Document Sample
AXA_Presentation_AXAUK_VA_20071001b Powered By Docstoc
					Presentation of AXA UK & Ireland

     Nicolas Moreau, CEO – October 1st, 2007
Cautionary statements concerning forward-looking statements

Certain statements contained herein are forward-looking statements including, but not
limited to, statements that are predications of or indicate future events, trends, plans or
objectives. Undue reliance should not be placed on such statements because, by their
nature, they are subject to known and unknown risks and uncertainties. Please refer to
AXA's Annual Report on Form 20-F and AXA’s Document de Référence for the year
ended December 31, 2006, for a description of certain important factors, risks and
uncertainties that may affect AXA’s business. In particular, please refer to the section "
Special Note Regarding Forward-Looking Statements" in AXA's Annual Report on Form
20-F. AXA undertakes no obligation to publicly update or revise any of these forward-
looking statements, whether to reflect new information, future events or circumstances or

Today’s agenda

  1     Market Context

  2     Strategic overview of AXA UK

  3     Focus on Life and Wealth Management

  4     Focus on Non-Life

Economic Background
There has been sustained growth in the UK economy and the
underlying fundamentals are strong
UK GDP has seen consistent growth
                                           • High disposable income &
                                             improving savings ratio

                                           • Inflation and interest rates have
                                             increased within controlled limits

                                           • Highly entrepreneurial culture
   Source: Yahoo Finance

The stockmarket has been increasing over
the past 4 years, but can be volatile….
                                           • Economy vulnerable to impact of
                                             falls in global economic confidence,
                                             e.g. sub prime lending

                                           • Financial services providers can
                                             feel the effects e.g. Northern Rock
  Source: FTSE 100 index, Yahoo Finance
 Changing Demographics
 The UK population is getting older, and living longer into retirement

UK Population trends
               35,000                                                           • The ‘baby boomer’ effect means the largest
               30,000                                                             proportion of the population are now in the 35-60
               25,000                                                             age group
               20,000                                               75 & over

               15,000                                               45-59
                                                                                • We predict that 46% of the population will be over
               10,000                                                             the age of 45 in 2031

                  -                                                             • The average age was 38.8 years in 2005, an
                        2003 2006 2011 2016 2021 2026 2031
                                                                                  increase of 4 years since 1971
    (source: Population Trends: Government Actuaries Department, Winter 2004)

Life expectancy at age 65 is increasing

                                                                                • More years in retirement require substantial
                                                                                  retirement planning during working life

                                                                                • For many, the extra years are not necessarily lived
                                                                                  in good health

                                                                                • Much less than the 52% of people intending to
                                                                                  retire before 65 will have sufficient funds to do so
    (source: Government Actuary’s Department ? ONS
Political and Social agenda
Driven by a desire to educate the public and reduce dependency on state
benefits, the government has a devised a strong reform agenda
Financial Capability
• Average Briton spends less than 23 minutes per month reviewing and planning their finances.

• 2.1m are permanently overdrawn and 8.2m adults are in serious debt

• In response to this, the government is looking for initiatives to increase the public’s understanding of
  financial affairs through education programmes and access to simple, low cost advice

Long term Pension reform

• One-in-four people who could and should be preparing for their retirement are not saving at all into any
  form of pension savings vehicle (Source: Scottish Widows research, June 2007)

• “A-Day” in April 2006 saw wholesale reform and simplification of the UK pension system

• The demise of final salary pension scheme makes it more important that employees contribute to their
  pension to have a full filling retirement

• Proposals to introduce a national pension scheme where employees are automatically enrolled are
  planned for launch in 2012

• A centralised body will administer the scheme, rather than providers

  Government initiatives are closely supported by or implemented through the industry regulator;             5
  Financial Services Authority (FSA)
Web as a way of life
Widespread use of the internet is changing the way customers want
to access financial services

Internet penetration in UK homes

                                                               •   Increasing use of broadband internet allows
                                                                   customers to research and buy products online,
                                                                   typically at a reduced cost

                                                               •   Insurance and Investment providers are
                                                                   experiencing financial benefits of finding new
                                                                   online client base

                                                               •   Providers and intermediaries need to fully
                                                                   embrace e-commerce solutions to remain
  Source Ofcom research, Q4 data 2001-2005, Q1 data for 2006       competitive and accessible to their customers


   Source CIFAS
Market Size
The UK insurance market is the third largest in the world and has
further growth potential

                              Worldwide Combined Insurance Premium
                              Income ($bn)


                       400            376

                       200                          154
                                                             92      90
                       100                                                     59            49         39       35

