AXA S.A.

Andrew Wallace-Barnett - Head, IR Gerald Harlin - CFO

Peter Eliot - Kepler Cheuvreux Paul De'Ath - RBC Nick Holmes - Societe Generale James Shuck - UBS Investment Bank Farooq Hanif - Citigroup Jon Hocking - Morgan Stanley Stewart Blair - Bank of America Merrill Lynch Niccolo Dalla Palma - Exane BNP Paribas Michael Huttner - JPMorgan Andrew Crean - Autonomous Research Ralph Hebgen - KBW

Thank you. Good morning everyone and welcome to the AXA conference call on our activity indicators for the first quarter of 2016.

Gerald Harlin, our Group CFO, would like to give you a quick overview of the main figures included in the press release which we issued yesterday evening and of course make some comments on the announcements we made about UK transactions this morning. You can find both of these press releases on our website.

Following that, Gerald will be happy to answer your questions. Gerald, I hand over to you.

Good morning and thank you Andrew. So, let me begin by making some remarks about the UK transactions that we have announced and then give you overview of the main figures for the first quarter of the year before moving of course to the Q&A.

So as you noticed, AXA announced today that following a strategic review conducted by AXA UK of the UK Life & Savings market, it has agreed to sell its wrap platform business Elevate to Standard Life plc. This transaction follows the announcement made on April 28 for the disposal of its UK offshore investment bond business which is called AXA Isle of Man.

AXA also confirms that it is engaged in discussions for the disposal of its remaining UK Life & Savings assets, i.e., its direct protection business called SunLife. AXA UK P&C, Health and asset management collective operations Architas are not included and remain key businesses for us.

We expect total proceeds from this transaction at around €800 million and to generate an exceptional negative P&L impact of circa minus €0.4 billion accounted for in net income. As previously communicated, we also expect to realize an exceptional gain of circa €1 billion after tax on the disposal of the two real estate properties in the U.S.

which will be accounted for in net income during the first half of 2016. So, now let me move to an overview of the figures of the first quarter.

We have continued to see growth in revenue this quarter with total revenues up 1% on a comparable basis to €32 billion. On Life & Savings, we recognized plus 16% APE growth and this growth includes higher corporate pension scheme sales in the UK of €0.3 billion.

If we excluded the UK Life sales, then the overall APE growth would have been flat. The high unit-linked sales in the UK were offset by Hong Kong due to the non-repeat of the exceptional sale of large contracts and high carryover sales in Q1 2015 in anticipation of the change in regulation implemented in 2015.

Also worth noting are the high sales of G/A savings single premium business in China as part of the Chinese New Year marketing campaign. These seasonal sales were higher than last year.

For the remainder of the year, we expect to sell the higher margin regular premium business in China and would expect the overall NBV margin for the year for China to be somewhere between 10% and 15% similar to last year. The NBV margin at 29% remains high.

The decline compared to the first quarter 2015 reflects for the most part the higher corporate pension scheme sales in the UK in the quarter which have a lower NBV margin. If we restated the numbers to exclude the UK Life & Savings business, then the NBV margin for the Group would have been around 36%.

Life & Savings net inflows for the quarter were at €3 billion and this includes around €0.5 billion outflows from the most recent GMxB buyout in the U.S. which operates from December 2015 to March 2016.

P&C revenues were up 3% mainly driven by a positive pricing effect of 3.4% on average. In mature markets, revenues increased by 1% driven by the UK, Ireland, Germany with higher volume and prices.

In high growth markets, revenues were up 9%. This was driven by Turkey where we significantly increased pricing from April 2015 to restore the profitability of our portfolio and business growth in Mexico and Malaysia.

Excluding Turkey, revenue growth in high growth markets was 4%. Direct revenues grew at 7% driven by Japan, the UK and France.

Let's speak now on asset management. Asset management business total inflows where €10 billion with AXA IM at €8 billion mainly from Asian JVs and AB at €2 billion mainly from institutional clients.

