AXA will therefore continue its recognized actions to support the fi ght against climate change. For example, the Group has taken innovative and ambitious commitments, through partnerships with the United Nations to help cities face up to climate risks and with the World Bank to support vulnerable populations with
Unit-Linked features which were previously classifi ed under the Unit-Linked line of business are now classifi ed under the
In 2015, AXA indicated that it targets to pay aggregate dividends in a general range of 45% to 55% of this amount (representing an increase from the prior indicative range of 40% to 50%). The dividend proposed by the Board of Directors in any particular year may vary considerably depending on a variety of factors
The signifi cance and the meaning of individual ratings vary from agency to agency.
Acquisition of (i) 50% of Tian Ping, a Chinese Property & Casualty insurance company; (ii) 51% of Grupo Mercantil Colpatria’s insurance operations in Colombia; and (iii) 77% of Mansard
Re”); (ii) BRE Insurance, mBank’s Property & Casualty subsidiary in Poland; (iii) the P&C large commercial risks insurance subsidiary of SulAmérica in Brazil; (iv) Commercial International
■ Brokers are independent fi rms that negotiate with insurance companies, in return of a commission, on behalf of customers seeking coverage. As opposed to exclusive agents, brokers usually work with different insurance companies.
■ Distribution partnerships are generally structured as sales agreements between an insurance company and another company from the fi nancial services industry, especially banks, or from other industries. This may take the form of a joint venture between the insurance company and its partner or an exclusive or non exclusive distribution arrangement.
Global P&C activity is mainly driven by its Property pool which provides AXA entities with cover on natural catastrophes; ■ AXA Assistance, which is the Group subsidiary committed to servicing its customers in emergencies and everyday situations. AXA Assistance operates through four business lines (Vehicle, Travel, Health and Home) to offer customer focused services; ■ AXA Liabilities Managers, which is the Group’s specialized company in charge of managing AXA Group’s Property &
The split of distribution channels used by AXA’s Property & Casualty operations (excluding Direct), based on gross revenues for the years ended December 31, 2016 and 2015, is presented below: Based on gross revenues in 2016
In 2016, fi nancial markets reacted to a number of important political events: the ‘Brexit’ vote at the United Kingdom (UK)
Japan 15 2.0 18 1.6 Life Insurance Association Japan of Insurance Research Institute (excluding Kampo Life) for the 12 months ended September 30, 2016 and September 30, 2015.
Gulf Region, Nigeria and Brazil. In China, growth remained much higher than in European countries, while unfavorable economic conditions and higher competition in Asia resulted in slower growth. Underwriting profi tability remained globally at a relatively high level with a stabilizing trend in Europe still benefi ting from a low level of natural catastrophes. However, profi tability was impacted by lower reinvestment yields in most economies.
On April 4, 2016, AXA announced that AXA Philippines had completed the acquisition of 100% of Charter Ping An Insurance
Global Direct Seguros y Reaseguros, the Portuguese branch of its direct operations (Direct business) (3). The total cash consideration amounted to €189 million. AXA recorded an exceptional positive impact of €41 million, accounted for in net income in 2016.
AXA expanded operations in Africa by launching a Lloyd’s specialty insurance venture with Chaucer
The notes will be treated as capital from a regulatory and rating agencies’ perspective within applicable limits. The transaction has been structured for the notes to be eligible as Tier 2 capital under Solvency II.
Personal lines (51% of P&C gross revenues) increased by 4% (or €+645 million) on a comparable basis.
HEALTH REVENUES (AS REPORTED IN LIFE & SAVINGS AND PROPERTY & CASUALTY SEGMENTS)
(iv) Mexico up 14% (or €+81 million) to €573 million mainly driven by tariff increases, partly offset by (v) the Gulf Region down 21% (or €-103 million) to €386 million mainly due to the loss of large accounts in the Group business.
mainly driven by AXA SA as a consequence of lower fi nancial charges mainly refl ecting the interest rate management program implemented in the context of lower interest rates.
Net income amounted to €5,829 million (or +4%). On a constant exchange rate basis, net income increased by €136 million (or
(€- 0.5 billion) as well as by the partial write-off at AXA SA of the net deferred tax asset position of the French tax consolidation
Health in the context of the ANI and in Individual Protection refl ecting an increase in average premium; ■ G/A Savings sales (28% of APE) decreased by €31 million
Adjusted earnings increased by €84 million (+10%) to €913 million. On a constant exchange rate basis, adjusted earnings increased by €72 million (+9%) driven by higher underlying earnings and higher net realized capital gains.
Following announcements of the disposal, the UK Life & Savings contribution has been restated as discontinued operations for both 2015 and 2016. As a consequence, the profi t and loss contribution of the business has been recognized in net income.
On a constant exchange rate basis, net income increased by €217 million (+74%) mainly due to higher adjusted earnings as well as a favorable change in the fair value of both m utual funds and interest rate hedging derivatives not eligible for hedge accounting.
