AXA S.A.

Thomas Buberl – Chief Executive Officer Gérald Harlin – Deputy Chief Executive Officer and Chief Financial Officer

Nick Holmes – Societe Generale Andrew Sinclair – BofA Merrill Lynch James Shuck – Citi John Hocking – Morgan Stanley Peter Eliot – Kepler Cheuvreux Michael Huttner – JP Morgan Colm Kelly – UBS Farooq Hanif – Credit Suisse Johnny Vo – Goldman Sachs Ralph Hebgen – KBW Andrew Crean – Autonomous

Thank you, Andrew, and good afternoon to all of you. I'm extremely happy to be with you this afternoon, particularly, in view of the very good results that we have presented this morning.

When we look at the key takeaways of the results, I would like to stress five points. The first one is you have seen that we have published excellent results.

It is a very strong earnings growth relative to last year, which has led the both of AXA SA to decide that the dividend will increase. The second important message if you look where the growth and earnings come from, it is not from one geography or from one operation, it is across the board, from all geographies that have contributed to this excellent performance.

The third one is many of you might say, well, on the revenue side, you've been flat, but this was a very dedicated and clear decision to focus ourselves on more profitable new business and to deprioritize business that is not profitable enough, and this focus has really driven those strong results that we have published today. All of this has happened and will happen in the future on a very strong and reliable balance sheet.

You've seen that our Solvency II ratio has again been reinforced, and this is also a very good basis for a very strong cash generation in the group. For the first time, we have also published Health separately.

I know this was a big desire of yours – some of yours over a long time. We've done it, because Health for us is very important.

It is a big ground for innovation. We have certainly moved on with some very tangible results.

And Health is not only a question on the insurance side and innovation side, it is also a question on how are we behaving as a social actor when it comes to investing. And also on the social acting site and being a responsible citizen, we have taken some very clear measures when it comes to our investment focus and sustainability.

If I start with Ambition 2020. In June 2016, we have launched Ambition 2020.

Four major targets were attached to these objectives of Ambition 2020. The first one was underlying earnings per share.

We set our ambition is despite the fact that we have a negative impact from capital markets, we want to achieve an underlying earnings per share growth between 3% and 7%. In 2017, we have hit the absolute top of this range with plus 7%.

The second important target was the free cash flow. We set ourselves the objective based on the remittance ratio that is quite high to get to a cash generation capabilities over the period of 2016 to 2020 of €28 billion to €32 billion.

2017 has been a year of generation of €6.3 billion, again well in line within the target range that we have set ourselves. On the adjusted return on equity, we set ourselves a target between 12% and 14%.

And in 2017, we have even overreached this range with 14.5%. On the Solvency side, I commented early on it.

We have a target range between 170% and 230%. We are spot on in the middle, slightly above the middle with a very proud 205%, which is an increase compared to last year.

When we look at the underlying earnings, we can see a strong growth of 7.5%, which has led to an underlying earnings per share growth of 7.3%, right at the top of the range that I indicated just earlier. On the adjusted earnings and net income, we see a very similar tendency.

For the first time, 7.6% on the adjusted earnings and 8.5% on the net income. €6.2 billion on the net income is also the first time that we have surpassed the threshold of €6 billion in the history of AXA.

When we look at the adjusted earnings per share, which is the base for the dividend, we can report 7.6% growth, and this has obviously led to the decision of the Board of AXA to say, we wants to increase the dividend. We want to increase it from €1.16 to €1.26, while at the same time, increasing our payout ratio from 48% to 49%.

With those 49%, we are still in the guidance range of 45% to 55%. I said earlier that this result has been fueled by a very good performance across all the geographies that AXA has.

And, maybe, you notice here that we have for the first time now changed our reporting from a line of business reporting to a geography reporting. This goes very much with the simplification of our organization.

Last year in November, on the 14 of November, we have announced that we have changed our organization away from a very complex regional and line of business organization to an extremely simple organization that is based on geographies. When you look at those geographies, you can see that France, which is our stronghold, which makes roughly 20% of our overall result, is a very strong contributor to the overall results.

We are a strong market leader in France, we are in the top three everywhere. And despite the fact that we are big, we are still gaining market share.

Why is that the case? Jack and his team is extremely innovative, is extremely well positioned when it comes to product innovation, when it comes to distribution, and they can really reap the benefit of this great positioning.

The same is true when you look outside of France into Europe. Again, Europe with €2.3 billion underlying earnings is a very strong contributor, has grown by 2%.

And when you look across these markets, you see that AXA has extremely strong positions. Number one in Belgium, number one in Switzerland, number five in Germany, very strong in the U.K.

when it comes to Health and Commercial Line, number two in Health, so very strong positions. These have helped us to really grow, to really improve and also to make sure that the business mix has shifted in the right direction.

We've often heard about the fact that Europe is not so strong and that the emerging markets bring all the new profitability. If you look at our experience, this is not true.

Europe is strong. Europe is alive.

And we are also happy that the core of AXA is alive. It brings good results.

Nevertheless, outside of Europe, we also have two other strong footholds that are very important for us. One is the U.S.

In the U.S., we have a very strong position in the retirement space, in the teacher segment and also in the Asset Management with AllianceBernstein. The U.S.

has experienced a very positive year with plus 16% of underlying earnings, where it's really a great story. When we look into Asia, we also have a very unique positioning.

We are the only company that is multi-line insurer there. We're the only company that place in the bancassurance entity agent channel.

A very strong positioning where we have really focused on fewer countries to really fuel the growth there. There, we clearly need to continue working on our business mix, continue working on our growth.

I would've loved to see more growth there in 2017. On the international businesses, which is all the other countries, we have also realized a significant improvement in the underlying earnings growth of 20%.

Those are the markets of tomorrow, but those are also the markets that we need to streamline and need to decide where are we staying in and where are we going out. And you've seen that we mean it.

Yesterday, we have announced one disposal in Azerbaijan, and we will continue working on those portfolios to manage the profits and manage them for profit, but also to rationalize our footprint. When we look at the business mix, I'm extremely proud that we have continued to optimize our business mix.

And despite the fact that some of you in this room have said, look, at 40% NBV margin, it's over, not -- more is not possible. We have seen that we have proven the opposite.

We have gone from 40% to 43.1%. Again with the further shift towards Protection, towards Health, and towards Unit-Linked, this obviously has a consequence on the growth because if you focus yourself on one area and more or less exclude other growth areas, it does show in the growth.

But that doesn't matter, we need to continue this journey, and we need to really make sure that despite rising interest rates, we stay disciplined, and we show an improvement year-after-year. When we look into the profitability of the other lines of business, P&C, Protection & Health, we can also see that our strong discipline in driving profitability has clearly shown into the combined ratios, we have worked hard on improving our loss ratios.

We have been very disciplined, and Gérald will show that you in a few minutes on the question of how is our reserving, how is our prior year experience, we've been very clearly at the lower end. As I said, earlier, Health, for the first time, is fully separated.

Health for us is a very strategic segment. We are the leader in Health.