                                                                                             PR China


                                                                               South Korea




  Source: Swiss Re Sigma No 5/2006                                                                                        7
Customer Attitudes
An insurance gap which creates opportunities for insurers
                     The results are clear to see

                       Savings gap currently estimated at >£27bn (ONS)

           31% of the UK working population are failing to invest sufficiently in their
                                      pension (ABI)

              Over 7.5m people in the UK only save for short term goals such as
                                   holidays (credit action)

                    Income protection under-provision estimated at £150bn

           25% of households have no Contents Insurance, and 5% of drivers drive
                              illegally without insurance (ABI)

            50% of SMEs have insufficient premises, motor and income protection
                                 cover (AXA Research)

            Half the population could only survive financially for 17 days should they
                   experience a sudden loss of income (Combined Insurance)

An evolving market
The UK Insurance market is an innovative market where being closer
to the customer is vital

The UK is a highly intermediated market and margins are increasingly shifting towards those
who control the relationship with the customer.

In response to this, New entrants are targeting specific gaps and capitalising on technology
developments to offer a new proposition to customers

  Fund Trading platforms

Personal direct insurance /

    Dynamic pricing
A highly regulated market
The UK is one of the most regulated insurance markets in the world

Numerous mis-selling scandals have dented the image of the insurance industry, and have
led to strict regulatory regimes being imposed on providers and distributors.

                                     Strict Solvency

                                 Regulated products and
                                    advice processes

                                  Responsibility to Treat
                                    Customers Fairly

Which aim to protect customers from poor advice, excessive pricing and financial
                       collapse of insurance companies
Today’s agenda

  1     Market Context

  2     Strategic overview of AXA UK

  3     Focus on Life and Wealth Management

  4     Focus on Non-Life

     AXA UK and Ireland is a core part of the AXA Group

2006 Revenues                                 2006 Underlying Earnings            2006 Employees
Total AXA Group Life Sales                    Total AXA Group Life – EUR 2.3bn    Total AXA Group employees – 150,000
(APE1) – EUR 6.2bn
                         18%                                   7%


Total AXA Group P&C Sales                       Total AXA Group P&C – EUR 1.5bn
(GWP2) – EUR 19.8bn
                                24%                                                                              92%

            76%                                   73%
                                                                                  AXA UK

        1   APE - Annual Premium Equivalent                                        AXA Group excluding AXA UK & Ireland
        2   GWP – Gross Written Premium
           AXA UK and Ireland growth has been through acquisitions

                                                                                                                                                                                             Acquisition of Stuart Alexander,
                                                                          AXA UK exchanged 2/3                                                                         Acquisition of         Smart & Cook and remaining
                                                                                                                                       Sale of AXA
                                                                           holding in AXA IM UK                                                                        Thinc Destini           61.1% of Layton Blackham
                                                                                                                                   Insurance (ex GRE)
                                         AXA purchases                    for holding in expanded                                                                   (Financial Advisory           (Insurance Brokers)
                                       remaining 43.7% of                      AXA IM Group
Pre 1999 - History                       SLPH for £2.3bn
1988                                                                                                                                               2005           2006
                         Sale of GRE UK                                                                                                                                                                   Acquisition of
                                                                                                                               2004                                                 Acquisition of
■ UAP becomes             Life for £759m                                                                     2003                                         AXA UK registered                                Swiftcover
                                                                                             2002                                                                                    Winterthur
major shareholder in                                                                                                                                      office moves to 5                              (Online insurer)
Sun Life (SLPH)                                                                                                                                           Old Broad Street,
■ GRE acquires                                                   SLPH renamed
leading Irish insurer,                                           to AXA UK
PMPA Insurance                                       Sale of GRE Ireland Life
1996                                                 for IR£110m
■ SLPH listed on                1999 SLPH acquires GRE
London Stock                         £3.4bn
■ AXA-UAP merger
announced                                                                                                                                                                £308m
■ Creation of Off-                   £175m                                                                                                                £266m
shoring company
within GRE                        (pro-forma &         Comparable
                                includes realised    information not
1998                                                                                             £147m               £66m
                                 gains (FGAAP)           available
■ GRE acquires PPP                                                           £44m
                                     1999            2000                     2001                2002                2003                 2004           2005            2006
                                Profit after tax (FGAAP)                                                                                              Underlying earnings (IFRS)

                                   Building Phase                                                Consolidation Phase                                                      Profitable Growth
                                * 1999 to 2003 shows FGAAP profit after tax vs IFRS from 2004 onwards (no direct comparatives available)

