In addition to the foreign exchange rate management performed locally (hedged through f oreign e xchange forward and currency swaps), the Group Corporate Finance and Treasury Department steers the global exposure to foreign exchange risk and reports the position fi ve times a year to the Finance Committee of the
For the purpose of optimizing the fi nancial management and control of fi nancial risks linked to holding companies, the Group
Corporate Finance and Treasury Department has defined and implemented formal management standards, as well as guidelines for monitoring and assessing fi nancial risks. These standards are designed to permit a consistent measurement of the positions of each affi liate.
Counterparty credit risk is defi ned as the risk that a third party in a transaction will default on its commitments. Given the nature of its core business activities, AXA monitors two major types of counterparties, using methods suitable to each type: ■ investment portfolios held by the Group’s insurance operations
(corporate, Government agency and sub sovereign). The limits also take into account all AXA Group exposure on these issuers through debt securities, equity, derivatives and reinsurance counterparty risk.
At December 31, 2015, the breakdown of the debt security portfolio (€428.3 billion) by credit rating category was as follows: Other
At December 31, 2014, the breakdown of the debt security portfolio (€421.3 billion) by credit rating was: 19% in AAA, 35% in
AA, 17% in A, 22% in BBB, 3% in BB and lower, and 4% in other.
Government related bonds fair values (€225 billion) by country was as follows: Spain
(a) Mainly consumer ABS (plus some leases and operating ABS assets).
Consumer ABS, 5% in CDO, 8% in Commercial MBS, 4% in
At December 31, 2014, the economic breakdown of the total value of ABS (€9.5 billion excluding assets held for sale, as well as CMOs and Agency pool ABS) was: 66% in CLO, 5% in
derivatives through a specifi c Group-wide policy. This policy includes: ■ rules on derivative contracts (ISDA, CSA); ■ mandatory collateralization; ■ a list of authorized counterparties; ■ a limit framework and an exposure monitoring process.
Limits are set specifi cally for each authorized counterparty, based on an internal scoring system. This policy also includes daily collateralization for the majority of the Group’s exposure.
The Group Credit Risk Committee approves changes to the above policy and reviews the exposures every month.
At December 31, 2015, the breakdown of counterparty exposure coming from OTC derivatives by rating was as follows (positive fair value net of collateral received): A+
(1) This fi gure represents an accounting view i.e. 100% of assets held directly and in consolidated investment funds “Core Investment Portfolios”, and excluding credit derivatives in Non consolidated investment funds, in line with Note 20 of the notes to the consolidated fi nancial statements. The
At year end 2015, total invested assets of the Banking segment amounted to €33.7 billion (€35.1 billion in 2014).
Credit risks are regularly reviewed by the Management Board of each bank, and are subject to regulation. For instance AXA Bank
Group level but performed jointly by central and local teams: ■ risk controls on new product complementing underwriting rules and product profi tability analyses; ■ optimizing of reinsurance strategies in order to cap the
The main characteristics of these procedures are: ■ the local decision to launch a new product must result from a documented approval process that complies with AXA Group standards in terms of product features, pricing, ALM and aspects related to legal, compliance, regulatory, accounting and reputation. For Variable Annuity products with guarantees, as well as Long Term Care products, the local governance is supplemented by a centralized review performed by GRM, which is submitted to the Management Committee for formal approval; ■ guarantees and options embedded in products must be quantifi ed using market consistent stochastic methods in order to ensure the adequate measure of their “manufacturing cost”. Analyses of return on capital across multiple scenarios also provide for a better understanding of any asset-liability mismatch risk and capital requirement at an early stage of the product’s lifetime; ■ stress tests are required on key financial & technical assumptions to ensure that appropriate “what if” scenarios are considered; ■ pricing reports for material products are sent to GRM, which provides a Group reporting on a quarterly basis.
This framework complements underwriting rules by ensuring that no risks are taken outside the Group tolerances and that value is created by adequate risk pricing.
■ energy transition risks: sometimes referred to as “carbon asset risks”, these are fi nancial risks which could arise for investors from the transition to a lower-carbon economy (e.g. potential re-pricing of carbon-intensive fi nancial assets). These risks are explored by AXA and further described in the “Climate change” section in Appendix 7.
The structures of these pools are designed to adequately protect the Group in compliance with the Group risk appetite framework.
C onsolidated F inancial S tatements included in Part 4 of this
AXA’s risk exposure. On these products, the underlying fi nancial market performance is mostly passed on to the policyholders. This category also includes products that may provide a stand-alone guarantee on invested capital in the event of death. Overall, they present only a limited market risk for the Group through reduction of shareholders’ value; ■ 12% at the end of 2015 (12% at the end of 2014) of the
Group’s Life & Savings technical reserves cover separateaccount products with related interest-rate or equity guarantees provided by the insurance companies, called
• biometric risks (e.g. longevity/mortality) and policyholder behaviours (notably lapses and annuity election rates), are regularly monitored. The hedging programmes embed dynamic policyholder behaviours to a range of possible market situations; ■ 14% at the end of 2015 (14% at the end of 2014) cover savings products without guaranteed cash values upon surrender; ■ 20% at the end of 2015 (20% at the end of 2014) are related to savings products offering one-year guaranteed rates that are updated every year. The risks arising from a sustained fall in interest rates in the fi nancial markets are limited for these types of products. Hedging programs have been implemented to cover long-term fi xed maturities from the risk of an increase in interest rates; ■ 31% at the end of 2015 (31% at the end of 2014) cover other products like Protection and Health. These reserves cover surrender guarantees and, in some cases, a guaranteed longterm rate. Related risks are managed in the following ways: • products that are not surrender-sensitive are usually backed by fi xed-income investments with maturities and interest rates generally suffi cient to cover guaranteed benefi ts, so as to reduce as much as possible the reinvestment risk,
REGULATION, RISK FACTORS 3 3.3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK FACTORS
AXA has defined a single Group framework for identifying, quantifying and monitoring the main operational risks, involving the deployment of a common system, dedicated operational risk teams and a common operational risk typology classifying operational risks into seven risk categories: internal fraud, external fraud, employment practices and workplace safety, clients, products and business practices, damages to physical assets, business disruption and system failures and execution, delivery and process management.
■ Across the Group, the most critical o perational risks of each entity and a set of Group stress scenarios are identifi ed and assessed following a forward-looking and expert-opinion approach. These risk scenarios are then used to estimate the capital requirement needed to cover o perational risks based on advanced models based on Solvency II principles. The o perational risk management process is embedded into local governance through senior management validation to ensure the adequacy, appropriateness and comprehensiveness of the risk assessment but also to ensure that adequate corrective and pre-emptive actions are defi ned and implemented in front of the main risks; ■ In addition, a loss data collection process is in place in most companies of the Group in order to track and appropriately mitigate actual operational risk losses. This process is also used as a valuable source of information to back-test the assumptions taken in local risk assessments.
AXA intends to promote a better understanding and better forecasting of the emerging risks and to support sustainable development.
Reputation risk is the risk that an event, internal or external, will negatively infl uence the stakeholders’ perceptions of the
AXA has defi ned a global framework with a two-fold approach to reactively protect and proactively monitor, manage and mitigate reputational issues in order to minimize value destruction, and build and maintain brand equity and trust among stakeholders.
AXA Group created a Global Reputation Network whose purpose is to implement locally a reputation risk management framework.
■ define accountability for reputation risks across the organization (Marketing, HR, Finance / Investors Relations, etc.), at Group and local levels; ■ implement a common reputation risk management framework throughout the organization.
A strategic risk is the risk that a negative impact (current or prospective) on earnings or capital, material at the Group level, arises from a lack of responsiveness to industry changes or adverse business decisions regarding: ■ signifi cant changes in footprint, including through mergers and acquisitions; ■ product offering and client segmentation; ■ distribution model (channel mix including all iances/
Local CIOs manage local portfolios, aiming at an optimised riskreturn ratio, maintain reporting lines to the Group, and manage close relationships with asset managers and local stakeholders.
Moreover, they are responsible for the investment performance and for implementing and executing a sound asset liability management.
These committees are responsible for, inter alia, defi ning the entity’s Strategic Asset Allocation, approving and monitoring investments, meeting local compliance obligations and reviewing the participation to investment proposals syndicated by the
ALM studies are performed by Investment & ALM Departments with the support of internal asset managers when appropriate and a second opinion provided by local Risk Management
At local entity level, the strategic asset allocation issued from the ALM study must be reviewed by local risk management, and approved with regards to predefi ned risk appetite limits, before being fully endorsed by the l ocal Investment and ALM
c ommittee. The strategic asset allocation allows for taking a tactical stance within a given leeway.
The IAP is completed at Group level for any significant investment, notably if several local entities are participating to the same investment. In that case, the successful completion of an IAP is done after the production of a second independent opinion by Group Risk Management. The IAP is used and completed at local level to cover local characteristics (tax, statutory accounting…).
AXA SA. In a similar way, this set-up ensures all entities benefi t from technical expertise, legal protection and good execution of such transactions within the following governance framework for derivatives.
Derivative strategies are systematically reviewed and validated by local Investment and ALM c ommittees. In addition, there is a segregation of duties between those responsible for making investment decisions, executing transactions, processing trades and instructing the custodian. This segregation of duties aims in particular at avoiding confl icts of interest.
Legal risk is addressed by defining a standardized master agreement. AXA business units may trade derivatives only if they are covered by legal documentation which complies with the requirements set out in the Group standard. Any change to certain mandatory provisions defi ned in the Group standards must be approved by Group Risk Management.
For a large proportion of its assets, AXA utilizes the services of asset managers to invest in the market: ■ local AXA companies mandate the day-to-day management of their asset portfolios primarily to AXA’s asset management subsidiaries, i.e. AXA Investment Managers and AB. Local
CIOs continuously monitor, analyze, and challenge asset managers’ performances; ■ in order to benefit from a more asset specific and/or geographical expertise, AXA can also decide to invest through external asset managers. In these cases, thorough due diligence analyses are performed by the Investment and the
Risk Management communities and a continuous monitoring is implemented at both Group and Local levels.
NOTE 32 Subsequent events 341 4.7 REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS
Note: All invested assets are shown net of related derivative instruments impact.
(c) Includes assets backing contracts where the fi nancial risk is borne by policyholders with Guaranteed Minimum features.
(d) As of December 31, 2015, amounts include assets of Portuguese operations, AXA Bank Hungary and two real estate properties in the United States for which the disposal process was not fi nalized at year-end.
As of December 31, 2014 amounts included assets and liabilities of Mandatory Provident Fund (MPF) and Occupational Retirement Schemes Ordinance (ORSO) businesses in Hong Kong for which the disposal process was not fi nalized at this date.
Liabilities arising from investment contracts with discretionary participating features and where the fi nancial risk is borne by policyholders 3,362 4,053
Other payables 14,509 14,352 5 Liabilities held for sale (d) 2,059 946
(a) Reso Garantia is accounted for using the equity method in the Group consolidated fi nancial statements on the basis of a closing at September 30. Given signifi cant movements in the Russian ruble exchange rate between September 30, 2014 and December 31, 2014, the balance sheet used as a basis of the equity method has been translated using December 31 exchange rate.
(c) Includes liabilities arising from contracts where the fi nancial risk is borne by policyholders with Guaranteed Minimum features.
(d) As of December 31, 2015, amounts include the liabilities of Portuguese operations and AXA Bank Hungary for which the disposal process was not fi nalized at year-end.
Net realized gains and losses relating to investments at cost and at fair value through shareholders’ equity (c) 2,518 1,924
Net realized gains and losses and change in fair value of investments at fair value through profi t and loss (d) 182 12,325 of which change in fair value of assets with fi nancial risk borne by policyholders (e) 1,407 9,520
Change in goodwill impairment and other intangible assets impairment (115) (118)
Net consolidated income - Minority interests 370 313 27 Earnings per share 2.19 1.95
Reserves relating to changes in fair value through shareholders’ equity (2,610) 7,131
Items that may be reclassifi ed subsequently to Profi t or Loss 947 9,756
Net gains and losses recognized directly through shareholders’ equity 885 8,517
(a) Reso Garantia is accounted for using the equity method in the Group consolidated fi nancial statements on the basis of a closing at September 30. Given signifi cant movements in the Russian ruble exchange rate between September 30, 2014 and December 31, 2014, the balance sheet used as a basis of the equity method in 2014 has been translated using December 31 exchange rate.
Others reserves - transaction on treasury shares - - - - -
(c) Reso Garantia is accounted for using the equity method in 2014 in the Group consolidated fi nancial statements on the basis of a closing at September 30. Given signifi cant movements in the Russian ruble exchange rate between September 30, 2014 and December 31, 2014, the balance sheet used as a basis of the equity method has been translated using December 31 exchange rate.
Reserves relating to the change in fair value of hedge accounting derivatives (cash fl ow hedge) Other (a)
Change in fair value of investments at fair value through profi t or loss (881) (14,097)
Net change in liabilities arising from insurance and investment contracts (d) 10,560 20,265
Income (net of impairment) from investment accounted for using the equity method (214) 73
Dividends recorded in profi t or loss during the period (3,205) (3,277)
Investment expense (excluding interests on fi nancing and undated subordinated debts, margin calls and others) (5,699) (3,286)
Net cash provided by other assets and liabilities (g) 611 (1,267)
Net cash related to changes in scope of consolidation 72 (442)
Sales of equity instruments and non-consolidated investment funds (g) (h) 27,654 21,367
Sales of investment properties held directly or not (g) 654 1,149
Sales and/or repayment of loans and other assets (g) (i) 32,882 27,860
Net cash related to sales and repayments of investments (g) (h) (i) 136,610 100,065
Net interest margin of hedging derivatives on fi nancing debt - (221)
CASH AND CASH EQUIVALENT AS OF JANUARY 1 (k ) 21,631 20,477
Net impact of foreign exchange fl uctuations and reclassifi cation on cash and cash equivalents 1,180 700
(d) Includes impact of reinsurance and change in liabilities arising from contracts where the fi nancial risk is borne by policyholders.
(h) Includes equity instruments held directly or by consolidated investment funds as well as non-consolidated investment funds.
(l) In 2015, amounts include the liabilities of Portuguese operations and AXA Bank Hungary for which the disposal process was not fi nalized at year-end.
These consolidated fi nancial statements including all notes were fi nalized by the Board of Directors on March 17 , 2016.
Income or fair value through profi t or loss. A fi nancial asset is measured at amortized cost if both a) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash fl ows and b) the contractual terms of the fi nancial asset give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”). If both a) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash fl ows and for sale and b)
the contractual terms of cash fl ows are SPPI, the fi nancial asset is measured at fair value through Other Comprehensive
Other Comprehensive Income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in profi t or loss. Additionally, for fi nancial liabilities that are designated as at fair value through profi t or loss, the amount of change in the fair value of the fi nancial liability that is attributable to changes in the credit risk of that liability is recognized in Other Comprehensive Income, unless the recognition of the effects of changes in the liability’s credit risk in Other Comprehensive Income would create or enlarge an accounting mismatch in profi t or loss; ■ impairment: The impairment model under IFRS 9 refl ects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to refl ect changes in credit risk since initial recognition; ■ hedge accounting: IFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.
The method of implementation of IFRS 9 and its potential impact on the Group’s consolidated fi nancial statements are currently being examined within the Group
January 1, 2021). The proposals were open for public comment until February 8, 2016 and will be deliberated by the IASB prior to reaching a fi nal decision.
IFRS 15 is effective for annual periods beginning on or after
May 12, 2014 January 1, 2016 * Clarification of the principle for the basis of depreciation and amortization as being the expected pattern of consumption of the future economic benefi ts of an asset.
Postponed Guidance regarding the sale or contribution of assets between an investor and its associate or joint venture. A consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business and a partial gain or loss is recognised when a transaction involves assets that do not constitute a business. The 2015 Amendment postpones the effective date until a current research project on the equity method of accounting is concluded.
Annual Improvements to IFRSs 2012 – 2014 Cycle September 25, 2014 January 1, 2016 * Collection of amendments to IFRSs in response to issues that are not part of a major project.
January 29, 2016 January 1, 2017 * These amendments require entities to provide information about changes in their fi nancing liabilities, including changes from cash fl ows and non-cash changes (such as foreign exchange gains or losses).
* With earlier application being permitted (subject to conditions in some cases).
As recommended by IAS 1, assets and liabilities are generally classifi ed globally on the balance sheet in increasing order of liquidity, which is more relevant for fi nancial institutions than a classification between current and non-current items. As for most insurance companies, expenses are classified by destination in the income statement.
or more of the voting rights. Signifi cant infl uence can also be exercised through an agreement with other shareholders.
Investment funds and real estate companies are either fully consolidated or accounted for under the equity method, depending on which conditions of IFRS 10/IFRS 11/IAS 28 listed above they satisfy. Fees received by asset managers are also taken into account in the assessment of the exposure to variability of returns. For fully consolidated investment funds, minority interests are recognized at fair value and shown as liabilities in the balance sheet if the companies’ instruments can be redeemed at any time by the holder at fair value. Investment funds accounted by equity method are shown under the balance sheet caption “Financial investments”.
If, after the period of twelve months, a deferred tax asset, initially considered as not recoverable, fi nally meets the recognition criteria, the corresponding tax benefit is recorded in the consolidated statement of income without a corresponding adjustment in goodwill.
