AXA: Half Year Financial Report – June 30, 2024

Half Year Financial Report

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June 30, 2024

TABLE OF CONTENTS

I.      Activity Report……………………………………... 3

II.   Consolidated interim financial statements…… 31

III.                        Statutory auditors’ review report             on the 2024 Half Year Financial Information …… 85

IV.                       Statement of the person responsible for the Half

Year Financial Report …………….…………….. 89

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                                                      I.      Activity Report

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June 30, 2024

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IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENT REGARDING FORWARDLOOKING STATEMENTS AND THE USE OF NON-GAAP AND ALTERNATIVE PERFORMANCE MEASURES

Certain statements contained herein may be forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans, expectations, or objectives. In particular, the statements in the “Outlook” section of this report, including the capital management and distribution policy, is based on the current views and intentions of the Board of Directors and is subject to change. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause AXA’s actual results to differ materially from those expressed or implied in such forward-looking statements. Please refer to Part 5 - “Risk Factors and Risk Management” of AXA’s Universal Registration Document for the year ended December 31, 2023 (the “2023 Universal

Registration Document”) for a description of certain important factors, risks and uncertainties that may affect AXA’s business and/or results of operations. Forward-looking statements in this report speak only as of the date of this report. 

AXA undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events, or circumstances or otherwise, except as required by applicable laws and regulations.

In addition, this report refers to certain non-GAAP financial measures, or alternative performance measures (“APMs”), used by Management in analysing AXA’s operating trends, financial performance and financial position and providing investors with additional information that Management believes to be useful and relevant regarding AXA’s results. These non-GAAP financial measures generally have no standardized meaning and therefore may not be comparable to similarly labelled measures used by other companies. As a result, none of these non-GAAP financial measures should be considered in isolation from, or as a substitute for, the Group’s Consolidated Interim Financial Statements and related notes prepared in accordance with IFRS. Underlying Earnings, Underlying Earnings per Share, Underlying Return on Equity, Combined Ratio and Debt Gearing are APMs as defined in ESMA’s guidelines and the AMF’s related position statement issued in 2015. A reconciliation from APMs Underlying Earnings and Combined Ratio to the most directly reconcilable line item, subtotal, or total in the Consolidated Interim Financial Statements of the corresponding period is provided on pages 18 and 19 of this report. APMs Underlying

Return on Equity and Underlying Earnings per Share are reconciled to the Consolidated Interim Financial

Statements in the tables set forth on page 27 of this report. For further information on any of the above-mentioned APMs, please see the definitions in the section “Alternative Performance Measures” on pages 559 to 560 in the 2023 Universal Registration Document, in its Appendix IV “Glossary”. 

In this report, unless provided otherwise or unless the context otherwise requires, (i) the “Company”, “AXA” and “AXA SA” refer to AXA, a “société anonyme” (a public limited company) organized under the laws of France, which is the publicly traded parent company of the AXA Group, and (ii) the “AXA Group”, the “Group” and “we” refer to AXA SA together with its direct and indirect consolidated subsidiaries. 

This is a translation into English of the Half-Year Financial Report of the Company issued in French and available on the Company’s website (www.axa.com).

Operating Highlights

NEW STRATEGIC PLAN

AXA announced its 2024-2026 strategy, setting ambitious new financial targets

On February 22, 2024, AXA published its strategic plan “Unlock the Future” and its key financial targets for 20242026.

The new Plan is focused on growing and strengthening AXA’s core businesses, with continued disciplined execution, following strong delivery of “Driving Progress 2023”⁽¹⁾.

The main financial targets for 2024-2026 are the following:

•       Underlying earnings per share CAGR⁽²⁾ 2023-2026E between 6% and 8%

•       Underlying return on equity between 14% and 16% over 2024E to 2026E

•       Over Euro 21 billion cumulative organic cash upstream over 2024E to 2026E

•       New capital management policy⁽³⁾ with a total payout ratio⁽⁴⁾ target of 75% of underlying earnings per share, comprising 60% dividend payout ratio and 15% via annual share buy-back⁽⁵⁾, and with dividend per share to be at least equal to prior year.

SIGNIFICANT TRANSACTIONS

AXA announced an agreement terminating the sale of a closed life and pensions portfolio at AXA

Germany, as well as a reinsurance agreement for an in-force Savings portfolio concluded by AXA Life Europe 

On May 2, 2024, AXA announced that it had mutually agreed with Athora to terminate the sale agreement related to the purchase of a closed life and pensions portfolio from AXA Germany, which was initially communicated on July 14, 2022. AXA will retain this portfolio, which is well capitalized and duration matched, as well as its associated earnings. The termination was expected to have no impact on the financial targets announced by the Group as part of its new strategic plan, “Unlock the Future”.

(1) For additional details, please refer to the AXA Group’s press release “AXA announces its 2024-2026 strategy, setting ambitious new financial targets” published on February 22, 2024 on AXA’s website.

(2) Compounded Annual Growth Rate; period-to-period results may vary.

(3) Subject to annual Board and Shareholders’ Annual General Meeting approvals and absent (1) for share buy-backs, any significant earnings event (i.e., significant deviation in the Group’s underlying earnings) and (2) for dividends, the occurrence of a significant capital event (i.e., event that significantly deteriorates Group solvency). Board discretion includes considering AXA’s earnings, financial condition, applicable capital and solvency requirements, prevailing operating and financial market conditions and the general economic environment.

(4) Payout based on underlying earnings per share.

(5) Annual shares buy-backs exclude share buy-backs related to the neutralization of earnings dilution from disposal and in-force management transactions, as well as the dilutive effect relating to employee share offerings and stock-based compensation.

Separately, AXA Group also announced that its subsidiary AXA Life Europe^{( 1 )} had entered into a reinsurance agreement⁽²⁾ with New Reinsurance Company⁽³⁾ that covers ca. Euro 3 billion of Variable Annuity reserves⁽⁴⁾. This transaction will result in a reduction in underlying earnings of ca. Euro 20 million per annum from 2024 onwards. Following the announcement, a Euro 0.2 billion share buy-back was completed to offset the earnings dilution related to the reinsurance agreement. The transaction, including the impact of the share buy-back, was expected to have a ca. -1 point impact on AXA Group’s Solvency II ratio⁽⁵⁾.

CAPITAL / DEBT OPERATIONS  

AXA announced the successful placement of Euro 1.5 billion Restricted Tier 1 Notes

On January 10, 2024, AXA announced that it had successfully completed the placement with institutional investors of Euro 1.5 billion of Reg S perpetual deeply subordinated notes (the “Notes”) with institutional investors. The Notes qualify as Restricted Tier 1 capital under Solvency II. Investor demand for the issuance was strong with a book subscribed more than 5 times.

The initial fixed rate was set at 6.375% per annum until the end of a 6-month call window period (ending on January

16, 2034), when the interest rate will reset and every five years thereafter at the prevailing Euro 5-year Mid Swap rate plus a margin of 384.1 basis points. In line with the Solvency II requirements, the Notes feature a loss absorption mechanism in the form of a write-down⁽⁶⁾ of the nominal amount of the Notes if one of the solvencyrelated triggers⁽⁷⁾ is breached⁽⁸⁾. Interest payments are at the full discretion of AXA unless they are mandatorily prohibited.

The Notes were rated BBB+ by Standard & Poor’s and Baa1(hyb) by Moody’s. They are eligible to be treated as capital from a regulatory and rating agencies’ perspective within applicable limits.

