AXA S.A.

Andrew Wallace-Barnett - IR Gerald Harlin - Group CFO

Peter Eliot - Kepler Cheuvreux Jon Hocking - Morgan Stanley Paul De'Ath - RBC Andy Hughes - Macquarie James Shuck - UBS Nick Holmes - So Gen Farooq Hanif - Credit Suisse Michael Huttner - JPMorgan Andrew Crean - Autonomous David Barma - Exane BNP Paribas Blair Stewart - Bank of America

Thank you very much and good morning everybody. Welcome to the AXA conference call on our activity indicators for the first nine months of 2016.

Gerald Harlin, our Group CFO, would like to give you a quick overview of the main figures included in the press release which we issued yesterday evening, and if you haven't found it already, you can find on our website. And following that Gerald would be very happy to answer your questions.

Gerald, I hand over to you.

Thank you, Andrew. Good morning to all.

So, let me begin by giving you an overview of main figures for the third quarter of the year, and then we will move as said by Andrew to the Q&A. So first, total revenues were up 0.4% on the comparable basis to €75.7 billion.

On Life and Savings APE gross improved in the third quarter with a 3.4% growth of the quarter ahead of market expectations. For the nine-month period, APE remains stable as compared to the previous year.

Protection & Health APE grew by 4%, driven primarily by higher sales of group business in France, in Hong Kong and in Switzerland. G/A savings grew by 23%, mainly from good momentum in China, the continued success of G/A capital light products in Japan and the recovery of sales in Hong Kong, including successful launch of the G/A capital light product in Hong Kong.

If you remember the high Chinese New Year single-premium sales in the first quarter, in the subsequent quarters, sales in China have been driven by relatively higher margin whole life savings products. The growth in Protection and Health and G/A savings APE were however offset by the adverse impact of the volatile financial market conditions in Continental Europe on our Unit-Linked business and our Mutual Fund and other business, driven primarily by a non-repeat of an exceptional sales of a large contract in France.

NBV margin remained high at 38% indicating that along with growth in the third quarter, we continue to successfully focus on the profitability of the business. Life and Savings net flows were strong at plus €4.9 billion with Protection and Health at €4.7 billion, Unit-Linked at €1.1 billion and G/A capital light at plus €2.7 billion partially offset by net flows minus 3.6 billion in traditional G/A, in line with our strategy.

This includes €0.6 billion of traditional G/A outflows relating to the successful plus 20 by our programming base. This prior program was open from August 24th to August 21th and so we may expect hit the out-flow recoveries in Q4.

Yes, it was from August 24th to October 21st I am sorry, and so we may expect to see those out flows recovering in Q4. P&C revenues were up 3.4% with strong growth in both personal and commercial lines, driven by a positive price effect of 3.4% overall.

It is to be noted that the slight reduction in growth rate in P&C gross written premium as compared to first half 2016 was expected due to the dissipation of the Turkey pricing impact. Excluding Turkey, the revenue growth for the first nine months was 2.5%, in line with our half year 2016.

In mature markets, revenues increased 2%, mostly driven by tariff increases notably in UK and Ireland. In high gross market, revenues were up 10%.

This was primarily driven by Turkey pricing impact and business growth in Mexico, mostly from the health business. Excluding, Turkey revenue growth in high gross market was 5%.

Direct revenues grew at 6%, driven by Japan, the UK, France and Poland. Asset management business now.

Net inflows in asset management were at plus €18 billion in the first nine months as strong inflows in AXA IM including some good flows into our Asian JV were partially offset by outflows in AB following the loss of two large mandates in the institutional channel. Average AUM dropped 2%, driven by an unfavorable foreign exchange impact and the withdrawal of first tranche of assets from Friends Life in Q4 2015.

Revenues in asset management dropped 6% due to lower management fees, mainly driven by lower average assets under management at AXA IM and the decrease in average management fees at AB, linked to a higher share of fixed income products. Solvency II now.

Solvency II ratio was at 191%, down 6 points versus first half 2016; as the change in EIOPA reference portfolio which was minus 6 points, together with impact of adverse market conditions and estimated dividend accrual was partially offset by positive operating income return. I would also like to remind you that on October 27, S&P upgraded its long term financial strength rating of AXA's core operating subsidiaries to AA minus, with a stable outlook from single A plus with a positive outlook.

