AXA S.A.

Andrew Wallace Barnett - IR Henri de Castries - CEO Denis Duverne - Deputy CEO Gerald Harlin - CFO

Oliver Steel - Deutsche Bank

So hello and welcome to AXA’s full year 2014 earnings presentation. Welcome to those of you joined by webcast or on the telephone.

Welcome to those you who here in the room. So we’re joined here by CEO and Chairman, Henri de Castries; with Deputy CEO Denis Duverne, and CFO, Gerald Harlin; and without any further ado it’s my pleasure to hand over to Henri.

Thanks, Andrew. Good afternoon everybody.

It’s a please to share with you this afternoon these results specially because we think they are strong and good and because we think you like the dividend, but we’ll come back to that later. So I mean what has been 2014, clearly a strong year.

We’ve been delivering on all fronts regarding Ambition AXA. We’re now in 2015 in the last year of Ambition AXA, but 2014 was quite important and in 2014 I think we have delivered.

The dividend an important point for us because it’s both a number and a message. The number is 95.

The message is it shows you that the group is confident in its cash generating ability in the strength of its balance sheet. Discipline, I think we’ve shown discipline in the operations in the investments in an environment which is not particularly easy, but if you look what we’ve been doing I think these where the right things and we think we are clearing the basis for future growth in revenue and earnings.

Last but not least probably the most important thing for the long-term of the group, I think we’ve been progressing pretty well on the digital front. The more we look at it, the more invest in it, the more we’re convinced that this is going to very fundamentally changed very key aspects of the industry, from customer relationship of course -- where it’s obviously for everybody but to underwriting which is probably less obviously to some but we think that there, there are many things which can be done and we want to be at the forefront of it.

So what do I mean by delivering, revenue growth 3%, ideally we would have wished it to be slightly higher clearly but nevertheless 3% is a good performance. Second point underlying earnings growth 8% in both domains the three key pillars of the business have been contributing to the growth and we’ll see in a few seconds.

In life, APEs are up 6%. We told you I think at the beginning of the year that what we were expecting, that would be something around 5%, we have been delivering 6% in an environment where things have not been particularly easy for life companies because with the decline in interest rate if you didn’t have acceleration and the diversification of the product mix plus the competitiveness of the group itself it’s certainly not something we would have achieved, so 6% is a good number and 14% in terms of earnings growth for this segment it shows that now that the uncertainty related to the financial crisis is starting to dissipate.

Life & Savings are a very significant engine for the group. Property and casualty revenues up 1%, earnings up 2%, could be seen a slightly disappointing us for as earnings are concerned and we’ve been hit by natural catastrophes more than an average.

Denis will come back to but you will see how many points of combined ratio the natural catastrophes are costing us because hailstorms in Europe and because of hurricane in Southern California, it’s more than the average if you normalize to try to have a better view of what is underlying strengths of the earnings in P&C you would have come to certainly percent earnings growth. I mean this number is what is what but it’s just to give you a view.

I don’t want to go too far there. Last but not least, asset management, I think 2014 is clearly the demonstration that AXA is performing very well and their APE is clearly on its path to recovery, inflows have been positive in two firms, different magnitude 19 billion RMI, 3 billion RAB, but RAB we moved from negative to positive territories.

So it’s a good growth in terms of assets and the management. Good growth in earnings 12% excluding -- I mean once exclude the impact of the sale of AXA private equity.

This growth in underlying earnings has led a growth in adjusted and a growth in net income; adjusted earnings are progressing 7%, net income 12%. It could have been more had been impaired the value of our investment or fraction of goodwill on our investment in the RESO, the P&C Russian company.

Why did we do that not that? Note the overview of the Company itself has fundamentally changed, it remains very good and probably the best P&C company in the Russian market, but the revolution of the Ruble plus the economic prospects of Russia have lead us to think that the growth in the years to come would not what you could have expected few years ago, so as sign of caution we impaired a significant fraction of goodwill on the RESO acquisition.

So if you try to compare the performance to what were the four key metrics of Ambition AXA earnings growth underlying we are at 6% since the beginning of the plan so well within the range, operating free cash flows -- we will have accumulated nearly 20 billion until the end of 2014 so there too I mean very strong capacity of the group to generate cash. You will see later in Denis and Gerald’s presentation that in particular in the U.S the up-streaming of cash has been very significant in 2014.

Return on equity, we're close to the top of the range of Ambition AXA we've said 13 to 15; we're 14.5 which we think is a very strong number. Last but not least [gearing], this used to be one of our prior occupations and I think you can sleep quietly on that front.

We are at 24% well within the range. So it shows that -- I mean the fundamentals of the group are pretty strong, we're increasing the dividend by 17% moving the payout ratio in July or early August in this variable.

We were telling you cautiously that we were listening carefully to you and we're starting to open the door to increasing the payout putting it at 45% is clearly the sign that we're confident in the ability of the group to generate further cash and that we think that the shareholders have to benefit from a portion of this cash. This is leading to a dividend yield which is close to 5% and I think compares well to the rest of the industry.

If I go little bit more into the details on discipline because I think it's always good to remind you what we had said we would do and to compare it to what we really do. A couple of points to illustrate that, Life business; where are we in terms of product mix, the efforts we started to undertaking 2010 are paying, the general account proportion in the APEs is now 15% whereas it was 25% at the beginning of the plan.

Unit linked has grown significantly and health and protection have growth significantly. So this in a framework where the overall revenues are growing, so it's not as if we would have a sort of stagnant level of business with difficulties to reallocate from one segment to the other, we're able to generate growth whilst changing the mix.

Second point, new business value margin 34% clearly a satisfactory level. Last but not least a payback period which has been shortened by one-third which we think is also an indication of the competitiveness of the group.

P&C growth in revenues, P&C is probably the area where the group if you take 15 years prospective has grown the fastest both organically and through acquisitions. We are close to the 30 billion mark without the international activities -- the P&C International activities.

The current year combined ratio over the period has been reduced by five points. It's slightly higher than what we would have been expecting at midyear this year because of the natural catastrophes, but we think it's nevertheless a good ratio.