Profi t or loss on fi nancial assets (under Fair Value option) & derivatives (24) (5)
decreased by €50 million (-6%) to €807 million mainly due to the non-repeat of higher renewals in 2015 in Group Protection, partly offset by higher new business; ■ G/A Savings revenues (26% of gross revenues) decreased by €85 million (-22%) to €309 million mainly due to lower sales of the Oxylife Secure hybrid product, in line with the strategy to focus on Protection products and to exit the Individual
Savings business line; ■ Unit-Linked sales (16% of APE) decreased by €37 million
Investment margin increased by €24 million (+8%) to €342 million driven by higher investment income from m utual funds, as well as lower credited interests and policyholder bonus allocation.
As a result, the underlying cost income ratio increased by 1.6 points to 84.4%. On a comparable basis, the underlying cost income ratio decreased by 0.3 point.
In the comments below, the comparable basis excludes the contribution of the pension business sold on September 1, 2015.
(1) AXA Life Invest includes all AXA Life Europe entities except Germany and Japan.
Legal Protection; ■ Commercial lines (45% of gross revenues) were stable at €1,399 million as higher volumes in Motor and Workers’
(v) Spain (€+21 million or +12%) driven by a higher retention rate and higher new business, partly offset by (vi) South Korea
Expense ratio increased by 1.9 points to 31.2%. On a constant exchange rate basis, expense ratio increased by 1.8 points mostly driven by higher administrative expenses (+1.4 points)
Net investment result increased by €6 million (+18%) to €42 million. On a constant exchange rate basis, net investment result increased by €7 million (+20%) mainly driven by higher average asset base in Malaysia and a positive change in asset mix in Singapore.
On a comparable basis, enlarged expense ratio increased by 1.4 points.
Underlying earnings decreased by €9 million (-16%) to €47 million. On a constant exchange rate basis, underlying earnings decreased by €7 million (-13%) mainly driven by less favorable developments on run-off portfolios.
On a constant exchange rate basis, net income decreased by €6 million (-3%) driven by lower adjusted earnings, partly offset by an exceptional realized capital gain on the sale of a seed capital investment (€28 million).
(ii) lower intermediation activities, partly offset by (iii) higher commercial results from strong new credit production.
Net income decreased by €13 million (-87%) to €2 million, as a result of a less favorable change in the fair value of debt and hedging instruments.
In the comments below, the comparable basis excludes the contribution of Genworth holdings, consolidated starting from
Life & Savings and Property & Casualty insurance contracts are disclosed in Note 14.10.1 “Payment and surrender projections”
The principal sources of liquidity for AXA’s Asset Management and Banking subsidiaries are operating cash fl ows, repurchase agreements, borrowings from credit institutions, banking clients, drawings on credit facilities, proceeds from the issuance of ordinary shares (where applicable).
On a consolidated basis, AXA’s total outstanding financing debt excluding derivatives amounted to €1,139 million at
The AXA Group defined a clear framework for its capital management policy around a central regulatory solvency ratio target range: ■ the central target range is between 170 and 230%. Within this central range, AXA intends to (i) maintain its dividend policy which targets a 45% to 55% payout ratio; (ii) neutralize dilution resulting from employee share offerings and stock options exercise; and (iii) maintain investments in business growth; ■ above 230% and as solvency increases, fl exibility may be added to the dividend payout ratio. Excess capital could also provide some additional fl exibility 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 offering and stock options exercise; and reviewing the dividend payout ratio; ■ below 140%, the AXA Group may restrict its growth initiatives, further reduce its appetite for investment risk and reduce dividend payout.
Company’s buy-back program, or any redemption or repurchase of other TSS.
Report of the Board of Directors on the compensation policy of the Company’s Corporate Offi cers 167 3.3 RELATED-PARTY TRANSACTIONS 171
Mr. Jean-Martin Folz) and refl ected the Board’s conclusions that splitting the roles of Chairman and Chief Executive Offi cer was in the best interest of the Company at this time. The Board concluded that the separation of roles would ensure that the Group benefi ts from the mix and complementarity of the respective experiences and skills of Mr. Denis Duverne and
Ministry of Labour. In 1993, he joined the Rhône-Poulenc Group and held various executive positions. In 2003, he was appointed Chief Executive
Global Markets and HSBC Bank. In early 2007, she became Deputy
Executive Board with the responsibility of Chief Investment Offi cer. Since
Deputy Chief Executive Offi cer of Lyonnaise des Eaux. From 2009 to
University as well as a Fellow of the Singapore Institute of Directors. She also sits on the Board of the World Justice Project, a global organization for the promotion of the rule of law.
October 2013, Mr. Stefan Lippe was elected as Chairman of the Board of
(Romania) (Magister Artium) and of the Deutsche Versicherungsakademie of Munich (Germany) (Degree in insurance management
3 Not have signifi cant business relationships ✓ ✓ ✓ ✓ ✓ ✓
Suet Fern Lee, Deanna Oppenheimer and Dominique Reiniche and Messrs. Jean-Pierre Clamadieu, Jean-Martin Folz,
(executives considered to be competent to effectively manage the Company as required by Solvency II), and determines their respective compensation; ■ convenes Shareholders’ Meetings; ■ recommends directors for appointment to the Shareholders’
In 2016, the Board met eleven times and the average attendance rate was 97%. Board meetings had an average duration of three and a half hours.
