Since the 2008 fi nancial crisis, a signifi cant volatility related to corporate spreads has been observed leading to transfers between l evel 1 and 2 with both yield and bid ask spreads widening and narrowing from one closing to another. Since 2010, this volatility has also been experience in government bonds with yields and bid ask spreads which have widened signifi cantly leading transfers from l evel 1 to l evel 2 for Greece,
The identifi cation of l evel 3 assets among assets not quoted in an active market involves a signifi cant level of judgment. The following are considered as observable: inputs provided by external pricing services, information observable obtained from specialized data providers, rating agencies, external surveys.
Assets such as certain unquoted debt instruments, some instruments issued on private markets such as Private Equity instruments or private loans were always considered as not quoted in active markets as an inherent characteristic of these investments and were included as Assets not quoted in active markets/ No active markets in all periods presented. Valuations are based either on external pricing providers or internal models using techniques commonly used by market participants.
measured as of December 31, 2012 using the valuation techniques described above (€826 million): ■ u sing alternative credit risks assumptions higher by 25%
Transfer in and out of the l evel 3 category and other movements
A majority of assets classifi ed in l evel 3 corresponds to Private
ICBC-AXA Assurance Co Ltd (previously AXA Minmetals Assurance Co Ltd) (c) (d) 89 - (10) (1) 13 91
At the end of 2012, Reso Garantia’s fi nancial information was as follows (on a 100% basis and excluding goodwill related to
AXA’s investment): ■ total assets: €2,205 million (€1,841 million as of December 31, 2011); ■ total liabilities: (excluding shareholders’ equity): €1,733 million
Reso Garantia had a net value of €624 million (€580 million as of December 31, 2011). Changes were related to foreign exchange impacts.
Philippines AXA Life Insurance Corporation (b) 26 - 6 1 (4) 29
AXA Investment Managers Asia Holdings Private Limited 2 - (4) - 2 -
(b) Those entities closed their full year accounts as of September 30, 2011.
This No te excludes investment funds and real estate Companies consolidated by equity method, which are presented as fi nancial investments (Note 9).
Receivables from brokers and general agents 43 (24) 19 19 23 (15) 8 8
Receivables arising from outward reinsurance operations 835 (89) 746 746 755 (84) 671 671
The table above excludes cash held by consolidated investment funds in the “Satellite Investment Portfolio”, as defi ned in Note 1.7.2.
As of December 31, 2012, total consolidated net cash and cash equivalents amounted to €30,101 million, net of €445 million bank overdrafts classifi ed under “Other debt instrument issued and bank overdrafts” in the consolidated statement of fi nancial position.
Partly offset by: ■ the Company €-653 million mainly driven by the signifi cant decline of outstanding commercial paper by €1,729 million partly offset by the reimbursement of a US$1 billion loan granted to RESO Garantia’s shareholders and positive cash fl ow from the entities to the Company net of the dividend paid; ■ the US €-644 million mainly due to a decrease of income from derivatives partly offset by an increase in outstanding commercial papers; ■ Japan Life & Savings €-627 million driven by higher investments and unfavorable evolution of foreign exchange rates, partly offset by operating cash.
Regarding the consolidated statement of cash fl ows presented together with the primary fi nancial statements, net cash provided by operating activities totaled €10,519 million in 2012, compared to €15,384 million in 2011.
Net cash used in investing activities was €-7,475 million in 2012 and is mainly refl ecting: ■ €-5,849 million of net cash used in purchases and sales of fi nancial invested assets; ■ €-1,392 million of net cash impact of assets lending/
Net cash relating to fi nancing activities totaled €-5,560 million in 2011 mainly due to: ■ d ividends payments of €-1,769 million; ■ €-3,296 million following the buy back of minority shares in
As of December 31, 2012, the Company and its subsidiaries owned approximately 16 million AXA shares, representing 0.7%
As of December 31, 2012 and December 31, 2011, undated subordinated debt recognized in shareholders’ equity broke down as follows: (I n Euro million)
Undated notes - variables rates in € 660 660 660 660
Undated notes - (of which 500 M US$ at 7.1%) in US$ 875 663 875 676
AXA the ability to redeem on certain dates the principal amount before settlement and without penalty; and
At April 25, 2012 Shareholders’ Meeting, shareholders approved a dividend distribution of €1,626 million with respect to the 2011 fi nancial year.
of the share capital, a decrease of 8 million shares compared to December 31, 2010. The share repurchase program terminated on February 18, 2011, impacting shareholders’
As of December 31, 2011, 2.0 million treasury shares backing contracts where fi nancial risk is borne by policyholders held in controlled investment funds were not deducted from shareholders’ equity. Their total estimated historical cost was €43 million and their market value €21 million at the end of
On April 1, 2011, AXA announced that it had successfully completed the AXA APH transaction, whereby it had disposed of its Australian & New Zealand operations and acquired the
The increase of gross unrealized gains and losses on assets available for sale totaled €22,351 million, mainly from debt instruments (€21,271 million), primarily due to interest rates and credit spreads decrease.
Shadow accounting on Value of purchased Business In force (651) (554)
Unrealized gains and losses (net of tax) - Equity accounted companies (d) 4 (21)
Minority interests’ share in unrealized gains and losses (e) (78) 3
(a) As described in Note 1.2.1, comparative information related to previous periods was retrospectively restated for the voluntary change in accounting policy on deferred acquisition costs.
(b) Unrealized gains on total available for sale invested assets including loans.
Shadow accounting on Value of purchased Business In force - - (72)
Unrealized gains and losses (net of tax) - Equity accounted companies 21 - -
UNREALIZED GAINS AND LOSSES (NET OF TAX) – 100% - TOTAL 2,826 502 394
Minority interests’ share in unrealized gains and losses (c) (7) - -
Transfer in the income statement on the period (b) (469) (742)
Unrealized gains and losses (net of tax) 100%, closing 11,177 5,218
The decrease of gross unrealized gains and losses on assets available for sale totaled €-284 million, driven by equity securities (€-2,912 million) mainly driven by the sale of Taikang
The total impact of foreign exchange rate movement was €+97 million (of which €+408 million from group share and €-311 million from minority interest) as of December 31, 2011.
The €12 million decrease in minority interests to €2,355 million was driven by comprehensive income and transactions with minority interests’ holders: ■ the comprehensive income for the period notably included the following: • net income attributable to minority interests for €+130 million,
• reserves relating to changes in fair value through shareholders’ equity for €+83 million,
• impact from open market purchase of AllianceBernstein holding units for €-64 million; ■ transactions with minority interests’ holders, mainly included: • dividend payout to minority interests’ holders for €-172 million.
The €-1,799 million decrease in minority interests to €2,367 million was due to transactions with shareholders’ for €-1,616 million mainly resulting from AXA APH transaction
The comprehensive income for the period notably included the following: ■ net income attributable to minority interests for €+190 million; ■ change in translation reserves for €-311 million mainly driven by Australia; ■ reserves relating to changes in fair value through shareholders’
equity for €-59 million, including €-152 million following the transaction with AXA APH.
Liabilities arising from insurance contracts, including those where the fi nancial risk is borne by policyholders, were split by segment as follows: (I n Euro million)
Reinsurers’ share in claim reserves (a) 998 1,591 2,112 4,702 775 1,625 2,401 4,801
TOTAL LIABILITIES ARISING FROM INSURANCE CONTRACTS, NET OF REINSURANCE CEDED 410,319 48,638 6,942 465,899 398,258 46,856 7,046 452,160
Reinsurer’s share in insurance contracts liabilities relating to policyholders’ participation (€139 million in 2012 and €51 million in 2011), as well as derivatives instruments (none in 2012 and 2011) are excluded from the table above.
The following table shows a breakdown by segment of liabilities arising from investment contracts including those where the fi nancial risk is borne by policyholders: (I n Euro million)
Liabilities arising from investment contracts with no discretionary participating features 251 380
Reinsurers’ share in liabilities arising from investment contracts where the fi nancial risk is borne by policyholders 5 5
Note: Liabilities relating to unearned revenues and fees (see Note 7.3), to policyholders’ participation (see Note 14.8), and derivative instruments (see Note 20.4), are excluded from the table above.
Reinsurance’s share in investments contracts liabilities relating to policyholders’ participation (none in 2012 and 2011), as well as derivatives instruments (none in 2012 and 2011) are excluded from the table above.
Claim reserves as of January 1 34,423 8,138 42,561 35,176 8,833 44,009
Claim handling cost reserves as of January 1 1,155 250 1,405 1,232 234 1,466
Gross claims reserve as at January 1 (a) 35,579 8,388 43,967 36,408 9,067 45,476
In 2011, changes in scope of consolidation totaled €-1,337 million, mainly due to the disposal of Canadian operations (€-1,581 million).
Reinsurers’ share in claim reserves as of January 1 1,625 2,401 4,027 1,725 2,839 4,564
Change in scope of consolidation, portfolio transfers, change in accounting principles and other changes 22 12 35 (47) (50) (97)
Reinsurers’ share in claim reserves as of December 31 1,591 2,112 3,704 1,625 2,401 4,027
14.4. CHANGE IN LIABILITIES ARISING FROM INSURANCE AND INVESTMENT CONTRACTS - LIFE & SAVINGS
The table below includes liabilities arising from insurance and investment contracts for the Life & Savings segment, whether or not the risk is borne by policyholders (i.e. including Unit-Linked business), except unearned revenue and unearned fees reserves, liabilities arising from policyholders’ participation and derivative instruments relating to insurance and investment contracts.
Collected premiums net of loadings on premiums (+) 45,249 6,216 51,465 41,754 8,665 50,419
Surrenders, maturities and other claims and benefi ts paid net of charges and penalties (-) (43,857) (8,484) (52,341) (42,511) (9,644) (52,155)
Unit-Linked technical reserves value adjustment (+/-) 12,317 1,404 13,722 (4,639) (19) (4,658)
Change in reserves relating to technical and actuarial items (+/-) (b) 6,101 2,406 8,507 11,506 542 12,048
Change in scope of consolidation, portfolio transfers and change in accounting principles (6) (61) (68) (761) 111 (650)
Impact of foreign currency fl uctuation (7,521) 878 (6,643) 9,001 92 9,093
Reinsurers’ share in collected premiums net of loadings on premiums (+) 1,525 - 1,525 1,065 - 1,065
Impact of foreign currency fl uctuation (79) - (79) 151 (3) 148
(Unit-Linked) – Liabilities arising from contracts where fi nancial risk is borne by policyholders:
Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (a) (c) 4,080 3,621
(a) In accordance with IFRS 4 standard which allows, under certain conditions, to continue to use a previous accounting policy to liabilities arising from contracts with discretionary participating features.
(c) & (d) As Unit-Linked contracts, such contracts share the same reserves measurement determined on the basis of held assets units fair value (“current unit value”). Only the valuation of related assets is different: ■ for Unit-Linked contracts with a discretionary participating feature (c), an asset representing the deferred acquisition costs is recognized in continuity with previous accounting policies; ■ for Unit-Linked contracts with no discretionary participating feature (d), an asset representing the rights to future management fees is recognized in accordance with IAS 18 (Rights to future management fees also known as Deferred Origination Costs “DOC”) – see Note 1.6.3 and Note 7.
