The DPL or DPA corresponds to the discretionary participation available to the policyholders and is generally determined by applying on the basis of estimated participation of policyholders in unrealized gains and losses and any other valuation difference with the local contractual basis. Jurisdictions where participating business is signifi cant are Switzerland (for group insurance policies), Germany and France where the minimum is set to 90%, 90% and 85% respectively, of a basis which may include not only fi nancial income but also other components such as in Germany or Switzerland. Participating business is less prevalent in the United States or in Japan.
When a net unrealized loss (unrealized change in fair value, impairment, expense related, …) is accounted, a deferred participating asset (DPA) may be recognized only to the extent that it is highly probable that it can be charged to policyholders, by entity, in the future. This could be the case if the DPA can be offset against future participation either directly through deduction of the DPL from future capital gains or the DPL
Unrealized gains and losses on assets classifi ed as trading or designated at fair value through profi t and loss, along with any other entry impacting the income statement and generating a timing difference, are accounted for through the income statement with a corresponding shadow entry adjustment also in the statement of income. The shadow accounting adjustments relating to unrealized gains and losses on assets available-for-sale (for which change in fair value is taken to shareholders’ equity) are booked through shareholders’ equity.
In addition, at each balance sheet date, liability adequacy tests are performed in each consolidated entity in order to ensure the adequacy of the contract liabilities net of related
DAC and VBI assets and deferred policyholders’ participation asset. To perform these tests, entities group contracts together according to how they have been acquired, are serviced and have their profi tability measured. Entities use current best estimates of all future contractual cash fl ows as well as claims handling and administration expenses, and take into account guarantees and investment yields relating to assets backing these contracts.
Embedded derivatives meeting the defi nition of an insurance contract are described in Note 14.10.
In accordance with IAS 39, these contracts are accounted for using “deposit accounting”, which mainly results in not recognizing the cash fl ows corresponding to premiums, benefi ts and claims in the statement of income (see “Revenue recognition” paragraph below). These cash fl ows shall rather be recognized as deposits and withdrawals.
(retirement compensation, additional pension benefi t, health insurance). In order to meet those obligations, some regulatory frameworks have allowed or enforced the set up of dedicated funds (plan assets).
Obligation and the market value at the balance sheet date of the corresponding invested plan assets after adjustment for any minimum funding requirement or any asset ceiling effect. If the net result is positive, a provision is recorded under the provision for risks and charges heading. If the net result is negative, a prepaid pension asset is recorded in the balance sheet but not more than its recoverable amount (asset ceiling). Actuarial gains and losses (now termed remeasurments under IAS 19 revised) arising from experience adjustments and changes in actuarial assumptions are recognized in shareholders’ equity (in
Other Comprehensive Income) in full in the period in which they occur. Similarly, the actual return on assets and any change in asset ceiling, excluding the net interest income on assets, is recognized in shareholders’ equity. The regular impact in the income statement mainly relates to the current service cost
(annually accruing employee benefi t) and the net interest on the amount recorded in the opening balance sheet (unwinding of discount applied to the net liability/asset at start of the annual period, taking into account contributions and benefi ts payments during the period). Past service cost represents the change in the present value of the defi ned benefi t obligation resulting from a plan amendment or curtailment to a defi ned benefi ts plan. It is recognized totally and immediately in the income statement when incurred. Gains and losses on the settlement of a defi ned benefi t plan also have an impact in the income statement when the settlement occurs.
Cash-settled share-based compensation plans are recognized at fair value, which is remeasured at each balance sheet date with any change in fair value recognized in the statement of income.
The AXA Shareplan issued under a specifi c French regulatory framework includes a traditional and a leveraged formula (with an application subject to specifi c local regulations within the
The Group unbundles the deposit component of contracts when required by IFRS 4, i.e. when both the following conditions are met: ■ the Group can measure separately the “deposit” component
Revenues from other activities mainly include: ■ commissions received and fees for services relating to asset management activities; ■ insurance companies revenues from non insurance activities, notably commissions received on the sales or distribution of fi nancial products; and
AXA Life Insurance Merged with AXA Japan Holding 99.02 99.02 100.00 99.02
AXA Colpatria Seguros de vida (Colombia) Acquisition 51.00 51.00 - -
Kyobo AXA General Insurance Co. Ltd. (South Korea) Minority interest buyout 99.61 99.61 99.55 99.55
AXA Non Life Insurance Co. Ltd. (Japan) 100.00 99.02 100.00 99.02
Hilo Direct SA de Seguros y Reaseguros (Spain) 100.00 100.00 100.00 100.00
Seguro Directo Gere Companhia de Seguros SA (Portugal) 100.00 100.00 100.00 100.00
AXA Investment Managers (sub group) Minority interests buyout 96.17 96.11 95.87 95.82
Main changes in scope of consolidation are detailed in Note 5.
As of December 31, 2014, 19 consolidated real estate companies corresponded to a total of €7,515 million invested assets (€5,025 million at the end of 2013), mainly in France,
As regards main subsidiaries with minority interests (other than investment funds and real estate companies): ■ the fi nancial information of AllianceBernstein is available in
Data of its Annual Report for the year ended December 31, 2014, which is fi led with the SEC; ■ summarized fi nancial information for AXA MPS is as follows (including AXA and external share but excluding goodwill related to AXA’s holdings and before intercompany eliminations with other companies of the Group).
Above entities represent 80% of minority interests of the Group at December 31, 2014. AllianceBernstein is part of the Asset
Management segment and AXA MPS is part of both Life & Savings and Property & Casualty segments.
Bharti AXA General Insurance Company Limited (India) 26.00 26.00 26.00 26.00
In 2008, AXA France invested in Arche Finance, an investment vehicle dedicated to credit investment, which entered the scope of consolidation in June 2008 with a debt of €200 million. On
Furthermore, given its insurance business, the Group holds direct investments in corporates of various sectors, such as debt instruments, equity securities and loans. These investments are not designed to be done in structured entities and the whole Group’s exposure is refl ected on the consolidated balance sheet.
Information on these unconsolidated investment funds is provided in different sections of the Annual Report: ■ Section 1.2 “Information on the Company”: • business overview: AXA’s total assets under management including assets managed on behalf of third parties; • asset Management segment: A ssets under management
(including assets managed on behalf of third parties) and revenues; ■ Section 1.3 “Activity report” – Asset Management segment; ■ Section 4.6. “Notes to the consolidated fi nancial statements”: • Note 9 – Investments with the breakdown of investments and detail on non-consolidated investment funds in
Main changes in scope of consolidation are detailed in Note 10.
The Group has set up an organization by Global business lines for both Life & Savings and Property & Casualty in order to improve the speed and effectiveness of the organization and further leverage its size. In addition, the Group announced in
December 2014 the creation of a third Global Business line dedicated to Health insurance business.
The Global business line dedicated to Health insurance business has set the following priorities: ■ become a health benchmark in up to 11 countries where
Life & Savings: AXA’s Life & Savings products include a broad range of Investment & Savings products as well as
Property & Casualty: This segment includes a broad range of products including mainly motor, household, property and general liability insurance for both personal and commercial customers (commercial customers being mainly small to medium-sized companies). In some countries, this segment includes Health products. The Property & Casualty segment aggregates nine geographical operating components (France,
Central and Eastern Europe, Asia and Other countries) and one operating component for the Direct business.
Company and the Group Property & Casualty run-off managed by AXA Liabilities Managers.
AllianceBernstein entities, which are provided to a variety of institutional investors and individuals, including AXA’s insurance companies.
The Banking segment includes banking activities (mainly retail banking, mortgage loans, savings) conducted primarily in
Change in unearned premiums net of unearned revenues and fees (202) (10) (70) - - - (16) (298)
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (b) 12,133 (159) 31 49 - 268 3 12,325 of which change in fair value of assets with fi nancial risk borne by policyholders 9,520 - - - - - - 9,520
Other operating income and expenses (78,013) (29,117) (3,290) (2,916) (581) (683) 812 (113,789)
Net consolidated income after tax 3,603 1,785 264 597 (47) (864) - 5,337
Split between: Net consolidated income – Group share 3,524 1,734 261 419 (49) (864) - 5,024
Net consolidated income – Minority interests 79 51 3 178 1 - - 313
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (c) 20,825 (65) (6) 51 - (151) (33) 20,621 of which change in fair value of assets with fi nancial risk borne by policyholders 22,187 - - - - - (6) 22,180
Amortization of the value of purchased business in force (409) - - - - - - (409)
Other operating income and expenses (83,564) (28,033) (3,098) (3,032) (510) (665) 703 (118,199)
Split between: Net consolidated income – Group share 2,614 2,085 184 577 (8) (969) - 4,482
(b) Includes gains/losses from derivatives hedging variable annuities within Life & Savings and International Insurance segments.
All of the following paragraphs form an integral part of the
Please refer to pages 183 to 185 of the “Quantitative and
Gross value Accumulated impairment Net value Gross value Accumulated impairment Net value
Note: Goodwill related to entities accounted for using the equity method is not presented in this table (see Note 10).
Consistent with IAS 36, each unit or group of units to which the goodwill is allocated represents the lowest level at which the goodwill is monitored for internal management purposes within the Group and is never larger than an operating segment as defi ned by IFRS 8 such as presented in Note 3.
(b) Life & Savings: includes the sale of MONY portfolio in the United States.
Write back of impairment of goodwill sold during the period (b)
(a) Property & Casualty: includes a full impairment of the goodwill in Ukraine P&C as a consequence of deteriorated economic perspectives.
(b) Life & Savings: includes the write back of impairment due to the disposal of Hungary Life & Savings operations.
(a) Includes the expected disposal of the Hungarian Life & Savings operations (€38 million).
(b) Includes the immediate write off in net income of the goodwill related to the HSBC employee benefi t portfolio acquisition in Singapore (€13 million).
The goodwill for Ukraine was fully impaired. For all others, the results of cash fl ow projections exceed the carried amount of each related cash-generating unit or group of units.
Group’s business is subject. For each CGU, sensitivity analyses were performed with regards to the discount rate: an increase of 0.5% in the discount rate would not lead to an impairment loss for any of the CGUs as the recoverable amount for each
However, subsequent impairment tests may be based upon different assumptions and future cash flow projections, which may result in an impairment of these assets in the foreseeable future.
On November 7, 2014, AXA announced it has entered into an agreement with The Principal Financial Group (“The Principal”)
The major classes of assets and liabilities of these businesses classifi ed as held for sale included the following as of December 31, 2014
AXA decided to recognize goodwill only for the Group share. At
December 31, 2014, based on the closing exchange currency rate, the goodwill related to the operation had a value of €240 million, (respectively €167 million for Property & Casualty and €73 million for Life and Savings within the Mediterranean and Latin America Region cash generating units).
Insurance Company (“MONY”) and to get reinsurance for an in-force book of life insurance policies written by MONY’s subsidiary MONY Life Insurance Company of America (“MLOA”)
(net of tax and group share). As of December 31, 2014, the
AXA Group held a 10% share (17% at the December 31, 2013)
in AXA Private Equity capital. On September 30, 2013, the transaction valued AXA Private Equity at €510 million for 100%
The change in Value of Business In-force (“VBI”) in the Life & Savings segment was as follows: (In Euro million) 2014 2013
(a) In 2013, includes the sale of MONY portfolio in the United States.
(c) Applicable to investment contracts with no discretionary participation features (IAS 39).
Changes in deferred acquisition costs and equivalent for Life & Savings were as follows: (In Euro million)
Life & Savings deferred acquisition costs and equivalent net carrying value as of January 1 16,634 943 16,312 932
DAC and similar costs capitalization for the period 1,871 202 1,965 169
7.3. DEFERRED ACQUISITION COSTS AND EQUIVALENT, NET OF AMORTIZATION, UNEARNED REVENUE RESERVES AND UNEARNED FEE RESERVES – LIFE & SAVINGS
Unearned revenues and unearned fees reserves 2,356 681 2,422 577 of which shadow unearned revenues reserves (468) - (260) -
DAC net of unearned revenues and unearned fees reserves 15,818 444 14,212 366
Intangible assets recognized in business combinations and other business operations 3,156 806 51 2,299 2,311 8.2. BREAKDOWN OF INTANGIBLE ASSETS RECOGNIZED IN BUSINESS COMBINATIONS AND OTHER BUSINESS OPERATIONS
AXA MPS (Italy) Life and Savings 2007 & 2008 592 - - 592 592 - - 592
8.3. CHANGE IN INTANGIBLE ASSETS RECOGNIZED IN BUSINESS COMBINATIONS AND OTHER BUSINESS OPERATIONS
In 2014, includes €21 million on acquisition of Capital Fondsmaeglerselskab in Denmark by AllianceBernstein.
except derivatives related to macro-hedges which are shown separately. Detailed effects of derivatives are provided in Note 20.3.
Investment in real estate properties at amortized cost 23,491 17,587 2.58%
Non consolidated investment funds designated as at fair value through profi t or loss (a) 4,985 4,985 0.73%
Other assets designated as at fair value through profi t or loss, held by consolidated investment funds 8,828 8,828 1.30%
Investments (excluding those backing contracts where the fi nancial risk is borne by policyholders) 507,276 499,569 73.40%
(c) Eligible to the IAS 39 Loans and Receivables measurement category.