AXA UK has demonstrated growing momentum…

 …In Life

Including Winterthur1                                      2006     06/05 growth   05/04 growth
Sales (APE)                                               £1,036m      +35%           +21%
 1   Figures not audited

 …In Non-Life
                                                           2006     06/05 growth   05/04 growth
Revenues                                                  £3,231m      +7%            +1%1
Profitability (Combined ratio)                            96.5%       +0.2 pts       -1.0 pts
 1     Excludes AXA direct business sold to RAC in 2004

…although Profitability in both sectors still needs to be improved

Our strategy is aligned with market drivers

     Market Drivers                      AXA UK Strategic Agenda

  Fragmented distribution

 Pressure on manufacturer
         margins                    1)   Optimising distribution
                                    2)   Enriching customer and
     Economic power is                   distribution proposition
  increasingly with those           3)   Building an entrepreneurial
   closer to the customer                organisation structure
                                    4)   Delivering an efficient operating
    Changing customer                    model

   New business models

1) Optimised distribution

Actions                                                Benefits
• Develop existing direct distribution capabilities:   • Bring AXA closer to the customer and ensure:
  • AXA Sun Life Direct                                  • client insight
  • SME Direct                                           • innovation
                                                         • access to distribution
• Acquire direct distribution capabilities:            • While capturing distribution margin
  • Swiftcover (Internet distribution)

• Acquire intermediated distribution capabilities:
  • Thinc Group, PIFC Consulting, Cameron Scott
  • Smart & Cook, Layton Blackham, Stuart
    Alexander, Davis Group

2) Enriched customer and distribution proposition

Actions                                            Benefits
• Invest in technology and services that support   • Add value to the customer with:
  distribution                                       • more focused solutions
• Relaunch life offer including wider investment     • more meaningful brand
                                                   • Capitalise on segment with strong footprint
• Launch of accumulator type product
                                                   • While improving manufacturing margin and
• Capitalise on greying affluent population          positioning
• Expand the product offer in Non-life             • Increase retention and client satisfaction
• Strengthen brand values around Trust

3) Entrepreneurial organisation structure

Actions                                       Benefits
• Deliver strategic business unit structure   • Improve:
• Embed cultural change programme               • entrepreneurial behaviours and agility
                                                • market focus
                                                • profit awareness
                                              • While capturing economies of scale

4) Efficient operating model

Actions                                               Benefits
• Build competitive cost structure                    • Increased profitability while improving:
  • Benefit from dedicated management team for          • quality of service
    closed book                                         • operational efficiency
  • Simplify IT architecture
  • Deliver best in class claims management
• Optimise capital efficiency and investment return

Today’s agenda

  1     Market Context

  2     Strategic overview of AXA UK

  3     Focus on Life and Wealth Management

  4     Focus on Non-Life

UK Life and Pensions Total Market

      Total Market 2006 (excluding Mutual Funds) (£m Sales)     • Wealth Management provides savings,
                                                                  investments and pension products
                                                                        • Grew by 36% in 2006
                       1,041                                            • AXA has 10.7% share in the IFA channel

                                                                • Corporate generally offers Company
                                                                  Pension schemes
                28%                                                     • Market grew by 35% in 2006
                                                                        • AXA has a 7.9% market share, with
                                                                          £6.9bn funds under management
                                                                • Protection offers solutions to ensure that
                                                                  family or self do not suffer financially in the
                                                                  event of ill health or death
                                                                        • Market sales fell by 1% in 2006
                                                                        • AXA has 4.6% market share with both a
     Traditional Wealth Management    Corporate    Protection
                                                                          strong direct marketing and IFA protection

 Source: ABI
UK Life and Pensions Distribution Mix

                                                                            • IFA continues to be the dominant channel:
           Distribution Mix 2006 (£m Sales)
                                                                                • The number of IFA firms has
                                815                                               increased substantially over the last
                                6%                                                year
                 13%                                                            • Providers are seeing movement
                                                                                  towards consolidation amongst larger
                                                                                • Technology is seen a key issue to
                                                                                  improve profitability

                                                         9,683              • Single tie continues to decrease:
                                                          76%                   • Companies look to lower their
                                                                                  expenditure through minimising their
               Insurance Brokers (Independent Financial Advisers (IFAs) &
                                                                                  Tied sales
               Agents (Single Tie)

                                                                            • Direct is growing albeit at a slower pace
               Direct to Consumer

                                                                            • Bancassurance continues to grow
 Source: ABI
UK Life and Pensions Competitors (2/2)
New entrants are changing the competitive landscape