Asset liabilities management which is probably one of your points of focus these days. Re-investment rates, re-investment yield.

In November when we saw you for the Analyst Day or for the Investors Days we told you that we thought that we could re-invest at 2.4% and this would have an impact on the underlying earnings of 100 million a year? It's worse today of course because given the decline interest rates we think that we will re-invest at around 2% it's costing an additional 100 million, but if you look at how much is 100 million when compared to 5 billion of underlying earnings it's nothing actual but I think I can say it's 2%.

And so you see that it has an impact but this impact can be mitigated by additional operating efforts. The group is less sensitive than what some observers could think to a decline in interest rates.

Economic solvency, solvency too is not finalized yet but we're starting to see the fog dissipating. We closed the year with a solvency ratio which is at 200%; we're very comfortable with it.

We still think that there are some points to be clarified with the Europe and European Commission. But we're confident that the approval of the internal model should not create significant surprises and that the group is well capitalized when you enter into the solvency [took] world.

The debt clearing I have already mentioned it. The next point I want to cover in terms of discipline is the capital allocation.

We told you at the beginning of our Ambition AXA that we would be active in screening the portfolio and disposing the businesses which we thought would not have the growth or the margins prospects we could reasonably expect. We have sold for nearly 9 billion of businesses since the beginning of the plan and we have acquired less than 1 billion or approximately 1 billion every year, the difference has been enforcing the balance sheet.

What's the message behind that? I know that some people still think, well what is AXA going to do, are they going to embark again in mega acquisition as soon as they have strong financial flexibility.

We are pragmatic people; we want to increase the footprint in emerging markets at reasonable conditions. We don’t think we need to spend billions and I think strategically long term the most important thing is to be sure that we get things right as far as digital and Big Data is concerned.

So we are not going to stop doing acquisitions, we’ll keep doing acquisitions. But I would say the multiples and the financial conditions of these acquisitions are absolutely key for us to push the button.

Next point, cost savings. We started with a target which was 1.5 billion.

We increased the target first time to 1.7 we then said 1.9 and we say today that it’s going to be at least 1.9 before the end of 2015. Where has it been coming from?

Very clearly, I mean, shown in the right hand part of this slide increase in distribution efficiency, improvement of the operational performance, IT investments and cost reduction and procurement savings. You see it’s a well-balanced source or savings -- these are well balanced sources of savings showing that I mean this can be the sort of ongoing effort, not easy to achieve but we have achieved it.

Digital, why do I insist on that because I really think that this is going to transform the industry probably faster than what people would have thought three to five years ago, we have not stayed in mobile in this field. You have heard some of the actions we’ve been taking in 2014 and which will be extended in 2015 and beyond.

The data innovation lab is a great way for us to access the technologies, hire the skills and the people; we did not necessarily have or have enough of. We are now starting or launching this strategic venture front which is also going to enable us to put foot or finger into interesting experiences which could be applied to our model or our industry.

We have been setting up partnerships with both big and small names. The interesting point is that given the strength of the AXA brand it has been I wouldn’t say relatively easy but possible for us to come to agreements, partnerships with the best names in the industry to try to understand the way we can apply what they do to our sales forces to earn the righting as an example.

So partnering with Digital leaders will remain one of our preoccupations. Better knowing our clients risks is also something important.

We have illustrated here the AXA drive application which has been download more than once. We think that if we can convince the customers that sharing data with us is a way to allowing interests because it helps us understand the risk better, do better prevention therefore have better rates if we can do that we will gain an efficiency, gain in customer satisfaction, gain in market share.

So that’s why I’d say we have been investing heavily in digital. 900 million over 2013, 2015 compare that with the 1 billion we’ve spent in external acquisitions every year.

So you will see that the effort into transforming the business model is pretty significant and will remain pretty significant because what we want to do is to position this group for the future so that it can be able to generate growth in revenues, going forward, which of course will lead to an increase in future dividends, hopefully. Denis, back to you for the financial performance.

Thank you, Henri. Good afternoon everyone.

So, I will talk to you about the financial performance and then hand over to Gerald. First, the group earnings, the plus 8% of underlying earnings and I am on Slide 20.

We had good numbers across the board in all of our businesses , Life time savings plus 14%, P&C was plus 2%, I will talk later about the level of national catastrophes with a normalized level of Nat Cat would have been at plus 13%, asset management was flat but would have been up 12% if we didn’t have -- we had not sold the AXA P business in ’13, international insurance have 2%, banking up 36%, holdings were up well higher expense increased by 11%, reflecting additional investments in brands and digital and orient as told about our digital investments. Looking at the waterfall on Slide 21 I would just like to mention that there was an impact of the fact that we sold MONY in 2013 and we missed the contribution of MONY during ’14.

The other comments I want to make is related to currency impacts in fact the ForEx impact ‘14 were relatively small because the average level of the U.S. dollar between ‘13 and ‘14 was about the same, so the main impact is the yen deprecation which is an impact of minus 46.

Moving to adjusted earnings, they were up 7%. You see that net realized capital gains and losses are flat at 442 million most of that is equity gain only €100 million of realized gains on fixed income.

We keep our unrealized gains fixed income unrealized because that’s a function of ALM. Impairments were relatively stable minus 296 against 301 last year.

Net income was up 12% at €5,024 million. There was a slight positive of the change in fair value and ForEx coming mostly from the decline in interest rate, in the exceptional and discontinued operation we have €100 million of impact on our ongoing and loan portfolio.

Integration and restructuring costs were more modest than last year and intangible amortization you see the 251 million of goodwill depreciation on our RESO participation which already mentioned. Going to each of the segments now, on Life & Savings, new business already mentioned the 6% of overall growth of APE.

We can decompose that into 4% in mature markets and 14% in gross markets, so still a very good number for our gross market. In taxing I would note that we have the growth of 28% in our Chinese joint venture.

