Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class: Name of each exchange on which registered: Ordinary shares New York Stock Exchange
ITEM 19 Financial Statements and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 a03-338 • Item 1 (US) ok 23/05/00 12:01 Page 4 PHILIPPE PHILIPPE 2:JOBS:AXA:03-338 • AXA COB 1999 (US):
States, France, the United Kingdom and Germany; in addition, AXA will become a significant player in
Unies began operating under the AXA name in 1984 and took control of Groupe Présence, a French stock insurance company, in 1986. In 1988, AXA transferred its insurance businesses to Compagnie du Midi, in exchange for a substantial equity interest and, in
Mutual Life”); • In 1997, AXA acquired Compagnie UAP (“UAP”), a
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As of December 31, 1999 and 1998, AXA’s economic interest in AXA Financial, Inc. common stock was approximately 58.4% and 58.5%. AXA’s investment in
July 1, 1999 the CVGs were cancelled with no cash payment required to be made in accordance with the terms and conditions of the CVGs. However, the settlement of hedging programs set up by AXA in 1998 cost € 71 million which has been added to the acquisition cost of the public offer of exchange initiated by
– AXA Life (Japan). In 1995, AXA commenced life insurance operations in Japan through an investment totaling € 169 million as of December 31, 1999. Furthermore, AXA’s life operations in Japan will expand significantly during 2000 following its acquisition of Nippon Dantai Life Insurance
E v e n t s S u b s e q u e n t t o
March 2000 and up to ¥ 65 billion before March 2001.
Transnational Property and Casualty Insurance Group activities, which was previously reported as a sub-segment within the Property and Casualty Insurance
During 1999, the life insurance market experienced significant growth in the sale of separate account (unit linked) primarily due to strong performance in the global stock markets and increasing consumer awareness and interest to participate in the investment markets. This increase was complemented by continued demand for life and health protection products, and retirement and other savings-oriented products due to the aging population and increasing consumer awareness for the need to have sufficient savings to support retirement as more countries reduce the level of state funded welfare systems.
Historically, they have represented a partial return of investment income. Once credited, regular bonuses are guaranteed to be paid at maturity, death or as otherwise specified in the policy.
Unamortized acquisition expenses, administrative expenses, mortality experience and income taxes are also taken into account in determining the amount payable on surrender.
Gross premiums and gross insurance reserves associated with the products sold by the UK Life Insurance
Financial Advisors “IFAs”, are the largest channel of distribution for the sale of life insurance products in the United Kingdom, accounting for 58% of annualized new business premiums in the first nine months of 1999, while direct sales forces accounted for 27%, exclusive agents for 12% and direct marketing for 3%.
The UK Life Insurance Group distributes life and retirement products through IFAs, exclusive agencies, a direct sales force and direct marketing. The two major factors influencing new business written by IFAs are product pricing and investment performance of separate account (unit-linked) products. Based on 1999 annualized new business premiums for the UK Life
Years ended December 31, At December 31, (except percentages, in euro millions) 1999 1998 1997 1999 (a)
(a) Gross premiums and actuarial reserves for National Mutual Life are for the fiscal years ended and as at September 30 being National Mutual Life’s financial year-end.
Zealand (including contributions to trusts) and the second largest life insurer in Hong Kong.
Gross premiums and gross insurance reserves associated with the products sold by the Belgian Life
For most retirement and life products, first-year costs are higher than those in the years after policy issue due to first year commissions and the costs of underwriting and issuing a contract. Consequently, persistency is important to profitability. The vast majority of individual retirement products and individual life products issued by AXA can be surrendered for a cash surrender value. Most of the individual life and retirement products issued by AXA have front-end charges
Companies have been able to maintain overall profitability during 1999 primarily due to strong investment returns in the financial markets and cost efficiencies arising from integration of companies acquired by AXA over the past few years.
Italian property and casualty operations have been in the process of being restructured during the period to achieve greater efficiencies. In connection with the restructuring initiative, AXA increased automobile insurance rates and closed unprofitable agencies to improve operating results.
The International Insurance Segment in 1999 accounted for € 3.1 billion or 5% of AXA’s total revenues. The International Insurance Segment includes the operations previously reported within the
States. In 1999, there were the earthquakes in Turkey and Taiwan, and Hurricane Floyd in the United States, the floods in southwestern France and the European storms at the end of 1999. Consequently, it is not expected that there will be a major turnaround in the market until 2001.
