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transcript
Investor Day November 20, 2014
Andrea ROSSI – CEO AXA Investment Managers Member of the AXA Group Executive Committee
AXA INVESTMENT MANAGERS
Entering a new phase of growth
Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please refer to the section “Cautionary statements” in page 2 of AXA’s Document de Référence for the year ended December 31, 2013, for a description of certain important factors, risks and uncertainties that may affect AXA’s business. 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.
AXA Investor Day – AXA Investment Managers | November 20, 2014 F3 |
TODAY’S KEY MESSAGES
LEADING GLOBAL ASSET MANAGER WELL POSITIONED FOR THE NEXT PHASE OF GROWTH
AXA IM VISION SUPPORTED BY CLEAR STRATEGIC PRIORITIES
CONCLUDING REMARKS
Leading global asset manager well positioned for the next phase of growth
AXA Investor Day – AXA Investment Managers | November 20, 2014 F5 |
Structurally attractive business
• Attractive RoE driven by low capital requirements • Strong Free Cash Flows generation • Exposure to financial markets
16% RoE1 €1bn Free Cash Flows2 generated over 2010-2013
Strategic to insurance activities
Benefiting from parent synergies
• Investment performance excellence • Wide range of asset classes / strategies • Natural offset to interest rate exposure on insurance
business
• Stable insurance asset base • Innovation support and seed money capacity • Access to insurance distribution and developments
74% of AXA assets managed by AXA IM3
€3.7bn4 AuM raised in the last 2 years through AXA seed money
Attractive 3rd party franchise • Provide investment performance and leading innovation • Benefit from scale and operational leverage • Leverage ALM know-how for liability driven clients
€8.0bn of 3rd party Net New Money5 in 9M14
AXA IM – A SUSTAINABLE GROWTH ENGINE WELL POSITIONED FOR 3rd PARTY SUCCESS
All notes are on page F19 of this document
AXA Investor Day – AXA Investment Managers | November 20, 2014 F6 |
Assets: Euro 607 billion
9M14 Revenues: Euro 825 million1
Fixed income 77%
Real estate 9%
Judgmental – Framlington 3%
Quantitative – Rosenberg 2%
Solutions (MACS)2
6%
Structured Finance
3%
Fixed income 36%
Judgmental Framlington 21% Quantitative
Rosenberg 5%
Solutions (MACS)2
11%
Structured Finance
2%
Real Estate
9%
Asian JVs
15%
Third-party assets: Euro 203 billion
AXA assets: Euro 403 billion
Figures as at 09/30/2014
One of the world’s largest active asset managers
A LEADING GLOBAL ASSET MANAGER WITH AN ACTIVE AND DIVERSIFIED PORTFOLIO OF EXPERTISE…
Listed Fixed Income Listed Equities Multi-Assets
Alternatives Joint Ventures
44%
66%
Strong contribution from 3rd party business
Ca. 2,500 employees worldwide located in 28 cities and in 21 countries
A well balanced multi-asset player providing active and smart beta strategies only
A strong track record in developing “specialized” franchises Third-party
clients AXA Insurance companies
56%
34%
1/3 of assets managed for third-party clients accounting for more than 50% of AXA IM revenues
Balanced portfolio of active expertise
All notes are on page F19 of this document
AXA Investor Day – AXA Investment Managers | November 20, 2014 F7 |
Annualized rolling outperformance2 Number of Funds ranked in first 2 quartiles1
Alternative strategies (i.e. AXA Real Estate and AXA Structured Finance) performing above 1 year and 3 years benchmark and targets (e.g. 93% of AXA Structured Finance funds above IRR targets)
Judgmental Framlington
Quantitative Rosenberg
Solutions (MACS)3
Alternatives
… WITH STRONG TRACK RECORD OF INVESTMENT PERFORMANCE ACROSS THE BOARD…
Listed Equity
Fixed Income 5 years 0.5%
3 years 0.5%
5 years 2.4%
3 years 1.4%
5 years 0.6%
3 years 0.7%
5 years 0.5%
3 years 0.2%
5 years 82%
3 years 67%
5 years 94%
3 years 73%
5 years 82%
3 years 78%
5 years 75%
3 years 60%
Figures as at 09/30/2014
All notes are on page F19 of this document
AXA Investor Day – AXA Investment Managers | November 20, 2014 F8 |
Resilient and growing profits Growing assets under management AUM1 in Euro billion
607547532
493500484469535
474426
341
ca. +€120bn
9M14 FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 FY04
101
172164163
134
236241
191
149
91
1H14 FY13 FY12 FY11 FY10
1632
FY09 FY08 FY07 FY06 FY05 FY04
… ENABLING RESILIENT FINANCIAL PERFORMANCE WHILE POSITIONING FOR THE NEXT PHASE OF GROWTH
Underlying Earnings1 in Euro million
All notes are on page F19 of this document
AXA IM vision supported by clear strategic priorities
AXA Investor Day – AXA Investment Managers | November 20, 2014 F10 |
AXA IM VISION IS SUPPORTED BY CLEAR STRATEGIC PRIORITIES
GROWTH
Capture multiple sources of growth through targeted developments
CLIENT CENTRIC OFFERING
Enhance client centric business model across the full value chain
OPERATIONAL EXCELLENCE
