a constant exchange rate basis, net technical margin decreased by €50 million (-26%) mainly due to a deterioration in disability and mortality claims experience.
On a constant exchange rate basis, expenses increased by €-12 million (+5%) mainly driven by administrative expenses.
Administrative expenses rose by €-21 million (+11%) to €-203 million mainly driven by higher regulatory project costs, a higher provision for litigations as well as an overall portfolio growth.
Amortization of VBI decreased by €12 million (-64%) to €-7 million. On a constant exchange rate basis, amortization of VBI decreased by €12 million (-63%) benefi ting from an exceptional positive assumption update in Individual Life.
Income tax expenses decreased by €7 million (-8%) to €-76 million. On a constant exchange rate basis, income tax expenses decreased by €5 million (-6%) mainly driven by lower pre-tax underlying earnings.
On a constant exchange rate basis, net income decreased by €31 million (-9%) mainly due to lower adjusted earnings and a negative change in the fair value of economic interest rate hedge derivatives not eligible for hedge accounting.
Net capital gains or losses attributable to shareholders net of income tax 22 52 52
APE decreased by €24 million (-14%) to €151 million. On a comparable scope basis, APE was €22 million (-13%) lower than last year: ■ G/A Protection & Health (15% of APE) decreased by €17 million (-43%) mainly due to the non-repeat of a 2012 large Corporate contract; ■ Unit-Linked (43% of APE) increased by €46 million mainly driven by the launch of Oxylife hybrid product (€+40 million)
and by structured funds (€+5 million); (1) €2,012 million after intercompany eliminations.
Investment margin increased by €33 million (+11%) to €339 million. On a comparable scope basis, investment margin increased by €29 million (+9%).
Fees & revenues decreased by €10 million (-7%) to €132 million. On a comparable scope basis, fees & revenues decreased by €4 million (-3%) driven by lower loadings on premiums as a result of lower gross revenues and a change in business mix.
(-2%) due to lower commissions and a lower impact from an unfavorable fi nancial assumptions update on deferred acquisition costs, partly compensated by an increase in overhead costs driven by infl ation and IT investments.
As a result, the underlying cost income ratio improved by 4.9 points to 51.8%. On a comparable scope basis, the underlying cost income ratio improved by 3.9 points.
Income tax expenses increased by €-6 million (+10%) to €-69 million. On a comparable scope basis, income tax expenses increased by €-6 million due to the increase of pretax underlying earnings.
Adjusted earnings decreased by €12 million (-6%) to €190 million. On a comparable scope basis, adjusted earnings decreased by €12 million mainly due to lower realized capital gains (€-41 million) mainly on fi xed income assets and equities, partly offset by an increase in underlying earnings (€+18 million).
On a comparable scope basis, net income decreased by €119 million mainly driven by lower adjusted earnings (€12 million), the non repeat of the 2012 favorable change in fair value of Mutual funds and other assets (€-47 million) and by an unfavorable change in the fair value of interest rate hedging swaps not eligible for hedge accounting (€-39 million) as a result of the rise in interest rates.
Company is currently focusing on other business lines with a signifi cant increase particularly in Protection business (+81%
Net income decreased by €50 million to €-58 million. On a constant exchange rate basis, net income decreased by €51 million, despite higher adjusted earnings, mainly driven by a realized loss on the disposal of the Hungarian Life & Savings operations (€-50 million) and by the accelerated amortization of intangible assets in Poland as a consequence of the Pension
Net capital gains or losses attributable to shareholders net of income tax - 5
Profi t or loss on fi nancial assets (under FV option) & derivatives 3 (26)
APE increased by €41 million (+10%) or €42 million (+10%) on a comparable basis to €443 million: ■ mature markets were up €39 million (+11%) to €387 million, principally refl ecting a better performance on Unit-Linked products, mainly at AXA MPS; ■ high growth markets increased by €3 million (+5%) to €56 million, mainly driven by Turkey (€+10 million) due to strong performance in Pension business, partly compensated by Mexico (€-5 million) which actively de-emphasizied
Protection with Savings products with low profi tability in line with strategy.
Investment margin decreased by €42 million (-15%) to €245 million. On a constant exchange rate basis, investment margin decreased by €42 million (-15%) mainly due to AXA
Fees & revenues increased by €76 million (+20%) to €449 million. On a constant exchange rate basis, fees & revenues increased by €77 million (+21%) largely driven by AXA
Net technical margin rose by €18 million (+13%) to €159 million. On a constant exchange rate basis, net technical margin increased by €18 million (+13%) with a strong contribution from mature markets (€+15 million) mainly driven by a higher mortality margin (€+18 million) due to better claims experience in Protection business.
On a constant exchange rate basis, expenses increased by €-4 million (+1%): ■ mature markets were up €-5 million, mainly driven by AXA
MPS, refl ecting higher deferred acquisition costs amortization in line with increased surrenders; ■ high growth markets decreased by €1 million primarily due to Mexico (€+9 million) mainly from 2012 nonrecurring commission adjustments, partly offset by higher commissions and marketing costs to promote the Pension business in Turkey (€-9 million).
Income tax expenses increased by €-22 million (+41%) to €-75 million. On a constant exchange rate basis, income tax expenses increased by €-22 million (+41%), mainly due to higher pre-tax underlying earnings and an additional Corporate income tax (IRES) (1) in Italy (€-8 million).
On a constant exchange rate basis, net income increased by €62 million (+48%) mainly driven by higher adjusted earnings and a favorable change in the fair value of interest rates hedging derivatives not eligible for hedge accounting, mainly at
Net capital gains or losses attributable to shareholders net of income tax - 21
Profi t or loss on fi nancial assets (under FV option) & derivatives 18 (10)
Average exchange rate: 1.00 € = Hong Kong Dollar 10.291 9.994
Gross revenues increased by €94 million (+5%) to €1,818 million (1). On a comparable basis, gross revenues increased by €198 million (+12%) mainly due to higher revenues from G/A Protection & Health products (€+152 million) driven by in-force growth, Unit-Linked products (€+24 million) driven by an active promotion and some large contracts in 2013, and
APE increased by €35 million (+9%) to €443 million. On a comparable basis, APE increased by €48 million (+12%) due to higher sales of Unit-Linked products (€+44 million) which were actively promoted, and higher Pure Protection and
Fees & revenues increased by €34 million (+8%) to €478 million. On a constant exchange rate basis, fees & revenues increased by €48 million (+11%) mainly driven by an increase in loadings on premiums stemming from new business and in-force growth.
Net technical margin rose by €2 million (+6%) to €44 million.
On a constant exchange rate basis, expenses increased by €-43 million (+19%) mainly due to higher investments in business infrastructure and higher acquisition expenses driven by new business and in-force growth.
Amortization of VBI decreased by €7 million (-53%) to €-6 million. On a constant exchange rate basis, amortization of
1. As a consequence, the underlying cost income ratio increased by 2.2 points to 51.2%.
Income tax increased from a €2 million benefi t in 2012 to a €-6 million charge in 2013. On a constant exchange rate basis, income tax expenses increased by €8 million mainly due to a lower tax benefi t from the change in the tax base for a block of insurance business in the context of the merger of two insurance entities.
On a constant exchange rate basis, net income increased by €43 million (+18%) as lower adjusted earnings (€-15 million)
(€+31 million) and the non-repeat of 2012 losses related to the closure of two distribution networks and the closure of the
Net capital gains or losses attributable to shareholders net of income tax - (1)
Profi t or loss on fi nancial assets (under FV option) & derivatives (1) (1)
For consistency, 2013 fi gures have been compared to the same scope for 2012 i.e. adjusted for alignment of reporting period with Group calendar year in Indonesia, China and
Gross revenues (1) (2) decreased by €27 million (-9%) to €268 million. On a comparable basis, gross revenues increased by €21 million (+8%) mainly driven by higher revenues from
APE (2) remained stable at €463 million. On a comparable basis, APE increased by €84 million (+21%) mainly driven by: ■ China with continued momentum in G/A Protection & Health business (€+32 million) refl ecting the continued business growth in ICBC-AXA Life joint venture which commenced in
& Health and G/A Savings products; ■ higher sales in Singapore (€+16 million) in particular from newly launched participating G/A Protection with Savings products.
(2) South-East Asia, India & China Life & Savings scope: (i) for gross revenues: Singapore and non-bancassurance subsidiaries in Indonesia, on a 100% share basis; (ii) for APE, NBV, underlying earnings, adjusted earnings and net income: China, India, Indonesia,Thailand, Philippines and
Underlying earnings (1) increased by €6 million (+7%) to €92 million. On a comparable basis, underlying earnings increased by €16 million (+20%) mainly due to: ■ higher volumes and better claims experience in Thailand
(€+3 million); ■ lower losses in India (€+4 million) benefi ting from better business mix.
Net income (1) decreased by €7 million (-10%) to €70 million.
On a comparable basis, net income increased by 1%, mainly due to higher adjusted earnings, partly offset by the impact of the acquisition of the HSBC employee benefi ts portfolio in
(1) South-East Asia, India & China Life & Savings scope: (i) for gross revenues: Singapore and non-bancassurance subsidiaries in Indonesia, on a 100% share basis; (ii) for APE, NBV, underlying earnings, adjusted earnings and net income: China, India, Indonesia,Thailand, Philippines and
Profi t or loss on fi nancial assets (under Fair Value option) & derivatives - -
Underlying earnings as well as adjusted earnings increased by €-2 million (+11%) to €-17 million.
(1) AXA Life Invest Services (ex AXA Global Distributors merged with AXA Life Hedging Services) aim to promote Unit-Linked products with guarantees through third party bank partnerships.
The following tables present the consolidated gross revenues, underlying earnings, adjusted earnings and net income attributable to
Net income from investments in affi liates and associates 29 43 43
Profi t or loss on fi nancial assets (under FV option) & derivatives 46 89 89
(d) Direct business in France, Belgium, Spain, Portugal, Italy, Poland, United Kingdom, South Korea and Japan.
Mediterranean and Latin American Region (c) 281 232 232 o/w. high growth markets 225 77 77
(d) Direct business in France, Belgium, Spain, Portugal, Italy, Poland, the United Kingdom, South Korea and Japan.
Profi t or loss on fi nancial assets (under FV option) & derivatives 20 39 39
Net technical result rose by €43 million (+3%) to €1,710 million: ■ the current accident year loss ratio increased by 0.3 point to 73.7% mainly due to higher climatic events, notably in
Household, as well as a deterioration in claims experience in Construction, partly offset by tariff increases and lower frequency mainly in Personal Motor; ■ the all accident year loss ratio increased by 0.1 point to 70.9%, refl ecting the increase of current accident year loss ratio, as well as a reserve strengthening on bodily injury following a change in regulatory environment, partly offset by higher positive prior year reserve developments notably in Liability and Motor.
Expense ratio decreased by 0.5 point to 23.7% mainly driven by a reduced cost base as well as a higher non-recurring positive impact from tax contributions (€+29 million in 2013 vs.
As a consequence, the combined ratio was down 0.4 point to 94.7%.
Gross revenues decreased by €243 million (-6%) to €3,907 million (1). On a comparable basis, gross revenues decreased by €70 million (-2%): ■ Personal lines (49% of gross revenues) were down 10%
at €1,888 million. Motor was down 5% to €530 million due to market tariff softening within the UK and increased price competition in Ireland. Non-Motor was down 12%
Non-Motor was up 8%. Property was up 11% to €535 million refl ecting tariff increases and strong new business. Health was up 7% to €765 million mainly due to continued growth in the UK and International Large Corporate businesses.
Commercial Lines, partly offset by a deterioration in Personal other (0.4 point) from increases in travel claims refl ecting improved economic conditions; ■ the all accident year loss ratio decreased by 2.6 points to 67.9% refl ecting the improvement in current year loss ratio and a reduction in prior year reserves charge (€+18 million).
to €208 million. On a constant exchange rate basis, net investment result decreased by €19 million (-8%) due to lower yields on fi xed income assets and lower real estate and Mutual funds income.
Income tax expenses was up €-15 million (+32%) at €-65 million. On a constant exchange rate basis, income tax expenses increased by €-18 million (+36%) refl ecting higher pre-tax underlying earnings.
Underlying earnings increased by €48 million (+31%) to €202 million. On a constant exchange rate basis, underlying earnings increased by €54 million (+35%).
Net capital gains or losses attributable to shareholders net of income tax 24 5
Gross revenues decreased by €17 million (0%) to €3,807 million (1): ■ Personal lines (57% of gross revenues) were stable at €2,151 million as tariff increases were offset by loss of contracts; ■ Commercial Lines (35% of gross revenues) decreased by 1% to €1,316 million mainly due to portfolio pruning in Motor and a less competitive product positioning in Liability; ■ Other lines (8% of gross revenues) rose by 4% to €340 million mainly driven by higher assumed business in
(-6.8 points) resulting from tariff increases and lower frequency despite higher natural event charges, in particular from the fl oods in Bavaria and Saxonia (€50 million) and from the storms Norbert (€39 million) and Andreas (€29 million); ■ the all accident year loss ratio decreased by 0.4 point to 69.0% mainly due to lower current accident year loss ratio, partly offset by lower positive prior year reserve developments.
due to lower general expenses, partly offset by an increase of claims handling cost reserves.
As a result, the combined ratio was down by 1.6 points to 98.2%.
Net investment result increased by €29 million (+9%) to €360 million mainly resulting from exceptional distributions from credit funds.
As a result, the combined ratio was down by 0.6 point to 88.9%.
Adjusted earnings decreased by €8 million (-2%) to €411 million. On a constant exchange rate basis, adjusted earnings decreased by €1 million as higher underlying earnings and realized capital gains on all asset classes were offset by higher impairments.
On a constant exchange rate basis, net income increased by €8 million (+2%) mainly attributable to a favorable change in the fair value of private equity funds.
Gross revenues decreased by €37 million (-2%) to €2,050 million (1): ■ Personal lines (50% of gross revenues) were down 2% to €1,029 million following pruning actions, partly offset by tariff increases in both Motor and Household; ■ Commercial lines (48% of gross revenues) were down 3%
Net technical result decreased by €12 million (-2%) to €756 million: ■ the current accident year loss ratio decreased by 1.9 points to 66.9% mainly driven by an improved attritional claims experience (-1.9 points) as a result of tariff increases and lower frequency, as well as lower large claims (-1.0 point), partly offset by reinsurance (+0.7 point); ■ the all accident year loss ratio decreased by 0.1 point to 63.4% as improved current accident year loss ratio was offset by lower positive prior year reserve developments.
Net income increased by €19 million (+9%) to €233 million mainly driven by higher adjusted earnings, partly offset by an unfavorable change in the fair value of infl ation derivatives.
Net realized capital gains or losses attributable to shareholders 1 (4)
Profi t or loss on fi nancial assets (under Fair Value option) & derivatives 15 10
(a) Reso accounted for using the equity method. AXA's share of profi t is recognized in income statement.
Underlying earnings, adjusted earnings and net income increased by 33% to €2 million. On a constant exchange rate basis, earnings increased by €1 million (+39%), as a strong increase in investment income was partly offset by a 1.6 points deterioration of the combined ratio as a result of a change in product mix.
Underlying earnings decreased by €22 million to €20 million on a constant exchange rate basis, despite a strong portfolio growth (+17%), driven by a deterioration in claims experience and an increase of expense ratio, as well as a lower investment income. As a result, the combined ratio was up 5.4 points to 98.9%.
Adjusted earnings decreased by €16 million to €21 million on a constant exchange rate basis, mainly driven by lower underlying earnings (€-22 million) compensated by the absence of impairments on fi xed income assets (€+6 million).
Profi t or loss on fi nancial assets (under FV option) & derivatives 28 19
refl ecting growth in Turkey (€+194 million) from both tariff increases and positive volume effect, partly offset by decreases in Italy (€-42 million) and Spain (€-37 million) as positive net new contracts were more than offset by pricing and mix effects; ■ Commercial lines (43% of the gross revenues) were up 10% to €3,185 million driven by Motor lines (+15% or €+145 million)
in Turkey (€+96 million) mainly from tariff increases and in the Gulf region (€+53 million) from new large accounts. Non-
■ the current accident year loss ratio decreased by 0.3 point to 72.7% including a 0.7 point Nat Cat charge. High growth markets decreased by 2.4 points while mature markets increased by 1.2 points. Excluding the Nat Cat charge, improvement in high growth markets was mainly driven by
(€-79 million) due to an increase of average claim costs in both Motor and Household, the Gulf region (€-17 million) and
Net investment result increased by €20 million (+5%) to €404 million. On a constant exchange rate basis, net investment result increased by €26 million (+7%) mainly driven by Turkey as a result of a higher asset base.
