or “USD” or “U.S.$” or “$”. For historical exchange rate information, please refer to Part 1 – “The AXA Group: Our global business operations, recent fi nancial performance and fi nancial condition”, Section 1.1 “Exchange Rate Information”
in analyzing its business operations and, therefore, may not be comparable with terms used by other companies. These terms are defi ned in the glossary provided at the end of Section 1.3 in Part 1 – “The AXA Group: Our global business operations, recent fi nancial performance and fi nancial condition” of this
(f) In accordance with IFRS 3, i.e.within 12 months following the acquisition date, the Group adjusted certain items impacting the allocation of the 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.
(w) Holding company that owns The National Mutual Life Association of Australasia Limited, National Mutual Funds Management (Global) Limited and National Mutual International Pty Limited. AXA’s ownership interest and voting power in AXA Asia Pacifi c Group is divided between a direct holding of 44.60% and an additional 9.42% owned by Société Beaujon.
Asia (notably Japan, Singapore, South Korea and Hong Kong), the Middle East, and Latin America (Mexico).
Development of distribution channels is key to reach targeted customers and overall for the profi tability of the activity.
In 2009 and 2010, as many emergency government programs slowed or wound down, global regulatory and legislative focus generally moved to a second phase of broader reform and a restructuring of the way in which fi nancial institutions are regulated. While the fi nal nature, scope and extent of this second phase of initiatives are still evolving, many of the principal jurisdictions where the Group does business have considered or enacted major, and in some cases transformational, changes to the way fi nancial institutions are regulated.
Regulation Law), and European Union regulations. These areas and themes are likely to include: ■ potential reforms to regulatory structures and schemes: • various proposals designed to optimize regulatory structures and coordination with respect to supervision of the largest “systemically signifi cant” global fi nancial institutions including proposals to impose new/additional prudential requirements/restrictions on these institutions with respect to capital, liquidity, leverage and/or business activities,
The full consequences and implications of being so designated are not yet clear but, if the AXA Group were to be so designated, it could have a variety of consequences (including imposition of new/additional prudential requirements and restrictions with respect to capital, liquidity, leverage and/or business activities) and could adversely affect the Group’s competitive position. See Section 3.1 “Risk Factors - Financial crisis related
In 2009, the FSB published implementation standards for its Principles of Sound Compensation Practices. Among the matters covered in these standards and principles are a variety of mechanisms (including minimum recommended deferrals of cash bonuses, greater use of long-term equity grants rather than cash as a form of compensation, minimum vesting/deferral periods, and performance criteria for vesting of long-term awards) that are designed to ensure an appropriate alignment of interests between (i) Executive management and certain employees (such as traders) who can have a potentially signifi cant impact on the nature and duration of risks incurred,
These principles and standards are refl ected in a variety of regulations and legislations that have been enacted over the past two years in various jurisdictions where the Group does business. While these restrictions are often aimed primarily at the banking sector and do not apply uniformly to the Group across the various jurisdictions where we do business, the
Its principal objective is to establish a solvency regime that is better matched to the underlying risks of insurers, enabling supervisors to protect policyholders’ interests as effectively as possible and with common principles across the EU ensuring a level playing fi eld. The new approach will be based on three pillars – minimum solvency requirements, supervisory review of fi rms’ assessment of risk, and enhanced disclosure requirements – and will cover valuations, the treatment of insurance groups, the defi nition of capital and the overall level of capital requirements.
which will enter into force only in 2013. There have been a number of other initiatives in Europe with implications for
ICHEIC. After having completed its archival researches and audit processes as well as the payment of all valid claims submitted by Holocaust victims and their heirs, the
stable but competition intensifi ed. AXA had a market share of 2.2% and ranked 12th based on premium income (8th in Medical business).
(8) Source: AXA Belgium estimates based on Assuralia market fi gures.
South East Asia and China. The region continued to record strong positive growth in Life insurance premiums in 2010.
AXA jumped from 5th to 3rd overall with a market share of 11.6%
The Swiss market is still saturated and very competitive with a continuing pressure on prices, especially in Commercial business. AXA was the market leader in Property & Casualty with a market share of 13.4%.
On February 10, 2010, AXA and Banca Monte dei Paschi di Siena (BMPS) announced the extension of their bancassurance agreement in Italy to the 1,000 branches of former Banca Antonveneta following its acquisition by BMPS
AXA APH had signed transaction documents to implement proposal. The transaction documents provide for a two step transaction to allow the merger of AMP and AXA APH, followed by a sale to AXA by AMP of AXA APH’s Asian assets.
On December 30, 2010, AXA announced the acquisition of 80% of Belarussian second largest insurer (and 1st private insurer) B&B Insurance. With this operation, AXA pursues its expansion in Central & Eastern Europe (CEE). On the Property
Reconstruction and Development (EBRD) for an amount of €147 million (1) (ca. 0.9 x Embedded Value). This transaction will be funded internally. Closing, subject to customary regulatory approval, is expected to take place in the course of the fi rst semester 2010.
For several years, the AXA Group has been offering its employees in and outside France, the opportunity to subscribe to shares issued by way of a capital increase reserved for employees. In 2010, employees invested a total of €0.3 billion leading to a total of 30 million newly issued shares. Employee shareholders represented 6.5% of the outstanding share capital as of December 3, 2010.
Form 15-F to deregister with the SEC on March 26, 2010 and its deregistration with the SEC became effective on June 25, 2010. Following its delisting from the NYSE and deregistration
have not extended their respective commitments to maintain minimum cross shareholding participations, even though they currently do not contemplate unwinding them.