Leverage the size and scope of our operations to drive operational excellence
CULTURE
Build One AXA IM
«BE A WORLD-CLASS LEADER CONSISTENTLY SATISFYING CLIENT NEEDS»
AXA Investor Day – AXA Investment Managers | November 20, 2014 F11 |
GROWTH Capture multiple sources of growth through targeted developments
Reinforce historical strong position through segmented approach
Build on existing presence / capabilities
Develop further distribution coverage
Europe: Maintain market share with Institutional clients, selectively target Retail and Defined-Contribution and better leverage AXA distribution capacity
US & Canada: Develop Institutional and Retail segments with an initial focus on AXA IM successful US expertise
Latin America: Target sources of long term growth and leverage AXA Group presence
Nordics: Main focus on pension funds and insurance companies
Asia (including Japan): Benefit from growth of wealth accumulation, leverage the development of AXA Group and accelerate in Japan
Sovereign Wealth Funds: Reinforce globally, particularly in Middle East
Serve and support AXA around the globe
Deepen presence where AXA IM is already strong through segmented approaches
Target mature markets in which AXA IM is not playing at its fair market share
Capture opportunities in selected high growth markets
Development priorities
AXA Investor Day – AXA Investment Managers | November 20, 2014 F12 |
Constant focus to meet and anticipate client demands • Leading in industry innovation with circa 10 new strategies
launched per year • Tailoring existing offering to specific client needs:
• Specific share classes e.g. Solvency 2 “friendly” • Mainstreaming ESG1 criteria for AXA assets
Align investment capabilities to the way clients manage their investments
• Full scope of credit offering in one single expertise with the
integration of AXA Structured Finance capabilities into AXA Fixed Income
• Creation of a “Solutions” hub
Ensure comprehensive approach • Creation of dedicated transversal business lines for
Retail/Wholesale and Institutional clients • Reinforcing client servicing through a more developed local
coverage
CLIENT CENTRIC OFFERING Enhance client centric business model across the full value chain
INN
OVA
TIO
N
MAN
UFA
CTU
RIN
G CL
IEN
T CO
VERA
GE
Net New Money2 In Euro billion
1211
0
-4
-21
FY12 FY11 FY10 9M14 FY13
Continuously delivering on client satisfaction
AXA IM ranking (2012-2014) Greenwich Quality Index
• 1st quartile in Investments
• 1st two quartiles for Service and in overall ranking
All notes are on page F19 of this document
AXA Investor Day – AXA Investment Managers | November 20, 2014 F13 |
PIONEERS ON SMARTBETATM PRODUCTS Innovation at the service of client needs
Capitalizing on market inefficiencies avoiding inherent drawbacks of indexing and optimized implementation
Innovative solution:
Well diversified and low cost way to improve financial markets return being
more efficient than passive
Client need SmartBeta ™
Leveraging AXA Rosenberg capabilities SmartBeta™ Equity
Leveraging AXA Fixed Income capabilities SmartBeta™ Credit
• 20 years of successful experience in running low-risk, low-turnover portfolios
• Access to high quality data and broad credit coverage combined with strong risk management culture and efficient execution
• Delivering investment performance: all strategies getting strong support from consultants
• Leader in systematic investing since 1985 • Data platform with over 40 years’ of granular data history for
20,000 companies • Delivering investment performance: 1 year outperformance at
1,16%1
SmartBeta™ AUM since inception
in Euro billion
9M 14
4.3
0.2
FY13 FY12
3.0
SmartBeta Credit
SmartBeta Equity
All notes are on page F19 of this document
AXA Investor Day – AXA Investment Managers | November 20, 2014 F14 |
Innovative solution:
Organization perfectly aligned with client way of thinking and supported by successful franchises and innovation
Clients looking for diversification and yield under constraints, evolving towards
outcome oriented solutions across asset classes
Client need Global credit continuum offering
Leading franchises matching investors demand, in particular in a low interest rate environment Successful franchises
A constantly renewed pipeline of innovation Innovation
FOCUS ON GLOBAL CREDIT CONTINUUM OFFERING Constantly adapting to a changing environment at the service of client needs
Full credit spectrum covered • Integration of
Structured Finance within Fixed Income
• Broaden range of assets covered within Real Estate
Ability to combine elements within the credit spectrum and beyond
• Global Fixed Income products to play between geographies
• Development of Solutions & ALM driven approaches
• Ability to combine real assets, listed equities and credit
US Short Duration High Yield Commercial Real Estate Debt