Investment in real estate properties designated as at fair value through profi t or loss (b) 1,033 1,033 0.17%
Debt instruments (at cost) that are not quoted in an active market (d) 6,517 6,410 1.06%
Equity instruments designated as at fair value through profi t or loss (b) 6,477 6,477 1.07%
Non consolidated investment funds designated as at fair value through profi t or loss (b) 4,396 4,396 0.73%
Other assets designated as at fair value through profi t or loss, held by consolidated investment funds 6,876 6,876 1.13%
Investments (excluding those backing contracts where the fi nancial risk is borne by policyholders) 449,975 443,789 73.24%
(b) Assets measured at fair value under the fair value option.
(c) Includes assets measured at fair value notably under the fair value option.
Investment in real estate properties includes buildings owned directly and through consolidated real estate entities.
Breakdown of the carrying value and fair value of investment in real estate properties at amortized cost, excluding the impact of all derivatives: (In Euro million)
Change in impairment and amortization of investment in real estate properties at amortized cost (all activities): (In Euro million)
(b) Includes change in scope and the effect of changes in exchange rates.
Debt instruments (at cost) that are not quoted in an active market 4,991 5,208 4,991 219 2 6,431 6,538 6,431 141 33
Equity instruments available for sale 11,867 15,135 15,135 3,357 90 12,222 15,158 15,158 3,034 98
Non consolidated investment funds available for sale 5,969 6,934 6,934 986 21 5,113 6,002 6,002 901 11
Debt instruments available for sale 9,973 10,268 10,268 316 20 9,607 9,625 9,625 136 118
Equity instruments available for sale 1,103 1,381 1,381 280 1 1,912 2,263 2,263 361 10
Non consolidated investment funds available for sale 11 25 25 14 - 276 281 281 6 -
Debt instruments available for sale 320,925 373,888 373,888 53,740 778 306,910 329,735 329,735 25,413 2,587
Debt instruments (at cost) that are not quoted in an active market 6,943 7,160 6,943 219 2 7,706 7,813 7,706 141 33
The effect of derivatives modifi es in certain cases the maturity profi le of assets presented below. Most of the debt instruments and loans held by the Group are fi xed-rate instruments (i.e.
Carrying value of associated liabilities (a) 2,276 25,794 1,388 1,625 24,418 3,766
The detail of non-consolidated investment funds breakdown was as follows: (In Euro million)
Non consolidated investment funds mainly holding equity securities 2,332 344 2,675 2,018 286 2,305
Other non consolidated investment funds 5,358 156 5,515 4,729 379 5,108
(b) Amounts are presented net of the effect of related hedging derivatives (IAS 39 qualifying hedges or economic hedges) except derivatives related to macro-hedges which are shown separately.
Equity instruments available for sale 15,093 (2,123) 12,971 3,457 16,428 16,515 (2,380) 14,135 3,054 17,189
Non consolidated investment funds available for sale 6,930 (950) 5,980 870 6,850 6,418 (1,029) 5,389 934 6,322
(c) Asset value including impairment, discounts/premiums and accrued interests, but before revaluation to fair value of assets available for sale.
(e) Revaluation to fair value for instruments at cost related to the application of hedge accounting.
Other assets held by consolidated investment funds designated as at fair value through profi t or loss 1,776 5,778 1,569 9,123 1,233 4,580 1,116 6,928
Financial investments and loans designated as at fair value through profi t or loss 29,136 27,326 7,461 63,924 24,758 22,413 6,757 53,928
Financial investments and loans held for trading 728 314 - 1,042 624 179 - 803
Note 1.5. The Group applies the IFRS 13 fair value hierarchy.
Fair values determined in whole directly by reference to an active market relate to prices which are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis, i.e. the market is still active. Such assets are categorized in the Level 1 of the IFRS 13 fair value hierarchy.
The common characteristic of level 2 and 3 assets is that their related market is considered as inactive. Their value is generally based on mark to market basis, except when there is no market or when the market is distressed, in which case a mark to model approach is used. Assets not quoted in an active market which are marked to market using mainly observable inputs are classifi ed in level 2. Assets not quoted in an active market for which fair value determination is not mainly based on observable inputs are classifi ed as level 3. For all assets not quoted in an active market/no active market and for which a mark to model approach is used, the classifi cation between level 2 and level 3 depends on the proportion of assumptions used supported by market transactions and observable data
(market observable inputs): ■ assumed to be used by pricing services or; ■ used by the Group in the limited cases of application of mark to model valuations.
a) Fair values determined in whole directly by reference to an active market (level 1)
Since the 2008 fi nancial crisis, a signifi cant volatility related to corporate spreads has been observed leading to transfers between level 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 experienced on European government bonds with yields and bid ask spreads which widened signifi cantly leading to transfers from level 1 to level 2. In 2013, fl oating rate Japanese sovereign bonds were reclassifi ed from level 2 to level 1 consistent with sustained improved market liquidity for those instruments. At December 31, 2014, Ireland, Portugal, Spain and Italy sovereign bonds were classifi ed in level 2. For these sovereign bonds classifi ed in level 2, trends observed in 2012 and 2013 were confi rmed in 2014 with an acceleration of peripheral countries spread contraction and liquidity improvements. These market indicators will continue to be monitored to assess the sustainability of those improvements. Therefore, the classifi cation as at December 31, 2014 was maintained compared to December 31, 2013.
Amounts presented in level 2 and 3 represent a variety of circumstances. A fi nancial instrument is regarded as not quoted in an active market if there is little observation of transaction prices as an inherent characteristic of the instrument, when there is a signifi cant decline in the volume and level of trading activity, in case of signifi cant illiquidity or if observable prices cannot be considered as representing fair value because of dislocated market conditions. Characteristics of inactive markets can therefore be very different in nature, inherent to the instrument or be indicative of a change in the conditions prevailing in certain markets.
A majority of assets classifi ed in Level 3 corresponds to Private Investments and in particular Private Equity assets.
Debt instruments held to maturity - - - - - - - -
Financial investments and loans held to maturity - - - - - - - -
Debt instruments at cost (loans & receivables) 45 4,188 2,927 7,160 1,284 4,704 1,825 7,813
Financial investments and loans at amortized cost 47 51,281 38,983 90,311 1,286 46,955 33,765 82,006
Note 1.5 which notably considers, for assets not quoted in an active market, the weight of observable inputs in the valuation, concludes that the fair value calculations, which are based on valuations performed by qualifi ed property appraisers mainly based on market observable inputs, are considered as level 2 fair values. However, as noted in Note 1.5 and Note 9.10.1, the assessment of the signifi cance of an input against the fair value measurement in its entirety involves judgment and a different weighting could produce a different categorization.
Philippine AXA Life Insurance Corporation 30 - 12 4 (8) 38
On February 20, 2014, AXA announced the completion of the acquisition. The acquired operations have been integrated in the scope of the Asian Region and accounted for using the equity method since February 20, 2014. The fi nal acquisition cost was RMB 4.1 billion (or €495 million (2)), corresponding to a 50% stake. AXA and Tian Ping’s current shareholders jointly control AXA-Tianp ing. AXA’s previously existing Chinese P&C
Philippine AXA Life Insurance Corporation (c) 29 - 12 (4) (7) 30
PT AXA Mandiri Financial Services 60 - 29 (15) (28) 46
(b) Includes dividend distributions, changes in consolidation method, impacts of revaluation to fair value of fi nancial investments in shareholders’ equity and increase in capital.
Financial information for main joint ventures is as follows (including AXA and external share but excluding goodwill related to AXA’s investment): (In Euro million)
Total liabilities (including fi nancing debts but excluding shareholders’ equity) 4,292 1,016 2,046
A reconciliation of the summarized fi nancial information to the carrying amount of the joint ventures is as follows: (In Euro million)
Financial information for main associates is as follows (including AXA and external share but excluding goodwill related to AXA’s investment): (In Euro million)
A reconciliation of the summarized fi nancial information to the carrying amount of the associates is as follows: (In Euro million)
Receivables arising from outward reinsurance operations 930 (60) 871 871 789 (78) 710 710
(b) Fair value is assessed as being equal to net carrying value given the nature of such assets.
Cash and cash equivalent as of December 31 (c) 21,631 20,477
(c) The “Cash and cash equivalents” item excludes cash backing contracts where the fi nancial risk is borne by policyholders (unit-linked contracts).
As of December 31, 2014, total consolidated net cash and cash equivalents amounted to €21,631 million, net of €418 million bank overdrafts classifi ed under “Other debt instrument issued and bank overdrafts” in the consolidated statement of fi nancial position.
(€963 million as of December 31, 2014 foreign exchange rate) subordinated debt due 2054; ■ Dividends payments of €-2,235 million.
Net cash relating to fi nancing activities totaled €-1,918 million in 2013 mainly due to: ■ Dividends payments of €-1,954 million.
AXA’s share capital and capital in excess of nominal value: ■ employee share offering (December 2014) of 19 million shares for €313 million net of related charges; ■ stock-option exercise of 4 million shares for €53 million; ■ share-based payments for €35 million.
As of December 31, 2014, the carrying value of treasury shares and related derivatives was €164 million. There was no
As of December 31, 2014, 2 million treasury shares backing contracts where fi nancial risk is borne by policyholders held in consolidated investment funds were not deducted from shareholders’ equity. Their total estimated historical cost was €33 million and their market value €39 million at the end of
In 2014, the change in other reserves was driven by: ■ €+997 million from the issuance of a new subordinated debt
Undated notes - 375 MUS$ variables rates 375 309 375 272
At April 23, 2014 Shareholders’ Meeting, shareholders approved a dividend distribution of €0.81 per share corresponding to €1,960 million with respect to the 2013 fi nancial year.
of the share capital, a decrease of 12 million shares compared to December 31, 2012.
As of December 31, 2013, the carrying value of treasury shares and related derivatives was €188 million. This fi gure included €0.9 million relating to AXA shares held by consolidated Mutual funds (69,818 shares) not backing contracts where fi nancial risk is borne by policyholders.
As of December 31, 2013, 2 million treasury shares backing contracts where fi nancial risk is borne by policyholders held in consolidated investment funds were not deducted from shareholders’ equity. Their total estimated historical cost was €40 million and their market value €42 million at the end of
In 2013, the change in other reserves was driven by: ■ €+633 million from the issuance of a new subordinated debt; ■ €-284 million from interest expense related to the undated subordinated debt (net of tax); ■ €-381 million from the exercise of an early redemption call on an undated subordinated debt; ■ €-277 million from foreign exchange rate fl uctuations.
The increase of gross unrealized gains and losses on assets available for sale totalled €+30,479 million, of which €+30,137 million increase in unrealized capital gains on debt securities which was mainly driven by interest rates and corporate spreads decrease.
Less unrealized gains and losses attributable to: Shadow accounting on policyholders’ participation and other obligations (33,973) (14,270)
Shadow accounting on Value of purchased Business In force (178) (215)
UNREALIZED GAINS AND LOSSES (NET OF TAX) – 100% – TOTAL 15,469 8,426
(c) Unrealized gains and losses on total available for sale invested assets including loans.
Shadow accounting on Value of purchased Business In force - - (85)
Unrealized gains and losses (net of tax) – Assets available for sale 3,047 885 496
Unrealized gains and losses (net of tax) – Equity accounted companies 42 - -
Unrealized gains and losses (net of tax) 100%, opening 8,426 11,177
Investments bought in the current accounting period and changes in fair value (b) 7,228 (1,866)
Unrealized gains and losses (net of tax) 100%, closing 15,469 8,426
(c) Transfer induced by disposal of fi nancial assets, impairment write-back following reevaluation, or transfer of expenses following impairment charge during the period, and debt instruments discount premium impacts.
The total impact of foreign exchange rate movement was €+2,625 million (of which €+2,432 million from group share and €+193 million from minority interest) as of December 31, 2014.
(€-76 million), and the Company (€-44 million) driven by change in fair value of debt hedging net investments in foreign operations.
The negative impact in equity of actuarial gains and losses arising from employee defi ned benefi ts obligation was mainly explained by: ■ the decrease in the discount rates; ■ plan assets outperformance above the opening discount rate; ■ the decrease in the infl ation rate and pension growth rates.
The decrease in gross unrealized gains and losses on assets available for sale totaled €10,554 million, mainly from debt instruments (€8,000 million), mainly due to an increase in interest rates partly offset by credit spreads decrease.
Liabilities arising from insurance contracts, including those where the fi nancial risk is borne by policyholders, were split by segment as follows: (In Euro million)
Liabilities arising from insurance contracts 308,437 54,080 8,957 371,474 288,632 51,041 8,661 348,334 of which measured at current assumptions (e) 11,366 - - 11,366 6,058 - - 6,058
Reinsurers’ share in future policy benefi t reserves 12,518 - - 12,518 11,888 - 1 11,889
Reinsurers share in liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders - - - - - - - -
Reinsurer’s share in insurance contracts liabilities relating to policyholders’ participation (€154 million in 2014 and €155 million in 2013), as well as derivatives instruments (none in 2014 and 2013) are excluded from the table above.
(c) For the detail of Property & Casualty and International Insurance IBNR, see Note 21.3.4.
(e) See Note 1.14.2 – Reserves measured according to the option offered by IFRS 4.24 for selective re-measurement of reserves at current market assumptions.