Asian businesse to AXA has given the necessary approval by the Deputy Prime Minister and Federal Treasurer,
Total Life & Savings gross revenues were down 1% to €56,923 million, or down 3% on a comparable basis mainly due to France, the United States, Japan and Australia &
France APE decreased by €217 million (-14%) to €1,384 million, mainly due to (i) lower volumes in Group Retirement (€-88 million or -69%) following last year high level of large contracts,
Latin American Region (-7%) refl ecting the exit from unprofi table business.
mainly due to higher performance fees (€+11 million) while management fees remained stable.
mainly resulting from: (i) Higher investment margin (€+312 million or up 14%)
Net Income amounted to €2,749 million. Excluding the €1,642 million loss related to the partial disposal of the United
Kingdom Life & Savings business and on a constant exchange rate basis, net income increased by €645 million (+18%) mainly as a result of: (i) Higher adjusted earnings: €+707 million to €4,317 million; (ii) Less favorable change in fair value of financial assets and derivatives: €-288 million to €+210 million. These €+210 million can be analyzed as follows: a. positive change in fair value mainly from Asset Backed
Fees & revenues increased by €83 million (+6%) to €1,513 million mainly due to higher loadings on premiums on
(€+56 million) including a non-recurring change in lapse assumptions (€+16 million).
As a result the underlying cost income ratio decreased by 0.5 point to 52.8%.
APE increased by €55 million (+11%) to €553 million. On a comparable basis, APE increased by €49 million (+10%)
Investment margin increased by €29 million (+13%) to €253 million. On a constant exchange rate basis, investment margin increased by €26 million (+12%) mainly due to higher asset base while maintaining a stable average investment spread.
Income tax expenses increased by €22 million (+46%) to €-70 million, on both a reported and constant exchange rate basis, mainly due to new tax on reserves in Italy (€12 million), higher pre-tax underlying earnings and a negative country mix impact.
decreased by €277 million (-24%) to €1,090 million, as a result of lower sales in Guaranteed Savings Account product
On a constant exchange rate basis, net income increased by €3 million (+46%) mainly driven by higher adjusted earnings.
Variable Annuity products through third party partnerships, specifi cally large banks.
■ Personal lines (62% of gross revenues) increased by 4% to €3,617 million mainly as a result of tariff increases; ■ Commercial lines (38% of gross revenues) increased by 1%
Adjusted earnings increased by €88 million to €468 million mainly due to lower impairments (€+26 million), higher realized capital gains (€+36 million) mainly on equities, including €+10 million positive impact following a change in the French tax regulation on the “réserve de capitalisation” balance, combined with higher underlying earnings.
Nat Cat charge (-0.4 point), partly offset by (iii) higher severity in Commercial lines due to large claims; ■ All accident year loss ratio decreased by 1.4 point to 72.0%
to €396 million. On a constant exchange rate basis, net investment result decreased by €28 million (-7%) mainly driven by lower asset base and equity dividend yield in Spain as well as lower fi xed income yield notably in Turkey and Mexico.
Adjusted earnings increased by €63 million (+69%) to €154 million. On a constant exchange rate basis, adjusted earnings increased by €43 million (+47%) due to €34 million higher underlying earnings, €6 million lower impairment on equities and €3 million higher realized capital gains.
Gross revenues increased by €5 million to €1,951 million (1). On a comparable basis, gross revenues decreased by €55 million
Property &Casualty run-off portfolio partly offset by lower losses on Life run-off portfolio.
Net income increased by €60 million to €66 million mainly driven by the increase in adjusted earnings and following an improvement of hedging effi ciency.
(3) In Banking segment, for underlying earnings, “on a comparable basis” means after allocation of central treasury results in 2009.
Net income decreased by €20 million to €-23 million due to decrease of adjusted earnings and exchange rates impact
Over the past several years, AXA has expanded its core operations (insurance and asset management) through a combination of organic growth, direct investments and acquisitions. This expansion has been funded primarily through a combination of (i) dividends received from operating subsidiaries, (ii) proceeds from debt instruments issuance principally subordinated debts and borrowings (including debt issued by subsidiaries), (iii) the issuance of ordinary shares, and
As of December 31, 2010, AXA’s consolidated statement of fi nancial position included cash and cash equivalents of €21.0 billion, net of bank overdrafts of €1.1 billion; ■ a debt profi le characterized by (i) debt mostly subordinated and with a long maturity profi le (€1.0 billion of debt repayments over the next three years out of total net fi nancing debt of €15.2 billion (1)), taking into account the fi rst date of stepup calls on subordinated debt, and (ii) stable debt ratios consistent with strong rating requirements (debt gearing: 28% (2) at year-end 2010, versus 26% at year-end 2009; interest coverage: 8.5x (3) at year-end 2010, versus 7.9x at year-end 2009); ■ broad access to various markets via standardized debt programs: for example, at the end of 2010, an envelope of €5 billion of French commercial paper, of $1.5 billion of
Each year the Board of Directors assesses the independence of all of its members on the basis of the recommendations contained in the AFEP/MEDEF Code. As of February 16, 2011, the Board of Directors determined that eleven of the fi fteen Board members were independent after assessing the criteria of the AFEP/MEDEF Code: Mmes. Isabelle Kocher,
Wendy Cooper (60) Member of the Board of Directors, representing the employee shareholders
Member of the Board of Directors Chairman Europe of The CocaCola Company
Department of Politics Corwin Hall Princeton University Princeton, N.J. 08544 United States
Board of Directors has also reviewed Mr. Marcus Schenck’s situation in light of the AFEP/MEDEF Code and considered him independent.
Non-executive Chairman: ■ AXA Equity and Law plc (1) (United Kingdom)
National Heritage Board, a member of the Advisory Board to the Law School at Singapore Management University, a trustee for Nanyang Technological University as well as a Fellow of the Singapore Institute of Directors. Since 2000, she has been
Ms. Wendy Cooper, who is the employee shareholders representative on the AXA’s Board of Directors, is an employee of AXA Equitable, which is AXA’s principal United States subsidiary.