New business margin was essentially flat at 34% and flat both in mature and in emerging market. Looking at each of the elements our Life sales, protection and health which is the part that we emphasize -- we have emphasized as part of Ambition AXA.

The most still other solid margin of 55% and still good net flows as 5.2 billion in spite of the fact that we have sold the lot less group business in Switzerland than the previous year. G/A savings margins continue to be a descent at 14% even though it’s lowest of the three life segments.

We had an increase in the APE of 11 points and negative flow of 2 billion versus 5 billion in the previous year. This is essentially due to strong sales in France of group business, strong sales also of hydride products with unit-linked and G/A savings and hydride products strong sales as well as in APE in our JV with MPS.

On the unit-linked side with the margin of 31%, the growth of APE was 9%. The flows were modest at 700 million.

They were impacted like as they were last year by significant outflow coming from the VA buyout offers in the U.S. which was launched in ‘13 but had an impact in first half of ‘14.

Looking at the picture from an earnings standpoint, on the pretax basis life earnings went up by 17%. They were up 10% in protection and health.

Thanks for higher fees and revenues linked to higher sales and higher positive prior developments in France. The combined ratio has moved back to I would say more normalized levels after two years of unfavorable developments.

G/A savings, the earnings were up 37% largely as a result of non-repeat modern and assumption changes in Japan and to a lesser extent to higher positive prior years of developments and unit-linked were up 13% on one hand we had higher management fees thanks to higher asset base and good equity performance. This was partly offset by lower U.S.

[indiscernible] margin because of the essentially decline in interest rates and some basis risk. Moving to property and casualty, our revenues were up 1%, €29.5 billion with personal lines up 1% and average price increase of 1.5%.

We had net of 500,000 new contracts in personal lines. On the commercial lines side we see a slightly higher gross of revenues of 2% with average price increase of 2.2%.

This led me to the usual picture where we show the pricing trends both in Personal lines and Commercial lines across our footprint. You see still in '14 a lot of green so we've been able to implement price increases almost everywhere with the exception of Asia and our Mediterranean and Latin America region.

Overall plus 1.5 in Personal lines, plus 2.3 in Commercial lines. Going forward we still see I would say positive trends on the pricing side in France and the UK more stable or declining prices in the other geographies.

Looking at distinguishing mature high growth and direct. Our revenue growth was clearly disappointing in P&C this year 1% in mature market, 2% in high growth market and here Asia was up 7% again interesting to note that in China our AXA Tian Ping JV had revenues up 19.5% and growth in the direct segment of 49%.

MedLa was the big disappointment where we saw flat revenues in Mexico and slightly declining revenues in Turkey where the competition intensified in spite of a worrying situation on the bodily injury side that we had flagged already in 2013 but which has continued since then. The direct growth was also more modest than usual at plus 5.

We saw good growth in France and Japan but our Spanish portfolio was more challenged given the competitive conditions in Spain. The current year combined ratio improved 0.2 points overall at 297.6%.

There was a slight deterioration in high growth markets linked to what we saw in Mexico and Turkey I mentioned Turkey in terms of bodily injury, Mexico was hit by Hurricane Odile which hit Baja, California and we were particularly affected by this hurricane. On the direct side it's the impact of difficult underwriting conditions in Korea that led to this modest increase in the combined ratio which remains below 100%.

Underlying earnings on P&C went up 2%. I mentioned the fact that we had more than our fair share of natural catastrophes in '14 with a hit of 1.9 points of combined ratio.

I would say that we tend to think that's a normalized level of Nat Cat is 1 point of combined ratio here it was slightly higher almost double that. We had also slightly lower prior year reserve development at 0.6% leading to an all year combined ratio of 96.9%, 0.3 points above the previous year.

Within that environment we have managed to keep our investment income at quite a good level investment income was up 5%. We benefited from high dividends in French mutual funds which added 71 million or 12 basis points to the investment yield.

The investment yield was stable at 3.9%. Moving now to asset management at AXA Investment Managers the flows had increased quite a bit to EUR19 billion, average AUM were up 5% and revenues up 4% on a like-for-like basis i.e.

excluding AXA Private Equity. At APE average AUM were also up 5%, APE had a good year in terms of net flows even if was more modest in AXA IM at €3 billion against an outflow of €4 billion.

Revenues were also up 4%. The earnings were flat I mentioned that already.

The earnings were down 4% AXA IM would have been 20% on a like-for-like basis and they were up 5% at APE, so overall good trends in our asset management portfolio. I would like now to thank you for your attention and over to Gerald for the balance sheet.

Thank you very much.

Good afternoon. So the general account amounted to €523 billion and we still have 84% in fixed income which still remains by far the largest asset class.

You can see that Govies was on 47% corporate bonds 29%. We mentioned the fact that the average rating of the Govies is maintained AA -- in the AA range and A for Corporate.

Nothing new and nothing changed on the asset duration 7.6 years in Life & Savings, 4.6 years in P&C and as mentioned by Denis before for P&C we have a trend which is -- which was more or less stable in terms of earnings yield between '13 and '14. The guaranteed rates the spread between the yield and the -- asset yields and the guaranteed rates on the within first book of business is pretty large 160 basis points which explains why we had resilient investment margin you can notice that it stayed stable at 80 basis points and for new business it’s even more relevant because we have an average guaranteed rates on new business at 40 basis points which means that we have 230 bps spread between the yields as investment yield that was a marginal investment yield in 2014 and the guaranteed.

It should be clear that for the new business the general accounts is mainly used as explained before by Denis in order to sell hybrid products combining general account and unit linked. Here is the assets the investments and the new investments in 2014, 43 billion and at an average rate of 2.7%.

You can see that we invested compared within first book of business we invested more in Govies -- less in Govies more in corporate bonds. And as mentioned by Henri we have been investing this at 2.7% in November at the IR day we told you that we would invest we expected at that line to invest in 2015 at 2.4 at that time we told you that from one year to another it would mean the decline in the underlying earnings of just 100 million now we expect to invest in 2015 at 2% which means that the earnings impact -- the underlying earnings impact on one year to another will be roughly 200 million.