This is a recognition to our continued balance sheet strength and resilience in face of the current rate context. Overall I could say that the nine month numbers reflect our strong and continued discipline and resilience in this challenging macroeconomic environment.

I'm now happy to answer your questions.

Operator, do we have the questions please.

I guess the first thing I wanted to ask about was the regulatory landscape. An update, I guess, in particular, in France.

You mentioned the Hammond Law in your release, and perhaps you could talk through just the impact you're seeing on a net basis there. But also, I appreciate the irony of worrying about interest rate rises in the current environment, but could you also comment on the Saturn 2 amendment, which allows the regulator to restrict withdrawals from the funds on euros, which -- if that happens.

And perhaps you could share with us the scale of the issue as you see it, and the level of protection you have there from unrealized gains in that portfolio. And then the second area I wanted to ask on was just perhaps some general comments on the business mix.

I noted very positive developments in the capital light G/A Savings, but the non-capital light G/A savings are also still growing significantly. I was wondering if you could just give us your thoughts on that, and also on the growth rates of the high-growth markets in P&C.

I guess if you exclude the price effect there, the growth is fairly flat there. So I was just wondering if you had some general comments on those.

Thank you very much.

Okay. So Peter, let's first start with the regulatory evolution and the point that you made about France.

What I can tell you, is that there is also a VATPR, which is a French supervisor, already as a possibility to limit the surrender. So it's nothing new.

To be honest with you, this has been not getting well managed from a communication point of view. So honestly in September, we had a drop in the sales in both general account and unit-linked, and since then it's recovered.

So that means that October is better. So I believe that it shouldn’t be in a end a big issue.

And most people didn't understand that the objective, indeed, of this measure, is in case there would be – as you said, in case there would be a sharp rise of interest rates and there would be some unrealized losses and this would avoid these companies to realize losses. As far as we are concerned we have acquired high.

The level of capital gains in France is pretty high. So that means that we are roughly speaking in France, on top of my head we should have running yield which is close to 3.5%.

On top of this maybe, remember in the past I told that we had, in case of a sharp rise of interest rate, that we had some options. And we see that this options.

So that means that for me it's not actually a matter of worry, as I would say that the fact that there is a recovery in October was quite good sign. Your second question was about the business mix.

And I would say that the fact that what – I can tell you is that on APE side, we had on average growth of -- your question was about G/A investment and savings, and on average we were at 23%. So we had stronger -- quite stronger recovery coming from Honk Kong, coming as well from Southeast Asia.

We were focusing on the capital light versus capital non-light. But indeed, the capital non-light is mostly coming from China, but on that side it's good news because you remember that in the first quarter you were -- I told you that we were in a negative NBV territory.

Since then we recovered. NBV margin from China for the first nine months is back at plus 8%, as I'm still expecting it to be in these territories.

So that’s quite good news. So yes, we have strong growth in both capital light and non-capital light, but with strong recovery in non-capital light of our profitability.

Okay, thanks very much. I guess the only other point I mentioned was the high-growth markets in P&C where if you exclude the price effect, that there's just not a lot of growth coming through at the moment.

Yes, that means that it's -- excluding the price effect in the high growth countries we should be more or less flat. That's what I can tell you.

But anyway, the fact that we have strong a price effect coming from Turkey means that -- it explains why we are seeing such a situation. So keep in mind that in Turkey, we increased.

On top of my head, we increased our prices by 145%.

I've just got one question, please. Just on the life margins, I just wondered whether you could talk a little bit about the mix impact on the margins, and what would the interest rate impact be if you were to update for current assumptions on some of the European margins.

Thank you.

Okay. So first, a general remark.

We have the strong margin of 38%, Jon, and as you know this is based on the interest rates of last year. So when updated with the interest rates, today's interest rate, we should be at 35%.

So it doesn't change, fundamentally, the fact that we have a strong and that we keep strong margin. So that's the first point.

As far as going into a bit more detail, we could say that we still have an NBV margin which is pretty strong. In Hong Kong, it's 78%.

In Southeast Asia, we still at 24%. Also, we had strong growth in China.

In France, we still have an NBV margin of 25%, which is quite flat. In the U.S., and this is in France.

Sorry, your question was about the business mix and the business mix still quite strong, because we still improved in protection and health. So we had an increase in our NBV margin by almost 4 points in France.

We had a decline in the savings product, but an important point is to mention that we still have roughly 40% of our savings which are in unit-linked product. So that's mostly it.