Offi cer as well as the Head of the Group Legal Department attend the Committee’s meetings on a regular basis.
Jacques de Vaucleroy (b) Chief Executive Offi cer for the Northern, Central and Eastern Europe business unit
During his 22-year tenure at Goldman Sachs, Mr. Kraus also served as co-head of the Financial Institutions Group
AXA UK plc in July 2006. From 2006 to 2010, he was Group
Chief Executive Offi cer of UAP Vie and of Alpha Assurances.
(QBRs), during which the performance of the AXA Group is assessed. These QBRs were introduced in 2000 to provide a clear and consistent framework for: ■ Reviewing operational performance and monitoring the progress of key projects using quantifi able standards of measurement defi ned; ■ Assessing the status of Group transversal projects; and
On January 1st, 2011, the Executive Committee was comprised of the following twenty members, including eleven non-French nationals: Henri de Castries Chairman & Chief Executive Offi cer of AXA
Management Board until April 29, 2010 and Mr. Christopher Condron decided to retire respectively as of April 29, 2010 and January 1, 2011.
Variable compensation for the year 2009 paid en 2010 €2,700,000 €2,599,327 96%
(3) the decrease of return on equity in 2010 compared to 2009, and (4) the 6% decrease of the underlying earnings per share.
”% Target” corresponds to the achievement of performance objectives related to the year.
In the tables below, compensation not paid in euro have been converted into euro on the basis of yearly average exchange rate for 2010 as follows: USD/EUR 0.747959; GBP/EUR
(b) Mr. Christopher Condron decided to retire as from January 1st, 2011.
Fixed compensation Variable compensation Exceptional compensation Board fees Benefi ts in kind Total
Henri de Castries – Chairman & Chief Executive Offi cer 0 -
Annual grants are made during the fi rst quarter of the year, generally 20 trading days after the date annual earnings of the
If the performance condition has not been met at the expiry date of the options, the options under performance conditions are automatically cancelled.
Total number (a) of shares to be subscribed or purchased, from which to be subscribed or purchased by: 7,926,121 813,515 289,532 306,981
(a) Number of options and exercise prices have been adjusted, pursuant to applicable regulation, as a result of operations on the AXA stock.
Total number (a) of shares to be subscribed or purchased, from which to be subscribed or purchased by: 114,324 22,291 2,137,462 53,237
Representative of employees shareholders at the Board of Directors 19/03/10 subscription or purchase 19/03/2020
Stock options granted during the year by AXA or any eligible AXA Group’s subsidiaries, to the ten employees, outside management bodies’ members of the Company or of eligible AXA Group’s subsidiaries, who received the highest number of stock options (aggregate information) 742,217 15.43
Denis Duverne Deputy CEO in charge of Finance, Strategy and Operations 2,610,758 -
• For the AXA Group performance: net income per share; ■ The achievement of these performance targets determines the number of Units/Shares that will be acquired by the benefi ciary at the end of the acquisition period, subject to the benefi ciary being still employed by the AXA Group. The number of Units/Shares acquired may vary between 0% and 130% of the Performance Units/Shares initially granted.
A new Performance Unit plan was launched on March 19, 2010 and 3,924,244 Performance Units were initially granted to 3,972 benefi ciaries outside France.
This policy requires each executive director to hold, during the entire duration of his/her functions, a minimum number of AXA shares (the “Minimum Shareholding Requirement”)
AXA shares, ADSs or shares of listed Group subsidiaries, held directly or indirectly through Mutual funds or similar investment vehicles, are taken into account for purposes of this Minimum
To the best of the Company’s knowledge based on information reported to it, several members of the Supervisory Board until
In addition, and in connection with the two share repurchase programs carried out pursuant to Article L.225-209 of the
I AXA subordinated convertible bonds as of December 31, 2010 (a)
In our capacity as Statutory Auditors of AXA SA we hereby submit our report on regulated agreements and commitments.
Nature, purpose, terms and conditions: On August 3, 2010, the AXA Board of Directors authorized the signing of an agreement between AXA and BNP Paribas.
With the following Executive Offi cers: Messrs. Henri de Castries, Denis Duverne and François Pierson
These factors, combined with depressed real estate markets, volatile equity market values, declining business and consumer confi dence and the risks of increased future infl ation and unemployment, have precipitated a signifi cant economic slowdown in many of the countries where we do business.
While there are signs of a recovery in a number of countries, management believes we are in a period of slow growth in mature countries and it is not yet certain whether the recovery is sustainable.