On top of this and due to the significant part of our business denominated in U.S. dollar and Swiss franc we should have positive impact in 2015 of 100 million on our underlying earnings.

Shareholders equity; shareholders equity moved up from 52.9 to 65.2 I won’t comment all the moves focusing on the couple of events, first the change in net realized capital gains mostly due to the drop in interest rates, than ForEx movements net of hedging, you know that we have part of our shareholders equity which is invested in dollars and over 2014 the U.S. dollar went down from 235 to 221 which explains most of the difference.

And the change in pension benefit minus 1.2 that’s a net present value we are using AA rate and AA rate went down by more than 100 basis points which explains that we have a negative adjustment of 1 point. Next is the debt gearing which is stable at 24% you can see on the left that our debt moved up from 12.3% to 13.5% mostly in undated subordinated debt i.e.

Tier 1 and Tier 2. We have a slight increase of the undated subordinated debt because we placed 1 billion in May 2014 whereas for the Tier 2 we had reimbursement of 2.1 and earnings fees of only £750 million.

Economic solvency went down from 206 to 201 and on the right you have the key sensitivities and the key sensitivities this don’t differ so much from last year. What is interesting is the [indiscernible] forward because we have an operating return at plus 24% we have the dividend impact the dividend that is being paid in May and we have the market impact and you can see that also we have a small duration gap this is mostly explained for 21 points by the lower interest rates.

And moving to the group operating cash flows we had strong performance this year, we moved -- our operating cash flow moved up with our performance, with our earnings and we moved from 5.2 billion to 5.5 billion. The remittance ratio went up as announced already at the IR Day November, we benefited this year from the repayment of the U.S.

which means that in the end the remittance ratio went up from 75% to 86% it would have been 73% excluding the U.S. as a whole that means that the cash remitted from entities went up by 21% which is quite sizeable.

Going into a bit more detail and expected inflow stock flow generation went up by 10% and new business investment was more or less stable which confirms our disciplines that means that although we have a 6% APE growth we have a new business investment which was almost flat in the end operating free cash flow went up by 18% from 2.3 to 2.5. Life & Savings internal rate of return was stable at 14.2% with some plus and minuses, plus is the improvement of the business mix as explained before lower unit cost and at the same time we could not dispose the lower unit cost that are cost to income in Life dropped by 4% and we have a negativity coming from the lower management expectation, we revised our management expectation in order to take into accounts the decision from the [ECB] and the Swiss National Bank.

On the group embedded values; group embedded value moved up from 43 billion and 47 billion which is called operating return in line with our operating performance and non-operating variance coming mostly from the minus 2.7 from the drop in interest rate. So plus 19% operating return.

I had it now to Henri.

Thank you Gerald. So if we try to sum up everything, where are we and where we want to go?

What should be the key takeaways for you from this day? First top-line growth with business mix which keeps improving, it’s exactly what we were intending to achieve and it’s generating the satisfactory earnings growth.

Second point, very important in this times where interest rates are low. We keep a very strong ALM discipline.

Next point, increased dividend I think I have insisted enough on that. Last point, strong balance sheet, we are confident that the outcome of the Solvency II negotiations will be fine for the group.

Going forward what does this mean we think we are well positioned to deliver the last year of Ambition AXA, we think we will continue to show very significant resilience to low interest rates. So we will have sustainable policy in terms of dividend going forward.

The Group has a strong cash generating ability and this should create a satisfactory situation for shareholders. The most important thing long-term to preserve the competitiveness of this group will be availability to succeed in the acceleration of the culture and operational transformation and we are very much focused on that.

And I will now leave room for all the questions you may have.

I had a couple of technical questions and one strategic question. The first technical one is on direct insurance.

It still has a combined ratio about the Group, I wondered when you think that discussion reach the Group level or indeed in surpass the -- get better than the Group level. Or maybe this the wrong way of looking at it, maybe you are interested in growth from Direct rather than combined ratio.

That’s the first one. The second one is Solvency II, wanted to ask about the equivalence ratio.

Different companies seems to have different views on what is the right level of RBC coverage. I think yours is 300% correct me if I am wrong, but other companies have different ratios.

Where do you think this is going to end up? And then final question is strategic, you not I think going to tell us about target supposed on a ’15, but just wondered if you could share with us your thoughts about growth expectations going forward.

You have been targeting 5% to 10%, is that a sort of range we should be thinking of going forward?

Thanks Nick, I will start with the last one and then ask my friends to help comment on the first two ones. We will come back to you second quarter of 2016 on the next plan.

So it’s too early to say what we are going to come with. But if you take the very broad and very long picture, the efforts we are making to accelerate the transformation both geographic and operational models wise should we just see growth in the years to come.

So of course there are some uncertain factors [indiscernible] going to be Europe, how are we going to see very low long-term interest rates, is there a point where they are going to gradually increase, maybe they will start to increase sooner in the U.S. then in Europe it should be probable.

So there are uncertainties we need to clarify couple of things there, but long-term I think the industry and within the industry AXA remains on the growth path because the appetite for risk coverage is still growing and we think we have a very, very sound operational base. On Direct, I think you have given both the question and the answer.

It’s a balance between the growth we want to achieve and the combined ratio we are ready to tolerate. Ideally in 2014 we would have liked to see a slightly higher growth but they are -- always remember that we have some operations which are getting close to normal pace of growth in Direct and we have also operations which are emerging ones accelerating is only like the Chinese one.

So overtime it’s a very long run the combined ratio of course should increase and get closer to of course should increase and get closer to the one of the -- should decrease and get closer to the other operations but we think it's not inappropriate to tolerate the slightly higher one because there are market-shares, profitable market-shares which can be gained -- I mean extending the footprint in China, in Japan, I mean in some places in the mid region and so on and so forth. This was the second, so first question which becomes the second, do you want to I would say add to the first two questions and answer the third one?

