Full Year 2015 Earnings

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2015 has been for the Group overall a very satisfying year, with the highest level of underlying earnings ever reached. AXA also successfully delivered on its Ambition AXA strategic plan. Henri de Castries, CEO of AXA, comes back on these 2015 earnings.

FY15 Key Highlights

Sales

Total revenues were up 1% on a comparable basis and up 7% on a reported basis, benefiting from a positive Forex effect.

• Life & Savings revenues were stable as growth in Protection & Health, Mutual Funds and Unit-Linked was offset by lower G/A Savings revenues in line with strategy;
• Property & Casualty revenues increased by 1%, mainly driven by 2.8% tariff increases on average, partly offset by lower volumes following pruning actions;
• International Insurance revenues increased by 7%, reflecting the strong growth at AXA Assistance mainly with third party clients;
• Asset Management revenues increased by 1%, mainly driven by higher management fees as a result of higher average assets under management at AXA IM partly offset by lower performance and distribution fees at AB.

Life & Savings New Business Volume (Annual Premium Equivalent, APE) was up 5% on a comparable basis, and up 14% on a reported basis, benefiting from a positive Forex effect. The 5% increase on a comparable basis was mainly driven by (i) Unit-Linked due to the on-going success of hybrid and pure Unit-Linked products in Continental Europe, Japan and South-East Asia, India & China, as well as higher corporate pension scheme sales in the UK, partly offset by lower sales in Hong Kong as a result of unfavorable regulatory changes, and (ii) Protection & Health as strong growth in France and South-East Asia, India & China more than offset the impact of the continued repositioning of the Group Life product mix in Switzerland initiated in 2014. This was partly offset by (iii) lower sales in G/A Savings, mainly driven by the non-repeat of two large contracts in French Group Retirement business sold in 2014 and by the strategic focus on Unit-Linked and Protection & Health products.

Life & Savings net inflows amounted to Euro +9.6 billion compared to Euro +4.0 billion in FY14. The main contributors were (i) Protection & Health at Euro +5.9 billion mainly in France, Japan and Hong Kong and (ii) Unit-Linked at Euro +5.7 billion, driven mainly by the UK, France and Germany, partly offset by continuing net outflows in (iii) G/A Savings at Euro -2.4 billion, in line with strategy.

Profitability

Life and Savings New Business Value margin decreased by 1 point to 34%, as an overall more favorable business mix and lower unit costs were offset by the negative impacts from lower interest rates in Switzerland and in the US as well as from high corporate pension scheme sales in the UK. New Business Value (NBV) increased by 2% to Euro 2.5 billion.

Property & Casualty current year combined ratio improved by 0.2 point to 97.3%. All-year combined ratio improved by 0.6 point to 96.2%.

Earnings

• Underlying earnings were up 2% to Euro 5.6 billion, mainly driven by Life & Savings and Asset Management, partly offset by Property & Casualty.
• Adjusted earnings were up 2% to Euro 6.0 billion, mainly driven by higher underlying earnings.
• Net income was up 3% to Euro 5.6 billion mainly driven by higher adjusted earnings.

Balance Sheet

• Shareholders’ equity was Euro 68.5 billion, up Euro 3.3 billion vs. December 31, 2014 mainly driven by (i) net income contribution and (ii) favorable forex movements, partly offset by (iii) a decrease of unrealized capital gains attributable to higher interest rates and corporate spreads widening and (iv) dividend payment.
• Solvency II ratio at 205%, up 4 points vs. December 31, 2014 mainly driven by a strong operating return contribution, net of dividend proposed by the Board of Directors, partly offset by financial market impacts.
• Solvency I ratio was at 246%.
• Debt gearing was at 23% down 1 pt vs. December 31, 2014, in line with our objective.
• Adjusted ROE stood at 14.1% down 0.4 point vs. FY14 as higher adjusted earnings were more than offset by higher average adjusted shareholders’ equity.
• Group operating Free Cash Flows were Euro 5.8 billion on Solvency I basis, up Euro 0.3 billion vs. FY14.
• A dividend of Euro 1.10 per share (up 16% vs. FY14) will be proposed at the Shareholders’ Annual General Meeting on April 27, 2016. This represents a pay-out ratio of 47% of adjusted earnings, net of the interest charges on undated debt.

Capital Management

Main transactions between January 1, 2015 and December 31, 2015:

• Completion of the acquisition of a 7% stake in Africa Re on March 17, 2015;
• Completion of the acquisition of 100% of BRE Insurance, mBank's Property & Casualty subsidiary in Poland, and launch of the partnership with mBank on March 30, 2015;
• Completion of the acquisition of the private medical insurance business of Simplyhealth in the UK on August 3, 2015;
• Completion of the sale of the retirement schemes business in Hong Kong on September 1, 2015;
• Agreement to dispose of AXA’s Portuguese operations to Ageas signed on October 16, 2015. Completion of the transaction is expected during the first semester of 2016, subject to required regulatory approvals;
• Announcement of the acquisition of 100% Charter Ping An Insurance by AXA Philippines on November 5, 2015. Finalization is subject to customary closing conditions and is expected during the first semester of 2016;
• Completion of the partnership with Commercial International Bank in Egypt and acquisition of Commercial International Life on November 30, 2015;
• Increase of the participation of AXA in its insurance joint-ventures in India from 26% to 49% announced on December 1, 2015;
• Completion of the acquisition of Genworth Lifestyle Protection Insurance on December 2, 2015;
• Announcement of the acquisition of Liberty Ubezpieczenia, the Polish P&C operations of Liberty Mutual Insurance Group, on December 18, 2015. Completion of the transaction is subject to customary closing conditions and is expected in the third quarter of 2016;
• Completion of the acquisition of the P&C large commercial risks insurance subsidiary of SulAmérica in Brazil on December 28, 2015.