We are very strong in six markets. And this €12 billion of revenues have grown at 6%, which is a remarkable figure.

At the same time, the underlying earnings have grown by 11%. And we have continued to invest and to realize and build up our innovative scales.

I would like to mention two important pieces. One is the acquisition of Maestro Health in the U.S.

Maestro Health is a population health management company, so they're not an insurance company in the private space, but they're a service company to help, in particular, companies to reduce their medical expenses. And I was very pleased to see that after we have realized that purchase, that three large U.S.

institutions have put themselves together to make sure that they work on exactly that topic. That has shown to me that we are on the right journey.

The second element, which is not on the slide, but I'm also very proud of that is that we have now over two years ramped up our telemedicine operations in various countries. Today, I can report back to you that 10 million beneficiaries have access to the telemedicine.

So it's really something very different. It is something that is very convenient for the customers, because, in the first instance, with the first call, we can resolve 70% of the issues.

These are the first steps among many others that I can't talk about now because we have no time, that we're making from really moving from a payer to a partner. As a very large investor, we also have to ask ourselves the questions, what can we do to help society to live a better life and what can we also do to influence the claims behavior that we're experiencing in a positive way?

And clearly, you've seen, we have a long track record of being very focused as a responsible and sustainable insurer, being focused on climate change, being focused on really providing people with a healthy life. We have started divesting from coal.

We have then divested from tobacco. And we have taken a further step from divesting from coal.

On the one hand, increasing our investments in green – and in green areas. €12 billion, which is four times more than what we had previously.

Additionally, divesting €3 billion from coal and not insuring any new production of coal. This is for us an absolutely core element because our mission is how do we empower people to live a better life.

This goes with paying claims. This goes with helping people in their daily lives without having claims, but that also goes with investing in a responsible way.

If I come back to Ambition 2020, I'm again very proud of these results. All of the KPIs that we've published this year are either in the range or at the top of the range with 7% underlying earnings per share at the top of the range.

€6.3 billion of free cash, 14.5% return on equity, above our target range and an extremely solid balance sheet of 205%, 8% more coverage than last year. I would now like to hand over to Gérald who goes into more detail.

Thank you.

Thank you, Thomas. So underlying earnings, according to in line with our new format, but you will see later on that we have some reconciliations.

It's – what you can see is that, as explained by Thomas, we have an underlying earnings, which is up 7%. And you can see that all the markets are up across the board.

Let's start with – and let's go through all these markets and let's start with France. And in France, we have underlying earnings going up by 3%, explained by higher Unit-Linked fees in line with market improvement and improved loss ratio in Protection, improved claims experience in P&C Commercial Lines, and this is offset by lower investment income, and you will see that across the board, in most our markets, we have lower investment income in line with our expectation.

And also, we have higher expenses, but it's quite normal because it concerns Health and Protection where we have strong top line growth. Next, on the top right, you can see high profitability of our business in France, and you will see that we can make exactly same remarked response Europe is concerned.

So P&C combined ratio 94.6%, NBV margin 34.5% plus 3 points. Revenues plus 4% when we exclude the large pension contract at the end of 2016, with [indiscernible] in Unit-Linked.

Next is Europe. And in Europe, it's almost the same story.

Underlying earnings plus 2%, explained by higher technical margin, notably in Belgium and Germany. Lower expenses because, maybe, remember that in 2016, we had an extraordinary amortization of our VBI in Switzerland, and we have negative coming from lower investment margins.

High profitable business, P&C 94.6% combined ratio. NBV margin even stronger than France, 56.6% plus 8 points.

And look at the bottom right, 84% of our revenues are in P&C, Health and Protection. Absolutely, in line with our strategy, which consists in being less dependent from the financial markets because technical margin, as you know, are the correlated from the financial markets.

Minus 1% in revenues, mostly, explained by the G/A Savings. And the minus 20 screen G/A Savings, it’s mostly first in Italy.

Because in Italy, we have revenues down 12%, which I should insist a strong recovery in the second part of the year in Italy, thanks to NPS. NPS had problems and difficulties in the first half of the year, but we have a strong recovery, which is most of the significant part of this new business than Unit-Linked business, which explains also the plus 30% that you can see here.

Next is Asia. And Asia, underlying earnings are up 7%.

I would say that it's explained by two main elements. First, improve technical profitability across the both among all the countries.

And second, lower expenses and that's mostly in Japan. Here, again, just have a look at the combined ratio for Health, 78.3%; NBV margin 70.6% plus 6 point.

And again, look at the – on the bottom right – at the bottom right, circle, 86% of our production of our revenues are in P&C, Health and Protection. 1% economic revenues in Japan, we were at minus 6% why because we had to develop in the bank insurance business, which was mostly G/A type – General Account type of business with whole life business, single premium whole life business.

Why because there is a new regulation, and I mentioned it already for the first half, that imposed banks to disclose the commissions and it's slow down the new business. In Hong Kong, plus 2%.

It's also due to a change in the regulation as you know with decrease in limited commission in Unit-Linked business, which again slow down the Hong Kong business. But plus 11% and high potential, which is quite good.

Moving now to the United States. Plus 16%.

So United States, it's, as mentioned by Thomas just before, it's our business plus the Asset Management business of AB. So here, we could say that underlying earnings are going significantly, plus 16%, explained by improved financial market conditions with higher Unit-Linked fees, with higher – its B margin, technical margin and higher management fees at AB.

This is offset by unfavorable mortality experience and net unfavorable model updates. So AB plus 6% with strong momentum, especially in higher sales and mutual funds; NBV margin plus 23.4%, plus 2 point and this – most of this 2 points improvement correspond to the tax effect because it's net present value of future profit and tax, as you know, will drop in the U.S.

explaining most of the 2 points improvement. Net inflows plus €12 billion, and management fees plus €2.7 billion.

And it's good news. Meaning that foreign asset management company, a lot of asset management companies today are suffering from decrease in their management fees.

It's even the country here at AB because they're moving towards higher proportion of retail business versus institutional business, explaining this improvement in the management fees. International.

So international, it's most – it's a smaller market, €337 million of underlying earnings, but UE increasing by 20% with higher investment and technical profit in Turkey. Turkeys back in black and it was not the case last year.

We have a current combined ratio, which is now close to slightly below 99%, which is good. And as you know, we have a investment income, which are quite high in Turkey around 8%.

Improved technical margin as well in Russia and these two good elements, positive elements, are offset by in net cat charges in Mexico and Turkey. You can notice that revenues are up 2% and, excluding Turkey, I remind you and we mentioned it for the first half, that in April 2017, we had – we've been imposed 30% drop in prices in DTL in soft part of liability.

So it's not the biggest business line in Turkey, but nevertheless, we suffered from this element, but it's progressively improving because we have the capacity to increase our prices by 1.5% per month. Next is the AXA IM just to finish this review.

Underlying earnings plus 16%. Reasons for this improvements are not very different from AB higher management fees, improved cost to income ratio.

