[PDF] Registration Document 2017 - Annual Financial Report 2017 - AXA

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ANNUAL FINANCIAL REPORT

CERTAIN PRELIMINARY INFORMATION ABOUT THIS ANNUAL REPORT 1

Chairmans Message 8

Chief Executive O icers Message 9

THE AXA GROUP 11

1.1

Key figures 13

1.2

History 17

1.3

Business overview 19

ACTIVITY REPORT AND CAPITAL MANAGEMENT 25

2.1

Market environment 26

2.2

Operating Highlights 30

2.3

Activity Report 34

2.4

Liquidity and capital resources 73

2.5

Events subsequent to December 31, 2017 79

2.6

Outlook 80

CORPORATE GOVERNANCE 81

3.1 Corporate governance structure - A balanced and e icient governance 82 3.2

Executive compensation and share ownership 106

3.3

Corporate Governance Code of Reference 136

3.4

Related party transactions 137

RISK FACTORS AND RISK MANAGEMENT 141

4.1

Risk factors 142

4.2

Internal control and Risk Management 155

4.3

Market risks 169

4.4

Credit risk 175

4.5

Liquidity risk 178

4.6

Insurance risks 179

4.7

Operational risk 183

4.8

Other material risks 184

CONSOLIDATED FINANCIAL STATEMENTS 187

5.1

Consolidated statement of financial position 188

5.2

Consolidated statement of income 190

5.3 Consolidated statement of comprehensive income 191 5.4

Consolidated statement of changes in equity 192

5.5

Consolidated statement of cash flows 196

5.6 Notes to the Consolidated Financial Statements 198 5.7 Report of the Statutory Auditors on the consolidated financial statements 334

SHARES, SHARE CAPITAL AND GENERAL INFORMATION 341

6.1

AXA shares 342

6.2

Share capital 343

6.3

General Information 349

CORPORATE RESPONSIBILITY 361

7.1

Introduction 362

7.2

Social information 364

7.3

Environmental information 375

7.4 Responsible Investment, Article 173Ž/Climate-related Financial Disclosures (TCFD) 381 7.5

Societal information 388

7.6

Vigilance Plan 396

APPENDICES 401

Appendix I

Managements annual evaluation of internal control over financial reporting 402

Appendix II

Statement of the person responsible for the Registration Document 405

Appendix III

AXA parent company financial statements 406

Appendix IV

Group Embedded Value & AFR 432

Appendix V

Glossary 433

Appendix VI

Board of Directors report - Cross-reference table 438

Appendix VII

Corporate governance report - Cross-reference table 439

Appendix VIII

European Commission regulation (EC) No. 809/2004 of April 29, 2004 - 440 Cross-reference table

Appendix IX

Annual Financial Report - Cross-reference table 443 1 2 3 4 5 6 7 A

REGISTRATION DOCUMENT <

2017 ANNUAL REPORT

This Registration Document, the French version of which was filed with the French Autorité des marchés financiers

(AMFŽ)

on March19 , 2018, in accordance with the provisions of Article212-13 of its General Regulation (the Registration

DocumentŽ), may be used in support of a financial transaction if supplemented by a securities note approved by the

AMF. This document has been prepared by the issuer, and its signatories are responsible for its content.

This Registration Document includes (i) all the components of the Annual Financial Report (Rapport Financier Annuel)

referred to in paragraph I of ArticleL.451-1-2 of the French Monetary and Financial Code (Code monétaire et financier) as

well as in Article222-3 of the AMF General Regulation

Règlement Général de l'AMF

) (please refer to the cross-reference

table on page 443 of this Registration Document which indicates the relevant sections of this Registration Document

corresponding to the items referred to in Article222-3 of the AMF General Regulation), and (ii) all disclosure matters

required to be included in the Board of Directors report to AXAs Shareholders Meeting to be held on April25, 2018,

established pursuant to ArticlesL.225-100 and L.225-100-2 of the French Commercial Code (Code de commerce) (the

relevant sections of this Registration Document corresponding to such required disclosures have been approved by

AXAs Board of Directors and are referred to in the cross-reference table on page 438 of this Registration Document as

well as (iii) all the elements required to be included in the corporate governance report established pursuant to Articles

L.225-37

et seq

. of the French Commercial Code (Code de commerce) (the relevant sections of this Registration Document

corresponding to such required disclosures have been approved by AXAs Board of Directors and are referred to in the

cross reference table on page439 of this Registration Document (the Annual ReportŽ). CERTAIN PRELIMINARY INFORMATION ABOUT THIS ANNUAL REPORT In this Annual Report, unless provided otherwise, (i) the> CompanyŽ, AXAŽ and AXA SAŽ refer to AXA, a société anonyme > (a public limited company) organized under the laws of France, > which is the publicly traded parent company of the AXA Group, > and (ii) the AXA GroupŽ, the GroupŽ and weŽ refer to AXA SA>

together with its direct and indirect consolidated subsidiaries.> The Groups consolidated financial statements and related notes

are pr epared in accordance with International Financial Reporting Standards (IFRS) (the Consolidated Financial StatementsŽ) and published in Euro (EuroŽ, euroŽ, EURŽ or  Ž). Unless otherwise stated, all amounts in this Annual Report are (i) expressed in Euro, with applicable foreign exchange rates presented on page

27 of this Annual Report, and (ii) presented in millions for

convenience. Such amounts may have been rounded. Rounding di

erences may exist, including for percentages. The Companys ordinary shares are referred to in this Annual

Report as 

sharesŽ, ordinary sharesŽ, AXA sharesŽ or AXA ordinary sharesŽ. The principal trading market for AXAs ordinary shares is Euronext Paris (Compartment A), which we refer to in this Annual Report as Euronext ParisŽ. I REGISTRATION DOCUMENT - ANNUAL REPORT 2017 - I 1

This page was intentionally le blank.

2

I REGISTRATION DOCUMENT - ANNUAL REPORT 2017 - I

Cautionary

stat ement regarding forward-looking stat ements and the use of non-GAAP financial measures This Annual Report may include statements with respect to future events, trends, plans, expectations or objectives and other forward-looking statements relating to the Groups future business, financial condition, results of operations, performance, and strategy. Forward-looking statements are not statements of historical fact and may contain the terms mayŽ, willŽ, shouldŽ,

continueŽ, aimsŽ, estimatesŽ, projectsŽ, believesŽ, intendsŽ,

expectsŽ, plansŽ, seeksŽ or anticipatesŽ, or words of similar meaning. Such statements are based on Managements current views and assumptions and, by nature, involve known and unknown risks and uncertainties; therefore, undue reliance should not be placed on them. Actual financial condition, results of operations, performance or events may dier materially from those expressed or implied in such forward-looking statements, due to a number of factors including, without limitation, general economic and political conditions and competitive situation; future financial market performance and conditions, including fluctuations in exchange and interest rates; frequency and severity of insured loss events, and increases in loss expenses; mortality and morbidity levels and trends; persistency levels; changes in laws, regulations and standards; the impact of acquisitions and disposal, including related integration issues, and reorganization measures; and general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors

may be more likely to occur, or more pronounced, as a result of catastrophic events, including weather-related catastrophic event

s, or terrorist-related incidents. Please refer to Part 4 ... Risk factors and Risk ManagementŽ of this Annual Report for a description of certain important factors, risks and uncertainties that may aect AXAs business and/or results of operations. AXA assumes no obligation to update or revise any of these forward- looking statements, whether to reflect new information, future events or circumstances or otherwise, except as required by applicable laws and regulations. In addition to the Consolidated Financial Statements, this

Annual Report r

efers to certain non-GAAP financial measures, or alternative performance measures, used by Management in analyzing the Groups operating trends, financial performance and financial position and providing investors with additional information that Management believes to be useful and relevant regarding the Groups results. These non-GAAP financial measures generally have no standardized meaning and therefore may not be comparable to similarly labelled measures used by other companies. As a result, none of these non-GAAP financial measures should be considered in isolation from, or as a substitute for, the Consolidated Financial Statements included in Part 5 ... Consolidated Financial StatementsŽ of this Annual Report. The non-GAAP financial measures used by the Group are defined in the Glossary set forth in Appendix V to this Annual Report. I REGISTRATION DOCUMENT - ANNUAL REPORT 2017 - I 3

I - ANNUAL REPORT 2017 - AXA I

GROUP PROFILE

>100

MILLION

CLIENTS FIRST GLOBAL INSURANCE

BRAND (1) 17%

United

States

TRANSVERSAL ENTITIES

6% (1) Interbrand's Best Global Brands ranking 2017.

I - ANNUAL REPORT 2017 - AXA I

STRONG

LOCAL MARKET POSITIONS*

SOLID

BALANCE SHEET

SOLVENCY II RATIO OF 205 %

5%

International

21%

France

16% Asia 35%

Europe

* AXA ranks within Top 5 in the following countries: France, Switzerland, Belgium, UK & Ireland, Germany, Spain, Hong Kong, Mexico, Thailand and Indonesia.

All percentages expressed are underlying earnings contribution (excluding AXA SA and other Central Holdings)

AXA INVESTMENT

MANAGERSAXA CORPORATE SOLUTIONS ASSURANCEAXA ASSISTANCE

I - ANNUAL REPORT 2017 - AXA I

FULL YEAR EARNINGS 2017

Underlying earnings by geography

France

€1. 4 +3

Europe

€2. 3 +2 Asia 1. 1 +7

United States

€1. 1 + 16

International

€0. 3 +20 €98. 5

Revenues

€6. 0 7

Underlying

earnings €6. 2 8 Net i ncome

I - ANNUAL REPORT 2017 - AXA I

AMBITION 2020

DIVIDEND

+7

Underlying

earnings per share

3% -7%

(1)

2015-2020

The proposed 2017 dividend, payable in 2018, has increased by a further 9% to 1.26 per share, equivalent to a 49% payout.

170% -230%

12% -14%

28-32
€6.3 Free cash flows 14.5

Adjusted return

onequity (2) 205

Solvency II

ratio (1) Compound annual growth rate, on a reported basis. (2) Adjust ed ROE is a non-GAAP financial measure.

(3) Proposed d ividend , submitted for approval at the A nnual S hareholders eeting, April 25, 2018.

+9 0.81 2013
0.95 2014
1.10 2015
1.16 2016
1.26 (3) 2017

I - ANNUAL REPORT 2017 - AXA I

CHAIRMANS

MESSAGE

2017 was a decisive year for the implementation of AXAs strategy,

Ambition 2020, which got o to an excellent start. AXA announced its intention to list a minority stake in AXAs US operations, subject to market conditions, to reduce AXAs exposure to financial risks while strengthening its economic capital position. AXA also recently acquired Maestro Health Inc., a US digital health benefits administration company, which will accelerate innovation at AXA and reflects AXAs intention to adapt its model from P ayer- to- P artner. The Board of Directors and I are more committed than ever to assisting the ne w management team assembled by Thomas Buberl with the implementation of Ambition 2020, which has our full support. Implementation of the AXA Group corporate responsibility strategy continued in 2017. The Gr oup continued to be a forerunner in the fight against global warming, taking a firm stand on the issue as it has done for the past several years. I had the opportunity to work with our teams on the launch of an innovative partnership between AXA and the International Finance Corporation (IFC), a subsidiary of the World Bank that supports climate related infrastructures projects in emerging countries aimed at protecting vulnerable populations. Further to its decision in 2016 to divest from the tobacco industry, in 2017 AX

A sponsored the worlds first international investor declaration in support of the World Health Organization Framework on tobacco control and in support of related government action.

AXA also successfully launched health and prevention products to serve the middle class in emer ging countries, reaching 8million policies by the end of 2017. The Board of Directors will continue to devote significant attention to c orporate responsibility matters with a view to contributing to sustainable economic development, taking into account the interests of society as a whole. Finally, last December, the Board of Directors decided to propose the rene wal of my and Thomas Burberls directorships at the next Shareholders Meeting, to be held on April25, 2018, and also announced that it would reappoint

Mr.Thomas Buberl as Chief

Executive O icer and myself as Chairman of the Board. I am very honored by the confidence that the Board has shown me and welcome the opportunity to continue to work with the Group in the coming years. On behalf of myself and the Board, I would like to extend my warmes t thanks to all Group employees for their commitment and the energy invested during 2017 in implementing this most recent step in the Groups transformation.

Denis Duverne

Chairman of the Bo

ard of Directors

I - ANNUAL REPORT 2017 - AXA I

CHIEF EXECUTIVE OFFICERS

MESSAGE

A er more than a year as the CEO of AXA, I have the same conviction that our industry is facing unprecedented transformations. New protection needs arise all over the world. Emerging risks linked to cybersecurity and climate change generate and exacerbate these new protection needs, as they do the development of new forms of labor and the soaring healthcare costs in more and more countries. I am convinced that insurance has a key role to play in this changing environment. The insurance model, based on the diversification and mutualization of risks, brings a formidable and very relevant response to our societies most acute challenges. The AXA Group is well positioned to tackle these new challenges.

However

, and in order to fulfill our promise to empower people to live a better life, we ought to transform ourselves to become the trusted partner of our customers. Among other things, this boils down to simplifying our organization to get closer to the end customer and to stepping up our e orts to innovate and better cater to the evolving needs of our customers. Simplification and innovation: zooming in on these two topics, 2017 has been a w atershed year for AXA. We started to simplify and decentralize our organization to make sure most decisions would be taken at the local entity level, closer to our customers. We also decided to accelerate our e orts to focus on a few preferred segments with strong growth potential, namely Health, Commercial lines P&C and Protection. Focusing on these segments will trigger more frequent and meaningful interactions with our customers, and allow us to become a true partner and life companion in their daily lives. The announcement of the acquisition of XL G roup is a key milestone in this strategy, making AXA the number one global P&C Commercial lines player. We also set up a new business unit dedicated to innovation that falls under my pur view, and which mission will be to develop an open innovation ecosystem to launch and scale adjacent services

to our current offers. To speed up our efforts, we decided to dedicate 20% of our M&A budget, or about 200million annually, to innovation.

In addition to these important milestones in our transformation journey , the Group managed to deliver a solid performance lastquotesdbs_dbs25.pdfusesText_31

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