Entrants focused on providing IFAs with the means to change their business model

New models integrating advice and product ‘manufacturing’

Niche product providers in complex product areas

The Life insurers have to face many challenges

          Market Challenges                              Impact

• Fragmented market

                                            • Low barriers to entry
• Dependence on IFAs

• Threat from new entrants
                                            • Need for scale

• Technology and new comers put
  pressure on manufacturers
                                            • Enhanced focus on retention of
• Recycling of business (Increased levels
  of outflows)

We have built a scale business with a strong platform for profitable

AXA and Winterthur Sales 2004-6                                           Combined strength

Total Market Sales (£m)
                                                                          • Scale business with 7.9% market share
                                    ate     +19%
                             rowth R
            Average A
                     nnual G                                              • Top 3 Wealth Management business
                                                                          • Acquisition of Winterthur accelerates our
                                                      12845                 strategies:
                                                                              • Strong focus on investment
                                                                              • Focus on wealthy clients
    2004                     2005                      2006

                                                                              • High quality service
 AXA Sales (£m)
                                            27   %
                                  th   Rate
                     An nual




    2004                    2005                     2006
   Source: ABI       AXA     W interthur

   * HNW = High Net Worth. Adults with investable assets above £250,000
Our strategy is to improve our profitability and we will do it by
achieving higher margins in our core scale businesses and scale in
higher margin segments

                           AXA Business Mix 2006
                                    e sca



                Increase                           69%
                 margins                                     Increase

                  Wealth Management    Corporate Pensions   Protection

 Source: AXA
Our focus is on developing our position in the Wealth Management

Fast growing, highly intermediated
market                                  AXA’s Position
 Wealth Management Market               • 8.8% market share
                                        • Leading offshore bond manufacturer
               7                        • Strong Pensions and Distribution bond heritage
                                        • Benefit from strong business following A-Day
                                          (Pension Reform)
               5                        • Winterthur a complementary fit with AXA’s
                                          refreshed wealth management proposition
 Sales (£bn)





                                           Onshore and Offshore
                   2005          2006            Bonds

 Source: ABI
     Management of the end to end value chain is key to enhancing
     profitability in Wealth Management

                Investment           Product Design and
                                                                Management          Advice and Sales
                Management             Administration

                                    Target the AXA and                                 Build a scale
Actions       Build a multi         Winterthur brands at       Launch a Wrap         advisory business
            manager expertise       separate distributor          platform            which harnesses
                                         segments                                   value through Wrap

          • Innovative investment                          • Help IFAs transform
            solutions                                        their business
          • Improve margin                                 • Leverage our IFA
                                                             relationship and our
          • Support distributors
                                                             platform experience

    AXA entered the independent financial advice sector with the
    acquisition of Thinc Group in 2006

                   Thinc Group                                                Strategy

•    Top 5 UK Financial Services Group                  • To create a market leading trusted financial advice
•    250,000 Clients: Top 15 IFA, corporate and
     private clients                                    • Aggressive growth – organic and acquisition

                                                        • Sustainable commission models
•    Nationwide advice brand
                                                        • Integrate AXA’s tied advice network into Thinc

                                                        • AXA and Thinc work in partnership to develop
                                                          wrap-enabled investment model

                                                                Key metrics for Advice

                                                                              Today        2012

                                                             Advisers         c850        c3,000

                                                             FuM             £1.5bn       c£15bn
                                                             Revenue          £44m       c£300m

                            Thinc Group brand offices                                                      31
Today’s agenda

  1     Market Context

  2     Strategic overview of AXA UK

  3     Focus on Life and Wealth Management

  4     Focus on Non-Life

                         The Property & Casualty market is steadily growing in the UK

                        UK Market Growth 2006 – 2012: 6% Annual Growth
                                                                                                    •   Both Personal Lines and Commercial Lines
                                                                                                        markets to grow steadily to 2012
£bn U K G A A P G W P

                        50                  £41bn                                                   Distribution mix
                                                               Commercial Lines
                        40                                     Annual Growth 6%                     Products are sold through three main channels
                        30                    £19bn                                        £5bn
                                              £1bn                                         £12bn    • Intermediated through P&C Brokers
                        20                    £8bn               Personal Lines            £5bn     • Direct to Consumer
                        10                    £5bn              Annual Growth 6%
                                                                                           £14bn    • Corporate Partnerships and Affinity Relationships
                                               2006                           2012                  •   Personal Lines to move further toward Direct and
                                                  Commercial intermediary
                                                  Commercial Direct                                 •   Commercial Lines Direct to increase
                                                  Personal affinity and banks
                                                  Personal intermediary
                                                  Personal Direct
                                                                                                    Benefits of products to clients
                  Sources: Information based on SynThesys database of FSA Return and AXA Analysis

