AXA S.A.

Andrew Wallace Barnett - IR Thomas Buberl - Group CEO Gerald Harlin - Group CFO Gaelle Olivier - Group CEO for our P&C Operations Paul Evans - Group CEO of Life, Savings, Health and Asset Management

Jon Hocking - Morgan Stanley Farooq Hanif - Credit Suisse Nick Holmes - So Gen Mark Cathcart - Jefferies Andy Hughes - Macquarie Andrew Crean - Autonomous Blair Stewart - Bank of America-Merrill Lynch Niccolo Dalla Palma - Exane BNP Paribas

Good afternoon everyone. I hope you can hear me.

Welcome to AXA's 2016 Full Year Results. Welcome to those on the phone, welcome to those on the webcast and of course, welcome to those here in London.

For the Q&A, we'll be happy to take questions from those on the line or on the phone, on the webcast. Just please follow the instructions that you've been given.

We'd be happy to have your questions, but we will give preference to questions from people here in the room. The presentation this afternoon will be made by our Group CEO, Thomas Buberl; and our Group CFO, Gerald Harlin.

We're also joined and present and delighted to take part in the Q&A today Gaelle Olivier, our Group CEO for our P&C Operations; and Paul Evans, who is Group CEO of Life, Savings, Health and Asset Management. So, they will be happy to take your questions [Indiscernible].

And it is my pleasure to hand over to Thomas.

Thank you, Andrew. Good afternoon everybody.

I'm very happy to be here with you in London even though it was not easy to get here due to the stormy weather. The results -- our results on the contrary are not so stormy.

When we look at the key takeaways, the results have been very solid in a very challenging environment. We have managed to grow in all lines of the business.

We have delivered an earnings growth that was particularly well in the second half of this year, which has also led to the fact that the Board of Directors yesterday will go with a proposal to the AGM to increase the dividend which is clearly supported by the earnings growth. We have also continued to push ourselves in more innovation.

As you remember we have presented the plan last year to you based on two pillars focus and transform and in the transform piece of the plan, we have very clear ambition to become global innovation leader in insurance. When we look at the earnings growth, I said the second half of the year has certainly helped us a lot to achieve an attractive earnings growth of 3% underlying earnings growth and 3% adjusted earnings growth.

This is certainly much higher than we have reported at half year where these numbers were zero and minus 2%. When we look at the underlying earnings per share, we can also see that they have increased by 4% and the adjusted earnings per share by 3%.

This has enabled us to propose to the Board and the Board have agreed to it to propose to the Annual General Meeting an increase of dividend for €1.10 to €1.16, which represents a 5% increase of the dividend per share. All of this is a payout at 48%, which is well in the range that we have indicated between 45% and 55% of adjusted earnings.

If I go now into these different businesses, I’d like to start with the Life and Savings business, certainly a business that is highly marked by the low interest rate environment, despite the fact that we were reporting minus 2% APE at half year, the second half has been very strong and we have achieved an overall APE growth of 2% across the year. At the same time, we have managed to increase the NBV by 5% at a very high margin of 40%.

Why is that the case? First of all we have experienced a strong growth in Asia, plus 16% of APE.

Secondly, we have continued to work on the optimization of our business mix, more focus on protection, more focus on Health and more focus on Capital light business. The third piece is we have continued our in-force management and I would like to highlight one particular action in Belgium where we have launched a buyout of €1.5 million with a record-high take-up rate of 70% where we are continuously working on reducing our exposure to the traditional general accounts.

Second important market for us is the P&C market. Also in this market, we have experienced a growth of 3.4% both in the retail business and in the commercial business and you can also see that the difference between mature and emerging market has materialized again and particular in the emerging markets, we benefited from a growth of 7%.

At the same time, the loss ratio has been reduced even though the overall combined ratio has slightly increased. That has got two reasons; one is we have reduced the prior year relative to last year.

And secondly, we have clearly set a target of growing more in commercial lines. If you want to grow, you need to invest and the increase in the cost ratio is reflected in the investment in growth.

We clearly, however, confirmed our combined ratio target for all year between 94% and 95% through to 2020. A third business that is very important for us and that is often hidden behind the Life and the P&C business is the Health business.

We are today one of the largest player in the Health business, very strong in six market; one of them being the U.K. We have experienced an attractive growth of 4.3% in these markets and have reached a revenue figure of €2 million.

All of this at a very attractive combined ratio of 94.9%, clearly, a market where we want to continue our growth. If we look at the cost savings, we have started Ambition 2020 that we have presented to you in June last year -- in the last year.

We have clearly phrased a target of €2.1 billion by 2020 and obviously we have started our effort already in 2016. We have reached €300 million of savings and confirm our ambition of €2.1 billion by 2020, focusing on all key levers from administrative expenses, through to claim handling expenses and acquisition expenses because the cost savings have a high contribution to the underlying earnings growth per share.

When we look at the achievements relative to the Ambition 2020, we can clearly state that we have completed a good first step in this and towards this ambition. Why is that the case?

With 4% underlying earnings per share growth, we are well in the range of 3% to 7% and our 3% to 7% were very much linked to how are the capital markets performing, how is the environment in terms of volatility. If you think about last year Brexit, Trump Election, those were all elements that have contributed to a significant volatility.

The second area is cash flows. We have reached €6.2 billion free cash flow.

Again, if you project this onto a journey between 2016 and 2020, we are well in the range of €28 billion to €32 billion. On the adjusted return on equity, 13.5% well in the range between 12% and 14% and on the solvency provision, 197, again well in the middle between our target range of 170 to 230.

So, overall very solid results based on a very solid balance sheet and the first step in Ambition 2020 is well concluded. When we now look how do we invest in the future and how do we transform our business.

We have clearly said that we want to leap this way and really think how can we transform. In order to do this, we need to create an ecosystem for this information.

We have started and acted very much with the financial and business means on it. We have built AXA Strategic Ventures; we have already invested in quite few a ventures and have launched an additional funds this year of €50 million.

The idea is to start new start-ups, new ideas, and have a merger between AXA and the start-up working together and benefiting from each other in a way that start-ups have many ideas, we have large scale and the two together make a good combination. It has been very successful.

On AXA Next that we have created last year, we are moving into new business models. If you take my words on the Health business, we see that there is certainly a lot dynamic in this market.

Population Health Management which is along the questions how can you manage the cost increase in chronic diseases better is something that we really want to be in, we're developing new business models in this area. And commerce, this is an incubator for disrupting ourselves where we have also launched three concrete ideas in order to really create new business models.

On the other hand, we are also in the middle of society acting as a social contributions to society and that is very clear, we have got a very strong hand on where do we invest and where do we not invest. We have taken the decision last year to withdraw some investments in the tobacco industry which was quite a bold statement and we have also engaged ourselves in emerging markets and providing solutions for the emerging middle-class through our investments in MicroEnsure one of the two leading micro-insurance company in this way.

The third focus for us is clearly to push more gender diversity, we have been very active on it and we’ve also received certification for it and just to give you an example, how strong our commitment is? On the Group senior executives which is about 150 to 170 people, we are almost at 30% women in the new round of nomination.

I wanted to show you a few concrete examples of what has happened in the last couple months in terms of really transforming the business. One of them is in Asia around prevention, which is a lot of the question, how can we really get closer to the customer, gets more customer contact.

Here we have clearly launched a chatbox where we have a mix of human and robot advice and where we have many, many more contact with the customer than we usually in our business. I would dream of the proper insurance contract to have seven contracts per week, this is impossible and therefore we clearly want to increase the contact frequency and give value added services for the customer where you see also in the second example which comes from Egypt, where we have launched telemedicine service for our Egyptian customers we may use it because at the moment there is any hardly any private medical infrastructure and we can have or if you take another example on the other extreme in adjacent services from Germany where we have launched an application called WayGuard where you are being accompanied by AXA so imagine your daughter goes to a party on a Friday evening and you want to make sure that when he she parks her car away from her apartment that she gets home safely she can connect herself to AXA and walk with AXA back to her apartment.