Governance Committee are independent directors; ■ none of AXA’s corporate offi cers may be members of the
– capital and solvency; ■ to examine the impact on capital and solvency at Group level of the main orientations and limits of the Asset Liability Management policy; and
– the overall annual allocation of Company stock options or performance shares to employees of the AXA Group. The Chief Executive Offi cer also informs the Committee of the compensation of the main executives of the AXA Group.
■ in depth analysis of certain Group human resources topics, including reviewing each year the Company’s policy with respect to professional equality and equal pay; ■ to examine the Group’s strategy on corporate responsibility and other related issues; ■ to examine in depth certain governance matters relating to the operation and organization of the Board of Directors and the organization of the periodic selfassessment of the Board ; and
Management Committee which meets weekly or fortnightly to discuss Group strategic, financial and operational matters.
CAC 40 index (companies selected to form the panel, which may vary from year-to-year, are comparable to AXA in terms of stock capitalization, revenues, sector, number of employees and/or geographic coverage); ■ a second market composed exclusively of international fi nancial companies comparable in size and scope to the AXA
The proportion allocated to individual performance reflects the Board of Directors’ desire to place more weight on the executive offi cers’ individual performance on the execution of major strategic initiatives that are critical to the Group’s longterm success.
In order to assess Mr. Denis Duverne’s individual performance in 2016, the Board of Directors assessed the achievement of the following objectives set in his target letter : (i) the preparation of the Group’s new strategic plan “Ambition 2020”, articulated around the two strategic priorities: focus and transform (25%),
Group performance is measured by the underlying earnings per share, return on equity (adjusted Return on Equity – ROE), and customer satisfaction index. Individual performance is evaluated considering predetermined objectives specifi cally deriving from strategic initiatives.
Individual performance is assessed both on (i) the achievement of results for each predetermined individual objective (the
(adjusted Return on Equity-ROE) which is slightly above target and (iii) a customer scope index which is in line with the target.
(b ) The options and performance shares were granted to Mr. Thomas Buberl prior his appointment as the AXA Chief Executive Offi cer.
Pursuant to the stock option plan rules, benefi ciaries who resign from the Group lose the right to exercise their options.
Within the global limit authorized by the Shareholders’ Meetings, the Board of Directors approves all stock option programs prior to their implementation. For the last few years, the choice was systematically made to gran t purchase options.
Number of options exercised at 31/12/2016 2,754,019 115,975 48,081 2,554 1,381,646 38,424 0 3,656 3,119,118 68,283
(a) In 2016, options were granted to Mr. Thomas Buberl prior to his appointment as AXA Chief Executive Offi cer.
IFRS standards. This is a historical value at the date of grant, calculated for accounting purposes as described in Note 26.3.1
Henri de Castries Chairman & Chief Executive Offi cer until August 31, 2016 1,390,629 -
Performance Shares which is used as a reference to calculate the actual number of shares that will be defi nitely granted at the end of a 3-year performance period.
(“performance rate”) is used to determine the number of Shares which will be defi nitively acquired by the benefi ciaries at the end of the acquisition period, under the condition that the benefi ciary is still employed by the AXA Group. The number of Performance Shares defi nitively granted shall therefore be equal to the number of Performance Shares initially granted multiplied by the performance rate which may vary between
For each of these indicators, the cumulated performance over the fi scal years of the acquisition period is compared to the cumulated performance of such indicator over a reference period of identical duration preceding the Performance Shares grant.
For the corporate offi cers the fl oor described above will be increased to 80%. Therefore, in the event of a performance below 80% of the performance required to reach the target, no performance shares would be defi nitively granted. In case of performance equal to 80% of the performance required to reach the target, 50% of the number of shares initially granted will be defi nitively granted. For example, should the achievement rate regarding the Group performance indicator (Adjusted Earnings
(c) The 71,790 units of the June 13, 2012 plan have been settled at €1.19 million.
Deputy Chief Executive Offi cer until August 31, 2016 and Chairman of the Board of Directors as of September 1, 2016 - Performance Shares
On December 31, 2016, based on the AXA share value on that date (€23.99), the Chief Executive Offi cer does not yet meet his Minimum
(a) Transaction performed by an independent fi nancial intermediary pursuant to a discretionary mandate.
Executive on August 31, 2016 and was appointed Chairman of the Board of Directors as of September 1, 2016, also claimed his pension rights according to the collective defi ned benefi t pension scheme as of September 1, 2016. However, Mr. Denis Duverne decided to waive payment of the annuities amounting to circa €750,000 per year before taxes and social security charges, until termination of his term of offi ce as Chairman of the Board without any retroactive payment.
At the Company’s Board of Directors meeting on December 14, 2016, the Board of Directors approved the first grant of retirement performance shares. Accordingly, 509,345 retirement performance shares were granted to 418 officers, which represent 0.02% of the outstanding share capital on the date of the grant, of which 3,042 retirement performance shares were granted to AXA’s Chief Executive Offi cer representing 0.60% of the total grant.