And as you can see, good level of net inflows, €8 billion, of which €9 billion in third-party and cost income ratio going down from 70.2 to 70.8, meaning that in the end, we have an improved operational leverage. So I presented all these markets except Transversal and Central Holdings because in this category, in this bucket, we have – which droves by 8%.

We have AXA IM presented it already plus 16%. But we have also AXA Corporate Solutions, which is our large risk company.

Unfortunately, underlying earnings of this year went down by 59% linked to the weather events and to the net cat. And we have also AXA SA at an improvement and this improvement is linked to the 3% tax because you know that previously we had 3% tax on dividend and starting from 2017, we don't have this tax anymore, and you will see later in the presentation that net income will benefit from the reimbursement of the last years of this 3% tax.

Adjusted earnings, explained mostly by plus 7% and plus 8% underlying earnings. And also, we have these capital gains, mostly, in equities, 674.

You can see that net impairments are significantly, down compared to last year. The markets are quite good, and this improvement translates into lower impairments.

That’s for adjusted earnings. Now, net income.

Net income benefit from this 8% improvement in adjusted earnings. And we have the different elements, starting first with this mark-to-market of derivatives minus 357.

It's mostly – these derivatives don't benefit from the hedge accounting. And we've also the change in fair value of assets, which are mostly mutual funds, which are not consolidated and as a consequence to our mark-to-market.

This is due to the tightening of spreads, which explains 222. So minus 134, then, we have the exceptional and discontinued operations, 124.

I should give you four elements because we have a lot of big amounts of 13 itself. First, the U.S.

DTL, that means that as you know, we have position in the U.S. and IFRS, which means that the drop in the tax rates makes that it was a good guy.

€288 million from these – coming from this U.S. DTL decrease.

On the reverse in France, we have a net DTL position, which means that it was a negative from 191. And we have this profound this different of the 3% dividends that I mentioned before, it's plus 249.

Unfortunately, this has been offset by another element, which means that we have – we are managing some annuities in France and part of the indexation previously was paid by the state. We are referring to very old annuities dating from 60 years ago.

And good way for the French state to pay – to repay the refund of 3% was to stop paying these subsidy on annuities, which means that for us, it's a negative of 206, which means that more or less in France, unfortunately, it was a wash. So as a whole, nevertheless, after all these elements, we have integration restructuring cost, remember the last year, we had significant structure in costs coming from Germany, from Belgium, now we are minus 148, pretty in line with usual rate.

So as a whole, net income is at plus 8%. Now moving to the underlying by business line.

I would say, the old format. And you can see that as a whole, we have plus €6 billion of underlying earnings plus 7%.

Looking and focusing on Life & Savings, it's plus 9%, which I would say higher management fees, offset by lower investment margin. In P&C, minus 1% at €2.4 billion with lower investment margin, but also some cat net – net cat meaning that in the end, we're at minus 1%.

Strong growth in Health, coming from the top line as well as an improvement in the technical margin. And Asset Management plus 32% at €540 million, explained by higher management fees and also the operational leverage, i.e.

the cost of income ratio going down. Let's move to these additional slides.

This one didn't change on the combined ratio. So you can see on the left that we have a currency of combined ratio going down by 0.1 points, excluding the natural catastrophes, it went down by 0.3.

You can notice that we have prior year reserve developments at 1.2% – minus 1.2% versus minus 1.3%. So we continue to take a prudent approach, and you'll get more details, maybe you will have questions in GIFR report.

And all year combined ratio moves down from 96.4 to 96.3. Let's move to the cost savings.

We are on track. We achieved €0.5 billion after €0.3 billion one year ago.

As a whole, we are quite confident that we'll achieve the €2.1 billion. And you remember that during the IR Day, I mentioned to you this €0.3 billion savings coming from [indiscernible] functions, which makes us even more confident that we'll achieve this €2.1 billion.

Let's move to the balance sheet. And we are managing now General Account, €575 billion, 82% are managing fixed income, nothing very different year.

You can notice that we still have a duration, which is pretty long, 8.2 years. What's will, I believe, interest to you is yield on assets.

It went down by 20 basis points in life, 10 basis points, 15 basis points in non-life, and the investment yield has been 2.1% in 2017. Let's move to the investment margin.

And here, you can notice that on enforce, we have an average guaranteed rate of 1.8%, on new business close to 0.3%. So we have some flexibility.

This flexibility translates into the investment margin because the investment margin goes down from 73 basis points to 69 basis points. I just told you that investment income went dropped by 20 basis points.

So meaning that we had some latitude and flexibility in order to decrease the remuneration to our policyholders. You can notice here that we are at 69 basis points versus 65 basis points to 75 basis points guidance that we shared with you when we presented our Ambition 2020 plan.

On the P&C yield minus 12 basis points, I'm sorry I mentioned to you minus 15 basis points, it's minus 12 basis points. Shareholder's equity, so it's slightly down from 70.6 to 69.6.

On the right, we have all the moving elements, and adjusted ROE, as mentioned by Thomas, went up from 13.5% to 14.5%. Solvency II ratio quite strong.

It's moved from 197% to 205%. On the right, you have the sensitivity analyzes.

And operating return was 23 points, including 4 points of positive operating variance this year, meaning that it doesn't change. We shared with you that we were close to 20.

Excluding this operating variance, we would have been at 19 points. We have the dividends, we have the market impacts, which was positive, and keep in mind that we decreased our sub debt by €1.2 billion and we're roughly €1 billion of buyback in order to offset the dilutive effect of the benefits of the stock options and free shares, performance shares.

Strong cash flow generation, it's moved from €6.2 billion to €6.3 billion and 78% of remittance ratio, which is within the target of 75% to 85%. So I'll move to -- I'll hand over to Thomas for the conclusion.

Thank you.

Thank you very much, Gérald. As you have seen, the year 2017 has been a year of very strong earnings, and we've always said when we speak about the dividend, the dividend increase needs to be justified by a very strong earnings.

The Board has taken the decision to increase the dividend in a very attractive way. All of these results, as you've seen are really embedded in all geographies across all lines of business.

And we have really implemented what we set, a clear and decisive focus on lines of business that are growing, that are more profitable and that – that’s the most important are the closest to the customer; Health, Protection and Commercial Line P&C. This is the driver of our results.

All of this has happened and will happen on the basis of an extremely strong balance sheet where we have again shown that we have improved our Solvency II position by 8 points to 205%, which is also the motto of a very strong cash generation with €3.6 billion. And we have continued our journey in innovation.

We have implemented many innovations. I have shown you a few ones in Health, which I'm very proud about, acquisition of Maestro, movement into telemedicine with great success, and also, a very clear and strong and decisive act when it comes to our investment policy as a sustainable actor of society.

Thank you very much for your attention. And we will now go over to your questions.

As Andrew said at the very beginning, we are starting with the questions in the room, and we will then see if there are questions in the webcast. Let's start with Nick.

Nick Holmes of Soc Gen. I had a couple of questions on health insurance.

Firstly, can you tell us more about your plans to grow the Health business. I mean, Maestro is obviously very interesting acquisition, but it's a relatively small.

I mean, what sort of appetite do you have geographically, where would you focus on things like that? And then secondly, on Health.