                                                                                                    •   Comprehensive protection for unforeseen losses
                                                                                                    •   Financial protection for businesses and people’s
                                                                                                        families and lifestyle

                UK Non-Life competitors (1/2)
                Many of our competitors struggled in 2006 while AXA achieved
                growth and profitability

                                                                                                 2006 was a challenging year
                                                                                                      AXA Insurance growth outperformed the market
              2006 Written Premiums of the Top Insurers
                                                                                                      throughout 2006 closing the gap between 4th and
                                                                                                      5th position

                                                                                                      AXA Insurance was the only major insurer to be able
                                                                                                      to report revenue growth and profitability
Revenue £m


                                                                                                 2007 continues to be difficult for some

             £1,000m                                                                                  Over the first half year 2007, with the inclusion of
                 £m                                                                                   Swiftcover, AXA Insurance has become the 4th
                                   Aviva   RSA    Zurich        AXAI incl
                                                                            HBOS   Allianz
                                                 2005   2006
                                                                                                      All insurers have suffered from heavy losses as a
Sources: Results are based on publicly available reported results presentations.
N.B.: Zurich report in USD. Allianz report in EUR. Currency fluctuations have been removed and
                                                                                                      result of the Kyrill Winter Storm and June floods.
    values reported in GBP.                                                                           Most insurers report that they expect the same or
                                                                                                      slightly higher losses from the July floods

                                                                                                      1: Based on publicly available reported results presentations
UK Non Life competitors (2/2)
New entrants are leveraging advantages from their speed to market
and online capabilities

                • Quinn Direct – low cost direct internet provider
                  entering UK market following success in Ireland

                • Premier Line Direct – direct commercial insurer
                  backed by Allianz

                • Castle Cover - Specialist broker for the ‘good risk’
                  over 50’s market

                •, and
                  – internet based aggregator based on helping
                  customers find the cheapest quote

                • Sheila’s Wheels, Diamond, Elephant – sub-brands
                  of existing direct players targeting specific customer

   The total UK P&C UK Commercial Market will
   continue to grow
                                                                                                                                                                            Core Products in the SME Market
AXA Insurance only operates in the SME section                                                                                                                              Property – Buildings and Contents protection business
of the UK Commercial Market, which represents                                                                                                                               Financial Loss
approximately 50% of the total UK Commercial
Market. Large risks are written by AXA                                                                                                                                      Motor – Compulsory Third Party Liability and
Corporate Solutions outside of AXA UK entity                                                                                                                                comprehensive options for fleet and non-fleets

                                                                                                                                                                            Liability – Includes compulsory Employers Liability, Public
                                                                                                                                                                            and Products Liability, Professional Indemnity, Directors and
UK Total Commercial P&C Market Size
                                                                                                                                                                            Officers Liability
                                                                                                                                                                            Packages – Combines several products to give a more
                                                                                                                                                                            comprehensive cover
                                 £30.0bn                                                                                                                £27.7bn
  Commercial Lines Market GWP.

                                 £25.0bn                                                                                  £22.9bn

                                                                    £20.1bn   £19.9bn    £19.4bn    £19.4bn
                                                          £16.9bn                                                                                                           Distribution/channels

                                                                                               Comm Property
                                 £15.0bn   £11.8bn
                                                                                                                                                                                                   AXA Business MixMarket Mix
                                                                                                Financial Loss

                                                                                                   Comm Motor                                                               Intermediated             91.0%             92.0%
                                                                                               General Liability
                                                                                                                                                                            Direct & Affinity          9.0%             8.0%
                                       2000     2001      2002      2003      2004       2005       2006         2007     2008      2009      2010      2011      2012
                                                                                                                                                                            Commercial Insurance - Biased towards intermediaries.
                                                                General Liability       Comm Motor       Financial Loss       Comm Property
                                                                                                                                                                            Brokers provide tailored advice/risk management.
                                                                                                                                                                            Standard products, at the smaller end of the market, are
                                                                                                                                                                            more capable of being sold direct.
                        Sources:                                                                                                                                                                                                            36
                        2000-2006 data: SynThesys database of FSA Returns
                        2007-2012 data: AXA estimates, based on consensus industry views (including Datamonitor).
                                 UK Personal General Insurance Market