Incentives (LTI) to the Chief Executive Offi cer in the form of stock options and performance shares.
The Board of Directors has also decided that the number of LTIs allocated to the Company’s corporate offi cers in the form of stock options and performance shares may not exceed 10% of the total number of LTIs granted to all benefi ciaries within the Group.
The LTIs granted to the Chief Executive Offi cer are entirely subject to demanding internal and external performance conditions (the details of which are presented in Section 3.2 of this Registration Document ), which are assessed over a minimum period of three years, and do not guarantee any minimum grant or gain. Moreover, the LTI plan rules provide that in the event the Chief Executive Offi cer leaves his position (1) at any time before the end of the performance period, any instruments initially granted are irremediably lost, unless otherwise approved by the Board of Directors in a motivated decision disclosed at the time of the offi cer’s departure.
The only benefi t in kind granted to the Chief Executive Offi cer is the use of a company car.
Accordingly, the Board of Directors has decided, upon recommendation of its Compensation & Governance Committee, to maintain the amount of the fi xed annual compensation of the Chairman of the Board of Directors unchanged, for 2017, i.e. at €1.2 million.
The payment of the severance benefi t should be also subject to performance conditions. During its meeting held on February 20, 2014, upon proposal of the Compensation & Governance Committee, the Board of Directors authorized the execution of a new agreement between the Company and Mr. Henri de Castries in order for the payment of the severance benefi ts to be subject, from
Our businesses, fi nancial position and results of operations are inherently subject to global fi nancial market fl uctuations and economic conditions generally. While fi nancial markets generally recovered in 2016, a wide variety of factors continue to negatively impact economic growth prospects and contribute to high levels of volatility in financial markets (including in currency exchange and interest rates). These factors include, among others, continuing concerns over sovereign debt issuers, particularly in Europe; concerns over levels of economic growth and consumer confidence generally; the strengthening or weakening of foreign currencies against the Euro; structural reforms or other changes made to the Euro, the Eurozone or the European Union; the availability and cost of credit; the stability and solvency of certain fi nancial institutions and other companies; inflation or deflation in certain markets; central bank intervention in the fi nancial markets through quantitative easing or similar programs; volatile energy costs; uncertainty regarding membership in the European Union or the Eurozone; adverse geopolitical events (including acts of terrorism or military confl icts); political uncertainty arising from recent elections in the
Due to the geographical diversity of our business, we are subject to the risk of exchange rate fl uctuations since a signifi cant portion of our participations and investments, revenues and expenses are denominated in currencies other than euro (primarily in
We employ a range of risk mitigation strategies in order to avoid or limit losses or liabilities. We use derivatives (including equity futures, treasury bond futures, interest rates swaps and swaptions, equity options and variance swaps) to hedge certain, but not all, risks under guarantees provided to our clients, including the Accumulator guarantees. On a substantial part of the in-force portfolio and for all new vintages of business, these hedging instruments are coupled with volatility risk mitigation techniques.
Certain risks under the Accumulator guarantees and under other contracts and policies issued by AXA US are reinsured by
might signifi cantly affect our margins in certain lines of business.
Our business is highly dependent on the effective operation of our telecommunications, electronic data, information technology and other operational systems. We rely on these systems to perform necessary business functions, including providing insurance quotes, processing applications and claims, providing information and support to customers and distributors, administering complex products, conducting actuarial analyses and keeping fi nancial records. We also use computer systems to store, retrieve, evaluate and utilize customer, employee and company data and information, including proprietary and confi dential information. Some of these systems, in turn, rely, on third-party systems.
AXA Group’s solvency ratio is also sensitive to capital market conditions (including the level of interest rates, the level of equity markets and foreign exchange impacts) as well as other economic factors generally. In addition, regulators may become more conservative in the interpretation, application and enforcement of these rules, as a result of which they may, for example, impose increased reserving requirements for certain types of risks, greater liquidity requirements, higher discounts/“haircuts” on certain assets or asset classes, more conservative calculation methodologies or take other similar measures which may signifi cantly increase regulatory capital requirements. In particular, the French insurance regulator, the
The AXA Group operates in 64 countries around the world and our operations are subject to a wide variety of insurance and other laws and regulations. Our regulatory environment is evolving rapidly and supervisory authorities around the world are assuming an increasingly active and aggressive role in interpreting and enforcing regulations in the jurisdictions in which we do business, resulting in signifi cant compliance challenges.
The quickly evolving regulatory environment surrounding data transfer and protection in the European Union could increase our costs and adversely impact our business
Report. O nly information referr ed to in Note 4 is covered by the report of the Statutory Auditor s on the C onsolidated F inancial
In addition, the Solvency II regime requires the Group to have in place an effective system of governance which provides for sound and prudent r isk m anagement. This governance system must be based on a clear separation of responsibilities and must be proportionate to the nature, extent and complexity of the Group’s operations.
Committee with a view to ensuring that these agendas include the appropriate items.
