Board or the Supervisory Board within six months of the end of each fiscal year to approve AXA’s annual accounts, as provided by French law. The Management Board or the Supervisory Board may convene other ordinary general meetings at any time of year. AXA’s statuts further provides that an extraordinary general meeting of shareholders may be convened at any time of year. Generally, under French company law and AXA’s statuts, mergers, increases and decreases in share capital, the creation of new classes of shares, the issuance of investment certificates or notes convertible or exchangeable into shares, the contribution of a substantial part of the company’s assets, the transformation and the liquidation of the company require a prior vote of shareholders at an extraordinary general meeting. Shareholders’ meetings are held for the purposes of discussion and decision as provided by
The statuts of AXA provide that the Management Board or the Supervisory Board may call meetings of shareholders but, if the Management Board or the Supervisory Board fail to call a required meeting or refuse to call any meeting, AXA’s statutory auditors or, under specified circumstances, an agent appointed by a court may call such meetings. One or more shareholders together holding 10% of the issued shares, or a duly qualified association of shareholders holding their shares in registered form for at least two years and together holding 1% of AXA’s voting power, or any interested party in the case of an emergency may request the court to appoint such agent. French law further permits new majority shareholders to call a general meeting to consider certain matters after their acquisition of control of AXA.
French law requires that in order to have the right to attend or be represented at a general meeting of shareholders and vote, a holder of registered ordinary shares of AXA must have its shares registered in its name in a share account maintained by or on behalf of AXA at least five days prior to the date of the meeting.
The AXA statuts further provide that the Management Board may waive or reduce this five day period in the interest of all shareholders. Shareholders have the right to attend and vote at shareholders’ meetings either personally or by proxy.
• a duly qualified association of shareholders who have held their shares in registered form for at least two years and hold shares representing 1% of the outstanding voting power.
French law designates as a quorum the presence in person or by proxy of shareholders having not less than 25% (in the case of an ordinary general meeting) or one third (in the case of an extraordinary general meeting) of the voting power of the outstanding AXA ordinary shares. If a quorum is not present at any meeting,
then the meeting is adjourned. If a shareholders’ meeting is reconvened for lack of a quorum, there is no quorum requirement in the case of an ordinary general meeting, and 25% of the voting power of the outstanding AXA
French company law provides that a simple majority of the votes of the shareholders attending or represented at the meeting is required to pass a resolution at an ordinary general meeting and two-thirds of the votes of the shareholders attending or represented at the meeting is required to pass a resolution at an extraordinary general meeting.
Supervisory Board may temporarily consist of up to 30 members for a period of up to three years. The members of the Supervisory Board are appointed by a majority of the shareholders at their annual general meeting. French company law does not allow for cumulative voting. Members of the Supervisory Board are appointed for a four-year term. The Supervisory Board appoints a Chairman and a Vice-Chairman from among its members.
The Chairman calls and presides over the meetings of the Supervisory Board.
Any member of the Management Board may be removed from office by a decision of a majority of AXA’s shareholders present at a shareholders’ meeting following the submission of a proposal to that effect by the
The members of the Supervisory Board may be removed from office by decision of a majority of AXA’s shareholders present at a shareholders’ meeting. The members of the Supervisory Board may be removed from office according to a shareholders’ decision at any time without notice or indemnity.
Supervisory Board caused by the removal, resignation or death of one or more of their members must be disclosed to the public within one month of that change.
In addition, the stock market regulations of the Conseil des Marchés Financiers require any person or persons acting in concert acquiring one third or more of the share capital or voting rights of AXA to initiate a public tender offer for the balance of its share capital. The tender offer must also cover all securities issued by
AXA’s consolidated annual financial statements prepared in accordance with French GAAP together with a reconciliation to U.S. GAAP. In addition, AXA files periodic reports on Form 6-K which contains AXA’s unaudited consolidated financial statements for the six-month period ended June 30 prepared in accordance with French GAAP.
meeting. Generally, shareholders holding one third of the voting power of AXA’s outstanding ordinary shares would constitute a quorum. However, pursuant to French law, no such extraordinary shareholders’ meetings may decide (i) to increase the liability of the shareholders towards the company or a third party; or (ii) to undermine the individual rights vested in each shareholder (such as voting right, right to distributable profits of the company when allocated as dividends, right to sale one’s shares, right to sue the company before courts).
MATERIAL CONTRACTS There have been no material contracts (outside the ordinary course of business) during the last two years to which the Company is a party, other than the Merger Agreement, dated October 17, 2000, between AXA,
Under current French foreign exchange control regulations, there are no limitations on the amount of cash payments that may be remitted by AXA to residents of the United States. Laws and regulations concerning foreign exchange controls do require, however, that all payments or transfers of funds made by a French resident to a non-resident be handled by an accredited financial intermediary. In France, all registered banks and substantially all credit establishments are accredited financial intermediaries.
interest in AXA. However, both European Union and non-European Union residents must file a déclaration administrative, or administrative notice, with French authorities in connection with the acquisition of a controlling interest in any French company. Under existing administrative foreign direct investment regulations and administrative rulings, ownership by non-residents of France of more than 20% of a listed company’s share capital or voting rights is regarded as a controlling interest, but a lower percentage might be held to be a controlling interest in certain circumstances. The factors that will be taken into account in making that determination include the existence of: • an option of the acquiring party to buy additional shares,
• patent licenses granted by an acquiring party or management of technical assistance agreements with the acquiring party that place the French company in a dependent position vis-à-vis that party or its group.
Ministry of the Economy prior to entering into a transaction to acquire a direct or indirect interest, or to increase or decrease its direct or indirect interest, in AXA if such transaction would allow that person, or group of persons acting in concert, to (i) acquire control of, or cease to control, AXA or (ii) increase its interest to 10%, 20%, 33.33%
or 50% of AXA’s voting power, including, in each case, through the holding of ADSs. Furthermore, any such transaction allowing such person, or group of persons acting in concert, to hold AXA ordinary shares representing in aggregate in excess of 5% of AXA’s voting power requires that person to provide prior notice to the French
TAXATION The following generally summarizes the material U.S. Federal income tax and French tax consequences to U.S. Holders of the ownership and disposal of AXA ordinary shares or ADRs representing ADSs.
• A person otherwise subject to U.S. Federal Income tax on its worldwide income.
ADSs the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners of partnerships holding these shares or AXA ADRs should consult their tax advisors as to the tax consequences of owning or disposing of AXA ordinary shares or ADRs representing ADSs, as applicable.
A “Non-U.S. Holder” is a holder that is not a U.S. Holder. This discussion does not address the U.S. Federal, local, state, foreign or other tax consequences to Non-U.S. Holders as a result of the ownership or disposal of
States, including the United States Internal Revenue Code of 1986, as amended (which we refer to in this annual report as the “Code”), its legislative history, temporary, existing and proposed Treasury Regulations, Internal Revenue
Service rulings and judicial opinions as well as the Convention between the United States of America and The
in 2002. The French Government has also signaled that the rules relating to the précompte will also change with effect from 2002. For a discussion of the avoir fiscal and the précompte see “Ownership of AXA Ordinary
Shares and ADRs-French Taxation-Taxation of Dividends-”Avoir Fiscal”. No further details on these changes are available as of the date of this prospectus. Your individual circumstances may affect the tax consequences of the ownership or disposition of AXA ordinary shares or ADRs representing ADSs, and your particular facts or circumstances are not considered in the discussion below.
ADSs other than as capital assets; • Persons whose functional currency is not the U.S. dollar; • Certain U.S. expatriates; • Persons subject to the U.S. alternative minimum tax; and
For purposes of the Treaty, French tax law and the Code, U.S. owners of AXA ADRs will be treated as owners of AXA ordinary shares underlying the ADSs represented by those ADRs.
France generally imposes a 25% withholding tax on dividends distributed in cash or in the form of ordinary shares by a French corporation (such as AXA) to shareholders who are not residents of France for French tax purposes. However, the Treaty generally reduces the withholding tax rate to 15% on dividends paid in cash or in the form of shares to an “Eligible U.S. Holder”.
(ii) a corporation that does not own, directly or indirectly, 10% or more of the capital of AXA, provided in each case that that holder: • is a resident of the United States under the Treaty,
• is entitled to Treaty benefits under the limitation on benefits provisions in Article 30 of the Treaty, and
In the case of dividend distributions to beneficiaries who are not individuals, the amount of the avoir fiscal was recently decreased to 25% for distributions effected in 2001 and will be further reduced from 25%
Treasury that is the equivalent of the avoir fiscal. That payment is made by the French Treasury not earlier than the January 15th following the close of the calendar year in which the related dividend is paid, and only after receipt by the French tax administration of a claim for that payment in accordance with the procedures described below. However, the following are certain limitations to the availability of the avoir fiscal under the Treaty: • The avoir fiscal is generally only granted if the Eligible U.S. Holder is subject to U.S. Federal income tax on both the dividend and the avoir fiscal.
• Partnership or a trust (other than a pension trust, a real estate investment trust or a real estate mortgage investment conduit) in its capacity as an Eligible U.S. Holder is entitled to the avoir fiscal only to the extent that its partners, beneficiaries or grantors, as applicable, are themselves Eligible U.S. Holders (other than a regulated investment company) and are themselves subject to U.S. Federal income tax on their respective shares of both the dividend and the avoir fiscal.
or more of the capital of AXA. This rule only applies if less than 20% of the shares of the regulated investment company should be beneficially owned by persons who are neither citizens nor residents of the United States under the Treaty.
Thus, the total net payment to the Eligible U.S. Individual Holder would be 127.5, although, as discussed below, that holder would recognize 150 of income for U.S. Federal income tax purposes.
• an Eligible U.S. non Individual Holder and the requirements are satisfied, that holder would initially receive 85 (the 100 dividend less a 15 withholding tax). That holder also would receive an additional payment from the French Treasury of 34.02, consisting of the avoir fiscal of 40, less the 15% withholding tax on that amount.
A U.S. Holder entitled to the refund of the précompte must apply for the refund by filing a French Treasury form RF 1 B EU-NO. 5053 before the end of the calendar year following the year in which the dividend is paid.
The form and its instructions are available from the United States Internal Revenue Service or at the Centre des
Impôts des Non-Résidents (9, rue d’Uzès, 75094 Paris Cedex 02, France).
Eligible U.S. Holders must follow certain procedures in order to be eligible for the 15% dividend withholding tax and to receive a refund of the avoir fiscal (less the 15% withholding tax on that amount) under the Treaty.
• file with AXA or the French person in charge of the payment of dividends on the AXA ordinary shares, such as the French paying agent, in the case of AXA ordinary shares, or with the depositary in the case of AXA ADRs, a French form RF1 A EU n° 5052, entitled “Application for Refund”, before the date of payment of the relevant dividend. An Eligible U.S. Holder that is a regulated investment company must also be identified as such on a list provided annually by the U.S. Internal Revenue Service to the French tax administration. However, if an Eligible
U.S. Holder is not able to complete, have certified and file the Application for Refund before the date of payment of the dividend, that Eligible U.S. Holder may still benefit from the Treaty if the U.S. financial institution that is in charge of the administration of that holder’s AXA ordinary shares or ADRs provides AXA or the French paying agent in the case of AXA ordinary shares, or the depositary in the case of AXA ADRs, with certain information with respect to that Eligible U.S. Holder and his or her holding of AXA ordinary shares or ADRs before the date
of payment of the relevant dividend. Whichever procedure is followed, the avoir fiscal is not paid by the French
• any “Eligible Not-For-Profit Organization”, which is a tax-exempt entity organized in the United States, the use of whose assets is limited under U.S. Federal or state laws, both currently and upon liquidation, to the accomplishment of the purposes that serve as the basis of its exemption from income taxation in the
United States and which does not own, directly or indirectly, 10% or more of the capital of AXA, and
• does not have a permanent establishment in France to which the AXA ordinary shares or ADRs are attributable to or, in the case of an individual, who does not maintain a fixed base in France to which the AXA ordinary shares or ADRs are effectively connected.
A transfer of AXA ordinary shares or ADRs representing ADSs by gift by, or by reason of death of, a U.S.