                                                                                                                                             Core Products in the Personal Market
                                                                                                                                             Motor – Compulsory Third Party Liability & comprehensive
                 UK Total Personal P&C Market Size – growing by 6%                                                                           options

                                 £35.0bn                                                                                                     Household – Buildings and Contents protection, & Public
                                                                                                                       £29.9bn               Liability
                                 £30.0bn                                                                        £28.2bn
                                                                                                                                             Travel – Annual Policy and Single trip options
Personal Lines Market GWP £'bn

                                 £25.0bn                                                   £23.6bn

                                 £20.0bn                                                 Financial Loss                                      Financial Loss – Includes Creditor, Extended Warranty,
                                            £15.4bn£16.0bn                                                                                   Legal Expenses and Pet Insurance
                                 £15.0bn £13.3bn

                                  £5.0bn                                         Private motor
                                                                                                                                                                          AXA Business Market Mix
                                       2000    2001   2002   2003     2004    2005     2006     2007   2008   2009      2010   2011   2012   Intermediated                  49.9%                23.6%
                                                             Travel    Private Motor     Household     Financial Loss
                                                                                                                                             Direct to Consumer             11.4%                40.7%
  NB Travel is reported as part of Accident & Health and is estimated here to                                                                Corporate Partnerships          38.7%               32.5%
  provide a comparison for the market.
                                                                                                                                             Other                             -                 3.2%
                                                                                                                                                             Increasingly commoditised
                                                                                                                                                             Customers dealing direct
                                                                                                                                                             Corporate Partnerships growing in
                                    Sources:                                                                                                                                                             37
                                    2000-2006 data: SynThesys database of FSA Returns
                                    2007-2012 data: AXA estimates, based on consensus industry views (including Datamonitor).
 AXA positioning in the UK General Insurance market

Commercial Market                                                     Our position

                                 Commercial                           • Number 2 SME Insurer in the UK
                                   £162m                              • Position enhanced through further investment
                                                                        in Direct capabilities
                31%                                                   • Largest provider of Property and Liability
                                                                        products to SME’s
                                                                      • Number 2 Property Owners insurance

Personal Market
                                                                      Our position
               Creditor                 Motor                         • Number 7 in Personal lines insurance
              and other                £212m
                £253m                   23%
                 28%                                                  • Number 1 Travel Insurer
                                                                      • Market leading Corporate Partners
                                                                        proposition, with leading position in financial
               £155m                       £299m                        services, retail and travel industries
                17%                         32%
                                                                      • Acquisition of Swiftcover, the UK’s only 100%
                                                                        online insurer enabling a closer relationship     38
  Sources: Synthesys, Datamonitor and AXA. SME Market assumed to be
  50% of total Commercial Market
   AXA’s strategy and response to the major trends

Market Context                         AXA Insurance Strategy
Commercial Market
                                          Market leading SME direct proposition, selling online, by
 •Continued Broker Consolidation      telephone, through Corporate Partnerships and our field force
 •Value moving towards distribution
                                          Achieve closer relationships with our end customers,
 •Channel mix                         through direct to consumer distribution and owned
 •E-Trading                           intermediaries

                                         ‘Best in class’ pricing capabilities, underwriting expertise
                                      and relationship management

                                          Providing innovative new solutions to larger SME clients

Personal Market
 •Continued Pricing Pressure              Continued leadership position with partners and
                                      innovative new solutions to meet our customer needs

 •New Entrants                            Profitable growth of our direct capabilities, primarily
                                      through the Swiftcover brand
                                          An enriched direct proposition including new product
                                      launches and improved capabilities                                39
   We are increasing our presence in Non Life
   Commercial Distribution through Venture Preference Ltd

                                                                                             Our position
A Nationwide                                                                                 • 2nd largest SME brokerage in UK
                                                                                             • Increasing presence in Non-Life distribution
                                                                                             • Our acquired brokers control £400m of GWP and
                                                                                               generate £80m commission income
                                               17 Edinburgh
                            Glasgow 16