Just out of curiosity, do you see it as more P&C or life insurance? You're recategorizing lot of your business.

Just wondered, what your thoughts were on that? And then just one very quick additional question, which is how much has the recent volatility in market hurt your Unit-Linked growth, which, of course, has been so strong?

Thank you.

Thanks, Nick. So I suggest that I will take the first two questions, Gérald takes the third one.

And while Gérald is looking up the effect, I can answer the first two questions. Your first was around growth in Health.

Thinking back, we have six countries where we are very strong in health, one of them being in the UK. Our aim is to really gain market share in these countries and grow our health franchise with very innovative products.

When you start in the UK, we have been gaining market share as a number two in the market because we are very innovative and very close to the customer with a lot of innovation. If you go to Germany, which is another strong hold, we have been gaining market share and climbing up the ladder.

And you can look at this for all these six geographies. The key is how can we grow with our customer base, how can we grow with services around our customer base?

And if you look into Jack de Peretti's business in France, they are already strong leader in health. The fact that they have added wellness and telemedicine into their corporate offering has increased their retention and has also increased their chances of winning business.

So there's a very strong focus in those six countries. Everywhere else, where we are not strong yet, there is a growth focus on health.

If you are in Nigeria or you are in Indonesia or you're in Thailand or you're in China or you're in Mexico, people will always talk to you at AXA about focus in health, always with the question how can we grow in the base coverage, but also how can we grow in the services around it. And the services question in Mexico is a very different one as an answer to the one that it is a Nigeria where you have no medical infrastructure or insufficient medical infrastructure.

Your second question was around which type of business and we have obviously individual business, group business, P&C and life like. My preference is to grow more in the individual business to grow more in the P&C Life business because if you look at the target segments and target lines of business that we have chosen, Health, Protection, and the P&C Commercial, this is basically all insurance risk and a very P&C minded look at insurance because protection at the end of the year is the P&C part of the life business.

Gérald?

Yeah, your question about the present volatility in Unit-Linked goes. No, we didn’t suffer so much from this volatility.

I remind you that we are quite good starting France and Jack could comment on this. We have a good momentum in the U.S.

and you know that France and the U.S. are the main countries for Unit-Linked.

Keep in mind as well that if you take the example of France, we don’t sell exclusively equity products, so we have a lots of products with different kind of products, which are – which smoothes the performance making that in the end we don’t suffer too much from this volatility. Clearly, I remind you that in France we have 40% of our individual revenues for individual savings, which are Unit-Linked, and this is not something, which is declining not at all.

Let’s stay there and go this way. I think Andy you have the next one.

Thank you. I am Andrew Sinclair from BofA Merrill Lynch.

Three questions please. Firstly, jump to the slide B62, if you can.

Looking at the comments on the U.S. cash reference there and just wondered if you could give us any update on what that means for the pre-IPO transactions?

Secondly, just wanted to quantify your net M&A budget and spent over the last couple of years given you've done quite a few disposals as well relatively few acquisitions? And where do they feel you’re setting on too much.

And third just wondered if you can give us any guidance on the outlook for the U.S. tax rate?

Thanks.

Good, so I suggest Gérald to take the first question and the third one and I will give a go at the second one.

Okay. So starting first with the Page 62, B62.

So out of the EUR 4.9 billion, we have EUR 0.8 billion roughly, coming from the U.S. that means that we have injected EUR 0.8 billion in the U.S., but the equity part that means that in order to reinforce the equity, we initially told you during the previous meetings that it would amount to $1 billion and it would be much smaller, it’s EUR 0.3 billion.

And so the rest EUR 0.6 billion will be paid in 2018. So meanings that the impact of the recapitalization of the U.S.

is smaller than what we would expect a few minutes ago. U.S.

tax rate, as far as the U.S. tax rate is concerned, we'll benefit.

I would say I mentioned in my presentation, the one-off effect on the net income. So these being said, this is a one-off effect, due to the fact that we have a DTL position and IFRS and moving from 35% to 21% is a good guy.

At the same time, going forward, we can expect to have to benefit from this lower tax rate. This benefit, I would say, it's not – it cannot be, so precise because it's a bit complex, but let's say, that it could be north of €50 million.

North of €50 million.

On the second question on M&A. In the Ambition 2020, we have stated that we have yearly net M&A budget of €1 billion, which should result also in 1% underlying earnings per share increase.

When you look over the years, you're absolutely, right. We have done some smaller disposals.

We have also invested some money. I mean, if you look, we have brought Maestro Health.

We have done some share buybacks on delusion site. Last year, we did a little bit more.

And we have hopefully an event coming up that will give us more means to redeploy capital, which is the U.S. IPO.

Our policy on M&A remains unchanged. If we have the means and if we see interesting and attractive objects and investment opportunities, they will only be looked at in the focus areas; Health, Protection and Commercial Line P&C, in our focused geographies, the 10 big markets, and the six high markets.

That is unchanged.

Sorry. Can you give us a figure for what's lifespan of the net M&A budget?

Gérald, do you have a figure?

Give me a few seconds, and I will give you a precise figure.

We come back to the question. Let's continue with James.

It’s James Shuck from Citi here. I had three questions, please.

Firstly, in terms of capital allocation within the group, you changed disclosures on -- you focusing much more capital efficiency. I would like to get some insight into what the regional return on capital employed is?

Where there are underperforming areas and what you're actual processes for allocating or freeing up capital within the group? And also kind of within that, are you able to give any indication of what the capital actually is residing within smaller entities that you identified Investor Day, 26 or so there?

Secondly, the growth outlook, kind of 6% or 7% of EPS growth is the target, which you're kind of well on track for doing. I kind of look at France and Europe, AXA France and they're growing at like 2% or 3% and had a bit of boost of free income from high markets.

I would've expected France to be growing a little bit quicker than that. I appreciate it's competitive market, but it's digital post it all for the group.

Do you expect it to be growing kind of group level you expect Europe to be matching those group levels? And if so, when could we expect that acceleration come through?

And then my final question is just on the operating variances within the IFR, because the operating variances being driven largely by positive revision to the best estimate liabilities over IFRS, which is mainly driven by Switzerland, UK, Italy and Spain. I would be interested drivers of that were and why we have that [indiscernible] comes through in the IFRS?

I suggest Gérald, I will take the first two questions and you do the third one. When it comes to the capital allocation.

So we have a very clear framework of how we allocate our capital and also how we manage the companies. And essentially, what we do is we look at every entity, how their on equity is.

Is it, first of all, above the capital costs and then is it returning the way we want to return? And this also then split by line of business and that is how we manage the entities.

There is a CEO dialogue with all entities every half year, where we basically have look at these numbers and have asked those entities to give us a clear idea and clear measures of how to improve the return on equity. The new organizational model, which is called freedom in boundaries where we have a lot of empowerment locally, but where we have on the one hand very clear competence in the center for allocating the capital and also for allocating the investment means, this enables us today to really give the capital where we have sufficient returns above clearly our capital costs and in these markets where we are a very happy with the returns.

