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AXA Group
Global Ambition
To become THE PREFERRED COMPANY in the industry for our clients, employees, suppliers, shareholders
90.1 billion euros in consolidated revenues 3.9 billion euros in operating earnings 3.5 billion euros in adjusted earnings income
Entrance on the Romanian market in 2010 by acquiring a small company Our ambition is to achieve to build, together, AXAs business in Romania and become a preferred, profitable and trustworthy company.
In Romania, AXA currently operates in the life insurance sector (offering financial plans for children, individual and family protection) and on the health insurance sector (offering corporate life and health plans)
By bringing innovative products, well trained agents and improved customer experience AXA wants to redefine a market of promises into a market of proofs.
Mortgage home loans in US Long term mispricing the real risk, over-leverage, reducing credit quality Credit rating agencies Lack of appropriate regulation and supervision Lack of liquidity in the market
nationalization Fall of the stock markets, assets value, real estate value Reducing the interest rates Reducing the value of pension funds and life insurance UL investment Indirect exposure at the financial institutions which went into bankruptcy
Insurance industry is not at the origin of the crisis, but witnessed and was impacted! Insurance were in a strong position when crisis started and were well capitalised Insurance industry had a stabilizing impact on the financial industry overall due to:
Long term investment policy Prudent investment policy
Insurance cannot not generate systemic risk Overall losses much lower than in the banking sector (21%)
Effects on insurance:
Direct and indirect Different for life insurance, pensions and general insurance Short term and long term
Direct effects
Decrease of the population income; reducing the purchasing power Increase of the surrenders and lapses Reducing sales Competition with substitute products Reputational risk Decrease consumer confidence Increasing the hedging price Lower interest for investing in financial sector, mainly for the individual investors Increase demand for RI Positive effects:
Companies focused more on clients communication and quality of services Focus on increasing the efficiency of the internal processes Focus on core-business, divesting or decreasing the non core-business More demand for the protection products and guarantee products New approach on supervision
guarantee insurance Decrease of the asset value stock, real estate, mark to market valuation etc Exposure to toxic assets Reducing the interest rate - pressure on the liabilities Insurance premium volume Profitability of the companies Solvency margin, extra capital needed mainly for the companies offering guaranteed products Weaker insurance B/S from equity and corporate bonds losses Assets-liabilities management Increased risk management costs
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Industry losses USD 261 bill vs. USD1230 bill losses in banking sector (Bloomberg 2010); total capital raised at industry level about 160 billion USD
Write downs, credit losses and capital raised (including guarantees) of the major insurance companies during 2007 - January 2010 (billion USD)
Insurance company 1 2 3 4 5 6 7 8 9 American Insurance Group (AIG) ING Groep NV Ambac Financial Group Inc Aegon NV Hartford Financial SVCS GRP Fortis Swiss Re Metlife Inc Allianz SE Losses 98,2 18,6 12,0 10,7 9,7 9,3 8,5 7,2 7,0 Capital raised 98,1 24,1 1,4 4,0 6,4 22,7 2,9 4,0 2,0 Shortfall -0,1 5,5 -10,6 -6,7 -3,3 13,4 -5,6 -3,2 -5,0
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11 12 13 14 15 16 17 18
Allstate Corp
Prudential Financial Inc MBIA Inc Aflac Inc Genworth Financial Inc-CL A XL Capital CNA Financial Group Zurich Financial Altele - Total US companies - Total European companies TOTAL
6,6
6,6 5,7 5,2 4,8 4,0 3,1 3,1 40,7 188,9 69,0 261,0
0,0
5,9 1,0 0,0 0,6 2,6 1,2 0,0 14,8 127,4 59,9 191,7
-6,6
-0,7 -4,7 -5,2 -4,2 -1,4 -1,9 -3,1 -25,9 -61,5 -9,1 -69,9
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Source: Bloomberg; OECD, The Impact of the Financial Crisis on the Insurance Sector and Policy Responses, April 2010, pg. 8.
General Insurance
Decrease of the appetite for UL Lower interest rates and higher hedging costs on volatile markets Solvency capital increase Decrease of the profitability Consumer capacity affected differently (more in emerging markets) De-risking / re-risking
Premium increase for certain lines (D&O, credit & guarantees, professional liability) due to claims ratio Change of the UW policy Exclusions Change of the RI prices
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Protect the company financial position Protect the existing portfolio Intensify the client communication Maintaining the operational control mechanisms to prevent financial crime and fraud that can increase during the crisis time Setting up adequate reserves for the longevity risk Adequate measurements of integrated risk management Solvency II Corporate governance
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Discouraging taking short term risks by the management of the companies Reviewing the role of the rating agencies regulation? Relate the remuneration system for the co management with the risk, short term and mainly medium and long term objectives Discourage risk taking with no consequences Better regulation for the financial guarantee insurance Accounting convergence, IFRS Solvency II consistent risk based capital adequacy across Europe Macro prudential monitoring and improved supervision Supervision / Group supervision based on risk exposure Greater policyholder security Transparency of the financial products Free competition and market Change of behavior in the market
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