This Universal Registration Document has been filed on March 19, 2020 with the Autorité des Marchés Financiers (the
Cautionary statement regarding forward-looking statements and the use of non-gaap fi nancial measures
AB), which, as a U.S. public company, reports in U.S. GAAP in accordance with the rules of the U.S. Securities and Exchange
customer journey redesign, claims management), and more short-term/tactical actions, encompassing adjusting business processes and tools to enhance immediately customers’
R eport” and the Glossary set forth in Appendix V to this Annual Report.
to meet its payment obligations and may not reflect the potential impact of all risks on the value of AXA’s securities. A rating is not a recommendation to buy, sell or hold securities. None of these ratings should be construed as an indication or forecast of the historical or potential performance of AXA’s securities nor should any such rating be relied upon for the purpose of making an investment decision with respect to any of the Company’s securities. The Company does not undertake to maintain its ratings, nor in any event shall the Company be responsible for the accuracy or reliability of any of the ratings set forth below.
Auto. A modular and flexible off ering has been put in place, spread across a set of packages and options. The latter reflects the ability to meet customers’ needs while maintaining attractive and agile pricing.
Soluzioni Salute with 37,000 services sold; ■ in Belgium, a teleconsultation pilot was successfully launched with AXA Partners, and now also includes the collective hospitalization schemes at AXA Assistance representing approximately 300,000 customers.
In SME, new enriched off erings and various partnerships were completed to provide customers a holistic off er with the aim of empowering SMEs to have ease of doing business: ■ in Italy, the SME Cyber risk service Protezione Business was launched, which includes vulnerability assessment, monitoring and remote support; ■ in Switzerland, partnerships with 3 start-ups that provide payroll, accounting, fringe benefits and legal services (Accounto, Swibeco
topped the Advisen Pacesetter Index, announcing more than 16 new and enhanced products.
The MSCI World Index increased by 24.9%. The MSCI G7 index increased by 25.6% and the MSCI Emerging index increased by 15.1%.
In 2019, the French Savings insurance market grew by 4% to reach €145 billion premiums, of which Unit-Linked contracts represented 27%. However, Unit-Linked volumes decreased, as policyholders continued to favor investments into G/A products. In a context of low rate environment, insurers face both persistent reinvestment yield and capital strain headwinds. Insurance companies have taken actions to mitigate the impact, notably by adjusting policyholder bonus, thus resulting in an all-time low average return on G/A contracts (-0.40 point from 2018 at approximately 1.40% for 2019), or through incentivizing policyholders to invest into other types of funds. In 2019, the “Loi Pacte” (Action Plan for
Health insurance market continued to grow, benefiting from the launch of tax-deductible voluntary health insurance certified plans.
Thailand, the Life & Savings market grew strongly, driven by higher sales of G/A Savings and Unit-Linked products, while the Health market and the Motor Property & Casualty market continued to grow. In Indonesia, the Life & Savings market increased moderately thanks to good agency performance. In the Philippines, the Life
Indonesia n/a n/a 4 6.6 AAJI Statistic measured on Weighted New Business
Shareholders’ Meeting called in 2021 to approve the financial statements of the preceding fiscal year.
Gérald Harlin assumes the role of Chairman of the Board since
(5) AXA tested the “investment temperature” concept in its 2019 Climate report as an institutional investor’s response to the Paris Agreement.
insurance financial strength rating of AXA’s principal insurance subsidiaries, changing the outlook from negative to stable.
On February 1, 2019, AXA unveiled its new tagline, which will be rolled out across all its markets in the next year: “Know you can”.
(1) AXA is the Global Insurance Partner of Liverpool Football Club.
The Off ering and the Share Buyback resulted in a negative net income impact of €-0.6 billion. This impact reflected the diff erence between the Off ering price and the consolidated book value (1) of
shares, amounted to USD 834 million or €739 million (6) (7). Following this sale, AXA’s ownership in EQH decreased from 48.3% (2 ) (9) to 40.1% (2 ) (9 ). In addition, AXA granted the underwriters a 30-day option to purchase up to an additional 6,000,000 EQH shares.
Net proceeds (6 ) to AXA from the exercise of the underwriters’ option amounted to USD 125 million or €112 million (10), corresponding to a net price (6 ) of USD 20.85 per share. Following the sale of these additional shares, AXA’s ownership in EQH decreased from
or employee share off erings (14), as of December 31, 2019, AXA had bought back 26,420,747 shares. These shares will be delivered to the beneficiaries of share-based compensation schemes or cancelled, all in accordance with the share repurchase program (15).
(4) This reflects the eff ect of the deconsolidation of EQH but does not reflect the intended use of the proceeds to reduce of AXA’s Debt Gearing towards the targeted range of 25%-28% by 2020.
Board membership to a minority share led to the loss of control of AXA over EQH, while continuing to retain a significant influence over EQH. As a result, AXA: ■ deconsolidated EQH on March 31, 2019, and recorded a negative net income impact of €-0.6 billion (including the recycling of related other comprehensive income and currency translation reserve) corresponding to the diff erence between the fair value and the consolidated carrying value of EQH at the date of the deconsolidation; ■ from April 1, 2019, to November 13, 2019, accounted for its remaining ownership in EQH using the equity method and reclassified the equity component of the Mandatory
Europe gross revenues were up 4% (or €+1,334 million) on a comparable basis to €34,415 million: ■ Switzerland (€+53 million or +1%) to €5,992 million mainly from
Savings (+17%) mainly in G/A Savings and Unit-Linked from the sale of hybrid products and Protected Unit-Linked, and
on a comparable basis in (i) Italy (€+53 million) mainly from G/A
The Adjusted Return on Equity (“Adjusted RoE”) is calculated as adjusted earnings net of financial charges related to undated subordinated debt, preferred shares and mandatory exchangeable bonds up to the date of deconsolidation of EQH (recorded through shareholders’ equity as disclosed in Part 5.4 - “Consolidated statement of changes in equity” and financial debt as disclosed in
Underlying Earnings net of financial charges related to undated subordinated debts recorded through shareholders’ equity – Group share, and preferred shares and mandatory exchangeable bonds up to the date of deconsolidation of EQH (recorded through shareholders’ equity as disclosed in Part 5.4 - “Consolidated
(€-1,162 million) to €-1,634 million mainly due to (i) the expected loss on the upcoming disposals of AXA Bank Belgium (€590 million) and AXA Life Europe (€-89 million), the negative impact linked to the deconsolidation of Equitable Holdings,
■ Life & Savings (€+28 million or +1%) to €3,187 million, mainly due to new business in G/A capital light products (€+113 million)
NBV Margin decreased by 14.1 points to 52.4% mainly driven by lower interest rates and large Group pension contracts, partly off set by lower expenses following eff iciency gains.
(+0.6 point) mainly driven by increased severity of Motor damage claims, higher large losses and investments in claims processes, partly off set by more favorable weather conditions, and (iii) lower net investment income; ■ Health (€-24 million or -13%) to €161 million, driven by (i) a higher combined ratio (+1.3 points) mainly due to the nonrepeat of an exceptional favorable claims experience in the second half of 2018 and higher expenses following investments in transformation programs, combined with (ii) lower net investment income;
On a constant exchange rate basis, adjusted earnings increased by €7 million (+2%) driven by higher net realized capital gains.
(+10%) to €188 million. On a constant exchange rate basis, income from aff iliates and associates increased by €5 million (+3%): ■ Thailand (€+23 million or +42%) to €84 million, mainly due to a higher net investment income as well as lower expenses in Life
Professional (€+383 million or +36%), including a new significant multi-year contract written in the first quarter, International
and dividend payments until the end of the strategic plan. AXA
SA also reduced its credit lines to €8.5 billion at year-end 2019
(3) Debt gearing is defined in the Glossary set forth in Appendix V hereto.
ratio target range: ■ the central target range is between 170% and 220%. Within this central range, AXA intends to (i) pay dividends for an amount representing a pay-out (3) ratio within 50% to 60% target range; (ii) buy back shares to neutralize at least dilution resulting from employee share off erings and stock options exercise; (iii) maintain investments in business growth; and (iv) maintain current investment risk appetite; ■ above 220% and as solvency increases, excess capital could be returned to our shareholders, used to add flexibility within the dividend pay-out range, to invest in business growth or increase its appetite for investment risk; ■ below 170%, the AXA Group may become more conservative gradually, selectively de-risking the investment portfolio, increasing selectivity in growth initiatives, allowing for dilution resulting from employee shares off ering and stock options exercise; and potentially having more flexibility in the dividend pay-out ratio; ■ below 140%, the AXA Group may restrict its growth initiatives, further reduce its appetite for investment risk and reduce the dividend pay-out ratio below its target range.
In particular, most of the Company’s TSS include loss absorption mechanisms which provide that under certain circumstances where the Company does not meet its regulatory capital requirements, the principal amount of each of the relevant TSS will be written down. In such event, interest will become payable on the reduced principal amount only. The principal may be reinstated when the
AXA is closely monitoring the Group’s exposure, including (i) the operational impact on its business, (ii) the consequences of a deterioration in macroeconomic conditions or of a slowdown in the flow of people, goods and services, especially on new business volumes, (iii) the extent of insurance coverage impacted, including
Commercial lines, Health and Protection) and a focus on partnerships and innovation, seizing opportunities arising from new technologies to off er products and services beyond insurance and becoming a trusted partner for its customers.
Terms of Reference”) which detail in particular the role and responsibilities of the Board and its Committees, as well as matters reserved for Board decisions. The Board’s Terms of
Mr. Denis Duverne, former Deputy Chief Executive Off icer and member of the Board, as non-executive Chairman and Mr. Thomas
Nationality of directors Balanced and complementary composition in terms of nationalities (at least four nationalities represented on the Board)
General in New York (1984-1986), he became director of the Corporate Taxes Department and then responsible for tax policy within the French Ministry of Finance from 1986 to 1991. In 1991, he was appointed Corporate Secretary of
Group (PSAG), which brings together international leaders of the private sector whose shared goal is to help developing countries improve their corporate governance, co-founded in 1999 by the World Bank and the Organisation for Economic Cooperation and Development (OECD). Since September 1, 2016,
Member of the Advisory Board: University of Nottingham for Asia (United Kingdom)
Professor of Corporate Governance at the Erasmus University and had also various Non-Executive and advisory positions, most notably Vice-Chairman of the Supervisory Board of the Dutch regulatory institution (AFM). In 2009, Dr. Angelien
(New York, United States). In 1981, she joined Aetna Life and
To ensure that the personal interests of the members of the Board of Directors and those of the Company are appropriately aligned, the Board’s Terms of Reference provide that each member of the
Group, the review of the Board Committee reports, the review of the ORSA report and AXA’s Internal Model as well as other written policies required under Solvency II, the Group’s Pre-emptive
(i) the conclusions of the Board self-assessment, (ii) the principal areas identified for improvement and (iii) made recommendations to the Board of Directors which were examined and approved at the Board meeting of December 18, 2019.
Terms of Reference which are reviewed and approved each year by the Board of Directors.
Committee has no formal decision-making authority and is advisory in nature.
French insurance regulator (Autorité de Contrôle Prudentiel et de Résolution (ACPR)).
Strategy; ■ Innovation: Scale innovation to support acceleration of Payer to Partner: • Accelerate development of new business models in Health through strategic partnerships and review of potential acquisitions,
The performance of operating businesses is determined in particular on the basis of the following performance indicators: ■ Underlying earnings; ■ Property & Casualty current year combined ratio; ■ Health & Protection current year/all year combined ratio; ■ Commercial Property & Casualty gross revenues; ■ Health & Protection gross revenues; ■ Net Promoter Score.
These LTIs represent a significant part of their global variable compensation in order to associate the Group executives to the creation of long-term value. In this context, the number of LTIs granted is set so that the executives are between the median and the 3rd quartile of market references considering the global amount of the variable part (comprised of one part in cash and one part in LTIs). The Compensation & Governance Committee and the Board of Directors however ensure that the performance shares granted to the Group executives and valued in accordance with IFRS standards are not disproportionate compared to the aggregate compensation and shares granted to the said executives.
As required by the regulation in force and in accordance with the Afep guidelines, the table below sets out the ratios comparing, on the one hand, the Chief Executive Off icer’s and the Chairman’s compensation paid or granted in 2019 and, on the other hand, the mean and median 2019 compensation of employees of the holding Company in France (AXA SA) (1) and, on a voluntary basis, of employees of the Group’s France-based entities (2).
AXA entities in France employees’ mean compensation +1.13% +1.75% +3.51% +2.52%
Ratio between AXA SA Chairman & CEO’s compensation and the median compensation of employees of AXA in France -31.49% (b ) N/A N/A N/A
Ratio between AXA SA CEO’s compensation and the median compensation of employees of AXA in France N/A N/A (d ) +1.57% (e ) +3.68%
Performance rate divided by 2 should no dividend be paid during any of the fiscal years of the acquisition period.
(directeurs) of AXA Group entities in France, in a mandatory and collective supplementary pension scheme with defined benefits on the condition that they terminate their career in the AXA Group in accordance with the provisions of Article L.137-11 of the French
French Insurance Code). This AXA pension fund was implemented in 2011 and benefits to the employees of AXA Group entities in
(directeurs) of AXA Group entities in France including for the Chief
The Chief Executive Off icer’s total eff ective variable compensation may not exceed 150% of his variable compensation target, i.e. 150%
Chief Executive Off icer’s compensation, to ensure that the application of the abovementioned criteria fairly reflect the Chief Executive
The performance shares granted under such plan are subject to (i) a vesting period of three years, and (ii) an undertaking not to transfer the performance shares before the date on which the beneficiary retires, subject to the option off ered to the beneficiaries, for diversification purposes, to transfer their shares (aft er the end of the acquisition period of three years) as long as the proceeds of such transfer are invested in a long-term savings plan until the beneficiary retires.
Our exposure to interest rate risk relates primarily to the market price and cash flow variability associated with changes in interest rates. Changes in interest rates may negatively aff ect the value of our assets (particularly fixed-income investments) and our ability to realize gains or avoid losses from the sale of those assets, all of which also ultimately aff ect earnings. In particular, negative interest rates and low levels of interest rates generally, such as those experienced in recent years, have and may continue to negatively impact our net interest income and the profitability of our Life & Savings business.
We have significant exposure to third parties that owe us money, securities or other assets and which may fail to perform or default on their obligations to us due to bankruptcy, insolvency, lack of liquidity, operational failure, fraud, or other reasons.
Our Risk Management programs may be inadequate to protect us against the full extent of the exposure or losses we seek to mitigate and may leave us exposed to unidentified, unanticipated or incorrectly quantified risks that could result in significant losses
Furthermore, the operation of our hedging program is based on models involving numerous estimates and management judgments, including, among others, mortality, lapse rates, election rates, volatility and interest rates and correlation among various market movements. Our hedging program may change over time and there can be no assurance that actual experience will not diff er materially from our assumptions, which could adversely impact our results of operations and financial condition.
For a description of the regulations and supervision framework applicable to the Group, please refer to Section 6.3 “General
Any failure to comply with GDPR and other applicable data protection laws, and data theft , loss or misuse, aff ecting any
The Solvency II Committee is also responsible to monitor current developments in systemic risk.
Anti-Bribery and Corruption Risk Assessment has been developed and rolled out to the entities. This risk assessment enables entities to identify in a more granular manner risks related to bribery.
Development Program (CSDP) which is an ongoing program of structured on-site Compliance reviews conducted by the Group
The Group’s Internal Audit function exists to help the Board and Executive Management protect the assets, reputation and sustainability of the organization by providing an independent and objective assurance activity designed to add value and improve the organization’s operations. It helps the organization meet its objectives by bringing a systematic, disciplined approach to challenge Executive Management and evaluate the eff ectiveness of Risk Management, control and governance processes.
Local Chief Risk Off icers head the local Risk Management teams within each operational entity, and report both to their local Chief
The Group’s consolidation and reporting processes are based on a central information system “Magnitude”. This tool is managed and updated by a dedicated team. This system is also used to deliver management reporting information and the economic balance sheet. The process through which this management reporting information and the economic balance sheet are produced and validated is the same as the one used to prepare consolidated financial information.
Economic Area that are within the scope of the Internal Model)
Model validation and model change processes, and liaises with local governance. It also reviews the conclusions of the regular validation activities.
Such monitoring is designed to ensure market risks, arising from cash or derivative instruments, are properly controlled and remain within approved limits.
Eligible Own Funds represent the amount of economic capital available to absorb losses under stress events. The EOF are the surplus of assets over liabilities derived from the Solvency II
L&S EOF) of 5% to upward 50 bps and -6% to downward 50 bps show an asymmetry mainly driven by guaranteed interest rates having higher value when interest rates decrease, while higher reinvestment returns would need to be shared with policyholders limiting shareholders’ gains in a higher rate environment. However, this classical pattern is not followed everywhere, as for certain type of business with significantly low interest rate guarantees, the EOF behaves more like a portfolio of fixed-income assets. In addition, higher interest rates aff ect the value both positively through higher investment rate and negatively through lower starting value of fixed income assets and higher discount rates for future profits. For diff erent product types these interactions produce diff erent results.
In the insurance companies, which accounted for 90% of Group assets at December 31, 2019 (91% in 2018), assets and liabilities with foreign currency exposure are generally naturally matched or hedged.
mainly in US Dollar (€2,278 million), with further UK exposure to the Euro (€1,313 million) and exposure to Pound Sterling
In Italy, AXA held investments in foreign currency for €1,234 million in 2019 (€1,111 million in 2018) both directly and indirectly through physical assets. These investments are mainly in US Dollar for €1,018 million (€913 million in 2018). The overall exchange risk exposure is managed within the FX limits approved in the correspondent Local Investment Committees. Unhedged FX
in 2018): Equitable Holdings, Inc. have been deconsolidated in 2019 (see
These limits aim at managing the default risk of a given issuer, depending on its rating and on the maturity and seniority of all bonds issued by the issuer and held by the AXA Group (corporate,
Group, natural catastrophes). The approach is prudent as it is assumed that all events occur simultaneously.
Risk Management” of this Annual Report and is taken into account in AXA’s liquidity Risk Management framework (please refer to
(claims frequency deviation, claims severity, reinsurance, pricing consistency, natural and man-made catastrophes, biometric and behavior risks deviations).
(including mortality, longevity and morbidity) and uses the results of this work to optimize its product design and its reinsurance coverage. These exposure analyses are supported by expert risk models in Life & Savings.
AGRe is responsible for all Group external cessions. Since the acquisition of the XL Group, AXA XL contributes to placing directly part of its covers under AGRe’s delegation and control. 2020
The operational Risk Management process is embedded into local governance through senior management validation to ensure that the risk assessment is adequate, appropriate and comprehensive but also to ensure that adequate corrective and pre-emptive actions are defined and implemented in respect of the main risks; ■ in addition, a loss data collection process is in place within most companies of the Group in order to track and appropriately mitigate actual operational risk losses. This process is also used as a valuable source of information to back-test the assumptions taken in risk assessments.
A strategic risk is the risk that a negative impact (current or prospective) on earnings or capital, material at the Group level, arises from (a) a lack of responsiveness to industry changes, or
NOTE 32 Subsequent events 365 5.7 REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL
Reserves relating to changes in fair value of financial liabilities measured at fair value through profit and loss that are attributable to changes in
(b) Includes impairment and amortization of intangible assets booked in the context of business combinations.
The IFRIC clarified that to determine the enforceable duration of the lease, an entity must take into account all of the economic aspects of the contract and not limit the analysis to contractual termination payments. Within the Group, this decision applies mainly to some real estate leases located in France and more particularly to “baux 3-6-9”. The duration of these leases is being analyzed. The impact of this decision will be accounted for in 2020 but is not expected to be material.
AXA has decided to early adopt the amendments to IAS 39 and
October 12, 2017, and endorsed by the European Union change the initial IFRS 9, in regards of the classification of financial assets with prepayment features that may result in negative compensation.
Group presentational currency are translated as follows: ■ assets and liabilities of entities in a functional currency diff erent from Euro are translated at the closing exchange rate; ■ revenues and expenses are translated at the average exchange rate over the period; ■ all resulting foreign exchange diff erences are recognized as a separate component of equity (translation diff erences).
For investment contracts with no discretionary participating features, a similar asset is recognized, i.e. rights to future management fees, also known as Deferred Origination Costs
Debt Obligations) funds controlled and consolidated by the Group; ■ portfolios of managed financial investments whose profitability is valued on a fair value basis: mainly securities held by consolidated investment funds, managed according to the Group Risk Management policy (“Satellite Investment
Assets designated as available for sale, trading assets, investments designated as at fair value through profit or loss and all derivatives are measured at fair value, i.e. the amount for which an asset could be exchanged, between knowledgeable, willing parties in an arm’s length transaction. The Group applies the IFRS 13 fair value hierarchy.
The Group assumes and cedes reinsurance in the normal course of business. Assumed reinsurance refers to the Group’s acceptance of certain insurance risks that other companies have underwritten. Ceded reinsurance refers to the transfer of insurance risk, along with the related premiums, to other reinsurers who will assume the risks. Indeed, in the normal course of business, the Group seeks to reduce the potential
Investment contracts with no discretionary participating features fall within the scope of IAS 39. Deposit accounting applies to these contracts, which involves the following: ■ the Group directly recognizes the consideration received (apart from potential fees) as a deposit financial liability rather than as revenues; ■ claims paid are recognized as withdrawals with no posting in the income statement apart from potential fees.
Board of Directors twice a year is consistent with the presentation provided in the consolidated financial statements.
Europe, CEO of AXA in Asia, CEO of AXA XL, CEO of International)
Please refer to pages 203 to 205 of Section 4.6 “Insurance risks”, subsections “Product approval”, “Exposure Analysis”, “Ceded
In addition, the future cash flow expectations from both the in-force and new business and other assumptions underlying management’s current business plans could be negatively impacted by other risks to which the Group’s business is subject.
Acquired assets and liabilities were adjusted to fair value in the opening balance sheet and integrated within Consolidated
Exchangeable Bonds from non-controlling interests to financial liability (valued at €614 million).
NET INCOME RESULT 2 of which other comprehensive income recycling 61
Bank Belgium to Crelan for a total consideration of €620 million, comprised of (i) a total cash consideration of €540 million (4), and (ii) the transfer to AXA Belgium of 100% of Crelan Insurance
Capitalized interests for the period of Life DAC 599 24 916 26
Debt instruments (at cost) that are not quoted in an active market (d) 9,346 9,193 1.30%
Loans from activities other than insurance and banks 100 100 86 86
The table below sets out the contractual maturities of debt instruments held by the Group. Eff ective maturities may diff er from those presented, mainly because some assets include clauses allowing early redemption, with or without penalty or duration extension features. In some cases, the effect of derivatives (detailed in Note 20.3) modifies the maturity profile of assets presented below.
Assets such as certain unquoted debt instruments, some instruments issued on private markets such as private equity instruments or private loans were always considered as not quoted in active markets as an inherent characteristic of these investments and were included as assets not quoted in active markets/no active markets in all periods presented. Valuations are based either on external pricing providers or internal models using techniques commonly used by market participants.
Equity instruments available for sale 18,415 2,887 - - 15,170 (2,564) - -
Net cash relating to financing activities amounted to €-7,011 million in 2019, mainly driven by: ■ the repayment of preference shares (€-1,086 million) related to the XL Group; ■ subordinated debt issued (€+145 million) the repayment of financing debt (€-559 million) and undated subordinated debt in 2019 (€-253 million); ■ dividends payments of €-3,268 million.
Undated subordinated debt instruments are classified in shareholders’ equity and valuated at their historical value or their closing value as regards exchange rates. The corresponding foreign exchange differences are cancelled out through the translation reserve.
AXA the ability to redeem on certain dates the principal amount before settlement and without penalty, and; ■ interest rate step-up clauses with eff ect at diff erent contractual given dates.
(e) Including unrealized gains and losses on assets held for sale.
The total impact of employee benefits actuarial gains and losses amounted to €+253 million (of which Group share was €+608 million and minority interests were €-355 million) as of
Under IFRS, minority interests in most investment funds in which the Group invests consist of instruments that holders can redeem at will at fair value, and qualify as a liability rather than shareholders’ equity item.
Liabilities arising from investment contracts where the financial risk is borne by
(b) See Note 1.14.2 “Reserves measured according to the option opened by IFRS 4.24” for selective re-measurement of reserves at current market assumptions.
(a) Excluding “other policy benefits liabilities” (mainly mathematical annuity reserves), which totaled €5.5 billion in 2019 and €5.3 billion in 2018.
Reinsurers’ share in claims reserves as of December 31 12,277 10,670
Change in scope of consolidation and change in accounting principles (c) (4,948) - (4,948) 2,651 - 2,651
(b) The comparative information related to previous periods was restated for the implementation of IFRS 10 and 11.
Gross and net of reinsurance loss reserve development table: AXA XL
The table below gives a reconciliation between developed reserves and total recognized claims reserves for the claims reserves and other reserves arising from insurance contracts as disclosed in Note 14.2: (in Euro million)
Claims reserves at end of year 515 381 560 432 of which Reported claims 130 96 164 129 of which IBNR claims 385 285 397 303
In the tables presented in Note 14.10.1 and 14.10.2, liabilities arising from Life & Savings and Property & Casualty insurance contracts and investment contracts exclude contracts where the financial risk is borne by policyholders. These liabilities are not exposed to interest rate or duration risk, except Unit-
Life & Savings – Locked-in discount rate (a) 221,065 1.93% 262,164 1.80%
AXA sells insurance contracts that contain a variety of options and guarantees for contract-holders. These features are described in
from management’s estimates. In addition to providing for risk through establishing reserves, AXA also manages the risk through a combination of reinsurance programs and active financial Risk
are not traded in active markets and quoted prices are not available. Given the short maturities of main liabilities arising from banking activities (see Note 15.2), the carrying amounts may be considered as reasonable proxies for fair values.
The table below sets out the contractual maturities of liabilities arising from banking activities. These contractual maturities are mostly classified under the category “12 months or less”. Consequently, the diff erence between maturities based on contractual cash flows in comparison with the carrying values is not significant: (in Euro million)
Provisions relating to employee benefits and share-based compensations are commented in Note 26 “Employees”.
partly off set by AXA SA (€2,329 million) driven by the decrease in interest rates during the period. The Group applies the IFRS 13 fair value hierarchy as described in Note 1.5. The fair value amounts are mainly based on observable market data inputs and are therefore considered as level 2 fair value.
Tax losses of prior years used in the current year without DTA recognized previously (24) (20)
The table above includes current payables net of current receivables towards the tax administrations. It also includes some receivables and payables with non-consolidated entities members of a tax group which are classified in “other receivables” and “other payables”.
Uncertain tax treatments are determined separately at entity level. For these positions considered as probably not accepted by tax authorities, the assessment of the uncertainty is determined based on the most likely amount in a range of possible outcomes.
(notional amount of €3.9 billion at the end of 2019 versus €1.8 billion at the end of 2018); ■ enhance the return mainly on government bonds portfolios by holding government bonds and at same time selling protection on very good quality names as an alternative to the direct purchase of a corporate bond. This type of ALM
Macro-hedge and other derivative instruments on insurance and investment contracts (liabilities) - 227 227 - (910) (910)
Non quoted debt instruments (amortized cost) 220 (2) - - 218
(a) Include losses related to the disposal processes of AXA Bank Belgium and AXA Life Europe (see Note 5.3).
In France and Belgium, benefit payments are managed by insurance companies or Mutual funds.
Defined Benefit Obligation at the end of the year (A) 19,469 19,754 234 622 19,703 20,376
Interest income on plan assets 193 217 0 0 193 217
(d) In 2019, this amount mainly reflected the deconsolidation of benefit obligation and plan assets associated with defined benefit plans sponsored by Equitable Holdings, Inc. as at March 31, 2019. In 2018, this amount comprised the additional benefit obligation and plan assets in connection with the AXA XL acquisition and the consolidation of Roland Rechtsschutz.
Statement of financial position liability at the end of the year (8,037) (7,633) (228) (617) (8,266) (8,250)
(a) The other category of plan assets mainly includes investment funds.
(discount of 20% to the reference price of €22.87 representing the average over the twenty trading days ending on the date preceding the Chief Executive Officer’s decision setting the definitive terms of the operation) and at a price of €21.73 per share for the leverage plan (discount of 4.99% to the reference price). A total of 17.8 million new shares were issued, increasing the share capital by €375 million. This off ering represented a total cost of €3.5 million taking into account the five-year lockup period.
From 2019 grants, the restriction on the two years transfer period is no longer applicable.
Weighted average number of ordinary shares (net of treasury shares) – opening 2,383 2,383
In 2018, net income per ordinary share attributable to continuing operations stood at €0.79 on a basic and fully diluted basis.
We attest that the consolidated non-financial statement required by Article L.225-102-1 of the French Commercial Code (code de commerce) is included in the Group’s management report, it being specified that, in accordance with Article L.823-10 of this Code, we have verified neither the fair presentation nor the consistency with the financial statements of the information contained therein. This information should be reported on by an independent third party.
■ Evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
Mutual funds (FCPE) with direct voting rights have been created since 2005 to allow beneficiaries, in most cases, to directly exercise their voting rights during the Company’s Shareholders’
Solvency II is designed to implement solvency requirements that better reflect the risks that (re)insurance companies face and build a supervisory system that is consistent across all EU Member
In addition, certain AXA entities must comply with revised obligations on capital resources for banks and certain investment firms, including Directive 2013/36/EU of June 26, 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (as amended “CRD”), and Regulation (EU) No. 575/2013 of June 26, 2013 on prudential requirements for credit institutions and investment firms, as amended, which set forth specific capital, governance and remuneration requirements (as amended “CRR”). On June 27, 2019, Directive (EU) 2019/878 of May 20, 2019 (“CRD II”) and
European Union could increase our costs and adversely impact our business” in Section 4.1 “Risk Factors” of this Annual Report.
United States. For further information concerning transatlantic data transfers, please see the paragraph “The evolving and complex regulatory environment surrounding data protection and transfer in the European Union could increase our costs and adversely impact our business” in Section 4.1 “Risk Factors” of this Annual Report.
IFRS 17 is scheduled to become effective for annual periods beginning on or aft er January 1, 2021.
Regulatory authorities have also proposed reforms to and potential changes aff ecting interest rate, equity, foreign exchange rate and other types of indices (also known as “benchmarks”).
The IDD supersedes the Insurance Mediation Directive and is designed to improve consumer protection by ensuring that all distributors of insurance products operate on a level playing field.
France, all key operational entities/countries/geographic zones have a tax team in charge of ensuring that tax regulations are well understood and fully satisfied by the entities.
In addition to the details reported around the Group eff ective tax rate, AXA reports substantial information on the impacts of any change in local tax regulations on its business, as well as details of the tax burden per line of business and per country. AXA’s income tax expenses/benefits are extensively disclosed in the
Lastly, AXA reported in 2019 for the first time a Tax Transparency
insurance policies entered into represent a true transfer of risk and that their status as (re)insurance contracts could not be subject to challenge. Business between Group companies must be transacted at market prices where a market price exists, or in the absence of market prices, must be supported by formally documented justification for the charge made.
At least 15 days (or six days in certain cases) prior to the date set for the meeting on first call, and at least 10 days (or four days in certain cases) before any second call, the Company shall send a final notice containing all the information requested by law by mail to all registered shareholders who have held shares for more than one month prior to the date of this final notice and publish a final notice in a bulletin of legal notices, as well as the BALO.
sustainable development objectives”; ■ the split of environmental risk into two distinct risks related to climate change: both AXA’s impact on climate change and the impact of climate change on the business; ■ the consideration of biodiversity as an emerging risk despite a stable rating compared to 2018; ■ fair business practices-related issues have been removed from the list of AXA main CSR risks and are treated as “ other issue”
Other issues have also been identified: ■ fair business practices-related issues: include ensuring our suppliers and contractors meet CR requirements. See
I AXA Tianping, our new P&C insurance entity in the Chinese market
AXA’s overall salaried workforce on December 31, 2019, was 120,869 employees (open-ended and fixed-term contracts), which represents a decrease of more than 4% compared to 2018. This decrease is mainly due to (i) the disposal of Equitable Holdings, Inc., representing some 7,800 employees, (ii) the finalization of the acquisition of the AXA Tianping entity, representing some 3,000 employees, and
In terms of geographies, the footprint of AXA’s salaried workforce in 2019 was: 58% in Europe (+1.4 points compared to 2018), 26% in
has focused on several actions: ■ ask top management to play a more active role to foster gender diversity – diversity objectives are set to all Top Senior
Number of employees with disabilities – concerns entities operating in France only 760 emp. 743 emp. 770 emp.
newsroom/news/how-to-support-the-transition-towards-theprotection -of-biodiversity); ■ in November 2019, the Group launched a new phase in its climate strategy, based on four new developments: the
“real assets” such as real estate. This is termed “physical” risks according to the TCFD guidelines. As an insurer, AXA has a significant amount of claims-related data to conduct a “physical risks” analysis on its real estate portfolio. AXA’s Investments and
AXA’s green investments reached €11.8 billion (€11.3 billion end of 2018).
AXA’s Scope 2 emissions per FTE decreased by 7% between 2018 and 2019 and by 55% since 2012. This performance is notably related to the purchase of renewable electricity. In order to calculate our CO
emissions per FTE increased by 19% compared to 2012 and by 43% between 2018 and 2019, mostly due to emission factors updating. When recalculating data with same emission factors as used in previous year, CO
AXA’s use of paper concerns office (printing, measured per employee) and marketing & distribution (leaflets, etc., measured per customer). Our off ice paper consumption per FTE decreased by 12% between 2018 and 2019, and by 59% since 2012 (our global 2020 target has thus been achieved ahead of schedule).
This recent significant decrease is partly linked to the fact that
Electronic and Electrical Equipment (WEEE). For example, in 2019, the IT Direction of GIE AXA added second-hand or rebuilt equipment in its catalogue for mobile device.
Through the development of its Emerging Customer insurance off er across high-growth markets, AXA addresses social exclusion by enabling vulnerable segments of the population to access insurance services that accompany them in their economic progression and that provide a safety net that prevents them from falling into poverty. This approach is to design products that are simple, fair, and accessible. The products are designed involving co-creation with customers leveraging technology and alternative distribution partners like mobile network operators, banks and microfinance institutions, and remittance companies.
micro-insurance contract is offered voluntarily to the house owner, at a very aff ordable price.
For the third consecutive year, the AXA Research Fund has partnered with the Red Cross Foundation to support research in the humanitarian field around the pillars of health and climate change; 8 African researchers were rewarded.
Protection and Responsible use of Customer Data, Engagement with Social Media, Prevention of Discrimination and Harassment and Fair and Professional Treatment of customers. The content and style of the Code has also been revised to make it more accessible and easier to reference.
(prohibiting the resort to child/forced labor, promoting employee health & safety and freedom of expression, and non-discrimination). In addition, AXA implemented a CR Risk assessment of its suppliers, identified thanks to an internal CR
risks categories are asked to share their valid DJSI or EcoVadis scores or even follow an EcoVadis assessment.
Statement: customer protection, prevention of human rights violations within the supply chain and fight against corruption.
Please refer to Section 7.2 “Social Information – Employee relations and work conditions – A continuous and established social dialogue” of this Annual Report for further information on
Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). It is designed to define the IFC scope, governance, and principles in order to ensure consistency and quality in AXA Group’s financial reporting.
To the Board of Directors of AXA: As Statutory Auditors of AXA and in response to your request , we have performed audit procedures on AXA and its subsidiaries’ (the
In our opinion, the Company’s management’s assertion that internal control over financial reporting as of December 31, 2019 is eff ective, in all material respects, is fairly stated based on the criteria established in the IFC framework.
I, the undersigned, having taken all reasonable care to ensure that such is the case, hereby certify that the information contained in this Universal Registration Document is, to the best of my knowledge, in accordance with the facts and contains no material omission likely to render it misleading or inaccurate.
Tax receivables amounted to €83 million, representing an increase of €56 million mainly due to corporate income tax instalments.
The €286 million increase versus 2018 was primarily due to the recognition in profits of the foreign exchange translation diff erences on the US dollar, following the disposal of Equitable
Since January 1, 2011, AXA has applied regulation ANC n°2015-05 linked to term financial instrument and hedge operation.
2013-02, so as to measure any additional adjustment necessary to ensure the coverage of defined post-retirement benefit obligations and for accounting purposes. The method 1, as defined by this
The information used for calculating the fair value of financing debt is market prices at the end of the period, using (i) market rates for each currency, (ii) AXA’s average spread by maturity and for the main currencies, distinguishing subordinated debt and senior debt, and (iii) options included in issue contracts, such as issuer redemption options.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2019 and of the results of its operations for the year then ended in accordance with French accounting principles.
Report, before the impact of the following items net of policyholder participation, deferred acquisition costs, VBI, taxes and minority interests: ■ integration and restructuring costs related to material newly acquired companies as well as restructuring and associated costs related to productivity improvement plans; ■ goodwill and other related intangibles; ■ exceptional operations (primarily change in scope and discontinued operations); and
Debt Gearing refers to the level of a company’s debt related to its equity capital, usually expressed as a percentage. Debt Gearing is used by Management to measure the financial leverage of the Group and the extent to which its operations are funded by creditors as opposed to shareholders. AXA’s Debt Gearing is calculated by dividing the gross debt (financing debt and undated subordinated debt) by total capital employed (consolidated shareholders’ equity excluding undated subordinated debt and reserves relating to the change in the fair value of financial instruments and of hedge accounting derivatives plus the gross debt). Furthermore, following the deconsolidation of EQH the
Exhibits 20. Table of the Company’s financial results over the last five years 451 21. Report of the Statutory Auditors on the corporate governance report 467
&famille=BDIF&bdifId=0310-91.D_D.19-0130 : (a) Section 2.2 “Operating Highlights” on pages 37 to 44; (b) the report of the Board of Directors of AXA for the year ended December 31, 2018, including all sections listed in