Liabilities arising from investment contracts with no discretionary participating features 481 99
Liabilities arising from investment contracts where the fi nancial risk is borne by policyholders 39,299 36,925
Reinsurers’ share in liabilities arising from investment contracts with discretionary participating features 89 18
Reinsurers share in liabilities arising from investment contracts where the fi nancial risk is borne by policyholders 4 4
Loss reserves development (prior years) (516) (237) (753) (360) (217) (578)
Change in scope of consolidation and change in accounting method 383 157 540 29 30 59
Impact of foreign currency fl uctuation 504 262 766 (344) (154) (498)
Claim reserves as of December 31 38,172 7,442 45,614 36,093 7,330 43,423
Gross claim reserves as of December 31 (b) 39,295 7,703 46,998 37,183 7,584 44,767
(b) Excluding “other policy benefi ts liabilities” (mainly mathematical annuity reserves), which totaled €5.1 billion in 2014 and €4.6 billion in 2013.
Reinsurers’ share in claim payments (932) (519) (1,451) (706) (407) (1,113)
Change in scope of consolidation, portfolio transfers, change in accounting principles and other changes 76 157 233 (40) 30 (10)
Impact of foreign currency fl uctuation 49 86 136 (56) (46) (103)
Collected premiums net of loadings on premiums (+) 45,056 9,269 54,325 46,489 6,841 53,329
Surrenders, maturities and other claims and benefi ts paid net of charges and penalties (-) (46,807) (8,098) (54,905) (46,394) (9,854) (56,247)
Unit-Linked technical reserves value adjustment (+/-) 8,631 (1,641) 6,990 20,297 761 21,058
Impact of foreign currency fl uctuation 19,694 1,797 21,491 (15,816) (678) (16,494)
Kong for €-847 million partially offset by the entry of Colpatria
Reinsurers’ share in surrenders, maturities and other claims and benefi ts paid net of charges and penalties (-) (1,080) (5) (1,086) 5,900 1 5,902
Change in scope of consolidation and change in accounting principles (74) 58 (16) (308) 1 (307)
(Non Unit-Linked) – Liabilities arising from: Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (a) (d) 33,669 33,850
(Unit-Linked) – Liabilities arising from contracts where financial risk is borne by policyholders: Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (a) (c) 4,053 4,243
Investment contracts with no Discretionary Participation Features (DPF) measured at current unit value (d) 35,246 32,682
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 issued guidance to measure fair value but with no principles addressing policyholder participation features and interpreting them before the issuance of IFRS 4
The loss reserves development table shows movements in loss reserves between 2004 and 2014, based on previously applied accounting standards, in accordance with IFRS 4. All contracts concerned are insurance contracts as defi ned by IFRS.
The fi rst line labelled “Gross reserves for unpaid claims and claim expenses developed initially at the booking date”
The surplus (shortfall) of the initial reserve with respect to the re-estimated (gross) fi nal cost for each year represents, for a given year N, the difference between the amount shown in the second line (gross reserves for unpaid claims and claims expenses developed in 2014 adjusted for changes in exchange rates and scope of consolidation) and the amount shown in the fi nal diagonal under “Reserve re-estimated”.
Gross reserves for unpaid claims and claims expenses developed initially at the booking date (a) 29,128 31,168 41,301 44,020 44,046 44,470 46,367 45,946 46,440 47,031 49,868
(f) The comparative information related to previous periods was restated for the implementation of IFRS 10 and 11.
On December 21, 2006, the Group fi nalized an agreement to sell the Coliseé Re reinsurance business to Paris Ré Holding.
Reserves recognized after that, which correspond to exposure assumed fully by Paris Ré, have not been developed. Paris Ré
Gross reserves for unpaid claims and claims expenses developed initially at the booking date (a) 3,314 4,523
Cumulative redundancy (defi ciency) from the initial gross claims reserves in excess of (less than) re-estimated gross claim reserves 220 1,059
Property & Casualty and International Insurance (excluding Colisée RE (ex AXA RE)) (b) 49,868 47,031
TOTAL GROSS CLAIM RESERVES AND OTHER RESERVES FOR PROPERTY & CASUALTY AND INTERNATIONAL INSURANCE 52,135 49,391
The calculation of reserves for asbestos risks raises specifi c diffi culties as conventional reserving techniques cannot be used for evaluating IBNR. AXA evaluates the future cost of those claims using a range of specifi c methods based either on exposure analysis, frequency/cost projections or reserving benchmarks. Asbestos reserves are reviewed on a yearly basis to ensure that they adequately refl ect the latest claims experience, as well as legal and economic developments.
At year-end 2014, key data relating to Asbestos claims were as follows: (in Euro million)
Claims reserves at end of year 1,117 1,050 1,046 976 of which Reported claims 176 159 176 159 of which IBNR claims 941 892 870 817
In 2014, AXA paid a net amount of €32 million in respect of asbestos. During the year, AXA incurred loss is €45 million net of reinsurance at constant exchange rates. It was mainly driven by the re-estimation of the ultimate liability for UK mesothelioma claims. In addition, the impact of change in exchange rates is signifi cantly unfavourable this year due to an important movement in exchange rates between 2013 and 2014.
Total Liabilities arising from policyholders’ participation and other obligations 48,491 26,271
The Increase in deferred policyholders’ participation liability mainly relates to increase in unrealized gains on assets available for sale in France, Germany, Switzerland and Belgium.
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.
As shown in the table below, as of December 31, 2014: 88%
In Property & Casualty and International Insurance business, most reserves (91% as of December 31, 2014) 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.
Life & Savings – locked-in discount rate (b) 263,746 2.25% 249,271 2.34%
Life & Savings – unlocked discount rate 36,670 3.47% 35,446 3.40%
Non Life – locked-in discount rate (b) 4,324 3.61% 4,177 3.82%
The estimated impact of the unlocking of discount rates relating to Life & Savings reserves was €3,207 million reserve increase for 2014 (compared to €1,603 million reserve decrease for 2013) gross of policyholders’ participation, tax impacts and other shadow accounting impacts and was included in the income statement of the period.
This Note describes the features that are embedded derivatives and meet the defi nition of an insurance contract on a standalone basis. The primary features can be divided into two main categories: guaranteed minimum death benefi ts (GMDBs) or guaranteed minimum income benefi ts (GMIBs) offered on unitlinked contracts and guaranteed annuity purchase rates.
also manages these risks through asset-liability management programs including derivatives to protect against a decline in interest rates.
Medium Term Notes) from banking activities designated at fair value through profi t or loss (€2,447 million in 2014 and €1,690 million in 2013).
The Group applies the IFRS 13 fair value hierarchy as described in Note 1.5. The valuation method of liabilities arising from banking activities excluding derivatives (detailed in Note 20.5)
Banking liabilities related to retail customers, corporate customers, and interbanking refi nance, are not traded in active markets and quoted prices are not available. Given the short maturities of main liabilities arising from banking activities
TOTAL LIABILITIES ARISING FROM BANKING ACTIVITIES 30,187 4,865 2,350 37,402 29,456 3,355 2,564 35,375
As of December 31, 2014, the “Other provisions for risks and charges” mainly included provisions for tax liability (€870 million)
Changes in provisions for risks and charges (excluding employee benefi ts and share-based compensation) are set out below: (In Euro million) 2014 2013 Restated (a)
Impact of change in scope of consolidation and changes in accounting method (106) 67
Other fi nancing debt instruments issued (under €100 million) 155 185
For the sensitivity to movements in interests rates, please refer to page 174 of the “Interest rates & Equity risk related to the operating activities of Group subsidiaries” Section.
Derivatives on fi nancing debt instruments issued (a) (53) (53) (53) (53)
Financing debt owed to credits institutions at cost - - 853 846
The fair value of fi nancing debt as of December 31, 2014, excluding accrued interests, was €10,221 million, including related hedging derivative instruments. The fair value decreased by €-1,274 million compared to December 31, 2013 mainly due to the repayment of subordinated notes partly offset by the decrease in interest rates.
Total carrying value12 months or less More than 1 year up to 5 years More than 5 years
Payables arising from direct insurance and inward reinsurance operations 8,831 8,305
(d) Excludes debt relating to investments under lending agreements and equivalent in Bank segment (see Note 15).
caption is the contra of assets recognized on the different lines of the consolidated balance sheet for the share not held by the Group in consolidated investment funds. Movements in this caption both depend on the changes in the Group’s ownership and the changes in fair values of these funds.
Minority interests in funds under this caption totaled €10,241 million as of December 31, 2014, an increase of €2,447 million compared with December 31, 2013, mainly due to a decrease in Group share of the funds as well as increase in
Net Assets Value of the funds mainly in France Life & Savings, the United Kingdom Property & Casualty and Switzerland
OTHER DEBT (OTHER THAN FINANCING DEBT) – OWED TO CREDIT INSTITUTIONS 273 363
As of December 31, 2014, other debt instruments issued and bank overdrafts (other than fi nancing debt) totaled €1,855 million, the decrease of €557 million compared to
December 31, 2013, mainly due to decrease of Bank overdrafts notably from France Life & Savings, Switzerland Life & Savings and the United States Life & Savings as well as the maturity of the Arche Finance debt in France Life & Savings partially offset by the collateral loan in Japan Life & Savings.
The fair value of other debt instruments issued and bank overdrafts (other than fi nancing debt) were €1,855 million as of December 31, 2014. Among the elements included in the preceding table, fair value is only calculated for other debt instruments issued.
As of December 31, 2014 and December 31, 2013, the Group did not hold any debts other than Financing debt designated as at fair value through profi t or loss.
As of December 31, 2014, payables arising from direct insurance and inward reinsurance operations totaled €8,831 million, a increase of €526 million compared to December 31, 2013 mainly due to increase in payables to policy holders, brokers and general agents and reinsurance operations in France Life &
The reconciliation between the theoretical tax charge (pre-tax profi t multiplied by the applicable tax rate in France for the period concerned) and the effective tax charge was as follows: (In Euro million) December 31, 2014
Impact of differences in tax rates and tax bases (507) (557)
Tax losses of prior years used in the current year without DTA recognized previously (27) (19)
Deferred tax assets recognized on tax losses of prior years (16) (12)
Deferred tax assets not recognized on tax losses of the year 23 47
The impact of rate differences on notional tax charge represents the difference between the expected tax calculated at each entity level with the applicable standard rate and the tax calculated using the 38.00% French tax rate applicable to the Company. This tax rate is composed of the following items: a basic tax rate (33.3%), a social contribution (1.1%)
and a temporary exceptional contribution (3.6%). The blended standard rate was 30% in 2014 and 30% in 2013.
Net deferred tax balances broke down as follows: (In Euro million)
The change from net liability position €-1,983 million in 2013 to €-4,335 million in 2014 mainly came from a signifi cant increase in unrealized capital gains on fi xed income assets.
In 2013 it was mainly driven by the sale of MONY portfolio in the United States of America.
The decrease in tax losses carried forward in 2014 mainly concerns Germany.
DTA recognized on tax losses carried forward 216 254 208 254 239 142 252 19 - 1,584
(see Note 13 for details) or derivative instruments held by consolidated investment funds in the “satellite investment portfolio” (see
< 1 year 1 to 5 years > 5 years December
Liability Management and local regulatory requirements for insurance and banking operations,
AXA also uses derivatives as an alternative to gain exposure to certain asset classes through “synthetic positions”, for example, holding cash and equity futures instead of physical equities. Another example is the combination of government bonds and credit default swaps (CDS) as a synthetic position and an alternative to the direct purchase of a corporate bond.
The market turmoil that started in 2008 has increased the importance of risk management and led to additional hedging activity. While AXA’s liabilities remained almost stable, the notional amount of the derivatives used by AXA almost doubled over the 2006-2012 period. The rise in derivative activity was part of AXA’s risk management response to such a tumultuous environment. Since then AXA has continued its use of derivatives to hedge risks, increasing or decreasing derivative positions in accordance with AXA’s governance framework for derivatives.
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 &
For further detail on Asset Liability Management governance, please refer to page 188 of Section 3.4 “Investment Community and Organization”.
In 2014, the use of derivatives within the Group increased overall by €+30.3 billion in terms of notional amount for the main reasons listed below (see also details in Note 20.2.1): ■ notional amount of currency derivatives increased by €+12.7 billion compared to 2013 mainly due to an increased fair value of foreign currency portfolios driven by market conditions notably denominated in the United States dollar and the Great Britain sterling pound; ■ notional amount of interest rates derivatives increased by €+11.2 billion, mainly due to (i) increase of interest rate hedging associated with guaranteed minimum benefi ts on
In 2014 the notional amount of hedging derivative instruments as defi ned by IAS 39 (fair value hedge, cash fl ow hedge and net investment hedge) of the Group was €73.3 billion versus €68.5 billion in 2013. The net fair value recorded was €-792 million as of December 31, 2014, versus €-856 million in 2013.
States Life & Savings (notional amount of €27.6 billion in 2014 versus €21.3 billion in 2013), Germany Life &
Savings (notional amount of €18.0 billion in 2014 versus €17.5 billion in 2013), and in Japan Life & Savings (notional amount of €7.2 billion in 2014 versus €6.0 billion in 2013); (ii) manage duration gap and/or hedge convexity risk between assets and liabilities on the General Account as a part of
and in Japan Life & Saving for €24.0 billion in 2014 (versus €24.7 billion in 2013); (iii) minimize the cost of Group debt and limit the short-tomedium term volatility of its net interest expenses mainly in the Company, with notional amount of €58.0 billion in 2014 versus €59.8 billion in 2013, mainly due to the unwind of interest rate derivatives related to the continuous review of the Net Investment Hedge policy; (iv) hedge interest rate risk exposures arising in the context of its ordinary banking activities, mainly at AXA Bank
mainly uses (i) Equity puts and calls (49% of total notional amount of equity derivative instruments) and (ii) Equity futures and forwards (43%).