                                                        15 Newcastle
                                     Carlisle 31           29 Stockton-on-Tees
                                                                                             Our strategy
                                    Penrith 32      25         24 Scarborough
                                          Harrogate 14        Northallerton                  • Acquisition platform: Our brokers give us an
                                                            19 28 Hull
                                              Skipton 26 18
                                                    Leeds       27 Grimsby
                                                                                               ideal platform for further broker consolidation
                                         Horwich 20        York
                                                         35       21 Lincoln
                                                                                             • Growth: We will continue to grow the revenue
                                Welshpool 12
                                        Ludlow 23       7 Coventry
                                                                                 6 Norwich
                                                                                               controlled to over £1.25bn
                                                             22 Northampton
                                         Worcester 13
                                                                Milton Keynes
                                                                            5 Chelmsford     • Synergies: Integration of business into a single,
                                              Swindon 10
                                             Bath 33
                                                                      1 4 34 London
                                                                       30                      streamlined entity deliver operational synergies in
 Stuart Alexander Offices                             West Wickham 11 Tonbridge
                                           Bournemouth 3
                                                          2 Southampton                        back office processes, proposition development
 Layton Blackham Offices                                                                       and customer insight
 Smart & Cook Offices

  In a softening market, AXA Ireland has delivered continued strong

                                                                                    Our position
                                                                                    • Predominantly motor insurer – over 80% of
                                                                                      premium in 2006 was from motor insurance
                                                                                    • The remaining 20% was mainly household
                           Irish Motor Market GWP                                     insurance
                                                                                    • Number 4 P&C insurer in Ireland
        1,400                                                             30
                                                                                    • Number 2 in core motor insurance market
        1,200                                                             25

£ G P

 m W


         600                                                                       Our proposition – what differentiates us
                                                                                   • Excellent service delivery & product
           0                                                              0
                     2000         2001        2002   2003   2004   2005            • Strong brand in the market
                                  Total Market       AXA Market share

                Source: Irish Financial Regulator                                  • Multi-channel distribution capability
                                                                                     including a network of over 40 local sales
                                                                                   • Highly experienced staff with strong
                                                                                     customer relationships
AXA Ireland Competitors
AXA is a podium player in a highly competitive market

  Irish competitors share of GWP, 2006

                                                          Erosion of market share of the largest
  Zurich                                                  players by Quinn Direct and FBD
   8%                                             Aviva
                                                   22%    Aviva has moved focus from intermediary
                                                          to direct in personal lines, and towards
                                                          the SME / commercial market
                                                          RBS Group has begun trading under the
                                              Quinn       Direct Line brand
         10%             Allianz               12%
    Source: Irish Financial Regulator

   AXA Ireland has a clear strategy to face the current
   market challenges

Market Context                AXA Ireland Strategy

  •Falling market prices

                                  Focus on profitable pricing discipline
•Aggressive competitors
   and new entrants
                                  Strong brand leveraged through extension of
                               product range
    •Uncertain claims
                                  Expansion of distribution reach through further
                               development of branch network, affinities and online
 •Pressure on expenses

The UK healthcare insurance market

UK healthcare market by expenditure                       Healthcare options in UK
  UK Private Medical                                               Full range of care
  Expenditure (PMI)
                                                                   Funded by taxation
        (2005)                                                     Free access at point of use to all citizens
 UK Public Healthcare
                                                                   General Practitioner (GP) is ‘gateway’ to
  Expenditure (2005)                                               treatment
                                                                   Offers a choice of where and when to be
                                                                   Hotel type facilities
                                                                   Ancillary services offered such as
                                                                   Occupational Health and Employee
                                                                   Assistance Programmes
                                                                   Private dentistry treatment is also offered
Benefits of PMI to companies and individuals
                        Prompt diagnosis of medical condition
                        Speed and quality of treatment and aftercare
                        Reduce time an employee is off work and therefore cost of sickness absence

The UK healthcare insurance market

PMI competitive landscape, 2006

                                      API 2006           Market share     Movement
                                        £m                  2006          2005-2006
                                                                                      • A slowly growing market
   BUPA                                   1,381                42.4%         +0.2
                                                                                        dominated by two big players
   AXA PPP                                 775                 23.8%         +0.9
                                                                                      • New entrants are limited as a
   Norwich Union                           309                     9.5%      +0.6
                                                                                        result of high cost of entry,
   Standard Life Healthcare                244                     7.5%     +1.2*
                                                                                        although PruHealth entered
   WPA Health Insurance                    101                     3.1%      -0.1
                                                                                        the market in 2004
   *SLH results for 2006 include the acquisition of First Assist
   Source Laing and Buisson

   Distribution characteristics

       Individual - direct (80%) and brokers (20%)

       Corporate - direct (25%) and brokers inc SMEs (75%)
       Direct channels include telesales, face to face sales teams direct mail and
       site marketing

AXA PPP healthcare - strong and growing position

Our performance                                                                          Our position

         Annual growth rate in total subscriber numbers                                  • Number 2 UK PMI provider
15%                                                                                      • Largest dental payment plan (c80% share)
                                                                                         • Innovative provider with a comprehensive range
                                                                                           of healthcare solutions
 -5%    1999   2000   2001     2002    2003    2004   2005    2006