When the contract involves an unconditional commitment exercisable by the option holder, it is recognized as a liability.
(with a balancing entry recorded in minority interests). This impact is identifi ed in the “other” changes of the consolidated statement of shareholders’ equity.
Group presentational currency are translated as follows: ■ assets and liabilities of entities in a functional currency different from Euro are translated at the closing exchange rate; ■ revenues and expenses are translated at the average exchange rates over the period; ■ all resulting foreign exchange differences are recognized as a separate component of equity (translation differences).
Fair values of assets and liabilities traded on active markets are determined using quoted market prices when available. An instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis between a willing seller and a willing buyer. For fi nancial instruments traded in active markets, quotes received from external pricing services represent consensus prices, i.e. using similar models and inputs resulting in a very limited dispersion.
Equity instruments quoted on exchange traded markets and bonds actively traded on liquid markets for which prices are regularly provided by external pricing services that represent consensus with limited dispersion and for which quotes are readily available are generally considered as being quoted in an active market. Liquidity may be defi ned as the possibility to sell or dispose of the asset in the ordinary course of business within a certain limited time period at approximately the price at which the investment is valued. Liquidity for debt instruments is assessed using a multi-criteria approach including the number of quotes available, the place of issuance and the evolution of the widening of bid ask spreads.
Scholes models, etc.) based on quoted market prices for similar instruments or underlyings (index, credit spread, etc.) whenever such directly observable data are available and valuations are adjusted for liquidity and credit risk.
Internal mark to model valuations are therefore normal market practices for certain assets and liabilities inherently scarcely traded or exceptional processes implemented due to specifi c market conditions.
In such cases, the Group uses valuation techniques including observable data whenever possible and relevant, adjusted if needed to develop the best estimate of fair value, including adequate risk premiums or develops a valuation model based on unobservable data representing estimates of assumptions that willing market participants would use when prices are not current, relevant or available without undue costs and efforts: in inactive markets, transactions may be inputs when measuring fair value, but would likely not be determinative and unobservable data may be more appropriate than observable inputs.
The value of future expected earnings is estimated on the basis of the life insurance and investment contracts embedded value models or similar calculations for other activities. Fair values less costs to sell are based on the IFRS 13 fair value as described in
The value of purchased insurance contracts and investment contracts with discretionary participating features recognized in a business combination (see paragraph 1.3.2) is amortized as profits emerge over the life of the contracts’
1.7.3. Deferred acquisition costs (DAC ) relating to insurance contracts and investment contracts with discretionary participating features – rights to future management fees, also known as deferred origination costs (DOC ) relating to investment contracts with no discretionary participating features
For investment contracts with no discretionary participating features, a similar asset is recognized, i.e. r ights to future management fees, also known as Deferred origination costs
This asset is amortized by taking into account projections of fees collected over the life of the contracts. The amortization of DOC is reviewed at each closing date to refl ect changes in assumptions and experience. This asset is also tested for recoverability.
They also include customer relationships intangibles as well as distribution agreements recognized as a result of business combinations. If these assets have a fi nite useful life, they are amortized on a straight line basis over their estimated life. In all cases, they are subject to impairment tests, at each closing for assets with a finite useful life and at least annually for other assets. In the event of a signifi cant decline in value, an impairment is booked corresponding to the difference between the value on the balance sheet and the higher of value in use and fair value less costs to sell.
Investments include investment in real estate properties and fi nancial instruments including equity instruments, debt instruments and loans.
Investment in real estate properties (excluding investment in real estate properties totally or partially backing liabilities arising from contracts where the fi nancial risk is borne by policyholders) is recognized at cost. The properties components are depreciated over their estimated useful lives, also considering their residual value if it may be reliably estimated.
Investment in real estate properties that totally or partially back liabilities arising from contracts where the fi nancial risk is borne by policyholders is recognized at fair value with changes in fair value through profi t or loss.
willing parties in an arm’s length transaction. The Group applies the IFRS 13 fair value hierarchy.
Impairments of loans available for sale are based on the present value of expected future cash fl ows, discounted at the loan’s effective interest rate (down to the loan’s observable market price), or on the fair value of the collateral.
(average cost, fi rst-in fi rst-out, etc.) depend on local Assets and Liabilities Management (ALM) strategies as these strategies have been set up to take into account specifi c commitments to policyholders. These methods may differ within the Group provided that they are used consistently at each entity level.
(investment in real estate properties, debt instruments or equity instruments, etc.). Details of these assets are provided in the notes.
For the statement of fi nancial position, derivatives are presented alongside the underlying assets or liabilities for which they are used, regardless of whether these derivatives meet the criteria for hedge accounting.
In the event of a discontinuation of operations representing either a business line, a main and distinct geographical region or a subsidiary acquired solely with a view to reselling, their after-tax contribution is stated on a separate line of the income statement. For comparison purposes, the same applies to the presentation of income statements relating to previous periods that are included in the fi nancial statements. This separate line also includes the post-tax gain/loss recognized on the disposal of the discontinued operation at the date of loss of control.
Additional costs (net of tax) directly attributable to the issue of equity instruments are shown in shareholders’ equity as a deduction to the proceeds.
Undated subordinated debt and any related interest charges are classifi ed either in shareholders’ equity (in the “other reserves”
aggregate) or as liabilities depending on contract clauses without taking into consideration the prospect of redemption under economic constraints (e.g. step up clauses or shareholders’
The main characteristics of the accounting principles applied prior to IFRS and retained after the conversion to IFRS are as follows: ■ reserves must be suffi cient; ■ life reserves cannot be discounted using a discount rate higher than prudently estimated expected assets yield; ■ acquisition costs are deferred to the extent recoverable and amortized based on the estimated gross profi ts emerging over the life of the contracts; ■ property and casualty claims reserves represent estimated ultimate costs. Post claims reserves are generally not discounted, except in limited cases (a detail of discounted reserves is shown in Note 14.9).
Part of the policyholders participation reserve is included in future policy benefi ts reserves, according to contractual clauses.
Except when these guarantees are covered by a r isk m anagement program using derivative instruments (see next paragraph), guaranteed minimum benefi ts reserves relating to contracts where the fi nancial risk is borne by policyholders
Some guaranteed benefi ts such as Guaranteed Minimum Death or Income Benefi ts (GMDB or GMIB), or certain guarantees on return proposed by reinsurance treaties, are covered by a r isk m anagement program using derivative instruments. In order to minimize the accounting mismatch between liabilities and hedging derivatives, AXA has chosen to use the option allowed under IFRS 4.24 to re-measure its provisions: this revaluation is carried out at each accounts closing based on guarantee level projections and considers interest rates and other market assumptions. The liabilities revaluation impact in the current period is recognized through income, symmetrically with the impact of the change in value of hedging derivatives. This change in accounting principles was adopted on the fi rst time application of IFRS on January 1, 2004 for contract portfolios covered by the r isk m anagement program at that date. Any additional contract portfolios covered by the r isk m anagement program after this date are valued on the same terms as those that applied on the date the program was fi rst applied.
Any identifi ed defi ciency is charged to the income statement, initially by respectively writing off DPA, DAC or VBI, and subsequently by establishing a LAT provision for losses arising
DAC and VBI. For non-life insurance contracts, an unexpired risk provision is recognized for contracts on which the premiums are expected to be insuffi cient to cover expected future claims and claims expenses.
Deferred tax assets and liabilities emerge from temporary differences between the accounting and fi scal values of assets and liabilities, and when applicable from tax loss carry forwards.
In particular, a deferred tax liability is recognized for any taxable temporary difference relating to the value of shares in a consolidated company held, unless the Group controls at what date the temporary difference will reverse and it is probable that the temporary difference will not reverse in the foreseeable
future. If a group company decides to sell its stake in another consolidated entity, the difference between the carrying value and the tax value of these shares for the Company that holds them leads to the recognition of deferred tax (including as part of a business combination when the Group as the buyer intends to sell or carry out internal restructuring of the shares following the acquisition). The same approach applies to dividend payments that have been voted or deemed likely, to the extent that a tax on dividends will be due.
The measurement of deferred tax liabilities and deferred tax assets refl ects the expected tax impact, at the balance sheet date. That would follow the way the Group expects to recover or settle the carrying amount of its assets and liabilities. When income taxes are calculated at a different rate if dividends are paid, deferred taxes are measured at the tax rate applicable to undistributed profits. The income tax consequences of dividends are only accounted when a liability to pay the dividend is recognized.
The present value of the future benefi ts paid by the employer, known as the DBO (Defi ned Benefi t Obligation), is calculated annually on the basis of long-term projections of rate of salary increase, infl ation rate, mortality, staff turnover, pension indexation and remaining service lifetime. The amount recorded in the balance sheet for employee defi ned benefi t plans is the difference between the present value of the Defi ned Benefi t
The AXA SharePlan issued under a specifi c French regulatory framework includes a traditional and a leveraged formula (with an application subject to specifi c local regulations within the Group).
The cost of the traditional formula of SharePlan is valued according to the specifi c guidance issued in France by the ANC
Provisions are not recognized for future operating losses. The same applies to contingent liabilities, except if identifi ed at the time of a business combination (see paragraph 1.3.2).
According to these principles, rights and obligations related to contracts are recognized in all situations.
1.19.5. Change in unearned premiums reserves net of unearned revenues and fees
Revenues from other activities mainly include: ■ commissions received and fees for services relating to a sset m anagement activities; ■ insurance companies revenues from non-insurance activities, notably commissions received on the sales or distribution of fi nancial products; and
The net investment result includes: ■ investment income from investments other than from banking activities, net of depreciation expense on real estate investments (depreciation expense relating to owner occupied properties is included in “administrative expenses”); this item includes interest received calculated using the effective interest method for debt instruments and dividends received on equity instruments; ■ investment management expenses (excludes fi nancing debt expenses); ■ realized investment gains and losses net of releases of impairment following sales; ■ the change in unrealized gains and losses on invested assets measured at fair value through profi t or loss; and
AXA Affi n General Insurance Berhad (a) 43.63 43.63 43.63 43.63
AXA Aurora Vida, S.A. de Seguros (Spain) 99.97 99.81 99.97 99.81
AXA Global Direct Seguros y Reaseguros SAU (Spain) 100.00 100.00 100.00 100.00
AXA Global Direct Seguros y Reaseguros SAU branch (Portugal) 100.00 100.00 100.00 100.00
(c ) UK Direct activities is part of AXA Insurance UK Plc.
AXA Investment Managers (sub-group) Minority interests buyout 96.29 96.23 96.17 96.11
Japan, Germany and Belgium and mainly relating to the Life &
As of December 31, 2015, 25 consolidated real estate companies corresponded to a total of €7,980 million invested assets (€7,515 million at the end of 2014), mainly in France,
Report of for the year ended December 31, 2015, which is fi led with the SEC; ■ summarized fi nancial information for AXA MPS is as follows
December 31, 2014). AB is part of the Asset Management segment and AXA MPS is part of both Life & Savings and
AXA Mansard Insurance plc (Nigeria) Scope entry 77.51 77.51 - -
Kyobo AXA Investment Managers Company Limited Acquisition of shares 50.00 48.12 50.00 48.06
INVESTMENT FUNDS AND REAL ESTATE ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD
The Group does not hold signifi cant interests in unconsolidated insurance / reinsurance structured entities.
Some unconsolidated funds managed by the Group are partially or fully held by external investors.
Given the activities of AXA, the operating results are presented on the basis of fi ve operating business segments: Life & Savings,
Health products offered include critical illness and permanent health insurance products. The types and specifi cities of the products offered by AXA vary from market to market.
The Life & Savings segment aggregates ten geographic operating components: France, the United States, the United Kingdom,
Japan, Germany, Switzerland, Belgium, the Mediterranean and Latin American Region, Asia (excluding Japan) and other countries.
Property & Casualty: This segment includes a broad range of products including mainly Motor, Household, property and general liability insurance for both personal and commercial customers (commercial customers being mainly small to medium-sized companies). In some countries, this segment includes Health products. The Property & Casualty segment aggregates nine geographical operating components (France,
Germany, the United Kingdom and Ireland, Switzerland, Belgium, the Mediterranean and Latin American Region, Central and
Eastern Europe, Asia and o ther countries) and one operating component for the Direct business.
Solutions Assurance. These products provide coverage to large national and international corporations. This segment also includes assistance activities, life reinsurance activities in run-off primarily AXA Corporate Solutions Life Reinsurance Company and the Group Property & Casualty run-off managed by AXA
The inter-segment eliminations include only operations between entities from different segments. They mainly relate to reinsurance treaties, assistance guarantees recharging, Asset Management fees and interests on loans within the Group.
Net revenues from banking activities - - - - 581 - 35 616
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (b) 438 (81) (2) (33) - (151) 11 182 of which change in fair value of assets with fi nancial risk borne by policyholders 1,408 - - - - - (1) 1,407
Amortization of the value of purchased business in force (156) - - - - - - (156)
Change in goodwill impairment and other intangible assets impairment (20) (92) 1 (4) - - - (115)
Other operating income and expenses (70,828) (30,359) (3,682) (3,315) (417) (760) 853 (108,508)
Net consolidated income after tax 3,916 2,179 229 693 51 (1,080) - 5,987
Net consolidated income - Minority interests 107 48 2 211 2 0 - 370
Fees and charges relating to investment contracts with no participating features 327 - - - - - - 327
Net realized gains and losses relating to investments at cost and at fair value through shareholders’ equity 1,447 398 60 0 - 16 4 1,924
Net investment result excluding fi nancing expenses 27,272 2,181 318 54 (0) 550 (565) 29,810
Net consolidated income - Minority interests 79 51 3 178 1 (0) - 313
All of the following paragraphs form an integral part of the Group fi nancial statements. They appear in Section 3.2 “Quantitative and Qualitative Disclosures about Risk Factors” and Section 1.4
Please refer to pages 177 to 178 of the “Quantitative and
Please refer to pages 185 to 188 of the “Quantitative and
Please refer to pages 189 to 191 of the “Quantitative and
Please refer to pages 89 to 94 , of the “Liquidity and Capital
Mediterranean and Latin America Region 935 - 935 959 - 959
The total goodwill Group share amounted to €15,795 million as of
(b) Property & Casualty: includes the deconsolidation of AXA Ukraine (€-15 million) and the classifi cation as held for sale of AXA Global Direct Portugal (€-13 million) and AXA Portugal (€-4 million).
Fair value includes quotations when available and/or relevant or valuation techniques incorporating observable market data, adjusted when necessary to take into account control premiums.
In these tests, for all segments, discount rates used in nonrisk neutral approaches range from 6.9% to 10.9% in 2015 compared to range from 6% to 10.8% in 2014, and growth rates, where applicable, from 2% to 4% beyond the strategic plan horizon, which corresponds to the same growth rates as in 2014.
For all cash-generating units, to the extent that securities valuations and interest rates levels remain depressed for prolonged periods of time, volatility and other market conditions stagnate or worsen, new business volumes and profi tability together with the in force portfolio value would likely be negatively affected. In addition, the future cash fl ow expectations from both the in force and new business and other assumptions underlying management’s current business plans could be negatively impacted by other risks to which the Group’s business is subject. For each CGU, sensitivity analyses were performed with regards to the discount rate: an increase of 0.5% in the discount rate would not lead to an impairment loss for any of the CGUs as the recoverable amount for each CGU would still exceed its carrying value.
5.3.2. Acquisition of the private medical insurance business of Simplyh ealth
(3) AXA owns 99.7% of the P&C business, 95.1% of the Life business and 100.0% of the Direct business.
(a) Amounts are presented net of intercompany balances with other AXA entities for €11m of assets and €31m of liabilities.
Kong to The Principal Financial Group (“The Principal”). In conjunction with the sale, The Principal has entered into an exclusive distribution agreement with AXA for the distribution of the relevant MPF and ORSO schemes through AXA’s proprietary distribution networks in Hong Kong for 15 years. The total cash consideration amounted to HKD 2.6 billion (or €296 million (1)).
Southern Europe. It will also support the Group’s acceleration in high growth markets such as China, Latin America, Turkey and Poland. Moreover, with Genworth LPI’s strong and lasting relationships with major banks, insurance companies and auto fi nance providers, AXA credit and lifestyle protection activities would be able to double the portfolio of strategic partners in
Income from Genworth’s activities between December 2, 2015 and December 31, 2015 was regarded as immaterial with respect to the AXA group’s consolidated income.
(1) EUR 1 = HKD 8,7080 as of August 27, 2015. Source: Bloomberg.
Assets and liabilities on the acquisition date totalled: (in Euro million)
Business In force (VBI). In accordance with practices used in past acquisitions, and based on previously used accounting methods that are still permitted under IFRS for insurance contracts, deferred acquisition costs relating to Property &
Casualty have been maintained on the balance sheet. The value of unearned premiums net of these costs plus unexpired risk reserve represents an estimate of the fair value of these liabilities.
(b) Net of the exceptional loss accounted for in AXA Bank Hungary.
The change in Value of Business In-force (“VBI”) in the Life & Savings segment was as follows: (in Euro million) 2015 2014
Deferred acquisition costs and equivalent relating to Property & Casualty and International Insurance 1,934 1,819
(b) Applicable to investment contracts with no discretionary participation features (IAS 39).
