- Continued focus on profitable growth driving strong performance
PARIS, Sept. 22 /PRNewswire-FirstCall/ -- AXA released today its
detailed 1H'05 results(5). First half 2005 underlying earnings(6)
at Euro 1,761 million increased strongly by 26% compared to the
first half of 2004. IFRS 1H05 per Euro million 1H05 1H04 Change
share(a) Change Except per share amounts Reported @ Cst FX
Underlying Earnings 1,761 1,398 +26% +28% 0.93 +21% Net capital
gains 370 263 Adjusted Earnings 2,132 1,661 +28% +31% 1.12 +24%
Profit or loss on financial assets under Fair Value option and
derivatives 119 -16 Exceptional operations 27 126 Goodwill &
related intangibles -4 -38 Net income, Group share 2,274 1,733 +31%
+33% 1.19 +27% (a) Fully diluted. Weighted average number of fully
diluted shares was 1,958m in 1H05 versus 1,931m in 1H04. Underlying
Earnings 1H05 underlying earnings improved by 26% (or +28% at
constant exchange rates) to Euro 1,761 million, driven by
double-digit growth in Life & Savings, Property & Casualty
and Asset Management. IFRS (Euro million) 1H05 1H04 Change Change @
Cst FX Life & Savings 972 815 +19% +22% Property & Casualty
695 577 +20% +21% International Insurance 103 138 -25% -26% Asset
Management 154 123 +25% +30% Other Financial Services &
Holdings -163 -256 -- -- Total Underlying Earnings 1,761 1,398 +26%
+28% Note: For underlying earnings analysis below, percentage
changes between first half 2004 and first half 2005 are presented
at constant exchange rates. Life & Savings underlying earnings
increased by 22%, to Euro 972 million, notably driven by fees &
revenues and technical margin, which more than compensated for a
continued low interest rate environment. As expected, the US
benefited from Euro 61 million incremental earnings stemming from
the MONY acquisition. Japan's underlying earnings included non
recurring elements for a net impact of Euro 47 million including a
positive tax impact (Euro 188 million) reflecting the improvement
in recoverability of tax losses carried forward, partly offset by
additional VBI(7) and DAC(8) amortization due to a change in future
investment assumptions (Euro -136 million). In addition to these
elements, the main contributors to the Life & Savings' strong
performance were France and the US. Underlying investment margin
was Euro 1,098 million, down 3%, mainly driven by Japan. In Japan,
the decrease in investment margin resulted from higher currency
hedging costs and the portfolio restructuring (shift from US bonds
into Japanese bonds) implemented in late 2004. In the US, the
positive impact of the integration of MONY more than offset lower
yields and prepayments on fixed maturities as well as lower
partnership distributions from a very strong level in 2004. Fees
& Revenues were Euro 2,437 million, up 18%. Excluding the
positive effect of MONY, Fees & Revenues were up 13%, driven by
higher separate account balances resulting from both market
appreciation and strong net inflows, notably in France, the UK and
the US, and by strong overall sales of life products. The UK also
benefited from the development of credit insurance business. In
addition, mutual fund revenues were up 15% mainly driven by
Australia. Net technical margin was Euro 532 million, up 34%.
Excluding MONY, net technical margin was up 12% driven by better
morbidity margin on health products in Japan, better life mortality
experience in the US and adverse 2004 claims experience in Group
disability in France. Globally, total gross margin (sum of the
above margins) was Euro 4,067 million, up 13% with MONY
representing 7 points of this growth. Expenses, tax and minority
interests were Euro -3,095 million up 11% with MONY representing 7
points of this growth. H1 2005 was impacted by higher DAC
amortization especially in the US and by higher expenses in the UK
related to sales and customer services strategic initiatives. Japan
was positively impacted by the non-recurring profit mentioned
above. Property & Casualty underlying earnings were Euro 695
million, up 21%, due principally to a 1.0 point improvement in the
combined ratio to 97.5%, together with premium growth, and higher
investment income supported by strong cash flows. 1H'05 continued
to benefit from improved claims frequency in individual motor and a
low level of large claims, especially in Property. The main
contributors to the P&C improvement were Germany, France, the
UK & Ireland and Canada. Combined ratios Ratios in % Change 1H
2005 from 1H 2004 France 98.5 -1.0 Germany 96.7 -2.5 UK &
Ireland 97.3 -0.2 Belgium 96.5 +1.6 Southern Europe 99.1 -- Other
countries 94.8 -4.9 Total P&C 97.5 -1.0 The loss ratio improved
1.5 point to 70.2% driven by improvement in the current year loss
ratio and positive prior year developments in all countries.