Average AUM topped 4% driven by the withdrawal of assets on Friends Life in 2015 explaining roughly 3% drop in AUM. And revenues dropped 9% due to lower asset under management first and a decrease in average management fees linked to a higher share of fixed income products following weak equity markets in the first two months of the year.

Our economic solvency ratio is estimated at 200%, down 5 points versus prior year 2015. The impact of adverse market condition was partially offset by positive operating return and the issuance of €1.5 billion subordinated debt.

As disclosed in full-year 2015 results, our Solvency II ratio now includes an estimated dividend accrual for the PIL estimated based on 25% of last year's dividend. I would like to take this opportunity to remind you that we plan to share with you our new strategic plan during our IR Day in Paris on June 21.

I'm now happy to answer your questions.

First question I want to ask. I guess now we have the detail from the Department of Labor.

I was wondering if you can give us an update on your view of the impact that that will have? And perhaps also on the U.S.

now that there's sort of the mark to the second phase of buyouts are over, I was just wondering if you could share with us whether you have any intentions to do anything else there. And finally just on the Southeast Asia, India and China, you said that the margin was down due to the business mix and high Chinese sales, but I guess that the value of new business was also down quite a lot.

So, I'm just wondering if it was something other than just an [indiscernible] to the high volume of low margin business. Can you comment a little bit more on that?

Let's start with DoL. So, it's quite obvious and I believe that most U.S.

players noticed that DoL was slightly better than we could see. You remember that we mentioned at the last presentation of the accounts at the end of Feb.

that it would be between 10% and 30% so we could say roughly speaking that the impact on the U.S. new business might be 20%.

So slightly better again than we could see and I believe that we'll give you more detail about the U.S. and the impact of the U.S.

on June 21. So buyouts, do we intend to do other buyouts?

I believe that we can expect now that - it's difficult for me to tell you I don't expect in the foreseeable future to have other buyouts, but I believe that we'll present it more globally with our U.S. strategy.

About China, so it's true and quite obvious that in the first three months we had strong growth and strong production in China which was clearly in general account business and with an NBV margin which was negative. It was an NBV margin of minus 6%, why?

Because first of all in China for the first three months that means around the Chinese New Year, like we did in the past but this year it's more important there are massive marketing campaigns which are quite important in order for ICBC to increase its market base. And that's what we did and that's the reason why we had quite attractive products in the first part of the year.

But I can tell you that in April we produced new products with an NBV margin between 15% and 20% and on a cumulative basis at the end of April, we're positive in term of global NBV. So, it's absolutely in line with what we explained to you which is that in the first three months we have general account production which is close to zero or even negative which is the case today, first.

And second, for the rest of the year we can expect to produce other type of products which are not pure savings product, but which are much more whole life products with higher margin and as a whole, we can expect to have a margin for the whole year between 10% and 15%. So, again these figures reflect the very strong marketing campaigns that we did.

I can tell you that in the end we didn't pay any goodwill for our business in China and for us, being the Number 10 so quickly in China in Life is good success. So, that means that it's something which was expected and it's a good news for us because it's a way for us to increase our footprint in China.

Couple questions if I can on the UK transactions. Firstly, just looking at it from the outside on the face of it, the UK life market should be one that fits well with the AXA strategy of having more unit-linked and less guaranteed products and that kind of thing.

So, I'm just interested to know what it was within the strategic review that made you think that actually the UK wasn't a place that you want to grow the business. And secondly, linked to that point and just looking at the Q1 sales for the institutional pensions business that you sold in the UK, where does that fit within the Life and Pensions businesses that you're selling or indeed is it part of the asset management business that you're holding on to?

Let's start with the first part of your question on the UK. First of all, we don't take scale and that's very important in the business.

If I take two example. Isle of Man, that means Isle of Man was €9.4 billion AUM; take Elevate, Elevate is €10 billion.

Second, you have these figures of course. But just have a look at the MD&A from last year and you will notice that underlying earnings contribution portion was for sure 75% in life, but a lot of this was corresponding to tax one-offs.

Just have a look at the pre-tax underlying earnings contribution; in 2015 it was €30 million. So, you can understand that we were small on one side.