DAC net of unearned revenues and unearned fees reserves 18,531 497 15,818 444
I Note 8 Other intangible assets 8.1. BREAKDOWN OF OTHER INTANGIBLE ASSETS
Intangible assets recognized in business combinations mainly include value of distribution agreements and customer related intangibles, including €1,453 million (net carrying value) assets with indefi nite useful life.
Investment in real estate properties designated as at fair value through profi t or loss (a) 1,107 1,107 0.15%
Non-consolidated investment funds designated as at fair value through profi t or loss (a) 5,720 5,720 0.80%
Investment in real estate properties designated as at fair value through profi t or loss (a) 1,023 1,023 0.15%
Debt instruments designated as at fair value through profi t or loss (b) 39,077 39,077 5.74%
Equity instruments designated as at fair value through profi t or loss (a) 7,990 7,990 1.17%
Non-consolidated investment funds designated as at fair value through profi t or loss (a) 4,985 4,985 0.73%
Loans designated as at fair value through profi t or loss 0 0 0.00%
(a) Includes change in scope and the effect of changes in exchange rates.
Debt instruments available for sale 326,036 370,743 370,743 47,148 2,441 310,952 363,619 363,619 53,424 757
Debt instruments available for sale 8,859 9,145 9,145 298 12 9,973 10,268 10,268 316 20
Debt instruments available for sale 334,895 379,888 379,888 47,446 2,453 320,925 373,888 373,888 53,740 778
Equity instruments available for sale 14,617 18,162 18,162 3,703 158 12,971 16,516 16,516 3,637 91
Non-consolidated investment funds available for sale 6,651 7,572 7,572 960 39 5,980 6,959 6,959 1,000 21
(a) In December 31, 2015, government and government like debt instruments, other debt instruments issued by government related and corporate debt instruments amounts include the impact of the reassessment of the government related debt instruments credit risk based on the level of sovereign state support given default.
(c) Includes fi xed maturity investment funds and debt securities related to reverse repo.
Debt instruments (at cost) that are not quoted in an active market, the effect of derivatives (detailed in Note 20.3), loans and debt instruments backing contracts where the fi nancial risk is borne by policyholders are excluded from the table below. The effect of derivatives modifi es in certain cases the maturity profi le of assets presented below. Most of the debt instruments and loans held by the Group are fi xed-rate instruments (i.e. exposed to fair value interest rate risk).
Total Financial investments exposed to interest rate risk 34,518 133,997 314,085 482,600 35,685 130,095 304,153 469,932 9.6. EXPOSURE TO PRICE RISK
Excluding the effect of derivatives (detailed in Note 20.3) and equity instruments of real estate companies, the breakdown by industry of equity instruments owned across the Group is as follows: (in Euro million) Financial
The detail of non-consolidated investment funds breakdown was as follows: (in Euro million)
(a) Amounts are presented net of the effect of related hedging derivatives (IAS 39 qualifying hedges or economic hedges) except derivatives related to macro-hedges which are shown separately.
Non-consolidated investment funds available for sale 7,705 (1,054) 6,652 897 7,549 6,930 (950) 5,980 870 6,850
and assets backing contracts where the fi nancial risk is borne by policyholders is as follows: (in Euro million)
Financial investments and loans held for trading 792 932 2 1,726 728 314 0 1,042
TOTAL FINANCIAL INVESTMENTS AND LOANS ACCOUNTED FOR AT FAIR VALUE 309,374 152,762 13,918 476,054 297,940 153,472 10,917 462,329
Level 2 and 3 assets are investments which are not quoted in an active market or for which there is no active market. Fair values for level 2 and 3 assets include: ■ values provided by external parties which: • are readily available including last transaction prices but relate to assets for which the market is not always active, or
(market observable inputs): ■ assumed to be used by pricing services; or
At December 31, 2015 the net transfers between Level 1 and
Level 2 was €11,898 million. This amount was comprised of €25,739 million transferred investments from Level 2 to Level 1
Assets such as certain unquoted debt instruments, some instruments issued on private markets such as private equity instruments or private loans were always considered as not quoted in active markets as an inherent characteristic of these investments and were included as assets not quoted in active markets/ No active markets in all periods presented. Valuations are based either on external pricing providers or internal models using techniques commonly used by market participants.
Valuation teams make the maximum use of current transaction prices (if any) and observable data but some of the underlying sectors to which the investments relate may be so particular that
TRANSFER IN AND OUT OF THE LEVEL 3 CATEGORY AND OTHER MOVEMENTS
From January 1, 2015 to December 31, 2015, the amount of
A majority of assets classifi ed in Level 3 corresponds to Private
Investments in real estate properties at amortized cost 0 27,278 0 27,278 - 25,390 0 25,390
Generally fair values of investments in real estate properties cannot be determined via reference to quotes of an active market from an exchange market or service provider and no property is therefore categorized in level 1. However, AXA’s investments in real estate properties are mostly physically located within liquid markets with identical or comparable asset sales. Given the regulatory environment, some real estate properties located in markets like France are valued by experts using very similar approaches leading to very limited dispersion in prices, with a majority of market inputs themselves homogeneous in terms of sources and values. Hence, the Group, consistently with the policy described in Note 1.5 which notably considers, for assets not quoted in an active market, the weight of observable inputs in the valuation, concludes that the fair value calculations, which are based on valuations performed by qualifi ed property appraisers mainly based on market observable inputs, are considered as level 2 fair values. However, as noted in Note 1.5 and Note 9.10.1, the assessment of the significance of an input against the fair value measurement in its entirety involves judgment and a different weighting could produce a different categorization.
I Note 10 Investments accounted for using the equity method 10.1. BREAKDOWN OF INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Krungthai AXA Life Insurance Company Ltd 147 - 63 3 (55) 158
Bharti AXA General Insurance Company Limited 20 22 (19) 2 9 34
(c) Thaigi AXA Insurance Public Company Limited (Thailand) has been accounted for using the full consolidation method since January 1, 2015.
Insurance plc for a total fi nal cash consideration of €195 million.
Mediterranean & Latin American Region and resulted in a goodwill of €164 million.
Given timing and operational constraints, it was decided not to consolidate the operations and maintain the classifi cation as equity securities as of December 31, 2014 and June 30, 2015. Based on materiality, Nigeria operations are accounted for using the equity method as of December 31, 2015. The full consolidation accounting methodology will be reassessed based on the materiality in the next years.
Through this acquisition, AXA became the fourth insurance player in Nigeria.
in India, and demonstrates the agility and commitment of both parties in further expanding their operations in the country. This operation did not lead to a change in the control assessment and the Group still exercises a signifi cant infl uence on those entities.
Krungthai AXA Life Insurance Company Ltd 98 - 51 16 (18) 147
Bharti AXA General Insurance Company Limited 14 - (4) 2 7 20
Total assets (including cash and cash equivalents) 9,453 1,732 5,407 1,479
Total liabilities (including fi nancing debts but excluding shareholders’ equity) 7,994 1,217 4,292 1,016
Change in unearned premiums net of unearned revenues and fees (2) (32) 3 (37)
Dividends received by AXA from the joint venture - - - -
Dividends received by AXA from the associate - 10 - 7
(b) In 2014, based on closing foreign exchange rate. Using average foreign exchange rate, the impairment booked in the net income was €-251 million.
This note excludes investment funds and real estate companies accounted for using the equity method, which are presented as fi nancial investments (Note 9).
Receivables from policyholders, brokers and general agents 9,520 (352) 9,168 9,168 8,357 (336) 8,021 8,021
Premiums earned not yet written 4,002 - 4,002 4,002 3,596 - 3,596 3,596
Receivables arising from direct insurance and inward reinsurance operations 16,921 (355) 16,566 16,566 15,026 (338) 14,688 14,688
Cash and cash equivalent as of December 31 (b) 25,630 21,631
(b) The “Cash and cash equivalents” item excludes cash backing contracts where the fi nancial risk is borne by policyholders (unit-linked contracts).
As of December 31, 2015, total consolidated net cash and cash equivalents amounted to €25,630 million, net of €645 million bank overdrafts classifi ed under “Other debt instrument issued and bank overdrafts” in the consolidated statement of fi nancial position.
Net cash and cash equivalents increased by €3,999 million compared to 2014 mainly due to: ■ the US Life & Savings (€+2,067 million) mainly due higher
Regarding the consolidated statement of cash fl ows presented together with the primary fi nancial statements, net cash provided by operating activities totaled €18,226 million in 2015, compared to €12,935 million in 2014.
shares held by consolidated Mutual funds not backing contracts where fi nancial risk borne by policyholders.
Undated subordinated debt instruments are classified in shareholders’ equity at their historical value as regards credit spread and interest rates and their closing value as regards exchange rates. The corresponding foreign exchange differences are cancelled out through the translation reserve.
As of December 31, 2015 and December 31, 2014, undated subordinated debt recognized in shareholders’ equity broke down as follows: (in Euro million)
As of December 31, 2014, the carrying value of treasury shares and related derivatives was €164 million. There was no AXA
(net of fees); ■ €-35 million from the exercise of an early redemption call on an undated subordinated debt; ■ €-307 million from interest expense related to the undated subordinated debt (net of tax); ■ €+418 million from foreign exchange rate fl uctuations.
Less unrealized gains and losses attributable to: Shadow accounting on policyholders’ participation and other obligations (29,459) (33,973)
Shadow accounting on Value of purchased Business In force (155) (178)
Minority interests’ share in unrealized gains and losses (e) (133) (154)
In jurisdictions where participating business represents an important portion of contracts in force and where required minimum local policyholders’ share in the entities’ results (limited to investment or not) are signifi cant, the reconciliation between gross unrealized gains and losses on available for sale fi nancial assets and the corresponding net reserve recognized in shareholders’ equity were as follows as of December 31, 2015: (in Euro million)
Unrealized gains and losses (net of tax) - Assets available for sale 2,811 824 510
The change in reserves related to changes in fair value of available for sale fi nancial instruments included in shareholders’ equity as of December 31, 2015 and December 31, 2014 broke down as follows: (in Euro million)
Transfer in the income statement on the period (b) (809) (538)
Investments bought in the current accounting period and changes in fair value (1,928) 7,228
Unrealized gains and losses (net of tax) 100%, closing 13,352 15,469
The total impact of foreign exchange rate movement was €+3,557 million (of which €+3,387 million from group share and €+169 million from minority interest) as of December 31, 2015.
(€+193 million), partly offset by (€-288 million) driven by change in fair value of derivatives and debt hedging net investments in foreign operations.
The total impact of employee benefi ts actuarial gains and losses amounted to €-62 million (of which group share was €-63 million and minority interests was €+1 million) as of December 31, 2015.
Benefi t Pension plans (mainly in the UK) compared to the discount rate;
The total impact of foreign exchange rate movement was €+2,625 million (of which €+2,432 million from group share and €+193 million from minority interest) as of December 31,
Company (€-44 million) driven by change in fair value of debt hedging net investments in foreign operations.
The €1,351 million increase in minority interests to €4,166 million was driven by comprehensive income and transactions with minority interests’ holders: ■ the comprehensive income for the period notably included the following: • net income attr ibutable to minority interests for €+370 million,
• foreign exchange movements for €+169 million; ■ transactions with minority interests’ holders, mainly included: • dividend payout to minority interests’ holders for €-355 million,
The €294 million increase in minority interests to €2,815 million was driven by comprehensive income and transactions with minority interests’ holders: ■ the comprehensive income for the period notably included the following: • net income attr ibutable to minority interests for €+313 million,
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 152,079 - - 152,079 142,042 - - 142,042
Reinsurers’ share in other reserves 379 (2) (1) 377 425 (5) 0 420
Reinsurers’ share in liabilities arising from insurance contracts 14,857 2,493 2,127 19,477 14,358 2,669 1,619 18,646
Reinsurers share in liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 0 - - 0 0 - - 0
TOTAL LIABILITIES ARISING FROM INSURANCE CONTRACTS, NET OF REINSURANCE CEDED 469,955 53,937 7,486 531,378 436,121 51,411 7,338 494,869
(b) For the detail of Property & Casualty and International Insurance IBNR, see Note 21.3.4.
(d) See Note 1.14.2 – Reserves measured according to the option offered by IFRS 4.24 for selective re-measurement of reserves at current market assumptions.
The following table shows a breakdown by segment of liabilities arising from investment contracts including those where the fi nancial risk is borne by policyholders: (in Euro million)
Reinsurance’s share in investments contracts liabilities relating to policyholders’ participation (none in 2015 and 2014), as well as derivatives instruments (none in 2015 and 2014) are excluded from the table above.
(b) See Note 1.14.2. – Reserves measured according to the option opened by IFRS 4.24 for selective re-measurement of reserves at current market assumptions.
Claim reserves as of January 1 38,172 7,442 45,614 36,093 7,330 43,423
Claim handling cost reserves as of January 1 1,123 261 1,384 1,090 253 1,344
Impact of foreign currency fl uctuation 732 334 1,067 504 262 766
Gross claim reserves as of December 31 (a) 40,673 8,198 48,871 39,295 7,703 46,998
(a) Excluding “other policy benefi ts liabilities” (mainly mathematical annuity reserves), which totaled €5.4 billion in 2015 and €5.1 billion in 2014.
Change in scope of consolidation, portfolio transfers, change in accounting principles and other changes 45 (27) 18 76 157 233
Impact of foreign currency fl uctuation 27 52 78 49 86 136
The table below includes liabilities arising from insurance and investment contracts for the Life & Savings segment, whether or not the risk is borne by policyholders (i.e. including unit-linked business), but excludes unearned revenue and unearned fees reserves, liabilities arising from policyholders’ participation and other obligations and derivative instruments relating to insurance and investment contracts.
Technical reserves as of January 1 (a) 450,479 73,449 523,928 414,226 70,874 485,100
Collected premiums net of loadings on premiums (+) 48,793 12,320 61,113 45,056 9,269 54,325
Surrenders, maturities and other claims and benefi ts paid net of charges and penalties (-) (48,019) (8,466) (56,485) (46,807) (8,098) (54,905)
Unit-Linked technical reserves value adjustment (+/-) 1,372 189 1,561 8,631 (1,641) 6,990
Change in scope of consolidation, portfolio transfers and change in accounting principles (351) (3,060) (3,411) 272 (851) (580)
Impact of foreign currency fl uctuation 26,696 1,704 28,400 19,694 1,797 21,491
Technical reserves as of December 31 (a) 484,813 76,606 561,418 450,479 73,449 523,928
(a) Includes: future policy benefi ts reserves (including shadow accounting reserves), unearned premiums reserves, unexpired risk reserves, claims reserves, claims expense reserves, other policy benefi ts reserves. Excludes: unearned revenues and unearned fees reserves, liabilities from policyholders’ participation.
In 2015, the change in scope of consolidation totalled €-3,411 million, mainly due to the classifi cation as held for sale of Portugal business for €-831 million and deconsolidation of Polish p ension funds for €-2,212 million.
Reinsurers’ share technical reserves as of December 31 (a) 14,858 101 14,959 14,358 94 14,452
(a) Includes: future policy benefi ts reserves (including shadow accounting reserves), unearned premiums reserves, unexpired risk reserves, claims reserves, claims expense reserves, other policy benefi ts reserves. Excludes: unearned revenues and unearned fees reserves, liabilities from policyholders participation.
(Unit-Linked) – Liabilities arising from contracts where fi nancial risk is borne by policyholders: Investment contracts with Discretionary Participation Features (DPF) measured according to existing accounting policies (a) (c) 3,362 4,053
The fi rst line labelled “Gross reserves for unpaid claims and claim expenses developed initially at the booking date” represents the loss reserves developed in the Group’s balance sheet on the reporting date for the year indicated in the column heading. For example, the amount of €31,168 million appearing in the fi rst line of the table in the 2005 column represents all loss reserves developed in all years of occurrence prior to and including 2005, recognized on the Group’s balance sheet as of December 31, 2005.
The surplus (shortfall) of the initial reserve with respect to the re-estimated (gross) fi nal cost for each year represents, for a given year N, the difference between the amount shown in the second line (gross reserves for unpaid claims and claims expenses developed in 2015 adjusted for changes in exchange rates and scope of consolidation) and the amount shown in the fi nal diagonal under “Reserve re-estimated”.
Loss reserves development table: Property & Casualty and International Insurance (excluding Colisée RE - ex AXA RE)
(c) In accordance with IFRS 3, i.e. within 12 months following the acquisition date, the Group adjusted certain items impacting the allocation of Seguros ING (Mexico) purchase price, resulting in a €33 million increase in the goodwill to €512 million. Most of this increase in goodwill was due to adjustments to provisions for liabilities and claims reserves.
December 31, 2005. However, the proportional treaty set in place as part of the agreement between Colisée RE and Paris RE
protects AXA entirely from any claims occurring after January 1, 2006. Consequently, the table below shows the development of loss reserves recognized in Colisée RE ’s balance sheet at each year-end until December 31, 2005. Reserves recognized after that, which correspond to exposure assumed fully by Paris
RE , have not been developed. Paris RE has been acquired by
Gross reserves for unpaid claims and claims expenses developed initially at the booking date (a) 4,523
Cumulative redundancy (defi ciency) from the initial gross claims reserves in excess of (less than) re-estimated gross claim reserves 971
Initial net claims reserves in excess of (less than) re-estimated net claims reserves as of December 31, 2015
(a) Total gross claims and other reserves developed are presented on the basis of the loss reserves development table. The reserves of AXA Corporate Solutions Insurance US were included in Property & Casualty and International Insurance loss reserves. The reserves of Mosaic Insurance Company (ex AXA RE P&C Insurance Company) and Coliseum RE (ex AXA CS Reinsurance Company) (€70 million in 2015, €72 million in 2014) were included in Colisée RE’s (ex AXA RE) loss reserves development table.