In the United States, we have an NBV margin at 21%, which was slightly down 3.5 points. But again, we won't suffer in the U.S.

from this climb and adjustment of interest rate, because as you know, for the VA business it’s adjusted for the year. And that's mostly, in Japan, we still have a pretty NBV margin, 1.05% and we were quite stable compared to last year, because we were at the same level last year.

In countries like Germany, Switzerland we slightly increased our NBV margin. We are at 39% in Germany, 56% in Switzerland.

So I would say that across the board, we have a global stabilization of improvement and we have this dilution effect coming from China. That's what I could tell you, but positive again in China, which is a great news.

A couple of questions, please. Just on the growth in Hong Kong, was obviously very strong in the quarter, and I was just wondering if you see, going forward, any impact from China getting tougher from Mainland Chinese going to Hong Kong and buying life insurance products.

And then the other question was just on the asset management business. So you've obviously lost a couple of institutional mandates out of Alliance Bernstein towards the end of the quarter.

Would you be able to elaborate slightly on those mandates, and why did you lose them, and also were they high margin, low margin? Essentially, what's the impact going forward on revenues from those?

First, what I could say about Hong Kong and your question is relative to Union Bank. What I can tell you is that -- a few comments.

First of all I should say that 98% of our regular premium are below $57. And second I could say that if I give you sensitivity, because I cannot be more precise.

Nobody knows exactly how it will end up, but even if we would have the new business -- I'll give you a new business sensitivity. That means that if we would have a decrease of AB by 10% or 20%, it means that our earnings calculation, maybe that impact on earnings would be between minus 0.2% and minus 0.4%.

So it's extremely small as a scale of the group. Of course it's an important news but compared to some of our peers it's much-much more on our balance sheet, and P&L.

The second question is about asset management. Yes, you are right.

We lost two contracts, and the impact of these contracts is quite significant. It's contracts relatively small fees, because in basis points it was something around 7 basis points and this explains most of the decline of AB.

And as far as the AXA IM is concerned, it's different, it's coming from Friends Life. And as far as Friends Life is concerned, we had a drop; and excluding the impact of Friends Life which was expected, which was already announced, we would have been roughly flat in terms of revenues.

I wonder, could you talk me through the 3Q-on-3Q price changes of P&C, because I'm not really following the point about the price declines being due to MedLA. Because if I look at the A24 from the half-year, on personal lines you had 6% increase in prices over the first half of the year.

That went to 4.2% over the first nine months. To get that math, I have to have declines 3Q on 3Q across most of the regions.

Is that actually what's happening? Are you cutting P&C prices to try and stimulate growth?

Maybe you could explain the trend there. I can see that MedLA price rises were 19.5% a year for the first half-year.

But how does that get to 10% for nine months, unless prices have gone down Q3 on Q3? The same in France and other regions, please.

I believe Andy, that the most important factor is coming from Turkey. Because the Turkey increase on a relative basis, what's much in more important the first half of the year because it's diluted I could say over the nine-month, which explains why you -- on the figures, you are right.

But in fact, if you exclude Turkey we don't have such an element.

So, just to be correct, even if I take out Turkey, Turkey prices must have gone down on personal lines to get you from 19.5% down to 9.7%. And even if we exclude Turkey, France was up 0.07% in the first half-year, and went to plus 0.4% for the nine months, which suggests Q3 had price falls for the personal lines, to get to that weighted average of 0.4%.

Have you changed the methodology at all?

Excluding Turkey, we have plus 2% price effect. Plus 2% price effect excluding Turkey.

For the third quarter.

For the first nine months. And on top of my head it was more or less same for the first six months.

That explains why, I told you that it's mostly due to Turkey.

Okay. Maybe we can take this one offline, because I'm kind of a little bit confused on that one.

And then could you update on the reinvestment rate, please, for the life business, which was 2% in the half-year. Is there any chance you could give an update on that number?

That would be great.

You remember that last time -- beginning of August I told that you Trader B [ph] was to invest between 1.6% and 1.7%. It's presently the case.

And of today's conditions that's more or less the rate between that, 1.6% roughly. So in other words, it's line with what we showed.

It's in line with our plan and so no worry on that side.

I have a few questions from my side, please. Gerald.

So firstly, just looking at the net flows in the third quarter for NORCEE and MedLA, move to outflows in the third quarter. I was just wondering if you just comment on what was going on there, please?