Just one addition point on there actually, it's a function with the maturity of the portfolio, we still have companies like Italy, Poland which are fairly recent about metric maturity it's -- China is not yet consolidated and when we consolidated it will probably be consolidate as part of Asia, so we have parts of the portfolio which are not mature and we need to continue to gain scale and we look at it from a value perspective, we take our most mature operations like France and Japan. We could easily lower the combine ratio that would be at the expense of growth and there is more value in keeping a high level of growth rather than optimizing the common ratio at this stage.

Nick on your third question about Solvency II, yes we are using 300, I confirmed and as you know there are some companies taking a different threshold at different levels there are some companies with the lower level and we consider that we’re comfortable at this level that we have an average ratio in the U.S. which ended up at 560% and we consider that we don’t as far as we know we don’t anticipate that this level and the [equivalence] level of 300 will be challenged, but I remain very cautious.

Just a very quick follow-up to Gerald, when do you think this will be decided the -- I mean for rather more relevant to other players than you but when is this H1, H2 that Solvency II will decide?

I think the balance you know it will be much more on I believe on H2 and anywhere is a whole scope and the whole framework of Solvency II will be completely official at the end of the day and not before.

On the comment slide you had on yields -- reinvestment yield, first if you tell me how much this is all depended on the U.S. so what proportion maybe of your reinvestment is U.S.

based rather your or rather than euro or other. And to what sensitivity there might be to prior yields go up in U.S.?

And then secondly you talk about actions that you're going to take, I mean what are they it seems to me that there is problem seems to be getting worse every time you talk about it, so what are the actions you need to accelerate that? And lastly very quickly, you have a 100% remittance ratio from your Life business to holding is that all the effect to the U.S.

or are there other areas that are maybe non-recurring that you need to adjust for going forward? Thank you.

Yes on the -- you're referring how can be 2% investment -- of marginally investment that we mentioned, roughly speaking what I can say that 50% roughly is coming from the U.S. because of course in companies like Switzerland where you don’t have enough liquidity on the Swiss fixed income portfolio we’re investing in U.S.

dollar and then we swap and Japan as well, on Europe for example out of this 2% we are expecting to invest that 1.5 which is available taking to account the fact that what we have been doing is that when building such a plan, we are assuming that we keep a level of economy capital which is stable. So we are not increasing our risk there to gain some additional basis points if you see within.

What do we do? So, we try and we -- what we do is that it's in line with what we did in 2014 mainly investing in assets which are less liquid, but high quality it's corporate real estate bonds, it's loans, it's at the same time some impossible share debt, this type of investment which are less liquid but with significant yield.

And the impacts of -- I mean our assumption is that yields are going to go up in the U.S. during the year but the very little of that is reflected in investment plan because if yields are say at 2.6 in December the earnings that we’ll get from our investments in December will be almost zero.

So basically it has very little impact on the investment plan.

I have got three questions please, first of all on the economic Solvency ratio, have there been any methodology changes since you last reported it to us? I was wondering if you could give a comment about what is the major controversies are in having a model signed off and is regulatory remain to send a model gain over the standard format, et cetera is the first question.

Second question I want your view on what key variable does clearly given on [indiscernible] do you have any expectations actually going to work in terms of stimulating European growth and the impact on the business it will have and just slightly on the reinvestment yield you taken the number down 40 basis points since November. Just wondering have there any commercial change in the types of assets you consider investing in and a course those assets in the last few months?

Thank you.

You want to take question one and three first?

Yes on the economy solvency, no we didn’t change. So that means that keep it consistent and we don’t changed the methodology, one part of your question was about the what are open discussion that you could have, you can understand that we -- it’s not the right place in order to comment.

On the reinvestment we didn’t change that means that when we roughly speaking when we announced 2.4% of marginal investments that was in November, between November and January February we didn’t changed too much asset location, slightly more investment in liquid asset as I said. But again I insist on the fact that we didn’t deteriorate the average quality of our investment.

I think you hope to look at what has happened. I think we have two types of QE the once who are used in economies where either end take firms or you have flexibility in the economy it's the U.S and the UK it works and there are places where you have QE results structural reforms, Japan, after a while it doesn’t work.

So continental Europe has a choice which means the key is now the structural reforms and the metaphor I’ve being using with the press is to say that [indiscernible] is absolutely exceptional I mean I think he is doing everything he can do and doing it masterfully but is the anesthetics, you need the surgeons to take care of the real problem and the surgeons are the governments. So they have to be the one acting on structural reforms at one stage or the other you want to see growth resuming through private investment.

Oliver Steel, Deutsche Bank. Your undiscounted to cash flow seem to be quite a lot lower than last year and part of that pretty obvious.

But particularly the six to ten seem to be quite lot lowers both for the back book cash flows but also the new business cash flow as you said in the note I think it's the last page of your appendix just in case you're looking for it. You're saying that this is been driven by QE, but I just wondering if could comment a bit more on what's driven that and which countries particularly has driven that reduction and then linked to that you also talk about back book management actions.

You've been talking about that to quite a long time. But is there anything in imminent that you want to share with us?

On discounted cash flows Oliver, I believe that these should be underlying the light of [JV] report which is quite seek and I imagine that you had giving so much time to look at it more globally is due to the revision of the new curves that is that the management -- as you know this is done on a management case and the management case has been lowered as I mentioned that’s exactly the same report for IR and for the calculation of internal retrofitting, nevertheless one way to answer your question is to mention that the as far as IR is concerned that we are at the same level as previously. Yes, we lower as first year because as you can imagine just taking the Europe for example, we are expecting that in the first three year '15, '16, '17 we will below 1% which means -- and it was not the case before.

So long as you flattened as the first part of the curve by definition you have lower cash flow. But at the same time we can consider [indiscernible] the implied discount rate were slightly lower that means you will see it in the report -- in the easy report and it's completely linked.

So that’s mostly it.

On the reinforce you have pulling of first floor who are presented very brilliantly in November at the Investor Day. On enforce you know everything about enforce as there is nothing new to learn on this topic.

And may be thinking back to one of the question which we didn’t fully answer on the remittance is, there was one other exceptional element in '14 which was Japan. So I mean the U.S was large but we also won exceptionally high level of remittance from Japan.

