AXA Enhances Its Embedded Value Disclosure By Adopting European Embedded Value Principles
2005年12月12日 - 5:50PM
PRニュース・ワイアー (英語)
Key Highlights of Life & Savings 2004 results under the
European Embedded Value (EEV) framework: PARIS, Dec. 12
/PRNewswire-FirstCall/ -- AXA reported today its 2004 Life &
Savings Embedded Value and New Business Value, restated under
European Embedded Value (EEV) principles, as published by the CFO
Forum(1). The EEV methodology uses a bottom-up market consistent
approach to better account for risks. In the context of a bottom-up
market consistent value, results are independent from the choice of
market assumptions as both earned rate and risk discount rate are
equal to the risk free rate. Time value of options & guarantees
is explicitly allowed for based on stochastic scenarios consistent
with the approach used in financial markets. The value also
includes a specific charge for the cost of capital and
non-financial risks based on holding capital required to obtain at
least a AA rating at the local entity level. AXA has chosen a
bottom-up market consistent approach because management believes
that it provides the most transparent information on value to the
shareholder, is better aligned with the way the business is managed
internally and allows the measurement of risk adjusted values by
product, while differentiating risks for inforce and new business.
The revised approach to embedded value uses sophisticated
stochastic models that capture the impact of movements in the
financial markets on value, allowing for management actions and
anticipated policyholder behavior under those circumstances. "EEV
is a significant milestone in providing the investment community
with more easily comparable information on Life & Savings
businesses across different insurance companies," said Denis
Duverne, Chief Financial Officer of the AXA Group. "Our EEV
methodology based on a bottom up market consistent approach is both
rigorous and robust and delivers a clear picture of the progress
accomplished by AXA: the results underline our profitable growth
and risk-focused approach, notably when looking at the
profitability and risk profile of our new business." A Restatement
Report documents the transition to the new methodology underlying
AXA's reported embedded value and provides detailed disclosures by
countries. This report is available on AXA's website. Tillinghast
assisted AXA in developing the methodology and reviewed AXA's Life
& Savings 2004 results under EEV principles. Tillinghast's
opinion is included in the Restatement Report. Highlights of Life
& Savings 2004 Results under EEV Framework In Euro million,
except changes and margins in % Group Share Traditional EV EEV
Change Embedded Value (EV) 26,843 25,627 -5% New Business Value
(NBV) 774 895 +16% Annual Premium Equivalent (APE) 4,743 4,807 +1%
NBV/APE margin 16.3% 18.6% +2.3 pts Present Value of Existing
Premiums (PVEP) 40,124 42,125 +5% NBV/PVEP margin 1.9% 2.1% +0.2 pt
Overview of Bottom-up Market Consistent Methodology AXA's
methodology for 2004 Life & Savings EEV complies with the CFO
Forum's EEV Principles. In particular, it: -- Allows for financial
risks, valued in line with the market prices of securities --
Provides for the time value of all significant options &
guarantees (O&G) -- Includes a specific charge for cost of
capital and non-financial risks (CoC/NFR) -- Includes costs of
administrative services provided to the Life & Savings
companies by affiliated businesses on a "look-through" basis,
although the Life & Savings value does not include the profits
earned by AXA's investment managers in managing AXA's Life &
Savings assets. AXA Life & Savings EEV consists of the
following elements: -- Adjusted Net Asset Value (ANAV). This
represents the tangible net assets. It is derived by aggregating
the local regulatory (statutory) balance sheets of the life
insurance companies restated with surplus assets at market value;
these totals are reconciled to the Life & Savings IFRS equity.