This has been very, very popular in Germany about 30,000 users and every 13 days of contact this is clearly focused in the direction how do we transform, how do we create a different customer experience, how are we much closer in contact with our customers. Thank you very much.

I would now like to hand over to Gerald to go into the details of our numbers.

Hello, good afternoon. So going to the earnings.

So underlying earnings are plus 3% at 5.7 billion. I won’t comment life savings, P&C and Asset Management because as you know and as usual we have a dedicated part for each of the business lines.

As far as banking is concerned minus 19% is due to decrease in interest rate and for holdings as you will see in the year, in the appendixes we made it from lower rate and also from some saving expense savings. Adjusted earnings mostly at plus 3% mostly explained by underlying earnings.

Net realized gains 515 mostly on equities and real estate and net impairments 395 mostly on equities as well so plus 3%. Net income so as usual, we have some elements which won’t benefit like derivatives which won’t benefit from hedge accounting that’s the reason why we had negative adjustments of minus 158 than versus fair value of concerns which are mark-to-market plus 40 than we have the discontinued operation and I would like to mention three operations.

First, like in first we discussed it and we shared it with you in the first half with the disposal of 2 billion in U.S. for close 1 billion in fact €973 million and the hedge as well.

The disposal of the U.K. wealth management business and the disposal of Bluefin which is the broker in the U.K.

So now as you know, we have our business in U.K. which is concentrating on P&C and Health.

So as a whole minus 454 from this -- plus 387 on this exceptional and discontinued operations, integration and restructuring cost is linked to our workforce planning investment and 454 concern Belgium and 450% of it and rest is Germany and France. So as a whole net income plus 2% at 5.8 billion.

Going to a bit more detail and moving to Life and savings. So on the topline, we have a growth of AB plus 2%.

Mature market minus 1, plus 14 you can notice at plus 2% is significant increase at the end of June, we were at minus 2, we were at 0 at the end of September, so nice improvement we are at plus 2 now. New business value plus 5% and plus 7 in mature market, minus 1 in emerging market coming mostly from China and as you can read in the middle China NBV margin is at 17% there again there again remember that there was a bit of emotion at the beginning of the year because we had a negative NBV margin on China so we end up at 17% which is much better so we have also told you that at that time, after new year we will write much more protection business in china [indiscernible] so as a whole New business margin moves up on 48 to 40%.

Then lets concentrate on this slide on the net flows, so we have plus 4.4 billion of net flows of which Protection and Health plus 5.1. GA savings is minus 3, but indeed its plus 3.6 in capital light and minus 6.6 in capital AB and unit link is plus 1.3, but we had the effect of GMxB buyouts so excluding this effect, we would have been at plus 2, so nice level of net inflows in us.

Let's go to the underlying earnings. So on post-tax basis as I mentioned we are at plus 2.

Let's go to the pre-tax basis, minus 5 in protection and health explained by higher net technical margin but you remember maybe that in 2015, we had negative one-off and we had some we had in 16 non-repeat of the assumption changing part which corresponded to a positive 300 million at the end of 15, so that means that on the protection and health we have a nice improvement of the technical margin excluding these 2015 one-offs. In GA savings, we are at plus 2 explained by lower expense, higher technical margin, but lower investment margin, I will go back on these later on.

Unit linked minus 2, we had higher result on the U.S. GMxB but we have lower fees and revenues in Italy due to specific situation in Italy and as you know with NPS we had mainly we had significant part which was in unit link business and we have higher DAC amortization.

So to make a long story short, it’s a good quality earnings on the life side because it's more technical margin and more DAC amortization. Another way to look at it, it's this charts we start from 2015 to 2018 starting from 3.4 billion and we had protection and health plus 124, GA saving plus 15 million, U.S.

GMxB plus 107 and then we had other unit link minus 141 mostly coming from two countries which are impact of Italy and Belgium as well. Other ForEx and other plus 110 and we had this exceptional one-off in France in 2015 which makes that in 2015 it’s a decline -- of corresponding decline of €259 million.

Then with tax €131 million and higher positive tax one-offs €35 million and you will find all of these in the MD&A, so we end up at €3.5 billion. Let's move to Property & Casualty, so plus 3% revenues, personal lines plus 4%, commercial lines plus 2%.

Here we have additional slides on the price effects and you can see that we benefited from the price effect of 3.8% in personal lines and it translated into 3.6% in revenue growth. Price effect had been positive almost everywhere expect in Italy where we -- the market suffered from decline in pricing and I remind you that the market was at very high prices in Italy.

Commercial lines plus 1.5% and in the end revenue growth of plus 2.3%. You can see on the market pricing trend, more or less, we're still expecting positive price effects in the U.K.

and Ireland, in Spain, and more or less flat in France and Germany and negative trend in other countries. Mature markets; let's go to the margins and revenue, so revenue as I mentioned to you plus 3%, its plus 2% in mature markets, plus 7% in emerging markets, and here we -- in fact, its 9% on an economic basis, why, because we have in Asia notably we have some entities which are consolidated end of equity methods that means that the topline growth that then flows from the 7% if we restate, we would have been at plus 9% and direct is at plus 7% topline.

Current year combine ratio flat in mature markets. In emerging markets slightly up, mostly due to the acquisition expenses, direct declined from €99.3 million to €98.7 million and as a whole, we have a current year combined ratio which is up 0.2%.

Another way to look at it, in fact, additional slides, starting with current year combine ratio which is what I just explained, but we have another element which is natural catastrophes and we were at 0.5% this year versus 0.7% the year before in 2015. Prior year developments dropped from 1.4 to 1.2.

Overall, our whole year combined ratio moved up from 96.2 to 96.5. Investment income was more or less stable with two elements, higher average invested assets, but as planned and as we discussed in the previous meeting and when we presented the plan, the investment yield is dropping from 3.6 to 3.4, within the range that we shared with you.

Asset management now, net flows as a whole are quite significant, €45 billion plus €56 billion at AXA IM, significant part of it is €34 billion is with Asian JV. Average AUM is down 3%, mostly explained by the -- partly explained by the Friends Life -- the merger between Friends Life and Aviva made at -- in the end.

We lost asset management contract, excluding it, as you can see on the right hand side on the chart, revenues would have been at plus 1% excluding the Friends Life contract versus minus 3% published. Average AUM AB is minus 12% and minus 12% didn’t change things the third quarter.

The negative -- the drag on negative net flows corresponding to the loss of two last contract, average AUM plus 1% and revenues minus 3%. Let's move to underlying earnings, underlying earnings are down 8%, minus 1% explained again by the Friends Life contract.

If not, would have been positive. On AB we have a strong negative tax one-off of €50 million and excluding this one-off, we would have been at plus 6%.

Balance sheet, now, it's with the invested asset, so invested assets amount to €583 billion. No big change in our asset allocation, no big change in asset duration above eight for Life & Savings 5.6 for P&C and as you can see and as I already commented for the P&C business, our yield decreased from 3.6% to 3.3% for Life and from 3.6% to 3.4% for P&C business.

No big change for these and relative terms still benefit from rating which is in AA range as far as corporate bonds are concerned in A range. This is -- this relates to the investment that we made during 2016.

We invested €82 billion in fixed income at an average rate of 1.8%. You have the allocation on the left hand side, so we invested more in corporate bonds than before.

You cannot seek below investment grade traded which is at 12%, because it's going to shorten our yield. We won't -- to remarks, we don't intent to invest anymore in initial duration yields, I mean that's naturally because there's a very short duration because the returns too low.

Presently, we have spread on these types of business of 1.5% -- below 1.5% which is not enough, so we'll invest in other categories. As I said, we intent to invest this year under present condition whereas last year we were investing at 1.8; we should invest slightly above 2 this in 2017.