And that also will then make the decision easier of where do we withdraw from certain business and where do we also sell entities or change our mind. This has really helped us to be extremely disciplined.

And when we look at the results, it is mainly driven by drilling down on to each entity into each line of business and managing them in a way that you can either get out of the misery of underperforming or we need to find a better or not for the business. And this is how we manage this on a very consistent basis.

The international markets yesterday, our many markets, but there is not that much capital in it. If I remember correctly, Gérald, I think it was €4 billion that is in international markets.

But we must not get or misconclude from international equals for sale. Again, international, we said, those are the markets of tomorrow.

The majority of these markets will be kept, but they will be managed in a different way, which is more in the private equity lifestyle and then we obviously have some markets in there that will be sold, where we reduce our footprint. I mentioned earlier, you will see one example, yesterday, of Azerbaijan.

Your second question was on Europe and France. France to my mind has really delivered an excellent result.

And we often forget what the year 2017 has looked like in France. When you think about the year 2017, all you think about is Emmanuel Macron.

But when you think about what happened before May, we've forgotten the political turmoil, we have forgotten the uncertainty, and we've forgotten that there was no political clarity, which has caused France to be in a very difficult and miserable situation in the first half of 2017. And given this situation and also given the fact that the competition between the traditional insurers and the bank insurers, in particular, in the area of the P&C retail business, after implementation of lower amount has significantly increased.

I personally believe that the results at AXA France have shown as a market leader, gaining market share, very, very good results. When you look further into Europe, it is true that I would have loved to see some more growth in some countries.

UK has done a fantastic job in dealing with a very difficult situation of [indiscernible] at the beginning of the year and managing very well to a cycle. If you look at the benchmarks of the UK insurer with AXA, we should be extremely proud of what we have achieved, both in terms of growth and in terms of profitability.

Belgium has delivered a fantastic turnaround case and is back on the gross track. Where I would love to see a bit more growth is clearly in Germany on the life science and it's clearly in Switzerland on the life side.

If we look at the P&C side, in Germany and Switzerland, we should be very happy with the results. So overall, I'm very happy with the results we've seen in Europe.

If there is one area where I would like to see more growth, it's on the life side in Protection and Capital. But this is clearly something, it’s not our agenda and it will be addressed with the new responsible Antimo Perretta who has a great experiencing of managing a fantastic business and Switzerland.

Gérald?

First going back to your previous questions on the M&A. So in 2017, the M&A outflows -- net M&A outflows was minus €0.3 billion.

This was on top of the share buyback that we mentioned before of €1.1 billion. So on net basis, we could say that it was €1.4 billion to be compared with our €1 billion budget that we announced at the IR Day.

Going back to the other questions relative to operating variance. Indeed, there's been operating variance addressing corresponding to 0.24 points of return on the IFR.

But this is IFR, meaning that it's mark-to-market. So meaning that anytime you have an improvement in your reserve situation and an increase of your excess reserve, then by definition, it's an additional return, which is completely different from IFRS accounts.

In IFRS accounts, the reserves and the reserve colleagues has been 1.2% as I presented to you before. But what is quite interesting is to go back to the IFRS report where you will see, indeed, what exactly what you explained about the operating variance.

But on top, you will notice that in the reconciliation between the embedded value and the IFR. You have this adjustment from IFRS reserve to the P&C.

And you'll see that whereas one year ago, we had the €5.1 billion adjustment. Now, we have a positive €5.7 billion adjustment.

So we could see that it’s kind of a continuation. It is in it that means it’s in the AFR, it’s confirmed that in the AFR, but it is different from accounting, meaning that these results could be released at a later – in the future years.

This is just a, it looks like the margin over the best estimate has actually increased.

Yeah, that is true.

Okay thank you.

You can hand the mic to John and then we go this way.

Thank you, John Hocking from Morgan Stanley. Just one question please.

In terms of investment appetite, given the movements we've seen in yields particularly in the U.S. this year.

Have you changed your approach to new money in terms of investment allocation by type?

No we didn't change. I believe that first of all, it's good news for us to have rates in the U.S.

and long-term bonds at 2.95 close to 3 is an excellent news. It's a good news because as you know we have a gap between assets and liabilities.

And our liability duration is higher than our asset duration. And second because for new business, it's good.

We didn't change it. I believe that the comments that I made six months ago, about the fact that we're moving towards more illiquid assets, high-quality illiquid assets like ABS for example, but also commercial real loans, loans illiquid products is still even more relevant.

Because in the meantime, for sure, we had nice increase of the rates, but the spreads, as you know, compressed. And this spread compression is something that we tried to fight.

And we tried to find some alternatives in order to increase our investment income. As I said, we've been investing in fixed income this year.

Last year in 2017 at an average of 2.1% and we expect of course this year to invest at a higher rate. Maybe it will be 20 basis points higher, something of this magnitude.

So it is low. Don’t consider, I am quite optimistic on the facts that we won’t see anymore of a extremely low interest rates, nevertheless the recovery will be slow because we have quite compressed spread.

Thanks, Peter Eliot from Kepler Cheuvreux. Three outstanding fairly specific possibly related questions.

I noticed that your average in force guarantee in Germany has come down from 3.4% at the half-year to 2.9% now. I am just wondering, if there is anything in particular, you have done there that has caused that?

Secondly, on the solvency sensitivities, the interest rates it is a lot low than it was before I'm just wondering if you could comment further? And then finally on the slide that we were just on I was surprised by life yield was coming down sort of so much quicker than the P&C yield.

I was just wondering if you can just explain that phenomenon?

Okay, Gérald, do you want to tackle the last two questions and I do the first one.

Absolutely let’s start with the solvency and the sensitivity. Since sensitivity is always low, it is always lower when the rates are going up.

And here, keep in mind that we have the U.S. and that we have the U.S.

which is in equivalent. So, of course, when rates are going up, we should have our solvency going up.

And here, we have the effect of the U.S. Nevertheless, we could say that the convexity when rates are going up is a bit lower and this explains most of the movement.

About the Life yield and the P&C yield, mostly for one reason, why 20 basis points in Life and why down 12 in P&C, due to Turkey, because in Turkey, we’re investing at 8%. That’s only country.

Yes, 8%. Yes.

So we are imposed with 30% drop on our prices in GPL. But nevertheless, we’re investing at a higher rate, and that’s why it helped us just to give you an idea today the contribution to earnings of Turkey was €70 million.

On your first question in Germany. First of all, it’s very good news, that the guaranteed rate comes down actually it’s today below the market average where it was use to be above the market average.

The reason for it is three-fold. First of all, we have really focused our new business sales on business with very low guaranty and it follows exactly what you’ve seen on the one slide that Gérald have showed earlier with respect.

The guarantee in the new business is very close to zero. So the dilution, I would say, of the inflows brings the overall guarantee down.

The second point is you had – at a time in Germany still tax benefiting life insurance contracts that are now running off. This is one part why the guarantee has come down.