9M14
6.9
2012
3.1
2010
0.8
9M14
16.4
2010 2005
0.6
10.5
AUM in Euro billion
2012
• SmartBetaTM Credit expertise • Global Strategic bonds expertise • European Mid Cap Private
Placement Platform
2013 2014
• Leveraged loans (CLO and funds)
• Infrastructure debt platform
• Alternative Credit initiative
• Mortgage loans
AXA Investor Day – AXA Investment Managers | November 20, 2014 F15 |
IT architecture and infrastructure improvement
Operating Cost Income ratio1
-6pts
1H14
70%
FY13
72%
FY12
72%
FY11
75%
FY10
76%2
Full revamp of data platform
Continuous optimization of existing operational set-up
• IT infrastructure upgrade completed • Investment platform front office tool architecture
under review
• Launch of multi-year data transformation program
• Lean management program • Fund range rationalization
OPERATIONAL EXCELLENCE Leverage the size and scope of operations to drive operational excellence
A scalable global operating model ready to on-board additional growth at marginal cost
A continuous approach to deliver improvement in Cost Income ratio
All notes are on page F19 of this document
AXA Investor Day – AXA Investment Managers | November 20, 2014 F16 |
“A corporate project and new mind-set, framed around 3 key themes”
CULTURE Build on One AXA IM
Develop a more agile way of working
Transform & simplify IT architecture
Achieve a step-up change in data management to accelerate digitalization
Refocus on a unique AXA IM branding and strengthen brand identity
Reinforce transparency, leadership and empowerment
Strengthen recognition and reward for performance to align further company and client long-term interests
“Agility and speed” “Full empowerment , full alignment”
“Leverage AXA IM evolving organization ”
CLIENT CENTRICITY
UNITY SIMPLICITY
Creation of the “Client Group” to better address client needs
Enhance monitoring of quality of service to continuously improve moments which matter the most for clients
Concluding remarks
AXA Investor Day – AXA Investment Managers | November 20, 2014 F18 |
Key takeaways Priorities going forward
CONCLUDING REMARKS
A proven win-win model with the AXA Group
Performing and innovative client centric offering
A sustainable growth engine well positioned for 3rd party success
Scalable global operating model ready to on-board additional growth at marginal cost
Deliver on geographical developments
Continue efforts on AXA IM cost income ratio
Pursue the new phase of growth in particular through 3rd party business development
Continue to adapt our offering
AXA Investor Day – AXA Investment Managers | November 20, 2014 F19 |
Notes Page F5 1. Adjusted ROE as of June 2014: Return corresponds to adjusted earnings net of interest charges on undated debt. Equity corresponds to average
shareholders’ equity excluding undated debt and reserves related to change in fair value 2. AXA IM free cash flow (AXA IM dividend at 100%) incl. special dividend linked to AXA Private equity sale 3. Figures as of 06/30/2014 4. AuM raised since 09/30/2012 5. Excl. AXA Main Fund & Unit Linked Page F6 1. Revenue split between AXA Insurance companies and 3rd party clients is based on revenues net of distribution fees and before intercompany
eliminations (9M14 net revenues were €814m). 2. MACS: Multi Asset Client Solutions (includes multi-assets, external managers and total return) Page F7 1. Morningstar© data – AXA IM scope: Crossborder Funds - €41bn of AuM. Past performance cannot be relied on as a guide to future performance or
construed as a reliable indicator for future performance 2. Scope: AXA IM Funds with outperformance objective – respectively €111bn of AuM for 5 years annualized rolling outperformance and €122bn of
AuM for 3 years annualized rolling outperformance. Past performance cannot be relied on as a guide to future performance or construed as a reliable indicator for future performance
3. MACS: Multi Asset Client Solutions (includes multi-assets, external managers, total return and structured products) Page F8 1. Excluding AXA Private Equity 2. Excluding Rosenberg Coding Error provision Page F12 1. Environmental, Social and Governance criteria 2. Excluding Private Equity Page F13 1. As at 10/31/2014 Page F15 1. Excluding financial result & AXA Private Equity 2. Excluding AXA Rosenberg coding error provision
Appendix
AXA Investor Day – AXA Investment Managers | November 20, 2014 F21 |
BIOGRAPHY
Andrea is Chief Executive Officer of AXA Investment Managers and member of the AXA Group Executive Committee.
He had been previously Chief Executive Officer of AXA Assicurazioni from 2008 to 2013, and Chief Executive Officer & Deputy Chairman of AXA Insurance Gulf and Middle East from 2006 to 2008.
Andrea joined AXA Group in 2001, after having worked for Olivetti, General Electric and
Transamerica Aegon.
ANDREA ROSSI CEO, AXA IM