AXA

Company Profile
Publication Date: 11 Oct 2011

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

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AXA
Company Overview

COMPANY OVERVIEW
AXA ('the group') is a holding company that provides financial protection, insurance and asset management services.The group is one of the leading insurance providers in the world. AXA primarily operates in Europe, North America and Asia Pacific. The group is headquartered in Paris, France and employs 102,957people. The group recorded revenues of E121,672 million ($161,422 million) in the financial year (FY) ended December 2010, a decrease of 2.8% over FY2009. The operating profit of the group was E4,454 million ($5,909 million) in FY2010, a decrease of 27.3% over FY2009. The net profit was E2,749 million ($3,647 million) in FY2010, a decrease of 23.8% over FY2009.

KEY FACTS
Head Office AXA AXA Group 25 Avenue Matignon 75008 Paris FRA 33 1 4075 5700 33 1 4075 5795 http://www.axa.com

Phone Fax Web Address

Revenue / turnover 121,672.0 (EUR Mn) Financial Year End Employees Paris Ticker December 102,957 AXA

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AXA
SWOT Analysis

SWOT ANALYSIS
AXA is the holding company for a number of international companies that offer life insurance, property and casualty insurance, and reinsurance products. It holds strong market position in the global financial services industry. The group is diversified geographically as well as business wise by offering life as well property and casualty insurance; however uncertainties in the global economy may affect the profitability, and growth prospects of the group. Strengths Strong market position in the global financial services market Revenue stream diversified by business activity and geography Turnaround in financial position Increasing EEV Opportunities Acquisitions may accelerate growth momentum Opportunities in the growing AsiaPacific insurance market Increasing focus on global asset management could accelerate business growth Weaknesses Increasing expenses impacting P&C profitability Declining APE affecting revenue growth

Threats Global economic uncertainties likely to affect business prospects Increasing regulatory compliance and complexity in the US Regulatory hurdles to business acquisitions and divestitures

Strengths

Strong market position in the global financial services market The AXA Group, through its subsidiaries, holds strong market position in the global financial services market. The AXA Group was one of the worlds largest insurance groups, with total revenues of E121.7 billion ($161.4 billion) for the year ended December 31, 2010. The AXA Group was also one of the worlds largest asset managers, with total assets under management as at December 31, 2010 of E1,103 billion ($1,463.4 billion). Based on available information at December 31, 2009 and taking into account companies engaged in the asset management business, AXA was the worlds 6th largest asset manager. Strong market position in global financial services market provides competitive advantages such as easy access to new markets and global capital markets. Revenue stream diversified by business activity and geography

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AXA
SWOT Analysis

AXAs revenue is well diversified by business activity and geography. For FY2010, life and savings accounted for 62.6% of revenues followed by property and casualty (30.4%), asset management (4.1%), International insurance (3.3%), banking (0.6%). Similarly, the groups geographic diversification is well balanced with France accounting for 22.5%, followed by Mediterranean & Latin America (15.2%), Germany (11.3%), the US (10.4%), Switzerland (8.1%), the UK (6.8%), Japan (6.1%), and Belgium (5.1%). Revenue stream diversification by business activity and geography helps the group sustain its business momentum. Turnaround in financial position The groups balance sheet after a contraction in FY2008 showed turnaround in FY2009 and further strengthening in FY2010. Investments as a proportion of total assets increased from 74.5% in 2008 to 77.7% in 2010. Equity capital as a proportion of total assets increased from 5.6% in 2008 to 6.8% in 2010. Long term debt declined from 2.2% of total assets in 2008 to 1.4% in 2010. AXAs consolidated solvency ratio increased to 182% at December 31, 2010 compared to 171% at the end of 2009.Turnaround in financial position cushions the group against adverse market developments while also positioning it to benefit from market opportunities. Increasing EEV AXA improved its embedded value during 200810. The Embedded Value (EV) of a life insurance company is the present value of future profits plus adjusted net asset value. The groups EEV (European Embedded Value) improved from E18,600 million ($26,659.9 million) at end 2008 to E34,152 million ($45,309.5 million) at end 2010. Increasing EEV indicates business efficiency and positive outlook for business operations.

Weaknesses

Increasing expenses impacting P&C profitability During FY200910, AXA experienced higher than expected increase in expenses at its P&C division. Increase was across geographies. For instance, expense ratio of France P&C operations rose unfavorably by 0.4 percentage points, and 0.2 percentage points in FY2009, and FY2010. Expense ratio of Belgium P&C operations rose unfavorably by 0.3 percentage points, and 1.2 percentage points in FY2009, and FY2010. Increasing expenses impacted the groups P&C profitability during 200910 and are likely to do so in 2011 as well. Declining APE affecting revenue growth During 200710, AXA experienced declines in annual premium equivalent (APE). APE declined from E7,694 million ($11,028 million) in 2007 to E5,780 million ($7,668.3 million). Moreover, decline in APE was across geographies. With the exception of the Mediterranean & Latin American Region, Switzerland, and other countries (Australia and New Zealand, Hong Kong, and Central & Eastern

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SWOT Analysis

Europe), all other major geographic markets experienced declines in APE. Declining APE indicates to an extent weakness in the success of the groups marketing efforts. Continued decline could affect the groups growth momentum in revenue and profitability.