Secondly, in terms of the new business value as opposed to the APE, South East Asia and China, still declining in the third quarter. Obviously, you're piling on volume in China, but I'm just surprised to see that South East Asia and China new business value is not actually growing.

If you can comment on that. And then thirdly, just wanted to point the NAIC proposals in the U.S., I was wondering, could you give us an update on what your latest RBC ratio in the U.S.

is? I think you've previously given a number for 2015.

And where you want to actually manage that level to? I think you rely on voluntary reserves to some extent, which is boosting that number to about around about a 600% level.

So a 400% kind of guidance is probably not strictly appropriate, given the reliance on the voluntary reserves. And then, if you could just do a kind of update on how you see the NAIC proposals reflecting that number, and any potential risk of recapitalization over time, please.

And then finally, if you're able to comment on this one, great. I thought I'd have a go anyway.

But there's some kind of talk around the EIOPA, revisiting the calculations of dynamic VA. I was just wondering, could you tell me, there's a 6-point negative impact from the Solvency II bridge from half-year to now, from a change in the reference portfolio.

What would happen if you were to move from a dynamic VA to a static VA, please?

No. I'll start with this point.

Yes, you are right. The VA has been updated.

And it's, as we said and as we told you, it's a bit of a mystery, because it's quite complicated and the way it's been, this adjustment wasn’t expected as you know. It's due to the revisions.

There is a yearly revision. So there will be one within a year.

The static VA is not at all something which is under consideration. As you know, there are -- keep in mind that there are still some companies which are using the VA with their own portfolio, and not with the reference portfolio.

So we are miles away from companies using their internal models. We are miles away from a situation where we would move to a static VA.

And it’s not at all the spirit of Solvency II. May I remind you that the VA was a basic principle of Solvency II.

Last but not least, keep in mind that it wouldn't be consistent, within the UK, the matching adjustment. Because in the UK the matching adjustment is quite favorable because it's linked to the assets.

It's not the reference portfolio, and of course the matching adjustment is something which is not under threat. So I have no fear on that side.

I can tell you that we never discuss this with our own supervisor. So it's not the straight for me.

As far as the NAIC is concerned, which was your other question, we don't -- we are still -- the RBC ratio, we don't give the figure for the quarterly account. But the RBC ratio is still pretty high in the U.S.

Last time, at the end of June, there were around 600%. So we are pretty, at a pretty high level.

As far as the NAIC is concerned, it is nothing new. As you know, we are just in the process now of, we will get -- we are in a testing phase, I would say, and we'll get news mid-next year.

I don't expect to get news before. About your question, relative -- it means that we would be in the situation to be recapitalize our U.S.

business. Without any figure, without any new rules, it's difficult for me to tell you how it would work.

Nevertheless, I could say that we are quite well reserved. Keep in mind that, including the excess reserves, we are in CT98.

So in the high 90's. So very good level of capital.

And last but not least, as I told you already, I believe, I got a question at the end of June. From a Solvency II point of view, we are using as you know with the equivalent -- we are using the RBC ratio, but we are using 300% CAR as a requirement, which is pretty high.

As you know that we are by far the highest one. So in case there would be a revision -- a global revision of the NAIC capital requirement, most probably that will be also an adjustment on the way we underlined it, because 70% of the low requirement has nothing to do with the high requirement.

So that was the point. You had also questions on the NORCEE and MedLA.

And you know, it's coming from two elements. First of all, it's coming from Belgium, because in Belgium we have an APE drop of 55%, which is from the flows and I was answering on APE.

Yes, I'm back on the flows. We have a bit more than 536 million -- 760 million outflows in Belgium.

Most of the 600 million is coming from Crest20, as I said in my initial comments. why?

Because it's right for us. It's in-force management.

It's pure in-force management because it was a traditional G/A business, with very high guarantees and this is quite interesting to us, because it's a way to get rid of high guarantees and excellent conditions. As far as MedLA is concerned, it's minus 200 in terms of outflows, and it's mostly coming from the unit-linked business and linked with MPS, and the global situation of the bank.

Nevertheless, as far as MPS is concerned I just wanted to flag one element, which is important, which is at the end of October, on the 24th, the bank presented its plan and it was clearly said that you can go back to that presentation and it was clearly explained that they were relying on the growth and the strength of our partnership as far as savings protection and P&C is concerned. So we can expect to have quite an improved environment on that side.

And the final point was just on the South East Asia new business value in the third quarter? The nine-month stage?