We directly linked to the level of interest rate when interest rates are very low in Japan the capital requirement is lower as well.

So the life and underlying earnings 3.1 billion, in the MD&A there is note saying that the DAC contribute to this 400 million, now wondered if that’s kind of one of thing and I really don’t understand what the clean number might be. So if you could help on that that would be very good.

And then you said, enough said about dividend, I’d like to hear more about dividends please. So it’s 45% where you’d like to be, given that you want to grow or can we see you’re maybe moving up to the 50% of Solvency.

Let’s take first the non-naive question.

Yes, as far as the DAC is concerned we have -- your question is improvement coming from the DAC, but maybe remember that 400 million in mind and that’s a good number but last year we have a negative adjustment of 200 million that was coming from the mortality. So we can consider that now we are at the normal level.

It was last year that we have level of DAC on activation which was at volatility low level compared with the normal trend.

Okay. Now take the question of the dividend.

So we are the guys setting between two lions and a goat. The two lions yourself on your appetite for the first one and the other lion is the regulators with their appetite for Solvency capital.

And we are the guys who have been growing the goat to feed the lions. We have the feeling that the second lion the regulators are looking with a close eye at how much you’re paying dividend because if they have the feeling that you give too much meat to the first lion their appetite will increase.

So we have to play with these two constraints. Once the normalized appetite of the second lion will be cleared it will give -- maybe if we keep going the goat more meat for the first lion.

If I’ve been cleared it’s probably that you have not understood me.

Thanks for that. Its [indiscernible] Three questions please.

The first is on payback period, you made some good progress in the life business on payback periods but there is two or three markets that are still are lagging, the UK, Germany in particular, have you done as much as you can do there or is there more that you can do? Secondly, on the cost base you’ve been successful in taking the quite a lot of cost, so how do you measure the cost base or how do you measure the cost opportunity of the company when you look internally, how do you benchmark yourself?

And thirdly a technical question for Gerald I guess, why have the economic capital sensitivities the lower interests not gone up I would have thought that given the rate decline there would have been convexity that meant the 100 basis points that was more impactful but it doesn’t seem to have been interested in that. Thank you.

You are right. I think that there is more convexity but it’s floor to 0 and in order to go to better perception of the interest rates and the level that we’ve been using, you should go to the EV report and in EV report you have the first year of and -- of interest assumptions and you will see here country-by-country.

In other words the flow will not be hit for Europe but it will be hit for a country like Switzerland. So more convexity but the flow at 0.

And we considered that it was quite relevant because even on long-term rate which is our high levels look at Switzerland even if we’re quite negative in the first days after the reevaluation of the Swiss franc now we’re at few basis points positive. I can’t follow up on this point with you.

On expenses our view is that we’ve done a decent job in the last four years but we have the intention to keep going. We believe that the digital opportunity is significant that we are -- I mean digital brings the number of elements as Henri mentioned, one if the element is that we are going to change the interaction with customers and our distributors, but one other element is that we are going to simplify our products automate number of back office activities, give back to the customer the ability to make changes by themselves instead of doing those changes within the company.

So we see multiple opportunities to continue to improve our productivity both on the life side and on the P&C side. So there is more to grow on the efficiency improvements, we have to keep growing and it will not -- we do not expect the efforts to slowdown all going forward.

And on the benchmarks?

I would say on P&C we now benchmark favorably compare to multiline peers. There is always in each country company that is more efficient than we are, so we’re not -- I would say we’re reasonably well positioned but we have somewhere to go if we want to be among the best.

And on Life?

On Life, it’s more difficult to do comparisons because it depends a lot of the nature of distributions, so the Company doing mostly bank insurance with our much lower expense ratio whereas a company doing mostly wealth management with the proprietary sales force will have a much higher expense ratio, so it’s much more difficult to -- its more determined by your mix of distribution rather than anything else so it’s very difficult -- I mean if I could find someone who tells me how to measure competitively your performance on the Life side from an expense standpoint, I would love to have that question, even talking to consultants they did this one different responses to the question. But I would say we’re reasonably positioned but not -- we have a lot of room for improvement.

Yes on your first question you’re pointing out the two places where the rates are the lowest and when we still have good legacy books, there is always an additional work of reducing expenses and transformation of the mix, but the impact is going to be gradual.

[Indiscernible]

Switzerland and the UK, on the UK so obviously we have just the breakeven in 2014 so the situation should improve as we move into positive territory from an earnings standpoint.

Three questions, can you talk a little bit about how you think your economic capital coverage ratio will operator on 72 and whether those sensitivities will expand or not? Secondly, could you talk a little about the internal loan and payment for that?

How big is the internal loan from the U.S. back to France?

I think you’ve paid back 0.7 billion this time, is that a target which the regulators is aiming for, for you too or that you have to lower that? And then thirdly when you were thinking about general account business in Europe, how much yield you need to cover you costs credit default previous and a profit margin, how much yield you need before you can actually credit anything to the customer?

Gerald, if you want to take, I am sorry.

Yes, on your first question was about the U.S. So in the U.S., they roughly paid back.

We have $8 billion loan, it went back to $7 billion. We can expect going forward that the U.S.

will repay something between $600 million and $1 billion per year. Yes, it depends from the supervisor because we know that there are some rules but we will see, but we should reconsidered this year for example they expected that we reimburse to surplus note, that for the U.S.

Your second question?

Just on that question, does you main rate, French regulator or do you have targets for the lowering that internal loan to a certain level?

There is no target. I think it was important for the French regulator -- the French supervisor that to be able to tell them that basically the $3 billion that had been moved to the U.S.

internal aid had been paid back and we still have some interest to pay back but the principal has been paid back that’s quite nice and that there is no target, no constraints at this stage on that number.

The other question was on the general account and the margin.

As far as the general account maybe we can go back to appendices and to the Life & Savings, G/A savings on page B26 and you can here that we have a margin on the G/A savings of 840 million. You have all the components and this margin went up by 226 million in 2015.