In Phase I, the IAS Board acknowledged the diffi culties involved in the recognition and the measurement of discretionary participating features included in insurance or investment contracts. The IAS Board has numerous projects underway that could infl uence the defi nition of fair value of discretionary participating features including, but not limited to the Insurance
The IASB decided end of February 2013 to grant the staff permission to ballot the forthcoming Exposure Draft on
The loss reserves development table shows movements in loss reserves between 2002 and 2012, based on previously applied accounting standards, in accordance with IFRS 4. All contracts concerned are insurance contracts as defi ned by IFRS.
Gross reserves for unpaid claims and claims expenses developed in 2012 adjusted for changes in exchange rates and scope of consolidation (a) 25,961 26,698 27,429 28,788 43,077 44,740 45,105 45,309 45,502 45,846 46,440
(b) It is not appropriate to extrapolate future redundancies or future defi ciencies based on the loss reserves development presented in the table, as conditions and trends that have affected development of the liability in prior periods may not necessarily occur in the future periods. Redundancy/defi ciency disclosed includes forex impact between one year and the next.
Gross reserves for unpaid claims and claims expenses developed initially at the booking date (a) 4,778 4,200 3,314 4,523
(c) Represents premiums earned subsequent to the accounting year end and premiums reinstatements/experience-rated premiums received and accrued from the ceding insurers as assumed losses were incurred.
TOTAL GROSS CLAIM RESERVES AND OTHER RESERVES FOR PROPERTY & CASUALTY AND INTERNATIONAL INSURANCE 49,197 48,298
Claims reserves at end of year 1,113 1,030 1,071 984 of which reported claims 195 170 199 174 of which IBNR claims 918 860 873 810
Reserves adequacy ratios 3-Year survival ratio excluding commutations (a) 39 years 41 years 37 years 37 years
Cumulative Payments to date / Projected Ultimate Cost 38% 37% 38% 39%
In 2012, AXA paid a net amount of €25 million in respect of asbestos (€37 million in 2011). During the year, AXA incurred losses and loss expenses of €52 million net of reinsurance
(€5 million in 2011). This increase was mainly driven by the reestimation of the ultimate liability for UK mesothelioma claims.
participation assets mainly relates to decrease in unrealized losses on assets available for sale at AXA MPS.
In the tables presented in Note 14.9.1 and 14.9.2, liabilities arising from Life & Savings and Property & Casualty insurance and investment contracts exclude contracts where the fi nancial risk is borne by policyholders. These liabilities are not exposed to interest rate or duration risk, except Unit-Linked contracts with performance guarantees. In addition, as far as liquidity risk is concerned, entities hold Unit-Linked assets backing the corresponding liabilities arising from these contracts.
International I nsurance. Actual maturities may differ signifi cantly from the estimates set out below, mainly because some of the contracts contain a surrender option controlled by the policyholder that may reduce their duration.
& Casualty, which are consistent with past experience in the Group’s business. They are gross of reinsurance. Given the strong use of estimates, it is likely that actual payments will differ.
The table hereafter and related comments exclude contracts where the fi nancial risk is borne by policyholders (Unit-Linked contracts).
In Property & Casualty and International Insurance business, most reserves (91% as of December 31, 2012) are not discounted, with the exception of disability annuities and worker’s compensation liabilities that are deemed structured settlements and where the discount rate is revised regularly.
Undiscounted reserves are not sensitive to interest rate risks in fi nancial statements.
Life & Savings – locked-in discount rate (a) 260,239 2.43% 263,614 2.48%
Non Life – locked-in discount rate (a) 4,231 3.84% 4,182 3.87%
The estimated impact of the unlocking of discount rates relating to Life & Savings reserves was €625 million reserve increase for 2012 (compared to €3,175 million reserve increase for 2011)
The risk of GMDB and GMIB features to AXA is that protracted under-performance of the fi nancial markets could result in benefi ts being higher than the accumulated policyholder account balances could support. Reserves are established for these features on the basis of actuarial assumptions related to projected benefi ts and related contract charges. The determination of estimated GMDB and GMIB liabilities is based on models which involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, policyholders’ behaviour assumptions and
Given the short maturities of the main liabilities arising from banking activities (see below), the total fair value of amounts displayed above is close to carrying amounts.
Banking liabilities issued at fair value - Retail customers (a) 125 578 359 1,062 (3) 311 70 378
Other liabilities arising from banking activities 179 1,500 859 2,538 18 1,113 - 1,131
TOTAL LIABILITIES ARISING FROM BANKING ACTIVITIES 28,511 3,439 1,544 33,494 30,411 3,338 275 34,023
(a) Banking liabilities issued at fair value that were previously included in the line “Retail customers” (€378 million in 2011) are now presented in a dedicated line. In order to present a comparable basis, corresponding amounts in 2011 (including impact of derivatives) were restated in this line.
Provisions for risks and charges included the following items: (I n Euro million) December 31, 2012 December 31, 2011
(€561 million). Other provisions for risks and charges other than provisions for tax liability amounted to €885 million mainly in the Company (€379 million), AXA Investments Managers
Changes in provisions for risks and charges (excluding employee benefi ts and share-based compensation) are set out below: (I n Euro million) 2012 2011
Impact of change in scope of consolidation and changes in accounting method (19) (63)
Subordinated debt maturity below 10 years fi xed rate 126 143
Other fi nancing debt instruments issued (under €100 million) 221 189
Other fi nancing debt instruments issued (under €100 million) 220 137
For the sensitivity to movements in interests rates, please refer to page 163 of the “Interest rates & Equity risk related to the operating activities of Group subsidiaries” Section.
Derivatives on fi nancing debt instruments issued (a) 1 1 52 52
Minority interests of consolidated investment funds and other puttable instruments held by minority interest holders 3,775 3,896
Other debt instrument issued, notes and bank overdraft (b) 4,510 6,272
Movements in the “Minority interests in consolidated investment funds” caption depend on: ■ changes in minority interests in consolidated investment funds and changes in their fair value. There is an identical change in invested assets held by these funds; ■ buyouts of minority interests for which the Group holds an unconditional commitment. Entries balancing these movements are recorded in goodwill.
“Debt relating to investments under lending agreements and equivalent” totaled €24,397 million as of December 31, 2012, a decrease of €3,112 million compared with
December 31, 2011, or €2,580 million at constant exchange rate, mainly due to decrease of repurchase agreements activity in Japan.
ERIV: amortizing loan - Euribor 3M + 145 bps, due 2013 175 180
ERIV: mortgage loan based on Euribor 3M + 85bps, due 2013 + 2x1 year 84 88
APIV+EHV: mortgage loan based on Euribor 3M + 120bps, due 2015 101 96
OTHER DEBT (OTHER THAN FINANCING DEBT) - OWED TO CREDIT INSTITUTIONS 1,681 1,835
As of December 31, 2012, other debt instruments issued and bank overdrafts (other than fi nancing debt) totaled €4,510 million, a decrease of €1,761 million compared to
December 31, 2011, mainly due to decrease of commercial papers in the Company during the year (€-1,729 million) and bank overdrafts in the Life & Savings segment (€-538 million), partly offset by increase of commercial papers in the US
The fair value of other debt instruments issued and bank overdrafts (other than fi nancing debt) was €4,529 million as of December 31, 2012. Among the elements included in the preceding table, fair value is only calculated for other debt instruments issued.
( b) As described in Note 1.2.1, comparative information related to previous periods was retrospectively restated for the voluntary change in accounting policy on deferred acquisition costs.
Income from operating activities, gross of tax expenses (excluding discontinued activities and result from investments consolidated using equity method) 5,299 4,328
Impact of differences in tax rates and tax bases (503) (384)
Deferred tax assets recognized on tax losses of prior years (51) (4)
Deferred tax assets not recognized on tax losses of the year 34 52
Derocognition of deferred tax assets on tax losses of prior years (c) 11 20
Derecognition/Recognition of DTA on temporary differences of prior years (other than tax losses) (c) 4 (2)
Impact of adjustments, decrease in value and other items (27) (304)
(c) Derecognition of DTA (Deferred Tax Assets) arising on tax losses is shown in “Tax losses impact”.
In 2011, the impact of the goodwill reduction in the United
States activities, which was not tax deductible, was partly offset by the reduced taxation of capital gains in respect of the stake in Taikang Life and Australian and New Zealand operations disposals.
mainly included positive tax benefi ts following tax audit settlements in the United States Life & Saving, AllianceBernstein and Germany.
Deferred tax Assets/ (liabilities) concerning: ■ Reserves relating to the fair value adjustment of available for sale assets 6,045 10,876 (4,831) (2,157)
DTL disclosed in these tables corresponds to the deferred tax before the netting that occurs for balance sheet presentation purpose as required by IAS 12-74.
Movements through profi t or loss 762 - 762 (1,355) 12 (1,342)
In 2011, the change in scope and other variations mainly corresponded to (i ) the disposal of Canadian operations as well as,
The tables below break down (i) in the fi rst part the maturity by which the Group expects to use the DTA accounted at year end and the corresponding tax losses carried forward, (ii) in the second part, the “expiration date” of the DTA, i.e. the latest date at which the Group could use them.
In 2011, the €462 million net DTL position included €15,316 million DTA of which €2,517 million DTA on tax losses carried forward.
DTA recognised on tax losses carried forward 836 215 296 355 203 42 50 519 - 2,517
DTA recognised on tax losses carried forward 18 13 20 61 33 101 13 537 1,720 2,517
The amount of the potential Deferred Tax Assets (DTA) which has not been recorded in the accounts at the end of the year as considered unrecoverable represented €503 millions (€544 million in 2011) of which: ■ €401 million concerned unrecognized DTA on €1,728 million tax losses carried forward (€366 million DTA on €1,422 million tax losses carried forward in 2011). The major part of these losses has no maturity date (€1,447 million in 2012 and €1,259 million in 2011); ■ €101 million related other unrecognized deferred tax assets (€178 million in 2011).
which are recognized at fair value in accordance with IAS 39.
As of December 31, 2012, the notional amount of all derivative instruments totaled €459.2 billion (€463.9 billion at the end of 2011). Their net fair value as of December 31, 2012 totaled €-721 million (€-2,098 million at the end of 2011).
Liability Management (ALM) strategy in insurance companies, as well as holdings and banks. Notional amount of such hedging strategies amounted to €447.7 billion and include: (i) managing interest rate exposures on fi xed maturity investments, long-term debt and guaranteed interest rates on insurance contracts; (ii) reducing foreign-currency exposures on foreign-currency denominated investments and liabilities; (iii) managing liquidity positions (including the ability to pay benefi ts and claims when due) in connection with assetliability management and local regulatory requirements for insurance and banking operations; (iv) limiting equity risk; and
Moreover, regulatory developments will most likely continue to increase derivative hedging activities. Indeed, in a regime where the capital requirements are based on the value at risk over a one-year horizon of the marked-to-market balance sheet, the extensive use of derivatives is the major way to decrease the risk of the options and guarantees that are implicit in most Life
In the tables above, the fourth column includes derivatives that do not qualify for hedge accounting under IAS 39, but whose objective is nevertheless to provide economic hedging of a risk, with the exception notably of certain credit derivatives. They also include “macro-hedging” derivatives as defi ned by the
These instruments are mainly used to: (i) hedge interest rate risk and interest volatility risk as part of the Asset Liability Management strategy associated with the guaranteed minimum benefi ts on Variable Annuity products, mainly in the United-States Life & Savings
(notional amounts of €39,639 million in 2012 versus €36,491 million in 2011), Germany Life & Savings (notional amount of €21,914 million in 2012 versus €23,200 million in 2011) and in Japan Life & Savings (notional amount of €14,214 million in 2012 versus €12,418 million in 2011); (ii) manage duration gap and/or hedge convexity risk between assets and liabilities on the General Account as a part of
Europe, in order to manage an interest rate exposure between its interest-earning assets and interest-bearing liabilities mainly by interest rate swaps (notional value of €18,809 million in 2012 versus €27,286 million in 2011).
