Axa Sa · EURONEXT:CS
Axa Sa — Investor Presentation (June 2004)
56 slides from Axa Sa's investor presentation, Jun 8, 2004
Slide 1: Review of AXA's Activities in the Mediterranean Region
Review of AXA's Activities in the Mediterranean Region Paris, June 8, 2004 1
Slide 2: Table of contents
Table of contents 1: Mediterranean Region Market 2: Mediterranean Region within AXA Group 3: AXA Mediterranean Region Business profile Outline 4: Strategy 5: Companies profile 6: Selected financials for Southern Europe 7: Summary and outlook Review of AXA’s Activities in the Mediterran
Slide 3: A macroeconomic view of a region
A macroeconomic view of a region ... POPULATION ´03 GROSS DOMESTIC PRODUCT ´03 Million US$ billion Italy 57,5 Italy 1455 Spain 40,5 Spain 827 Portugal 10,4 Portugal 147 Turkey 69,7 Turkey 253 Morocco 30,1 Morocco 39 Source: OECD, 2004. Preliminary figures. Source: OECD, 2004. GDP per HEAD, ´03 GDP G
Slide 4: A developing insurance industry growing at a strong pace
…and a developing insurance industry… P&C PREMIUMS, 2002 P&C PREMIUMS/HEAD, 02 Italy 31 616 Italy 550 20 415 Spain 504 Spain Portugal 369 Portugal 3 827 Turkey 28 INSURANCE T urkey 1 958 Morocco 23 PENETRATION TOTAL PREMIUMS AS % OF GDP Morocco 735 EU Avge. 773 US$ million US$ Italy 6.97% Source: Si
Slide 5: P&C and L&S market trends in Southern Europe
P&C market trends in Southern Europe Product offer in P&C 2003 Distribution for P&C 2002 7% 2% Portugal 22% 67% 22% 34% 5% 89% Spain 16% 67% 45% 34% 20% 8% Italy 12% Italy Spain Portugal 60% Agents Brokers Direct Motor Property Liability others Banks other ¿ Motor lines dominates the market Property
Slide 6: Summary: the Mediterranean insurance market is evolving
As a summary, the Mediterranean insurance market is evolving ª An attractive market - with high potential in Life and Savings business in Southern Europe (14% in Portugal, 17% in Italy as average growth rate in the last 3 years) - more mature in Motor but with growth potential in Liability and Prope
Slide 7: Mediterranean Region is one of the business units of AXA Group
Mediterranean Region is one of the 10 business units of AXA Group Role Supervisory Board Define the Group ’s vision Claude BEBEAR, Chairman / 13 members and determine its strategic Management Board guidelines Henri de CASTRIES, Chairman, Claude BRUNET, Christopher (Kip) CONDRON, Denis DUVERNE, Franç
Slide 8: Seven AXA entities in Mediterranean Region
…seven AXA entities in Mediterranean Region with a FULL MANAGEMENT CONTROL Consolidated AXA AXA ONA AXA OYAK AXA Seguros AXA Seguros Assicurazioni Morocco Turkey Spain Portugal Italy Non Consolidated AXA Insurance E.C. AXA Middle east Gulf Region Lebanon 100% owned by AXA Group Partnership of AXA Gr
Slide 9: Southern Europe share of Group P&C and L&S revenues
In P&C, Southern Europe represents 15% of Group consolidated revenues In million euros Total AXA P&C revenues in 2003 = 17 128 M€ 5 000 # 3 in the AXA Group, or 18,5% of Group revenues 4 640 if all entities were fully integrated (*) 4 000 3 676 3 169 # 4 in the AXA Group, or 15,1% of 2 852 Group rev
Slide 10: 2004 first quarter revenue figures
…as demonstrated by 2004 first quarter revenue figures Southern Europe gross revenues (M€) 1 006 AXA Group* 869 % L&S + 1,5% 5,9 255 +1 220 * +10,4% P&C +5,4% 750 648 Q1 2003 Q1 2004 Property & Casualty Life & Savings *on comparable basis Review of AXA’s Activities in the Mediterranean Region- Page
Slide 11: 5.6 million customers and market positions
AXA : 5,6 millions customers overall, with strong growth potential 1 534 000 Customers 1,6 policy per customer 1 797 000 Customers Italy 1,6 policy per customer 409 933 Customers 1,1 policy per customer Morocco Spain Turkey 1 055 000 Customers Portugal 1,5 policy per customer 833 803 Customers 1,2 p
Slide 12: Main contributors and motor-dominated business