Income tax expenses increased by €-12 million (+9%) to €-150 million. On a constant exchange rate basis, income tax expenses increased by €-14 million (+10%) due to both higher pre-tax underlying earnings and an additional Corporate income tax (IRES) (2) in Italy (€-21 million), partly offset by positive country mix.
Underlying earnings increased by €48 million (+21%) to €281 million. On a constant exchange rate basis, underlying earnings increased by €51 million (+22%).
Net capital gains or losses attributable to shareholders net of income tax 3 - -
Profi t or loss on fi nancial assets (under FV option) & derivatives 7 (1) (1)
Gross revenues increased by €60 million (+3%) to €2,274 million (1). On a comparable basis, gross revenues increased by €105 million (+5%): ■ Personal Motor (87% of gross revenues) was up €78 million
(+4%) to €1,975 million mainly driven by France (+14% or €+47 million), Japan (+7% or €+25 million) and Italy (+20%
or €+20 million), partly offset by the UK (-5% or €-22 million)
Expense ratio increased by 0.8 point to 22.3%. Acquisition expense ratio increased by 0.6 point refl ecting a lower average premium in the UK and lower volumes in Spain. Administrative expense ratio increased by 0.2 point mainly refl ecting an unfavorable change in business mix due to higher new business and lower renewals.
As a result, the combined ratio was down by 1.6 points to 99.1%.
On a constant exchange rate basis, income tax expenses increased by €11 million refl ecting higher pre-tax underlying earnings, partly offset by a favorable country mix.
Adjusted earnings increased by €33 million to €88 million. On a constant exchange rate basis, adjusted earnings increased by €37 million due to higher underlying earnings and realized capital gains.
Net income increased by €37 million to €84 million. On a constant exchange rate basis, net income increased by €42 million mainly due to higher adjusted earnings.
Note: Asia Property & Casualty scope (i) for gross revenues and combined ratio: Hong Kong, Malaysia and Singapore, on a 100% share basis; (ii) for underlying earnings, adjusted earnings and net income: India, Hong Kong, Malaysia,
Indonesia operations are not consolidated. India and Thailand are consolidated through equity method.
Gross revenues increased by €293 million (+55%) to €822 million (1). On a comparable basis, gross revenues increased by €68 million (+9%): ■ Personal lines (49% of the gross revenues) were up €26 million
(€+21 million) from new large accounts and volume increases in Hong Kong as well as volume increases in Singapore and Malaysia, (ii) Workers Compensation (€+8 million)
Net technical result increased by €99 million (+58%) to €270 million. On a comparable basis, net technical result increased by €27 million (+11%).
Compensation (-7.5 points) driven by tariff increases and selective underwriting in Hong Kong, as well as favorable claims experience in Singapore, (ii) Commercial Property
(iii) Commercial Health (-2.6 points) driven by price increases in Hong Kong and better reinsurance coverage in Hong
refl ecting lower commissions paid to HSBC bank following the acquisition of HSBC portfolio and a favorable change in business mix in Hong Kong.
Enlarged expense ratio improved by 1.6 points to 29.8% on a comparable basis.
As a result, the combined ratio improved by 2.9 points to 93.1%. On a comparable basis, the combined ratio improved by 2.4 points.
On a comparable basis, adjusted earnings increased by €21 million driven by higher underlying earnings and lower net realized capital gains.
Net income increased by €14 million to €13 million (2). On a comparable basis, net income increased by €6 million driven by the increase in adjusted earnings, partly offset by the amortization of the 10-year distribution agreement and integration costs related to the HSBC portfolio which acquisition was closed in November 2012.
Marine (+3%) both driven by portfolio developments, and in Construction (+7%). This growth was partly offset by a decrease in Aviation (-9%) mainly due to tariff decreases following favorable claims developments in recent years.
Construction; ■ the all accident year loss ratio improved by 0.3 point to 81.9% mainly driven by higher positive prior year reserve developments in Aviation.
As a result, the combined ratio improved by 0.1 point to 97.7%.
Net investment result decreased by €2 million (-1%) to €193 million. On a constant exchange rate basis, net investment result decreased by €1 million mainly due to lower income from fi xed income assets (€-13 million) partly offset by higher income from equities (€+7 million).
Underlying earnings decreased by €6 million to €16 million mainly as a result of higher administrative expenses and lower technical results in AXA Group covers, partly offset by a higher technical result in AXA Global Life.
Adjusted earnings decreased by €5 million to €16 million mainly as a result of lower underlying earnings.
Net income decreased by €5 million to €21 million mainly due to lower adjusted earnings.
Underlying earnings was stable at €20 million mainly driven by positive developments across the board, partly offset by an increase in development costs, mainly in high growth markets.
Adjusted earnings increased by €1 million to €21 million mainly driven by underlying earnings.
Underlying earnings increased by €37m to €17 million. On a constant exchange rate basis, underlying earnings increased by €36 million mainly driven by lower losses on Life run-off portfolio, partly offset by lower results on Property & Casualty run-off portfolio.
Net realized capital gains or losses attributable to shareholders (1) (4) (4)
Profi t or loss on fi nancial assets (under FV option) & derivatives 1 4
from the MONY sale of €-5 billion offset by an increase in AUM
of €1 billion from acquisition in December 2013 of W.P. Stewart
Net investment result was level at €2 million. On a constant exchange rate basis, net investment result remained stable at €2 million.
General expenses decreased by €18 million (-1%) to €-1,719 million. On a constant exchange rate basis, general expenses increased by €34 million (+2%) due to higher compensation expenses resulting from increased revenues partly offset by lower general administrative expenses, primarily offi ce and related expenses and professional fees.
(+16%) to €185 million. On a constant exchange rate basis, underlying earnings and adjusted earnings increased by €31 million (+20%).
Net capital gains or losses attributable to shareholders net of income tax (1) (4) (4)
Profi t or loss on fi nancial assets (under FV option) & derivatives 12 9 9
In order to provide a consistent analysis following the sale of AXA Private Equity (“AXA PE”) on September 30, 2013, commentaries are based on restated fi gures with all P&L
AXA PE underlying earnings amounted to €56 million in 2012 and €44 million for the fi rst nine months of 2013.
PE exclusion in both periods, constant foreign exchange rate restatement, and distribution fees netting.
Assets under Management (“AUM”) decreased by €7 billion from year-end 2012 to €547 billion at the end of 2013.
Excluding the impact from the sale of AXA PE (€-22 billion),
Excluding this €22 million positive impact, and on a comparable basis, the underlying cost income ratio improved by 1.9 points to 72.5%.
Income tax expenses increased by €8 million (+7%) to €-119 million, including €-19 million from AXA PE for the fi rst nine months of 2013. On a comparable basis, income tax expenses increased by €11 million (+12%) mainly due to higher pre-tax earnings.
Underlying earnings decreased by €4 million (-2%) to €216 million, including €44 million from AXA PE for the fi rst nine months of 2013. On a comparable basis, underlying earnings increased by €10 million (+6%).
Adjusted earnings decreased by €1 million (-1%) to €214 million, including €44 million from AXA PE for the fi rst nine months of 2013. On a comparable basis, adjusted earnings increased by €13 million (+8%), in line with underlying earnings improvement.
(a) Of which AXA Bank Europe and its branches: €355 million.
(b) Includes commercial activities in Belgium and shared services of AXA Bank Europe (treasury and support functions).
Net realized capital gains or losses attributable to shareholders 1 (5) (5)
Profi t or loss on fi nancial assets (under Fair Value option) & derivatives (35) (3) (3)
Underlying earnings increased by €50 million (+161%) to €80 million due to higher operating net banking revenues
(€+50 million) and the non-repeat of impairments on fi xed income assets (€+7 million) .
Net income increased by €23 million to €1 million as a result of the increase in underlying earnings and the non repeat of 2012 unfavorable impact from interest-rate hedging instruments not eligible to hedge accounting.
Underlying earnings increased by €2 million (+48%) to €5 million mainly from a positive tax one-off.
Net income decreased by €6 million to €-18 million mostly driven by one-off expenses related to the closure of banking activities.
France Assurance, AXA Financial, AXA United Kingdom Holdings, AXA Germany Holdings, AXA Belgian Holding, CDOs and real estate companies.
Net realized capital gains or losses attributable to shareholders (31) (72) (72)
Profi t or loss on fi nancial assets (under Fair Value option) & derivatives (64) (228) (228)
Underlying earnings increased by €2 million to €-589 million mainly due to €32 million gain related to the hedging program on
Adjusted earnings increased by €58 million to €-595 million mainly driven by the end of the premium amortization on equity call options in 2012 (€-48 million in 2012).
Excluding profi ts linked to the sale of the Group’s Canadian operations in respect of the deferred contingent consideration
(€+8 million in 2013 vs. €+67 million in 2012), net income increased by €317 million mainly driven by: ■ €+58 million from adjusted earnings evolution; ■ €+291 million from a change in mark to market of interest rate and foreign exchange economic derivatives; which are not eligible for hedge accounting under IAS 39; ■ and €-46 million from the non-repeat of 2012 time value of the above mentioned equity options.
(+13%) to €-23 million in line with the increase in underlying earnings.
Net income increased by €7 million to €-14 million driven by adjusted earnings evolution.
On a constant exchange rate basis, underlying earnings increased by €15 million mainly due to lower fi nancing costs following the settlement of a loan (€+10 million) and higher tax one-off credits (€+9 million), partly offset by increased pension costs (€-4 million).
Underlying earnings decreased by €2 million (-36%) mainly due to a lower investment result.
Adjusted earnings decreased by €17 million (-98%) to €-34 million mainly due to higher impairment charges notably on Real Estate funds.
On a constant exchange rate basis, net income increased by €25 million (+36%) driven by the increase in adjusted earnings and by the positive impact of a litigation settlement, partly offset by an unfavorable tax one-off.
After signs of global recovery in 2013, the short-term economic outlook remains concerning. In this context, the AXA Group carries on with the execution of its Ambition AXA plan, the targets of which are within reach.
Ambition AXA is an important milestone of our long-term journey towards becoming a truly customer-centric organization. In 2014, we will therefore continue to concentrate our efforts on being closer to and better serving our customers, and accelerate the investments in our digital transformation. We will also focus on the more profi table market segments and faster growing geographies as well as on delivering the planned effi ciency measures.
The split between high growth market and mature market is detailed below: The notion of High Growth market includes the following countries: Central & Eastern countries (Poland, Czech
before the impact of: ■ exceptional operations (primarily change in scope and discontinued operations); ■ 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; and
■ profi t or loss on fi nancial assets accounted for under fair value option (excluding assets backing liabilities for which the fi nancial risk is borne by the policyholder), foreign exchange impacts on assets and liabilities, and derivatives related to invested assets.
funds, for which cost at inception, intrinsic value and pay-off fl ow through adjusted earnings, and only time value fl ows through net income when there is no intention to sell the derivatives in the short term (if not, fl ows through adjusted earnings).
General Account and shareholders’ funds; ■ related impact on policyholder participation (Life & Savings business); ■ DAC and VBI amortization or other reactivity to those elements if any (Life & Savings business) and net of hedging if any.
■ policyholders’ interest in participating contracts is refl ected as a change in insurance benefi ts in the Statement of
Underlying Net Technical margin includes the following components: ■ mortality/morbidity margin: The amount charged to the policyholder in respect of mortality/morbidity for the related period less benefi ts and claims. It is equal to the difference between income for assuming risk and the actual cost of benefi ts. This margin does not include the claims handling costs and change in claims handling cost reserves; ■ surrender margin: The difference between the benefi t reserve and the surrender value paid to the policyholder in the event of early contract termination; ■ GMxB (Variable Annuity guarantees) active fi nancial risk management is the net result from GMxB lines corresponding to explicit charges related to these types of guarantees less cost of hedge. It also includes the unhedged business result;; ■ policyholder bonuses if the policyholder participates in the risk margin; ■ ceded reinsurance result; ■ other changes in insurance reserves are all the reserves strengthening or release coming from changes in valuation assumptions, additional reserves for mortality risk and other technical impacts such as premium defi ciency net of derivative if any.
DPF; ■ amortization of acquisition expenses on current year and prior year new business, including the impact of interest capitalized: amortization charge for Deferred Acquisition
Costs (DAC) and net rights to future management fees only for investment contracts without DPF; ■ administrative expenses; ■ claims handling costs; ■ policyholder bonuses if the policyholder participates in the expenses of the company.
All accident year loss ratio net of reinsurance is the ratio of: ■ all accident years claims charge gross of reinsurance + claims-handling costs + result of reinsurance ceded on all accident years excluding the recurring interests credited to the insurance annuity reserves; to
(including commissions) related to acquisition of contracts (with the related acquisition ratio) and all other expenses (with the related administrative expense ratio). Underlying expenses exclude customer intangible amortization and integration costs related to material newly acquired companies.
Net New Money: infl ows of client money less outfl ows of client money. Net New Money measures the impact of sales efforts, product attractiveness (mainly dependent on performance and innovation), and the general market trend in investment allocation.
Underlying Cost Income Ratio: (general expenses net of distribution revenues)/ (gross revenues excluding distribution revenues).
Net operating revenues are disclosed before intercompany eliminations and before realized capital gains/losses or changes in fair value of « fair-value-P&L » assets and of hedging instruments.
(principally subordinated debt) and borrowings (including debt issued by subsidiaries), (iii) the issuance of ordinary shares, and
Each of the major operating subsidiaries is responsible for managing its liquidity position, in coordination with the
In 2013, AXA continued to manage its liquidity risk carefully and conservatively with as at year end 2013: ■ a large cash position across all business lines (information on cash fl ows from operations is provided in Note 12 to the
French Bons à moyen terme négociables (“BMTN”); ■ a debt profi le characterized by (i) a decrease in total net fi nancing debt (1) from €13.0 billion at year-end 2012 to €12.3 billion at year-end 2013 (partly fi nanced through the
AXA has a robust liquidity risk management framework that it reviews on a regular basis. Its assessment is performed through a quarterly monitoring of liquidity and solvency requirements in stressed environments both at local and Group level. At yearend 2013, Group entities held altogether more than €100 billion government bonds issued by Eurozone countries, which enables them to address any local liquidity need through highly liquid ECB eligible assets. The Group also held €12.7 billion of committed undrawn credit lines at year-end 2013. The Group has its own liquidity requirements which are mainly coming from solvency needs from Group entities under severe stress scenarios and collateralized derivatives held by AXA SA. This derivatives book is monitored and managed on a daily basis by the AXA Group Treasury.
In addition, as part of its risk control system, AXA remains vigilant regarding contractual provisions, such as ratings triggers or restrictive covenants, in fi nancing and other documentation that may give lenders, security holders or other counterparties, rights to accelerate repayment, demand collateral or seek other similar remedies under circumstances that could have a material adverse effect on AXA’s consolidated fi nancial position. At year-end 2013, AXA had no rating triggers and no fi nancial covenants in its credit facilities.
(2) Total net fi nancing debt/Shareholders’ equity excluding undated subordinated debt and excluding unrealized gains & losses recorded through shareholders’ equity + total net fi nancing debt.
Statements”), compared to €7,317 million at December 31, 2012. The increase was €668 million, or €677 million on a constant exchange rate basis.
Movements in these items are described in Note 17 of Part 4 -
On a consolidated basis, AXA’s total fi nancing debt outstanding amounted to €1,568 million at December 31, 2013, a decrease of €946 million from €2,514 million at the end of 2012. On a constant exchange rate basis, the decrease was €943 million.
At December 31, 2013, other debt instruments issued totaled €1,070 million, down from €2,208 million at the end of 2012. The decrease of €1,138 million mainly resulted from €1,133 million repayment of commercial paper.
Dividends received by the Company from its subsidiaries amounted to €3,189 million in 2013 (€3,303 million in 2012), of which €421 million were in currencies other than the Euro
(€1,251 million in 2012) or €998 million after the impact of hedging derivative instruments (€1,161 million in 2012), of which interest on undated subordinated debt of €425 million
December 12, 2004, which introduced the notion of fi nancial conglomerate into the French Insurance Code. According to Article 20 of the Insurance Code, the provisions of this ordinance applied for the fi rst time to periods starting on or after January 1st, 2005.