As of December 31, 2012, the notional amount of equity derivative instruments totaled €23,100 million (€27,085 million at the end of 2011). Their net fair value as of December 31, 2012 totaled €18 million (€182 million at the end of 2011).
These instruments are mainly used to: (i) hedge equity risk as part of the Asset Liability Management strategy associated with the guaranteed minimum benefi ts on Variable Annuity products, mainly in the United States
(notional amount of €757 million in 2012 compared with €663 million in 2011); (ii) hedge the exposure to equity risk within the General
States Life & Savings (notional amount of €1,757 million in 2012 compared with €600 million in 2011), in Japan Life
The Group has entered into different currency instruments to reduce its exposure to foreign currency risk. Currency derivative instruments represent agreements to exchange the currency of one country for the currency of another country at an agreed price and settlement date.
Savings using future and forward foreign currency contracts to hedge exchange-rate risk arising from its investments in fi xed-maturity debt instruments denominated in non JPY
currencies with a total notional amount of €17,076 million in 2012 versus €18,173 million in 2011, and (ii) Switzerland using such contracts to hedge exchange rate risk arising from their investments in equities and debt instruments denominated in non CHF currencies (mainly € and US$) with a total notional amount of €29,045 million in 2012 versus €26,280 million in 2011.
In 2012, the notional amount of credit derivatives held by the
strategies, leading to the creation of an asset that can be compared to a risk-free asset. CDS protections used by
AXA in this context amounted to €5,056 million in 2012 versus €6,681 million in 2011; (iii) enhance the return mainly on government bonds portfolios by holding government bonds and at same time selling protection on very good quality names as an alternative to the direct purchase of a corporate bond. This type of
ALM strategy is implemented to compensate for the lack of depth or liquidity in some markets by taking a synthetic credit risk (notional amount of €11,294 million in 2012 versus €13,718 million in 2011).
Investment in real estate properties 16,061 - 16,061 2,574 - 2,574 18,635 - 18,635
Macro-hedge and other derivatives (169) 1,452 1,283 - (2,500) (2,500) (169) (1,049) (1,218)
Liabilities arising from insurance contracts 362,378 (929) 361,449 358,146 (612) 357,534
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 113,921 (29) 113,891 104,642 (167) 104,475
TOTAL LIABILITIES ARISING FROM INSURANCE CONTRACT 476,299 (959) 475,340 462,788 (779) 462,009
Fair value not based on a majority of observable market data (l evel 3)
Fair value based on a majority of observable market data (l evel 2)
Derivative instruments relating to insurance and investment contracts 2 (2,055) - (2,053) 20 (2,078) 3 (2,056)
Net value of derivative instruments - liabilities (2) 41 (1,666) - (1,625) 95 (1,491) 3 (1,393)
ASSETS FOR WHICH FAIR VALUE IS NOT BASED ON A MAJORITY OF OBSERVABLE MARKET DATA – LEVEL 3
Among amounts presented as l evel 3, fair values determined in whole or in part using a valuation technique based on assumptions that are not supported by a majority of prices from observable current market transactions in the same instrument or a majority of available observable market data represented as of December 31, 2012 net fair values of €0.2 million of derivatives held by the Group (including an estimation of the extent to which external quotes on inactive markets are based on observable data), in comparison with net fair values of €-1 million as of December 31, 2011. There was no signifi cant transfer in or out of the l evel 3 category and all changes relate to changes in fair value through income or expirations.
For more information about the Group’s segments identifi cation, please refer to page 211 to 215 of Note 3 Statement of income by segment.
Geographical information regarding revenues and assets of International Insurance and Asset Management is not readily available in the Group reporting tool and the cost to develop it would be excessive. A relevant split by entity is provided above for these segments.
Contracts with fi nancial risk borne by policyholders (Unit-Linked) 15,232 113,921 34,063 12,051 104,642 29,957
Fees, commissions and other revenues 222 197 - 21. 3.4. Liabilities arising from insurance contracts in the Property & Casualty and International Insurance segments
TOTAL - PROPERTY & CASUALTY EXCLUDING INTERNATIONAL INSURANCE 28,106 7,377 1,037 106 36,626 13,943 50,569
Net investment result (excluding fi nancing expenses) from the fi nancial assets of insurance Companies and Companies in other business segments (excluding revenues from the fi nancial assets of banks included in net revenues from banking activities) was as follows: (I n Euro million)
Investment in real estate properties at amortized cost 699 111 - (53) 757
Investment in real estate properties as at fair value through profi t or loss 47 - 27 - 75
Non quoted debt instruments (amortized cost) 107 - - - 107
Equity instruments designated as at fair value through profi t or loss (c) 176 - 164 - 340
Non consolidated investment funds designated as at fair value through profi t or loss 343 - 23 - 366
Assets backing contracts where the fi nancial risk is borne by policyholders - - 14,186 - 14,186
(c) Includes equity instruments held by consolidated investment funds, designated as at fair value through profi t or loss.
Investment in real estate properties as at fair value through profi t or loss 63 - 35 - 98
Equity instruments available for sale (d) 544 1,648 (304) (776) 1,112
Non consolidated investment funds designated as at fair value through profi t or loss 211 - 79 - 291
Non consolidated investment funds held for trading 3 - (31) - (27)
Other assets held by consolidated investment funds designated as at fair value through profi t or loss 84 - (86) - (2)
(a) As described in Note 1.10, the contribution of 2011 discontinued Canadian operations is classifi ed on a separate line of the income statement.
(e) Includes equity instruments held by consolidated investment funds, designated as at fair value through profi t or loss.
Net investment income is presented net of impairment charges on directly-owned investment properties, and net of amortization of debt instruments premiums/discounts. All investment management fees are also included in the aggregate fi gure.
Net result of reinsurance ceded was as follows: (I n Euro million)
Premiums ceded and unearned premiums ceded (1,676) (1,828) (929) 358 (4,075)
Increase/(write back) of tangible assets amortization (19) 1 - (18) - - (1) - (19) (29)
(a) As described in Note 1.10, the contribution of 2011 discontinued Canadian operations is classifi ed in a separate line of the income statement.
Expenses increased by €168 million compared to December 31, 2011. Excluding the unfavourable forex impact, expenses decreased by €443 million, following: ■ a positive impact of Australia and New Zealand disposal as well as in the UK (Denplan and Bluefi n); ■ productivity programs leading to decrease in administrative expenses in mature insurance markets; ■ as well as non repeat of 2011 higher restructuring costs notably €340 million deferred compensation accelerated vesting charge in AllianceBernstein and restructuring of participation in India; partly offset by: ■ higher commissions both in Life & Savings and Property &
Expected return on plan assets and separate assets 5.0% 6.8% 1.3% 8.2%
For any given plan, the discount rate is determined at the statement of fi nancial position date by reference to market yields for the corresponding currency on high quality corporate bonds depending on the plan’s duration and the maturity profi le of the defi ned benefi t obligation. The discount rate used in projections still meets the high quality corporate bonds defi nition at the end of 2012 with a reference to AA.
Some plans do not have benefi ts linked to salary increase or infl ation.
option, actuarial gains and losses are recognized in full in the period in which they occurred, but outside of profi t or loss, and are presented on a separate line of the SoCI in shareholders’
holding Company, with preserved rights at the date of the sale and a related compensation implicitely included in the sale price.
As of January 1, 2009, in Switzerland, a part of AXA Winterthur
Amendments (including acquisitions and disposals) (a) 15 (574) 110 (75) (150) (1) (56) 4 (2) 12
Benefi ts paid by plan assets and by separate assets (575) (486) (464) (474) (434) - - - - -
Fair value of plan assets at the beginning of year 8,311 7,834 6,181 4,662 7,057 4 5 4 3 3
Actual return on plan assets 737 322 544 516 (1,498) (1) (1) 0 (0) (1)
Fair value of plan assets at the end of the year (B) 9,164 8,311 7,834 6,181 4,662 4 4 5 4 3
Fair value of separate assets at the beginning of year 952 985 893 789 739 - - - - -
Underfunded status (plan by plan) (8,792) (8,049) (7,907) (7,500) (7,087) (685) (620) (601) (530) (507)
Overfunded status (plan by plan) 9 7 9 19 21 - - - - -
Cumulative impact of asset ceiling (10) (7) (2) (10) - - - - - -
Plans with a positive net position (Asset) - 0 6 8 20 - - - - -
Net economic funding position (including separate assets) (7,678) (7,029) (6,855) (6,530) (6,206) (685) (619) (600) (529) (506)
For pension plans where the fair value of plan assets exceeds the benefi t obligation, the aggregate fair value of plan assets and aggregate benefi t obligation were respectively €47 million and €38 million as of December 31, 2012. As required by IFRIC 14, a surplus is recognized to the extent that it is recoverable, either through future contribution reductions or a refund to which the Group has an unconditional right.
For pension plans where the benefi t obligation exceeds the fair value of plan assets, the aggregate benefi t obligation and fair value of plan assets were respectively €17,909 million and €9,117 million as of December 31, 2012.
Pension and other benefi ts expense 393 448 517 404 306 36 (4) 44 37 37 26.2.6. Net economic funding position
The evolution in the net economic funding position from January 1, 2012 to December 31, 2012 captures both the change in the liability recorded in the Group’s statement of fi nancial position and the change in separate assets, as presented in the table below: (I n Euro million)
Impact of foreign currency fl uctuations 26 (137) (490) (11) (247) 8 (18) (36) 9 (20)
(b) This amount includes the effect of the reclassifi cation of General Account assets as plan assets in 2009 in Switzerland.
The 2012 change in the net economic funding position was mainly due to actuarial losses on pension liability (see Note 26.2.8) partly offset by additional contributions paid to plan assets in the United States (€245 million) and in the United Kingdom (€82 million) to reduce the defi cit, together with assets outperformance above their expected return.
Benefi ts paid by separate assets 94 90 71 66 64 - 0 - - -
Net transfer in/(out) of separate assets to plan assets (b) - - - 41 10 - - - - -
Actuarial gains and losses recognized in the SoCI component (1,163) (840) (532) (1,493) (1,229) (82) (61) (29) (36) 19
Fair value of separate assets at the end of the year 1,041 952 985 893 789 - - - - -
Net economic funding position at the end of the year (7,678) (7,029) (6,855) (6,530) (6,206) (685) (619) (600) (529) (506)
(a) This amount includes the acquisition of Seguros ING in 2008, now AXA Mexico, and the sale of Canada, Australia and New Zealand’s activities in 2011.