Overall current year loss ratio benefited from: - the favorable
evolution of bodily injury claims frequency on the personal motor
portfolio in France and Southern Europe; - lower severity of bodily
injury claims and a favorable product mix in the UK. The expense
ratio increased 0.5 point to 27.3% mainly driven by acquisition
expenses, notably in the UK with a continued shift towards lower
loss/higher commission business. The administrative expense ratio
was stable at 10%. P&C performance was achieved while
maintaining very strong premiums and claims ratios. The net
technical reserves to net earned premiums ratio increased by 2
points to 199% compared to June 30, 2004 ratio while the net claims
reserves to net claims paid ratio increased by 8 points to 262%.
Investment income increased Euro 105 million to Euro 819 million
driven by higher average asset bases fueled by positive cash flows
(Euro 1.6 billion)(9) . International Insurance underlying earnings
were down 26% to Euro 103 million as AXA RE was impacted by major
losses in 1H'05 (Euro 73 million, gross of tax), compared to none
during the same period last year. AXA RE underlying earnings were
down 37% at Euro 55 million. 10 points of this decrease is
explained by the transfer in October 2004 of AXA RE US entities to
the Other International Activities segment (Euro 13 million of
underlying earnings for 1H'04). On a comparable basis, underlying
earnings decreased 27%, driven by (i) a 5.2 point deterioration of
the loss ratio to 82.0% as major losses recorded in 1H'05 more than
offset lower attritional claims, as well as (ii) unfavorable
geographical mix of results negatively impacting the overall tax
rate. At the same time, AXA RE continued to improve its expense
ratio by 2.6 points to 15.0% following on-going cost control. As a
result, AXA RE combined ratio was 97.0% versus 94.4% last year. AXA
Corporate Solutions Assurance underlying earnings were up 47% or
Euro 12 million to Euro 38 million mainly driven by stronger
investment income which benefited from the reinvestment of positive
cash flows. Asset Management underlying earnings were Euro 154
million, up 30%, benefiting from higher average Assets Under
Management, fuelled by solid net inflows of Euro 16 billion(10),
and cost-control. Total AUM for Asset Management at the end of June
2005, was Euro 809 billion, up 5%(10) at constant exchange rates
versus December 31, 2004. Alliance Capital underlying earnings
increased 19% to Euro 98 million mainly driven by a 1.5 point
improvement in the operating cost income ratio and by a 2.8%
increase in the ownership interest of the AXA Group to 61% as of
June 30, 2005. AXA Investment Managers underlying earnings
increased 53% to Euro 57 million driven by a strong increase of
revenues(11) (+21%) supported by higher average AUM (+19%), which
benefited from strong net inflows, favorable market appreciation
and higher performance fees. At the same time, expenses grew at a
lower pace resulting in a 2.8 point improvement of the operating
cost income ratio. Other Financial Services & Holdings
underlying earnings improved by Euro 91 million to Euro -163
million, mainly due to a tax benefit at AXA SA (Euro 47 million)
and to higher AXA Bank Belgium earnings. Adjusted earnings 1H'05
adjusted earnings, the basis for our dividend policy, were up 28%
(or +31% at constant exchange rates) to Euro 2,132 million, driven
by the solid underlying earnings performance as well as a Euro 107
million increase in net capital gains attributable to shareholders
to Euro 370 million. 1H'05 net capital gains attributable to
shareholders benefited from (i) Euro 114 million release of
valuation allowance on tax losses carried forward in Japan, (ii)
capital gains on the restructuring of the AXA Japan investment
portfolio (Euro 200 million) offset by related impacts of changes
in future investment assumptions, (iii) strong equity markets,
especially in Europe. Net income, Group share 1H'05 net income of
Euro 2,274 million increased by 31% (or 33% at constant exchange
rates) driven by the increase in adjusted earnings. The lower
impact from exceptional operations was more than offset by (1)
higher profit on financial assets under Fair Value option and
derivatives and (2) the non-recurrence of half year 2004 goodwill
impairment in our Netherlands P&C operation. Balance sheet As
of June 30, 2005 shareholders' equity was Euro 32.7 billion, up 15%
compared to December 31, 2004, primarily benefiting from retained
earnings and the appreciation of financial markets. Fair value of
invested assets recorded through shareholders' equity was Euro 7.5
billion, up Euro 1.7 billion versus December 31, 2004. Total
unrealized capital gains attributable to shareholders reached Euro
10.1 billion as of 6/30/05 of which - Euro 7.5 billion of fair
value of invested assets recorded through shareholders' equity, as
mentioned above, - Euro 1.1 billion of unrealized capital gains on
real estate and loans (not recorded through shareholders' equity),
stable from December 31, 2004, - Euro 1.5 billion of unrealized
gain on Alliance Capital investment (not recorded through
shareholders' equity), up Euro 0.5 billion from December 31, 2004.