(1) For this purpose, required capital is calculated based on formulas that take into account a variety of factors including (i) for Life & Savings business: specifi ed percentages of mathematical reserves (4% of mathematical reserves for business where investment risk is borne by the insurer and 1% of mathematical reserves for business where investment risk is borne by policyholders) adjusted by an entity specifi c retention rate plus an amount of capital at risk; and (ii) for Property & Casualty business, the highest amount of the following two results: 23% of the average cost of claims or 16%
Company made a capital injection of €111 million into ALE and discussions with the Irish Central Bank are continuing on the other matters covered in their notice. In 2009, ACAM (Autorité
A downgrade in our claims paying ability and credit strength ratings could adversely impact our business, results of operations and fi nancial condition
Third parties that owe us money, securities or other assets may not perform under their obligations. These parties include private sector and government (or government backed) issuers whose securities we hold in our investment portfolios (including mortgage-backed, asset-backed, government bonds and other types of securities), borrowers under mortgages and other loans that we extend, reinsurers to which we have ceded insurance risks, customers, trading counterparties, counterparties under swap and other derivative contracts, other counterparties including brokers and dealers, commercial and investment banks, hedge funds, other investment funds, clearing agents, market exchanges, clearing houses and other fi nancial institutions. Many of our transactions with these third parties expose us to credit risk in the event of default of our counterparty. In secured transactions, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not suffi cient to cover the full amount of the loan, derivative or other secured obligation. We have also entered into contractual outsourcing arrangements with third party service providers for a wide variety of services required in connection with the day-to-day operation of our insurance and Asset Management businesses (including policy administration, claims related services, securities pricing and other services) which expose us to operational, fi nancial and reputational risk in the event of a default of our counterparty service providers. In addition, defaults by parties with which we have no direct contractual relation, such as a default by a credit insurer that has insured bonds, structured fi nance products or other securities we may hold in our investment portfolios, may adversely impact the value of those securities and potentially adversely affect the fi nancial markets more generally. These parties may default on their obligations due to bankruptcy, lack of liquidity, downturns in the economy or real estate market, operational failure or other reasons. Negative trends and investment climates in our major markets, such as those experienced in the course of the last three years and/or a sovereign debt default or restructuring (including the potential collateral consequences of such a default on the fi nancial markets and on other fi nancial institutions holding such sovereign debt) may result in an increase in impairments on our invested assets. There can be no assurance that any such losses or impairments of these assets would not materially and adversely affect our business and results of operations. For further risks relating to impairments taken on our investment assets, see “The determination of the amount of allowances and impairments taken on our investments requires use of signifi cant management judgment in certain cases, particularly for debt instruments, and could materially impact our results of operations or fi nancial position”. The default of a major market participant could disrupt the securities markets or clearance and settlement systems in our major markets, which could in turn cause market declines or volatility. A failure of a major market participant could also cause some clearance and settlement systems to assess members of that system or could lead to a chain of defaults that could adversely affect us. Even in the absence of an actual default, a perceived lack of creditworthiness of a major market participant may result in market-wide illiquidity or other disruptions that may adversely impact us and the fi nancial intermediaries (such as clearing agencies, clearing houses, banks, securities fi rms and exchanges) with whom we interact on a daily basis. For risks relating to defaults by reinsurers and retrocessionaires to which we have transferred part of our risks, see “Reinsurance may not be adequate to protect us against losses and we may incur losses due to the inability of our reinsurers to meet their obligations”.
EEV are inherently uncertain processes involving assumptions about factors such as policyholder behavior (e.g. lapses, persistency, etc.), court decisions, changes in laws and regulations, social, economic and demographic trends,
International Insurance businesses. With the exception of disability annuities and workers compensation liabilities that are deemed structured settlements, the claims reserves are not discounted. Reserves do not represent an exact calculation of liability, but instead represent estimates, generally using actuarial projection techniques at a given accounting date.
The failure to maintain and modernize our information systems could adversely affect our business
AXA’s direct competitors receiving substantial capital injections from government authorities. While many of these institutions continue to be controlled by government authorities or to benefi t from direct or indirect government support, others have been recapitalized by their governments and subsequently sold to our competitors or re-privatized through initial public offerings or similar mechanisms. This unprecedented situation may negatively impact the competitive position of AXA in certain markets and adversely affect its results of operations and fi nancial condition.
US broker-dealers to increased risk of SEC enforcement actions and liability.
Board (IASB). Note 1.2 to the consolidated fi nancial statements for the year ended December 31, 2010 included in Part 4 of this Annual Report summarizes the signifi cant amendments and interpretations of the Standards effective in 2010.
Management Committee; ■ Defi ne and run the Group risk appetite process (framework, limits) and monitor the consistency between group and local frameworks; ■ Implement Economic Capital measures and co-lead the validation of the Group’s internal model for Solvency II; ■ Develop and deploy models/metrics to measure risks and monitor the profi tability of the business lines (please see the
Casualty; Life & Savings), centralize the Group’s purchasing of reinsurance. Please refer to the Section “controlling exposure and insurance risk” for further details on reinsurance strategy.
Risk Offi cer to ensure a better alignment of Group and local interests. The missions of local Risk Management are set in accordance with the responsibilities stated above. The minimum missions required for all Risk Management teams are: ■ Performing a second opinion on P&C reserves, ALM studies
Withdrawal Benefi ts. Derivatives are used to help reduce the economic impact of, among other things, unfavorable changes in GMDB, GMIB, GMAB and GMWB exposures due to movements in the equity, fi xed income and foreign exchange markets. Two hedging platforms located in AXA
• hedging programs that make use of derivatives may be set up to hedge the risk of a fall (fl oor) or a rise (cap) in interest rates.
Group subsidiaries; ■ Risks relating to the management of holding companies’
The AXA Group analyzes sensitivity to movements in interest rates and equity markets looking at two different measures: ■ Sensitivities of European Embedded Value (EEV) in the Life
Net unrealized capital gains/losses, not included in IFRS shareholders’ equity 936 1,920 2,855 906 1,656 2,561
In line with industry’s converging practices, AXA has adjusted the approach introduced in 2008 in its market-consistent methodology in terms of liquidity premium (calibration and allowance by products) and yield curve extrapolation for long term maturities where no suffi cient liquid data is available on the markets.
portfolio was as follows and showed that 59% were AAA &
The “others” caption relates to reserves ceded to reinsurance pools, reserves ceded to reinsurers with which the AXA Group does limited business (not in the top 50) and reinsurers not rated by the main rating agencies.
At December 31, 2009, the breakdown of reserves ceded to reinsurers (€11.3 billion) by reinsurer rating was: 7% in AAA, 36% in AA, 31% in A, 3% in BBB/BB/B, and 23% in others.
Based’ scoring models regularly monitored to ensure a risk selection consistent with each bank’s risk appetite, ‘Retail
In addition, in the Property & Casualty business, the above mentioned tools permit analysis on a worldwide basis of market cycle, price elasticity, reinsurers’ counterparty risk, claims frequency deviation, reserves adverse development and natural catastrophes. The results of this exercise are mainly used to optimize the Group’s protection (through reinsurance or securitization) and business-mix.