26.2.8. Change in actuarial gains and losses recognized in the statement of fi nancial position in the SoCI component of shareholders’ equity
The Statement of Comprehensive Income (SoCI) is an integral part of the statement of changes in shareholders’ equity. It includes actuarial gains and losses as well as net income for the period (see Part “Consolidated Statement of changes in equity”).
The table shows the change in SoCI component due to employee benefi ts (excluding net income impacts), before deduction of deferred tax and policyholder benefi ts, between
Adjustment due to the sales of subsidiaries - 54 - - - - 1 - - -
Impact of foreign currency fl uctuations (10) (107) (176) 6 (34) 2 (3) 3 (1) 3
equity after deduction of deferred tax and policyholder benefi ts amounted to €-812 million (€-577 million in 2011, €-450 million in 2010, €-1,031 million in 2009 and €-695 million in 2008).
The 2011 net change included €29 million reclassifi ed as a reduction of retained earnings due to the sale of some AXA
TOTAL (in Euro million) 10,208 8,061 2,112 36 26.2.11. Other employee benefi ts funded on a pay-as-you-go basis
AXA Financial continues to fund the postretirement benefi ts costs for these plans on a pay-as-you-go basis with the exception of certain fully insured retiree life insurance benefi t. In 2011, AXA Financial eliminated any subsidy for retiree medical and dental coverage for individuals retiring on or after May 1, 2012 as well as a €8 thousand retiree life insurance benefi t for individuals retiring on or after January 1, 2012.
For 2012, postretirement benefi ts payments amounted to €34 million (€32 million in 2011), net of employee contributions.
Net position (excluding separate assets) (a) (9,404) (8,600) (8,440) (7,952) (7,501)
- Assets/(liabilities) held for sale (b) - - 31 41 -
(c) It corresponds to a liability of €9,564 million (as of December 31, 2012) included in the statement of fi nancial position under the caption “provision for risks and charges”, and an asset included in the statement of fi nancial position under the caption “other receivables”.
AXA APH stock option plan (terminated as at December 31, 2011) - 1.7
(a) The amount presented for 2011 is due to a restructuring of compensation plans on November 17, 2011, leading to an accelerated vesting of all AllianceBernstein deferred compensation plans for a total cost of €340.2 million. €234.5 million exclude the impact on the deferred cash awards.
The following table shows AXA SA stock options granted under all plans, and not only the ones granted after November 7, 2002.
The number of outstanding options and the number of exercisable options as of December 31, 2012 and 2011 are shown below by maturity date: Expiry year of options (in million)
The number of outstanding options and the number of exercisable options as of December 31, 2012 and 2011 are shown below by maturity date for AXA SA plans granted after November 7, 2002: Expiry year of options (in million)
Weighted average fair value per option at grant date in Euro (a) (c) 1.81 1.78 2.24 1.91 3.23
(a) For employees who have been granted more than 5,000 options the vesting of the fi nal instalment is subject to the fulfi lment of a condition regarding the performance of the AXA shares compared to the DowJones Euros toxx Insurance index. The options with performance criteria were valued at €1.33 per option granted in 2012 and €1.44 per option granted in 2011, based on a Monte-Carlo model. The options without performance criteria were valued at €2.12 per option granted in 2012 and €1.90 per option granted in 2011, based on the Black & Scholes model.
December 31, 2012 was €14.8 million (€0.6 million for the 2008 grants, €1.8 million for the 2009 grants, €3.8 million for the 2010 grants, €5.8 million for the 2011 grants, €2.9 million for the 2012 grants).
AXA shares. Consequently, current holders of AXA ADRs may continue to hold or trade those shares, subject to existing transfer restrictions, if any.
to the reference price) Subscriptions amounted to 29.7 million shares, increasing the share capital by €290.9 million. This offering represented a total cost of €9.7 million taking into account the fi ve-year lock-up period.
[B] Cost of the lock-up for the employee 19.81% 17.07% 18.49% 13.53%
ordinary shares (“AXA Miles”) to more than 120,000 employees worldwide, engaging all employees in the successful execution of the Company’s strategic plan Ambition AXA. A fi rst tranche of 25 AXA Miles was granted without any condition. The second tranche was subject to the fulfi lment of a performance condition determined by AXA’s Board of Directors. This condition required the achievement of at least one of two indicators related to
The free shares are valued using the ANC approach described in the AXA Group Shareplan section using assumptions adapted to the structure of the plan (2+2 or 4+0 plan), based on a market price of €13.18 per share on March 16, 2012 (€32 per share on July 1, 2007) and an estimated 5% pre-vesting lapse rate.
The total cost of the AXA Miles is amortized over the vesting period (i.e. over 2 years for the 2+2 plan and over 4 years for the 4+0 plan) starting from the grant date. On that basis, the expense recognized in the profi t or loss for the year ended was €8.7 million).
In 2012 the valuation was based on a market price of €13.18 per share at grant date and an estimated 5% pre-vesting lapse rate per year. The grant date fair value of Performance Shares granted in 2012 was €8.74.
The total cost of Performance Shares recognised is €22.0 million in 2012 (20.4 million in 2011).
Stock Appreciation Rights (as they are subject to variations in the basis of recognition due to changes in the market value of
Most of the awards granted in 2011 and in 2012 contained the same conditions than awards amended in November 2011, resulting in the immediate recognition of the cost of these awards instead of an amortization over a maximum of four years.
At the end, the 2012 total cost amounted to €73.1 million
Weighted average number of ordinary shares (net of treasury shares) - opening 2,340 2,294 2,294
BASIC NET INCOME PER ORDINARY SHARE C = A/B 1.65 1.69 1.75
In 2012, net income per ordinary share stood at €1.65 on a basic calculation, all attributable to continuing operations, and €1.64 on a fully diluted basis also all attributable to continuing operations.
Subsidiaries and the Mutuelles AXA and allocated among them through a Groupement d’Intérêt Économique or “GIE”
AXA France , and respectively €197 million and €192 million for
(e.g. to facilitate acquisitions, integration of acquired businesses, distribution arrangements, off-shoring arrangements, internal restructurings, sales or other disposals of assets or businesses, sales or renewals of products or services or similar transactions), to support their credit ratings, and/or to promote effi cient use of the Group’s capital resources. In this context, the Company may guarantee repayment of loans or other obligations between its subsidiaries, guarantee obligations of its subsidiaries to third parties, or provide other types of guarantees for the benefi t of its subsidiaries. The benefi ciaries of these guarantees are generally required to compensate the
Internal Commitments granted by the Company to its subsidiaries are disclosed in Appendix V of this Annual Report
Commitments received by AXA totaled €66,369 million at the end of 2012, and increased by €904 million compared to the end of 2011, mainly due to an increase in guarantee commitments (€+1,776 million) and an increase in fi nancing commitments (€+1,316 million), partly offset by a decrease in other commitments (€-2,187 million).
Life & Savings (€1,310 million), and (ii) €1,664 million other guarantees received from customers at AXA Banque.
Other commitments received totaled €2,970 million at the end of 2012, and were broken down as follows: ■ €1,482 million from France Life & Savings mainly due to commitments received by real estate funds; ■ €924 million received by AXA Bank Europe related to money market activities; ■ €490 million received by Belgium Life & Savings (€245 million)
Commitments given totaled €59,073 million at the end of 2012, a decrease of €5,470 million compared to the end of 2011, mainly due to a decrease of €7,346 million in pledged securities and collaterized commitments mainly in relation with repurchase transactions and similar operations (see below).
(€1,902 million) and pledged assets and collaterals for derivatives instruments (€1,071 million); ■ €11,925 million in AXA France including €10,102 million from
Life & Savings due to pledged assets for security repurchase agreements and similar operations (€9,359 million) and derivative transactions (€697 million), as well as €1,822 million from Property & Casualty mainly due to pledged assets for security repurchase agreements and similar operations
Japan Life & Savings (€357 million) and United States Life &
On August 5, 2010, and after authorization by the AXA Board of Directors on August 3, 2010, AXA and BNP Paribas entered into an agreement that replaced a previous agreement between them dated December 15, 2005.
The 2010 agreement maintains the option for each party to repurchase its shares in the event of a hostile change of control of the other party.
In force for a period of three years starting from August 5, 2010, this agreement is renewable automatically for successive periods of one year thereafter, unless one of the two parties decides to terminate the agreement earlier, in which case the terminating party is required to give three month notice prior to the next renewal date. The agreement was made public by the
Companies with their registered offi ce in a European Union member country are required to maintain minimum solvency ratios which must be supported by capital, retained earnings and reserves and unrealized capital gains on marketable securities and real estate as reported in regulatory fi lings or subject to approval by local regulators in some countries. AXA’s insurance operations in countries outside the European Union are also subject to local capital adequacy and solvency margin regulations.
AXA regularly monitors its exchange rate hedging strategy and will continue to review its effectiveness and the potential need to vary it in any way taking into account earnings, value, solvency, gearing and liquidity indicators.
PRICEWATERHOUSECOOPERS AUDIT: 63, rue de Villiers – 92208 Neuilly-sur-Seine, represented by
Membership in a professional body: Mazars is registered as an independent auditor with the
(a) Consistently with its nature, SSAE 16 related fees have been reclassifi ed from “Audit” to “Other specifi c audit assignment”.
(both class action and individual), investigations, and other actions arising in the various jurisdictions where they do business, including the following.
L.P.) is included in the Annual Reports on Form 10-K for the year ended December 31, 2012 and subsequent reports on Form 10-Q, respectively, of AXA Equitable Life Insurance
United States and elsewhere involving insurers’ sales practices, alleged agent misconduct or misrepresentation, alleged failure to properly supervise agents, compensation of intermediaries as well as numerous other matters. Some of these actions have resulted in the award of substantial judgments against insurers (including material amounts of punitive damages)
In April 2010, AXA Rosenberg, a quantitative asset manager owned 75% by AXA Investment Managers at that time (now fully owned), communicated to its clients that a coding error in its risk model, corrected in November 2009, had not been reported in a timely manner. AXA Rosenberg’s Board of
AllianceBernstein believes that any losses to this client resulted from adverse developments in the U.S. housing and mortgage market that precipitated the fi nancial crisis in 2008 and not from any negligence or failure on their part. AllianceBernstein believes that it has strong defenses to these claims , which are set forth in its October 12, 2012 response to the letter of claim, and will defend this matter vigorously.