New business value on South East Asia, yes it was 24% minus 10 points, but it's -- the minus 10 points it's explained by 80% due to investment and savings. And investment and savings, again it's mostly linked to China, which means that that roughly speaking, we have -- in South East Asia we have an NBV margin at 24% and it was 21% in first half.

And that’s globally speaking these improvements that I mentioned to you.

Hello. Hi there.

Two questions, please. Coming back on the U.S., wondered if you could update us on the DOL reform, your latest thoughts?

I think you were expecting 10% sales reduction. Wondered if that is still true?

Also, you've been growing very strongly in the non-GMxB variable annuities. Wondered if you could give us a bit more color on that?

And the second question is on the capital light GA savings products. Wondered basically if you can give us more color on what sort of products these are?

Are they hybrids? Or -- and do they have interest rate guarantees and if so, at what sort of level?

Thank you very much.

Okay, thank you Nick. First of all, about the DOL, no use.

We confirm the minus 10%. So I don’t change on that side, but no specific news.

Maybe we will have some news in beginning of next year. On the non-GMxB in the U.S., it's most due to a product which is Unit-Linked type of product which is STS.

And that’s a product which is a Unit-Linked with some protection and these protections are two options, where the client is protecting on a limited decline and they give up an exchange on back of the upside. So that’s a first point.

It's a high-end -- STS means a less capital and it's slightly lower NBV margin, but on the net return and capital it's excellent. As far as the capital light, your question about what type of products these are, look we are -- the best example in some countries we don’t need any more a early guarantee, and that’s what will happen in France.

I am sure, Nick sure, that you heard about the euro-croissance and euro-croissance is a guarantee in this end 100% after eight years only, which means that you can change the asset allocation, you have much more flexibility. In some countries as well we are selling products with guarantees below 100%.

In the present interest rate environment, that’s what we will do and we are not the only one to move in that direction. It's a global move of the market, which is a good news.

That's great, Gerald. Just a little bit more color on the Hong Kong capital light GA savings?

I think this is a new product, isn't it?

Yes, it's a completely new product. It's a product -- it's not a exactly -- so in Hong Kong, it's not exactly the -- we see that some very low guarantee, but on top we have higher premium, so our [ph] margin, it's [indiscernible] fees in the first year.

So that explains why we are capital light. I mentioned that capital light is when the numerator, the AFR, is above the SCR.

So that means that's accretive in term of capital and Solvency II -- and Solvency II capital. So almost everywhere, presently, when we -- at the same time we feel we want to have a strong percentage of our sales which are in unit-linked product.

But at the same time, in order to sell more, even in conditions which are not very favorable for unit-linked business, it’s important to have these capital light products, which even in a very low interest, or close to zero interest rate environment, allows us to sell products with high return on capital.

Hi, everybody. It's Farooq Hanif from Credit Suisse.

Just wanted to go back on the EIOPA reference portfolio. Can you explain if there are going to be any asset allocation shifts?

My understanding is that the whole philosophy behind how they calculate the reference portfolio has changed to include unit-linked. If you could just explain what's [indiscernible].

Yes. I have no problem to discuss this topic.

Again, I’m not absolutely sure. My own guess is that it’s coming from unit-linked.

So that means that they included unit-linked and then they excluded unit-linked, which, by definition reduce the ratio. That's the first assumption.

That's the first possibility. And the second one is also the fact that they don't take into account the part which is swapped.

In other words, imagine that in the portfolio, in the European portfolios, we would add some U.S. dollar-denominated bonds swapped into euros.

Apparently, they don't take this into account. But this is what I believe, but I’m not 100% sure, but I cannot tell you more.

So that's -- and even when we discuss with them, they are not 100% clear. So that's it.

But from now on, I don't expect any further adjustment. Maybe it could be a pure, I would say mistake that they made at the beginning possibly.

I don't know. I cannot be more precise.

But doesn't it encourage you to take more foreign bond risk, to buy U.S. corporate?

No, no. Let's be clear.

Let me explain to you that, yes, we are using some U.S. dollar bonds, but they are swapped into euros.

So that means that we don't -- from an ALM perspective, and in order to optimize our capital, our Solvency requirement, it's important for us to hedge and not to take an open FX risk. We have some, but it’s extremely limited.

So that means that because it -- for us it could present a significant risk, that would immediately translate into higher capital requirement. I don't know if I'm clear, but -- which means that yes, we are using plenty of different bonds, even denominated in other currencies, but they are swapped back into the balance sheet currency of the underlying company.

We do the same in Switzerland. That's a next -- that's another example.

In Switzerland, as you know, there is a scarcity of paper and today, globally speaking, Europe, it's also starting to be the case due to the QE. But nevertheless, we have this capacity, we have plenty of the market, the U.S.

market. The bond U.S.

market is very deep. But anyway, when we invest, then we swap it back into Swiss franc for Switzerland or into euro for Europe.

It's clear?

Last one quick question. Another one.

What happened to Unit-Linked since September 30th? Has there been any recovery, in terms of sales and net flow?

I told you that it was slightly better. In France, October has been a bit better.

But I don't have sufficient -- I would say region in order to tell you, but France which is one of our biggest markets apparently, because that's in line with the -- in France when I said if we covered the savings business, recovered [ph] but we're still on 40%. So, we still sense 60% of general account and 40% of Unit-Linked, roughly speaking.

I just have two questions. One is the 191%.

I just wondered if you could give more granularity on that? Consensus and I was at 192% -- and you might say, oh, there's only 1% but given you'd flagged the 6% change so well, I just wondered if there's a moving part I'm missing here.

I don't know what it would be, so it's an open question. And the other one -- on the -- you mentioned the S&P review.

In there -- there was only one negative, and I'm sorry I'm mentioning a negative -- the rest was brilliant. So very good job, well done.

The negative was they said they'd downgraded your ERM factor because they said you were subject to multiple something or other. And I just wondered if you could explain their thinking or what it could mean for you?

Yes, may I start with the last question? Yes, it was great news for us, because it is strong recognition of our strength -- balance sheet strength.

So, it's right -- you're right, in that we've been downgraded. We're still good, but we're not at the top of the year end.

Why? It's coming from the fact -- and if you go into detailing their comments, it's coming from the fact that in the U.S.

we have two different frameworks. We've one framework which is equivalent and we have another one which is Solvency II.

As you know and many times I repeated it, today, so where we manage our products with -- where we find our product is completely linked with Solvency II, although we benefit from the equivalence driven by Solvency II. But the fact that the U.S.

represent a large part of our business makes that -- this discrepancy between two different frameworks is something that they consider as justifying a slight penalization. But as far -- and this is this reason [ph] that's a point on which we have been always crystal clear, the way we manage our business, including in the U.S., including for pricing of years on, it's the pure Solvency II type of approach with the Solvency II requirement.

The first question, your first question was about the Solvency II?

The 191%?

Yes, 191% and let's -- we have been discussing -- there were many questions on the reference portfolio. So starting on 197%, which was the Q2, 2016 Solvency; operating return is roughly 4%.

Dividend is roughly 2%. I'll remind you that while using as usual the dividend of the previous year.

And then we have the marketing part, excluding a fix that means that it's minus 3% and then as the remaining part is partially minus 5, of which minus 6 of the of the reference portfolio. That's mostly it.

If we would do it today, maybe we would be slightly better in the marketing factor what there could save. It's fluctuating by definition.

On that thing, I was discussing with your really helpful colleague yesterday and he was explaining that when -- now I'm going to get this wrong, so don't -- when the bonds -- corporate bond spreads narrow, the impact on you, because of the way the volatility adjust works is actually negative. So, narrower corporate bond spreads, how I think is positive, because bond values go up -- is actually not great, because there's a bigger impact on the way you value the liabilities.

Have I got it right or am I kind of?

No I believe that it's volatility marginal. The situation -- today's situation is the spread.

It's small because it's one or two points. So I would not flag this event as an indicator of our change in the Solvency ratio.

I could say on the reverse that compared with the situation of August -- July-August, the recent rise of interest rates of 20 basis points roughly, because in Germany we are at 15, it's a good news, because it's an improvement, which will conflate into our future earnings, marginally, but nevertheless it's important and in the Solvency as well. So that fit.

But no -- I would say it's a secondary factor of the impact.

Three questions, if I can. Can I come back on James Shuck's question and just ask the numeric answer to what the impact on your Solvency II coverage would be if you moved to a static VA?

I understand you don't think it's on the table, but it would be interesting to know. Secondly, just wanted to understand the cansma [ph] proposition of offering guarantees below 100% on general account products.

You can -- the product is guaranteed to give somebody's money back if you put the money under the bed. So it doesn't look that promising to give less than that.

And then thirdly, a more generic question. I'm sure -- looking back over five years, the profitability of the protection and health business hasn't moved at all.

Every quarterly update we get figures from you saying that there's strong net flows and good sales and high margins in general account, protection and health. I just wonder why that's not flowing through to the IFRS profit?

Okay. Let's with the just last part of your question, I believe that -- your question is that, yes I hope and I expect it to flow overtime in the IFRS profit.

And I look to -- you can refer to what I said in the presentation of plan at the end of June. And you remember that at that time I said that I was expecting the protection and health plus ratio to go down between 93% and 94% on the level of 95.4% at the end of '15.

And I can tell you that we are doing everything. And even if we have some one-off events in the past that made that -- you are right, our profitability in terms of protection and health was not, improvement in profitability was not obvious.

I'm still expecting it and I'm doing -- and we are doing everything in order it to flow into the earnings. So it's -- yes, I'm expecting it.

I repeat what I said at the end of June. Your other question about the 100% and the guarantee.

The point is that it's the way -- look, it's a way for people, it’s a way for investors to have a part invested in -- a higher part invested in equities or in hedge funds, so in more volatile instruments, without running the risk to be below their guarantees. And I can tell you that even if, in Italy, for example, we sell products, which are below 100% and with guarantees below 100%.

People prefer to have -- in a period where rates are close to zero, they accept and it confirms maturity of clients. They accept to take a bit more risk, while at the same time giving up part of their guarantee.

So that's something that more and more clears and in different markets.

But Gerald, what is the money invested in? What proportion is in equities or hedge funds versus bonds?

Instead, today, let's say that with a traditional product that one of the persons, you have let's say 5% roughly invested in equity. And with this, if you have a guarantee, take my first example of guarantee after eight years.

Then in such case a, you could have more -- you could have more important part invested in equity. In other words, today, I have one figure in mind.

If you make some projections today with a guarantee, if you invest today in the portfolio, you would have a traditional portfolio with a guarantee at 100% every year, you can expect to have 1.5%, whereas APT at the end of the eight years, it should be 2.5%. That's roughly what we can expect.

In terms of percentage of equity, I think in such a case we would move to 10% maybe 15%.

Okay. Thanks.

And the static VA question?

Yes. We don't -- honestly, that's something that we don't publish and because it's -- and I don't have the figure.

Thank you. Hi, good morning.

I just have one question on the French business. Recently, Mr.

de Peretti, in an interview gave us some color on the organizational changes in France with the creation of three divisions, anyway. Is there any additional details you could provide on this?

And more specifically, will there be -- I guess an integration between the online business of Direct Assurance and the traditional multichannel business? Or will the Direct remain a separate white form?

Thank you.

Okay. So relative to your first question on France.

I would say that it seems 2003. That means over the last 13 years, we had an organization which was by-market.

By-market means that you had an organization with first line of business for individuals and next for the commercial and we believe today that at a time where there is much more interaction between those, it makes more sense; and in terms of efficiency it's better to have networks dedicated to both. I remind you that in France -- France it's mostly on SME and new market and that's why it's -- I would say that it's much more efficient.

You can go through the -- there is a press article that was issued yesterday and which is an interview from Jacques de Peretti, the head of AXA France, and you will have all the details concerning this restructuring. At the same time what we're expecting is much more efficiency and I would say that it will be part of our €2.1 billion plan.

And we can expect that France will contribute significantly to it.

Just one follow-up on the U.S. please, Gerald, with regards to the DOL.

We've had some of the distributors come out and talk about whether they're going to move to fee or go down the best interest clause exemption route. I just wonder if there's any update from the AXA perspective?

And then secondly on your 10% guidance, is that something that you feel is appropriate for this year and then have a gradual increase in sales thereafter? Or how do you see the medium-term picture for the U.S.

business here?

We will have a gradual improvement after -- so that we consider that it would be 10%, but that after and normally within reasonable period of time we should recover. So, it's not minus 10% for the next five years, and Blair it's an important point.

As I told before, as far as DOL is concerned, we don't have so much experience and it will be next year. So it's -- I cannot give you any more insight, but we are preparing ourselves and I would say that we consider that this would be a temporary decline.

Yes, so, I thank you all for attending this call and I believe that, first of all -- these concerns as I said is strength of our business and next time I believe it will be for the full year earnings. So speak to you soon.

Have a good day and thanks for attending this call.