Axa Sa · EURONEXT:CS
Axa Sa — Shareholder Meeting (April 2009)
54 slides from Axa Sa's shareholder meeting presentation, Apr 30, 2009
Slide 1: Annual shareholders' meeting
Annual shareholders' meeting April 30, 2009 1
Slide 2: Summary agenda
Jacques de Chateauvieux Chairman of the Supervisory Board Summary agenda 2
Slide 3: Summary agenda: ordinary business
Summary agenda Ordinary business: Approval of AXA's statutory and consolidated 2008 financial statements. Appropriation of earnings and declaration of a dividend of Euro 0.40 per share for payment on May 12, 2009. Approval of the Auditors' special report on related-party agreements. Re-elect
Slide 4: Summary agenda: extraordinary business
Summary agenda Extraordinary business : Authorization granted to the Management Board to increase the share capital by issuing ordinary shares with or without preemptive rights. Authorization granted to the Management Board to issue debt securities. Authorization granted to the Management Boar
Slide 5: 2008, a year of upheaval
Éric Chaney Group Chief Economist 2008, a year of upheaval 5
Slide 6: In late 2008, the world economy plunged into an unprecedented recession
In late 2008, the world economy plunged into an unprecedented recession The worst recession since World War II, triggered by a collapse in world trade 14 7 % 12 6 10 5 8 4 6 3 4 2 2 1 0 0 -2 -1 -4 -2 -6 -3 -8 -4 Commerce mondial, World Trade: on the échelle left sidede gauche -10 -5 % World PIB GDP:
Slide 7: A "historical" storm hit the financial markets in 2008
A "historical" storm hit the financial markets in 2008 The worst stock market performances in 183 years 2008 US market (%, total returns) 1825 - 2008 7
Slide 8: 2008, a year of financial and economic upheaval
2008, a year of financial and economic upheaval The first recession in the globalization era The massive monetary and budgetary measures taken allow us to consider an economic recovery in 2010 8
Slide 9: Impacts and opportunities
Impacts and opportunities The recession has also affected the insurance world, but differently and probably less in France and some other European countries than in the rest of the developed world The exit from crisis will offer insurers new opportunities, which will differ according to country
Slide 10: AXA Group: position and strategy
Henri de Castries Chairman of the Management Board AXA Group: position and strategy 10
Slide 11: AXA's business in the finance industry and the current crisis
AXA's business in the finance industry and the current crisis The current crisis is unprecedented and is affecting us We are and will remain focused on our core business: z Property & Casualty z Life & Savings z Asset Management Our business is a long-term one z Our business is to underwrite r
Slide 12: 2008 revenues slightly down after a record year in 2007
2008 revenues slightly down after a record year in 2007 Revenues: Euro 91.2 billion (down 2%) z Continued growth in P&C z Life & Savings affected by customer aversion to risk and preference for liquidity and/or short- term products. However, revenues were higher than in 2006 and net inflows remain
Slide 13: 2008 net income was impacted by the financial crisis
2008 net income was impacted by the financial crisis Earnings (1) (in Euro billion) Underlying earnings CAGR* 15% 5.7 5.1 2007 was a record 5.0 year 4.2 4.0 3.9 2008 underlying 3.7 3.3 earnings higher than 2.6 in 2006 2.0 2008 net income 1.7 1.5 affected by the 0.9 1.0 0.9 financial markets 0.
Slide 14: Underlying earnings still high with three profitable business lines
Underlying earnings still high with three profitable business lines Underlying earnings: Euro 4,044 million (In Euro million) P&C Life & Savings Asset Management 2,394 1,508 589 + 31% - 43% + 6% z Improvement in combined z Impact on managed assets z Impact on managed assets ratio z Impact on asset b
Slide 15: Disappointing stock market performance
Disappointing stock market performance 1-year 10-year Share price vs At April 28, 2009 Date performance* performance* historical peak CAC40 -37% -10% -56% Sept. 4, 2000 Insurance sector S&P 500 -37% -25% -45% Oct. 9, 2007 underperformed the Stoxx Insurance -49% -57% -76% Nov. 17, 2000 Stock Indexe
Slide 16: Dividend: AXA is profitable and intends to act prudently
Dividend: AXA is profitable and intends to act prudently throughout the crisis Dividend Dividend per share (In Euro million) (In Euro) 2,473 1.20 836 0.40 2007 2008 2007 2008 z Payout ratio* of 25% of adjusted earnings, i.e. almost 100% of net income z A balance between prudent capital management an
Slide 17: What conclusions can we draw?
What conclusions can we draw? Continue to focus on risk management as a priority, especially in Life & Savings Adapt our investment policy to extremely volatile markets Continue to enrich and adapt our Life & Savings offering to meet changing customer needs and their increasing aversion to ris
Slide 18: Our strengths: employee engagement
Despite the crisis, our strengths allow us to approach the future with confidence: employee engagement (1) … Improvement in employee commitment 77 È È 73 71 2006 2007 2008 z Deep understanding of and commitment to the Group's strategy z Pride in belonging to a robust company in an unstable environme
Slide 19: …and customer satisfaction
…and customer satisfaction Improvement in customer satisfaction (1) 81 79 79 È È 2006 2007 2008 z Focusing on customer needs beginning to bear fruits z Increase in the share of operating investments assigned to service quality 19 (1) Customer satisfaction index
Slide 20: A business model based on sustainably robust fundamentals
A business model based on sustainably robust fundamentals Impacts of the crisis on long-term growth factors in the insurance business Growth market in the long-term Increase in life Pensions: growing Ä expectancy need to provide for È + 1 quarter per year additional income Increasing aversion Growth
Slide 21: 2008 financial results
Denis Duverne Chief Financial Officer 2008 financial results 21
Slide 22: 2008 financial results: key highlights
2008 financial results: key highlights Robust underlying earnings z Strong diversification, both geographical and by segment z Highly profitable P&C business z Decline in Life & Savings earnings, mainly due to the cost of guarantees on variable annuity products (unit-linked retirement products wit
Slide 23: Diversified operating model reducing our risk profile
Diversified operating model reducing our risk profile Group Insurance underlying earnings Group underlying earnings by region* by business line (In Euro million) (In Euro million) 1,429 1,187 1,084 1,109 2,670 2,394 883 1,863 665 1,508 517 505 435 428 438 590 589 Life & Savings P&C Asset France** Me
Slide 24: Contained decline in underlying earnings in line with expectations
Contained decline in underlying earnings in line with expectations Underlying earnings Main factors affecting underlying (In Euro million) earnings 4,963 Higher cost of hedging Variable -17% 4,044 Life & Savings - Annuity Secondary guarantees, notably in the United States Excellent combined ratio P&
Slide 25: Net income understating the economic profitability of the Group
Net income understating the "economic“ profitability of the Group, due to impact of accounting regulations (In Euro million) 2,428 4,044 (3,676) 2,796 (1,873) 923 2008 Realized capital Economic impacts "Economic" Impact of 2008 net underlying gains and of impairment and result accounting income earn
Slide 26: Shareholders' equity impacted by lower unrealized capital gains
Shareholders’ equity impacted by lower unrealized capital gains on equities (In Euro million) 45,642 923 711 (2,473) (5,087) 37,440 (2,275) 2007 Net income Dividend Employee Variation in FX & other 2008 (for 2007 paid Shareplan unrealized in 2008) capital gains z Net unrealized capital gains on real
Slide 27: A comfortable solvency ratio reflecting a robust balance sheet
A comfortable solvency ratio reflecting a robust balance sheet 2008 : Solvency I ratio of 127% 2009 : Comfortable solvency ratio after dividend A surplus of Euro 6bn 127% + Surplus Euro 6bn Continued strong earnings capacity 100% + Minimum Prudent capital management regulatory requirement = Euro 22b
Slide 28: Healthy debt profile and strong liquidity
Healthy debt profile and strong liquidity Long-term debt profile Comfortable debt ratio 7.6 Senior debt Perpetual super subordinated notes 35% Subordinated debt Perpetual subordinated notes 30% 5.7 2.8 1.8 1.8 1.1 0.6 1.7 0.3 0.2 0.9 0.1 0.1 0.1 0.3 0.3 2009 2010 2011 2012 2013 2014 2015 2016 - 20 2
Slide 29: Quality and diversification of asset portfolio
Quality and diversification of asset portfolio Measures taken in 2008: reduction in equity exposure, increase in liquidity Impact of the crisis: decline in value of ABS Comments Economic view based on 2007 % 2008 % market value (in Euro billion) Fixed income 298 76% 300 77% Government and public
Slide 30: Plan to improve profitability of US variable annuities business
An active plan to improve the profitability of our variable annuities business in the United States Due to the unprecedented market shocks in 2008, the hedging cost of variable annuity guarantees was higher than expected We have taken the necessary measures to mitigate this: z Redefinition and r
Slide 31: Ownership structure at December 31, 2008
Ownership structure at December 31, 2008 Others 2.4% 5.9% Employees* 7.6% Individual shareholders* France 18.0% 1.4% Treasury shares BNP Paribas 5.8% 14.3% Mutuelles AXA 3.7% Rest of world North America 19.9% 3.3% Rest of Europe 2.5% Benelux UK & Ireland 11.6% 3.8% Germany
Slide 32: 2009 outlook
2009 outlook Business will remain affected by the financial crisis and world economic environment z P&C business resilient in volume and profitability z Contrasting outlook in Life & Savings, with a decrease in asset base partially offset by positive impacts of US Variable Annuity action plans z A
Slide 33: Supervisory Board comments on the management report and financial statements
Jacques de Chateauvieux Chairman of the Supervisory Board Supervisory Board comments on the management report and financial statements 33
Slide 34: AXA's two core businesses
AXA's two core businesses z Suffered by a property z P&C (motor, “Guaranteeing household, etc.) compensation for z Suffered by a person z Health, disability, the consequences of z Suffered by a company industrial risks, a contingent loss… ” z Caused to a third party liability Insurance "Guaranteeing
Slide 35: Property & Casualty
Property & Casualty P&C income statement (including International Comments Insurance) (in Euro billion) 58.3 Tight management of claims and administrative expenses: P&C combined ratio 95.5%(1) 29.2 Record underlying earnings = Euro 3.6bn (before tax) (19.3) High technical reserves = (8.1) 1.8
Slide 36: Life & Savings
Life & Savings Life & Savings income statement Comments (in Euro billion) 455.4 322.9 Positive net inflows and (general reserves(1)) higher retention 58.0 Decrease in assets due to decline in markets Decrease in financial 5.1 income retained by AXA 132.5 (3.2) (unit-linked High hedging cost
Slide 37: Asset Management
Asset Management Underlying earnings Comments (in Euro billion) 816 415 (third-party management) Decrease in assets due to decline in markets Net outflows and lower asset performance at 4.3 401 AllianceBernstein (AXA) (3.1) 1.2 Management Admin. Underlying earnings Assets fees expenses before ta
Slide 38: General income statement
General income statement General income statement Comments (in Euro billion) 2.4 Asset Management 1.2 (1.7) Life & Savings 2.0 Robust underlying (3.7) earnings despite crisis Net income minimizing the P&C(1) 3.6 Group's "economic" (1.9) 0.9 profitability Tax and Impact of Economic Impact of Net
Slide 39: AXA's asset allocation reflects prudent risk management
AXA's asset allocation reflects prudent risk management General account asset portfolio1 Comments (in Euro billions) 390 Asset value is naturally sensitive to: 134 Government bonds changes in interest rates: z implemented by governments and central banks z required by the market 137 Corporate bond
Slide 40: AXA's management performance in 2008
AXA's management performance in 2008 External factors AXA management Strengths Areas for improvement Slowdown in economic P&C combined ratio Hedging against risks related to guarantees on growth Hedging against the risk of variable annuity products fall in equities Decline in financial mar
Slide 41: Key factors underpinning AXA's robustness
Key factors underpinning AXA's robustness Engagement and professionalism of AXA's people Customer confidence generating positive cash flows Technical effectiveness and high reserves in P&C Pro-active risk management, high-quality diversified assets, satisfactory solvency Sensitivity of Sav
Slide 42: Supervisory Board opinion
Supervisory Board opinion The Supervisory Board: Pays homage to the men and women of AXA for their engagement, decisive spirit and level of customer care they have shown during this year of crisis Congratulates the Management Board for its management strengths Encourages the implemented of ide
Slide 43: Henri Lachmann
Henri Lachmann Date of birth: September 13, 1938 Member of the Board of Directors and then the Supervisory Board since 1996 Member of the Finance Committee since February 2004 and of the Audit Committee since February 2005 Professional experience Since 2006 z Chairman of the Supervisory Board of S
Slide 44: Election of Ramon de Oliveira to the Supervisory Board
Election of Ramon de Oliveira to the Supervisory Board Date of birth: September 9, 1954 French and Argentinean nationality Managing partner of Logan Pass Partners LLC Independent candidate under the Afep-Medef corporate governance code and the Sarbanes- Oxley act Professional experience Since 2001
Slide 45: Executive compensation policy
Jacques de Chateauvieux Chairman of the Supervisory Board Executive compensation policy 45
Slide 46: Compensation, stock options and other benefits
Compensation, stock options and other benefits Information about compensation, stock options, performance shares, top-up pensions, termination benefits and requirements to hold AXA shares is provided in AXA's 2008 Registration Document, pages 144 to 181. The general principles governing the Grou
Slide 47: Compensation of Management Board members
Compensation of Management Board members Compensation paid to members of the Management Board comprises a fixed and a variable portion. The Supervisory Board sets the target amount and performance criteria for the variable portion. The variable portion actually paid depends on the percentage a
Slide 48: Stock options and performance shares
Stock options and performance shares AXA has awarded stock options annually since 1989 and performance shares since 2005. Stock options are subject to AXA shares performing at least in line with the EuroStoxx Insurance index either since the date of award or during the past three years. Perfor
Slide 49: 2009 stock option awards
2009 stock option awards The exercise price of stock options is set with no discount. AXA's share price hit a record low in early 2009 and the exercise price for stock options awarded in March 2009 would have been Euro 7.54 using the normal method (average closing share price in the 20 trading d
Slide 50: Stock options and performance shares
Stock options and performance shares Number of Performance Exercise price % of capital Number of options shares(**) of stock options (dilution) beneficiaries 2003 22,929,346 - 10.73 1.11% 3,146 2004 21,168,792 - 17.31 1.03% 3,931 2005 14,550,999 743,310 20.18 0.74% 4,116 2006 11,433,176 892,958 28.4
Slide 51: Stock options and performance shares awarded to Management Board members
Information on stock options and performance shares awarded to Management Board members Stock option Minimum stock % of total Performance share % of total AXA shares awards in option exercise award awards in 2009(*) award held 2009(*) price(**) Henri de Castries 265,000 Euro 15.85 3.6% 108,000 2.0%
Slide 52: Termination benefits
Termination benefits Henri de Castries, Claude Brunet, Denis Duverne and François Pierson do not have any contractual "golden parachute" entitlements. They are entitled only to the provisions of the collective bargaining agreement governing the insurance industry. If they are dismissed, their leng
Slide 53: Top-up pensions
Top-up pensions Henri de Castries, Claude Brunet, Denis Duverne and François Pierson are members of the same supplementary pension plan as all AXA executives in France. Christopher Condron is entitled to a supplementary pension from AXA Equitable at the age of 65 equal to 2% of his annual compen
Slide 54: Auditors' reports
Auditors' reports PricewaterhouseCoopers Audit Eric Dupont Mazars Jean-Claude Pauly 54