AXA and certain of its subsidiaries are also involved in various legal actions and proceedings arising out of transactions involving the acquisition or sale of businesses or assets, mergers or other business combination transactions, the establishment or dissolution of joint ventures or other partnerships, public exchange or tender offers, buy-outs of minority interests or similar types of transactions (“M&A Transactions”). In connection with M&A Transactions, AXA and its subsidiaries from time to time: ■ are involved in legal actions or other claims brought by purchasers, joint venture partners, shareholders or other transaction parties asserting claims for damages on various theories (including misrepresentation, failure to disclose material information, failure to perform contractual duties, breach of fi duciary duties), seeking contractual indemnifi cation, or otherwise seeking to impose liability on
UK also granted a separate indemnity to Friends Provident for any losses that FP may suffer as a result of having to pay out monies to pension scheme trustees/employers in relation to pension equalisation claims. In addition, in a separate matter, Banca Monte dei Paschi (“BMPS”) has notifi ed certain indemnifi cation claims to AXA Assicurazioni in connection with its sale of AXA SIM in 2007. AXA’s indemnity covers certain misselling and litigation liabilities (up to a defi ned cap) arising on business written on or before the closing. These indemnifi cation claims are currently under review and the ultimate amount of liability in these matters will take several months/years to determine. Management believes that AXA’s ultimate liability in connection with these matters will not be material to the
many of these jurisdictions and government prosecutors and judges have broad discretion in this area. In recent years, complaints against or indictments of corporate entities for alleged criminal offences have become increasingly common and certain AXA Group companies have been the subject of penal complaints and/or indictments from time to time including in Belgium and France. While a criminal complaint against or indictment of a corporate entity may not pose material fi nancial risk, it has broad potential implications for a regulated fi nancial institution like AXA both from a reputation point of view and from a regulatory perspective because a criminal conviction can have potentially far reaching negative implications for AXA
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking users. The statutory auditors’ report includes information specifi cally required by French law in such reports, whether modifi ed or not. This information is presented below the opinion on the consolidated fi nancial statements and includes an explanatory paragraph discussing the auditors’ assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated fi nancial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated fi nancial statements. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended
December 31, 2012, on: ■ the audit of the accompanying consolidated fi nancial statements of AXA , as attached to the present report; ■ the justifi cation of our assessments; ■ the specifi c verifi cation required by law.
In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Group as at December 31, 2012 and of the results of its operations for the year then ended in accordance with International
Without qualifying our opinion expressed above, we draw your attention to the paragraph related to the “voluntary change in accounting policy on deferred acquisition costs (DAC)” included in Note 1.2.1 of the consolidated fi nancial statements which disclose the change in accounting policy regarding the defi nition of deferred acquisition costs.
■ The carrying values of purchase goodwill are tested at each closing for impairment using the methods described in Notes 1.6.1 and 5.2.2 to the consolidated fi nancial statements.
We have in particular ensured the valuation approaches used rely on assumptions that are consistent with the forecasts that emerge from the strategic plans established by the Group. We have also examined the elements gathered by the Group to assess the other assumptions considered as well as the sensitivity tests performed.
We have assessed whether the hedging activities that abide by hedge accounting have been duly documented in accordance with hedge accounting rules.
As required by law we have also verifi ed the information given in the Group’s management report in accordance with the professional standards applicable in France.
Changes in the capital 327 5.2 DESCRIPTION OF AXA’S SHARE CAPITAL 328
Board of Directors’ Bylaws include a number of specifi c provisions concerning members of the Board of Directors, including the following: COMPENSATION
Bylaws provide that no directors’ fee shall be paid to directors exercising in the Executive Management (Chief Executive
When the permanent representative of a legal entity member of the Board of Directors reaches seventy-years old, the legal entity is deemed to have resigned automatically unless it designates a new representative within three months.
In accordance with the AFEP/MEDEF Code, the directors shall be shareholders of the Company and own a signifi cant number of shares in the Company; if they do not own such shares at the time they are fi rst appointed, they shall use their directors’ fees to acquire AXA shares. Accordingly, the
Shareholders’ Meeting decided that each ordinary share fully paid and held in registered form by the same person for at least two full fi scal years entitled its holder to double voting rights with respect to such share.
Under the provisions of AXA’s Charter, the actual dividend payment date is decided by the Board of Directors.
AXA’s Charter provides that, the shareholders may grant each shareholder the choice of receiving dividends in either cash or additional ordinary shares.
(“société anonyme”) have the power to amend the charter of the Company. Such an amendment generally requires the approval of two-thirds of the shareholders attending or represented at an Extraordinary Shareholders’ Meeting.
2010 Share capital reduction by cancellation of shares (45) (2,137) 2,289,965,079 5,244,020,031
New equity issue reserved for employees of AXA (SharePlan 2011) 36,713,690 233,119,323 2,357,146,021 5,397,864,388
APPENDIX II MANAGEMENT’S ANNUAL EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING 339
APPENDIX IX COMMISSION REGULATION OF APRIL 29, 2004 CORRESPONDENCE TABLE 393
AXA’s m anagement and has taken into account information furnished to the Board of Directors with respect to the Group’s internal control environment. This report was assessed by the
detail in this Annual Report. Please see, in particular, Part 3 –
(iv) disclosure controls and procedures designed to ensure that Management has the necessary information to make fully informed disclosure decisions on a timely basis and that the Company’s disclosures on material information
AXA currently has an 8-member Management Committee which is an internal committee having for main mission to assist the
During the fourth quarter, each business unit presents its strategic plan to the Group’s strategic plan steering committee chaired by the Chief Executive Offi cer or the Deputy Chief
(Document de Référence) fi led with the AMF; ■ liaising with the Statutory Auditors and contributing to Audit
■ steering convergence of accounting and fi nancial reporting processes, systems and organizations for insurance activities in Europe.
This consolidation process and its related controls are based on the following: Defi nition of standards and maintenance of an information system
Groups which are organized around the substantive matters that the department manages on a continuing basis in addition to one-off projects or issues that arise from time to time. These Practice Groups are: (i) Corporate Law (Mergers
As part of its Compliance responsibilities, the Group l egal d epartment manages a wide range of compliance related matters including (i) regular reporting from Group companies on signifi cant compliance, litigation and regulatory matters,
Guide which applies to all AXA Group employees worldwide and (iii) fi nancial crime matters including the Group’s global
Business Standard and the Group Standard on business with countries and/or individuals subject to international sanctions.
Departments of AXA’s principal subsidiaries on legal, regulatory, and compliance matters impacting those companies. In order to optimize integration, coordination, ensure open lines of communication across the Group’s global Legal & Compliance
Committee with independent and objective assurance on the effectiveness of internal control and risk management across the Group.
Group Head of Audit whilst also having a direct and unfettered reporting line to their local Audit Committee chairman and an administrative reporting line within their local management structure.
In addition to its other activities, the c ommittee has undertaken a comprehensive risk mapping exercise covering the aggregate risks to which the Group is exposed including fi nancial, solvency, insurance, operational, legal and compliance, tax, audit, human resources, and communication risks. As part of the process, priorities and action points were established for the various GMS Departments that manage these risks.
AXA’s ICOFR includes policies and procedures that: ■ pertain to the maintenance of records that, in reasonable detail, accurately and fairly refl ect the transactions and dispositions of Group assets; ■ provide reasonable assurance that transactions are recorded as necessary to permit the preparation of fi nancial statements in accordance with the applicable generally accepted accounting principles; ■ provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorization of m anagement and directors of the Group; and
PBRC (the Internal Financial Control (IFC) program ) designed to ensure that AXA’s Chief Executive Offi cer and Deputy Chief
Treadway Commission (COSO). The IFC Standard is designed to defi ne the IFC scope and governance, ensure consistency and quality in AXA’s fi nancial reporting and provide an overall framework for AXA’s annual IFC program .
However, all internal control systems, no matter how well designed, have inherent limitations and do not constitute a guaranty or provide absolute certainty. Even systems determined to be effective by m anagement may not prevent or detect all human errors, all system malfunctions, all fraud or all misstatements and can provide only reasonable assurance. In addition, effective controls may become inadequate over time because of changes in conditions, deterioration of compliance with procedures or other factors.
Pursuant to the provisions of the French law dated July 3, 2008, it has been decided, in December 2008, to adopt all of the AFEP/MEDEF recommendations, including the recommendations on the compensation of executive offi cers dated October 2008, as AXA’s Corporate Governance Code of reference.
AFEP/MEDEF Code. However, the Company endeavours, to the extent possible, to provide the members of the Audit
Committee with the required documents early enough to allow their proper examination; ■ s ection 20.2.3 of the AFEP/MEDEF Code relative to stock options and performance shares: (i) holding of shares subsequent to subscription options or allotment of performance shares: in 2007, the
Deputy Chief Executive Officer is required to hold the equivalent of his/her total cash remuneration multiplied by two. AXA shares, ADS and other quoted subsidiaries of the Group are taken into account to calculate the number of shares actually held. Each Executive Offi cer is required to meet with this minimum shareholding requirement within a period of fi ve years from (i) January 1, 2007 or
Code, companies shall determine periods preceding the disclosure of their fi nancial statements during which the exercise of the stock options is not allowed (“sensitive periods”). To date, the sensitive periods are determined by applying the AXA Group’s Compliance and Ethics Guide.
Commercial Code, it is specifi ed that the conditions for the participation to Shareholders’ Meetings are detailed in
Paris). AXA’s Charter is also available on the Company’s website (www.axa.com). In addition, the information referred to in Article L.225-100-3 of the French Commercial Code is made public in the Report of AXA’s Board of Directors which is included in this Annual Report.
Treadway Commission (COSO). The IFC Standard is designed to defi ne the IFC scope and governance, ensure consistency and quality in AXA’s fi nancial reporting and provide an overall framework for AXA’s annual IFC programme.
In line with the COSO framework, AXA’ICOFR is organized around the following key processes and controls: Entity-Level
Group level, to evaluate their impact on AXA’s consolidated fi nancial statements, considering their likelihood, potential
At each year-end, the in-scope AXA Group companies are required to perform an evaluation of their ICOFR as part of an internal certifi cation process. This process involves formal sign-off by the company’s process owners and culminates with a formal certifi cate signed by the company’s CFO or another senior executive offi cer stating their conclusion as to the effectiveness of the company’s ICOFR and certain other matters.
internal control over fi nancial reporting as of December 31, 2012, in order to be able to obtain reasonable assurance as to whether
AXA (the “IFC standard”), which is an internal control and governance standard developed by AXA and used as a framework for its IFC programme, as described in the Management’s Annual Evaluation of Internal Control Over Financial Reporting on page 339 of this Annual Report. Our responsibility is to express an opinion on the Company’s management’s assertion, based on our audit procedures.
We conducted our work in accordance with French professional standards and ISAE 3000 (“Assurance engagements other than audits or reviews of historical fi nancial information”). These standards require that we plan and perform the audit procedures to obtain reasonable assurance about whether AXA management’s assertion that internal control over fi nancial reporting is effective, was fairly stated in all material respects. Our audit procedures included obtaining an understanding of internal control over fi nancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit procedures provide a reasonable basis for our opinion.
I confi rm that, to the best of my knowledge, the fi nancial statements have been prepared in accordance with applicable accounting standards and fairly present the assets and liabilities, the fi nancial position and the profi t or loss of the Company and its consolidated subsidiaries, and that the Board of Directors’ Report, the various sections of which are mentioned on page 392 of this Annual Report, fairly presents the evolution of the business, results and fi nancial position of the Company and its consolidated subsidiaries, and describes the principal risks and contingencies facing the Group.
The Statutory Auditos have prepared a report on the Consolidated fi nancial statements for the year ended December 31, 2012 presented in this Document. This report, set out in pages 321 and 322 contains an observation.
AMF on March 15, 2012 under number D.12-0161 contains an observation.