Holder that would be subject to French gift or inheritance tax under French domestic tax law will not be subject to such French tax by reason of the Convention between the United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Estates,
Inheritances and Gifts, dated November 24, 1978 unless: • the donor or decedent is domiciled in France within the meaning of that Convention at the time of making the gift, or at the time of his or her death, or
Under French tax law and the Treaty, the French wealth tax generally does not apply to U.S. Holders that are not individuals or in the case of natural persons, who own alone or with their parents, directly or indirectly,
For U.S. Federal income tax purposes, dividends will be taxable to the U.S. Holder of AXA ordinary shares or ADRs outstanding on the record date established by French law, which in the case of an annual dividend will be fixed by the shareholders at the shareholders’ meeting approving the distribution of dividends, and in the case of an interim dividend will be fixed by the Management Board approving the distribution of interim dividends. Any payment of the avoir fiscal or the partial avoir fiscal and précompte, plus the withholding tax relating to those payments, will generally be included in the dividend income of a U.S. Holder in the year in which the payment or refund is received. The amount recognized as dividend income by a U.S. Holder will be equal to the U.S. dollar value of the distributed Euro, or, in case of a Stock Distribution, the AXA ordinary shares, on the date of the recognition of the dividend for U.S. Federal income tax purposes, regardless of whether the payment is in fact converted into U.S. dollars. The Euro distributed will have a tax basis equal to their U.S. dollar value at such time. Any gain or loss realized upon a subsequent conversion or other disposition of the Euro will be treated as ordinary income or loss from sources within the United States.
As discussed above, payments of dividends, the avoir fiscal, the partial avoir fiscal and the refund of the précompte to a U.S. Holder will be subject to French withholding tax. For U.S. Federal income tax purposes, a
For U.S. Federal income tax purposes, a U.S. Holder generally will recognize gain or loss on any sale, exchange or other disposition of AXA ordinary shares or ADRs representing ADSs, unless a specific nonrecognition provision applies. That gain or loss will be measured by the difference between the U.S. dollar value of the amount of cash, and the fair market value of any other property, received and the U.S. Holder’s tax basis in the AXA ordinary shares or the ADRs, determined in U.S. dollars. A U.S. Holder’s tax basis in the AXA ordinary shares or the ADRs will generally equal the amount paid by that U.S. Holder for the AXA ordinary shares or the ADRs or, in the case of AXA ordinary shares acquired by way of Stock Distribution, the amount included in income at the time of the Stock Distribution. Gain or loss arising from a sale or exchange of AXA ordinary shares or ADRs will be capital gain or loss if these AXA ordinary shares or ADRs are held as capital assets by the U.S. Holder, and will be short term or long term depending whether the holding period of the U.S. Holder for these AXA ordinary shares or ADRs exceeds one year. In general, gain from a sale or exchange of AXA
Under certain circumstances, a U.S. Holder who is an individual may be subject to information reporting requirements and backup withholding at a 31% rate on dividends received on AXA ordinary shares or ADRs representing ADSs. This withholding generally applies only if that individual holder: • fails to furnish his or her taxpayer identification number to the U.S. financial institution that is in charge of the administration of that holder’s AXA ordinary shares or ADRs or any other person responsible for the payment of dividends on the AXA ordinary shares or ADRs,
• fails, under specified circumstances, to comply with applicable certification requirements.
Any amount withheld from a payment to a U.S. Holder under the backup withholding rules will be allowable as a credit against such U.S. Holder’s U.S. Federal income tax liability, provided that the required information is furnished to the U.S. Internal Revenue Service.
U.S. Holders should consult their own tax advisor as to the application of the U.S. Federal information reporting and backup withholding requirements to them and their qualification, if any, for an exemption under these rules.
The following information should be read in conjunction with (i) “Item 5 – Operating and Financial Review and Prospects”, (ii) AXA’s consolidated financial statements and the related notes included elsewhere in this annual report, and (iii) information under the heading “Special Note Regarding Forward-Looking Statements” at the beginning of this annual report.
Market risk represents the potential loss as a result of absolute and relative price movements in financial instruments due to changes in interest rates, equity prices, foreign currency exchange rates, and other factors.
AXA’s exposure to market risk varies by nature across its operations.
Risks attributable to policyholders are also actively managed to ensure that such risks are prudent and satisfy policyholders’ risk and reward objectives. In addition, AXA’s insurance operations worldwide are subject to local regulatory requirements in most jurisdictions in which AXA operates. The local regulations prescribe: • the type, quality and concentration (counterparty, geographical and type of securities held) of investments, and
• the level of assets to be maintained in the local currency to meet the insurance liabilities in that local currency.
At December 31, 2000, approximately 35% of the total net life insurance liabilities represented contracts with policyholder participating benefits (including 8% of total net life insurance liabilities relating to UK withprofit contracts). In respect of these contracts, the policyholder participates in the earnings or surplus of the insurance company (in the case of UK with-profit contracts, the amount due to policyholders are generally based on the fair value of the investments supporting such products) through the distribution of policyholder dividends.
Therefore, AXA’s exposure to market risk is reduced as generally 85% or more of the earnings are attributed to the policyholders in respect of participating insurance contracts.
AXA uses derivatives in its operations to manage customer and shareholder exposures to interest rate fluctuations, foreign currency fluctuations and equity price movements, primarily in respect of non-trading activities. See notes 2, 4 and 17 to the consolidated financial statements for information regarding AXA’s use of derivatives.
For purposes of the sensitivity analyses, fair values were estimated in accordance with the valuation methods described in notes 2 and 4 to the consolidated financial statements. However, the financial statement disclosures relating to fair values on financial instruments included only insurance contracts defined as “investment” insurance contracts, that is, those contracts with insignificant mortality and morbidity risk, while the sensitivity analyses included all insurance contracts.
• The fair values for property and casualty and international insurance and non-participating life insurance contracts were estimated using a discounted cash flow approach. Such fair values, which vary with changes in the estimated discount rate, were considered to be sensitive to interest rate changes but unaffected by equity price changes. For property and casualty and international insurance contracts, no changes were made in the estimates of claims amounts and timing as a result of changes in interest rates or stock market prices for equity securities.
Interest Rate Risk. For purposes of interest rate sensitivity analyses, parallel yield curve shifts were made relative to the yield curves prevailing in the country in which the subsidiary operates. The estimated potential exposure due to a 100 basis point parallel shift upward in the December 31, 2000 and 1999 yield curves would result in an estimated net fair value loss for all items within the scope of the analyses of approximately €1.0 billion and €1.1 billion, respectively, before minority interest allocations and tax effects. The impact relating to the fixed rate long term debt including subordinated debt of nearly €4.0 billion obtained in 2000 to finance various acquisitions was offset by the increase in insurance-related invested assets of Nippon Dantai (acquired in March 2000).
In both 2000 and 1999, the potential loss from stock market fluctuations was larger than the loss resulting from interest rate changes. The impact of interest rate fluctuations on interest-sensitive investments was partially offset by fair value changes in the related insurance liabilities. The impact of stock market declines on equity securities was accompanied by smaller changes in the estimated fair value of insurance liabilities (except for participating life contracts and separate account contracts). After excluding separate account liabilities (representing 36% total net life insurance liabilities, for which fair value changes in assets result in an equal and opposite change in related liabilities), the remaining life insurance liabilities are supported largely by fixed maturity securities and the fair value of these liabilities are generally estimated using discounted cash flows.
The increase in exposure from €69 million in 1999 to €240 million in 2000 related to two significant items arising in the U.S. operations, (i) the gain from the sale of Donaldson, Lufkin & Jenrette, and (ii) the loss primarily relating to a writedown on the high-yield bond portfolio as a result of broad weaknesses in credit markets from a slowing economy. Excluding these two significant items transacted in U.S. dollars, AXA’s exposure to changes in foreign currency exchange rates would be approximately €70 million.
Limitations. The above analyses do not consider that assets and liabilities are actively managed and that there are strategies in place to minimize the exposure to market fluctuations. For example, as market indices fluctuate, management could take certain actions including selling investments, changing investment portfolio allocation, and adjusting bonuses credited to policyholders. In addition, such sensitivity analyses do not consider the affect of market changes on new business generated in the future, primarily insurance premiums, which are a critical and integral component of future profitability. AXA, and its competitors, would likely reflect adverse market changes in the pricing of new business. Therefore, management believes actual losses as a result of financial market fluctuations of the magnitudes analyzed would be less than these potential estimated losses.
The consolidated financial statements appear on pages F-2 to F-104 and include: Consolidated Financial Statements : Consolidated Balance Sheets as at December 31, 2000, 1999 and 1998 F-2
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 F-6
TO THE SHAREHOLDERS OF AXA: We have audited the accompanying consolidated balance sheets of AXA (“the Company”) and its subsidiaries as at December 31, 2000, 1999 and 1998 and the related consolidated statements of income, of shareholders’
Euros. In addition, we have audited the financial statement schedule listed in the accompanying index. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.
(a) The Euro amounts were converted using the previously reported financial information in French francs and the French franc to Euro exchange rate established on January 1, 1999 of FF6,55957 = €1.00. See Note 1.
Short-term and long-term debt: Accrued expenses and other liabilities (Note 23) 52,803 44,057 33,817
Gross premiums and financial services revenues (Note 22) 79,971 66,528 56,697
Net Income (excluding exceptional operations) Per Ordinary Share (Note 16): (a) The Euro amounts were converted using the previously reported financial information in French francs and the French franc to Euro exchange rate established on January 1, 1999 of FF 6.55957 = €1.00. See Note 1.
Adjustment on opening balance – – – (16) (16) Issuance of ordinary shares 1.16 11 102 – 113 Cash dividend – – – (582) (582) Exercise of stock options 3.30 30 82 – 112
– Employee stock purchase program (July 2000) 1.97 18 217 – 235 – Exchanged in the buyout of minority interests in AXA Financial, Inc. 20.90 191 2,940 – 3,131 Exercise of stock options and conversion of bonds 0.70 7 27 – 34 Cash dividend – – – (713) (713) Impact of foreign currency fluctuations – – – (296) (296) Effect of restructurings – – – 8 8 Goodwill from the buyout of minority interests in AXA Financial, Inc. – – – (2,518) (2,518) Net income – – – 3,904 3,904
(a) The Euro amounts were converted using the previously reported financial information in French francs and the French franc to Euro exchange rate established on January 1, 1999 of FF 6.55957 = € 1.00. See Note 1.
(b) The change in goodwill arising from the UAP acquisition in 1999 was attributable to AXA’s decrease in ownership interest in Sun Life & Provincial Holdings (“SLPH”) (a former UAP operation) as SLPH issued ordinary shares in connection with the acquisition of Guardian Royal Exchange (“GRE”) in May 1999.
AXA - CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, (in euro millions) 2000 1999 1998 (a)
Net purchases of property and equipment (452) (133) (413) Net cash used in investing activities (15,220) (36,703) (10,687) Cash flows from financing activities: Long term debt 193 818 430
(b) Includes unrealized gains on trading account securities, other debtors and other creditors, including reinsurance deposits. (c) Includes net movement in Separate Account assets in 2000 of €15,240 million (1999 : €8,640 million), in 1998, such movement was included in the separate lines by category of security under “maturities and sales” and “purchases” above. The total movement in separate account assets in 1998 included in those line items was €4,794 million.
Equitable Life and Alliance Capital Management (Donaldson, Lufkin & Jenrette (DLJ) was sold on November 3, 2000) (United States), (ii) Sun Life & Provincial Holdings (“SLPH”), subsequently renamed AXA UK Holdings after the buyout of minority interests in July 2000, and its consolidated subsidiaries, principally AXA Sun Life and AXA Insurance (United Kingdom), (iii) AXA Asia Pacific Holdings and its consolidated subsidiaries including
AG (“AXA Colonia”) and its consolidated subsidiaries (principally in Germany and Austria), (v) AXA Royale Belge and its insurance subsidiaries and AXA Banque Belgium (principally in Belgium), and (iv) AXA Nichidan Insurance
The consolidated financial statements of AXA have been translated into English from those published in
French and include additional disclosures required by the U.S. Securities and Exchange Commission (“SEC”).
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in France (“French GAAP”). French GAAP is based on the French Law of January 3, 1985 and its Décret of application regarding consolidation; French insurance regulatory Décrets Nos. 94-481 and 94-482 of June 8, 1994, and the related Order (Arrêté) of June 20, 1994, implementing European Union Directive No. 91/674
French Banking Regulation Rule 91-02. In certain material respects French GAAP differs from generally accepted accounting principles in the United States (“U.S. GAAP”). A description of the significant differences between
GAAP and condensed consolidated statements of income and balance sheets for each of the three years ended
These amounts have been converted to Euro using the FF/Euro conversion rate of FF 6.55957 = €1.00 established on January 1, 1999 (the legal conversion rate). An alternative approach would have been to translate the financial statements of each respective country directly into Euro using the exchange rate applicable for that particular currency; however, such approach may have altered reported trends. AXA’s amounts reported in Euro for the year ended December 31, 1998 may not be comparable to Euro amounts reported by other companies, both
There were no changes in accounting methodologies or new accounting principles adopted in 2000 or 1999, which would effect the comparability between the years ended December 31, 2000, 1999, 1998 and at December 31, 2000 and 1999.