Asset & Liability management, so we benefit -- we still benefit from margin -- significant margin of 140 basis points between the invested assets and the guaranteed assets on the in-force business on the left as well as on the new business on the right. And investment margin is being resilient at 73 basis points, well high end of the guidance which was 65 to 75 basis points for 2017 and 2016 -- for 2016 and 2017.

Next is the shareholder's equity, shareholder's equity went up by €2.1 billion from €68.5 billion to €70.6 billion, mostly explained by the net income. We had increase in net unrealized gains because we had drop in the interest rates in the euro.

We had the dividend and we had the reimbursement of debt and we had also the change in pension benefit, why, because due to this drop in the interest rates, we had lower discount rates -- discount rates was lower by 60 bps, which means that we had an increase -- a collative increase in the pension. That's mostly it.

Look at the adjusted ROI which is at 13.5% as mentioned before by Thomas, well within the 12% to 14% range. Financial debt as a whole -- as last year, you can notice that we still have mostly sub debt, €9.1 billion in sub debt and €8.1 billion in undated subordinated debt.

You can see that the interest cover is quite good. Debt gearing is at 26% and we have been upgraded by S&P to AA- in October 2016.

More or less across the Board, we're AA- in all the three agencies. Solvency II ratio, we are 197%, so you had the whole forward to operating return expense plus 19 points.

We start in the 205%. I remind you that we were at 191% at the end of September, dividend -- so plus 19% compared with the full year 2015, plus 19% on operating return, minus 10% on dividend -- at the dividend that has been in May last year, market impact minus 14%, and the other elements minus 5%, so we end up at 197%, which is 6 points above the level of November -- of last September.

Last slide is on the cash flow, so we have strong cash flow generation and strong remittance. We have operational free cash flows are €6.2 billion, so in line with last year, but the cash remitted to the Group to the holding are at €5.4 billion, so higher than last year, because we looked remittance ratio at 81% to 88%.

And now I hand over to Thomas for the conclusion.

Thank you very much Gerald. If you look at the results that we have presented, there is two major conclusions.

One is they are in line with long series of consistent delivery, if you look at the previous ambition and this ambition, we have always managed to deliver what we have promised and the new ambitions at the first year of a very good start. What are the key characteristics?

We have managed to grow the topline by 3%. We have managed to grow the earnings by 4%.

This has led to a decision to increase the dividend per share by 5%. All of this based on a very solid business model, very solid balance sheet with a return on equity of 13.5 and the Solvency II ratio of 197.

Thank you very much for your attention and we are now coming to all your various questions that you will certainly ask. John, why don't you start?

This is Jon Hocking from Morgan Stanley. I've got three questions please.

Firstly, on M&A, I think you've been very clear that you're not interested in large scale M&As. I just wondered if you could just reiterate for us what your M&A criteria, size and metrics you would look at you are doing a transaction.

That's the first question. Second question just to pick up on what Gerald said about the investment allocations.

You're putting less into short duration high yield, why are you reallocating to in terms of the reimbursement mix. And then just finally on the interest cover, the interest coverage jumped up dramatically in the leverages through probably similar the earnings are [Indiscernible] just wondering what's driving the jump in interest cover?

Thank you.

Thanks Jon. So, I will take the first question and Gerald will do number two and three.

There is certainly many questions at the moment on M&A. When we look at AXA's history, AXA have grown by bolt-on M&A.

The aim was to get to global scale. Today, we are at global scale.

So, when we look forward in terms of M&A, it is not about acquiring small pieces and it's not about large M&A. It is about where can you reinforce ourselves in the area where we want to grow.

What are these areas? Health, commercial and P&C and the preferred geography is Asia.

We are actively looking out for targets as you know this market is very hot at the moment and it's never easy to get quickly to the right target. But we are very actively looking and when the time is right, we will take the right decision to enlarge our footprint in these areas.

Gerald, for two and three.

Yes. As far as the -- Jon as far as your second question is concerned, yes, we -- I mentioned that we did this intent as of present conditions and below a spread of 1.5% to invest in short duration yield.

We are -- as far as the low investment grade is concerned, the prefer to-date much more loans, leverage loans because we benefit from government and which give much more protection. At the same time, we have highest price.

The way we manage our assets is really comparing the return on economy capitals and that's why from time-to-time, when you have these decline in the spreads than normal interest to raise capital because you led into high risk capital to invest in this share of asset. That's more or less the way we do it.

On the interest cover, you remember that I said and it was the same at the first -- during the first half. We said that in the holding side, we had an improvement in the [Indiscernible] earnings contribution coming from the lower interest rate.

Progressively, the decline of interest rate will benefit from this lower interest rate and that's the strategy.

Thank you. Let's move just the row forward and then we go to them.

Thank you very much. It’s Farooq Hanif from Credit Suisse.

Can you just comment please Gerald on the sharp increase in U.S. yield influence Q4, how does that factor through in your earnings in the context of the plan that you gave Ambition 2020.

And that's my first question. Second question is -- general question, I mean there has been a sharp increase in your market share and revenue to the U.S.

because I believe you’re going up tables in the market was sharply down. What's going on there?

What's the outlook in that business in the margins? Thank you.

Gerald for the first question and then Paul Evans will take the second one.

The higher rates in the U.S. is a good news for us.

It doesn’t reflect into the -- so much into the RBC, half year at 600. Why?

Because we keep investing, it’s doesn’t play, it doesn’t improve the Solvency position like in Solvency II. In reality the economic situating is improving while brackets are going up.

And you can see that could go through the full-time appendices and in the appendix you have the contribution to earnings of the U.S. and it's on page B-31.

And on page B-31, you can see that indeed in the end we have a contribution which is the interest rate credit and spread. You can see the fifth line and you can notice that we are positive [Indiscernible].

And again that’s a situation, here its net of that, but that's a situation which is in itself is quite positive, because the higher the rates, the more we can amortize that and you will notice that as far as we tell you that as far as the old book of business is concerned, we decreased quite substantially all of that roughly by €600 million So, that’s mostly -- it’s a good news and at the same time, the present situation where relatively high stock market plus higher rates is a good news for us.

Thanks. [Indiscernible] guidance you gave in Ambition 2020 that the U.S.

deal is more important than anything else?

No. I believe that its very -- no, the U.S.

yield are important, but what is as much as important is also the yield curve in Europe and the yield curve in Europe is very important, but at the same time, it increased but not so much. We are coming -- remember just after the presentation on the 21st of June, we had rates in Germany going down to minus 30 bps, now we are plus 30 bps so it's far better.

We benefit on the situation, it’s at the end of the game. Remember that the base case that we showed in last June was a slight increase from half year where we were before to 100 basis points if I’m right by the end of 2019.

So, we are on this path, so what is important is from a macroeconomic perspective, I would say from interest rate perspective we are back in the business case which is a great news.

Second question Paul

Yes, on the fair annuity market, you saw last year that the U.S. market was down as distributors and providers prepared for Development of Labor reductions around fiduciary duties, and indeed AXA US’s sales were down in the first half of the year, around 40% of the U.S.

volume are variable annuity, and the U.S. had launched a product which is called the structured capital strategies which is an investment detecting index where you offer to guarantee a reduction of 5%, 10% 15% 20% in the value of investment over time in exchange for give on upside.

And we saw a very strong sales brand proposition throughout 2016 and in particular its part of our Q4 growth story, but of course the market additionally than took into account the views of the incoming administration. The margin in our product is lower than retirement consortium, retirement consortium is the traditional VA replacement product that we introduced P&C it's about half the margin that we get from retirement consortium.

So VA [indiscernible] VA, we move forward to that side.

Nick Holmes of So Gen. Couple of questions.

The first on expenses your cost reductions program although the growth numbers are pretty good, doesn’t seems the hitting the bottom line perhaps in 2016 with as much as in previous years I site for example administrative expense ratio raise to 27% I wondered how confidence are you that 2 billion is actually going to hit the bottom line? And the second question is with growth, Asia going very, very well, but I wondered what your thoughts are about the areas that you have highlighted in the past of growth areas in particular healthcare and of course Unit-Linked neither of which is quite delivering perhaps as you had hopes of certain Unit Linked is not?

