AXA - Be Life Confident

• AXA UK¹ posts robust adjusted earnings², up £145 million on 2003
• Sustained improvement in P & C combined ratio, 2.4 points better in 2004
• Breakthrough product and distribution initiatives delivered in AXA Life
• Total revenues up 5% in 2004 at £7.3 billion

Globally, AXA reported a continuation of strong operating performance in 2004 with adjusted earnings doubling to Euro 2.9 billion. Henri de Castries, CEO of the AXA Group, commented, “AXA teams have built a unique platform in terms of scale and diversification and our 2004 results provide additional proof of the effectiveness of our organisation and strategy.”

In the UK and Ireland, adjusted earnings more than doubled from £110 million in 2003 (before financing costs of £38 million) to £266 million in 2004 (before financing costs of £48 million). All major classes of business have delivered an improved performance in 2004.

AXA UK has made a sustained recovery from the poor market conditions experienced in recent years. Significant group investment has been made in AXA’s property & casualty and life businesses, and is reflected in improved customer service industry rankings and awards. As such, each is now well placed to take advantage of the emerging return of consumer confidence.

Total revenue in AXA UK Property and Casualty businesses increased by 4.3% from £2.9 billion in 2003 to £3.1 billion in 2004. Strong growth in personal lines has seen a successful shift away from personal motor into less volatile business in the UK via household, travel and creditor products. In Ireland, average premiums fell as a consequence of rate reductions brought about by an improved claims environment and better risk selection.

In UK commercial lines, revenues increased by 6.3% reflecting a successful new business campaign, improved retention of existing customers and selective rate increases. Despite a competitive environment in UK commercial lines, revenues in property increased by 7%, casualty by 6% and motor by 6%.

Health revenues increased by 5.6% mainly as a result of additional partnership deals in the personal and corporate sectors, and the successful launch of lower premium products.

Adjusted earnings in AXA UK Property & Casualty increased by £112 million to £192 million in 2004. This has been brought about by a significant improvement in the net combined ratio (down 2.4 points to 98.2% in 2004). The adjusted earnings figure has also benefited from a lower impairment charge in 2004 compared to 2003. (£3 million in 2004; £36 million in 2003).

In our UK Life and Savings business, revenues increased from £4.04 billion in 2003, up 8% to £4.28 billion in 2004. New annualised business (NBI³) was 3% higher in 2004 with significant growth in group pensions (up 31% in 2004) and offshore bonds (up 69% in 2004). Total revenues increased significantly by 16% in the final quarter of 2004, driven by stronger sales in the IFA channel where NBI³ was up 38% on Q4 2003.

Independent Financial Advisers (IFAs) continue to be the main focus of AXA UK’s sales, accounting for 82% of new business in 2004. The structure of distribution is changing in response to depolarisation, and AXA is well-placed to take advantage of the revised distribution landscape. During the last year AXA has secured distribution agreements with Britannia Building Society, Millfield Group, THINC Destini and is currently negotiating further distribution arrangements. AXA’s distinctive Protection account was successfully launched during the final quarter of 2004 with initial partners that included Bankhall, Millfield, Tenet and, more recently, Sesame. We believe this critical development positions AXA well with a balanced product mix.

Adjusted earnings in UK Life and Savings increased by £44 million to £74 million in 2004, mainly as a result of non-recurring reserve strengthening completed in 2003.

Dennis Holt, AXA UK Group Chief Executive, commented, “I am delighted to be able to report a particularly robust result for the UK and Ireland. Our businesses have built on the improvements delivered in 2003 and each now has the strength, momentum and focus to deliver sustainable results, and keep our business moving forward over the coming years.

“World stock markets have stabilised and begun to grow, and consumer confidence is returning which – if sustained - will bring about better prospects for our industry. AXA boasts an attractive franchise and a strong brand which leaves us well placed for 2005 and beyond.”

¹AXA UK's businesses include Property & Casualty operations for AXA Insurance, AXA Ireland and AXA PPP healthcare along with Life & Savings operations for AXA Sun Life.

²Adjusted earnings are net income before the impact of exceptional operations and goodwill amortisation.

³New Business Index being Regular Premiums + 10% Single Premiums. This excludes mutual funds.

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