-- Value of inforce (VIF). This is the present value of local
regulatory (statutory) profits projected over the entire future
duration of existing liabilities, net of the cost of holding
additional capital required to support the business. The Life &
Savings market consistent VIF is made of the following three
elements: -- The base value is a certainty equivalent Present Value
of Future Profits (PVFP), which is the value of the business
considered without taking credit for any future investment risk
premiums (which are the expected excess returns of equities,
corporate bonds, etc. over the risk free rate). As part of future
profits, this value captures the in-the-money O&G. -- The base
value is then reduced by the time value of O&G, which is valued
in a manner consistent with the approach used in financial markets
to value O&G. -- A charge for CoC/NFR is deducted, which is the
economic cost incurred through the payment of investment expenses
and taxes on investment income of assets held in excess of the
policyholder reserves. The amount of such assets is equal at least
to the capital consistent with a AA rating. Overview of 2004 Life
& Savings European Embedded Value Reconciliation of Life &
Savings 2004 Traditional EV to EEV In Euro million -- Group share
ANAV VIF(2) EV Life & Savings 2004 Traditional EV 10,982 15,861
26,843 Flexible premium modeling 337 337 Impact of certainty
equivalent valuation -937 -937 Impact of stochastic valuation of
time value of O&G -2,053 -2,053 Other adjustments 349 1,088
1,437 Change in assumptions 797 797 Model refinement and others 349
291 640 Life & Savings 2004 EEV 11,331 14,295 25,627 AXA's Life
& Savings 2004 EEV is 5% lower than 2004 Traditional EV: --
ANAV increased 3%, mainly due to a change in the treatment of the
Inherited Estate in the UK. In the Traditional EV, the Inherited
Estate treatment followed the terms of the scheme of arrangement,
with the ANAV reflecting a discounted value of the assets
supporting the Inherited Estate. In compliance with EEV Principles,
the ANAV now reflects the face value of assets, but a reduction in
value for the fact that assets can not be immediately distributed
to shareholders is reflected in the cost of capital captured in the
VIF value. -- VIF decreased 10% compared to the Traditional PVFP
less cost of capital, mainly due to the combined impacts of the
certainty equivalent approach and the introduction of O&G costs
based on stochastic scenarios in most of the countries. Adopting a
market consistent approach led to a broader review of the
projection methodology. This resulted in the release of some
conservatism built into the Traditional assumptions and the change
of models to deal with stochasticity and the EEV principles. VIF
under the EEV framework includes a charge for CoC/NFR of Euro -1.6
billion, corresponding to the cost of holding at least the capital
required to obtain a AA rating at the local entity level. This cost
is approximately Euro 0.5 billion higher than maintaining the
minimum local regulatory requirements. Overview of 2004 EEV New
Business metrics for Life & Savings operations Life &
Savings New Business APE increased 1% compared to the Traditional
framework, mainly due to the different treatment of future flexible
premiums under EEV, in line with the CFO Forum principles. Life
& Savings NBV increased by 16%, as the time value of O&G on
new business was more than offset by the positive impacts of
certainty equivalent valuation and other adjustments. These other
adjustments resulted from the broad review of the projection
methodology pursuant to the adoption of the market consistent
approach, which led to the release of some conservatism built into
the Traditional assumptions and the change of models to deal with
stochasticity and the EEV principles. NBV under the EEV framework
includes a charge for CoC/NFR of Euro -86 million, corresponding to
the cost of holding at least the capital required to obtain a AA
rating at the local entity level. Reconciliation of Life &
Savings 2004 NBV from Traditional to EEV framework In Euro million
-- Group share NBV Life & Savings 2004 NBV - Traditional EV
based 774 Impact of certainty equivalent valuation 160 Impact of
stochastic valuation of time value of O&G -153 Other
adjustments 113 Change in assumptions 98 Model refinement and
others 15 Life & Savings 2004 NBV - EEV based 895 Information
about the Life & Savings 2004 EEV Conference You can follow the
analyst conference by audiocast using the information below. A
slide presentation, available at http://www.axa.com/, will
accompany the event. Please note that it will be audiocast live at
http://www.axa.com/en/investor/presentations/. You will also be
able to participate by phone at the following numbers: -- Europe:
+44(0)20 7162 0025 -- US: +1 334 323 6201 Phone replay will be
available only tomorrow, December 13, at these numbers: -- Europe:
+44(0)20 7031 4064 - pincode 685918 -- US: +1 954 334 0342 -
pincode 685918 The archived audiocast will be available, starting
December 13 afternoon, on our website at
http://www.axa.com/en/investor/presentations/. 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, the presentation and the
restatement report are available at: http://www.axa.com/. 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 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
Life & Savings 2004 European Embedded Value (EEV), New Business
Value (NBV), Annual Premium Equivalent (APE) and NBV to APE margins
- Group Share Euro million, except margins in % EEV NBV APE NBV/APE
Margin United States 7,159 232 1,482 15.7% France 6,664 103 951
10.9% United Kingdom 4,041 51 713 7.2% Japan 1,777 279 505 55.3%
Benelux 2,522 58 315 18.4% Australia 658 21 268 8.0% Hong Kong 892
47 62 75.5% Germany 955 74 387 19.1% Southern Europe 656 27 125
22.0% Unmodeled countries 302 Life & Savings 25,627 895 4,807
18.6% 1 The CFO Forum (http://www.cfoforum.nl/) is a high level
group formed by the Chief Financial Officers of the major European
listed and non-listed insurance companies. Its aim is to discuss
issues relating to proposed new accounting regulations for their
businesses and how they can create greater transparency for
investors. The Forum was created in 2002 and launched a set of
embedded value principles in May 2004 ("European Embedded Value")
that its members across Europe have agreed to adopt for their 2005
published accounts. 2 In the Traditional framework, VIF = PVFP less
cost of capital. In the European framework, VIF = certainty
equivalent PVFP less time value of options & guarantees less
cost of capital/non-financial risks. DATASOURCE: AXA Group CONTACT:
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; 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, all for AXA Group Web site:
http://www.axa.com/ http://www.cfoforum.nl/
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