(b) Includes reserves inward reinsurance (€1,214 million in 2015, €1,222 million in 2014).
AXA actively conducts its exposure to asbestos claims by using its unit specialized in non-life run-offs: AXA Liabilities Managers.
Claims are managed by dedicated teams of experts who use a variety of claims payment including settlements, policy buybacks and, in certain cases, litigation. In addition, they focus specifi cally on fi nal resolutions of exposures, either through commutations or other solutions.
The calculation of reserves for asbestos risks raises specifi c difficulties as conventional reserving techniques cannot be used for evaluating IBNR. AXA evaluates the future cost of those claims using a range of specifi c methods based either on exposure analysis, frequency / cost projections or reserving benchmarks. Asbestos reserves are reviewed on a yearly basis to ensure that they adequately refl ect the latest claims experience, as well as legal and economic developments. Consistent with
Claims reserves at end of year 1,136 1,077 1,117 1,050 of which Reported claims 165 153 176 159 of which IBNR claims 971 924 941 892
Reserves adequacy ratios 3-Year survival ratio excluding commutations (a) 29 years 31 years 38 years 42 years
of € 1,077 million at year-end 2015. This increase was mainly driven by movement in exchange rates between 2014 and 2015.
This year, the 3-Year survival ratio decreased due to claims settlements.
The following table shows liabilities and assets arising from policyholders’ participation and other obligations as of December 31, 2015.
Total Liabilities arising from policyholders’ participation and other obligations 46,222 48,491
mainly in relation to unrealized gains and losses on invested fi nancial assets available for sale as described in Note 13.2.1, but also with regard to other temporary differences not necessarily linked to fi nancial assets. Note 13.2.1 also contains a focus on jurisdictions with signifi cant portions of participating business and where required minimum local policyholders’ share in the entities’ results are signifi cant. This Note discloses for such jurisdictions unrealized gains and losses related to available for sale investments and related shadow accounting adjustments.
In the tables presented in Note 14.9.1 and 14.9.2, liabilities arising from Life & Savings and Property & Casualty insurance and investment contracts exclude contracts where the fi nancial risk is borne by policyholders. These liabilities are not exposed to interest rate or duration risk, except unit-linked contracts with performance guarantees. In addition, as far as liquidity risk is concerned, entities hold unit-linked assets backing the corresponding liabilities arising from these contracts. Occasional mismatches result mainly from administrative timing differences in the processing of day-to-day operations.
By convention, contracts with zero guaranteed rates are deemed not-discounted, except for products offering guaranteed rates updated annually and for one year: these contracts are presented in discounted reserves. Reserves for savings contracts with nonzero guaranteed rates are discounted at the technical interest rate. Contracts for which the assumptions are revised in the fi nancial statements at closing mainly consist of reserves for guarantees (Guaranteed Minimum Death Benefi ts, etc.).
In Property & Casualty and International Insurance business, most reserves (91 % as of December 31, 2015) are not discounted, with the exception of disability annuities and worker’s compensation liabilities that are deemed structured settlements and where the discount rate is revised regularly.
Undiscounted reserves are not sensitive to interest rate risks in the fi nancial statements.
Life & Savings – locked-in discount rate (a) 277,573 2.17% 263,746 2.25%
Non Life – locked-in discount rate (a) 4,237 3.48% 4,324 3.61%
The tables in Note 21 set out the Group’s major insurance business areas, and reflect the Group’s high level of diversifi cation.
AXA reports separately at fair value because: ■ many of the features would be considered clearly and closely related to the host contract, and
This Note describes the features that are embedded derivatives and meet the defi nition of an insurance contract on a standalone basis. The primary features can be divided into two main categories: G uaranteed M inimum D eath B enefi ts (GMDB ) or
G uaranteed M inimum I ncome B enefi ts (GMIB ) offered on unitlinked contracts and guaranteed annuity purchase rates.
GMIB features provide a guaranteed lifetime annuity which may be elected by the contract-holder after a stipulated waiting period, and which may be larger than what the contract account balance could purchase at then-current annuity purchase rates.
The risk of GMDB and GMIB features to AXA are related to the unhedged portion of the benefi ts and to the policyholder behaviour becoming materially different from the expected behavior. Reserves are established for these features on the basis of actuarial assumptions related to projected benefi ts and related contract charges. The determination of estimated GMDB
Macro-hedge derivatives and other derivatives relating to liabilities arising from banking activities (264) (263) (239) (239)
The fair value option is used to measure the fair value through profi t or loss of certain Banking liabilities issued at fair value
(€2,829 million at 2015): • €1,196 million at 2015 (€834 million at 2014) based upon market prices that are available in active markets and are considered as Level 1 fair values,
• €375 million fair values at 2015 (€280 million at 2014)
Banking liabilities issued at fair value - Retail customers 258 729 1,842 2,829 35 764 1,648 2,447
Other liabilities arising from banking activities 442 2,043 0 2,485 179 1,737 613 2,529
I Note 16 Provisions for risks and charges 16.1. BREAKDOWN OF PROVISIONS FOR RISKS AND CHARGES
Provisions for risks and charges included the following items: (in Euro million) December 31, 2015 December 31, 2014
Changes in provisions for risks and charges (excluding employee benefi ts and share-based compensation) are set out below: (in Euro million) 2015 2014
Impact of change in scope of consolidation and changes in accounting method 8 (106)
For the sensitivity to movements in interests rates, please refer to page 180 of the “Interest rates & Equity risk related to the operating activities of Group subsidiaries” Section.
Debts relating to investments under total return swap agreement (b) 153 138
(b) Amounts are included in the line item Other debt instruments issued, notes and bank overdrafts in 4.1 Consolidated statement of fi nancial position.
The “Minority interests in consolidated investment funds” caption is the counterparty of assets recognized on the different lines of the consolidated balance sheet for the share not held by the Group in consolidated investment funds. Movements in this caption both depend on the changes in the Group’s ownership and the changes in fair values of these funds.
As of December 31, 2015, other debt instruments issued and bank overdrafts (other than fi nancing debt) totaled €3,539 million, an increase of €1,684 million compared to December 31, 2014, mainly due to increase in other debt instruments issued.
18.3. FAIR VALUE MEASUREMENT OF OTHER DEBT INSTRUMENTS ISSUED AND BANK OVERDRAFTS (OTHER THAN FINANCING DEBT)
The table below sets out the contractual maturities of other debt instruments issued, notes and bank overdrafts (excluding the impact of derivatives which is detailed in Note 20.1). Effective maturities may differ from those presented, mainly because some instruments include clauses allowing early redemption, with or without penalty.
The income tax charge was split as follows: (in Euro million) December 31, 2015 December 31, 2014
Impact of differences in tax rates and tax bases (621 ) (507)
Tax losses of prior years used in the current year without DTA recognized previously (26) (27)
(a) Derecognition of Deferred Tax Assets (DTA) arising on tax losses is shown in “Tax losses impact”.
The impact of rate differences on notional tax charge represents the difference between the expected tax calculated at each entity level with the applicable standard rate and the tax calculated using the 38.00% French tax rate applicable to the Company.
■ Reserves relating to Equity-Settled share based compensation plans 19 (0) 19 8
disclosed in these tables corresponds to the deferred tax before the netting that occurs for balance sheet presentation purpose as required by IAS 12.
(a) The movements through shareholders’ equity mainly concern net investment hedge in the Company, revaluation to fair value of fi nancial investments through shareholders’ equity and employee benefi ts actuarial gains and losses.
The €23,437 million DTA included €1,466 million of DTA on tax losses carried forward as of December 31, 2015.
DTA recognised on tax losses carried forward 207 197 280 260 294 85 111 32 - 1,466
DTA recognised on tax losses carried forward 14 8 9 4 17 - 62 495 856 1,466
In 2014, the €4,335 million net DTL position included € 22,512 million DTA of which €1,584 million DTA on tax losses carried forward.
This Note includes all types of derivatives excluding derivative instruments that meet the defi nition of shareholders’ equity instruments
(see Note 13 for details) or derivative instruments held by consolidated investment funds in the “S atellite I nvestment P ortfolio” (see
Macro-hedges and other derivative instruments not qualifying under IAS 39 but generally used as economic hedges Total
As of December 31, 2015, the notional amount of all derivative instruments totaled €445.0 billion (€433.5 billion at the end of 2014). Their net fair value as of December 31, 2015 totalled €-628 million (€256 million at the end of 2014).
(€424.0 billion at the end of 2014) and includes: (i) m anaging interest rate exposures on fixed maturity investments, long-term debt and guaranteed interest rates on insurance contracts; (ii) r educing foreign-currency exposures on foreign-currency denominated investments and liabilities; (iii) m anaging liquidity positions (including the ability to pay benefi ts and claims when due) in connection with Asset
AXA actively manages counterparty risk generated by derivatives through a specifi c Group-wide policy. This policy includes a limit framework and an exposure monitoring process. Limits are specifi cally set for each authorized counterparty, based on an internal scoring system. This policy also includes daily to weekly collateralization for the majority of the Group’s exposure. The total net collateral received or given for all derivative instruments including those related to derivatives held within investment funds of the “S atellite I nvestment P ortfolio” (see Note 1.8.2)
The market turmoil that started in 2008 highlighted increasing importance of Risk Management and led to additional hedging activity over the 2008-2012 period. Since then AXA has continued the use of derivatives to hedge risks, increasing or decreasing derivative positions in accordance with AXA’s governance framework for derivatives.
Solvency II. The various policies that AXA applies with reference to the use of derivatives and hedging instruments, include a close monitoring of its hedging strategy and associated risks as part of a Systemic Risk Management Plan (SRMP), approved by the Management Committee and the Board of Directors, in the context of the policy measures that apply to Global Systemically
In 2015, the use of derivatives within the Group increased overall by €+11.4 billion in terms of notional amount for the main reasons listed below (see also details in Note 20.2.1): ■ notional amount of currency derivatives increased by €+26.0 billion compared to 2014 mainly due to an increased fair value of foreign currency portfolios driven by market conditions notably denominated in the United States dollar and the Great Britain sterling pound; ■ notional amount of interest rates derivatives decreased by €-25.1 billion, mainly due to (i) the decrease of interest rate hedgings assets mainly in the Company hedging debts, (ii) the unwind of i nterest r ate s waps and the sale of i nterest r ate c aps mainly in AXA Bank Europe, (iii) the sale of i nterest r ate c aps combined with the the maturity of i nterest r ate s waps in Switzerland Life & Savings and (iv) to a lower extent, the decrease of interest rate derivatives associated with guaranteed minimum benefi ts on Variable Annuity products, mainly in the United States; ■ notional amount of credit derivatives increased by €+2.4 billion in order to increase exposure to the corporate spread risk.
In 2015 the notional amount of hedging derivative instruments as defined by IAS 39 (fair value hedge, cash flow hedge and net investment hedge) of the Group was €72.2 billion versus €73.3 billion in 2014. The net fair value recorded was €-310 million as of December 31, 2015, versus €-792 million in 2014.
■ As of December 31, 2015, the notional amount of interest rate derivative instruments totalled €236.5 billion (€261.5 billion at the end of 2014). Their net fair value as of December 31, 2015 totalled €1,126 million (€1,798 million at the end of 2014).
These instruments are mainly used to: (i) hedge interest rate risk and interest volatility risk as part of the Asset Liability Management strategy associated with the guaranteed minimum benefi ts on Variable Annuity products, with notional amount of €62.0 billion at the end of 2015 (€59.6 billion at the end of 2014) mainly in the United
(notional amount of €13.6 billion in 2015 versus €18.0 billion in 2014), and in Japan Life & Savings (notional amount of €8.8 billion in 2015 versus €7.2 billion in 2014); (ii) manage duration gap and/or hedge convexity risk between assets and liabilities on the General Account as a part of
mainly uses (i) e quity option contracts (51% of total notional amount of equity derivative instruments) and (ii) e quity futures and forwards (40%).
Life & Saving for €0.5 billion (versus €0.7 billion in 2014).
In 2015, the notional amount of currency derivative amounted to €126.9 billion versus €100.9 billion in 2014. Their market value was €-1,909 million versus €-2,126 million in 2014. AXA mainly uses (i) c urrency future and forward contracts (63% of total notional amount of currency derivative instruments), (ii) c urrency swaps (27%) and (iii) c urrency option contracts (10%).
One of the main objectives of currency derivatives instruments is to limit variations in net foreign currency-denominated assets resulting from movements in exchange rates in order to protect partially or in full the value of AXA’s net foreign-currency investments in its subsidiaries and thus reduce the variability of Group consolidated shareholders’ equity against currency fl uctuations, but also of others key indicators such as liquidity, gearing and solvency ratios. Notional amount of derivatives used by the Company to hedge the foreign currency exposure increased from €23.1 billion in 2014 to €24.2 billion in 2015, mainly due to the continuous review of its Net Investment Hedge policy.
The Group, as part of its investment and credit r isk m anagement activities, uses strategies that involve credit derivatives, which consist mainly of Credit Default Swaps (CDS). These instruments are used as an alternative to corporate bonds portfolios, when coupled with government debt instruments, but also as a protection on single names or specifi c portfolios.
Credit derivative instruments are mainly used to: (i) hedge credit risk involving the purchase of CDS as a protection mainly on single corporate names or specifi c portfolios (notional amount of €9.2 billion in 2015 versus €8.5 billion in 2014).
(ii) implement credit risk hedging strategies by purchasing bonds and protection on the same name (i.e. CDS). During stressed market conditions, the credit derivative market is indeed more liquid than the cash market. For instance,
holders of cash bonds may be unwilling or unable to sell the bonds that they hold as part of their longer-term investment strategies. For this reason, rather than simply selling their bonds, they turn to the CDS market to buy protection on a specifi c company or issuer and thus, contribute to increase the CDS market liquidity. This creates hedging opportunities
In fact, through hedging strategies, insurance companies execute Negative Basis Trade (NBT) strategies, leading to the creation of an asset that can be compared to a riskfree asset. CDS protections use by AXA in this context amounted to €2.5 billion in 2015 versus €3.4 billion in 2014.
ALM strategy is implemented to compensate for the lack of depth or liquidity in some markets by taking a synthetic credit risk (notional amount of €12.2 billion in 2015 versus €9.5 billion in 2014).
Investment in real estate properties 18,610 - 18,610 613 - 613 19,223 - 19,223
Liabilities arising from insurance contracts 398,776 (654) 398,123 371,474 (1,338) 370,137
Liabilities arising from insurance contracts where the fi nancial risk is borne by policyholders 152,079 0 152,079 142,042 - 142,042
MACRO-HEDGE AND OTHER DERIVATIVE INSTRUMENTS ON INSURANCE AND INVESTMENT CONTRACTS (LIABILITIES) - (873) (873) - (1,424) (1,424)
Financing debt owed to credit institutions 0 - 0 0 - 0
Liabilities arising from banking activities 32,902 (264) 32,639 37,640 (239) 37,402
Derivative instruments relating to insurance and investment contracts (9) (1,632) - (1,641) 19 (2,856) - (2,837)
Macro-hedge banking activities and other derivatives 23 (122) (12) (111) 3 (80) (17) (93)
The Group mitigates counterparty credit risk of derivative instruments by contractually requiring collateral for the majority of derivative contracts. At December 31, 2015, the adjustment to the fair value of derivatives for non-performance risk was not material.
I Note 21 Information by segment For more information about the Group’s segments identifi cation, please refer to page 232 to 236 of Note 3 Statement of income by segment.
Fees and charges relating to investment contracts with no participating features (b) 371 - 40,102 327 - 35,727
Fees, commissions and other revenues 1,464 - - 1,211 - -
TOTAL - PROPERTY & CASUALTY EXCLUDING INTERNATIONAL INSURANCE 30,622 8,861 1,108 82 40,673 15,758 56,431
TOTAL - PROPERTY & CASUALTY INCLUDING INTERNATIONAL INSURANCE 35,268 12,149 1,315 139 48,871 17,172 66,043
Investment in real estate properties as at fair value through profi t or loss 36 - 63 - 99
Debt instruments designated as at fair value through profi t or loss (b) 1,010 - (523) - 486
Non-consolidated investment funds designated as at fair value through profi t or loss 332 - (124) - 208
Other assets held by consolidated investment funds designated as at fair value through profi t or loss 153 - (211) - (57)
Assets backing contracts where the fi nancial risk is borne by policyholders - - 1,407 - 1,407
Non quoted debt instruments (amortized cost) 3 (0) - - 3
Non-consolidated investment funds designated as at fair value through profi t or loss 331 - (29) - 302
Non-consolidated investment funds held for trading 2 - 5 - 7
Other assets held by consolidated investment funds designated as at fair value through profi t or loss 78 - 77 - 155
Investment Portfolios” as defi ned in Note 1.8.2; ■ changes in fair value of underlying hedged items in fair value hedges (as designated by IAS 39) or “natural hedges” (i.e.