The deleveraging of the balance sheet, in progress since year end
2000, accelerated in 1H'05 and as of June 30, 2005 gearing stood at
38% down from 42% as of December 31, 2004. Outlook In the first
half of 2005, the Group demonstrated its capacity to deliver very
strong earnings growth in Life & Savings, Property &
Casualty and Asset Management. Management currently expects the
financial market environment to remain good for Life & Savings
and Asset Management, and more particularly for higher margin
unit-linked products in a context of low interest rates. In
Property & Casualty, management expects a continuation of the
positive trends witnessed in the first half of the year, despite
some pricing pressure, due to continued moderate claims
frequencies. Despite the recent weather related events in the US
and barring any new major catastrophic events, Management believes
that the Group is well on track to deliver strong double digit
earnings growth for the full year 2005. Information about the Half
Year Earnings Presentations Members of AXA's senior management will
discuss these results at a press conference to be held in Paris on
September 22, 2005 at 10.00 am.. The conference will be accessible
through a live Webcast from 10.00 am Paris time (9.00 am London
time). A slide presentation will accompany the event. Go to
http://www.axa.com/10-15 minutes prior to the event to join the
Webcast or to obtain the documents available for journalists. About
AXA AXA Group is a worldwide leader in financial protection. AXA's
operations are diverse geographically, with major operations in
Western Europe, North America and the Asia/Pacific area. AXA had
Euro 935 billion in assets under management as of June 30, 2005.
For full year 2004, IFRS revenues amounted to Euro 67 billion and
IFRS underlying earnings amounted to Euro 2,640 million. AXA
reported total IFRS revenues of Euro 37 billion and IFRS underlying
earnings of Euro 1,761 million for the first half of 2005. The AXA
ordinary share is listed and trades under the symbol AXA on the
Paris Stock Exchange. The AXA American Depository Share is also
listed on the NYSE under the ticker symbol AXA. This press release
is available on the AXA Group web site: http://www.axa.com/ AXA
Investor Relations: Matthieu Andre: +33.1.40.75.46.85 Caroline
Portel: +33.1.40.75.49.84 Sophie Bourlanges: +33.1.40.75.56.07
Marie-Flore Bachelier: +33.1.40.75.49.45 Emmanuel Touzeau:
+33.1.40.75.49.05 Kevin Molloy: +1.212.314.2893 AXA Media
Relations: Christophe Dufraux: +33.1.40.75.46.74 Clara Rodrigo:
+33.1.40.75.47.22 Rebecca Le Rouzic: +33.1.40.75.97.35 Mary Taylor:
+1.212.314.5845 IMPORTANT LEGAL INFORMATION AND CAUTIONARY
STATEMENTS CONCERNING FORWARD- LOOKING STATEMENTS Certain
statements contained herein are forward-looking statements
including, but not limited to, statements that are predications of
or indicate future events, trends, plans or objectives. Undue
reliance should not be placed on such statements because, by their
nature, they are subject to known and unknown risks and
uncertainties and can be affected by other factors that could cause
actual results and AXA's plans and objectives to differ materially
from those expressed or implied in the forward looking statements
(or from past results). These risks and uncertainties include,
without limitation, the risk of future catastrophic events
including possible future weather-related catastrophic events,
terrorist related incidents, economic and market developments,
regulatory actions and developments, litigations and other
proceedings. Please refer to AXA's Annual Report on Form 20-F and
AXA's Document de Reference for the year ended December 31, 2004,
for a description of certain important factors, risks and
uncertainties that may affect AXA's business. AXA undertakes no