Thank you for two questions. I suggest that Gerald is taking the first one on cost and Paul will take the second one on Health and Unit-Linked.

Yes, as I said, you said our expense hit the bottom line especially in P&C. You are right that it is due to the acquisition cost means that as far as the admin cost we are perfectly on track and its due to acquisition cost especially on the commercial lines and maybe there would be question on this and that could develop.

What I can tell you is that we're on track in concerns of 2.1 so that’s no feeling on that side we will do our plan.

Maybe guys before Paul answers going to the topic on acquisition cost on commercial land to clarify the question.

It is important to see that on the retail side is flat. If that goes in the right direction the commercial lines its increasing slightly, admin expenses are flat, acquisition expense are increasing slightly it’s a combination mostly of two factors one is one of change [indiscernible] some of our international brands, which has been brought back into the overall commercial end segment and the other dimension is the specific investments that we are making to develop partnerships and as you know, partnerships develop although few years, so we are incurring the cost to start with and we expect early next to benefit fully in earnings.

So, on healthcare and Unit-linked, so if you got back to A22, which shows the mix of APA, so first on health, so we've shown 4% growth in revenues in healthcare. The 4% growth to 2 billion in healthcare which actually was very solid performance across the board and was despite some turn back in the growth in particular.

In Unit-linked, we’ve got a combination story in Unit-linked, so we have situation in Italy with [indiscernible] where it became, obviously, very difficult predominantly Unit-linked product. So, in the branch we had the closure of the individual saving business in Belgium, which further reduced UL, we had the experience in the first half of 2016 when stock market volatility had a particular impact in France, but also touch earlier, the VA impact in the U.S.

Nevertheless, I increasingly look at UL and capital light G/A together, because we are increasingly re-engineering our G/A products to be capital light i.e. NBV margin is actually by far is matching the comment after in the end or above.

So, in particular there we saw strong growth in Hong Kong in particular, in Italy, we were able to capitalize in the bank rather than UL. So, you need to look increasing those two lines together.

So I’m less concerned now that UL should grow year after year after year, I’m looking at the two together, because capital light grew last year.

Nick, maybe just to add on the cost side, those numbers are one thing and the other thing is one of the lead indicator for cost, if you look at where are the core restructuring programs happening, and so I was mentioning the restructuring cost numbers, we have a very big restructuring program in Belgium. We have a significant one in France.

We have a big one in Germany, and another big one in the U.S. and also particularly in U.K.

So everywhere we are in the preparation and negotiation and implementation of restructuring program. Our core businesses is in Europe.

One key value of AXA which we’d really like to keep is the social partnership with the social partners, which means we have to invest time and negotiations. But that pays off because if you take the three countries that I have mentioned where you have very high social partnerships, France, Belgium, Germany, we have concluded very positively to go into the conversion.

So if you look at the lead figures of what will happen in terms of cost savings that is very clear rely on the future.

I forgot two things. One is on the ASH; you should have net remitted number of 5.4 billion I think.

I’d like to discuss whether that number still includes any repayment of internal debt? And if it does it would be great if you could tell us how much and indeed whether your strategy is ongoing to pay down internal debt domicile in the AXA Financial Holding in the U.S.?

And the second question related to P&C, we all noticed that you have combined the all P&C function, international insurance, you have repeated your target, but indeed extended if do not includes the international or the core business unit in the old international insurance segment. My question is basically, what drives that optimism?

Are you hoping to generate others simplification pricing benefits from the combination of few segments or anything else? Thank you.

Thank you very much. Question one for Gerald, question two for Gaëlle.

Okay, so your question about the 5.4 billion, that will end of said coming from the U.S., yes. We are seeing 1.2 billion and it was higher than the previous year.

You remember that I mentioned in the guidance that was 1.6 billion. Why because we had the disposal of the two buildings and the cash of the two buildings have been extreme.

And your second part of your question is about what’s next and what will we do in the future? Yes, we’ll go on.

And the objective is [indiscernible] phase of course, but with guiding principle and through in social [indiscernible]. Another point also, you remember that in June, I said that I was comfortable with 75 to 85 remittance ratio guidance because we had some potential to reduce our capital – I am sure you remember this – to reduce capital and to optimize capital in Europe.

So, globally speaking, that means that’s why we are comfortable and we remain comfortable within this range because there will be plus or minus depending on the years. But we still have this capacity to optimize our financial situations.

Gaëlle?

So on the commercial segment, maybe just to reemphasize what we have done in 2016, you see the growth of 2.3% more or less on the commercial end side, and that includes the international segment. You [indiscernible] sure it is improving by 0.8 and you see an expense ratio which is increasing not on the admin but on the acquisitions side.

So that give us comfort going forward, that we can achieve overall an all-year combined ratio target for the commercial segment by 2020 to reach 94 to 95% range because despite being a soft market we eye not only to grow our business through a mix of price but also volume effect, while improving on the line profitability. Now, if you remember what we had disclosed back in 2016 June in our targeted segment strategy for commercial lines, we see good progress there as well.

If I just illustrate with you initiatives that Amanda here is a sponsor of [indiscernible] initiative. We are growing that segment at 3.6%, which is well in the range that we have also shared with you back in June last year.

And the other element is in the international segment, you have two main pillars. One is the assistance partners part, and the other one is your corporate solutions part.

On the partners part, is exactly what I mentioned earlier. We are today doing some investments to develop new partnerships and we expect those partnerships to really develop in the coming years and to translate into earnings in a profitable manner by 2020,which is why we are reiterating our target of 94 to 95% combined ratio earlier by 2020 equally as well within the international segment.

It’s Mark Cathcart from Jefferies. You mentioned earlier about M&A.

But if we go into a situation [indiscernible] Generale, Allianz, Zurich, things happen in Europe. You mentioned you’ve got global critical mass, but your market share is pretty low relative to a large players quite significantly within Europe.

We saw Allianz tweak their capital management strategy just one year into their business plan. My question is based on this.

Does AXA have the essence of flexibility in their thinking and to consider adapting that business plan, if you start to get sizeable moves going on within Europe?

The question is always which sizeable moves? I have said earlier that we have two areas where we do contemplate M&A in the main geographies that we have.

I prefer Asia, but again, if there is M&A opportunities in Europe on commercial land P&C or on health, I am always ready to look, but when you look at it at the moment many of the opportunities that are presented are in traditional GA life and that’s certainly not something I am interested in.

We go this way and turn.

Thanks. [indiscernible].

I had a couple on solvency, please. First of all, I noticed your sensitivities to interest rates seem to have increased but I was wondering if you could just say what’s happened there the reason for that.

And secondly, in the second half of the year we are looking at 11 points of operating for Solvency II basis, I am wondering if you could just sort of say how much of that you might consider one-off, because obviously its – I guess, its above your sort of guidance for ongoing some capital generation?

It's one of the sensitivity I could say that you have to take into consideration the facts that we’re benefiting from the equivalence. The equivalence makes that when interest go up.

In all non-U.S. companies we benefit from this situation that means that so long as we have an low conservation gap which is relatively limited but say one year, we benefit – we benefit from higher interest rates.

But in the U.S. it’s a reverse it’s a reverse because we are using our BC.

So that’s why you could be surprise on page 40 that we hold that means that we have an interest rate to sensitivity which is relatively limited plus 3 points. From an economic point of view it would be higher that’s the message.

Next about the operating return, it’s good to show– yes, we said that it would be between 15 and 20 and you’re referring to this between 15 and 20 bps of operating return per year. We are in the high end of these range, we could say it could vary from one, two points but it's not substantial.

What is important is to say that at 197 we are already within our range and that – there are always some situation, but I believe that until media and you will have the AXA SA report and we will have opportunity to discuss with you on more sensitivity and so on. But no specific sign about changing the guidance we said 15 to 20 will be remained within this guidance.