Risk Offi cer and the Group Chief Financial Offi cer, is in charge of (i) steering the overall AXA Group Solvency II framework,
Risk Steering Committee) responsible for monitoring the current development in systemic risk and reviewing the documentation required from the Group in light of its global systemically important insurer (G SII) status.
Second line of defense: Group Risk M anagement function, Group Compliance function and Internal Financial C ontrol function
At entity level, AXA’s subsidiaries are responsible for recording and controlling accounting and fi nancial data that comply with the AXA Group Accounting Manual and refl ect consolidation rules under IFRS accounting standards. In this respect, the Chief
For further information, please refer to Appendix II “Management’s annual evaluation of the i nternal c ontrol o ver fi nancial r eporting”
M anagement believes appropriate and adapted to its business and the global scale of its operations.
The ORSA policy defi nes minimum standards for assessing and reporting own risks and solvency to be applied across the
Committee of the Board of Directors, and fi nally to the Board of
The Group’s main goal in using its Internal Model as opposed to the standard formula is to better refl ect the Group’s risk profi le in its Solvency Capital Requirement. This is refl ected through several objectives: ■ taking into account local specificities – The Group is a global company, and caters to a wide range of insurance markets with a variety of products offered targeting certain demographics and with differing risk exposures. It is therefore appropriate, to the extent possible, to calibrate stresses specifi c for these risk profi les and to allow for the benefi ts of diversifi cation of risks which arise as a result of being spread over these markets; ■ addressing shortcomings inherent to the standard formula –
The Group risk grid (2 ) aims to identify all material risks applicable to the Company’s insurance businesses. The Internal Model is intended to capture all material risks to which the Group is exposed from the risk assessment performed at sub-risk level to the overall aggregation of risk categories.
Chief Risk Offi cer. The Group Chief Investment Offi cer is also member of this Committee (please refer to the paragraph
The market risks arising from derivatives are regularly monitored taking into account the Group’s various constraints (such as risk appetite and Internal Model).
AXA Group is exposed to fi nancial market risks through its core business of fi nancial protection (i.e. insurance) and through the financing of its activities as part of its equity and debt management.
Synthetic reports, including information about hedging strategies, are sent to and reviewed by the Finance Committee of AXA’s Board of Directors fi ve times a year.
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
scoring models regularly monitored to ensure a risk selection consistent with each bank’s risk appetite) and a regular monitoring of portfolios by product management teams and
Liquidity is a key dimension of the Risk Appetite Framework allowing the AXA Group to ensure that both AXA SA and the local entities have at all times suffi cient liquidity buffer to withstand a severe shock. The objective is achieved through the monitoring of the liquidity adequacy across the AXA Group on the basis of a metric called “Excess Liquidity”, i.e. the difference between liquidity resources and liquidity needs calculated under severe stress conditions and over different time horizons: 1 week, 1 month, 3 months and 12 months.
Lines) as well as the local/regional actuarial functions established in insurance entities across the Group.
The breakdown of the Group’s Life & Savings technical insurance reserves by product type was as follows: ■ 19% at the end of 2016 (23% at the end of 2015) of the
These risk scenarios are then used to estimate the capital requirement needed to cover operational risks based on advanced models based on Solvency II principles. 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 defi ned 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.
The implementation of the Reputation Risk Framework encompasses all AXA Group activities including insurance, Asset
Other receivables 17,416 14,263 5 Assets held for sale (c) 1,100 2,988 12 Cash and cash equivalents 26,314 26,275
(a) The contribution of discontinued United Kingdom Life & Savings operations is reclassifi ed on a separate line of the income statement in order to present a comparable basis.
(c) Net of investment management costs and including gains/losses from derivatives hedging variable annuities.
Net gains and losses recognized directly through shareholders’ equity 1,173 885
Net interest margin of hedging derivatives on fi nancing debt 4 -
These consolidated fi nancial statements including all notes were set by the Board of Directors on March 16, 2017.
Committee that are endorsed by the European Union before the balance sheet date with a compulsory date of January 1, 2016. The Group does not use the “carve out” option allowing not to apply all hedge accounting principles required by IAS 39.
Property & Casualty, Asset Management and Banking) to cash generating units corresponding (i) to the companies acquired or portfolios of business acquired according to their expected profi tability, and (ii) to the entities already within the AXA Group that will benefi t from the synergies of the combination with the activities acquired. This allocation of goodwill is used both for segment reporting and for impairment testing.
The effective portion of changes in the fair value of derivatives designated and qualifying as cash fl ow hedge is recognized in shareholders’ equity. The gain or loss relating to any ineffective portion is recognized in the income statement. Cumulative gain or loss in shareholders’ equity is recycled in the income statement when the hedged underlying item impacts the profit or loss for the period (for example when the hedged future transaction is recognized). When a hedging instrument reaches its maturity date or is sold, or when a hedge no longer qualifi es for hedge accounting, the cumulative gains or losses in shareholders’ equity are held until the initially hedged future transaction ultimately impacts the income statement.
