Weak Equity Markets Hit AXA 1st Half Net Earnings, Down 75%

August 12, 2003

Despite a solid operating performance which saw a 6 percent rise in underlying earnings to 1.1 billion euros ($1.25 billion) France’s AXA Group posted a sharp decline in net earnings to 209 million euros ($237 million), compared to 837 million ($950 million) in the first half of 2002.

A total of 1.1 billion euros ($1.25 billion) in “impairment charges,” i.e. writedowns in the value of its investment portfolio were mainly responsible for the decline.

The company’s announcement also cited the following highlights for the period:
— International Insurance turnaround on track: combined ratio improved by 7 points(3) to 103.5% from first half 2002.

— Continued expense reduction on an economic basis: – Euro 215 million [$244 million]between 1H03 and 1H02, benefiting from the Group cost saving efforts in the last 12 months.

— Sustained organic growth: gross revenues up 4% on a comparable basis, to Euro 37.5 billion [$42.5 billion].

— Growth in assets under management (AUM): Euro 755 billion [$857 billion], up 2% versus year-end 2002. This growth in AUM was the first experienced since end 2000

“In a still weak and uncertain economic environment, coupled with the negative impact of a weak US dollar down 19% versus the Euro from first half 2002, our first half 2003 results demonstrate AXA’s strong commitment and continued achievements in terms of operational excellence and business rationalization” stated Henri de Castries, AXA Group Chief Executive Officer.

“Our operational discipline is paying off, with our underlying earnings improving by 6% to Euro 1,085 million. The Group’s Property & Casualty combined ratio is at 101.8%, and AXA RE and AXA Corporate Solutions Insurance are back to underlying profit. Our Life & Savings and Asset Management operations attracted strong net inflows and helped build the base for a strong future.

“Moreover, as a result of our continuous efforts in terms of cost savings and containment, we have reduced by Euro 215 million [$244 million] our economic expenses between first half 2002 and first half 2003. And our focus on organic growth is also paying off, with revenues growing 5.2% compared to first half 2002, excluding a voluntary decrease in reinsurance business.”

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