Opportunities

Acquisitions may accelerate growth momentum In the last three years ending FY2010, AXA made several strategic acquisitions. For instance, in 2008, AXA (i) completed the acquisition of 36.7% of the share capital of RESO, Russias 2nd largest P&C insurer (June 2008), (ii) completed the acquisition of Seguros ING (subsequently renamed AXA Seguros, SA de Compaia de Valores), the 3rd largest Mexican insurer with leading positions in key markets such as Motor or Health and also active on the Life market (July 2008), and (iii) acquired OYAKs 50% share in AXA OYAK, Turkeys 1st largest P&C insurer (August 2008). In 2009, AXA the strengthened its position in Central and Eastern Europe with the acquisition of minority interests held by the European Bank for Reconstruction and Development (EBRD) in AXAs Hungarian, Czech and Polish subsidiaries, and (ii) acquired a $1.9 billion portfolio of limited partnership interests in private equity funds from Bank of America. In 2010, the group made 13 acquisitions. The acquisition of 100% of the Asian businesses of AXA APH from AMP was the most notable acquisition in 2010. These acquisitions could increase the groups long term growth rates. Opportunities in the growing Asia- Pacific insurance market The fundamentals for growth in the insurance industry remain attractive as retail and wholesale risk transfer markets are expected to continue to expand faster than global GDP. The proportion of world GDP spent on insurance premiums is also expected to increase from 5.6% (2006) to 9% by 2015. In emerging markets, Asian economies are expected to be the key drivers of growth. As GDP per capita increases in these countries, the demand for insurance as a means of protecting corporate and individual interests will accelerate. The emerging markets' share of the world reinsurance market is expected to rise from 12% in 2004 to 17% in 2015. The group is poised to take advantage of its expanding operations in the Asia Pacific region, which may provide it with high margin new businesses. Increasing focus on global asset management could accelerate business growth The outlook for the global asset management and custody banks sector is expected to be positive. Datamonitor estimates that the global asset management and custody banks sector had assets under management of $70,758.3 billion in 2009, representing a compound annual growth rate (CAGR) of 6.9% for the period spanning 2005-2009.The global asset management and custody banks sector is estimated to be worth $142,366.5 billion by the end of 2014. The compound annual growth rate of the industry during the period 2009-2014 is expected to remain at 15%. The main factors driving this growth would include the need for private individuals to make provision for their pension requirements. AXAs principal Asset Management companies are AllianceBernstein and AXA

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SWOT Analysis

Investment Managers. The group estimates that its asset management business could generate 4-5% net new money per year over 2012-2015. The groups focus on develop multi-expert model notably through product innovation could enable it benefit from market expansion in the global asset management sector.

Threats

Global economic uncertainties likely to affect business prospects Global economic prospects are uncertain. The Greek debt crisis is escalating, with fresh concerns over the nations political commitment to bailout terms and an impasse among European officials over how to finance Greece's growing financing gap. The risk of the country's defaultand its problems affecting the rest of Europeis rapidly rising. In June 2011, the International Monetary Fund (IMF), revised down its global growth estimate for 2011 to 4.3%, from the earlier 4.4%. Especially, economic prospects for Europe look fragile as sovereign debt crisis has been spreading to Portugal, Italy, Spain and other European economies as well. Global economic uncertainties could affect the groups business prospects. Increasing regulatory compliance and complexity in the US The year 2010 witnessed the passage of several stringent new regulations in the US. For instance, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) has imposed comprehensive changes to the regulation of financial services in the US and has implications for non-US financial institutions with a US presence, such as AXA. DoddFrank directs existing and newly created government agencies and bodies to promulgate regulations implementing the law, a process anticipated to occur over the next few years ending 2014. The group may become subject to stress tests to be promulgated by the Federal Reserve in consultation with the newly created Federal Insurance Office (discussed below) to determine whether, on a consolidated basis, the group has the capital necessary to absorb losses as a result of adverse economic conditions. Increasing regulatory compliance and complexity in the US could pose significant challenges to the group's business expansion in the Americas. Regulatory hurdles to business acquisitions and divestitures AXA has been facing regulatory hurdles to consummate its acquisition and divestiture deals. For instance, in 2010, the group had to review its Asian strategy after the Australian Competition and Consumer Commission opposed National Australia Bank Ltd's bid for group's AXA Asia Pacific Holdings unit (APH). However, in April 2011, the group was able to complete the APH deal. Towards the end of May 2011, the group announced its intention to sell its Canadian operations in Property & Casualty and Life & Savings insurance to Intact Financial Corporation. However, as of end July 2011, the group hasnt announced any progress in the deal closure. Regulatory hurdles to business acquisitions and divestitures could force the group to review its strategies and even book losses in some instances.

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