Southern Europe is the main contributor Property & Casualty : 3 169 M€ Total 2003 gross revenues : 4 495 M€ 1 301 1 400 Including not fully integrated entities (*) 1 200 1 088 1 000 800 600 324 261 Gulf 400 155 Turkey Lebanon Region 200 19 23 Morocco 7% 0,4% 0,5% 0 5% ly n n al y co n io e ai no It
Slide 13: Distribution model dominated by tied agents
…which explains why our distribution model is dominated by tied agents Customers Direct Salaried Tied Agents Brokers Bank Others 3% sales force 60% 17% partnerships partnerships 3 000 8% 2 713 7% 5% 2 500 Total gross revenues 2003 : 4 495 M€ 2 000 Including not fully integrated entities (*) 1 500 Pr
Slide 14: A clear vision to develop the business
Table of contents 1: Mediterranean Region Market 2: Mediterranean Region within AXA Group 3: AXA Mediterranean Region Business profile Outline 4: Strategy 5: Companies profile 6: Selected financials for Southern Europe 7: Summary and outlook Review of AXA’s Activities in the Mediterran
Slide 15: Act local: develop flexible products
1.Act local: Strengthen our market position in developing four strategic axes l i ca hn nt Pr ova In c & me od tio e n T s t ins uc n e v rg ts In M a Pr n od & Qu io t Se t n uc bu m e rv i t iv r i ce st e ity Di nag a al m it y Review of AXA’s Activities in the Mediterranean Region- Page 29 Devel
Slide 16: Develop market shares and service quality
Develop market shares while n tio nt r ibu me s t ge maintaining our profitability Di na m a Train and upgrade Î 2004: Train more AXA’s proprietary than 2,000 tied The P&C market channels agents in the Region Agents continue to dominate distribution Develop value Î 2004: Reduce tied except in Sp
Slide 17: Improve technical margins; act regional
al Improve technical margins and Te c hn ic & me t nt es rgin s risk management within the region v In M a Combined Ratio The P&C market Improvement in P&C: Î2004: - 1 pts - enhancement of tariff Î2005: - 2 pts Technical results segmentation (versus 2003) improvement within the Region (evolution o
Slide 18: CRM: customer retention and common approach
2. CRM: Increase customer retention, using AXA Seguros and AXA Japan expertise Ð The retention program was launched in 2003 and begins to generate interesting savings in P&C and in L&S Key features Retention program P&C retention : Portugal and Italy are implementing best practices from Spain L&
Slide 19: IT and procurement
2. IT: Adopt a common IT service delivery policy Ð Convergence in IT Service Delivery to deliver economies of scale Key features Service Design a Program for Service Delivery Delivery optimization, cooperation & rationalization Support other Regional synergies Address a budgeted expense of 44M
Slide 20: Risk management and actuarial; summary
2. Risk Management and Actuarial: Mutualize resources and reinforce regional expertise ÐLeverage risk management capabilities ÐMadrid based Actuarial team to deliver local skill to Turkey, Lebanon and Gulf Region Risk Key features Management Implementation of transversal Risk Management functions
Slide 21: Key takeaways
Key takeaways Successful integration in line with AXA’s track record Scale can be acquired locally or regionally D Strong value creation Review of AXA’s Activities in the Mediterranean Region- Page 41 Table of contents 1: Mediterranean Region Market 2: Mediterranean Region within AXA Group
Slide 22: Review of AXA's Activities in Spain
Review of AXA's Activities in Spain Outline Spanish Market Overview AXA Spain Rationalization Distribution Products Innovation Operational Performance Global Strategy 1st Quarter 2004 Results Acquisition of Direct Seguros Review of AXA’s Activities in the Mediterranean Region- Page
Slide 23: AXA Spain rationalization and organization
AXA Spain - Rationalization Brand Staff On a comparable basis, 2 466 including Direct Seguros - 39 8#F TE 2 203 2 134 2 068 1998 2002 Merger Mediterranean Region 2001 2002 2003 Q1 2004 Reorganization Management New Management Team CEO Leaner regional structure already achieved New organisation in 20