This issuance was part of AXA Group’s funding plan for 2024 and the proceeds were to be used for general corporate purposes, including the refinancing of part of the AXA Group’s outstanding debt.

The settlement of the Notes took place on January 16, 2024.

Execution of a share repurchase agreement in relation to AXA’s share buy-back program of up to Euro 1.8 billion

On February 23, 2024, AXA entered into a share repurchase agreement with an investment services provider, whereby AXA was initially to buy back its own shares for a maximum amount of Euro 1.6 billion, reflecting:

(1) AXA Life Europe, an Irish entity, manages a portfolio of variable annuity products primarily sold in Germany. It has been closed to new business since 2017.

(2) The reinsurance agreement provides cover for all risks of AXA Life Europe’s portfolio during the accumulation phase, excluding only expenses relating to the management of the portfolio of AXA Life Europe. Longevity risk during the decumulation phase is excluded from the scope of this agreement.

(3) New Reinsurance Company Ltd, a Swiss entity, is a subsidiary of Munich Re and a member of the Munich Re Group.

(4) Amount as of full year 2023.

(5) As of half year 2024.

(6) With discretionary reinstatement subject to conditions as further described in the Prospectus dated January 10, 2024.

(7) As determined under Solvency II.

(8) Either at AXA Group level or at AXA SA solo level. AXA SA expects to transition the calculation of its Solo Solvency II ratio from the Solvency II standard formula to the AXA Group’s Internal Model by the end of 2024, subject to prior approval by the ACPR. At AXA SA level, the impact of such transition is expected to result in a reduction in the AXA SA Solo Solvency II ratio to a level more consistent with AXA Group’s Solvency II ratio. At Group level, such transition is expected to have an immaterial impact on the AXA Group’s Solvency II ratio and a limited negative impact on the AXA Group’s MCR coverage. The AXA SA MCR coverage is expected to remain materially above the AXA Group MCR coverage.

•       Euro 1.1 billion share buy-back, in line with its new capital management policy, as announced on February 22, 2024

•       Euro 0.5 billion anti-dilutive share buy-back related to the reinsurance agreement for an in-force Savings portfolio at AXA France, as announced on December 20, 2023

Under the initial share repurchase agreement⁽¹⁾ signed on February 23, 2024, shares were bought back commencing on February 26, 2024, and the execution of the share buy-back was expected to end at the latest on August 5, 2024.

On May 7, 2024, AXA announced an amendment to the initial share repurchase agreement with the investment services provider, to increase by Euro 0.2 billion to Euro 1.8 billion the maximum amount of its own shares that AXA would buy back. The amendment also extended the end of the purchase period from August 5 to August 30, 2024. This amendment reflected the Euro 0.2 billion anti-dilutive share buy-back program relating to the execution of the reinsurance agreement between AXA Life Europe and New Reinsurance Company, as announced on May 2, 2024.

The share buy-back program, as amended, was completed on June 13, 2024, for an amount of Euro 1.8 billion⁽²⁾, having been carried out in accordance with the terms of the applicable Shareholders’ Annual General Meeting authorization⁽³⁾. On each day during the purchase period, the price per share paid by AXA⁽⁴⁾ was determined based on the volume-weighted average share price.

AXA intends to cancel all shares repurchased pursuant to this share buy-back program.

AXA announced cash tender offers for two series of subordinated notes

On February 26, 2024, AXA announced an all-cash tender offer for each of the following two series of AXA SA subordinated notes:

•       GBP 350,000,000 Fixed to Floating Rate Undated Deeply Subordinated Notes issued on July 6, 2006⁽⁵⁾ and

•       GBP 723,925,000 Undated Deeply Subordinated Resettable Notes issued on November 7, 2014⁽⁶⁾

The tender offers expired at 5:00 p.m., Central European time, on March 4, 2024. 91% of the GBP 350,000,000 Fixed to Floating Rate Undated Deeply Subordinated Notes issued on July 6, 2006 were tendered, as were 95% of the GBP 723,925,000 Undated Deeply Subordinated Resettable Notes issued on November 7, 2014.

The transaction was part of AXA Group’s active management of its debt structure and will allow AXA to further optimize its capital base.

AXA announced the placement of Euro 750 million senior notes due 2034

On May 29, 2024, AXA announced the placement of Euro 750 million of Reg S senior unsecured notes due 2034 (the “Notes”) with institutional investors. The settlement of the Notes took place on May 31, 2024.

The Notes have a fixed annual coupon of 3.375% and were rated A+ by Standard & Poor’s and A1 by Moody’s.

(1) On February 23, 2024, it was indicated that the up to Euro 1.6 billion share buy-back program would be executed in addition to any other potential anti-dilutive share buy-back.

(2) AXA bought back its own shares for an exact amount of Euro 1,799,999,979.81.

(3) The Shareholders’ Annual General Meeting authorization granted on April 27, 2023, or on April 23, 2024, as applicable.

(4) The purchase price did not exceed the maximum purchase price approved at the applicable Shareholders’ Annual General Meeting.

(5) Fixed rate of 6.6862% until the first call date on July 6, 2026.

(6) Fixed rate of 5.453% until the first call date on March 4, 2026.

This issuance was part of AXA Group’s funding plan for 2024 and the proceeds were to be used for general corporate purposes, including the refinancing of part of the AXA Group’s outstanding debt. Over the period 2024 to 2026, the Group intends to maintain a stable debt stock⁽¹⁾.

PARTNERSHIPS AND INNOVATION

The Universal Postal Union (UPU) and AXA join forces to advance inclusive insurance through Postal Networks

Postal networks play a crucial role in global financial inclusion, with over a quarter of the world’s adult population accessing formal financial services through their post office. This is possible because postal networks combine lastmile distribution reach with strong customer trust, thereby reaching very remote populations most other networks do not extend to, including those working in the informal economy. Posts have traditionally focused on payments and savings, and today insurance is generating a growing interest and shows great promise. In 2021, 53% of posts offered insurance, up from 38% in 2016⁽²⁾.

Through AXA EssentiALL, the Group’s inclusive insurance business, AXA provides affordable, accessible, and attractive insurance solutions to over 14 million people and micro-businesses⁽³⁾ by leveraging physical and digital distribution channels that target these lower income classes, have scaled and penetrated networks, as well as trusted brand names. Initially focused on emerging markets, AXA EssentiALL is extending its geographical scope to Europe to bring inclusive insurance solutions to low to middle income households and small businesses facing purchasing power and social protection challenges.

This two-phased partnership between UPU and AXA began in Q2 2024 with a research program showcasing successful postal insurance models around the world to provide posts and insurers with insights and best practices.

Building on this research and its actionable conclusions, UPU and AXA will work together to establish the Postal Insurance Technical Assistance Facility (PITAF). PITAF will aim to provide local posts with both technical and financial support to avail, expand or diversify inclusive insurance schemes. Capitalizing on the UPU’s postal network and AXA’s insurance expertise, PITAF will help promote financial inclusion and risk mitigation amongst underserved populations.

GOVERNANCE

Composition of the Board of Directors and its Committees

The Shareholders’ Meeting of April 23, 2024, approved (i) the renewal of the terms of office for Antoine Gosset-

Grainville, Clotilde Delbos, and Isabel Hudson as directors (for 4 years), as well as for Angelien Kemna and MarieFrance Tschudin (for 3 years), and (ii) the appointment as director, upon the proposal of the AXA Group's employee shareholders, of Helen Browne (for 4 years).