Hi. Andy Hughes from Macquarie.

A couple of questions, if I could, first one the reinvestment rate obviously it’s come down in the second half versus the – sorry – versus the first half, I’m just quite curious about the leverage loan investment strategy that you are planning. How much yield are you getting on the leverage loans and what’s the risk’s in the leverage loan portfolio, can that be a large part of the assets of AXA or is it always going to be a very small part of the business?

And the second question was about the commercial loans expansion, so I guess I heard from Zurich and maybe also AIG that they were pulling away from long term loans in commercial because of the inflation risk. And I’m just wondering how you feel about that at the moment, I can see it’s probably a bit hard to beat you up over the reinvestment rate and the inflation rate at the same time but seems I’m doing it.

So on the P&C side if inflation picks up and you’ve obviously got quite long duration in the P&C assets how well provisioned are you guys there? Thank you.

Gerald, do you want to take the two questions on investment and then Gaëlle maybe you comment on the commercial loans business in the long term nature?

About the average loan it was an example. So last year as I said we invested 12% roughly in below investment grade.

But we are speaking from and last year we had 82 billion to invest which was quite large. This year I’m expecting to invest to have between 40, 50 billion, 45 to 50 billion to invest.

So I’m speaking for few billions I’m not speaking for huge amounts. About the spreads your question was what you expect it in terms of spreads, it seems like the spread of 250 bps and I’m seeing that exist because again the point is that the difference for us is clearly how much capital that’s the answer I gave before that’s the amount of capital that we want to dedicate to it.

So I’m not at all ready you can see that in all the line of business, all the line of business has a quite high return because that means that in term of return on investment, return on equity we have high levels. I don’t want to invest and to dedicate capital in order to have less than 10% returns.

So that’s why we are quite keen and mobile, flexible in term of investment. Last point and to answer fully your questions at no time we would like to change and to an average of portfolio should be single A plus.

I don’t want at all to change the average rating of our portfolio, because indeed in the end it would more capital for marginal return. We are today in a situation where spreads are quite low and look there is such a demand for U.S., because most of the short term high yield is U.S., short-term high yield as you know, and there is such a demand for high yield product that spread are to a level which are no more reasonable.

That’s the message I wanted to convey, nothing more, and it won’t change fundamentally the way we invest, but majority of our investment will still be in investment grade, say 90%.

[indiscernible]?

Yes, the lot of yield would come from small part of the assets, but to develop more, for example, a significant part of our new money is invested in corporate real estate loans, for example and corporate loans are investment grade loans and but there is a aliquot which gives a bit more return. So there is no magic in it, but I can tell you that my team – my investment teams are working hard in order to find buckets of assets with good return, which are mostly investment grade, but with high return on capital, even if we except to be less liquid.

Commercial loans?

On the commercial lines I would say, on the perspective I would say probably [indiscernible] the first one is compared to the competitors that you have mentioned, we have been historically less exposed to commercial lines. Commercial lines today is roughly 40% of our revenues and we believe that there is room to grow for us, to grow our business in commercial lines, again in a profitable manner.

The second thing is the way we are intending to do it is a very significant manner and we believe that today we have still opportunities to grow in segments in commercial lines. SME was an example, mid-market is another one, international offers where today we have a global presence is another example of areas where we believe we can grow business profitably in commercial lines.

And the third aspect is if you project yourself five, 10 years from now, we see some new risk emerging, Cyber is one, but also probably the motor insurance where we will see more and more exposure for our commercial lines compared to what we see today being a retailer individual insurance and we want to be in that market, because we believe that this market is going to grow and we believe that we have the expertise to grow that business profitably. So, that’s why in our strategy long-term, commercial lines is an important dimension where we want to continue to grow market share, reach to the normal market share that we should have or even beyond and things of new risk opportunity that we see as opportunities for business.

We go to the very back and then move over to Andy.

Thank you so much. One question for you Mr.

Buberl, is the -- so 3% to 7% was EPS growth target of the period, 4% I guess is the number today. And does the 4% correspond to your judgment what you can maintain at the current level of interest rates?

Or was there still an element to backend loading with the cost to come, so that would be my first question. Then Mr.

Harlin, on the cash flow from the U.S., 1.2 billion is lovely number, but if I just deduct the gain from the buildings, is only 0.2 billion or 0.3 billion, however you round it? Is there a stress there linked to the proposal to increase the reserve capital for the U.S.?

How does that look? That’s my only questions.

Thank you.

Thank you very much. So, I’ll do question one and Gerald will do question two.

You're absolutely right; we have stated very clear differentiation doing our June 21st meeting between what is in our hands and what is not in our hands. What is in our hands are clearly the 8% underlying earnings per share growth from margin improvement, from cost reduction, from better capital management.

This we have to mirror against the capital markets which is not in our hands. We have planned at the time for a very negative scenario where the one thing we hope would not happen a couple of days after our Investor Day presentation, Brexit was even considered.

So, the -- yes, first of all, the 4% or whatever it will be is, first of all, dependent on how are the markets performing? We have said earlier have seen good equity markets.

We have seen a rise in interest rate in Europe -- sorry in the U.S. We have not seen yet a rising interest rate in Europe and we believe this will come overtime, but it’s a more longer term issue.

And secondly, you are absolutely right, when you look the development between 2016 and 2020, I would not assume a linear movement because there are things that you have to invest in, have to get going before they materialize. I mentioned earlier the cost, if you want to reduce your staff in European entities, you have to first understand where you can do it, how you can do it.

You have to agree with the social partners. That takes time, but I’ve indicated earlier that certainly in three countries, we have reached major agreement to go forward and materialize.

So, yes, this should not be a straight line. Second question to Gerald.

Yes, your question about the U.S. cash flows, indeed for technical reasons, first, even if it is a repayment of debt, it translate into a repayment of debt with the holding company and then the operating company and the operating company pays dividend to the local holding company.

And for technical reasons, you should get an agreement from local supervisor and we got an agreement extremely late, which makes that for technical reason, we kept some cash and it will flow in 2017. So don’t have any fear.

We have accepted the two building that is real cash flow.

Andrew, your hand must be falling off now, I am sorry you have to wait so long.

It's Andrew Crean, Autonomous. I want to take you up on that restructuring issue because your restructuring provisions have gone up by nearly three times $450 million.

They represent 8% of your underlying earnings. You are restructuring the organic business here.

It’s not that you are requiring the operations. Should there is restructuring provisions not be taken within the underlying earnings, in which case, I think your underlying earnings would have been down 2%, no doubt 3%, because they are costs, which you are incurring to improve your business to grow the underlying earnings.

And basically that’s a presentational question behind that lies, what is outlook for the $454 million restructuring provision.

Thank you, Andrew. Gerald.

Yes, that's -- no, we cannot analyze it this way. Let’s take the underlying earnings from the restructuring cost coming from Belgium.

It’s more than €160 million. What does it cost into disposal of the business, we start the business indeed.

So, it’s not at all underlying cost because it’s a line of business that is being stopped. We decided clearly to discontinue our individual savings business.

So, it is a cost associated to it. So it’s just like -- imagine that you would dispose a business, there is no case for putting this cost or this loss in underlying earnings.

For the two other countries, which are concerned Germany plus France, it’s really restructuring. It’s restructuring because we have to -- we have pre-retirements in this countries and these pre-retirements correspond also to initiatives that are taken in order to change a business to be more effective, to be more profitability.

That's more or less the case. So, really -- and it’s not something that you could expect to have on a regular basis.

So don’t expect to have restructuring costs at such level in the future years. So you always have some restructuring costs, but this year it was at an exceptional high level, but for justified reasons.

Blair.

Thanks very much. It’s Blair Stewart from Bank of America-Merrill Lynch.

Three questions please. We’ve talked about the plan a lot and the interest rate movements, and I think in your plan there is a 0% equity assumption, we’ve had better than that and we may well get better than coming year.