                  AXA PPP          AXA PPP and Denplan

  Turnover                                 circa. £1bn YE 2006

Our customers                                                                            Our proposition – what differentiates us
                                                                                         • Market leading medical procurement
                                                                                         • Claims cost management capability
                                                                                         • Exceptional customer service provision
                                                                                         • Motivated engaged workforce
                                                                                         • Product and distribution innovation

       Large Corporate    SME         Individual   International     Individual Budget                                                46
   AXA PPP Healthcare – Strong and growing position

Market Context               AXA PPP Healthcare Strategy

                                  For Large Corporate – Extending provision to
    •NHS Investment           offer integrated health and wellbeing services

                                 For SME – Focusing on distribution (acquired
 •Increasing Competitive      broker –SecureHealth) and infrastructure investment

                                 For Individuals – Developing new products to
   •Product Innovation        reach new customers in new ways - Also providing
                              lower cost products

  •Increasing Consumer
        Expectation              For International – Seeing strong growth
                              supported by infrastructure investment

 •Rising medical inflation
                                 The strategy will be underpinned by enhancing
                              existing key differentiators
AXA UK 2012 Ambition

                                            Financial Targets
         Strategic Objectives                  2006-2012

   1. To become the preferred          Align with Group targets to:
      company for our customers and
                                           Double revenues
   2. To become the top three in all
      the business segments in which          Triple profit
      we operate
                                          Based on 2004 figures
   3. To play an increasing role in


  1   AXA UK and Ireland organisational chart

  2   Glossary

            Our business structure today is aligned to our key markets…

                                                             AXA UK & Ireland

                 AXA Life                   UK General Insurance                AXA PPP Healthcare               Ireland General Insurance

                      Wealth Management                    Personal lines                   Personal lines
                                                     •   Brokers
                                                                                                                          Personal lines
                                                     •   Corporate Partners

                            Protection                                                     Commercial lines
                                                           Personal direct                 ICAS international
                                                                                          Employee health and
                                                                                            wellbeing services
                                                         Commercial lines
                        Group Pensions
                                                     •   Brokers
                                                     •   Direct                                 Denplan
                            Mature Book

                      AXA Sun Life Direct

                       Advisory Services                 Venture Preference
                       Thinc Group / PIFC                                                SecureHealth Broker
                                                            Broker Group


          Term                                                        Description
Affinity relationship   A relationship or partnership between two organisations with a common purpose
Corporate Business      The part of AXA’s business in the UK marketing corporate (or group) pensions to companies or
                        businesses whose employees then join as individual members of a group scheme

Independent Financial   A financial adviser who advises clients and customers on the investment, protection and pension
Adviser (IFA)           products of insurance companies (or providers) from across the whole market

Income Drawdown         A lump sum remains invested whilst an income is paid from the fund to the client.
                        This income is not guaranteed, nor is the fund growth, as it taken from the fund

Multi-tied adviser      A financial adviser who can advise on and sell the products of a limited number (typically four or five)
                        insurance (or provider) companies

Onshore Bond            A savings product which offers some fiscal advantages to the client.
                        Offers the client various underlying fund choices, for example, with-profits.
                        Usually has a fixed term but some do allow the client to take regular withdrawals
Offshore Bond           Similar to an Onshore Bond but the underlying funds are held outside the UK with a more favourable
                        tax position. Suitable for those who have contributed the maximum pension allowance


            Term                                                  Description

Personal Pension      A product that enables clients to save for retirement i.e. funds can not be removed before retirement,
                      but is subject to maximum contributions.
                      Offers fiscal advantages
                      Investment choice is usually limited to a range of funds

Protection business   A type of business unit (or type of policy that provides protection (as opposed to investment or
                      saving). Typically, this will involve life assurance, critical illness cover (a lump-sum payment when
                      the policyholder contracts one of a number of designated serious illnesses) and income protection (a
                      monthly payment triggered when the policyholder is unable to work because of accident, sickness or
SIPP                  A personal pension which offers the clients to chose where to invest their money or who can invest
                      their money on their behalf
                      Has a much wider choice of investments e.g. commercial property but is still subject to maximum
Tied Adviser          A financial adviser who can only advise on and sell the products of a single company (to which they
                      are ‘tied’)

Wrap                  A virtual ‘folder’ that allows a suite of investment products and services to be packaged together and
                      accessed by the distributor (usually a financial adviser) through an internet enabled solution


Shared By: