AXA's half-year 2007 earnings published this morning point to the Group's strong performance over the whole period: underlying earnings up 29%, to Euro 2.7 billion, growth in adjusted earnings of 21%, to Euro 3.4 billion and net income up 16%, to Euro 3.2 billion.
"AXA has delivered in 1H07 strong numbers again following a very good year in 2006", said Henri de Castries, Chairman of the AXA Management Board.
"Revenues, underlying and adjusted earnings grew by more than 20% on a reported basis, as a result of continued organic growth and Winterthur contribution. I am convinced that our business model will continue to prove its efficiency, including in a more challenging environment, and I remain confident that we will continue to deliver according to our Ambition 2012 plan".
Activity and profitability indicators
Life & Savings businesses delivered solid growth in 1H07, with new business APE1 up 28% to Euro 3,877 million, or up 11% on a comparable basis.
New Business Value2 was up 21% to Euro 851 million, or up 9% on a comparable basis. The NBV margin stood at 21.9%, down 0.5 pt on a comparable basis, the overall improvement in business mix (+0.7 pt) being more than offset by an adverse evolution in the country mix (-1.2 pts).
Property & Casualty revenues increased by 33% to Euro 14,195 million, or +4% on a comparable basis in the context of a softening market. The combined ratio was 98.4%, up 1.4 pts on a reported basis including 2.8 pts (Euro 339 million) related to European Windstorm "Kyrill" and UK June floods, partly offset by positive developments on prior accident years.
Asset Management revenues increased by 15% to Euro 2,407 million, or up 22% on a comparable basis, with very strong net inflows of Euro 33 billion. Underlying cost income ratio was 67.6%, improving by 1.4 pts compared to 1H06.
Earnings
Underlying earnings were up 29% to Euro 2.7 billion, or +19% excluding Winterthur and at constant exchange rates, with a positive contribution from all business lines notably Life & Savings (+19%) and Asset Management (+27%).
Adjusted earnings reached Euro 3.4 billion, up +21%, or +14% excluding Winterthur and at constant exchange rates, including Euro 736 million capital gains consistent with the yearly target range.
Net income of Euro 3.2 billion was up 16%, or +10% excluding Winterthur and at constant exchange rates, due to strong adjusted earnings partly offset by, mainly, the non recurrence of some positive exceptional operations in 2006.
Earnings per share
Underlying earnings per share, net of interest charges on perpetual subordinated debt ("TSS" and "TSDI"3), increased by 14% to Euro 1.22, in line with our long term ambition.
Balance Sheet
Shareholders' Equity amounted to Euro 45.7 billion down Euro 1.5 billion versus December 31, 2006 as a result of dividend payment in first half and higher interest rates levels impacting adversely the level of unrealized capital gains.
This increase in interest rates is expected to be neutral on Group Economical value and positive on new business value.
Fair value of Invested assets amounted to Euro 610 billion, with a stable asset allocation including a low exposure to US subprime residential and Alt A mortgage loans of Euro 2.3 billion (92% equaling or above AA rating and 55% estimated policyholders participation).
Since the end of July, AXA has purchased, at market value, approximately Euro 0.3 billion shares of AXA IM's Libor + funds. These purchases were made at approximately 20% discount to par, reflecting market prices on US residential subprime MBS.
