AXA - Be Life Confident

Globally, AXA reported underlying earnings up 27% to €5.0 billion (up 15% on a comparable basis) and a proposed dividend of €1.20 per share, up 13%.

In the UK & Ireland, underlying earnings of £354 million for 2007 were 15% ahead of 2006 (£308 million).

General and Health insurance revenues in the UK and Ireland increased by 8% from £3,232 million in 2006 to £3,499 million in 2007 in a challenging environment.

In the Personal sector of AXA's UK General insurance, strong revenue growth was evident in motor at Swiftcover where policies in force increased by 178% during 2007 helped by increased volumes through aggregator websites. Travel revenues (up by 32% in 2007) increased as a result of the implementation of rating enhancements and through further business from existing corporate partners. UK Commercial revenues were unchanged, reflecting the competitive marketplace and AXA UK's strong desire to underwrite business only on premium levels that are sustainable.

Health revenues increased by 12% (from £887 million in 2006 to £993 million in 2007). In the Personal sector growth of 10% was experienced across both PMI and budget healthcare. In the Commercial sector growth was 13% with SME and large corporate business contributing to the increase. 2007 also witnessed an expansion in AXA UK's expatriate healthcare business.

In Ireland, policy volumes increased although revenues fell by 5% (from €474 million in 2006 to €450 million in 2007) as a result of the continued downward pressure in premium rates in the core motor market in the Republic of Ireland. However, business in Northern Ireland experienced growth through the intermediary and direct channels.

As a direct result of the significant adverse weather events in 2007, including the January storms (£38 million before tax) and the Summer floods (£185 million before tax) the General and Health combined ratio worsened by 4.9 points to 101.4% in 2007 from 96.5% in 2006. With the maintenance of pricing discipline and the absence of any major weather related events, AXA UK expects the combined operating ratio to return to the levels witnessed in recent years in the short term.

Total General and Health Insurance underlying earnings in the UK and Ireland, including Distribution, decreased by £83 million from £263 million in 2006 to £180 million in 2007. This was brought about by the significant adverse weather events which were partially offset by favourable prior year reserve developments, notably on liability claims.

In Life & Savings business, APE² increased by 6% on a like for like basis (from £1,024 million in 2006 to £1,087 million in 2007). Wealth management was up 7% due to individual pension business (up 14%) reflecting the strength of the combined AXA/Winterthur individual pension offering as well as strong performance in the Offshore Estate Planning Bond (up 68%). This was partly offset by a drop in Offshore Bonds cash sales (-36%) resulting from a change in the tax environment for these products in the first quarter of 2007 which negatively impacted our Life & Savings APE² growth momentum in the second half of 2007. Protection business was up 27% driven by new distribution contracts and improved propositions to IFAs as well as effective direct marketing campaigns. Group pension business was up 2%.

New business value increased by 12% on a like for like basis to £133³ million in 2007 compared to £119³ million in 2006 which was brought about by volume growth, a more favourable mix of business and margin improvements in some product lines. Underlying earnings for the Life and Savings business, including Distribution, of £174 million in 2007 were £68 million ahead of 2006 levels, as a result of favourable investment performance, higher fees and an improved tax margin which included a £20 million gain in 2007 relating to the change in rate of corporation tax.

Nicolas Moreau, group chief executive of AXA UK and Ireland, commented, "Our results provide further evidence that we are delivering on our UK Strategy. We have continued to strengthen our position as the operator of the UK's second largest SME broker, and we have consolidated our position in the employee support and well-being arena. At the same time our market share in both protection and IFA wealth management has improved. The other changes we are embarking on, from the launch of our Wrap platform to the development of our investment office, are fundamental to the future of our business.

"One of our big challenges in 2007 was the destructive summer flooding and I have been impressed by our ability to deliver a significant benefit to our customers at a time of real need. Over 29,000 flood claims were received and we are proud of the way we have dealt with the enormity of the situation and helped to rebuild people's lives."

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