Second, we believe that we have the opportunities to redeploy this €800 million corresponding to the disposal. So it's a no-brainer, again it's a matter of scale.

I fully agree with you that in term of products, unit-linked and so on; it was in line, but you know that the UK life market is extremely competitive and in other countries we can do unit-linked business at much bigger scale and with a much bigger profitability. The second part of your question was?

Where the profit [ph] sits?

The cost for IP first of all they are in unit-linked business. If your question is where is it in the net inflows.

In the net inflows it was a regular premium which means that it's only part of the total IP impact that flows through the net inflows for the first quarter.

Okay. And it's more a question of whether or not that business was also part of the UK Life business' mix.

It is part of the transaction.

Yes, it is part of the transaction.

First is, any comment on the Turkish repricing policy? I'm wondering whether you're confident that you're getting the situation under control.

Second, any comments on the situation in Hong Kong? I'm thinking here of the sale of G/A products to replace the unit-linked.

Could you update us how that is going? Thanks very much.

As far as the Turkey situation is concerned, yes, you remember that following the reinforcement of reserves that we did last year, we decided at the same time to significantly increase more than double the price of MTPL. That's what we did and so that's perfectly in line with what we could expect.

The second point is maybe you noticed that there will be an evolution in the legislation in Turkey relative to MTPL and we're just studying it and it might be I would say an improvement going forward. You know that the real problem over there is that due to the bodily injury indemnification which are extremely high, this led to very high price increase and the government tried to more than fight, find solution in order to stop this price increase.

So, it could be a good evolution. We will really discuss it later on in the year and I will update you on this, but I could say so far so good.

About Hong Kong, yes, you noticed that in Hong Kong we decreased significantly the APE due to the fact that we had a change in the legislation and productively we're increasing the life business, the traditional G/A business; but it's what I could call capital light and at the same time as you can see, we have an NBV margin which is quite good. So yes, we're progressing but still we're not there.

That means that we have to compensate the unit-linked business which means that in Hong Kong we still have a 17% drop in APEs and we're expecting to recover over time and at the same time, you can notice that our NBV margin is still pretty high at 63%. So it's not a matter of worry, but we have to ramp up our new generation of products, that's presently what we're doing.

Just a very quick follow-up, so would you say that in Hong Kong you do want to grow significantly the G/A Savings business? I mean that is your strategy rather than just say being protection because you're very strong in protection, aren't you?

Yes, exactly. But the savings part first of all it's not pure savings products, its products with some protection need.

Second, it's capital light. To be clear, the way we're designing these products makes that you have almost no guarantee, you don't have a yearly guarantee.

We have a lot of surrender fees in the first years which means that in case there would be a surrender, then we don't have [indiscernible] because we would be indemnified through these surrendered premiums. So, where we designed this product makes that it's really and clearly the generation of capitalized products.

Once again just on Hong Kong, I'm just interested to hear about your sales into Mainland China. Obviously you're rebasing down the level of sales following the changes on unit-linked.

But most of the companies that I look at are seeing big increases from sales into Mainland China and I'm just wondering why we're not seeing that with you, whether that is actually part of your plan or was that something you just decided not to sell? Secondly in more general terms, could you just kind of outline where you are in terms of new product designs in Europe in particular and how they're adapting to the low bond yield environment, low return environment?

I'm particularly interested in the new generation products, you talked about something in Japan in terms of new generation savings products there. But I'm interested in Europe in terms of fee structures, commissions, surrenders and whether Q1 is the start of something that's going to evolve over the coming years or whether you're already where you need to be in terms of those new product designs.

Thank you.

Sales in Mainland, roughly we have 50% of our sales coming from Mainland China in Hong Kong. What I explained before we had a drop compared with the beginning of last year in unit-linked products, it's true for both Mainland Chinese and Hong Kong customers.

So that's it, but we didn't have any decline and I believe that the comments made by the other competitors, it's true for us. So, that means that we didn't have any decline of the Mainland Chinese due to the change in the regulation of cash payments.