(e) Assets and liabilities related to the Australian and New Zealand operations, and some UK Life & Savings portfolios for which the disposal process is not fi nalized as of December 31, 2010 are classifi ed as held for sale. This classifi cation already applied for Australian and New Zealand operations as of December 31, 2009 (see Note 5.3).
Net consolidated income – Minority interests 342 428 27 Earnings per share (h) (i) 1.08 1.56
Net change in liabilities arising from insurance and investment contracts (b) 27,360 31,467
Purchases and/or issues of loans and other assets (g) (h) (39,260) (40,303)
IFRS, which may continue to be applied under IFRS 4, future premiums relating to acquired business may be recognized in the “Value of acquired business in force” item.
UK with-profi t fund along with the supporting assets, the group was not permitted to reclassify the assets as available for sale assets, which would had represented the relevant category to match the traditional valuation of non profi ts
Life & Savings portfolios for which the disposal process is not fi nalized as of December 31, 2010 are classifi ed as held for sale. This classifi cation already applied for the Australian and
As of December 31, 2010, consolidated investment funds represented total invested assets of €95,045 million
Net realized gains and losses and change in fair value of other investments at fair value through profi t or loss (b) 16,053 (32) 37 24 - (610) (26) 15,446 of which change in fair value of assets with fi nancial risk borne by policyholders 13,798 - - - - - (10) 13,788
Amortization of the value of purchased business in force (256) - - - - - - (256)
Split between: Net consolidated income – Group share 1,396 1,750 378 255 9 (1,040) - 2,749
Split between: Net consolidated income – Group share 2,075 1,516 326 409 (17) (703) - 3,606
Of which: (a) Assets and liabilities related to the Australian and New Zealand operations, and some UK Life & Savings portfolios for which the disposal process is not fi nalized as of December 31, 2010 are classifi ed as held for sale. This classifi cation already applied for Australian and New Zealand operations as of December 31, 2009. (see Note 5.3).
The deal closed on September 15, 2010. However, certain portfolios will be transferred in 2011 and are classifi ed as “Held for sale” as of December 31, 2010.
The consideration of €3.3 billion (or £2.75 billion (1)) consists in €2.7 billion (or £2.25 billion (1)) of cash and €0.6 billion (or £0.5 billion (1)) of Resolution Ltd senior Deferred Consideration
Life & Savings deferred acquisition costs and equivalent net carrying value as of January 1 15,825 1,225 15,952 1,074
Debt instruments designated as at fair value through profi t or loss (c) 43,606 43,606 7.79%
Investments (excluding those backing contracts where the fi nancial risk is borne by policyholders) 408,553 404,570 72.24%
TOTAL FINANCIAL INVESTMENTS EXPOSED TO INTEREST RATE RISK 29,987 101,638 255,961 387,585
(b) Corresponds to fi nancial assets held for trading purposes and fi nancial assets recognized designated as at fair value through profi t or loss.
Debt instruments designated as at fair value through profi t or loss (b) 3,890 12,390 19,870 36,150
For all assets not quoted in an active market/no active market, the classifi cation between Level 2 and Level 3 depends on the proportion of assumptions used supported by market transactions and observable data: ■ assumed to be used by pricing services; or
The identifi cation of Level 3 assets among assets not quoted in an active market involves a signifi cant level of judgment. The following are considered as observable: inputs provided by external pricing services, information observable obtained from specialized data providers, rating agencies, external surveys.
Premiums earned but not written 1,372 - 1,372 1,372 1,553 - 1,553 1,553
At April 30, 2009 Shareholders’ Meeting, shareholders approved a dividend distribution of €836 million with respect to the 2008 fi nancial year.
(a) Unrealized gains and losses on total available for sale invested assets including loans.
The €+635 million increase in minority interests to €+3,693 million was mainly due to: ■ net income attributable to minority interests for €+428 million; ■ change in the scope of consolidation mainly due to a capital increase in AXA Asia Pacifi c Holding (€+290 million)
Investment contract with no Discretionary Participation Features (DPF) measured at current unit value (e) 25,006 46,750
The fi rst line entitled “Gross reserves for unpaid claims and claim expenses developed initially at the booking date”
January 1, 2006. Consequently, the table below shows the development of loss reserves recognized in AXA RE’s balance sheet at each year-end until December 31, 2005. Reserves recognized after that, which correspond to exposure assumed fully by Paris Ré, have not been developed. Paris Ré has been acquired by Partner Re and terms of the agreements mentioned above remains in-force.
Consistent with AXA’s reserving practices, and despite the particularly long-tail nature of those risks, reserves for asbestos are undiscounted.
Claims reserves at beginning of year (a) 1,064 1,027 1,005 961
The general principles for establishing insurance liabilities are set out in Note 1 of the consolidated fi nancial statements.
Liabilities are based on estimates, and one of the key assumptions used in these estimates is the discount rate.
Macro hedge derivatives relating to liabilities arising from banking activities 275 275 1,658 1,658
Given the short maturities of the main liabilities arising from banking activities (see below), the total fair value of amounts displayed above is close to disclosed carrying amounts.
APIV+EHV: mortgage loan based on Euribor 3M + 120bps, due 2015 93 94
As of December 31, 2010, other debt instruments issued (other than fi nancing debt) and bank overdrafts totaled €6,905 million, an increase of €2,431 million compared to December 31, 2009, mainly due to the increase of use of commercial paper in the
Other debt owed to credit institutions held at cost 2,104 2,285
Payables arising from direct insurance and inward reinsurance operations 7,387 7,387 6,761 6,761
As of December 31, 2010, payables arising from direct insurance and inward reinsurance operations totaled €7,387 million, an increase of €626 million compared to December 31, 2009.
