AXA Group Investment & ALM Improving insurers’ investment environment Insurance Europe Malta, June 12 th , 2014 Laurent Clamagirand, Group CIO Group Investment & ALM Laurent Clamagirand, Group CIO
AXA today: a diversified Group Geographical diversification Business diversification Direct Protection & Health Property & Casualty 3% and International Asia-Pacific 26% Insurance 10% 42% Underlying France 24% Earnings Northern, Central & Eastern Europe Mediterranean & Revenues region Latin America Savings & 29% 2012 region Asset Management 15% 32% United States UK & Ireland AXA at a glance 13% 5% Euro billion 91.2 revenues Asia (excl. Japan) International insurance Euro billion 1,113 8% 4% assets under management Japan Euro billion 4.7 France 8.5% underlying earnings 24% Euro billion 52.9 Insurance shareholders’ equity Northern, Underlying 102 Central & million customers United States Earnings Eastern Europe 11% 56 30% countries United Kingdom insurance brand 1 st & Ireland worldwide Mediterranean 3.5% & Latin America region Direct P&C 9% 2% As of 31/12/2013 2
Property & Casualty Scope overview A balanced business mix 2 nd P&C insurer in Europe 2 nd P&C insurer in Europe FY13 revenues by activity (incl. International insurance) 1 st international insurer in Asia* 1 st international insurer in Asia* Commercial 37% 3 rd Direct insurer in Europe 3 rd Direct insurer in Europe € 31.9 bn Personal International FY13 52% Insurance Revenues 11% 18 Euro billion compensation paid in 18 Euro billion compensation paid in A diversified distribution 2013 for the benefit of 40 million 2013 for the benefit of 40 million FY13 revenues by channel (excl. International insurance) Agents customers customers 38% € 28.8 bn Direct (1) FY13 11% Revenues Brokers & other 8.5 million motor claims paid in 2013 8.5 million motor claims paid in 2013 47% Partnerships 5% - Insurance Europe - Malta, June 12th, 2014 3
Life & Savings Scope overview A balanced business mix 1 st L&S insurer in Europe 1 st L&S insurer in Europe APE by activity in 2013 Protection & Health Unit-Linked 34% 39% € 6.3 bn APE 2013 Mutual Funds & 25 Euro billion increase in the value 25 Euro billion increase in the value other G/A Savings 12% 14% of our customers’ Life Insurance of our customers’ Life Insurance invested assets invested assets A diversified Distribution 12 Euro billion benefits paid to 12 Euro billion benefits paid to APE by channel in 2013 Partnerships Protection & Health customers Protection & Health customers 17% Agents & salaried € 6.3 bn sales force APE 2013 47% 6 Euro billion new business in 2013 6 Euro billion new business in 2013 Brokers - IFAs 36% - Insurance Europe - Malta, June 12th, 2014 4
Asset Management Scope overview Complementary business models AXA Group ~10 th largest asset manager worldwide – A multi-expert model structured by asset – Structured by “Investment Style” class – Focus on growth and value equities, – An expertise in fixed income, equities blend strategies, fixed income Product offer and quantitative management – New developments in alternative – A distinctive presence in alternative investments investments (structured finance, private – Institutional research services equity, real estate, funds of hedge funds) Separate distribution platforms for Third Integrated distribution platforms Distribution parties & AXA Insurance Companies Footprint Mainly Europe Mainly US and Asia Assets under Euro 539 billion as at 31/12/2013 Euro 354 billion as at 31/12/2013 Management - Insurance Europe - Malta, June 12th, 2014 5
AXA Group’s Investment teams organization Overview At the Group level, AXA’s investment team is composed of around 250 professionals A centralization of the organization along with the implementation of specialized, cross-entities Centers of expertise has been implemented The current set-up, chaired by the Group CIO, allows an improved reactivity and a better sharing of the knowledge In order to coordinate local and global Investment processes, decisions within the investment community are taken by the Group Investment Committee This committee defines investment strategies, steers tactical asset allocation, evaluates new investment opportunities and monitors the Group’s investment performance. 6