André François-Poncet, whose term of office expired at the end of the Shareholders’ Meeting, did not wish to stand for re-election and has not been replaced. 

(1) Please refer to the AXA Group’s press release “AXA announces its 2024-2026 strategy, setting ambitious new financial targets” published on February 22, 2024 on AXA’s website. 

(2) “Advancing financial inclusion through access to insurance: the role of postal networks”, Universal Postal Union – International Labor Organization, 2016.

(3) AXA Group, full year results 2023.

The Board of Directors is therefore comprised of 15 members, including 9 women and 6 men. In addition, 9 directors are considered independent (representing 75%, in accordance with the Afep-Medef Code). 

In addition, the Board of Directors, which met after the Shareholders’ Meeting, confirmed the renewal of Antoine Gosset-Grainville’s term as Chairman of the Board of Directors for the duration of his directorship, and appointed Clotilde Delbos as a member of the Finance & Risk Committee.

On August 1, 2024, the Board of Directors decided to appoint Gérald Harlin as a member of the Compensation, Governance & Sustainability Committee.

The composition of the Board Committees is now as follows:

•       Audit Committee: Isabel Hudson (Chairwoman), Clotilde Delbos, Ramon Fernandez, Angelien Kemna and Rachel Picard;

•       Finance & Risk Committee: Ramon Fernandez (Chairman), Clotilde Delbos, Gérald Harlin, Isabel Hudson and Ramon de Oliveira;

•       Compensation, Governance & Sustainability Committee: Guillaume Faury (Chairman), Bettina Cramm (employee representative), Rachel Duan, Gérald Harlin and Marie-France Tschudin.

Furthermore, Rachel Duan informed the Board of Directors of her intention to resign her directorship at the end of the year.

OTHER

AXA published the fourth edition of its Mind Health Report

On March 6, 2024, AXA published the fourth edition of its Mind Health Report, a study aimed at identifying mental health and well-being problems in society in order to build solutions to alleviate them. This was carried out jointly with Ipsos among 16,000 people aged 18 to 75 from sixteen European, Asian and American countries and territories.

In this fourth edition, AXA and Ipsos focused specifically on understanding the working population’s mental health and wellbeing. It reveals that 3 in 4 people are experiencing multiple mental health conditions as a result of their work environment, of whom almost 70% feel disengaged with work.

The work environment seems to take the greatest toll on the mental health of younger populations. Whilst almost a quarter (23%) of all workers have been signed off work on sick leave due to mental health issues, this figure rises to 38% amongst young workers. Almost two-thirds (62%) of those aged between 18-44 responded that mental health care and support provided by their employers is important in their decision to remain at their places of work.

The economic impact is clear. For countries and territories included in our study, the cost of mind health at work is estimated at 2.7 trillion dollars, on average 4.4% of their GDP⁽¹⁾.

Mental health conditions are, in large part, preventable with accessible and comprehensive support. More than 50% responded that company-driven mental health initiatives and benefits, such as firmwide mental health first aid courses, would influence their engagement at work.

Today, only 4 out 10 people would seek professional help if work affected their mental wellbeing. Almost 70% believe that they could reach out to family, friends, or peers if they needed the psychological support. For example, AXA France built an internal network of 100 employees to act as mental health first-aid respondents towards peers.

(1) Cebr was commissioned by AXA to estimate the impact of workers' disengagement from work / decreased productivity due to the health consequences of work-related stress on the economy of 16 countries and territories.

AXA trains its individual shareholders on the challenges of climate change 

On April 4, 2024, AXA announced the roll-out of its training offer on the challenges of climate change to its individual shareholders, thus confirming its ambition to be a responsible player in society in the face of environmental challenges.

The fight against climate change, as well as prevention and adaptation to this change, are strategic pillars for AXA, as an insurer, as an investor and as an employer. This is why, after having trained 96% of its employees in the challenges of climate change through a training program created by AXA Climate, the Group is now going to offer this training, The Climate School, to its individual shareholders.

AXA Climate's Climate School has been produced with contributions from over 120 scientists, experts and researchers around the world and is the most comprehensive 100% digital micro-learning catalogue on environmental and sustainable transition issues to date. It provides a user-friendly, science-based learning experience to explain the impacts of climate change on the environment and businesses, and to show what can be done to reduce them at both individual and corporate level. It is, for example, through this platform and its various modules that we aim to reinforce the awareness of our individual shareholders about these issues.

RISK FACTORS

The principal risks and uncertainties faced by the Group are described in detail in Section 5.1 “Risk Factors” and Section 7.3 “General Information” of the 2023 Universal Registration Document (on pages 236 to 257 and pages 486 to 505, respectively). The 2023 Universal Registration Document was filed with the Autorité des marchés financiers (the “AMF”) on March 18, 2024, and is available on the AMF’s website (www.amf-france.org) as well as on AXA's website (www.axa.com). The descriptions contained in these sections of the 2023 Universal Registration Document remain valid in all material respects at the date of the publication of this report regarding the evaluation of the major risks and uncertainties affecting the Group as of June 30, 2024, or which Management expects could affect the Group during the remainder of 2024. 

RELATED PARTY TRANSACTIONS 

During the first half of 2024, there were (i) no modifications to the related-party transactions described in Note 25

“Related-party transactions” to the audited Consolidated Financial Statements for the fiscal year ended December 31, 2023, included in the 2023 Universal Registration Document (pages 460 and 461) filed with the AMF and available on its website (www.amf-france.org) as well as on the Company's website (www.axa.com), which significantly influenced the financial position or the results of the Company during the first six months of the fiscal year 2024, and (ii) no new transactions concluded between AXA SA and related parties that significantly influenced the financial position or the results of the Company during the first six months of 2024.

Events subsequent to June 30, 2024

AXA entered into an exclusive negotiation to sell AXA Investment Managers to BNP Paribas On August 1, 2024, AXA announced that it has entered into an exclusive negotiation to sell its asset manager AXA

Investment Managers (“AXA IM”) to BNP Paribas for cash proceeds⁽¹⁾ of €5.1 billion. In addition, AXA would receive €0.3 billion consideration from the sale of Select⁽²⁾ to AXA IM prior to the closing of the proposed transaction. The total estimated transaction value is expected to be €5.4 billion, representing a multiple of 15x 2023 earnings. Under the terms of the proposed transaction, AXA and BNP Paribas would also enter into a long-term strategic partnership under which BNP Paribas would provide investment management services to AXA. The combination of AXA Investment Managers and BNP Paribas would create a leading European asset manager, with total assets under management of €1.5 trillion⁽³⁾. 

The intention to exit the Asset Management business further emphasizes the Group’s strategy to simplify its business model and to focus on its core insurance activities. In particular, AXA’s Life & Savings business is wellpositioned to grow, driven by the Group’s strong distribution and product design capabilities, and our customers will benefit from a broader array of asset classes, including continued access to a best-in-class Alternatives asset management platform. AXA retains full authority over product design, asset allocation and asset-liability management decisions. 

The completion of the transaction is subject to customary closing conditions, including the information and consultation of employee representative bodies, followed by the signing of the Share Purchase Agreement and the receipt of regulatory approvals, and is expected to be finalized by the second quarter of 2025. 