Account assets, protecting policyholders’ investments and their guaranteed liability over time, mainly in the United
States Life & Savings (notional amount of €5.2 billion in 2014 compared with €3.6 billion in 2013), and in Japan
Life & Saving for €0.7 billion (versus €0.8 billion in 2013).
In 2014, the notional amount of currency derivative amounted to €100.9 billion versus €88.2 billion in 2013. Their market value was €-2,126 million versus €-1,226 million in 2013. AXA
Savings using future and forward foreign currency contracts to hedge exchange-rate risk arising from its investments in fi xedmaturity debt instruments denominated in non JPY currencies with a total notional amount of €15.5 billion in 2014 versus €13.3 billion in 2013.
A description of Exchange-rate risk related to the operating activities of Group subsidiaries and the Company is included in
Credit derivative instruments are mainly used to: (i) hedge credit risk involving the purchase of CDS as a protection mainly on single corporate names or specifi c portfolios (notional amount of €8.5 billion in 2014 versus €3.5 billion in 2013); (ii) implement credit risk hedging strategies by purchasing bonds and protection on the same name (i.e. CDS). During stressed market conditions, the credit derivative market is indeed more liquid than the cash market. For instance, holders of cash bonds may be unwilling or unable to sell the bonds that they hold as part of their longer-term investment strategies. For this reason, rather than simply selling their bonds, they turn to the CDS market to buy
protection on a specifi c company or issuer and thus, contribute to increase the CDS market liquidity. This creates hedging opportunities (i.e. bond spread is higher than CDS
spread) where the Group can hedge the underlying asset at an attractive price. In fact, through hedging strategies, insurance companies execute Negative Basis Trade (NBT)
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 €9.5 billion in 2014 versus €10.1 billion in 2013).
Macro-hedge and other derivatives (265) 1,363 1,098 - (165) (165) (266) 1,199 933
Investment in real estate properties 17,479 - 17,479 573 - 573 18,052 - 18,052
Macro-hedge and other derivatives (103) 988 886 - (1,362) (1,362) (103) (373) (476)
(d) Carrying value (see (b)), but including effect of hedging instruments (IAS 39), economic hedging instruments not acting as hedging under IAS 39, macro-hedge and other derivatives.
Liabilities arising from insurance contracts 371,474 (1,338) 370,137 348,334 (533) 347,802
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 142,042 - 142,042 125,593 2 125,595
TOTAL LIABILITIES ARISING FROM INVESTMENT CONTRACTS 73,449 (75) 73,374 70,874 (22) 70,852
MACRO-HEDGE AND OTHER DERIVATIVE INSTRUMENTS ON INSURANCE AND INVESTMENT CONTRACTS (LIABILITIES) - (1,424) (1,424) - (533) (533)
As of December 31, 2014, derivatives related to banking liabilities shown in Note 15 are used to hedge interest rate risk exposures in the context of ordinary banking activities, in order to achieve an appropriate interest rate spread between its interest earning assets and interest bearing liabilities. Related hedged assets are disclosed in Note 9.4.2 and liabilities in Note 15.
(b) Financing debts are disclosed in the balance sheet net of the impact of derivatives. As a result, the amount showing in the column “value including effect of derivatives” is their carrying value.
Net value of derivative instruments – assets (1) (1,822) (486) - (2,308) (215) (1,678) - (1,893)
Derivative instruments relating to fi nancing debt, operating debt and other fi nancial liabilities - 365 - 365 - 211 - 211
The Group mitigates counterparty credit risk of derivative instruments by contractually requiring collateral for the majority of derivative contracts. At December 31, 2014, the adjustment to the fair value of derivatives for non-performance risk was not material.
For more information about the Group’s segments identifi cation, please refer to page 227 to 231 of Note 3 Statement of income by segment.
PROPERTY & CASUALTY 29,460 28,763 of which direct premiums 28,902 28,303 of which reinsurance assumed 495 403 of which revenues from other activities 63 57
(a) Net of intercompany eliminations. (b) As described in Note 1.2.1, comparative information related to previous periods was retrospectively restated for the implementation of IFRS 10 and 11. (c) AXA Life Japan aligned its closing date with the Group calendar year starting with 2013 annual accounts. Therefore, its contribution to the AXA consolidated result for the 2013 annual accounts exceptionally covered a period of fi fteen months.
(a) Net of intercompany eliminations and after deduction of the value related to the shares eliminated in consolidation.
(c) As described in Note 1.2.1, comparative information related to previous periods was retrospectively restated for the implementation of IFRS 10 and 11.
Fees and charges relating to investment contracts with no participating features (b) 327 - 35,727 323 - 32,781
Fees, commissions and other revenues 228 228 - 21. 3.4. Liabilities arising from insurance contracts in the property & casualty and international insurance segments
TOTAL – PROPERTY & CASUALTY INCLUDING INTERNATIONAL INSURANCE 34,513 11,101 1,270 114 46,998 16,039 63,037
TOTAL – PROPERTY & CASUALTY EXCLUDING INTERNATIONAL INSURANCE 28,808 7,285 1,013 77 37,183 13,858 51,041
Debt instruments designated as at fair value through profi t or loss (b) 1,023 - 688 - 1,711
Equity instruments designated as at fair value through profi t or loss (c) 276 - 292 - 568
Non consolidated investment funds available for sale 279 159 169 (49) 558
Non consolidated investment funds designated as at fair value through profi t or loss 331 - (29) - 302
Assets backing contracts where the fi nancial risk is borne by policyholders - - 9,520 - 9,520
Investment in real estate properties at amortized cost 705 325 - (120) 911
Investment in real estate properties as at fair value through profi t or loss 43 - 20 - 63
Debt instruments designated as at fair value through profi t or loss (c) 1,063 - (475) - 588
Non quoted debt instruments (amortized cost) 104 1 - - 105
Equity instruments designated as at fair value through profi t or loss (d) 184 - 304 - 489
Non consolidated investment funds available for sale 249 195 (29) (101) 313
Non consolidated investment funds held for trading 2 - 11 - 13
Loans designated as at fair value through profi t or loss - - 11 - 11
Assets backing contracts where the fi nancial risk is borne by policyholders - - 22,180 - 22,180
All investment management fees are also included in the aggregate fi gure.
Commissions received from / paid to reinsurers (13) 266 131 (13) 371
Claims ceded (including change in claims reserves) 2,165 983 302 (267) 3,183
Commissions received from / paid to reinsurers 417 236 122 (18) 757
In 2014, fi nancing debt expenses, which includes income and expenses relating to hedging derivative instruments on fi nancing debt, amounted to €509 million (€618 million in 2013) mainly in the Company: €460 million (€536 million in 2013).
Change in deferred acquisition expenses and equivalents (c) (1,258) 9 (3) (1,252) - - - - (1,252) (769)
Other staff expenses and employees’ profi t sharing (b) 334 415
Benefi t payments in the United Kingdom, the United States and Switzerland are from trustee-administered funds and plan assets held in trusts are governed by local regulations and practices. The Board of trustees, generally composed of representatives of the Company and plan participants in accordance with the plan’s regulations is responsible for governance of the plans including investment decisions and contribution schedules in order to meet the existing minimum funding requirement or funding regime objective, jointly with
In the United Kingdom the main defi ned benefi t plan was closed to new members on August 31, 2013 and members who were part of defi ned benefi t sections had the option to participate in the defi ned contributions sections.
In August 2013, the Swiss p ension p lan was amended (with effect from January 1, 2014) to refl ect the gradual decrease of the conversion rate at retirement and the increase in the retirement credits or guarantees for some employees.
In the United States, AXA Equitable discontinued benefi t accruals under its defi ned benefi t pension plans after December 31, 2013 and provides a company defi ned contributions benefi t plan for services after January 1, 2014.
Pension benefi t obligation – assumptions as of December 31, 2014
The table below presents the change in benefi t obligation and the change in plan assets associated with pension plans and other benefi t plans sponsored by AXA, together with an analysis of separate assets and the balance sheet position.
Defi ned Benefi t Obligation at the beginning of the year 16,787 17,937 546 705 17,333 18,641
Actuarial (gains) and losses arising from changes in demographic assumptions 68 78 (9) (25) 59 53
Benefi ts paid by plan assets and by separate assets (559) (584) - (1) (559) (586)
Defi ned Benefi t Obligation at the end of the year (a) 20,310 16,787 665 546 20,974 17,333
Fair value of plan assets at the end of the year (b) 11,187 9,536 5 5 11,191 9,541
Interest income on separate assets 32 22 - - 32 22
Fair value of separate assets at the end of the year 1,116 1,038 - - 1,116 1,038
Changes in the asset ceiling, excluding the interest cost 6 (1) - - 6 (1)
(b) In 2013, this amount mainly includes impact of the sale of AXA Investment Managers Private Equity.
(c) In 2014 and 2013, this amount includes additional contributions paid to plan assets in the United Kingdom and in the United States to reduce the defi cit.
“Other benefi ts” include postretirement benefi ts other than pensions, principally health care benefi ts, and post-employment benefi ts after employment but before retirement.
The annual expense for employee pension and other benefi ts recorded in the income statement (included in Note 26.1.), for the years ended December 31, 2014 and 2013 is presented below: (In Euro million)
Interest cost on the defi ned benefi t obligation 603 538 23 21 626 559
Interest income on plan assets (378) (320) (0) (0) (378) (320)
insurance policies written within the Group that provide direct rights to the employees and ii) insurance policies with related parties that are outside the scope of consolidation. Under these circumstances, these assets are not considered Plan Assets that would be deducted from pensions’ DBO (Defi ned Benefi t
Similarly in some other countries (mainly in Switzerland), although non-transferable insurance policies related to Defi ned
Benefi ts Obligation between entities within the Group are effectively backed by General Account assets (available to general creditors in case of bankruptcy), they are not taken into consideration in the pension assets disclosures.
Defi ned Benefi t Obligation like any other Plan Assets (which are presented in Note 26.2.8.) and deducted from the Defi ned
December 31, 2014 shown below only captures the evolution of the liability recorded in the Group’s statement of fi nancial position net of Plan Assets and does not include Separate
Account liabilities (which are presented in Note 26.2.8.). The table below shows the detailed roll-forward of the statement of fi nancial position liability, with the separate assets added at each year end.
Pension and other benefi ts expense (429) (375) (31) (32) (460) (407)
Benefi ts directly paid by the employer 299 314 41 37 340 351
Net transfer in/(out) (including acquisitions and disposals) 5 47 - - 5 47
Statement of fi nancial position liability at the end of the year (9,140) (7,261) (660) (542) (9,800) (7,802)
The sensitivity analysis are performed plan by plan using the projected unit credit method (same as the method applied when calculating the defi ned benefi t liability recognized in the statement of fi nancial position) and are based on a change in an assumption while holding all other assumptions constant.
In Switzerland, the presentation of the pension liability refl ects the fact that the assets covering a large part of the retirees do not qualify as pension assets defi ned under IAS 19 (not taken into consideration in the pension assets disclosures as described in Note 26.2.6.) because managed internally by the insurance company and not handled by a third party. However, legally, the sole purpose of these assets is the coverage of the liabilities of the pension fund. This means that under statutory
The estimated amount of 2015 employer contributions for pension benefi ts is €296 million (€287 million estimated in 2013 for 2014).
From year N+11 until the last benefi t payments is paid 26,512 684
26.2.10. Management of risks specifi c to the Group arising from defi ned benefi t plans 26.2.11. Statement of fi nancial position/balance sheet reconciliation
Defi ned benefi t plans expose AXA mainly to market investment risk, interest rate risk, infl ationary risk and longevity risk: ■ a decline in asset market value (equity, real estate, alternatives, etc.) will immediately increase the balance sheet liability and the near-term cash-fl ows for countries where there is a minimum funding requirements; ■ a decrease in corporate bond yields will result in an increase in plan liabilities even if this effect will be partially offset by an increase in the value of the plans’ bonds; ■ and an increase in infl ation rate or an increase in life expectancy will result in higher plan liabilities.
International Performance shares amounted to €90.2 million in 2014 (net amount of €49.4 million in 2013).
The fair value of AXA SA stock options is calculated using the
Weighted average fair value per option at grant date in Euro (b) (c) 1.88 1.36 1.81 1.78
(a) Assumptions at grant date, in average weighted by grants of the year.
(b) The options with market performance criteria were valued at €1.78 per option granted in 2014 and €1.28 per option granted in 2013, based on a Monte-Carlo model. The options without performance criteria were valued at €2.03 per option granted in 2014 and €1.43 per option granted in 2013, based on the Black & Scholes model.
(c) Based on an estimated 5% pre-vesting lapse rate per year for options without performance criteria.
Following these actions, AXA ADRs continue to trade in the over-the-counter markets in the United States and be exchangeable into AXA ordinary shares on a one-to-one basis while AXA ordinary shares continue to trade on the compartiment A of Euronext Paris, the primary and most liquid market for AXA shares. Consequently, current holders of AXA
AXA ADR volatility was based on AXA SA ordinary shares volatility, adjusted for the US$/€ exchange rate volatility. The expected dividend yield on AXA SA shares was based on the market consensus. The risk-free interest rate was based on the
(either through m utual funds (FCPE) or through direct share ownership) with a discount. The leverage on the employees’
personal investment is in the form of a loan (non-recourse) from a third party bank. The shares are restricted from sale during a period of 5 years (except specifi c early exit cases allowed by applicable laws). Employees who participate in the leverage plan benefi t from a guarantee on their personal investment and also receive a defi ned percentage of any upside appreciation
(3) transfer their assets invested in the leveraged plan into the traditional sub-fund.
des normes comptables). The ANC approach values the restricted shares through a replication strategy whereby the employee would sell the restricted shares forward at the end of the lock-up period, borrow enough money to buy unrestricted shares immediately, and uses the proceeds of the forward sale together with dividends paid during the lock-up period to fi nance the loan. For the leveraged plan, the cost also includes the opportunity gain implicitly provided by AXA by enabling its employees to benefi t from an institutional price for derivatives as opposed to a retail price.
to the reference price). Subscriptions amounted to 19.3 million shares, increasing the share capital by €313.8 million. This offering represented a total cost of €6.9 million taking into account the fi ve-year lock-up period.