Second, it's a new product design. You mentioned Japan, indeed in Japan what we did is initially you remember that we were selling G/A products at a poor margin.

On top of this, it created some volatility as you know due to the hedging in line with our policy to hedge G/A products. And we decided to sell another style of savings product which is an Australian dollar denominated product and we saw quite high margin.

So, that's an example of savings products where the profitability is pretty high, on top of my head we should be close to 40% in terms of profitability. The second part of your question was about Europe.

Yes, in Europe we're obviously working. We don't give up selling unit-linked product.

I should tell you that also we had some decline in the savings product due to the turbulence in the market in France in the first two months. Nevertheless we're still selling 41% of unit-linked product in our savings products so that's quite good.

That means that we don't give up. It's not because the markets are difficult that we give up on the percentage of unit-linked business, point number one.

Point number two, we're working on more attractive general account products. You all heard about Euro quadrant and we have good news because Euro quadrant is a product that should benefit.

It's not completely done yet, but should benefit from part of the capital gains from the general account portfolio and the way Euro quadrants will work is that you won't have a yearly guarantee, but a guarantee after hedges which makes that it will be clearly a capital light type of product. We're doing the same in other countries.

Take Germany, in Germany we have [indiscernible] products which are products with general account and with unit-linked. But again it's a capital light type of product and we have the same in Hong Kong, I just described it.

And almost everywhere you can expect that we will develop general account products with a capital light type of structure, but anyway there is no mystery. In the present interest rate environment, we cannot expect to make very attractive products so it should be analyzed as a complement to unit-linked products.

Last but not least in some countries as well, we can develop some structured products with guarantees which are not at 100%, but at 80%, 85%, why? Because in such a low interest rate environment, it could prove to be attractive to propose to our clients a structured product which is a unit-linked product with a guarantee which is below 100%.

I was wondering if you could comment on the implications for AXA investment management in the UK from Elevate and then also the sale of the other UK Life & Savings business, what proportion of the assets are managed and what could be at risk? Secondly, returning to Property & Casualty following up slightly on Nick's question.

Is Turkey going to be going back to underwriting profit? And generally speaking when you look at the price increases that you're putting through particularly in personal lines, it seems to me to be towards the upper end of the range of claims inflation.

Will we see an improvement in underlying loss ratios particularly in the direct area where you're obviously looking for scale, but revenue's been growing. So, if you could just comment on profitability in P&C given your activity indicators?

Thank you.

First of all on AXA IM, I said that a lot of our business was open architecture and it was done mostly through Architas and you know that we keep Architas there. Architas should be €20 billion roughly and Architas is kept within our own because it's not a tool only for our UK business, but it's a tool also for the other European countries to sell unit-linked business especially for high net worth individuals where open architecture is key.

The second part of your question is on the casualty business. I would say that if your question is about the loss ratio, it's a little bit early to give you any indication, Farooq.

For the time being what I can say that the weather conditions are quite fair and good, but beyond I cannot go and let's wait until the end of June in order to comment on this. I can say that even you mentioned direct, yes in direct we're plus 7%.

It doesn't mean it's quite a success. You know that in direct we're benefitting for example from the lower [indiscernible] where we have much more surrenders which means we benefit from this situation.

It's [indiscernible] for direct, but we don't give up on our traditional rules of profitability so that's for sure.

Just to clarify. Actually you're committed to the group pensions business in the UK that hasn't changed the results of any of these transactions?

No. That's quite clear that the group pension business is something that we won't run any more life business in the UK, let's be clear except the asset management part of Architas that I just described before.

So, that means that all the life business will be sold. We already announced the disposal of first Isle of Man which is indeed the offshore investment bond business €9.4 billion AUM.

Second, this morning we announced the disposal of Elevate which is the wrap platform and it's €10 billion of assets under management. The last part which is not sold yet, but it's our intention to sell its Sun Life business and Sun Life business is protection business.

And we have also the traditional investment and pension business what we call Embassy which will be sold as well. So that means that in the end with these three transactions, out of which two have been announced yet, we will get rid of all our life business in the UK except the asset management because we will keep Architas.