Well, can you give us some form of sensitivity to what happens if you get some positive effect in equity markets say 5% or 10%, what does that do to the earnings of the company? Secondly on Asia, you’ve struggled fairly optimistic tone about Asia, I notice that payback period is going from three years to eight years, is that a function of macro conditions or is it something else, was it eight years is quite high by Asian standards?

And thirdly, I just wonder if you can give some commentary on the U.S., you’ve given good guidance in the past about what may happen to DOL or what might happen to VA volumes at upper end of DOL, which is fairly accurate. Given the DOL is likely to get also done and given the possibility of prospect of lower tax rates, et cetera in the U.S.

I wonder if you can just refresh some of that guidance what might happen in the U.S.? Thank you very much.

Okay. Thank you, Blair.

So, let's take first question Gerald, and question two and three for Paul.

Okay. Let's just for sake of clarity, propose you to go to page B21 because I believe it will answer your question.

Here, sets the usual analysis what we call the margin analysis of our Unit-Linked business and here you have €163 billion of Unit-Linked average reserve. It's not exclusively equity; let's say that half two-third in equity.

So, it gives you a good view. You have €2.6 billion coming from equity.

So, let's say that rise of 10% of the equity market, more or less represents something like €200 million pretax and pretax that gives you a good idea. I believe based on this page, you have a good view and a good sensitivity of what it could mean.

Yes, for sure, it would be a good news for us, that's what I said. Both in the Europe, both in the U.S., we have two large countries where we have Unit-Linked business, as you know, it’s the U.S., it’s France and also other countries, but not to the same extent.

It would be an extremely good news.

Asset management…

Yes. Asset management as well, you’re absolutely right.

And you can make all your math on asset management as well. You have all the appendices here.

You’re right.

Paul, on payback in Asia and U.S. regulation.

Back in Asia, I’ll speak under Gerald’s control. I believe what you’re seeing there is the mix of country toward China.

Gerald, are you going to say yes to that?

Yes. It’s on which page 70…

72.

72, yes. So what you’re referring to is the fact that we are moving [AHL].

And you are absolutely right. It’s coming from the fact that in China we have less -- we had a very high profitability in countries like Indonesia, Thailand and the fact that we are going strongly in a country like China which a marginal MBV, but it’s linked makes that we are increasing the paybacks.

That’s exactly the reason.

I mean, clearly, the Thailand mix, we saw two factors in Thailand mix, where our banking partner have issues with performing loans and we of course saw death of the King. So, we saw downturn in profits and volumes in a high margin country and switched into China, which saw a great growth.

The U.S. -- it’s difficult to give projection in the U.S.

because there are now quite a number of moving parts. So, yes, the new administration issued an instruction that the DOL should reconsider their plans.

We don’t yet know whether that will mean they reconsider them and to continue as planned. I mean, many distributors in the U.S.

are progressing as of the April implementation date will continue. We expect it to change, but we don’t expect it to be zero.

We don’t expect no reform of fiduciary duty, but we do expect it to be more favorable. Then you have the administration’s plans for taxes, which are of course unclear but at an expectation of lower corporation tax rates which is positive for us, expectation on dividend tax which is negative, and the key question is where the administration go on its state taxes.

So, actually I don’t -- I struggle to give -- I'd like to a range we had for DOL. But I would say that the U.S.

market will nevertheless remain challenging for us in 2017.

Gerald? Corporate tax in the U.S.?

Corporate tax rate is 40% today. Altogether, we are at 40%.

Yes. But pay attention, because -- and it's difficult to make some speculation about this.

For sure, it would be great news. But take in mind that that will benefit also from the DRD reduction.

So, on the face value, you could -- we could imagine an announcement of significant decrease of the tax rate to 15% or 20%. But if the dividend -- the DRD go down, it will offset.

I believe that the net should be positive. I fully agree with what I confirm what Paul said.

Pay also attentions that on the first year we could have a slight depreciation on the DTA, on deferred tax assets. Okay, but it would be a one-off anyway.

But on a recurring basis, should be positive, so far difficult to say because we should know exactly what -- the devil's in the details. The face amount will be decrease, but could be some of setting amounts which would be negative.

So, net should be positive.

Going to back again.

So, considering France to be also the next political place. Could you give a feel for how the various scenarios could play out for the group?

Certainly here in London there is always a discussion say that France could exit the Euro maybe there's a hope part of it?

So, there is certainly a topic and when you take the -- if you take the bond markets as a temperature feeling for how certain or uncertain something like this is. You have seen in the past couple of days that spreads between the OAT and the German bonds have been widening.

This could be a sign of concern. If you go back further in the history, you see that those 80 plus minus basis points are actually not that high, because we have seen times during the European financial crises where the spreads have been much higher.

It is true today that you can have very different scenarios on the political front in France. You know them as well as I do.

And the question arises what is the chance of a Frexit. The general sentiment in France and my personal opinion is that this chance today is fairly low, because after Brexit, it was a clear wakeup call for Continental Europe.

And what you see today is a much heavier corporation and effort between the German and Frankel couple. Because at the end of the day, if you want to give a new narrative to Europe, it is those two countries who need to carry the narrative.

Both countries will have election this year and there is a strong hope and desire that two candidates and two voted people emerge that will carry this couple forward. So, my personal opinion, yes, there is a chance.

The chance is to my mind very low and if you look at the markets and the spreads that we'll show you that relative to the past. However, we need to prepare ourselves for it.

But we mustn’t only focus ourselves on Europe, because apart from Frexit and Brexit, there is many, many uncertainties in the U.S. There is China, there is Thailand, there is Malaysia, we are living in a world of uncertainty and risk and fortunately our business is to manage uncertainty and risk.

And if you look over the last 30 years, we have always coped with this in a very proactive approach, identifying it early and acting on it and I'm very sure that in a case of Frexit, which I really hope will not happen, we will be doing the same.

[Indiscernible]

Can I ask you, you are clearly all very confident in the balance sheet and the earnings is pretty stable, cash flow is looking good. What does it take for the dividend to move up through the payout ratio range?

So, I mean, we have clearly stated today that the dividend will increase because underlying earnings have increased and for me this is an absolute key paradigm. We want to keep the stability of the balance sheet.

That is our asset, our backbone and we don’t want to jeopardize this balance sheet by applying a dividend policy that does not follow the earnings.

Sorry, you need a microphone. So I didn’t want -- you can finish your writing.

I'm sorry I didn’t…

No, no. It's all clear.

Actually this was exactly the same question. I was just looking…

So, I've already answered it.

Yes. Already written the answer down here.

No, basically perhaps just a slightly different framework. If you just look at the U.S., well, U.S.

is really in bullet point. You have a 660% RBC range.

The operations there are clearly self-funded. Sometimes you sell a building.

There is internal debts, still at AXA Financial which you can upstream. The dividend which you paid is 1.5 times covered.

This compares to annual run rate in the past of 1.3 times. So, slight differently, what are you doing with all this cash?

I understand, of course, the requirement and necessity to keep the balance sheet slow. But this is exactly also my sentiment, would you not be able to even though allow the payout ratio to increase to perhaps the upper end or the upper half of the payout ratio range.

So, perhaps if you share some additional thoughts reflecting the enhanced cash generation capacity, which AXA has achieved over the last two years?

First of all, we don’t have so many buildings any more that are left in the U.S. Secondly, you are absolutely right, we have been successful in our cash generation and we want to continue to be successful.

I’ve also given you a very clear hint when questions came on the M&A strategy that we are dedicated to reinvest that cash in the activities that we like to increase and when I’m talking about health and commercial lines, I’m not only talking about core insurance health and commercial lines, I mentioned earlier AXA Next, there are businesses developing beyond insurance that are related to insurance. I mentioned population health management, you could go as well in the commercial line area and see that the risk consulting and risk identification piece, certainly if you take one booming area cyber risk is a business that we should be looking at.