(excluding shareholders’ equity) held for sale are entered separately on the liability side of the consolidated balance sheet, with no netting against assets.
DBV Deutsche Beamten-Versicherung AG Merged with AXA Versicherung AG - - 100.00 100.00
December 31, 2015). Minority interests related to consolidated investment funds and real estate companies that are classifi ed in shareholder’s equity amounted to €2,136 million as of
The operating results are presented on the basis of four operating business segments: Life & Savings, Property & Casualty, Asset
(b) Includes gains/losses from derivatives hedging variable annuities within the Life & Savings segment.
In these tests, for all segments, discount rates used in nonrisk neutral approaches range from 5.9% to 12.8% in 2016 compared to a range from 6.9% to 10.9% in 2015, and growth rates beyond the strategic plan horizon, where applicable, from 2.1% to 5.6% compared to 2% to 4% in 2015.
Income arising from investments in associates - Equity method - -
Life & Savings deferred acquisition costs and equivalent net carrying value as of December 31 21,374 777 20,870 1,223
The value of Life & Savings deferred acquisition costs and equivalent, net of amortization, unearned revenue reserves and unearned fee reserves, was as follows: (in Euro million)
except derivatives related to macro-hedges which are shown separately. Detailed effects of derivatives are also provided in Note 20.3.
Debt instruments (at cost) that are not quoted in an active market (d) 5,955 5,736 0.79%
Loans designated as at fair value through profi t or loss - - -
Debt instruments available for sale 343,689 390,821 390,821 54,800 7,668 325,098 369,011 369,011 50,183 6,270
(b) Net of impairment - including premiums/discounts and related accumulated amortization.
The amortized cost of non consolidated investment funds available for sale was as below: ■ Funds mainly holding equity securities: €1,306 million in 2016 compared to €939 million in 2015; ■ Funds mainly holding debt instruments: €2,701 million in 2016 compared to €2,363 million in 2015; ■ Other funds: €4,162 million in 2016 compared to €3,350 million in 2015.
(b) Fair values of assets not quoted in an active market – no active markets (level 2 and level 3)
Investments in real estate properties at amortized cost - 29,050 0 29,050 29,155 0 27,278 0 27,278 27,295
Kyobo AXA Investment Managers Company Limited 33 - 3 (0) (2) 33
AXA Mansard Insurance plc (P&C including Assur African Holding) 176 0 9 (43) (56) 85
As of December 31, 2015, 2 million treasury shares backing contracts where fi nancial risk is borne by policyholders held in consolidated investment funds were not deducted from shareholders’ equity. Their total estimated historical cost was €34 million and their market value €48 million at the end of
Shadow accounting on Deferred Acquisition Costs (b) (327) - (73) (85)
The table below gives detailed information on reinsurers’ share in claim reserves in Property & Casualty segment presented in Note 14.2: (in Euro million)
Technical reserves as of January 1 (b) 485,560 76,606 562,166 450,979 73,449 524,428
The table below gives reconciliation between developed reserves and total recognized claim reserves for the Claim reserves and other reserves arising from insurance contracts as disclosed in Note 14.2.
December 31, 2016) are not discounted, with the exception of disability annuities and worker’s compensation liabilities that are deemed structured settlements and where the discount rate is revised regularly. Undiscounted reserves are not sensitive to interest rate risks in the fi nancial statements.
risk through a combination of reinsurance programs and active fi nancial Risk Management programs including derivatives.
Macro-hedge derivatives and other derivatives relating to liabilities arising from banking activities (370) (370) (264) (263)
Data used when calculating the fair value of fi nancing debt are period-end market data that refl ect (i) interest rates by currency,
The table below sets out the contractual maturities of fi nancing debt (including the impact of derivatives detailed in Note 20.1).
Savings and EMEA-LATAM Property & Casualty partially offset by AXA Corporate Solutions Property & Casualty.
Other debts instruments issued, notes and bank overdrafts excluding TRS - Carrying value 1,928 153 - 2,081
In the table below, the net deferred tax position corresponds to the difference between deferred tax assets (DTA) and deferred tax liabilities (DTL) carried on the Group’s consolidated statement of fi nancial position. Note that the breakdown of DTA/DTL disclosed in these tables corresponds to the deferred tax before the netting that occurs for balance sheet presentation purpose as required by
States, (iii) the maturity of interest rate swaps in UK Life &
Geographical information regarding revenues and assets of Asset Management is not readily available in the Group reporting tool and the cost to develop it would be excessive. A relevant split by entity is provided above for this segment.
(c) Reclassifi cation of the International Insurance activity in Life & Savings and Property & Casualty segments.
Non consolidated investment funds held for trading 2 - (26) - (24)
Net transfer In/(Out) (including acquisitions, disposals and reclassifi cations) (b) (21) - - - (21) Benefi ts paid by plan assets (553) (571) - - (553) (571) Amount paid in respect of settlements (52) (0) - - (52) (0)
Fair value of separate assets at the end of the year 1,204 1,276 - - 1,204 1,276 Change in the cumulative effect of asset ceiling Cumulative effect of asset ceiling at the beginning of the year 19 17 - - 19 17 Interest cost on asset ceiling 1 1 - - 1 1 Changes in the asset ceiling, excluding the interest cost 1 0 - - 1 0
Interest cost on the defi ned benefi t obligation 405 529 19 21 424 550
Consistently with IAS 19 requirements, this Note only considers liabilities net of Plan Assets and therefore excludes Separate
A description of the risk that pension schemes are exposed to is presented in Note 26.2.10. The sensitivity analysis for signifi cant actuarial assumptions showing how the Defi ned Benefi t Obligation (totaling €22,777 million as of December 31, 2016 and €21,716 million as of December 31, 2015) would have been affected by changes in the relevant actuarial assumption that is reasonably possible for year ended as of December 31, 2016 and 2015 is presented below: effect of 0.50%
The share-based compensation instruments listed above are mostly composed of instruments settled in equity but include also instruments settled in cash. The unit cost of the equity
The option pricing assumptions and fair value at grant date for plans issued in 2016, 2015, 2014, and 2013 are as follows: Assumptions (a)
The total cost is amortized over the vesting period and an estimated pre-vesting lapse rate of 0% is applied over the remaining vesting period. On that basis, the expense recognized in profi t or loss for the year ended December 31, 2016 was €4.3 million (€4.6 million for the year ended December 31, 2015).
The fair value of AXA ADR stock options was calculated using the Black & Scholes option pricing model.
In 2016, the cost of the lock-up period was measured at 18.72%
The total cost of the Performance Shares Retirement recorded as of December 31, 2016, was €10.7 million in earnings, gross of tax.
To the best of the Company’s knowledge, based on information reported to it: ■ on December 31, 2016, there were no loans outstanding from the Group to the Company’s two executive offi cers or to any member of the Company’s Board of Directors; ■ various members of the Company’s Board of Directors as well as various other executive offi cers and directors of other
Pledged securities and collaterized commitments 35,134 575 496 5,005 41,211 39,093
(a) I ncludes future minimum payments for operating leases. December 31, 2015 amount was restated on the same basis.
Enedis (formerly ERDF, a subsidiary of Électricité de France, the primary electric utility in France) has notified claims for coverage under a professional liability policy underwritten by
“Decrees”). In February 2014, the Court of Appeal of Versailles ruled against Enedis in one of these law suits and, as part of this decision, ruled that AXA CS was liable to Enedis under the terms of the insurance policy for compensation of these losses in this specifi c case. AXA CS has appealed this decision to the French
(“Ogden rate”) from 2.5% to -0.75% starting from March 20, 2017. After having analyzed the impact of this change in discount rate on prior year results, AXA considers its existing reserves to be suffi cient.
The table below sets forth, for the periods indicated, the reported high and low prices (intraday) in Euro for AXA ordinary shares on
Meeting of April 27, 2016, the Board of Directors increased the
3,323,259 stock options have been granted, each of which gives the holder a right to acquire an AXA share (either newly issued or existing) at a specifi ed strike price.
Important Insurer (“GSII”) and is consequently subject to specifi c measures in this respect.
Company when allocated as dividends, the right to sell one’s shares and the right to sue the Company).
Report by one of the Statutory Auditors , appointed as an independent third party, on the consolidated human resources, environmental and social information presented in the management report 418
AXA believes Corporate Responsibility (CR) is an integral part of our business strategy. As a company whose business is to protect people over the long term, we have a responsibility to help build a stronger and safer society. It is an essential driver of employee engagement, customers trust and brand image. CR is also a risk/opportunity management concern: it enables AXA to reduce certain costs and business and operational risks, while improving market opportunities in emerging or future commercial segments.
The aforementioned Group EWC agreement commits the Group to a certain number of measures in favor of employees when major organizational changes impact their jobs. AXA maintains the following principles with a view to guiding its various
■ Proportion of absences due to work related accidents 2.0 % 1.9 %
In 2016, over 28,000 employees in 36 countries, representing over 24% of the eligible employees, subscribed to Sharep lan .
■ Proportion of fi xed pay (related to wages) 45.4 % 45.6 %
The Group implemented environmental travel guidelines since 2011 in order to reduce travel-related GHG emissions. Some entities have adapted these guidelines to meet their local specifi cities. For instance, AXA Germany, was among the fi rst company in Germany to have implemented a “fl exible driving”
entities have achieved a better level of management maturity and reporting quality regarding their water consumption patterns.
AXA is also aware of the role it can play as an insurer with regards to circular economy imperatives. BlaBlaCar, a French carsharing service, and AXA launched a fi rst-of-its-kind ridesharing insurance product. BlaBlaCar’s members benefit from free additional insurance covers provided by AXA. BlaBlaCar and
COP22 UN climate talks, notably stressing the importance of both climate resilience, meaningful price on carbon, and the need for fi nancial rules and regulations that encourage and support quality, long-term investment. Indeed AXA believes it can also inform public policies on the importance of tackling and adapting to climate change. Recent examples of the approach include our co-Chairmanship of the FSB Task Force on Climate-
(e) The emissions factors specifi c to each country used for energy, train and air were revised in 2013. Source: the lnternational Energy Agency (IEA) and Ademe.
Mansard ventured into micro-insurance in October 2013 with the introduction of an insurance offering to the customer base of a leading mobile network operator. In addition, AXA
AXA has a set of Stakeholder Engagement Principles, published on its corporate website. These principles apply to all AXA’s businesses worldwide, and set out the Group’s overall approach to stakeholder engagement. As well as these principles, AXA
In addition to tracking and managing ESG metrics, AXA factors climate-related risks into its RI process since 2015, as these are not well captured by ESG analysis. Our analysis of the consequences of climate change on our investments focuses on
This fi rst-mover event helped place coal divestment on the agenda of many other mainstream investors, ahead of COP21.
integration process, it supports the energy transition, and it is also consistent with our broader Corporate Responsibility strategy to promote a “stronger and safer” society; ■ green investments – In May 2015, the Group committed to tripling its green investments, aiming to reach over €3 billion by 2020 for its General Accounts, in the belief that these assets may benefi t from a transition to a low-carbon economy, but it also represented a commitment to promote this transition.
best practice in its portfolio companies. Our recent engagement initiatives include the following: ■ in 2016, AXA decided to strengthen its shareholder engagement at Group-level, complementing existing efforts at AXA Investment Managers and AB level. This included for example joining a collective engagement initiative on the issue of Arctic Oil drilling; ■ the “ESG Footprint Committee”, a RIC sub-committee, reviews risks posed by companies presenting both a low
Commercial Code (Attestation regarding the completeness of CSR Information); ■ express a limited assurance conclusion that the CSR Information taken as a whole is, in all material respects, fairly presented in accordance with the Guidelines (Conclusion on the fairness of CSR Information).
a balanced and efficient governance” and 3.2 “Executive compensation and share ownership” of this Annual Report describing corporate governance mechanisms and containing information about executives’ compensation.
In our capacity as Statutory Auditors of AXA, and in accordance with Article L.225-135 of the French Commercial Code, we hereby report to you on the report prepared by the Chairman of the Board of Directors of your Company in accordance with Article L.225-37 of the French Commercial Code for the year ended December 31, 2016.
The professional standards require that we perform procedures to assess the fairness of the information on internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information set out in the Chairman’s report. These procedures mainly consisted of: ■ obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of fi nancial and accounting information on which the information presented in the Chairman’s report is based, and of the existing documentation; ■ obtaining an understanding of the work performed to support the information given in the report and of the existing documentation; ■ determining if any material weaknesses in the internal control procedures relating to the preparation and processing of fi nancial and accounting information that we may have identifi ed in the course of our work are properly described in the Chairman’s report.
internal control over fi nancial reporting as of December 31, 2016, in order to be able to obtain reasonable assurance as to whether
APPENDICES AAPPENDIX III STATEMENT OF THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT
French tax consolidation group and a €128 million provision for exchange-rate risks.
AXA PARTNERS HOLDINGS SA (ex-AXA ASSISTANCE) 6, rue André Gide – 92320 CHATILLON
Employee benefi t liability was reviewed and a valuation was carried out, in accordance with the Recommendation ANC
Undated deeply Subordinated Notes (nominal) 6,618 (1,254) (237 ) 5,127 3.11. Provisions for risks and charges
These fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these consolidated fi nancial statements, based on our audit.
In accordance with the requirements of Article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: ■ fi nancial assets are valued using the methods applying to each category and described in paragraph 2.5 of the notes to the fi nancial statements.
(shareholders’ equity excluding undated subordinated debt and reserves relating to the change in the fair value of fi nancial instruments and of hedge accounting derivatives plus gross debt).
Underlying investment margin includes the following items: ■ net investment income; and
Pages 1. Responsible persons 1.1 Indication of responsible persons 432 1.2 Statement by responsible persons 432 2. Statutory a uditors 2.1 Names and addresses of the auditors 364 2.2 Resignation, removal or re-appointment of auditors 364 3. Selected fi nancial information 3.1 Historical fi nancial information 5; 11 to 13 3.2 Financial information for interim periods n/a 4. Risk factors 178 to 189 and 204 to 221 5. Information about issuer 5.1 History and development of the issuer 15 and 16; 381 6. Business overview 6.4 Dependence on patents or licenses, industrial, commercial or fi nancial contracts or new manufacturing process n/a 6.5 Ba sis for statements made by the issuer regarding its competitive position 10; 30 and 32 7. Organizational structure 7.1. Brief description of the group and the issuer’s position within the group 4 and 5; 10 7.2. List of the issuer’s signifi cant subsidiaries 252 to 258 8. Property, plants and equipment 8.1 Existing or planned material tangible fi xed assets n/a 8.2 Environmental issues that may affect the issuer’s utilisation of the tangible fi xed assets 403 to 408 9. Operating and fi nancial review 9.2. Operating results 38 to 92
Report of the Chairman of the Board of Directors on the conditions of preparation and organization of the Board’s work and on internal control procedures 424 to 426