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PRESS RELEASE For Immediate Release - 03/14/2001
NET CASH EARNINGS INCREASE 24.2% TO NEW RECORD OF EURO 2.54 BILLION IN 2000
PARIS-AXA Group today reported consolidated net cash earnings rose 24.2% to Euro 2,540 million compared with Euro 2,045 million in 1999. Net cash earnings include the operational results of the business lines but exclude a Euro 1,643 million net gain from one-off items and goodwill amortization of Euro 279 million. At its meeting on March 14, 2001, AXA's Supervisory Board approved a 4-for-1 split of AXA's outstanding ordinary shares to be implemented by dividing the nominal value per AXA ordinary share. The Board also approved a change in the parity between AXA's ordinary shares and AXA's American Depositary Shares (ADSs) from the current parity of two ADSs per AXA ordinary share to a new parity of one ADS per AXA ordinary share. The 4-for-1 stock split is subject to approval by AXA's shareholders at AXA's annual meeting on May 9, 2001. AXA currently expects the stock split and the change in ADS parity to become effective in the second half of May, following the shareholders meeting. "We are very pleased with our results that were achieved during a year of increasing equity market volatility and in which we completed an unprecedented number of strategic transactions while investing to transform our operations," said Henri de Castries, AXA Chief Executive Officer. "We saw especially strong earnings growth in the Life and Savings segment in France, Asia/Pacific, the U.S. and in Asset Management. "The Group's strategy and priorities are embodied in the transactions we made in 2000. The acquisitions of Nippon Dantai and the minority interests in Sun Life Provincial Holdings and AXA Financial increased our focus on Life and Savings, diversified revenues across borders, and gave AXA a deeper footprint in key growth markets. The acquisition of Sanford Bernstein improved our asset management offering with the addition of high net-worth distribution, value-style investment expertise and more than Euro 96 billion in assets under management. The divestment of Donaldson, Lufkin & Jenrette, Banque Worms and GRE South Africa demonstrate our continuing commitment to focusing resources on core operations, reducing balance sheet risk and stabilizing earnings. "We will increasingly leverage IT, management expertise and scale across our global operations to enhance our focus on customers and shareholder return. Execution is our priority-on strategy and on our initiatives. Of particular importance is our commitment to a multi-channel distribution model across our operations that focuses on customers' needs and objective financial advice."
Net income rose 21.2% to an all-time high of Euro 2,261 million from Euro 1,865 million in 1999 (including goodwill amortization, excluding one-off items). Net reported income including one-off items, reached an all-time high of Euro 3,904 million, up 93.2%, compared with Euro 2,021 million billion in 1999. One-off items include a previously announced net gain of Euro 1,643 million primarily related to the sale of DLJ, Banque Worms, and a write-down on AXA Financial's high-yield portfolio.
The U.S. contribution to net cash earnings increased primarily due to growth in revenues and better margins. France had significant gross premium growth, and the contribution to AXA's consolidated net cash income increased by Euro 53 million. Net cash earnings were also beneficially impacted by: German tax reform, the first contribution of newly acquired Nippon Dantai, the increase in AXA's ownership of the Hong Kong subsidiary; rapid growth in separate account products in Spain and Italy, and improved results in the Netherlands also contributed to the increase in earnings. France - Net cash earnings rose 15.9% to Euro 388 million from Euro 335 million in 1999. These results were achieved despite a negative impact from a change in tax regulation and a lower level of capital gains, which was more than offset by better operating margins including the impact of revenue growth. - Revenues increased 18.7% to Euro 12.53 billion. Individual retirement savings-type products (66% of gross premiums) increased by 30.6% in 2000, driven by significant sales growth in separate account products which accounted for 62% of gross premiums in individual retirement savings, compared with 43% in 1999. United States - Net cash earnings increased 50.7% to Euro 404 million. This increase was primarily due to positive mortality experience, a significant increase in fee income (as a result of higher balances in separate accounts), and due to better operating margins derived from financial services-related activities and from the appreciation of the US dollar to the Euro. - Revenues increased only 4.1% to Euro 12.48 billion as business was impacted by volatile markets in the second half of 2000. United Kingdom - Net cash earnings were Euro 179 million, down 5.1%. This decrease was primarily due to a decline in new business, partially offset by increased ownership. Results were also negatively impacted by a change in tax regulation in 1999 and 2000. UK health insurance net cash earnings were stable. - Total revenues decreased 4% to Euro 7.94 billion. Revenues were affected by increased competition and the voluntary limitation on the sale of With-Profit bonds. Despite uncertainties related to the implementation of Stakeholder Pension regulations in 2001, which reduce allowable sales charges on retirement savings-type products, retirement products (which account for 50% of total gross premiums) increased by 14%. Belgium - Net cash earnings were Euro 172 million, down 10.0% from Euro 192 million in 1999. Net cash earnings decreased in 2000 as 1999 included an exceptionally high level of non-taxable equity capital gains. - Revenues increased by 20.6% to Euro 1.10 billion in 2000, primarily due to 25.6% growth in individual premiums, which accounted for 73% of gross premiums. Separate account products increased by 93.6%, and now represent 31% of all individual life insurance premiums written, compared with 20% in 1999. The increase in savings products with guaranteed interest rates (up 50.2%) is attributable to broader distribution via the banking network and brokers and the introduction of a single premium fixed-rate product sold through the Belgian postal service. Asia/Pacific - Net cash earnings rose 189.7% to Euro 116 million from Euro 40 million in 1999. - Revenues increased 14.6% to Euro 6.80 billion. Australia/New Zealand: - Net cash earnings were down 44.7% to 17 million compared with Euro 30 million in 1999. This was primarily due to non-recurring capital gains in 1999. The ratio of general expenses to gross premiums improved to 14.0% from 16.4% in 1999 due to premium growth - Revenues rose 22.6% to Euro 2.40 billion. This increase was primarily attributable to growth in retirement savings premiums (up 34%) due to a more competitive product offering. Japan: - Net cash earnings were up strongly to Euro 52 million from a loss of Euro 28 million in 1999. Year 2000 data includes net cash earnings from the newly created unit (AXA Japan, integrating the Nippon Dantai operations since March 2000) for approximately six months of operation and net cash earnings for first quarter 2000 for AXA Life Japan that were a net loss of Euro 10 million. - Revenues rose 12.3% to Euro 3.35 billion. Hong Kong: - Net cash earnings rose 56.6% to Euro 42 million from Euro 27 million. The increase in AXA China Region's contribution to AXA's consolidated net cash earnings in 2000 was due primarily to the buyout of its minority interests on December 1, 1999 (as a result of which AXA Asia Pacific Holdings' ownership of AXA China Region increased from 74% to 100%) and to the revision of certain assumptions used to estimate future cash flows on business in its portfolio (value of purchased business inforce). - Revenues written by AXA China Region were stable at Euro 0.84 billion as the market was expecting reform of mandatory pension funds. Germany - Net cash earnings rose 192.2% to Euro 41 million from Euro 14 million. In Life, earnings were positively impacted by higher spread income, tax reform, as well as the increase in AXA's ownership of AXA Colonia to 90% from 86% during 1999. In Health, earnings were affected by a positive impact of tax reform, an improvement in the net investment result due to higher dividends received, offsetting an increase in unfavorable loss reserve development and new significant IT expenditures. - Revenues increased 2.7% to Euro 2.91 billion. The rapid development of separate account products, up 117.6%, was significantly higher than the decrease in single premiums products as the market is waiting for pension reform scheduled for 2002. Other countries - Net cash earnings rose 63.0% to Euro 136 million from Euro 84 million in 1999. - Revenues increased 8.8% to Euro 2.24 billion. Netherlands - Net cash earnings rose 35.4% to Euro 57 million from Euro 42 million in 1999. This increase was primarily due to improvement in the net investment result attributable to realized capital gains and higher fees on growing separate account assets. - Revenues increased 5.6% to Euro 0.92 billion due to health premium rate increases and a new universal single premium life insurance product. Italy - Net cash earnings rose 75.3% to Euro 44 million from Euro 25 million primarily due to an increase in technical margin from revenue growth. - Revenues increased 13.8% to Euro 0.39 billion, primarily from strong growth in separate account product sales, which accounted for 50% of gross revenues in 2000. Spain - Net cash earnings increased to Euro 14 million from Euro 1 million primarily due to a non-recurring charge in 1999 of Euro 12 million, related to changes in the mortality tables used to calculate insurance reserves for annuities. - Revenues increased 26.1% to Euro 0.42 billion due to an increase in separate account products. Property & Casualty
The decrease in net cash earnings was due to reserve strengthening in the United Kingdom, Italy and Ireland, lower net cash earnings from Belgium (where significant capital gains were realized in 1999), and asset write-downs in Morocco. The decrease in net cash earnings was partially offset by improved results in France and Germany. "We have strengthened reserves and will continue to take steps to improve our operations, including tightening standards in underwriting," said Henri de Castries. "Results were mixed as the benefit from rising rates was tempered by higher claims related to storms and floods. We are investing to transform our claims handling processes while pursuing strategic initiatives and implementing technology to drive earnings. Combined with premium rate increases, these investments should improve our profitability across this core business." France - Net cash earnings increased 11.2% to Euro 281 million compared with Euro 253 million in 1999. 1999 earnings included a one-time expense while 2000 registered significantly lower capital gains and higher income tax expenses. - Revenues were flat at Euro 4.0 billion compared with 1999, but showing significant improvement toward the end of the year.
- Net cash earnings decreased by Euro 161 million to a loss of Euro 150 million, primarily due to the strengthening of insurance loss reserves. This increase in reserves was primarily due to deterioration in the automobile and casualty claims experience in the UK market, which reduced net income by Euro 125 million. Earnings were also impacted by a series of floods that occurred in the last quarter of 2000 (Euro 55 million). - Revenues increased 1.6% to Euro 2.68 billion due to 8.7% growth in gross automobile insurance premiums (46% of total premiums) reflecting premium rate increases in effect since the beginning of the year and growth in the portfolio of insurance business with affinity groups. Belgium - Net cash earnings were down 26.0% to Euro 191 million from Euro 258 million. This decrease was mainly due to lower non-taxable capital gains on equity securities in 2000. - Revenues rose 1.5% to Euro 1.30 billion. Germany - Net cash earnings increased 166.6% to Euro 159 million from Euro 60 million. Earnings were affected by the positive impact of tax reform (Euro 85 million) and the additional ownership interest acquired by AXA in its German property and casualty subsidiaries (Euro 13 million). - Revenues decreased 0.3% to Euro 3.08 billion attributable to increased competition in the German market and the restructuring of the Albingia portfolio. Other countries - Net cash earnings were a loss of Euro 73 million compared with a gain of Euro 49 million, mainly due to reserve strengthening in Italy (Euro 47 million) and Ireland (Euro 30 million) and asset write-downs in Morocco (Euro 31 million). - Revenues rose 12.9% to Euro 4.51 billion.
Asset Management
"Asset Management continues to experience strong net inflows and growth of assets under management despite volatile equity markets," said Henri de Castries. "The addition of Sanford C. Bernstein to Alliance Capital fits well with our initiative of broadening distribution and our product offering. The acquisition also adds the potential for cross-selling to Bernstein's 15,000 private clients. AXA Investment Managers doubled its contribution to the Group's net cash income and made significant progress in retail asset distribution in Europe." Alliance Capital - Net cash earnings rose 115% to Euro 160 million from Euro 74 million in 1999. This was primarily due to an increase in revenues and an improvement in the general expense to revenue ratio, from 63% to 59% as Alliance Capital benefits from economies of scale. In addition, Sanford C. Bernstein contributed Euro 25 million to net cash earnings. - Revenues increased 19.7% to Euro 2.58 billion, as a result of a 21% growth in average assets under management. AXA Investment Managers - Net cash earnings rose 108% to Euro 48 million from Euro 23 million in 1999. This was primarily attributable to tax savings of Euro 15 million related to tax consolidation in France and the United Kingdom in 2000, and the increase in the Group's ownership in AXA Investment Managers UK following the buyout of SLPH minority interests (Euro 7 million). - Revenues increased 34.2% to Euro 0.38 billion due to a 17% increase in average assets under management and an increase in separate account assets, which command higher fees. International Insurance The International Insurance segment is primarily made up of AXA Corporate Solutions, which now covers the activities of reinsurance and large insurance risks.
"Results in International Insurance showed a significant improvement as we are seeing the benefits of last year's reorganization and more rigorous underwriting policies," Henri de Castries said. AXA Corporate Solutions Reinsurance - Net cash earnings increased 34.3% to Euro 133 million from Euro 99 million in 1999. This increase was primarily due to anticipation of the reinsurance recovery, specifically in natural catastrophe coverage. Loss ratio decreased to 75.7 from 87.6 in 1999. - Revenues increased by 34.1% to Euro 2.12 billion, as a result of the turnaround in the reinsurance market since 1999. AXA Corporate Solutions Insurance - Net cash earnings were a loss of Euro 17 million compared with a loss of Euro 151 million in 1999, in line with the more stringent underwriting policy adopted. The improvement also reflects the beginning of a recovery in the large commercial risks market that is expected to continue in 2001. - Revenues decreased by 15.6% to Euro 1.10 billion, with higher rates only partially offsetting the effect of a change in the underwriting policy implemented since the end of 1999 (revenues decreased 52.1% in the U.K and 72.2% in the U.S). Other Financial Services Despite the positive impact of foreign currency fluctuations, the contribution of DLJ to AXA's consolidated net cash earnings decreased significantly in 2000. Due to its sale on November 3, 2000, DLJ's net cash earnings contribution reflects only nine months of operation in 2000. As a result of this sale, revenues and earnings of the Other Financial Services will be significantly lower in the future. Holding Companies Holding Companies contributed Euro 58 million to net cash earnings compared with a loss of Euro 23 million in 1999, chiefly related to higher capital gains partially offset by an increase in interest charges from higher debt levels related to transactions completed in 2000. Live Webcast Information Members of AXA senior management across its major operations will today join AXA CEO Henri de Castries in a live Webcast to present goals and initiatives for the Group and its global operations.The Webcast will begin at 6:30 pm in Paris (12:30 pm in New York, 5.30 pm in London). A slide presentation will accompany the event. Go to www.axa-financial.com/investorrelations/index.html 10-15 minutes prior to the event to join the Webcast. The Webcast will be available for 60 days following the event on AXA's Web site. About AXA AXA Group is a worldwide leader in financial protection and wealth management. AXA's operations are diverse geographically, with major operations in Western Europe, North America and the Asia/Pacific area. AXA had Euro 893 billion in assets under management as of December 31, 2000 and reported revenues of approximately Euro 80 billion for the full year 2000. IMPORTANT LEGAL INFORMATION |
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