obligation to publicly update or revise any of these
forward-looking statements, whether to reflect new information,
future events or circumstances or otherwise. APPENDIX 1 -
UNDERLYING EARNINGS Change at constant exchange IFRS Results (Euro
million) HY 2005 HY 2004 Change rates TOTAL Underlying earnings
1,761 1,398 +26% +28% Life & Savings 972 815 +19% +22% United
States 388 317 +22% +28% France 249 218 +14% +14% United Kingdom 43
38 +13% +15% Japan 118 80 +48% +54% Germany 15 0 -- -- Belgium 42
41 +4% +4% Southern Europe 25 23 +6% +6% Other Countries 92 98 -6%
-4% of which Australia / New Zealand 29 29 +2% +2% of which
Hong-Kong 36 39 -7% -3% Property & Casualty 695 577 +20% +21%
France 195 164 +19% +19% Germany 105 68 +55% +55% United Kingdom
161 145 +11% +12% Southern Europe 70 67 +4% +4% Belgium 84 92 -9%
-9% Other Countries 81 42 +91% +89% International Insurance 103 138
-25% -26% AXA RE(12) 55 88 -37% -37% AXA Corporate Solutions 38 26
+47% +47% Assurance Other International 9 24 -61% -63% Asset
Management 154 123 +25% +30% Alliance Capital 98 86 +14% +19% AXA
Investment Managers 57 38 +50% +53% Other Financial Services 42 8
+400% +400% Holding Companies (205) (265) -- -- APPENDIX 2 -
EARNINGS SUMMARY AFTER TAXES AND MINORITY INTERESTS - Half Year
2005 Goodwill and Consolidated Earnings Net Income related (in euro
million) Group Share intangibles Period Period Period Period Ended
Ended Ended Ended June 30, June 30, June 30, June 30, 2005 2004
2005 2004 Life & Savings 1,223 975 (4) - France 328 254 - -
United States 402 352 (4) - United Kingdom 40 (27) - - Japan 236
209 - - Germany 17 (33) - - Belgium 64 88 - - Southern Europe 31 29
- - Other countries 105 102 - - of which Australia / New Zealand 32
25 - - of which Hong-Kong 39 44 - - Property & Casualty 882 677
- (32) France 237 180 - - Germany 157 62 - 1 Belgium 125 112 - -
United Kingdom & Ireland 189 182 - - Southern Europe 86 110 - -
Other countries 88 32 - (34) International Insurance 155 156 (0)
(5) AXA RE 66 103 - (5) AXA Corporate Solutions Assurance 54 21 - -
Other 35 32 (0) - Asset Management 160 126 - - Alliance Capital 105
87 - - AXA Investment Managers 55 39 - - Other Financial services
58 1 - - Holdings (204) (202) - - TOTAL 2,274 1,733 (4) (38) Profit
or loss Exceptional (excluding change) operations on financial
assets (under Fair Value option) & derivatives Period Period
Period Period Ended Ended Ended Ended June 30, June 30, June 30,
June 30, 2005 2004 2005 2004 Life & Savings - (7) 41 (1) France
- - 44 (11) United States - - 2 8 United Kingdom - - (11) (1) Japan
- - 3 10 Germany - (7) 0 (1) Belgium - - 1 (7) Southern Europe - -
2 (0) Other countries - - 1 1 of which Australia / New Zealand - -
- (0) of which Hong-Kong - - - - Property & Casualty - - 47 11
France - - 29 1 Germany - - 13 11 Belgium - - 5 (1) United Kingdom
& Ireland - - - - Southern Europe - - (0) 1 Other countries - -
- - International Insurance 23 - (3) 2 AXA RE - - 1 2 AXA Corporate
Solutions Assurance - - (3) 0 Other 23 - (1) 0 Asset Management 3 -
(2) 1 Alliance Capital 3 - - - AXA Investment Managers - - (2) 1
Other Financial services 2 - 10 (7) Holdings - 134 26 (22) TOTAL 27
126 119 (16) Net realized Adjusted Earnings capital gains
attributable to shareholders Period Period Period Period Ended
Ended Ended Ended June 30, June 30, June 30, June 30, 2005 2004
2005 2004 Life & Savings 1,185 983 213 168 France 284 266 35 47
United States 404 344 16 27 United Kingdom 51 (27) 8 (65) Japan 232
199 114 119 Germany 17 (25) 2 (25) Belgium 63 95 21 55 Southern
Europe 29 29 4 6 Other countries 104 101 13 4 of which Australia /
New Zealand 32 25 3 (3) of which Hong-Kong 39 44 2 5 Property &
Casualty 835 698 140 121 France 208 179 13 15 Germany 143 50 38
(18) Belgium 120 113 37 21 United Kingdom & Ireland 189 182 28
37 Southern Europe 86 109 16 42 Other countries 88 65 7 23
