The average and closing exchange rates used in the preparation of the consolidated financial statements, to translate into Euro the results of operations of the principal subsidiaries that are not denominated in Euro, are set out in the table below: year-End Exchange Rate Average Exchange Rate
The Euro Noon buying Rate on December �1, 2008 was €1.00 = $1.�919.
France for tax purposes are eligible for a tax relief of 40% on the dividend, i.e. Euro 0.16 per share for fiscal year 2008.
For information on AXA’s dividend policy, see Part V “Consolidated Financial Statement” and Part VI “Certain Additional Information”, Section “Dividends” of this Annual Report.
In 2000, AXA (i) acquired a majority interest in a Japanese life insurance company, “Nippon Dantaï Life Insurance Company”, through a new Japanese holding company, “AXA Nichidan”, (ii) increased its interest in SLPH from 56.3% to 100%, (iii) sold its interest in Donaldson Lufkin & Jenrette (“DLJ”) to Credit Suisse Group, (iv) acquired Sanford C. Bernstein through its US based asset management subsidiary Alliance Capital (which subsequently changed its name to AllianceBernstein), and (v) acquired the minority interest in AXA Financial, which is now a 100% owned subsidiary of AXA.
AXA operates primarily in Europe, North America, the Asia Pacific region and, to a lesser extent, in other regions including the Middle East, Africa, and Latin America. AXA has five operating business segments: Life & Savings, Property & Casualty, International Insurance, Asset Management, and Banking. In addition, various holding companies within the AXA Group conduct certain non-operating activities.
(a) Restated for full year 2006 means restatement of The Netherlands’ activities as discontinued businesses. (b) Annual Premium Equivalent (APE): Measure of new business volume which represents 100% of regular premiums + 10% of single premiums, in line with EEV methodology. APE is group share. (c) New Business Value (NBV): The value of new business issued during the current year which consists of the Value in Force of new business at the end of the year plus the statutory profit result of the business during the year. NBV is Group share.
Life products include: • Term assurance, which provides a death benefit for a defined period of time. • Whole life products, which provide a death benefit over a person’s entire lifetime or up to a certain age, such as age 95 or 100, as long as the required premiums are paid.
Salaried sales forces are salespeople employed by a single insurance company (or an affiliated company) to sell the company’s products exclusively.
(a) Source: Swiss Re, Sigma report 2008 “World insurance in 2007”. (b) Source: AXA, mainly based on national insurance association data for each specific country in 2007. (c) United Kingdom: includes Health, but excludes ireland. (d) indicative only, as AXA purchased business in Mexico in July 2008. (e) Gulf Region: includes Saudi Arabia, United Arab Emirates, Kuwait, Qatar and Oman. (f) considering all companies part of the Group of Public insurer independently. if these companies were to be considered as a group in the rankings, AXA
For more details on market description, refer to “Part 2.3 – Activity Report”, section “Insurance and Asset Management Markets”.
To attract and retain clients, new products are designed to add value for the clients and support cross-selling, thus improving client retention.
AXA bANqUE Based in Paris, AXA Banque had more than 675,000 registered customers at the end of 2008, with development focused on exclusive networks (exclusive agents and salaried sales force) covering 80% of client scope. It offers a large range of retail banking products including deposit and savings accounts and consumer loans.
Gross reserves for unpaid claims and claims expenses developed in 2008 adjusted for changes in exchange rates and scope of consolidation (c) 21,�46 2�,000 2�,7�8 25,158 25,716 26,414 27,2�0 28,598 41,98� 4�,4�� 44,046
There have been a number of other initiatives in Europe with implications for AXA’s European insurance subsidiaries, and the European insurance sector more generally, including the following: • The financial stabilization initiatives referred to above. • In various European and other jurisdictions, including the UK, insurance and financial services regulators have adopted or are generally moving towards a “principles based” system of regulation founded on a set of general and broadly worded principles rather than detailed prescriptive rules. These principles, which provide regulators with broad discretion in their application, cover a variety of matters and are designed to ensure, among other matters, that insurers and other financial services providers treat their customers fairly, conduct their business with the requisite levels of integrity and ethics, maintain appropriate corporate governance practices and internal controls, and generally manage their businesses in a prudent manner taking into account their fiduciary duties and the interests of their customers.
• In France and in certain other EU jurisdictions, there are continuing discussions concerning implementation of a “class action” litigation mechanism that would allow groups of plaintiffs to bring collective actions. The scope and form of any such mechanism, as well as the timing of introduction, are currently under discussion.
United States 2. In the Life insurance market, total Life industry sales were down 3% for the first nine months of 2008 as compared to the same period last year. The equity market downturn had a strong negative effect on industry Variable Life product sales, resulting in a decline of 16% for the first nine months of 2008. Industry Universal Life sales also saw a decline during the same period, falling 2%, partly attributable to price increases across the industry. In addition, for the nine month period, Whole Life insurance sales increased 4% and Term Insurance sales decreased 1%. In the annuity industry, Variable Annuities were negatively impacted by the fall in equity markets as industry sales declined 10% through the first nine months of 2008. Conversely, Fixed Annuities benefited from the difficult market environment as consumer preferences shifted to more conservative investment vehicles, leading to an industry sales increase of 41% for the first nine months of 2008. In Life, AXA ranked 13th overall for the same period, as increased pricing in Universal Life products impacted sales considerably. AXA’s Variable Annuity business maintained its 2007 year-end market share, ranking third overall through nine months.
Switzerland. The Property & Casualty market was flat 14 due to fierce competition and price pressure mainly in Motor business and Commercial lines. AXA Winterthur was the market leader in P&C with a stable market share at 15%.
Mediterranean and latin American Region. In Italy the market remained stable as the non Motor business (+3%) was offset by Motor (–3%), impacted by the slowdown in car sales 1. In Spain the market, +2% 2, showed clear signs of deceleration with the economy in recession, an important rise of unemployment, a drop in car sales (–28%) and the fall of the construction industry. In Mexico the growth of the market is expected to accelerate (13-15% vs. CAGR03-07 of 10%). Health is expected to continue to grow (15-20%). As of Q3 Motor grew about 12%, the large players remained with a stable market share, however, Q4 expected to slow down growth (yearly growth expected about 10%). In the other lines of business the growth is mainly driven by government business (8-10%). In Turkey, the market increased by +16% � but is expected to be impacted by the economic deterioration (GDP recession, inflation stabilized around 10% and the explosion of unemployment rate). In Portugal the market decreased by 2% 4 mainly explained by Motor branch (–7%) and workmen compensation (–3%) impacted by the economic deterioration. In Greece the market increased by 4%. In Morocco the market increased by 11% 5 driven the economic growth. In Gulf Region market continued growing strongly (18-20%) driven by regulatory changes, investments in infrastructures and population inflows, with an increasing price competition.
Canada 16. In 2008, overall premiums grew by an estimated 3%. The market was very fragmented and very competitive with a continuing pressure on prices. In Personal lines, the growth was estimated at 3% driven mainly by an increase in volume. In Commercial lines, the pressures on prices and margins were offset by the inflation impact of values to be insured. AXA ranked 6th 17 in the P&C market.
As of the end of 2006, AXA Financial, either directly or indirectly through wholly owned subsidiaries, had acquired a total of 24.5 million AllianceBernstein Units for an aggregate price of approximately $885.4 million through several purchases made pursuant to the Put. AXA Financial completed the purchase of another tranche of 8.16 million AllianceBernstein Units pursuant to the Put on February 23, 2007 for a total price of approximately $746 million. This purchase increased the consolidated economic interest of AXA Financial, Inc. and its subsidiaries in AllianceBernstein L.P. by approximately 3% from 60.3% to 63.2%.
Significant disposals In 2007 On January 4, 2007, AXA reached an agreement with QBE Insurance Group for the sale of winterthur’s U.S. operations for US$1,156 million (€920 million taking into account hedges put in place by AXA for this transaction at 1 Euro = 1.26 US$), and successfully completed the sale on May 31, 2007. In addition, Winterthur U.S. repaid US$636 million, of which US$79 million had already been repaid in Q4 2006 (€506 million taking into account hedges put in place by AXA for this transaction at 1 Euro = 1.26 US$) of intercompany loans to Winterthur Group. This transaction followed AXA’s decision to put Winterthur U.S. operations under strategic review, as initially announced on June 14, 2006.
