AXA - Be Life Confident

• Excellent growth in UK General Insurance revenues with improved loss ratios across most business classes and improved underlying earnings
• Strong growth in Health revenues continued - up 8% in 2006 with increased volumes across all business sectors
• Record new business levels in Q4 2006 in Life & Savings. APE¹ increased by 38% on a constant exchange rate basis (from £559 m in 2005 to £773 m in 2006).

Globally, AXA reported very strong 2006 results with group underlying earnings up 20% to Euro 4.0 billion.

"AXA teams have achieved an excellent performance in 2006, contributing to the strong growth in all of our businesses - ahead of our Ambition 2012 targets - while building the future of the Group through offer innovation, distribution management and quality of service initiatives," said Henri de Castries, Chairman of AXA's Management Board.

In the UK & Ireland, underlying earnings of £308 million for 2006 were 16% ahead of 2005 levels (£266 million).

Total UK General Insurance revenues increased by 9% in 2006 to £2.0 billion led, in particular, by strong growth in Personal Motor (up 42%), Household (up 19%) and Commercial Property (up 10%). Creditor revenues were down by 19% reflecting a significant downturn in the market. Underlying earnings grew by 19% against 2005 (£150m in 2006 against £127m in 2005), while the combined ratio improved to 97.8% in 2006 against 99.9% in 2005.

Strong growth in UK Health revenues seen in the last two years was maintained (up 8% in 2006 at £887 million) with a particularly strong performance in sales of new UK individual contracts. Underlying earnings grew 36% against 2005 (£65m in 2006 against £47m in 2005), while the combined ratio improved 2.2 points to 93.3% in 2006 (95.5% in 2005).

In Ireland, revenues were down (-4% at €474 million in 2006) and the combined ratio increased to 97.1% reflecting the effects of downward pressure on premiums arising from intense market competition. Despite the difficult trading environment in 2006, AXA Ireland grew personal lines policy volumes by 1%.

Overall underlying earnings in the General and Health Insurance sectors, including Ireland, decreased by 4% to £263 million in 2006 compared to £273 million in 2005.   The overall combined ratio for General and Health Insurance, including Ireland, remained roughly stable at 96.5% (2005: 96.3%). 

In the Life & Savings business, APE increased by 38% to £773 million in 2006 largely due to strong sales of unit-linked investment bonds and Pensions.  Development of distribution relationships in respect of wholesale Offshore Bond products led to significant volume increases (+109%). Pension business also demonstrated strong growth (+29%) following changes to Pensions legislation.

New business value increased by £19 million to £68 million post tax (£97m pre-tax) in 2006 following growth in new business volumes. Underlying earnings increased by £48 million to £106 million in 2006, due to higher fees and revenues following net new money growth and investment returns, additional With Profits bonus and expense savings of £20 million from ongoing cost reduction activities.

Nicolas Moreau, group chief executive of AXA UK, commented, "I am delighted to be able to announce a strong improvement in our results for 2006. This provides the first evidence of the benefits to be gained from the business re-engineering, focused on delivering sustainable earnings and cost control, which we started during the year and will continue during 2007 and beyond. The UK and Ireland markets are at varying stages in their respective underwriting cycles but I remain committed to the maintenance of strong underwriting discipline to ensure the profitability of our Life, Health and General Insurance new business as we grow in our selected markets.

"Over recent months, in addition to continuing the consolidation of Winterthur Life into the AXA UK family, we have made strong moves to secure extra distribution capability in the UK market and I am confident that these moves will ensure that our growth momentum will be maintained. We will continue to invest in those areas where we can add value both to our current proposition and to our customers."

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