International Insurance 135 159 32 22 AXA RE 64 107 10 19 AXA
Corporate Solutions Assurance 58 21 19 (5) Other 13 32 4 8 Asset
Management 159 125 5 2 Alliance Capital 102 87 4 2 AXA Investment
Managers 57 38 0 - Other Financial services 47 8 5 (0) Holdings
(231) (314) (25) (50) TOTAL 2,132 1,661 370 263 Underlying
Underlying Earnings Earnings Period Period Change Ended Ended at
June 30, June 30, constant 2005 2004 Change FX Life & Savings
972 815 19% 22% France 249 218 14% 14% United States 388 317 22%
28% United Kingdom 43 38 13% 15% Japan 118 80 48% 54% Germany 15 0
-- -- Belgium 42 41 4% 4% Southern Europe 25 23 6% 6% Other
countries 92 98 -6% -4% of which Australia / New Zealand 29 29 2%
2% of which Hong-Kong 36 39 -7% -3% Property & Casualty 695 577
20% 21% France 195 164 19% 19% Germany 105 68 55% 55% Belgium 84 92
-9% -9% United Kingdom & Ireland 161 145 11% 12% Southern
Europe 70 67 4% 4% Other countries 81 42 91% 89% International
Insurance 103 138 -25% -26% AXA RE 55 88 -37% -37% AXA Corporate
Solutions Assurance 38 26 47% 47% Other 9 24 -61% -63% Asset
Management 154 123 25% 30% Alliance Capital 98 86 14% 19% AXA
Investment Managers 57 38 50% 53% Other Financial services 42 8
400% 400% Holdings (205) (265) -- -- TOTAL 1,761 1,398 26% 28% (1)
At constant exchange rates (2) At constant scope and exchange rates
(3) Excluding AC Cash Management Services (4) Including, fair value
of invested assets recorded through shareholders' equity,
unrealized gains on Alliance Capital and unrealized gains on loans
and real estate which are not recorded in shareholders' equity (5)
AXA's independent auditors have carried out a limited review of
AXA's consolidated first half 2005 financial statements. AXA's 1H05
results have been prepared in accordance with IFRS and
interpretations expected to be applicable and endorsed by the
European Commission for the year-end 2005 closing. (6) Underlying
earnings are adjusted earnings, excluding net capital gains
attributable to shareholders. Adjusted earnings represent net
income before the impact of exceptional operations, goodwill and
related intangibles amortization/impairments, and profit or loss on
financial assets accounted for under the fair value option and
derivatives related to invested assets (For more details see
glossary in the Management Report). Adjusted and underlying
earnings are non-GAAP measures and as such are not audited, and
they may not be comparable to similarly titled measures reported by
other companies. Management uses these non-GAAP measures as key
indicators of performance in assessing AXA's various businesses and
believes that the presentation of these measures provides useful
and important information to shareholders and investors as measures
of AXA's financial performance. (7) VBI: Value of Business In force
(8) DAC: Deferred Acquisition Costs (9) Net operational cash flows
are written premiums net of claims paid, including expenses, taxes
and investment income. Scope : France, UK + Ireland, Germany,
Belgium and Southern Europe. (10) Excluding impact of the sale of
AC Cash Management Services (11) Revenues, excluding management and
front-end fees collected on behalf of external distributors (12)
Transfer of AXA RE US entities from AXA RE segment to Other
International Activities in October 2004 DATASOURCE: AXA Group
CONTACT: Matthieu Andre, +33-1-40-75-46-85, Caroline Portel,
+33-1-40-75-49-84, Sophie Bourlanges, +33-1-40-75-56-07,
Marie-Flore Bachelier, +33-1-40-75-49-45, Emmanuel Touzeau,
+33-1-40-75-49-05, Kevin Molloy, +1-212-314-2893, Christophe
Dufraux, +33-1-40-75-46-74, Clara Rodrigo, +33-1-40-75-47-22,
Rebecca Le Rouzic, +33-1-40-75-97-35, or Mary Taylor,
+1-212-314-5845, all of AXA Web site: http://www.axa.com/
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