Amount subscribed by employee (In Euro million) 23.7 29.0 20.4 27.2
Total amount subscribed (In Euro million) 23.7 290.2 20.4 272.4 total number of shares subscribed (in million shares) 1.6 17.7 1.4 17.4
[B] Cost of the lock-up for the employee 19.64% 10.76% 19.73% 12.88%
Total cost for AXA = [A] – [B] + [C] (as a percentage of the reference price) 0.36% 2.09% 0.27% 2.52%
Company’s strategic plan Ambition AXA. A fi rst tranche of 25
The free shares are valued using the ANC (Autorité des normes comptables) approach described in the AXA Group Shareplan section using assumptions adapted to the structure of the plan
For 2014 grants, the performance and the vesting period is raised to 3 years for 100% of Performance Shares granted to the Group’s executive offi cers and for 50% of the Performance
The total cost of Performance Shares recognized was €31.4 million as December 31, 2014 (€27.7 million as of
For 2010 grants, the employing entity at the end of the vesting period in 2012 paid in cash the fi rst half of the Performance
Units defi nitely acquired. One year later in 2013, the employing entity paid in cash the second half provided that the benefi ciary was still an employee of the AXA Group at that date. For the settlement of the second half of the Performance Units defi nitely acquired, benefi ciaries may, if they wished, choose a settlement of all or part of their Performance Units in AXA
(PSi) plan, benefi ciaries of Performance Shares have the right to receive at the s ettlement d ate, a certain number of AXA shares based on the achievement of performance criteria defi ned by
Performance Units granted in 2011 and 2012). However, as opposed to Performance Units granted in 2012 and 2011, under the 2013 International Performance Shares plan, the settlement will be made in shares rather than in cash.
In 2014, the terms and conditions for the grant made are similar to 2013 grants, except that for 50% of “International
AXA Investment Managers grants Performance S hares to certain key employees as part of its overall LTI policy that also includes DIP (Deferred Incentive Plan) and LTIP (deferred payments based on unit rights per employee). The Investment
The total cost of Investment Managers Performance Shares recorded as of December 31, 2014 amounted to €7.7 million in earnings (€18.6 million as of December 31, 2013) gross of tax.
AB Holding Units or cash which are granted to certain key employees.
Most of the awards granted in 2013 and in 2014 contained the same conditions as awards amended in 2011, resulting in the immediate recognition of the cost of these awards instead of an amortization over a maximum of four years.
(€119.1 million in December 2013) of which €120.6 million in the form of Restricted AB Holding Units (€106.1 million in 2013), elected in December 2014 and representing 6.6 million restricted AB Holding Units (6.5 million in 2013).
Long-term benefi ts: Amounts provisioned or recognized by AXA SA and its subsidiaries for the payment of pensions or retirement benefi ts to the members of the Management Committee totaled €105.2 million as of December 31, 2014 (€62.2 million as of 26.5. SALARIED WORKFORCE
At December 31, 2014, the Group employed 96,279 salaried people on a full-time equivalent basis (93,146 at the end of
mainly attributable to the acquisition of Colpatria in Colombia; ■ AXA Assistance (+500) mainly driven by business growth, notably in Mediterranean and Latin American Region and
Asia; ■ AXA Business Services (+359) following business growth; ■ the United Kingdom & Ireland (+238) mainly driven by business expansion, partly offset by restructuring plans in the Wealth management business, in particular the bancassurance channel; Partly offset by: ■ Germany (-401) following effi ciency programs; ■ Belgium (-295) mainly following effi ciency programs.
BASIC NET INCOME PER ORDINARY SHARE C = A/B 1.95 1.76
Fully diluted – weighted average number of shares (c) D 2,432 2,397
FULLY DILUTED NET INCOME PER ORDINARY SHARE F = A/D 1.94 1.75
In 2014, the Company was party to the following transactions with related parties which may be deemed to have been material to AXA or the related party in question or unusual in their nature or conditions.
Certain costs and charges (excluding commissions) are allocated between the Subsidiaries and the Mutuelles AXA
Mutuelle 11%. Aggregate written premiums recorded in this coinsurance agreement amounted to €1,862 million in 2014
Expenses invoiced by the GIE AXA to its members in 2014 and 2013 amounted to respectively €213 million and €199 million.
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 Company at a negotiated rate based on prevailing market rates and conditions for guarantees of a similar nature. In addition, from time to time, the Company may provide comfort letters or similar letters to rating agencies and/or regulators for the benefi t of its subsidiaries and affi liates for various business purposes, including facilitating specifi c transactions, achieving target rating levels and, more generally, helping to develop the business of these subsidiaries.
Commitments granted by the Company to its subsidiaries are disclosed in Appendix V of this Annual Report “AXA parent
To the best of the Company’s knowledge, based on information reported to it: ■ on December 31, 2014, there were no loans outstanding from the Group to any of the Company’s executive offi cers or to any member of the Company’s Board of Directors; ■ various members of the Company’s Board of Directors as well as various other executive offi cers and directors of other
are consolidated as disclosed in Note 2.2 to the fi nancial statements.
Commitments received by AXA totalled €80,030 million at the end of 2014, and increased by €10,768 million compared to the end of 2013, mainly due to an increase in other commitments mainly from AXA Bank Europe from forex and money market activity (€4,593 million), in pledged assets and collaterals
Savings as part of its operations; ■ €110 million stand-by credit lines at AXA Banque France.
Banque France (€493 million), (ii) €2,453 million other guarantees received from customers mainly at AXA Banque
France and (iii) €2,515 million guarantees received from credit institutions mainly at AXA Banque France (€2,291 million).
(€20,416 million) and AXA Bank Hungary (€2,859 million); ■ security reverse repurchase agreements and similar operations totaled €3,343 million mainly in Japan Life &
■ €4,018 million collaterals for reinsurance operations of which €2,810 million in the United States Life & Savings and €620 million in International Insurance (AXA Corporate
from an increase in collaterals deposit according to the variations of the derivatives to cover the risk of the counterparty.
Letters of credit received totaled €728 million at the end of 2014 and were mainly from the US Holdings (€199 million)
mainly due to LOC increase in 2014 due to Life Reserve increase, Turkey Property & Casualty (€175 million) and from the US Life & Savings (€127 million).
Other commitments received totaled €8,776 million at the end of 2014, and mainly consisted of: ■ €3,617 million mainly received by AXA Bank Europe
(€136 million), related to mortgages as guarantees for debt instruments; ■ €1,134 million mainly received by Switzerland Life &
Pledged securities and collaterized commitments 35,980 362 460 2,921 39,723 34,424
Financing commitments given totalled €3,237 million at the end of 2014, and mainly consisted of fi nancing commitments to customers (€3,172 million), notably comprising loan commitments granted at AXA Bank Europe (€1,427 million),
(€552 million) and AXA France Life & Savings (€263 million) to their customers.
■ €131 million guarantee commitments given to customers mainly at AXA Banque France (€64 million), Belgium Life &
Pledged securities and collateralized commitments given totalled €39,723 million at the end of 2014, and mainly consisted of: ■ security repurchase agreements and similar operations totaled €31,072 million mainly in France Life & Savings
Property & Casualty (€630 million); ■ pledged assets/collaterals for derivatives instruments totaled €6,247 million mainly in Japan Life & Savings (€2,005 million),
Other commitments given totalled €14,655 million at the end of 2014 and mainly consisted of: ■ €5,000 million commitment to Private equity funds mainly from France Life & Savings (€1,752 million), Switzerland Life &
AXA subsidiaries are required to indemnify their employees and directors against certain liabilities and costs that they may incur from time to time in performing activities within the scope of their duties. These activities may include, for example, service as a director, offi cer, agent, general partner, or in a similar capacity for (i) an AXA Group company other than the employee’s principal employer or (ii) a company outside the
AXA Group where service is at the request of (or for the benefi t of) the Group (e.g. joint ventures, partnerships, or specialpurpose investment Companies or funds). The potential amount of compensation relating to commitments covered by these obligations cannot be evaluated with any certainty.
Supports provided without having a contractual or constructive obligation to do so
In accordance with European Union directives, insurance 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.
PRICEWATERHOUSECOOPERS AUDIT: 63, rue de Villiers – 92208 Neuilly-sur-Seine Cedex, represented by Messrs. Xavier Crépon and Michel Laforce, fi rst appointed on February 28, 1989. The current appointment is for a term of 6 years, until the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year 2017.
Messrs. Philippe Castagnac and Gilles Magnan, fi rst appointed on June 8, 1994. The current appointment is for a term of 6 years, until the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year 2015.
Legal, tax and employment consulting 2,714 4,332 7% 11% 54 52 0% 0%
Versicherungswerte (“KVAG”). Following the effective date of these squeeze out transactions in July 2007, certain former
A number of lawsuits have been fi led against insurers and other fi nancial institutions in the United States and elsewhere involving insurers’ sales practices, alleged agent misconduct or misrepresentation, alleged failure to properly supervise agents, compensation of intermediaries, product features, fees or performance 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) or in substantial settlements. In certain jurisdictions, juries have broad discretion in awarding punitive damages. AXA’s United States subsidiaries are involved in these types of litigations as well as regulatory inquiries, investigations or actions with respect to these and a wide variety of other matters related to the ownership or management of real estate, asset or investment management activities, corporate transactions, employee benefi t disputes, alleged discrimination in employment practices, as well as other matters. For additional details on these matters, please see the Subsidiary SEC Reports.
(“Sivolella Litigation”). The lawsuit was fi led derivatively on behalf of eight funds and seeks recovery under Section 36(b)
Insurance Company (Zweiman v. AXA Equitable) in New York state court and a second substantially similar action (Shuster v. AXA Equitable) was fi led in November 2014 in New Jersey state court. These actions were brought on behalf of a class of persons who purchased variable annuities from AXA Equitable that were subject to the AXA Tactical Manager (ATM) strategy which is a managed volatility strategy in certain variable investment options offered to purchasers of AXA Equitable
The lawsuit is a putative class action on behalf of all persons and entities that, directly or indirectly, pur chased, renewed or paid premiums on life insurance policies issued by AXA
Equitable from 2011 to March 11, 2014 (the “Policies”). The complaint alleges that AXA Equitable did not disclose in its
Law of the equivalent of all premiums paid by the class for the
AXA France and AGIPI breached their contractual obligation to maintain a 4.5% interest rate on certain life insurance contracts
(CLER) subscribed by policyholders prior to June 1995. The class action complaint cites seven individual cases and is brought on behalf of all similarly situated policyholders. AXA
During the fourth quarter of 2012 a lawsuit was fi led against
Sistema KLEC, alleging breach of contract in connection with an arrangement entered into by AXA Spain in 2008 for the development of up to 125 agencies. The plaintiff claims damages on alternative theories for amounts ranging from approximately €149 million to €623 million. AXA Spain believes that it has strong defenses to these claims and will defend them vigorously. The trial in this case was completed in January 2014 and a decision is expected shortly. This decision is subject to appeal by either party to this litigation.
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. 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 Group’s consolidated results of operations or fi nancial position in any event.
AXA and certain of its subsidiaries are also involved in tax assessment negotiations and/or active litigation with tax authorities over contested assessments or other matters in a number of jurisdictions. These actions or assessments arise in a variety of circumstances including matters in connection with
M&A, restructuring or fi nancing transactions as well as in the ordinary course of business.
Group companies engaged in regulated businesses around the world (including for their ability to obtain and/or maintain licenses to engage in certain types of regulated business activities such as asset management, insurance and banking).
I Report of the Statutory Auditors on the consolidated fi nancial statements (For the year ended December 31, 2014)
In accordance with the requirements of Article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: ■ your Company describes in Notes 1.8.2, 4.3 and 9.9 to the consolidated fi nancial statements the valuation methods it applies to fi nancial assets.
Michel Laforce – Xavier Crépon Philippe Castagnac – Gilles Magnan * This document is the English translation of the original legal statutory audit report which is, by law, prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information therein, the original language version takes precedence over this translation. This English version should be read in conjunction with, and construed in accordance with French law and professional auditing standards applicable in France.
Governance Committee. Members of the Board of Directors receive a fi xed annual directors’ fee, the maximum overall amount of which is determined by the Shareholders’ Meeting and apportioned by the Board of Directors among its members.
An individual aged 70 or older may be appointed or reappointed to the Board of Directors exclusively for a two-year term of offi ce. His/her term of offi ce can be renewed only once.
fees to acquire AXA shares. Accordingly, the Board of Directors has set for each Board member, whether an individual or a permanent representative of a legal entity to whom directors’
fees were paid, the objective of holding, within two years after fi rst being appointed, a number of shares in the Company, the value of which, on the basis of the closing price of the AXA share on December 31 of the preceding fi scal year, corresponds to an amount at least equivalent to the gross director’s fees earned in respect of the previous fi scal year. The shares purchased for the purpose of this holding objective must be held in registered form.