Starting from FY24, AXA IM will be classified as ‘discontinued operations’ in AXA’s consolidated financial statements and AXA will continue to account for the contribution of AXA IM to the Group’s Underlying Earnings until the expected completion of the sale. Upon completion, the proposed transaction is expected to result in (i) a reduction in Underlying Earnings of ca. Euro 0.4 billion on an annualized basis for the Group and (ii) an estimated one-off Net Income gain of €2.2 billion. AXA intends to offset the earnings dilution from the proposed disposal with a share buyback, currently estimated at Euro 3.8 billion, to be launched immediately following the closing of the proposed transaction. The proposed transaction and the associated share buyback are expected to have a neutral impact on AXA’s Solvency II ratio. The proposed transaction is expected to have no material impact on the key financial targets⁽⁴⁾  that were communicated as part of the ‘Unlock the Future’ plan.

(1) For 100% share capital of AXA IM, of which 98% is owned by the AXA Group (67% by AXA SA and 31% by other AXA entities), subject to price adjustment mechanisms.

(2) Select (formerly named ‘Architas’) is an AXA company offering investment solutions, including management of funds, investment management services, advisory services and investment related services, to retail customers in France, Belgium, Hong Kong and Indonesia.

(3) As of December 31^st, 2023, based on companies’ financial disclosures.

(4) Underlying earnings per share CAGR 2023-2026E between 6% and 8%, Underlying return on equity between 14% and 16% over 2024E to 2026E, over Euro 21 billion cumulative organic cash upstream over 2024E to 2026E.

Market Environment

FINANCIAL MARKET CONDITIONS

STOCK MARKETS

Source: Bloomberg.                                                                                                        

Over the first half of 2024, stock markets continued to build on the momentum of 2023, anticipating lower inflation and, therefore, first cuts in interest rates from central banks. The MSCI AC World index increased by 11% across the first half of 2024.

In the United States, the S&P 500 followed on from strong gains in 2023 to deliver an equally solid first half of 2024, up 14% from end-2023. Performance again had a narrow base, with gains concentrated in technology companies. 

In Europe, markets have also performed well, although they have not matched gains observed in the United States. The Euro Stoxx 50 index rose by 8% in the first half of the year. This pattern was broadly echoed across the Eurozone economies. However, the French CAC 40 has fallen by 1% so far this year, with most of this underperformance materializing in June as President Macron announced snap elections that introduced political uncertainty. In the United Kingdom, the FTSE 100 has continued to underperform most markets in the first half of 2024 (+6%). 

In Asia, Japan’s stock markets also performed strongly, boosted by the sharp depreciation of the Yen boosting overseas sales and the yen value of overseas profits. The Nikkei rose by 18% in the first half of 2024. 

BOND MARKETS

_{Source: Bloomberg.}                                                                                                                                                

The bond markets have seen a general rise in yields over the first half of 2024, signalling a shift in market expectations since the end of 2023.

In the United States, market expectations of seven cuts at the end of 2023 for the Federal Reserve have shifted to a view of one or two cuts by year-end 2024. As a result, US 10-year Treasury yields have risen by 52bps to close the first half of 2024 at 4.40%.

In Europe, the Central Bank also saw a shift in outlook, with markets currently expecting three cuts for the year, down from seven at the end of 2023. German bund 10-year yields were 48bps higher (at 2.50%), Italian BTP 10-year yields were 37bps higher (4.07%), and Spanish 10-year bonds were 43bps higher (3.42%). France stands out with OAT 10-year yields rising by 74bps (3.30%), with 20bps of that underperformance occurring over May and June, reflecting public deficit concerns exacerbated by recent political uncertainty. UK 10-year Gilt yield rose by 64bps (4.17%).

In Japan, the surge in global inflation has impacted the Japanese economy and the Bank of Japan tightened its monetary policy in March. Accordingly, 10-year bond yields rose by 44bps in the first half of 2024 to 1.06% - their highest in 12 years.

Corporate spreads have continued to tighten this year across jurisdictions and credit quality. In the United States, spreads have pulled to their tightest levels since pre-2007, close to the pre-pandemic tights. European credit spreads have also narrowed sharply this year following a less aggressive correction last year.

EXCHANGE RATES

                                                                                 End of Period Exchange rate                                 Average Exchange rate

Source : WM/Refinitiv                                                                                                                       

Exchange rates in developed markets have been relatively stable in the first half of 2024 as adjustments in interest rate outlooks have been similar across jurisdictions. The one notable exception is the Japanese Yen that weakened significantly as the Bank of Japan continued to maintain low interest rates in a bid to revive inflation on a sustainable basis.

The Euro closed 2023 at a strong USD 1.10, up 3% over the year. It has retraced most of this, back to USD 1.07 over the first half of the year, though nearly half of the move so far this year occurred in June and is associated with political uncertainty, notably in France. The British Pound Sterling has made steady gains against the Euro, up 2% this year to GBP 0.85. The Japanese Yen has seen the sharpest moves, dropping by 11% versus the Euro to JPY 172 in the first half of this year.

Activity and Earnings Indicators

ACTIVITY INDICATORS 

Average Assets under Management(c ) 749 736 1.8% (a) Changes are on comparable basis.    (b) Net of Intercompany eliminations.    

(c) in Euro billion.                                                                                                                                                            

(a) Changes are on comparable basis.    (b) Net of Intercompany eliminations.    

Consolidated Gross Written Premiums and Other Revenues amounted to €59,872 million as of June 30, 2024, up 7.4% on a reported basis, and up 7.0% on a comparable basis compared to June 30, 2023. 

The comparable basis restatement (€-0.2 billion or -0.4 point) mainly includes the half-year 2023 contribution of acquired entities in Spain, Türkiye and United Kingdom & Ireland. It also neutralizes the foreign exchange rate movements due to the appreciation of the average Euro exchange rate, mainly against the Japanese Yen, partly offset by the depreciation notably against the Swiss Franc.  

GROSS WRITTEN PREMIUMS & OTHER REVENUES

Property & Casualty gross written premiums were up 7% (or €+2,048 million) on a comparable basis to €32,522 million:  

•       Commercial lines grew by 7% (or €+1,323 million) primarily driven by (i) AXA XL Insurance (+7%) mainly from strong price increases across all lines except US Professional and Cyber, along with volume growth and strong retention mostly driven by Property, Casualty as well as the renewal of a multi-year fronting deal, (ii) Asia, Africa & EME-LATAM (+23%) mainly driven by Türkiye mostly from higher average premiums in Property and Motor in a hyperinflationary context, along with favorable volume and price effects most notably in Mexico and Colombia, (iii) Europe (+5%) from price increases in all lines of business, notably Property and Motor, combined with a positive volume effect, (iv) France (+5%) reflecting price increases, notably in Property and Motor;

•       Personal lines grew by 6% (or €+555 million) driven by (i) Non-Motor (+8%) primarily in Europe (+7%) mostly in Germany, Switzerland and United Kingdom & Ireland from strong price increases, partly offset by lower volumes with focus on profitability, in Asia, Africa & EMEA-LATAM (+35%) notably in Colombia from higher volumes and price effect in Compulsory accident insurance, and Türkiye from higher average premiums in Property, and finally in France (+5%) stemming from price increases. Gross written premiums also grew in (ii) Motor (+4%), in particular in France (+11%) from strong price increases combined with new business growth, in Europe (+2%) driven by strong price effects, partly offset by lower volumes and a change in business mix notably as a result of underwriting measures in United Kingdom & Ireland as well as in Germany, and finally in Asia, Africa & EME-LATAM (+5%) mainly driven by Türkiye mostly from higher average premiums in a hyperinflationary context, along with favorable volume and price effects, notably in Mexico;

•       AXA XL Reinsurance increased by 10% (or €+170 million) primarily from price increases in Property and in Casualty, as well as higher volumes in Specialty.