(€28.8 billion at December 31, 2012); ■ admitted subordinated debt: €11.8 billion (€12.1 billion at
December 31, 2012); ■ locally admitted assets: €2.4 billion (€2.5 billion at
In accordance with the methods of calculation implemented by AXA in line with existing regulations, AXA’s consolidated solvency ratio was estimated at 221% at December 31, 2013 compared to 233% at the end of 2012. This change resulted mainly from lower unrealized capital gains on fi xed income assets, partly offset by the contribution from Underlying
In the event the Company and/or any of its insurance subsidiaries fails to meet minimum regulatory capital requirements, insurance regulators have broad authority to require or take various regulatory actions. A failure of any of the Company’s insurance subsidiaries to meet their minimum regulatory capital requirements and/or a reduction in the level of their regulatory capital that may negatively impact their competitive position may also result in the Company having to inject signifi cant amounts of new capital into its insurance subsidiaries, which could adversely affect the Company’s liquidity position.
Management closely monitors the Group’s ratings and currently expects that these ratings should remain at levels suffi cient for the Company and its insurance subsidiaries to compete effectively. However, given continuing high volatility and uncertainty in fi nancial markets and general economic conditions, management cannot predict with any degree of certainty the timing and/or magnitude of future ratings actions.
Please refer to Note 32 of Part 4 — “Consolidated Financial Statements” for other subsequent events.
chose to adopt, in 2008, the c orporate g overnance c ode for listed corporations (Code de gouvernement d’entreprise des sociétés cotées) published by the Afep (Association française des entreprises privées) and the Medef (Mouvement des entreprises de France) (hereinafter the “Afep - Medef Code”)
Company’s governance structure. The former dual structure consisting of a Management Board and a Supervisory Board was replaced by a unitary Board of Directors.
Prior to its decision, the Board of Directors, together with its Compensation & Governance Committee, have taken into consideration and analyzed several factors including
(i) the Group’s particular circumstances at this stage of its development, (ii) the advantages and disadvantages of the other types of governance structures, (iii) Messrs. de Castries’ and
Company’s current governance structure which has optimized the decision-making process and proved both the reactivity and effi ciency of the Group despite a diffi cult macroeconomic environment for fi nancial institutions.
Offi cer was in the best interests of AXA, its shareholders and other stakeholders.
Mr. Henri de Castries as Chairman & Chief Executive Offi cer was in particular motivated by the following reasons: ■ his deep experience and knowledge of the Group and its activities acquired during his 25 years at AXA; ■ his strategic vision of the insurance sector; ■ his past performance including his ongoing successful execution of the Group’s “Ambition AXA” plan launched in 2010 which has resulted in a strategic repositioning of the AXA Group over the past years with greater exposure to emerging markets, a better mix of business, increased profi tability and a stronger balance sheet; ■ his understanding of corporate governance practices and the fast evolving regulatory, legal and compliance environment which are of increasing importance for global fi nancial institutions; and
■ his unique ability to represent AXA with the full spectrum of the Company’s stakeholders (clients and partners, employees, shareholders, governments, regulators and industry associations).
During its meeting of February 20, 2014, the Board of Directors, also unanimously, decided to propose the re-appointment of Mr. Denis Duverne as a director at the next Shareholders’
Offi cer. The Board considered that the appointment of two executives (Chief Executive Offi cer and Deputy Chief
Executive Offi cer) as directors has lead, since 2010, to a better representation of the Group management within the Board, and allowed an effi cient and balanced distribution of powers among the members of management while promoting the complementarity of their respective contribution to the Board’s work.
The Board’s decision to re-appoint Mr. Duverne as a director and Deputy Chief Executive Offi cer was motivated, in particular, by: ■ his deep knowledge of the Group acquired during his 19 years at AXA; ■ his strong track record driving operational execution of the Group’s “Ambition AXA” strategic plan including his management of several key merger & acquisition transactions that have been instrumental in the Group’s strategic repositioning over the past years; ■ his proactive management of the Group’s consolidated fi nancial position including numerous capital optimization initiatives; and
Strongly supported by the Deputy Chief Executive Offi cer in the management of the operational activities of the Group, the Chairman & Chief Executive Offi cer is thus well positioned to implement the global strategic initiatives and represent the
When the Board decided to unify the positions of Chairman and Chief Executive Offi cer in 2010, it implemented various measures designed to ensure an appropriate balance of powers consistent with best governance practices including adopting
■ a Vice-Chairman acting as Lead Independent Director must be appointed when the positions of Chairman of the Board of Directors and Chief Executive Offi cer are held by the same person (this is also provided in AXA’s Charter approved by the shareholders).
AXA’s Lead Independent Director, Mr. Norbert Dentressangle, has a number of specifi c powers including the power to convene meetings of the directors without the Chairman &
Thus, the independent directors have played a central role within the governance of the Company, in particular through their contribution to the work of the Board Committees, but also by attending executive sessions.
He in particular examines, during preliminary sessions and with the Executive Management, the quality of the information given to the members of the Board and Committees before their meetings, the relevance of the agendas and the documents sent to the directors. As well, the Chairmen of the three
Committees of the Board are involved in the preparation of the meetings of the Committees they respectively chair.
The Board of Directors is also required to approve certain signifi cant transactions (sales or acquisitions over €500 million; signifi cant fi nancing operations or other types of transactions that are not within the Company’s announced strategy…).
In order to ensure that the personal interests of the members of the Board of Directors and those of the Company are appropriately aligned, the Board’s Bylaws provide that each member of the Board of Directors must hold, within two years following his/her fi rst appointment, AXA shares with a value at least equal to the gross director’s fees earned in respect of the previous fi scal year. For this purpose AXA shares are valued using the closing price of the AXA share on December 31 of the preceding fi scal year.
Periodically, Board members may meet among themselves without the attendance of the Executive Management
(“executive sessions”). Prior to each meeting, the Board members receive documentation concerning matters to be reviewed, generally eight days in advance. In accordance with the Board of Directors’ Bylaws, they shall also be informed by the Chief Executive Offi cer on a regular basis about the
Company’s fi nancial condition, cash position and commitments as well as any signifi cant events or transactions involving the
Board of Directors on the agenda and planning of every Board meeting.
convene meetings of the non-executive directors at any time without the attendance of the Chairman & Chief Executive
Offi cer and the Deputy Chief Executive Offi cer (these meetings called executive sessions are chaired by the Vice-Chairman and may be held at any time at the Vice-Chairman’s discretion).
During the 2013 fi scal year, the Lead Independent Director attended all meetings of the Board of Directors (nine meetings)
The Lead Independent Director was, in 2013, once again strongly implicated in the preparation of each meeting of the Board of Directors. Working closely with the Executive
Management, he examined the frequency and the dates of the meetings, ensured the quality of the information delivered to the members of the Board and the Committees before their meetings, the relevance of the agendas and the documents sent to the members of the Board.
Governance Committee, the Lead Independent Director, although he is not a member of the Committee, attended all meetings of this Committee. In particular, he was involved in the selection process of the future members of the Board and Committees, the organization of the periodic selfassessment of the Board as well as the work of the Committee regarding corporate governance related matters such as the functioning of the Board, the succession plans of the Executive
The proportion of women within the Board of Directors was 35.7% on December 31, 2013. The Board’s composition therefore complies with the provisions of law n° 2011-103 of
& Governance Committee intends to propose additional women directors for consideration by shareholders at future
As 75% of AXA’s activities take place abroad, the Board has considered that it shall be composed of a high proportion of foreign members. At this stage, the Board is comprised of 28.6% of members who are nationals of countries other than
More generally, the Board of Directors pays particular attention to the level of diversity among its members. Criteria set in connection with the selection process of future directors include the defi nition of an appropriate mix within the Board of technical skills and professional experience as well as diversity in terms age, nationality and culture.
This representative is appointed by shareholders every four years from a list of candidates selected by the Group’s employee shareholders, following an internal selection process (Article L.225-23 of the French Commercial Code).
Henri de Castries (59) Chairman & Chief Executive Offi cer of AXA 25, avenue Matignon - 75008 Paris - France French nationality
Denis Duverne (60) Director, Deputy Chief Executive Offi cer of AXA in charge of Finance, Strategy and Operations 25, avenue Matignon - 75008 Paris - France French nationality
Jean-Pierre Clamadieu (55) Chairman of the Executive Committee and director of Solvay (Belgium) Rue de Ransbeek 310 - 1120 Brussels - Belgium French nationality
Paul Hermelin (61) Chairman & Chief Executive Offi cer of Capgemini 11, rue de Tilsitt – 75017 Paris - France French nationality
Name (age) and principal function Principal business address Nationality Position within the Board of Directors
François Martineau (62) Attorney at Law Lussan / Société d’avocats 282, boulevard Saint Germain - 75007 Paris - France French nationality
Mrs. Deanna Oppenheimer (55) Chief Executive Offi cer of CameoWorks (United States) 1215 – 4th Avenue, Suite 935 – Seattle – WA 98161 – United States American and British nationalities
Mrs. Dominique Reiniche (58) Chairman Europe of The Coca-Cola Company 27, rue Camille Desmoulins - 92784 Issy-les-Moulineaux Cedex 9 - France French nationality
The Shareholders’ Meeting to be held on April 23, 2014 will be asked to vote on the re-appointment of fi ve members of the Board of Directors whose term of offi ce will end
In this context, the Board of Directors proposed, based on the recommendation of its Compensation &
reports, review of the proposed signifi cant acquisitions and disposals, review of the Group’s portfolio of businesses, review of capital allocation, self-assessment of the Board of Directors and independence of the Board members, merger of two Committees (Ethics & Governance Committee and Compensation & Human Resources Committee), reappointment of the executive offi cers, appointment of new directors and as a consequence, review of the composition of the Board Committees, approval of the new Bylaws of the
In March 2013, the Board reviewed the strategy of the Group during a full day dedicated session.
In March 2014, the Board of Directors held a two-day seminar outside of AXA’s registered offi ce. During this session, the members of the Board in particular reviewed the Group’s strategy.
In 2013, the Board met nine times and the average attendance rate was 94.03%. The Board meetings had an average duration of three hours.
Paul Hermelin (as from April 30, 2013) 5/5 100% - - - - - - - - - -
Dentressangle Group, a transportation and logistics services specialist, and served as Chairman until 1998. He is currently
Norbert Dentressangle S.A., also holds equity interests in real estate, industrial and business services fi rms. From April 2008 to April 2010, Mr. Norbert Dentressangle was Vice-
Offi cer. In September 2011, further to the combination between the groups Rhodia and Solvay, Mr. Clamadieu became Vice-
Offi ce (Lionel Jospin). In 2002, she joined the Suez group. She then held various positions: from 2002 to 2005, at Strategy &
Organisation; from 2007 to 2008, Deputy Chief Executive Offi cer of Lyonnaise des Eaux. From 2009 to September 30, 2011,
German-speaking area. In 1986, he became Head of the non-proportional underwriting department. He was appointed member of the Management Board in 1988 when he assumed responsibility for the company’s casualty line of business in the German-speaking area. In 1993, he became Chairman of the Management Board of Bavarian Re. Mr. Stefan Lippe was appointed a member of Swiss Re’s Executive Board in 1995, as Head of the Bavarian Re Group. In 2001, he was assigned the role of Head of the Property & Casualty Business Group and appointed a member of Swiss Re’s Executive Committee.
Life & Health Underwriting activities; and in September 2008, he took over as Chief Operating Offi cer of Swiss Re and was also appointed Deputy Chief Executive Offi cer of Swiss Re.
In 2009, he was appointed Chief Executive Offi cer of Swiss Re and stayed in this function until January 2012. Mr. Stefan Lippe was named Reinsurance CEO of the year 2011 by the leading industry publication, Reaction, and he was recognised at the
Re, he turned to other activities. In 2011, Mr. Stefan Lippe cofounded Acqupart Holding AG and Acqufi n AG and serves currently as Vice-Chairman of the Board of Directors of both companies. In May 2013, he co-founded Paperless Inc. and serves currently as Chairman of the Board of Directors of this company. With effect October 2013, Mr. Stefan Lippe was elected as Chairman of the Board of Directors of CelsiusPro
Institut d’Études Politiques de Paris. Mr. François Martineau has been Attorney since 1976. In 1981, he was “Secrétaire de la Conférence”. In 1985, he was a lecturer at the University
Chairman of the Board of Directors: Friends of Education (notfor -profi t organization) (United States)
Mrs. Deanna Oppenheimer is graduated from the University of Puget Sound with degrees in political science and urban affairs. She completed the Advanced Executive Programme at the J.L. Kellogg School of Management at Northwestern
Expert in AGF (now Allianz) in Cologne (Germany). In 1990, she joined the AXA Group as Reinsurance Director of AXA
(Singapore). On April 2012, Mrs. Doina Palici-Chehab was elected the employee shareholder member of the AXA Board of Directors.
Certain members of the Board of Directors, however, are corporate offi cers and/or executives of companies that may have agreements or enter into transactions from time to time with the AXA Group including extensions of credit, purchases of securities (for their own account or for third parties), underwriting of securities and/or furnishing of other types of services or goods. These agreements or deals are generally fully negotiated and performed on arm’s length terms and conditions. Consequently, AXA does not believe that any of these agreements or transactions give rise to confl icts of interests between (i) the director’s duties towards AXA and
(1) Mrs. Doina Palici-Chehab only holds directorships within the AXA Group.
The Board of Directors conducts an annual self-assessment in order to review its composition, organization and functioning.
(SpencerStuart) who collected the views and suggestions of each director during individual meetings based on an interview guide established together with the Chairman of the
The conclusions of this assessment and the principal areas identifi ed for improvement were discussed at the Board of
Committees, their high level of implication and the smooth relation with the Board, as well as the level of diversity and internationalization within the Board members.
At its meeting of February 20, 2014, the Board discussed the main areas for improvement relating to the Board internal dynamic. A methodology has been set to more clearly distinguish in the debates between the position of the Management and recommendations of the Committees presented by their respective Chairmen. The Board also insisted on the interest of reinforcing informal interactions between all Board members to foster cohesion and team spirit.
Directors has ensured that independent directors have a major role on all Board Committees. In this context: ■ each of the three Committees is chaired by an independent director; ■ all members of the Audit Committee and the Compensation
& Governance Committee are independent directors; ■ AXA’s executive offi cers cannot be members of the
& Human Resources Committee into a single Committee called the “Compensation & Governance Committee”. This new Committee assumes all the former responsibilities of the
& Governance Committee. The merger of these Committees takes into account the increasing link between compensation and governance matters within large companies, these matters being inseparable for many stakeholders. According to the members of this new Committee, this structure allows a broader approach of the subjects, for example by putting into perspective compensation and governance subjects with the Group’s strategy on human resources and corporate responsibility. Furthermore, this new organization has lead to a more effi cient and reactive organization of the Committee’s work, and avoids the potential dissipating effect the participation to several Committees could have on directors. The length of the meetings of the Compensation & Governance Committee has been extended in order to tackle in an appropriate manner all the subjects falling within its scope of responsibilities.
Composition on December 31, 2013: Stefan Lippe, Chairman Isabelle Kocher Ramon de Oliveira Deanna Oppenheimer
The Committee also examines the compliance with the risk appetite limits agreed with the Board following Management’s recommendations.
The review of fi nancial statements by the Audit Committee is accompanied by a presentation from the Statutory Auditors on the Group’s consolidated fi nancial position and results of operations which includes the Auditors’ views on the accounting choices adopted by Management. The Committee also receives presentations from the Group Chief Risk Offi cer, the Group General Counsel and the Group Chief Financial Offi cer describing the Company’s principal risk exposures.
The Deputy Chief Executive Offi cer, the Group Chief Financial Offi cer, the Group Head of Audit, the Group Chief Risk Offi cer as well as the Company’s Statutory Auditors attend each Audit Committee meeting. The Group Chief Accounting Offi cer and Group General Counsel also attend the Committee’s meetings on a regular basis.
The Audit Committee met six times in 2013. The average attendance rate was 87.50%.
Référence); ■ the half-year fi nancial statements for 2013; ■ internal control and risk management
(reports from Internal Audit, Compliance, Risk Management, the Group’s Internal Financial Control (IFC) function, and the Global Business Lines…); ■ Solvency II and ORSA report (Own Risk and Solvency Assessment); ■ Risk Management Framework, Appetite and Reporting; ■ the results of internal and external audit work; ■ the results of regulatory compliance reviews; ■ internal and external fraud events; and ■ the internal and external audit plans and resources.
Composition on December 31, 2013: Ramon de Oliveira, Chairman Suet Fern Lee Doina Palici-Chehab Stefan Lippe
The Finance Committee met fi ve times in 2013. The average attendance rate was 91.67%.
(guarantees); ■ review of the proposed capital increase reserved for the employees of the AXA Group (“SharePlan 2013”).
The Chairman of the Board of Directors, even if not a member of the Committee, as well as the Vice-Chairman, Lead Independent Director , take part in the Committee’s work and attends its meetings except when its personal situation is at stake.
• the overall annual allocation of Company stock options or performance shares/units to be granted to employees of the AXA Group; ■ to issue proposals on the appointments of the Chief Executive Offi cer, the Deputy Chief Executive Offi cer and the members of the Board of Directors and its Committees. The Committee is also informed of the appointments of the main executives of the Group, and in particular of the members of the Management Committee and the Executive Committee. The Committee examines the provisions considered by the Chief Executive Offi cer in order to prepare the renewal of the Executive Management (Chief Executive Offi cer and/or Deputy Chief Executive Offi cer); ■ to examine in more depth certain Group human resources issues and to review each year the Company’s policy with respect to professional equality as well as equal pay; ■ to examine the Group’s strategy on corporate responsibility and related issues; ■ to examine in more depth certain governance matters relating to the operation and organization of the Board of Directors and the organization of the periodic self-assessment of the Board of Directors; ■ to review the AXA Group Compliance and Ethics Guide.
The Compensation & Governance Committee met six times in 2013 (one meeting for the Ethics & Governance Committee, one meeting for the Compensation & Human Resources Committees and four meetings for the Compensation & Governance Committee). The average attendance rate was 83.33%.
The Committee focused, in particular, on the following issues: ■ Compensation issues: • the compensation paid to the Chairman &
Chief Executive Offi cer, the Deputy Chief Executive Offi cer and to the members of the Management Committee and the Executive Committee; • the 2013 and 2014 equities’ allocation (stock options and performance shares/ units) and their performance conditions; • the Organization & Talent Review (OTR) and succession plans; • the “say-on-pay” (advisory vote on the aggregate compensation elements related to the preceding fi scal year
Executive Offi cer); ■ Governance issues: • the process of selection of the future directors and corporate offi cers; • the composition of the Board and its Committees; • the independence of the members of the Board; • the self-assessment of the Board of Directors; • the share ownership requirements for members of the Board of Directors; • the corporate responsibility; • the Group diversity policy; • the review of the new Afep - Medef Code.
(a) New Committee following the merger of the Compensation & Human Resources Committee with the Ethics & Governance Committee decided by the Board of Directors on April 30, 2013.
Chairman of the Board of Directors in addition to his functions as Chief Executive Offi cer, for the duration of his term of offi ce as director, i.e. four years.
Offi cer by the Board of Directors on April 29, 2010, for the duration of his term of offi ce as director, i.e. four years.
The Chairman & Chief Executive Offi cer has decided to establish a Management Committee to assist him in the operational management of the Group. The Management Committee has no formal decision making authority.
The Management Committee also holds three annual meetings dedicated to the “quarterly business reviews” (QBRs) during which its members welcome senior executives from the main entities. They present the performance of their operations and the progress status of their key projects using defi ned quantifi able standards of measurement which are common to all entities of the Group.
Banking (excluding AXA Bank Belgium) (f) 1,111 1,172 1,122 - AXA Bank Central & Eastern Europe 322 378 356
AXA Technology, AXA Group Solutions, AXA Business Services (j) 7,423 6,602 6,952
(b) In 2013, decrease by 230 in France mainly due to a decrease in commercial and administrative staff.
(c) In 2013, decrease by 383 in the United States mainly due to restructuring plans, offshoring and outsourcing.
(d) In 2013, decrease by 757 in the United Kingdom and Ireland driven by restructuring plans in the Wealth management business, in particular the bancassurance channel, together with non replacement of IT contractors.
(e) In 2013, decrease by 465 in Germany due to effi ciency programs.
(g) In 2013, increase by 982 in Direct business mainly driven by the inclusion of Natio Assurance in the scope of this reporting ( 303), the acquisition of Ergo Daum in South Korea ( 232) and new recruitements ( 216) mainly following business growth in all countries.
(j) In 2013, increase by 350 mainly driven by AXA Business Services following business growth.
(1) The information contained in this section is presented in accordance with recommendation n°2009-16 of the AMF, as modifi ed on December 17, 2013, and with the recommendations of the Afep - Medef Code, as revised in June 2013.
Board regarding, in particular, (1) the Company’s compensation policy and principles, (2) the determination of the Chairman
Independent Director (Mr. Norbert Dentressangle) is involved in the Committee’s work and presents the compensation policy of the Company each year at the Shareholders’ Meeting.
Group Human Resources and Group Legal. The Committee is empowered to undertake or commission specifi c reviews and to use external consulting expertise to the extent deemed appropriate. Thus, in 2013, the Committee worked several times with a compensation consulting fi rm in order to benefi t from an external expertise and an independent overview in order to compare AXA’s variable compensation practices with general market practices.
It follows three guiding principles: ■ competitiveness and consistency of compensation considering market practices while maintaining a balance within internal compensation practices at AXA; ■ internal equity, based on individual and collective performance, in order to ensure fair and balanced compensation refl ecting an executive’s individual achievement, measured on a quantitative and qualitative level; and
The fi xed component takes into account responsibilities, experience, as well as market practices. It is targeted to be equal or below the median of the market.
Each year, AXA, with the assistance of specialized fi rms, conducts compensation reviews in order to ensure the competitiveness and consistency of executive compensation and to measure the suitability of the global compensation policies. In this context, two markets are used as a reference: ■ a fi rst market composed of 12 companies in the CAC 40 index (companies selected to form the panel are comparable to AXA in terms of stock capitalization, revenues, sector, number of employees and/or geographic coverage. This panel may vary from year to year); ■ a second market composed exclusively of international fi nancial companies comparable in size and scope to the
compensation more closely with international best practices, his target variable compensation percentage compared to his fi xed salary has substantially decreased since 2006 when it represented 500% of his fi xed salary.
The variable component of his compensation, unchanged since 2010, was €1,450,000 in 2013, i.e. 193% of his fi xed annual compensation.
■ individual performance for 50%, which is evaluated on the basis of objectives specifi cally related to strategic initiatives set and reviewed each year.
individual performance on the execution of major strategic initiatives critical to the Group’s long-term success.
Group performance rely on the budget and on predefi ned performance indicators for non-fi nancial measures like customer satisfaction. They are directly linked to the strategic orientations of the Group in particular with respect to growth, profi tability, capital management, brand strategy, operational effi ciency and productivity.
Castries’ individual achievement against these criteria is based on quantitative and qualitative performance indicators.
& Chief Executive Offi cer may not exceed 150% of his variable target compensation, i.e. 371% of his fi xed annual compensation.
(a) This amount includes the part of the variable compensation with respect to 2012 and 2013 which has been deferred in accordance with the mechanism described on page 118 . The total amount paid will depend on performance conditions and may then vary.
For the other members of the Management Committee, the variable compensation is also determined on the basis of an individually predefi ned target amount and was based, in 2013, on three metrics: ■ Group performance, as measured by the underlying earnings per share, return on equity, and customer satisfaction index; ■ performance of their business unit or functional area of responsibility, measured against objectives set at the beginning of the year; ■ their individual performance, evaluated on the basis of predetermined objectives deriving from strategic initiatives.
The increase, as from the 2013 fi scal year, of the percentage linked to individual performance from 40% to 50% refl ects the
Mr. Duverne’s individual achievement against these criteria is based on quantitative and qualitative performance indicators.
Committee members who benefi t from a variable part (in 2013, Mrs. Véronique Weill, Messrs. Jean-Laurent Granier,
The performance of operational entities is determined on the basis of the following performance indicators: ■ underlying earnings; ■ customer centricity; ■ gross revenue Protection & Health; ■ Life & Savings New Business Value; ■ economic expenses; ■ Life & Savings Operating Free Cash Flow; ■ Property & Casualty revenues; ■ current year combined ratio.
Performance indicators that measure the Group and/or the operational entities’ performance are defi ned at the beginning of the year with: ■ a predefi ned target, aligned with the strategic plan (budget), the attainment of which will result in 100% achievement; ■ a fl oor (which may vary between 50% and 90% of achievement against the target depending on the indicator), which defi nes the threshold below which no variable compensation for that component will be paid; ■ a cap (which may vary between 110% and 130% of achievement against the target depending on the indicator), which defi nes the threshold above which the variable compensation for that component is capped.
The individual performance is assessed both on (i) the achievement of results for each predetermined individual objective (the “what”) and (ii) qualitative factors, including demonstrated leadership abilities measured against AXA’s
Deputy Chief Executive Offi cer in charge of Finance, Strategy and Operations France 1,450,000 1,292,542 89% 1,450,000 1,415,746 (a) 98% 1,450,000 1,567,450 (a) 108%
Governance Committee and the Board of Directors took into account the following measures: (1) the strong increase in the underlying earnings per share, (2) return on equity (operating
Since 2013, the Board of Directors has decided to provide for the Chairman & Chief Executive Offi cer and the Deputy Chief
Deputy Chief Executive Offi cer in charge of Finance, Strategy and Operations France 2,220,691(a) 255,360 1,006,848 - 3,482,899 2,352,064(a) 216,320 1,255,752 - 3,824,136
Total of the other Management Committee members 8,182,842 484,120 839,040 1,069,776 10,575,778 10,137,314 596,480 1,396,584 1,337,904 13,468,282
IFRS standards. This is a historical value at the date of grant, calculated for accounting purposes as described in Note 26.3.1 of the 2013 “Consolidated Financial Statements” included in
Part 4 of this Annual Report. This value does not represent a current market value, a current valuation of these options and performance shares/units or the actual amounts that may be paid to benefi ciaries if and when the options are exercised or the performance shares/units are acquired.
On March 22, 2013, the fair value of one option was €1.28 for options with performance conditions, and the fair value of one performance share/unit was €9.78.
Total of the other Management Committee members 3,752,846 5,612,753 - 673,130 440,276 10,137,315 3,752,846 4,538,977 - 673,130 440,276 9,405,229
(b) Director's fees are deducted up to 70% from the variable compensation.
Deputy Chief Executive Offi cer in charge of Finance, Strategy and Operations France 750,000 1,012,183 (a) - 50,795 4,150 1,785,691 750,000 1,292,542 - 50,795 4,150 2,097,487
During the fi scal year 2013, none of the members of the Board of Directors, except for its Chairman and the Deputy Chief
Executive Offi cer, received compensation from the Company, with the exception of directors’ fees (jetons de pré sence). The amount of directors’ fees paid to each AXA Board member is indicated in the table below.
Shareholders’ Meeting, in accordance with applicable laws, and apportioned by the Board of Directors to its members in accordance with its Bylaws: ■ in accordance with the recommendations of Afep- Medef
Board, with the Vice-Chairman receiving a double fee; ■ a second part equivalent to half of the remaining amount is allocated by the Board of Directors to the Board Committees and distributed among their members in proportion to the number of Committee meetings actually attended by each member, with the Chairmen of the Committees receiving a double fee. No directors’ fees are distributed as fi xed compensation for the attendance to Committees. Due to the importance of their role and the signifi cant demand on their time, members of the Audit Committee receive a higher proportion of directors’ fees by application of a coeffi cient of 1.5.
Insurance. This compensation consists of € 330,856 of fi xed compensation and € 114,605 of variable compensation.
Stock options are valid for a maximum period of 10 years. They are granted at market value, with no discount, and become exercisable by tranches, generally in thirds between 2 and 4 years following the grant date. Nevertheless, as from 2014, the Board of Directors decided to extend the vesting period of option plans by one extra year. They will from now on become exercisable between 3 and 5 years following the grant date.
Committee, approves the grant of a global option pool. The pool of options allocated to each business unit is essentially determined on the basis of their contribution to the Group’s fi nancial results during the previous year and with consideration for specifi c local needs (market competitiveness, adequacy with local practices, Group development).
Group and its subsidiaries are selected to participate in the stock option program based on a selection of criteria that include: ■ importance of the position ➮ role
The recommendations for individual grants of options are made by the Chief Executive Offi cers of the local entities or business units and by the Group functional department heads. These recommendations are reviewed by the Executive Management to ensure a global coherence. Individual grants of options are then decided by the Board of Directors, provided that individual grants to the Chairman & Chief Executive Offi cer, the Deputy
Usually, annual grants are made during the fi rst half of the year, generally 20 trading days after the date the annual earnings of the Group are published, in order to avoid that the choice of the grant date be perceived as creating a dead-weight effect for the benefi ciaries. In 2013, the annual consolidated earnings were published on February 21, 2013 and the option grant then took place on March 22, 2013. The strike price, equal to the average of the closing AXA share price during the 20 trading days before the grant date, was set at €13.81.
Executive Offi cer and Deputy Chief Executive Offi cer) each year may not exceed 10% of the aggregate number of options granted during the same year, to avoid an excessive concentration of option grants to the executive offi cers.
Deputy Chief Executive Offi cer) represented 9.7% of the total number of options granted.
employees had a total of 66,465,371 outstanding options, representing 2.75% of the Company’s share capital on the same date, and 718 employees in the United States had a total of 1,829,748 outstanding purchase options on AXA ADS, representing 0.08% of the share capital.
Committee. This performance condition also applies to the last tranche of each option grant (i.e. the last 1/3rd of the options granted), for all benefi ciaries of options (as from 2013). As from 2014, the Board of Directors decided that this condition would from now on apply to all options granted to the members of the Executive Committee, which is currently composed of 19 members.
Pursuant to this performance condition, the options become fully exercisable only if the AXA share price performs at least as well as the stock reference index of the insurance sector (1) over a same period . This external performance condition subjects the acquisition of the right to exercise the options to the achievement of a fully objective and public performance and allows to measure the relative performance of AXA compared to its main European competitors over a period of at least three years.
Grant date (Board of Directors or Management Board) 14/03/2003 14/03/2003 02/04/2003 26/03/2004 14/04/2004 29/03/2005 29/03/2005 06/06/2005 27/06/2005 01/07/2005
Subscription or purchase price of options (a) 10.47 10.47 11.82 16.90 15.00 19.70 19.95 19.02 19.32 19.91
Number of options exercised at 31/12/13 7,057,545 2,799,497 1,825,459 6,892,150 200,000 332,045 116,969 - 2,565 -
Total number of shares to be subscribed (a ) or purchased, from which to be subscribed or purchased by: 114,443 7,628,101 2,768,553 1,223,253 53,733 22,805 7,409 6,818,804 1,815,676 1,312,233
Expiry date of options 21/09/2015 31/03/2016 31/03/2016 31/03/2016 25/09/2016 25/09/2016 13/11/2016 10/05/2017 10/05/2017 10/05/2017
Number of options exercised at 31/12/13 - 2,877 - - - - - - - -
Date of the Shareholders’ Meeting 20/04/2005 20/04/2005 20/04/2005 24/04/2005 20/04/2005 20/04/2005 22/04/2008 22/04/2008 22/04/2008 22/04/2008
Expiry date of options 24/09/2017 24/09/2017 19/11/2017 19/11/2017 01/04/2018 01/04/2018 19/05/2018 19/05/2018 22/09/2018 22/09/2018
Subscription or purchase price of options (a) 29.72 29.72 28.53 28.53 21.00 21.00 23.42 23.42 21.19 21.19
Grant date (Board of Directors or Management Board) 24/11/2008 20/03/2009 20/03/2009 02/04/2009 10/06/2009 10/06/2009 21/09/2009 08/12/2009 08/12/2009 19/03/2010 19/03/2010
Executive Directors: Start date of exercise 24/11/2012 20/03/2011 20/03/2013 02/04/2011 10/06/2013 10/06/2011 21/09/2013 08/12/2011 08/12/2013 19/03/2012 19/03/2014
Number of options exercised at 31/12/13 8,791 1,328,018 60,274 21,310 704 105,175 6,585 - - 330,997 7,190
Grant date (Board of Directors or Management Board) 18/08/2010 18/08/2010 13/10/2010 13/10/2010 22/12/2010 18/03/2011 18/03/2011 04/04/2011 16/03/2012 13/06/2012 22/03/2013
Total number of shares to be subscribed (a) or purchased, from which to be subscribed or purchased by: 22,846 10,619 4,274 27,772 12,758 8,598,469 154,705 375,988 4,508,380 76,089 3,480,637
Executive Directors: Start date of exercise 18/08/2012 18/08/2014 13/10/2012 13/10/2014 22/12/2014 18/03/2013 18/03/2015 04/04/2013 16/03/2014 13/06/2014 22/03/2015
Expiry date of options 18/08/2020 18/08/2020 13/10/2020 13/10/2020 22/12/2020 18/03/2021 18/03/2021 04/04/2021 16/03/2022 13/06/2022 22/03/2023
Chairman & Chief Executive Offi cer 22/03/2013 subscription or purchase 22/03/2023 100% of options: SXIP index
Deputy Chief Executive Offi cer in charge of Finance, Strategy and Operations 22/03/2013 subscription or purchase 22/03/2023 100% of options: SXIP index
Representative of employee shareholders to the Board of Directors 22/03/2013 subscription or purchase 22/03/2023
Representative of employee shareholders to the Board of Directors 14/03/2003 4,206 10. 47 07/01/2013 - - - -
STOCK OPTIONS GRANTED AND/OR EXERCISED BY THE TOP 10 BENEFICIARIES (OUTSIDE THE EXECUTIVE OFFICERS) DURING 2013
STOCK OPTIONS HELD BY EXECUTIVE OFFICERS (OPTIONS GRANTED BUT NOT EXERCISED AS AT DECEMBER 31, 2013)
Performance Shares are usually granted to benefi ciaries residing in France while Performance Units are generally granted to benefi ciaries residing outside of France.
Shares. This number will be used to calculate the actual number of units or shares that will be defi nitely granted at the end of a 2-year or 3-year (as from 2014) performance period.
For the Performance Units and Performance Shares granted in 2011, 2012 and 2013, the cumulated performance in 2011-2012, 2012-2013 and 2013-2014, is measured over a 2-year period.
For each of these indicators, the cumulated performance over the 2 fi scal years of the acquisition period is compared to the average of such indicator during a reference period corresponding to the 2 fi scal years preceding the Performance
A global performance rate is then calculated as follows: 1/3 performance rate (Net Income Per Share) + 2/3 * 1/2
Only a global performance corresponding to a weightedcompound annual growth rate of the indicators higher or equal to 20% allows a maximal acquisition of the Units/Shares initially granted under performance conditions. As from the 2014 plans, should the performance be lower than 50% of the maximal performance for the Group performance conditions and 46% for the operational entities’ performance conditions, no Unit/Share will be granted to the benefi ciaries at the end of the acquisition period; no minimal gain is then guaranteed to the executives or the employees of the Group. Between these minimal and maximal performance levels, the number of Units/
Furthermore, should no dividend be paid by the Company during any fi scal year of the acquisition period, the number of Units/Shares defi nitively granted would be automatically divided by 2 compared to the number of performance Units/
As far as Performance Units are concerned: ■ since 2010, the Performance Units granted are subject to a 2-year performance period followed by a 1-year differed acquisition period. The payment of these Performance
They do not create any dilution for shareholders since no new shares are issued.
Total number of Performance Units granted from which granted to: 2,957,911 160,025 350,792 3,924,244 4,728,124 323,105 6,769,606 71,017 6,958,447
Number of Performance Units cancelled 293,420 27,298 20,767 588,240 779,597 90,696 647,145 - 187,866
(d) The 2,828,546 units acquired of the March 19, 2010 plan have been settled as €36.5 million and 5,296 shares.
The numbers of Performance Units indicated for 2009 have been adjusted to take into account the impact of the share capital increase with preferential subscription rights of December 4, 2009.
Date of the Shareholders’ Meeting 22/04/2008 22/04/2008 22/04/2008 22/04/2008 27/04/2011 27/04/2011
Total number of benefi ciaries 1,740 8 1,774 1,984 2,083 2,212
Total number of Performance Shares granted from which granted to: 1,528,418 433,231 1,940,338 2,056,780 2,787,659 2,944,910
Acquisition date of the shares 20/03/2011 10/06/2011 19/03/2012 18/03/2013 16/03/2014 22/03/2015
Number of shares acquired at 31/12/13 1,399,545 323,376 1,659,914 (a) 2,063,033 (b) 3,484 (c) -
Number of Performance Shares cancelled 70,206 91,112 116,290 104,626 131,278 28,080
(a) From which 975 shares acquired by anticipation related to deceased benefi ciaries.
(c) From which 3,484 shares acquired by anticipation related to deceased benefi ciaries.
Denis Duverne Deputy Chief Executive Offi cer in charge of Finance, Strategy and Operations 10/06/2009 87,932 10/06/2013
Doina Palici-Chehab Representative of employee shareholders to the Board of Directors 20/03/2009 2,287 20/03/2013
PERFORMANCE UNITS GRANTED TO EXECUTIVE OFFICERS AND MANAGEMENT COMMITTEE MEMBERS DURING 2013
Doina Palici-Chehab Representative of employee shareholders to the Board of Directors earning -net income per share
AXA shares, ADS or shares of listed Group subsidiaries, held directly or indirectly through Mutual funds or similar investment vehicles, are taken into account for the purposes of calculating this Minimum Shareholding Requirement.
Requirement, all stock options and Performance Shares granted to him/her after January 1st, 2007 will be subject to the following restrictions: ■ upon each exercise of these stock options granted after
On December 31 , 2013, based on the AXA share value (€20.21) and on the AllianceBernstein share value (€16.08) at that date, the
Company’s executive offi cers already met their Minimum Shareholding Requirement such as described in the above Section “Share ownership policy for executives of the Group”. The following table summarizes the compensation granted to executive offi cers during the fi scal year 2013: Compensation paid in 2013 Shareholding requirement Shareholding on 31 /12 /2013
The principal features of this mandate are as follows: ■ the mandate is signed for an indefi nite term; ■ each instruction agreed between the executive and the bank, within the framework of the mandate, is valid for a duration it determines and starts after the expiry of a 3-month abstention period; ■ the mandate and the instructions are signed when the executive is not in possession of any inside information and outside blackout periods. During a 3-month abstention period following the signing of each instruction, the bank is prohibited from engaging in any transaction on behalf of the executive; ■ the executive may not intervene in management by the bank who exercises discretion in application of the instructions. The executive generally commits to proscribe all communications with the bank and not to exercise any infl uence on it prior to the expiry of a standing instruction.
To the best of the Company’s knowledge and based on the information reported to it, several members of the Board of Directors made the following disclosures in the course of 2013 concerning their transactions involving Company securities. Detailed information about all of these transactions, as well as individual disclosures fi led in accordance with Articles 223-22 and 223-25 of the AMF
General Regulations, are published on the Company’s website (www.axa.com) and on the AMF website (www.amf-france.org).
Marcus Schenck 2,000 * Transaction performed by an independent fi nancial intermediary pursuant to a discretionary mandate.
Under this scheme, a supplementary pension is paid to senior executives who retire immediately upon leaving the AXA Group, and who have a minimum length of service of 10 years, of which at least 5 years as a senior executive. Senior executives whose employment is terminated by the Company after the age of 55 may also benefi t from the scheme provided that they do not resume any professional activity before retiring.
The escalation of the rights depending on the seniority is thus lower than the 5% of benefi ciary’s compensation limit set by the Afep - Medef Code.
The amount of the obligations mentioned hereabove cannot be considered as a capital which could be paid to the benefi ciaries.
It must allow the Company to address its obligations during the benefi ciaries’ entire retirement.
Mr. Henri de Castries decided in 2010, on an individual and voluntary basis but in consultation with the Board of Directors, to limit the compensation to be taken into account in order to calculate his global pension. For information purposes, as of today considering his length of service within the Group (more than 24 years on the date of this Annual Report), the part of his global pension that would be paid under the supplementary pension scheme would represent approximately 32% of his current annual target compensation.
(1) For information, the annual s ocial security ceiling for 2014 is equal to €37,548.
In connection with this decision, the Supervisory Board undertook a review of the consequences of this renunciation including with respect to the continuity of the social benefi ts
employees under the 1993 collective agreement covering director-level employees of the insurance sector, but with the addition of new performance conditions in accordance with the Afep -Medef recommendations. A severance benefi t would be applicable, except in the case of gross or wilful misconduct, solely in the event of dismissal, non-renewal or resignation within 12 months following a change in the
Notwithstanding the foregoing, if only 2 of the 3 performance conditions are met, the amount of severance benefi t will be reduced by 50% if performance condition (1) is not met or if
Shareholders’ Meeting of April 29, 2010, and will continue so long as they remain executive offi cers of AXA (including under renewed mandates).
On December 31, 2013, AXA’s fully paid up and issued share capital amounted to €5,536,911,928.59 divided into 2,417,865,471 ordinary shares, each with a par value of €2.29 and eligible for dividends as of January 1st, 2013.
To the best of the Company’s knowledge, the table below summarizes the ownership of its issued outstanding ordinary shares and related voting rights on December 31, 2013: Number of shares % of capital ownership % of voting rights (a)
Treasury shares held directly by the Company 54,079 0.00% [0.00%] (c)
(b) AXA Assurances IARD Mutuelle (11.29% of capital ownership and 18.75% of voting rights) and AXA Assurances Vie Mutuelle (2.88% of capital ownership and 4.79% of voting rights).
December 31, 2013, 493,158,651 shares entitled their holders to double voting rights as of that date.
Treasury shares held directly by the Company 54,079 0.00% [54,079] (c) [0,00]% (c) 57,048 0.00% [57,048] (c) [0.00%] (c) 979,168 0.04% [979,168] (c) [0.03%] (c)
In connection with the share repurchase programs approved by AXA’s shareholders during their Shareholders’ Meetings held on April 25, 2012 (resolution 17) and April 30, 2013
for an average weighted gross unit price per share of €13.72, and (ii) no AXA shares were sold between January 1st and
As a result, on December 31, 2013, following the delivery, during the 2013 fi scal year, of AXA treasury shares to employees of the Group within the context of performance share plans, the total number of AXA treasury shares, all allocated for hedging purposes, was 54,079, corresponding to 0.002% of AXA’s share capital at the year-end closing date. These shares were acquired for an aggregate purchase price of €764,395.84 (with a par value of €2.29 per share).
Early redemption ■ The Company may purchase the bonds on any Stock Exchange or otherwise in accordance with applicable regulation, including by way of tender for purchase or exchange; ■ At the option of the issuer, in cash, from January 1, 2007 at a price with a gross 6% actuarial yield, if the Company’s share average over 10 consecutive days is above 125% of the anticipated repayment price; ■ At any time, at the option of the issuer, at €269.16 if the number of bonds in circulation is below 10% of the number of bonds issued.
The shareholders waived their preferential subscription rights so that this offering could be made to employees (SharePlan 2013).
In countries that met the legal, regulatory and tax requirements to participate in SharePlan, two investment options were offered to the Group employees in 2013: ■ the traditional plan, offered in 37 countries; ■ the leveraged plan, offered in 36 countries.
on countries) with a 20% discount. The shares are held within the Group Company Savings Plan and are restricted from sale during a period of approximately 5 years (except specifi c early exit cases allowed by applicable laws). Employees are subject to the share price evolution, up or down, as compared to the subscription price.
The leveraged plan in 2013 allowed employees to subscribe, on the basis of 10 times their personal investment, in AXA
Mutual funds (FCPE) with direct voting rights have been created since 2005 to allow benefi ciaries, in most cases, to directly exercise their voting rights during the Company’s
• €272.4 million in the leveraged plan; ■ a total of approximately 19 million new shares were issued, each with a par value of €2.29. These shares began earning dividends on January 1st, 2013.
On December 31, 2013, AXA employees and agents held 7.03% of the share capital and 9.10% of the voting rights.
It does not fall within the scope of our assignment to ascertain the potential existence of other agreements and commitments but rather, on the basis of the information that was given to us, to inform you, the shareholders, of the main features of those agreements of which we have been informed. It is not our responsibility to express an opinion on the utility or merits of such agreements. Pursuant to Article R.225-31 of the French Commercial Code, you are being asked to form an opinion on the relevance of such agreements for the purpose of approving them.
We were advised of the following agreements and commitments concluded since yearend and which were previously authorized by your Board of Directors.
On February 17, 2010, the Supervisory Board acknowledged the effective renunciation by Mr. Henri de Castries of his employment contract as of the Shareholders’ Meeting of April 29, 2010 during which the former dual structure consisting of a Management Board and a Supervisory Board was replaced by a unitary Board of Directors structure in which Mr. Henri de Castries holds the position of
The Supervisory Board was concerned that the decision of Mr. Henri de Castries to renounce his employment contract, in accordance with the Afep-Medef recommendations, would not jeopardize the continuity of his accrued and future social benefi ts.
■ T he Supervisory Board authorized that Mr. Henri de Castries be granted a contractual severance benefi t upon termination of his term of offi ce as executive offi cer. This severance benefi t, subject to performance conditions in conformity with the Afep-Medef recommendations , would be equivalent to that provided for in the collective agreement relative to director-level employees of insurance companies dated 1993 and which was previously applicable to Mr. Henri de Castries as employee. The initial amount of the severance benefi t would be equal to 19 months for Mr. Henri de Castries. One month will be added to the initial amount of the severance benefi t for each additional year of seniority acquired after April 30, 2010 up to a maximum cap of 24 months.
On February 20, 2014, the Board of Directors authorized the execution of an agreement between the Company and Mr. Henri de
Castries in order for the payment of the severance benefi ts to be subject, from now on, to the three following performance conditions: ■ A chievement, for at least 2 of the 3 preceding fi scal years, of the objectives set for the benefi ciary’s variable compensation and corresponding to the payment of at least 75% (against 65% before) of his variable compensation target; ■ E volution of the AXA share price at least equal to the stock reference index of the insurance sector (SXIP) (in percentage) over a 3-year period preceding the termination of the term of offi ce (unchanged condition); ■ A verage adjusted Return On Equity (adjusted ROE) over the three preceding consolidated fi scal years higher than or equal to 5%
(this new condition replaces the condition applied in the past which required that the fi nancial strength ratings (FSR) of the AXA
The other elements related to commitments granted to Mr. Henri de Castries remain unchanged.
On February 20, 2014, the Board of Directors authorized the execution of an agreement between the Company and Mr. Denis
In accordance with Article R .225-30 of the French Commercial Code, we were advised of the following commitments and regulated agreements, approved during previous fi scal years, which remained in force during the past fi scal year.
With the BNP Paribas Group – concerned director: Mr. Michel Pébereau (Member of the Board of Directors)
Under this scheme, a supplementary pension is paid to e xecutives who retire immediately upon leaving the AXA Group and have a minimum length of service of 10 years, of which at least 5 years as e xecutive. May also benefi t from the scheme, e xecutives whose employment contract is terminated by the Company after the age of 55, under the condition that they do not resume any professional activity before retiring.
The amount of the supplementary pension is calculated at the time of retirement and comes in addition to the total amount of retirement pensions paid under mandatory schemes (Social Security, ARRCO, AGIRC…) and under any other retirement scheme to which the benefi ciary may have participated during his/her career, both within or outside the AXA Group.
During 2013, these commitments applied to Messrs. Henri de Castries and Denis Duverne (respectively Chairman & Chief Executive
Nature, purpose, terms and conditions: On February 17, 2010, the Supervisory Board acknowledged the effective renunciation by Mr. Henri de Castries of his employment contract as of the Shareholders’ Meeting of April 29, 2010 during which the former dual structure consisting of a Management Board and a Supervisory Board was replaced by a unitary Board of Directors structure in which Mr. Henri de Castries holds the position of
The Supervisory Board was concerned that the decision of Mr. Henri de Castries to renounce his employment contract, in accordance with the Afep-Medef recommendations, would not jeopardize the continuity of his accrued and future social benefi ts. Consequently, the Supervisory Board took the following decisions: ■ T he Supervisory Board authorized the Company to take all appropriate commitments to ensure that Mr. Henri de Castries would continue to have social benefi ts (health insurance, life insurance, disability insurance, retirement…) identical or on terms equivalent to those applicable to AXA Group’s director-level employees in France, including by amending Group benefi t plans in terms of health, life and disability insurance; ■ T he Supervisory Board authorized that Mr. Henri de Castries be granted a contractual severance benefi t upon termination of his term of offi ce as executive offi cer. This severance benefi t, subject to performance conditions in conformity with the Afep-Medef recommendations and the applicable laws and regulations, would be equivalent to that provided for in the collective agreement relative to director-level employees of insurance companies of 1993 and which was previously applicable to Mr. Henri de Castries as employee.
The payment of the severance benefi t would also be subject to the three following performance conditions: (1) achievement, for at least 2 of the 3 preceding fi scal years, of the objectives set for the benefi ciary’s variable compensation and corresponding to the payment of at least 65% of his variable compensation target; (2) evolution of the AXA share price at least equal to the Dow Jones
Board with regard to the insurance industry and the ratings of AXA’s principal competitors.
The initial amount of the severance benefi t would be equal to 19 months of the average compensation (fi xed and variable) paid during the 24-month period preceding termination for Mr. Henri de Castries. One month will be added to the initial amount of the severance benefi t for each additional year of future service up to a maximum cap of 24 months.