And then there is a third element, which obviously, we have done across whole group but particularly also in Germany is to work significantly on the inflows and really to see how do we bring the guarantee down because there are ways of bringing it down. And how can we also make sure that if people need cash, we can accommodate their wish.

But overall, we shouldn’t be complaining about these numbers.

Just on the new business point. The average guarantee you are showing there is still 0.9%, but is that just – the mix or rather than the guarantee on traditional – the new business guarantee you are showing there is still 0.9%, that which is what it was before.

Yes. You have to see, so in Germany, there is a particular situation, you have new business and new-new business.

So you have the so called dynamic, which is I have concluded a contract in 1950, in every year there is an automatic increase of the contribution to at the rates of the old guarantee. This brings your average guarantee as a new business artificially up.

And then you have the new-new business, where we are very close to a very, very small guarantee. And that’s the blend of those two.

Thank you very much. Michael Huttner from JP Morgan.

Three questions sir, on the U.S. pre-IPO which presented on 14 November, and I know you gave the details.

But could just for simplicity sake, actually give the figure? I remember a figure of €2 billion back then and I got confused by the numbers, I’m a bit slow, I’m sorry.

Sorry, what figure was it exactly?

So, on 14 of November you gave a figure of €2 billion pre-IPO and today you gave a lot of figures, but I got confused, I saw minus €0.8 billion and I panicked here.

Gérald, knows what you are talking about.

Yes. Absolutely.

And then aligned to that, maybe explain a little bit the cash remittance, this figure of €4.9 billion or €5.7 billion underlying, I don’t know how you look at it. And that’s cash remittance, is understand then includes all this pre-IPO, post-IPO, so the U.S.

will kind of come through that figure. Is that right or is the figure we are seeing kind of underlying.

And the other question is on the over earning or over under earning – under reporting really, where your reserves are increasing more than, than you are showing in terms of combined ratio. And can you explain a little bit where that comes from.

It’s really because I’d like to be able to mobile going forward 23% rather than 19%, so I have a bit confidence there would be lovely. And my last question is, just a numbers question, you gave Turkey, so I’m just trying my luck, if you could give the contribution of the Asian JV’s in AXA investment.

Thank you.

Gérald four questions for you.

Okay. First, the pre-IPO, I’m sorry if I confuse you, but when you go to the presentation that we made on November 13, nothing has changed expect that internet numbers that we presented at that time.

And it’s – where we had – you remember that we have €2 billion cash positive net. So, it was €2 billion cash positive net, so no change.

What I said is that out of this €2 billion cash positive net this is after the capitalization of the U.S. of €0.3 billion that’s net in the €2 billion.

But there is a different that means that €0.6 billion, which is also in the net €2 billion, will be reimbursed in 2018 with some shares of subsidiaries that we have to keep at the group level €4.6 billion. So you could say from an economic perspective it’s not €2 billion but €2.6 billion taking this into account.

That’s your first point. Pre post-IPO cash remittance.

Michael, the way it works is that this year, we had this remittance ratio and remittance there was a drag for the U.S. coming from €6.8 billion, I just described.

This year, we didn’t benefit from any dividend coming from the U.S., that’s it. And we don’t expect that it will last a long time, so we hope that there will be dividend but this year it was instead of last year, we had – I remember that I told you that we have an average level of €600 million dividend capacity from the U.S.

So instead of this we had a drag of an injection to the U.S. of €0.8 billion.

End of reserving or other reserving. Let’s put it this way, so long as AFR is – AFR are mark-to-market and all the reserves are booked in the best estimate liability basis.

This year we had – I would say a decrease of the best estimate liabilities we through a good developments, good expected developments. But we cannot expect that every year you will get exactly the same.

And that’s why to be honest, I said that on a recurring basis are much more expecting 19% or 20% other than 24% like it was, maybe we’ll have good developments. We are always, I could say a bit conscious which makes that we have more positives and negative developments, but that’s it, but I cannot promise you that next year we’ll have a gain such type of evolution in our reserves.

Turkey, so you asked for the earnings coming from the Asian JV’s it’s right? So from Asia, let’s me go through, yes, so Thailand €77 million, Indonesia €57 million, Philippines, so Philippines €21 million, €15 million from China.

Thank you, Michael. Let’s go over to this side, starting in the front.

Thanks, Colm Kelly, UBS. There questions, one on the life savings investment margin, the guidance of 55 to 65 for 2018 to 2020, I mean, how should we thinking about that now in the context the actual margin of 6 billion bps reduce – the rate of decline has reduced year on year the new business reinvestment rate or 40 bps higher year on year.

And then in the context of what we’ve seen recent trends normalization of interest rate, policy and central buying intervention, should we see that target now more conservative rather than best estimate. That’s the first question.

Second question is on top, obviously very strong headline solvency, if we think more about own funds and the growth of own funds, funds has been largely flat, which is logical given the focus on improving the quality of the capital. So it’s a positive trend.

At what point should we think about both growth in own funds and improving quality simultaneously in the context of own funds growth being a proxy for shareholder value growth on future distributable cash and capital to shareholders. That’s the second question.

But third question is on operating free cash flow, we’ve seen 2% growth year on year in the operating free cash flow from segments. It seems like there was a large reduction in required capital for P&C within that I think a third reduction, which we wouldn’t have seen that much growth in that number.

And again, logically thinking about this with solvency capital on capital intensive back book business running off at a high rate, new business capital being less intensive. I would expect that operating free cash flow number to grow at a much higher rate.

So perhaps just the reasons for the lower capital requirement for the P&C and what growth rate should I expect going forward on the operating free cash flow. Thank you.

Thank you. Gérald, if you mind I’ll take the first question and you will do the question two and three.

So our ambition 2020, which was based on the assumptions, if you remember, we basically modeled it according to what is in our hand that’s the operating performance. What is not in our hands is a capital market, equity and interest rates.

And from there, we have taken two scenarios, two or three scenarios with the flat interest rates, with slightly rising, with rising interest rates. And these assumptions have always been based on a middle scenario where we have overtime slightly rising interest rates in the U.S.

and Europe. We always talk now about a rising interest rates.

Yes, it's true. We see it in the U.S.

we have clear indications in U.S. I think it will continue.

In Europe, I would say, it's the first days of spring. And the spring is not there yet when the sun is shining once.

So, therefore, I would be cautious still in Europe. And this guidance that we've given, since it's 10 basis point guidance, is a guidance that was just not picked on one scenario, but on an assumption that is larger.

You should keep that as a given, also for 2018 and going forward. Gérald, question two and three?

Yes. I will start with the question three.

And you can see it on Page 22 of the embedded value report. And indeed, it's very small difference.

Because in P&C, changing is required capital was minus 140 in 2016, minus 96 in 2017. So it's really a small difference.

As you know that it could come from different elements, including the asset allocations and business and so on and so. It's is difficult.

It's not sizable, I would say, difference that could be – could find your vision in clear business decision. It's just a blended rate and that's what I can tell you.

On your second question about I just wanted to make two remarks. So first one and again, it's something that you can find in the IFRS report, you remember that last IR Day, we mentioned that Life & Savings, Solvency II future profit including in AFR was €13 billion.