Claims ceded (including change in claims reserves) 2,005 799 987 (112) 3,678
Increase/(write back) of tangible assets amortization 1 (0) (0) 1 - - - - 1 (0)
Charges relating to owner occupied properties 240 265 43 548 204 17 22 (1) 790 689
December 31, 2014. On a constant exchange rate basis, expenses increased by €148 million, driven by: ■ higher expenses in high growth markets (€57 million) mainly in
■ higher commissions at AXA Assistance (€50 million) refl ecting business growth across all geographies.
Partly offset by: ■ a decrease in both administrative and acquisition expenses in mature markets refl ecting the effect of cost savings programs; and
■ lower expenses at AXA Bank Hungary (€113 million) mainly due to the non-repeat of a one-off provision of €101 million in 2014.
The cost of the contributions paid was recognized as an expense in the income statement, and amounted to €186 million as of 26.2.2. Defi ned benefi t plans
Most of the defi ned pension benefi t plans are funded through long-term employee benefit funds or covered by insurance policies or Mutual funds. In Switzerland and Belgium, the main defi ned benefi t plans are contributory pension plans whereas in the United States, France and Germany, the main plans are non-contributory defi ned benefi t plans.
In the United States, AXA US discontinued benefi t accruals under its defi ned benefi t pension plans after December 31, 2013 and provides a company defi ned contributions benefi t plan for services after January 1, 2014.
The assumptions for each of the liabilities are consistent with the economic features of the corresponding countries’ plans. The weighted-average fi nancial assumptions used by AXA for pension plans in the principal regions in which AXA operates were as follows: DE CEMBER 2015 ASSUMPTIONS
Pension benefi t obligation - assumptions as of December 31, 2014
Defi ned Benefi t Obligation at the beginning of the year 20,310 16,787 665 546 20,974 17,333
Net transfer In/(Out) (including acquisitions, disposals and reclassifi cations) (b) 93 (5) - - 93 (5)
Net transfer In/(Out) (including acquisitions, disposals and reclassifi cations) (b) - (0) - - - (0) Benefi ts paid by plan assets (571) (453) - - (571) (453) Amount paid in respect of settlements (0) - - - (0) -
Fair value of plan assets at the end of the year (B) 11,697 11,187 5 5 11,702 11,191 Change in separate assets Fair value of separate assets at the beginning of year 1,116 1,038 - - 1,116 1,038 Interest income on separate assets 18 32 - - 18 32 Actual return on separate assets, excluding interest income 68 38 - - 68 38
(b) this amount mainly includes the variation in the scope of plans reported under IAS 19 (contribution-based plan with a promised return in Belgium and Genworth acquisition in 2015).
“Other benefits” include postretirement benefits other than pensions, principally health care benefi ts, and post-employment benefi ts after employment but before retirement.
is recognized to the extent that it is recoverable, either through future contribution reductions or a refund to which the Group has an unconditional right, including the ability to use the surplus to generate future benefi ts.
Interest cost on the defi ned benefi t obligation 529 603 21 23 550 626
Separate Assets amounted to €1,276 million as of December 31, 2015 (€1,116 million as of December 31, 2014) mainly in France and Belgium. This represents the fair value of assets backing
IAS 19 considers liabilities net of Plan Assets on the one hand and Separate Assets and a part of Swiss assets on the other hand separately while economically, Separate Assets and a part of Swiss assets should be considered as backing Defi ned Benefi t
Pension and other benefi ts expense (393) (429) (14) (31) (407) (460)
Adjustment due to separate assets (94) (83) - - (94) (83)
Net transfer In/(Out) (including acquisitions, disposals and reclassifi cations) (93) 5 - - (93) 5
Statement of fi nancial position liability at the end of the year (9,415) (9,140) (618) (660) (10,033) (9,800)
26.2.7. Sensitivity analysis of the D efi ned B enefi t O bligation (DBO ): gross of all assets
Assets other than plan assets (b) 3,042 2,794 - - 3,042 2,794
The estimated amount of 2016 employer contributions for pension benefi ts is €384 million (€296 million estimated in 2014 for 2015).
ESTIMATED FUTURE BENEFITS TO BE PAID BY THE ASSETS OR THE EMPLOYER
From year N+11 until the last benefi t payments is paid 27,579 680
The following tables disclose the fair values of P lan A ssets and their level within the fair value hierarchy for the Defi ned Benefi t plans of
(a) The other category of P lan A ssets mainly includes Investment funds.
(a) The other category of P lan A ssets mainly includes Investment funds .
Defi ned benefi t plans expose AXA mainly to market investment risk, interest rate risk, infl ationary risk and longevity risk: ■ a decline in asset market value (equity, real estate, alternatives etc.) will immediately increase the balance sheet liability and the near-term cash-flows for countries where there is a minimum funding requirements,
■ and an increase in infl ation rate or an increase in life expectancy will result in higher plan liabilities.
Liability Management (ALM) framework defining an optimal strategic allocation with respect to the liabilities structure.
The management of the assets notably includes liquidity management, diversifi cation of each asset type so that the failure of any specifi c investment does not present a material risk to the plans, and implementation of hedging programs.
Over 2015, the UK p ension s cheme entered into a longevity swap transaction with the aim of economically hedging longevity risk inherent within the pensioner population of the Scheme.
The above presentation of the cost related to Performance Units does not include a gain of €19.4 million in 2015 before tax
Performance S hares amounted to €82.9 million in 2015 (net amount of €90.2 million in 2014).
Executive offi cers and other key employees may be granted options on AXA ordinary shares under employee stock option plans. These options may be either subscription options involving newly issued AXA ordinary shares or purchase options involving
From 2007 to 2012, for the employees who were granted more than 5,000 options, the fi rst two instalments vest unconditionally at the end of the vesting period, while the fi nal instalment is subject to the fulfilment of certain conditions regarding the performance of the AXA shares compared to the STOXX
The option pricing assumptions and fair value at grant date for plans issued in 2015, 2014, 2013, and 2012 are as follows: Assumptions (a)
The total cost is amortized over the vesting period and an estimated pre-vesting lapse rate of 5% is applied. On that basis, the expense recognized in profi t or loss for the year ended
Depositary Receipt). These options were issued at the market value of AXA ADRs on the date of grant. Options granted prior to 2004 vest over a three-year period, with one third vesting on each anniversary date. However, starting in 2004, new grants generally vest over a four-year period with one third vesting on each of the second, third and fourth anniversary dates (generally in March). Options currently issued and outstanding have a 10year contractual term from their date of grant.
shares. Consequently, current holders of AXA ADRs may continue to hold or trade those shares, subject to existing transfer restrictions, if any.
AXA offers to its employees the opportunity to become shareholders through special employee share offerings. In countries that meet the legal and fiscal requirements, two investment options are available: the traditional plan and the leveraged plan.
The traditional plan allows employees to purchase, through a personal investment, AXA shares (either through Mutual funds
Normes Comptables”). The ANC approach values the restricted shares through a replication strategy whereby the employee would sell the restricted shares forward at the end of the lockup period, borrow enough money to buy unrestricted shares immediately, and uses the proceeds of the forward sale together with dividends paid during the lock-up period to fi nance the loan.
For the leveraged plan, the cost also includes the opportunity gain implicitly provided by AXA by enabling its employees to benefi t from an institutional price for derivatives as opposed to a retail price.
On October 21, 2015, the AXA Group made an employee share offering at €17.74 per share for the traditional plan (discount of 20% to the reference price of €22.17 representing the average over the twenty trading days ending on October 20, 2015) and at €20.27 per share for the leverage plan (discount of 8.57% to the reference price). Subscriptions amounted to 18.7 million shares, increasing the share capital by €375.5 million. This offering represented a total cost of €7.8 million taking into account the fi ve-year lock-up period.
In 2015, the cost of the lock-up period was measured at 19.68%
for the traditional plan and 8.54% for the leveraged plan (due to different discounts). In addition to the lock-up cost, the opportunity gain offered to the employees under the leveraged plan was measured at 1.99%.
Total cost for AXA = [A] – [B] + [C] (as a percentage of the reference price) 0.32% 2.03% 0.36% 2.09%
The free shares are valued using the ANC (Autorité des Normes
Comptables) approach described in the AXA Group Shareplan section using assumptions adapted to the structure of the plan
Performance Shares are granted to executive officers and other key employees in France. These Performance Shares plans are equity-settled award plans subjected to a non-market performance criteria and have a two-year vesting period followed by a two-year restrictions period until 2013. For 2014 grants, the performance and the vesting period is raised to 3 years for 100% of Performance Shares granted to the Group’s executive offi cers and for 50% of the Performance Shares granted to other eligible employees. For 2015 grants, the performance and the vesting period is 3 years for all Performance S hares granted.
In 2015, the valuation was based on a market price of €22.42 per share at grant date and an estimate 5% pre-vesting lapse rate per year. The grant date average fair value of Performance
In 2013, AXA established common terms and conditions for the attribution of “International Performance Shares” to eligible employees. Under this 2013 International Performance Shares
This amendment eliminated employee service requirement but did not modify delivery dates contained in the original award agreements.
Most of the awards granted in 2014 and in 2015 contained the same conditions as awards amended in 2011, resulting in the immediate recognition of the cost of these awards instead of an amortization over a maximum of four years.
Restricted AB Holding Units (€120.6 million in 2014), elected in December 2015 and representing 6.6 million restricted AB
Moreover, options to acquire AB Holding Units were granted as follows: 29,056 options were granted during 2015, 25,106 options were granted during 2014, and 37,690 options were granted during 2013.
The 2015 total cost amounted to €137.0 million (€116.2 million in 2014), gross of tax.
Partly offset by: ■ Central and Eastern Europe (-810) ref lect ing the deconsolidation of Ukraine; ■ France (-405) following natural leaves; ■ Germany (-229) reflecting efficiency programs and early retirements.
■ the calculation of diluted net income per ordinary share takes into account shares that may be issued as a result of stock option plans. The effect of stock option plans on the number of fully diluted shares is taken into account only if options are considered to be exercisable on the basis of the average stock price of the AXA share over the period.
Net income including impact of undated subordinated debt A 5,312 4,718
BASIC NET INCOME PER ORDINARY SHARE C = A / B 2.19 1.95
FULLY DILUTED NET INCOME PER ORDINARY SHARE F = A / D 2.18 1.94
In 2014, net income per ordinary share stood at €1.95 on a basic calculation, all attributable to continuing operations, and €1.94 on a fully diluted basis also all attributable to continuing operations.
In 2015, the Company was party to the following transactions with related parties which may be deemed to have been material to AXA or the related party in question or unusual in their nature or conditions.
Mutuelle and AXA France IARD, a Property & Casualty insurance subsidiary of the Company. For this coinsurance, AXA France
(e.g. fi nance, accounting and reporting, tax, legal, marketing and brand, internal audit, human resources, procurement, information systems, Risk Management, cash management)
GIEs to the Company and its subsidiaries are generally invoiced at cost and are included in the consolidated expenses refl ected in the Company’s audited consolidated fi nancial statements.
AXA has given numerous commitments and guarantees, including fi nancing commitments, guarantees given to fi nancial institutions and customers, pledged assets, collateralized commitments and letters of credit. For a description of these commitments and guarantees, see Note 29 “Contingent assets and liabilities and unrecognized contractual commitments” to the Group’s Consolidated Financial Statements.
Certain of these guarantees are given by the Company for the benefi t of its subsidiaries and affi liates for various business purposes including to promote development of their business
(e.g. to facilitate acquisitions, integration of acquired businesses, distribution arrangements, off-shoring arrangements, internal restructurings, sales or other disposals of assets or businesses, sales or renewals of products or services or similar transactions), to support their credit ratings, and/or to promote effi cient use of the Group’s capital resources. In this context, the Company may guarantee repayment of loans or other obligations between its subsidiaries, guarantee obligations of its subsidiaries to third parties, or provide other types of guarantees for the benefi t of its subsidiaries. The benefi ciaries of these guarantees are generally required to compensate the Company at a negotiated rate based on prevailing market rates and conditions for guarantees of a similar nature. In addition, from time to time, the Company may provide comfort letters or similar letters to rating agencies and/or regulators for the benefi t of its subsidiaries and affi liates for various business purposes, including facilitating specifi c transactions, achieving target rating levels and, more generally, helping to develop the business of these subsidiaries.
Commitments granted by the Company to its subsidiaries are disclosed in Appendix V of this Annual Report “AXA Parent
The Company, from time to time, makes capital contributions, loans, other extensions of credit, or otherwise provides liquidity and capital resources to its subsidiaries and affi liates for various business purposes including to fi nance their business operations
Company may also from time to time borrow from its subsidiaries for various business purposes. These transactions are generally carried out on arms-length terms and conditions with loans and other extensions of credit bearing interest at varying rates that generally refl ect prevailing market rates at the respective dates such loans were originated.
Consistent with the principles set forth in Note 1.3.1 “Scope and basis of consolidation” to the fi nancial statements, (i) AXA’s investments or other arrangements with non-consolidated special purpose entities (SPEs) do not allow AXA to exercise control over such SPEs; and (ii) SPEs controlled by AXA are consolidated as disclosed in Note 2.2 to the fi nancial statements.
(€4,896 million) partly offset by increase in commitment received on letter of credit (€2,949 million) and in guarantee commitments
Company mainly due to stand-by credit lines; ■ €1,151 million at AB including €921 million commitment lines with various banks and other lenders and €230 million standby credit lines; ■ €413 million commitment lines granted to Japan Life &
(€21,589 million); ■ €4,585 million collaterals for reinsurance operations mainly from the United States Life & Savings (€2,941 million) and from France Life & Savings (€648 million); ■ €3,698 million collateral for derivatives mainly from Germany
Letters of credit received totaled €3,677 million at the end of 2015 and were mainly from the United States (€3,447 million)
Pledged securities and collaterized commitments 35,589 173 298 3,033 39,093 39,723
Commitments given totaled €64,829 million at the end of 2015, a decrease by (€549) million compared to the end of 2014, mainly due to a decrease of (€1,125) million in pledged securities and collateralized commitments mainly in relation with derivative instruments, (€580) million in other pledged securities and collateralized commitments, (€566) million in pledged securities and collateralized commitments for repurchase and similar transactions partly offset by increase in pledged securities and collateralized commitments in relation with loans (€1,666 million)
Financing commitments given totalled €3,185 million at the end of 2015, and mainly consisted of fi nancing commitments to customers (€3,183 million), notably comprising loan commitments granted at AXA Bank Europe (€1,194 million), AXA
(€606 million) and AXA France Life & Savings (€403 million) to their customers.
AXA Bank Europe through guarantees in case of insolvency or default (€1,615 million) and through guarantees related to financial obligations (€950 million) and from AB through guarantees related to fi nancial obligations (€703 million);
Assurance (€499 million); ■ pledged assets and collaterals for derivatives instruments totaled €5,123 million mainly in Japan Life & Savings
Letters of credit given totalled €120 million at the end of 2015 and were mainly from Colisée RE (€66 million), from Turkey
(€116 million); ■ €2,481 million guarantees given by the Company as part of
Group employee insurance contracts; ■ €1,386 million as commitments to Real Estate funds mainly from the Unite d States Life & Savings (€797 million), Belgium
Savings (€495 million) and by the Company (€149 million); ■ €175 million as commitments to partnerships given mainly by France Life & Savings (€142 million) and AXA France
In most cases, the amounts available for distribution from AXA’s insurance subsidiaries and joint ventures are limited to net income for the year and retained earnings calculated in accordance with the statutory accounting policies used by the subsidiaries to prepare their local fi nancial statements. Further restrictions may be imposed by the local insurance regulators in countries where AXA
In accordance with European Union directives, insurance companies with their registered office in a European Union member country are required to maintain minimum solvency ratios which must be supported by capital, retained earnings and reserves and unrealized capital gains on marketable securities and real estate as reported in regulatory fi lings or subject to approval by local regulators in some countries. AXA’s insurance operations in countries outside the European Union are also subject to local capital adequacy and solvency margin regulations.
Legal, tax and employment consulting 3,527 2,714 8% 7% 282 54 2% 0%
shareholders brought an action in Germany alleging that the cash compensation offered by AXA SA was not adequate. In the fi rst half of 2016, we expect an initial expert valuation report to be delivered to the court. Based on recent precedents in other
In the United States, certain AXA subsidiaries are involved in a number of lawsuits (both class actions and individual litigations), investigations and other actions in various states and jurisdictions where they do business. A detailed description of signifi cant matters involving AXA Equitable Life Insurance Company and its subsidiaries (including AB L.P.) is included in the Annual
Reports on Form 10-K for the year ended December 31, 2015 and subsequent reports on Form 10-Q, respectively, of AXA
or in substantial settlements. In certain jurisdictions, juries have broad discretion in awarding punitive damages. AXA’s United
District Court of the District of New Jersey entitled Mary Ann
(“Sivolella Litigation”) and a substantially similar action was fi led in January 2013 entitled Sanford et al. v. FMG LLC (“Sanford
(i) Section 36(b) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), for alleged excessive fees paid to AXA Equitable and FMG LLC for investment management services and administrative services and (ii) a variety of other theories including unjust enrichment.
applicable. The Sivolella Litigation and the Sanford Litigation have been consolidated and went to trial on January 6, 2016 and testimony concluded in February 2016. Closing arguments are scheduled to occur in May 2016 following post-trial briefi ng.
Beginning in April 2014, a series of related lawsuits (Yale/Ross and Yarbrough) were fi led against AXA Equitable Life Insurance
Company in US federal district court for the Southern District of New York on behalf of a purported class of persons who renewed or paid premiums on life insurance and/or annuity contracts issued by AXA Equitable from 2011 to March 2014.