You have here all the components and roughly speaking I could say that we have the margin and revenues which is 225. You have the earning cost of 619 and starting for this admin cost plus acquisition cost assuming that we would have margin and revenues of 225 and we have acquisition cost for 440 and 620 for admin that means that roughly speaking we have 800 million earning starting cost with an investment margin of 1.5 billion so that means that that roughly speaking that’s starts very high.

It’s 50% that means that it should be 40 basis points we can follow-up together but that's roughly it.

And so for that we've been able to maintain investment spread, even slightly increase it in this segment -- I mean overall you know that our investment spread is 80 basis points, you saw in this segment it's 90, you saw in Gerald's part of the presentation that as we lowered the guaranteed rate we had still ample room to maintain our investment spread, so we are not too worried about that I think it's more a question of the business mix going forward in interest of the of our customers. They should be more and more away that they will not be able to provide for their retirement if they invest mainly in general accounts they have to invest more in unit linked to be able to withstand a peaceful retirement and I think our interest are lying on that front.

Sorry, the economic Solvency ratio?

Yes the Economic Solvency ratio and the Solvency to ratio I cannot say that the figure will be exactly the same but I can tell you that the sensitivities would be the same, there is the same calculation. The only thing that we don't know yet is the extent to which the capital add on versus the other model exchange that we implement will be a net negative and by how much but the sensitivities will not change.

[Indiscernible]

No I mean our economic capital model is not classified, our economic capital model is our economic capital model which we have submitted to the supervisor and for which we have ongoing discussions on capital items, but the sensitivities will not change.

Two questions please. The first one on the remittance ratio you indicated at 75% was kind of the upper limit I think one year ago now which is higher because of the U.S on this one-off, can you maybe comment on what the 75% has become, are you more confident on your ability to obtain cash from other geographies in the U.S that's the first question.

The second question is back to Africa you actually had two acquisitions this year, just what -- maybe a bit more detail on what kind of profitability you expect on the capital deployed there and what's the timeframe you are looking at to actually meet the cost of capital. And maybe just from a strategic point of view do you have -- do you expect synergies between the two acquisitions the Africa Re and [indiscernible] is completely separated?

Thank you.

No they are two separated things. Denis do you want to comment on Africa because you have been very instrumental in making this happen.

If you look at our current African portfolio roughly we've invested in total €0.5 billion in Africa. We have an historical existing presence which is dominated by our presence in Morocco it's out biggest business, we have presence in Algeria with an operation which started three years ago and we have a presence French speaking Sub-Saharan Africa, we have added to that Nigeria and we're starting -- we will be starting hopefully in Egypt in June through a Greenfield.

Of that €0.5 billion of investment currently our return including Nigeria will be €50 million of earnings and we don't believe that's the end of the story, we believe that's the beginning of the story and that we will make more out of this investment and we still have plans to look at potential opportunities in Africa because we believe that Africa is an area -- is a continent where a lot of growth will happen eventually. We are not focused on South Africa because the insurance penetration is even higher than Europe, but the rest of Africa we're quite interested and we see very significant growth prospects.

The investment in Africa Re was predicated on I would say building further connections in the African insurance community, exploring potential cooperation's with Africa Re on -- I would say on the understanding of natural events that can hit African operations because we have some knowledge in that area, they have lot of market knowledge and we think we could benefit from that but there is no direct connection between the two.

On the remittance ratio?

As I presented just before, last year we had 75 we [investment] from the U.S. This year excluding the U.S repayment we were at 73% with some element which were relatively favorable coming from Japan due to the low writing environment.

So I would say that this -- we cannot consider that there is much more potential in this environment on the traditional companies except the U.S but including U.S. you can expect -- we can expect to have a good level of remittance ratio.

On top of this I should say that in some countries as you know like Germany or like Belgium we have some specific reserve that are imposed because all the dividends are paid from the statutory account that thereof stripe off special reserves which makes that from time to time it could -- we could have some limits for the time being we are not hit by such type of limit but it’s in a very poor launch at this time we could have a slight decline coming from these countries but on the reverse in Japan if we would stay in this extremely low environment we could have quite good level of dividends.

I think the important point for you is what has been outlined by Denis a few minutes ago is the fact that the U.S. has become again a cash generating machine.

Thanks. Ross [Hector] from KBW.

I have three questions as well one is on the P&C performance. I mean if I didn’t do this wrong it looks to me as if in the second half the current year combined ratio excluding the Nat Cats was very low indeed it was about 94% with higher.

If I am not missing something obvious it would be interesting to hear what’s the drivers of this good performance were and to which extent you believe that might be sustainable? And the second one is again on the 700 million debt repayment.

I am not sure I understand exactly the dynamics of this how much debt is not left in the U.S. and to which extent do you think in the future we repayment of that might continue and also and I think this is something which Andrew may have asked the 700 million which has now arrived in the holding will this actually be used at some point in the future to repay the debt which the holding I believe has with France.

So you can see that I am confused on the dynamics maybe that will be interesting to clarify? And finally in the U.S.

we have seen interest rates coming down recently to levels where they were at in 2012. And yes I hear that you’re saying they might actually or you expect them to go up they has gone up recently.

But just hypothetically can you explore what the current situation or position of the U.S. VI book is following the 2013 results strengthening are you happy that the various assumptions that you make relating to lapse rate et cetera would hold robust in an environment where interest rates might stay low in the U.S.

So I would take the U.S. question.

Yes we remain comfortable with the assumptions that we have in the U.S. as far as customer behavior is concerned.

We do not see any reason to go back to the reserve strengthening as we did in 2012. We have done obviously some stress testing of our U.S.

portfolio and we don’t see even in this low rate environments reasons to worry about the future evolution of the U.S. business obviously the situation of the U.S.

would be much better with higher rates but we can live with the current level of rates for quite a number of years so we are not worried about where the U.S. will be, the U.S.

is now in the good position. And the reason why the U.S.

is capable of spending lot more cash is that the current production -- I mean the IR on the current production is quite high and the capital consumption the capital requirements on the new business is much lower than it was a few years back. This explains to a large extent the fact that the U.S.

has been able to upstream more cash it has been helped a little bit in 2014 by the fact that our Life production was down, but I hope that we can also improve our Life production which would have a slight negative impact. But overall our situation is much improved from a cash flow perspective because of the low capital consumption of the selling start of the sales.