Slide 24: AXA Spain distribution
AXA Spain - Distribution Network by structure (as % of P&C and Life GWP) Bancasur 1 313 Brokers 11% 1 763 Agents Agents 41% Brokers Badajoz 43% Advisors Blue Pts 4% 544 Blue Points 1% 613 Advisors Structure by segment (as % of GWP) 14% 15% 13% 44% Contact Center 88% 86% 85% 87% 6 Regional Ce
Slide 25: Product innovation and operational performance
Develop our Business: a range of a highly innovative products of financial protection Reserved to AXA customers 2002 2003 2004 Mobility Protection Family Protection Health Protection Savings & Old Age Protection Professional Protection Review of AXA’s Activities in the Mediterranean Region- Page 49
Slide 26: AXA Spain combined ratio and expense ratio
AXA Spain - Combined Ratio A Combined Ratio improving each year and below 100%... Combined ratio 107,1% Unexpired risks reserve and Premium French Gaap cancellation expenses 99,4% +0,1% -1,4% 99,9% 99,4% Spanish GAAP 98,1% 2001 2002 2003 Review of AXA’s Activities in the Mediterranean Region- Page 5
Slide 27: AXA Spain global strategy and Direct Seguros
AXA Spain - Global Strategy Distribution Maintain leadership in proprietary channels and focus on internal growth Develop profitable business through local brokers Focus revenue diversification in key accounts on profitable business Improve channels integration within company Offer Enhance
Slide 28: AXA Spain 1st quarter 2004 results
AXA Spain - 1st Quarter 2004 results are showing good momentum Combined ratio P&C 99,4% 98,2% Gross revenues (M€) 98,3% 492 424 -14,1 108 % 125 Q1 2003 FY 2003 Q1 2004 +16,5% 385 Motor net Inflow (# contracts) 299 Jan - Apr 2003 + 11 580 Q1 2003 Q1 2004 Full Year 2003 + 44 490 Property & Casualty Li
Slide 29: Portugal market overview and rationalization
Portugal Market Overview in 2003 903 P&C 2003 year-end Dimension: 788 (Thousand Euro) Life market is dominant 368 329 304 287 42,8% P&C Life 57,2% CGD BCP BES AXA Allianz Zurich 23,2% 20,2% 9,5% 8,4% 7,8% 7,4% 4.042 M€ 5.400 M€ 1.249 LIFE 986 (Thousand Euro) Total Market Revenues : 854 9.442 M€ 573
Slide 30: AXA Portugal distribution and products
AXA Portugal - Distribution Viana Castelo Braga Network by structure Vila Real Bragança 115 Brokers (as % of P&C and Life GWP) Porto Maia 20 Commercial Offices Porto Penafiel Brokers Gaia 14% Aveiro Viseu o/w 242 Agents with Guarda 149 Agents Private exclusive contract 17% Agents with exclusiv
Slide 31: AXA Portugal operational performance and combined ratio
AXA Portugal - Operational Performance Revenues Underlying Earnings (Euro Million) 470 20 (Euro Million) 456 450 17 R R 425 CAG 13 CAG 3,4% 24,6% 2000 2001 2002 2003 2001 2002 2003 Life & Savings Revenues 2003 Property & Casualty Revenues 2003 12% 4% 2% 23% 55% 5% 84% 13% 2% Invt&Savings non UL Life
Slide 32: AXA Portugal expense ratio and global strategy
AXA Portugal - Expenses Ratio A decrease of Expense Ratio… driven... P&C Expense Ratio Breakdown 32,3% 28,4% 28,2% … by a significant decrease -4,1pt s in tw of “economic expenses” o ye a rs 19,8% 16,5% 17,3% P&C + Life Economic Expense - in M€ - 13M € in t 12,5% 11,1% 11,7% w o ye 87 ars 78 74 2001
Slide 33: AXA Portugal 1st quarter 2004 results
AXA Portugal - 1st Quarter 2004 Results Combined ratio P&C 99,7% 95,0% (*) Gross revenues (M€) 93,7% 109 115 23 % 25 Q1 2003 FY 2003 Q1 2004 1,2 +1 (*) Including 25% of total 2004 headcount reduction cost. Without this exceptional cost, combined ratio would have been of 91,1%. 86 +4,7% 90 Jan - Apr
Slide 34: Italian market overview and AXA Italy rationalization
Italian Market Overview 19,9% P&C market share 16,4% 15,5% A dominant life market 11,1% 6,4% 3,3% 35,3% P&C Life 64,7% Fondiaria Gruppo Allianz Unipol Toro AXA Italia SAI Generali Ras 22,2% LIFE market share Total Market Revenues(2003) : 14,3% Euro 97 bil. 8,1% 8,0% 7,0% 1,0% Gruppo Allianz Unipol S
Slide 35: AXA Italy agents network and operational performance
AXA Italy: Organisation of the Agents Network Milan 256 Agencies GWP: 585 M€ Rome 254 Agencies Turin GWP: 387 M€ 231 Agencies GWP: 492 M€ Review of AXA’s Activities in the Mediterranean Region- Page 69 AXA Italy - Operational Performance Since 2000, a vigorous action of portfolio cleaning has allowe
Slide 36: AXA Italy reserves and Life & Savings growth
AXA Italy - Operational Performance … while increasing significantly reserves standards Premiums and claims reserves / net earned premiums (Italian Gaap) AXA Italy Market comparisons (2002) (*) 211% (*) 204% (*) 211% 185% December 2000 December 2002 AXA Italy Italian Market * Recalculated with the p
Slide 37: Life business scale effect and operational performance
Life business: the “Scale effect” in the agent channel 2002 250 GENERALI ALLEANZA 200 150 GENERALI VITA LIFE EARNINGS M€) INA VITA 100 50 RAS ERGO PREVIDENZA WINTERTHUR VITA - UNIPOL - TORO 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 AXA REALE FONDIARIA SAI LLOYD ADRIATICO -50 PREMIUM INCOME (M€
Slide 38: Global strategy AXA Italia
Global strategy AXA Italia Our global strategy to enlarge market share and increase financial results • DEVELOP OUR BUSINESS through: ¾ a multi-channel distribution model centered on the agent network ¾ the acquisition of new agencies /sub-agencies ¾ a segmented approach of the network ¾ a highly in
Slide 39: Segmented approach of agents network; innovative products
AXA Italy : a segmented approach of the Agents network Guidelines and actions Profitability1 + A B C - Guidelines Actions α Large autonomy and α New internal sales forces strong growth. Support for specialised in Life and internal sales network. personal lines. β Growth capacity2 Selective growth (m
Slide 40: On-line project and AXA Italy 1st quarter 2004
Improve Operating Performance: Key features of the on-line project Loss Ratio reduction through a tight Premium control •Elimination of tariff differences on policies •Stronger control of budget for rebates •Stricter control on policies acquisition •Delegation of underwriting power to Agents under c
Slide 41: Glossary and scope of analysis
Table of contents 1: Mediterranean Region Market 2: Mediterranean Region within AXA Group 3: AXA Mediterranean Region Business profile Outline 4: Strategy 5: Companies profile 6: Selected financials for Southern Europe 7: Summary and outlook Review of AXA’s Activities in the Mediterran
Slide 42: Southern Europe underlying earnings trebled
4. Selected financials on Southern Europe 6.1: Overview 6.2: Property and Casualty profitability factors 6.3: Life and Savings profitability factors 6.4: Assets Allocation Review of AXA’s Activities in the Mediterranean Region- Page 83 Southern Europe Underlying earnings have trebled between
Slide 43: Growth in P&C and Life & Savings
… sustained by strong growth in both Property & Casualty and Life & Savings 2001 (*) 2003 Total gross revenues (M€) 3 345 3 758 +12 % Property & Casualty Life & Savings (* ) years years in two n in two + 15% ding pensio + 11% exclu ing in Spain +37% u r c outso funds 3 000 2 418 2 577 2 000 2 318 1
Slide 44: P&C combined ratio and loss ratio improvement
In Property and Casualty, combined ratio has significantly improved by -6.1 pts in two years… Combined ratio by country 110% 108,5% 107,1% 104,6% 104,8% 105% 103,7% - 6. 101,0% 112,5% 1p 99,9% 99,7% ts o 100% 99,4% nc om bin 107,4% e dr a t io 106,4% 95% Spain Italy Portugal 102,1% 101,4% 101,3% 200
Slide 45: Expense ratio improvement
…and by -2.5 pts expense ratio improvement... Expense ratio by country 34% 32,3% 32% 30% 28,4% 28,2% - 2.5 28% pts o 25,7% 25,8% n expe 26% 24,9% nse 24,0% ratio 24% 22,8% 22,2% 22% 20% 26,6% Spain Italy Portugal 2001 2002 2003 24,1% 24,1% 2001 2002 2003 Review of AXA’s Activities in the Mediterrane
Slide 46: Underlying and adjusted earnings increased strongly
Underlying earnings and Adjusted earnings increased strongly Underlying earnings (Euro mm, Group share) Adjusted earnings (Euro mm, Group share) 107 123 105 % 120 + 63 13 + 74 % 11 90 105 90 75 65 71 65 51 75 60 9 60 45 23 42 45 30 30 33 42 47 15 15 1 33 -12 0 0 -10 -15 -15 2001 2002 2003 2001 2002
Slide 47: Reducing earnings volatility in Life and Savings
The objective is to reduce earnings volatility in Life and Savings Underlying earnings Adjusted earnings (M€, Group share) (M€, Group share) 75 69 - 53% + 51% 75 - 52% 67 10 9 60 60 48 - 23% 45 7 45 32 36 24 42 32 30 20 30 7 9 11 15 15 30 29 17 22 22 13 0 0 -11 -15 -15 2001 2002 2003 2001 2002 2003
Slide 48: Investment margin; fees and revenues
Investment margin stable excluding exceptional items 2002 2003 Consisting of : 38 • Spread on non UL products • Revenues on shareholders funds 48 Million euros, at 100% • Retrocession of assets manager fees on UL products Drivers : • -10 M€ : One-off adjustment on deferred policyholder bonus in Ital
Slide 49: Technical margin and expenses
Technical Margin improved beyond non recurring favorable items 2002 2003 Consisting of : • Mortality and Morbidity profits • Profits on surrenders • “Mortality bonus” in addition to policyholder Million euros, at 100% bonus • Allowance/release of technical reserves Drivers : • +24 M€ : release of pa
Slide 50: Continue to grow while maintaining profitability
We want to continue to grow while maintaining strong profitability… Life and Savings – FY 2003 Southern Total Million euros % Europe AXA Gross revenues 1 182 46 812 2.5% New Business Contribution 25 675 3.7% before cost of capital New Business Contribution 17 512 3.3% after cost of capital New Busin
Slide 51: Invested asset allocation in P&C and Life
Invested Asset Allocation in P&C : 65% bonds, 25% equities Carrying value, in millions euros 2002 2003 Real estate 206 (6%) 194 (5%) Fixed maturities 2 112 (60%) 2 385 (63%) Equity, mutual funds 854 (24%) 947 (25%) Of which mutual funds in bonds 199 (6%) 255 (7%) Mortgage, policy, loans 14 (0%) 28 (
Slide 52: Unrealized capital gains
As a result of a prudent asset allocation, unrealized capital gains level remain at a comfortable level Unrealized capital gains as of December 2003 – Euro mm Gross = 610 Shareholder’s part = 196 Equity Equity 25 Real 7 Estate 144 Fixed Mat. 94 Real Estate Fixed 94 Mat. 442 Review of AXA’s Activitie
Slide 53: Summary; 2004 plan is ambitious but achievable
Summary Î Mediterranean region : An innovative platform concept with a proven track record Î A platform enabling organic as well as external growth Î Last three years are clearly a demonstration of the potential and attractiveness of the region, and more to come … Review of AXA’s Activities in the M
Slide 54: AXA Assurances Maroc: Company profile
Appendices AXA Assurances Maroc : Company profile Business Organization History Corporate profile Governance • 500 staff • Founded in 2000 • Assured by the members • Result of the two partners via • # 1 player in • merger of AXA Al 3-4 Board P&C and Life in Headquarter’s Amane and meetings per year
Slide 55: AXA Assurances Maroc key figures; AXA OYAK profile
AXA Assurances Maroc : Key figures and strategy Revenues (Euro M) Underlying earnings Key strategy /action plan Growth rate calculated on comparable basis 237 (Euro M) at 100% 212 211 • Increase technical and 73 +14,4% 81 -6,2% 83 10 8 financial results by: - applying strict underwriting rules -4,4%
Slide 56: AXA OYAK key figures; cautionary statements
AXA OYAK : Key figures and strategy Revenues (Euro M) Underlying earnings Key strategy /action plan 320 (Euro M) at 100% 256 252 261 Further improvement combined 205 201 14 ratio due to 59 6 - Redesigned reinsurance 50 51 0,4 program - Streamlined claims handling 2001 2002 2003 2001 2002 2003 proces