As of December 31, 2010, payables arising from direct outward reinsurance operations totaled €5,598 million, an increase of €27 million compared to December 31, 2009.
In the table above, the “net deferred tax position” column corresponds to the difference between deferred tax assets
DTA recognized on tax loss carry forward 1,961 276 411 343 181 22 18 16 - 3,229
Unrecognized Deferred Tax Assets (DTA) by expiration date: The tables below break down the potential Deferred Tax Assets (DTA) which has not been recorded in the accounts at the year end as considered unrecoverable and the “expiry date”, i.e. the latest date the Group could use them.
Unrecognized DTA on tax losses carry forward 39 9 3 1 6 4 15 68 115 259
at the end of 2009). Credit derivatives are mainly used as an alternative to debt security portfolios, when coupled with government debt instruments, but also as a protection on single names or specifi c portfolios. In 2010, the Group held €6.1 billion Corporate Default Swaps (CDS) protections used for negative basis trades (€4.4 billion at the end of 2009). This strategy consisted in purchasing (i) corporate debt instruments and (ii) CDS with the same name, maturity and seniority so as to lock associated liquidity premium.
Life & Savings also uses future and forward foreign currency contracts (for a total notional amount of €17,080 million) to hedge exchange rate risk arising from its investments in fi xedmaturity debt instruments denominated in foreign currencies.
Liabilities arising from insurance contracts 342,559 - (585) 341,974 330,016 - (288) 329,728
Fair value not based on observable market data Level 3 TOTAL
Principles applied by the Group in order to proceed with the classifi cation of fi nancial instruments into the IAS 39 fair value hierarchy categories and the fair value hierarchy applicable to such instruments are described in Note 9.9. Same principles apply as far as derivatives instruments are concerned.
Fees and charges relating to investment contracts with no participating features (c) 518 - 31,967 547 - 47,666
Claims ceded (including change in claims reserves) 1,047 648 752 (326) 2,122
In 2010, the partial sale of the UK Life & Savings operations has not led to a signifi cant decrease in the liabilities of the
SoCI at the beginning of the year (2,442) (955) 308 (720) (1,112) 30 67 45 (4) (28)
TOTAL (in Euro million) 8,823 6,918 1,585 321 26.2.11. Other employee benefi ts funded on a pay-as-you-go basis
from a third party bank. The shares are restricted from sale during a period of 5 years (except specifi c early exit cases allowed by applicable laws). Employees who participate in the leverage plan benefi t from a guarantee on their personal investment and also receive a defi ned percentage of any upside appreciation (above the non-discounted reference price) on the full leveraged amount invested.
In 2009: ■ short-term benefi ts: compensation paid to members of the
In addition, the Company may enter into various other types of transactions with its subsidiaries and affi liates from time to time for various other business purposes including in connection with liquidity, solvency and capital management initiatives designed to promote effi cient use and fungibility of the Group’s capital resources. These transactions may involve loans or other types of credit arrangements, acquisitions or sales of assets, securities or other fi nancial instruments
Pledged securities and collaterized commitments 23,587 9 11 603 24,211 10,606
MAZARS: 61, rue Henri Regnault – 92400 Courbevoie Cedex, represented by Messrs. Philippe Castagnac and Gilles Magnan, fi rst appointed on June 8, 1994. The current appointment is for a term of 6 years, until the General Shareholders Meeting called to approve the fi nancial statements for the fi scal year 2015.
AXA SA is involved in lawsuits, investigations, and other actions arising in the various jurisdictions where it does business, including the following: In 2007, AXA SA completed the squeeze-out of the minority shareholders at two German subsidiaries, AXA
plc granted an indemnity to Friends Provident (“FP”) for any losses that FP may suffer as a result of having to pay out monies to pension scheme trustees/employers in relation to pension equalisation claims. This relates to a 1990 UK court decision (Barber v Guardian Royal Exchange) which required equalization of retirement ages for men and women covered under UK pension schemes. Prior to this decision, many of the schemes had different retirement ages for men and women
(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 “Additional factors that may affect AXA’s Business”
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
Each AXA share entitles its holder to one vote at all
Share capital reduction by cancellation of shares (45) (2,137) 2,289,965,079 5,244,020,031
Committees exercise their activities under the responsibility of the Board of Directors and report regularly to the Board of
Committee is an internal committee which has no formal decision making power, its plays an important role in assisting the Executive Management to effectively manage the Group’s operating businesses, consider strategic initiatives and in such other areas as the Executive Management deems appropriate from time to time. The Executive Committee meets at least quarterly at the time of the Quarterly Business Reviews (QBRs).
This system is also used to deliver management reporting information used to produce an economic perspective on the consolidated fi nancial statements. The process through which this management reporting information is produced and validated is the same as that used to prepare consolidated fi nancial information.
Group Audit Department operates mainly through: ■ overseeing of internal audit teams within operating units; ■ strategic and transversal internal audit assignments.
of the Group’s 2010 Annual Report describing corporate governance mechanisms and containing information about executives’ compensation.
AXA’s comments on the latest developments on the proposed AXA Asia Pacifi c Holdings’ transaction (04/19/2010)
George Stansfi eld, AXA Group General Counsel, is appointed Head of Group Human Resources in addition to his current responsibilities and joins AXA’s Executive Committee (10/13/2010)
Extract of the minutes of the Board of Directors’ meeting of 04/29/2010 related to the appointment of the Chairman & Chief Executive Offi cer, of the Vice-Chairman of the Board of Directors - Lead Independent Director and of the Deputy Chief Executive Offi cer 2009 annual and consolidated fi nancial statements
Extract of the minutes of the Board of Directors of 02/03/2011 related to increase of the share capital
Disclosure of trading in the Company’s shares by the corporate 03/17/2010 Giuseppe Mussari 03/26/2010 François Martineau 06/07/2010 François Martineau 06/28/2010 Wendy Cooper 12/03/2010 Henri de Castries 12/03/2010 Denis Duverne 12/03/2010 François Martineau 12/27/2010 Mrs. Dominique Reiniche 01/14/2011 Norbert Dentressangle 02/22/2011 Henri de Castries 03/02/2011 Jean-Martin Folz
(j) At the date on which stock options are granted by the Board of Directors.
Holding Vendôme 3 and €98 million in respect of the annual allowance for provisions for redemption premiums; ■ Releases of provisions for contingent liabilities totaled €189 million in 2010, versus €772 million in 2009. This amount included a €751 million release of provisions relating to the mark-to-market revaluation of an equity swap with another Group company intended to hedge an equity position. During the 2010 fi scal year, this mainly refl ected the release of €160 million in respect of Holding Vendôme 3, but was offset by an identical addition to valuation allowances for the same securities given the effective completion of the capital increase; ■ Net exceptional items showed a profi t of €141 million, primarily refl ecting a gain of €167 million resulting from the unwinding of equity derivatives. In 2009, they included a gain of €1,946 million resulting from the equity option strategy implemented by the Group in 2008 and unwound in 2009.
Tax receivables increased by €198 million owing to the €197 million carry back receivable generated by the loss recorded in the 2008 fi scal year.
Unrealized foreign exchange gains amounted to €1,190 million at year-end 2010, down from €1,466 million at December 31, 2009. This item refl ects the positive effects derived from the revaluation of foreign currency denominated assets and liabilities at the balance sheet closing exchange rate. This item declined compared with 2009 owing chiefl y to the unfavorable impact of the increase in the US dollar exchange rate on the liabilities.
Financial assets are measured at acquisition cost or transfer cost. At the balance sheet date, the acquisition cost is compared with the fair value, and the lower of these two values is then recognized in the balance sheet.
AXA’s share capital is represented by 2,320,105,237 shares with a par value of €2.29, giving a total value of €5,313,040,993 at December 31, 2010.
in 2009); ■ Expenses are adjusted for non-recurring expenses and one-time strategic spending; ■ Some benefi t from future mortality improvement on Life business is included, while annuity business does have an allowance for the costs of longevity increasing in all markets; ■ Non-fi nancial risks are provided for through the cost of holding capital consistent with the necessary amount to obtain a AA rating at each entity level; ■ A weighted average tax rate of 31.6% was assumed in 2010
As Statutory Auditors of AXA Group and in accordance with your request, we have examined the Life & Savings European Embedded
Report; ■ checking the consistency of the accounting information and other relevant underlying data used in preparing the EEV Information with the annual fi nancial statements and underlying accounting records at December 31, 2010; ■ obtaining the information and explanations as deemed necessary to deliver our conclusion.
Authorization granted to the Board of Directors in the event of an issue of shares through public offering or private placement without preferential subscription rights, to set the issue price under the conditions defi ned by the General Shareholders’
Delegation of authority granted to the Board of Directors for the purpose of increasing the share capital of the Company through the issue of ordinary shares or securities giving a claim to ordinary shares of the Company, in return for contributions in kind up to a maximum of 10% of the share capital outside a public exchange offer initiated by the Company
The upper limit (in nominal value) for the capital increases through the issue of ordinary shares that may be carried out pursuant to the delegations of authority proposed to the General Shareholders’ Meeting accordingly amount to €2 billion (not including capital increases through capitalization of reserves, earnings or premiums that may be carried out by virtue of the ninth resolution, which are limited to €1 billion and not including capital increases that may be carried out in the context of Company savings plans pursuant to the nineteenth and twentieth resolutions, which are limited to €150 million, and not including capital increases resulting from the allocation of options or shares pursuant to resolutions twenty-one to twenty-three which each have a specifi c limit).
In the tenth resolution, the Board of Directors requests from the General Shareholders’ Meeting a delegation of authority to issue ordinary shares or securities giving a claim to ordinary shares of the Company or one of its Subsidiaries, with preferential subscription rights. The total nominal amount of the capital increases that may be carried out by virtue of this resolution may not exceed €2 billion.
In the thirteenth resolution, in accordance with the provisions of Article L.225-136 of the French Commercial Code, you are however proposed to authorize the Board of Directors to set the issue price as follows, within the limit of 10% of the share capital for each 12-month period: the issue price shall not be less than, at the discretion of the Board of Directors, (a) the volume-weighted average quoted price of the share on NYSE
Euronext Paris over the trading day preceding the setting of the issue price or (b) the volume-weighted average quoted price of the share on NYSE Euronext Paris set over the trading day at the time the issue price is set, in each case minus a maximum discount of 5%.
In the nineteenth resolution, you are asked to delegate to the Board of Directors, for a period of eighteen months, with the right to sub-delegate as provided by law, the power to issue, as provided in Articles L.225-129 et seq, L.225-138 I
in the 2010 Annual Report fi led with the AMF and which is made available in accordance with applicable laws and regulations, in particular on AXA’s website (www.axa.com).
APPENDICES A APPENDIX VIII SHAREHOLDERS’ MEETING – APRIL 27, 2011 from the date the prohibition ends. The period for exercising the options will be postponed accordingly.
In accordance with the law, the Board of Directors will have all powers to set the list of benefi ciaries of the options and the number of options allotted to each benefi ciary, and the terms and conditions applicable to the options, provided that each allotment of options to executive offi cers of the
Under the twenty-third resolution, the Board of Directors associate the employees of the AXA Group with the implementation and attainment of its strategic objectives, through the allotment of free shares to all the employees of the Group.
In our capacity as Statutory Auditors of AXA, and in accordance with the terms of our appointment pursuant to the French Commercial
■ to authorize it, under the 13th resolution, in the event of an issue of ordinary shares and/or securities giving a claim to the capital of the Company or pursuant to Article L.228-93 of the French Commercial Code, of a company in which the Company holds directly or indirectly more than half of the capital, without preferential subscription rights, under the terms, and specifi cally the amount, set forth in the 11th and 12th resolutions, to set the issue price within the limit of 10% of the share capital for each 12-month period.
Your Board of Directors is required to prepare a report in accordance with Articles R.225-113, R.225-114 and R.225-117 of the
In accordance with Article R.225-116 of the French Commercial Code, we will submit a supplementary report, as the case may be, when your Board of Directors will make use of this authorization in the event of an issue of securities that entitle to an allotment of debt instruments.
Your Board of Directors is required to prepare a report in accordance with Articles R.225-113, R.225-114 and R.225-117 of the French
The Board of Directors requests you to give it, for a period of 18 months as of the date of this General Meeting, full authority so as to cancel the shares purchased under any share repurchase program up to a maximum of 10% of the share capital per 24-month period.
meetings, and having reviewed the Board of Directors’ report and the Statutory Auditors’ report on the Company’s fi nancial statements, hereby approve the fi nancial statements of AXA (the “Company”)
4) Resolve that the Board of Directors may grant shareholders a priority right to subscribe to shares as of right and/or on the basis of their exact rights, within the timeframe and under the conditions it will determine, for part or all of the issue carried out by virtue of this resolution, and which shall be exercised pro rata the number of shares owned by each shareholder, in accordance with applicable laws and regulations.
5) Resolve that in the event the above-defi ned issues of shares or securities are undersubscribed, the Board of Directors may implement, in the order it considers appropriate, any one and/or several of the following options: • limit the capital increase to the amount of the subscriptions, provided that such amount is equal to at least three quarters of the increase resolved,
6) Resolve that the issue price of ordinary shares or securities to be issued by virtue of this resolution shall be at least equal to the minimum set forth in applicable laws and regulations.
The shareholders duly note that the Board of Directors must provide an additional report, duly certifi ed by the Statutory
These securities may be issued by Subsidiaries only with the prior approval of the Board of Directors of the
The total nominal amount of the securities that may be issued by virtue of this delegation shall not exceed €2 billion, or the equivalent amount in another currency or any other monetary unit established by reference to several currencies, it being specifi ed that this nominal maximum amount is independent of the amount of debt instruments that may be issued by virtue of the tenth to the sixteenth resolutions hereinabove, and that any redemption premiums above this nominal amount shall be added to this amount.
Board of Directors may also substitute all or a portion of the discount by the allotment of ordinary shares or securities giving a claim to the Company’s capital, in application of the provisions hereinafter.
5) Resolve that the characteristics of any other securities giving a claim to the share capital of the Company shall be determined by the Board of Directors in accordance with the conditions set by the applicable laws and regulations.
Meeting of April 22, 2008, under the sixteenth resolution. It is granted for a period of 38 months, starting from the date of this
Authorization granted to the Board of Directors to grant free shares to employees of the Group in connection with the attainment of its strategic objectives and the implementation of the law dated December 3, 2008
After the diffi cult market environment of 2009 and the related workforce contraction, AXA Group stabilized its global workforce in 2010. The overall salaried workforce on December 31st 2010 remained at more than 127.000 employees, which represents a slight decrease of 0.7% when compared to 2009 fi gures.
1.263 employees in 2009). With regards to the number of net job creations, there is 39% less job destruction when compared to 2009.
The aforementioned Group EWC agreement provides a certain number of commitments to employees in the event of major organizational changes with impacts on jobs. AXA has developed the following principles with a view to guiding its various European business units in their local management: ■ 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 this information-gathering and consultative process, the data and information provided by
Diversity and inclusion is tightly linked to AXA’s values and culture, based on respect for employees, customers, and communities around us. A diverse workforce helps AXA
Forum that had over 100 key diversity and inclusion stakeholders from both the business and HR attend. At the event, both the AXA CEO and the Deputy CEO stated their commitment to diversity & inclusion in AXA. During the event, local AXA entities were recognized through a Diversity
Mentoring” program in 2010. AXA Life Japan addresses the issue of women’s representation in management by organizing programs for pre-manager women and career advice and trainings. AXA Life Japan also developed a scheme that helps senior employees’ career fl exibility while providing new opportunities to younger talents. When senior employees reach the age of 50 or 55 (depending on their job grade), the company offers them various options and career advice including further development, early retirement packages, and even starting-up as a tied agent. AXA Mexico established a
AXA’s core values of professionalism, innovation, pragmatism, team spirit and integrity. Learning is a key lever for the HR
Since 2008, AXA has assessed, with the assistance of a specialized service provider, an in-depth analysis of the
Number of employees with disabilities - concerns entities listed in France only 515 emp. 19,6% 616 emp.
(b) United Kingdom mentioned in their perimeter an error in their 2009 fi gures of 915 employees.
(c) AllianceBernstein mentioned an error in their 2009 reporting as, while fi gures have been captured for headcount, no fi gure were captured for FTEs.
(i) This average does include leavers who received a training during the calendar year. Therefore, turnover has to be taken into account.
/FTE): 20% reduction; ■ Water consumption (m3/FTE): 15% reduction; ■ Paper consumption (kg/FTE): 15% reduction (2009-2012).
Both AXA France and AXA Germany launched car-sharing websites open to all employees, which helps to reduce the carbon footprint of employee commuting. AXA France also implemented eco-driving courses for sales teams in certain
Registration Document corresponding to the parts of the Board of Directors’ Report as approved by the Board of Directors of the Company.