This income was previously deducted from general expenses. The impact on year 2000 revenues was an increase of €436 million, compared with an increase of €170 million for 1999. The impact on 1998 revenues was not material.
– Companies in which AXA directly or indirectly holds at least 20% of the voting rights and for which AXA
– Companies in which AXA exercises significant long-term influence are accounted for by the equity method.
Significant influence is presumed when AXA directly or indirectly holds at least 20% of the voting rights or when significant influence is exercised through an agreement with other shareholders.
Mutual funds and investment and real estate management companies (owned by the life insurance companies) are not consolidated. Investments in shares of such companies are accounted for using the cost method.
– the information required to prepare the consolidated financial statements cannot be readily obtained, either for reasons of cost, timeliness or materiality.
Assets of consolidated companies linked with separate account (unit linked) contracts are included in the calculation of the Company’s controlling interest but excluded from the calculation of the percentage of ownership interest.
United Kingdom. As a result of the buyout of minority interests in SLPH (subsequently renamed AXA
UK Holdings) in July 2000, AXA’s ownership interest increased from 56% to 100%. AXA’s consolidated net income for the post six-month operating period in 2000 included 100 % of AXA UK Holdings and its subsidiaries.
– In December 2000, AXA proceeded to buyout the minority interests in AXA Financial. The exchange offer was completed on December 29, 2000 and the subsequent merger between AXA Merger Corp1 and AXA
Nichidan Life, and also created a new holding company, AXA Nichidan. AXA held a 96.4% ownership interest in AXA Nichidan at December 31, 2000. As a result of the acquisition, AXA’s total assets increased by €38.3 billion and AXA’s consolidated operating results in 2000 included six months of post-acquisition operating results for AXA Nichidan and its consolidated subsidiary (as these operations have a September 30th fiscal year end).
Hong Kong. In November 1999, AXA Australia (a subsidiary of AXA Asia Pacific Holdings, in which AXA
The principal change in scope of consolidation in 1999 was the acquisition of Guardian Royal Exchange
The purchase price includes the direct costs and external fees related to the transaction and costs of settling/
exchanging outstanding employee share options of the target company (applicable to all acquisitions including acquisitions of minority interests). If the transaction is based in a foreign currency, the impact of the foreign currency is included in the purchase price at the date of the transaction or the initial date of the transaction (if it occurs over a period of time). The purchase price is determined at the date the transaction settles, or the close of the offer period if shares are exchanged.
(1) AXA Merger Corp. was a Delaware holding company created to facilitate the exchange offer and subsequent merger of AXA Financial, Inc. and was a wholly-owned subsidiary of AXA.
are treated as off-balance sheet liabilities until the earlier of the maturity date or when cancelled. Cash payments at maturity if any, to the Certificate holders and any amounts paid to purchase and retire Certificates prior to their maturity will increase the existing goodwill asset, net of accumulated amortization as if such goodwill had been recorded at the date of acquisition. The accumulated amortization is recorded immediately as a charge against income.
For insurance company acquisitions after December 31, 1992, assets other than certain fixed maturities and non-insurance liabilities of the acquired company are generally recorded at their estimated fair value. Insurance liabilities are maintained at historical value if the basis for measuring such liabilities is consistent with French accounting principles. For property and casualty insurance operations acquired, fixed maturities are maintained at their carrying value. If information becomes available that necessitates an adjustment to purchased assets or liabilities such adjustment can be made until the end of the fiscal year that follows the year of the acquisition. If the related goodwill was initially charged directly to retained earnings and reserves, such purchase accounting adjustments will correspondingly increase or decrease retained earnings and reserves.
In respect of the acquisitions of minority interests, the portion of assets acquired and liabilities assumed are maintained at their carrying value at the date of acquisition and are not adjusted to reflect their estimated fair values.
In conjunction with purchase accounting relating to acquired life insurance operations, an identifiable intangible asset is recorded, in certain cases, for the present value of future profits of purchased life insurance business in-force. The VBI represents the value of estimated future profits from insurance contracts existing at the date of acquisition. The future profits are estimated using actuarial assumptions based on anticipated experience determined as of the purchase date and discounted. The VBI is amortized over the remaining lives of the underlying contracts in proportion to the earnings on the contracts, generally between 10 and 25 years. The VBI is subject to recoverability testing at the end of each accounting period, based on actual experience and expected trends with respect to the principal assumptions used to calculate the VBI.
The difference between the purchase price and the net assets acquired represents goodwill. If goodwill is negative, that is the value of net assets acquired is greater than the purchase price, the estimated fair value determined for real estate is decreased to the extent necessary to eliminate such excess. Any excess remaining after full elimination of the adjustment is recorded as a negative goodwill liability. Negative goodwill is amortized over a period not to exceed five years.
European subsidiaries, the amortized cost of fixed maturity securities is written down for impairments in value deemed to be other than temporary.
Equity securities are stated at cost. For a decline in the estimated fair value of a specific equity investment that is deemed to be other than temporary, AXA’s European subsidiaries record a valuation allowance and AXA’s non-European subsidiaries directly write down the equity investments. Investments in mutual funds are included in equity securities.
Mortgage loans on real estate are stated based on the outstanding principal balances, net of unamortized discounts and valuation allowances. Impairment measurement is based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.
For AXA’s European subsidiaries, valuation allowances on all classifications of real estate are recorded for a decline in the value of a property that is deemed to be other than temporary. In determining whether or not a decline in the estimated fair value is other than temporary, AXA considers the length of time and extent to which the estimated fair value has declined, the market conditions, and the ability of AXA to retain the asset for a period sufficient to recover any such decline. For AXA’s non-European subsidiaries, valuation allowances are recorded only for real estate held for sale and are computed using the lower of estimated fair value (net of selling costs)
Separate account assets relate to certain life insurance contracts which, when issued, are linked with specific pools of assets (France: assurance à capital variable (“ACAV”) and assurance à capital variable immobilier
The basis for determining the fair value of investments is as follows: (i) listed equity and fixed maturity securities are based on the quoted market price at date of valuation, (ii) the fair value of real estate held for investment purposes is determined by qualified appraisers and are reviewed with reference to current market conditions, and (iii) the fair value of loans is based on estimated future cash flows utilizing interest rates that reflect current market conditions, and non-performing loans are valued based on the lower of the guaranteed value or future cash flows.
The costs of acquiring new and renewal business that vary with and are primarily related to the production of new business are specifically identified and deferred by establishing an asset that is amortized in subsequent years. The acquisition costs are subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. For traditional life and annuity policies with life contingencies
from the contracts over the term of the contract. Estimates of gross profits are reviewed at the end of each accounting period and the cumulative effect of any changes in estimated gross profits impacting the amortization of deferred acquisition costs is recognized immediately in income.
Front-end fees charged to policyholders (for future services that are not fully earned in the period assessed)
are reported as a reduction of deferred acquisition costs. These unearned revenues are recognized in net income over the periods benefited using the same assumptions and methods as are used for amortizing deferred acquisition costs.
Other equipment, computer hardware and software is amortized on a straight-line basis over the estimated useful life of such assets (in general not to exceed five years).
Amounts receivable from reinsurers are estimated in a manner consistent with the insurance benefits /
claim reserves associated with the reinsured business. These receivables are evaluated and monitored for recoverability to minimize exposure to significant losses from reinsurer insolvencies. The reinsurers’ share in insurance reserves is presented in the balance sheet net of insurance reserves, and not as a separately reported receivable.
For traditional life insurance contracts (that is, those with significant mortality risk), the liability for future policy benefits is calculated in accordance with the applicable regulatory and accounting rules on the basis of actuarial assumptions as to investment yields, mortality, morbidity and expenses. In general, for AXA’s
European subsidiaries, except the UK and the Netherlands, the actuarial assumption for mortality is specified by legislation, the assumption for interest is the rate guaranteed in the contract, and contracts are assumed to remain in force until their contractual maturity date or the death of the insured. For the UK, the Netherlands, and the companies outside of the European Union, the reserves are based on a best estimate that takes account of estimated terminations/surrenders. If the contract provides for a minimum interest rate guarantee and the investment results are insufficient to meet that guarantee, an additional provision will be established for that shortfall.
The liability for universal life and investment-type contracts represents an accumulation of gross premium payments plus credited interest less expenses and mortality charges and withdrawals.
Separate account (unit linked) contracts are linked to a specific pool of investment funds / assets and are written by AXA’s life insurance companies. The insured bears the investment risks and rewards. For these contracts the liability represents the fair value of the investment funds / assets linked to those contracts at the balance sheet date.
“UK with-profit contracts” with the remaining portion included in retained earnings and reserves.
A liability for insurance claims and claims expenses is recorded for (i) claims incurred and reported in the accounting period and (ii) claims incurred but not reported (“IBNR”) in the accounting period. The liability will also include associated claims handling expenses.
Claims reserves also include: – Unexpired risk provision. A reserve for unexpired risks is established (in addition to the unearned premium reserve) for contracts for which the premiums are expected to be insufficient to cover future claims and claims expenses. Such liability is recorded net of acquisition costs as part of the claims and claims expenses liability.
An unearned premium reserve is established and represents the portion of gross premium written which has not yet been earned. The unearned premium reserve generally is calculated by pro rata methods, based on the proportion of insurance still in force at year-end.
method. Under such method, gains and losses associated with the derivative instruments, in respect of effective hedges, are deferred and recognized in the net investment results generally over the life of the hedged asset or liability with amounts recorded in the category corresponding to the hedged item.
Realized and unrealized gains and losses on derivative instruments that are hedging the foreign currency risk of net investments in certain foreign subsidiaries are recorded in shareholders’ equity, along with the related foreign currency translation adjustments.
INCOME TAXES AXA’s French insurance subsidiaries, AXA Financial and, where permitted, other subsidiaries each file individually consolidated income tax returns; other companies file separate income tax returns. Current income tax expense (benefit) is recorded in earnings based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income tax assets and liabilities are recorded based on the differences between financial statement carrying amounts and income tax bases of assets and liabilities and for net operating loss carryforwards, if any, using enacted income tax rates and laws expected to be applicable when such differences reverse. Valuation allowances are recorded for deferred tax assets that are not expected to be realized.
Property and casualty insurance and reinsurance gross premiums, including estimates of premiums written but not reported, are generally recognized as revenue over the terms of the related contracts.
For insurance operations, depreciation expense on real estate is recorded as a reduction of related investment income. For financial services operations, depreciation expense on real estate is recorded in administrative expenses.
From time to time subsidiaries that are not wholly owned by AXA may issue additional capital. As a result,
Intercompany transactions, that are eliminated on consolidation, are reallocated in the segment presentation of the net investment results. The intercompany transactions relate primarily to internal reinsurance and to intercompany loans and commissions paid and received for asset management.
exceeds the exercise price of the options on the date both the number of options and exercise price are known.
The stock-based compensation expense is recognized over the employees’ service period that is generally considered to be the vesting period of the options. No compensation expense is recorded in respect of share options granted or employee share purchase plans offered by AXA (the Company).
Where an employee may receive cash in lieu of ordinary shares, compensation expense is recorded over the vesting period based on the excess of market value of the underlying ordinary shares over the exercise price of the options. This charge is recorded as a provision that is adjusted as estimates are revised each accounting period, taking into consideration market value changes in the underlying ordinary shares.
In respect of acquisitions of minority interests, the cost of settling or exchanging outstanding employee share operations of the target company is included in the acquisition purchase price.
– Intercompany transactions: As of January 1, 2001, capital gains and losses on intercompany transactions involving assets other than consolidated equity securities are eliminated in consolidation (with the exception of other than temporary capital losses), including cases where the buyer or seller is an insurance or reinsurance company. Tax expense recorded by the seller in such transactions is eliminated, and the income statement impact of any interest credited to policyholders is offset by a debit entry in an adjustment account, to be amortized over the average remaining lives of the portfolio’s underlying contracts (net of lapses).
– Amortization of the value of purchased life insurance business in-force and deferred acquisition costs: Regardless of the type of contract, writedowns recorded after January 1, 2001 are calculated based on gross profits emerging from the contracts over the term of the contracts. This method, which is already applied to investment-related savings contracts, will be extended to traditional life insurance contracts.