On June 4, 2007, AXA announced that it had entered into a memorandum of understanding with SNS Reaal with a view to finalizing discussions on the sale of its Dutch operations, comprising 100% of AXA Netherlands, winterthur Netherlands and DbV Netherlands, for a total cash consideration of €1,750 million, after consultation with trade unions and workers’ councils. AXA contemplated exiting the Dutch insurance market given the limited possibilities to reach a leading position through organic growth in the foreseeable future as this market is highly competitive and dominated by large local players. AXA’s Dutch operations concerned by this proposed transaction were treated as discontinued operations (held for sale) in AXA’s 2007 consolidated financial statements. As a consequence, their earnings until closing were accounted for in net income for all reported years. Their contribution in 2007 amounted to €480 million (of which €406 million gains on disposal and €74 million result up to the closing date), which was accounted in net income. The transaction closed on September 5, 2007.
At December closing, the strategy had a mark-to-market of €2,387 million including an intrinsic value of €3,358 million before tax.
This section includes certain terms that are used by AXA in analyzing its business operations and, therefore, may not be comparable with terms used by other companies; these terms are defined in the glossary provided at the end of this section.
(c) includes notably cdOs and real estate companies. (d) Restated means the restatement of The Netherlands’ activities as discontinued businesses.
Net banking revenues in banking segment were up 22% or +15% on a comparable basis to €412 million, mainly attributable to AXA Bank Europe (+15% to €249 million mainly due to higher net interest and fee income) and AXA Banque (+25% to €102 million).
(iii) €+1,636 million increase in market value of equity derivatives in 2008 mainly driven by €+1,335 million at AXA SA, due to equity derivatives set up to reduce the Group exposure to equities, and also €+143 million in Germany and €+109 million in France.
b. €–2,317 million change in fair value and realized gains on Mutual Funds, other assets and freestanding derivatives, mainly driven by credit spread widening.
INCOME FROM OPERATING ACTIVITIES, GROSS OF TAX EXPENSE 2,058 �,855 �,4�0 �,509
Investment margin increased by €84 million (+9%) to €1,022 million due to higher investment revenues, mainly on bonds due to a volume effect and higher yield.
(€+75 million) partly offset by the non repeat of 2007 increase in “low margin” coinsurance business (€–33 million). • Individual Life improved by €6 million (+11%) to €69 million resulting from the positive development of regular premiums both unit-linked (+22% or €+2 million) and non unit-linked (+10% or €+3 million), and the positive impact of mutual fund sales (€+1 million) launched late in 2007.
Net capital gains or losses attributable to shareholders net of income tax (474) 206 255
Underlying earnings increased by €6 million (+5%) to €133 million. On a constant exchange rate basis, underlying earnings increased by €17 million (+13%), mainly driven by non-recurring impacts on DAC amortization (revised actuarial assumptions).
Adjusted earnings decreased by €54 million (–38%) to €89 million. On a constant exchange rate basis, adjusted earnings decreased by €47 million (–33%) reflecting significantly higher realized losses and impairments on equities, despite an improvement in underlying earnings.
Underlying earnings increased by €7 million to €7 million. On a constant exchange rate basis, underlying earnings increased by €6 million mainly due to an increase in investment margin partly offset by higher administrative expenses to develop distribution networks.
Fees and revenues from investment contracts without participating feature – – – –
Profit or loss on financial assets (under FV option) & derivatives (290) 34 64
MPS, Gulf Region and Mexico, the current year loss ratio increased by 0.9 point to 77.4% mainly linked to motor business in Italy with higher impact from large claims.
Profit or loss on financial assets (under FV option) & derivatives (52) (10) –
Expense ratio increased by +0.6 point to 24.5% mainly driven by higher acquisition costs resulting from the change to an independent sales organization for exclusive agents partly offset by the positive €36 million one time impact of the change in own pension scheme.
(a) includes Hong Kong, Singapore and Malaysia (Malaysia was fully consolidated for the first time in 2007). (b) Restated means the restatement of The Netherlands’ activities as discontinued businesses.
Canada Gross revenues amounted to €1,076 million. On a constant exchange rate basis, premiums increased by €59 million (+5%) as a result of (i) €88 million growth in premiums mainly reflecting an organic growth of 6% as well as portfolio transfers, partly offset by (ii) €–29 million resulting from the 24 month policies success in 2007 leading to less renewals in 2008.
Underlying earnings and adjusted earnings remained stable at €–10 million, as the improvement in technical and investment results were offset by higher expenses driven by strong development of this activity launched in 2006.
The following tables present the consolidated gross revenues, underlying earnings, adjusted earnings and net income for the International Insurance Segment for the periods indicated consolidAtEd gross rEvEnUEs
Profit or loss on financial assets (under FV option) & derivatives (77) 1 1
As a consequence, underlying earnings increased by €16 million (+17%) to €113 million. On a constant exchange rate basis, underlying earnings increased by €11 million (+11%).
Net capital gains or losses attributable to shareholders net of income tax – 1 1
Underlying and adjusted earnings decreased by €–12 million to €–12 million resulting mainly from commercial development costs in saving and current accounts, combined with a slight fall on lending activity, in the context of the financials crisis.
Adjusted earnings increased by €981 million to €769 million driven by €1,335 million increase in the mark-to-market (net of premiums) of equity derivatives set up to reduce the Group exposure to equities partly offset by underlying earnings evolution.
Net income increased by €24 million. On a constant exchange rate basis, net income increased by €25 million mainly due to the change in fair value of derivatives non eligible to hedge accounting (a €8 million loss in 2008 versus a €30 million loss in 2007).
Our confidence in the performance of AXA going forward is supported by the increasing engagement of our employees, the trust of our clients, the financial flexibility and diversification of the Group and our operating profit resilience through turbulent times.
INTERNAl SOURCES OF lIqUIDITy: AXA’S SUbSIDIARIES The principal sources of funds for AXA’s insurance operations are premiums, investment income and proceeds from sales of invested assets. These funds are mainly used to pay policyholder benefits, claims and claims expenses, policy surrenders and other operating expenses, and to purchase invested assets. The liquidity of the Group’s insurance operations is affected by, among other things, the overall quality of AXA’s investments and the Group’s ability to liquidate its invested assets to meet policyholder benefits and insurance claims as they fall due. Information on projected payments and surrenders related to Life & Savings and Property & Casualty insurance contracts are disclosed in Note 14.9.1 of Part V – Consolidated Financial Statements.
(1) including interest charge on perpetual subordinated debt. (2) (net financing debt + perpetual subordinated debt) / (shareholders’ equity, excluding fair value recorded in shareholders’ equity
In addition, in most of the Company’s TSS, upon the occurrence of certain events relating to the Company’s consolidated net earnings and shareholders’ equity, the Company is required to defer payment of interest. In such event, the Company may satisfy mandatory deferred interest by way of alternative settlement mechanisms (such as, subject to applicable limits, issuance of new shares or other securities including TSS or preference shares, sale of treasury shares, or an increase in the principal amount of the relevant notes) within five years, failing which the interest is forfeited. However, the settlement of deferred interest becomes due, on a best efforts basis, in certain circumstances including redemption of the notes, liquidation, payment of a dividend or interest on any other TSS, any share buy back outside the Company’s buy-back programme, or any redemption or repurchase of other TSS. Finally, under its TSS, the Company has an option to cancel payments of interest upon the deterioration of its financial position, unless certain events have occurred in the preceding year (e.g. a dividend payment or interest payment on any TSS, any share buy-back outside the Company’s share buy-back programme or a repurchase or redemption of any TSS). However, upon the occurrence of certain circumstances relating to the consolidated solvency margin of the Company, the Company is required to cancel the payment of interest.
CREDIT RATING Claims paying and credit strength ratings are factors contributing to the competitive position of insurance companies. Rating agencies review their ratings and rating methodologies on a recurring basis and may change their ratings at any time. Consequently, our current ratings may not be maintained in the future. In the context of the current financial market crisis and the deterioration in the credit and equity markets over the past months, certain rating agencies have lowered their outlook on the life insurance sector to negative from stable and have downgraded a growing number of companies. In February 2009, (i) Standard & Poor’s affirmed its AA counterparty credit and financial strength ratings on AXA’s principal insurance subsidiaries and its A+ counterparty credit ratings on the Company, but revised its outlook on these ratings to negative from stable, and indicated that they “believe that AXA’s fundamentals are sound and are highly likely to help the Group withstand market conditions and keep ratings in the ‘AA’ category in the medium term”; and (ii) Moodys’ Investors Services reaffirmed the Aa3 counterparty credit and financial strength ratings on AXA’s principal insurance subsidiaries and its A2 counterparty credit rating on the Company and maintained its stable outlook. In March 2009, Fitch Ratings downgraded the financial strength ratings of AXA’s principal insurance subsidiaries from AA to AA- (one notch) and also downgraded the Company’s senior debt from A+ to A- (two notches), subordinated debt from A to BBB+ (two notches) and short term debt from F1+ to F1 (one notch). Fitch Ratings also revised its outlook on these ratings to negative from stable.
AXA’s Supervisory Board has established four Committees to review specific matters and report back to the Supervisory Board.
Business address BOURBON – 33, rue du Louvre – 75002 Paris, France
Expertise and experience Mr. Jacques de Chateauvieux is a graduate of the Institut Supérieur de Gestion (Paris) and of Columbia University (New York). In 1975, he joined l’Union des Transports Aériens as a management auditor. From 1977 to 1979, he worked as a consultant for the Boston Consulting Group (BCG). Since 1979, Mr. Jacques de Chateauvieux has been Chairman and Chief Executive Officer of BOURBON. From 1989 to 2001, he helped develop BOURBON into an international conglomerate and then listed the company on the Paris Stock Exchange in 1998. From 2001, he has refocused BOURBON’s strategy on making it a world leader in offshore oil and marine services. Mr. Jacques de Chateauvieux has been a member of the AXA Supervisory Board since 2005 and became Chairman of the Board in April 2008.
Business address AXA Financial, Inc. – 1290 Avenue of the Americas – New York - NY 10104, United States
Business address Vivendi – 42, avenue de Friedland – 75008 Paris, France
into Hoechst to create Aventis. From December 1999 to May 2002, he served as Vice-Chairman and Chief Operating Officer of Aventis. Chairman of the International Chamber of Commerce in 2003 and 2004, Mr. Fourtou co-chairs the Franco-Moroccan Economic Impetus Group created in September 2005. In July 2002, he became Chairman and Chief Executive Officer of Vivendi Universal and then Chairman of the Supervisory Board of Vivendi.
Expertise and experience Mr. François Martineau is a graduate of the University Paris IV (Philosophy Degree), University Paris I (Law Master), and l’Institut d’Etudes Politiques de Paris. Mr. François Martineau has been Attorney since 1976. In 1981, he was “Secrétaire de la Conférence”. In 1985, he was a lecturer at the University Paris I (Civil Procedure). In 1995, he was a Professor at the Paris Bar School (EFB) and in 1998, he was a Honorary Professor at the Law and Political Sciences School of Lima (Peru). In 1996, he became an Expert at the Council of Europe and fulfilled various missions in Eastern Europe countries regarding the reform of the Code of the Judicial Organization, the reform of the magistrates’ and lawyers’ training and the revision of the Code of Civil Procedure. Since 1987, Mr. François Martineau has been a Partner of the law firm SCP Lussan & Associés, and Managing Partner since 1995.
Business address EPS/PIIRS – Aaron Burr Hall – Princeton University – Princeton, N.J. 08544 – United States
Previous directorships held during the last five years Institut d’Etudes Politiques (Paris), Associate Professor
The Selection, Ethics, Governance and Human Resources Committee met four times in 2008. The average attendance rate was 88.89% and the Committee focused, in particular, on the following matters: • replacement of the Chairman and Vice-Chairman of the Supervisory Board; • composition of the Supervisory Board and its Committees; • independence of the members of the Supervisory Board; • review of the candidates to be the employee-representative on the Supervisory Board; • composition of the Executive Committee and appointment, evolution, perspectives and succession of key Group management personnel; • adoption of the AFEP / MEDEF recommendations as corporate governance code of reference; • AXA University: culture development.
Alfred Bouckaert (62) Member of the Management Board, chief Executive Officer for Northern, central and Eastern Europe business unit
Mr. Henri de Castries is a graduate of the Ecole des Hautes Etudes Commerciales (HEC) and obtained a law degree before completing preparatory studies for the Ecole Nationale d’Administration (ENA). After graduating from ENA, Mr. de Castries began his career with the French Finance Ministry Inspection Office. Mr. de Castries joined AXA’s corporate finance department on September 1, 1989. He was appointed Corporate Secretary in 1991 and Senior Executive Vice-President for the Group’s asset management, financial and real-estate businesses in 1993. In 1997, Mr. de Castries was appointed Chairman of The Equitable Companies Incorporated (now AXA Financial Inc). Mr. de Castries has been Chairman of the AXA Management Board since May 2000.
Previous directorships held during the last five years Managing Director: AXA Belgium SA (Belgium) Chairman of the Board of Directors: • Winterthur-Europe Assurances (Belgium) • L’Ardenne Prévoyante (Belgium) • Viaxis (Belgium) Chairman Managing Director: • Royale Belge Investissements (Belgium) Director: • Servis (Belgium) • Servis-Life (Belgium) • AXA Nederland BV (The Netherlands) • AXA Verzekeringen (The Netherlands) • AXA Bank AG (Germany)
Previous directorships held during the last five years Director or member of the Supervisory Board: • AXA RE • AXA Konzern AG (Germany) • AXA Aurora S.A. (Spain) • AXA Aurora Ibérica S.A. de Seguros y Reaseguros (Spain)
Previous directorships held during the last five years • MONY Holdings, LLC (United States), Chairman of the Board, “President” and Chief Executive Officer Director and Chairman: • U.S. Financial Life Insurance Company (United States) • Financial Marketing, Inc. (United States)
Other information on members of the Management Board and of the Supervisory Board Conflicts of interests The members of the Management Board do not hold any directorships or other positions with companies outside the AXA Group, except for a limited number of outside directorships which do not interfere with or impede in any material way their availability to focus on the Group and its business. Certain members of the Supervisory Board, however, are executive officers and/or directors of companies that may have dealings from time to time with the AXA Group including extensions of credit, purchases of securities (for their own account or for third parties), underwriting of securities and/or furnishing of other types of services or goods. These dealings are generally fully negotiated and performed on arm’s length terms and conditions. Consequently, AXA does not believe these dealings give rise to any conflicts of interests between (i) the duties to AXA of the Supervisory Board and Management Board members and (ii) the private interests and/or other duties of these individuals.
Nicolas Moreau chief Executive Officer of AXA UK-ireland and chairman of the Board of Directors of AXA investment Managers
The compensation of Management Board members is approved by the Supervisory Board, based on the Compensation Committee’s recommendation.
Variable remuneration for the year 2003 paid in 2004 €1,824,728 €2,000,000 91%
Variable remuneration for the year 2007 paid in 2008 €2,644,366 €2,500,000 106%
Alfred Bouckaert cEO North, central Belgium e980,000 e900,000 109% e750,000 e1,000,000 75% & Eastern Europe Business Unit claude Brunet chief Operating France e918,473 e900,000 102% e793,789 e940,000 84% Officer christopher condron President & cEO UsA e4,566,372 e4,500,000 101% – e4,750,000 – AXA Financial inc.
On May 10, 2007, the fair value of one option was e6.63 for options without performance condition and e5.89 for options with performance condition, and the fair value of one performance share/unitt e27.40.
(Gross amounts in Euro) Country Fixed remuneration Variable remuneration Exceptional remuneration Board fees Benefits in kind TOTAL Fixed remuneration Variable remuneration Exceptional remuneration Board fees Benefits in kind TOTAL
Expiry date of options 26/05/2009 26/05/2009 09/06/2009 09/06/2009 18/11/2009 05/07/2010 05/07/2010 12/07/2010 13/11/2010
Date of the Management Board 01/04/2008 01/04/2008 19/05/2008 19/05/2008 22/09/2008 22/09/2008 24/11/2008
Denis Duverne group chief Financial Officer 01/04/2018 1/3 of options: Eurostoxx insurance index
The amounts corresponding to Performance Units are charged to expenses each year under the variable accounting method, but do not create any dilution for shareholders since no new shares are issued.
Each year, the Management Board proposes a global Performance Shares pool to the Supervisory Board’s approval and the annual grants of Performance Shares are generally made simultaneously with the granting of stock options.
François Pierson chairman & cEO AXA France 01/04/2008 60,200 0.003% 1,022,196 01/04/2010 01/04/2012 – underlying earnings per share
EMPLOyEE SHAREHOLDERS SharePlan Since 1993, the AXA Group has promoted employee shareholding by offering each year to its employees an opportunity to become shareholders through a special equity issue reserved exclusively for them (“SharePlan”).
Treasury shares held directly by the company 5,669,457 (b) 0.27% 12,983,056.53
Maximum percentage of share capital, maximum number and types of securities that may be repurchased by the Company and maximum purchase price
Type of securities Maximum % of share capital Maximum number of shares (a) Maximum purchase price
By virtue of the authorization granted by the shareholders at the Annual General Meeting of April 22, 2008 (19th resolution), the Management Board increased the Company’s share capital in one offering, through the issue of shares to Group employees under the SharePlan 2008 program. The shareholders waived their preferential subscription rights to facilitate this offering to employees. In the countries that met the legal and tax requirements for participation in SharePlan, two investment options were offered in 2008: • the traditional plan, offered in 36 countries, • the leveraged plan, offered in 36 countries.
By virtue of the authorization granted by the shareholders at the Annual General Meeting of May 14, 2007, the Management Board granted on July 1, 2007, 50 AXA shares to each employee of the AXA Group, with the exception of Management Board and Executive Committee members.
Calendar Period Closing High (€) (a) Closing Low (€) (a) Intraday High (€) Intraday Low (€)
The global fixed-income markets are experiencing a period of both extreme volatility and limited market liquidity conditions, which have affected a broad range of asset classes and sectors. As a result, the market for fixed income instruments has experienced decreased liquidity, increased price volatility, credit downgrade events, and increased probability of default. Global equity markets experienced a severe correction of historic proportions over the past months with many major markets falling more than 40% from their peak and continue to experience extreme volatility.
our asset management and unit-linked life insurance businesses, is significantly impacted by such factors as the state of the financial markets and ongoing operating performance. To the extent that the operating performance of our businesses and/or securities valuations remain depressed for prolonged periods of time or market conditions stagnate or worsen from their current levels, we may be required to significantly impair our goodwill, accelerate our amortization of DAC and VBI and/or derecognise our deferred tax assets which, individually or in the aggregate, could have a material adverse effect on our consolidated results of operations and financial position.
we face strong competition in all of our business segments and recent governmental investments in certain financial institutions may negatively affect AXA’s competitive position in certain of its key markets and adversely impact its results of operations and financial condition We face strong and increasing competition in all our business lines. Our competitors include mutual fund companies, asset management firms, private equity firms, hedge funds, commercial banks and other insurance companies, many of which are regulated differently than we are and offer alternative products or more competitive pricing than we do. In addition, development of alternative distribution channels for certain types of insurance and securities products, including through the internet, may result in increasing competition as well as pressure on margins for certain types of products. These competitive pressures could result in increased pricing pressures on a number of our products and services, particularly as competitors seek to win market share, and may harm our ability to maintain or increase our profitability.
The Risk Management departments of operational entities are managed by local Chief Risk Officers, who report directly to local CFOs. The roles and responsibilities of local Risk Management departments are formally approved by the executive committees of Group entities and comply with the Group’s Risk Management priorities. They consist in: • Leading efforts to determine the Economic Capital of local entities and developing the necessary tools. The Risk Management department performs these tasks using a uniform set of techniques including stochastic models to assess AXA’s risk exposure.
• Reinsurance can also offer more customized solutions than the financial markets to mitigate certain risks; e.g., used in part of the in-force GMIB (Guaranteed Minimum Income Benefit) products.
Companies in the German Life & Savings segment hold investments denominated in foreign currencies (€3,688 million in 2008, €3,558 million in 2007, and €3,577 million in 2006), both directly and indirectly through investment funds, with the aim of diversifying their investments and taking advantage of foreign markets’ performance. These investments are mainly in US dollars (€3,001 million in 2008, €2,629 million in 2007, and €2,092 million in 2006), but also in pound sterling (€371 million in 2008, €674 million in 2007, and €1,018 million in 2006) and Japanese yen (€103 million in 2008, €178 million in 2007, and €151 million in 2006). Exchange-rate risk exposure is hedged using forwards (notional €3,146 million vs. €2,542 million in 2007 and €2,241 million in 2006) and currency swaps (notional of €314 million vs. €430 million in 2007 and €423 million in 2006).
– £1.9 billion or €2.0 billion (£1.9 billion or €2.6 billion at the end of 2007, and £1.2 billion or €1.8 billion at the end of 2006) in respect of the UK business, mainly in the form of debt,
ASSET BACKED SECURITIES By UNDERLyINg TypE OF ASSET (excluding Collateralized Mortgage Obligations (CMOs)) At December 31, 2008, the economic breakdown of the total value of ABS (€11.8 billion1 excluding CMOs and ABS held through with-profits funds) was: Prime Residential
CREDIT DERIVATIVES The AXA Group, as part of its investment and credit risk management activities, may use strategies that involve credit derivatives (Credit Default Swaps or CDS), which are mainly used as an alternative to corporate debt security portfolios, when coupled with government debt securities, but also as a protection on single corporate names or specific portfolios.
• For post-launch business, to ensure the appropriate profitability and risks control of the in-force P&C underwritings. This profitability framework complements strong and basic underwriting rules to ensure that no risks are taken outside the Group tolerances and that value is created by adequately pricing the risk.
For Property & Casualty business, the Group Risk Management, together with Group P&C Insurance Operations, Group Claims Department and other entity specialists, performs in-depth reviews on specific portfolios to re-assess all underlying assumptions, methods and processes driving the exercise (claims management, actuarial, underwriting, etc.) and to check the compliance with the Group standard on reserving, which covers, among other matters, the independency of opinions, the documentation of the escalation process (meant to solve significant differences of opinion between first and second assessments) and the reconciliation process.
Gradual premium rate adjustments will be required to widely reflect these risk factors, but are not likely to be sufficient to cover risks underwritten in the most exposed areas to flood or cyclone. By seeking to develop new solutions and actively contributing to the overall debate about the issues involved – particularly as part of the Carbon Disclosure Project – AXA, along with other major market players, intends to promote a better understanding and better forecasting of the risks resulting from global warming.
Liabilities arising from investment contracts with discretionary participating features 38,081 40,121 32,606
Notes December 31, 2008 December 31, 2007 December 31, 2006 (In Euro million, except EPS in Euro) Restated (i)
(b) Net of investment management costs. (c) Includes impairment releases on investments sold.
Standards and interpretations published but not yet effective IFRS 8 – Operating Segments, published in November 2006 and applicable from January 1, 2009, replaces IAS 14 – Segment Reporting. The new standard requires disclosed operating segments to be based on the segmentation used in the entity’s internal reporting, on the basis of which operational heads allocate capital and resources to the various segments and assess the segments’ performance. The standard requires the entity to explain the basis on which segments are determined, and provide a reconciliation between consolidated balance sheet and income statement amounts. The standard is not expected to have a significant impact on the Group’s financial statements.
All amounts in the consolidated balance sheet, consolidated statement of income, consolidated statement of cash flows, consolidated statement of recognized income and expense for the period and in the notes are expressed in Euro million, and rounded up to the nearest whole unit, unless otherwise stated.
Impairment of financial instruments AXA assesses at each balance sheet date whether a financial asset or a group of financial investments at (amortized) cost or designated as “available for sale” is impaired. A financial asset or group of financial investments is impaired when there is objective evidence of impairment as a result of one or more events and this event has an impact on the estimated future cash flows of the asset(s) that can be reliably estimated.
For insurance and investment contracts with discretionary participating features, if the contracts include a minimum guaranteed rate, any potential reserve deficiency caused by insufficient future investment return is immediately booked.
1.15. FINANCING DEBTS Financing debts issued to finance the solvency requirements of an operational entity or to acquire a portfolio of contracts are isolated in a specific balance sheet aggregate.
AXA China Region Limited (including MLC Hong-Kong) (a) 100.00 53.42 100.00 53.86
Winterthur Seguros Generales, S.A. de Seguros y Reaseguros 99.89 99.89 100.00 100.00
Change in fair value of other investments at fair value through profit or loss (b) (51,579) (775) (77) (543) – 1,000 (19) (51,994)
Net realized investment gains and losses 3,443 594 132 50 – 6 – 4,225
Bernstein item of the above table totaled €7 million at December 31, 2008 (€328 million at December 31, 2007 and €785 million at December 31, 2006).
At December 31, 2008, the goodwill had a net value of €103 million.
• On July 22, 2008, AXA acquired 100% of the share capital of Seguros ING, the Mexican insurance subsidiary of ING, for $1.5 billion (€959 million). The purchase accounting was completed with an opening balance sheet as of July 1, 2008 and gave rise to a goodwill and an intangible (VBI) of respectively to €564 million and €48 million.
Acquisition of Winterthur (2006) On December 22, 2006, AXA acquired 100% of Winterthur for €7.9 billion. At December 31, 2008, the goodwill had a net value of €2,649 million.
(Asia/Pacific) (€46 million). • €–133 million in 2007 as the acquisition of AXA-MPS Vita and Danni (€105 million) was more than offset by the disposal of the
Other assets designated as at fair value through profit or loss, held by controlled investment funds 4,358 4,358 0.75% 166 166 1.21% 4,524 4,524 0.76%
Other assets held by controlled investment funds designated as at fair value through profit or loss 3,144 3,144 0.54% – – – 3,144 3,144 0.52%
Non controlled investment funds held for sale 5,153 5,336 5,336 346 163 3,109 3,446 3,446 368 31 4,188 4,593 4,593 428 24
Equity securities available for sale 2,638 1,457 1,457 117 314 2,575 2,550 2,550 133 158 2,450 2,744 2,744 295 –
Total Financial investments exposed to interest rate risk 28,700 88,308 213,436 330,444
TOTAL – Financial investments exposed to cash flow interest rate risk 1,614 5,536 13,350 20,501
Equity securities held by controlled investment funds (a) 5,519 433 218 139 396 51 168 82 2,087 9,093
Total Equity securities as at December 31, 2006 22,588 7,140 4,571 2,398 6,856 5,108 3,240 2,672 6,605 61,178
Valuation techniques may be used when there is little observation of transaction prices as an inherent characteristic of the market, when quotes made available by external pricing providers are too dispersed or when market conditions are so dislocated that observed data can not be used or need significant adjustments. Internal mark to model valuations are therefore normal market practices for certain assets inherently scarcely traded or exceptional processes implemented due to specific market conditions.
a) Fair values determined in whole directly by reference to an active market (column (1))
For ABS and CDOs measured as at December 31, 2008 using the valuation techniques described above (€7,787 million): • using alternative credit risks assumptions higher by 25% would impact net income by €–4.4 million, net of tax and policyholders’
AXA Asia Pacific Holdings associates 26 (14) 8 – (6) 14
c) Perpetual debt and related financial expenses As described in paragraph 1.12.2 of the accounting principles, the perpetual deeply subordinated notes issued by the Group do not qualify as liabilities under IFRS.
b) Treasury shares At December 31, 2007, the Company and its subsidiaries owned approximately 31 million AXA shares, an increase of 1 million shares or €99 million compared to December 31, 2006.
(a) Transfer induced by disposal of financial assets, impairment write-back following reevaluation, or transfer of expenses following impairment charge during the period, and fixed maturity securities discount premium impacts.
13.3.2. Change in minority interests in 2007 The €331 million increase in minority interests to €3,272 million was mainly due to: • positive net income for the period (€+725 million); • changes in the scope of consolidation (€+449 million), mainly due to the acquisition of 50% of MPS Vita and Danni (€+700 million), partly offset by the buyout of minority interests in Morocco (€–256 million); • change in translation reserve (€–182 million); • other movements (€–608 million), mainly including dividends paid to minority interests (€–544 million).
Treasury shares – – – – 169 – – – – – – 169 –
Impact of transactions with shareholders 28,404 2.29 65 477 169 – – – (719) – (2,100) (2,108) (385)
Net income of the period – – – – – – – – 5,085 5,085 673
(b) Includes reserves for claim handling costs. (c) Notably includes non-life annuities mathematical reserves. (d) See Note 1.13.2. – Reserves measured according to the option offered by IFRS 4.24 for selective re-measurement of reserves at current market assumptions.
Liabilities arising from investment contracts where the financial risk is borne by policyholders 46,520 46,520 69,587 69,587 67,129 543 67,673
Loss reserves development (prior years) (2,173) (279) (2,452) (1,531) (157) (1,687) (827) (132) (959)
Impact of foreign currency fluctuation (67) 276 208 (19) (323) (341) (18) (218) (236)
14.4. CHANGE IN LIABILITIES ARISING FROM INSURANCE AND INvESTMENT CONTRACTS – LIFE & SAvINGS
December 31, 2006 (in Euro million) December 31, 2008 December 31, 2007 Restated (e)
Investment contract with no Discretionary Participation Features (DPF) measured at fair value 57 541 611
The surplus (shortfall) of the initial reserve with respect to the re-estimated (gross) final 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 2008 adjusted for changes in exchange rates and scope of consolidation) and the amount shown in the final diagonal under “Reserve re-estimated”.
(c) In 2004, AXA Corporate Solutions Assurance US, AXA RE P&C Insurance Company and AXA RE P&C Reinsurance were transferred from AXA RE to “other international activities”. The reserves of AXA Corporate Solutions Assurance US were presented on an occurrence year basis and included in the Property & Casualty loss reserves development table. The reserves of AXA RE P&C Insurance Company and AXA RE Reinsurance Company were presented on an underwriting year basis and included in the AXA RE loss reserves development table.
Property & Casualty and International Insurance (excluding AXA RE) 44,046 44,020 41,301
3 – Year survival ratio excluding commutations (c) 32 years 33 years 36 years 38 years
Debt component of subordinated convertible notes due 2014 (€) 1,773 1,714 1,660
Financing debt owed to credit institutions 1,216 1,227 175 175 95 95
17.2. OTHER DEBT INSTRUMENTS ISSUED, NOTES AND BANk OvERDRAFTS (OTHER THAN FINANCING DEBT) BY ISSUANCE
HOHO 2: class B Mezzanine Class B Mortgage-backed notes, maturity 2080, 5.04%, Fixed rated – – 18
HOHO 3: class B Mezzanine Class B Subordinated Mortgage-backed notes, maturity 2083, 3 month Euribor + 0.19%, Floating – – 19
APIV+EHV: CALYON_Amortizing loan based on Euribor 3 month + 1.60 point, maturity date: 2015 57 – –
The fair value of other debt instruments issued and bank overdrafts (other than financing debt) was €6,694 million at December 31, 2008. Among the elements included in the preceding table, fair value is only calculated for other debt instruments issued. Other items mainly comprise repository agreements balances or short-term interbank liabilities carried by Group banks. By nature, their fair value is very similar to their nominal value.
The effective tax rate of –215.57% as of December 31, 2008 was mainly due to the significant effect of the policyholders’ tax (€–843 million in 2008 versus €82 million in 2007 and €349 million in 2006), mainly in the united Kingdom.
Deferred tax through reserves relating to the fair value adjustment of available for sale assets (701) – 839 (42) 2 99
Deferred tax through profit or loss (897) 363 – 53 (244) (725)
TOTAL recognized DTA by expected date of use 1,963 436 394 391 604 174 1,791 2,238 – 7,991
Unrecognized Deferred Tax Assets (DTA) by expiration date: The tables below break down the potential Deferred Tax Assets (DTA) which have 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 carryforward 1 20 21 5 7 18 61 7 196 337
Notional Fair Notional Fair Notional Fair Notional Fair Notional Fair (in Euro million) amount value amount value amount value amount value amount value
Debt securities available for sale 241,220 (9) 556 241,766 4,933 1 – 4,935 246,153 (8) 556 246,701
Non controlled investment funds held for trading 135 – – 135 8 – – 8 143 – – 143
Macro hedge and other derivatives – – – – – – – – – – – –
Debt securities held for trading 71 – 23 94 1,172 – 31 1,203 1,244 – 54 1,297
Liabilities arising from investment contracts with discretionary participating features (a) 38,081 – – 38,081 40,121 – (102) 40,019 32,606 – – 32,606
Payables arising from outward reinsurance operations 6,211 – – 6,211 6,024 – – 6,024 5,849 – – 5,849
Fees and charges relating to investment contracts with no participating features (b) 662 39,975 740 – 60,625 608 – 57,243
Fees, commissions and other revenues 1,244 1,332 – – 1,076 – –
December 31, 2006 (in Euro million) December 31, 2008 December 31, 2007 December 31, 2006 December 31, 2008 December 31, 2007 Restated (a)
Non controlled investment funds available for sale 89 157 – (38) 208
Loans designated as at fair value through profit or loss – – 51 – 51
Non controlled investment funds designated as at fair value through profit or loss 192 42 (13) – 221
Premiums ceded and unearned premium ceded (1,050) (1,309) (1,810) 292 (3,878)
Change in deferred acquisition costs and equivalents (c) (1,442) (40) 8 (1,474) – – – – (1,474) (1,911) (1,371)
Other staff costs and employees’ profit sharing (b) 372 508 332
Overfunded status (plan by plan) 21 200 12 1 – – – –
Plans with a positive net position (Asset) 20 199 11 1 – – – –
Experience and assumptions adjustments on plan liabilities 799 1,055 226 (1,053) 20 57 28 (30)
Experience adjustments on plan assets and separate assets (2,028) (33) 141 426 (1) (3) (5) 3
Total number of shares subscribed (in million shares) 1.7 23.0 3.2 18.9 2.3 13.2
(€513 million) from various banks and other lenders, • Bank credit lines granted to AXA Life Japan as part of its operations (€426 million), • The united States holding company’s share in revolving cash facilities (€358 million).
Due after Due after Due in one year three years one year through through Due after (in Euro million) or less three years five years five years TOTAL TOTAL TOTAL
Commitments towards some Group employees In addition to other employment-related obligations, various AXA subsidiaries are required to indemnify their employees against certain liabilities and costs that they may incur from time to time in performing activities within the scope of their employment duties. These activities may include, for example, service as a director, officer, agent, general partner, or in a similar capacity for (i) an AXA Group company other than the employee’s principal employer or (ii) a company outside the AXA Group where service is at the request of (or for the benefit of) the Group (e.g. joint ventures, partnerships, or special-purpose investment companies or funds). The potential amount of compensation relating to commitments covered by these obligations cannot be evaluated with any certainty.
AXA Equitable and certain of its subsidiaries, like other life and health insurers in the uS, are involved in these types of litigations as well as in a wide variety of other matters including the following: • A putative class action entitled Stefanie Hirt, et al. v. The Equitable Retirement Plan for Employees, Managers and Agents, et al., was filed in August 2001 in the District Court for the Southern District of New-York against The Equitable Retirement Plan for Employees, Managers and Agents (the “Retirement Plan”) and The Officers Committee on Benefit Plans of AXA Equitable Life Insurance Company, as Plan Administrator. The action was brought by participants in the Retirement Plan who alleged that a change effective January 1989 in the pension benefit formula from a final average pay formula to a cash balance formula violates the Employee Retirement Income Security Act of 1974 (“ERISA”). In July 2008, the Court of Appeals for the 2nd Circuit affirmed a lower court decision in favor of defendants holding that the cash balance plan does not violate the age discrimination provisions of ERISA and that plaintiffs’ claims also were barred by the statute of limitations. In September 2008, the Court of Appeals denied plaintiffs’ motion for rehearing and the time for plaintiffs to make an appeal to the united State Supreme Court has expired.
In addition to litigation risks of the type described above, AXA and its subsidiaries are subject to comprehensive regulation in the various jurisdictions where they do business. In this context, 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 significantly 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” in Part II of this Annual Report, “Risk Factors” in Part IV of this Annual Report and Note 28 to the Group’s Consolidated Financial Statements in Part V of this Annual Report.
In January 2009, AXA restructured its equity hedging program in order to lock in the positive mark-to-market impact resulting from the strong drop in equity markets and unwound €11 billion out of the first €14 billion tranche and the full €9 billion second tranche. This resulted in a €46 million gain net of tax on the mark-to-market since December 31, 2008. As of mid-march 2009, AXA’s remaining position consists of €250 million put spreads financed by the sale of call options on FTSE 100 and €2.5 billion put spreads on Eurostoxx 50 both maturing in March 2010.
The increase in share capital effected by capitalization of reserves, profits or premiums, requires a simple majority of the votes cast at an extraordinary meeting of shareholders. In the case of an increase in share capital in connection with the payment of a stock dividend (instead of a cash dividend), the voting and quorum procedures of an ordinary meeting of shareholders apply.
Pursuant to French law and AXA’s statuts, AXA may obtain from Euroclear, at its own cost and at any time, the name, nationality, address and number of shares held by each holder of ordinary shares and other equity-linked securities with the right to vote in general meetings of shareholders. Whenever these holders are not resident in France and hold such ordinary shares and other equity-linked securities through accredited financial intermediaries, AXA may obtain such information from the relevant accredited financial intermediaries (through Euroclear), at AXA’s own cost. Subject to certain limited exceptions provided by French law, holders who fail to comply with AXA’s request for information will not be permitted to exercise voting rights with respect to any such ordinary shares or other equity-linked securities or to receive dividends pertaining thereto, if any, until the date on which these holders comply with AXA’s request for information.
EXCHANgE CONTROLS AND OTHER LIMITATIONS AFFECTINg FOREIgN SECURITY HOLDERS Under current French foreign exchange control regulations, there are no limitations on the amount of cash payments that may be remitted by AXA to residents of the United States. Laws and regulations concerning foreign exchange controls do require, however, that all payments or transfers of funds made by a French resident to a non-resident be handled by an accredited financial intermediary. In France, all registered banks and substantially all credit establishments are accredited financial intermediaries.
If a partnership holds ordinary shares or ADRs evidencing ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners of partnerships holding these ordinary shares or ADRs should consult their tax advisors as to the tax consequences of owning or disposing of ordinary shares or ADRs evidencing ADSs, as applicable.
Application to U.S. Holders Pursuant to the Treaty, an “Eligible U.S. Holder” (as defined below) will generally be entitled to a reduced withholding tax rate of 15% with respect to dividends paid in cash or in the form of shares, subject to the satisfaction of certain requirements described below.
A U.S. Holder that is not eligible for the 15% withholding tax rate at source may apply for a refund of taxes withheld that were in excess of the 15% rate provided that it furnishes to the French paying agent an application for refund on forms No. 5000-FR and 5001-FR certified by the U.S. financial institution managing the U.S. Holder’s securities account (or, if not, by the competent U.S. tax authorities) before December 31 of the second year following the date of payment of the withholding tax at the 25% rate to the French tax authorities, according to the requirements provided by the Administrative Guidelines. Any French withholding tax refund is generally expected to be paid within twelve months from the filing of forms No. 5000-FR and 5001-FR. However, it will not be paid before January 15 of the year following the year in which the dividend was paid.
Under French domestic tax law, part of the gain realized by a shareholder on redemption of ordinary shares by AXA and equal to the difference between (i) the redemption price and (ii) the share capital and share issue premiums’ amounts contributed to AXA will generally be treated as a dividend and will be subject to French dividend withholding tax as described above. The excess gain, if any, will be treated as a capital gain.
AXA that such individual holder is subject to backup withholding, or • fails under specified circumstances, to comply with applicable certification requirements.
U.S. Holders should consult their own tax advisor as to the application of the U.S. federal information reporting and backup withholding requirements to them and their qualification, if any, for an exemption under these rules as well as the particular tax consequences to them of owning and disposing of ordinary shares and ADRs evidencing ADSs under U.S. federal, state, local and Non-U.S. law.
The group Audit Department fulfills its responsibilities as follows: • oversees the quality and performance of the local internal audit teams; sets internal audit policy and standards; co-ordinates the audit planning of local internal audit teams to ensure adequate risk-based audit coverage; monitors the audit coverage and activity, and the key risks and issues raised by local internal audit teams; and fosters the development of professional internal audit practices, processes and systems; and
In connection with the first group Risk & Compliance Committee held on october 27, 2008, a comprehensive risk mapping exercise was undertaken. This exercise covered a broad range of risks to which the group is exposed including financial, solvency, insurance, operational, legal and compliance, tax, audit, human resources, and communications risks. As part of the process, priorities and action points were established for the various gMS Departments that manage these risks. The Committee is scheduled to meet on a quarterly basis going forward.
ANNUAL INFORMATION DOCUMENT Pursuant to Article 222-7 of the AMF general Regulations, the table below sets forth all information published or otherwise made public by the Company over of the previous twelve months, in one or more States that are party to the Agreement on the european economic Area (eeA) or in one or more countries outside the eeA in order to fulfill the legal or regulatory obligations in those countries with respect to financial instruments, issuers of financial instruments or financial instrument markets.
Two new members to join the Executive Committee of the AXA Group (07/10/2008)
The Statutory Auditors’ certificate on the global amount of the paid sums to the 5 best paid persons
(a) Independent ceiling. (b) 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. This upper limit is separate and distinct from the limit on issuances of debt securities with no claim to the share capital of the Company (ceiling of €2 billion).
(c) The aggregate nominal value of the capital increase with or without preferential subscription rights may not exceed the global upper limit of €1.5 billion. (d) Including the issue of ordinary shares or securities (i) in the event of a public offer initiated by the Company, (ii) in consideration for contributions in kind for up to 10% of the share capital, or (iii) as result of a securities issue by subsidiaries of AXA. (e) Common ceiling. (f) At the date on which performance shares are granted by the Management Board. (g) Existing shares and/or newly issued shares. (h) At the date on which restricted shares are granted by the Management Board. (i) At the date on which options are granted by the Management Board.
Provisions for contingent liabilities amounted to €4,104 million, and mainly consisted of €2,335 million of currency risk provisions, €751 million relating to an intra-group equity swap, €609 million for redemption premiums on subordinated bonds and €321 million for the possible repayment of tax savings to subsidiaries belonging to the French tax consolidation group.
CIE FINANCIÈRE DE PARIS 9 123 99.99% 184 60 10 6 19 22 Dec. 31, 2008 137, rue Victor Hugo – 92687 LEVALLOIS PERRET
AXA JAPAN HOLDING COMPANY LIMITED 1,646 2,088 78.01% 3,206 3,206 32 4 (4) Sept. 30, 2008 NBF Platinium Tower 1-17-3 Shirokane – Minato-ku 108 – 8020 TOKYO
AXA ITALIA SPA 624 54 98.24% 715 715 64 57 52 Dec. 31, 2008 15, Via léopardi - 15 - 20123 MILAN
Since January 1, 2005, AXA has applied regulations 2002-10 relating to depreciation and amortization of assets, as amended by CRC regulation 03-07, and 2004-06 relating to the definition, recognition and measurement of assets. Application of this regulation has had no impact on the Company’s financial statements.
• other financial assets comprise securities representing less than 10% of the share capital and which are not investments in subsidiaries and affiliates.
2.7. Marketable securities At the balance sheet date, the acquisition cost is compared with the fair value, which corresponds to the exit value for SICAv and FCP mutual funds and to the average share price over the last month before the balance sheet date for the other securities.
Gross value at Gross value at (in euro million) 31/12/2007 Acquisitions Disposals 31/12/2008
The perpetual subordinated notes are perpetual bonds. The Company has the option of deferring payment of the coupons under certain conditions. Nonetheless, the coupons must be paid when these conditions cease to be met or on redemption of the instruments. when payment is deferred for an extended period, the coupons remain payable by law. Similarly, in the absence of dividends being paid, unpaid coupons accumulated over the years will be recognized as payable upon liquidation, if any. These instruments are classified as debt on the basis of this contractual obligation to pay the coupons.
we have no matter to report regarding: • the fairness of the Management Board’s Report and the documents addressed to the Shareholders concerning the Company’s financial situation and financial statements, and their consistency with the financial statements, • the fairness of the information provided in the Management Board’s Report on compensation and benefits paid to AXA executives, as well as commitments made to them when they started, changed or ceased to exercise their duties, or thereafter.
(a) The NBV sensitivities shown in this template assumed a shock “after sale”. It indicates how the new business written in 2008 would have been affected by an economic shock after sale but prior to year-end.
I – Approval of annual financial statements Ordinary resolutions 1 to 4
on May 15, 2006 the AXA group and the Schneider group entered into an agreement concerning minimal cross-shareholdings. The parties have agreed to a reciprocal repurchase option in the event of a hostile takeover attempt, by a third party, over the share capital of either AXA or Schneider. In these circumstances, and pursuant to the agreement, the AXA group would be entitled to repurchase, partly or entirely, the outstanding shareholding of Schneider in AXA on the date it exercises its repurchase option. Reciprocally, the Schneider group will enjoy the same repurchase option over the outstanding shareholding of AXA in Schneider.
The Management Board requests that Shareholders once again authorize it to purchase up to 10% of the Company’s outstanding share capital, or 5% of the total number of shares comprising the share capital at any given time in the case of shares acquired by the Company for the purpose of holding them for subsequent payment or tender in a merger, spin-off or contribution. It is specified that the preferred shares that may be issued by the Company pursuant to the 23rd to 25th resolutions are excluded from this authorization to the extent that the terms and conditions of their repurchase are set forth is specific provisions of the Bylaws.
In the event of a public offer on the Company’s shares, the Company may pursue the execution of its share repurchase program in accordance with Article 232-17 of the AMF general Regulation, but only if (i) the offer to purchase the Company’s shares is paid for exclusively and entirely in cash and if (ii) the repurchase transactions are carried out pursuant to a program in progress are consistent with the objectives above-mentioned in points b) and d) and are not likely to compromise the success of the offer. In this respect, the Management Board believes it is important that the Company may, if need be, repurchase the Company’s shares, even in the event of a public offer, in order to comply with its obligations vis-à-vis securities owners of securities representing debt instruments giving a claim on the Company’s share capital (above-mentioned objective d)) or for the purpose of hedging employees and corporate officers’ profit sharing plans (above-mentioned objective b)).
within the limits of the delegations proposed to your general Meeting, the Management Board would have the necessary powers to set the methods of the securities issue, acknowledge the completion of the capital increases and amend the Company’s Bylaws accordingly. however, pursuant to Article 12 of the Company’s Bylaws, the issues of securities giving directly or indirectly a claim on the share capital that may be carried out by the Management Board, pursuant to the delegations proposed to your general Meeting, would have to be submitted to your Supervisory Board for prior approval.
Issue of ordinary shares or securities giving a claim to ordinary shares of the Company or one of its subsidiaries, without preferential subscription rights of shareholders (13th and 14th resolutions) your Management Board requests from your general Meeting a delegation of authority to issue, through a public offer and/or a private placement to qualified investors or a restricted circle of investors under the meaning of the French Monetary and Financial Code (Code monétaire et financier), ordinary shares or securities giving a claim to ordinary shares of the Company or one of its subsidiaries, without preferential subscription rights.
Issue of ordinary shares or securities giving a claim to ordinary shares of the Company in the event of a public exchange offer initiated by the Company (16th resolution) In the 16th resolution, your Management Board requests from your general Meeting a delegation of authority in order to issue ordinary shares or securities giving a claim to ordinary shares of the Company or one of its subsidiaries, in the event of a public exchange offer initiated by the Company over securities of a company which shares are traded on a regulated market of a european economic Area (eeA) or organisation for economic Co-operation and Development (oeCD) Member State. The total nominal amount of the capital increases that may be carried out by virtue of this resolution would not exceed 20% of the share capital as at the date of this general Meeting under the limit of €1 billion, in deduction of the upper limit referred to in the 13th resolution.
The maximum aggregate amount of share capital increases which may be raised through issues of preferred shares without voting rights pursuant to the delegations provided for in resolutions 23 to 25 shall not exceed, in addition to the limits provided by law, gross issue proceeds of €2 billion, subject to such amount not exceeding €1 billion in total nominal amount, without taking into account the nominal value of ordinary shares to be issued in order to safeguard the rights of owners of securities or other rights giving access to the Company’s capital, in compliance with the laws and regulations, and if applicable, the contractual terms providing for other cases of adjustment. For reference purpose only, this maximum nominal amount represents 20.9% of the statutory share capital as at January 21, 2009 and is therefore less than the maximum legal limit applicable to companies whose shares are listed on a regulated market, i.e. 25% of the share capital to date (Article L. 228-11 paragraph 3 of the French Commercial Code).
A full description of the preferred shares is set out in the amended Bylaws attached to this report. Their principal financial characteristics are summarised below.
In addition, the preferred dividend may not be lower than the minimum dividend nor higher than the maximum dividend. The minimum dividend shall be between 6% and 8% of the current amount of the relevant preferred shares determined by reference to the prior fiscal year (such current amount corresponding to the issue price of the relevant preferred shares, as reduced in the event of any loss absorption), and the maximum dividend shall be between 10% and 14% of the same amount. The minimum dividend and maximum dividend applicable to each issue of preferred shares shall be determined by the Management Board at its discretion in its decision to issue such shares.
The regulations of the funds, which were approved by the AMF (Autorité des marchés financiers) on June 20, 2008 and on September 12, 2008, provide further details on the offering.
This capital increase is being submitted to your approval pursuant to Articles L.225-129-6 of the French Commercial Code and L.3332-18 et seq. of the French Labour Code.
In the event that the Company holds certain of its own shares at the time dividends are made available for payment, the corresponding dividends shall be appropriated to retained earnings.
Fifth resolution Re-appointment of Mr. Jacques de Chateauvieux to the Supervisory Board The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings and pursuant to Article 10 of the Company’s Bylaws, hereby re-appoint Mr. Jacques de Chateauvieux to the Supervisory Board for a term of four years expiring at the close of the general Meeting of Shareholders called in 2013 to approve the financial statements of the preceding fiscal year.
Eighth resolution Re-appointment of Mrs. Dominique Reiniche to the Supervisory Board The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings and pursuant to Article 10 of the Company’s Bylaws, hereby re-appoint Mrs. Dominique Reiniche to the Supervisory Board for a term of four years expiring at the close of the general Meeting of Shareholders called in 2013 to approve the financial statements of the preceding fiscal year.
This authorization replaces and renders null and void the non-utilized portions of the authorization granted by the Shareholders at their Meeting of May 14, 2007, under the twentieth resolution. It is granted for a period of 26 months, starting from the date of this Meeting.
2) Decide to waive the preferential subscription rights of Shareholders on the shares issued by virtue of this authorization and to reserve the subscription rights to the category of beneficiaries meeting the following characteristics: any bank or any entity held by such bank, which, at the request of the Company, participates in the implementation of a structured offer for employees, corporate officers and general insurance agents of companies or economic interest groups affiliated to the Company within the meaning of Articles L.225-180 of the French Commercial Code and Articles L.3344-1 and L.3344-2 of the French Labor Code, incorporated outside France. This structured offer shall be similar, in terms of economic profile, to the offer at other employees and corporate officers of the Company or its affiliated companies or economic interest groups within the meaning of Article L.225-180 of the French Commercial Code and Articles L.3344-1 and L.3344-2 of the French Labor Code carried out, notably, by virtue of a capital increase made pursuant to the twentieth resolution submitted to this Meeting.
2) Resolve that the preferred shares to be issued pursuant to this resolution and to be named category B shares, will be deprived of voting rights at the shareholders’ general meetings and will have the characteristics set out in the amended Bylaws exhibit attached as an exhibit hereto. The proposal of amended Bylaws is deemed to be part of this resolution.
5) Resolve that the issue price of the preferred shares to be issued pursuant to this resolution (i) will be equal to the volumeweighted average quoted price of the AXA ordinary share on euronext Paris over the twenty trading day preceding the date on which the decision to issue is made and/or (ii) shall be at least equal to be minimum price authorized by applicable laws and regulations. each new issue of shares of category B non-fungible with the prior issue(s) of preferred shares will result in the creation of a new category of preferred shares.
TITLE II > SHARE CAPITAL – SHARES Article 6 – Share capital The Company’s share capital represents €4,784,172,207.01 divided into 2,089,158,169 shares which are fully paid up and have the same nominal value.
8. In the event of a vacancy, and regardless of its cause, the candidates to the employee Ordinary Shareholder representative seat at the Supervisory Board shall be designated following the same procedures as those indicated hereinabove and prior to the next ordinary general meeting or, if this meeting is held less than four months after the seat has become vacant, prior to the following ordinary general meeting. The new employee Ordinary Shareholder representative replacing the outgoing officeholder shall be appointed by the Shareholders for a four-year term of office.
9. I n the event that the report submitted annually by the Management Board to the Shareholders pursuant to Article L.225-102 of the French Commercial Code reveals that the percentage of the Company’s Ordinary Shares owned by the employees Ordinary Shareholders representative has fallen below 3 percent of the Company’s total Ordinary Shares, the current term of office of the employees Ordinary Shareholders representative shall end at the close of the Shareholders’ ordinary general meeting at which such report was submitted. In that case, if such seat is vacant for any reason whatsoever between the end of the fiscal year and the date of the aforementioned Shareholders’ meeting, the Supervisory Board may continue to hold meetings and conduct business as usual.
within three months following the close of each fiscal year, the Management Board prepares the Company’s final financial statements and, if applicable, its consolidated financial statements which it submits to the Supervisory Board for review and control. It suggests how to allocate earnings for the fiscal year ended.
Article 2021 – Compensation of members of the Management Board The Supervisory Board shall set the amount and terms of compensation for each of the members of the Management Board.
The remaining balance shall be distributed among the shares outstanding in proportion to their nominal value Shares fully paidup and unredeemed shares as follows: • The Management Board determines when, where and how dividend payments are to be made. • the Total Amount of the Preferred Dividend (as defined below) shall be first distributed to the holders of Preferred
Principal function Chairman of the Board of Directors of BNP Paribas
DIRECTORSHIPS CURRENTLY HELD BNP Paribas, Chairman of the Board of Directors Director or member of the Supervisory Board: • Saint-gobain • Total • Lafarge • eADS N.v. (the Netherlands) • Banque Marocaine pour le Commerce et l’Industrie (BMCI) (Morocco) • Pargesa holding S.A. (Switzerland) galeries Lafayette, Censor (non-voting member of the Board) Académie des Sciences Morales et Politiques, member
PREVIOUS DIRECTORSHIPS HELD DURING THE LAST FIVE YEARS BNP Paribas, Chairman and Chief executive officer Director or member of the Supervisory Board: • Dresdner Bank Ag (germany) • BNP Paribas Uk (United kingdom)
The group is an equal opportunity employer. The diversity and equal opportunity policy of the AXA group primarily aims at recognizing and respecting individual differences. For example, in 2008, AXA Belgium, AXA Uk and AXA Spain partnered with non-profit organizations promoting the professional integration of people with disabilities. AXA germany signed a diversity charter. AXA France, that was already participant to such a diversity charter, was one of the first companies in 2008 to sign the Parenthood Charter. It also participated in a nationwide campaign to facilitate the employment of youths from disadvantaged communities and joined other major companies to support employment and equal opportunity. AXA France devoted a special budget, in addition to that of general and individual pay increases, to reduce the pay gap between men and women.
chain risks. In 2008, AXA conducted, with the assistance of a specialized service provider, an in-depth analysis of the sustainable development performance of approximately fifty strategic suppliers. The goal of this analysis was to identify the main risks and give suppliers a tangible incentive to improve their practices. A new evaluation will be subsequently performed to measure their progress. In addition, in 2008, the group Procurement department developed a grid to assess sustainable development issues for each purchasing category. Thanks to this new tool, purchasers have a detailed view of the level of risk and opportunities involved for each supplier and can prioritize their improvement plans. Finally, a “sustainable development clause” requiring suppliers to make a formal commitment to uphold ILo principles is included in 81% of group’s contracts with suppliers in 2008.
CO2 emissions resulting from onsite power consumption T eq. CO2 173,619 225,833
Compensation paid to Statutory Auditors in 2008 and 2007 (art.222-8)................................................................................. 408
Statement made by the person responsible for the Annual Financial Report 446