So, we are all personally very committed and dedicated to invest this cash where it’s required, where it’s building our business, and where it’s generating further earnings capacity that we can then distribute, but again we need to take one step after the other.

Hi, there. I want to follow-up on commercial lines, because history is listed with companies have gone into new areas, and have found profitability especially in commercial lines is challenged and we’re facing a situation and everybody is telling us whether it’s international programs or long-tail even sort of mid-tail business and the pricing is down.

So, how can we be confident, how can you be confident that you're just not going to fall into that trap?

Certainly, I just wanted to say, just a remark that came spontaneous being new in the business and having half of your P&C business in commercial, I wouldn’t consider new. But Gaëlle, you go ahead.

I understand your question and I think it’s important that I clarify. Commercial lines is not only the large risk here and very often what you have in mind when you see commercial line are really large risk here.

So, that’s why I anticipate so much in my sales before on the semi-segment. It’s an illustration of small companies and we think SMEs let's say less than 50 people in Florida.

And in that segment those companies when they are growing the economy, 80% of the growth of an economy, let's say is coming from that segment. Two, they need proper protection.

Three, they are not properly address today. And when I look precisely at what we're doing in the growth we're able to generate.

Again, the growth in our commercialize segment is 2.6 in average in 2016. On the SME segment its 3.6.

So we have a segment there which is growing much faster. Now to illustrate that we have a perfect example here with U.K.

and what Amanda is doing in the U.K. U.K.

mature country. You could say low inflation, low economic development are you able to grow in that market in a profitable manner.

And what we're able to demonstrate in the U.K. on the P&C side in commercial lines is that we're able to grow at 9% on the P&C side in the U.K.

in a profitable manner. And we have other examples like that in other countries.

We have also other countries where we have very sizable commercial line book, take France for instance or Switzerland. So obviously when we already have a sizable book here, the strategy grow to here will be different.

But when we have opportunities that we see in some markets and we're attract them in a very segmented manner and we see the first success building up and then yes we want to be confident that we can continue on that successful way and continue to deliver our host again in a profitable manner. And those are not large risk.

So it is not a long-terms liability that you can associate with [Indiscernible] very large risk, those are the business that we encounter every day when we look in the streets when we do our own individually, you go to the barber, you go to the coffee shop, those people they need insurance as well. And that’s what we're targeting.

And I think the big opportunity that we have in our hands being both retail players and a commercial RIET player is that we're able to leverage the new technology today the new tools to address that segment in a much more convenient lean user friendly way and that’s what we're doing in the U.K., but I'm not sure other.

The power of a living example can ever be beaten. So Amanda, why don't you join me tell exactly what you have done.

So yes, I think the opportunities are not just in the traditional sense. So what we’ve done here is look at the various different segments as Gaëlle outlined in the macro asset maybe we you look at it in a different route to market.

So we’ve looked at a more direct route to market so taking what we know about the direct business, a digital approach, much more efficient without any acquisition cost so with lower acquisition cost and we’ve grown that business, we’ve started that from scratch as a pure digital play. It also allows us to do more value prevention and more rounded service.

So, I will completely echo what Gaëlle has said. And what I see from my sponsorship of SME worldwide is the opportunity for us to grow in SME is there in virtually every entity.

You do not get then the huge exposure to bit, the big scary stuff which I think you do all associate with commercially to really more retail like than it is commercial lines.

Perfect Amanda. And just to add to this, because we looked at the UK now.

If you look into Europe, where’s our strength? Our strength is not in underwriting the scary stuff, if I may quote, Amanda.

Our strength is in presence of agency sales force, if you look what is the challenge of this agency sales force. They are today very much exposed to the motor business.

We all know that you cannot make a living anymore in 10 or 20 years only for motor business. We are actively transforming these agency sales forces towards more advise heavy business, commercial business, the butcher, the barber, those are the ones that are close to the agents.

And if I give you one example of AXA France, where Gaëlle used to work, today we have significantly reduced the business mix of the agency sales force to 30% in motor only and the commercial line space has taken this vacancy, so that is where our strength is. We don’t want to go in broad international large risk.

Our home turf is retail like SME.

Niccolo Dalla Palma from Exane BNP Paribas. So my question is on innovation and there were some examples on slide 14 which I thought were interesting.

And the – so each of these examples clearly makes sense, is probably profitable on its own but it's small in the group context. So my question I, how do you manage the complexity of innovation, because it's – it's a bit like a good restaurant moving from a menu with a few plates which for food distribution are really good, to a very 40 page menu where you struggle to choose.

My question, are you looking at each of these initiatives as a co-option on one or two or three or five of them will be great, or are we just going to have to be used to much more compact environment where you will be running thousands of initiative that altogether are profitable?

So you’re absolutely right. We don’t want to create the menu with 40 pages.

However to get to a decent menu, you probably need to launch 40 things to see what are three or four that are very interesting and carry future value. On the slide here I’ve only given you the latest one.

I have not mentioned the ones that are already in production where we are in the market. It is very clear for us that we don’t want to have 40,000 innovative ideas and innovative approaches.

We want however to enable our people to innovate. And one thing that has struck me when I was traveling to all of the different AXA countries in the first place and doing it again now is the innovative and entrepreneurial activity and energy that AXA has and that is in every country be it in U.K., be it in Egypt, be it in Asia.

What we’re going to do is to have a look which of these have the highest potential and if you look for example at the telemedicine – at the telemedicine idea that has clearly been copied. We have started telemedicine approaches in the U.K.

in France and our views to same logic and the same approach for the Egyptian market obviously you have to adapt if you have no doctor and no hospitals it is a very different situation where you have an over population of doctors and the social security system on the site. So you take the same ideas and adapt it country by country and that’s how we are going to do it.

First create a lot and you also have seen in the slide beforehand that we have a very different approaches. We have one approach where we invest into innovations, we have another one where we destroy ourselves with commit disruptive approaches and we have a search pillar which is building innovations out of ourselves.

All those three it's important to generate the menu but at some point the boss has to decide what other dishes that are coming on the menu and we are constantly in that phase whenever a new idea for our dish is coming we are looking is it better than the dish that is on the menu or should we keep the odd menu. So it is clear not a huge complexity slim menu but also leveraging the size and the logic of AXA which is we can copy and paste from one country to another and you have certainly countries that are well ahead of the curve.

If you take the U.K. market, very competitive, very innovative, much more advanced than many other countries.

I think that was first in the way back and then.

You reiterated the 94%, 95% combined ratio guidance but now it includes the international business which is always been higher. So 98%, so where does the extra positive come from to offset the -- I don’t make a lot of sense but anyway it sounds as if you improve your target this is what I am trying to say and not just wondering where it comes from?

Probably you repeat what I said earlier, yes, it is actually an improvement of the target. What gives us comfort there is 2 Cs.

One, how we start to see the development of our plan going with the force, which is building up boost from volume aspect, price effect, despite a soft cycle and with a loss ratio, which is improving. So we see that as a good sign that we are able to roll despite the soft cycle and in a profitable manner.

And the second aspect is what we call international segment is basically two pillars, the AXA’s installed partner’s part and the AXA corporate solutions part. And if you look at the partner’s part, that’s precisely where we have started to invest building new partnership, that’s why acquisition expenses are increasing and we expect those investments and partnership to translate into earnings over the plan, which is why we are recreating our target but widening the scope in a wilder book of business including international insurance.

Hi. Andy Hughes, Macquarie.

Just a kind of strategic question, I guess. I think you sort of covered this with the comment about merchant insurance and agents in 10, 20 years' time, I mean I could say the same thing about general account business with the reinvest rate at 1.8%.

It won’t be much of future’s agent selling general account business if we are earning 1% or 2% on our assets. So I am wondering do you AXA in 10 years' time in the continuation of current trends.

Clearly they can expand into direct markets as you described providing that’s not whatever else does. And I guess the future is unit linked, but you’ve pointed there might be volatility this year from the various elections coming through.