– Invested assets: Invested assets will be recorded at historical cost (historical amortized cost for fixed maturities), including the trading account securities of non-European insurance companies, except in cases where the unrealized investment gains or losses are included in the valuation of policyholder insurance benefits. The rules for establishing writedowns for impairments in value that apply to AXA’s European subsidiaries will be extended to its non-European subsidiaries.
– Insurance reserves: Additional provisions relating to changes in mortality tables that may be amortized over time in statutory financial statements, can not be amortized over time in the consolidated financial statements but must be immediately and fully recognized.
Unless otherwise indicated, these new policies will be applied retroactively. The effects of retroactively applying the change in methodologies, net of taxes and deferred policy participation, will be recorded in shareholders’ equity at January 1, 2001.
Had these new policies been applied as of January 1, 2000, the impact on AXA’s consolidated net income for the year ended December 31, 2000 would not have been material (based on criteria established by the
FIXED MATURITIES AND EQUITY SECURITIES Information regarding equity and fixed maturity securities held in the general account, that is, excluding separate account (unit linked) assets, trading account securities, and assets supporting the UK with-profit contracts at December 31, 2000 and 1999 is presented below.
Assets allocated to UK with-profit contracts (19,052) (12,048) – – (19,052)
(a) At December 31, 2000, unlisted fixed maturity and equity investments totaled €36,597 million and had an estimated fair value of €38,081 million (1999: totaled €24,453 million with an estimated fair value of €27,001 million).
(b) Basis for determining the estimated fair value is described in note 4.
Carrying Historical Unrealized Unrealized Fair (in euro millions) Value Cost Gains Losses Value (a) (b)
Total Equity Securities and Mutual Funds 36,106 36,627 10,286 239 46,154
Based on AXA’s principal operations in France, the United States, the United Kingdom, Japan, Australia/
– there was no fixed maturity and / or equity investment in any one issuer, including an issuer’s affiliates, that were in aggregate 10% or more of total shareholders’ equity, or €2,432 million.
The difference between estimated fair value and carrying value of investments constitutes unrealized gains or losses. Upon disposal of the investment, the realization of these unrealized gains and losses (after tax, attribution to participating policyholders (as an increase in insurance benefits) and allocation to minority interests) is recorded in AXA’s net investment results.
TREASURY SHARES The investment holding of the Company’s shares by the Company or its subsidiaries (“treasury shares”)
Balance at Other Balance at (in euro millions) January 1, 2000 Additions Deductions Changes December 31, 2000
Balance at Other Balance at (in euro millions) January 1, 1998 Additions Deductions Changes December 31, 1998
financial statements, along with AXA’s ownership interest percentage. An analysis of carrying value and contribution to net income of equity method investments is shown below: F-24
– Members Equity Pty Ltd – 7 – – 7 5
PPP Columbia (subsidiary of PPP Group) 116 – (116) – – –
National Mutual Life affiliates: – National Commercial Union 54 – (54) – – –
PPP Columbia (subsidiary of PPP Group) – 116 – – 116 4
For the years ended December 31, 2000, 1999 and 1998, AXA received cash dividends from companies accounted for by the equity method of €4 million, €49 million (€40 million from National Commercial Union which was sold in 2000) and €20 million, respectively.
Listed companies : Banco Bilbao Vizcaya Argentaria 130 18,726 2,232 2000 Dec 31, 2000 1.27%
Banque Crédit Marocain 105 380 72 1999 Dec 31, 1999 10.27%
Financial Assets: Mortgage policy and other loans 32,472 32,558 23,921 24,180
Financial Liabilities: Short-term and long-term debt 13,646 13,680 17,103 17,037 4 - Disclosures About Fair Value of Financial Instruments
In respect of short-term and long-term debt, (i) the carrying amount of short-term borrowings approximates its fair value, and (ii) the fair value of long-term debt is determined using published market values, where available, or contractual cash flows discounted at market interest rates reflecting the credit worthiness of the Company or subsidiary issuing the debt. The estimated fair values of financial instruments for which carrying value differs from estimated fair value are as follows: F-26
Deferred acquisition costs related to property and casualty insurance and reinsurance amounted to €1,205 million, €1,003 million and €720 million at December 31, 2000, 1999 and 1998, respectively. In 2000, acquisition costs that relate to unearned premiums were included under the balance sheet caption ”Other assets”.
They were previously under the balance sheet caption “Deferred acquisition costs”.
Deferred acquisition costs, net of unearned revenue reserves, relating to the life insurance operations and the changes in the period indicated are set out below.
At Dec. 31, Year ended December 31, 1999 At Dec. 31, Year ended December 31, 2000 At Dec. 31,
Carrying Structural Currency Amorti- Other Carrying Structural Currency Amorti- Other Carrying Years (in euro millions) value changes (a) changes zation changes value changes (a) changes zation changes value remaining
AXA China Region (including acquisition of minority interest) – 43 – (4) – 39 300 (10) (15) – 314 19
AXA Investment Managers (including AXA Rosenberg) – 136 – (14) – 123 – – (14) – 109 14
Guardian Royal Exchange (without Albingia) – 774 15 (472) – 317 – (1) (13) 123 426 29
AXA Financial Inc. (stocks repurchase) 68 60 – (4) – 123 16 – (7) (60) 72 29
National Mutual (AXA Asia Pacific) 87 – – (5) – 82 – – (5) – 77 15
AXA Aurora (acquisition of minority interests) – – – – – – 104 – – – 104 30
GOODWILL An analysis of goodwill by principal acquisition is presented in the table below.
– €7,316 million in cash including €539 million relating to the cost of settling / exchanging outstanding employee share options of AXA Financial and €89 million of direct transaction costs.
Based on the carrying value of the portion of net assets acquired of €3,913 million, the excess purchase price was €7,301 million. The entire excess purchase price was attributed to goodwill and was recorded as set out below.
– €2,518 million of the excess purchase price was charged directly to retained earnings and reserves in proportion to the value of ordinary shares issued by AXA to total purchase price; and
– €4,782 million of the remaining excess purchase price was recorded as a goodwill asset, of which 80%
The annual charge for goodwill amortization will be €175 million. Had no goodwill been charged directly to retained earnings and reserves, additional goodwill amortization of €92 million would have been recorded against income in future periods.
As a result of the transaction, AXA’s ownership interest in AXA Financial increased from 60% to 100%
and, therefore, 100% of AXA Financial’s post-acquisition operating results, along with goodwill amortization expense will be included in AXA’s consolidated net income in 2001, as the date of acquisition was December 31, 2000.
The purchase price was $3.5 billion (€4.0 billion) and consisted of cash in the amount of $1.5 billion and 40.8 million newly issued private units in Alliance Capital. A portion of the cash was funded by AXA Financial through a financing agreement whereby in June 2000 AXA Financial purchased 32.6 million units of limited partnership interest of Alliance Capital Management L.P. for an aggregate purchase price of $1.6 billion and, as a result, recorded goodwill of €0.5 billion.
The excess purchase price paid by Alliance Capital over the fair value of the net assets acquired in Sanford
As a result of Alliance Capital issuing private units to the former shareholders of Sanford C. Bernstein,
Inc., AXA Financial’s ownership interest in Alliance Capital decreased from 56.3% at January 1, 2000 to 52.8%.
As a result, AXA Financial recorded a realized gain under French GAAP on the disposal of a portion of its ownership interest (see note 13 “Net Investment Results”), which was offset by a provision recorded for a similar amount. The provision was recorded as, in connection with this transaction, AXA Financial agreed to provide liquidity to the former shareholders of Sanford C. Bernstein after a two-year lockout period to allow the 40.8 million private units of limited partnership interest to be sold to AXA Financial over the subsequent eight years (generally not more than 20% of such units may be sold to AXA Financial in any one annual period).
The purchase price was £2.3 billion (approximately €3.7 billion) and was funded principally from the net cash proceeds obtained from the issuance of ordinary shares of AXA in June 2000. The excess purchase price over the carrying value of the portion of net assets acquired was €1,971 million. The entire excess purchase price was attributed to goodwill. Goodwill is being amortized over 30 years, or €66 million per year.
(1) The amount reported in the consolidated financial statements for the six months ended June 30, 2000 was €162 million, which was preliminary as certain valuations were not yet complete.
In November 1999, AXA Australia purchased the minority interests in AXA China Region for HK$4.1 billion
National Mutual Holdings and the parent company of AXA China Region) in 1995.
On December 28, 2000, AXA acquired the 30% interest in AXA Aurora held by Banco Bilbao Vizcaya
Argentaria SA (BBVA) for €205 million. Subsequent to this transaction, AXA Aurora became a wholly-owned subsidiary of AXA. Goodwill recorded in respect of this acquisition was €104 million and is being amortized over 30 years. Concomitantly, AXA Aurora sold its 21.4% ownership interest in Hilo Direct Seguros, a direct selling automobile insurance unit, to BBVA for €8.9 million. Upon completion of the second transaction, AXA and BBVA
The operating results of GRE were included in AXA’s consolidated operating results from the date of acquisition being May 1, 1999.
In 2000 there was deterioration in the claims ratios relating to the former GRE property and casualty insurance portfolios in the United Kingdom and Ireland from the pre-acquisition period. As a result, the opening balance sheet of GRE had been revised and, therefore, goodwill had increased. At December 31, 2000, gross goodwill was €1,261 million, accumulated amortization was €505 million (of which €25 million represented an amortization charge in 2000) and, therefore, goodwill net of accumulated amortization totaled €770 million, after taking account of foreign currency fluctuations of €14 million.
In addition, SLPH issued ordinary shares to partly finance this transaction. Consequently, AXA’s ownership interest in SLPH decreased to 56% from 71.6% at December 31, 1998 and AXA recorded a realized gain on the disposal of a portion of its ownership interest (see note 13 “Net Investment Results”).
In 1998, AXA acquired the minority interests in Royale Belge, which was accounted for under the purchase method of accounting. Goodwill recorded in connection with the buyout of Royale Belge minority interests was €1,137 million at December 31, 1998. The purchase price did not include an amount that AXA could have been required to pay in respect of Certificates of Guaranteed Value. In December 1999, these Certificates were cancelled when the closing price of AXA stock was above FF900 (€137.3) on five out of ten consecutive trading days.
Had no goodwill been charged directly to retained earnings and reserves, additional goodwill amortization of €11 million would have been recorded against income in each of the years ended December 31, 2000 and 1999.
In 1997, AXA acquired UAP, which was accounted for under the purchase method of accounting. The purchase price, which did not include an amount for the Certificates of Guaranteed Value issued in connection with the acquisition, was €5,625 million, of which €1,863 million represented the excess purchase price over the net identifiable assets acquired. The entire excess purchase price was attributed to goodwill.
Had no goodwill been charged directly to retained earnings and reserves, additional goodwill amortization of €53 million would have been recorded against income.
Goodwill from companies accounted for by the equity method – (36) (1)
(a) Amount relates to a change in AXA’s method of accounting for stock options in 1998, as recommended by the COB, the French stock exchange regulator.
Banque Worms was acquired in the UAP acquisition. Prior to 1999 it was included in AXA’s consolidated financial statements at original cost (fair value at date of acquisition) less estimated disposal costs, as it was the
AXA’s intention to sell these operations within one year of the UAP acquisition. The goodwill relating to Banque
Amortization of the value of purchased life business in-force, net of accrued interest, expected to be recorded in each of the next five years is €271 million, €275 million, €264 million, €251 million and €196 million. Such amounts are best estimates based on assumptions regarding anticipated future experience of the purchased business. Accordingly, such amounts are subject to adjustment each year to reflect actual experience.
AXA Colonia: AXA Financial, Inc.: Senior Notes, 7,75% due 2010 (C) 507 –
AXA Asia Pacific Holdings: Bilateral Loan Facility, 5.40% due 2000 – 219
AXA UK Holdings: Syndicated loan, variable rate due 2001 511 480
Guardian Royal Exchange: Wholly-owned and Joint venture Real Estate (AXA Financial, Inc.): Mortgage Notes, 5.87% to 12.00% due through 2006 371 350
Rate (“Euribor’’). At December 31, 2000, the three-month Euribor rate was 4.855%. In addition, a quarterly or semiannual commitment fee is paid on the average daily unused amounts.
In addition, at December 31, 2000, the Company had a €3.0 billion French commercial paper program, of which €2,076 million was in issue (1999: €1.5 billion of which €373 million was in issue).