Okay. So you have P&C, you have the health business, you have Architas, you have asset management and you still have a corporate pension platform there, right?

No, because Elevate and the traditional investment and pension business will be sold. No, that's quite clear.

We will keep P&C, you are right; we will keep asset management; PPP; but we won't have any more life business.

The first one, can you comment, Gerald, on the ongoing P&L effect of the UK disposals? That will be useful.

Secondly, you've talked about 3.4% price increases in P&C. What would be the price increase if we exclude the impact of the Turkish price change?

And thirdly, you've announced that you expect to raise €800 million from the UK disposals, you raised I think €1 billion or so from the U.S. real estate disposal, that's quite a lot of money.

What do you intend to do with those proceeds?

So first of all, I'll take your first question on the P&L effect. I said that and we announced this morning that we could expect €400 million net income impact so it's a book value which was higher so we take a loss selling at €800 million.

So, the book value was roughly at €1.2 billion. I wanted to tell you at the same time that you should keep in mind that we should have a significant capital gain from the disposal of the two business as I said in my introduction.

So that means that anyway we believe first that it was a good decision taking into account as I said before the good profitability of this business, good scale. And second, yes, there will be an impact in term of P&L but this impact would be more than offset by other operations.

Gerald, the question was what is the ongoing impact on the P&L from selling these businesses, the ongoing effect?

The ongoing effect, that means that we can expect there will be relatively a few impacts I would say. There will be some funding cost that will remain, but very quickly we'll take the right measures in order to offset them.

So, don't expect a significant negative impact on the P&C business. I see your question, but you can imagine that at the same time that we'll take the right decision in order to offset it.

We have a nice business in the UK. Our P&C business and PPP in health is doing extremely well.

We have a strong growth so that means that this strong growth means that we will absorb it very quickly and I've don't have any specific fear on that side. On the second question which is the price increase, you can go to the press release and you will notice that in P&C on page 6 that you have a price increase in mature markets which is 1.3%, high growth markets which is 15.2%.

I don't have the exact figures but I can expect that most of it, at least two-thirds of it, is coming from Turkey so it's by far the main impact. I just wanted to tell you that we have a 9% growth in revenues.

We said that excluding Turkey we would have been at 4%, but it would have been more 5% because as you know, we have some companies which are accounted under the equity measures. If we take this into consideration and for example with China jumping, then we would be more towards 5% to 6%.

So, it's something that needs to be kept in mind. Your last question is about the cash.

So that means that the cash of this roughly speaking we will stream. I believe nothing is decided yet.

Out of the €800 million, we might stream €400 million maybe from the UK, the rest staying locally because we will have some needs for the pensions fund and so on and for the organic growth. So, that's it.

Yes, this year we can expect to have a good level of cash that would be streamed to the holding company, but nothing will change. That means that we will keep the same policy meaning that will be a way for us to fund.

You remember in December that I mentioned that we could slightly decrease the Tier 1 debt because it was not efficient. So, it could be a way for us to marginally decrease also our Tier 1 debt, part of it which is not so efficient.

So, that's it. But I believe that we will have also the opportunities as usual to develop our business through organic growth and external growth as we said.

We took the example €1 billion of acquisitions so that on average over the next year will be something that you could keep in mind, but it's not our intention. At the same time, you know that our solvency is at 200%.

It's a good level and it's just within our range so no intention for us to go to the top of 230%.

What about the proceeds from the U.S. disposal, Gerald?

How much of that will you upstream?

We should upstream. I said that usually we have €600 million coming from the U.S., you remember I'm sure this figure, so we could have this year a bit more.

That means that it could be €700 million, €800 million coming from the U.S. but there are plus and minuses at the group level.

So, it's a bit early to tell you what would it be because it's your question, what would it mean, how will it [indiscernible] into your remittance ratio. So the remittance ratio last year we were in the high end so we can expect due to this to be in the high end, but it's too early to give you a more precise answer relative to this.