On February 17, 2010, the Supervisory Board acknowledged the effective renunciation by Mr. Denis Duverne of his employment contract as of the Shareholders’ Meeting of April 29, 2010 during which the former dual structure consisting of a Management
The Supervisory Board was concerned that the decision of Mr. Denis Duverne to renounce his employment contract, in accordance with the Afep-Medef recommendations, would not jeopardize the continuity of his accrued and future social benefi ts. Consequently, the Supervisory Board took the following decisions: ■ T he Supervisory Board authorized the Company to take all appropriate commitments to ensure that Mr. Denis Duverne would continue to have social benefi ts (health insurance, life insurance, disability insurance, retirement…) identical or on terms equivalent to those applicable to AXA Group’s director-level employees in France, including by amending Group benefi t plans in terms of health, life and disability insurance; ■ T he Supervisory Board authorized that Mr. Denis Duverne be granted a contractual severance benefi t upon termination of his term of offi ce as executive offi cer. This severance benefi t, subject to performance conditions in conformity with the Afep-Medef recommendations and the applicable laws and regulations, would be equivalent to that provided for in the collective agreement relative to director-level employees of insurance companies of 1993 and which was previously applicable to Mr. Denis Duverne as employee.
Offi cial trading of listed securities on Euronext Paris, including the Company’s ordinary shares, is transacted through French stockbrokers (sociétés de bourse) and takes place continuously on each business day in Paris from 9:00 a.m. to 5:30 p.m.
Eurozone. In addition, the Company’s ordinary shares are also included in the SXIP index-StoxxInsurance Index, the insurance related index for companies within the Eurozone, and in the
While the extent and nature of regulation varies from country to country, most jurisdictions in which AXA’s insurance subsidiaries operate have laws and regulations governing standards of solvency, levels of reserves, permitted types and concentrations of investments, and business conduct to be maintained by insurance companies as well as agent licensing, approval of policy forms and, for certain lines of insurance, approval or fi ling of rates. In certain jurisdictions, regulations limit sales commissions and certain other marketing expenses that may be incurred by the insurer and impose product suitability and disclosure requirements. In general, insurers are required to fi le detailed annual fi nancial statements with their supervisory agencies in each of the jurisdictions in which they do business. Such agencies may conduct regular or unexpected examinations of the insurers’ operations and accounts and make requests for particular information from the insurer. Certain jurisdictions also require registration and periodic reporting by holding companies that control a licensed insurer. This holding company legislation typically requires periodic disclosure concerning the corporation that controls the licensed insurer and other affi liated companies, including prior approval of transactions between the insurer and other affi liates such as inter-corporate transfers of assets and payment of dividends by the controlled insurer. In general, these regulatory schemes are designed to protect the interests of policyholders rather than shareholders.
The Company’s insurance subsidiaries are subject to regulatory capital requirements in the jurisdictions where they do business, which are designed to monitor capital adequacy and to protect policyholders. While the specific regulatory capital requirements (including definition of admitted assets and methods of calculation) vary between jurisdictions, an insurer’s required capital can be impacted by a wide variety of factors including, but not limited to, business mix, product design, sales volume, invested assets, liabilities, reserves and movements in the capital markets, including interest rates and equity markets. Regulatory capital requirements may increase, possibly significantly, during periods of declining equity markets and/or lower interest rates.
While the Group currently expects to be able to obtain ACPR’s approval for use of its internal economic capital models on a timely basis, discussions with ACPR are on-going and, consequently, there is a risk that ACPR may not approve these models on a timely basis (or otherwise) and/or may impose conditions or require modifications which would have multiple adverse consequences for the Group including increasing the levels of required capital.
These principles and standards are reflected in a variety of regulations and legislative initiatives that have been enacted over the past three years in various jurisdictions where the
Policyholders liabilities and related assets are currently accounted for according to IFRS 4 phase I which generally allows the continuation of accounting policies applied prior to the conversion to IFRS. The IASB issued a new Exposure Draft on June 20, 2013 in order to defi ne principles to be applied for IFRS 4 phase II. This new standard may signifi cantly affect the accounting of policyholders’ liabilities and related assets at the date of fi rst application which is not expected to be before 2018.
Our results of operations are materially affected by conditions in the global fi nancial markets and the economy generally. We have been affected by the fi nancial crisis and its aftermath since 2008. While fi nancial markets generally stabilized and performed well in 2013, a wide variety of factors continue to negatively impact economic conditions and consumer confi dence in certain jurisdictions where we do business and/or contribute to continuing volatility in fi nancial markets (including in foreign exchange and interest rates). These factors include, among others, concerns over the creditworthiness of certain sovereign issuers, particularly in Europe, the strengthening or weakening of foreign currencies against the Euro, the availability and cost of credit, the stability and solvency of certain fi nancial institutions and other companies, the risk of future infl ation as well as defl ation in certain markets, central bank intervention in the fi nancial markets through “quantitative easing” or similar programs, volatile energy costs, the risk of a possible exit from the Eurozone of one or more European states, and geopolitical issues.
Since June 2011, a number of European sovereigns and several major European fi nancial institutions (including AXA)
These events and the continuing market volatility, have had and may continue to have an adverse effect on our revenues and results of operations in part because we have a large investment portfolio. Our investment income is an important factor in our profi tability, and our sales of insurance and asset management products (as well as level of surrenders and lapses) is dependent upon fi nancial market performance, customer behavior and confi dence as well as other related factors.
or access to fi nancing over a prolonged period may have a material adverse effect on our business, results of operations and consolidated fi nancial position. Our principal sources of liquidity are insurance premiums, annuity considerations, deposit funds, asset management fees, cash fl ows from our investment assets and cash/cash-equivalents on our balance sheet. Sources of liquidity in normal markets also include a variety of short and long-term instruments, including repurchase agreements, commercial paper, committed credit facilities, medium and long-term debt, subordinated debt securities, capital securities and shareholders’ equity.
(taking into account the dividend payment of €0.81 per share proposed at the Shareholders’ Meeting of April 23, 2014)
which represented a €28.5 billion capital surplus at that date: (i) €23.6 billion of required capital (1), versus (ii) €52.1 billion of available capital (2). The Company’s consolidated solvency margin ratio is sensitive to capital market conditions (including the level of interest rates, the level of equity markets and foreign exchange impacts) as well as a variety of other factors.
Moody’s view that (i) financial risks stemming from the operating and investment exposure to weakened European sovereigns and banks have increased, as well as (ii) Moody’s expectations of continued weak economic growth in certain of AXA’s key markets. On March 11 , 2014 , Fitch reaffirmed the AA- financial strength ratings of AXA’s principal insurance subsidiaries revising the outlook to stable from negative . On
May 22, 2013, S&P reaffi rmed the A+ financial strength rating on the core operating entities of the AXA Group and the Along -term counterparty credit ratings on AXA SA and AXA
Market conditions, changes in accounting policy and/or other factors could adversely affect the carrying value of our goodwill, cause us to accelerate amortization of our DAC, VBI and other intangibles and/or to reduce deferred tax assets and deferred policyholders participation assets which could have a material adverse effect on our consolidated results of operations and fi nancial statements
to the 2013 C onsolidated F inancial S tatements included in this
Losses due to defaults by fi nancial institution counterparties, reinsurers and/or other third parties including potential sovereign debt defaults or restructurings, impairment of our investment assets and unrealized losses could negatively affect the value of our investments and reduce our profi tability
Third parties that owe us money, securities or other assets may not pay or perform under their obligations. These parties include private sector and government (or government-backed) issuers whose securities we hold in our investment portfolios (including mortgage-backed, asset-backed, government bonds and other types of securities), borrowers under mortgages and other loans that we extend, reinsurers to which we have ceded insurance risks, customers, trading counterparties, counterparties under swap and other derivative contracts, other counterparties including brokers and dealers, commercial and investment banks, hedge funds, other investment funds, clearing agents, market exchanges, clearing houses and other fi nancial institutions. Many of our transactions with these third parties expose us to credit risk in the event of default of our counterparty.
Value” in the 2013 consolidated fi nancial statements included in this Annual Report. The determination of fair values in the absence of quoted market prices is based on a variety of factors including those described in Note 9.10. Certain of our investment assets, for which there is no active trading market or other observable market data, are valued using models and methodologies that involve estimates, assumptions and signifi cant management judgment. During periods of market disruption of the type we have experienced over the past several years, a larger portion of our investment assets may be valued using these models and methodologies as a result of less frequent trading or less observable market data with respect to certain asset classes that were previously actively traded in liquid markets. There can be no assurance that our valuations on the basis of these models and methodologies represent the price for which a security may ultimately be sold or for which it could be sold at any specifi c point in time. Use of different models, methodologies and/or assumptions may have a material impact on the estimated fair value amounts and could have a material adverse effect on our results of operations and fi nancial condition.
Our accounting principles and policy with respect to the determination of allowances and impairments on our investments are set forth in Note 1.8.2 “Financial instruments classifi cation” in the 2013 C onsolidated F inancial S tatements included in this Annual Report. The determination of the amount of allowances and impairments vary by investment type and is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available.
During periods of declining interest rates: ■ life insurance and annuity products may be relatively more attractive to consumers due to minimum guarantees in these products, resulting in increased premium payments on products with fl exible premium features, and a higher percentage of insurance policies and annuity contracts remaining in force from year-to-year, creating asset liability duration mismatches; ■ we may be required to increase provisions for guarantees included in life insurance and annuity contracts, as the guarantees become more valuable to policy holders and surrender and lapse assumptions require updating; and
Conversely, in periods of increasing interest rates: ■ surrenders of life insurance policies and fi xed annuity contracts may increase as policyholders choose to forego insurance protection and seek higher investment returns; ■ obtaining cash to satisfy these obligations following such surrenders may require us to liquidate fi xed maturity investments at a time when market prices for those assets are depressed because of increases in interest rates which may result in realized investment losses and decrease our net income; ■ accelerated surrenders may also cause us to accelerate amortization of deferred policy acquisition costs, which would reduce our net income; ■ our fee income may decrease due to a decline in the value of
Our mitigation efforts with respect to interest rate risks are primarily focused on maintaining an investment portfolio with diversifi ed maturities that has a weighted average duration that is approximately equal to the duration of our estimated liability cash fl ow profi le. However, our estimate of the liability cash fl ow profi le may be inaccurate and we may be forced to liquidate investments prior to maturity at a loss in order to cover the liability. Although we take measures to manage the economic risks of investing in a changing interest rate environment, we may not be able to mitigate the interest rate risk of our assets relative to our liabilities.
Regulatory and other legal restrictions may limit our ability to transfer funds freely, either to or from all our subsidiaries. In particular, our principal insurance subsidiaries are subject to restrictions on the amount of dividends and debt repayments that can be paid to us and our affi liates. Moreover, our designation as global systemically important insurer by
European regulators could impose similar or other restrictions on the transfer of funds which could negatively impact the fungibility of our capital. These factors may adversely impact the Company’s liquidity position and capacity to pay dividends.
(“GMIB”) and/or Withdrawal for Life Benefi ts (“GMWB”), available in particular under our Variable Annuity products.
On a substantial part of the in-force portfolio and for all new vintages of business, these hedging instruments are coupled with volatility risk mitigation techniques (“Capped Volatility
These hedging techniques are designed to reduce the economic impact of unfavorable changes to certain of our exposures under the Accumulator guarantees due to movements in the equity and fi xed income markets and other factors. In certain cases, however, we may not be able to apply these techniques to effectively hedge our risks as intended or expected or may choose not to hedge certain risks because the derivative market(s) in question may not be of suffi cient size or liquidity, the cost of hedging may be too expensive (as a result of adverse market conditions or otherwise), the nature of the risk itself may limit our ability to effectively hedge or for other reasons.
Services (the “NYDFS”) have been scrutinizing insurance companies’ use of affi liated captive reinsurers or off-shore entities. In July 2012, as part of an industry-wide inquiry, AXA
to provide information regarding the use of affi liated captive reinsurers or off-shore entities to reinsure insurance risks. In
“FIO”), Offi ce of Financial Research (the “OFR”), the NAIC and state insurance commissioners conduct inquires similar to the
transactions involving captive insurers until these inquiries are complete. Like many life insurance companies, AXA Equitable utilizes a captive reinsurer, AXA RE Arizona, as part of its capital management strategy. We cannot predict what, if any, changes may result from these reviews. If the NYDFS or other state insurance regulators were to restrict the use of such captive reinsurers or if AXA Equitable otherwise is unable to continue to use a captive reinsurer, the capital management benefi ts received under this reinsurance arrangement could be adversely affected.
We use numerous assumptions to determine the appropriate level of insurance reserves, deferred acquisition costs (DAC), employee benefi ts reserves and to calculate certain widely used industry measures of value such as Life & Savings New Business Value (NBV) and European Embedded Value (EEV), which involve a signifi cant degree of management judgment and predictions about the future that are inherently uncertain; if these assumptions are not correct, they may have an adverse impact on our results of operations and/or performance indicators, such as NBV, that may adversely affect the price of our securities
The claims experienced in our Life & Savings businesses could be inconsistent with the assumptions we use to price our products and establish our reserves and adversely affect our earnings
(“FSB”) to identify global systemically important fi nancial institutions (“G-SIFIs”). The assessment methodology, which is endorsed by the FSB, is intended to identify those insurers whose distress or disorderly failure, because of their size, complexity and interconnectedness, would cause signifi cant disruption to the global fi nancial system and economic activity.
G SIIs, which includes the AXA Group. The framework policy measures for G SIIs, also published by the IAIS on July 18, 2013 for implementation by the GSIIs, include (1) new capital requirements, including (i) a “basic” capital requirement, formerly known as “Backstop Capital Requirement” (“BCR”)
RRP and the development and implementation of the BCR in 2014, while other measures are to be phased in more gradually, such as the HLA, which is to be developed by the end of 2015 and applied as from 2019.
Our business is subject to extensive laws and regulations and to signifi cant litigation risks in the various countries where we operate; changes in existing or new laws and government regulations in these countries and/or an adverse outcome in any signifi cant pending or future litigation or regulatory investigation may have an adverse effect on our business, fi nancial condition, results of operations, reputation or image
Furthermore, our international operations expose the Group to different local political and regulatory, business, and fi nancial risks and challenges which may affect the demand for our products and services, the value of our investment portfolios, the required levels of capital and surplus, and the credit quality of local counterparties. These risks include, for example, political, social or economic instability in countries in which we operate or we transfer part of our business processes, including the risk of nationalization, expropriation, price controls, capital controls, fl uctuations in foreign currency exchange rates, credit risks of our local borrowers and counterparties, lack of local business experience in certain markets, risks associated with exposure to insurance industry insolvencies through policyholder guarantee funds or similar mechanisms set up in foreign markets and, in certain cases, risks associated with the potential incompatibility with foreign partners, especially in countries in which we are conducting business through joint ventures or other entities we do not control.
While the US over-the-counter (“OTC”) markets have become more sophisticated and liquid in recent years, no assurance can be given as to the liquidity of the OTC market for AXA ADS
P&C new product characteristics (risk-adjusted pricing and profi tability), P&C and Life Economic reserves, Asset and Liability Management studies, Asset allocation and new investments, and Reinsurance.
framework. AXA STEC model is designed as a consistent and comprehensive risk management tool, which also forms an important element in the capital management and planning process.
Group’s risk appetite, with strengthened reporting, risk limits and decision processes; ■ performing a second opinion on key processes, such as the defi nition of characteristics for new products before launch, P&C reserves, ALM studies & asset allocation and reinsurance strategy; ■ on the internal capital model, local Risk Management is responsible for checking the adequacy of the risk profi le, implement, test and validate the internal model.
Local Chief Risk Offi cers head the local Risk Management teams within each operational entity and report both to a member of their Executive Committee (CEO or CFO) and to the Group CRO. Chief Risk Offi cers are independent from operations and internal Audit Departments.
Group Audit Committee, to the Finance Committee, and to the Board of Directors; 2. Group Risk Committees aim at covering main risk categories: For Financial risks: • the Group Asset-Liability Management Supervisory
Please refer to Section 3.4 of this report for more details; For Life insurance risks and for P&C insurance risks: • two Global Business Lines dedicated Boards, chaired by the CEO of each business l ine and which GRM attends; For Operational and Reputation risks: • Risk & Compliance Committee, co-chaired by the Group
CFO and the Group COO, and where GRM is in charge of its secretariat.