AXA Group’s Investment teams organisation GIA simplified organisation chart Group Investment & Group’s Asset Managers ALM department AXA Investment Alliance Bernstein Managers Group CIO Group ALM / Group Credit Team Group Investment Investment (GCT) Solutions (GIS) Monitoring Local Entities Group CIO Local CEO/CFO AXA France AXA Germany AXA Belgium Centers of Expertise AXA Switzerland AXA Japan AXA UK 9 Asset Class 5 Functionnal CoEs CoEs AXA MedLa AXA Equitable AXA CEE AXA Asia Region - Insurance Europe - Malta, June 12th, 2014 7
AXA Group’s Investment stream The investment value chain Liabilities Assets Asset-liability Asset Portfolio management allocation management Group The ALM methodology is Asset allocation decided Performance defined centrally centrally and locally by the measurement is computed (ongoing). GIC Centrally Entities Local Asset allocation is ALM is a local implemented locally responsibility, including Local responsibility (exceptions to be justified by deciding on SAA. local team) Managers Asset Asset allocation executed Mainly performed by by the asset managers Group asset managers - Insurance Europe - Malta, June 12th, 2014 8
Asset Management Investment policy in Fixed income for Life & Savings and P&C entities Investment portfolio overview 2013 investment policy on Fixed income ABS Loans ~ 5% Alternative investments ~ 10% 3% Short duration Real Estate Government bonds high yield 5% ~ 41% ~ 8% Policy loans Secured 1% Listed equities financial bonds 4% ~ 5% of which Euro 4 bn on European Corporate bonds Cash Govies and peripheral countries ~ 31% 4% related 45% Other fixed income 2 7% FY13 reinvestment rate on Fixed income assets for Life & Savings and Property & Casualty entities FY13 Corporate Eurozone 3.2% bonds US 3.3% 31% Japan 2.2% Switzerland 1.9% Total 2.9% Amount reinvested Euro 55 billion FY13 Total insurance invested assets 3 : Euro 470 bn - Insurance Europe - Malta, June 12th, 2014 9
Asset & Liability Management Interest rate management in General Account Life & Savings Duration gap L&S asset yield L&S net investment margin 3.9% 80 bps 3.8% 3,7% 78 bps Asset duration as at June 30, 2013 Guidance: 70-80 bps Life & Savings 7.3 years Property & Casualty 5.0 years FY11 FY12 FY13 FY12 FY13 Property & Casualty P&C asset yield Duration gap close to 1 year 4.0% 3.9% 3.9% Interest rates increase expected to reduce duration gap FY11 FY12 FY13 AXA asset yield definition: Net underlying investment income on General Account assets Average General Account asset base at amortized cost - Insurance Europe - Malta, June 12th, 2014 10
Asset & Liability Management Life & Savings investment spreads Inforce business New business Spread above Spread above guaranteed rates guaranteed rate +150bps 3.7% +230 bps 2.9% 2.2% 0,6% FY13 FY13 Yield on total L&S asset base Yield on L&S fixed income assets L&S average guaranteed rate L&S average guaranteed rate Significant buffer to cover guarantees and to manage crediting rates to Products sold to attract higher preserve investment margin margin Unit-Linked business Average reserves of Euro 338 billion - Insurance Europe - Malta, June 12th, 2014 11
AXA Group and Solvency 2 Multiline & Multinational AXA is a major actor of the Insurance sector in Europe and beyond As a multi-line insurer, AXA has to manage different business lines presenting different characteristics - P&C / Commercial and Retail - L&S - Asset Management 9 Eurozone countries + other countries Which creates multiple accountancy constraints: - More than 30 local GAAP - Financial Statements - IFRS In addition, AXA’s global position, has been deemed G-GSiFi Insurer - Further constraints on our balance-sheet (still unknown) Solvency II brings some complexity (coverage ratio) … … but allows an alignment of constraints (Eurozone & Equivalence) - Insurance Europe - Malta, June 12th, 2014 12
AXA Group and Solvency 2 Governance update Need to create a matrix organization: local/group AXA is fine-tuning its reshaping to fully incorporate S2 constraints in its organization Internal model management Lobbying Local CEO 50% 50% Matrix organization of Investment Local Group ... Local CRO CRM CFO 25% and Risk Departments: 75% Group Local ... CIO CIO More generally, all our processes are currently thought around Solvency 2 philosophy: - Use Test - KPIs - Investment decision - Analyst Communication - Performance Measurement - Rating agencies S2: An in-depth organizational change - Insurance Europe - Malta, June 12th, 2014 13
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