Life & Health gross written premiums were up 7% (or €+1,856 million) on a comparable basis to €26,505 million.

Life gross written premiums were up 7% (or €+1,230 million) on a comparable basis to €17,419 million: 

•       General Account Savings increased by 12% (or €+581 million) mainly driven by (i) Asia, Africa & EMELATAM (+90%) reflecting the strong increase in sales of the capital-light Single Premium Whole Life product in Japan following the improved performance of broker channels, and (ii) Europe (+8%) notably from the successful launch of capital-light products in Italy and Belgium;

•       Unit-Linked increased by 11% (or €+410 million) driven by (i) Europe (+22%) primarily from the launch of a new product in Italy, as well as (ii) in France (+5%) from successful commercial campaigns in Individual savings;

•       Protection grew by 3% (or €+240 million) mainly from (i) Protection with Unit-Linked (+21%) in Asia, Africa & EME-LATAM (+21%) driven by continued growth in Japan, and (ii) Pure Protection (+1%) mainly in Hong Kong. 

Health gross written premiums were up 7% (or €+626 million) on a comparable basis to €9,086 million: 

•       Group business increased by 10% (or €+392 million), driven by strong tariff increases and higher volumes mostly in France (+7%), in Asia, Africa & EME-LATAM (+24%) mainly in Mexico and Hong Kong, and in Europe (+11%) notably in United Kingdom & Ireland;

•       Individual business grew by 5% (or €+234 million), primarily from tariff increases, driven by Asia, Africa & EME-LATAM (+9%) mostly in Türkiye and Mexico, and in France (+15%).

Asset Management revenues were up 5% (or €+38 million) on a comparable basis to €787 million mainly driven by higher management fees (€+24 million) from higher Average Assets under Management and higher performance fees (€+16 million).

Average Assets under Management increased by 2% (or €+13 billion) on a comparable basis to €749 billion mainly driven by favorable market effects, combined with business growth in both AXA IM Alts and Core activities.

Banking revenues decreased by 8% (or €-5 million) on a comparable basis to €57 million mainly due to pressure on margins in the context of higher interest rates.

NEW BUSINESS PERFORMANCE

Present Value of Expected Premiums (“PVEP”)

PVEP increased by 10% on a reported basis and 12% on a comparable basis to €25,588 million driven by (i) Life (+8%), from higher volumes in Japan and France, and (ii) Health (+27%), mainly from France due to higher volumes and favorable changes in actuarial assumptions.

New Business Value Margin (“NBV margin”)

NBV margin decreased by 0.4 point on a reported basis and 0.3 point on a comparable basis to 4.7% mainly driven by a less favorable business mix in Japan.

UNDERLYING EARNINGS AND NET INCOME GROUP SHARE

JUNE 30, 2024

Combined Ratio                                                                                     

JUNE 30, 2023

                                                                               June 30,             Property &                                                                  Asset

(in Euro million)                                                                                                2023               Casualty                     Life & Health                Management                 Holdings(a)

(a) Holdings segment includes banking and holding activities.

(b) Life & Health Contractual Service Margin is restated following the termination in 2024 of the sale agreement of a closed life and pensions portfolio at AXA Germany, classified as held for sale as of June 30, 2023.

Alternative Performance Measures

Underlying Earnings, Underlying Earnings per Share, Combined Ratio, Underlying Return on Equity and Debt Gearing are Alternative Performance Measures (“APMs”) as defined in ESMA’s guidelines and the AMF’s related position statement issued in 2015. A reconciliation from Underlying Earnings and Combined Ratio to the most directly reconcilable line item, subtotal, or total in the Consolidated Financial Statements of the corresponding period is provided in the above tables. Underlying Return on Equity and Underlying Earnings per Share are reconciled to the Consolidated Financial Statements in the table set forth on page 27 of this report. For further information on any of the above-mentioned APMs, please see the definitions in the section “Alternative Performance Measures” on pages 559 to 560 of the 2023 Universal Registration Document, in its Appendix IV “Glossary”.

Commentary on Group Earnings

UNDERLYING EARNINGS

On a reported basis, Underlying Earnings amounted to €4,244 million, up €133 million (+3%).

On a constant exchange rate basis, Underlying Earnings increased by €158 million (+4%), with growth from Property & Casualty (€+185 million or +7%), Life & Health (€+111 million or +7%, increasing to €+134 million or

+8% when excluding the impact of the reinsurance agreements on in-force portfolios in France and AXA Life Europe, as well as the acquisition of Laya in Ireland) and Asset Management (€+16 million or +8%), partly offset by Holdings (€-154 million).       

PROPERTY & CASUALTY

UNDERLYING EARNINGS GROUP SHARE                                 2,717            508         1,042            949            708            186                 32

On a reported basis, Property & Casualty Underlying Earnings amounted to €2,908 million, up €190 million (+7%).

On a constant exchange rate basis, Property & Casualty Underlying Earnings increased by €185 million (+7%), fuelled by (i) a strong growth in gross written premiums across business lines, (ii) favorable technical results (€+379 million), (iii) higher financial results (€+142 million) driven by significant increase in investment income (€+449 million) thanks to higher reinvestment yields on fixed income assets, more than compensating the increase in the unwind of the discount of claims reserves (€-307 million) resulting from the increase in interest rates experienced since 2022. This was partly offset by (iv) higher income taxes (€-285 million) due to higher pre– tax Underlying Earnings as well as the impact of the OECD Pillar Two minimum taxation rules implemented in 2024.

AY Combined Ratio improved by -0.7 points to 90.2%, mainly driven by (i) a more favorable undiscounted current year loss ratio excluding Natural Catastrophe charges (-0.8 point) from the continued improvements in attritional claims in Commercial lines following strong pricing actions to mitigate impacts from inflation, combined with improvement in Personal lines due to underwriting measures in response to higher frequency in Motor observed in the second half of 2023, notably in United Kingdom & Ireland and Germany, and (ii) favorable prior years’ reserve developments (-0.9 point to -1.5% of combined ratio). This was partly offset by (iii) higher Natural Catastrophe charges (+0.5 point to 3.6%) in Europe and in France, (iv) the decrease in current year discount (+0.3 point to -3.9%), driven by the lower average interest rates across most geographies, and (v) higher expenses (+0.1 point) due to the increase in commission expenses (+0.2 point) driven by business mix changes, partly offset by the improvement of the non-commission ratio (-0.1 point). 

LIFE & HEALTH 

(a) Life Contractual Service Margin is restated following the termination in 2024 of the sale agreement of a closed life and pensions portfolio at AXA Germany, classified as held for sale as of June 30, 2023.

Asia,

Transversal

                                                                                           June 30,                                                             Africa &

(in Euro million, except percentages)                                                         France         Europe        AXA XL                          & Central

                                                                                                2023                                                                EME-

Holdings 

LATAM

UNDERLYING EARNINGS GROUP SHARE                                      1,643             538             449                 6             648                   1

On a reported basis, Life & Health Underlying Earnings amounted to €1,725 million, up €82 million (+5%).