(B) In December 2000 and in connection with the acquisition of the minority interests in AXA Financial, AXA
borrowed $2.75 billion under a $5.0 billion multi-currency dual tranche credit facility arrangement, in the form of a three-year term loan due on December 31, 2003, denominated in U.S. dollars and Swiss francs.
The interest on the amount is based on Libor or Euribor, as applicable, plus a margin of 0.30% per year during the first year, a margin of 0.325% per year during the second year, and a margin of 0.35% per year during the third and final year. This multi-currency dual tranche credit facility arrangement also included a $2.25 billion 364-day revolving credit facility that was not used and voluntarily cancelled by AXA before December 31, 2000. Subsequent to December 31, 2000, the amount of the borrowing denominated in Swiss francs was repaid (see note 25 “Events Subsequent to December 31, 2000”).
(D) In 1999 Guardian Royal Exchange plc issued loan notes of £156 million (€247 million) with an interest rate
At December 31, 2000, aggregate maturities of long-term financing debt based on required principal payments at maturity for 2001 and the succeeding four years amounted to €928 million, €349 million, €3,146 million, €347 million and €465 million, respectively, and €1,228 million in 2006 and thereafter.
Long-Term Operating Debt: DLJ : Senior Notes, 5.875% due 2002 – 644
Medium Term Notes, 4.995% to 7.42%, due through 2016 – 1,753
Equitable Life: Surplus Notes, 6.95% scheduled to mature 2005 425 396
Nichidan Life: Subordinated Notes, fixed and variable rate, due through 2010 (G) 211 –
(A) In February 1999, the Company issued 2.5% subordinated convertible notes for €1,524 million. In 2000, €6 million of these notes had been converted into AXA ordinary shares. The conversion into shares of all notes issued would result in the issuance of AXA ordinary shares of 9.2 million. The Company has the right to redeem these notes starting in January 2005 at a price of €186.12 per note. The issuance price per note was €165. Unless previously converted, redeemed or cancelled, the notes will mature and become repayable on January 1, 2014 at a price of €230.38 per note.
(C) In March 2000, the Company issued €500 million 7.25% undated subordinated notes to partly finance the acquisition of Nippon Dantai and the buyout of minority interests in AXA China Region. The notes can be redeemed by the Company in full at par (100% of the nominal amount), being €25 per note at any time.
The issuance price per note was €165.50. Unless previously converted, redeemed or cancelled, the notes will mature and become repayable in full on January 1, 2017 at a price of €269.16 per note.
(E) The Company issued four subordinated debt instruments in 2000. The debt has a variable interest rate based on Euribor three-month rates and is scheduled to mature in 20 years with an option to redeem early during the first ten years.
– US dollar tranche - $900 million, due December 15, 2030, at an issue price of 99.712% and with annual interest of 8.60%, paid semi-annually ; – Euro tranche - €650 million, due December 15, 2020, redeemable after 10 years, at an issue price of 99.787% with an annual interest rate of 6.75% for 10 years and thereafter at Euribor 3 months plus 220 basis points paid on a quarterly basis ; and
– Sterling (GBP) tranche - £325 million, due December 15, 2020, at a price of 99.885% and with an annual interest rate of 7.125%.
(G) Nichidan Life (formerly Nippon Dantai) issued various subordinated debt in 1998 to several financial institutions that mature in ten years. The borrowings are primarily variable rate notes. On certain of the notes the interest rate is Libor plus 100 basis points and on other notes the interest rate is the long term prime rate plus 10 basis points (which increases to the long term prime rate plus 50 basis points).
AXA sponsors a variety of pension benefit and retirement indemnity plans covering the majority of AXA
The following table sets forth the change in benefit obligation, change in plan assets and weightedaverage assumptions associated with various pension plan and postretirement benefits. The amounts are recognized in the accompanying balance sheet as at December 31, 2000 and 1999.
Change in benefit obligation: Benefit obligation, beginning of year 7,067 4,586 531 475
Change in plan assets: Fair value of plan assets, beginning of year 7,523 3,909 8 8
Fair value of plan assets, end of year 7,503 7,523 9 8
Reconciliation of Funded Status with Accrued or Prepaid Pension Cost: Unrecognized Prior Service Cost 44 6 (20) (27)
Rate of compensation increase 2.5% to 6.4% 2.5% to 6.4% n/a n/a
The net benefit cost for the years ended December 31, 2000, 1999 and 1998 included the following components: F-43
FAS 88 expenses less Contributions – (17) 22 (2) – –
For other plans with accumulated benefit obligations in excess of plan assets and accrued pension liability as at December 31, 2000, the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans were €1,671 million, €1,708 million and €447 million, respectively (1999: €837 million, €769 million and €51 million, respectively).
UK with-profit contract liabilities 25,111 25,332 – – – – 25,111 25,332
TOTAL INSURANCE RESERVES, NET OF REINSURANCE CEDED 334,448 288,318 29,091 27,956 7,870 7,672 371,410 323,947
Claims and Claims Expenses: Provision attributable to the current year 11,879 2,684 11,222 3,092 9,381 2,821
Total claims and claims expenses 12,127 3,635 10,592 2,969 8,587 2,255
Net reserve for claims and claims expenses, December 31 24,348 6,305 23,481 6,325 18,633 5,444
(a) Reserve for claims and claims expenses of subsidiaries purchased or sold, as of the date of the transaction, reserve for claims and claims expenses acquired or disposed of on a portfolio basis, as of the date of transfer, and other items affecting the reserve balance which have no effect on net income.
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly referred to as
“Superfund”) could affect the liabilities of policyholders and insurers relating to environmentally impaired sites covered by Superfund. Resolution of these uncertainties may ultimately result in additional claim losses.
Under insurance and reinsurance contracts related to environmental pollution and asbestos AXA paid claims and legal costs of approximately €67 million in 2000 (1999: €30 million and 1998: €85 million). At
Net Investment Results Before Intersegment Eliminations 17,781 14,759 13,721 218 227 169 2,865 644 179 20,863 15,630 14,069
Net investment income: Mortgage, policy and other loans 1,451 1,219 1,160 41 55 57 4 4 4 1,496 1,279 1,221
Net Investment Result Before Intersegment Elimination 14,868 11,787 11,373 2,275 2,371 1,845 637 601 503 17,781 14,759 13,721
Credit Suisse Group held by AXA and its affiliates. The realized gain (before minority interests and tax and net of realized and unrealized losses on the shares of Credit Suisse Group received) amounted to €5.4 billion, or €2.0 billion (net group share). The realized gain was allocated to the Life and Savings Segment (€2.5 billion before tax and minority interests, or €0.9 billion net group share) and the holding companies (€2.9 billion before tax and minority interests, or €1.1 billion net group share).
Capital decreased and, therefore, a realized gain of $928 million (before tax and minority interests) was included in the net investment result. This gain was offset by a charge to establish a provision associated with the redemption rights offered by AXA Financial to the former shareholders of Sanford C. Bernstein (see note 6 “Business Combinations”
In 1999, AXA tendered its Paribas stock in the public offer of exchange initiated by BNP. At December 31, 1999, AXA held an 8.3% interest in BNP-Paribas. Based on the average price of BNP stock on the three trading days preceding and following the initial offer made by Societe Generale, the realized gain on this transaction totaled €331 million, group share.
When AXA establishes a fund, the insurance company’s General Account contributes cash or other assets, generally in the form of securities or real estate, to the fund and receives all of the shares of the fund in return.
When French Savings Contracts are issued, shares of the funds supporting such French Savings Contracts are transferred from the General Account to the corresponding Separate Account on a first-in, first-out basis and a gain or loss is recognized by AXA through its General Account for the difference between the fair value of the fund shares and their carrying value. Annual fund income is credited to the policyholders and additional fund
shares are transferred from the General Account to the Separate Account for such income. At contract maturity or redemption, fund shares are transferred back to the General Account, for cash, at fair value and a new cost basis in such shares held in the General Account is established. Such shares are generally held in the General
In the normal course of business, AXA seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results through reinsurance. AXA limits the effect of catastrophic events and certain other risks on the results of its property and casualty insurance subsidiaries by reinsuring against such events and risks on a non-proportional excess of loss basis. AXA’s life insurance subsidiaries reinsure individual mortality risks in excess of amounts that vary by subsidiary, based on the subsidiaries’ financial position. AXA also assumes certain levels of risk in various areas of exposure from other insurance companies or reinsurers. Reinsurance assumed activity is included with direct insurance activity for each of the three insurance segments.
The components of reinsurance ceded, net, as presented in the consolidated statements of income, are summarized as follows: F-50
Insurance benefits and claims ceded (include changes in claims reserves, ceded) 694 411 383 1,072 1,305 744 1,706 936 837 3,472 2,652 1,965
(b) Correction in 1999 to reflect gross premiums earned in Property and Casualty Segment and in International Insurance Segment, previously presented net of certain reinsurance ceded contracts.
A summary of the income tax (expense) benefit in the consolidated income statements is shown below: F-52
French income tax (expense) benefit: Foreign income tax (expense) benefit: The provisions for income taxes are different from the amounts determined by multiplying income before income tax expense by the French statutory income tax rate (38% in 2000, 40% in 1999 and 41 2/3% in 1998).
The sources of differences from the statutory rate and the tax effect of each are as follows: Years ended December 31, (in euro millions) 2000 1999 1998
French income tax (expense) benefit: Income tax expense at statutory rate (3,168) (1,604) (1,450)
Permanent differences relating to: – Operating expenses and other (326) (742) 32
Tax rate differentials and changes in tax rates 463 149 (88)
The components of the net deferred tax asset and net deferred tax liability are as follows: At December 31, 2000 At December 31, 1999 Net Deferred Net Deferred Net Deferred Net Deferred
(a) The change from a net deferred tax liability of €1,280 million at December 31, 1999 to a net deferred tax asset of €397 million is primarily attributable to Nippon Dantai acquired in March 2000 (€1,673 million).
(€45 million) and Belgium (€ 56 million). These net operating loss carryforwards are included in income tax returns that are subject to examination by various tax authorities.
The calculation of basic net income per ordinary share assumes no dilution and is based on the weighted average number of ordinary shares outstanding for the period. The calculation of diluted net income per ordinary share reflects the dilution that would have occurred if potential ordinary shares had been issued and shared in the net income of the Company, if the effect of the potential ordinary shares would have been dilutive. Potential ordinary shares include stock options granted but not exercised and potential ordinary shares on convertible debt (on an ‘if converted’ basis). The weighted average number of share options outstanding during 2000 but not included in the calculation of diluted net income per ordinary share because the exercise price exceeded the average market price of AXA’s shares was 987,529 (1999: 14,188 and 1998: nil).
Net Income Per Ordinary Share (basic) – 10.28 – 5.73 – 4.52
(a) Relates to stock options issued by subsidiaries within AXA which are not 100% owned by AXA, principally AXA Financial (1999 and 1998 only) and its subsidiaries, Alliance Capital (2000, 1999 and 1998) and DLJ (1999 and 1998 only).
Net income excluding exceptional operations 379.54 2,261 352.99 1,865 338.74 1,531
Net Income Per Ordinary Share excluding exceptional operations (basic) – 5.95 – 5.28 – 4.52
Net income excluding exceptional operations attributable to ordinary shares and potentially dilutive securities 405.95 2,311 376.14 1,875 361.67 1,534
AXA uses primarily interest rate swap contracts to manage its exposure to interest rate fluctuations. Interest rate swap contracts allow AXA to raise long-term borrowings at floating rates and swap them into fixed rates that are lower than those available to AXA if fixed-rate borrowings were obtained directly. Under interest rate swap contracts, AXA agrees with other parties to exchange, at specified intervals, fixed-rate and floating-rate interest amounts calculated by reference to an agreed-upon notional principal amount. AXA is exposed to the credit risk of the counterparty to the extent that amounts are due to AXA if the swap contract was terminated currently, but AXA has no credit risk related to notional principal amounts. The notional amounts do not represent the amounts actually exchanged by the parties and thus are not a measure of AXA’s exposure under these interest rate swap contracts. Gains and losses related to interest rate swap transactions are amortized as yield adjustments over the remaining life of the underlying hedged security and are reflected in net investment income.
The notional amount of interest rate swaps (representing asset and liability positions) outstanding at
Life on these contracts was €51 million and is being amortized ratably over the contract periods ranging from one to three years. Income and expense resulting from this program are reflected as an adjustment to interest credited to policyholders’ account balances.