And now, it's increased to €16.2 billion, which is a quite good, which makes that in the end, and you could see it in Page B65, that we have quality of capital, which improved because indeed we have – screen here, you have 85% of Tier 1 capital plus 7 points, which is quite noticeable. So in other words, it means that the quality of our capital, as measured by AFFO, as measured by real value of in a Solvency II context, real value of our company clearly improved.

So that means that the earnings plus quality of capital, which improved.

Thank you very much, it's Farooq Hanif from Credit Suisse. Just a quick question on the U.S.

Obviously, by share it's a numbers question. There will be potentially an increase in capital requirements if the NAIC increases the charges half of that.

What would be the impact be? And then another thing I believe the regulators allowing you now to use fair value for your hedges and liabilities in advance of change in regulation on VAs.

I don't know if that's true. But how higher interest rates therefore helped your RBC ratio year-to-date?

I'm sure answers on that. Second question is just on cost.

So you got – you still got more than half of your costs to deliver. It is cost savings of it.

Should we expect an acceleration therefore, in the expense margins declined in Life and P&C now, will it be noticeable in which areas? Thank you.

So let me try and do question one and three. Gérald, you do two.

So on the RBC ratio, it is clear that the changes of the NAIC and the question remains when does it actually come in place. There was a certainly be impact on the RBC ratio.

We have tried our best to anticipate with all the changes pre-IPO that we've shown you in our Investor Day in November, to anticipate as much as possible. Today -- from what we know today, what will come on most likely we assume that there's very little changes in what we have already done.

But the question remains, it's not done yet and is also the question when does it come. And obviously, we are following it very closely.

When we look at the cost, it is true that we are when you sum up the €0.3 billion and €0.5 billion. So we are at EUR0.8 billion relative to EUR2.1 billion.

You're absolutely right in say you're not beyond half, but we're also not beyond half of the time. If I remind you, we still have three years.

It was 2016 to 2016. At what I said last year in the same place is, we are operating in environments where cost savings require a certain prework, which is called social dialogue.

And therefore, you will certainly, by nature, see slower start and then you can't to our normal run rate. So I’d assume that’s what you have seen now will continue going forward.

Again, our aim is EUR2.1 billion. We have set in November with the additional EUR300 million that we have shown you in November about restructuring of the group and the regions, that contribute to the EUR2.1 billion, we can get into an acceleration.

So today, I have no evidence that we should not be making those EUR2.1 billion.

About the VAs and the interest rates, still, we can say that rise of interest rates is deteriorating RBC doesn't improve it. Nevertheless, and what I can tell you is that even if you anticipate a decision of NAIC to apply, to the deck to new tax rate of 21%.

We will have in the U.S. and RBC ratio that will be about the 500% that we mentioned, at the last IR day.

So I am quite reluctant we have a strong position strong capital position in U.S. So that's quite obvious.

The question is exactly how it does play out because tax rate and that is one of the piece don't know yet how it's going to but it should be positive.

It’s Johnny Vo from Goldman Sachs. Just a couple of questions in relation to some of your peers that have U.S.

operations. It's notable that within the equivalent framework, they have adjusted CAL the calculation down to increase Solvency.

So this is obviously an opportunity for you guys and would obviously boost Solvency given your Solvency ratio is now in the 200% and the U.S. is providing a small drag.

That's the first question, is it something that you're considering adjusting the count for Solvency II purposes? The second question just relates to given that Solvency is really no longer constraint for the group, what are the constraints for the group to lift the payout ratio to the top end of the range or indeed, start initiating buybacks?

Thanks.

So I start with the first question and then, Gérald will complement. I think what is important is to see what are the rules for the CAL.

And the rules for the CAL, that EIOPA has put down is that the minimum is the 150%. So everything about 150% is a luxury where you will have the disposal of going up and down.

150% is limited. Gérald will tell you in a minute, what we're planning for the IPO.

Yes. So we decided on -- I believe that we mention it at the IR Day, Johnny.

We have decided to recapture the business and since the recapture should take place roughly in the first half of the year of 2018. So what we did for the Solvency II calculation is that we anticipated this recapture.

So long as we anticipated this recapture, because cost because we had to deplete -- we lost a significant part of our EIOPA. We decided -- so long as we decided to put everything in New York and no more for G/A speak to rely on Arizona, we decided to move from 300% to 200% CAL.

And so the decision has been taken with the full approval of ICBC-AXA. I remind you that we have a lot of companies, including alliances which are 250% as I expect.

It was a worse, so that means that it was a total wash, and India, it’s – we consider that it's far better with our normal to rely for G/A need to be on Arizona because the regulatory environment could change. It's much safer to be New York now.

It is also one of the anticipation of the new NAIC rules when you look at what we've done in Arizona. Your second question was on the payout ratio.

So the payout ratio was something that was defined based on our Solvency II framework. We have said we feel very comfortable in the range of 170% to 230%.

When we are below 170%, we do need to think about the payout ratio. When we're above 230%, we also need to think about the payout ratio.

In that scale, between 170% and 230%, we want to position the payout ratio between 45% and 55%. When you think about dividend policy, you should always be predictable and should also make sure that your dividend policy is sustainable.

I think you will not appreciate if the payout ratio would jump around every year. And therefore, my aim is to have a sustainable different -- development that is clearly based on operational improvement.

It makes no sense if you're eating the stock to show a nice dividend. And therefore, you can see this year, we had a very good increase in the underlying earnings per share of 7%.

We have a very good solvency position. We said fine, we can increase by one point.

So we can show a dividend increase of almost 9%. And so we will look at this every year-on-year, because I think it's in your interest also to be -- to have a partner and the company that really manage the dividend in a positive way without any surprises.

Andrew? I'm sorry, we go to Ralph and then we go Andrew, sorry It’s easier from a microphone logistic.

Yes. It’s – thank you very much, it’s Ralph Hebgen from KBW.

Just a follow-up quick one to Gérald on the numbers, again back to the RBC ratio. This just goes back to the detail as you just outlined that part of the $1 billion capital strengthening previously shown on the slide going to the U.S.

it is now going to be repaid probably in the second half of this year. And that I think €600 million short term loan.

Would that note reduce the RBC ratio, or in other words the 500% did you anticipate repaying that in the second half of 2018 when you disclose the 500% on slide.

No. This is loan €6.6 billion note will be repaid as I told you.

But I can tell you that answering the previous question when I said that was quite relax and in fact that even after the NAC would take into account the decrease in the tax rate we would be about 500% this includes of course, this anticipated movement.

Andrew.

Hi, it’s Andrew Crean from Autonomous. I mean it sound like a quite record, I think.

You’re talking by acceleration growth in underlying earnings going for 4%, 7% and excited by that. I’m looking at the underlying pretax, which in last year, two years, is going by 1% and follow by 1%.

And that’s in line with revenues, which I think were flat. And that doesn't really look -- that's really this is driving force of the business.

That doesn't really look like I’m very exciting growth within the 3% to 7% range. What’s happening is your tax rate in the United States is 1%.