On a constant exchange rate basis and excluding the impact of the reinsurance agreements on in-force portfolios in France and AXA Life Europe, as well as the acquisition of Laya in Ireland, Life & Health Underlying Earnings increased by €134 million (+8%) from (i) a higher short-term business technical margin (€+105 million) reflecting 1.2 points decrease in the combined ratio, mostly in Europe (€+97 million) driven by United Kingdom & Ireland from the turnaround plan implemented in response to the increase in Health claims frequency observed in 2023, and in France (€+15 million) mostly driven by Health. (ii) Long-term business technical margin decreased by (€-21 million) mainly from the recognition of a loss component in Italy resulting from the widening of government spreads, while the release of the Contractual Service Margin remained stable (€+1 million) as favorable model and assumption changes in 2024, enabling better profitability recognition, was offset by the adverse impact of the net outflows last year, notably in France which did not impact the first half of 2023. (iii) Financial result increased (€+99 million) notably in Europe and Asia, Africa & EME-LATAM reflecting higher yields and an improved funds distribution. This was partly offset by (iv) higher income taxes (€-51 million) from higher pre-tax Underlying Earnings.

ASSET MANAGEMENT 

On a reported basis, Asset Management Underlying Earnings amounted to €204 million, up €16 million.

On a constant exchange rate basis, Asset Management Underlying Earnings increased by €16 million (+8%) driven by (i) higher revenues (€+8 million), (ii) higher investment income (€+6 million) from higher interest rates and higher income from seed capital, (iii) lower expenses (€+6 million) from cost containment measures compensated by higher staff expenses to support business, partly offset by (iv) lower income from affiliates and associates (€-1 million) and (v) higher taxes (€-2 million) from higher pre-tax Underlying Earnings.

HOLDINGS

On a reported basis, Holdings Underlying Earnings amounted to €-592 million, down €-155 million.

On a constant exchange rate basis, Holdings Underlying Earnings decreased by €154 million mainly driven by (i) Transversal & Central Holdings (€-93 million) driven by further investments in technology and growth initiatives, and (ii) Europe (€-59 million) mostly from United Kingdom & Ireland due to the non-repeat of favorable tax one-offs.  

NET INCOME

On a reported basis, Net Income amounted to €4,020 million, up €187 million (+5%).

On a constant exchange rate basis, Net Income increased by €225 million (+6%) as:

•       the increase in Underlying Earnings, up €158 million to €4,244 million combined with; 

•       favorable net realized capital gains, up €135 million to €93 million in both fixed income and Investment properties notably in Japan;

•       lower unfavorable change in the fair value of assets and derivatives, improving by €47 million to €43 million as (i) the increase in the fair value of mutual funds (€+73 million) mainly from hedge funds was more than offset by (ii) the unfavorable change in the fair value of derivatives (€-115 million) mainly hedging equity (€-55 million) and forex (€-16 million); combined with

•       lower negative impact of goodwill and other related intangibles, improving by €43 million to €-50 million from the amortization of intangibles at AXA XL, in Switzerland and at AXA Tianping; as well as

•       lower integration and restructuring costs, improving by €4 million to €-78 million, mainly consisting of costs (i) at AXA XL (€-25 million) from IT productivity initiatives, including automation, (ii) United Kingdom & Ireland (€-21 million) notably from the integration of Laya in Ireland, as well as (iii) at AXA Life Europe (€-9 million) from project costs in relation with the implementation of a reinsurance agreement on an in-force portfolio; were partly offset by:

•       higher negative impact of exceptional items, down €162 million to €-146 million, mainly from (i) Reso (€-115 million) driven by the net profit of the period including the impairment of both Reso-owned frozen assets and AXA's receivable on dividends declared by Reso combined with (ii) the disposal of India Life (€-42 million).

SHAREHOLDERS’ EQUITY GROUP SHARE                                                                                      

As of June 30, 2024, Shareholders' equity Group share totaled €47.3 billion. The movements in Shareholders' equity Group share since December 31, 2023, are presented in the table below:

SOLVENCY INFORMATION⁽¹⁾

As of June 30, 2024, the Group’s Eligible Own Funds (“EOF”) amounted to €57.7 billion and the Solvency II ratio to 227%, compared to €57.4 billion and 227% as of December 31, 2023.

(1) Solvency-related information included in this section, including the Solvency II ratio and the Eligible Own Funds (“EOF”), is not subject to the review of the Half Year 2024 Consolidated Financial Statements included in the Half Year 2024 Financial Report, nor the verification of the information otherwise included in such Half Year 2024 Financial Report, performed by the Group’s statutory auditors.

Shareholder value EARNINGS PER SHARE (“EPS”) 

Underlying Earnings Per Share on a fully diluted basis amounted to €1.87, up 4%.

RETURN ON EQUITY (“ROE”) 

(a)               Including adjustments to reflect net financial charges related to undated and deeply subordinated debt (recorded through shareholders' equity).

(b)               Excluding reserves related to the change in fair value of invested assets and derivatives, reserves related to insurance contracts  as well as undated and deeply subordinated debt (recorded through shareholders' equity).

Outlook

AXA has made a good start to its new strategic plan “Unlock the Future”, delivering strong operational performance in the first half of 2024. This reflects the strength of its business model, which is balanced between Commercial and Retail lines and diversified across geographies. Management is confident in achieving underlying earnings per share growth in 2024 in line with the 6-8% CAGR plan target⁽¹⁾ range over 2023-2026E period. 

In Property & Casualty, the pricing environment remains favorable. Management believes that this environment is conducive to sustaining the Group’s strong underwriting margins in Commercial lines and to improving the margins in Personal lines, notably in Europe through pricing and underwriting actions. 

In Life & Health, Management expects the recovery in the technical margin in UK Health to continue in the second half of 2024, reflecting the impact from ongoing price increases and underwriting measures.

Results in Holdings reflect investments in technology and growth initiatives that are expected to remain at a similar level in the second half of the year.

Assuming a definitive agreement is reached and the sale of AXA Investment Managers to BNP Paribas is completed, the Group would exit the asset management business⁽²⁾. The Group will continue to recognize the earnings of AXA Investment Managers until the expected completion of the proposed transaction. Upon completion, the Group plans to launch a share buy-back to offset the underlying earnings per share dilution that would result from the proposed transaction.

In this context, Management is confident in the Group’s ability to deliver on the main financial targets of AXA’s

“Unlock the Future” plan: (i) underlying earnings per share growth of 6-8% CAGR target range between 2023 and 2026E, (ii) underlying return on equity between 14% and 16% between 2024 and 2026E, and (iii) cumulative organic cash upstream in excess of €21 billion for 2024-2026E. Management also affirms the capital management policy⁽³⁾ of the Group’s “Unlock the Future” strategic plan, targeting a total payout ratio of 75%⁽⁴⁾, comprising a 60% dividend payout ratio and an additional 15% from annual share buy-backs⁽⁵⁾. The policy also includes a dividend per share floor, whereby the proposed dividend per share in a given year is expected to be at least equal to the dividend per share paid in the prior year.

AXA’s strategy is focused on delivering profitable organic growth and scaling technical excellence across its businesses, while driving operational excellence across its entire organization. AXA’s Management believes that the Group is well placed to create lasting shareholder value and offer an attractive return.

(1) Assuming current operating and market conditions persist and based on a Nat Cat load of ca. 4.5 points, defined as normalized natural catastrophes losses expected in a year expressed in percentage of gross earned premiums for the same year. Natural Catastrophe charges include natural catastrophe losses regardless of event size. 