Equitable Life Insurance Company in New York, New Jersey and Connecticut state courts. These actions were brought on behalf of a class of persons who purchased Variable Annuities or variable life insurance policies from AXA Equitable that were subject to the AXA Tactical Manager (ATM) strategy which is a managed volatility strategy in certain variable investment options offered to purchasers of certain AXA Equitable Variable
Annuity and variable life insurance contracts. These suits assert claims for breach of contract which alleges that AXA Equitable breached express provisions of the contracts/policies by failing to comply with New York State law when it implemented this strategy. Damages sought are not quantifi ed. During 2015, the
November 2015, was referred to the United States District Court for the Southern District of New York. AXA Equitable believes that it has strong defenses to these claims and will defend them vigorously.
ERDF (a subsidiary of the primary electric utility in France) has notifi ed claims for coverage under a professional liability policy underwritten by AXA Corporate Solutions (“AXA CS”). The underlying liabilities in question arise out of a series of lawsuits
(more than 500 individual suits) brought against ERDF by local electricity producers in France engaged in production of solar/
“Decrees”). In February 2014, the Court of Appeal of Versailles ruled against ERDF in one of these lawsuits and, as part of this
(and damages are currently being assessed). In the context of another case before the court in December 2015, however, the
Court of Appeal of Versailles referred the question as to legality of the Decrees to the European Court of Justice (“ECJ”) for a preliminary ruling. An ECJ ruling that the Decrees were illegally adopted would substantially limit any claims for damages by the plaintiffs. Pending the ECJ decision on illegality, it is anticipated that other courts may stay proceedings. AXA CS believes that strong defenses exist to the claims brought against ERDF and, in addition, that certain policy exclusions and defenses apply to
ERDF’s claims for coverage under the professional liability policy underwritten by AXA CS.
RBS has notifi ed claims for coverage to AXA CS under general liability policies covering the years 2001-2004. AXA CS insured the primary layer (up to £5 million per claim or series of related claims) under these policies. RBS seeks coverage for potential liabilities arising out of three class actions brought against
■ benefi t from contractual rights to indemnifi cation from third party sellers or other transaction counterparties that are designed to protect the Group against existing or potential future litigation exposures or other types of contingent liabilities of the acquired businesses or assets. These indemnities generally constitute unsecured obligations of the indemnifying party and, consequently, their value may be substantially impaired or rendered worthless in the event of the bankruptcy or insolvency of the indemnifying party.
AXA and its subsidiaries are subject, from time to time, to examinations, investigations, enforcement proceedings and other actions by regulatory and law enforcement authorities (involving civil and/or penal matters) as well as to proposed changes in law and/or regulation that may signifi cantly impact their business and results of operations. For additional information on these matters as well as other risks and contingent liabilities affecting the Group and its business, please see Section 3.1 “Regulation” and 3.2
Annual Report. Some of the litigations described above have been brought on behalf of various alleged classes of claimants, and certain of the claimants in these actions seek signifi cant or unspecifi ed amounts of damages, including punitive damages.
M anagement believes that the ultimate resolutions of the matters described above are not likely to have a material adverse effect on the consolidated fi nancial position of AXA, taken as a whole.
that bear little or no relation to actual economic damages incurred by plaintiffs or the underlying regulatory violations, AXA’s
In 2015, AXA undertook a review of its historical strategic real estate ownership in New York City. On December 2, 2015, AXA
Assistance. This business is expected to develop innovative solutions, be it in terms of partnerships, products and services, distribution channels or operating models, in order to better address the needs of this client segment.
On March 21st, 2016, AXA announced that Mr. Henri de Castries,
Executive Officer of AXA and a member of AXA’s Board of
AXA’s new strategic plan, and to ensure an effective leadership transition.
I Report of the Statutory Auditors on the consolidated fi nancial statements (For the year ended December 31, 2015)
■ the audit of the accompanying consolidated fi nancial statements of AXA; ■ the justifi cation of our assessments; ■ the specifi c verifi cation required by law.
We have assessed the appropriateness of the fi nancial asset valuation process, as well as the information disclosed in the above mentioned notes.
We assessed the reasonableness of the assumptions used to calculate these values, particularly with respect to the Group’s experience and its regulatory and economic environments as well as the overall consistency of these assumptions.
We ensured that the valuation approaches used were based on assumptions that are consistent with the forecasts resulting from the strategic plans established by the Group. We also examined the information gathered by the Group to justify the other assumptions used as well as the sensitivity tests performed.
Michel Laforce – Xavier Crépon Jean-Claude Pauly - Gilles Magnan * This document is the English translation of the original legal statutory audit report which is, by law, prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information therein, the original language version takes precedence over this translation. This English version should be read in conjunction with, and construed in accordance with French law and professional auditing standards applicable in France.
Changes in the capital 349 5.2 DESCRIPTION OF AXA’S SHARE CAPITAL 350
We summarize below certain material provisions of applicable French law, in force at the fi ling date of this Annual Report, and of our Charter (Statuts). You may obtain copies of our Charter in French from the Paris Trade and Companies Register (Registre du commerce et des sociétés).
Committee. Members of the Board of Directors receive a fi xed annual directors’ fee, the maximum overall amount of which is determined by the Shareholders’ Meeting and apportioned by the Board of Directors among its members. Notwithstanding the above, the Board of Directors’ Bylaws provide that no directors’
fee shall be paid to directors who are also executive offi cers (i.e.
the Chief Executive Offi cer and Deputy Chief Executive Offi cer).
In accordance with the Afep-Medef Code, the directors shall be shareholders of the Company and own a signifi cant number of shares in the Company; if they do not own such shares at the time they are fi rst appointed, they shall use their directors’ fees to acquire AXA shares. Accordingly, the Board of Directors has set for each Board member, whether an individual or a permanent representative of a legal entity to whom directors’ fees were paid, the objective of holding, within two years after fi rst being appointed, a number of shares in the Company, the value of which, on the basis of the closing price of the AXA share on December 31 of the preceding fi scal year, corresponds to an amount at least equivalent to the gross director’s fees earned in respect of the previous fi scal year. The shares purchased for the purpose of this holding objective must be held in registered form.
Upon proposal by the AXA Board of Directors, the shareholders of AXA may decide to allocate all or part of distributable profi ts to special or general reserves, to carry them forward to the next fi scal year as retained earnings, or to allocate them to the shareholders as dividends. If AXA has earned a distributable profi t since the end of the previous fi scal year, as refl ected in an interim balance sheet certifi ed by its Statutory Auditors, the Board of Directors may distribute interim dividends to the extent of the distributable profi t without prior approval of the shareholders. AXA’s Charter requires
AXA to distribute dividends between its shareholders in proportion to their share in the capital.
Company. Such an amendment generally requires the approval of two-thirds of the shareholders attending or represented at an Extraordinary Shareholders’ Meeting. However, no such
The notifi cation shall be repeated in the conditions stated above each time an additional fraction of 0.5% of the share capital or voting rights is crossed upward or downward.
Meetings if, at such meetings, the notifi cation failure has been recorded and if one or more shareholders jointly holding at least 5% of the share capital so request. Loss of voting rights shall be applicable in all Shareholders’ Meetings that would be held up until two years following proper notifi cation.
New equity issue reserved for employees of AXA (SharePlan 2013) 18,834,270 244,011,703 2,410,695,530 5,520,492,764
This report presents, pursuant to the provisions of Article L.225-37 of the French Commercial Code, the composition of the Board of
For information on the composition of the Board of Directors and the gender balance on the Board, as well as on the conditions of preparation and organization of the Board of Directors’
Directors” and “Board of Directors’ Committees”, Sections of this Annual Report. For information on specifi c limitations of the powers of the Chairman & Chief Executive Offi cer decided by the
Board of Directors with respect to the Group’s internal control environment. This report was assessed by the Audit Committee before being reviewed and approved by the Board of Directors during its meeting of March 17, 2016.
In this report, the term “Group” refers to AXA SA (the “Company”)
Committee. These Committees exercise their activities under the responsibility of the Board of Directors and report regularly to the Board of Directors on matters within the scope of their respective responsibilities.
AXA’s principal subsidiaries, whether publicly traded or not, are generally governed by (i) a b oard of d irectors or a s upervisory b oard which generally include independent or n on-e xecutive d irectors and (ii) various b oard c ommittees including an a udit c ommittee and a c ompensation c ommittee, which generally include independent or n on-e xecutive d irectors.
independence criteria, b oard committees and their roles, and directors’ fees.
(the Group Standards Handbook). These Group Standards are designed to ensure that all the companies of the Group have effective Risk Management processes and appropriate governance structures, and meet the Group’s minimum control requirements. Chief Executive Offi cers of AXA Group companies are therefore required to annually certify that the companies under their responsibility are in compliance with the Group
For more information about the Executive Committee including its composition, please see Section 2.1 “Corporate offi cers, executives and employees” of this Annual Report.
January 1, 2016, require the Group to have in place a governance system designed to guarantee a sound and prudent management. This governance system is based on a clear separation of responsibilities and must be proportionate to the nature, extent and complexity of the Group’s operations.
regulations defi ne four key functions: ■ the risk-management function which is, in particular, in charge of the design, implementation and validation of the internal model, the documentation of this model and any subsequent changes made to it as well as the analysis of the performance of this model and the production of summary reports thereof; ■ the compliance function, which is, in particular responsible for advising on compliance with the laws, regulations and administrative provisions regarding insurance and reinsurance activities; ■ the internal audit, which is, in particular, responsible for performing an evaluation of the adequacy and effectiveness of the Group’s internal control system and other elements of the system of governance. The internal audit function must be objective and independent from the operational functions; and
The Group’s two executive offi cers and each person in charge of a key function must fulfi ll the requirements of a fi t and proper assessment, as set in the Group’s internal procedure, and be notifi ed to the Autorité de Contrôle Prudentiel et de Résolution
(“ACPR”). Solvency II also requires procedures whereby the key function holders must have a direct access to the Board of
The role of Group Risk Management (GRM) is to identify, quantify and manage the main risks to which the Group is exposed.
To this end, GRM develops and deploys a number of risk measurements, monitoring instruments and methods, including a standardized methodology and framework for stochastic modelling (through AXA’s Solvency II internal model) including the ORSA (Own Risk & Solvency Assessment) required under
GRM coordinates Risk Management for the Group and is supported by local Risk Management teams within each operating unit. The types of risks covered include risks coming from the invested assets, from the insurance liabilities, asset/
has defi ned and implemented a set of policies and procedures to ensure that all risks embedded in the business processes are appropriately reviewed on a yearly basis. The Group ORSA
PBRC’s role encompasses the following principal activities: ■ development of both accounting and reporting standards; ■ managing instructions to process with the subsidiaries for the various exercises; ■ managing the Group’s fi nancial consolidation and reporting systems; ■ producing the consolidated fi nancial statements in accordance with International Financial Reporting Standards (IFRS) and analyzing key performance indicators; ■ managing the Internal Financial Control (IFC) program; ■ developing and using management control tools; ■ managing and consolidating the European Embedded Value process, related actuarial indicators and the economic balance sheet; ■ coordinating the production of AXA’s Annual Report
(Document de Référence) fi led with the Autorité des m archés f inanciers (“AMF”); ■ coordinating the production of reports fi led with the ACPR
At entity level, AXA subsidiaries are responsible for entering and controlling accounting and fi nancial data that comply with the
Department manages a wide range of compliance related matters including (i) regular reporting from Group companies on signifi cant compliance, litigation and regulatory matters,
Group Standard on business with countries and/or individuals subject to international sanctions. The Compliance Support and Development Program is a structured program of on-going reviews with the Group operating companies around the world that is designed both to review signifi cant compliance issues and processes as well as the quality of the Group’s C ompliance programs and personel.
Group composed of the general counsels of AXA’s principal subsidiaries which meets on a regular basis.
The Group’s Global Head of Audit reports to the Chairman of the AXA Group Audit Committee with an administrative reporting line to the Group’s Deputy Chief Executive Offi cer.
Global Head of Audit whilst also having a direct and unfettered reporting line to their local Audit Committee Chairman and an administrative reporting line within their local management structure.
Compliance Committee (RCC) to ensure that the Group has: (i) a comprehensive view of the various risks facing it on a continuing basis, (ii) a dedicated forum for reviewing, analyzing and prioritizing these risks, (iii) defi ned action plans to manage these risks and (iv) optimal coordination and communication between the different departments managing these risks.
Offi cer (CFO) to provide reasonable but not absolute assurance regarding the reliability of fi nancial reporting and the preparation of AXA’s consolidated fi nancial statements.
The IFC program is based on AXA’s IFC Standard, which is an internal control and governance standard. AXA’s IFC Standard is based on the “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway
In accordance with AXA’s IFC Standard, the in-scope AXA Group companies (i) document the significant processes and controls, as well as the rationale of how the associated risk of material misstatement due to error or fraud can be reduced to an acceptable level and (ii) test the design and operational effectiveness of key controls based on the test plans.
These tests form part of a continuous improvement process in the internal control exercised over fi nancial reporting. Areas for improvement are identifi ed by specifi c test plans designed by management with insight into the risks covered. These processes then help remediate the identifi ed potential control defi ciencies and maintain high standards of internal control within the Group.
At each year-end, the in-scope AXA Group companies are required to perform an evaluation of their ICOFR as part of an internal certifi cation process. This process involves formal signoff by the Company’s process owners and culminates with a formal management report from the Company’s CFO or another senior executive stating their conclusion as to the effectiveness of the Company’s ICOFR.
In December 2008, AXA adopted all of the Afep -Medef recommendations, including the recommendations on the compensation of executive offi cers dated October 2008, as its
Committee has adequate time to consider and address any issues concerning the Company’s annual accounts;
are taken into account to calculate the number of shares actually held. Each executive offi cer is required to meet with this minimum shareholding requirement within a period of five years from the date of his/her first appointment as executive offi cer. Considering the demanding level of these shareholding requirements imposed upon executive offi cers, the Board of Directors, upon recommendation of its Compensation & Human Resources Committee, has decided that it was not appropriate to compel executive offi cers to acquire more AXA shares following the expiration of the compulsory holding period applicable to their performance shares. AXA’s internal share ownership policy adequately covers the Afep-Medef Code requirement; (ii) exercise of stock options: pursuant to the Afep-Medef
Code, companies shall determine periods preceding the disclosure of their fi nancial statements during which the exercise of the stock options is not allowed (“sensitive periods”). Sensitive periods are determined by applying the AXA Group’s Compliance and Ethics Guide whereby these periods begin 30 days prior to the disclosure of the annual or half-year earnings releases and 15 days prior to its quarterly fi nancial information releases. During sensitive periods, the AXA Group’s Compliance and Ethics Guide
AXA shares obtained upon exercise (or otherwise engage in transactions involving AXA securities) during sensitive periods (or during other periods outside of sensitive periods when they may be in possession of material non-public information). It should be noted that the Haut Comité de
Commercial Code, it is specifi ed that the conditions for the participation to Shareholders’ Meetings are detailed in Section 23 of AXA’s Charter (statuts), copies of which are available at the
Paris Trade and Companies Register (Registre du commerce et des sociétés du tribunal de commerce de Paris). AXA’s Charter is also available on the Company’s website (www.axa.com). In addition, the information referred to in Article L.225-100-3 of the French Commercial Code is made public in the report of
In our capacity as Statutory Auditors of AXA, and in accordance with Article L.225-135 of the French Commercial Code, we hereby report to you on the report prepared by the Chairman of the Board of Directors of your Company in accordance with Article L.225-37 of the French Commercial Code for the year ended December 31, 2015.
It is our responsibility: ■ to report to you on the information set out in the Chairman’s report on internal control and r isk m anagement procedures relating to the preparation and processing of fi nancial and accounting information; and
Information concerning internal control and Risk Management procedures relating to the preparation and processing of fi nancial and accounting information
Management procedures relating to the preparation and processing of fi nancial and accounting information set out in the Chairman’s report. These procedures mainly consisted of: ■ obtaining an understanding of the internal control and Risk Management procedures relating to the preparation and processing of fi nancial and accounting information on which the information presented in the Chairman’s report is based, and of the existing documentation; ■ obtaining an understanding of the work performed to support the information given in the report and of the existing documentation; ■ determining if any material weaknesses in the internal control procedures relating to the preparation and processing of fi nancial and accounting information that we may have identifi ed in the course of our work are properly described in the Chairman’s report.
On the basis of our work, we have no matters to report on the information given on internal control and Risk Management procedures relating to the preparation and processing of fi nancial and accounting information, set out in the Chairman of the Board of Directors’
ICOFR. AXA’s Statutory Auditors provide a reasonable assurance report on AXA’s ICOFR each year.
The IFC programme includes primarily the entities which are individually signifi cant to AXA’s consolidated fi nancial position or results of operations, as well as the entities which provide signifi cant services to AXA and/or its consolidated subsidiaries
Central (PBRC) Department, other relevant AXA D epartments, and representatives from each in-scope AXA Group company.
The IFC programme and the conclusion of management as to the effectiveness of AXA’s ICOFR are also reviewed by AXA’s
Outstanding control defi ciencies are consolidated at Group level to evaluate their impact on AXA’s consolidated fi nancial statements, considering their likelihood, potential impact, compensating controls and other qualitative factors. This evaluation process is designed to identify any control defi ciencies that may rise to the level of a material weakness. A material weakness is a deficiency or a combination of deficiencies in internal control over fi nancial reporting, such that there is a reasonable possibility that a material misstatement of the
PricewaterhouseCoopers Audit and Mazars have performed audit procedures in order to be able to obtain reasonable assurance as to whether management’s conclusion as to the effectiveness of AXA’s ICOFR based on the AXA’s IFC Standard is fairly stated.
The Statutory Auditors prepared a report on the Company’s Consolidated fi nancial statements for the year ended December 31, 2013, which are incorporated by reference in this document. This report, set out in pages 330 and 331 of the Registration Document was fi led with the AMF on March 21, 2014 under number D.14-0184.
Ordinary shares and other securities giving a claim to ordinary shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (b) 6 billion (d) 2 billion (e) 26 months June 30, 2017
Ordinary shares reserved for a specifi c category of benefi ciaries in connection with offerings for employees – 135 million (f) 18 months October 30, 2016
Performance shares (actions de performance) (g) – 1% (h) 38 months June 23, 2017
(d) The aggregate nominal value of debt instruments associated with the issue of securities with or without preferential subscription rights may not exceed the global upper limit of €6 billion.
approval and will be submitted to the Shareholders’ Meeting on April 27, 2016: Issues without preferential subscription rights for shareholders
Ordinary shares or securities giving access to the capital, reserved for employees – 135 million (a) 18 months October 27, 2017
Performance shares (actions de performance) (b) (d) – 0.40% (c) 38 months June 27, 2019
USE OF THE VARIOUS FINANCIAL AUTHORIZATIONS PERTAINING TO CAPITAL INCREASES IN 2015
In 2015, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 23, 2014 (resolution 19)
American Region, compared to €70 million in 2014, up €206 million as AXA Mediterranean Holding decreased its dividend in 2014 in order to fund the acquisition of Colpatria
Dividends received from fi nancial subsidiaries and other holding companies fell by €121 million to €223 million versus €344 million in 2014. Of this decrease, €130 million is due to the liquidation of the company Finance Solutions during 2015 following the reimbursement of internal loans granted to US entities.
In 2014, the corporate income tax benefi t derived mainly from the €762 million of tax receivables from members of the tax consolidation Group.
At December 31, 2015, total assets amounted to €74,827 million, versus €73,270 million at December 31, 2014.
Investments in subsidiaries net of valuation allowances totaled €63,269 million, versus €62,586 million at year-end 2014, representing an increase of €683 million, refl ecting: ■ a €663 million capital increase of AXA Global Life to deploy the internal reinsurance program for AXA Group;
European Group Holdings Ltd; ■ a €215 million capital increase of Société Beaujon mainly to finance the acquisition of Mansard Insurance Plc and the increased investment in Bharti AXA General Insurance
Other financial assets amounted to €1,118 million, versus €872 million in 2014, a €246 million increase mainly attributable to margin calls paid to bank counterparties under collateral agreements linked to the management of derivative instruments, which stood at €970 million at year-end 2015, compared with €727 million at year-end 2014.
Tax receivables came to €112 million, including a €51 million carry-back receivable.
Miscellaneous receivables totaled €193 million, refl ecting €131 million in fi nancial income receivables.
Cash and cash equivalents stood at €2,623 million, versus €2,836 million at year-end 2014, the €213 million decrease being mainly explained by the redemption of €1 billion senior debt in January 2015 partly offset by dividends received from subsidiaries net of the dividend paid to shareholders and carryback receivable cash payment.
Provisions for risks and charges amounted to €1,460 million and mainly consisted in €632 million for the redemption premium related to the subordinated convertible note maturing in January 2017, €382 million of provisions for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation Group and a €235 million provision for foreign exchange risk.
Unrealized foreign exchange gains amounted to €604 million at year-end 2015, down from €785 million at December 31, 2014.
This item refl ects the effects derived from the revaluation of foreign currency denominated assets and liabilities at the closing exchange rate. It declined compared to 2014 due to Japanese
Supplier invoices to be paid at December 31, 2015 came to €11 million, €10 million of which are due within three months
Profi t on ordinary activities before tax (VI = III + IV + V) 1,069 1,770
Net book value on the sale of fi xed assets (202) (187)
1 – Closing balance sheet summary a) Capital – Ordinary shares (in Euro million) 5,398 5,470 5,537 5,593 5,557 b) Ordinary shares (numbers in million) 2,357 2,389 2,418 2,442 2,426 c) Bonds convertible into ordinary shares (numbers in million) (a) 7 7 7 7 7 2 – Income statement summary (in Euro million)
a) Gross revenues before sales tax 4,719 3,438 3,289 3,394 2,709 b) Pre-tax income from continuing operations, before depreciation, amortization and releases 2,992 1,850 1,776 1,785 1,079 d) Net after-tax income after depreciation, amortization and releases 8,649 3,261 1,727 2,392 1,747 3 – Per share data (in Euro)
a) After tax income, before depreciation, amortization and releases 3.98 0.65 0.81 1.00 0.71 b) After tax income, after depreciation, amortization and releases 3.67 1.37 0.71 0.98 0.72
AXA EQUITY AND LAW PLC 1 2,846 99.96% 1,133 5, Old Broad Street – LONDON EC2N 1AD – England 26, rue Drouot – 75009 PARIS
25, boulevard du Souverain – 1170 BRUXELLES – Belgium 120-122, avenue Hassan II – 21000 CASABLANCA – Morocco
Cœur Défense – Tour B – La Défense 4 – 100 Esplanade du Général de Gaulle – 92932 PARIS LA DEFENSE
Guild House – Guild Street – IFSC – DUBLIN 1 – Ireland
Calle monseñor Palmer numéro 1 – PALMA DE MALLORCA – Balearic Islands
General Guisan-str, 40 – CH-8401 WINTERTHUR – Switzerland 21, avenue Matignon – 75008 PARIS
I Notes to the fi nancial statements as at December 31, 2015
Net income for the fi scal year ending December 31, 2015 was €1,747 million against €2,392 million at December 31, 2014.
The fi nancial statements as at December 31, 2015 are prepared and presented in accordance with the provisions of the 2014
II, Section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salaries” (especially
December 31, 2015 1,491,713 shares were allocated to hedging purposes, representing €37 million.
Company’s fi nancial statements (regulation ANC n° 2014-03 chapter “titre VI, chapitre II, Section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salariés»).
Securities are classifi ed using the following criteria: ■ investments in subsidiaries and affiliates are securities representing at least 10% of the share capital of the issuing company plus those which the Company deems held for the long term; ■ other fi nancial assets comprise securities representing less than 10% of the share capital and which are not investments in subsidiaries and affi liates.
The income statement distinguishes between ordinary operations and capital operations: ■ ordinary operations include dividends, revenues from other investments, fi nancial expenses, operating expenses and income from transactions in investments; ■ capital operations include gains or losses on the disposal of investments in subsidiaries and affiliates and portfolio management investments, impairment charges and reversals in respect of these securities and related receivables, gains and losses arising from exchange rate movements, charges and reversals of provisions for risks and charges, and exceptional income and expense; ■ disposals of investments in subsidiaries and affi liates are measured using the weighted average unit cost method.
The charge for the year ending December 31, 2015 amounted to €55 million, and the existing provision at December 31, 2015 is €632 million. The unamortized balance of €56 million was recognized as an off-balance sheet commitment.
On January 11, 2007, the meeting of holders of AXA’s 2017 convertible bonds were held to vote on an amendment of the fi nal conversion dates of the bonds to January 26, 2007 in exchange for a cash payment in respect of the value of the conversion option.
Other shareholders’ equity included undated deeply subordinated notes totaled €6,734 million, versus €6,441 million in 2014, taking account of the €262 million negative foreign exchange effects.
Other debt issue expenses 103 81 4 18 3.7. Unrealized foreign exchange losses
Unrealized foreign exchange losses amounted to €2,998 million, of which €2,128 million related to the deferred recognition of foreign exchange losses in line with hedge accounting principles, offset by unrealized gains on investments in subsidiaries. This item also refl ects unrealized losses on assets and liabilities denominated in foreign currencies attributable to the effects of their revaluation at the closing exchange rate. The increase of €550 million compared with 2014 is mainly due to unfavorable impact of US Dollar and Pound Sterling on debts.
(a) Proposed dividend at year end 2015 is submited to Shareholders’ Meeting of April 27, 2016.
Undated deeply Subordinated Notes (nominal) 6,356 - 262 6,618 3.11. Provisions for risks and charges
(a) The €397 million provision for deferred taxes at end of the period includes €382 million of provisions for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group.
Value at December 31, 2015 Less than one year 1 to 5 years More than 5 years
Value at December 31, 2015 Less than 1 year 1 to 5 years
Unrealized foreign exchange gains amounted to €604 million at year-end 2015, down from €785 million at December 1, 2014. This item refl ects the effects derived from the revaluation of foreign currency denominated assets and liabilities at the closing exchange rate. It declined compared to 2014 due to Japanese Yen and US Dollar exchange rate trends, which adversely impacted liabilities.
(b) The corporate income tax benefi t amounted to €784 million, compared with a tax benefi t of €646 million in 2014. It mainly included €815 million of tax receivables from members of the tax consolidation group in France, partly offset by the €70 million payment related to the French tax of 3% on dividends paid to shareholders.
Subordinated convertible bond redemption premium (see § 2.9 of this Appendix ) 57 -
(e) A 10% depreciation of the Euro leads to a -3.9% deterioration in the fair value of debt, a 17.2% improvement in the fair value of derivatives and a 8.2% improvement in the fair value of loans.
I Report of the Statutory Auditors on the Company’s fi nancial statements (For the year ended December 31, 2015 )
■ the audit of the accompanying fi nancial statements of AXA SA; ■ the justifi cation of our assessments; ■ the specifi c verifi cations and information required by law.
In accordance with the requirements of Article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: ■ Financial assets are valued using the methods applying to each category and described in paragraph 2.5 of the notes to the fi nancial statements.
We have no matters to report as to the fair presentation and the consistency with the fi nancial statements of the information given in the management Report of the Board of Directors, and in the documents addressed to the shareholders with respect to the fi nancial position and the fi nancial statements.
Michel Laforce – Xavier Crépon Jean-Claude Pauly – Gilles Magnan * This document is the English translation of the original legal statutory audit report which is, by law, prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information therein, the original language version takes precedence over this translation. This English version should be read in conjunction with, and construed in accordance with French law and professional auditing standards applicable in France.
In accordance with the provisions of the articles L.225-102-1 and R.225-104 of the French Commercial Code, the following information describes the manner in which the Company takes into account the social, societal and environmental impacts of its business.
Data R eport” and on the AXA Group’s website (www.axa.com), in particular in the “Corporate Responsibility” Section.
UN Principles for Responsible Investment (UN PRI), a voluntary framework to integrate environmental, social and governance criteria into the investment value chain. Both AXA Investment
AXA strives to be a responsible employer, placing employee engagement at the heart of its business strategy. Achieving this has meant creating a workplace built on AXA’s values which foster diversity and equal opportunities for all, promote employee participation, encourage professional development and support employee wellbeing. For additional and more comprehensive information, refer to the 2015 “Social Data R eport”.
AXA’s overall salaried workforce on December 31, 2015, was 120,486 employees (open-ended and fi xed-term contracts), which represents an increase of 3.8% compared to 2014. This increase is due to the acquisition of 100% of the “Genworth
Lifestyle Protection Insurance” (17% as a proportion on total increase) as well as organic growth, mainly in Asia, the Americas and Africa.
Each AXA Group entity therefore engages with staff or their representatives for communications on a regular basis. AXA has also set up a European Works Council (EWC), whose extensive role goes beyond regulatory requirements. The EWC is made up of staff representatives from AXA’s largest European entities, who meet in order to receive and exchange information on the social, strategic and economic issues that concern the Group and maintain an ongoing dialogue between employees and management.
In June 2009, a Group EWC agreement (available at www. axa. com) was concluded in order to guarantee a high level of social dialogue. AXA holds two EWC plenary meetings a year as well as monthly sessions, held by 12 members of the EWC, to stay abreast of labor and economic developments in each country.
The majority of the Group’s employees are covered by the EWC’s framework agreement. Other affiliates outside the scope of the EWC have also developed social dialogue agreements, but these are not monitored at Group level. More generally beyond Europe, the Group strives to ensure that employees are fairly represented in all major countries where it is present. In addition to the work of the EWC, numerous collective bargaining agreements are signed on a local basis.
The aforementioned Group EWC agreement commits the Group to a certain number of measures in favor of employees when major organizational changes impact their jobs. AXA maintains the following principles with a view to guiding its various European business units in local management practices: ■ when organizational changes affect jobs, AXA pledges to supply relevant information and, as appropriate in light of local cultures and rules, to consult with employees and their representatives; ■ in connection with an information-gathering and consultative process, AXA would provide data and information about possible alternative solutions, where relevant; ■ factoring in its employees’, customers’ and shareholders’ interests, AXA undertakes to maximize opportunities for internal and external redeployment, when applicable, for all AXA employees affected by possible employment issues; ■ AXA will do its utmost to prevent compulsory redundancies and other collective transfers, by pursuing other approaches whenever possible; ■ when geographic mobility is necessary, it must be offered as a matter of priority to employees who volunteer to move, with the process managed with a view to enabling their integration into a new environment under the best possible conditions; ■ AXA pledges to acknowledge certain individuals as staff representatives and uphold their liberty, rights and purpose, in line with national legislation and, where relevant, agreements in force in local business units; ■ aware that training represents a major investment both for the Group and for its employees, AXA commits to embrace a continuous-learning culture; ■ AXA condemns discrimination of any kind on the basis of gender, color, ethnic origin, genetic form of difference, disability, sexual orientation, language, religion, personal conviction, union membership or political opinion.
In 2014, AXA joined the “Alliance for Youth”, a private sector initiative designed to address youth unemployment in Europe. The Company committed to provide at least 20,000 young people (aged 30 and under) with professional experience over five years in Europe in the form of 10,000 paid apprenticeships and/ or internship positions and 10,000 employment opportunities (open-ended or fixed-term contracts). Furthermore, AXA pledges to help increase employability of young people through coaching and training on essential skills and exposure to the work environment. By the end of 2015 (two years after starting the initiative) AXA provided more than 13,800 professional opportunities for the youth in Europe (and more than 27,000 opportunities in AXA globally).
International mobility reached its historical maximum of 864 international assignments in 2015. AXA’s Centre of Expertise for International Mobility (CEMI) focused on the development of key expertise and leadership skills especially in high growth markets. In 2015, 45% of new assignments were linked to high growth markets (vs. 35% in 2014).
With the aim of establishing a globally consistent and cost controlled international mobility framework, the CEMI was implemented in 2012 to deliver services to French-based entities. In 2015, it worked on an extension of services to provide centralized support to the majority of AXA entities across the globe. The full extension is planned for the beginning of 2016. Furthermore in 2015, revised international mobility policies for short-term assignments and graduates (around 20% of all assignments) were rolled out, aiming to reinforce the purpose of different types of international assignments, for both the individual and the business as well as provide more tailored support to each type of assignment.
AXA’s employees are the Company’s most important asset and bring us a true competitive advantage. As the business evolves so will its workforce and in 2014 AXA launched Strategic
Strategic Workforce Planning in 2016 will cover additional entities and be embedded in all major HR processes to become a sustainable approach and an integral part of AXA overall strategic planning activities, complementary to fi nancial and business strategic planning.
AXA developed and formalized an agility c harter – approved by the Group Executive Committee – and an agility toolkit at
Group level, describing the principles of agile working. By the end of 2015, 28% of AXA’s employees were already working in an agile working environment and various initiatives to further promote agility at work are in place across many AXA entities.
initiative, introducing an activity-based desk-sharing principle combined with teleworking. At the end of 2015, almost 1,500
Detailed information concerning AXA’s compensation policy is provided in Part 2 Section 2 of this Annual Report.
In 2015, this offer was made in 36 countries and approximately 24,000 employees participated to the program. The aggregate proceeds from the offering amounted to approximately €375 million, for a total of approximately 19 million newly-issued shares.
AXA promotes diversity & inclusion (D&I) by creating a working environment where all employees are treated with dignity and respect and where individual differences are valued. In all aspects of the working environment, AXA offers equal opportunities to all employees. AXA opposes all forms of unfair or unlawful discrimination and does not tolerate discrimination based on age, nationality, ethnic origin, gender, sexual orientation, gender identity, religion, marital status or disability.
AXA in 2015. The “Sponsorship Tandems” program, leveraging senior executives to act as advocates and using their infl uence to help strengthen the development of female talent, has formed 18 new Sponsorship pairings with the Group’s Executive
Committee members. Furthermore, local roll-outs are in operation across 13 AXA entities. The third AXA Women’s Conference was held in October 2015, aiming to foster networking among senior executive women and men, and 2015’s focuses were on the topics “Agility as an Accelerator of Diversity” and “Women as
Better Protect All” report. It analyzes the business opportunity the women’s market represents for insurers, identifying growth drivers and highlighting women’s needs in order to ensure the industry develops the most relevant value-added propositions for this segment.
As AXA strives to be the most inclusive company in the fi nancial services industry, Global Employee Resource Groups (ERGs)
AXA also continued to further encourage and support the integration of employees with disabilities and has signed the
In France, the number of employees with disabilities was 752 in 2015.
European Works Council agreement, which was signed with the labor organizations in June 2009 and which is available at www.axa.com.
AXA’s entities have undertaken initiatives to implement local policies and best practices, which they have tailor-made to their specifi c sectors and local environments. In accordance with AXA’s business environment, entities provide services and information campaigns on lifestyle risks such as certain types of cancer and cardiovascular problems, obesity, smoking, road safety or stress prevention.
The results of AXA’s development of employee skills remained high with 81.3% of its employees receiving a training course at least once during 2015. At the same time, the average number of training days per employee was at 3.0 days.
Technical Excellence and (4) Digital. Within those domains a number of programs, targeting different employee populations and business lines, were designed and delivered in 2015, such as “The Leader in Me” or the “Global Graduate Camp”.
Also in 2015, the “Digital Academy” delivered a number of new programs (“Agile Awareness”, “Unleash Innovation” and
(OTR), which are systematic reviews of its organizational structure, challenges and key positions. The process is designed to identify the potential of key people, taking into consideration their performance and leadership behaviors. It also helps build and share a robust and solid talent pipeline to ensure the right staffi ng around the globe.
among its current employees and attract the best diverse and international profi les.
“Discover AXA” (over 137,000 fans and followers at the end of
December 2015). Further in 2015, a global graduate campaign branded “Challenge Everything” was launched with the objective to attract talent able and ready to contribute to AXA’s business transformation.
Program aiming to recruit a variety of profi les including r isk m anagement, actuarial, IT, digital marketing and data. The objective of the program is to attract and recruit the best diverse graduate talent; consistently develop AXA’s next generation of leaders and contribute to enhance AXA’s attractiveness as an employer. In 2015, 141 graduates were hired on the AXA Global
Full-T ime E quivalents (headcount converted into full-time equivalents) 2015 Evolution 2014
■ Number of external recruitments (including re-hires) 13,044 emp. 11,427 emp.
■ Number of fi xed-term contracts transformed into open-ended contracts 1,819 emp. 1,421 emp.
■ Number of entries following mergers and acquisitions 1,430 emp. 2,183 emp.
■ Number of external recruitments (including re-hires) 3,743 emp. 4,123 emp.
■ Number of fi xed-term contracts transformed into open-ended contracts 87 emp. 119 emp.
■ Number of departures due to external transfers (b) 4 emp. 29 emp.
Net headcount evolution of salaried non-sales force (entries versus departures) 2,265 emp. 1,751 emp.
■ Number of fi xed-term contracts ended 3,439 emp. 3,197 emp.
■ Number of fi xed-term contracts ended 352 emp. 422 emp.
Turnover rate of salaried non-sales force 12.9 % +0.5 pt 12.4 %
Number of training days of salaried workforce 327,939.3 days +2.9% 318,774.3 days
Percentage of salaried workforce having received at least one training course 81.3 % +2. 0 pts 79.3 %
Average number of working hours per week 36.7 hrs +0.4% 36.6 hrs
■ Proportion of part-time salaried non-sales force 11.4 % 11.9 %
■ Proportion of part-time salaried sales force 3.0 % 2.9 %
■ Proportion of absences due to sickness 66.2 % 65.3 %
■ Proportion of absences due to sickness 67.0 % 65.9 %
■ Proportion of absences linked to maternity/paternity leave 31.1 % 32.0 %
Methodology note: The social data communicated here are collected through a reporting process defined by procedures associated with a list of indicators shared to all the entities of the AXA Group. This process is updated and communicated to each entity on a yearly basis. These indicators represent the data of 303 entities of the AXA Group (few entities may pre-consolidate data on a local level). The perimeter is updated annually following potential acquisitions/mergers or business disposals. These indicators are reported for the period between 01/01/2015 and 31/12/2015, unless mentioned otherwise. Evolutions are measured with ratios between 2014 and 2015 end-of-year data. The data are provided by local correspondents into an IT tool dedicated to the social data reporting process and accessible by all the entities since 2009. Consistency checks and quality controls are carried out before and during the data collect process. There are no estimations nor extrapolations made on the data provided. Regarding data published in ratios and percentages: numerator and denominator are realigned for each calculations to exclude entities with empty data points.
(c) As per the defi nition of compensation, it includes the individual fi xed pay, the individual variable pay, employer social contribution and collective profi t sharing (if any) and excludes equity based compensation (stocks options, performance shares, AXA Miles). On a comparable f oreign e xchange basis, total compensation cost increased by 4.2%.
(e.g. procurement, IT, marketing, HR) worked closely to set ambitious 2020 targets which will steer AXA to a more sophisticated and embedded environmental strategy. As a result,
Responsibility team coordinates a network of around 300 dedicated environmental managers and employees in local entities. This network monitors annual progress on its reduction targets through the internal reporting tool, which helps local entities evaluate their own action plans and targets. These managers then analyse indicators, identify performance targets and promote best practice sharing. To accompany these action plans, entities have put in place a wide variety of activities to raise awareness and train employees on environmental issues and risks (e.g. lunch and learn conferences, etc.). At Group level,
“CR Week” which is rolled out by all local entities. Environmental awareness is one of the key topics addressed during this event.
In addition, an annual transport survey available in 41 countries and in 22 languages is used to help estimating the amount of
AXA‘s power consumption per FTE decreased by 7% in 2015 compared to 2014. AXA entities made signifi cant steps forward to reduce their energy footprint, for example: ■ AXA Technology Services has pursued its Green IT program based on servers refreshes, data center consolidation and virtualization, PC refreshes and power management.
emissions per FTE related to energy, paper and business travel (air, rail and car fl eet) decreased by 8% between 2014 and 2015. 52% of Group CO
emissions are related to energy consumption, 26% from business travel (air and train), 15% from AXA’s vehicle fl eet and 7% from paper. In 2010, the
emissions per FTE increased by 3% compared to 2014 with 0.70 T eq. CO
AXA’s water consumption per FTE has decreased by 4% between 2014 and 2015. Since 2008, AXA entities have achieved a better level of management maturity and reporting quality regarding their water consumption patterns. Related recent initiatives include the installation of water sensors in bathroom facilities for AXA France and water-saving initiatives at various entities
between 2014 and 2015. A signifi cant number of entities have implemented a printing policy to help decrease offi ce paper consumption which includes reducing the number of printers, and installing an employee badging system to collect all printed documents (e.g. AXA L&P Poland, AXA Thailand).
To promote this type of paper, since 2011 the Group requires environmentally-friendly offi ce paper as a minimum standard for the main Group entities.
AXA’s unsorted waste volume has increased by 4% and paper sorted for recycling by 6% compared to 2015 as a result of renovations and relocations. For sorted paper, entities such as Belgium and Switzerland have improved their sorting process, thus increasing volumes. For unsorted waste, food waste is included from 75 canteens in the Group. Concerning the recycling of ink cartridges and toners, AXA has a positive trend increasing from 63% to 68% in 2015. AXA’s IT business unit, AXA Technology Services, for which electronic waste is of particular relevance, is a key contributor to this effort, as it strives to ensure compliance with the Waste Electronic and Electrical
promoting electric, hybrid and low emitting), home insurance policies encouraging energy effi ciency (e.g. environmental appliances upgrades), renewable energy installations (e.g.
(e.g. repair rather than replace auto spare parts). In addition, prevention devices (such as smartphone applications) to help raise customer and general public awareness are also being developed; ■ in the commercial product line, AXA entities strive to encourage “green” buildings or car fl eets. They also promote environmental risk prevention or the development of renewable energies via adapted policies covering the equipment and the revenues derived from electric energy sales, etc. AXA
(see above Sections). Indeed insurers are well equipped to address climate-related risks. They can fund and promote risk research and education. They possess claims loss data, as well as models and tools to analyse and project this data. They have a duty to disseminate knowledge about such new risks, including previously poorly known threats to society. Insurers, through their signifi cant investments, are also well positioned to send the right signals to the investment community and to the specifi c companies they invest in. This strategy addresses both the “mitigation” and the “adaptation” dimensions of climate change. They are not solely self-interested or commercially driven, but they need to be global and collective to be effective.
COP21, AXA stressed the importance of both climate resilience and of the private sector’s involvement in helping combat climate change and voiced its support for the introduction of a meaningful carbon price and the need for fi nancial rules and regulations that encourage and support quality, long-term investment.
Force will help fi rms understand what fi nancial markets want from disclosure in order to measure and respond to climate change risks, and encourage fi rms to align their disclosures with investors’ needs; ■ AXA has strengthened its cooperation with the UN Offi ce for
Since 2014, AXA also analyzes “carbon asset risks” and has undertaken the following initiatives in 2015: ■ coal divestment: in May 2015, AXA announced its decision to reduce its General Accounts’ exposure to Electric utilities and
analyzed and disclosed (www.axa.com) the carbon intensity of its General Accounts assets (equities, corporate bonds and sovereign debt). This type of analysis, and more generally portfolio alignment with energy transition scenarios, will become mandatory for asset owners in France by 2017 in accordance with Article 173, modifying Grenelle II Act. “Carbon asset risk” analysis (including exposure to coal-related assets)
Pledge” in 2015, has voluntarily committed to disclose its carbon footprint earlier. This analysis, which is available on www.axa.com, shows limits to assess “energy transition”
The AXA Group and local entities signed or joined the various initiatives in the area of environmental protection (and/or CR
more generally). As indicated above, in 2015, AXA became a vice-chair of the FSB Task Force on Climate-related Financial
Business Climate Pledge”, which committed 39 of France’s leading companies to fight climate change through new industrial projects and R&D devoted to renewable energy, energy effi ciency and other low carbon technologies. The Group also signed up to various initiatives including the World Business
“Sustainable Development Charter” (Fédération française des sociétés d’assurances) and the Investor Statement on Climate
Prevention, Resilience and Risk Reduction (e.g. increase public private partnership, share Risk Management expertise, etc.).
Business travel: AXA vehicle fl eet Thousands of km 265,098 268,938
(a) In 2015, environmental indicators were collected for sites representing 91,681 FTEs working on AXA sites (unless otherwise indicated in these footnotes) and were then extrapolated, continent by continent, to cover all 116,303 salaried FTEs (all types of contracts) working at the AXA Group in average in 2015. In 2014, this process took place on the basis of data collected from 90,988 FTEs, extrapolated to 105,767 revised in 2015 to 112,000 FTEs.
(k) Unsorted wasted covers 78,459 FTEs, which is low as many entities are currently unable to monitor this waste fl ow.
As a Group, AXA offers products and services that meet the needs of our customers, sharing its expertise to improve understanding of the risks faced by both individuals and society as a whole. AXA believes the insurance industry plays a key role in promoting and fi nancing economic growth by identifying and underwriting risk, managing claims, and acting as a signifi cant long-term investor.
believes, improves the Group’s understanding of key social, environmental, and governance issues. It is also used to strengthen the Group’s decision-making, help identify risks and opportunities for the business and improve the products and services AXA offers. By engaging, AXA can also help strengthen society – by making the Group’s knowledge, expertise and resources more widely available. Stakeholder engagement is a key part of AXA’s overall corporate responsibility approach.
Protecting customers from risk and unexpected events is at the core of AXA’s purpose. This is why AXA is committed to using its skills, resources and expertise to build a better understanding of the risks faced by both individuals and society as a whole.
To support this, AXA’s community investment program promotes risk research and risk education. This approach is included in the Company’s Community Investment Guidelines, introduced in 2011. Under these guidelines, AXA businesses were required to devote at least 50% of their community investment budget to risk research and education by 2015. This objective has been largely achieved as 57% of the nearly €21 million donated by
AXA business entities to community projects, were dedicated to risk education and research. In addition, AXA also provided support for other good causes, including healthcare, youth employment and humanitarian aid.
Louvre in 2015); ■ emergency fund-raising (In 2015, funds were raised to help the victims of the Nepal earthquakes and the Ebola virus in west
Since 2007, €149 million (1) have been committed to 492 research projects in 33 countries.
Action volunteers around the world made their skills and time available to help underprivileged people. AXA donated more than 89,000 working hours to allow employees to volunteer, down from 104,000 in 2014 because of a change in the methodology (1).
AXA’s Responsible Investment strategy. It currently focuses on four main activities: ■ ESG integration: AXA is committed to integrate environmental, social & governance (ESG) performance metrics and factors into our General Accounts assets through internal asset managers’ investment processes and decision-making. AXA
This work is described in the “Climate change” Section above; ■ voting and engagement: in line with Group Responsible
AXA IM’s proxy voting coverage includes the voting on all listed companies on a global basis and leads strategic engagement efforts on specifi c themes and companies. Finally, the RI team conducts thematic research in order to investigate material ESG
AXA is a major purchaser of products and services for the purpose of its internal operations as well as services provided to its policyholders. The volume of purchases equalled €12.6 billion in 2015. The buyers are required to sign a specifi c procurement code of ethics in addition to the Group
In 2013, AXA became a member of the non-profi t Transparency
Our independence is defi ned by regulatory texts, the French Code of ethics (Code de déontologie) of our profession and the requirements of article L.822-11 of the French Commercial Code. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional standards and applicable legal and regulatory requirements.
On the basis of our work, our responsibility is to: ■ attest that the required CSR Information is included in the management report or, in the event of non-disclosure of a part or all of the CSR Information, that an explanation is provided in accordance with the third paragraph of article R.225-105 of the French
For any consolidated information that is not disclosed, we verifi ed that explanations were provided in accordance with article R.225105, paragraph 3 of the French Commercial Code.
Based on the work performed and given the limitations mentioned above, we attest that the required CSR Information has been disclosed in the management report.
We conducted around twelve interviews with the persons responsible for preparing the CSR Information in the departments in charge of collecting the information and, where appropriate, responsible for internal control and risk management procedures, in order to: ■ assess the suitability of the Guidelines in terms of their relevance, completeness, reliability, neutrality and understandability, and taking into account industry best practices where appropriate; ■ verify the implementation of data-collection, compilation, processing and control process to reach completeness and consistency of the CSR Information and obtain an understanding of the internal control and risk management procedures used to prepare the
Regarding the CSR Information that we considered to be the most important: ■ at parent entity level, we referred to documentary sources and conducted interviews to corroborate the qualitative information
AXA Italy and MPS, AXA Business Services, AXA Tech Shared Services, AXA Bharti, AXA Life Japan, AXA Seguros Mexico, AXA
emission resulting from onsite power consumption, paper and business travel per person; ■ Usable occupied area and usable vacant area, including indicator net internal area.
■ Territorial, economic and social impact in terms of employment and regional development; ■ Partnership and patronage actions, including volunteering hours during paid hours and cash donations to community projects; ■ Inclusion of social and environment issues in the purchase policy; ■ Actions carried out to prevent corruption; ■ Other actions carried out to promote human rights.
This Registration Document includes all the compulsory matters required to be covered in the Board of Directors’ report of AXA
Registration Document corresponding to the parts of the Board of Directors’ report as approved by the Board of Directors of the Company.
Annual Report (Registration Document) fi led with the AMF on March 31 , 2016
Pages 16. Board practices 16.1. Date of expiration of the current term of offi ce 100 to 101 16.2. Information about members of the management bodies’ service contracts with the issuer or any of its subsidiaries 16.3. Information on the Audit Committee and the Remuneration Committee 109 and 111 16.4. Statement of compliance with the country of incorporation’s corporate governance regime 358 to 359 17. Employees 17.1. Number of employees 114 and 400 to 403 17.2. Shareholdings and stock options 124 to 134 and 140 to 141 17.3. Arrangements for involving the employees in the capital of the issuer 147 to 148 19. Related party transactions 147 and 331 to 332 20. Financial information concerning the issuer’s assets and liabilities, fi nancial position and profi ts and losses 20.1. Historical fi nancial information * 198 to 342 20.2. Pro forma fi nancial information n/a 20.4. Auditing of historical annual fi nancial information 343 to 344 and 392 to 393 20.5. Age of latest fi nancial information 417 20.6. Interim and other fi nancial information n/a 20.8. Legal and arbitration proceedings 338 to 341 20.9. Signifi cant change in the issuer’s fi nancial or trading position 25 to 31 ; 89 to 94 and 341 to 342 21. Additional information 21.2. Memorandum and Articles of association 346 to 349 22. Material contracts n/a 23. Third party information and statement by experts and declarations of any interest 412 to 414 24. Documents on display 6 25. Information on holdings 7 and 226 to 232 * Pursuant to Article 28 of Commission Regulation (EC) n° 809/2004 of April 29, 2004, the following items are incorporated by reference: ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2014 and the Statutory Auditors’ report on them, respectively presented on pages 192335 and on pages 336-337 of the Annual Report (Registration Document), the French version of which was fi led with the AMF (Autorité des marchés fi nanciers) on March 26, 2015 under reference n° D.15-0208; ■ AXA’s Consolidated Financial Statements for the year ended December 31, 2013 and the Statutory Auditors’ report on them, respectively presented on pages 188329 and on pages 330-331 of the Annual Report (Registration Document), the French version of which was fi led with the AMF (Autorité des marchés fi nanciers) on March 21, 2014 under reference n° D.14-0184.
Compensation paid to Statutory Auditors in 2015 and 2014 (Art. 222-8) 337
Report of the Statutory Auditors on the consolidated fi nancial statements of the Group 343 to 344
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