AXA - Be Life Confident

• AXA UK¹ reports IFRS² underlying earnings³ of £118 million for H1 2005 - up 19% on H1 2004
• Sustained improvement in Property & Casualty result; underwriting discipline being maintained
• Strong growth in UK Life APE⁴, well ahead of underlying market growth
• Sustained revenue growth in UK Health in traditional and new product propositions
• Resilient Ireland earnings despite competitive market conditions

Globally, AXA reported a very strong performance for the first half of 2005, with underlying earnings of Euro 1,761 million, up 26% on the first half of 2004 (Euro 1,398 million). Henri de Castries, AXA Chief Executive Officer commented on 6 September 2005, "The combination of continued focus on efficiency improvement, organic growth and opportunistic acquisitions has enabled the Group to deliver another strong performance in the first half of 2005. We believe we are well on track to deliver strong double digit earnings growth for the full year 2005 despite the recent weather related events in the US."

In the UK and Ireland, underlying earnings of £118 million for the first half of 2005 were 19% ahead of the first half of 2004 (£99 million). All AXA businesses in the UK have made a positive contribution to this improved result.

Total non life revenues in the UK and Ireland were flat at £1.56 billion for the first half of 2005. This reflects rate softening in UK commercial lines and adverse developments in motor in Ireland offset by strong growth in UK personal lines (up by 9%⁵) with property up by 16%⁵ and creditor up 24%.

UK health revenues also improved by 8% through the transfer of a major portfolio in the second half of 2004 and the successful launch of lower premium products designed to appeal to a wider market segment.

Satisfactory earnings have been maintained in non-life businesses through a combination of disciplined underwriting and a resilient product mix. Non-life underlying earnings increased by £12 million to £110 million for the first half of 2005. Combined ratio has been maintained at 97.3% for the first half of 2005 (97.5% for the first half of 2004) with lower average premiums together with higher motor claims frequency in Ireland being balanced by a better overall claims experience in the UK. The underlying earnings figure has also benefited from favourable investment income (£101 million for the first half of 2005 compared with £87 million for the first half of 2004).

In our UK Life and Savings business, APE⁴ was 14% higher for the first half of 2005 (£261 million) compared to the first half of 2004 (£228 million). AXA's growth in new business was well ahead of market trends. Significant growth was seen in the IFA channel (up 24%), with increases achieved in investment bonds (up 33%), executive pensions (up 55%) and group pensions (up 25%).

During the last year, AXA's Life and Savings division has successfully built distribution in the depolarised landscape having gained a significant distribution agreement with Britannia Building Society, and having also been selected onto the vast majority of multi-tie panels, including Barclays, Sesame, THINC Destini and Millfield Group.

Underlying earnings in UK Life and Savings increased by 15% from £26 million for the first half of 2004 to £30 million for the first half of 2005. This reflects higher fund management fees driven by growth in unit linked funds under management, partially offset by increased expenses due to investments in sales and customer service, including the acquisition of the sales force of the Britannia Building Society.

Dennis Holt, AXA UK Group Chief Executive, commented, "We are demonstrating that we can deliver stable revenue and earnings growth underpinned by a broad and resilient product mix. With our commitment to high quality customer service, we believe that this provides the strong foundations required to sustain profitable growth in these markets."

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