AXA’s authorizations to issue shares or other types of securities that were valid as of December 31, 2012 are summarized in the tables below: Issues with preferential subscription rights for shareholders
Shares issued in connection with the exercise of stock options – 2% (i) 38 months June 27, 2014
(b) Including the issue of ordinary shares or securities (i) in the event of private investments or through public offers, (ii) in the event of public exchange offers initiated by the Company, (iii) in consideration for contributions in kind for up to 10% of the Company’s share capital, or (iv) as result of securities issues by subsidiaries of AXA.
By virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 27, 2011 (resolution 23) and in order to associate all AXA Group employees with the roll-out of the AXA Group’s Ambition AXA strategic plan, 50 free AXA
These shares will vest upon completion of a two or four year vesting period (i.e. in 2014 or 2016) depending on applicable local regulations, and subject to fulfi lment of certain conditions.
and €260 million paid by the company Vinci following the redemption of a loan granted to AXA Canada.
Net financial expenses, including interest expenses net of interest income from loans and investments, totaled €1,105 million, compared with €994 million in 2011, up €138 million excluding non-recurring items in the previous year,
( €120 million loss on the sale of a tax receivable, a €36 million gain on cancelled shares following the merger into AXA SA of its wholly-owned subsidiaries AXA Participation II and Colisée
Operating expenses rose by €33 million to €353 million mailing due to the strong expansion in respect of the AXA
Capital operations resulted in a gain of €1,041 million in 2012, versus a profi t of €3,676 million in 2011, which broke down as follows: ■ a €903 million foreign-exchange gain resulting mainly from the euro’s appreciation, in particular against the Japanese
Yen, along with the unwinding of the positions in the Yen and
■ a gain of €70 million linked to the sale of Canadian operations in respect of contingent consideration based on profi tability metrics versus a profi t of €4,922 million as mentioned above in 2011; ■ fi nally, net exceptional items included a loss of €60 million on the unwinding of equity derivative positions.
In 2011, the corporate income tax benefi t derived mainly from the €1,113 million in carry-back receivables, €759 million of tax receivable from members of the tax consolidation group in
At December 31, 2012, total assets amounted to €73,464 million, versus €75,124 million at December 31, 2011.
HSBC’s non-life insurance business in Asia; ■ a €72 million increase in the capital of AXA Mediterranean
Republic, Romania and India; ■ fi nally, the acquisition of AXA Konzern AG’s participation in
USD340 million loan granted to AXA China Region and to the repayment for €118 million of credit lines granted to AXA
Other financial assets amounted to €3,509 million, versus €4,118 million in 2011, with the €609 million decrease mainly attributable to margin calls paid to bank counterparties under collateral agreements linked to the management of derivative instruments, which amounted to €3,366 million at end-2012, compared with €3,972 million at end-2011, mainly due to the unwinding of the foreign-exchange positions referred to above.
Miscellaneous receivables totaled €115 million, refl ecting €82 million in fi nancial income receivable.
Equity securities amounted to €40 million, down €9 million given the sale of some of the treasury shares held by the
Garantia’s shareholders and positive cash fl ow from the entities to the Company net of the dividend paid.
Unrealized foreign exchange losses amounted to €1,253 million, of which €1,023 million related to the deferred recognition of exchange-rate losses in line with the principles of hedge accounting which are compensated by unrealized capital gains on investments in subsidiaries. This item also refl ects unrealized losses on assets and liabilities denominated in foreign currencies arising from their revaluation at the balance sheet closing exchange rate.
Shareholders’ equity, before net income for the period and after payment of the dividends relating to the prior year, totaled €39,188 million. This represented an increase of €313 million, including €291 million through a capital increase reserved for employees.
Other shareholders’ equity included undated deeply subordinated notes amounting to €6,360 million, compared with €6,341 million in 2011, owing to negative €22 million in exchange-rate effects.
The €1,677 million reduction mainly came from the release of €1,379 million in provisions for exchange-rate risk.
Subordinated debt totaled €6,974 million, down from €7,030 million in 2011 driven by €54 million in positive exchange-rate effects.
Unrealized foreign exchange gains amounted to €1,017 million at end-2012, down from €1,071 million at
Supplier invoices to be paid at December 31, 2012 and due within three months amounted to €10 million (application of Article D. 441-4 of the French Commercial Code). At
December 31, 2011, they amounted to €10 million which €8 million were due within three months.
ACQUISITION OF EQUITY INTERESTS: In 2012, AXA did not acquire any signifi cant equity interests within the meaning of Article L.233-6 of the French Commercial
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX (VI = III + IV + V) 1,845 2,971
a) Capital - Ordinary shares (in Euro million) 4,784 5,244 5,313 5,398 5,470 b) Ordinary shares (numbers in million) 2,089 2,290 2,320 2,357 2,389 c) Bonds convertible into ordinary shares (numbers in million) 7 7 7 7 7 (a)
a) Gross revenues before sales tax 3,171 3,134 4,134 4,719 3,438 b) Pre-tax income from continuing operations, before depreciation, amortization and releases 1,561 1,568 2,529 2,992 1,850 d) Net after-tax income after depreciation, amortization and releases (1,253) 3,953 (488) 8,649 3,261 3 - PER SHARE DATA (IN EURO)
Meclisi Mebusan cadn° 15 - Salipazari 80040 ISTANBUL - Turkey 25, Boulevard du Souverain - 1170 BRUXELLES - Belgium 120-122, avenue Hassan II - 21000 CASABLANCA - Morocco
AXA LIFE INSURANCE COMPANY LTD 6 1 100,00% 90 151, Gloucester Road - Wan Chai - HONG KONG
Calle monseñor Palmer numero 1 - PALMA DE MALLORCA - Balearic Islands
General Guisan-str, 40 - CH-8401 WINTERTHUR - Swizerland 21, avenue Matignon - 75008 PARIS
Loans and cash advances given by the C ompany still outstanding
Colonia Allee, 10-20 - 51067 KOLN - Germany 100, Esplanade du Général De Gaulle - Cœur Défense Tour B
I Notes to the fi nancial statements as at December 31, 2012
Net income for the fi scal year ended December 31, 2012 was €3,261 million, compared with a profi t of €8,649 million for the year ended December 31, 2011, mainly driven by a €4,922 million gain on the disposal of the Australian and
Canadian businesses, a €1,113 million gain on carry-back receivables and €1,086 million of exceptional dividends.
Find below a summary of options and performances shares granted in 2012 and 2011 to Board of Directors paid by AXA
Financial assets consist in (i) investments in and receivables from subsidiaries and affi liates and (ii) other fi nancial assets and loans.
charges and releases of provisions for exchange rate risk are recognized in foreign exchange result, and (ii) charges and reversals of provisions for tax repayment risk are recognized in income tax benefi t/expense.
The fair value of investments in subsidiaries and affi liates is their going concern value for the fi rm. This may be determined as a function of either their share price or their shareholders’ equity, including unrealized gains, and prospects for the subsidiary.
The charge for the year ending December 31, 2012 amounted to €107 million, and the existing provision at December 31, 2012 is €1,018 million. The unamortized balance of €276 million was recognized as an off-balance sheet commitment.
Pursuant to this review, the employee benefi t liability amounted to €3 million at December 31, 2012.
(a) C orresponding to a net increase by €1,557 million of wich: ■ a €720 million increase in the capital of AXA Asia, of which €410 million representing the fi nancing for the acquisition of HSBC’s non-life insurance business in Asia; ■ a €72 million increase in the capital of AXA Mediterranean Holding to fi nance the acquisition of HSBC’s non-life insurance business in Mexico; ■ €230 million and €106 million capital increases respectively by AXA Life Europe and AXA Reinsurance Ireland to sustain their development; ■ a €134 million increase in Beaujon’s capital to foster the development of its subsidiaries, notably in Poland, the Czech Republic, Romania and India; ■ acquisition of AXA Konzern AG’s participation in AXA Investment Managers for €171 million.
(b) The net decrease of €496 million was primarily attributable to the reimbursement of the USD340 million loan granted to AXA China Region and to the repayment for €118 million of credit lines granted to AXA Investment Managers.
(d) The net decrease of €763 million result mainly from the reimbursement of a USD1 billion credit facility granted to shareholders in RESO Garantia.
Other fi nancial assets 55 3 - 58 3.4. Statement of receivables by maturity
(I n Euro million) Gross value Less than 1 year 1 to 5 years More than 5 years
Miscellaneous receivables and currents accounts with subsidiaries 116 116 - -
AXA’s share capital is represented by 2,388,610,984 shares with a par value of €2.29, giving a total value of €5,469,919,153.36 at
Undated deeply Subordinated Notes (nominal) 6, 230 - 21 6, 251 3.11. Provisions for contingent liabilities
Provision for foreign exchange losses 1, 840 - 227 1, 152 461
Subordinated debt totaled €6,974 million as opposed to €7,030 million in 2011 driven by €54 million in positive exchange-rate effects.
(I n Euro million) Value Less than 1 year 1 to 5 years
■ Directors’ fees allocated to members of the board of directors K€1,200
The Company had 3 employees or executive offi cers at the balance sheet date.
Income tax expense - 375 (b) 375 * A positive sign indicates tax benefi t.
Subordinated convertible bond redemption premium (see § 2.9 of this note) 276 5. 2. Commitments in respect of shareholder pacts
(2) A 10% depreciation of the Euro leads to a 3.8% increase in the fair value of debt, a 2.4% increase in the fair value of loans and a 14.3% decrease in the fair value of derivatives.
The information on fair value presented above should be used with care: ■ since these estimates are based on the use of measurements such as interest rates and spreads at the balance sheet date; such measurements may fl uctuate over time; and
market rates for each currency, (ii) AXA’s average spread by maturity and for the main currencies, distinguishing between subordinated debt and senior debt, and (iii) options included in issue contracts, such as issuer redemption options.
Affi liated companies (consolidated entities) (value net of provisions for impairment) (in Euro million)
I Report of the Statutory Auditors on the Company’s fi nancial statements (For the year ended December 31, 2012)
We have no matter to report regarding the fairness of the Board of Directors’ report and the documents addressed to the shareholders concerning the Company’s fi nancial situation and fi nancial statements, and their consistency with the fi nancial statements.
In accordance with the provisions of the Articles L.225-1021 and R.225-104 et seq. of the French Commercial Code, the following information describes the manner in which the Company takes into account the social, societal and environmental impacts of its business.
AXA’s overall salaried workforce on December 31, 2012, was 113,422 employees (open-ended and fi xed-term contracts), which represents a slight decrease of 0. 9%.
in 2011), 12% in the Americas (vs. 12 % in 2011) and 3% in
Effective labor-management communications and social dialogue pave the way for the stability which is needed to implement the Group’s business development strategy.
holds two EWC plenary meetings a year in combination with a preparatory and post-plenary session systematically held for debriefi ng.
Organization’s standards as well as AXA’s own set of core values and commitments. An appendix to the agreement also contains certain recommendations in case of restructuring, as detailed below.
The agreement, negotiated within the European Works Council, sets out an approach for social dialogue with the purpose of anticipating change in the sector in order to adapt employee skills to future needs and thus preserve jobs. According to the EWC, this agreement is unique in the insurance sector. It offers signifi cant means to secure employment in Europe. In an uncertain job environment, this sends a strong signal about how social responsibility within AXA’s EWC aims at fi nding alternative solutions and refuses to accept things as inevitable.
AXA has launched a new internal mobility policy and processes across its major entities in support of its business and to help its people better develop. The aim is (1) to make business needs immediately visible through global Group-wide posting of available jobs, (2) to detect internal skills through an enlarged hiring process and (3) to share knowledge, expertise and best practice in facilitating transfers and to align resources with
AXA’s business priorities. In 2012, the U.S. and Germany launched an extension of the mobility process, with the intent of fully integrating an external recruitment platform.
(about 600 assignments in 2012), supporting deployment and development of key expertise and leadership skills in mature as well as developing marketplaces. From April 2012 onwards, a new delivery model for international mobility was launched and an expertise center created (French: CEMI). The CEMI, located in France, provides support and expertise to 75% of
Support services enable assignees and their families to be better prepared for their international experience.
One of the Group’s diversity & inclusion priorities for 2012 was to create and launch a reference framework for a fl exible work. Group Human Resources, AXA Japan and a core team, comprised of fi ve other AXA entities, co-supervised the project.
The fl ex work framework offers a range of good practices, from both internal and external sources, and a toolkit for support to entities implementing fl exible work arrangements.
Various initiatives are in place across many AXA entities, such as AXA Germany’s fl ex work model, implemented across nearly all sites in Germany, where 450 employees were enrolled in
“telework” schemes. As seen in other AXA entities where fl ex work has been a priority, this has resulted in an increase in employee trust, empowerment, and satisfaction. It also increased productivity, quality and effi ciency at work, and yielded a reduced environmental footprint (406 tons of CO
saved in 2012) and an estimated annual €1.3 million reduction in real-estate costs from 2014 onwards.
Performance management is a key component of the overall reward policy which fosters and recognizes individual and collective superior achievements.
However, AXA’s policy is to target benefi ts coverage at the median of the relevant market and encourage fl exible benefi ts schemes, as this allows employees to choose the set of benefi ts they perceive as high-value. The Group’s policy is that benefi ts should include competitive insurance coverage
employees an opportunity to acquire shares at preferential prices. In 2012, this offer was made in 40 countries in which
At AXA, a key point of focus was furthering an inclusive culture in alignment with AXA’s Ambition culture of trust and achievement. The result was for inclusion to also be based on awareness of unconscious bias, micro-inequities and groupthink dynamics. In June 2012, AXA launched a new, speciallydesigned course entitled “Building an Inclusive Culture at AXA”.
Gender equality was one of AXA’s early priorities, dating back to the establishment of the AXA Group D&I offi ce. AXA conducted an in-depth analysis of gender issues across the Group, resulting in several actions, such as sponsorships, mentoring and developing a framework for fl ex work and for women successfully to return to work. In 2012, the focus was on strengthening the “gender pipeline.” Consequently, the Catalyst organization (a long-established global research organization focused on gender issues in corporations) recognized one
In total, AXA’s global gender balance is 52.3% women and 47.7% men.
portal, designed to help employees understand their health risks associated with diet, exercise, mind-set and lifestyle. That led to 2,487 employees registering and 1,093 completing the health risk assessment which identifi ed 4,700 health risks. So far 141 employees have succeeded in mitigating one or more risks. That was a signifi cant lifestyle improvement for employees and a productivity increase of approximately £70,500.
Resources development at AXA and instill a strong sense of belonging to a global company. More in detail, initiatives (1)
A corporate structure, AXA University, is entrusted with providing AXA’s leaders a place to focus on Group challenges and leadership practices and values, exchange ideas and build strong networks through well targeted development and competence-building opportunities. Training programs are structured around two broad themes: (1) professional
“colleges” (which build specifi c technical skills for families of professions, such as Finance, Risk, Operational Excellence,
IT, Human Resources, and Marketing) and (2) experiences dedicated to the development of the leadership capabilities of
AXA’s leaders. The emphasis is on driving innovation through learning and development by encouraging refl ection, enabling knowledge sharing and instituting learning as a continuous process. To achieve that mandate, AXA University partners with experts both within AXA and with some of the world’s leading institutions and business schools, such as Wharton,
(OTRs), which are systematic reviews of its organizational structure and what is required for AXA’s current business and future needs. The process provides a snapshot of organizational challenges and of key positions. It helps identify the potential of key people, taking into consideration their performance and leadership behaviors. It also helps build and share a robust and solid “talent pipeline” to ensure the right staffi ng around the globe. Finally, each OTR round offers a chance to discuss career paths, development plans and prepare for the next move (including international mobility) for key people. Since 2010, AXA has also used the process to review its structure and people from the perspective of the Group’s new global business lines and their respective areas of expertise.
in selected pilot entities with urgent needs. The initiative aimed gradually to build a strong employer brand that would boost pride world-wide in being an AXA employee. In addition, it should help attract the right talent to build Ambition AXA in all
Headcount (number of persons) as of December 31 2012 Evolution 2011
Headcount of salaried non-sales force √ 93,217 emp. -1.1% 94,241 emp.
Average FTE of salaried sales force 15,856.8 fte 1.8% 15,581.2 fte
■ Number of re-hires in the Company 30 emp. 21 emp.
Turnover rate of salaried sales force 29.8 % 3.1% 28.9 %
Number of training days of salaried workforce 276,179.1 days -2.4% 282,570.8 days
Percentage of salaried workforce having received at least one training course 83.2 % 0.6% 82.7 %
Average number of working days per year of salaried workforce 225.6 days -0.4% 226.5 days
Average number of working hours per week of salaried workforce 36.1 hrs -0.2% 36.1 hrs
■ Proportion of absences due to sickness √ 72.9 % 73.6 %
• Proportion of short term sick absences √ 79.6 % 79.9 %
• Proportion of long term sick absences √ 20.4 % 20.1 %
• Proportion of short term sick absences √ 78.3 % 78.9 %
■ Proportion of absences linked to pregnancy √ 24.7 % 23.6 %
■ Proportion of absences due to sickness √ 66.2 % 65.2 %
• Proportion of short term sick absences √ 92.1 % 89.1 %
• Proportion of long term sick absences √ 7.9 % 10.9 %
(√) Quantitative information reviewed by the Statutory Auditors according to the method presented in the limited assurance report page 432.
(a) Salaried workforce refers to non-sales and sales force employees with open-ended contracts, unless stated otherwise
(c) Salaried workforce who have left AXA because of an activity/job transfer to an external company or due to disposal of businesses, the employee is no longer under a contract with AXA.
Electronic waste is AXA’s most signifi cant hazardous type of waste. Paper is the most signifi cant raw material consumed by AXA. As a result, AXA’s environmental reporting and management processes focus on energy, water and paper consumption, as well as related CO
Responsibility team coordinates a network of around 300 dedicated environmental managers and employees in local entities. This network monitors annual progress on its reduction targets through the internal reporting tool, which helps local entities evaluate their own action plans and targets. These managers then analyse indicators, identify performance targets and promote best practice sharing. To accompany these action plans, entities have put in place a wide variety of activities to raise awareness and train employees on environmental issues and risks (e.g. lunch and learn conferences, Corporate
Responsibility week, etc.). In addition, an annual transport survey available in 41 countries is used to help estimating the amount of CO
AXA’s power consumption per FTE decreased by 7% in 2012 compared to 2011 and achieved a 16% decrease between 2008 and 2012. Although the Group did not completely achieve its 20% target, all AXA entities made signifi cant steps forward on reducing energy consumption and improving data quality. Moreover, AXA rents 80% of its buildings, which places constraints on the implementation of large infrastructure initiatives. Therefore, as AXA entities relocate to energy effi cient buildings, this should have a positive impact on AXA’s energy consumption. Two main actions can be seen as responsible for AXA’s decrease in energy consumption (2008-2012). The continued actions led by AXA Technology Services through the pursuit of an environmental optimization strategy for AXA’s
France, AXA Winterthur, AXA UK, AXA Middle East, etc.), as well as the selection of more energy effi cient buildings in cases of location transfers (e.g. AXA Assicurazioni, AXA Germany).
emissions are related to energy consumption, 28% from business travel (air and train) and 15% from AXA’s vehicle fl eet. While multiple local entities over the years have developed greenhouse gas emissions standards for their business travels (air, train, vehicle fl eets); the Group in 2010 defi ned common environmental travel guidelines, which were rolled out across the Group in 2011.
AXA’s offi ce paper consumption and marketing and distribution paper consumption both decreased by 11% between 2011 and 2012 and achieved a 43% decrease for offi ce paper and 33%
increased its use of offi ce paper from recycled sources from 64% to 66% and slightly decreased the use for its marketing and distribution paper from 72% to 68%. This trend is linked to the roll-out of internal campaigns. In 2011, the Group selected environmentally-friendly offi ce paper as sourcing minimum standards for the main G roup entities.
reduction in carbon emissions, a 16% reduction in energy consumption, a 43% and 33% reduction in, respectively, offi ce paper and commercial paper consumption, and a 4% reduction in water consumption. The Group has, therefore, made good progress at achieving its targets just falling short on energy and water consumption (respectively set at -20% and -15%), which are more complex to manage as they are often based on constrained collective processes in leased buildings. However,
emission vehicles (e.g. promoting electric, hybrid and low emitting), home insurance policies encouraging energy effi ciency (e.g. environmental appliances upgrades), renewable energy installations (e.g. wind, solar power, etc.), and environmental claims strategies (e.g. repair rather than replace auto spare parts). In addition, prevention devices (e.g. smartphone applications) to help raise customer and general public awareness are also being developed.
product offers (e.g. electric m otor vehicles, green buildings and renewable energies),
• encouraging “green” buildings or car fl eets in the SME
(see above sections). Indeed insurers are well equipped to address climate-related risks. They can fund and promote risk research and education. They possess claims loss data, as well as models and tools to analyse and project this data. They have a duty to unveil and disseminate knowledge about such new risks, including poorly known threats to society. Insurers, through their signifi cant investments, are also well positioned to send the right signals to the investment community and to specifi c invested companies. This strategy addresses both the “mitigation” and the “adaptation” dimensions of climate change. They are not solely self-interested or commercially driven, but they need to be global and collective to be effective.
The AXA Group and local entities signed or joined the various initiatives in the area of environmental protection (and/or
Carbon Disclosure Project (AXA Group partnership since 2005), “Sustainable Development Charter” (Fédération
Group on Climate Change: AXA IM, 2008). Other engagements are detailed online: www.axa.com/en/responsibility/strategycommitments /Commitments
√ (b) Number of employees on site, Full-Time Equivalent (FTEs) FTE 104,972 104,082
√ Paper recycled and/or garanteeing sustainable management: offi ce % 64 66
KPI: Marketing and distribution paper consumption per customer (k) kg/customer 0.12 0.11
Stable reporting perimeter compared to 2011, representing the 41 most signifi cant countries where the AXA Group is present. Key Performance Indicators (KPIs) highlighted in bold.
(a) In 2012, environmental indicators were collected for sites representing 93,261 FTEs (unless otherwise indicated in these footnotes) and were then extrapolated, continent by continent, to cover all 104,082 salaried FTEs working at the AXA Group as of 31/12/2012. In 2011, this process took place on the basis of data collected from 94,889 FTEs, extrapolated to 104,972 FTEs.
(e) Home/workplace commute estimations are based on an annual online transportation survey, issued to every AXA salaried employee. This data has been collected from 23,165 FTEs and then extrapolated. Sites whose response rate was below 5% have been excluded from the data consolidation process.
(f) The emissions factors specifi c to each country used for energy were revised in 2012. Source: the lnternational Energy Agency (IEA).
(j) Offi ce paper indicator covers 93,256 FTEs, whilst marketing and distribution covers 92,007 FTEs, as certain entities have not been able to report this data.
However, as a provider of insurance, savings and investment services, AXA promotes economic growth and social development through the support of over 100 million clients, local communities and businesses. Indeed AXA’s business is to protect people and businesses, their belongings, their health, their savings, their assets over the long run, providing peace of mind through uncertainty and support when it is most needed.
AXA developed in 2011 a set of community investment guidelines. All entities are required to ensure that 30% of their community investment projects are aligned with the CR fl agship theme of Risk Research and Education by year end 2013.
partnership, the AXA Group donated €930,000 to CARE in 2012. Moreover, most AXA entities support local risk prevention projects through sponsorship, philanthropy or products in the fi eld of road safety, health prevention, climate change, accidents at work, etc.
In a constantly changing world, societies cannot only rely on the past to explain the future, nor on mere incremental adaptation of existing models. The AXA Research Fund (www.
The AXA Research Fund contributes to truly understand the current reality of those risks: today’s research will help better protect tomorrow. This scientifi c philanthropy initiative is a major constituent of AXA’s commitment to better protect people against risks. Since its creation in 2008, the AXA
Research Fund invested €99 million to support 367 research teams of 49 nationalities in 27 countries. Funding is granted by decision of the AXA Research Fund’s Scientifi c Board, majorly composed of world-renowned researchers.
Accident & Health) were launched in 2009. In 3 years, including a 2009 pilot phase, 1.7M lives were insured and sold through different networks of NGOs, community groups or mobile phone retail distributors; ■ Mexico: AXA has launched 4 products in the fi elds of life insurance, personal accident, home and car robbery; ■ Mediterranean region : in 2012, AXA and Grameen Jameel
research capacity, RI Search©. The tool covers now more than 2300 companies. The RI Search© platform provides an ESG
score for each security and assesses them against peers thus enabling the portfolio managers to take ESG risks into account in their decision-making process.
AXA IM also expanded proxy voting coverage to include listed companies in Australia, Asia, Europe, North America & Japan.
The RI team created a thematic research function to investigate material ESG issues – for example research on the experienced skills shortage in the Oil & Gas sector in 2012. Further information can be found on www.axa-im.com/en/responsible-investment.
Offi cer. The RIC’s mandate is to develop a global approach to responsible investment which takes into account both controversial sectors from a reputational standpoint, and the more positive inclusion of ESG issues in investment processes, from a performance and risk management perspective.
– such as effective and accountable boards, shareholder rights and transparent remuneration policies – that AXA
project, w hich aims to allocate capital to investment strategies whose goal is to focus on assets that address key sustainability concerns such as renewable energy, poverty, health or risk prevention. In light of this progress, the AXA Group also decided to sign the UN Principles for Responsible Investment in 2012.
Pursuant to management request and in our capacity as Statutory Auditor of AXA, we hereby present our attestation of completeness on the consolidated social, environmental and other societal information disclosed in the management report prepared for the year ended December 31, 2012 Pursuant to Article L.225-102-1 of the French Commercial as well as our limited assurance report on a selection of information.
The Board of Directors is responsible for preparing a management report including the consolidated social, environmental and other sustainable development information provided for in Article R.225-105-1 of the French Commercial Code (hereinafter the
Article L.822-11 of the French Commercial Code. Furthermore, we have set up a quality control system that includes documented policies and procedures that aim to ensure compliance with rules of ethics, professional standards and the applicable legal and regulatory requirements.
Based on our work, our responsibility is: ■ to attest that the required Information is presented in the management report or, in the event of omission, is explained pursuant to the third paragraph of Article R.225-105 of the French Commercial Code and Decree no. 2012-557 of April 24, 2012 (Attestation of completeness); ■ to express a limited assurance conclusion on whether the selected information and designated by (√ ) is prepared, in all material respects, in accordance with the Reporting Framework (Limited assurance report).
We called upon our Corporate Social Responsibility experts to assist us in the performance of our work.
Our engagement was performed in accordance with professional standards applicable in France: ■ we have compared the Information presented in the management report with the list set forth in Article R.225-105-1 of the French
Commercial Code; ■ we have verifi ed that the Information covers the scope of consolidation, namely the company and its subsidiaries as defi ned in
We conducted our engagement in accordance with ISAE 3000 (International Standard on Assurance Engagements) and professional standards applicable in France.
We performed the following procedures to obtain a limited assurance that nothing has come to our attention that causes us to believe that the Information selected by the AXA Group and designated by (√ ), is not prepared in all material respects, in accordance with the Reporting Framework. A higher level of assurance would have required additional verifi cation procedures. Our work consisted in the following: ■ we have assessed the appropriateness of the Reporting Framework with respect to its relevance, completeness, neutrality, clarity and reliability, by taking into consideration, when relevant, the sector’s best practices; ■ we have verifi ed the implementation within the AXA Group of a process to collect, compile, process and check the selected information with regard to its completeness and consistency. We have obtained an understanding of the internal control and risk management procedures relating to the compilation of this information. We have conducted interviews with individuals responsible for social, environmental and other sustainable development reporting.
■ regarding the selected quantitative consolidated information designated by (√ ) (1): ■ for the consolidating entity and controlled entities, we have performed analytical procedures and have verifi ed, on a sample basis, the calculations as well as the consolidation of this information; ■ for the locations that we have selected based on their activity, their contribution to consolidated indicators, their location and a risk analysis, we have: • conducted interviews to verify the proper application of the procedures,
The selected sample included 34% of the total energy consumption, 37% of the total water consumption, 39% of the total of paper consumption and 31% of the total headcounts of the Group and included the following entities: ■ for environmental information: AXA Life Japan, AXA Direct Japan, ABS India, AXA Belgium, AXA France, AXA Ireland, AXA Seguros
Based on the work performed, nothing has come to our attention that causes us to believe that the selected information designated by (√ ) has not been prepared, in all material respects, in accordance with the Reporting Framework.
emissions resulting from onsite power consumption and business travel (airplane, train, AXA vehicle fl eet) per person, water consumption, Water consumption per person, offi ce paper consumed, Offi ce paper consumption per person, marketing and distribution paper consumed, recycled paper and/or paper guaranteeing sustainable management (offi ce and marketing), consumption of ink cartridges or toners, non-sorted waste, sorted offi ce paper (cardboard excluded) to recycling, ink cartridges or toners to recycling. Headcount of salaried non sales force and salaried sales force (open-ended contract, by status and gender), % of part-time among salaried non-sales force (open-ended contract), average age of salaried non-sales force (open-ended contract), average length of service of salaried non-sales force (open-ended contract), number of training days per salaried non-sales force, training cost – salaried non-sales force (not published), number of salaried non-sales force external recruitments (open-ended contract), number of salaried non-sales force resignations (open-ended contract), number of salaried non-sales force dismissals (collective layoff + Individual dismissal) (open-ended contract), involuntary turnover of salaried non-sales force (open-ended contract), annual gross payroll of salaried non-sales force and sales force (open-ended contract, fi xed and variable pay), absenteeism rate of salaried workforce (open-ended contract, non-sales force and sales force, by type of absence).
R egistration D ocument corresponding to the sections of the Board of Directors’ report as approved by the Board of
Annual Report (Registration Document) fi led with the AMF on March 21, 2013
Pages 3. Selected fi nancial information 4 to 5 5. Information about the issuer 5.1. History and development of the issuer 6 6. Business overview 6 to 19 and 20 to 22 7. Organizational structure 7.1. Brief description of the Group 9 to 10 7.2. List of signifi cant subsidiaries 205 to 210 8. Property, plants and equipment n/a 9. Operating and fi nancial review 10. Capital resources 10.1. Capital resources 82 to 87 and 247 to 251 10.2. Sources and amounts of cash fl ows 82 to 87; 186 to 187 and 246 to 247 10.3. Borrowing requirements and funding structure 82 to 87 and 266 to 267 10.4. Restrictions on the use of capital resources 82 to 87 10.5. Anticipated sources of funds needed 82 to 87 11. R&D, patents and licenses n/a 13. Profi ts forecasts or estimates n/a 14. Administrative, Management, and Supervisory bodies and senior management 14.1. Information on members of the Administrative, Management or Supervisory bodies 90 to 104 14.2. Administrative, Management and Supervisory bodies’ confl icts of interests 99 and 124 to 125 15. Remuneration and benefi ts 15.1. Amount of remuneration paid 106 to 129 15.2. Amounts set aside or accrued to provide pension, retirement or similar benefi ts 127
APPENDICES A APPENDIX IX COMMISSION REGULATION OF APRIL 29, 2004 CORRESPONDENCE TABLE
Pages 16. Board practices 16.1. Date of expiration of the current term of offi ce 92 to 93 16.2. Information about members of the management bodies’ service contracts with the issuer or any of its subsidiaries 16.3. Information on the Audit Committee and the Remuneration Committee 101 and 102 16.4. Statement of compliance with the country of incorporation’s corporate governance regime 90 and 336 17. Employees 17.1. Number of employees 105 and 379 to 382 17.2. Shareholdings and stock options 112 to 119 and 124 to 125 17.3. Arrangements for involving the employees in the capital of the issuer 132 to 133 19. Related party transactions 132 to 133 20. Financial information concerning the issuer’s assets and liabilities, fi nancial position and profi ts and losses 20.1. Historical fi nancial information* 175 to 320 20.2. Pro forma fi nancial information n/a 20.4. Auditing of historical annual fi nancial information 321 to 322 and 342 20.5. Age of latest fi nancial information 394 20.6. Interim and other fi nancial information n/a 20.8. Legal and arbitration proceedings 318 to 320 20.9. Signifi cant change in the issuer’s fi nancial or trading position 25; 82 to 87 and 320 21. Additional information 21.2. Memorandum and Articles of association 90 to 91 and 324 to 327 22. Material contracts n/a 23. Third party information and statement by experts and declarations of any interest n/a 24. Documents on display 6 25. Information on holdings 7 and 205 to 210 * Pursuant to Article 28 of Commission Regulation (EC) n° 809/2004 of April 29, 2004, the following items are incorporated by reference: ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2011 and the Statutory Auditors’ report on them, respectively presented on pages 227-402 and on pages 403-404 of the Annual Report (Registration Document), the French version of which was fi led with the AMF (Autorité des marchés fi nanciers) on March 15, 2012 under reference n° D12-0161; ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2010 and the Statutory Auditors’ report on them, respectively presented on pages 237-408 and on pages 409-410 of the Annual Report (Registration Document), the French version of which was fi led with the AMF (Autorité des marchés fi nanciers) on March 18, 2011 under reference n° D11-0147.
Compensation paid to Statutory Auditors in 2012 and 2011 (art. 222-8) 317
Registration Document corresponding to the various sections of the Annual Financial Report.
Report of the Statutory Auditors on the consolidated fi nancial statements of the Group 321 to 322