In addition, AXA Re Finance was established in 1996 to offer products and services relating to financial guarantee reinsurance. At December 31, 1999, AXA
These services include medical aid for travelers and automobile road assistance. Their clients include insurance companies, credit card companies, tour operators and automobile manufacturers.
Europe, where local banks have strong franchises in their home markets, but this is changing dramatically.
DLJ is a subsidiary of AXA Financial, Inc. It is also publicly traded company in the United States and, therefore, subject to the reporting requirements of the 1934
Insurance Segment) can be divided, in general, into three parts as set out below: Separate account (unit linked) products. The investment risks and rewards, including the investment returns, are transferred to the policyholders.
Item 1 and performance of the investments supporting all products mentioned above. Given that the investment risks and rewards on separate account business are passed directly to the policyholder, further information regarding the assets relating to the separate accounts insurance business is not provided. Therefore, the general account life insurance products and assets backing the property & casualty insurance and international insurance business products are, within this section of Item 1, referred to as “insurance-related invested assets”.
At December 31, 1999, of the insurance-related invested assets supporting the general account life operations (including those specific assets allocated to the
Assets Under Management Life Insurance Property and Casualty International Total % of total
General account insurance fixed maturity portfolio by remaining contract maturity At December 31,1999 Property (in euro millions Life Insurance and Casualty International except percentages) Insurance Insurance Total % of total
Vereinsbank Group (which is predominantly fully collateralized debt obligations sponsored by the institutions ) in the amount of € 2,208 million which represented 13.5% of AXA’s total stockholders’ equity of € 16,358 million. In addition, AXA held fixed maturity and equity securities in Banque Nationale de Paris in the amount of € 1,414 million which represented 8.6% of AXA’s total stockholders’ equity at December 31,1999. At December 31, 1998, AXA did not have any equity and/or fixed maturity investment in any one issuer, including an issuer’s affiliates, that were in aggregate 10% or more of AXA’s total shareholders’
Fixed Maturities. As of December 31, 1999, the fixed maturities investment category was the largest insurance -related asset class representing 54% of the total.
Réassurance is presented separately because (i) this business is insurance assumed from other insurers, (ii) the type of insurance and the nature of the risks and exposures covered is different compared to the insurance cover provided by AXA’s property and casualty insurance
Re-estimated net claims reserves: 687 781 1,023 968 1,114 1,841 1,959 1,998 2,303
higher than the minimum solvency states to ensure capital adequacy in accordance with the local regulations.
(“catastrophe equalization reserves” are separately discussed below) which are required in certain countries, specifically in the United Kingdom, France and
Assurance with respect to transfers of amounts to shareholders and a “non-profits” fund which is available 100% to the shareholders. Separate account
– Germany. Policyholders’ bonus on new business after 1994 must be at least 90% of the investment result on policyholders’ reserves plus a portion of the profits arising from other sources. The percentage of profits to be allocated on business sold before 1995 must be at least 90% of the profits generated by all sources. Due to strong competition in Germany, however, current policyholders’ participation, for all business, is approximately 94% of the profits generated by all sources.
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■ DLJ’s business, and the securities industry in general, is subject to extensive regulation in the United
(1) The figures shown include only the trading volume of the Shares on the Paris Stock Exchange. The Shares are also quoted on SEAQ International in London.
The table below sets forth, for the periods indicated the reported quarterly high and low sales price per
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France, all registered banks and substantially all credit establishments are accredited financial intermediaries.
US Holders, dealers in securities, persons which functional currency is not the US dollar, persons holding
– an Eligible US non Individual Holder and the requirements are satisfied, such Holder would initially receive € 85 (FF 558), (the € 100 dividend less a € 15 withholding tax). Such Holder also would b03-338 • Item 2 à 8 (US) 23/05/00 12:05 Page 76 PHILIPPE PHILIPPE 2:JOBS:AXA:03-338 • AXA COB 1999 (US):
States financial institution that is in charge of the administration of such Eligible US Holder’s Shares or
Pension Fund’’, which is a tax-exempt entity established in, and sponsored or established by a resident of, the United States, the exclusive purpose of which is to provide retirement or employee benefits and which does not own, directly or indirectly, 10 percent or more of the capital of the Company, (ii) any ‘’Eligible
(FF 32.8), less the 15 percent withholding tax on that amount. When the avoir fiscal is equal to 40 percent of the net dividend (for instance for “Eligible Pension funds” and “Eligible Not-for-Profit Organizations”),
Procedures to Obtain Treaty Benefits’’. Nevertheless, the existing French forms do not take into account the special tax treatment applicable to Eligible Tax-Exempt
Under French tax law and the Treaty, the French wealth tax generally does not apply to US Holders that are not individuals or in the case of natural persons, who own alone or with their parents, directly or indirectly, ADRs or Shares representing the right to less than 25 percent of the Company’s profits.
for the years ended December 31, 1999, 1998 and 1997, and at December 31, 1999 and 1998 have been derived from, and should be read in conjunction with, and is qualified in its entirety by reference to, the audited Consolidated Financial Statements and the notes thereto included in this Annual Report.
(“euros” or €). The financial data for the years ended or as at a date prior to January 1, 1999 have been translated from French francs to euros for purposes of this document at the legal conversion rate of
(b) All per ordinary share amounts calculated in accordance with French and US GAAP are based on the weighted average number of shares outstanding for each year presented. Shareholders’ equity per ordinary share is calculated based on the number of ordinary shares outstanding at each year-end presented (the US GAAP figures take into account treasury shares). The US GAAP calculations deduct ordinary shares held by AXA (that is, treasury shares) in the calculation of ordinary shares outstanding. The calculation of basic and diluted net income per ordinary share for each of the three years ended December 31, 1999 is presented in Note 16 to the Consolidated Financial Statements.
against the US dollar. Such rates, which are presented for the convenience of the reader, are not used by the Company in the preparation of the
decrease in bond returns. This movement was the result of two factors: continued strong growth in the
The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in France (”French GAAP”), which differs in certain material respects from generally accepted accounting principles in the United States
The Bank of Japan made several attempts to curb the currency demand by intervening in the market, but to no avail. Consequently, the yen appreciated at a greater rate than any other currency in 1999.
December 1999 subsequently withdrew this announcement. This growth primarily related to the sale of separate account (unit-linked) products, which now account for 10% of new business.
Western Europe at the end of the year. It is estimated that these storms will cost insurers approximately €1 billion net of reinsurance.
The goodwill relating to the property and casualty insurance operations in the UK, Ireland and Portugal principally relates to the significant deficiency in insurance claims reserves. The deficiency is mainly due to a different reserving basis used for local statutory purposes in these territories compared to the reserve basis used by AXA. Therefore an exceptional goodwill amortization charge of € 259 million (group share) in respect of the deficiency in reserves was recorded against the French GAAP earnings in 1999.
action gave rise to goodwill of €104 million that is being amortized over 15 years.
Belgium. Following the legal merger of the principal life and property & casualty operations of AXA and the former UAP (and thereby creating AXA Royale
GRE. This gain includes mainly: • a dilution gain realized by the Company due to the decrease in AXA’s ownership of SLPH, net of future costs related to the exercise of stock options issued by SLPH to holders of GRE stock options (€ 469 million, group share); • the exceptional amortization of goodwill relating to inadequacies in the technical reserves in connection with British, Irish and Portuguese activities
– A valuation allowance recorded by AXA France Assurance on its Australian property and casualty subsidiary (run-off of the property and casualty portfolio of business in the second half of 1999) (19)
– Reserve strengthening by the French Life Insurance Group due to anticipated mortality table change (€ 39 million) and interest rate decline (€ 33 million) (72)
■ In 1998, the Life Insurance Segment accounted for 68.8% of AXA’s insurance related gross premiums (versus 66.9% in 1997).
reflecting the non-taxable nature of the € 90 million share of the gain related to the sale of an approximately 18% interest in DLJ’s financial performance noted above.
On a constant exchange rate basis, administrative expenses remained relatively stable. Administrative expenses increased slightly in 1998 due to increases in marketing and information system costs. However, this increase was offset by the absence in 1998 of compensated by higher administrative expenses incurred in 1997 due to a € 38 million restructuring provision. The ratio of general costs (acquisition expenses, administrative expenses and claims handling expenses, which are included as part of insurance reserves) to gross premiums increased to 14.8%
Income tax expense declined by € 91 million compared to 1998, while net income decreased by € 23 million. The tax base at the French common rate declined while the long-term base, which is the subb03 -338 • Item 9 (US) ok 23/05/00 12:11 Page 116 PHILIPPE PHILIPPE 2:JOBS:AXA:03-338 • AXA COB 1999 (US):
noted that nearly all of the investment results on investments allocated to insurance contracts are reflected in insurance reserves.
On a constant exchange rate basis, income tax expense decreased 92.9% as a result of the decline in
On a constant structural basis, the increase in insurance benefits and claims technical charges of 6.6%
(versus 18.2% in 1997), while the ratio of general costs to insurance reserves was 2.21% (versus 2.18%
Austrian, Hungarian, Swiss, Canadian and Moroccan subsidiaries totaled € 347 million (up 7.9%). The
Other Countries. Gross premiums earned by life insurance subsidiaries in Portugal, Switzerland,
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On a constant structural basis, 1998 gross premiums decreased by 0.7% to € 4,179 million. Automobile insurance gross premiums represented 43% of the
Net investment results rose by € 73 million over 1997, to € 348 million. Net investment income and net realized gains totaled € 333 million and € 39 million, respectively. The relatively small amount of realized gains is due to the fact a large portion of the investment portfolios is actively managed within mutual funds (“special funds”) and distributions are in the form of dividends, therefore the gains realized by these funds are included in net investment income.
Gross premiums earned by AXA Insurance totaled € 1,134 million, an increase of 22.9% on a constant exchange rate basis. After taking account of the impact of the Thomas Cook travel insurance contract written in 1999 of € 91 million, the increase in gross premiums was 12.9%, with a total of 230,000 new contracts added to the portfolio of business.
AXA Insurance), bringing the total equalization reserve to € 28 million at December 31, 1999 (€ 23 million in respect of AXA Insurance).
Growth in the automobile insurance line of business, which represents 45.5% of gross premiums, was 13.9% on a constant exchange rate basis. This growth was led by a 44.8% constant exchange rate basis increase in direct marketing automobile insurance, which accounted 8.8% of 1998 gross premiums. This growth was offset by 20.5% declines in professional liability and construction insurance in a highly competitive market.
representing a decline of 1.3% in homeowner insurance partly offset by a 0.7% increase in automobile insurance gross premiums, both on a constant exchange rate basis. In commercial insurance, gross premiums increased by 1.8 %. At € 21 million, net income was stable in 1998 compared to 1997. The claims ratio for all accident years improved from 68.8% in 1997 to 67.4% in 1998 despite the occurrence of claims related to frozen rainstorms in Canada which decreased net income by € 7 million. The automobile insurance claims ratio improved markedly since the enactment of standardized claims settlement amounts in Ontario in November, 1996 which greatly reduced claims settlement periods. In addition, AXA Canada experienced significant positive loss reserve development in 1998 for prior accident years.
Against the backdrop of strong financial markets, net investment results increased by € 90 million to € 210 million. The increase is due to € 116 million in realized gains on the sale of equity securities, compared to € 39 million of realized gains in 1998.
A s s e t M a n a g e m e n t S e g m e n t
■ Including revenue earned from AXA insurance companies, eliminated upon consolidation, AXA IM’s revenues totaled € 430 million, an increase of 37%
Luxembourg Vie and AXA Assurance Luxembourg to Royale Belge (€ 46 million).
The cumulative investment made by the Company in the direct insurance operations in France, Germany,
(1) This capital increase has also been subscribed by AXA Holdings Belgium and Equitable Life for US $ 100 and US $ 90 million (85 and 76 million) respectively.
In 1998, it received € 363 million in respect of such dividends, of which € 162 million (A$ 320 million) was a non-recurring dividend from its subsidiary National
■ AXA’s property and casualty insurance and international insurance operations have generated positive cash flows from operating activities in each of the past five years. These positive cash flows, along with that portion of the investment portfolio that is held in cash and highly liquid securities, have historically been sufficient to meet the liquidity requirements of AXA’s property and casualty insurance and international insurance operations. In the event of large catastrophic or other losses, AXA property and casualty operations would be able to liquidate their investment portfolio, a large portion of which is invested in listed securities, if necessary to pay claims.
Net cash received by financing activities amounted to € 111 million in 1998 compared to net cash used of € 27 million in 1997. In 1998, there was a € 187 million net addition to short-term financing, compared to € 284 million net addition in 1997. Cash provided by additions to long-term debt increased to € 2,747 million in 1998 from € 1,741 million in 1996 and repayments of debt increased to € 1998 from € 1,420 million in 1997.
US GAAP which materially affect the determination of AXA’s net income and shareholders’ equity, see
French GAAP net income. Certain restructuring provisions recorded under French GAAP do not qualify under US GAAP leading to an increase in US GAAP net income of € 100 million. This impact was partially offset by € 68 million of additional amortization expense recorded under US GAAP principally due to the fact a large majority of goodwill from the UAP acquisition was charged directly to retained earnings and reserves and is not amortized through a charge to net income. Other purchase accounting adjustments, principally for the UAP acquisition, reduced US GAAP net income by an additional € 72 million.
December 31, 1999 as a large proportion of these gains are allocated to participating policyholders as an increase to insurance benefits and, therefore, do not impact AXA’s consolidated net income. The variation is predominantly attributable to the strong performance in the stock markets in 1999 and in part due to an increase in equity security investments specifically in France, the United-Kingdom and Germany.
At December 31, 1999, outstanding options to purchase 1,930,001 Shares from the Company were held by the members of the Management Board and the executive officers of the Company as a group
Adjustments to reconcile net income to net cash provided by operating activities: Net realized investment gains (3,669) (3,605) (2,454)
GAAP for each of the three years ended December 31, 1999 and at December 31, 1999 and 1998 are included in Notes 28 and 29.
Restatement of previously issued financial statements is not required. The adoption of SOP 97-3 did not have a material impact on AXA’s Consolidated
Over time the basis of reporting operating segment information may change, partly due to acquisitions and partly due to objectives to improve AXA reporting and analysis including, evaluating operational performance and allocating resources. Changes in segment will affect previously reported amounts, which will be restated accordingly for comparative purposes.
■ Goodwill and value of purchased business in-force will be evaluated based on circumstances and events that may arise and indicate the carrying value is no longer recoverable resulting in a change in estimated useful life or a writedown of the carrying amount. In the event that certain facts or circumstances arise
AXA’s non-European subsidiaries, the amortized cost of fixed maturity securities is written down for impairments in value deemed to be other than temporary.
■ Gross premiums from all types of life insurance are generally recognized as revenue when due. When premiums are recognized, liabilities for future policy benefits are recorded, with the result that benefits and expenses are matched with such revenue and profits are recognized over the life of the contracts. The revenues include the premiums received on separate account contracts and contracts with insignificant mortality or morbidity risk, which are accounted for as deposits under US GAAP, whereby only policy charges b03-338 • Items 17-19 (US) 23/05/00 12:14 Page F-17 PHILIPPE PHILIPPE 2:JOBS:AXA:03-338 • AXA COB 1999 (US):
For insurance and reinsurance operations, depreciation expense on real estate is recorded as a reduction of related investment income. For non-insurance operations (financial services operations and holding companies ), depreciation expense on real estate is recorded in operating expenses. Realized investment gains and losses are determined principally on a specific identification basis. Intercompany transactions eliminated in consolidation are reallocated in the presentation of segment investment results. The intercompany transactions relate primarily to internal reinsurance and to intercompany loans and commissions paid and received for asset management.
This provision will be included in the opening balance sheet of the acquired company with no impact on post acquisition operating results of the acquirer.
(in euro millions) at January 1, Additions Deductions changes differences December 31, Net Income
For the years ended December 31, 1999, 1998 and 1997, AXA received cash dividends from companies accounted for by the equity method of € 49 million, € 20 million and € 24 million, respectively.
For publicly traded fixed maturities and equity investments, estimated fair value is determined using quoted market prices. For fixed maturities without a readily ascertainable market value, AXA has generally estimated fair value using a discounted cash flow approach, including provisions for credit risk, generally based upon the assumption such securities will be held to maturity. Fair value for equity investments which do not have a readily ascertainable market value has been estimated by AXA generally based on financial and other information, including reference to quoted prices for similar securities. At December 31, 1999 and 1998, fixed maturities and equity investments without a readily ascertainable market value having an amortized cost of € 24,453 million and € 16,124 million, respectively, had an estimated fair value of € 27,001 million and € 17,402 million, respectively.
The acquisition was accounted for using the purchase method of accounting. The purchase price, which did not include an amount for the Certificates of
Shareholders’ Equity) and a reduction of € 4 million recorded as an asset (goodwill).
(a) Amount relates to a change in AXA’s method of accounting for stock options, as recommended by the COB, the French stock exchange regulator. (b) From fully consolidated subsidiaries.
(a) Includes the impact of foreign currency exchange rates on opening balances.
(E) – In 1998, DLJ issued 6.5 % Senior Notes of US$
January 1, 2000 and resulted in an increase of capital of € 282 million (see Note 27 ‘Events Subsequent to December 31, 1999’).
Fair value of plan assets at beginning of year 3,909 3,776 1,941
The significant movements in the table above arose from the acquisition of GRE in 1999 which has defined benefit pension plans in surplus positions in the aggregate.
Accumulated postretirement benefits obligation in excess of plan assets (512) (467)
Claim reserves, net of reinsurance ceded 7,898 6,930 23,481 18,633 6,325 5,444 37,703 31,007
In May 1999, Donaldson Lufkin & Jenrette (“DLJ”) completed its offering of 18.4 million shares of a new class of its common stock, priced at US $20 per share, representing 17.9% of DLJdirect, DLJ’s online brokerage unit. A realized gain of € 120 million (group share)
In the normal course of business, AXA seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results through reinsurance. AXA limits the effect of catastrophic events and certain other risks on the results of its property and casualty insurance subsidiaries by reinsuring against such events and risks on a non-proportional excess of loss basis. AXA also reinsures its non-French property and casualty insurance business against aggregate losses by line of business, primarily using non-proportional excess of loss contracts.
Effect of dilutive securities: Dilutive securities issued by subsidiaries (a) – (29) – (16) – (21)
amounts for derivative instruments or at market value for cash instruments: December 31, (in euro millions) 1999 1998
Unrealized gains included in assets at end of period 242 224
DLJ’s correspondent clearing activities, introducing correspondent brokers are required to guarantee the performance of their customers in meeting contractual obligations.
US$ 6.6 billion (€ 6.5 million). In accordance with industry practice, these securities borrowed and pledged are not reflected in AXA’s Consolidated
DLJ’s customer securities activities are transacted on either a cash or a margin basis in which DLJ extends credit to the customer. This credit on a margin or credit extended, subject to various regulatory and internal margin requirements, is collateralized by cash and securities in the customer’s account. DLJ seeks to control risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. DLJ monitors required margin levels daily and, pursuant to such guidelines, requires the customers to deposit additional collateral, or reduce positions, when necessary.
Equitable Life is the obligor under certain structured settlement agreements that it has entered into with unaffiliated insurance companies and beneficiaries.
Equitable owns single premium annuities issued by previously wholly owned life insurance subsidiaries.
In addition, a number of lawsuits have also been filed against DLJ and its subsidiaries involving alleged violations of various US securities laws in connection with
Equity in income (loss) of unconsolidated entities 31 4 – – (45) (1) (11)
Life and Casualty International Total Asset Financial Holding Total (in euro millions) insurance insurance insurance insurance management Services companies
b03-338 • Items 17-19 (US) 23/05/00 12:14 Page F-75 PHILIPPE PHILIPPE 2:JOBS:AXA:03-338 • AXA COB 1999 (US):
Life insurance Casualty insurance insurance Total Carrying Fair Carrying Fair Carrying Fair Carrying Fair
TOTAL CASH AND INVESTED ASSETS 293,393 302,797 32,143 35,528 7,167 7,410 332,703 345,734
b03-338 • Items 17-19 (US) 23/05/00 12:14 Page F-77 PHILIPPE PHILIPPE 2:JOBS:AXA:03-338 • AXA COB 1999 (US):
41 % of the total cost relates to external costs (such as, consulting fees). Approximately 38% of the total cost relates to costs to be incurred during the euro transition period through 2001. These costs are charged against income in the period that the cost is incurred. No material provision was established.
AXA increased its ownership in AXA Colonia from 73.1% at December 31, 1998 to 86% at December 31, 1999 through purchase of AXA Colonia’s common shares on the open market.
AXA Investment Managers acquired a 50% ownership interest in US asset manager Barr Rosenberg in the beginning of 1999 and is consolidated from that date.
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Under French GAAP the fair value adjustment to reflect insurance reserves in accordance with AXA accounting policies (which may differ from the acquired companies home country statutory requirements for establishing insurance reserves) may be taken as an immediate exceptional writedown of goodwill. Under
■ The accounting for minority interest acquisitions and the issuance of the Royale Belge Certificates is different under French GAAP compared to USGAAP. For
January 1998. Consequently, the gross goodwill recorded under US GAAP was € 619 million less than the gross goodwill recorded under French GAAP.
These net realized gains are then amortized into income over the remaining life of each investment sold. IMR has no effect on financial statements prepared in conformity with French or US GAAP.
Lapse Termination of a policy because of surrender, failure to pay a premium or lack of sufficient cash value to maintain in-force status.
Open group Group or association, often created for the purpose of obtaining insurance, which may offer favorable tax treatment or contract terms to members. Membership in the group is usually unrestricted.
expenses and other charges are specifically disclosed to a purchaser. This policy is sometimes referred to as unbundled life insurance because its three basic elements (investment earnings, cost of protection and expense charges) are separately identified both in the policy and in an annual statement to the policyholder.