(2) The completion of the transaction is subject to customary closing conditions, including the information and consultation of employees’ representative bodies, followed by the signing of the Share Purchase Agreement and the receipt of regulatory approvals, and is expected to be finalized by the second quarter of 2025. Please refer to the Press Release “AXA enters into an exclusive negotiation to sell AXA Investment Managers to BNP Paribas” published on August 1, 2024, and available on AXA’s website (www.axa.com).

(3) Subject to annual Board and Shareholders’ Annual General Meeting approvals and absent (1) for share buy-backs, any significant earnings event (i.e., significant deviation in the Group’s underlying earnings) and (2) for dividends, the occurrence of a significant capital event (i.e., event that significantly deteriorates Group solvency). Board discretion includes taking into account AXA’s earnings, financial condition, applicable capital and solvency requirements, prevailing operating and financial market conditions and the general economic environment.

(4) Payout ratio is calculated based on underlying earnings per share.

(5) Annual share buy-backs exclude share buy-backs related to the neutralization of earnings dilution from disposal and in-force management transactions, as well as well as to neutralize the dilution resulting from employee share offerings and stock-based compensation.

Glossary

SCOPE 

•       France (insurance and banking activities, and holding); •            Europe, consisting of: o      Switzerland (insurance activities), o          Germany (insurance activities and holding), o Belgium & Luxemburg (insurance activities and holding), o         United Kingdom & Ireland (insurance activities and holding), o Spain (insurance activities), o           Italy (insurance activities), and o             AXA Life Europe (insurance activities); 

•       AXA XL (insurance and reinsurance activities and holding);

•       Asia, Africa & EME-LATAM consisting of

o   Asia, consisting of:

§   Japan (insurance activities and holding),

§   Hong Kong (insurance activities),

§   Thailand (insurance activities),

§   Indonesia (insurance activities),

§   China (insurance activities),

§   The Philippines (insurance activities),

§   South Korea (insurance activities),

§   India (Life activities disposed on March 11, 2024 and holding), and

§   Asia Holdings; o    EME-LATAM, consisting of:

§   Brazil (insurance activities and holding),

§   Colombia (insurance activities),

§   Mexico (insurance activities),

§   Russia (Reso) (insurance activities), and

§   Türkiye (insurance activities and holding), o    Africa:

§   Morocco (insurance activities and holding),

§   Nigeria (insurance activities and holding),  o AXA Mediterranean Holdings;

•       AXA Investment Managers (includes, Select (previously referred to as Architas), Capza, and Asian joint ventures accounted for under the equity method);

•       Transversal & Central Holdings, consisting of:

o   AXA Assistance, o AXA Liabilities Managers,

o   AXA SA (including Group’s internal reinsurance activity consequently to the merger with AXA Global Re on June 30, 2022), and

o   Other Central Holdings.

ALTERNATIVE PERFORMANCE MEASURES

Information on the Group’s Alternative Performance Measures is incorporated herein by reference to the section “Alternative Performance Measures” on pages 559 to 560 of the 2023 Universal Registration Document in its Appendix IV “Glossary”.

OTHER DEFINITIONS  

Information on the Group’s Other Definitions is incorporated herein by reference to the section “Other Definitions” on pages 560 to 562 of the 2023 Universal Registration Document in its Appendix IV “Glossary”. 

II.  Consolidated Interim Financial Statements 

/

June 30, 2024

GIE_AXA_Internal

Contents

II.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION............................................................................................... 33

II.2 CONSOLIDATED STATEMENT OF PROFIT OR LOSS........................................................................................................ 35

II.3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME...................................................................................... 36

II.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY................................................................................................ 37

II.5 CONSOLIDATED STATEMENT OF CASH FLOWS............................................................................................................. 38

II.6 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS........................................................................... 40

NOTE 1 ACCOUNTING PRINCIPLES.................................................................................................................................. 40

NOTE 2 SCOPE OF CONSOLIDATION................................................................................................................................ 43

NOTE 3 CONSOLIDATED STATEMENT OF PROFIT OR LOSS BY SEGMENT..................................................................... 47

NOTE 4 TRANSACTIONS IN CONSOLIDATED ENTITIES................................................................................................... 50

NOTE 5 INVESTMENTS...................................................................................................................................................... 51

NOTE 6 SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTERESTS..................................................................... 59

NOTE 7 INSURANCE AND REINSURANCE CONTRACTS.................................................................................................. 64

NOTE 8 FINANCING DEBT................................................................................................................................................. 80

NOTE 9 FINANCIAL RESULT, EXCLUDING FINANCING DEBT EXPENSES......................................................................... 81

NOTE 10 NET INCOME PER ORDINARY SHARE............................................................................................................... 83

NOTE 11 SUBSEQUENT EVENTS....................................................................................................................................... 84

In this document, unless provided otherwise, “restated” refers to the comparative period that was restated following the termination in 2024 of the sale agreement of a closed life and pensions portfolio at AXA Germany, classified as held for sale in 2023. Please refer to Note 4.

II CONSOLIDATED INTERIM FINANCIAL STATEMENTS

II.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

II.2 CONSOLIDATED STATEMENT OF PROFIT OR LOSS                                          

II.3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

        Split between:                                                                                                                                                                                                                                                                       

(a) Including changes in the fair value of cash flows hedge reserve and cost of hedging reserve.                          

(b) Including changes in the fair value hedge reserve of equity instruments.

(c)  Including reactivity from insurance contracts, without recycling in Profit or Loss.                                      

                                                                  Half Year 2024 Financial Report                                                                                 ³⁶

GIE_AXA_Internal

                                                                                                                                        CONSOLIDATED INTERIM FINANCIAL STATEMENTS – HALF YEAR 2024

 II.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

Total comprehensive income for the period                                                                    -                    -                      -                           1,273                              5                    (772)                     565                3,856                                                                                                                                                    4,927               152                5,079 

Shareholders' equity closing June 30, 2023                                                       2,294,039                2.29          22,106                       (7,485)                     5,709                (2,415)               (2,087)             30,084                                                                                                                                             45,912                 2,906         48,819 

                                                                                                                                Half Year 2024 Financial Report                                                                                                                                                                                                                                                                                                                                                                                                 ³⁷

II.5 CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                      Half Year 2024 Financial Report                                                                           ³⁸

(a) Includes premiums/discounts capitalization and relating amortization, amortization of investment and owner occupied properties (held directly).

(b) Includes impairment and amortization of intangible assets booked in the context of business combinations.

(c) Includes impact of reinsurance and change in liabilities arising from contracts where the financial risk is borne by policyholders.

(d) Mainly includes change in provisions for risks & charges, for bad debts/doubtful receivables and change in impairment of assets held for sale.

(e) Includes related derivatives.

(f) Includes equity instruments held directly or by consolidated investment funds as well as non consolidated investment funds.

(g) Includes sales/purchases of assets backing insurance & investment contracts where the financial risk is borne by policyholders. (h) Net of bank overdrafts.

(a) Included in "Other debt instruments issued and bank overdrafts" of the consolidated statement of financial position. 

(b) The "Cash and cash equivalents" item excludes cash backing contracts where the financial risk is borne by policyholders (Unit-Linked contracts).

