Axa Sa Ord

Good morning, everybody, and welcome to AXA's conference call on our activity indicators for the first three months of 2020. I'm pleased to welcome Etienne Bordelon, our group CFO, who will be taking you through the highlights of the release, covering both the usual activity elements for the first quarter and also the additional disclosures we made in respect of COVID-19. At the end of his introductory remarks, Etienne will be happy to take your questions. Etienne, I hand over to you.

Thank you, Andrew. Hello and good morning to all. Thank you for joining the call. Starting first with the 1Q activity indicators. As you can see from yesterday's release, AXA performed well in the first quarter of 2020, recording a strong revenue growth. plus 4% at the group level, and importantly across all our business lines, preferred segments, and geographies. Let me go rapidly through some of the details. First, revenues in P&C increased by 3%, supported by the 5% growth in commercial lines, with price increases across the board. Notably, AXA Excel grew by 8% with continued strong price increases for the quarter, plus 10% in insurance and plus 6% in reinsurance. We see price increases continuing into April. Health revenues grew by 8%, all our countries contributing to this achievement. Additionally, life and savings revenues increased by 4%, most notably from unit-linked and protection products. Finally, our asset management segment recorded a strong performance with AXA-IM revenues growing by 11% in the first quarter, mostly supported by net inflows and positive market impacts. Moving now on to the balance sheet. Our balance sheet continues to be resilient, even in the face of these volatile market conditions. Our Solvency II ratio was 182% at the end of March, resilient and performing in line with our published sensitivities. Our debt gearing is now below 28% on the pro forma basis, adjusting for the repayment of 1.3 billion sub-debt on April 16. You would have also noticed that both S&P and Fitch have reaffirmed their ratings on AXA over the past weeks, at AA- with a stable outlook. Let's speak now about COVID-19. The safety of our employees was and remains our first priority, and they have been able to continuously work remotely in order to provide undisturbed services to our clients. As a responsible insurer, we have also taken several exceptional measures to support our clients and the society at large. In France, for example, access the largest private contributor to the State Solidarity Fund. In France, we have also given two months premium refunds for impacted SMEs and have extended work stoppage insurance coverage for pregnant women and people with chronic disease. We have as well dedicated funds to help the medical staff and to finance research against the virus. As explained before, We grew strongly in the first three months of the year. However, we can expect COVID-19 to have a progressive impact on our revenue growth. We have seen a decline of around 5% in March discrete, on a like-for-like basis, and initial trends indicate a decrease of around minus 12% in April. We can expect that impact to be more pronounced in life and savings, and to a lesser extent in P&C and In terms of claims, we have seen a limited amount of notifications in relation to COVID-19 at the end of March. However, we do expect the confinement measures enforced by the different countries to have a material impact on the level of claims for this year, most notably in even cancellation and in business interruption. In even cancellation, a preliminary estimate would be around mid-triple-digit million euros before tax and not of reinsurance. For business interruption, it is too early to make an estimate at this point. In terms of earnings, while it is too early to provide a precise guidance on the different impacts, we believe that the overall effect of COVID-19, taking into account revenues, claims, expenses, financial markets, and the cost of exceptional solidarity measures, will have an overall material impact on the group's earnings in 2020. In terms of assets, it is important to note that our asset portfolio remains of high quality, primarily composed of Govies rated AA on average and corporate bonds rated A on average. As you can see in the additional disclosure in our price release, within our corporate bond portfolio, around 90% of our assets are rated at or above BBB, with a significant share backing participating products. We also have limited exposure to the most vulnerable sectors in the current context. To conclude, the Group has performed well in the first quarter with 4% growth in revenues supported by all business lines and preferred segments. Our balance sheet remains resilient in a context of volatile market conditions. While it is too early to give a precise guidance, we believe the impact of COVID-19 will be material for the group's earnings in 2020, as is no doubt the case for the insurance sector as a whole. Looking forward, we are confident in our strategy and its execution, and the need for enhanced insurance coverage in our preferred segments confirms our growth potential post-crisis. I am now ready to take your questions.

Ladies and gentlemen, if you wish to ask a question, you may press 01 on your telephone keypad. We have one first question from Mr. Peter Elliott from Kepler Chevreux. Sir, the floor is yours.