And where do you see AXA in 10 years' time? Thank you.

So, Gaëlle and Paul have spent a lot of time and energy to answer exactly those two questions and I would like to give them the floor to answer. Gaëlle, why don’t you start and then Paul.

So where do we see the market in P&C ten years from now. First, we see retail continuing to develop, but nothing is similar to what is implemented today.

We see an opportunity to develop multiple interactions for the customers and we see the underlying assets, let’s say, the motor, for instance, the car, developing strongly in terms of automotive high curves or the cash hearing and that should drive you to do our business in a different manner. We have started to do that.

In the next five, 10 years, we don’t a massive change on the financials. We will continue to see a claims development.

We will continue to see price increase, but five, 10 years from now depending on the geographies, we expect to see disruption in the market with potentially a strong decrease of severity and claims and that’s where we need to adopt now our business or to take the necessary measures today to adopt our business and be able to transform it, so that we are ready for the instruction to come in the 10 years from now. On the commercial line side, we see golden opportunity for us to catch up vessels in market share that we are.

We do not have today compared to our existing size. We see an opportunity to grow.

As I have mentioned earlier on specific segments which are under served today and SME’s are very good example of this. And we see opportunities in new risk.

Thomas mentioned cyber that’s one example. We see opportunities in automotives high curves.

There will be more risk coming inside these at-large and commercial insurance, we’ll be able to address those risks and that’s why we believe commercial business, commercial PLC business is an area where we want to invest – develop expertise and grow. I do mentioned, further there is consulting angle which is I would say maybe a player for the next 10, 20 years where there are some things we have probably will come back to you in due time to clarify what we mean by that and what we can expect out of it.

Thanks.

So on the Life and Savings side, we’re clearly – yes you are right, an Asian who can’t carry on and doing what they are doing today because the channel is becoming expensive relative to the products that they are able to provide there. I don’t think we should focus on the G/A approaching rate because G/A tends to protected downside.

It gives a guarantee of return, but there are opportunities on the other side too. And what we know well is that somebody who is planning today for retirement has to say if more than doubles, someone who retires just 15 years ago.

So we know there is a massive need for society to save more. We know society needs this stupid to tact itself more particularly as the state withdraws more social benefits and needs to invest more in long-term health prevention.

So we’re going to have to look at how we help our agents become more productive focusing on long-term investment, protection from health and how we can enable our customers to deal not only face to face, but someone who can advise them, hold their hand through that experience, but also remote channels and ultimately of course their direct digital channels too. So, I think the role of the Asian going forward is quite an optimistic.

I think we have to help them become more productive and we do them because actually we see an increasing need in society for the products and the services that we can offer.

Yes.

I just want to come back on this U.S. tax rate question because -- if I look at your U.S.

Life results, tax rate was €40 million or 945 million of profit, sort of 4% tax rate is the major reason why AXA’s tax rate is so low this year. How do we square that with being enthusiastic -- or 40% tax rate and begin enthusiastic about U.S.

tax rate coming down and benefiting you? And I suppose, more broadly, what would you guide as to the underlying tax rate for the Group going forward?

The question is much more about the tax one-off we have in the U.S. and on a [indiscernible] basis you can see that over the last years we had 150 million of tax one-offs which are linked to the DRD, which means that there are some tax audits.

And it’s only after these tax audits that we release the reserves corresponding to this DRD. That’s it.

And in the next years, we still have tax one-off in the U.S. but I was not referring to it.

I was referring to the tax rate, the usual tax in the U.S. and I mentioned also the DRD because and that’s the reason why I said we should take care of what will this impact be.

So I believe that the net will be positive. We still have – we can still expect that we will have some release of reserves in the future corresponding to the DRD, point number one.

And point number two, we believe that on an ongoing basis, the net should be positive if there is a change in the U.S.

So the impression of that is in future years you’re paying less than 40 million on tax in the States?

No. But we could pay less than 40 million of tax.

If you have a tax one-off on the past years which is at 150 million and if your recurrent tax rate which is instead of 35%, 40% which could drop to the equivalent of 20, then we might have a few years with a negative coming from the U.S. Yes, it could be – we could imagine this possibility.

But, again, please, let’s wait for this reform to see exactly what will be the impact. and I mentioned the DRD because we should not consider that it will be straight decrease of the tax rate but there could be some collateral effects.

But I maintain that the net should be a positive for us.

Nick?

Nick Holmes at SocGen. Just a very quick one.

The EUPA requirements to disclose the impact over the long-term guarantee package. Just wondered if you could share with us your preliminary thought.

I mean, is this going to be helpful. Is this going to be meaningful?

Thank you.

Gerald?

No, I -- taking your questions, no. But I don’t believe so, because the long-term guarantee package is the -- and we have a few information on the volatility and just so and so.

But I don’t believe. But, keep in mind that over the next years there will be some thinking about some evolution that will take place.

You'll remember that there will be some slight change expected in 2018. But mostly it will concern the standard formula, so we shouldn’t be concerned.

But next it will be 2020 and in 2020 we could imagine some further adjustment, roughly speaking. What is really at stake is equivalent of the volatility adjuster, because the volatility adjuster should correspond to a reality and that's mostly to know.

I don’t believe that we should give too much emphasis to this. There will be some thinking.

We cannot expect in a foreseeable future any significant change.

I think just adding to this. I would look broader at what are the different geographies doing, because what you saw a couple of years ago was clearly a tendency to harmonize the standards across the globe, certainly for the systemic and relevant insurers.

What you see now is a certain deviation by geography it. And the question, what does it mean for the competitiveness of players being situated in a geography that is better or worse positioned versus the other.

If I look at the your AFR and the Life section, the actual existing business contribution from that was around 7% last year. Is that ongoing number to use.

And secondly, your numbers on -- on your new business done a basis of EEV or Solvency II, [EIFI].

It's clearly -- on NVV it’s done on the base of EEV.

That would be materially higher than under…

That's the way we communicate because we believe that it -- of course to an economy reality. And that's maybe a point on which I want to insist.

It's not -- you notice that in this report we tried to keep both -- we tried to EEV, because I know for us it’s important because that's also the way we are analyze our own business. And take the example of the U.S.

for example; it’s on the EV, its real economic basis, whether on the AFR is the equivalent. So we wanted to keep those so.

You will tell us exactly how you find this first attempt to combined those and present those, but it's important to see the differences and going back to your question about the hub, about the – about where we calculate the EMV, we believe that the EMV should be more calculated on navy type of approach on AFR but we have to leave with AFR. AFR is where we measure our Solvency and it will still exist.

So that's 7% or 6.5% gives us the contribution of the AFR which last year was 7%, is that an ongoing figure, I mean, I just took that 2 point…

I should – no but I should check, I will come back to you on this point because if your question -- your reference is a 7 is the contribution, we’re far off the new business.

No, no, the actual contribution unwind so you actually…

So the unwind.

Life and Savings side you said Gaëlle view existence contribution of around…

It’s a 2.9 billion. Yes.

Look there is a direct link not on immediate but there is a link between this 2.9 billion and the cash flows and of course I don’t expect it to be fundamentally difference. So there could be some fluctuation around it.

But I believe that it should be normal year good guess.

The reason I asked is we are getting such a materially different numbers I can’t do anything without them. So one of your peers yesterday disclosed 10.5 of it and…

I don’t have some papers. I don’t have the figures.

Business value is based on Solvency II from that so we’re getting no comparability at all.

No but again and I go back to the previous question about AFR. The AFR will be an opportunity for you guys to have more consistency or at least to understand how it’s done.

And I believe that such it’s a good point for us as well. We have -- we don’t always understand what the others are doing and it would be interesting to have something which is much more measurable and more comparison between the different entities.

I agree with you.

Any further questions? Do we have any questions from the webcast?

No. Very good then we close the session here.

Thank you very much for coming and certainly thank you very much for asking very interesting questions. We wish you a great rest of the afternoon.

Thank you very much.