Just wanted to check on the disposal of the two real estate properties in the U.S., did this gain impact solvency at all or were the buildings already mark to market in your Solvency II calculation?

They are already marked to market, point number one. Point number two, it's in the U.S.

so it's owned by the equivalents.

So, it's completely neutral?

Don't expect this will have cash impact as explained by Blair. This will have a net income impact with no solvency to impact.

Can you just walk us through the solvency from 205% to 200% between how much the bond contributed to the operating profit and the [indiscernible] from markets? That would be very helpful.

And then just to be clear, from what I understand from the previous points you explained on the U.S. and the UK, the benefit to solvency is only the UK disposals.

Can you give us a second maybe?

As far as your first question is concerned, so we were starting from 205% so we have the normal impact of the underlying gross profit which means that let's say it's always between 4% and 5% so it's absolutely in line with our sensitivities. Keep in mind at the same time that we were at 190% and we were not at 190%.

I gave you the indication that at the end of February on Feb. 25 that we were at 190%.

So, that means if I try to explain what happened in March. First of all, we had a bit more of operating proceeds maybe 1 point to 2 points.

We increased by 5 points the solvency due to the €1.5 billion subordinated debt increase and at the same time we have the dividend and we have a market impact that was a bit less benign starting from the 205% to be more clear. That means that 205%, operating profit plus 5 points, sub debt that we issued plus 5 points, dividend minus 2 points and the market impact minus 8 points and you are at 200%.

So, that [indiscernible]. I missed the second part of your question.

Just the UK deals, how must do they add to solvency?

One point.

Firstly, Japan represents about one-fifth of the overall new business profits and the margins are about 3.5 times the average margin, they're over 100%. Can you just talk a little bit in the medium term about whether those very high margins are sustainable?

And then secondly on European Life, I know on the G/A savings you've taken out the guarantees; but with interest rates at current levels, offering a return of premium promise is actually quite amorous when you think about the expenses, the capital charges and the default risk charges. Could you talk a little bit about what are the economics of that kind of return of premium promise on G/A savings?

So as far as Japan is concerned yes, Japan has consistently been a country where we have high profitability. Taking into consideration also that the NBV margin is not the IR.

In other words, keep in mind that the extremely low level of interest rates makes that NBV margin is pretty high, presently we're at 100%, 101% in term of IR which is excellent. We should be at the 15% on top of my head which is good when rates are at zero.

Our success is due to the fact that 70% of our business is protection and health and also some protection with savings business. The pure savings part, I described it before, is one-third so it's relatively small.

Second, keep in mind that also we have 2.5% market share only. We have captive clients with a CCI and in each CCI in Japan, we have a President from AXA which makes that it's an excellent network [indiscernible] business and where we can approach the owners of these SMEs and also the employees.

So, that's what makes our business extremely profitable and we don't expect in the foreseeable future a decline in the profitability. The second part of your question was about the general account products and how do we do in order to have an attractive return.

So, again take the example of all the countries or countries like AXA France. Last year we paid something which was close to 2.5% so we can expect that this is extremely attractive in the present environment.

We didn't at all reduce our margin. This year and in the foreseeable future we don't expect to reduce our own margin, but the fact that we've been managing hedges duration helps us.

At the same time, we're extremely cautious not to dilute these margins. So, the new business is invested these days roughly around 2.2% on average and we have an influx which is roughly at 3.5%.

So, all combined makes that you can still propose to our client a guarantee even for new products which is positive which is let's say even between 1% and 2% and still being attractive and it will help us sell more unit-linked business. That's our strategy, that's what we want to do.

Gerald, can I just follow-up on that? On new business if you're investing at 2.2%, you have expenses, you have to put capital up against credit defaults and if you're offering sort of what you were saying crediting rates of 1%, 2% I can't see how the economics work for the shareholder.

First of all, there is no defaults. That means that when you invest in new BBB, the default is extremely low and these days it's 0%.

At the same time keep in mind that you have no guarantee that means that there is no product that we sell today with any type of guarantee. On average we have on top of my head 90 basis points margin on such type of product.