Each AXA share entitles its holder to one vote at every AXA
At least 15 days (or 6 days in certain cases) prior to the date set for the meeting on fi rst call, and at least 10 days (or 4 days in certain cases) before any second call, the Company shall send a fi nal notice containing all the information requested by Law by mail to all registered shareholders who have held shares for more than one month prior to the date of this fi nal notice and publish this fi nal notice in a b ulletin of legal notices as well as the BALO.
All shareholders are entitled to attend these meetings, either in person or by proxy, provided that they show valid proof of
March 29, 2014 (visant à reconquérir l’économie réelle) or from certain provisions of the European Directive of April 21, 2004
(which was implemented in France in 2006) concerning takeover bids, may have certain anti-takeover effects. In the case of AXA, the relevant provisions include, among other things, the existence of AXA shares with double voting rights.
Meetings that would be held up until two years following proper notifi cation.
Exercise of stock options 7,169,941 97,734,715 2,417,865,471 5,536,911,929 2014 New equity issue related to the AXA Miles Program (2 + 2 plan) 1,521,950 - 2,419,387,421 5,540,397,194
New equity issue reserved for employees 31/12/2014 Exercise of stock options 1,302,279 14,592,483 2,442,276,677 5,592,813,590
APPENDIX II MANAGEMENT’S ANNUAL EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING 355
APPENDIX IX COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE 406
Article L.225- 37 of the French Commercial Code, the composition of the Board of Directors and the gender balance on the Board, the conditions of preparation and organization of the Board of Directors’ work (Part 1) as well as the internal control and risk management procedures implemented by the Company (Part 2). The report also presents the principles and the rules adopted by the Board of Directors in order to determine the compensation and the other benefi ts granted to the Company’s executive offi cers (Part 3). Finally, the report identifi es the Company’s Corporate Governance Code of reference and specifi es the provisions of that code, if any, that have not been applied by the Company and the reasons why they have not been applied (Part 4).
Sections of this Annual Report. For information on specifi c limitations of the powers of the Chairman & Chief Executive
In this context, the following report provides a summary of the AXA Group’s principal internal control mechanisms and procedures that allow management to conclude that the
In this report, the term “Group” refers to AXA SA (the
Group’s fi nancial statements and other market disclosures are timely and accurate.
These mechanisms and procedures principally include: ■ the Group’s corporate governance structures which are designed to ensure appropriate supervision and management of the Group’s business as well as clear allocation of roles and responsibilities at the highest level; ■ management structures and control mechanisms designed to ensure that the Group executives have a clear view of the principal risks the Group faces and the tools necessary to analyse and manage these risks; ■ I nternal C ontrol O ver F inancial R eporting (ICOFR), designed to ensure the accuracy, completeness and timeliness of the
The Board of Directors has established three Committees to assist it in fulfi lling its responsibilities: an Audit Committee, a Finance Committee and a Compensation & Governance
The scope of the Audit Committee’s responsibilities is set forth in the Audit Committee Terms of Reference, approved by the
For more information about the Audit Committee’s assignments and activities, its composition and the principal matters it handled in 2014, please see Section 2.1 “Corporate offi cers, executives and employees” of this Annual Report.
AXA’s principal subsidiaries, whether publicly traded or not, are generally governed by (i) a b oard of d irectors or a s upervisory b oard which generally include independent or non-executive directors and (ii) various board committees including an a udit c ommittee and a compensation committee, which generally include independent or non-executive directors.
AXA has taken steps designed to harmonize corporate governance standards throughout the Group. This effort is focused, among other matters, on standardizing, to the extent practicable, principles relating to various corporate governance matters including board composition and size, directors’
(the Group Standards Handbook). These Group Standards are designed to ensure that all the companies of the Group have effective risk management processes and appropriate governance structures, and meet the Group’s minimum
control requirements. Chief e xecutive o ffi cers of AXA Group companies are therefore required to annually certify that the companies under their responsibility are in compliance with the
Offi cer and the Deputy Chief Executive Offi cer in the operational management of the Group. The Management Committee does not have any formal decision making power.
AXA’s Management Committee generally meets once a week to discuss strategic, fi nancial and operational decisions.
While the Executive Committee is an internal committee with no formal decision making power, it plays an important role in assisting the Executive Management to effectively manage the
Management Committee conducts QBR , during which the performance of the main Group business units is reviewed.
Several GMS Departments are responsible for managing and/ or monitoring some aspects of internal control and/or risk related matters. However, the following four GMS Departments are primarily focused on these matters as part of their principal day-to-day management responsibilities: GROUP RISK MANAGEMENT DEPARTMENT
Group and is supported by local risk management teams within each operating unit. The types of risks covered include risks coming from the invested assets, from the insurance liabilities, asset/liability mismatch risks and operational risks.
For a detailed description of the organization, governance, missions and controls of Risk Management, please see
It works with local PBR units within fi nance d epartments of
(IFRS) and analyzing key performance indicators; ■ managing the Internal Financial Control (IFC) program; ■ developing and using management control tools; ■ steering and consolidating the European Embedded Value process, actuarial indicators related and economic balance sheet; ■ coordinating the production of AXA’s Annual Report
Solvency II balance sheets; ■ liaising with the Statutory Auditors and contributing to Audit
This consolidation process is based on the following: Defi nition of standards and maintenance of an information system
Group accounting standards, which are consistent with accounting and regulatory principles, are set forth in the
At entity level, AXA subsidiaries are responsible for entering and controlling accounting and fi nancial data that comply with the “AXA Group Accounting Manual” and refl ect consolidation rules under IFRS accounting standards. In this respect, the
C hief Fi nancial O ffi cer of each entity signs off on the accuracy of consolidated fi gures reported through Magnitude and their compliance with both the Group accounting manual and instructions in all frameworks produced (IFRS, Embedded
Value, actuarial indicators and economic balance sheet) within the internal fi nancial control program.
The Group Legal Department is responsible for identifying and managing the signifi cant legal, regulatory and compliance risks to which the Group is exposed. It provides expertise and advice on all signifi cant corporate legal matters at the Group level and manages the legal aspects of transactions undertaken by the Group as well as signifi cant litigation, regulatory, and compliance matters.
bribery program, the Group’s Cross-Border Business Standard and the Group Standard on business with countries and/or individuals subject to international sanctions. The Compliance
The Group Legal Department works closely with the l egal d epartments 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
Group composed of the g eneral c ounsels of AXA’s principal subsidiaries which meets on a regular basis.
Committee and the Group’s Management Committee with independent and objective assurance on the effectiveness of internal control and risk management across the Group.
Offi cer and is managed by Group Risk Management. The c ommittee usually meets on a quarterly basis.
Departments, each of which is responsible for presenting to the Committee the signifi cant risks within its scope: Group Risk
In addition to its other activities, the committee 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 Internal Control Over Financial Reporting (ICOFR) is a process designed under the supervision of AXA’s Chief
AXA has put in place a comprehensive program, managed by PBRC, entitled Internal Financial Control (IFC), designed to ensure that AXA’s Chief Executive Offi cer and Deputy Chief
AXA’s ICOFR is effective as of the end of each year.
The IFC program is based on AXA’s IFC Standard, which is an internal control and governance standard. AXA’s IFC Standard is based on the “Internal Control - Integrated Framework”
AXA’s fi nancial reporting, and provide an overall framework for the annual IFC program.
AXA Group companies (i) document the signifi cant processes and controls, as well as the rationale of how the associated risk of material misstatement due to error or fraud can be reduced to an acceptable level and (ii) test the design and operational effectiveness of key controls based on the test plans.
3. Disclosure Controls & Procedures Certifi cates required to be submitted by AXA’s Executive Committee members, regional CFOs and certain other senior executives
(including heads of GMS Departments) pursuant to which each of these executives is required to review the Group’s
4. CFO S ign-O ff on notes to the Consolidated Financial
The AXA Group believes it has put in place a comprehensive system of internal control procedures and mechanisms that is appropriate and well adapted to its business and the global scale of its operations.
Code that are in line with the long-established corporate governance principles initiated by the Company. Details are presented in Sections 2.1 “Corporate offi cers, executives and employees” and 2.2 “Full disclosure on executive compensation and share ownership” of this Annual Report describing corporate governance mechanisms and containing information about executives’ compensation.
Medef Code. However, the Company endeavours to provide the members of the Audit Committee with the required documents early enough to allow their proper examination.
In addition, the Audit Committee holds a specifi c session in December of each year to discuss in detail the account closing process and any issues arising. If at that time the
(fi xed salary plus annual variable compensa tion ) received for the previous fi scal year. The Chairman & Chief Executive
Offi cer is consequently required to hold the equivalent of his/her total cash compensa tion multiplied by three and the Deputy Chief Executive Offi cer is required to hold the equivalent of his/her total cash compensa tion multiplied by two. AXA shares and ADS 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 the date of his/her fi rst appointment as executive offi cer. Considering the demanding level of these shareholding requirements imposed upon executive offi cers, the Board of Directors, upon recommendation of its Compensation & Human
Resources Committee, has decided not to increase these requirements after the initial 5-year period. For the same reasons, the Board of Directors has decided that it was not appropriate to compel executive offi cers to acquire more
AXA shares following the expiration of the compulsory holding period applicable to their performance shares,
Paris Trade and Companies Register (Registre du commerce et des sociétés du tribunal de commerce de 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 r eport of
I Report of the Statutory Auditors prepared in accordance with Article L.225-235 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors of AXA (For the year ended December 31, 2014)
The professional standards require that we perform procedures to assess the fairness of the information on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information set out in the Chairman’s r eport. These procedures mainly consisted of: ■ obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information on which the information presented in the Chairman’s r eport is based, and of the existing documentation; ■ obtaining an understanding of the work performed to support the information given in the report and of the existing documentation; ■ determining if any material weaknesses in the internal control procedures relating to the preparation and processing of fi nancial and accounting information that we may have identifi ed in the course of our work are properly described in the Chairman’s r eport.
r eport, prepared in accordance with Article L.225-37 of the French Commercial Code.
This is a free translation into English of the Statutory Auditors’ Report issued in the French language and is provided solely for the convenience of English speaking readers. This Report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
The IFC programme is steered by the Group IFC Committee chaired by AXA’s CFO and involves the Planning Budgets
For every key process category, the in-scope AXA Group companies (i) document the signifi cant processes and/or controls, as well as the rationale of how the associated risk of material misstatement due to error or fraud can be reduced to an acceptable level, (ii) test the design and operational effectiveness of key controls based on the test plans elaborated with insight into risks, and (iii) remediate identifi ed control defi ciencies.
Outstanding control defi ciencies are consolidated at Group level to evaluate their impact on AXA’s consolidated fi nancial statements, considering their likelihood, potential impact, compensating controls and other qualitative factors. This
evaluation process is designed to identify any control defi ciencies that may rise to the level of a material weakness.
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 management report from the Company’s CFO or another senior executive offi cer stating their conclusion as to the effectiveness of the Company’s ICOFR.
This internal certifi cation process across all in-scope Group companies is designed to assist AXA’s management in its evaluation of AXA’s ICOFR and to support its conclusion as to the effectiveness of AXA’s ICOFR.
APPENDIX II MANAGEMENT’S ANNUAL EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING
I Report of the Statutory Auditors on internal control over fi nancial reporting
AXA’s management’s assertion that internal control over fi nancial reporting is effective, as included in the management’s annual evaluation of internal control over fi nancial reporting, is fairly stated.
The Company’s management is responsible for maintaining effective internal control over fi nancial reporting and for establishing a statement on its assessment of the effectiveness of internal control over fi nancial reporting as of December 31, 2014. A company’s internal control over fi nancial reporting is a process designed to provide reasonable assurance regarding the reliability of fi nancial reporting and the preparation of fi nancial statements for external purposes in accordance with IFRS accounting principles. The assessment of the effectiveness of internal control over fi nancial reporting is based on criteria established in the Internal Financial
Because of its inherent limitations, internal control over fi nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or if the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company’s management’s assertion that internal control over fi nancial reporting as of December 31, 2014 is effective, in all material respects, is fairly stated based on the criteria established in the AXA’s IFC standard.
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 for the periods presented, and that the Board of Directors’ Report, the various sections of which are mentioned on page 405 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 Auditors prepared a report on the Company’s Consolidated fi nancial statements for the year ended
Registration Document was fi led with the AMF on March 21, 2014 under number D.14-0184.
December 31, 2012, which are incorporated by reference in this document. This report, set out in pages 321 and 322 of the
(in Euro or in percentage of the share capital) Term Expiration
Ordinary shares reserved for a specifi c category of benefi ciaries in connection with offerings for employees - 135 million (e) 18 months October 23, 2015
Shares issued in connection with the exercise of stock options - 1% (h) 38 months June 23, 2017
(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 issued by subsidiaries of AXA.
(g) At the date on which performance shares are granted by the Board of Directors.
approval and will be submitted to the Shareholders’ Meeting on April 30, 2015: Issues with preferential subscription rights for shareholders
Ordinary shares and other securities giving a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (c) 6 billion (d) 550 million 26 months June 30, 2017
Ordinary shares reserved for a specifi c category of benefi ciaries in connection with offerings for employees - 135 million (f) 18 months October 30, 2016
(e) The aggregate nominal value of the capital increase with or without preferential subscription rights may not exceed €2 billion in nominal value.
USE IN 2014 OF THE VARIOUS FINANCIAL AUTHORIZATIONS PERTAINING TO CAPITAL INCREASES
Please see Part 2.3 “Major shareholders and related party transactions”, S ection “Employee shareholders” of this
In 2014, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 27, 2011 (resolution 22) 2,662,849 Performance Shares were granted by the
Net income for the fi scal year ended December 31, 2014 was €2,392 million against €1,727 million at year end 2013.
This result refl ected an exchange-rate gain of €330 million against a foreign-exchange loss of €332 million in 2013 and an impairment loss of €337 million on RGI Holdings BV (RESO
Dividends received from fi nancial subsidiaries and other holding companies fell by €207 million to €344 million from €551 million in 2013. Of this decrease, €272 million refl ected exceptional dividends paid by AXA Investment Managers in 2013 arising from the sale of AXA Private Equity.
Capital operations resulted in a loss of €24 million in 2014, versus a loss of €592 million in 2013, and broke down as follows: ■ a €330 million foreign-exchange gain, which mainly derived from the unwind of US dollar exchange rate derivatives, as opposed to a €332 million loss in 2013; ■ €434 million in allowances to provisions for subsidiaries, compared to €157 million in 2013, including €337 million on RGI Holdings BV (RESO GARANTIA) shares due to deteriorated economic perspectives in Russia and depreciation of the Ruble and also €29 million on AXA
Insurance shares (Ukraine); ■ €93 million in allowances to provisions for risks and charges, against €144 million in 2013 and mainly including the annual allowance of €53 million to provisions for 2017 subordinated bond redemption premium, the €51 million decrease is due to the subordinated bond repayment in January 2014; ■ an exceptional gain of €121 million, including €153 million resulting from the exchange offer for four series of undated deeply subordinated notes in November 2014 mainly due to foreign-exchange effects.
In 2013, the corporate income tax benefi t derived mainly from the €580 million of tax receivables from members of the tax consolidation group in France and a €102 million allowance to provision for the risk of tax repayments.
Intangible assets totaled €347 million. They mainly included the AXA brand contributed by FINAXA as part of the 2005 merger and valued at €307 million at the time based on brand royalties billed to Group subsidiaries and to the Mutuelles AXA, and €40 million relating to the capitalization of software costs.
China to foster the development of their businesses; ■ a €135 million capital increase in AXA Bank Europe to strengthen its solvency.
Receivables from subsidiaries amounted to €3,521 million, up from €123 million at year-end 2013, representing an increase of €3,398 million primarily attributable to $3,294 million in loans granted to US entities (€2,645 million) and £405 million (€511 million) to AXA UK Plc linked to internal refunding mentioned above and €150 million to Société
Miscellaneous receivables totaled €134 million, refl ecting €73 million in current accounts with Group entities and €20 million in fi nancial income receivables.
Cash and cash equivalents amounted to €2,836 million, versus €3,044 million at year-end 2013, the €208 million decrease was mainly due to the reimbursement of the subordinated debt in January 2014 for €2,122 million partly offset by bond issuances for €1,910 million mentioned below.
in January 2014 and €1 billion in May 2014 and a €324 million negative currency effect, partly offset by the maturity of a €1,516 million of nominal subordinated bond value in
Pound Sterling and US Dollar exchange rate trends, which adversely impacted liabilities.
Commercial Code (Code de commerce), disclosures related to the Company’s executive compensation appear in Part 2,
Supplier invoices to be paid at December 31, 2014 came to €8 million, €5 million of which are due within three months
In 2014, the Company did not acquire any signifi cant equity interests within the meaning of Article L. 233-6 of the French
a) After tax income, before depreciation, amortization and releases 0.69 3.98 0.65 0.81 1.00 b) After tax income, after depreciation, amortization and releases (0.21) 3.67 1.37 0.71 0.98
395-70, Shindaebang-dong, Dongjak-gu - SEOUL - South Korea 40, rue du Colisée - 75008 PARIS
25, Boulevard du Souverain - 1170 BRUXELLES - Belgium 120-122, avenue Hassan II - 21000 CASABLANCA - Morocco
NBF Platinium Tower 1-17-3 Shirokane - Minato-ku 108 - 8020 TOKYO - Japan
Guild House - Guild Street - IFSC - DUBLIN 1 - Ireland
Guarantees and commitments given by the Company under commitments made by subsidiary/
Calle monseñor Palmer numéro 1 - PALMA DE MALLORCA - Balearic Islands
21, Boulevard Grande-Duchesse Charlotte - L-1331 Luxembourg 21, avenue Matignon - 75008 PARIS
Colonia Allee, 10-20 - 51067 KOLN - Germany 100 , Esplanade du Général De Gaulle - Cœur Défense Tour B 92400 COURBEVOIE
a) in French companies (total) 72 b) in foreign companies (total) 81
ANC n °2014-03 chapter “titre II, chapitre I Actifs non financiers”
Company’s fi nancial statements (regulation ANC n°2014-03 chapter “titre VI, chapitre II, section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salariés”).
At the balance sheet date, the acquisition cost is compared to the fair value, which corresponds to the exit value for SICAV
The Company has issued two subordinated bonds: ■ 2.5% bonds, reimbursed at maturity January 1, 2014; ■ 3.75% bonds, maturity January 1, 2017: 6,613,129 bonds with a par value of €165.50 and a redemption value of €269.16 were in circulation at December 31, 2014. The redemption premium amounts to €688 million.
The charge for the year ending December 31, 2014 amounted to €53 million, and the existing provision at December 31, 2014 is €577 million. The unamortized balance of €112 million was recognized as an off-balance sheet commitment.
The General Meeting did not approve the amendment. As a result, to fully neutralize the dilution impact of the 2017 convertible bonds, AXA bought call options on AXA shares with an automatic exercise mechanism from a bank counterparty for a total cash amount equivalent to the payment proposed to bondholders. This €96 million premium is to be amortized over the residual ten-year term of the bond. At December 31, 2014, the remaining amount to be amortized was €19 million.
It also includes €40 million relating to the capitalization of software costs.
(b) The net increase of €3,398 million was primarily attributable to $3,294 million in loans granted to US entities (€2,645 million), £405 million (€511 million) to AXA UK Plc, and €150 million to Société Beaujon.
(a) €434 million in allowances to provisions for subsidiaries mainly due to €337 million on RGI Holdings BV (RESO GARANTIA) shares due to deteriorated economic perspectives in Russia and depreciation of the Ruble and also €29 million on AXA Insurance shares (Ukraine).
Unrealized foreign exchange losses amounted to €2,448 million, of which €2,072 million related to the deferred recognition of foreign-exchange losses in line with the principles of hedge accounting, offset by unrealized gains on investments subsidiaries.
Amortization of convertible bond redemption premiums 1,129 53 605 - 577
(a) The €421 million provision for deferred taxes at end of the period includes €410 million of provisions for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group.
(b) Release primarily concern provision for unrealized losses on derivatives for €305 million.
Value at December 31, 2014 Less than one year 1 to 5 years More than 5 years
Other payables, including tax and social payables (b) 232 232 -
(a) Debt relating to non-current assets totaled €129 million and included shares issued by entities but not yet fully paid, including €75 million for AXA Life Europe and €54 million AXA Reinsurance Ireland.
Guarantees and securities: Commitments to buy back shares and bonds from Group entities 45 -
Of which fi nancial guarantees given to Group entities 13,469 -
Subordinated convertible bond redemption premium (see § 2.9 of this note) 112 -
(1) A 100 bps rise in interest rates leads to a 5.7% improvement in the fair value of debt, a -29.3% deterioration in the fair value of derivatives, and a -0.4% deterioration in the fair value of loans.
This note does not omit any material commitment or any which might become material in the future.
By virtue of its business, the Company is mainly exposed to interest rate and exchange rate risks.
rise in the interest rate curve or a 10% depreciation of the Euro.
I Report of the Statutory Auditors on the Company’s fi nancial statements (For the year ended December 31, 2014)
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the fi nancial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
We assessed whether the impairment tests performed by the Company, depending on the situation regarding investments and the volatility of fi nancial markets, are appropriate and we also assessed the reasonableness of the resulting provisions. Regarding investments, for which impairment is based on the value-in-use and the intent to hold the investments, we assessed the data used in order to determine the value-in-use of the main investments in the portfolio and obtained confi rmation of the intent to hold them; ■ in accordance with the policies described in paragraph 2.9 of the notes to the fi nancial statements, provisions are recorded at the year-end for redemption premiums on convertible bonds issued by the Company whenever the prevailing stock price is lower than the discounted redemption value of the underlying note. We reviewed the reasonableness of the assumptions used to calculate these provisions, as regards stock market volatility and the maturities of outstanding convertible bonds issued by the Company;
Data Report” and on the AXA Group’s website (www.axa.com), in particular in the “Corporate Responsibility” section.
The Group ranks above average in its industry and is also included in international ethical indices.
The majority of this increase is due to the acquisition of 51%
The footprint of AXA’s salaried workforce in 2014 was: 62.6% in
Europe (vs. 65.1% in 2013), 20.1% in Asia-Pacifi c (vs. 20.0% in 2013), 13.7% in the Americas (vs. 11.4% in 2013) and 3.6% in
In June 2009, a Group EWC agreement (available at www.axa.com) was concluded in order to guarantee a high level of social dialogue. AXA holds two EWC plenary meetings a year as well as monthly sessions, held by 12 members of the EWC, to stay abreast of labor and economic developments in each country.
maintains the following principles with a view to guiding its various European business units in local management practices: ■ when organizational changes affect jobs, AXA pledges to supply relevant information and, as appropriate in light of local cultures and rules, to consult with employees and their representatives; ■ in connection with an information-gathering and consultative process, AXA would provide data and information about possible alternative solutions, where relevant; ■ factoring in its employees’, customers’ and shareholders’
Also in 2014, AXA joined the “Alliance for Youth”, a private sector initiative designed to address youth unemployment in Europe. The Company committed to provide at least 20,000 young people (aged 30 and under) with professional experience over the next fi ve years in Europe in the form of 10,000 paid apprenticeships and/or internship positions and 10,000 employment opportunities (open-ended or fi xedterm contracts). Furthermore, AXA pledges to help increase employability of young people through coaching and training on essential skills and exposure to the work environment. By the end of 2014, AXA provided more than 6,800 professional opportunities for the youth in Europe (and more than 12,000 opportunities in AXA globally).
One of the Group’s priorities over the recent years was to create the foundations for an agile working culture. Various initiatives are in place across many AXA entities. These resulted in an increase in employee trust, engagement, empowerment, work-life-balance and productivity. Moreover it boosted attraction and retention of diverse talent and yielded a reduced environmental footprint.
initiative, introducing an activity-based desk-sharing principle combined with teleworking. Today, AXA Belgium already has 1,000 employees working in this new environment. With their
Through its “Shareplan” program, the Group encourages employees to become AXA shareholders. Offered internationally for the fi rst time in 1994, each year “Shareplan” gives AXA
In 2014, this offer was made in 36 countries and over 21,000 employees participated to the program. The aggregate proceeds from the offering amounted to approximately €314 million, for a total of over 19 million newly-issued shares.
In all aspects of the working environment, AXA offers equal opportunities to all employees. AXA opposes all forms of unfair or unlawful discrimination and does not tolerate discrimination based on age, race, nationality, ethnic origin, gender, sexual orientation, gender identity, religion, marital status or disability.
In order to increase awareness of cross-cultural diversity and unconscious bias, an online e-learning module was rolled out globally in 2013. As of December 2014, more than 26,000 AXA’s employees have completed the e-learning course.
Gender equality remained a key topic for AXA in 2014. To fast track the career progression of women, AXA put in place
“Sponsorship Tandems”, leveraging senior managers to act as advocates and use their infl uence to help strengthen the development of female talent. In 2014, 17 Sponsorship
AXA Pride”. The objectives of this employee network are to encourage socialization through virtual platforms, education on
LGBT work-life issues and to make AXA the employer of choice for LGBT individuals.
AXA also continued to further encourage and support the integration of employees with disabilities. In France, the number of employees with disabilities was 857 in 2014.
In 2014, AXA developed and formalized h ealth and s afety guidelines at Group level, describing a set of rules which every local entity is expected to adhere to and implement in order to ensure a consistent management of the Group, its risks and ethics. In Europe, h ealth and s afety commitments are covered by the European Works Council agreement, which was signed with the labour organizations in June 2009 and which is available at www.axa.com.
Major AXA entities have undertaken initiatives to implement local policies and best practices, which they have tailor-made to their specifi c sectors and local environments. In accordance with AXA’s business environment, entities provide services and information campaigns on lifestyle risks such as certain types of cancer and cardiovascular problems, obesity, smoking, road safety or stress prevention.
The results of AXA’s development of employee skills remained high with 79.3% of its employees receiving a training course at least once during 2014. At the same time, the average number of training days per employee was at 3.0 days.
To further support AXA’s commitments to innovation and digital culture, AXA launched the “Digital Academy”. Its focus is to explore and leverage new and diversifi ed ways of learning.
AXA conducts organization and talent review processes (OTR), which are systematic reviews of its organizational structure, challenges and key positions. The process is designed to identify the potential of key people, taking into consideration their performance and leadership behaviours. It also helps build and share a robust and solid talent pipeline to ensure the right staffi ng around the globe.
In 2014, OTR was specifi cally leveraged to better understand the impacts of digitization on jobs and skills in every business area, and to identify and address re-skilling or up-skilling needs of AXA’s workforce.
Throughout 2014, AXA continued deploying its employer brand in India, Thailand, Hong Kong and Morocco, in addition to the deployments in 2013 in France, Germany, the Gulf Region,
To better engage with students and graduates and to enhance its employer brand attractiveness among this population, AXA
(resulted in over 57,000 fans and followers at the end of
December 2014); the launch of an innovative and differentiating global online game, “The Great Global Adventure”, a global competition for students and graduates which attracted 16,000 players worldwide by the end of 2014 .
Program” to recruit graduates, including profi les with competencies that are critical to face AXA’s digital transformation challenges (e.g. in Risk Management, Actuarial, Finance, IT,
Headcount (number of persons) as of December 31 2014 Evolution 2013
■ Number of entries following mergers and acquisitions (b) 2,183 emp. 143 emp.
■ Number of departures due to external transfers (c) 814 emp. 726 emp.
■ Number of re-hires in the Company 40 emp. 27 emp.
■ Number of fi xed-term contracts ended 3,197 emp. 3,136 emp.
■ Number of fi xed-term contracts ended 422 emp. 132 emp.
Internal mobility rate of salaried workforce 8.9 % 0.0pt 8.9 %
Turnover rate of salaried non-sales force 12.4 % -0.3pt 12.7 %
■ Proportion of variable pay (related to wages) 22.7 % 22.5 %
■ Proportion of fi xed pay (related to wages) 83.1 % 83.3 %
■ Proportion of variable pay (related to wages) 16.9 % 16.7 %
■ Proportion of fi xed pay (related to wages) 47.2 % 47.0 %
Number of training days of salaried workforce 318,774.3 days -6.8% (e) 341,924.6 days
Average number of training days per salaried workforce 3.0 days 3.3 days
■ Proportion of part-time salaried non-sales force 11.9 % 12.1 %
■ Proportion of part-time salaried sales force 2.9 % 3.0 %
■ Proportion of short term sick absences 88.1 % 84.4 %
■ Proportion of long term sick absences 11.9 % 15.6 %
■ Proportion of absences linked to maternity/paternity leave 32.6 % 31.6 %
■ Proportion of absences due to work related accidents 2.1 % 2.0 %
■ Proportion of absences linked to maternity/paternity leave 32.0 % 31.0 %
■ Proportion of absences due to sickness 60.0 % 60.2 %
■ Proportion of short term sick absences 90.4 % 86.2 %
Methodology note: The social data communicated here are collected through a reporting process defi ned by procedures associated with a list of indicators shared to all the entities of the AXA Group. This process is updated and communicated to each entity on a yearly basis. These indicators represent the data of 275 entities of the AXA Group (few entities may pre-consolidate data on a local level). The perimeter is updated annually following potential acquisitions/mergers or business disposals. These indicators are reported for the period between 01/01/2014 and 31/12/2014, unless mentioned otherwise. Evolutions are measured with ratios between 2013 and 2014 end-of-year data. The data are provided by local correspondents into an IT tool dedicated to the social data reporting process and accessible by all the entities since 2009. Consistency checks and quality controls are carried out before and during the data collect process. There are no estimations nor extrapolations made on the data provided. Regarding data published in ratios and percentages: numerator and denominator are realigned for each calculations to exclude entities with empty data points.
(e) The decrease in the percentage of workforce having received at least one training course during the year as well as the decrease in number of trainings days of salaried non-sales force is mainly due to the improved reporting capacity in AXA Konzern AG (Germany) and the end of a specifi c large-scale training initiative, also in AXA Konzern AG.
Activities and facilities are not likely to generate noise and odor emissions. No complaints, to AXA’s knowledge, related to this type of pollution were fi led against the Group. AXA’s operations and land use do not signifi cantly threaten biodiversity, nor water resource, as water consumption is mainly limited to building usage. Land use is limited to the space where AXA
This target is broken-down into the following targets: ■ -35% power consumption (kwh/FTE); ■ -15% business travel: vehicle fl eet (km/FTE); ■ -5% business travel: air and train (km/FTE); ■ -45% offi ce paper (kg/FTE); and
In addition, the Group has also set two environmental targets that are unrelated to carbon emissions: ■ 95% of paper must originate from recycled or sustainable sources; and
Switzerland have reduced their annual energy consumption by 20%; ■ some entities have been recognized by their efforts on energy effi ciency. For instance, AXA Hong Kong has been awarded with LEED Gold Certifi cation, AXA France’s Energi’Com tool was rewarded and AXA Sigorta earned the “Green Offi ce”
AXA Germany). AXA Switzerland moved to a new building heated using only incineration heat with a CO
AXA’s premises use electricity (78% of fl oor space), gas (14%
of fl oor space), fuel/steam (6% of fl oor space) and chilled water (2% of fl oor space). Of note, the proportion of renewable energy consumed by AXA’s premises is 37%.
emissions are related to energy consumption, 24% from business travel (air and train), 14% from AXA’s vehicle fl eet and 7% from paper. In 2010, the
Group defi ned common environmental travel guidelines, which were rolled out across the Group in 2011 and updated in 2014.
To encourage employees to reduce travel, the Group has installed 50 video-conferencing rooms since 2008. These have saved 20,920 trips and 21,531 tons of CO
AXA’s unsorted waste volume has decreased by 2% compared to 2013 while sorted paper for recycling decreased by 27%
Technology Services, for which electronic waste is of particular relevance, strives to ensure compliance with the Waste
In addition to reducing its operational environmental footprint, the Group seeks to minimize its “indirect” impact on the environment by offering insurance and investment solutions that promote environmentally-friendly behaviour.
(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,
■ developing insurance and investment products to promote mitigation and adaptation.
Today the private sector is called to play an increasing role in the implementation of the objectives agreed by these multilateral processes but also in the designing of concrete and operational solutions in support to governments. As an insurer,
AXA has indeed an important role in informing public policies on the importance to integrate risk prevention measures but also in helping societies at large to adapt to climate change.
as we became member of the Private Sector Advisory Group in 2013. AXA has therefore contributed to the designing of a private sector position paper aiming to feed Member
Business travel: airplane and train (c) Thousands of km 266,095 310,787
Business travel: AXA vehicle fl eet Thousands of km 271,172 248,795
Paper recycled and/or garanteeing sustainable management: offi ce % 70 61
KPI: Marketing and distribution paper consumption per customer (j) kg/customer 0.13 0.14
Stable reporting perimeter compared to 2013, representing the 41 most signifi cant countries where the AXA Group is present. Key Performance Indicators (KPIs) highlighted in bold.
(b) Includes electricity, natural gas, heating oil, steam and covers 90,988 FTEs.
(e) The emissions factors specifi c to each country used for energy, train and air were revised in 2013. Source: the lnternational Energy Agency (IEA) and Ademe. In 2014, the emission factor for heating oil has been revised for 2013.
AXA’s stakeholders include organizations that may infl uence or be infl uenced by its decisions and activities. Contacts with them enables AXA to improve its understanding of societal issues.
Protecting its clients from risks and unexpected events is at the core of AXA’s purpose. This is why AXA is committed to use its skills, resources and expertise to build a better understanding of the risks faced by individuals and society at large. AXA
The AXA Research Fund, the science philanthropy initiative of the insurance leader AXA, supports global fundamental research to understand and better prevent environmental, human life and socio-economic risks.
AXA employees worldwide support disadvantaged people through “AXA Hearts In Action”, the Group’s employee volunteering program. In 2014, more than 40,000 AXA Hearts
In Action volunteers around the world made their skills and time available to help underprivileged people. AXA donated more than 104,000 working hours to allow employees to volunteer (2).
AXA focuses on microinsurance projects that address social exclusion while being breakeven in the long term, by enabling vulnerable segments of the population to access insurance services. Current initiatives include: ■ France: AXA, in partnership with the Association pour le droit
■ India: Bharti AXA GI pioneered insurance for low income segment by 2009 to distribute Personal Accident, Health and
Mandiri Bank to propose Credit life, Personal Accident, and protection for natural/sickness death.
Investment (RI) research team as well as a global ESG research capacity through its platform, RI Search©. This tool covers more than 4,100 companies, 100% of the MSCI World index and 150 countries with ESG research from many sources. RI Search©
AXA IM’s proxy voting coverage includes listed companies on a global basis and leads engagement efforts on specifi c themes and companies. Finally, the RI team conducts thematic research in order to investigate material ESG issues, such as
RI & “smart beta” investing, research on the skills shortage in the Oil & Gas sector, board diversity in the largest European companies, and ESG integration in equity and sovereign debt asset classes. Further information can be found at www.axaim. com/en/responsible-investment. AXA IM is a UN-backed
The Guide covers a variety of matters, including specifi c rules concerning confl icts of interest, transactions involving AXA
INTEGRATION OF ENVIRONMENTAL, SOCIAL AND ETHICAL ISSUES IN RISK MANAGEMENT AND PRODUCT DEVELOPMENT
Reporting Protocol and the Community Investment Survey Guide used by the Company (hereinafter the “Guidelines”), summarised in the management report and available on request at the Company headquarters.
Our work was carried out by a team of 7 people between end of November 2014 and end of February 2015 and took around 15 weeks. We were assisted in our work by our specialists in corporate social responsibility.
We performed our work in accordance with the French professional auditing standards related to labour and environmental information falling within the scope of procedures directly related to the statutory audit engagement (NEP 9090), with the Decree of May 13, 2013 determining the conditions in which the independent third party performs its engagement and with ISAE 3000 (2)
concerning our reasoned opinion on the fairness of the CSR Information.
We compared the CSR Information presented in the management report with the list provided for by Article R.225-105-1 of the
Article L.233-1 and the entities it controls as defi ned by Article L.233-3 of the French Commercial Code within the limitations set out in the methodological information described at the bottom of the data tables “Social data 2014 – AXA Group” and “AXA Group environmental indicators”, as well as the footnote of the paragraph “Volunteering” of the Appendix VII of the management report.
We conducted around twelve interviews with around fi fteen people responsible for preparing the CSR Information in the departments charged with collecting the information and, where appropriate, the people responsible for the internal control and risk management procedures, in order to: ■ assess the suitability of the Guidelines in the light of their relevance, completeness, reliability, impartiality and comprehensibility, and taking into account best practices where appropriate; ■ verify that a data-collection, compilation, processing and control procedure has been implemented to ensure the completeness and consistency of the CSR Information and reviewed the internal control and risk management procedures used to prepare the
We determined the nature and scope of our tests and controls according to the nature and importance of the CSR Information with respect to the characteristics of the Company, the labour and environmental challenges of its activities, its sustainable development policy and best practices.
Investment Managers France, AXA Seguros Mexico, AXA Philippines, AXA Czech Republic et AXA Switzerland, selected by us on the basis of their activity, their contribution to the consolidated indicators, their location and risk analysis, we conducted interviews to ensure that procedures are followed correctly and we performed tests of details, using sampling techniques, in order to verify the calculations made and reconcile the data with the supporting documents. The selected sample represents on average 33%
For the other consolidated CSR information, we assessed consistency based on our understanding of the Company.
We believe that the sampling methods and sample sizes used, based on our professional judgement, allow us to express limited assurance; a higher level of assurance would have required us to carry out more extensive work. Because of the use of sampling techniques and other limitations intrinsic to the operation of any information and internal control system, we cannot completely rule out the possibility that a material irregularity has not been detected.
Appendix: List of the information that we consider as the most important
■ Recruitments and departures, including indicators external recruitments, resignations, dismissals and voluntary turnover of salaried non-sales force.
■ Compensations and evolutions, including total gross payroll of salaried non-sales force and gross fixed payroll of salaried sales force.
■ Absenteeism, including indicator absenteeism rate and proportions by type of absence of salaried non-sales and sales force.
■ Respect of the freedom of association and of the right of collective bargaining.
ENVIRONMENTAL INFORMATION: ■ Company organization to take into account environmental issues.
■ Partnership and patronage actions, including indicators number of volunteers and volunteering hours during paid hours.
Sections 1. Business and trends/Earnings/Financial position and key performance indicators 20 to 86 and 361 to 385 2. Use of fi nancial instruments by the Company when relevant for assessing its assets and liabilities, fi nancial position, and profi ts and losses 3. Description of major risk factors and uncertainties 152 to 187 4. Acquisition of signifi cant equity interests in companies headquartered in France 363 5. Events subsequent to fi scal year end/Outlook 27 to 28 ; 83 ; 92 and 33 5 6. Dividend distributions over the last three years 5 7. Information on market and liquidity risks (interest rate, exchange rate and stock price fl uctuation risk) 87 to 92 and 157 to 170 8. Purchase and sale of the Company’s own shares 142 10. Transactions involving Company stock completed by corporate offi cers 13 9 11. Directorships and positions held by corporate offi cers of the Company 100 to 105 12. Relevant provisions in the event of a public takeover bid on the Company 34 2 15. Adjustment of the rights of holders of securities with a claim on the capital of the Company n/a 16. Social and environmental information 387 to 40 4 17. Research and development activities n/a 18. Terms of payment 363 19. Agreements between a corporate offi cer or a shareholder of the Company and a subsidiary of the Company
Exhibits 20. Table of the capital increase delegations 359 to 360 21. Table of the Company’s fi nancial results over the last fi ve years 366 22. Chairman of the Board of Directors’ Report 34 6 to 352
Compensation paid to Statutory Auditors in 2014 and 2013 (art. 222-8) 331
Financial Code as well as in Article 222-3 of the AMF General
Report of the Statutory Auditors on the fi nancial statements of the Company-parent only 384 to 385
Report of the Chairman of the Board of Directors on the conditions of preparation and organization of the Board’s work and on internal control procedures 34 6 to 352