Annuities’ guarantees; ■ a regular monitoring of the fi nancial risks on the economic and solvency position of the Group; ■ reinsurance which also offers solutions to mitigate certain fi nancial risks; AXA’s exposure to market risk is strictly monitored. It is mitigated by: ■ its broad range of operations and geographical positions, which provides a high level of diversifi cation; and
Account products or fees on Unit-Linked contracts; ■ a rise in yields on fi xed-income investments (linked to interest rates or in spreads) reduces the market value of fi xed-income investments and could impact adversely the solvency margin, and increase policyholder’s surrenders due to competitive pressures; ■ a decline in asset market value (equity, real estate, alternatives, etc.) could adversely impact the solvency margin, as well as available surplus; ■ a rise in fi nancial market volatility may increase the cost of hedging the guarantees associated with certain products
(Unit-Linked, Variable Annuities…) and decrease the Group’s value; ■ a change in foreign-exchange rates would have limited impact for the operating units since foreign-currency commitments are matched to a large extent by assets in the same currency or covered by hedges, but it could affect the earnings contribution in E uros; ■ furthermore, P&C activities are subject to infl ation which may increase the compensation payable to policyholders, so that the actual payments may exceed the associated reserves set aside. This risk can be signifi cant for long-tail businesses but is managed through regular pricing adjustments or specifi c protections against peaks of infl ation.
Disclosures about Risk Factors”; ■ liquidity risk. Please read “Liquidity position and risk management framework” included in Part 1 – Section 1.4 –
The Group EV is not an estimate of AXA’s “fair value” as it does not include the value of the new business to be sold in the future, nor does include any value for future profi ts from existing business of other-than-life businesses (Property &
The Life & Savings “Adjusted Net Asset Value” (ANAV) is derived by aggregating the local regulatory (statutory) balance sheets and reconciling with the Life & Savings IFRS shareholders’
The Group EV equals the Life & Savings EEV plus the adjusted net value of other-than-life businesses, refl ecting the consolidated IFRS shareholders’ equity adjusted for: ■ the elimination of all intangible assets; ■ the reclassifi cation in the liabilities of all undated debt (TSS/
TSDI) that is treated as equity in IFRS; ■ the addition of unrealized capital gains or losses not already included in equity; ■ the mark-to-market of debt.
average infl ation rate was included in 2013 (2.0% in 2012)
and AXA follows a strict effi ciency plan; ■ projected expenses are adjusted for non-recurring expenses and one-time strategic spending; ■ some benefi t 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; ■ the cost of non-fi nancial risks is allowed for through the cost of holding hard capital at entity level and corresponding to that required to meet the Group target capital; ■ a weighted average tax rate of 29,1% was assumed in 2013
■ Downward parallel shift of 100 basis points in reference interest rates which is the same as above but with a shift downward. Where the shift of 100 basis points would drop rates below 0%, they are fl oored at zero.
■ 10% lower value of equity markets at the start of the projection which is the same as above but testing a decrease.
10% lower value of equity markets at start of projection (1,591) (4%) (347) (1%) (1,938) (5%) (1,271) (3%) (409) (1%) (1,680) (5%)
2013 interest rate sensitivities (% of Group EV) for Life &
EEV became less sensitive to an increase in interest rates, primarily driven by the United-States due to higher interest rates causing General Account guarantees and Variable
Annuity options to be less in the money, a lower exposure to interest risks following the “MONY” transaction and the Variable
2013 interest rate sensitivities (% of Group EV) for other-thanlife businesses of -3% to upward 100 bps and 4% to downward 100 bps (2012: -3% and 4%) refl ect mainly the impacts on fi xed-income assets, partly offset by derivatives and sensitivities to changes in debt value, should interest rates curve move, with all debt classifi ed as liabilities and re-measured at market value. The majority of other-than-life reserves in the fi nancial statements and therefore in TNAV is generally not sensitive to interest rate changes as not discounted in most cases.
2013 equity market sensitivities (% of Group EV) for Life &
lower value (2012: 3% and -3%) are more symmetrical. The limited asymmetries refl ect the impact of guarantees and profi t-sharing rules, along with some hedging programs to limit potential losses. The impacts of equity market value changes can come from General Account exposures or from changing asset balances impacting future fee revenue on separate account business.
2013 equity market sensitivities (% of Group EV) for otherthan -life businesses of 1% to 10% higher value and -1% to 10% lower value (2012: 1% and -1%) refl ect the impacts on equities including derivatives on equities.
Group assets at December 31, 2013 (88% in 2012), assets and liabilities with foreign currency exposure are generally naturally matched or hedged.
This exposure allows AXA France to diversify its investments and enable policyholders to benefi t from the performance of international fi nancial markets. AXA France offsets its exposure to exchange-rate risk by using foreign exchange forwards and other derivatives (notional of €10,200 million in 2013 versus €9,840 million in 2012).
AXA Japan may invest when relevant outside the Japanese market in order to diversify and optimize investments and enhance returns. At the end of 2013, the total assets denominated in foreign currencies held both directly and indirectly through investment funds (mainly US Dollars)
Swiss market. A major portion of the exposure is hedged back into Swiss Francs with foreign exchange swaps, options and forwards. At the end of 2013, Switzerland foreign exchange exposure amounted to €23,100 million (€22,621 million in 2012) which represented circa 36% of total assets (circa 33%
At the end of 2013, these countries accounted for 99% of the
Group’s Life & Savings companies’ assets (99% at the end of 2012).
■ Property & Casualty business: 9% of Group assets at the end of 2013 (9% at the end of 2012): In France, AXA was exposed to exchange-rate risk for a global amount of €1,833 million at the end of 2013 (€1,811 million in 2012) held both directly and indirectly through investment funds partly invested in foreign currencies (US Dollar: €1,386 million versus €1,439 million in 2012, Pound Sterling: €240 million versus €186 million in 2012 and Japanese Yen: €57 million versus €43 million in 2012), in order to diversify its investments.
France offsets its exposure to exchange-rate risk by using foreign exchange forwards in these currencies (notional of €1,806 million versus €1,712 million in 2012).
AXA Germany held €1,475 million investments denominated in foreign currencies at the end of 2013 (€1,407 million in 2012)
both directly and indirectly through investment funds with the aim of diversifying its investments and taking advantage of foreign markets’ performance. These investments were mainly denominated in US Dollars. AXA Germany offsets its exchangerate risk by using foreign exchange forwards for a notional amount of €1,180 million (notional €746 million in 2012), currency swaps for a notional amount of €188 million (notional €176 million in 2012) and congruent coverage (matching assets and liabilities denominated in the same currency) for €38 million
Healthcare subsidiaries, which operate in Pound Sterling, and AXA Ireland. Those entities have however diversifi ed their investment portfolios in line with asset liability management objectives as follows: • directly owned foreign currency investments and cash of €1,179 million (€1,208 million in 2012), of which €1,149 million (mainly fi xed income) is hedged through foreign exchange forwards or cross currency swaps.
■ International Insurance business (2% of Group assets at the end of 2013 versus 2% in 2012): In the course of its business, AXA Corporate Solutions
Counterparty credit risk is defi ned as the risk that a third party in a transaction will default on its commitments. Given the nature of its core business activities, AXA monitors two major types of counterparties, using methods suitable to each type: ■ investment portfolios held by the Group’s insurance operations (excluding assets backing separate-account products where the fi nancial risk is borne by policyholders)
Central Finance Department has defi ned and implemented formal management standards, as well as guidelines for monitoring and assessing fi nancial risks. These standards, which have been approved by the Group’s Management
The Group Central Finance Department is in charge of producing reporting data that consolidate interest rate, foreign exchange and liquidity risk exposures, as well as the interest expenses of the Company. This reporting also includes medium-term forecasts.
Rating changes versus 2012 were mainly driven by debt market evolution in 2013 leading to rating downgrades.
The exposure to sovereign debt securities issued by governments and related in Greece, Ireland, Italy, Portugal and Spain was as follows: Issuer (In E uro million)
Net amounts correspond to amounts after the related impacts of deferred tax and shadow accounting on policyholders’
participation, deferred acquisition cost and value of purchased business in force. Net amounts may evolve depending on the timing of realization of these potential losses and on the local regulatory environment.
At December 31, 2012, the economic breakdown of the total value of ABS (€10.1 billion excluding assets held for sale, as well as CMOs and Agency pool ABS) was: 40% in CLO, 11% in
Consumer ABS, 19% in CDO, 13% in Commercial MBS, 9% in
Prime Residential, 7% in US Subprime & Alt-A, and 2% in Non conforming RMBS. At December 31, 2012, AXA’s invested assets included a net exposure to US subprime residential and Alt-A mortgage loans of approximately €0.7 billion (4%
(€0.3 billion); iii. €10.1 billion of CDS protections sold as an alternative to the direct purchase of a corporate bond mainly by holding government bonds and at the same time selling protection on very good quality names. This type of ALM strategy is often implemented to compensate for the lack of depth or liquidity in some markets in order to take synthetic credit risk.
At December 31, 2013, the breakdown of these net CDS’s underlying debt securities by rating was as follows: High Yield/NR
Group holds €18.5 billion (notional amount) of credit derivatives as total exposure including consolidated investment funds “Satellite Investment
The breakdown of all reserves ceded to reinsurers by reinsurer rating as of December 31, 2013 (€17.8 billion) was as follows: BBB/BB/B
At December 31, 2012, the breakdown of reserves ceded to reinsurers (€10.6 billion) by reinsurer rating was: 51% in AA, 20% in A, 11% in BBB/BB/B, and 18% in others.
Solvency and reduce volatility of key fi nancial indicators; ■ reviews of technical reserves; ■ emerging risks initiative to share expertise within the underwriting and risk communities.
ALM and aspects related to legal, compliance, regulatory, accounting and reputation. For Variable Annuity products with guarantees, as well as Long Term Care products, the local governance is supplemented by a centralized review performed by GRM, which is submitted to the Management
(mortality, longevity, morbidity…) and uses the results of this work to optimize its product design and its reinsurance coverage. These exposure analyses are supported by expert risk models in Life & Savings
In order to build adjusted and optimized protection, the Group’s various operating entities place their reinsurance treaties through AXA Global P&C. A small part (10-20%) of most local treaties is placed on the domestic reinsurance market through
The structures of these pools are designed to adequately protect the Group in compliance with the Group risk appetite framework. In order to protect these pools, specifi c covers are arranged through either the traditional reinsurance market or the fi nancial one through securitization (cat bonds).
The analysis is segmented differently depending on product type, geographical location, distribution channel, local regulation and other factors, in order to obtain a homogeneous claims base and ensure an appropriate analysis of reserves.
For the breakdown of Property and Casulaty and International insurance technical reserves please refer to Note 21 of the notes to the consolidated fi nancial statements.
AXA’s risk exposure. On these products, the underlying fi nancial market performance is mostly passed on to the policyholders. This category also includes products that may provide a stand-alone guarantee on invested capital in the event of death. Overall, they present only a limited market risk for the Group through reduction of shareholders’ value;
Emerging Risks surveillance is organized through a detection process including watch on scientifi c publications, court decisions, etc. Risks are monitored and classifi ed within a risk mapping constituted of four sub-groups (legal/regulatory, environmental, socio-economical and technological). After prioritization of the monitored risks or after a warning from an entity, a working group is launched on a yearly basis by GRM
Guided by the principles set forth by the Basel Committee on banking supervision, AXA defi nes operational risk as the risk of loss resulting from inadequate or failed processes, people or systems. This inadequacy or failure may come from internal or external causes. It includes legal risk and considers reputation risk as an impact, and excludes risk arising from strategic decisions.
Anti-Money Laundering Charter that was initially adopted in 2002. In line with this charter, each AXA Group Company is required to maintain procedures based on Group standards and principles, in addition to those required by applicable local regulations, and to appoint an anti-money laundering offi cer.
liability, professional liability and fraud and are: ■ group-wide insurance programs covering all AXA Group entities with the exception of AXA Financial and its subsidiaries, which traditionally arrange cover within local market; ■ reviewed and approved annually by the Management
Offi cer (Group CFO). His role includes aligning AXA’s investment strategy with the broader strategy of the Group, fostering closer cooperation amongst local entities, enhancing methodology, and steering investment decisions.
ALM aims at matching assets with the liabilities generated by the sale of insurance policies. The objective is to defi ne the optimal asset allocation so that all liabilities can be met with the highest degree of confi dence while maximizing the expected investment return.
ALM constraints are also taken into account when new insurance products are being designed as part of the product approval process (see Section “Insurance risk – Product approval”).
Approval Process (IAP). The IAP ensures key characteristics of the investment are analysed, such as risk and return expectations, experience and expertise of the investment management teams, as well as accounting, tax, legal and reputational issues. The IAP is completed at Group level for any signifi cant investment, notably if several local entities are participating to the same investment. In that case, the successful completion of an IAP is done after the production of a second independent opinion by Group Risk Management.
Products involving hedging programs based on derivative instruments are designed with the support of dedicated teams at AXA Bank Europe, AXA Investment Managers,
Derivative strategies are systematically reviewed and validated by local Investment and ALM Committees. In addition, there is a segregation of duties between those responsible for making investment decisions, executing transactions, processing trades and instructing the custodian. This segregation of duties aims in particular at avoiding confl icts of interest.
The market and credit risks arising from derivatives are regularly monitored taking into account the Group’s various constraints
(Risk appetite, Internal model…). Such monitoring is designed to ensure market and credit risks, coming either from cash or derivative instruments, are properly controlled and remain within approved limits.
Valuation Risk is addressed through the use of expert teams. They independently counter-valuate the derivatives positions so as to get appropriate accounting, payment and collateral management but as well on the prices proposed by counterparties in case the AXA entity wished to initiate, early terminate or restructure derivatives. Such capacity in pricing requires high-level expertise, which relies on rigorous market analysis and the ability to follow the most up-to-date market developments for new derivatives instruments.
or geographical expertise, AXA can also decide to invest through external asset managers. In these cases, thorough due diligence analyses are performed by the Investment and the Risk Management communities and a continuous monitoring is implemented both at Group and Local level.
NOTE 10 Investments in associates accounted for using the equity method 253
NOTE 29 Contingents assets and liabilities and unrecognized contractual commitments 322
NOTE 32 Subsequent events 329 4.7 REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS 330
Receivables arising from direct insurance and inward reinsurance operations 14,137 14,968 13,346
(a) Before 2013, AXA Japan closed its full year accounts at September 30. Given signifi cant movements in foreign exchange rates between September 30, 2011 and December 31, 2011, and between September 30, 2012 and December 31, 2012, balance sheet items were translated using respectively December 31, 2011 and December 31, 2012 exchange rates. Starting with 2013 annual accounts, AXA Life Japan aligned its closing date with the Group calendar year.
(d) Also includes assets backing contracts where the fi nancial risk is borne by policyholders with Guaranteed Minimum features.
Liabilities arising from investment contracts with discretionary participating features 33,850 36,350 37,858
Liabilities arising from investment contracts with no discretionary participating features 99 251 380
Liabilities arising from investment contracts with discretionary participating features and where the fi nancial risk is borne by policyholders 4,243 4,080 3,621
Liabilities arising from investment contracts with no discretionary participating features and where the fi nancial risk is borne by policyholders 32,682 29,983 26,336
Derivative instruments relating to insurance and investment contracts (1,086) (2,053) (2,056)
Payables arising from direct insurance and inward reinsurance operations 8,317 8,955 7,212
Net realized gains and losses relating to investments at cost and at fair value through shareholders’equity (e) 2,410 2,004
Net realized gains and losses and change in fair value of investments at fair value through profi t and loss (f) 20,621 14,210 of which change in fair value of assets with fi nancial risk borne by policyholders (g) 22,180 14,186
Income from operating activities before tax 6,740 5,735 10 Income arising from investments in associates – Equity method 131 119 24 Financing debts expenses (i) (618) (568)
(g) Change in fair value of assets with fi nancial risk borne by policyholders is offset by a balancing entry in technical charges relating to insurance activities.
(i) Includes net balance of income and expenses related to derivatives on fi nancing debt (however excludes change in fair value of these derivatives).
Shareholders’ equity opening January 1, 2013 Restated (b) 2,388,611 2.29 5,470 20,749 (364)
Notably dilution impact from AllianceBernstein deferred compensation (€-97 million group share in 2013 and €+30 million in 2012, both offset in minority interests) and €-85 million in 2013 (€-185 million in 2012) from open-market purchase of AllianceBernstein holding units (€-54 million group share and €-31 million minority interests in 2013 and €-121 million group share and €-64 million minority interests in 2012).
Net increase/(write back) in impairment on investments and tangible assets 777 680
Adjustment of non cash balances included in the operating income before tax (9,350) 5,931
Adjustment for reclassifi cation to investing or fi nancing activities 2,436 986
Disposal of subsidiaries and affi liated companies, net of cash ceded 364 225
Sales and/or repayment of loans and other assets (h) (j) 22,988 26,912
Net cash related to sales and repayments of investments (h) (i) (j) 106,092 107,470
Purchases of equity instruments and non consolidated investment funds (h) (i) (24,716) (20,853)
Net cash related to purchases and issuance of investments (h) (i) (j) (114,904) (113,319)
Net cash related to sales and purchases of tangible and intangible assets (334) (319)
Net cash impact of assets lending/borrowing collateral receivables and payables (2,692) (1,392)
CASH AND CASH EQUIVALENT AS OF JANUARY 1 (e ) 30,101 30,042
Net impact of foreign exchange fl uctuations and reclassifi cation on cash and cash equivalents (1,364) (336)
CASH AND CASH EQUIVALENT AS OF DECEMBER 31 ( e) 20,609 30,101
(d) Includes impairment and amortization of intangible assets booked during business combinations.
(i) Includes equity instruments held directly or by consolidated investment funds as well as non consolidated investment funds.
AXA SA, a French “Société Anonyme” (the “Company” and together with its consolidated subsidiaries, “AXA” or the
The amendment to IAS 19 – Employee Benefi ts, published on June 16, 2011, eliminates the corridor method that allows the deferral of recognition of gains and losses. However, this method was not applied by the Group since all actuarial gains and losses were recognized through shareholders’ equity. The amendment also replaces interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defi ned benefi t liability (asset). In addition, the amendment no longer allows the deferral of past service costs which are immediately to be recognized in Profi t or Loss when incurred.
The revised standards also amended disclosure requirements which led to some changes to Note 26.
Provisions for risks and charges (10,760) (131) (10,891) (11,789) (163) (11,952)
The amendments to IFRS 7 – Financial Instruments Disclosure, published on December 16, 2011 amend disclosure requirements of information about rights of offset and related arrangements.
Annual Improvements 2009-2011 Cycle, published on May 17, 2012, includes amendments to IFRS that are not part of a major project. They are presented in a single document rather than as a series of small changes.
Income would create or enlarge an accounting mismatch in profi t or loss. Moreover, the IASB issued an Exposure Draft on November 28, 2012 that proposes limited amendments to IFRS9, in particular the introduction of a third category of classifi cation for fi nancial instruments that would correspond to fi nancial instruments held to collect contractual cash fl ows and for sale. These debt instruments would be measured at fair value with changes recognized in fair value through Other
November 19, 2013, introduces new requirements for hedge accounting that align hedge accounting more closely with risk management. They represent the completion of the third phase of the IAS 39 replacement project. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in
■ IFRS 11 – Joint Arrangements introduces new accounting requirements for joint arrangements and replaces IAS 31
The amendments to IAS 32 – Financial Instruments: Presentation published on December 16, 2011, provide clarifi cations of the application of the offsetting rules. The amendments to IAS 32 clarify that in order to result in an offset of a fi nancial asset and a fi nancial liability, a right to set-off must be available immediately rather than be contingent on a future event and must be exercisable by any of the counterparties, both in the normal course of business and in the event of default, insolvency or bankruptcy. Additional clarifi cations are presented regarding the settlement process. The amendments to IAS 32 are effective for annual periods beginning on or after
IFRIC 21 – Levies, published May 20, 2013, is an interpretation on the accounting for levies imposed by governments. The interpretation clarifi es that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The interpretation is effective for annual periods beginning on or after January 1, 2014 and is not expected to have a material impact on the Group’s consolidated fi nancial statements.
November 21, 2013, clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In addition, they permit a practical expedient of valuation if the amount of the contributions is independent of the number of years of service. The amendments are effective for annual periods beginning on or after July 1, 2014 (with earlier application being permitted) and are not expected to have a material impact on the Group’s consolidated fi nancial statements.
Investment funds and real estate companies are either fully consolidated or proportionately consolidated or accounted for under the equity method, depending on which conditions of
IFRS, which may continue to be applied under IFRS 4, future
premiums relating to acquired business may be recognized in the “Value of acquired business in force” item.
Group, the liabilities incurred by the Group to former owners of the acquiree and the equity interests issued by the Group.
Goodwill is measured as the excess of (a) the aggregate of the consideration transferred, the amount of any minority interest in the acquiree and in a business combination achieved in stages, the acquisition-date fair value of the Group’s previously held equity interest in the acquiree over (b) the net of the acquisitiondate amounts of the identifi able assets acquired and the liabilities assumed.
When control over a subsidiary is acquired, a put option may be granted to minority shareholders. However, the recognition of the puttable instruments as a liability depends on the contractual obligations.
receivables and gains/losses on intra-group transactions are eliminated: ■ in full for controlled subsidiaries, and
The consolidated fi nancial statements are presented in Euro million, the Euro being the Group’s presentational currency.
amount; ■ cost approach: The consideration of amounts that would currently be required to construct or replace the service capacity of an asset.
Valuation techniques are subjective in nature and signifi cant judgment is involved in establishing fair values. They include recent arm’s length transactions between knowledgeable willing parties on similar assets if available and representative of fair value and involve various assumptions regarding the underlying price, yield curve, correlations, volatility, default rates and other factors. Unlisted equity instruments are based on cross checks using different methodologies such as discounted cash fl ows techniques, price earning ratios multiples, adjusted net asset values, taking into account recent transactions on instruments which are substantially the same if concluded at arm’s length between knowledgeable willing parties, if any. The use of valuation techniques and assumptions could produce different estimates of fair value. However, valuations are determined
are amortized over the terms of the policies, as premium is earned. For Life business, the asset is amortized based on the estimated gross profi ts emerging over the life of the contracts.
Depending on the intention and ability to hold the invested assets, fi nancial instruments are classifi ed in the following categories: ■ assets held to maturity, accounted for at amortized cost;
■ assets held for trading and assets designated as at fair value with change in fair value through profi t or loss; ■ available-for-sale assets accounted for at fair value with changes in fair value recognized through shareholders’
(Collateralized Debt Obligations); ■ portfolios of managed fi nancial investments whose profi tability is valued on a fair value basis: mainly securities held by consolidated investment funds, managed according to the Group risk management policy (“Satellite Investment
■ as assets of the “Satellite Investment Portfolios”, refl ecting the strategic asset allocation based on a dynamic asset management aimed at maximizing returns.
Investment Portfolios” are accounted for at fair value with changes in fair value recognized through income statement.
Assets designated as available-for-sale, trading assets, investments designated as at fair value through profi t or loss and all derivatives are measured at fair value, i.e. the amount for which an asset could be exchanged, between knowledgeable, willing parties in an arm’s length transaction. The Group applies the IFRS 13 fair value hierarchy.
Loans which are not designated under the fair value option are accounted at amortized cost using the effective interest rate method.
– is removed from shareholders’ equity and an impairment is recognized through the income statement. Equity instruments impairment recognized in the income statement cannot be reversed through the income statement until the asset is sold or derecognized.
The Group is party to repurchase agreements and securities lending transactions under which fi nancial assets are sold to a counterparty, subject to a simultaneous agreement to
repurchase these fi nancial assets at a certain later date, at an agreed price. While substantially all of the risks and rewards of the fi nancial assets remain with the Group over the entire lifetime of the transaction, the Group does not derecognize the fi nancial assets. The proceeds of the sale are reported separately. Interest expense from repurchase and security lending transactions is accrued over the duration of the agreements.
Additionally, the Group is party to total return swaps under which fi nancial assets are sold to a counterparty with a corresponding agreement that cash fl ows equal to those of the underlying assets will be transmitted back to the Group in exchange for specifi ed payments and any increases or declines in the fair value of the assets are absorbed by the
The Group is also party to reverse repurchase agreements under which fi nancial assets are purchased from a counterparty, subject to a simultaneous agreement to return these fi nancial assets at a certain later date, at an agreed price. If substantially all of the risks and rewards of the securities remain with the counterparty over the entire lifetime of the agreement of the transaction, the securities concerned are not recognized as fi nancial assets of the Group. The amounts of cash disbursed are recorded under fi nancial investments, except for transactions arising from banking activities, which are recorded as separate assets. Interest income on reverse repurchase agreements is accrued over the duration of the agreements.
The Group holds fi nancial investments that also include embedded derivatives. Such embedded derivatives are separately recorded and measured at fair value through profi t or loss if the impact is deemed material.
The Group classifi es its insurance and investment contracts into six categories: ■ liabilities arising from insurance contracts; ■ liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders; ■ liabilities arising from investment contracts with discretionary participating features; ■ liabilities arising from investment contracts with no discretionary participating features; ■ liabilities arising from investment contracts with discretionary participating features where the fi nancial risk is borne by policyholders; these relate to Unit-Linked contracts or multifunds contracts containing a non-Unit-Linked fund with discretionary participating features; ■ liabilities arising from investment contracts with no discretionary participating features where the fi nancial risk is borne by policyholders.
Except where IAS 39 applies, according to IFRS 4, recognition and derecognition are based on the AXA accounting policies existing prior to IFRS and are described below, except for the elimination of equalization provisions, selective changes as permitted by IFRS 4 (see below), the extension of shadow accounting.
Except when these guarantees are covered by a risk management program using derivative instruments (see next paragraph), guaranteed minimum benefi ts reserves relating
respectively, of a basis which may include not only fi nancial income but also other components such as in Germany or
Sensitivities of: ■ fi nancial assets and liabilities; ■ insurance and investment contracts related assets and liabilities including the value of Life & Savings business inforce, to interest rate risk and equity risk are disclosed in
For reinsurance, premiums are recorded on the basis of declarations made by the ceding company, and may include estimates of gross written premiums.
Revenues from other activities mainly include: ■ commissions received and fees for services relating to asset management activities; ■ insurance companies revenues from non insurance activities, notably commissions received on sales or distribution of fi nancial products, and
Winsecura Pensionskasse AG Merged with Pro Bav Pensionskasse - - 100.00 99.74
AXA Sigorta AS (Turkey) Dilution of minorities interests 92.61 92.61 72.59 72.59
As of December 31, 2013, investment funds represented a total of €92,616 million invested assets (€104,031 million at the end of 2012), corresponding to 306 investment funds mainly in France, Japan, Germany and Belgium and mainly relating to the Life & Savings segment.
As of December 31, 2013, 22 consolidated real estate funds corresponded to a total of €5,192 million invested assets
“Minority interests of consolidated investment funds”. As of December 31, 2013, minority interests in consolidated investment funds amounted to €7,549 million (€3,775 million as of December 31, 2012) mainly due to the change from equity method to full consolidation in 2013 of the AXA IM Euro
France 2.1.3. Main investments in companies accounted for using the equity method
AXA Middle East SAL (Lebanon) Newly consolidated 51.00 51.00 - -
In 2008, AXA France invested in Arche Finance, an investment vehicle dedicated to credit investment, which entered the scope of consolidation in June 2008 with a loan of €200 million. Held assets amounted to €1,200 million as of December 31, 2013.
Life & Savings: AXA offers a broad range of Life & Savings products including individual and group savings retirement products, life and health products. They comprise traditional term and whole life insurance, immediate annuities and investment products (including endowments, savings-related products, such as variable life and variable annuity products).
The Life & Savings segment aggregates ten geographic operating components: France, the United States, the
Net realized gains and losses relating to investments at cost and at fair value through shareholders’equity 1,820 350 26 192 - 23 1 2,410
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (d) 20,825 (65) (6) 51 - (151) (33) 20,621 of which change in fair value of assets with fi nancial risk borne by policyholders 22,187 - - - - - (6) 22,180
Net result from outward reinsurance (85) (673) (516) - - - 114 (1,160)
Income from operating activities before tax 3,536 2,963 321 1,038 3 (284) (847) 6,740
Income arising from investments in associates – Equity method 85 43 - - - 2 - 131
Net income from operating activities before tax 3,499 3,001 318 1,005 (13) (1,567) - 6,253
Net realized gains and losses relating to investments at cost and at fair value through shareholders’equity 1,272 534 36 (2) - 163 - 2,004
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (d) 14,753 (49) 18 53 - (574) 8 14,210 of which change in fair value of assets with fi nancial risk borne by policyholders 14,195 - - - - - (9) 14,186
Technical charges relating to insurance activities (72,439) (19,173) (1,986) - - - 271 (93,326)
(a) As described in Note 1.2.1, comparative information related to previous periods was retrospectively restated for the amendments to IAS 19.
(b) Revenues net of intercompany eliminations amounted to €55 billion for Life & Savings, €28 billion for Property and Casualty and €3 billion for International Insurance (see Note 21).
Amortization of the value of purchased business in force (188) - - - - - - (188)
Change in goodwill impairment and other intangible assets impairment (37) (90) - - - - - (128)
Net income from operating activities before tax 3,540 2,835 312 533 (52) (1,884) 1 5,285
and section 1.4 “Liquidity and capital resources” sections of this Annual Report: 4.1. RISK MANAGEMENT ORGANIZATION
Please refer to pages 168 to 16 9 of the “Quantitative and
Please refer to pages 176 to 179 of the “Quantitative and
Please refer to pages 180 to 182 of the “Quantitative and
Mediterranean and Latin America Region 1,327 - 1,327 1,385 - 1,385
(a) Life & Savings: includes the HSBC employee benefi t portfolio acquisition in Singapore, for which a goodwill was recognized but immediately writen-off in net income.
(b) Includes €-13 million following the sale of Bluefi n Corporate Consulting.
Fair value includes quotations when available and/or relevant or valuation techniques incorporating observable market data, adjusted when necessary to take into account control premiums. Value in use calculations are based on valuation techniques, incorporating both observable market data and entity specifi c assumptions.
In these tests, for all segments, discount rates used in non-risk neutral approaches range from 5.6% to 11.9%, compared to range from 7.0% to 12.5% in 2012, and growth rates, where applicable, from 2% to 4% beyond the strategic plan horizon, which corresponds to the same growth rates as in 2012.
The results of cash fl ow projections exceed the carried amount of each related cash-generating unit or group of units.
For all cash-generating units, to the extent that securities valuations and interest rates levels remain depressed for prolonged periods of time, volatility and other market conditions stagnate or worsen, new business volumes and profi tability together with the inforce portfolio value would likely be negatively affected. In addition, the future cash fl ow expectations from both the inforce and new business and other assumptions underlying management’s current business plans could be negatively impacted by other risks to which the Group’s business is subject. For each CGU, sensitivity analyses were performed with regards to the discount rate: an increase of 0.5% points in the discount rate would not lead to an impairment loss for any of the CGUs as the recoverable amount for each CGU would still exceed its carrying value.
On November 5, 2012, AXA announced it has completed the acquisition of HSBC’s P&C businesses in Hong Kong and
This operation resulted in a goodwill of €169 million. The value of the distribution agreement was recognized as an intangible asset of €145 million and will be amortized over 10 years.
Mexico is recognized as an intangible asset of €41 million and will be amortized over 10 years.
On September 30, 2013, AXA announced that AXA IM had completed the sale of a majority stake in AXA Private Equity, generating a €165 million realized capital gain (net of tax and group share). As of December 31, 2013, the AXA Group held a 17% share in AXA Private Equity capital. The transaction values
AXA Private Equity at €510 million for 100% before transition costs.
On April 10, 2013, AXA announced it had entered into defi nitive agreements with Protective Life Corporation to sell MONY Life
& Savings operations in Hungary (2). AXA continues to have banking operations in the country.
This expected disposal led to a loss of €50 million recognized in net income as of December 31, 2013 of which €38 million goodwill impairment.
The change in Value of Business In-force (“VBI”) in the Life & Savings segment was as follows: (In Euro million) 2013 2012
Deferred acquisition costs relating to Life & Savings (a) 17,418 17,528
Acquisitions and disposals of subsidiaries and portfolios (c) (13) - - -
(c) In 2013 includes the sale of MONY portfolio in the United States.
The value of Life & Savings deferred acquisition costs and equivalent, net of amortization, unearned revenue reserves and unearned fee reserves, was as follows: (In Euro million)
Unearned revenues and unearned fees reserves 2,422 577 2,335 562 of which shadow unearned revenues reserves (260) - (416) -
DAC net of unearned revenues and unearned fees reserves 14,212 366 13,977 370
Intangible assets recognized in business combinations 3,078 714 53 2,311 2,388
The 2010 pension law reform in France led to an increase of policyholder reserves by €480 million. As a result of this law, insurers were also granted with rights to collect price increases and penalties. As a consequence, a corresponding €379 million intangible asset amount was recognized as of December 31, 2010 in other intangibles refl ecting such rights with a fi nite useful life. As of December 31, 2013, the accumulated amortization of this intangible asset amounted to €293 million and its net value amounted to €105 million.