So, let's say just below 100 basis points and even at 2.1%, if you keep 0.9% for you, you still have the capacity to pay 1% to the client. So, it's not really a big issue and this doesn't take into account the fact that you have in force business with people going out and you have positive cash flow coming from the in force book of business.

I hope I'm clear. But no, it's not something.

Of course if we would invest these rates will go further down, it would be different. But in the present environment, I'm not so worried about keeping a high level of profitability on traditional business in G/A.

You presently do reserve against corporate bond defaults in BBB, don't you even if you currently have no defaults?

First of all, we're not ruled by IFRS 9 rules and second, I can tell you they could go lower. When we have time together, I could go into more detail.

But you can trust me that the default is extremely low. As I explained at the end of February in order to avoid such type of default, we have strict guidelines.

We don't invest in BBB- or [indiscernible]. Second, we limit circulation when investing in BBB- or in BBB.

So, we have a team which is really working on, that's what we call the group credit team in my own team which is giving guidelines to the investment managers which are AXA IM and AB in order to significantly limit this type of issue.

It's Ralph Hebgen from KBW. Just one thing, Gerald.

You mentioned that you will be able to conduct unit-linked business both in higher volume and also higher profitability [indiscernible]. Would you be able to comment on what the focus is in your Group?

Which are these markets where you're hoping to focus your activities in unit-linked? Thank you.

It's a big unit-linked market for us via the U.S., via France and that's already a significant part of it and of course Asia with countries like Indonesia for example. So, what we do is I can give you an example.

These days since the beginning of the year, we have been quite successful in selling in force equities and that's the reason why we have been relatively successful. It's because we sold some real estate type of unit-linked products and these type of products is quite successful because it's relatively good return.

So, the point is to adapt yourself to the present need and to avoid and to have a balanced portfolio which means that our clients don't suffer too much from volatility. That's what we try to do and it's working quite well.

You know that AXA Investment Management is extremely successful in real estate. AXA IM Real Asset, that's its name, is the Number 1 in Europe so meaning that we're quite successful, we're very responsive and with excellent performance.

So, we try to balance these businesses and these unit-linked exposures.

Just one follow-up, Gerald, just coming back to the Chinese product that you sell in Q1, can you give us just a little bit more detail on what that product looks like, what's the guarantee, what's the expected deterioration in the ALM, et cetera? Thank you.

So, it's traditional short term products so that means that it's products with an expected duration between one and five years. So that's mostly it.

But again we try to limit it and it's not ideal from an ALM point of view to be clear and that's the reason why we limit these type of products. And for the rest, it's [indiscernible] maybe one-fifth of the global production of the year and for the rest it will be much more traditional products with some protection in it and so on and so forth.

So, that's it. I mentioned that we have an NBV margin.

This NBV margin is negative because there are some option to lapse for example from the clients, but the other products have much more [indiscernible] terms for us in term of profitability as I said. Just another point in term of earnings, we don't expect NBV margin is negative.

But I would say not on a market consistent basis, but in the real world these products are not loss making. That's an important point.

So, you're able to make a positive spread in the real world?

Yes. I would not say that it's a great spread to be clear, Blair.

But nevertheless it's a positive spread and we will make money on the other type of products that's it and that's what is important. Last element that I wanted to mention is that there has been a change in the regulation in China which means that for the time being these type of products are more or less stopped in China because the regulator with the new capital rules especially [indiscernible] will reinforce the level of capital that will be sold with this type of product.

So, we can expect that it will bring a bit more discipline within the market and that in the end we'll benefit from it. But again, it's not something which is unexpected in our development in China.

I take the opportunity to go back to Michael's questions. That means that I was not exactly right I believe in the math on the evolution of Solvency II.

So we started from 205%; operational is 5 points, sub debt is plus 5 points, but the market is minus 15 points and dividend is minus 2 points. I was wrong I said that the market was minus 8 points, I'm sorry for that.

Okay. Thank you very much everyone and of course we hope to see you on June 21.

Thank you and good day.