Axa Sa Ord

Good afternoon and welcome to the AXA Investor Event. We'll share with you today two presentations. The first one is a short one focused on our nine-month activity indicators that we published after the market closed yesterday. So our Group CFO, Albon de Mainel, will walk you through the highlights of the nine-month report, after which we'd be happy to take your questions. We'll then pause for a short break. After which, Albon and Grégoire de Montchalin, who is our Group Chief Accounting and Reporting Officer, will walk you through our presentation on the impact of the new accounting standards. So thank you very much for spending the next few hours with us here today. We really appreciate it. And with that, I'll turn over to Albon.

So thank you, Anu. Good afternoon to all of you. It's good to have you here in London. So as we have the presentation on IFRS 17, we also prepared a few slides for the nine months and that should make the discussion a bit more lively than usual on our side. So let's start with the key highlights for nine months. On revenues, so we stand at 78 billion, that's plus 2%, and we're happy both with the... the growth but also the fact that it's very much aligned with our strategy of growing in certain lines and reducing our exposure in others and obviously i'll come back to that in a second the second very important aspect obviously given the context is about pricing and the fact that we see very good pricing momentum everywhere at excel but obviously that has um been so for quite a few years now but also now in Europe both in commercial lines and in razor lines and that will support our margins going forward. The third message, but that's not a surprise, is the fact that we have a robust balance sheet with a high level of sovereignty with a ratio that stands at 225% and with also a good asset mix of quality which is the result of years of prudent asset allocation and asset selection. The fourth item is obviously also on E.ON, and we're pleased to show that E.ON cost 400 million dollars or euros, net over insurance and growth of tax. That's a 0.7% market share. We estimate that the cost of the hurricane for the whole industry should be around 60 billion. And that shows very clearly the efforts that we've made over the last few years to drastically reduce the exposure to NatCat that we have at Excel. So I think it's a good result overall. And last, in terms of capital management, we have completed the 1 billion share buyback that we had announced in August. And you also saw that we announced the acquisition or soon of the Spanish insurance subsidiaries of Groupe Crédit Mutuel and you saw with the domain multiples that we are very much in line with what we told you as we wanted to compare any acquisition to the benefit of a share buyback. And that kind of acquisition is exactly what we want to do both in terms of price but also in terms of what it brings to us in terms of diversification notably of our distribution locally. So now if we move to revenues. So the main messages here, there are two of them. One is it's very much in line with what you have here and second, good pricing momentum as I said. So I take them one by one by line of business. So P&C grew by 3%. We had very good growth in commercial lines insurance. led notably by France and Europe that are up 7% and 8% respectively. Excel on the insurance side is up 1%. That's very much in line with what we showed also at half-year with a clear focus on... on profitability, but nevertheless still benefiting from significant price increases, and we'll see that on the next slide. So that's for commercial lines. On the retail lines, good momentum as well. So it's plus 4%. France and Europe, it's 3% in motor, 4% in non-motor and generally supported by momentum in prices and that's a good signal for what is to come in the next quarters because clearly inflation is picking up and it's probably there for a few quarters again. The last item on PNC is Excel RE. And on this, revenues are down 20%. But again, no surprise. That's very much the reflection of the reduction in NatCat exposure that we have told you about. So that's PNC. On the live side, we had good growth in protection, 3%. That comes mainly from Switzerland and Asia. On unit linked, we are down by 12%, very much the same story again as it has here. It's mainly the fact that in France there was a large corporate contract last year and no equivalent this year. But what matters to us on unit linked is the net inflows and we are still very positive at 1.6 billion. On general account, We are down and that's driven by the traditional GA savings for which revenues are down 16% mainly. There's also a corporate contract on that part that we had in 21 and that we didn't have in 22. That's for life. Then we have health. Health is growing significantly, 14%. That's mainly driven by the international business books by AXA France, but you will see in the documents that we published yesterday that we have growth in health in all geographies and both retail and group. That's a very satisfactory outcome for those nine months. And finally, asset management. Asset management revenues are up 2% in a difficult environment. But what's good is the net inflows standing at 18 billion exclusively from third parties. That went from $5 billion to our AXIM Alps platform, another $5 billion to our AXIM Core, and $8 billion to our Asian joint ventures. So overall, as I said, a good mix of growth in the lines that we favour. So moving to pricing. So the first thing to say on this slide is that We are showing you here slightly different things when it comes to Excel and when it comes to the other entities. When it comes to Excel, the numbers here are price increases on renewals, so directly comparable. When we show the numbers for commercial lines XXL or retail business, it is price effect. i.e. by how much do price increases contribute to the increase in revenues. That underestimates the real price increases by circa 2%. So we will work in the future to get this renewal and renewal for the next quarters. But it's important to signal that here on this slide, if you compare the same business in two different periods, For commercial lines, XXL and retail, that's probably underestimated. So that being said, on XL, both insurance and reinsurance, nine months, we see significant price increases still. XL insurance plus 8%, still significantly above last trend. And what matters also to us is to see that in the lines that are most sensitive to inflation, such as property, price increases hold up quite well. Property insurance at Excel, price increases are 13%, so significantly above inflation. When it comes to commercial lines XXL, so in our GI entities in France and Europe, it's the same story where you see an acceleration in price increases and notably again in property lines. So property in Q3 discrete in Europe, prices were up 9%. So you do see the momentum that we had told you about linked to the indexation on local indices that protects us against inflation. And last, in personal lines, So here the numbers are a bit lower but you need to keep in mind that notably in motor we have or had the benefit of lower frequency. Now, we are at a point where we see still good levels of frequency compared to 2019, but we also see a bit more inflation, hence the need for more price increases in Europe. On this, you have several situations. You have clearly UK and Spain that were among the first to feel the need for price increases given local inflation. At the other end of the spectrum, and that's true both for retail and commercial lines, you have Switzerland, where you simply don't see inflation at all. And in France, you now see what I was telling you about, which is more need now for price increases. You don't see it yet for Q3. You will see it for Q4 and even more for next year. So overall, we remain very disciplined on pricing and we see an acceleration in momentum. If we move to solvency, so our solvency ratio stands at 225%. It's obviously a very high level. It's slightly down compared to half year. If I take the various items one by one, the operating return gave us one point of solvency instead of the usual two that we have by quarter. The difference is the hurricane Ian. On the market impact, so we have the benefit of higher interest rates, three points. Some of you might think that it's lower than expected. Keep in mind that obviously interest rates went up significantly in Euro and in dollars, but much less so in Swiss Franc and Japanese Yen. So if you take the weighted average of all this, that leads you to the plus three points that we had this quarter. Equity markets were down and therefore we lost two points and implied volatility on interest rates was very high at the end of Q3 and that cost us five points of sovereignty. And last, debt redemption. So you saw that we brought back around 600 million of subordinated debt this quarter and we refinanced that through senior debt and therefore the net is a reduction of two points of our solvency ratio. Two more things to say on solvency. The first one is, given the higher interest rates, you can expect a lower sensitivity to interest rates in our solvency. And the second, there is a change in interpretation by the regulatory community in Europe on subordinated debts that sit not at the top local level but at local level. And so the change is such that you lose the benefit of local debt in your consolidated solvency. So that will be enforced at the end of the year. For us, the impact relates to sub-debt that we had at AXA XL level that we found at the moment of the acquisition. That's roughly two points of solvency that we will lose at full year. And then, last slide before we move to your questions. It's on E.ON. So as I said at the beginning, full-time being, we estimate that E.ON will cost $60 billion to the industry, which makes it the second costliest hurricane ever, Katrina being the largest, obviously, in current dollar terms. What you see on this slide is that the cost for us is, as I said, $400 million in round numbers. net of reinsurance, growth of tax, the 0.7% market share. Five years ago, we had a 2.6% market share, so we reduced our market share by 70% and that's what we have been telling you of what we were doing on our portfolio at Excel Insurance and Excel Reinsurance notably this year. So as I said at the beginning, it's a good illustration of the efforts that we've made. So what does it mean for our CAT load for this year? At half-year, we were slightly above half of our annual catload. Within, and obviously depending on what we see at Q4, but most probably will be above our annual catload. But we believe that we will be able to mitigate most of that deviation thanks to good news that we have on other fronts such as better investment income or better frequency. And the last message on NatCat is about 2023. Several things. The first one is on Excel RE. Excel RE strategy will be next year like this year to have even better balance between CAT and other business lines. What it means is that they will further reduce their CAT exposure in 2023 compared to 2022. The second thing is when you look at our insurance business and its exposure to NatCAT, there are a few things to take into account. One, when you look at the effect of inflation, the simple fact that you have inflation, for a given return period, your catload increases by the amount of inflation. And so does any deviation. Second, there is clearly a hard market now on reinsurance for U.S. payrolls. And there are tensions, probably not yet hard market in Europe, but there are tensions also in Europe, which means that capacity will be more expensive. So if I combine the two, it means that on our insurance business, our CAD exposure will grow mostly because of inflation. But overall, the aim that we have for next year is to compensate, thanks to Excel's reduction in net cat exposure, the increase that we will have on the insurance side. So net-net, we aim for constant cat exposure in 23 at group level compared to 22. Obviously, we need, and we'll tell you about this in February when we have finalized the renewals in terms of reinsurance, but I think that's an important message for 2023 as well. So, overall, for me, the key takeaways are good growth overall, notably in our preferred lines of business, good momentum in pricing, and on NatCat, I think we have demonstrated through those numbers the efforts that we have accomplished over the last two to three years. And with that, I think we can move to your questions.

I think we'll move to Q&A. I'm going to point to the person so the lady with the mic can reach you. I'd request that you focus this Q&A session on nine months. So maybe we can start with Ashik at the back.