And I just kind to need some guidance as to where that tax rate is going. I know the element change in the tax reform will benefit you by €50 million as you said with the underlying tax rate.

But you’ve got these huge one-offs, which are coming through at a bigger rate, and really if we’re going to judge your performance on the 3% to 7%, you need to be able to do it against what is a sustainable rate of tax. Could you confirm the 1% is the tax rate from the states from here over after?

Or if it is not, what is your tax one-offs, which is still to come to benefit you.

I remember that question from last year, Gérald.

First of all I would like to Andrew to tell you that when you say that the pretax underlying growth is quite modest that your message. It is not true because we had some one-offs.

And I'm sure that you had time to look at it. And if you go through the MD&A, you will have all these elements.

And going to the MD&A makes that it's true that as a change to pretax could look like close to 3%. But indeed, taking into account and we could when you want and I'd be pleased to do it, we would be close to 6% pretax, excluding this one-off.

And there are some one-offs, which are in the U.S. And you notice that in the U.S.

we had some model change. We had some adverse mortality elements and restated for all these elements, but it's not limited to the U.S.

but also some other countries. Honestly, we would be close to 6%.

As far as the U.S. are concerned, we still have -- as you know, we had some reserves that we released, which makes that -- and you can see it in the MD&A.

We can see that rate is quite low. But we don't see why in the foreseeable future, it would change a lot.

That means that we still have some reserves. And at the same time, when I told you just before that we would have a benefit on the lower tax rate of €50 million plus in the U.S.

This takes it into account. So that means that we have some reserves.

At the same time, DFDand I don’t want to enter into complex explanation, but as you know, we benefit from DFD andwhen rates are going up, by definition we have more DFD, because these DFD are coming from the Unit-Linked business and from the underlying assets. And once these assets are going up, DFDs is going up.

And that's the reason why you have a decrease in the tax rate in the U.S. this year, but so long unless you would consider that the market could decrease, nevertheless, something that we can take into account.

How big is this U.S. tax reserves?

These tax reserves I cannot -- it's a few hundred millions. And you understand the same time that let's wait for the full presentation of the U.S.

accounts that didn't take place yet. And we will come back to you on these elements.

Michael.

Just I’ll try to ask it in a way polite way. Is the same question you have had, which is buybacks versus deals, but Allianz when they came to London last week they said one way cost of capital of 9% and this would be a buyback.

This is and of course, capital and it might be different number. I just wondered if you can give a little bit more indication of where you kind of -- your needle is bending at the moment.

it's incredibly balanced, which is very nice. But quite nice to have a slightly better kind of feel when you get this kind of windfall hopefully later this year?

Thank you.

Michael, the needle is extremely straight and will remain straight forward of time. Why is that the case?

We are doing share buyback every year to compensate for the delusion. This will not change and will continue.

The only area where we have been considering share buybacks is in the event of the IPO. And what we have said is the following and this is still true.

We've said that in case we do the IPO, we will have some funds to reallocate into the lines of business that we want to grow. Those lines of business are Health, Commercial and P&C, and Protection.

As we've always been developing business, and as I've learned from my predecessors, that as long as you have good ideas, you should be considering the investment into these businesses. And only if you have no alternatives, you should be looking at share buybacks we've been extremely clear.

Our priority is to reallocate. But we are not stressing out of audit, but we're not forcing it.

If we don't find anything in the given time frame, we are extremely happy to buy back our own shares. That should give you comfort that we are on the one hand, try our hardest to shift risk profile of the group, but we're not forcing the needle there or there.

And look at the moment, I don't even need to waste my time to think about it because the IPO hasn't taken place. When the IPO has taken place, we will come back to your question.

Andrew.

Just following up on that question. What is the reasonable time frame, because if you get the proceeds and sitting in your pocket adding whatever the earning not very much, it is -- it's painful to you and it is critical by time particularly with the evaluations are at the moment?

So you’ve given that answer yourself. I mean, essentially, a penny in the bank is a pain.

And if we go back to our Ambition 2020, we have promised the underlying earnings per share growth of 3% to 7%. Every penny that lies in the bank not employed is a drag on those 3% to 7%.

So we will have a very strong incentive of deciding relatively quickly after the IPO has happened and the money has hit the account, what to do with the money and where the needle is bending. James?

Okay, great thanks.

Thanks.

Not a labored point bit more. But I'm more familiar with the health market really in Asia and therefore I don’t really know what pockets of business might be up for sale.

Is it actually possible to spend several billion on health insurance company?

For sure. May be you shouldn’t look into Asia.

We have a very clear list of opportunities. We've gone through every country and by every country, I mean the ten plus six.

We've looked at it, and we know exactly what we are after. What I think is important is to look at it from a different angle.

The money that we are not only considering to allocating the money in the emerging markets, we are also looking at allocating the money in traditional markets because there you have synergy and there you talk about scale. I mean, health in the UK is impossible because we have an issue of market share at some point.

But health in other countries is very well opportunity, and there are possibilities.

So there’s no particular problem on supply. It’s just about getting the math to stack up for you.

Is it right?

The supply is never obvious. You need to try hard.

Are there any more questions in the room here? Blair?

Thank you. This is [indiscernible] from Blair.

Just on the U.S. one characteristic of the result is from the competitor companies is adverse mortality.

And some question marks over the integrity of some of the processes and models in some companies. And I guess you’ve been touched by both of those things.

How confident are you that these are blips or bad luck aspects rather than structural?

Look, I mean, when you look at mortality, it is true that it is a market phenomenon. And that we have also learned our lessons also going back in the past.

When you look at what has hit us and it is actually some events on the extreme, I would characterize it, and not events that are in the core of the business. I mean, the first change was very much about mortality of people that are 100 years and beyond so that I would call on the outskirts.

And the reason one was for mortalities beyond a very large amount of mortality sum. So those I would consider the as outliers.

The business in itself is working well and the wheels are turning well. We have done our homework and, in particular, in the process of the IPO, we be looking at it very carefully.

And we mustn't forget, I mean, if there is always our issue in the U.S. if you have an experience, protection does work like P&C.

You have the chance to adapt your premiums. Yes, it's not easy in the U.S.

Yes, we're facing litigation sometimes with the cost of insurance, but it is possible. And we have taken a very clear and disciplined approach to it, not being pushed back by potential litigation.

Any other questions in the room? Any questions on the webcast?

You’re shaking your head. Last chance for any question in the room.

Michel. Only if it’s a polite one.

And only if it's not about the needle.

No, no, no, on the timing. So…

Then it’s picking needles, yes. On the timing of the IPO, or what?

No, no, no. Let’s say you are seeing money on the Friday, do we expect the press release on Saturday?

This is a very picky question. Look I’ll answer this question when I'm in the position having the money on the Friday.

Today is not Friday and tomorrow is Friday, but I will not have the money tomorrow. Let's come back to that question.

Let’s cross that bridge when we come to it. My pockets are still empty.

Thank you very much. Thanks for your questions, thanks for your attendance and I wish you a good rest of the afternoon.

Thank you.