At December 31, 2000, the notional value of interest rate derivatives, foreign currency derivatives and options was €97,109 million, €2,160 million and €430 million, respectively (1999: €64,969 million, €1,214 million and €377 million, respectively). The fair value of these derivative instruments at December 31, 2000 totaled €374 million (1999: €46 million).
On August 25, 1998, AXA and certain other European insurers signed a Memorandum of Understanding with certain U.S. insurance regulators and non-governmental Jewish organizations agreeing to the establishment of the International Commission on Holocaust Era Insurance Claims (“ICHEIC”). The ICHEIC is currently conducting an investigatory process to determine the current status of life insurance policies issued to Holocaust victims between 1920 and 1945 and has established a claims and valuation process designed to settle valid claims filed with the ICHEIC with respect to any such policies which remain unpaid. The ICHEIC process is ongoing and AXA continues to actively participate in that process and pursue a dialogue with U.S. Jewish organizations,
United States (the “German Foundation Initiative”) as it relates to the German insurance industry. In France, AXA
is actively cooperating with the Matteoli Commission, a governmental commission investigating Holocaust era issues, and AXA’s French subsidiaries have contributed €3.5 million (out of a total of €10.5 million contributed by the French insurance industry) to the “Fonds pour la Mémoire”, a French government Holocaust-related initiative.
Additionally, financial guarantees are provided to customers and other financial institutions. Such commitments are noted in the following table: At December 31,
the German Foundation Initiative. With respect to claims concerning life insurance policies issued by AXA’s affiliates in other European countries, particularly France and Belgium, a global settlement agreement is in the course of being negotiated. In the United States, two class action litigations concerning Holocaust era insurance policies that had been pending against certain AXA Group companies as well as various other European insurers in
U.S. jurisdictions and/or future Holocaust related litigation) and the likelihood that these uncertainties and complexities will not be fully resolved in the near future, AXA management is not in a position at this time to make an estimate of loss or predict whether or not these matters will have a material adverse effect on AXA’s the consolidated results of operations in any particular period.
States, Equitable Life and certain of its subsidiaries are involved in such litigation. In addition, AXA’s U.S. subsidiaries
AXA Financial and Alliance Capital, which have been filed with the U.S. SEC. In the United Kingdom, life insurers, including AXA Sun Life, have been subject to governmental investigations regarding sales practices, agent misconduct or misrepresentation and certain other matters, particularly in connection with sales of pension products. In addition, certain AXA subsidiaries have been involved in litigation in both the United States and United Kingdom concerning the validity of, and scope of coverage under, insurance and reinsurance contracts issued by them in connection with financing of various film productions. Some of these lawsuits have been brought on behalf of various alleged classes of claimants, and certain of the claimants in these actions seek significant or unspecified amounts of damages, including punitive damages. In some jurisdictions, juries have substantial discretion in awarding punitive damages.
lawsuits and investigations, AXA’s management cannot make an estimate of loss, if any, or predict whether or not such lawsuits or investigations will have a material adverse effect on the AXA’s consolidated results of operations in any particular period.
In addition to the matters described above, AXA and certain of its subsidiaries are involved in various legal actions and proceedings of a character normally incident to their business. Some of these actions and proceedings have been brought on behalf of various alleged classes of claimants, and certain of these claimants seek significant or unspecified amounts of damages, including punitive damages. While the ultimate outcome of such matters cannot be predicted with certainty, based on information currently available to it, in the opinion of management no such matter is likely to have a material adverse effect on the consolidated financial position or results of operations of AXA, taken as a whole.
AXA’s principal insurance operations in France, the United States, the United Kingdom, Japan (2000 only),
Maximum amount of dividends that could be paid by these operations without prior regulatory appoval 3,030 728 2,492 479
(the Company) at a price generally between 90% and 100% of the market price of the ordinary shares at the date of grant. Options have a maximum term of ten years and generally become exercisable in installments of 25% per year on each of the second through fourth anniversaries of the grant date with the final 25% on either the fifth or ninth anniversary.
A summary of the status of the Company’s stock options for the periods indicated is presented below: F-59
Options available for future grants at year end 353,172 2,357,430 774,781
21 - Related Party Transactions From time to time, AXA enters into agreements and transactions with its subsidiaries and affiliates for various business purposes including the furnishing of services and/or financing of operating activities. These agreements and transactions are generally negotiated on an arms-length basis and reflect prevailing market terms and conditions for similar transactions at the time they are implemented.
The non-exclusive license grants AXA the right, subject to the prior written approval of Finaxa, to grant sublicenses to companies controlled, directly or indirectly, by AXA. Finaxa has no obligation to grant any such approval. Over the past several years, a number of AXA’s principal subsidiaries around the world have begun to use the AXA name pursuant to sublicenses granted by AXA. AXA is obligated to pay Finaxa pursuant to the licensing agreement an annual fee of €762,245 as well as 50% of any net royalties received from sublicensees.
Acquisition of the Minority Interest in AXA Financial. AXA’s acquisition of the minority shareholders in AXA Financial was partially financed through a financing arrangement between AXA and AXA Financial and
Chief Executive Officer of AXA Financial and vice chairman of AXA’s Management Board; Michael Hegarty, Vice
Chairman and Chief Operating Officer of AXA Financial and an Executive Officer of AXA; and Stanley Tulin, Vice
Chairman and Chief Financial Officer of AXA Financial an Executive Officer of AXA.
AXA offered SLPH shareholders a choice between cash and an AXA loan note, an AXA debt obligation.
AXA has five operating business segments: Life and Savings (formerly the Life Insurance Segment), Property and Casualty, International Insurance, Asset Management and Other Financial Services. In addition, non-operating activities are conducted by the holding companies. The financial information for AXA’s business segments, and the holding company activities, is presented on a French GAAP basis and is consistent with the presentation provided in the consolidated financial statements presented herein.
(1998), GRE (1999) and Nippon Dantai and Sanford C. Bernstein (2000) (see note 6 “Business Combinations”).
reporting and analysis, to more closely align the business segments with the basis used by management to evaluate performance and to allocate resources in line with the Company’s strategic objectives, AXA has realigned its operating business segments and sub-segments over the course of the past three years. In all cases, the prior years’ amounts have been restated accordingly for consistency.
Solutions Insurance, formerly named AXA Global Risks), which covered all aspects of global large risk insurance and reinsurance risk cover.
and services (such as financial planning services, sales of mutual fund investments) that are designed to meet a broad range of its customers’ needs throughout their financial life-cycles).
Property and Casualty Segment products and services. Includes a full range of products including principally automobile and homeowners’ insurance to individuals and commercial property and liability insurance to corporate customers, including workers’ compensation benefits.
Year ended December 31, 2000 Life Property Other and and International Asset Financial Holding
Total benefits, claims and other deductions (56,306) (17,344) (3,881) (2,317) (11,248) (124) (91,218)
Year ended December 31, 1999 Life Property Other and and International Asset Financial Holding
Total benefits, claims and other deductions (46,787) (15,264) (3,511) (1,629) (10,021) (137) (77,353)
Income before income tax expense 1,967 927 (24) 510 977 458 4,816
Year ended December 31, 1998 Life Property Other and and International Asset Financial Holding
Change in unearned premium reserve (5) 11 26 – – – 32
Information on the net investment results by segment is presented in note 13 “Net Investment Results”.
(in euro millions) Savings and Casualty Insurance Insurance Management Services companies Total
By nature of expense: Including: (a) Represents total acquisition expenses as presented in the statement of income including amortization expense for value of purchased life business in-force (VBI) and the change in deferred acquisition costs (DAC) net of changes in unearned premium reserves.
(b) Before amortization of value of purchased business in-force, the change in deferred acquisition costs and the change in unearned premium reserves. (c) Such costs are included within “insurance benefits and claims” in the consolidated statement of income. (d) Such costs are included within “net investment results” in the consolidated statement of income.
Year ended December 31, 1999 Life Other and Property International Total Asset Financial Holding
Year ended December 31, 1998 Life Other and Property International Total Asset Financial Holding
Mortgage, policy and other loans 26,014 26,084 6,233 6,250 225 224 32,472 32,558
Assets allocated to UK with-profit contracts 25,111 25,111 – – – – 25,111 25,111
Securities purchased under resale agreements – – 2,093 2,093 – – 2,093 2,093
Investments in companies accounted for by the equity method 787 787 122 122 499 499 1,408 1,408
BY INSURANCE SEGMENT: At December 31, 2000 Life and Savings Property & Casualty International Insurance Total Carrying Fair Carrying Fair Carrying Fair Carrying Fair
Investments in companies accounted for by the equity method 455 455 191 191 – – 646 646
BY INSURANCE SEGMENT: At December 31, 1999 Life and Savings Property & Casualty International Insurance Total Carrying Fair Carrying Fair Carrying Fair Carrying Fair
Investments in companies accounted for by the equity method 596 596 191 191 – – 787 787
At December 31, 2000 Year ended December 31, 2000 Number Salaries and benefits of employees (a) (in euro millions)
(a) The balance at December 31, 2000 included pension obligations attributable to Nippon Dantai (acquired in March 2000) of €355 million and the cost of settling / exchanging outstanding employee share options in AXA Financial of €539 million (net of tax) from the buyout of minority interests by AXA.
Other liabilities include provisions for risks and charges set out in the table below.
The provision for restructuring costs and charges thereto are presented in the tables below for the years indicated.
(in euro millions) in purchase Other in purchase Other accounting provisions Total accounting provisions Total
Additions to Existing Provisions: Purchase Accounting Adjustment – – – 208 – 208
Release of Provision via Payments (114) (107) (221) (273) (91) (364)
In addition, in 2000 a provision was recorded in respect of (i) the restructuring of AXA’s Australian operations of €34 million, of which €12 million was used in 2000, and (ii) AXA France Assurance holding company of
• United Kingdom. Subsequent to the GRE acquisition, a program to restructure property and casualty operations was undertaken. The costs related to implementing this program, which is scheduled for completion in 2001, are estimated at €174 million, of which €114 million was recorded in the opening balance sheet and €39 million was charged to 1999 income.
OTHER LIABILITIES In conjunction with the acquisition of Sanford C. Bernstein, Inc., AXA Financial provided redemption rights to the former shareholders of Sanford C. Bernstein, Inc. after a two-year lockout period and over a subsequent eight-year period (maximum of 20% per year). As a result of this contingency, a provision equal to the amount of the AXA Financial dilution gain of €928 million (before tax and minority interests) has been recorded in 2000
24 - Principal Subsidiaries and Companies Accounted for under the Equity Method
The following table lists the companies consolidated or included by the equity method of accounting as well as the Company’s share of the subsidiary’s voting rights and direct and indirect ownership interest, at
– In Morocco, AXA Al Amane Assurance was renamed AXA Assurance Maroc.
Parent and Holding Companies Voting Ownership Voting Ownership rights interest rights interest France Parent Parent
Asia/Pacific AXA Nichidan Insurance Holdings (*) 96.39 96.39 – – AXA Insurance Investment Holding 100.00 100.00 100.00 100.00 AXA Asia Pacific Holdings Ltd 51.00 51.00 51.00 47.11
(*) Consolidated for the first time in 2000. (**) The voting rights and ownership interest in AXA Financial, Inc. reflects the consummation of the merger between AXA Merger Corp. (a wholly-owned subsidiary of AXA created specifically for the purpose of effecting the AXA Financial transaction) with and into AXA Financial, Inc. on January 2, 2001.
Insurance and reinsurance Voting Ownership Voting Ownership rights interest rights interest France
United States AXA America Corporate Solutions, Inc. 100.00 99.70 100.00 99.72 AXA Corporate Solutions Insurance Co. 100.00 99.70 100.00 98.04 AXA Corporate Solutions Life Reinsurance Co. 100.00 99.70 100.00 99.72 AXA Corporate Solutions Reinsurance Co. 100.00 99.70 100.00 99.72 AXA Corporate Solutions Property & Casualty (*) 100.00 99.70 – – AXA Corporate Solutions America Insurance Co. (*) 100.00 99.70 – – The Equitable Life Insurance Soc. (**) 100.00 99.99 100.00 58.43
United Kingdom AXA Equity & Law Life Insurance Soc. 100.00 99.99 100.00 56.31 AXA Global Risks UK Ltd 100.00 99.70 100.00 98.49
Ireland Guardian Dublin Docks – – 100.00 56.31 Guardian PMPA Group Ltd 100.00 99.99 100.00 56.31
AXA Life Insurance – – 100.00 100.00 AXA Life Hong Kong – – 100.00 100.00
(*) Consolidated for the first time in 2000. (**) The voting rights and ownership interest in AXA Financial, Inc. reflects the consummation of the merger between AXA Merger Corp. (a wholly-owned subsidiary of AXA created specifically for the purpose of effecting the AXA Financial transaction) with and into AXA Financial, Inc. an January 2, 2001.
Insurance and reinsurance Voting Ownership Voting Ownership rights interest rights interest Germany
Albingia Lebenversicherung – – 100.00 85.17 Albingia Versicherung – – 98.98 85.17
Austria AXA Nordstern Colonia Versicherung 100.00 90.17 100.00 86.04 AXA Nordstern Colonia Leben 100.00 90.17 100.00 86.04
Ayuda Legal de Seguros y Reaseguros 100.00 99.67 100.00 69.65 Hilo Direct de Seguros y Reaseguros 50.00 50.00 71.43 49.89
Financial services Voting Ownership Voting Ownership rights interest rights interest France
Colisée Delcassé – – 99.98 94.87 Colisée Jeûneurs – – 99.98 94.87 Colisée Saint-Georges SA – – 100.00 100.00
Asia/Pacific AXA Investment Managers Hong Kong 100.00 94.90 100.00 93.79 AXA Investment Managers Hong Kong SAR 100.00 94.90 100.00 93.79 AXA Investment Managers Tokyo 100.00 94.90 100.00 93.79 National Mutual Funds Management (19 companies) 100.00 51.00 100.00 47.11
DISPOSALS Following the letter of intent executed in October 2000, on February 6, 2001 AXA agreed to sell Banque
INHERITED ESTATE OF AXA EQUITY & LAW On December 22, 2000, the High Court of Justice in the United Kingdom approved the financial reorganization plan that AXA Equity & Law submitted to its policyholders, according to which a portion of the assets of AXA Equity & Law that had accumulated over the years (referred to as the “Inherited Estate”) would be attributed to AXA as the shareholder, and the remainder would be attributed to policyholders in the form of a reorganization bonus. In addition, policyholders who elected to support the proposal will receive cash payments made by AXA. In the absence of appeal, the High Court approval became irrevocable in January 2001.
When policyholders voted on AXA’s proposal in October 2000, the holders of 542,000 policies, representing 79% of the policies by value, elected to accept AXA’s proposal. The reorganization became effective on April 1, 2001. At such time, AXA (i) has set aside the sum of £225 million to pay additional future bonuses to the policyholders, and (ii) started to make cash payments (which will continue during April 2001), which will amount to, on average, £400 per contract to policyholders who elected to accept the proposal (for a total of approximately £227 million).
The accounting impact relating to this transaction is currently under review as the financial reorganization is not expected to be completed until July 2001.
AXA ADS, and (iii) AXA Financial became a wholly-owned subsidiary of AXA. 4.9 million of ordinary shares were issued in connection with the merger and thereby increased AXA’s shareholders’ equity by €0.7 billion. In addition and upon completion of the merger, all of the outstanding employee stock options in AXA Financial common stock were either settled in cash or exchanged into options in AXA ordinary shares (in the form of AXA ADSs).
The number of AXA Financial stock options that were exchanged into options in AXA ADSs amounted to 9.1 million (or an equivalent of 4.5 million AXA ordinary shares), of which 8.5 million (or an equivalent of 4.2 million
The proceeds were used to pay down a portion of the $2.75 billion three-year term loan (borrowed in December 2000 to partly fund the buyout of minority interests in AXA Financial) denominated in Swiss francs. At the end of February 2001, the outstanding balance on the three-year term loan totaled $1,810 million and was denominated in U.S. dollars.
In March 2000, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 44 “Accounting for Certain Transactions Involving Stock Compensation – an Interpretation of APB Opinion No. 25” (“FIN 44”).
FIN 44 clarifies the application of APB Opinion No. 25 regarding the definition of an employee, the criteria for determining a non-compensatory plan, the accounting for changes to the terms of previously fixed share option plans or awards, the accounting for an exchange of stock options (share options) in a business combination
AXA’s financial condition and operating results under U.S. GAAP. However, as a result of the acquisition of minority interests in AXA Financial, under U.S. GAAP, the cost of exchanging / settling the outstanding employee stock options of AXA Financial was not permitted to be included in the purchase price as under French GAAP, but was recorded as an immediate charge against income in 2000.
In September 2000, FASB issued Statement of Financial Accounting Standards No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement
GAAP, are included in the consolidated financial statements using the equity method of accounting. Under the equity method of accounting the investment is carried at cost of acquisition, plus the share in undistributed earnings or losses since acquisition and less amortization of goodwill.
(including mutual funds) owned by French life insurance subsidiaries using the cost method. Under U.S. GAAP, such entities are either accounted for using the equity method or consolidated as AXA either exercises significant influence over or controls such entities, respectively. In consolidating mutual funds for U.S. GAAP purposes, investment securities held by the funds are carried at estimated fair value and changes in estimated fair value are included in net income.
• Under French GAAP, Certificates of Guaranteed Value issued in connection with an acquisition are not recorded as part of the purchase price but are off-balance sheet liabilities until the maturity date. Under U.S. GAAP, at the date of acquisition these certificates are recorded at fair value and included in the purchase price: such instruments are classified as debt with the change in fair value recorded in earnings until cancelled or settled.
Under French GAAP, in respect of acquisitions of insurance companies, in general, the portion of assets acquired and liabilities assumed, other than certain fixed maturities and non-insurance liabilities, are recorded at their estimated fair value; however, insurance liabilities are maintained at historical cost if the basis for measuring such value is consistent with the French accounting principles. Acquired assets and liabilities of a non-insurance company are maintained at their historical cost (carrying value) except for real estate, which is recorded at estimated fair value. The portion of assets acquired and liabilities assumed in connection with a buyout of minority interests are maintained at carrying value at date of acquisition. Under U.S. GAAP and in respect of all acquisitions, including the buyout of minority interests, the portion of assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition.
Under French GAAP, revisions can be made up to the end of financial year following the acquisition.
Under U.S. GAAP, revisions for outstanding contingencies can be made up to 12 months from the date of acquisition.
Under French GAAP, valuation allowances are recorded for declines in the value of real estate deemed to be other than temporary. Under U.S. GAAP, impairments in the value of real estate investments are evaluated
on the estimated future undiscounted cash flows and may be consequently remeasured at the lower of the carrying value or fair value less selling costs.
Under French GAAP for insurance companies, fixed maturities and equity investments are carried at amortized cost and original cost, respectively, less valuation allowances. Such valuation allowances are eliminated for U.S. GAAP
as fixed maturity and equity securities are written down directly, but only for declines in value deemed to be other than temporary.
Under U.S. GAAP, which has developed in a different environment from that in which the UK with-profit contract was developed, fixed maturity and equity investments allocated to UK with-profit contracts are classified as available-for-sale. Therefore, the entire change in net unrealized investment gains or losses on such assets are not recognized in income but recorded in other comprehensive income (a separate component of shareholders’ equity).
Real estate assets allocated to UK with-profit contracts are carried at cost, less accumulated depreciation and subject to impairment testing. Consequently, U.S. GAAP requires that the change in unrealized gains and losses on assets allocated to UK with-profit contracts be excluded from net income, while requiring recognition of a corresponding change in the liability for UK with-profit policyholder benefits in net income. Accordingly, AXA believes that this exclusion under U.S. GAAP results in amounts that do not reflect fully the economic effect of the UK with-profit contracts. An increase in the estimated fair value of these assets results in an increase in the liability for policyholder benefits, and a reduction of AXA’s consolidated net income. A decrease in the estimated fair value of assets results in a decrease in the liability for policyholder benefits, and an increase in AXA’s consolidated net income.
FUTURE POLICY BENEFITS AXA’s European Subsidiaries (excluding the UK and the Netherlands). Under French GAAP, AXA’s European subsidiaries calculate future policy benefits in accordance with the applicable regulatory and accounting rules using actuarial assumptions relating to investment yields, mortality, morbidity and expenses. Contracts are assumed to remain in-force until their contractual maturity date or the death of the insured.
AXA’s non-European subsidiaries, the UK, the Netherlands (excluding Equitable Life). For AXA’s non-
Equitable Life. For French GAAP purposes, in 1996 Equitable Life changed its method of accounting for certain long-duration participating life insurance contracts in accordance with the provisions prescribed by FAS
Long-Duration Participating Contracts’’. Management has elected not to implement FAS 120 for AXA’s consolidated financial statements under U.S. GAAP and accordingly has maintained its previous U.S. GAAP methodology for all long-duration participating life insurance contracts.
AXA operates, AXA provides a catastrophe equalization reserve for future catastrophe and other unusual losses.
U.S. GAAP does not permit recording reserves for such losses until incurred.
SHARES ISSUED BY A SUBSIDIARY (DILUTION GAINS) When a subsidiary of AXA issues shares, this decreases (dilutes) AXA’s ownership interest in that subsidiary and is treated as a partial disposal of the investment in that subsidiary.
– As described in note 6 “Business Combinations”, AXA’s ownership interest in SLPH decreased from 71% to 56% in connection with the GRE acquisition. Based on the value of the net assets disposed, an after-tax gain of €486 million (group share) was recorded in income under French GAAP as compared to an aftertax gain of €425 million (group share) recorded in income under U.S. GAAP, or a difference of €61 million.
equity under French GAAP. At the point in time a portion or all of the issued shares are repurchased, a portion or all of the provision will be released with a corresponding reduction in goodwill arising on the acquisition.
Under U.S. GAAP, the after-tax gain is accounted for as a capital transaction and recorded in shareholders’
Inc., (i) AXA Financial’s percentage ownership in Alliance Capital decreased from 56.3% to 52.8% and, therefore, a realized gain of €928 million (before tax and minority interests) was recorded and (ii) AXA
Financial provided redemption rights to the former shareholders. Under French GAAP, the gain of €928 million was recorded and fully offset by a corresponding provision whereas under U.S. GAAP the after-tax gain (group share) of €326 million was recorded in shareholders’ equity.
(ii) the loss is a result of a permanent impairment. Under U.S. GAAP, all gains or losses on intercompany sales of assets are eliminated with appropriate recognition given for asset impairment.
Under U.S. GAAP, such gains are proportionately recognized when the Savings Contracts are issued or the fund shares are sold to entities not included in the consolidated financial statements.
Long term debt with early redemption rights. Under French GAAP when long term debt is issued with early redemption rights whereby the redemption price is in excess of the original issue price per bond or note, the excess premium may not be amortized over the period from original issue date to earliest redemption period.
Under U.S. GAAP, as the value of the long term debt accretes according to the stated redemption price, this accretion, if significant, is amortized over the period up to earliest redemption date and is recorded as interest expense with a corresponding increase in the value of the principal outstanding in the balance sheet.
Unrealized investment gains on real estate allocated to UK with-profit contracts (273) (214)
In respect of significant acquisitions, material accounting differences between French GAAP and U.S. GAAP
and U.S. GAAP, and (iii) the portion of goodwill charged directly to shareholders’ equity when ordinary shares of AXA were issued.
Professional fees and other direct transaction expenses 28 28 85 89
Less: portion of net assets acquired (a) 2,514 1,766 4,096 3,913
(a) Net assets, which were previously attributed to minority interests in AXA’s consolidated balance sheet. (b) Under both French GAAP and U.S. GAAP, the goodwill asset is amortized over 20 years (asset management operations) and 30 years
and U.S. GAAP, the goodwill asset is being amortized over 30 years. Consequently, the annual goodwill amortization charge under U.S. GAAP is €5 million lower than the annual goodwill amortization charge under French GAAP.
UAP (1997). Under French GAAP, gross goodwill totaled €1,919 million at December 31, 2000 of which €1,630 million charged directly to retained earnings and reserves as AXA issued and exchanged shares in connection with the transaction. The goodwill asset under French GAAP was €289 million as compared to the goodwill asset under U.S. GAAP of €2,137 million, or a difference €1,848 million. Under both French GAAP
and U.S. GAAP, the goodwill asset is being amortized over 30 years. Consequently, the annual goodwill amortization charge under U.S. GAAP is €61 million higher than the goodwill amortization charge under French GAAP.
27 - Condensed U.S. GAAP Financial Statements and Additional U.S. GAAP Disclosures
DISCONTINUED OPERATIONS Under U.S. GAAP, the sale of a reportable segment (or a significant portion thereof) is subject to specific disclosure requirements. The sale of DLJ, completed on November 3, 2000, resulted in discontinued operation accounting treatment and, therefore, (i) the condensed consolidated statements of income under U.S. GAAP
for the three years ended December 31, 2000 present separately the net income and net income per ordinary share (on a basic and diluted basis) arising from continuing operations and discontinued operations of DLJ (including the gain realized on the sale), and (ii) the condensed consolidated balance sheets under U.S. GAAP as at December 31, 2000 and 1999 present separately the net assets attributable to DLJ as a single line item. Such presentational requirements do not exist under French GAAP.
Under U.S. GAAP, insurance contracts which have either flexible premiums or insignificant mortality or morbidity risk are deemed investment contracts. For these types of contracts, only the policy charges assessed against the policyholder are recorded as revenue and only the actual costs borne by the insurance company to administer and manage such contracts are recorded as an expense. The premiums received less policy charges are credited directly to the liability for future policy benefits (for universal life contracts) or separate account (unit linked) liabilities, as appropriate. In a corresponding manner, benefit payments are directly charged to such liability, rather than being included in benefits, claims and other deductions.
Given the impact on both revenues and expenses, there is no difference between net income reported under French GAAP and, therefore, it only represents a difference in presentation.
CLOSED BLOCK BUSINESS IN EQUITABLE LIFE The business of AXA Financial includes a Closed Block of participating policies established in connection with the demutualization of The Equitable Life Assurance Society of the United States (“Equitable Life”). Under the terms of the demutualization, liabilities for certain participating policies in-force at the date of demutualization together with an amount of assets were segregated into the Closed Block for the purpose of determining policyholder dividends. The maximum contribution from the Closed Block that may inure to the benefit of Equitable Life’s shareholders was determined at the time the Closed Block was established. For most individual participating policies issued by Equitable Life after its demutualization, Equitable Life is subject to regulations which require it to pay policyholder dividends equal to at least 90% of statutory profits (measured before policyholder dividends) attributable to participating products. The liability for annual policyholder dividends is recorded as earned and terminal dividends are accrued in proportion to gross margins over the life of the contract.
TOTAL LIABILITIES, MINORITY INTERESTS, SUBORDINATED DEBT, MANDATORILY CONVERTIBLE BONDS AND NOTES, AND SHAREHOLDERS’ EQUITY 499,161 499,551 474,616
(a) U.S. GAAP, except for adjustment for the unrealized investment gains on real estate and related deferred tax asset allocated to UK withprofits contracts.
Future policy benefits, other policy liabilities, insurance claims and claims expenses 218,598 218,598 214,946
Change in unearned premium reserves, net of reinsurance (395) (395) (405)
(b) Total revenues attributable to the discontinued DLJ operations were €10,894 million under both French GAAP and U.S. GAAP.
Change in unearned premium reserves, net of reinsurance 32 32 (17)
Income from continuing operations before income tax expense 970 3,566 3,139
(a) U.S. GAAP, except for adjustment for the increase in net unrealized investment gains and losses on assets allocated to UK with-profit contracts of €1,030 million.
Income from continuing operations before income tax expense 1,261 2,696 3,230
Income from discontinued DLJ operations, net of tax 129 129 129
(b) Total revenues attributable to the discontinued DLJ operations were €7,595 million under both French GAAP and U.S. GAAP.
(a) U.S. GAAP, except for adjustment for the increase in net unrealized investment gains and losses on assets allocated to UK with-profit contracts. (b) In 2000, general expenses that were allocated previously to intermediate holding cmpanies were reallocated to the relevant operating subsidiaries
Impact of foreign currency fluctuations (302) (322) 636 981 (252) (417)
Comprehensive income, being net income plus the change in other comprehensive income in accordance with U.S. GAAP totaled €1,586 million, € 2,227 million and € 2,377 million in 2000, 1999 and 1998, respectively.
Dilutive securities issued by subsidiaries (5) (32) (17) (5) (12) (7)
Interest on assumed conversion of convertible bonds 9 19 20 9 19 20
(e) 1999 data was restated as the subordinated convertible debt issued in 1999 became anti-dilutive as a result of the U.S. GAAP accounting treatment for DLJ discontinued operation and its impact on the calculation of net income per ordinary share on a diluted basis.
under U.S. GAAP. Under French GAAP, the potential conversion of these two subordinated convertible debt instruments were included in the calculation of net income pper ordinary share (diluted).
Such net unrealized gains were: • net of deferred taxes of €3,454 million and €4,150 million, respectively; and
DEFERRED TAX Differences between the French GAAP and U.S. GAAP components of the net deferred tax asset and liability are as follows: F-99
Net Deferred Tax Asset Net Deferred Tax Liability French Adjusted U.S. French Adjusted U.S.
EMPLOYEE BENEFIT PLANS AXA Financial recorded, as a reduction of its shareholders’ equity, an additional minimum pension liability
(net of tax) of €14 million and €16 million at December 31, 2000 and 1999, respectively, under U.S. GAAP.
The German subsidiaries also recorded as a reduction of its shareholders’ equity an additional minimum pension liability (net of tax) of €55 million and €52 million at December 31, 2000 and 1999, respectively. This liability which primarily represents the excess of the accumulated benefit obligation over the fair value of plan assets and accrued pension liability is not recorded under French GAAP.
“Accounting for stock-based compensation” which requires disclosure of the cost to AXA of share options granted on or after January 1, 1995, based on the fair value of the options on the date they were granted. Had AXA
Years ended December 31, (in euro millions except per share amounts) 2000 1999 1998
This information is additional to that required under French GAAP and should be read in conjunction with note 6 “Business Combinations”.
The unaudited pro forma consolidated results of operations have been prepared in accordance with French
The following summarized unaudited pro forma information presents the consolidated results of operations of AXA for the years ended December 31, 1999 and 1998 and assume the GRE acquisition had taken place on January 1st, of each year and: (i) excludes the exceptional amortization of goodwill of €446 million (€259 million, group share) which was recorded against the French GAAP earnings in 1999 relating to a significant deficiency in insurance claims reserves of the acquired companies at date of acquisition,
(iii) includes an adjustment to reflect the decrease in earnings in SLPH consolidated by AXA due to the dilution of AXA’s ownership interest in SLPH arising from the transaction (decrease of €18 million for the four months prior to the GRE acquisition in 1999 and €38 million in 1998), and
(iv) the amounts include GRE’s pro forma results for the full year of 1998 and for the first four months of 1999 prior to the acquisition, and actual results for the post-acquisition eight-month period in 1999, for those
GRE operations acquired and retained by AXA. The pro forma results were, for the pre-acquisition period, determined using the historical financial statements of GRE prepared under generally accepted accounting principles in the United Kingdom and adjusted in certain material respects to conform with French GAAP.
In addition, the pro forma results include amortization of the intangible assets and interest expense on debt issued to finance the purchase.
Years ended December 31, (in euro millions except for per share data) 2000 1999
(c) Guardian Royal Exchange is a subsidiary of SLPH, its results are also included for a full year in 1999 on a pro forma basis for the first four months of 1999 prior to its acquisition, and actual results for the post-acquisition eight-month period in 1999.
IMPACT OF THE BUYOUT OF THE MINORITY INTERESTS IN AXA FINANCIAL
The following summarized unaudited pro forma information presents the consolidated results of operations of AXA for the years ended December 31, 2000 and 1999 and assumes that the acquisitions of the minority interests in AXA Financial and in Sun Life & Provincial Holdings (SLPH) had taken place on January 1st, of each year:
As noted in note 25 “Events Subsequent to December 31, 2000”, on May 9, 2001 the shareholders of
AXA approved a 4-for-1 stock split of AXA’s outstanding ordinary shares listed on the ParisBourse. Immediately following this stock split, which became effective on May 16, 2001, the ratio between the AXA ordinary share and the ADS was changed from one ADS representing one-half of an ordinary share to one ADS representing one ordinary share.
The table presents unaudited pro forma information on net income per ordinary share in accordance with U.S. GAAP relating to the stock split.
Net income per ordinary share Income from continuing operations per ordinary share (a)
U.S. GAAP U.S. GAAP Years ended December 31, Years ended December 31,
In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133 (“FAS 133”) “Accounting for Derivative Instruments and Hedging Activities”. In June 1999, the FASB issued Statement of Financial Accounting
• Fair Value Hedges: The derivative is designated as hedging the changes in fair value exposures. The change in fair value of the derivative is recorded in income along with the associated gain or loss on the hedged item attributable to the risk being hedged.
• No hedge designation. The change in fair value of the derivative is recorded in income.
In December 2000, the American Institute of Certified Public Accountants (the “AICPA”) issued Statement of Position No. 00-3 “Accounting by Insurance Enterprises for Demutualizations and Formations of Mutual Insurance
Holding Companies and for Certain Long-Duration Participating Contracts” (“SOP 00-3”). Equitable Life’s demutualization occurred in July 1992 and, therefore, before December 31, 2000. SOP 00-3 should be applied retroactively through restatement or reclassification. However, if implementation is impracticable because the demutualization occurred many years prior to January 1, 2001, no retroactive restatement is required. AXA Financial has determined it is not practicable to produce an actuarial calculation as of the July 1992 demutualization date.
Therefore, SOP 00-3 will be adopted prospectively as at January 1, 2001 with no financial impact associated with its initial implementation. However, future income from our U.S. life operations in Equitable Life will be affected to the extent actual Closed Block earnings exceed those assumed at January 1, 2001.
Ordinary shares, nominal value in the aggregate of €9.15 per ordinary share: 3,809 3,260 525.5 million shares authorized and 416.2 million shares issued at December 31, 2000 and 465.6 million shares authorized and 356.3 million shares issued at December 31, 1999
Total liabilities, subordinated debt, bonds mandatorily convertible bonds and notes, and shareholders’ equity 39,762 21,369
Cash flows from investing activities: Maturities and sales of investments 978 1,170 1,573
Cash flows from financing activities: Additions to debt 7,436 2,769 4,883
(a) Includes a liability at December 31, 2000 of €2,998 million, which relates to the amount of cash to be paid by AXA (the Company) in January and February 2001 in connection with the buyout of the minority interests in AXA Financial.
(b) In 2000, non-cash transactions, whereby ordinary shares of AXA were either issued or exchanged, included: (i) conversion of the mandatorily convertible bonds that matured in January 2001 of €282 million, (ii) the merger of AXA Participations (an existing wholly-owned subsidiary) with and into AXA (the Company) of €216 million, and (iii) ordinary shares exchanged in connection with AXA’s buyout of minority interests in AXA Financial of €3,131 million as at December 31, 2000. See note 25 to AXA’s consolidated financial statements for information relating to the additional ordinary shares exchanged by AXA in respect of this transaction in January 2001.
At December 31, 2000 aggregate maturities of long-term debt based on required payments at maturity for 2001, the following four years and thereafter are €0 in 2001, €0 in 2002, €0 in 2003, €223 million in 2004, €171 million in 2005, €30 million in 2006 and thereafter.
Information relating to the subordinated debt (including terms of redemption by the issuer and share conversion) and bonds mandatorily convertible into ordinary shares of AXA is provided in note 10 to AXA’s consolidated financial statements.
French statutory basis of accounting, which uses the costs method of accounting for investments. French GAAP
(on a consolidated basis) and U.S. GAAP use the equity method of accounting for investments. Other differences between French GAAP and U.S. GAAP are described in note 26 and 27 to AXA’s consolidated financial statements included elsewhere in this annual report.
Net income in accordance with French GAAP (statutory basis) 1,057 1,160 944
Net income in accordance with French GAAP (consolidated basis) 3,904 2,021 1,531
Shareholders’ equity in accordance with French GAAP (consolidated basis) 24,322 16,358
Registration Statement on Form F-4 filed on November 21, 2000 (registration no. 333-50438) and incorporated herein by reference.
4. (a) Merger Agreement, dated as of October 17, 2000, between AXA, AXA Merger Corp. and AXA Financial, filed as exhibit 2.1 to the Company’s Registration Statement on Form F-4 filed on November 21, 2000
8. List of the Company’s consolidated subsidiaries at December 31, 2000 is provided in note 24 to the consolidated financial statements included elsewhere in this annual report.
that it hs duly caused and authorized the undersigned to sign this annual report on its behalf.
(b) Continuity Agreement between, Edward D. Miller and AXA Financial, Inc. dated September 29, 2000, filed as exhibit 10.6 to the Company’s Registration Statement on Form F-4 filed on November 21, 2000 (registration no. 333-50438) and incorporated herein by reference.
to ck b yt e 25, AVENUE MATIGNON F-75008 PARIS www.axa.com