II.6 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1 ACCOUNTING PRINCIPLES

1.1 GENERAL INFORMATION

AXA SA, a French Société Anonyme (the “Company” and, together with its consolidated subsidiaries, “AXA” or the “Group”), is the holding (parent) company and the internal reinsurer of an international financial services group focused on insurance protection. The list of main entities included in the scope of consolidation is provided in Note 2 hereafter.

AXA is listed on Euronext Paris Compartiment A.

The Consolidated Interim Financial Statements for the period from January 1 to June 30, 2024, including associated Notes, were set by the Board of Directors on August 1, 2024.

1.2 GENERAL ACCOUNTING PRINCIPLES

The Consolidated Interim Financial Statements are condensed financial statements prepared in accordance with

IAS 34 - Interim Financial Reporting, on the basis of IFRS and interpretations of the IFRS Interpretations Committee that are endorsed by the European Union before the end of the reporting period with a compulsory date of January 1, 2024.

When applying IFRS 17 - Insurance Contracts, the Group uses the option provided by the European Union which allows not to apply the annual cohort requirement under IFRS 17 for determining the groups of insurance contracts meeting some criteria (refer to paragraph 1.14.3 of Note 1 Accounting principles of the Notes to the 2023 Consolidated Financial Statements included in the 2023 Universal Registration Document).

The 2024 half year Consolidated Interim Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the 2023 Universal Registration Document.

For existing and unchanged IFRS standards and interpretations, the accounting policies applied in the preparation of the Consolidated Interim Financial Statements are consistent with those applied in the preparation of the Consolidated Financial Statements for the year ended December 31, 2023. The nature and effects of amendments to the IFRS standards first applied in the present Consolidated Interim Financial Statements are summarized in paragraph 1.2.1 below.

1.2.1 IFRS requirements adopted on January 1, 2024

The application of the amendments below as of January 1, 2024 had no material impact on the Group’s Consolidated Interim Financial Statements:

•       Amendments to IAS 1 - Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (including the deferral of its effective date) and  Non-current Liabilities with Covenants;

•       Amendments to IFRS 16 - Leases: Lease Liability in a Sale and Leaseback; and

•       Amendments to IAS 7 - Statement of Cash Flows and IFRS 7 - Financial Instruments: Disclosures: Supplier Finance Arrangements.

1.2.2 Standards and amendments published but not yet effective

Amendments to the Classification and Measurement Requirements for Financial Instruments in IFRS 9 - Financial Instruments and IFRS 7 - Financial Instruments: Disclosures

These amendments, issued on May 30, 2024, will be effective on January 1, 2026, with earlier application permitted. They have not yet been endorsed by the European Union.

They result from the post-implementation review of the classification and measurement requirements in IFRS 9 - Financial Instruments and related requirements in IFRS 7 - Financial Instruments: Disclosures. These amendments improve the requirements in IFRS 9 and IFRS 7 related to settling financial liabilities using an electronic payment system as well as to assessing contractual cash flow characteristics of financial assets with contingent features, including those with environmental, social and governance (ESG)-linked features.

The amendments also modify disclosure requirements relating to investments in equity instruments designated at fair value through other comprehensive income and add disclosure requirements for financial instruments with contingent features that do not relate directly to basic lending risks and costs.

The assessment of their impact on the Group’s Consolidated Financial Statements is in progress.

IFRS 18 - Presentation and Disclosure in Financial Statements

IFRS 18 - Presentation and Disclosure in Financial Statements, published on April 9, 2024, will be effective on January 1, 2027, with earlier application permitted. The standard has not yet been endorsed by the European Union.

It is aimed at improving the quality and cross-industry comparability of financial reporting, notably by introducing defined subtotals in the statement of profit or loss, adding new principles for aggregation and disaggregation of information and requiring disclosures about management-defined performance measures. It will replace IAS 1 - Presentation of Financial Statements.

The assessment of its impact on the Group’s Consolidated Financial Statements is in progress.

Other IFRS requirements not yet effective

The amendments to IAS 21 - The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, published on August 15, 2023 and effective for annual periods beginning on or after January 1, 2025, are not expected to have a material impact on the Group’s Consolidated Financial Statements.

1.2.3 Preparation of financial statements

The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions. In preparing the Consolidated Interim Financial Statements, significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the Consolidated Financial Statements as at the year ended December 31, 2023.

Disclosures relating to the International tax reform (Pillar Two) 

The international tax reform released by Organization for Economic Cooperation and Development (OECD), known as Pillar Two, aims to ensure that an effective taxation of 15 % is reached in each jurisdiction where multinational groups operate. This tax reform is effective in France starting from the 2024 fiscal year. As a result, the Group has to determine the effective tax rate based on Pillar Two rules in each jurisdiction where it operates, and, if this rate is lower than the minimum 15 % rate, an additional tax will have to be paid.

Furthermore, amendments to IAS 12 - Income Taxes issued by the IASB on May 23, 2023 and endorsed by the European Union on November 8, 2023, introduce a mandatory temporary exception in IAS 12, prohibiting both the recognition and disclosure of deferred tax assets and deferred tax liabilities that arise from the implementation of the OECD Pillar Two model rules. The Group applies these amendments starting from 2023.

The Group has initiated a specific project in 2023 to implement Pillar Two model rules. Based on the analysis in progress, main jurisdictions where the Group has an exposure are Bermuda, Ireland and Hong Kong.

In Bermuda, a local corporate income tax of 15 % has been enacted on December 27, 2023. This tax will be effective for fiscal years beginning on or after January 1, 2025. In this context, the Group expects to pay a top-up tax in France on its 2024 expected profits in Bermuda but will be subject to local tax in this jurisdiction starting from fiscal year 2025, which is expected to increase the effective tax rate of the Group in Bermuda and correspondingly reduce any top-up tax requirement in France.

In Ireland, Pillar Two rules have been enacted as of December 18, 2023 and came into effect from January 1, 2024. A local minimum top-up tax has been adopted as part of the overall implementation of the reform.

In Hong Kong, no Pillar Two rules have been enacted yet but a minimum top-up tax at the rate of 15 % is expected to take effect for fiscal years beginning on or after January 1, 2025.

As at June 30, 2024 the current tax expense included €43 million for these new taxes (payable at AXA SA level or at local level in case of local minimum tax being enacted such as in Ireland). This is an estimate, subject to further refinement, as it is based, from one hand, on the calculation method of the effective tax rate Pillar Two which still needs to be clarified on certain aspects and, from the other hand, on projections of results by jurisdictions for corporate entities and most recent financial statements available for investment entities.

NOTE 2 SCOPE OF CONSOLIDATION   

2.1 CONSOLIDATED COMPANIES

(a) AXA XL mainly operates in the United States, the United Kingdom, France, Germany, Australia, Switzerland, Netherlands, Italy, Spain, Bermuda and Canada.

NON-CONTROLLING INTERESTS ON CONTROLLED INVESTMENTS FUNDS AND REAL ESTATE COMPANIES

As of June 30, 2024, non-controlling interests in consolidated investment funds amounted to €8,934 million, (€7,593 million as of December 31, 2023). In most investment funds (particularly open-ended investment funds), non-controlling interests are presented as liabilities under “Non-controlling interests of consolidated investment funds”. Non-controlling interests related to consolidated investment funds and real estate companies that are classified in shareholder’s equity amounted to €1,510 million as of June 30, 2024 (€1,543 million as of December 31, 2023).

2.1.2 Main investments in entities accounted for using the equity method

Companies accounted for using the equity method listed below exclude investment funds and real estate entities: