AXA Posts 2.3% Increase in Adjusted Q1 revenues; 1.9% Decline in Reported Revenues on Euro’s Rise

May 7, 2004

In a classic “good news/bad news” situation, France’s AXA Group reported first quarter consolidated revenues of 20 billion euros ($24.1 billion), adjusted for currency fluctuations. The figure indicates a 2.3 percent overall increase.

But, on a reported basis this turns into a 1.9 percent decrease when compared to the first quarter of 2003, when AXA reported consolidated revenues of $20.4 billion euros ($24.58 billion). The sharp rise of the euro over the course of 2003-04 was the main cause of the discrepancy. The dollar is currently trading at around $1.20-22 to the euro. AXA calculated that the impact cost it roughly 800 million euros ($964 million) or 3.9 percent.

The earnings report listed the following highlights:
— Total Life & Savings revenues increased by 1.5 percent in the first quarter of 2004 to 11.777 billion euros ($14.2 billion); unit-linked products sales were up 22 percent (representing 35 percent of Life & Savings Revenues). Total sales growth was affected by significant non-recurring premiums in both Japan and Belgium in the first quarter 2003.
— Total Property & Casualty gross written premiums increased by 5.4 percent in the first quarter of 2004 was 5.631 billion euros ($6.785 billion), evidence of the continuation of a favorable pricing environment as well as the Group’s ability to attract new clients.
— Asset Management revenues increased by 25.5 percent to 743 million euros ($895 million) in the first quarter of 2004, as a result of higher average AUM (+21 percent compared to first quarter 2003).
— International Insurance revenues declined by 7.3 percent to 1.690 billion euros ($2.036 billion) on the back of a 15.2 percent decrease in reinsurance activities reflecting the tail effect of AXA RE’s restructuring program implemented since 2002. AXA RE’s core business lines posted only a slight decline. AXA Corporate Solutions Assurance operations decreased by 2.3 percent, mainly affected by a selective approach in Property.

AXA’s report noted that those numbers given above “have not been adjusted for scope and currency changes. Growth rates are on a comparable basis and, accordingly, have been adjusted for changes in scope, accounting methods and currency.”

AXA CEO Henri de Castries commented: “Revenues for the first quarter of 2004 on Property & Casualty, Asset Management and Unit-Linked products are very encouraging. First quarter growth in our Life & Savings operations is tempered by specific events that occurred in first quarter 2003, but is showing underlying strength in line with our strategy to focus on more profitable products. Performance of International Insurance is aligned with our objective of risk control. All of those indicators point towards profitable growth both in terms of short term earnings and longer term value creation.”

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