Your other questions on P&C, Gerald do you want to comment, on the second half of P&C that’s not the way we look at it generally but I would say the only comment that I could make but Gerald may have other points -- is that the weather conditions was relatively benign so we have this big hit of the Odile Hurricane in Mexico, but otherwise there was no flooding, no storms, no bad weather in Europe and the weather situation was benign and better than what we normally planned for the fourth quarter but other than that there was -- I mean we don’t look at it that way so I would be at I think we’ve had a difficult to comment exactly on that front.

Yes and taking also into account -- completely agree with your answer and second an important point is that it’s not [symmetric], is that we don’t you have seasonality in the P&C business as you know most of the premium are in the first half, there is so much seasonality that any conclusion that you could hope from this very simple comparison honestly would not be relevant.

Going back to your first question I think the very cost comment is the [indiscernible] is less capital intensive to finance its cost, which is also one of the reasons for which we think we have more flexible reason before.

Just the points on the debt situations in the U.S. business?

700 million. I think that Gerald has already answered the question that was posed on that and we move from $8 billion to $7 billion.

So don’t really understand what’s your question is.

It just related to the future, are you -- are the dynamics such that we might expect future or further debt repayments of down payments. And also the second part of this is unless I am wrong the holding also has commitments to France.

In 2008 I believe regulatory access capital was taking out of France and made funds put into the U.S. The 700 million debt repayment has emerged and is now at holding unless I am misunderstanding this, would that not be in time a repayment from the holding of the French loan?

It’s a possibility, yes.

And has as a consequence now, for the gearing at the Group level has not increased because of that?

No, it’s internal. So it’s not -- but of course it has no impact since we are dealing with internal debt, it has no impact on the cash so long you don’t use this cash in order to repay external debts if you see what they mean.

So your point on cost is valid, so these are some of the different schemes that we could -- on which we are working and on the right time we will come back to you and tell you what we intend to do but yes it’s a working to manage and that’s a same time you should take into considerations that we have to think in this new environment where short-term money’s return which is zero or even negative.

Thank you, [indiscernible]. On the P&C side could you add a little color in terms of the declining level of prior year reserve release we saw coming through in 2014 and provides us a bit of direction in terms of where that could emerge on a more normalized basis.

And then second in terms of the remaining Ambition AXA cost reduction target, I think that’s at least 300 million to go coming through in ’15 if I understood you correctly. How much of that can we realistically expect to see turning up in underlying earnings or whatever metric you want.

On the P&C side, yes we had some adjustment on the prior year coming from deterrent countries with France with construction and we mentioned it already in the first half. About the second question which is the outflow -- what would flow through the P&L account, and look at what we did this year, look at the expense ratio for example in P&C which went down by [0.5] points that’s an illustration of the savings that we can achieve.

On the sustainability of the fire releases I would say that 0.6 was probably a minimum and 1.2 of last year was probably a more normalized level.

Just on the U.S. cash flow what was the figure please?

And the other is on Solvency II, how much would the ratio be different if you had a loading for Solvent debt?

So we will have a loading for Solvent debt. There is not one now but that’s part of the -- we have chosen not to do multiple changes to the number we published.

There are number of elements which we have not taken into account in the number that we have published positives and negatives and we will do one final mop-up once we know the add ones -- once we’ve agreed the add on with the supervisors. But there will be a charge for Solvent risk because our supervisor has asked us within the internal model to put a to charge Solvency and I think we have been already mentioned in that.

And other question was about the U.S. cash flow, so please you go to page B59 and you have here the cash flows of different entities and you will notice that and you will see that U.S.

cash flow went up from 219 last year to 542 this year, yield.

We have one question on the phone, from the web. From [indiscernible] CMCICS.

Is AXA planning to evolve like society general in terms of its governance by separating the functions of the chairman and the CEO?

Not for the time being. We've change the governance in 2010 we are pragmatic people is there is a point where we need to do it, we do it.

But we don’t think we need it now. On this happy note, I know there is another one.

Two questions please, first one on your general account savings. You had two positive developments other one asset of negative in 2014 and maintenance slide 27 you have 840 million on the line as earnings and you also had a significant cost savings on acquisition cost.

Do you think they level has passed the level as guidance for 2015. And second one is relatively a smaller one for you, in terms of growth market India has been a promising but very difficult market and huge joint venture despite being here for about 15 years has not done quite well unlike your peers.

Given that government is now allowing you to increase SDA to 49%. Would you be looking at possibilities?

Second question on leave time to find the numbers. On India we've been late entrance and therefore it is been difficult for us to find the bulk insurance distribution.

This is the reasons why we've not done as well as other entrance which came in earlier. On the P&C side we are now in a situation we are breakeven to making money we have a feeling that with the new government it’s going to be possible to expand the business faster.

It's the first in years that the government has a consistent majority in the lower house, we remain cautions with the insurance ordinance has been passed on allowing foreigners to move from 26 to 49. So that’s the good side but it has to be approved by both houses and the affiliate issue with the upper house.

So we hope it's going to be sold if it sold I think it going to be an opportunity for us to accelerate the business if there are couple of addition changes may we will be in a position to find a bank or to join forces with also acquired business from people we will want to exit we remain cautions we think that it's moving the right direction probably not as fast as with people we're expecting six months ago. But we see it for the long term each remains an interesting market possible.

On your first question on G/A savings, I think we can say the 840 of 2014 are normalized level and the 640 of last year were impacted by negative one of in Japan. So you should take with 840 as a sustainable number.

If we have no more questions. We will close out thank you very much for your attention and as you see the group is in good shape.

As you see the group is generating cash and as you see the group has been increasing its dividend. Thank you very much.